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Overview of Intellectual Property Rights and the TRIPs Agreement
I. What is Intellectual Property?
Intellectual property refers to rights in creations of the human mind which
arise under the laws of patents, copyrights, trademarks, trade secrets, unfair
competition and related laws. Article 2 of the Convention Establishing the
World Intellectual Property Organization (WIPO) defines intellectual property as
follows:
(viii) "intellectual property" shall include the rights relating to:
- literary, artistic and scientific works;
- performances of performing artists, phonograms, and broadcasts;
- inventions in all fields of human endeavor;
- scientific discoveries;- industrial designs;
- trademarks, service marks, and commercial names and designations;
- protection against unfair competition; and
- all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.
Intellectual property rights (IPRs) are the legal rights given to creators of
intellectual property. IPRs usually give the creator of intellectual
property the right to exclude others from exploiting the creation for a defined
period of time. Intellectual property laws provide the incentives that
foster innovation and creativity, and strive to ensure that the competitive
struggle is fought within certain bounds of fairness. The protection of
IPRs contributes significantly to technological progress, competitiveness of
businesses and our country's well-being.
II.
The Relationship between Effective IPR Protection and Foreign Direct Investment and Technology Transfer
Although there is not a unanimous view on the subject, various studies have indicated that effective intellectual property rights protection can be an important factor in securing foreign direct investment and technology transfer, especially in high technology industries:
Edwin Mansfield, "Intellectual Property Protection, Foreign Direct Investment and Technology Transfer," International Finance Corporation Discussion Paper 19, The World Bank (1994): "Based on a combination of survey data, interview studies, and statistical analysis, we find that the strength or weakness of a country’s system of intellectual property protection seems to have a substantial effect, particularly in high-technology industries, on the kinds of technology transferred by many U.S. firms to that country. Also, this factor seems to influence the composition and extent of U.S. direct investment there, although the size of the effects seems to differ greatly from industry to industry." p 1.
Edwin Mansfield, "Intellectual Property Protection, Direct Investment, and Technology Transfer: Germany, Japan and the United States," International Finance Corporation Discussion Paper 27, The World Bank (1995): "The findings indicate that, in relatively high-technology industries like chemicals, pharmaceuticals, machinery, and electrical equipment, a country's system of intellectual property protection often has a significant effect on the amount and kinds of technology transfer and direct investment to that country by Japanese and German, as well as U.S. firms. Also, when a variety of relevant factors are held constant in an econometric model, the effects of such protection on U.S. foreign direct investment are substantial and statistically significant." p.1.
Ronald T. Rapp and Richard P. Rozek, "Benefits and Costs of Intellectual
Property Protection in Developing Countries," Journal of World Trade,
Volume 24, pp.75-102 (October 1990): "It has been shown that there are
substantial benefits for developing countries from protection [sic] intellectual
property. The benefits are in the form of investment and technology flowing to
the country that protects intellectual property, access by local firms to this
technology, and ultimately economic growth of the country as a whole." p. 101.
III.
WTO Agreement on Trade-Related Aspects of Intellectual Property Rights: General Overview
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement) is the Uruguay Round agreement covering the protection and enforcement of intellectual property rights. Intellectual property rights were a key area of concern for the United States during the Uruguay Round negotiations. From the perspective of the United States, the TRIPs Agreement was a major achievement of the Uruguay Round.
The TRIPs Agreement incorporates by reference most of the substantive provisions of two earlier multilateral IPR conventions: the Paris Convention for the Protection of Industrial Property (1967)(covering patents, trademarks, trade names, utility models, industrial designs and unfair competition) and the Berne Convention for the Protection of Literary and Artistic Works (1971) (covering copyrights).WTO Dispute Settlement Understanding applies to the TRIPs Agreement (including right of cross-retaliation in products and services).
IV. Different Types of Intellectual Property Rights
A. Patents
(1) Introduction
A patent consists of a disclosure of an invention to the public in exchange for a limited period of time to exclude others from using the invention without the owner's consent.
A patent may be granted in the United States if the invention meets the statutory requirements of novelty (it’s new), utility (it’s capable of practical application), and non-obviousness (the invention would not be obvious to someone of ordinary skill who practiced in the technical field in question). These statutory requirements apply to both product and process inventions.
In Diamond v. Chakrabarty, 447 U.S. 303 (1980), the U.S. Supreme Court held that genetically modified microorganisms which were useful in cleaning up oil spills were patentable subject matter. According to the Court, Congress intended that patentable subject matter would "include anything under the sun that is made by man."
A patent contains "claims" which define the scope of invention–these are like the "metes and bounds" in land titles. A patent often contains a drawing illustrating the invention claimed. In the United States, the patent applicant must disclose the "best mode"–the best method known at the time of application–of practicing the invention. 35 U.S.C. Sec. 112.
There are two basic types of patents: product patents (covering the composition of a product–e.g., the chemical composition of an antibiotic) and process patents (covering a method of producing a product–e.g., a process for producing an antibiotic). Both product and process patents are collectively referred to as "utility patents" because they are capable of industrial application.
The U.S. also permits "design patents" covering the ornamental features of goods (e.g, the shape of a chair). U.S. design patents have a term of 14 years from the date that the patent is granted. The U.S. is one of the few countries in the world that uses design patents. Most other countries protecting designs use an "industrial designs" system of protection.
(2)
Who Receives the Patent if There are Competing Applications?--"First to Invent" vs. "First to File"
However, U.S. inventors wishing to obtain patent protection in foreign countries have to operate as if they were in a first to file system. In other words, they must file U.S. patent applications as quickly as possible in order to establish the earliest possible filing date for future foreign filings. The Paris Convention for the Protection of Industrial Property creates a priority period of twelve months from the date that the first patent application was filed in a Paris Convention country. A patent application that was filed within 12 months of the date that the original patent application was filed in the U.S. will receive the benefit of the U.S. filing date in the foreign country. The priority period provisions in the Paris Convention are incorporated by reference into the TRIPs Agreement.
(3) TRIPs Requirements
Patentable Subject Matter:
Members may bar the patenting of inventions 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, provided that such exclusion is not made merely because the exploitation is prohibited by their law." (Article 27.2)
Subject to the provisions on transition periods, permissible exclusions from patentable subject matter, and "mailbox requirements" for pharmaceutical and agricultural chemical product patent applications (see below), "patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced." (Article 27.1)
Scope of Rights:
- The WTO Appellate Body has ruled that Canada violated the TRIPs Agreement by not providing a patent term of at least 20 years from date of filing to those patents in force on January 1, 1996 that were issued as a result of applications filed before October 1, 1989. (Report of the Appellate Body, Canada-Term of Patent Protection, WT/DS170/AB/R 18 September 2000.)
A product patent confers on its owner the right to prevent third parties not having the owner's consent from making, using, offering for sale, selling or importing for such purposes the patented product. (Article 28.1)
A process patent confers on its owner the right to prevent third parties not having the owner's consent from the act of using the process, and from using, offering for sale, selling or importing for such purposes at least the product obtained directly by that process. (Article 28.1)
Members Not Providing Article 27 Consistent Product Patent Protection for Pharmaceutical and Agricultural Chemicals on January 1, 1995 Must Comply with the Mail Box/Exclusive Marketing Rights Requirements in Articles 70.8 and 70.9:
Similarly, TRIPs Article 70.9 requires that WTO Members not currently in compliance with TRIPs requirements for pharmaceutical and agricultural chemical product patent protection provide exclusive marketing rights to applicants for pharmaceutical and agricultural chemical product patents, for five years after marketing approval is granted in that Member, or until a product patent is granted or rejected in the Member, whichever period is shorter, provided that, subsequent to the entry into force of the WTO Agreement, such patent has been granted and marketing approval received in another WTO Member. As noted earlier, the TRIPs Council has agreed to grant a waiver to least-developed countries until January 1, 2016 regarding the exclusive marketing rights obligation for pharmaceutical products. This decision is subject to approval by the WTO's General Council.
"Other Use Without Authorization of the Right Holder" (Compulsory Patent Licensing and Use by the Government or Third Parties Authorized by the Government): Permitted under Article 31, but Subject to Procedural Requirements:
Such requirements include, but are not limited to the following:
The "scope and duration" of the use must be "limited to the purpose for which it was authorized."
The legal validity of the decision authorizing such use must be "subject to judicial review or other independent review by a distinct higher authority in that Member."
"Any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member."
Use without authorization of the right holder "may only be permitted if, prior to such use the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly."
Use without authorization of the right holder must be non-exclusive and "shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use."
The Doha Ministerial Declaration on the TRIPs Agreement and Public Health (WT/MIN(01)/DEC/2, 20 November 2001) states: "We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics." The Declaration instructs the TRIPs Council "to find an expeditious solution" and "to report to the General Council before the end of 2002" regarding those WTO Members who have "insufficient or no manufacturing capacities in the pharmaceutical sector" and who "could face difficulties in making effective use of compulsory licensing under the TRIPs Agreement."
B. Trade Secrets ("Undisclosed Information")
(1) Introduction
Trade secrets are valuable. Some examples of trade secrets are the Coca Cola formula, customer lists, and confidential pharmaceutical test data used to obtain governmental marketing approval.
How do patents and trade secrets differ? Patents expire at the end of their term (e.g., 20 years from date of filing); trade secrets have no expiration date as long as they remain secret.
State Law: Most states apply some version of the Uniform Trade Secrets Act. Until 1996, the primary laws in the U.S. protecting trade secrets were state laws.
Federal Law: The Economic Espionage Act of 1996 makes theft of trade secrets a federal crime.
(2) TRIPs Agreement
Prohibits unfair commercial use of test or other data, the origination of which involved considerable effort, used in approving the marketing of pharmaceutical and agricultural chemical products employing new chemical entities. (TRIPs Article 39.3)
C. Trademarks
(1) Introduction
U.S. federally registered (Principal Register) trademarks and service marks have a renewable term of 10 years. The U.S. also has common law (unregistered trademarks) and state trademark registration systems that provide substantially less protection than federal trademark registrations.
U.S. and most common law jurisdictions grant trademarks on the basis of first use. By contrast, civil law jurisdictions (e.g., France) usually grant trademarks on the basis of first to register.
Trademarks are territorial; if you want trademark protection in another country, you must file in that country; international protection through the Madrid Protocol (U.S. Senate is currently considering accession to the Madrid Protocol). The Madrid Protocol permits the nationals of Madrid Protocol members to file a single international trademark application to obtain protection in multiple members of the Madrid Protocol.
Six month priority periods for foreign trademark filings under the Paris Convention for the Protection of Industrial Property (1967).
(2) TRIPs Agreement and Trademarks
Trademarks and service marks must have a minimum term of seven years and must be renewable indefinitely. (Article 18)
Restrictions on cancellation of trademark registrations for non-use:
- "If use is required to maintain a registration, the registration may be cancelled only after an uninterrupted period of at least three years of non-use, unless valid reasons based on the existence of obstacles to such use are shown by the trademark owner. Circumstances arising independently of the will of the owner of the trademark which constitute an obstacle to the use of the trademark, such as import restrictions on or other government requirements for goods or services protected by the trademark, shall be recognized as valid reasons for non-use." (Article 19.1)
Parallel importation (unauthorized importation of genuine trademarked products):
- Except with respect to the National Treatment and Most Favored Nations obligations in Articles 3 and 4, parallel importation ("exhaustion of intellectual property rights") is not subject to dispute resolution under the TRIPs Agreement (TRIPs Article 6).
Enhanced Protection for "well-known" marks:
- "In determining whether a trademark is well-known, Members shall take account of the knowledge of the trademark in the relevant sector of the public, including knowledge in the Member concerned which has been obtained as a result of the promotion of the trademark." (Article 16.2)
Under the Paris Convention (which is generally incorporated by reference into the TRIPs Agreement), well-known marks are entitled to protection in all Paris Convention/TRIPs Members, regardless of whether the mark is registered. (For an interesting discussion of the general issue of when an unregistered well-known mark must be protected see the decision by the Supreme Court of South Africa, Appellate Division, in McDonald’s Corporation v. Joburgers Drive-Inn Restaurant (PTY) Limited, Case No. 547/95, August 27, 1996.)
D. Geographical Indications (TRIPs Articles 22-24)
What Are Geographical Indications?
The 1994 Agreement on Trade‑Related Aspects of Intellectual Property Rights
("TRIPS Agreement") came into force in 1995, and had effect in developed
countries – including the United States – as of January 1, 1996.
Developing countries had until January 1, 2000 to comply with the TRIPs
standards with respect to geographical indications and least-developed
countries have until January 1, 2006 in which to comply.
Geographical indications are, for purposes of the TRIPS Agreement, a type of intellectual property ("IP"). "Geographical Indications," ("GIs") are defined, at Article 22(1) of the TRIPS Agreement, as "indications which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin."
Examples of geographical indications from the United States include "FLORIDA" for oranges; "IDAHO" for potatoes; and "WASHINGTON STATE" for apples.
The TRIPS
Agreement requires that WTO Members provide the legal means for interested
parties to prevent the use of a GI that:
(1) indicates or suggests
that a good originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the
good; or
(2) constitutes an act of
unfair competition.
The TRIPS Agreement also provides for an "enhanced" minimum level of protection for GIs that identify wines and spirits. WTO Members are required to provide the legal means for interested parties to prevent the use of GIs even if they do not imply that the wines or spirits originate in a place other than the true place of origin. (In other words, for wines and spirits, even if the public would not be deceived by use of a particular GI, a GI may not be used if the wines or spirits do not originate in the place indicated by the GI.)
The TRIPS Agreement provides some exceptions to these requirements. For instance, TRIPS does not require that a WTO Member extend protection to a GI if that GI is the "generic" name for the goods in the Member. As an example, in the United States the word "CHABLIS" is often used to refer to any sort of white wine. Since "CHABLIS" is a generic term in the United States, the United States can continue to permit use of word "CHABLIS" as a synonym for "white wine." (The word "champagne" is another prominent example of a generic term, which in the United States means any light‑colored wine with bubbles.)
Another exception to the protection afforded GIs arises in situations where a trademark already exists. Where a trademark has been applied for or registered in good faith, or where the rights to the trademark have been acquired through actual use in good faith, either (1) before the date of application of the TRIPS Agreement for a particular WTO member, or (2) before the GI was protected in its country of origin, the trademark maintains its legal presumption of superiority, based on the principle of "first‑in‑time, first‑in‑right."
Why Are Geographical Indications Important?
Geographical indications are valuable to producers from particular regions for the same reasons that trademarks are valuable. First, they are source‑identifiers‑‑they identify goods as originating in a particular territory, or a region or locality in that territory. Geographical indications are also indicators of quality‑‑they let consumers know that the goods come from an area where a given quality, reputation or other characteristic of the goods is essentially attributable to their geographic origin. In addition, GIs are business interests – GIs exist solely to promote the goods of a particular area. Finally, for purpose of the TRIPS Agreement, GIs are intellectual property, eligible for relief from acts of infringement and/or unfair competition.
Geographical indications are used to indicate the regional origin of particular goods, whether they are agricultural products or manufactured goods ‑ provided that those goods derive their particular characteristics from their geographic origin. Any producer who meets the standards set by the GI owner can use a GI. In the United States, the owner of a GI can be any legal entity—be it a government, an association of producers, or even an individual.
The TRIPS definition highlights the source‑indicating capacity of the indication. Not every indication can rise to the level of a GI. There must be a link between some characteristic of the good and the particular region where it was produced. That link must inform consumers of some important characteristic of the product which is material in their decision to purchase the good.
For example, soil from a particular area might help produce a distinctive‑tasting tomato, while goats raised on grass grown in volcanic soil from a particular region in the Himalayas could produce a particular type of fiber for clothing, or silicon crystals artificially created in a highly controlled environment in the Silicon Valley region of California, for use in semi‑conductors, might be considered superior due to the knowledge and craftsmanship of the information technology specialists working there.
Why Are Geographical Indications Suddenly an Issue?
WTO Members and their nationals are increasingly recognizing that geographical indications, like trademarks, are valuable as marketing tools in the global economy. Furthermore, intellectual property owners are finding that protecting IP is no longer just a domestic endeavor.
What Protection Does the United States Offer for Geographical Indications?
The United States offers robust protection for geographical indications, generally through registration as a certification mark (a type of trademark).
Examples of geographical indications protected as certification marks in the United States include: U.S. Registration No. 571,798 (‘ROQUEFORT" for cheese ‑ France); U.S. Registration No. 1,632,726 ("DARJEELING and design" for tea ‑ India); U.S. Registration No. 2,014,628 ("PARMA HAM" for ham products ‑ Italy); U.S. Registration No. 1,570,455 ("SWISS" for chocolate ‑ Switzerland); and U.S. Registration No. 1,959,589 ("STILTON" for cheese – United Kingdom). Information regarding these and all other U.S. trademark registrations is available from the United States Patent and Trademark Office's (USPTO) Internet website at www.uspto.gov
In addition, the United States protects geographical indications that are not registered. For example, the Trademark Trial and Appeal Board (an administrative appeal body within the USPTO) has held that "COGNAC" is protected as a common‑law (unregistered) certification mark in the United States. Institut National Des Appellations v. Brown‑Forman Corp., 47 USPQ2d 1875 (TTAB 1998)("Cognac" is a valid common law regional certification mark, rather than a generic term, since purchasers in the United States primarily understand the "Cognac" designation to refer to brandy originating in the Cognac region of France, and not to brandy produced elsewhere, and since opposers control and limit use of the designation which meets certain standards of regional origin.)
E. Copyrights and Related Rights
(1) Introduction
U.S. has recently adopted a copyright term of life of the author plus 70 years.
Many foreign countries use a system of "neighboring" (related) rights to protect sound recording producers, performers, and broadcast organizations. Several of these countries, unlike the U.S., are members of the "International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, adopted at Rome on 26 October 1961" ("Rome Convention").
A copyright, except for the case of sound recordings, provides the copyright owner with broad exclusive rights (e.g., exclusive right to reproduce, publicly distribute, translate, transmit, publicly perform, etc.).
Copyright notices are no longer required under U.S. law; however, their use provides certain advantages in the event of copyright infringement litigation.
U.S. origin works must be registered with the Copyright Office of the Library of Congress before copyright infringement lawsuits may be filed in the U.S.; foreign origin works from WTO and Berne Convention (see below) member countries are exempted from this requirement.
(2) Berne Convention for the Protection of Literary and Artistic Works (1971)
The U.S. did not join the Berne Convention until 1989 because of the many provisions of U.S. copyright law that were incompatible with Berne (e.g., mandatory copyright notices, copyright renewal, shorter copyright term than life plus 50 years, mandatory registration with the Copyright Office). Prior to joining Berne, the U.S. authors and publishers primarily relied on the Universal Copyright Convention and "simultaneous publication" in Berne Convention members.
(3) TRIPs Agreement
Copyright protection is only available for expression, and not for ideas, procedures, methods of operation, or mathematical concepts. (Article 9.2)
Articles 3 and 4 of the TRIPs Agreement contain fairly broad exceptions to national treatment and most favored nation obligations regarding copyrights and related rights, including the exceptions in the Berne Convention for the Protection of Literary and Artistic Works (1971) and the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations ("Rome Convention"). The intellectual property chapter of the North American Free Trade Agreement (NAFTA), by contrast, contains a stronger national treatment provision regarding copyrights and sound recordings. (NAFTA Article 1703.1)
Members must permit authors and their successors in interest the right to bar rental of computer programs, sound recordings and cinematographic works (exemption permitted if no widespread copying of such cinematographic works has occurred in a Member because of rentals).
Copyrighted works originating in a WTO/Berne member are automatically protected in all other WTO/Berne members without formalities (i.e., copyright registration and copyright notices are not required).
Scope of exceptions:
WTO panel report found that U.S. music licensing exemptions in Subparagraph (B) of Section 110 (5) of the Copyright Act violated TRIPs copyright obligations, but "home style" exception for single radio and television receivers in Subparagraph (A) in Section 110 (5) of the Copyright Act was TRIPs consistent) (Panel Report, United States-Section 110 (5) of the US Copyright Act, WT/DS160/R, 15 June 2000).
Computer programs, whether in object code or source code, must be protected as literary works under the Berne Convention. (Article 10)
Provides protection to performers, producers of phonograms (sound recordings) and broadcasting organizations; fifty-year minimum term of protection to performers and producers of sound recordings; twenty-year minimum term of protection for broadcasting organizations. (Article 14)
Extends Article 18 (concerning restoration of copyright protection) in the Berne Convention for the Protection of Literary and Artistic Works (1971) to the rights of performers and producers of sound recordings in sound recordings. (Article 14.6)
F. Layout-Designs (Topographies) of Integrated Circuits (Semiconductor Mask Works)
Innocent infringers may continue using a layout-design, with respect to stock on hand or ordered before being notified that there was an unlawful reproduction of a protected layout-design, but they must pay a reasonable royalty to the owner of rights in the layout-design. (Article 37)
G. Industrial Designs
Members must provide reasonable cost-effective protection to textile designs. Textile designs may be protected either through industrial design law or copyright law. (Article 25.2)
The U.S. design patent law and copyright law comply with TRIPs requirements on industrial designs.
V. Enforcement: TRIPs Requirements
Part III of the TRIPs Agreement--"Enforcement of Intellectual Property Rights"--contains provisions on general obligations, civil and administrative procedures and remedies, provisional measures, border measures and criminal procedures. It should be noted that Part III contains only a general description of mandatory and permissive provisions, but not detailed rules governing the application of such provisions. Enforcement issues are becoming increasingly important as more countries enact laws which are generally TRIPs consistent. Increasingly, the compliance issues in the IPR area will not be inadequate foreign laws, but rather inadequate enforcement of TRIPs-consistent IPR laws.
In the ongoing U.S.-Chile Free Trade Agreement, U.S.-Singapore Free Trade Agreement, and Free Trade Area of the Americas negotiations, the U.S. has been seeking provisions on intellectual property rights, including IPR enforcement, that build upon and provide greater specificity than the TRIPs Agreement. The U.S.-Jordan Free Trade Agreement, which went into effect on December 17, 2001, contains provisions on intellectual property rights (including enforcement) that build upon the TRIPs Agreement. Such enforcement-related provisions cover, inter alia, government use and acquisition of computer software, circumvention of copyright protection systems, trademark license recording requirements, calculation of damages based upon the value of infringed-upon items, proof of the right to enforce copyrights and related rights, and the definition of willful copyright piracy on a commercial scale.
There have been no WTO panel reports or Appellate Body decisions to date regarding inadequate enforcement of IPRs. There has been only one complaint filed in the WTO against inadequate IPR enforcement--a complaint filed by the United States in June 1998 against Greece and the European Union because of the Greek Government's failure to enforce its intellectual property laws effectively against television stations that broadcasted U.S. copyrighted works without authorization. On March 22, 2001, after extensive consultations, Greece, the European Union and the United States formally resolved this WTO dispute without a decision by a dispute settlement panel.
A. General Obligation: Members Must Permit "Effective Action" Against Infringement
Article 41 describes the general obligation of Members, both with respect to enforcement of intellectual property rights and procedural due process. From the perspective of intellectual property owners, Article 41.2 contains a critically important general enforcement obligation:
"Members shall ensure that enforcement procedures...are available under their law so as to permit effective actions against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse." (Article 41.1)
It should be noted that this language is mandatory, not merely permissive; extends to all intellectual property rights covered by the TRIPs Agreement; and specifically requires "expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements." This paragraph is the cornerstone for IPR enforcement obligations under the TRIPs Agreement.
B. Injunctions, Damages and Disposition of Infringing Goods
Courts in WTO Members must have the authority to order a party to desist from an infringement, including to prevent the entry into domestic commerce of imported goods that involve the infringement of IPR’s, immediately after customs clearance. Courts must also have the authority to award damages for infringements. (Articles 44 and 45)
Courts must have "the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or unless this would be contrary to constitutional requirements, destroyed."
Courts must also have "the authority to order that materials and implements the predominant use of which has been in the creation of the infringing goods be, without compensation of any sort, disposed outside the channels of commerce in such a manner as to minimize the risks of further infringements." Except in "exceptional cases", simply removing the unlawfully used trademark does not permit the release of the goods into the channels of commerce. (Article 46)
C. Deterrent Criminal Sanctions Required: Trademarks and Copyright Infringement
on a Commercial Scale
D. Administrative Procedures
Many countries rely heavily upon administrative procedures in providing a remedy to owners of intellectual property rights. Article 49 makes it clear that the requirements described above govern such proceedings on the merits of a case:
"To the extent that any civil remedy can be ordered as a result of administrative procedures on the merits of a case, such procedures shall conform to principles equivalent in substance to those set forth in this Section [i.e., Article 42-49]"
E. Provisional Measures
Courts must have the authority to issue provisional measures inaudita altera parte (e.g., ex parte search and seizure orders–i.e., with no prior notice to the alleged infringer), in particular in those cases where any delay is likely to cause irreparable harm to the right holder or there is demonstrable risk of evidence being destroyed. (Article 50.2)
Administrative agencies that can order provisional measures must comply with the requirements in Article 50. (Article 50.8)
F. Border Enforcement
Trademark and copyright owners must have the right to petition customs authorities for orders barring the release of imported goods into free circulation, where they have "valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods may take place...". (Article 51) Members may also permit applications for suspension of customs release of goods that involve other intellectual property rights (e.g., patents) provided that the requirements of Articles 51 through 60 are satisfied. Such suspension of customs clearance procedures may also be adopted regarding the export of infringing goods.
Any right holder seeking to suspend the release of goods by customs authorities is "required to provide adequate evidence to satisfy the competent authorities that, under the laws of the country of importation, there is prima facie an infringement of the right holder’s intellectual property rights and to supply a sufficiently detailed description of the goods to make them readily recognizable by the customs authorities. The competent authorities shall inform the applicant within a reasonable period whether they have accepted the application and, where determined by the competent authorities, the period for which the customs authorities will take action." (Article 52).
Article 55 imposes stringent time limits on the suspension of customs clearance. Within ten working days after the applicant has been served notice of the suspension of customs clearance, proceedings leading to a decision on the merits of the case must be initiated by a party other than the defendant or a competent authority must have "taken provisional measures prolonging the suspension of the release of the goods..." In "appropriate cases" this time limit may be extended by another ten working days. Otherwise, if all other conditions for export or import have been complied with, the goods must be released by customs authorities.
Competent authorities must have the authority "to require an applicant to provide a security or equivalent assurance sufficient to protect the defendant and the competent authorities and to prevent abuse. Such security or equivalent assurance shall not unreasonably deter recourse to these procedures." (Article 53). Members must give both the right holder and the importer "sufficient opportunity" to have goods detained by customs authorities inspected. (Article 57)
As noted earlier in the discussion of Article 46, Members must give their competent authorities the authority to order the destruction or disposal of infringing goods. Of particular interest to trademark owners is a provision that bars the re-exportation of counterfeit trademark goods "in an unaltered state or subject them to a different customs procedure, other than in exceptional circumstances." (Article 59)
VI. A Non-Exhaustive List of Internet Resources on IPR Issues
International Trade and Investment generally:
Office of the Chief Counsel for International Commerce: http://www.ogc.doc.gov/intl_comm_home.html
IPR generally:
U.S. Patent and Trademark Office, U.S. Department of Commerce: www.uspto.gov
U.S. Copyright Office, Library of Congress: www.loc.gov/copyright
Prepared by:
John T. Masterson, Jr.
Deputy Chief Counsel for International Commerce
U.S. Department of Commerce
Tel: 202-482-0937
Fax: 202-482-4076
E-mail: occic@doc.gov
August 12, 2002
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