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WTO ANALYTICAL INDEX: TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights |
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> Preamble |
Members,
Desiring to reduce distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade;
Recognizing, to this end, the need for new rules and disciplines concerning:
(a) the applicability of the basic principles of GATT 1994 and of relevant international intellectual property agreements or conventions;
(b) the provision of adequate standards and principles concerning the availability, scope and use of trade-related intellectual property rights;
(c) the provision of effective and appropriate means for the enforcement of trade-related intellectual property rights, taking into account differences in national legal systems;
(d) the provision of effective and expeditious procedures for the multilateral prevention and settlement of disputes between governments; and
(e) transitional arrangements aiming at the fullest participation in the results of the negotiations;
Recognizing the need for a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods;
Recognizing that intellectual property rights are private rights;
Recognizing the underlying public policy objectives of national systems for the protection of intellectual property, including developmental and technological objectives;
Recognizing also the special needs of the least-developed country Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base;
Emphasizing the importance of reducing tensions by reaching strengthened commitments to resolve disputes on trade-related intellectual property issues through multilateral procedures;
Desiring to establish a mutually supportive relationship between the WTO and the World Intellectual Property Organization (referred to in this Agreement as "WIPO") as well as other relevant international organizations;
Hereby agree as follows:
1. In India - Patents (US), addressing the US claim that the Indian legal regime for patent protection for certain products was inconsistent with the TRIPS Agreement, the Appellate Body referred to a part of the preamble in its interpretation of Article 70.8(a): "The Panel's interpretation here [of Article 70.8(a)] is consistent also with the object and purpose of the TRIPS Agreement. The Agreement takes into account, inter alia, 'the need to promote effective and adequate protection of intellectual property rights'."(1)
Part I: General Provisions and Basic Principles
II. Article 1 back to top Article 1: Nature and Scope of Obligations 1. Members shall give effect to the provisions of this Agreement. 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. Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice.
2. For the purposes of this Agreement, the term "intellectual property" refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part II.
3. Members shall accord the treatment provided for in this Agreement to the nationals of other Members.(1) In respect of the relevant intellectual property right, the nationals of other Members shall be understood as those natural or legal persons that would meet the criteria for eligibility for protection provided for in the Paris Convention (1967), the Berne Convention (1971), the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits, were all Members of the WTO members of those conventions.(2) Any Member availing itself of the possibilities provided in paragraph 3 of Article 5 or paragraph 2 of Article 6 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for Trade-Related Aspects of Intellectual Property Rights (the "Council for TRIPS").
(footnote original) 1 When "nationals" are referred to in this Agreement, they shall be deemed, in the case of a separate customs territory Member of the WTO, to mean persons, natural or legal, who are domiciled or who have a real and effective industrial or commercial establishment in that customs territory.
(footnote original) 2 In this Agreement, "Paris Convention" refers to the Paris Convention for the Protection of Industrial Property; "Paris Convention (1967)" refers to the Stockholm Act of this Convention of 14 July 1967. "Berne Convention" refers to the Berne Convention for the Protection of Literary and Artistic Works; "Berne Convention (1971)" refers to the Paris Act of this Convention of 24 July 1971. "Rome Convention" refers to the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, adopted at Rome on 26 October 1961. "Treaty on Intellectual Property in Respect of Integrated Circuits" (IPIC Treaty) refers to the Treaty on Intellectual Property in Respect of Integrated Circuits, adopted at Washington on 26 May 1989. "WTO Agreement" refers to the Agreement Establishing the WTO.
(a) "free to determine the appropriate method of implementing" 2. In India - Patents (US), the Appellate Body reviewed the Panel's decision that India did not meet its obligations under the TRIPS Agreement in that it failed to provide "a sound legal basis to preserve novelty and priority" of certain patent applications: "[W]hat constitutes such a sound legal basis in Indian law? To answer this question, we must recall first an important general rule in the TRIPS Agreement. Article 1.1 of the TRIPS Agreement states, in pertinent part:
'Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice.'
Members, therefore, are free to determine how best to meet their obligations under the TRIPS Agreement within the context of their own legal systems. And, as a Member, India is 'free to determine the appropriate method of implementing' its obligations under the TRIPS Agreement within the context of its own legal system."(2) 3. In Canada - Patent Term the Panel examined Canada's argument that Article 1.1 permitted it to maintain a term for patent protection of 17 years counting from the date of grant of a patent, in spite of the minimum requirement, under Articles 33 and 70, of granting patent protection for a period expiring 20 years from the date of filing of such application. The Panel noted the discretion of Members, under Article 1.1, to determine the appropriate method of implementing their obligations under the TRIPS Agreement, but emphasized that such discretion did not extend to choosing which obligation to comply with: "... Article 33 contains an obligation concerning the earliest available date of expiry of patents, and Article 62.2 contains a separate obligation prohibiting acquisition procedures which lead to unwarranted curtailment of the period of protection. We recognize that some curtailment is permitted by the text of these two provisions. However, Article 1.1 gives Members the freedom to determine the appropriate method of implementing those two specific requirements, but not to ignore either requirement in order to implement another putative obligation concerning the length of effective protection."(3) 4. In US - Section 211 Appropriations Act the Appellate Body disagreed with the Panel's conclusion that the categories of intellectual property covered by the TRIPS Agreement are those referred to in Article 1.2: "The Panel interpreted the phrase 'intellectual property' refers to all categories of intellectual property that are the subject of Sections 1 through 7 of Part II' (emphasis added) as if that phrase read 'intellectual property means those categories of intellectual property appearing in the titles of Sections 1 through 7 of Part II.' To our mind, the Panel's interpretation ignores the plain words of Article 1.2, for it fails to take into account that the phrase 'the subject of Sections 1 through 7 of Part II' deals not only with the categories of intellectual property indicated in each section title, but with other subjects as well. For example, in Section 5 of Part II, entitled 'Patents', Article 27.3(b) provides that Members have the option of protecting inventions of plant varieties by sui generis rights (such as breeder's rights) instead of through patents. ..."(4)
III. Article 2 and Incorporated Provisions of the Paris Convention (1967) back to top Article 2: Intellectual Property Conventions 1. In respect of Parts II, III and IV of this Agreement, Members shall comply with Articles 1 through 12, and Article 19, of the Paris Convention (1967).(5)
2. Nothing in Parts I to IV of this Agreement shall derogate from existing obligations that Members may have to each other under the Paris Convention, the Berne Convention, the Rome Convention and the Treaty on Intellectual Property in Respect of Integrated Circuits.
1. Paragraph 1 of Article 2 of the TRIPS Agreement 5. In US - Section 211 Appropriations Act, the Appellate Body disagreed with the Panel's interpretation that Article 2.1 obliged Members to comply with Articles 1 through 12 and 19 of the Paris Convention (1967) only "in respect" of what is covered by Parts II, III and IV of the TRIPS Agreement. Instead, it found that Members do have an obligation to provide protection to trade names in accordance with Article 8 of the Paris Convention (1967) as incorporated by Article 2.1 of the TRIPS Agreement: "Article 2.1 explicitly incorporates Article 8 of the Paris Convention (1967) into the TRIPS Agreement.
The Panel was of the view that the words 'in respect of' in Article 2.1 have the effect of 'conditioning' Members' obligations under the Articles of the Paris Convention (1967) incorporated into the TRIPS Agreement, with the result that trade names are not covered. We disagree.
...
[W]e reverse the Panel's finding in paragraph 8.41 of the Panel Report that trade names are not covered under the TRIPS Agreement and find that WTO Members do have an obligation under the TRIPS Agreement to provide protection to trade names."(6) 2. Article 2 of the Paris Convention (1967) as incorporated in the TRIPS Agreement 6. With respect to the national treatment obligation in Article 2(1) of the Paris Convention (1967) as incorporated in the TRIPS Agreement, see the discussion of the national treatment obligation in Article 3.1 of the TRIPS Agreement from US - Section 211 Appropriations Act in paragraphs 19-24 below. 3. Article 6 of the Paris Convention (1967) as incorporated in the TRIPS Agreement 7. In US - Section 211 Appropriations Act, in the course of considering claims under Article 6quinquies A(1) of the Paris Convention (1967) as incorporated in the TRIPS Agreement, and under Article 15.2 of the TRIPS Agreement, the Appellate Body explained that the general rule in Article 6(1) of the Paris Convention as incorporated in the TRIPS Agreement reserves considerable discretion to WTO Members but that that discretion must be exercised consistently with internationally agreed grounds for refusing - and not refusing - trademark registration: "In this respect, we recall, once again, that Article 6(1) of the Paris Convention (1967) reserves to each country of the Paris Union the right to determine conditions for the filing and registration of trademarks by its domestic legislation. The authority to determine such conditions by domestic legislation must, however, be exercised consistently with the obligations that countries of the Paris Union have under the Paris Convention (1967). These obligations include internationally agreed grounds for refusing registration, as stipulated in the Paris Convention (1967).
The right of each country of the Paris Union to determine conditions for filing and registration of trademarks by its domestic legislation is also constrained by internationally agreed grounds for not denying trademark registration. This means, by implication, that the right reserved to each country of the Paris Union to determine, under Article 6(1), conditions for the filing and registration of trademarks includes the right to determine by domestic legislation conditions to refuse acceptance of filing and registration on grounds other than those explicitly prohibited by the Paris Convention (1967)."(7) 4. Article 6bis of the Paris Convention (1967) as incorporated in the TRIPS Agreement 8. In the same report, the Panel found that the obligation in paragraph 1 of Article 6bis to prohibit the use of a well-known trademark in certain situations did not apply to assertions of rights by an entity which had confiscated the well-known trademark, or its successor-in-interest, who was not considered the proper owner under national law: "We agree with the parties that a WTO Member is not required to give the benefit of Article 6bis to the confiscating entity or its successor-in-interest; the competent authority of a WTO Member may consider the well-known trademark as being the mark of the person who owned the trademark prior to the confiscation."(8) 5. Article 6ter of the Paris Convention (1967) as incorporated in the TRIPS Agreement 9. At its meeting of 11 December 1995, the Council for TRIPS decided on arrangements that apply with respect to implementation of the obligations under the TRIPS Agreement stemming from the incorporation of the provisions of Article 6ter of the Paris Convention (1967) which contains certain prohibitions relating to the registration and use as trademarks of state emblems, official hallmarks and emblems of intergovernmental organizations.(9) 10. Article 3 of the Agreement between the World Intellectual Property Organization and the World Trade Organization, done on 22 December 1995, (the "WIPO-WTO Agreement"), provides for procedures relating to communication of emblems and transmittal of objections under Article 6ter of the Paris Convention for the purposes of the TRIPS Agreement.(10) 6. Article 6quinquies of the Paris Convention (1967) as incorporated in the TRIPS Agreement 11. In US - Section 211 Appropriations Act the Appellate Body considered an argument that Article 6quinquies A(1) applied to more than merely the form of a trademark, and found that: "We also agree that the obligation of countries of the Paris Union under Article 6quinquies A(1) to accept for filing and protect a trademark duly registered in the country of origin 'as is' does not encompass matters related to ownership."(11) 7. Article 8 of the Paris Convention (1967) as incorporated in the TRIPS Agreement 12. In US - Section 211 Appropriations Act, the Appellate Body disagreed with the Panel's interpretation that Article 2.1 obliged Members to comply with Articles 1 through 12 and 19 of the Paris Convention (1967) only "in respect" of what is covered by Parts II, III and IV of the TRIPS Agreement. Instead, it found that Members do have an obligation to provide protection to trade names in accordance with Article 8 of the Paris Convention (1967) as incorporated by Article 2.1 of the TRIPS Agreement: "Article 8 of the Paris Convention (1967) covers only the protection of trade names; Article 8 has no other subject. If the intention of the negotiators had been to exclude trade names from protection, there would have been no purpose whatsoever in including Article 8 in the list of Paris Convention (1967) provisions that were specifically incorporated into the TRIPS Agreement. To adopt the Panel's approach would be to deprive Article 8 of the Paris Convention (1967), as incorporated into the TRIPS Agreement by virtue of Article 2.1 of that Agreement, of any and all meaning and effect. ...
...
[W]e reverse the Panel's finding in paragraph 8.41 of the Panel Report that trade names are not covered under the TRIPS Agreement and find that WTO Members do have an obligation under the TRIPS Agreement to provide protection to trade names."(12) 13. In US - Section 211 Appropriations Act the Appellate Body found that Article 8 of the Paris Convention (1967) as incorporated in the TRIPS Agreement does not determine who does or does not own a trade name: "We recall further our conclusion in ... the section addressing Article 16.1 of the TRIPS Agreement that neither the Paris Convention (1967) nor the TRIPS Agreement determines who owns or who does not own a trademark. We believe that the Paris Convention (1967) and the TRIPS Agreement also do not determine who owns or does not own a trade name. Given our view that Sections 211(a)(2) and (b) relate to ownership, we conclude that these Sections are not inconsistent with Article 2.1 of the TRIPS Agreement in conjunction with Article 8 of the Paris Convention (1967)."(13) 8. Paragraph 2 of Article 2 of the TRIPS Agreement 14. In EC - Bananas III (Ecuador) (Article 22.6 - EC), the Arbitrators followed Ecuador's request under Article 22.2 of the DSU for suspension of concessions and obligations, including certain obligations under the TRIPS Agreement. In their award, the Arbitrators addressed, inter alia, the relationship between the WTO Agreement and the obligations of WTO Members to each other arising under the four conventions listed in Article 2: "This provision can be understood to refer to the obligations that the contracting parties of the Paris, Berne and Rome Conventions and the IPIC Treaty, who are also WTO Members, have between themselves under these four treaties. This would mean that, by virtue of the conclusion of the WTO Agreement, e.g. Berne Union members cannot derogate from existing obligations between each other under the Berne Convention. For example, the fact that Article 9.1 of the TRIPS Agreement incorporates into that Agreement Articles 1-21 of the Berne Convention with the exception of Article 6bis does not mean that Berne Union members would henceforth be exonerated from this obligation to guarantee moral rights under the Berne Convention."(14)
IV. Article 3 back to top Article 3: National Treatment 1. Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection(3) of intellectual property, subject to the exceptions already provided in, respectively, the Paris Convention (1967), the Berne Convention (1971), the Rome Convention or the Treaty on Intellectual Property in Respect of Integrated Circuits. In respect of performers, producers of phonograms and broadcasting organizations, this obligation only applies in respect of the rights provided under this Agreement. Any Member availing itself of the possibilities provided in Article 6 of the Berne Convention (1971) or paragraph 1(b) of Article 16 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for TRIPS.
(footnote original) 3 For the purposes of Articles 3 and 4, "protection" shall include matters affecting the availability, acquisition, scope, maintenance and enforcement of intellectual property rights as well as those matters affecting the use of intellectual property rights specifically addressed in this Agreement.
2. Members may avail themselves of the exceptions permitted under paragraph 1 in relation to judicial and administrative procedures, including the designation of an address for service or the appointment of an agent within the jurisdiction of a Member, only where such exceptions are necessary to secure compliance with laws and regulations which are not inconsistent with the provisions of this Agreement and where such practices are not applied in a manner which would constitute a disguised restriction on trade.
(a) "treatment no less favourable than that it accords to its own nationals with regard to the protection of intellectual property" 15. Indonesia - Autos concerned the consistency of Indonesia's National Car Programme with several WTO agreements, including claims that the provisions of the programme discriminated against nationals of other WTO Members with respect to trademarks, in violation of Article 3.1 (the Panel Report was not appealed). With respect to the claim relating to the acquisition of trademarks, the Panel rejected the United States' claim that Indonesian law was according less favourable treatment to foreign nationals than to Indonesian nationals. The Panel saw the Indonesian law as merely stipulating, in a non-discriminatory manner, that only certain signs could be used as trademarks: "The issue to be examined therefore in regard to the United States' claim relating to the 'acquisition' of trademarks is whether, under the Indonesian law and practice which is before us, the treatment accorded to foreign nationals in respect of the acquisition of trademark rights, through the applicable procedures, is less favourable than that accorded to the Indonesian company in the National Car Programme. We do not consider that any evidence has been produced in this case to support such a claim. ... The fact that only certain signs can be used as trademarks for meeting the relevant qualifications under the National Car Programme, and many others not, does not mean that trademark rights, as stipulated in Indonesian trademark law, cannot be acquired for these other signs in a non-discriminatory manner."(15) 16. Equally, with respect to the argument that less favourable treatment was being accorded by the regulations pertaining to the maintenance of trademarks, the Panel could not discern any less favourable treatment under Indonesian law for foreign nationals: "We do not accept this argument for the following reasons. First, no evidence has been put forward to refute the Indonesian statement that the system, in requiring a new, albeit Indonesian-owned, trademark to be created, applies equally to pre-existing trademarks owned by Indonesian nationals and foreign nationals. Second, if a foreign company enters into an arrangement with a Pioneer company, it would do so voluntarily, with knowledge of any consequent implications for its ability to maintain pre-existing trademark rights, as indeed the United States itself has acknowledged in its submissions to the Panel."(16) 17. The Panel in Indonesia - Autos also cautioned against construing the national treatment obligation under Article 3 of the TRIPS Agreement as addressing also issues of tariffs, subsidies or other measure with respect to domestic companies which could have an indirect impact on the maintenance of trademark rights by foreign nationals: "In considering this argument, we note that any customs tariff, subsidy or other governmental measure of support could have a 'de facto' effect of giving such an advantage to the beneficiaries of this support. We consider that considerable caution needs to be used in respect of 'de facto' based arguments of this sort, because of the danger of reading into a provision obligations which go far beyond the letter of that provision and the objectives of the Agreement. It would not be reasonable to construe the national treatment obligation of the TRIPS Agreement in relation to the maintenance of trademark rights as preventing the grant of tariff, subsidy or other measures of support to national companies on the grounds that this would render the maintenance of trademark rights by foreign companies wishing to export to that market relatively more difficult."(17) 18. The following passage in Indonesia - Autos illustrates the Panel's approach to the relationship between Article 3 and other provisions of the TRIPS Agreement: "As is made clear by the footnote to Article 3 of the TRIPS Agreement, the national treatment rule set out in that Article does not apply to use of intellectual property rights generally but only to 'those matters affecting the use of intellectual property rights specifically addressed in this Agreement'. In putting forward its claim on this point, the United States has developed arguments relating to the use of trademarks specifically addressed by Article 20 of the TRIPS Agreement. It is the first sentence of this Article, which is entitled 'Other Requirements', to which the United States has made reference. ...
The main issues before us in examining this claim of the United States are therefore: first, is the use of a trademark to which the Indonesian law and practices at issue relates 'specifically addressed' by Article 20; and, second, if so, does this aspect of the system discriminate in favour of Indonesian nationals and against those of other WTO Members."(18) 19. In US - Section 211 Appropriations Act the Appellate Body considered a measure that, on a plain reading, afforded "differential treatment" between a Member's own nationals and nationals of other countries, and quoted from the GATT panel report in US - Section 337: "That panel reasoned that 'the mere fact that imported products are subject under Section 337 to legal provisions that are different from those applying to products of national origin is in itself not conclusive in establishing inconsistency with Article III:4 [of GATT].'
That panel stated further that:
'[I]t would follow ... that any unfavourable elements of treatment of imported products could be offset by more favourable elements of treatment, provided that the results, as shown in past cases, have not been less favourable. [E]lements of less and more favourable treatment could thus only be offset against each other to the extent that they always would arise in the same cases and necessarily would have an offsetting influence on the other. (emphasis added)'
And that panel, importantly for our purposes, concluded that:
'... while the likelihood of having to defend imported products in two fora is small, the existence of the possibility is inherently less favourable than being faced with having to conduct a defence in only one of those fora. (emphasis added)'"(19) 20. In US - Section 211 Appropriations Act the Appellate Body accepted that discriminatory treatment imposed by a measure could be offset in practice: "Yet, to fulfill the national treatment obligation, less favourable treatment must be offset, and thereby eliminated, in every individual situation that exists under a measure. Therefore, for this argument by the United States to succeed, it must hold true for all Cuban original owners of United States trademarks, and not merely for some of them."(20) 21. In the same report, the Appellate Body dismissed an argument that certain discriminatory treatment was offset in practice by another measure which provided unfavourable treatment to the Member's own nationals: "We disagree. We do not believe that Section 515.201 of the CACR would in every case offset the discriminatory treatment imposed by Sections 211(a)(2) and (b). For this argument by the United States to hold true in each and every situation, the scope of the phrase 'having an interest in' in Section 515.201 would necessarily have to overlap in coverage with the scope of the phrase 'used in connection with' in Sections 211(a)(2) and (b). However, the United States was unable to point to evidence substantiating that the different standards used in Section 515.201 and in Sections 211(a)(2) and (b) overlap completely. We are, therefore, not satisfied that Section 515.201 would offset the inherently less favourable treatment present in Sections 211(a)(2) and (b) in each and every case. And, because it has not been shown by the United States that it would do so in each and every case, the less favourable treatment that exists under the measure cannot be said to have been offset and, thus, eliminated."(21) 22. In the same report, the Appellate Body dismissed an argument that certain discriminatory treatment was offset in practice by the availability of a particular administrative procedure: "This [procedure] could eliminate less favourable treatment in practice. Yet, the very existence of the additional 'hurdle' that is imposed by requiring application to OFAC is, in itself, inherently less favourable. Sections 211(a)(2) and (b) do not apply to United States original owners; no application to OFAC is required. But Cuban original owners residing in the 'authorized trade territory' must apply to OFAC. Thus, such Cuban original owners must comply with an administrative requirement that does not apply to United States original owners. By virtue alone of having to apply to OFAC, even Cuban original owners that reside in the 'authorized trade territory' described in Section 515.332 are treated less favourably than United States original owners. So, in this second situation, the discrimination remains."(22) 23. In the same report, the Appellate Body dismissed an argument that a discretionary measure applicable only to nationals of foreign countries, but which had been consistently applied in a way which offset any discrimination, did not provide less favourable treatment. Although the Appellate Body agreed with the Panel that it could not assume that the discretionary executive authority would be exercised inconsistently with WTO obligations, it found that this measure violated the national treatment obligation in Article 2(1) of the Paris Convention (1967) (as incorporated in the TRIPS Agreement) and Article 3.1 of the TRIPS Agreement, for the following reason: "The United States may be right that the likelihood of having to overcome the hurdles of both Section 515.201 of Title 31 CFR and Section 211(a)(2) may, echoing the panel in US - Section 337, be small. But, again echoing that panel, even the possibility that non-United States successors-in-interest face two hurdles is inherently less favourable than the undisputed fact that United States successors-in-interest face only one."(23) 24. In the same report, the Appellate Body applied to trade names its findings with regard to trademarks in respect of Article 2.1 of the TRIPS Agreement in conjunction with Article 2(1) of the Paris Convention, and Article 3.1 of the TRIPS Agreement.(24) 25. At its meeting of 27 February 1997, the Council for TRIPS referred to three options for meeting obligations to notify laws and regulations that correspond to the obligations of Articles 3, 4 and 5 of the TRIPS Agreement. It circulated a format as a practical aid in respect of one of those options.(25) 2. Relationship with other Articles 26. With respect to the relationship with Article 65.2, see the excerpt from the panel report referenced in paragraph 142 below. 3. Relationship with other Agreements 27. In US - Section 211 Appropriations Act the Appellate Body referred to GATT jurisprudence in interpreting Article 3 of the TRIPS Agreement for the following reason: "As we see it, the national treatment obligation is a fundamental principle underlying the TRIPS Agreement, just as it has been in what is now the GATT 1994. The Panel was correct in concluding that, as the language of Article 3.1 of the TRIPS Agreement, in particular, is similar to that of Article III:4 of the GATT 1994, the jurisprudence on Article III:4 of the GATT 1994 may be useful in interpreting the national treatment obligation in the TRIPS Agreement."(26)
V. Article 4 back to top Article 4: Most-Favoured-Nation Treatment With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members. Exempted from this obligation are any advantage, favour, privilege or immunity accorded by a Member:
(a) deriving from international agreements on judicial assistance or law enforcement of a general nature and not particularly confined to the protection of intellectual property;
(b) granted in accordance with the provisions of the Berne Convention (1971) or the Rome Convention authorizing that the treatment accorded be a function not of national treatment but of the treatment accorded in another country;
(c) in respect of the rights of performers, producers of phonograms and broadcasting organizations not provided under this Agreement;
(d) deriving from international agreements related to the protection of intellectual property which entered into force prior to the entry into force of the WTO Agreement, provided that such agreements are notified to the Council for TRIPS and do not constitute an arbitrary or unjustifiable discrimination against nationals of other Members.
28. In US - Section 211 Appropriations Act the Appellate Body applied analogous reasoning to claims under Articles 3.1 and 4 of the TRIPS Agreement in respect of the same measure. The measure, on its face, discriminated as between the nationals of one other Member, and the nationals of all other countries. The Appellate Body dismissed an argument that the discrimination could be eliminated through an administrative procedure: "... Cuban nationals that reside in a country that is part of the 'authorized trade territory', such as the Members States of the European Communities, can apply to OFAC to be 'unblocked'. This implies that Cuban nationals that reside in the 'authorized trade territory' face an additional administrative procedure that does not apply to non-Cuban foreign nationals who are original owners, because the latter are not 'designated nationals'. Therefore, as we stated earlier, treatment that is inherently less favourable persists. ..."(27) 29. In US - Section 211 Appropriations Act the Appellate Body dismissed an argument that certain discriminatory treatment applied to the nationals of one other Member was offset in practice by another measure that could provide unfavourable treatment to the nationals of all other countries: "The fact that Section 515.201 of Title 31 CFR could also apply to a non-Cuban foreign national does not mean, however, that it would offset in each and every case the discriminatory treatment imposed by Sections 211(a)(2) and (b) on Cuban original owners."(28) 30. In the same report, the Appellate Body applied to trade names its findings with regard to trademarks in respect of Article 4 of the TRIPS Agreement.(29) 31. At its meeting of 27 February 1997, the Council for TRIPS referred to three options for meeting obligations to notify laws and regulations that correspond to the obligations of Articles 3, 4 and 5 of the TRIPS Agreement. It circulated a format as a practical aid in respect of one of those options.(30)
VI. Article 5 back to top Article 5: Multilateral Agreements on Acquisition or Maintenance of Protection The obligations under Articles 3 and 4 do not apply to procedures provided in multilateral agreements concluded under the auspices of WIPO relating to the acquisition or maintenance of intellectual property rights.
32. With respect to notifications of laws and regulations relating to Articles 3, 4 and 5 of the TRIPS Agreement, see paragraph 25 above.
VII. Article 6 back to top Article 6: Exhaustion For the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights.
33. With respect to the exhaustion of intellectual property rights, see the Declaration on the TRIPS Agreement and Public Health, reproduced in Section LXXVIII below.
VIII. Article 7 back to top Article 7: Objectives The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.
1. Relationship with other Articles 34. With respect to the relationship with Article 30, see the excerpt from the panel report referenced in paragraph 100 below. 35. With respect to the objectives and principles of the TRIPS Agreement, see the Declaration on the TRIPS Agreement and Public Health, reproduced in Section LXXVIII below.
IX. Article 8 back to top Article 8: Principles 1. Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.
2. Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.
1. Relationship with other Articles 36. With respect to the relationship with Article 30, see paragraph 100 below. 37. With respect to the objectives and principles of the TRIPS Agreement, see the Declaration on the TRIPS Agreement and Public Health, reproduced in Section LXXVIII below.
Part II: Standards Concerning the Availability, Scope and Use of Intellectual Property Rights
Section 1: Copyright and Related Rights X. Article 9 and Incorporated Provisions of the Berne Convention (1971) back to top Article 9: Relation to the Berne Convention 1. Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.
2. Copyright protection shall extend to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.
The text of Articles 1-21 of the Berne Convention and Appendix, other than Article 6bis appears in Section LXXVI below.
1. Relationship with the Berne Convention (1971) 38. In US - Section 110(5) Copyright Act, in examining the consistency of certain provisions of the US Copyright Act with the TRIPS Agreement, the Panel made a finding on the relationship between the TRIPS Agreement and the Berne Convention (1971): "Articles 9-13 of Section 1 of Part II of the TRIPS Agreement entitled 'Copyright and Related Rights' deal with the substantive standards of copyright protection. Article 9.1 of the TRIPS Agreement obliges WTO Members to comply with Articles 1-21 of the Berne Convention (1971) (with the exception of Article 6bis on moral rights and the rights derived therefrom) and the Appendix thereto. ...
We note that through their incorporation, the substantive rules of the Berne Convention (1971), including the provisions of its Articles 11bis(1)(iii) and 11(1)(ii), have become part of the TRIPS Agreement and as provisions of that Agreement have to be read as applying to WTO Members."(31) 39. The Panel also considered a provision of the Vienna Convention on the Law of the Treaties with respect to the TRIPS Agreement and the Berne Convention (1971). "We note that Article 30 of the Vienna Convention on the application of successive treaties is not relevant in this respect, because all provisions of the TRIPS Agreement - including the incorporated Articles 1-21 of the Berne Convention (1971) - entered into force at the same point in time."(32) 40. With respect to the relationship of the minor exceptions doctrine under the Berne Convention (1971) and the TRIPS Agreement, see also the excerpt from the panel report referenced in paragraph 52 below. 41. In US - Section 110(5) Copyright Act, the Panel emphasized the need, in the light of general principles of interpretation, to harmoniously interpret provisions of the TRIPS Agreement and the Berne Convention (1971): "In the area of copyright, the Berne Convention and the TRIPS Agreement form the overall framework for multilateral protection. Most WTO Members are also parties to the Berne Convention. We recall that it is a general principle of interpretation to adopt the meaning that reconciles the texts of different treaties and avoids a conflict between them. Accordingly, one should avoid interpreting the TRIPS Agreement to mean something different than the Berne Convention except where this is explicitly provided for. This principle is in conformity with the public international law presumption against conflicts, which has been applied by WTO panels and the Appellate Body in a number of cases. We believe that our interpretation of the legal status of the minor exceptions doctrine under the TRIPS Agreement is consistent with these general principles."(33) 42. The Panel adopted the same approach to the interpretation of the TRIPS Agreement and the WIPO Copyright Treaty ("WCT") as it had applied with respect to the TRIPS Agreement and the Berne Convention (1971) the Panel stated as follows: "In paragraph 6.66 we discussed the need to interpret the Berne Convention and the TRIPS Agreement in a way that reconciles the texts of these two treaties and avoids a conflict between them, given that they form the overall framework for multilateral copyright protection. The same principle should also apply to the relationship between the TRIPS Agreement and the WCT. The WCT is designed to be compatible with this framework, incorporating or using much of the language of the Berne Convention and the TRIPS Agreement. The WCT was unanimously concluded at a diplomatic conference organized under the auspices of WIPO in December 1996, one year after the WTO Agreement entered into force, in which 127 countries participated. Most of these countries were also participants in the TRIPS negotiations and are Members of the WTO. For these reasons, it is relevant to seek contextual guidance also in the WCT when developing interpretations that avoid conflicts within this overall framework, except where these treaties explicitly contain different obligations."(34) 2. Article 11 of the Berne Convention (1971) as incorporated in the TRIPS Agreement 43. In US - Section 110(5) Copyright Act, the Panel was called upon to interpret Article 11 of the Berne Convention (1971). The Panel considered the scope of Article 11 as follows: "As in the case of Article 11bis(1) of the Berne Convention (1971), which concerns broadcasting to the public and communication of a broadcast to the public, the exclusive rights conferred by Article 11 cover public performance; private performance does not require authorization. Public performance includes performance by any means or process, such as performance by means of recordings (e.g., CDs, cassettes and videos).(35) It also includes communication to the public of a performance of the work."(36) 44. In US - Section 110(5) Copyright Act, the Panel agreed with the parties that a particular type of communication was covered by the exclusive rights set forth in Article 11(1) of the Berne Convention (1971): "We share the understanding of the parties that a communication to the public by loudspeaker of a performance of a work transmitted by means other than hertzian waves is covered by the exclusive rights conferred by Article 11(1) of the Berne Convention (1971)."(37) 45. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators emphasized the difference between Members' respective obligations under Article 11(1)(ii) of the Berne Convention (1971) and right holders' exercise or exploitation of rights: "For purposes of the present dispute, this means that the United States is under an obligation to make available to EC right holders the exclusive rights set forth in Articles 11bis(1)(iii) and 11(1)(ii).(38) It is important to bear in mind, however, that, while it is for the United States to provide EC right holders with the exclusive rights set forth in Articles 11bis(1)(iii) and 11(1)(ii), it is for EC right holders to determine whether and how to exercise or exploit those rights."(39) (c) Relationship between Article 11 of the Berne Convention (1971) and other Articles of this Convention. 46. In US - Section 110(5) Copyright Act, the Panel found Article 11 to be a general rule concerning the communication of performances of works, while Article 11bis provided a specific rule concerning a particular type of communication: "Regarding the relationship between Articles 11 and 11bis, we note that the rights conferred in Article 11(1)(ii) concern the communication to the public of performances of works in general. Article 11bis(1)(iii) is a specific rule conferring exclusive rights concerning the public communication by loudspeaker or any other analogous instrument transmitting, by signs, sounds or images, the broadcast of a work."(40) 3. Article 11bis of the Berne Convention (1971) as incorporated in the TRIPS Agreement 47. In US - Section 110(5) Copyright Act, in interpreting Article 11bis(1), the Panel addressed the three "separate exclusive" rights provided by Article 11bis(1) subparagraph (i) through (iii): "In the light of Article 2 of the Berne Convention (1971), 'artistic' works in the meaning of Article 11bis(1) include non-dramatic and other musical works. Each of the subparagraphs of Article 11bis(1) confers a separate exclusive right; exploitation of a work in a manner covered by any of these subparagraphs requires an authorization by the right holder. For example, the communication to the public of a broadcast creates an additional audience and the right holder is given control over, and may expect remuneration from, this new public performance of his or her work.
The right provided under subparagraph (i) of Article 11bis(1) is to authorize the broadcasting of a work and the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images. It applies to both radio and television broadcasts. Subparagraph (ii) concerns the subsequent use of this emission; the authors' exclusive right covers any communication to the public by wire or by rebroadcasting of the broadcast of the work, when the communication is made by an organization other than the original one.
Subparagraph (iii) provides an exclusive right to authorize the public communication of the broadcast of the work by loudspeaker, on a television screen, or by other similar means. Such communication involves a new public performance of a work contained in a broadcast, which requires a licence from the right holder."(41) 48. In US - Section 110(5) Copyright Act (Article 25.3), the Arbitrators emphasized the difference between Members' respective obligations under Article 11bis(1)(iii) of the Berne Convention (1971) and right holders' exercise or exploitation of rights as follows: "For purposes of the present dispute, this means that the United States is under an obligation to make available to EC right holders the exclusive rights set forth in Articles 11bis(1)(iii) and 11(1)(ii).(42) It is important to bear in mind, however, that, while it is for the United States to provide EC right holders with the exclusive rights set forth in Articles 11bis(1)(iii) and 11(1)(ii), it is for EC right holders to determine whether and how to exercise or exploit those rights."(43) 49. In US - Section 110(5) Copyright Act, the Panel addressed the authorization, provided by Article 11bis(2), to substitute a compulsory licence for an exclusive right under Article 11bis (1): "We also conclude that Article 11bis(2) of the Berne Convention (1971) as incorporated into the TRIPS Agreement allows Members to substitute a compulsory licence for an exclusive right under Article 11bis(1), or determine other conditions provided that they are not prejudicial to the right holder's right to obtain an equitable remuneration. Article 11bis(2) is not relevant for the case at hand, because the United States has not provided a right in respect of the uses covered by the present Section 110(5), the exercise of which would have been subjected to conditions determined in its legislation."(44) (c) Relationship between Article 11bis of the Berne Convention (1971) and other Articles of the Convention 50. With respect to the relationship between Articles 11 and 11bis of the Berne Convention (1971) as incorporated in the TRIPS Agreement, see paragraph 46 above. 51. In US - Section 110(5) Copyright Act, the Panel addressed the question whether the "minor exceptions doctrine." in the context of copyrights applied under the TRIPS Agreement. The Panel decided first to examine to what extent this doctrine formed part of the Berne Convention (1971) acquis and second, to assess whether that doctrine had been incorporated into the TRIPS Agreement. With respect to the scope of the minor exceptions doctrine under the Berne Convention (1971), the Panel held: "The General Report of the Brussels Conference of 1948 refers to 'religious ceremonies, military bands and the needs of the child and adult education' as examples of situations in respect of which minor exceptions may be provided. The Main Committee I Report of the Stockholm Conference of 1967 refers also to 'popularization' as one example. When these references are read in their proper context, it is evident that the given examples are of an illustrative character. ...
... On the basis of the information provided to us, we are not in a position to determine that the minor exceptions doctrine justifies only exclusively non-commercial use of works and that it may under no circumstances justify exceptions to uses with a more than negligible economic impact on copyright holders. On the other hand, non-commercial uses of works, e.g., in adult and child education, may reach a level that has a major economic impact on the right holder. At any rate, in our view, a non-commercial character of the use in question is not determinative provided that the exception contained in national law is indeed minor. ..."(45) 52. As the second step in its "minor exceptions analysis", the Panel examined to what extent this doctrine under the Berne Convention (1971) had been incorporated into the TRIPS Agreement "Having concluded that the minor exceptions doctrine forms part of the 'context' of, at least, Articles 11bis and 11 of the Berne Convention (1971) by virtue of an agreement within the meaning of Article 31(2)(a) of the Vienna Convention, which was made between the Berne Union members in connection with the conclusion of the respective amendments to that Convention, we next address the second step of our analysis ...
...
... we conclude that, in the absence of any express exclusion in Article 9.1 of the TRIPS Agreement, the incorporation of Articles 11 and 11bis of the Berne Convention (1971) into the Agreement includes the entire acquis of these provisions, including the possibility of providing minor exceptions to the respective exclusive rights."(46) (e) Relationship between Article 11bis(2) of the Berne Convention (1971) and Article 13 of the TRIPS Agreement 53. With respect to the relationship between Article 11bis(2) of the Berne Convention (1971) and Article 13 of the TRIPS Agreement, see paragraphs 58-60 below. 4. Article 20 of the Berne Convention (1971) as incorporated in the TRIPS Agreement 54. In US - Section 110(5) Copyright Act, the Panel declined to address Article 20 of the Berne Convention (1971), because - contrary to the European Communities' argument - the United States was not claiming that the TRIPS Agreement authorizes exceptions inconsistent with the Berne Convention (1971): "In regard to the argument of the European Communities that the US interpretation of Article 13 is incompatible with Article 20 of the Berne Convention (1971) and Article 2.2 of the TRIPS Agreement because it treats Article 13 of the TRIPS Agreement as providing a basis for exceptions that would be inconsistent with those permitted under the Berne Convention (1971), we note that the United States is not arguing this but rather that Article 13 clarifies and articulates the standards applicable to minor exceptions under the Berne Convention (1971). Since the EC arguments in relation to these provisions would only be relevant if a finding that would involve inconsistency with the Berne Convention (1971) were being advocated, we do not feel it is necessary to examine them further."(47) 5. Appendix to the Berne Convention (1971) as incorporated in the TRIPS Agreement 54bis. At its meeting of 16 July 1998, the Council for TRIPS took note of the following statement by its Chairperson, in the light of informal consultations on the calculation of renewable periods of ten years under Article I(2) of the Appendix to the Berne Convention (1971): "The provisions of Article I(2) of the Appendix as incorporated into the TRIPS Agreement can be understood so that, for the purposes of the TRIPS Agreement, the relevant periods are calculated by reference to the same date, i.e. 10 October 1974, as for the purposes of the Berne Convention. This would mean that renewable periods of ten years would be the same for the purposes of both Agreements, and that, also under the TRIPS Agreement, the period of ten years currently running would expire on 10 October 2004."(48)
XI. Article 10 back to top Article 10: Computer Programs and Compilations of Data 1. Computer programs, whether in source or object code, shall be protected as literary works under the Berne Convention (1971).
2. Compilations of data or other material, whether in machine readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations shall be protected as such. Such protection, which shall not extend to the data or material itself, shall be without prejudice to any copyright subsisting in the data or material itself.
No jurisprudence or decision of a competent WTO body.
XII. Article 11 back to top Article 11: Rental Rights In respect of at least computer programs and cinematographic works, a Member shall provide authors and their successors in title the right to authorize or to prohibit the commercial rental to the public of originals or copies of their copyright works. A Member shall be excepted from this obligation in respect of cinematographic works unless such rental has led to widespread copying of such works which is materially impairing the exclusive right of reproduction conferred in that Member on authors and their successors in title. In respect of computer programs, this obligation does not apply to rentals where the program itself is not the essential object of the rental.
No jurisprudence or decision of a competent WTO body.
XIII. Article 12 back to top Article 12: Term of Protection Whenever the term of protection of a work, other than a photographic work or a work of applied art, is calculated on a basis other than the life of a natural person, such term shall be no less than 50 years from the end of the calendar year of authorized publication, or, failing such authorized publication within 50 years from the making of the work, 50 years from the end of the calendar year of making.
No jurisprudence or decision of a competent WTO body.
XIV. Article 13 back to top Article 13: Limitations and Exceptions Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.
55. In US - Section 110(5) Copyright Act, the Panel rejected a suggested limitation of the scope of Article 13: "In our view, neither the express wording nor the context of Article 13 or any other provision of the TRIPS Agreement supports the interpretation that the scope of application of Article 13 is limited to the exclusive rights newly introduced under the TRIPS Agreement."(49) 56. With respect to the scope of Article 13, see paragraph 58 below. 57. In interpreting Article 13, the Panel in US - Section 110(5) Copyright Act outlined its interpretative approach to this provision, specified the conditions for limitations or exceptions to exclusive rights and found that these conditions apply cumulatively: "Article 13 of the TRIPS Agreement requires that limitations and exceptions to exclusive rights (1) be confined to certain special cases, (2) do not conflict with a normal exploitation of the work, and (3) do not unreasonably prejudice the legitimate interests of the right holder. The principle of effective treaty interpretation requires us to give a distinct meaning to each of the three conditions and to avoid a reading that could reduce any of the conditions to 'redundancy or inutility'. The three conditions apply on a cumulative basis, each being a separate and independent requirement that must be satisfied. Failure to comply with any one of the three conditions results in the Article 13 exception being disallowed. Both parties agree on the cumulative nature of the three conditions. The Panel shares their view. It may be noted at the outset that Article 13 cannot have more than a narrow or limited operation. Its tenor, consistent as it is with the provisions of Article 9(2) of the Berne Convention (1971), discloses that it was not intended to provide for exceptions or limitations except for those of a limited nature. The narrow sphere of its operation will emerge from our discussion and application of its provisions in the paragraphs which follow."(50) (b) Relationship with other Articles 58. In US - Section 110(5) Copyright Act, the Panel made a finding on the scope of application of Article 13 with respect to individual subparagraphs of Articles 11 and 11bis of the Berne Convention (1971): "We conclude that Article 13 of the TRIPS Agreement applies to Articles 11bis(1)(iii) and 11(1)(ii) of the Berne Convention (1971) as incorporated into the TRIPS Agreement, given that neither the express wording nor the context of Article 13 or any other provision of the TRIPS Agreement supports the interpretation that the scope of application of Article 13 is limited to the exclusive rights newly introduced under the TRIPS Agreement."(51) 59. The Panel also clearly distinguished the different situations covered by Article 11bis(2) of the Berne Convention (1971) and Article 13 of the TRIPS Agreement, respectively: "We believe that Article 11bis(2) of the Berne Convention (1971) and Article 13 cover different situations. On the one hand, Article 11bis(2) authorizes Members to determine conditions under which the rights conferred by Article 11bis(1)(i-iii) may be exercised. The imposition of such conditions may completely replace the free exercise of the exclusive right of authorizing the use of the rights embodied in subparagraphs (i-iii) provided that equitable remuneration and the author's moral rights are not prejudiced. However, unlike Article 13 of the TRIPS Agreement, Article 11bis(2) of the Berne Convention (1971) would not in any case justify use free of charge.
On the other hand, it is sufficient that a limitation or an exception to the exclusive rights provided under Article 11bis(1) of the Berne Convention (1971) as incorporated into the TRIPS Agreement meets the three conditions contained in its Article 13 to be permissible. If these three conditions are met, a government may choose between different options for limiting the right in question, including use free of charge and without an authorization by the right holder. This is not in conflict with any of the paragraphs of Article 11bis because use free of any charge may be permitted for minor exceptions by virtue of the minor exceptions doctrine which applies, inter alia, also to Article 11bis.
As regards situations that would not meet the above-mentioned three conditions, a government may not justify an exception, including one involving use free of charge, by Article 13 of the TRIPS Agreement. However, also in these situations Article 11bis(2) of the Berne Convention (1971) as incorporated into the TRIPS Agreement would nonetheless allow Members to substitute, for an exclusive right, a compulsory licence, or determine other conditions provided that they were not prejudicial to the right holder's right to obtain an equitable remuneration."(52) 60. In the same context, the Panel considered that a reading of Articles 11bis(2) of the Berne Convention (1971) and Article 13 of the TRIPS Agreement which did not differentiate the situations covered respectively by these provisions, would render Article 13 "somewhat redundant": "We believe that our interpretation gives meaning and effect to Article 11bis(2), the minor exceptions doctrine as it applies to Article 11bis, and Article 13. However, in our view, under the interpretation suggested by the European Communities this would not be the case, e.g., in the following situations. If any de minimis exception from rights conferred by Article 11bis(1)(i-iii) were subject to the requirement to provide equitable remuneration within the meaning of Article 11bis(2), no exemption whatsoever from the rights recognized by Article 11bis(1) could permit use free of charge even if the three criteria of Article 13 were met. As a result, narrow exceptions or limitations would be subject to the three conditions of Article 13 in addition to the requirement to provide equitable remuneration. At the same time, broader exceptions or limitations which do not comply with the criteria of Article 13 could arguably still be justified under Article 11bis(2) as long as the conditions imposed ensure, inter alia, equitable remuneration. Such an interpretation could render Article 13 somewhat redundant because narrow exceptions would be subject to all the requirements of Article 13 and Article 11bis(2) on a cumulative basis, while for broader exceptions compliance with Article 11bis(2) could suffice. Both situations would lead to the result that any use free of charge would not be permissible. These examples are illustrative of situations where the terms and conditions of Article 13, Article 11bis(2) and the minor exceptions doctrine would not be given full meaning and effect."(53) 61. With respect to the relationship of Article 13 to Article 9(2) of the Berne Convention (1971) and Articles 17, 26.2 and 30 of the TRIPS Agreement, see footnote 103. 62. In US - Section 110(5) Copyright Act, the Panel interpreted the meaning of the phrase "certain special cases", the first condition in Article 13: In our view, the first condition of Article 13 requires that a limitation or exception in national legislation should be clearly defined and should be narrow in its scope and reach. On the other hand, a limitation or exception may be compatible with the first condition even if it pursues a special purpose whose underlying legitimacy in a normative sense cannot be discerned. The wording of Article 13's first condition does not imply passing a judgment on the legitimacy of the exceptions in dispute. However, public policy purposes stated by law-makers when enacting a limitation or exception may be useful from a factual perspective for making inferences about the scope of a limitation or exception or the clarity of its definition."(54) 63. The Panel also addressed the relevance of whether the measure at issue had as its declared aim a legitimate public policy: "As regards the parties' arguments on whether the public policy purpose of an exception is relevant, we believe that the term 'certain special cases' should not lightly be equated with 'special purpose'.(55) It is difficult to reconcile the wording of Article 13 with the proposition that an exception or limitation must be justified in terms of a legitimate public policy purpose in order to fulfill the first condition of the Article. We also recall in this respect that in interpreting other WTO rules, such as the national treatment clauses of the GATT and the GATS, the Appellate Body has rejected interpretative tests which were based on the subjective aim or objective pursued by national legislation.(56)"(57) 64. The Panel subsequently applied the above quoted standard under Article 13 to examine whether the United States' measure at issue in US - Section 110(5) Copyright Act met the first condition of "certain special cases": "[W]e first examine whether the exceptions have been clearly defined. Second, we ascertain whether the exemptions are narrow in scope, inter alia, with respect to their reach. In that respect, we take into account what percentage of eating and drinking establishments and retail establishments may benefit from the business exemption under subparagraph (B), and in turn what percentage of establishments may take advantage of the homestyle exemption under subparagraph (A). On a subsidiary basis, we consider whether it is possible to draw inferences about the reach of the business and homestyle exemptions from the stated policy purposes underlying these exemptions according to the statements made during the US legislative process."(58) (d) "do not conflict with a normal exploitation of the work" 65. In US - Section 110(5) Copyright Act, in examining the second condition under Article 13, i.e. "do not conflict with a normal exploitation of the work", the Panel first sought a definition for the term "exploitation" : "The ordinary meaning of the term 'exploit' connotes 'making use of' or 'utilising for one's own ends'. We believe that 'exploitation' of musical works thus refers to the activity by which copyright owners employ the exclusive rights conferred on them to extract economic value from their rights to those works."(59) 66. The Panel then proceeded to provide an interpretation of the term "normal": "We note that the ordinary meaning of the term 'normal' can be defined as 'constituting or conforming to a type or standard; regular, usual, typical, ordinary, conventional ...'. In our opinion, these definitions appear to reflect two connotations: the first one appears to be of an empirical nature, i.e., what is regular, usual, typical or ordinary. The other one reflects a somewhat more normative, if not dynamic, approach, i.e., conforming to a type or standard. We do not feel compelled to pass a judgment on which one of these connotations could be more relevant. Based on Article 31 of the Vienna Convention, we will attempt to develop a harmonious interpretation which gives meaning and effect to both connotations of 'normal'.
If 'normal' exploitation were equated with full use of all exclusive rights conferred by copyrights, the exception clause of Article 13 would be left devoid of meaning. Therefore, 'normal' exploitation clearly means something less than full use of an exclusive right.(60)"(61) 67. The Panel then endorsed a differentiated examination of whether a limitation or an exception conflicts with the normal exploitation of a work: "We agree with the European Communities that whether a limitation or an exception conflicts with a normal exploitation of a work should be judged for each exclusive right individually."(62) 68. The Panel also indicated that when assessing the meaning of "normal exploitation", it would consider both empirical and normative criteria: "In our view, this test [whether there are areas of the market in which the copyright owner would ordinarily expect to exploit the work, but which are not available for exploitation because of this exemption] seems to reflect the empirical or quantitative aspect of the connotation of 'normal', the meaning of 'regular, usual, typical or ordinary'. We can, therefore, accept this US approach, but only for the empirical or quantitative side of the connotation. We have to give meaning and effect also to the second aspect of the connotation, the meaning of 'conforming to a type or standard'. We described this aspect of normalcy as reflecting a more normative approach to defining normal exploitation, that includes, inter alia, a dynamic element capable of taking into account technological and market developments. The question then arises how this normative aspect of 'normal' exploitation could be given meaning in relation to the exploitation of musical works.
...
Thus it appears that one way of measuring the normative connotation of normal exploitation is to consider, in addition to those forms of exploitation that currently generate significant or tangible revenue, those forms of exploitation which, with a certain degree of likelihood and plausibility, could acquire considerable economic or practical importance."(63) 69. After exploring the two different connotations of the term "normal exploitation", the Panel then set forth a test for "normal exploitation" based on the consideration of "economic competition" and "market conditions": "We believe that an exception or limitation to an exclusive right in domestic legislation rises to the level of a conflict with a normal exploitation of the work (i.e., the copyright or rather the whole bundle of exclusive rights conferred by the ownership of the copyright), if uses, that in principle are covered by that right but exempted under the exception or limitation, enter into economic competition with the ways that right holders normally extract economic value from that right to the work (i.e., the copyright) and thereby deprive them of significant or tangible commercial gains.
In developing a benchmark for defining the normative connotation of normal exploitation, we recall the European Communities' emphasis on the potential impact of an exception rather than on its actual effect on the market at a given point in time, given that, in its view, it is the potential effect that determines the market conditions.
...
We base our appraisal of the actual and potential effects on the commercial and technological conditions that prevail in the market currently or in the near future. What is a normal exploitation in the market-place may evolve as a result of technological developments or changing consumer preferences. Thus, while we do not wish to speculate on future developments, we need to consider the actual and potential effects of the exemptions in question in the current market and technological environment.
We do acknowledge that the extent of exercise or non-exercise of exclusive rights by right holders at a given point in time is of great relevance for assessing what is the normal exploitation with respect to a particular exclusive right in a particular market. However, in certain circumstances, current licensing practices may not provide a sufficient guideline for assessing the potential impact of an exception or limitation on normal exploitation. For example, where a particular use of works is not covered by the exclusive rights conferred in the law of a jurisdiction, the fact that the right holders do not license such use in that jurisdiction cannot be considered indicative of what constitutes normal exploitation. The same would be true in a situation where, due to lack of effective or affordable means of enforcement, right holders may not find it worthwhile or practical to exercise their rights."(64) (e) "do not unreasonably prejudice the legitimate interests of the right holder" 70. In US - Section 110(5) Copyright Act, in examining the third condition under Article 13, i.e. the phrase "do not unreasonably prejudice the legitimate interests of the right holder", the Panel distinguished several steps in the analysis of this requirement: "We note that the analysis of the third condition of Article 13 of the TRIPS Agreement implies several steps. First, one has to define what are the 'interests' of right holders at stake and which attributes make them 'legitimate'. Then, it is necessary to develop an interpretation of the term 'prejudice' and what amount of it reaches a level that should be considered 'unreasonable'."(65) 71. The Panel then proceeded to examined each of these terms in turn and began with their ordinary meaning: "The ordinary meaning of the term 'interests' may encompass a legal right or title to a property or to use or benefit of a property (including intellectual property). It may also refer to a |
