Testing the Limits of the TRIPS Agreement

(How) Does TRIPS regulateTRIPS-plus IP Protection?

Henning Grosse Ruse – KhanMax Planck Institute for IP and Competition Law

Ninth Annual WTO Conference

London, 20-21 May 2009

Outline• Introduction: The Art.59 TRIPS claim in China –

IP Enforcement

• International IP Regimes Setting ‘Minimum Standards’ only?

• Mandatory Limits (Ceilings) on additional IP Protection in the TRIPS Enforcement Chapter

• TRIPS Ceilings on TRIPS-plus FTAs and other International Initiatives?

• Further Issues and Conclusions

Introduction

Chinese Border Measures at issue:• Procedures against goods suspected of

infringing IPRs (TM, © & related rights, Patents)– being imported into China; and– destined for exportation

• Remedies available if goods do infringe IPRs1. donation to social welfare bodies; or

2. sale to the rightholder; or – if 1. and 2. do not apply –

3. auction (after eradicating infringing features); or

4. destruction of goods

Introduction

US Claim under Art.59, 46 TRIPS:• Chinese authorities lack competence “to order the

destruction or disposal of infringing goods in accordance with the principles set out in” Art.46 TRIPS (as donation, sale and auction do not fall under Art.59 TRIPS)

• Auctioning after eradicating infringing features is inconsistent with the principle of Art.46 4th sentence TRIPS whereas for counterfeit TMs, “the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce.”

Introduction

Findings of the Panel:• No evidence that donation to Social Welfare

Bodies is not an disposal ‘outside the channels of commerce’ which ‘avoids any harm caused to the rightholder’ (Artt.59, 46 1st sentence)

• No evidence that auction is a mandatory option prior to destruction; hence no evidence for lack of competence under Art.59

• However, in case counterfeit TMs are auctioned, mere removal of infringing features is inconsis-tent with Artt.59, 46 4th sentence

Introduction

Crucial Limitation of Panel Findings:• 99.85% (by value) of infringing goods in China

concerned goods destined for exportation

• TRIPS regulates border measures against the importation of counterfeit TM, pirated © goods

• For infringing exports, “WTO Members may also provide corresponding procedures” (Art.51)

Panel finds that “there is no obligation to apply the requirements of Art.59 [or of any other provision in Artt.51-60 TRIPS] to goods destined for exportation” (para.7.224, 7.395)

Introduction

The Wider Picture: Does TRIPS regulate TRIPS-plus?

• As for additional (TRIPS-plus) IP protection / enforcement, TRIPS allows border measures on exports – but does not subject them to Artt.51-60

• In contrast, WTO Members may extends border measures to goods involving other (suspected) IP infringements only “provided that the require-ments of this Section are met” (Art.51 2nd sen.)

Extending not only minimum standards, but also any binding limits on IP protection to TRIPS-plus border measures for other IP infringements?

Minimum Standards Only?

The Classic IP Worldview:• International IP Agreements are setting

‘Minimum Standards’ which become the baseline for additional protection

• See e.g. Art.20 RBC: allowing further agreements “in so far as such agreements grant to authors more exten-sive rights than those granted by the Convention, or contain other provisions not contrary to this Convention”

Int. IP Regime thus an accumulation of increa-sing levels of Minimum Standards, with only the sky as the limit…(?)

Minimum Standards Only?

Challenging this Worldview:• Some International IP Treaties go beyond mini-

mum standards and offer the basis for manda-tory limitations (‘ceilings’) to IP protection

• Art.1:1 TRIPS: “Members may, but shall not be obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement.” (see also Art.19 PC)

• Other IL regimes may provide further binding limits on Int. IP protection

TRIPS Ceilings

Any Ceilings within TRIPS?

• Artt.9:1 TRIPS, 10 (1) RBC: “It shall be permissible to make quotations from a work”

• Art.9:2 TRIPS: “Copyright protection shall extend to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such”

• Art.10:2 TRIPS: Copyright protection for databa-ses ”shall not extend to the data or material itself“

TRIPS Ceilings

Ceilings relating to IP Enforcement Regimes:

• Procedural guarantees for the defendant and the need to prevent barriers to legitimate trade and safeguards against abuse lead to several binding limits on IP enforcement measures

• Compare Art.41:1-4; 42 TRIPS: several require-ments for decisions on the merits, mandatory judicial review, fair and equitable proceedings…

• See further Artt. 46 3rd sentence; 48:1; 50:3, 4, 6, 7 TRIPS

TRIPS CeilingsIP Enforcement – Examples:• “Decisions on the merits of a case shall be based

only on evidence in respect of which parties were offered the opportunity to be heard.” (Art.41:3)

• “Defendants shall have the right to written notice which is timely and contains sufficient detail, including the basis of the claims.” (Art.42)

• Mandatory competence to order an applicant to pay compensation and defendant expenses in cases of abusive reliance on enforcement procedures to the party wrongfully enjoined or restrained (Art.48:1)

TRIPS CeilingsCeilings on TRIPS-plus Border Measures?

• Artt.51-60 TRIPS are subject to various extensions via FTAs, plurilateral initiatives (ACTA, SECURE)

• Art.51 2nd sentence permits WTO Members to extend border measures to goods involving other IP infringements “provided that the requirements of this Section are met.”

• China – IP Enforcement, para. 7.223: “The second sentence includes an express condition that applies where Members provide border measures for other infringements of intellectual property rights, namely "provided that the requirements of this Section are met".”

TRIPS CeilingsBorder Measures – Examples:

• “The competent authorities shall have the autho-rity to require an applicant to provide a security or equivalent assurance sufficient to protect the defendant and the competent authorities and to prevent abuse.” (Art.53:1 TRIPS)

• For ex officio actions, “Members shall only exempt both public authorities and officials from liability to appropriate remedial measures where actions are taken or intended in good faith.” (Art.58:c)

TRIPS CeilingsApplicability to the EC - Transit case?

• EC Regulation 1383/2003 extends border measures to goods in transit; other IP infringements

• Even in transit cases, IP infringements are judged on the basis of IP laws of the transit country

• Under TRIPS, EC measures must comply with requirements of Artt.51-60 (see Art.51 2nd sen.)

• Art.52 demands adequate evidence for a prima facie IP infringement – based on the “law of the country of importation”

Is a Transit Country a “country of importation”?

Imposing Limits on TRIPS-plus FTAs?

Conceptualising ‘Ceilings’: ‘Maximum Standards’ – binding international

norms which limit IP protection available to right holders…

• Obligation upon national legislator as not to introduce more extensive (conflicting) protection in its own national law… and/or

• Obligation (or other form of subjecting) Contrac-ting Parties of ceiling regime not to enter into fur-ther int. agreements which contain obligations with more extensive (conflicting) protection?

Imposing Limits on TRIPS-plus FTAs?

Any Binding Frames for Int. IP Treaties?• Art.1:1 TRIPS: “Members may, but shall not be

obliged to, implement in their law more extensive protection than is required by this Agreement, provided that such protection does not contravene the provisions of this Agreement.”

• Art.19 PC: “It is understood that the countries of the Union reserve the right to make separately between themselves special agreements for the protection of industrial property, in so far as these agreements do not contravene the provisions of this Convention.”

Imposing Limits on TRIPS-plus FTAs?

Art.1:1 TRIPS; Artt.2:1 TRIPS & 19 PC as limitations for TRIPS-plus FTAs?

• Art.1:1 TRIPS explicitly referring to national laws only – hence laws implementing TRIPS-plus FTAs may be inconsistent with any relevant TRIPS ceiling…

• Art.19 PC (via Art.2:1 TRIPS part of WTO/TRIPS acquis) however concerns further int. agree-ments: PC-plus treaties which contravene PC hence are inconsistent with PC and TRIPS…

Imposing Limits on TRIPS-plus FTAs?

General IL background:• New Treaties are ‘born into’ & interact with all

pre-existing IL which continues to apply• No a priori hierarchy exists• Priority in application however can derive from

conflict norms in pre-existing treaty, in later treaty or in general IL (e.g. Art.30, 42 VCLT)

• General presumption of continuity and against conflict: Later (treaty) rule presumed to abide by earlier one – unless sufficient evidence for state intention otherwise

Imposing Limits on TRIPS-plus FTAs?

Hierarchy between TRIPS, TRIPS-plus FTAs

• TRIPS Conflict Rules: Art.1:1 TRIPS (-); Artt.2:1 TRIPS & 19 PC (+)

• Conflict Rules in TRIPS-plus Agreements:– Obligation to ensure “adequate and effective

implementation” of TRIPS (Art.139:1 EPA)– Parties agree that “nothing in this Agreement requires

[the parties] to act in a manner inconsistent with their WTO obligations” (Art.242 EPA; see Art.30:2 VCLT)

– The “Parties affirm their existing rights and obligations under the TRIPS Agreement” (Art.15:1 (7) CAFTA)

– “Nothing (…) shall derogate from the obligations and rights of one Party with respect to the other by virtue of the TRIPS Agreement” (Art.17:1 (5) US – Chile FTA)

Imposing Limits on TRIPS-plus FTAs?

General IL Conflict Rules:

• Legality of inter-se Agreements, Art.42 VCLT– Modification not prohibited by earlier treaty– Not affecting others’ rights and obligations– Not relating to norm crucial for treaty objective

• Priority in applying successive treaties, Art.30– In case of identical parties, and for parties bound by

the two treaties, later treaty prevails– Otherwise, treaty to which both parties are bound to

applies

Imposing Limits on TRIPS-plus FTAs?

Summing up the results:• Int. IP treaties containing binding limits on IP

protection can impact on the ability to enter into treaties containing more extensive protection– If ‘ceilings treaty’ contains a ‘prevailing’ conflict rule

(arguably not Art.1:1 TRIPS, but Art.19 PC); or– If ‘extensive treaty’ contains a conflict rule in favour of

ceiling treaty (often the case in favour of TRIPS); or– If application of Art.42 VCLT prohibits (inter se)

‘extensive treaty’

• As later treaty, ‘extensive treaty’ may however override ceilings treaty under Art.30 VCLT

Imposing Limits on TRIPS-plus FTAs?

Summing up the results:• In TRIPS, any limitation to IP protection

drafted in binding terms may serve as ceiling for TRIPS-plus IP protection

• Most exceptions and limitations are however optional (TRIPS flexibilities) – see Artt.13, 17, 26:2, 27:2&3, 30, 31 TRIPS

• Insofar as TRIPS contains ceilings, it not only prescribes lower, but also upper limits of IP protection true Framework for Global IP

Further Issues

Ceiling Approaches under Discussion:

• Introducing a mandatory requirement for the disclosure of source (and origin) of biological resources and/or associated traditional knowledge used in patented inventions; evidence of PIC and ABS schemes (India, China, Brazil, Peru et al, Proposal for Art.29 bis TRIPS, 2006)

• Proposal for “minimum mandatory exceptions and limitations particularly with regard to educational activities, people with disabilities, libraries, archives” (Brazil et al, WIPO SCCR proposal, 2008)

Further Issues

Problems to consider:• How to effectively enforce public interest ceilings in an

institutional and dispute settlement framework focused on commercial interests?– Securing public policy ceilings abroad may serve the domestic

interests of certain industries (e.g. generic Pharma and public health; alternative energy producers and environment protection)

– Need to rethink WTO/DSU: Giving public interests a (greater) voice; time for a ‘guardian of the (WTO) treaties’?

• Binding Ceilings limit flexibilities, policy space

• Internalising public interests into a trade environment may lead to a reconstruction of these interests from a trade perspective

Conclusions

• Binding ceilings to the protection of economic interests in Int. IP Regulation may be an option for– providing clarity & security about what is WTO-conform; – preventing certain TRIPS-plus obligations in FTAs which

frustrate TRIPS exceptions and limitations

• From a ‘free movement of information/knowledge’ perspective, binding limits to IP protection can serve as global minimum standards to safeguard trade in knowledge goods against IP protectionism

• Enforcing ceilings may require a fundamental change in the current institutional setting in the WTO; domestic ‘self-restraints’ on WTO-plus FTAs may be more viable

Thank you for your attention!

Comments or critique to

henning.gr-khan@ip.mpg.de

…more on ceilings:

http://ssrn.com/abstract=1326429