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TRIPS Enforcement RulesRecent Jurisprudence and other developments
42nd World Intellectual Property Congress
AIPPI Paris – 3-6 October 2010
Wolf MEIER-EWERTWorld Trade Organization
No views or analysis to be attributed to
the WTO, its Secretariat or any of its Members
2
Structure
� WTO Jurisprudence on TRIPS Enforcement Rules� Background
� China – IPRs (DS362)� Article 51 – scope of Section 4 of Part III
� Article 59 – “shall have the authority”
� Article 59 and 46 – release into the channels of commerce
� Relationship between Article 41.1 and 41.5
� Article 61 – meaning of “commercial scale”
� Pending consultations� EU – Goods in transit (DS408 & 409)
� Enforcement-related Discussions in the TRIPS Council
� Cross-retaliation under the TRIPS Agreement
3
I.
WTO Jurisprudence on
TRIPS Enforcement Rules
4
WTO Dispute Settlement StatisticsOverall figures (04/2010)
� Requests for consultations 405
� Mutually agreed solutions: 95
� Panels established: 173/214
� Panels composed: 146/182
� Panel reports adopted: 124
� Appellate Body reports adopted: 78
� Compliance panels: 29
� Appeals of compliance panels: 19
� Arbitrations on "retaliation" : 19
� Authorizations to "retaliate" : 17
5
WTO Dispute Settlement Mechanism Trends in the Use of the System (04/2010)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
As complainants
Developing
Developed
6
WTO Dispute Settlement MechanismMost frequent complainants/respondents (04/2010)
14Korea12Thailand
14Mexico13Japan
14Brazil14Korea
15Canada15Argentina
15Japan21Mexico
16Argentina18India
17China24Brazil
20India33Canada
83EC81EC
109US93US
No of cases defendedMemberNo of cases initiatedMember
7
GATT 1994
37%
Subsidies
10%Agriculture
8%
Licensing
4%
TBT
5%
SPS
4%
Other
15%
Safeguards
4%
TRIPS
5%
Anti-Dumping
10%
WTO Dispute Settlement MechanismConsultations according to Agreement at issue
(04/2010)
8
TRIPS Dispute Settlement Cases (1)
� Few cases of relevance for IPR enforcement in the past
� Cases subject to amicable settlement:
� US vs. Denmark (WT/DS 83)
� US vs. Sweden (WT/DS 86)
� US vs. Greece/EC (WT/DS 124 and 125)
� US vs. Argentina (WT/DS 196)
� Panel reports in which enforcement played a marginal role:
� EC vs. US (WT/DS 176)
� US/Australia vs. EC (WT/DS174 & 290)
9
TRIPS Dispute Settlement Cases (2)
� China - Measures affecting the Protection and Enforcement of Intellectual Property Rights (WT/DS362):
Claims by the United States regarding:
� Thresholds for criminal procedures and sanctions
� Disposal of IPR-infringing goods confiscated by Customs authorities
� Denial of copyright and related rights protection and enforcement to works that have not been authorized for publication / distribution within China
� Panel Report adopted on 20 March 2009 – no appeal
� Implementation period expired 20 March 2010
10
DS362: Customs Measures –
US claims
� Measures at issue:� Regulations on Customs Protection of IPRs
� Measures for the Implementation of the Customs IPR Regulations
� Public Notice No. 16/2007 notified by the General Administration of Customs
� Disposal options under the Customs Measures are� Donation
� Sale to the right holder
� Auctioning off according to law, after eradicating the infringing features
� Destruction (if infringing features cannot be eradicated)
11
� Claims:
� None of the disposal options (other than
destruction) provided for by the Customs Measures
complies with the principles of Art. 46
� Measures create a mandatory sequence regarding
customs disposal options for infringing goods, so that
Chinese customs authorities cannot exercise their
discretion to order destruction of the goods as
required by Art. 59, but must give priority to other
disposal options
DS362: Customs Measures –
US claims
12
DS362: Customs Measures –
Panel findingsArticle 51 TRIPS
Suspension of Release by Customs Authorities
Members shall, in conformity with the provisions set out below, adopt procedures (13) to enable a right holder, who has valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods (14) may take place, to lodge an application in writing with competent authorities, administrative or judicial, for the suspension by the customs authorities of the release into free circulation of such goods. Members may enable such an application to be made in respect of goods which involve other infringements of intellectual property rights, provided that the requirements of this Section are met. Members may also provide for corresponding procedures concerning the suspension by the customs authorities of the release of infringing goods destined for exportation from their territories.
(13) It is understood that there shall be no obligation to apply such procedures to imports of goods put on the market in another country by or with the consent of the right holder, or to goods in transit.
13
DS362: Customs Measures –
Panel findings
� Acknowledges that China applies TRIPS plus, as
border measures are applied
� not only to counterfeiting and piracy, but also in
respect of patent violations etc.
� not only to imports (0.15% of seized goods), but also
to exports (99.85% of seized goods)
� Interpreting Art. 51, the panel finds that Art. 59
only applies to goods suspended on export
14
� Article 59 TRIPS
� “..competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46..“
� Article 46 TRIPS
� “E 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 existing constitutional requirements, destroyed.
� In regard to counterfeit trademark goods, 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."
WTO Dispute Settlement:
China – Intellectual Property Rights (4)
15
DS362: Customs Measures –
Panel findings� Interpreting Art. 59 the Panel finds that “shall have the
authority to order the destruction or disposal”
� carries no obligation to exercise that authority,
� is not exclusive or exhaustive;
� requires the possibility to order destruction or disposal at any given
moment, until the goods are finally dealt with;
� Can authority be conditioned?
� no obligation to take action in the absence of an application or request
� text suggests that conditions that allow destruction or disposal are
permitted
� Panel finds disposal options not shown to be inconsistent
with Articles 46 sentence 1-3
� No mandatory hierarchy of disposal options under the
Customs Measures
16
DS362: Customs Measures –
Panel findings
� Article 46, sentence 4 contains an independent
obligation for Members’ authorities regarding
release of goods into the channels of commerce
� Disposal options under the Customs measures are
inconsistent with the principle in sentence 4 of Art.
46, as auction permits the release into the channels
of commerce after the simple removal of the
trademark in more than just exceptional cases.
17
� US Claims
� Criminal Law thresholds exclude classes of commercial activity
from criminal prosecution (thresholds of business volume, sales
or numbers of copies) inconsistently with Article 61
� Issues raised
� Article 41.5 – no obligation to put into place a judicial system for
IP enforcement
� Article 61 – remedies .. to provide a deterrent .. consistently with
the level .. applied for crimes of a corresponding gravity
� Article 61 – Definition of Commercial Scale
DS362: Criminal Measures
18
� Findings
� Relationship Article 41.1 to 41.5
� Requirements under Article 41.1 are general obligation
for Part III
� Article 41.5 creates no discretion for Members
regarding substantive obligations
� Article 61, sentence 2 – relationship with penalties
applied for crimes of a corresponding gravity
DS362: Criminal Measures -
Panel Findings (1)
19
� Findings
� Commercial Scale
� “the magnitude or extent of typical or normal commercial
activity” with respect to a given product in a given market
� No violation proven, as no specific evidence with
regard to products and markets had been presented by
the United States
DS362: Criminal Measures -
Panel Findings (2)
20
Pending Consultations – DS 408/409
� Brazil and India challenging the EU’s/NL’s
practice of stopping pharmaceutical products in
transit on the basis of patent infringement
� Compatibility with TRIPS obligations
� Applicability of conditions / safeguards in the provisions on
border measures ?
� Barrier to legitimate trade ?
� Compatibility with the spirit of the Doha Declaration on
TRIPS and Public Health
� Compatibility with GATT obligations
� Article V - freedom of transit ?
21
II.
Enforcement-related Discussions in the
TRIPS Council
22
Work in the TRIPS Council (2)
� Discussions on Enforcement (developed
countries)
� EC Initiatives: June 2005 (IP/C/W/448); March 2006 (IP/C/W/468);
June 2006 (IP/C/W/471)
� Joint Communication from EC/Japan/ Switzerland/US in October
2006 (IP/C/W/485)
� US Communication in Feb.2007 (IP/C/W/488)
� Swiss Communication in June 2007 (IP/C/W/492)
� Discussions on Enforcement (developing
countries)
� India and China proposed the Agenda item “TRIPS Enforcement
Trends” for the June 2010 TRIPS Council to discuss ACTA
developments and Goods in transit
23
III.
Cross-retaliation
under the TRIPS Agreement
24
WTO Dispute Settlement System:
Suspension of Concessions
� Full implementation of Panels findings preferred
� Suspension of concession or other obligations
(″retaliation″) can be authorized if a Member fails
to implement recommendations within the period
fixed or to offer acceptable compensation
� Applicable principles – Article 22.3 DSU� Normally suspension of concessions in the same sector
� If not practicable or effective, the Member may seek to
suspend concessions in other sectors under the same
agreement
� If not practicable or effective, the Member may seek to
suspend concessions under another covered agreement
(″cross-retaliation″)
25
WTO Dispute Settlement MechanismArbitrations – Art. 22.6 DSU
Variable amount based on a
formula / e.g. 147,4 millions
US$ for 2006
+
147,3 million US$ per year
31-08-2009Brazil / United StatesUS — Upland Cotton
(DS267)
US$21 mio/year21-12-2007Antigua and Barbuda /
United States
US — Gambling
(DS285)
US$247,797,00017-02-2003Brazil / CanadaCanada – Aircraft (DS222)
Amount of the final decisions
and awards under 1916 Act24-02-2004EC / United States
US — 1916 Act (EC)
(DS136)
Amount of disbursements
multiplied by a trade effect
coefficient
31-08-2004
Australia, Brazil, Chile,
European Communities, India,
Indonesia, Japan, Korea,
Thailand / United States
US — Offset Act (Byrd
Amendment)
(DS217, 234)
AwardDate of the
AwardPartiesDispute
