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IP and Applicable Law in Recent International Proposals

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IP and Applicable Law in Recent International Proposals IP and Applicable Law in Recent International Proposals IP and Applicable Law in Recent International Proposals: Report for the International Law Association by Rita Matulionytė, Vilnius, Dr. iur. (Munich and Freiburg), LL.M. IP (Munich), deputy director at the Law Institute of Lithuania Abstract: The report compares applicable law against particular solutions suggested in the propos- rules to intellectual property (IP) disputes as pro- als. This report was presented in the 1st meeting of posed in the recent international projects(ALI, CLIP, the Committee on Intellectual Property and Private Transparency, Kopila and Joint Japanese-Korean pro- International Law of the International Law Associa- posals). Namely, it identifies the differences among tion (15-17 March 2012, Lisbon) and is expected to proposals, reveals the underlying reasons of differ- contribute to the merge of current international pro- ing rules, looks at how particular issues have been posals into a single international initiative. until now solved at international and national levels, and finally, overviews the main arguments for and Keywords: Intellectual property, applicable law, conflict of laws, lex loci protectionis, lex originis, initial ownership, ubiquitous infringement, party autonomy © 2012 Rita Matulionytė Everybody may disseminate this article by electronic means and make it available for download under the terms and conditions of the Digital Peer Publishing Licence (DPPL). A copy of the license text may be obtained at http://nbn-resolving. de/urn:nbn:de:0009-dppl-v3-en8. This article may also be used under the Creative Commons Attribution-Share Alike 3.0 Unported License, available at h t t p : // creativecommons.org/licenses/by-sa/3.0/. Recommended citation: Rita Matulionytė, IP and Applicable Law in Recent International Proposals: Report for the International Law Association 3 (2012) JIPITEC 3, 263. A. Introduction G. Party autonomy B. Main rule H. De minimis rule C. Initial ownership I. Ubiquitous infringement D. Transferability J. Secondary infringements E. Contracts K. Summary F. Security rights A. Introduction tional Law Association of Korea and Japanese Waseda University Global COE Project (Joint JK).5 1 During the last years several proposals dealing with private international law (PIL) and intellectual prop- 2 The goal of this study is to compare the abovemen- erty (IP) have been made public, namely the Princi- tioned projects in order to facilitate their merge into ples by American Law Institute (ALI),1 proposal by a single international proposal. The current report the European Max Planck Group on Conflict of Laws focuses on applicable law rules to IP. It consists of in Intellectual Property (CLIP),2 Japanese “Trans- eight chapters covering the most important issues of parency” proposal,3 Principles by Korean Private applicable law, namely, (1) the main applicable law International Law Association (KOPILA)4 and Joint rule (lex loci protectionis); (2) initial ownership and (3) Proposal drafted by Members of the Private Interna- transferability issues; (4) the rules to IP contracts; 3 263 2012 Rita Matulionytė (5) party autonomy in infringement cases; (6) the de 6 Further, although all proposals seem to suggest very minimis provision; and the rules for (7) ubiquitous similar (if not identical) applicable law rules, their infringements as well (8) secondary infringements. formulations slightly differ. Some proposals distin- guish between registered and unregistered rights: 3 Each issue is discussed from four aspects. First, the the former is subject to the law of the “state of reg- rules in all proposals are compared by highlighting istration” whereas the latter is governed by the law their differences. Second, the rationale underlying of the “state for which protection is sought”6 (sec. the different provisions is outlined. When possi- 301(1) ALI, art. 19 Kopila and art. 301 Joint JK). Dif- ble, it is taken from written comments by the draft- ferently, the CLIP Proposal subjects all IP rights to ers or from individual consultations. In other cases, the law of the state “for which protection is sought.” the underlying reasons of particular solutions are Similarly, Transparency proposal subjects all rights searched for in the legal practice of relevant ju- (at least as far as issues related to a right as such are risdictions. Third, the international legal situation concerned) to the same rule; however, it is formu- is overviewed in order to see where the proposals lated in a unique way. It refers to the law of the state stand in the context of current legal practice in dif- “which grants the protection” (art. 305 Transpar- ferent countries. Fourth, the main arguments for and ency). This is meant to avoid the ambiguity of the against the suggested rules are summarized, mostly notion “lex loci protectionis” and cover both the lex as they are discussed in legal doctrine or, if no sig- loci protectionis and the state of registration rules.7 nificant discussion has been identified, from the per- spective of the author. More attention is devoted to 7 Different terminology is used for the above described the issues on which the proposals differ (e.g. initial rules. The CLIP Proposal uses “lex loci protectionis” ownership, secondary infringement), whereas some when referring to the “law of the country for which highly controversial issues are less analyzed if the protection is sought.” Joint JK Proposal covers under proposals suggest similar rules (e.g. ubiquitous in- “lex loci protectionis” both the country “for which pro- fringement rule, transferability issue). tection is sought” (as in CLIP) as well as the country of registration.8 The latter two rules are called “ter- ritoriality” in the ALI Proposal.9 Also, although ALI GENERAL RULES subjects unregistered rights to the law of the state “for which protection is sought” (like CLIP), in its comments ALI group refers to “affected market” as B. Main rule a usual point of attachment when the law of the pro- tecting country is applied.10 In this way, the ALI ap- Sec. 301 ALI; arts. 3:102, 3:601, 3:701 CLIP; art. 19 Kopila; art. proach comes closer to the “place of the results of 301 Transparency; art. 301 Joint JK. exploitation” rule as found in the Transparency pro- posal. It is most likely that these differences in ter- 4 All proposals, as a general matter, maintain the ter- minology would have no significant effects in prac- ritorial approach and suggest very similar applicable tice. The agreement on the common definition of law rules to IP disputes. It could be generally called such basic concepts as “lex loci protectionis” or “ter- “lex loci protectionis.” Some exceptions to this ap- ritoriality” is, however, important. proach and other differences still remain. II. Rationale I. Differences 8 The reasons for the market impact rule and a loos- 5 First, although Transparency proposal, similar like ened approach towards territoriality, as adopted in other proposals, follows the territorial approach the Transparency proposal, can be traced in the Jap- in regard to most issues, it suggests a loosened ap- anese court practice. The Japanese Supreme Court proach to territoriality with respect to IP infringe- formulated a strict approach to territoriality in the ment. The latter is subjected to the law of the place BBS case 11 and reiterated it in the Card Reader case.12 of the results of exploitation (or a “market impact” In the latter case, the defendant situated in Japan rule) (art. 301 Transparency). It deviates from the was producing the items covered by the U.S. patent strict territorial approach, which stipulates that the with the purpose of distributing them in the USA state law governs only the conduct occurring in that (the item was not patented in Japan). The court de- state. Rather, according to the market impact rule, fined territoriality in a strict way: “the principle the law of a particular state A will govern conduct of territoriality in relation to patent rights means occurring in state B if that conduct has (real or po- that a patent right registered with each country is tential) effects in the state A; and vice versa, the law to be governed by the laws of the relevant coun- of the state B will not be applied to the conduct oc- try with regard to issuance, transfer, validity and curring in its own territory if that conduct does not the like thereof and such patent right can come into have market effects there. force only within the territory of the relevant coun- 3 264 2012 IP and Applicable Law in Recent International Proposals try.” Accordingly, it rejected the application of the sal approach (e.g. Portugal, Romania and Greece).20 U.S. law in respect of conduct (production) occur- Even between countries that adhere to the territo- ring in Japan since no patent was granted in Japan. rial approach there is no unitary notion of it. Some The court argued that the application of the U.S. law countries stick to a traditionally very strict territo- would impinge the territoriality principle of IP rights riality principle which does not allow courts to adju- and would thus violate the public policy of Japan.13 dicate disputes over foreign IP rights. Because of this Such a strict territoriality approach, however, was (and other) reasons courts would adjudicate only dis- met controversially by legal scholars. For instance, putes over local IP rights and simply apply lex forum some argued that the court had run into confusion (thus, no applicable law rules are needed).21 Others between different concepts of the territoriality prin- have since recognized that the territoriality princi- ciple in private international and public law.14 Keep- ple does not preclude international jurisdiction in at ing this in mind, the drafters of the Transparency least disputes over foreign copyrights.22 proposal have suggested the market effect rule as an alternative solution.15 12 Countries that allow the adjudication of foreign IP disputes, often apply lex loci protectionis rule.
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