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DISPUTE SETTLEMENT: DISPUTE DS176

United States — Section 211 Omnibus Appropriations Act of 1998

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.

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See also: One-page summary of key findings of this dispute

Appellate Body and Panel Reports Adopted

Complaint by the European Communities and its Member States.

On 8 July 1999, the EC requested consultations with the US in respect of Section 211 of the US Omnibus Appropriations Act. The EC and its member States alleged as follows:

• Section 211, which was signed into law on 21 October 1998, did not allow the registration or renewal in the United States of a trademark, if it was previously abandoned by a trademark owner whose business and assets have been confiscated under Cuban law.
   
• This law provided that no US court shall recognize or enforce any assertion of such rights.
   
• Section 211 US Omnibus Appropriations Act was not in conformity with the US’ obligations under the TRIPS Agreement, notably its Article 2 in conjunction with the Paris Convention, Article 3, Article 4, Articles 15 to 21, Article 41, Article 42 and Article 62.

Further to the request of the EC and its member States, the DSB established a panel at its meeting on 26 September 2000. Canada, Japan and Nicaragua reserved their third-party rights. On 17 October 2000, the EC and its member States requested the Director-General to determine the composition of the Panel. On 26 October 2000, the Panel was composed.

The Panel circulated its Report on 6 August 2001. The Panel rejected most of the claims by the EC and their Member States except that relating to the inconsistency of Section 211(a)(2) of the Omnibus Appropriations Act with Article 42 of the TRIPS Agreement. In this regard, the panel concluded that this Section is inconsistent with the relevant TRIPs Article on the grounds that it limits, under certain circumstances, right holders’ effective access to and availability of civil judicial procedures.

On 4 October 2001, the EC and its Member States notified their decision to appeal certain issues of law and legal interpretations developed by the panel report. The Appellate Body report was circulated to Members on 12 January 2002. The Appellate Body:

• found, in respect of the protection of trademarks, that Sections 211(a)(2) and (b) of the Omnibus Appropriations Act violated the national treatment and most-favoured nation obligations under the TRIPS Agreement and the Paris Convention for the Protection of Industrial Property, thereby reversing the Panel’s findings to the contrary;
   
• reversed the Panel’s finding that Section 211(a)(2) is inconsistent with Article 42 of the TRIPS Agreement and concluded that Article 42 contains procedural obligations, while Section 211 affects substantive trademark rights;
   
• upheld the Panel’s findings that Section 211 does not violate the US’ obligations under Article 2.1 of the TRIPS Agreement in conjunction with Article 6quinquies A(1) of the Paris Convention, and Articles 15 and 16 of the TRIPS Agreement. It also upheld the Panel’s finding under Article 42 of the TRIPS Agreement in respect of Section 211(b); and
   
• reversed the Panel’s conclusion that trade names are not a category of intellectual property protected under the TRIPS Agreement and then completed the analysis reaching the same conclusions for trade names as with respect to trademarks. It also found that Sections 211(a)(2) and (b) are not inconsistent with Article 2.1 of the TRIPS Agreement in conjunction with Article 8 of the Paris Convention (1967).

At its meeting on 2 January 2002, the DSB adopted the Appellate Body report and the Panel report, as upheld by the Appellate Body report.

Implementation Status of Adopted Reports

At the DSB meeting on 19 February 2002, the US stated that it needed a reasonable period of time to comply with the rulings and recommendations of the DSB. On 28 March 2002, the US and the EC informed the DSB that they have reached a mutual agreement on the reasonable period of time for the US to implement the recommendations and rulings of the DSB. The reasonable period of time will expire on 31 December 2002, or on the date on which the current session of the US Congress adjourns, and in no event later than 3 January 2003.

At the DSB meeting on 1 October 2002, the US presented its status report regarding the implementation of the DSB’s recommendations and rulings. The US referred to the mutually agreed reasonable period of time. It also stated that the US Administration was consulting with the Congress to determine the appropriate statutory measures needed to be taken to resolve the dispute. Both the EC and Cuba expressed their expectation that a solution would be found within the agreed reasonable period of time.

At the DSB meeting on 28 November 2002, the US presented a status report where it said that the reasonable period of time for the implementation of the recommendations and rulings of the DSB would expire on 31 December 2002, or on the date on which the current session of the US Congress adjourned, whichever was later, and in no event later than 3 January 2003. He further stated that the US Administration was working with the US Congress with a view to resolving this dispute. The EC said that the EC was open to all solutions that would favour compliance by the US with its obligations under the WTO Agreement. While the EC expected to find a mutually satisfactory solution to the dispute with the US, it was concerned about recent pronouncements by the US Administration that there was no need to clarify that Section 211 did not apply in cases where the trademark had been abandoned by the original owner. He recalled that during the Panel proceedings, the US representatives gave assurances, which were accepted by the Panel, that Section 211 would not apply to a new trademark after a former trademark, to which the Section might have applied, had been abandoned. He further noted that the US Federal Courts had taken a contrary view and had applied Section 211 to trademarks succeeding abandoned trademarks. Given the uncertainty, it was imperative for any solution to this dispute to specifically address the issue of the abandonment of trademarks. Cuba urged the United States to bring its measures into conformity with the recommendations and rulings of the DSB within the reasonable period of time that it had agreed with the EC.

At the DSB meeting on 28 November 2002, the US submitted a status report indicating that the US Congress would convene early 2003 and that the US Administration would continue to engage the US Congress with a view to finding a solution to this dispute. The EC noted that the US status report was too brief and did not shed light on the steps being taken by the US to bring its measures into conformity with the recommendations and rulings of the DSB. The EC urged the US to stand by the affirmations it expressly made during the Panel proceedings and which were relied upon by the Panel. It was necessary for it to be clarified that Section 211 did not apply to a new trademark after a former trademark, to which Section 211 might have applied, had been abandoned. Cuba urged the US to bring its measures into conformity with the recommendations and rulings of the DSB within the reasonable period of time that it had agreed with the EC.

On 20 December 2002, the EC and the US informed the DSB that they had mutually agreed to modify the reasonable period of time for the US to implement the recommendations and rulings of the DSB, so as to expire on 30 June 2003. At the DSB meeting on 27 January 2003, the US submitted its status report and indicated that US Administration was intent on working with the new Congress in order to find a solution to this dispute. The EC indicated that, given the extension of the reasonable period, it expected that the US Administration would work diligently with the new Congress to bring its measures into conformity by the new deadline. Cuba strongly urged the US to implement the recommendations and rulings of the DSB within the reasonable period of time that it had agreed with the EC.

On 30 June 2003, the EC and the US informed the DSB that they had mutually agreed to modify the reasonable period of time for the US to implement the recommendations and rulings of the DSB, so as to expire on 31 December 2003.

At the DSB meeting on 2 October 2003, the US presented its status report noting that there is a bill pending in the US House of Representatives that would, among others, repeal Section 211. The US administration would continue to work with the US Congress with respect to appropriate statutory measures that would resolve this dispute. The EC welcomed the introduction of a bill in June 2003 in the US Congress that would, inter alia, repeal Section 211. The EC hoped that this repeal, which was part of a whole scheme of measures to ensure adequate protection of intellectual property rights, would offer a solution to this dispute to the benefit of all.

At the DSB meeting on 7 November 2003, the US said that the US administration would continue to work closely with the US Congress on appropriate statutory measures to resolve this dispute. The EC welcomed the introduction of the bill in the US Congress in June 2003. Cuba expressed concern about the lack of implementation by the US and urged it to promptly bring its measures into conformity with the recommendations and rulings of the DSB as soon as possible.

At the DSB meeting on 1 December 2003, the US repeated its previous status report. The EC noted that the deadline for implementation in this case would expire by the end of December 2003. Cuba reiterated it concern.

On 19 December 2003, the EC and the US informed the DSB that they had mutually agreed to modify the reasonable period of time for implementation of the DSB recommendations and rulings so as to expire on 31 December 2004. On 17 December 2004, the EC and the US informed the DSB that they had mutually agreed to modify the reasonable period of time for implementation of the DSB recommendations and rulings so as to expire on 30 June 2005.

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