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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
by Eric M. Solovy and Judah J. Ariel
Executive Summary
This chapter provides an overview of treaty-based rules that establish the minimum level of protection for intellectual property rights (IPRs) that WTO Members and members of regional trade agreements must provide to other members. In particular, this chapter addresses the following points from a business perspective:
1) The WTO TRIPS Agreement
2) Regional Trade Agreements (RTAs)
3) Transparency
* Eric M. Solovy is a partner in the International Trade Group at Sidley Austin LLP. Judah J. Ariel is a former Sidley associate and an international trade lawyer in Washington, DC. We acknowledge and appreciate the tremendous help of Laurie Hieta, of Sidley Austin LLP, in preparing this chapter. The views expressed in this chapter represent the personal views of the authors, and do not represent the views of Sidley Austin LLP or its clients. This chapter has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and the receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.
1.0 Introduction and Background
This Chapter explains how the TRIPS Agreement and RTAs impose minimum IPR protection requirements on the governments that are parties to these agreements. Governments that are parties to these agreements may, within their discretion, impose higher standards of intellectual property protection including, for example, longer periods of protection for copyrights or other types of IPRs.
The negotiators incorporated these disciplines into the scope of trade agreements in order to encourage trade in goods and services protected by intellectual property rights, and to encourage the development of new technologies and works. Like other rules in the WTO Agreements, these disciplines protect the competitive opportunities to gain and maintain access for products and services in foreign markets. They do so by minimising the risk that trade is diminished because of the sale of products and services that infringe intellectual property rights, or because of a failure to adequately incentivise the development of new technologies and works. After an introduction, this chapter explains the rules developed under the TRIPS Agreement, and provides examples of how these rules have been expanded and clarified by RTAs, including the recently negotiated (but unratified) Trans-Pacific Partnership Agreement (TPP).
It is important to note at the outset that intellectual property rights are territorial, i.e., acquired and protected on a country-by-country basis. Thus, there is no such thing as a single international patent or a single international trademark that is protected in all countries in the world, or even in all countries that are members of a trade agreement, such as the WTO.1Consequently, the minimum standards in the TRIPS Agreement and RTAs must be incorporated in the domestic laws and regulations of individual countries. And, as required by the transparency provisions of those agreements, such laws and regulations (and judicial/administrative interpretations thereof) must be published or made publicly available.2
The issues addressed in this section are best addressed through a hypothetical. Suppose that a US pharmaceutical company, the JF Corporation, invented a new drug that effectively treats the symptoms of Parkinson’s Disease in a manner far better[Page257:]than any previous drug. The drug sells under the ParkEnd brand name in the United States. JF has also published a self-help book explaining how certain lifestyle changes can prevent or delay the onset of Parkinson’s Disease, entitled Beyond ParkEnd. Among the lifestyle choices recommended in Beyond ParkEnd is that people drink at least one glass of red wine per day from Napa Valley, California, including those wines produced in the JF Corporation’s own vineyards. In order to have the greatest opportunities to sell ParkEnd, Beyond ParkEnd, and Napa Valley wine at premium prices (including prices high enough to recoup JF’s multi-million dollar research and development (R&D) expenditures for ParkEnd and other drugs), the JF Corporation will depend on strong IP protection around the world. To this end, the JF Corporation and its counsel should ask the following questions and consider whether the answers (discussed in the following sections) are consistent with each country’s obligations under the WTO TRIPS Agreement and applicable RTAs:
If the answer to any of the above questions is unfavourable, and a business cannot find recourse under the laws of the country in which it is trying to acquire or protect intellectual property, it should determine whether such treatment can be challenged under the WTO TRIPS Agreement or under any applicable RTA. In most instances, businesses must work through their governments if they want to challenge a WTO Member’s failure to provide the minimum standards of protection mandated by the TRIPS Agreement.
2.0 Overview of the TRIPS Agreement
A large part of the value of goods and services crossing international borders derives from the intellectual property incorporated in those products and services. In fact, goods are often produced in countries outside of the place where the embedded intellectual property was created. Take, for example, an Apple iPhone, which indicates[Page258:]on the back casing that the product is “Designed by Apple in California. Assembled in China”. That “design” includes the intellectual property that makes it work, as well as the intellectual property covering the look and feel of the phone itself. According to a 2011 study supported by the US National Science Foundation, the distribution of value for the iPhone reflects the relatively high value of ideas: assembly is wholly conducted in China, but this activity accounts for less than 2% of the cost; Apple, by contrast, retains 58% for technology and branding.3
The WTO TRIPS Agreement serves to facilitate trade in goods and services that are subject to intellectual property protection, and protects the interests of Members whose nationals have invested time, energy, creativity and money into creating the intellectual property. This is especially important for products and technologies that can be easily copied or imitated by competitors. This is true, for example, for certain pharmaceutical products – it may cost tens of millions of dollars to create a new medicine, but only a few dollars per pill to produce that medicine once invented. To take another example, movies and software that may cost tens of millions of dollars to create can be copied and distributed at little or no cost, with the proceeds going to counterfeiters. When infringement of this kind takes place, trade in legitimate products decreases for their creators, in terms of volume, value, or both. This explains why an IP-related treaty fits well within the context of a trade agreement, particularly in the modern world where much of the value of many traded goods and services derives from intellectual property.
Beyond protecting trade in goods and services that already exist, a goal of international intellectual property protection is to encourage the development of new goods and services that do not yet exist. Intellectual property protection provides incentives to invest funds and creative energy into developing goods and services, as it provides the opportunity to sell products at a higher price and, in some cases, without competition for a certain period of time.
The TRIPS Agreement is unusual when compared to other WTO Agreements in that it requires Members to provide and protect private rights. As a treaty that allows for dispute settlement only between Members, i.e., usually individual countries, there is a mismatch between those private rights and the possible remedies. As a result, the TRIPS Agreement includes provisions focused on the domestic judicial and administrative procedures for enforcing intellectual property rights in each WTO Member. As will be seen below, these provisions give significant discretion to Members.
Due to the controversial nature of IP rights, and particularly because of the way IP rights may affect access to pharmaceutical products or copyrighted material in developing countries, there have been fewer WTO disputes under the TRIPS Agreement during the past 20 years than one might otherwise expect. That is because, before launching a WTO dispute, governments generally consider not just the private interests of the company or industry that has been harmed, but also broader political pressures, including from groups and activists who are focused more on short-term access to products and works than the long-term benefits of strong intellectual property protection. Where available, the discussion below will refer to the lessons from WTO disputes when illustrating the protections accorded by the TRIPS Agreement.
2.1 Objectives and Principles
In Articles 7 and 8 of the TRIPS Agreement, the negotiators clarified what they understood to be the “objectives” and “principles” of the Agreement. Article 7, entitled “Objectives”, clarifies the desire of the drafters to balance the need to establish incentives to encourage the creation of new technology and arts with the aim of not unduly restricting the dissemination of that technology and art, once created. [Page259:]Article 8, entitled “Principles”, reflects concern that the protection of intellectual property rights might be taken too far, and in such a manner as to implicate other competing interests. Article 8 reflects two distinct issues. First, paragraph 1 provides that Members may adopt measures “necessary to protect public health and nutrition” and to promote “public interest in sectors of vital importance to their socio-economic and technological development.” The WTO Members expanded on the relationship between the TRIPS Agreement and public health in a 2001 declaration known as the “Doha Declaration,” discussed in Section 3.4.8.4Second, paragraph 2 of Article 8 provides that measures may be needed to prevent certain anti-competitive practices resulting from the abuse of IP rights, but any such measures must also be consistent with the TRIPS Agreement.
2.2 National Treatment and MFN
The critically important principles of national treatment and most-favoured-nation treatment, discussed in the context of the GATT in Chapter Two, have been incorporated into the TRIPS Agreement. The national treatment requirement under the TRIPS Agreement (Article 3) prevents a Member from discriminating with respect to IP protection in a manner that favours nationals from that Member over nationals from other WTO Members. The most-favoured-nation treatment requirement under the TRIPS Agreement (Article 4) also prevents discrimination among nationals of different Members, but the focus here is on discrimination among nationals from Members other than the Member at issue. For example, if the European Union provided a higher level of IP protection for EU nationals than for nationals from outside the European Union, that would violate the national treatment principle. If, however, the European Union provided a higher level of IP protection for nationals from Japan than it provided to nationals from China, that would violate the most-favoured-nation obligation. The following case illustrates the application of the national treatment principle.
EC – TRADEMARKS AND GEOGRAPHICAL INDICATIONS5
This case involved a regulation making it more difficult for a non-EU national to register and protect a geographical indication (GI) than for an EU national. Among other requirements, applications for a geographical indication within the European Union were to be sent to the EU Member State in which the geographical indication was located. That EU Member State was required by EU law to review the application and forward it to the European Commission, if justified. On the other hand, GIs from other countries had to be first reviewed by the authorities from the country in which the geographical area is located. Those authorities, unlike EU Member State governments, were under no legal obligation to consider compliance with the European regulation, or to send the application to the European Commission. The WTO Panel said that the “extra hurdle” faced by applicants in non-EU countries to ensure that their authorities review and send their applications to the Commission despite the lack of any domestic legal obligation to do so, violated the national treatment obligation.
While the national treatment and most-favoured-nation treatment obligations of the GATT focus on the origin of the goods, the focus of the TRIPS Agreement is on the treatment of nationals who are seeking to protect their intellectual property.
Critically, in addition to covering the ability to prevent infringement of intellectual property that has already been registered or that already exists, the “protection” covered by the national treatment and MFN provisions include “matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights,”6as illustrated by the EC – Trademarks decision.
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Violations of national treatment and MFN requirements may be clear from a mere review of the text of the IP laws and regulations themselves (“de jure” discrimination). Alternatively, a violation may be something that arises in practice, i.e., as a matter of fact (“de facto” discrimination). It is usually more difficult for a Member to prove de facto discrimination, than de jure discrimination. Both types are prohibited under the TRIPS Agreement.
If a company or individual doing business, or attempting to do business, with a WTO Member believes that its intellectual property rights are being violated because of its nationality, it should hire counsel and/or consult with its government’s trade experts to evaluate whether this is a case of a de facto or de jure violation of national treatment and/or MFN requirements.
2.3 Relationship with Pre-Existing IP Treaties
For over 100 years prior to the TRIPS Agreement (including the first iteration of the Paris Convention for the Protection of Intellectual Property (Paris Convention) in 1883), a number of countries have entered into treaties aimed at protecting intellectual property around the world. In addition to the Paris Convention (as updated in 1967), these treaties include the Berne Convention for the Protection of Literary and Artistic Works (1886, revised in 1971) (Berne Convention), the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (1961) (Rome Convention), and the Washington Treaty on Intellectual Property in Respect of Integrated Circuits (1989) (Washington Treaty). These treaties, however, were generally quite weak in that they had relatively small memberships, failed to provide definitions of the intellectual property at issue, lacked standards for enforcement under domestic laws, and, most importantly, did not include an effective dispute settlement system.
The TRIPS Agreement solved many of these problems. A considerable number of the disciplines of these prior IP agreements are integrated into the TRIPS Agreement, and are now obligations for over 160 WTO Members – many more countries than were party to the earlier agreements. For example:
Among WTO Members, obligations integrated into the TRIPS Agreement are subject to WTO dispute settlement.
3.0 Substantive Standards for Intellectual Property
3.1 Copyright
3.1.1 Introduction
Copyright, and related rights, refers to the protection of the rights of an author in creative and expressive works, from books to songs to video games. The basic objective of copyright is to allow authors to benefit from their works, and create economic incentives for the development of literature and the arts. There are a number of contentious issues in modern copyright law, many involving whether[Page261:]copyright protection has exceeded what is necessary to meet copyright’s basic objective. For example, critics of strong copyright protection argue that copyright can unduly limit access to works and inhibit the creation of new literary and artistic works that would otherwise build upon or transform existing works. Other challenges involve disciplining the development and use of new technologies for copying and disseminating copyrighted works. A number of these specific issues are beyond the scope of the TRIPS Agreement, although they are central to the TRIPS-plus provisions in regional trade agreements, discussed in Section 5 below.
The TRIPS Agreement sets forth the basic guarantees of copyright law. It sets out in Part 2, Section 1 the rights that must be protected, and the minimum term of protection owed by WTO Members, while providing flexibility for different approaches to many of the more controversial issues. While the TRIPS Agreement filled in some gaps that existed under the Berne Convention, its most important contribution in the area of copyright law was to embed many of the existing obligations within the institutional framework of the WTO, providing a mechanism to enforce a WTO Member’s copyright obligations and settle disputes arising from those obligations.
3.1.2 Requirements
3.1.2.1 Protected Works
The copyright protection required by the TRIPS Agreement covers all literary and artistic works. As defined in Articles 2(1) and 2(3) of the Berne Convention (1971), which are among the provisions of the Berne Convention incorporated into the TRIPS Agreement,7copyright protection must include books and other written works, plays and musicals, translations and adaptations, film and other cinematographic works, songs and other musical works, artistic works such as paintings and sculpture, dance, speeches, photographs, maps and architectural plans. Article 10 of the TRIPS Agreement clarifies that computer programmes and other data compilations are also subject to copyright protection.
Article 9.2 of the TRIPS Agreement provides, however, that copyright does not protect an idea, as such, but only the expression of the idea. Under Article 2(2) of the Berne Convention, a country may therefore require that works be fixed – such as through printing, recording, or notation – in order to obtain protection.
3.1.2.2 Types of Protection
The TRIPS Agreement requires WTO Members to provide authors and other creators of protected works certain specified rights to control the use of their works. It also requires a WTO Member to provide nationals of other WTO Members with the same copyright protections afforded to its own nationals. For example, if a Member provides copyright protections for political speeches by its nationals (which is permitted, but not required), it must also protect political speeches by a national of another WTO Member, even if political speeches are not protected in the territory of the other Member.8
Article 5(2) of the Berne Convention establishes that the rights accorded to qualifying works must be automatic, and may not be subject to any formality. Therefore, unlike patents, a Member may not require the formal registration of a work that originated in another country as a condition for granting copyright protection.
3.1.2.3 Exclusive Rights of Authorisation
The TRIPS Agreement guarantees an author’s exclusive rights to authorise – that is, control – certain uses of his or her work. Under Articles 8, 9, 11bis, and 12 of the Berne Convention, an author of a literary or artistic work enjoys an exclusive right to control four primary uses: translations, reproductions (including audio and visual recordings), broadcasts, and adaptations.
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A country may establish a compulsory licensing system that automatically allows the broadcast or public transmission of a copyrighted work, or the recording of music authored by another person (in the sense of recording a cover of a song), subject to payment of a fair royalty, as determined by agreement or by the government.
Other important rights include:
3.1.2.4 Terms of Protection
As under Article 7(1) of the Berne Convention (incorporated into the TRIPS Agreement), the TRIPS Agreement requires a minimum term of copyright protection corresponding to the life of the author plus 50 years. For cinematographic works, or other types of works where a Member is allowed to calculate the term of protection on some other basis than the author’s life, the minimum term of protection pursuant to Article 12 of the TRIPS Agreement is 50 years from the end of the year of publication, or 50 years from the end of the year the work was made, if it was not published within 50 years.
Under certain circumstances, however, Article 7(4) of the Berne Convention allows Members to provide a 25-year term of protection for photographs and works of applied art (such as jewellery or furniture).
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BEYOND PARKEND
If the author of Beyond ParkEnd and its licensee, the JF Corporation, learns that its self-help book is being photocopied by medical students in a WTO Member and sold on the street and over the Internet without authorisation, it must have the ability to prevent such sales. If a WTO Member has neither the substantive law nor enforcement provisions in place to enable such a prohibition, then that Member will be violating its obligations under the TRIPS Agreement.
3.1.3 Exceptions
The TRIPS Agreement also provides for certain exceptions and limitations to the rights of an author, which allow others to use a copyrighted work without authorisation or payment of royalties, in certain specified situations. These include, under Article 10 of the Berne Convention, the “fair use” exception for quoting from a work and the use of works as illustrations for teaching purposes, provided that attribution is given to the original source and author.
Under US law, for example, considering whether an unauthorised use is “fair use” takes into account several factors, such as: (a) the purpose and character of the use, including whether the use is of a commercial nature or is for non-profit educational purposes; (b) the nature of the copyrighted work; (c) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (d) the effect of the use upon the potential market for or value of the copyrighted work.11
Additionally, as explained in the example below, Article 13 of the TRIPS Agreement similarly allows Members to establish limited exceptions and limitations to the exclusive rights of authors and others, provided that the exemption or limitation is: (i) confined to certain special cases; (ii) does not conflict with the normal exploitation of the work; and (iii) does not unreasonably prejudice the legitimate interests of the rights holder.
THE IRISH MUSIC DISPUTE12
In US – Section 110(5) of the US Copyright Act, a WTO Panel held that a “business exception” in US copyright law did not qualify under the exception of Article 13 of the TRIPS Agreement, as it applied to a significant proportion of all restaurants, bars, and retail establishments. On the other hand, the Panel concluded that a “homestyle” exemption was consistent with Article 13, because it applied to far fewer establishments and covered only “dramatic” musical works (e.g., operas and musicals) not normally licensed to be played publicly.
After the Panel Report was adopted, the United States and the European Communities entered into a temporary agreement pursuant to which the United States was to make a lump-sum payment in the amount of US$3.3 million to a fund to be set up by performing rights societies in the European Communities, for the provision of general assistance to their members and the promotion of authors’ rights.13To date, this is one of only two WTO cases in which the parties agreed to settle a WTO case on the basis of monetary compensation.14
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3.2 Trademarks
3.2.1 Introduction
A trademark is defined in Article 15.1 of the TRIPS Agreement as “[a]ny sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings.” (Marks used in connection with services are commonly referred to as “service marks.”) Such “signs” include, at a minimum, words, letters, numerals, figurative elements and combinations of colours. In a number of countries, individual colours, sounds, shapes, and even scents have also been recognised as trademarks, provided that they are capable of distinguishing the goods or services. The TRIPS Agreement does, however, allow Members to require that signs be visually perceptible.
The essence of a trademark is its distinguishing function. The ability to distinguish a good or a service underlies a trademark’s economically valuable functions, most importantly: (i) the ability to indicate to a consumer the expected quality of the good or service, and (ii) to help the development of a reputation and goodwill by the producer.
Trademarks that are “capable of distinguishing” a good or service include both inherently distinctive and non-inherently distinctive signs. Inherently distinctive marks include fanciful, arbitrary, and suggestive signs:
Non-inherently distinctive marks include marks that are descriptive of the good or service – for example, Tasty Potato Chips, as well as basic, common, functional, ornamental, representative or descriptive figurative elements – in effect, any sign that would not be recognised by a consumer as identifying the particular source of a good. Under Article 15.1 of the TRIPS Agreement, a Member may make registrability of non-inherently distinctive marks depend on distinctiveness acquired through use, in which case a non-inherently distinctive mark generally becomes eligible for registration only after it has been used in connection with an undertaking’s goods or services, thereby developing an association for consumers with that particular undertaking. The length of time for such association to develop varies from case to case, and may often be shortened with advertising and other promotion.
3.2.2 Registration
The TRIPS Agreement does not require Members to actually register as a trademark every mark that is eligible for registration simply because it meets the definition of a trademark. A Member may make registrability of the mark dependent on the applicant’s use, or intended use, of the mark. However, actual use cannot be a requirement for filing an application to register a trademark. Additionally, a trademark cannot be refused registration solely because of failure to use the mark within three years from the date of the application. This provision is especially relevant to products [Page265:]requiring significant time between their development and when they can actually be introduced into the market, such as pharmaceuticals and other products that require regulatory approval.
A Member may not allow the nature of the goods or services to which a trademark is to be applied to form an obstacle to registration of the trademark. This is, at its most basic, a non-discrimination requirement, which prevents Members from denying trademark protection in connection with certain types of goods or services, including goods or services that are not presently legally available in a Member’s territory.
3.2.3 Term
When a trademark is initially registered, Article 18 of the TRIPS Agreement requires Members to provide at least seven years of protection, as well as to allow for indefinite renewals. This is a critical difference between trademarks and several other forms of intellectual property rights, such as patents and copyrights, for which Members limit the term of protection. While for patents and copyrights there is a public benefit from allowing the inventions and works to enter the public domain after a period of time, there is a general understanding that there is no benefit from allowing trademarks to enter the public domain, as this could lead to confusing use of that mark by competitors that would harm consumers and producers alike.
3.2.4 Denial or Cancellation
Article 15.2 of the TRIPS Agreement expressly allows Members to deny registration of a trademark, or cancel a registered trademark, on grounds that are consistent with the Paris Convention, which identifies certain exceptions to the basic obligation to register a valid foreign trademark:
Under Article 19.1 of the TRIPS Agreement, Members that require use in order to maintain registration may cancel a trademark for non-use only after at least three years of uninterrupted non-use. Even after three years, a trademark may not be cancelled for non-use if the owner can show valid reasons for such non-use as a result of obstacles to use, such as government restrictions on use of the trademark or on the goods and services protected by the trademark.
If a trademark is denied registration or cancelled in a foreign country for reasons other than those described above, its owner may be able to argue that the TRIPS Agreement and the Paris Convention require that the decision be reversed. Such an argument could be made through WTO dispute settlement by a WTO Member (on behalf of the private owner) or, in the few countries in which the TRIPS Agreement is given direct effect in domestic law, in national courts by the private owner itself.
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PARKEND HYPOTHETICAL
Assume that the JF Corporation wants to register its PARKEND trademark in a WTO Member that makes registration dependent on use. As noted above, PARKEND meets the definition of a trademark because it is an inherently distinctive sign. If the JF Corporation seeks to register its trademark with the intention of obtaining approval to market ParkEnd, a Member may not deny registration on the grounds of non-use (within three years of application), even if the drug will not obtain marketing approval for a few years. Once registered, pursuant to Article 19.2 of the TRIPS Agreement, the need to await government approval must be recognised as a valid reason for nonuse. However, the Member could deny the registration if, for example, a local drug manufacturer already had an existing drug called ParkEnd.
3.2.5 Rights of Trademark Owners and Exceptions
Article 16.1 of the TRIPS Agreement guarantees the owner of a registered trademark an exclusive right to prevent anyone without authorisation from using, in the course of trade, identical or similar signs for goods or services that are identical or similar to those for which the trademark was registered, if such use would result in a likelihood of confusion. Thus, for example, an unauthorised footwear company could not use the Nike “swoosh” trademark on shoes, as that would be the use of an identical sign on identical goods. (When identical signs are used on identical goods, the TRIPS Agreement provides for a presumption that a likelihood of confusion exists.)
Examples of similar signs on identical goods would include using the typeface and colour of the distinctive trademark (but not the Coca-Cola name itself) for a different brand of soft drink, or the word “Nike” for sportswear. Likewise, using a soft-drink trademark for other food products, or a personal computer trademark for other electronic devices, would likely constitute the use of identical signs on similar goods. The TRIPS Agreement does not define “likelihood of confusion” or explain how to determine whether such likelihood would exist, allowing for a slight variation among Members in the tests to be applied and the factors to be considered.
3.2.6 Well-Known Marks
Articles 16.2 and 16.3 of the TRIPS Agreement provide additional protection for trademarks that are considered “well-known.” A well-known mark, or an imitation of a well-known mark, cannot be used by a third party for any goods or services if doing so would indicate a connection between the trademark owner and the goods and services in question, and if the interests of the trademark owner are likely to be damaged. This protection extends even in the territory of a Member where the trademark is not registered, provided that it is “well-known” in that Member.
WIPO’s “Joint Recommendation Concerning Provisions on the Protection of Well- Known Marks” recommends certain factors that may be used to determine whether a mark is well-known: the degree of knowledge or recognition of the mark in the relevant sector of the public; the duration, extent and geographical area of any use or promotion of the mark; the value of the mark; and the record of successful enforcement of the mark.15Determination of whether a given mark is well-known is done on a country-by-country basis.
While the same mark can normally be used or registered by different owners in connection with unrelated goods or services (for example, a pharmaceutical research company and a clothing company could likely both use the trademark “JF” without creating a likelihood of confusion), unauthorised third parties are prohibited from using[Page267:]a well-known mark, such as Kodak, Viagra or Nike, even for products other than cameras, pharmaceuticals, or sportswear, respectively. The purpose is to protect not only the owner of the well-known mark’s brand, but also to prevent consumers from being misled.
Members are allowed, under Article 17 of the TRIPS Agreement, to establish exceptions to the rights associated with a trademark (such as “fair use of descriptive terms”), as long as the exceptions are both (i) limited and (ii) account for the legitimate interests of both trademark owners and third parties, including consumers and the intended beneficiaries of the exception. For example, fair use may be found to occur when a descriptive mark is used in good faith for its primary descriptive meaning, rather than its secondary distinctive meaning, and no consumer confusion is likely to result. So, for example, a store that sells containers in the United States may be able to describe its store as a container store, without infringing upon The Container Store Group’s rights in the mark
16Such a use is purely descriptive, and does not invoke the secondary meaning of the mark.
3.2.7 Use and Restrictions on Use
While the TRIPS Agreement does not provide an express “right to use” a trademark, it does discipline the manner in which Members may restrict use of a trademark, as well as the consequences that can be imposed for non-use. Such disciplines can be important when trademark owners are faced with regulations and restrictions that may limit their ability to use their trademarks on their packaging, or in advertising. For example, a number of countries have implemented or proposed legislation that restrict, or eliminate, the ability of trademark owners to use their trademarks on cigarette packages or infant formula.
As noted in Section 3.2.4 above, under Article 19.1 of the TRIPS Agreement, when Members require use of a trademark in order to maintain registration, a trademark may be cancelled for non-use only after three years of uninterrupted non-use. Circumstances independent of the trademark owner, such as government restrictions on use of the trademark, or on use of the goods and services protected by the trademark, are deemed to be “valid reasons” for non-use that an owner can raise to prevent cancellation.
Article 20 of the TRIPS Agreement prohibits Members from “unjustifiably encumber[ing]” the use of a trademark “by special requirements,” examples of which include requirements to use the trademark together with another trademark, in a special form, or in a manner that harms the trademark’s ability to distinguish. What makes an encumbrance either justified or unjustified has not been definitely interpreted, and is currently at issue in the WTO plain packaging disputes.17
3.3 Geographical Indications
3.3.1 Definition of a GI
Part II, Section 3 of the TRIPS Agreement applies to geographical indications (GIs) that, while bearing some similarities to trademarks, are protected as a distinct form of intellectual property. GIs concern goods “where a given quality, reputation or other characteristic” “is essentially attributable to its geographical origin” whether an entire country, or “a region or locality” within a Member’s territory (Article 22.1). Famous examples of GIs include Parma ham, Darjeeling tea, and Champagne. Whether a quality, reputation or characteristic is “essentially attributable” includes the concept of terroir, the qualities imparted to a product by the environment in which it is grown. It also relates to a quality, reputation, or characteristic based on traditional methods of production specific to a given place, such as hand-rolled Cuban cigars or Bohemian crystal.
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GIs do not need to be the actual name of the place of origin, as long as they indicate the geographical origin of the product. For example, “feta” is a protected GI within the European Union for a specific type of sheep’s milk cheese produced in Greece. GIs are also not limited to words, but may include (or consist of) designs and images, such as the GIs pictured below for Idaho potatoes and Serrano ham.
3.3.2 Protection for GIs
Article 22.2 of the TRIPS Agreement requires Members to provide the legal means for interested parties to prevent: (i) “designation or presentation” of a good that misleads the public as to its geographical origin, and (ii) acts of unfair competition, as defined in the Paris Convention, related to GIs, which include acts that create confusion with competing goods or the use of indications that are liable to mislead the public about the nature or characteristics of the good.
Under Article 22.4 of the TRIPS Agreement, these obligations also apply to indications of origin that may be literally true, but falsely represent a different origin to the public in a given Member. For example, while labelling a ham produced in Parma, Ohio as “Parma ham” may be literally true, doing so would falsely suggest to consumers in a given Member that the ham is from Parma, Italy, and shares the qualities and characteristics associated with Italian Parma ham.
The systems of protection for GIs vary significantly among WTO Members. The European Union and India, for example, have formal systems for the registration of GIs, while the United States does not have a specific legal regime for GI protection, generally relying instead on its laws governing trademarks and unfair competition. In principle, any of these systems may potentially satisfy the requirements of Article 22.2 of the TRIPS Agreement.
Because the determination of whether a sign meets the definition of a GI is made by each Member, there are often significant disagreements as to whether a sign asserted as a GI is, in fact, entitled to the protections guaranteed by the TRIPS Agreement. It is not unusual for the same term to be recognised as a GI by some Members, but to be considered merely a descriptive term by other Members. Such disagreements are often dealt with in bilateral negotiations, although they ostensibly could also be subject to WTO dispute settlement in the context of a dispute over compliance with the requirements described below.
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STANDSTILL
The TRIPS Agreement contains an “anti-rollback” or “stand-still” provision in Article 24.3, which prohibits a Member from diminishing the protection of GIs that existed at the time the WTO Agreement entered into force for that Member (1 January 1995 for original WTO Members), even if that protection exceeds what is otherwise required by the TRIPS Agreement. The extent of the “protection” covered by this provision, however, is not settled. According to one WTO panel, it concerns individual GIs that were protected by the Member at the relevant time;18others, however, argue that it is properly understood to address a Member’s legal framework or system of protection for GIs.
3.3.3 Special Provisions for Wines and Spirits
Article 23 of the TRIPS Agreement provides additional protections for GIs for wines and spirits, which were of particular concern to European countries during the TRIPS Agreement negotiations. Under Article 23.1, each Member must provide the legal means to prevent the use of GIs for wines and spirits that do not originate in the place indicated by the GI, even if the true origin is indicated or the GI is accompanied by terms such as “style” or “type.” Unlike the obligation in respect of GIs generally, this requirement applies regardless of whether the public would be misled. Thus, a wine cannot be sold, for example, as “Burgundy-style” or as “Argentinean Chianti,” even if it were clear to consumers in a WTO Member that such wine did not come from the Burgundy or Chianti regions of France and Italy, respectively.
JF Corporation and other Napa Valley winemakers would be entitled both to the protections afforded GIs generally, as well as the additional protection for wines and spirits specified in the TRIPS Agreement. The designation Napa Valley is widely recognised as meeting the definition of a GI for wine: it identifies the geographic origin of the wine, to which certain qualities, reputation, or other characteristics of Napa Valley wine are attributable. WTO Members would therefore be required to provide the JF Corporation with the means to prevent misleading use of the Napa Valley designation, and to prevent non-Napa Valley wines from being marketed with reference to Napa Valley or as Napa Valley-style wine.
3.3.4 Relationship Between GIs and Trademarks
GIs and trademarks both function to distinguish the source of goods or services, whether by place or brand. Conflicts between the protection of trademarks and the protection of GIs can arise, given the different approaches to each form of IP taken by various domestic legal systems and the different understandings of consumers in each Member. For example, Members where GIs were not specifically protected prior to the TRIPS Agreement may have allowed terms considered to be GIs in other Members to be registered as trademarks for different goods, or to be used as descriptive or generic terms for a product. Conversely, owners of such trademarks may not have been able to exercise their trademark rights in other countries where the trademark contained a GI recognised in those countries.
The TRIPS Agreement seeks to resolve these conflicts by ensuring, under Article 24.5, that the protection for GIs does not prejudice the registration or right to use of trademarks that are identical or similar to a GI, when those trademarks were acquired[Page270:]in good faith before the GI provisions of the TRIPS Agreement entered into force or before the GI was protected in its country of origin. Additionally, under Article 24.4, when a wine or spirits producer in one Member has continuously used a GI of another Member for 10 years prior to 15 April 1994, or in good faith before that date, the TRIPS Agreement does not prohibit its continued use of that GI.19For example, the US producer Korbel had marketed its sparkling wine as Champagne, a French GI, since the 1800s, and may continue to do so.
The tension between trademarks and GIs is illustrated by the following example, drawn from a WTO dispute involving agricultural products and foodstuffs:
EC – TRADEMARKS AND GEOGRAPHICAL INDICATIONS20
EC – Trademarks and Geographical Indications (discussed in Section 2.2 above) also involved an EC regulation on GIs that appeared to provide a positive right to use registered GIs for foodstuffs and agricultural products regardless of whether they infringed a trademark owner’s pre-existing right to prevent confusing uses. In other words, protection of GIs appeared to trump protection of previously registered trademarks. The United States and Australia argued that the regulation would allow the co-existence of pre-existing trademarks and later-registered GIs (including translations thereof) for the same products, which could result in a likelihood of confusion. The WTO Panel found that the EC regulation was inconsistent with Article 16.1 of the TRIPS Agreement, which gives a trademark owner the right to prevent use of identical or similar signs for identical or similar goods, when such use would result in a likelihood of confusion. However, the Panel held that the regulation was justified as a “limited exception” to trademark rights under Article 17 (see Section 3.2.6 above), particularly given statements made by the European Communities as to the limited opportunities for use of GIs that conflict with trademarks under the challenged regulation.21
3.4 Patents
3.4.1 Introduction
Going far beyond any prior multilateral treaty on patent rights, the TRIPS Agreement requires WTO Members to provide certain minimum protections for patents and patentable inventions. Such protections are particularly important to incentivise the development of new products and processes in various fields. This section will explore the obligations and exceptions in the portion of the TRIPS Agreement covering substantive patent protection, which was one of the most controversial sections in one of the most controversial WTO Agreements.
Intangible assets, such as patented technologies, constitute an increasing proportion of the value of products and services produced in developed countries. For instance, the stock market split between book value and market value (tangible to intangible assets) for the S&P 500 was 83:17 in 1975 and changed to 16:84 by January 2015.22While developing countries also benefit from the incentives and protections that come from protecting patents, many developing countries have traditionally been opposed to strong patent protection.
For example, many developing countries prior to the TRIPS Agreement had traditionally refused to allow patenting of pharmaceutical products out of concern that it would make them unaffordable. Indeed, some of the least developed Members of the WTO have continued to receive exemptions from certain patent-related obligations of the TRIPS Agreement more than 20 years after the WTO Agreements[Page271:]entered into effect, and some of those exemptions will continue for many years into the future. In particular, in November 2015, the WTO’s TRIPS Council decided to extend until January 2033 the period during which pharmaceutical products in least-developed countries (LDCs) are not subject to the core patent provisions of the TRIPS Agreement.23These least-developed countries are also exempt from applying all other substantive TRIPS standards until 2021.24 As of January 2017, the WTO had 36 LDC Members (using the United Nations definition), the vast majority of which are located in Africa.25
3.4.2 Patentable Subject Matter
Article 27 of the TRIPS Agreement defines the types of inventions that must be subject to patent protection within a WTO Member and indicates certain types of inventions that, on an exceptional basis, do not need to be protected. Article 27.1 provides that patents must be available for any inventions, including products and processes, in any field of technology, if the invention is “new”, involves an “inventive step”, and is capable of “industrial application”. These are terms of art in domestic patent laws around the world. To date, neither a WTO panel nor the Appellate Body has interpreted them.
The other requirement that must be met is that an alleged invention actually qualifies as an “invention”. Concepts such as laws of nature, abstract ideas and natural phenomena are not considered “inventions”. The concept of “invention” is the subject of much debate within domestic patent systems and courts.
Businesses that develop their own technology or depend upon licensed technology should be aware of how the definition of an invention is interpreted in IP cases before national courts.
3.4.3 Exclusions
WTO Members may exclude several categories of subject matter from patentability and still be consistent with the TRIPS Agreement. These are:
Some of these terms are quite technical and, if ever subject to dispute settlement, would likely result in vigorous argument by the parties to the dispute.
While the TRIPS Agreement permits Members to exclude from patentability “plants and animals other than micro-organisms,” it requires that Members provide for the protection of plant varieties either by patents or by an effective sui generis system[Page272:](i.e., a system created for the purpose of protecting plant varieties), or by any combination thereof. The International Union for the Protection of New Varieties of Plants (UPOV) is generally considered as offering an effective sui generis system.27
Finally, Article 27.2 of the TRIPS Agreement permits countries to deny patent protection for subject matter in order “to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment.”28For example, under US law, no patent shall be granted for any invention or discovery that is useful solely in the utilisation of special nuclear material or atomic energy in an atomic weapon.29
If a company or individual has invented something that it believes to be new, useful, and not obvious in view of what has come before that invention, it should apply for patent protection for that invention in markets where it expects to sell the product. If that company or individual believes that the patent office, or the judiciary, of a particular WTO Member has adopted an unduly narrow interpretation of any of the key requirements of patentable subject matter – i.e., new/novelty, inventive step/non-obvious, and utility/ industrial applicability, that company or individual should consider, together with international trade and patent law counsel, whether that Member is violating the TRIPS Agreement. If they conclude that such a violation is likely taking place, the government in which the company or individual is located, or another interested WTO Member, may initiate WTO dispute settlement proceedings or raise the matter bilaterally or in the WTO TRIPS Committee.
3.4.4 Rights Conferred by a Patent and Exceptions
Article 28 of the TRIPS Agreement requires that patent owners in WTO Members be given the exclusive rights to prevent all third parties from “making, using, offering for sale, selling, or importing” a patented product. Thus, it is not only the sale of the patented products that is at issue, but also the other activities (i.e., making, using, etc.). For patents that cover processes rather than products, the patent owner must have the right to prevent third parties from using the process itself, as well as the right to prevent use, offering for sale, sale, or import of the product directly obtained from that patented process.
Article 30 of the TRIPS Agreement allows Members to provide for certain “limited” exceptions to the exclusive rights conferred by a patent. An exception is limited if it makes only a small reduction in one or more of the rights in question which does not “unreasonably conflict with a normal exploitation of the patent.”
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CANADA – PATENT PROTECTION OF PHARMACEUTICAL PRODUCTS30
Canadian patent law in the 1990s provided two exceptions for patent protection covering products that were subject to regulatory approval for safety and effectiveness, including pharmaceutical products. The “regulatory review exception” allowed companies to make use of a patented invention (without the permission of the patent holder) in order to develop information required for marketing approval of a new drug. Such information could speed the release of a generic competitor upon expiration of the patent. The “stockpiling exception” allowed companies to make use of a patented invention to manufacture and stockpile unlimited quantities of a drug while the patent was still in effect, which could then be sold when the patent expired.
The WTO Panel issued a split decision, finding that the regulatory review exception fell within the scope of the exception to patent protection permitted by Article 30 of the TRIPS Agreement, but that the stockpiling exception (by allowing unlimited production of the patented product during the patent term) went too far and was not permissible.
Given the ambiguity of the terms in Article 30, as with other exceptions in the TRIPS Agreement, understanding whether a measure or judicial decision of a WTO Member might be excused by this provision may require advice from legal counsel specialised in the WTO Agreements.
3.4.5 Non-Discrimination Requirement
In addition to the general non-discrimination requirements in the TRIPS Agreement (i.e., national treatment and most-favoured-nation treatment), Article 27.1 of the TRIPS Agreement includes a non-discrimination requirement specifically related to patent protection. It provides that patents shall be available, and patent rights enjoyable (e.g., enforceable), without discrimination as to: (i) the place of invention; (ii) the field of technology; and (iii) whether products are imported or locally produced. Prior to the TRIPS Agreement, a number of countries actively discriminated in these ways, including against pharmaceutical products.31
A WTO Member may not refuse to grant a patent to ParkEnd, or to enforce a granted patent, because it covers a pharmaceutical product (i.e., “field of technology”), or because the invention was made in the United States. Nor may a WTO Member refuse to protect or enforce a patent for ParkEnd because the medicine is produced outside its territory and imported into that Member.
3.4.6 Disclosure of Patented Invention
Article 29 of the TRIPS Agreement requires that patent applications disclose the specifics of an invention. The disclosure must be sufficient to enable an expert in the field of the invention to be able to carry out the invention. In addition, Members may require that the application indicate the best way (“best mode”) to carry out the invention, as known by the inventor.
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As a consequence of this disclosure requirement, when a patent expires, and the period of exclusivity ends, competitors will then have enough information from the public domain to reproduce and build on the invention.
3.4.7 Term of Patent Protection
Under Article 33 of the TRIPS Agreement, a patent must last no less than 20 years from the date of the filing of the application. Moreover, Article 33 should be read together with Article 62.2 of the TRIPS Agreement (summarised below in Section 4.2), which imposes some discipline on the time that a Member may take to review a patent application, once filed. A number of WTO Members had to change their law to comply with this requirement, including the United States, which had previously counted the patent term (of 17 years) from the time of patent grant (rather than from the time of application).
CANADA – TERM OF PATENT PROTECTION32
In the Canada – Patent Term case, a WTO panel and the Appellate Body rejected Canada’s argument that because patents regularly took four to five years to issue, a term of 17 years from the date of the grant gave the patent owner at least 20 years of “effective” protection from the date of the application and was, therefore, consistent with Article 33 of the TRIPS Agreement. The Appellate Body explained that the notion of “effective” protection did not exist in Article 33 of the TRIPS Agreement.
3.4.8 Compulsory Licensing
Under Article 31 of the TRIPS Agreement, in certain unusual situations (e.g., emergencies in public health), a WTO Member may authorise a third party (or the government, itself) to make use of a patented invention without the authorisation of the patent owner, subject to various conditions. This is commonly referred to as a “compulsory license.” A Member’s decision to grant a compulsory license should not be taken lightly, given the potential consequences for business confidence, including investor and inventor confidence. Compulsory licenses imply a government’s reduced commitment to patent protection, and may reduce the incentive for business to innovate in the technical area subject to licensing.
Article 31 established the following conditions for a Member’s grant of a compulsory licence:
THE DOHA DECLARATION ON TRIPS AND PUBLIC HEALTH
The 2001 “Doha Declaration” of WTO Members recognised that the requirement that compulsory licenses be predominantly for supply of the domestic market may prevent certain Members, i.e., those that could not themselves produce pharmaceutical products from benefitting from compulsory licensing, even in cases of public health emergencies.33The General Council of the WTO came to a decision in 2003 specifying that, under certain situations, a Member could issue a compulsory license for export to a least-developed country Member to provide access to a patented pharmaceutical product.34 Canada was the first country to take advantage of this decision, having notified in 2007 its intention to issue a compulsory license for HIV/ AIDS medicines for export to Rwanda under Article 31.35 As of April 2017, this was the only instance when a compulsory license was authorised under Article 31. An amendment to the TRIPS Agreement embodying the 2003 decision has entered into force.36
3.5 Other Forms of Intellectual Property
3.5.1 Industrial Designs
Articles 25 and 26 of the TRIPS Agreement require WTO Members to provide protection for industrial designs. Industrial designs refer to ornamental or aesthetic aspects of an article, including two- or three-dimensional features. Industrial designs are focused on protecting the way a product looks, rather than the function of the product (which is generally the realm of patents). Members must protect industrial designs when they are “new” or “original”, and independently created. A design is not new or original if it does “not significantly differ from known designs or combinations of known design features.”
Owners of protected industrial designs must have the right to prevent unauthorised third parties from making, selling, or importing articles bearing or embodying a design which is a copy, or a substantial copy, of the protected design, where undertaken for “commercial purposes.” Industrial design protection must be provided for at least 10 years.
Article 26.2 of the TRIPS Agreement includes an exception for industrial design protection that is very similar to the exception for patent rights discussed in Section 3.4.3 above. It provides that Members may provide “limited” exceptions, as long as they 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 TRIPS Agreement accords WTO Members significant discretion in selecting the formal mechanism through which they can protect industrial designs. For example, in some countries, they are protected as a special type of patent known as a “design patent”; in other countries, they are protected under copyright law.
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3.5.2 Trade Secrets
Article 39.2 of the TRIPS Agreement requires WTO Members to provide a minimum level of protection for “trade secrets.” Trade secrets usually involve a formula, a method, a device, a process, a pattern, a compilation, or a programme. In order to protect a trade secret from being disclosed to, acquired by, or used by others without their consent, and in a “manner contrary to honest commercial practices,” a person must demonstrate that the information satisfies certain criteria:
The TRIPS Agreement defines “a manner contrary to honest commercial practices” to include at least breach of contract, breach of confidence and inducement to breach.37It also includes 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 of undisclosed information.38
Unlike the case of patents, as long as a trade secret satisfies the conditions listed in Article 39.2, it must be protected indefinitely. That said, trade secret protection generally ends when the confidential information becomes public – even if through a dishonest act – and a trade secret must therefore be closely protected to ensure that this does not happen.
In order to keep a trade secret confidential, the person lawfully in control of the information must take reasonable steps under the circumstances to keep it secret. The most common steps are for the owner or creator to require non-disclosure or confidentiality agreements from each recipient of confidential information.
In comparison to a trade secret, a patent is by its very nature a public disclosure of information, and patent protection expires at the end of the patent term.
A business in possession of undisclosed information that could be patented needs to decide whether to seek a patent or to rely on trade secret protection. While a patent provides its owner with guaranteed protection, that protection expires after a limited time (i.e., at least 20 years from the date of the patent application). A trade secret is protected for an unlimited time, but only while it remains a secret. Once disclosed, through, e.g., malfeasance, accident, or by reverse engineering, trade secret protection comes to an end.
Trade secret protection is critically important to a variety of industries, particularly in situations where patent protection is not available. Among the most valuable trade secrets are the formula for producing Coca-Cola or other high-value beverages, business strategies, pricing information, and customer information.
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Innovative pharmaceutical products are generally protected through patents, rather than trade secrets. That is because in many cases pharmaceutical products can be reverse engineered, so that an expert in the field can determine how it was made simply by studying the product itself. As a result, valuable information cannot be kept “secret.” ParkEnd would, therefore, be likely to seek patent protection rather than trade secret protection.
Businesses should note that trade secrets cover subject matter that may not be subject to patent protection, such as certain business methods, formulas, designs, or food/drink recipes. Regardless, under the TRIPS Agreement WTO Members must make both forms of protection available.
3.5.3 Data Protection
A company must generally receive regulatory approval before it is allowed to place pharmaceutical products and agricultural chemical products on the market. Approval is provided only if the producer can demonstrate to the government that a product is safe and effective. Proving the safety and effectiveness of such products often takes many years of testing and research, and may cost many millions of dollars. While pharmaceutical and agricultural products often benefit from patent protection, patents do not protect the investment in the test and other data that must be developed for regulatory approval. Thus, even when a particular patent has expired (or never existed for a particular product), data protection must continue to be provided for a significant period of time, depending on when that data was submitted for regulatory approval. The issue is illustrated by the example in the following text box.
Article 39.3 of the TRIPS Agreement requires Members to provide a minimum level of protection for test and other data needed for regulatory approval for pharmaceutical and agricultural chemical products that use new chemical entities and involve considerable effort. The protection must be against “unfair commercial use,” a term that is vague, and the provision does not provide any guidance as to the length of time during which such test and other data should be protected. Given the object and purpose of providing incentives to develop data on the safety and efficacy of pharmaceutical products, commercial use would likely be considered “unfair” if the protection were not sufficient, on average, to allow the originator of the data to at least recoup its investment.
Also, the test or other data must be protected against disclosure, unless such disclosure is necessary “to protect the public”, or unless steps are taken to prevent unfair commercial use of that data.
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PARKEND HYPOTHETICAL – DATA PROTECTION VS. PATENT PROTECTION
The JF Corporation spent several million dollars developing data showing that ParkEnd is effective at treating Parkinson’s disease and that it is safe for consumers who use it. Based on the test data submitted to a WTO Member’s government, ParkEnd receives marketing approval in January 2018 in that WTO Member. The patent on ParkEnd in that same WTO Member expires in February 2020. A generic pharmaceutical company applies for marketing approval in February 2020 asserting that, because the generic product has the same chemical formula and the same active ingredients, it can rely on the safety and effectiveness data generated by the JF Company for ParkEnd and receive marketing approval immediately upon expiration of the patent.
Under Article 39.3 of the TRIPS Agreement, a WTO Member cannot provide marketing approval for the generic version of ParkEnd based on data submitted by ParkEnd several months earlier. Patent expiration is irrelevant to this conclusion, as data protection and patent protection are two distinct forms of intellectual property rights.
Thus, to answer the question posed in the Introduction, if ParkEnd cannot prevent unfair commercial use of its pharmaceutical test data in a given WTO Member, it may attempt to seek recourse by convincing a government to launch a dispute against that Member for violating its obligations under the TRIPS Agreement.
As discussed in Section 5 below, several free trade agreements have clarified the scope of data protection that FTA members must provide by specifying a precise number of years as a minimum term of protection. For example, the US-Peru FTA requires the protection of pharmaceutical test data for “a reasonable period of time after [the data’s] submission,” which “shall normally mean” five years after marketing approval is granted.39
3.5.4 Unfair Competition
Article 10bis of the Paris Convention, as incorporated into the TRIPS Agreement, requires WTO Members to assure effective protection against unfair competition. The coverage of “unfair competition” disciplines is quite broad, as seen by the statement in Article 10bis(2) of the Paris Convention that acts of competition “contrary to honest practices in industrial or commercial matters” constitute unfair competition. Protection against unfair competition serves a three-fold purpose: (i) the protection of competitors; (ii) the protection of consumers; and (iii) safeguarding competition in the public interest.40
Article 10bis(3) provides examples of the types of actions that constitute unfair competition and must be prohibited:
It is important to note that these requirements overlap with the protection accorded to registered trademarks, geographical indications, and other specific forms of intellectual property. Yet to take advantage of these requirements, it is not necessary to hold one of those forms of intellectual property.41
Thus, to the extent the unfair competition provisions exceed the TRIPS protections provided to other forms of intellectual property, Article 10bis creates minimum protections that are quite important for establishing and maintaining fair market competition among competitors in an industry. For example, Article 10bis appears to require protection for “trade dress”, which is the overall commercial image (look and feel) of a product that indicates or identifies the source of the product and distinguishes it from those of others. Trade dress may or may not be separately protected as a trademark. WTO Members often implement other aspects of Article 10bis through, among other regimes, consumer protection laws.
If a competitor of ParkEnd makes demonstrably false statements in a WTO Member about ParkEnd that serves to discredit the product specifically, and the JF Corporation generally, then the JF Corporation must have recourse under the domestic laws of that WTO Member to prevent the continuation of such statements. If recourse is unavailable, then the WTO Member will be violating Article 10bis of the Paris Convention, as incorporated into the TRIPS Agreement.
4.0 Procedural Requirements
4.1 Introduction
In addition to establishing minimum standards of substantive IP protection, the TRIPS Agreement also establishes in Parts III and IV detailed requirements for the procedures that govern the acquisition, maintenance, and enforcement of intellectual property rights. In all cases, the TRIPS Agreement requires adherence to basic due process principles, including the requirements that procedures be fair and equitable, and not unnecessarily costly, complicated, or subject to unreasonable time limits or delays.42
4.2 Acquisition and Maintenance of IP Rights
Article 62 of the TRIPS Agreement, concerning procedures for acquiring and maintaining IP rights, is relatively succinct:
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4.3 Enforcement
4.3.1 In General
Intellectual property rights, of course, have little value unless they are effectively enforced. Consequently, the TRIPS Agreement contains detailed requirements as to both civil and criminal enforcement of IP rights, which is highly unusual, if not unprecedented, in international trade treaties. Article 41 directs Members to make available specific enforcement procedures to permit effective action against infringement, including remedies both to prevent infringement and to deter infringement. However, it also requires that such procedures be applied in a manner that “avoid[s] the creation of barriers to legitimate trade” and “provide[s] for safeguards against their abuse.”43
4.3.2 Civil Remedies
Generally, under Article 42, Members must provide civil judicial procedures for right holders to enforce any IP right protected under the TRIPS Agreement. Providing administrative procedures alone is therefore inadequate.44
Articles 44 and 45 require that the judicial proceedings offer the opportunity for both injunctive relief – that is, ordering the infringer to desist from infringement – and compensatory damages. For deterrent purposes, judicial authorities must also have the ability to order that infringing goods be disposed outside normal channels of commerce, without compensation to the infringer, as well as to order the forfeiture of materials and tools used to create the infringing goods.
Article 50 provides that judicial authorities must have the ability to order preliminary measures on an ex parte basis (without requiring all parties to be present) where appropriate, in particular to prevent an infringement or to prevent infringing goods from entering into the stream of commerce. Further, pursuant to Article 50.1(b), judicial authorities must have the authority to issue provisional measures preventing destruction of evidence relevant to alleged infringement.
At the same time, Article 48 of the TRIPS Agreement requires that judicial authorities have the authority to order a party that abuses these enforcement procedures to compensate a wrongfully accused defendant for any harm suffered, including payment of the defendant’s costs and attorney’s fees.
4.3.3 Border Measures
Article 51 of the TRIPS Agreement requires Members to adopt procedures allowing a right holder who has reason to suspect that “counterfeit” or “pirated” goods45 may be imported to request that customs authorities take measures at the point of importation to suspend the release of such goods into the Member’s territory. These measures can be effective if the Member has an efficient border authority, as they prevent any harm from counterfeit or pirated goods from occurring inside the borders.
To ensure effective protection from counterfeit and pirated goods at the border, companies should be in close communication with the customs authorities to create a strategy to catch infringing goods, in order to increase the chances that such goods do not get through the border. Active engagement with customs authorities can make an important difference.
4.3.4 Criminal Remedies
Finally, at least for cases of wilful counterfeiting or piracy on a commercial scale, Article 61 of the TRIPS Agreement requires WTO Members to provide for criminal penalties, including imprisonment or fines sufficient to provide a deterrent to such infringement (consistent with the penalties applied for other crimes of similar gravity).
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CHINA – CRIMINAL ENFORCEMENT
In China – Protection and Enforcement of IPR,46a WTO Panel rejected the US claim that provisions in China’s copyright and trademark laws that limited criminal enforcement to cases involving sales at a specified value provided too high a threshold. The Panel found that there was insufficient evidence of what would constitute a “commercial scale” in the Chinese market.
5.0 TRIPS-plus Provisions in RTAs
The previous sections have focused on the minimum standards of intellectual property protection binding upon all WTO Members under the TRIPS Agreement. Many bilateral and regional trade agreements (RTAs) also address the protection of IP rights. In a 2012 staff working paper, the WTO found that 76 of 194 active RTAs contained provisions addressing specific types of IP.47These RTA provisions often go beyond the protections required by the TRIPS Agreement and are therefore commonly referred to as “TRIPS-plus.”
TRIPS-plus provisions in RTAs generally fall into three categories:
A comprehensive review of the various TRIPS-plus provisions contained in RTAs is beyond the scope of this chapter. Below, however, we describe some of the most important and broadly relevant TRIPS-plus provisions contained in two of the most recently negotiated RTAs: (1) the Trans-Pacific Partnership (TPP), an agreement signed by 12 countries (including the United States, Japan, Korea, Australia, Vietnam, Canada, and Mexico), and (2) the Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada. With respect to the TPP, it was not clear at the time of writing (April 2017), which was after the US withdrawal from the agreement in January 2017, whether the 11 other countries would ratify the TPP. As for the CETA, it was not expected to enter into force until July 2017. Regardless of their current status, these agreements illustrate the present direction of international IP protection and will likely serve as templates for future TRIPS-plus RTA provisions.
Notably, these TRIPS-plus provisions are some of the most controversial aspects of recent RTAs. This is in part because the substantive approaches to intellectual property protection remain subject to vigorous domestic debate in many countries and, in part, because the nexus between some of these provisions and international trade appears to critics to be increasingly remote.
5.1 Copyright
The TPP and CETA both contain provisions applicable to use and infringement of digital works (or works fixed in a digital medium) – issues that have grown in importance to both content producers and content users since the TRIPS Agreement was negotiated. These include provisions concerned with: (i) technological protection measures (TPMs) and electronic rights management information (RMI), and (ii) liability for online infringement.
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5.1.1 Technological Protection Measures and Electronic Rights Management Information
The TPP and CETA both contain provisions addressing the circumvention of TPMs and the alteration or removal of electronic RMI. TPMs and RMI are two mechanisms designed to prevent or limit infringement with respect to digital works (for example, unauthorised file sharing of music or television recordings).
TPMs are any technical means used by rights holders to restrict unauthorised acts in respect of a protected work. They include both access-control technologies, such as encryption or password protection, and copy-control technologies, such as a digital code that secures digital content (e.g., e-books or online videos) against copying, printing, or downloading. RMI refers to data embedded in a copyrighted work identifying its content or the terms and conditions for use of the work, akin to a digital label or watermark.
The TPP and CETA both contain “anti-circumvention” provisions for TPMs. Under these provisions, the parties are required to establish laws protecting against, and providing liability for: (a) the unauthorised circumvention of TPMs, and (b) the production and sale of devices, products, and programmes designed to circumvent TPMs.48Likewise, with respect to electronic RMI, both agreements require their respective parties to provide legal protection against the removal or alteration of electronic RMI, as well as against the distribution or dissemination of works with missing or altered RMI, so as to facilitate or enable infringement (or conceal an act of infringement).49
5.1.2 Liability for Online Infringement
The TPP and CETA both establish similar, albeit not identical, provisions concerning the liability of Internet Service Providers (ISPs).50These provisions require the creation of limitations or exemptions from liability for certain passive or automatic ISP services and functions, which otherwise could involve or facilitate acts of infringement. These services include transmitting or routing online material (e.g., web-based email services and internet infrastructure providers); network storage of user content (e.g., cloud hosting or web-based email services); and automatically caching online content (i.e., the common practice of copying and storing data to enable faster retrieval, for example, by a web server).51The TPP also requires, and CETA allows, limitations or exemptions related to information location tools that refer or link users to online locations (e.g., search engines or directories).52
Both the TPP and CETA require parties to establish conditions that an ISP must meet in order to qualify for the “safe harbour” exemption from liability, although these conditions cannot oblige the ISP to actively monitor its service for acts of copyright infringement. In particular, with respect to network storage and online information location service providers, the TPP requires that an ISP remove or disable access to allegedly infringing material when the ISP is notified by the rights holder (i.e., through a “notice-and-takedown” system) or otherwise learns of actual infringement. The TPP also requires the parties to establish procedures for copyright holders to obtain information about an infringer from the ISP.
5.2 Trademarks
As with its copyright provisions, the trademark provisions of the TPP also contain requirements driven by technological change, namely with respect to Internet domain names. Under the TPP, each party must establish a system for resolving domain name disputes in a low-cost and expeditious manner.53
The TPP also prohibits registration of a domain name that is identical or confusingly similar to a trademark with bad faith intent to profit.54This requirement is a response[Page283:] to the practice of domain name “squatting,” or registering a domain name for the purpose of forcing the trademark owner to purchase a website, or to draw traffic from the trademark owner’s actual website.
5.3 GIs
CETA contains lists of specific European Union and Canadian GIs, that must be protected as GIs in the territory of the other party.55The European Union’s list includes certain prominent EU GIs, such as Prosciutto di Parma and Prosciutto di San Daniele, which previously could not be sold in Canada under those names, because PARMA and SAN DANIELE had previously been registered as trademarks by Canadian ham producers. Under Article 20.21.5 of CETA, which is similar to Article 24.5 of the TRIPS Agreement, the protection of the Prosciutto di Parma and Prosciutto di San Daniele GIs does not invalidate, or prevent the use of, the Canadian PARMA and SAN DANIELE trademarks. The TPP, in contrast, does not require the protection of specific GIs.
5.4 Patents
Many of the most consequential and controversial TRIPS-plus provisions in RTAs concern patents and the related issue of pharmaceutical test data. In part because the TRIPS Agreement required compromises between WTO Members with strongly divergent views on patents, countries and industries that support increased patent protection have further pursued their objectives through TRIPS-plus provisions in RTAs.
5.4.1 Patentable Subject Matter
Under the TRIPS Agreement, patents must generally be made available for new, non-obvious and useful inventions, although WTO Members have the discretion to deny patents for, among other things, plants (subject to the requirement that plant varieties must be protected at least through a sui generis system of plant variety protection). The TPP expands or clarifies the scope of subject matter that is required to be patentable to include new methods or processes of using a known product, as well as by providing that patents must be available for inventions derived from plants.56
5.4.2 Patent Terms
The TPP includes two provisions concerning the extension of patent terms. First, it requires parties to compensate patent owners for “unreasonable delays” in the issuance of a patent (meaning five years after the patent application was filed or three years after a request for examination of the application, whichever is later) by extending the term of the patent.57In comparison, the TRIPS Agreement contains a more general provision stating that patents should be issued within a reasonable period of time so as to avoid unwarranted curtailment of the period of protection.58
Second, both the TPP and CETA include provisions on patent term extensions specifically for pharmaceutical products. When delays in the marketing approval process for a pharmaceutical product unreasonably limit the “effective” patent term for that product, the TPP requires the parties to compensate the patent owner by extending the term of the patent.59Similarly, CETA provides for a period of sui generis protection for pharmaceutical products – being effectively the same as patent protection, albeit covering only approved pharmaceutical uses of the product – equal to the amount of time in excess of five years between when the patent was filed and the date of the first marketing approval.60
5.5 Regulatory Data Protection
The TPP and CETA both provide TRIPS-plus protection for undisclosed test and other data submitted for the purpose of obtaining regulatory approval for pharmaceutical products and agricultural chemical products. Whereas Article 39.3 of the TRIPS[Page284:]Agreement ambiguously mandates protection against “unfair commercial use” of such data, the TPP and CETA provide more concrete requirements.
Specifically, the TPP and CETA both require parties to provide for specified periods of data exclusivity, during which time the party may not grant marketing approval to a product that is the same as or similar to a previously approved product, based on the test and other data originally submitted in connection with approval of that reference product.
For agricultural chemical products, both the TPP and CETA require at least ten years of data exclusivity.61For pharmaceutical products, the TPP requires at least eight years of protection for new pharmaceutical products;62or at least five years of protection for new pharmaceutical products63plus one of the following options: (i) at least three years for new clinical information submitted in support of a new use of an existing pharmaceutical product,64or (ii) at least five years for pharmaceutical products that combine a new chemical entity and a previously approved chemical entity.65In comparison CETA, for new pharmaceutical products, mandates at least six years before a third party can apply for marketing approval based on data from the reference product, and at least eight years before marketing approval may be granted.66
5.5.1 Biologics
In CETA, protection for undisclosed data for pharmaceutical products also applies to the emerging class of drugs known as “biologics.”67Biologics, unlike traditional pharmaceuticals, are derived from a variety of natural sources rather than chemically synthesised. Patent protection is often unavailable for biologics, making regulatory data protection even more important for the biologic industry.
The TPP, unlike CETA, contains specific provisions on the protection of data concerning biologics. Specifically, it provides two alternative approaches to the protection of undisclosed test and other data submitted in connection with the first marketing approval of a biologic by a party, reflecting a highly contentious – and somewhat ambiguous – political compromise. These approaches require either: (i) providing at least eight years of regulatory data protection, in the same manner as generally required for new pharmaceutical products; or (ii) providing “effective market protection” that “deliver[s] a comparable outcome in the market,” through at least five years of regulatory data protection, together with “other measures” and “recognising that market circumstances also contribute to effective market protection.”68As drafted, it is unclear what, in practice, it would take for a party that provides five years of data protection for biologics to satisfy the additional requirements in the second alternative to “deliver a comparable outcome in the market.”69
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1 While there are no “international patents”, there are international treaty-based mechanisms that make it easier to receive individual patents in multiple countries. The most prominent of these mechanisms is the international patent application system established by the Patent Cooperation Treaty, and administered by the World Intellectual Property Organization (WIPO)
2 See e.g., Article 63 of the TRIPS Agreement
3 Kraemer, Linden and Dedrick (2011), “Capturing Value in Global Networks: Apple’s IPad and IPhone”, Figure 1, http://pcic.merage.uci.edu/papers/2011/value_ipad_iphone.pdf. Another study has estimated the assembly cost in China to be US$6.50. See Chapter Three, Section 2.1.
4 “Declaration on the TRIPS Agreement and Public Health”, Adopted 14 November 2001, WTO Document WT/MIN(01)/DEC/2, https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.
5 European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by Australia, WT/DS290/R (2005); European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R (2005).
6 TRIPS Agreement, footnote 3.
7 Article 9 of the Agreement incorporated Articles 1 through 21 of the Berne Convention (1971), except with respect to the “moral rights” provided in Article 6bis of the Berne Convention.
8 The one exception to this principle of national treatment, set out in Article 7(8) of the Berne Convention, is that a Member is not required to provide a longer term of protection for a work than it receives in its country of origin. Thus, where a Member provides for a longer term of protection than the minimum term required by the TRIPS Agreement, discussed in Section 3.1.2.4 below, it would not be required to provide the same term of protection for a work from a country that provides only the minimum required term
9 Under Article 2(3) of the Berne Convention, the creators of derivative works, such as translations or adaptations, enjoy these same rights for their works, in addition to the rights in the derivative work that belong to the author of the original work.
10 For cinematographic works, this obligation applies only where such rental has allowed widespread copying that undermines the author’s exclusive right to authorise reproduction.
11 See 17 U.S.C. § 107
12 United States – Section 110(5) of the US Copyright Act, WT/DS160/R (2000)
13 United States – Section 110(5) of the US Copyright Act, Notification of a Mutually Satisfactory Temporary Arrangement, WTO Document WT/DS160/23 (26 June 2003)
14 The other case was United States – Subsidies on Upland Cotton, WT/DS267/AB/R (2005). See Chapter Seven, Section 4.5.
15 http://www.wipo.int/edocs/pubdocs/en/marks/833/pub833.pdf
16 See http://www.containerstore.com/welcome.htm
17 See Panel Requests in Australia – Tobacco Plain Packaging (Honduras), WT/DS435/16 (2012); (Dominican Republic), WT/ DS441/15 (2012); (Cuba), WT/DS458/14 (2014); and (Indonesia), WT/DS467/15 (2014)
18 EC – Trademarks and Geographical Indications (US), para. 7.636, and (Australia), para. 7.636.
19 In March 2006, the United States and the European Communities entered into a bilateral agreement on wine-making practices and labelling of wine to deal with some longstanding issues regarding trade in wine, including limitations on the use of certain geographic terms, https://www.ttb.gov/agreements/us-eu-wine-agreement.pdf.
20 EC – Trademarks and Geographical Indications (US), paras. 7.512-7.688, and (Australia), paras. 7.516-7.686
21 For example, the European Communities explained that the positive right to use the GI extended only to the linguistic versions that have been entered in the register, and not to other names (including translations) or signs that have not been registered. The European Communities also explained that the use of a name registered as a GI is subject to the applicable provisions of the food labelling and misleading advertising directives, so that the ways in which it may be used are not unlimited.
22 News Release regarding Annual Study of Intangible Asset Market Value, 5 March 2015, Ocean Tomo, http://www.oceantomo.com/2015/03/04/2015-intangible-asset-market-value-study/
23 “Extension of the Transition Period Under Article 66.1 of the TRIPS Agreement for Least Developed Country Members for Certain Obligations with Respect to Pharmaceutical Products”, Decision of the Council for TRIPS of 6 November 2015, WTO Document No. IP/C/73.
24 “WTO Members Agree to Extend Drug Patent Exemption for Poorest Members”, WTO News Item (6 November 2015), https:// www.wto.org/english/news_e/news15_e/trip_06nov15_e.htm
25 A list of LDCs is provided by the WTO, at https://www.wto.org/english/thewto_e/whatis_e/tif_e/org7_e.htm
26 TRIPS Agreement, Article 27.3
27 International Convention for the Protection of New Varieties of Plants (UPOV), http://www.wipo.int/wipolex/en/other_treaties/details.jsp?treaty_id=27
28 28 Some of these grounds will be familiar to readers in view of the discussion in Chapter Two on Article XX of GATT 1994.
29 42 U.S.C. § 2181
30 Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R (2000).
31 31 The TRIPS Agreement included several transitional periods providing additional time for developing countries to protect patents in areas of technology not previously protected in those countries. See TRIPS Agreement, Article 65.4. See also Section 3.4.1, above.
32 Canada – Term of Patent Protection, WT/DS170/AB/R (2000).
33 Declaration on the TRIPS Agreement and Public Health, Adopted 14 November 2001, WTO Document WT/MIN(01)/DEC/2, [Page286:]https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm, para. 6
34 “Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health”, Decision of the General Council of 30 August 2003, WT/L/540 and Corr. 1 (1 September 2003), https://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm
35 “Canada Is the First to Notify Compulsory Licence to Export Generic Drug”, WTO News (4 October 2007), https://www.wto.org/english/news_e/news07_e/trips_health_notif_oct07_e.htm
36 Amendment of the TRIPS Agreement, Decision of 6 December 2005, WTO General Council, WT/L/641, https://www.wto.org/english/tratop_e/trips_e/wtl641_e.htm
37 TRIPS Agreement, footnote 10.
38 Id.
39 US-Peru FTA, Article 16.10.2(b).
40 WIPO, Protection Against Unfair Competition – Analysis of the Present World Situation (World Intellectual Property Organization, 1994), para. 33
41 World Intellectual Property Organization, WIPO Intellectual Property Handbook (2nd edition, 2008), para. 2.749. 42 TRIPS Agreement, Articles 41.2, 41.3
42 and 62.4
43 TRIPS Agreement, Article 41.1.
44 Footnote 4 to Article 23.1 of the TRIPS Agreement, however, allows for enforcement of the obligations in that provision by administrative action, notwithstanding Article 42
45 Counterfeit goods are goods that use an otherwise valid trademark for that type of good without authorisation of the trademark owner, while pirated goods refer to unauthorised copies of a good that infringe a copyright or related right. See TRIPS Agreement, footnote 14
46 China – Measures Affecting the Adoption and Enforcement of Intellectual Property Rights, WT/DS362/R (2009).
47 Raymundo Valdés and Runyowa Tevengwa, “Intellectual Property Provisions in Regional Trade Agreements,” WTO Staff Working Paper ERSD-2012-21, 31 October 2012, pp. 6, 20.
48 Trans-Pacific Partnership (TPP), Article 18.68, https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/ tpp-full-text; Comprehensive Economic and Trade Agreement Between Canada and the European Union (CETA), Article 20.9, http://trade.ec.europa.eu/doclib/docs/2016/february/tradoc_154329.pdf.
49 TPP, Article 18.69; CETA, Article 20.10
50 CETA uses the term “intermediary service providers”.
51 TPP, Article 18.82.1(b), .2(a)-(c); CETA, Article 20.11.1-.2(a).
52 TPP, Article 18.82.2(d); CETA, Article 20.11.2(b).
53 TPP, Article 18.28.1.
54 TPP, Article 18.28.2
55 See CETA, Annex 20-A; see also CETA, Articles 20.18 and 20.19
56 TPP, Article 18.37.2
57 TPP, Articles 18.46.3 and .4
58 TRIPS Agreement, Article 62.2
59 TPP, Article 18.48
60 CETA, Article 20.27.
61 TPP, Article 18.47; CETA, Article 20.30
62 TPP, Article 18.50.2, footnote 55
63 TPP, Article 18.50.1.
64 TPP, Article 18.50.2(a).
65 TPP, Article 18.50.2(b).
66 CETA, Article 20.29.
67 See CETA, Article 20.6 (defining “pharmaceutical product” to include biologics).
68 TPP, Article 18.52.1.
69 See http://www.politico.com/tipsheets/morning-trade/2016/06/hatch-obama-willing-to-dance-on-tpp-214854.