Intellectual Property (PIL)
by Axel Metzger
1. Principle of territoriality; lex loci protectionis
The private international law of intellectual property answers the questions as to which law shall govern the coming into existence, the ownership, the scope and the infringement of copyright, patents (patent law), trade marks (trade mark law) and other intellectual property.
The current private international law principles in this field have their origins in the traditional system of territorially restricted intellectual property rights. Beginning in the 14th century, intellectual property rights were granted by emperors, kings or seigneurs as ‘privileges’ for a respective country’s territory. This was also the traditional approach for copyright before the idea of natural law, whereby copyright should not be subject to any act of state or formality, became prevalent on the Continent. Industrial property rights, like patents and trade marks, are typically still subject to an administrative act of a granting state. Against this background, private international law traditionally applies the law of the state of registration for registered rights—or more generally, the law of the state for which protection is sought—to all questions concerning the existence and scope of protection. This rule of conflict-of-laws is called the lex loci protectionis principle.
According to the predominant theory, the concept of territorially restricted intellectual property rights is also to be found in the main international conventions for the protection of intellectual property. It is true that the Paris Convention for the Protection of Industrial Property of 1883 (last revised 1967), the Berne Convention for the Protection of Literary and Artistic Works of 1886 (last revised 1971), and the treaties which followed were not aiming for a unification of conflicts rules, but instead for minimum standards of protection and the national treatment of authors and rightholders coming from other member states. However, the conventions refer on several occasions to the ‘law of the country where protection is claimed’, which should be interpreted as a reference to the law of the country for which protection is sought. Given the ambiguous drafting, it is not surprising that the interpretation of these provisions has remained controversial. According to some authors, the reference to the law of the country ‘where’ protection is claimed is to be understood as a reference to the lex fori, including the private international law rules of the forum. Regarding the fact that the author’s right may not be construed as a mere functional instrument of economic policy but as a natural entitlement of protection, both of economic and personal interests or moral rights, it is an oft-asserted claim that the private international law of copyright should abandon the territorial approach and recognize a universalist concept. Further arguments in favour of such an approach may be drawn from the reduced registration requirements in copyright law—which is one of the major achievements of the Berne Convention, see Art 5(2)—and the increasing practical problems associated with adherence to territoriality in light of the emergence of ubiquitous media and communication services on the internet. The interests of rightholders are hardly compatible with a strict territorial approach to copyright law.
2. Current trends in European private international law
Notwithstanding the above-mentioned conceptual and practical challenges, the territoriality principle has thus far prevailed as the key principle of the private international law of intellectual property in the European Union. In 2006, the European Court of Justice applied the lex loci protectionis principle in a cross-border broadcasting case and based its judgment on the ‘principle of the territoriality of those rights, which is recognised in international law and also in the EC Treaty’ (ECJ Case C-192/04 – Lagardère v SPRE  ECR I-7199 para 46).
One year later the European legislature adopted Reg 864/2007 on the Law Applicable to Non-Contractual Obligations (Rome II). According to Art 8(1) of Rome II, the law applicable to non-contractual obligations arising from an infringement of intellectual property shall be the law of the country for which protection is sought. Article 8(3) excludes freedom of choice in the field of intellectual property and therefore implements a rather strict conception of territoriality. Regarding Art 15 of Rome II on the scope of the law applicable, it is uncontroversial that the lex loci protectionis governs not only the consequences of infringement, including remedies, but also ‘the basis and extent of liability’ and ‘the grounds for exemption from liability’. This comprises the scope of protection of intellectual property rights, as well as the limitations and exceptions, eg duration, exhaustion of rights and fair dealing-provisions.
The recognition of Union-wide unitary intellectual property rights, especially Community trade marks and Community designs, does not run counter to the general trend to uphold a territorial approach. When it comes to Union intellectual property rights, the whole Union is the ‘country’ for which protection is sought. For the few issues not regulated at the Union level, Art 8(2) Rome II provides a conflicts rule which refers to the law of the country ‘in which the act of infringement was committed’. However, Art 8(2) is only applicable for questions not dealt with in the respective regulation, eg the Community trade mark regulation (Reg 207/2009).
Regarding the law applicable to contracts, Reg 593/2008 on the Law Applicable to Contractual Obligations (Rome I) was finally adopted without a special rule for licence contracts, even though the Commission’s proposal did contain such a rule. Therefore, in the absence of a choice by the parties, contractual obligations arising from contracts having a transfer or licence grant of an intellectual property right as their object are governed by the general rules of Art 4.
3. Specific conflict-of-laws rules
On closer examination, the applicable law in intellectual property cases cannot be determined in accordance with a single conflicts rule. Rather, a dépeçage of the different aspects of typical intellectual property disputes is necessary. For some aspects, provisions of European Union law prescribe European standards. For all other issues, the autonomous—often non-codified—rules of the private international law of Member States apply.
Regarding the existence of an intellectual property right for a given subject matter, it is uncontroversial that the law of the country for which protection is sought is applicable. The lex loci protectionis governs the requirements for protection and the question of whether registration or examination by the public authorities is necessary. For cases involving a number of jurisdictions, this approach may lead to the application of multiple laws (‘mosaic approach’).
It is also uncontroversial that the lex loci protectionis is applicable to determine the scope of protection afforded by an intellectual property right. The law of the country for which protection is sought governs the extent of the exclusive right, eg whether a patent holder may prohibit the mere use of a patented product. It is also decisive of the various limitations and exceptions provided for in many intellectual property statutes, eg private copying in copyright legislation, experimental use in patent law or the term of protection of intellectual property rights. This rule is laid down in Arts 8, 15(b) Rome II.
By contrast, initial ownership is treated differently in the private international law of European jurisdictions. Some jurisdictions apply the lex loci protectionis, eg Germany, Austria and Belgium, whereas others favour the law of the country of origin, eg France and Portugal. At first glance, the application of the lex originis may seem better suited to authors and media industries with an international public because it provides for the worldwide application of one national copyright law to the question of ownership. But practical experience has shown that courts are not willing to accept the consequences of the lex originis and apply their national copyright law—especially provisions on moral rights—as part of the public policy of the forum or as internationally mandatory rules. The territorial approach prevents these frictions. Moreover, policy arguments militate in favour of a territorial approach. The attribution of rights has repercussions in relation to incentives for, and the working conditions of those involved in, the creation of copyright-protected content. It makes a difference in the production of movies, music recordings etc whether the authors or the producers are the original rightholders. The application of the lex loci protectionis limits consequences of a state’s policy choices regarding ownership to the territory of the state in question.
Regarding contracts, the transferability of intellectual property rights has to be separated from the issues of contract law. Copyright, or single components of copyright, are treated as non-transferable in many continental jurisdictions adhering to the droit d’auteur tradition. Those jurisdictions following the lex originis regarding ownership typically follow the same approach for the transferability of intellectual property rights, whereas jurisdictions applying the lex loci protectionis to the issue of ownership typically follow a territorial approach to the issue of transferability. For all questions of contract law, eg formation and interpretation of contracts, remedies for non-performance, warranty and liability, the general principles of Rome I apply.
Determination of the law applicable to infringement and remedies has proved controversial in Europe and abroad for a considerable time. In the past, some jurisdictions applied the lex loci protectionis to the question as to whether intellectual property rights were infringed and what remedies should be granted to the right holder, eg Austria, Belgium, England, Germany, Italy and Switzerland, whereas other jurisdictions applied the lex loci delicti to determine remedies, eg France and Portugal. Although different from a doctrinal point of view, the practical outcome of these two approaches was largely the same because infringement of an intellectual property right arising from activities conducted outside the country of protection is hardly conceivable. The country in which the act of infringement is committed and the country of protection are conceptually the same in intellectual property cases. Therefore, the material difference between the two approaches related to the question of whether freedom of choice should be allowed for remedies, especially in case of multistate infringements. Some jurisdictions allowed for freedom of choice concerning non-contractual obligations in general and remedies for intellectual property infringements in particular, whereas other jurisdictions adhered to a strict interpretation of the territoriality principle and did not allow for any party autonomy. Today, at least in the European Union, this controversy must be seen in a different context. Article 8(1) of Rome II unequivocally determines that infringement and remedies in intellectual property cases are to be governed by the law of the country for which protection is sought. Article 8(3) excludes freedom of choice in the field of intellectual property.
Although a growing number of authors argue for deviations from the lex loci protectionis rule, at least for infringement cases on the internet, the courts have so far resisted—as far as can be observed in reported cases—any attempt to overcome the ‘mosaic approach’.
4. International development
No international conventions have thus far been concluded regarding the private international law of intellectual property. The World Intellectual Property Organization (WIPO) has, since the 1990s, presented the issue at several conferences and meetings. But these efforts have not yet resulted in more concrete drafts of an international instrument. Of chief interest for international trade mark conflict-of-laws is the 2001 Joint Recommendation of WIPO and the Paris Union Concerning the Protection of Marks, and Other Industrial Property Rights in Signs, on the Internet. The Recommendation’s rules are applicable on a substantive law level. Their main purpose is to solve disputes on the use of protected signs on the internet by way of uniform interpretation of the national or regional trade mark laws.
The future development may possibly be guided by several collections of soft law principles which have been published recently on the issue or are expected to be published soon. This is already apparent in the American Law Institute‘s (ALI) ‘Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes’ published in 2007. According to the ALI Principles, as a general rule the infringement of intellectual property rights is governed by the law of the country for which protection is sought. However, for cases of ‘ubiquitous’ infringement on the internet, the ALI Principles allow for the compilation of worldwide claims under one law. If the plaintiff and defendant are resident in different states, the rightholder may plead the whole case under the law of his state of residence if he has made the main investments in that state. Taking into account the dominant position of US media and technology industries in many fields, the ALI Principles will allow US companies to routinely plead worldwide cases under US copyright or patent law. The ‘Principles for Conflict of Laws in Intellectual Property’ prepared by the Max Planck Group for Conflict of Laws in Intellectual Property (CLIP) in Europe, which have been published recently in a final draft version, also provide for special rules on ubiquitous infringement but primarily refer to the law of the defendant’s habitual residence. The final version of the CLIP Principles is expected to be published in 2012.
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