Improving Intellectual Property: A Global Project 1035310856, 9781035310852

Table of contents :
Front Matter
Copyright
Contents
Contributors
Preface
Rochelle Dreyfuss: Teacher, builder, scholar, friend
Acknowledgements
List of common citations
List of common abbreviations
1. Introduction
PART I ADDRESSING BOUNDARIES AND IMBALANCE
2. Prioritizing intellectual property’s freedom to operate
3. Are negative spaces likely to be fragile?
4. The Marrakesh Treaty: Using the tools of intellectual property law to advance human rights
PART II PUBLIC HEALTH, PANDEMICS AND CRISES
5. Winning and losing pairings in access to medicines: A practical guide
6. COVID crisis underscores IP imbalance
7. Using compulsory licences as a governance tool: The need for greater effectiveness and policy coherence
8. Food security, food crisis and boundaries to intellectual property
PART III PATENT CHALLENGES
9. The case for a liability rule to stimulate investment in sub-patentable innovation
10. How do we protect biomedical research in the evolving intellectual property environment?
11. The validity of patent royalties after patent expiration: from the viewpoint of Japanese private international law
12. ‘Tool Time’: The continuing relevance of compulsory licensing as a patent policy tool
13. US patent reform 2.0: Simplifying first-inventor-to-file novelty
PART IV DISPUTE SETTLEMENT AND COURT SPECIALIZATION
14. The Federal Circuit’s reach as a specialized court beyond patent law
15. Specialization everywhere: Increasing adjudicator specialization in the patent litigation ecosystem
16. The Unified Patent Court: A new patent troll haven
17. Transnational judicial competition in intellectual property law
18. Navigating public, private, national, and global: International commercial arbitration of patent disputes
PART V AUTHORS AND INVENTORS
19. Authors’ copyright (?)
20. Authors’ moral rights in the Berne Convention
21. AI machines as inventors: The role of human agency in patent law
22. Artificial inventors
PART VI EXPRESSIVE GENERICITY AND FREEDOMS
23. Patent exhaustion as a canon of expressive freedom
24. Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss
25. The sensibility of ‘expressive genericity’ and the rise (and potential fall) of in American trademark law
26. Trademarks as language in the 21st century
27. Do trademarks assist global fabless manufacturing?
PART VII INFORMATION/DATA AND CONFIDENTIALITY/PUBLICITY
28. Information law pioneer
29. The right of publicity as civic communication
30. Governing valuable confidential data in the EU: Transparency as fairness
31. FAIR, FRAND and open - The institutionalization of research data sharing under the EU data strategy
32. A shifting paradigm of regulatory data transparency in Europe: How to reconcile the irreconcilable
PART VIII NON-DISCRIMINATION ISSUES
33. Remuneration rights and national treatment
34. The limits of national treatment
35. Discriminatory non-discrimination
36. Non-discrimination as to the field of commerce as a norm of international trade mark law
PART IX MAKING INTERNATIONAL IP AND INVESTMENT LAW
37. Proceduralism is not fetishism - International intellectual property lawmaking and global administrative law
38. Early findings on the economic impacts of intellectual property-related trade agreements
39. The changing chemistry between intellectual property and investment law
40. Investment treaties and public health: Time to rethink the strategy?
41. Excluding intellectual property from bilateral trade and investment agreements: A lesson from the global health crisis
PART X INSTITUTIONS AND POLITICAL DRIVERS
42. Justifying the public law of patents
43. WIPO alert - A reason to be alerted?
44. A scholarly look at international IP - Idealistic and pragmatic
45. IP in an era of new mercantilism
46. Toward pluralism in United States intellectual property
47. Does IP improve the world?
Index

Citation preview

Improving Intellectual Property

For Rochelle Dreyfuss

Improving Intellectual Property A Global Project Edited by Susy Frankel FRSNZ, Professor of Law and Chair in Intellectual Property and International Trade, Te Herenga Waka, Victoria University of Wellington, New Zealand

Margaret Chon Donald and Lynda Horowitz Endowed Chair for the Pursuit of Justice, Seattle University School of Law, USA

Graeme B. Dinwoodie Global Professor of Intellectual Property Law and Distinguished University Professor, IIT Chicago-Kent College of Law, USA

Barbara Lauriat Visiting Associate Professor and Frank H. Marks Intellectual Property Fellow, George Washington University Law School, USA

Jens Schovsbo Professor of Law, University of Copenhagen, Denmark

Cheltenham, UK • Northampton, MA, USA

© The Editors and Contributors Severally 2023 Cover image: FLY:D on Unsplash. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2023930355 This book is available electronically in the Law subject collection http://dx.doi.org/10.4337/9781035310869

ISBN 978 1 0353 1085 2 (cased) ISBN 978 1 0353 1086 9 (eBook)

EEP BoX

Contents List of contributorsx Prefacexv Rochelle Dreyfuss: Teacher, builder, scholar, friendxvi Harry First Acknowledgementsxx List of common citationsxxi List of common abbreviationsxxii 1 Introduction Graeme B. Dinwoodie and Susy Frankel PART I

ADDRESSING BOUNDARIES AND IMBALANCE

2

Prioritizing intellectual property’s freedom to operate Margaret Chon

3

Are negative spaces likely to be fragile? Christopher Jon Sprigman

4

The Marrakesh Treaty: Using the tools of intellectual property law to advance human rights Laurence R. Helfer

PART II

1

7 18

28

PUBLIC HEALTH, PANDEMICS AND CRISES

5

Winning and losing pairings in access to medicines: A practical guide Peter Drahos

6

COVID crisis underscores IP imbalance Cynthia M. Ho

7

Using compulsory licences as a governance tool: The need for greater effectiveness and policy coherence Duncan Matthews, Esther van Zimmeren and Timo Minssen

v

39 50

61

vi

8

Improving intellectual property

Food security, food crisis and boundaries to intellectual property Geertrui Van Overwalle

75

PART III PATENT CHALLENGES 9

The case for a liability rule to stimulate investment in sub-patentable innovation Jerome H. Reichman and Ana Santos Rutschman

88

10

How do we protect biomedical research in the evolving intellectual property environment? Dianne Nicol and Jane Nielsen

95

11

The validity of patent royalties after patent expiration: Brulotte/Kimble from the viewpoint of Japanese private international law Toshiyuki Kono

12

‘Tool Time’: The continuing relevance of compulsory licensing as a patent policy tool Margo A. Bagley

13

US patent reform 2.0: Simplifying first-inventor-to-file novelty Toshiko Takenaka

106

116 126

PART IV DISPUTE SETTLEMENT AND COURT SPECIALIZATION 14

The Federal Circuit’s reach as a specialized court beyond patent law Jeanne C. Fromer

138

15

Specialization everywhere: Increasing adjudicator specialization in the patent litigation ecosystem Sarah R. Wasserman Rajec and Melissa F. Wasserman

149

16

The Unified Patent Court: A new patent troll haven Thomas Riis

159

17

Transnational judicial competition in intellectual property law Marketa Trimble

170

18

Navigating public, private, national, and global: International commercial arbitration of patent disputes Barbara Lauriat

180

Contents

PART V

vii

AUTHORS AND INVENTORS

19

Authors’ copyright (?) Jane C. Ginsburg

191

20

Authors’ moral rights in the Berne Convention Gustavo Ghidini and Laura Moscati

204

21

AI machines as inventors: The role of human agency in patent law 214 Brad Sherman

22

Artificial inventors Daniel Gervais

224

PART VI EXPRESSIVE GENERICITY AND FREEDOMS 23

Patent exhaustion as a canon of expressive freedom Dan L. Burk

235

24

Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss Martin Senftleben

246

25

The sensibility of ‘expressive genericity’ and the rise (and potential fall) of Rogers v. Grimaldi in American trademark law Barton Beebe

258

26

Trademarks as language in the 21st century David Tan

266

27

Do trademarks assist global fabless manufacturing? Stephen Petrie, Trevor Kollmann, Russell Thomson, Alexandru Codoreanu and Elizabeth Webster

277

PART VII INFORMATION/DATA AND CONFIDENTIALITY/PUBLICITY 28

Information law pioneer Sharon K. Sandeen

290

29

The right of publicity as civic communication Megan Richardson

300

30

Governing valuable confidential data in the EU: Transparency as fairness Nari Lee

309

viii

Improving intellectual property

31

FAIR, FRAND and open – The institutionalization of research data sharing under the EU data strategy Mireille van Eechoud

319

32

A shifting paradigm of regulatory data transparency in Europe: How to reconcile the irreconcilable Żaneta Zemła-Pacud

330

PART VIII NON-DISCRIMINATION ISSUES 33

Remuneration rights and national treatment P. Bernt Hugenholtz

341

34

The limits of national treatment Annette Kur

353

35

Discriminatory non-discrimination Susy Frankel

363

36

Non-discrimination as to the field of commerce as a norm of international trade mark law Lionel Bently

373

PART IX MAKING INTERNATIONAL IP AND INVESTMENT LAW 37

Proceduralism is not fetishism – International intellectual property lawmaking and global administrative law Orit Fischman Afori

385

38

Early findings on the economic impacts of intellectual property-related trade agreements Keith E. Maskus and William Ridley

396

39

The changing chemistry between intellectual property and investment law Peter K. Yu

405

40

Investment treaties and public health: Time to rethink the strategy?416 Dhanay Cadillo Chandler

41

Excluding intellectual property from bilateral trade and investment agreements: A lesson from the global health crisis Christophe Geiger

426

Contents

PART X

ix

INSTITUTIONS AND POLITICAL DRIVERS

42

Justifying the public law of patents Kali Murray

437

43

WIPO alert – A reason to be alerted? Alexander Peukert

448

44

A scholarly look at international IP – Idealistic and pragmatic Justin Hughes and Ruth L. Okediji

460

45

IP in an era of new mercantilism Daniel Benoliel

473

46

Toward pluralism in United States intellectual property Michael J. Burstein

484

47

Does IP improve the world? Henning Grosse Ruse-Khan

492

Index503

Contributors Orit Fischman Afori, Law Professor at Haim Stricks Faculty of Law, College of Management, Israel Margo A. Bagley, Asa Griggs Candler Professor of Law, Emory University School of Law, USA Barton Beebe, John M. Desmarais Professor of Intellectual Property Law, New York University School of Law, USA Daniel Benoliel, Professor of Law, University of Haifa Faculty of Law, Mount Carmel, Haifa 31905, Israel Lionel Bently, Herchel Smith Professor of Intellectual Property Law, Faculty of Law, University of Cambridge, UK Dan L. Burk, Chancellor’s Professor of Law, University of California, Irvine, USA Michael J. Burstein, Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University, USA Dhanay Cadillo Chandler, Faculty of Law, University of Turku; and Senior researcher, Hanken School of Economics, Finland Margaret Chon, Donald and Lynda Horowitz Professor for the Pursuit of Justice, Seattle University School of Law, USA Alexandru Codoreanu, Data Scientist, Centre for Transformative Innovation, Swinburne University of Technology, Australia Graeme B. Dinwoodie, Global Professor of Intellectual Property Law and Distinguished Professor of Law, IIT Chicago-Kent College of Law, USA Peter Drahos, Professor of Law and Governance, Law Department, European University Institute; Chair of Intellectual Property, Queen Mary, University of London, UK Susy Frankel, FRSNZ, Chair in Intellectual Property and International Trade and Professor of Law, Te Herenga Waka, Victoria University of Wellington, New Zealand x

Contributors

xi

Jeanne C. Fromer, Walter J. Derenberg Professor of Intellectual Property Law, New York University School of Law, USA Christophe Geiger, Professor of Law, Luiss Guido Carli University, Rome, Italy Daniel Gervais, Milton R Underwood Chair in Law, Vanderbilt University Law School, USA Gustavo Ghidini, Emeritus, University of Milan, Italy; Senior Professor of Intellectual Property and Competition Law, Department of Law, Luiss University, Rome, Italy Jane C. Ginsburg, Morton L. Janklow Professor of Literary and Artistic Property Law, School of Law, Columbia University, USA Laurence R. Helfer, Harry R. Chadwick, Sr. Professor, Duke University School of Law, USA Cynthia M. Ho, Clifford E. Vickrey Research Professor, Loyola University of Chicago School of Law, USA P. Bernt Hugenholtz, Emeritus Professor of Intellectual Property Law, Institute for Information Law (IViR), Amsterdam Law School, University of Amsterdam, The Netherlands Justin Hughes, Hon. William Matthew Byrne Jr. Distinguished Professor of Law, Loyola Marymount University, USA Trevor Kollmann, Research Fellow in Economics, Centre for Transformative Innovation, Swinburne University of Technology, Australia Toshiyuki Kono, Distinguished Professor, Graduate School of Law, Kyushu University, Japan Annette Kur, Professor (retired), Max-Planck-Institute for Innovation and Competition, Munich, Germany Barbara Lauriat, Visiting Associate Professor and Frank H. Marks Intellectual Property Fellow, George Washington University Law School, USA Nari Lee, Professor of Intellectual Property Law, Dept of Accounting and Commercial Law, Hanken School of Economics, Finland Keith E. Maskus, Arts and Sciences Professor, Department of Economics, University of Colorado Boulder, USA Duncan Matthews, Professor of Intellectual Property Law, Queen Mary

xii

Improving intellectual property

Intellectual Property Research Institute (QMIPRI), Centre for Commercial Law Studies, Queen Mary University of London, UK Timo Minssen, Professor of Biotechnology Law, Center for Advanced Studies in Biomedical Innovation Law (CeBIL), Faculty of Law, University of Copenhagen, Denmark Laura Moscati, Full Professor of History of European Law, Faculty of Law, Sapienza University of Rome, Italy Kali Murray, Professor of Law, Marquette University Law School, Marquette University, USA Dianne Nicol, Distinguished Professor Emerita of Law, College of Arts Law and Education, University of Tasmania, Australia Jane Nielsen, Associate Professor of Law, College of Arts Law and Education, University of Tasmania Ruth L. Okediji, Jeremiah Smith, Jr. Professor of Law, Harvard Law School, USA Stephen Petrie, Data Scientist, Centre for Transformative Innovation, Swinburne University of Technology, Australia Alexander Peukert, Professor of Civil and Commercial Law, Faculty of Law, Goethe University Frankfurt am Main, Germany Sarah R. Wasserman Rajec, Professor of Law, William & Mary Law School, USA Jerome H. Reichman, Bunyan S. Womble Emeritus Professor of Law, Duke Law School, USA Megan Richardson, Professor of Law, Melbourne Law School, The University of Melbourne, and Chief Investigator, ARC Centre for Excellence for Automated Decision-Making and Society, Australia William Ridley, Assistant Professor, Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign, USA Thomas Riis, Professor of Innovation Law and Law & Economics, Centre for Information and Innovation Law, Faculty of Law, University of Copenhagen, Denmark Henning Grosse Ruse-Khan, Professor of International and European Intellectual Property Law, University of Cambridge, UK

Contributors

xiii

Ana Santos Rutschman, Professor of Law, Charles Widger School of Law, Villanova University, USA Sharon K. Sandeen, Professor of Law, Mitchell Hamline School of Law, USA Jens Schovsbo, Professor of Law, University of Copenhagen, Denmark Martin Senftleben, Professor of Intellectual Property Law, Institute for Information Law (IViR), Amsterdam Law School, University of Amsterdam, The Netherlands Brad Sherman, ARC Laurette Fellow, Law School, University of Queensland, Australia Christopher Jon Sprigman, Murray and Kathleen Bring Professor of Law, New York University School of Law, and Co-Director, Engelberg Center on Innovation Law and Policy, USA Toshiko Takenaka, Washington Research Foundation/W Hunter Simpson Professor of Technology Law, University of Washington School of Law, USA; Visiting Professor, Keio University Law School, Japan David Tan, Professor of Law, National University of Singapore, Singapore Russell Thomson, Associate Professor of Economics, Centre for Transformative Innovation, Swinburne University of Technology, Australia Marketa Trimble, Samuel S. Lionel Professor of Intellectual Property Law, William S. Boyd School of Law, University of Nevada, Las Vegas, USA Mireille van Eechoud, Professor of Information Law, Institute for Information Law (IViR), Amsterdam Law School, University of Amsterdam, The Netherlands Geertrui Van Overwalle, Professor, Centre for IT and IP Law (CiTiP), School of Law, University of Leuven, Belgium Esther van Zimmeren, Professor of Intellectual Property Law & Governance, Research Group Government & Law, Faculty of Law, GOVTRUST Centre of Excellence, University of Antwerp, Belgium Melissa F. Wasserman, Charles Tilford McCormick Professor of Law, Associate Dean for Research, University of Texas School of Law, USA Elizabeth Webster, Professor of Economics, Centre for Transformative Innovation, Swinburne University of Technology, Australia

xiv

Improving intellectual property

Peter K. Yu, Regents Professor of Law and Communication and Director, Center for Law and Intellectual Property, Texas A&M University, USA Żaneta Zemła-Pacud, Assistant Professor in the Institute of Law Studies, Polish Academy of Sciences, Poland

Preface This book honours Professor Rochelle Cooper Dreyfuss’ scholarship. But that was only part of the motivation for those who contributed as editors or authors. Rochelle has often brought together scholars to discuss how intellectual property could be improved. Her efforts have enriched many of us in the classroom and at events and lectures around the world. She has tirelessly commented on presentations and draft writings and has enthusiastically propelled many of us to improve our arguments, to tighten our reasoning and above all to enjoy the intellectual debate. In short, she is the exemplar of a generous and generative scholar. Among her many contributions, Rochelle has been an enthusiastic member of ATRIP (the International Association for the Advancement of Teaching and Research in Intellectual Property) where she has been central to international debates among intellectual property scholars and a mentor to early career academics. As a global organization with 400+ members, ATRIP’s annual Congresses bring together senior and junior academics from all over the world to present and discuss the topics of the day. Rochelle has been a fixture at ATRIP’s Congresses. She has spoken about a broad variety of topics such as public health, investor-state dispute settlement, technological inequality, and Brexit and intellectual property. To many ATRIP Members, the opportunity of listening to and engaging with Rochelle is a large part of the reason to travel half-way across the world to an ATRIP Congress. ATRIP is honoured that Rochelle joined the Executive Committee in 2022 and will thus take an active part in the leadership of ATRIP in the coming years. We dedicate this book to Professor Rochelle Cooper Dreyfuss in honour of her extensive and multifaceted career and the more to come. Susy Frankel, Margaret Chon, Graeme B. Dinwoodie, Barbara Lauriat and Jens Schvosbo

xv

Rochelle Dreyfuss: Teacher, builder, scholar, friend Harry First1 Rochelle Dreyfuss has many attributes. The four I want to single out—teacher, builder, scholar, friend—are connected mainly to her professional life and to NYU law school, where she has spent nearly her entire legal career. I chose these attributes because all of them are important for understanding Rochelle’s full professional contribution and because some of them are easy to overlook in a volume dedicated to her scholarship.

TEACHER You might think that the main beneficiaries of Rochelle’s teaching have been her students. You would be right, of course, but I view this more selfishly. I think that the main beneficiary of Rochelle’s teaching has been me. I teach antitrust and competition policy. I don’t hold myself out as an intellectual property expert or scholar, although I have written several articles about the intersection of antitrust and intellectual property law and how to deal with the competition problems that intellectual property law can raise. How did I learn enough intellectual property law to write these articles? I co-taught with Rochelle. Not that I learned everything about IP from Rochelle; our esteemed colleague, Diane Zimmerman, supplied much of the copyright component, particularly in the early years of our time on the faculty. Rochelle’s background in science and her interest in patents, though, was further from things that I knew ‘easily’, so I listened and learned. Rochelle is both the consummate teacher and co-teacher. She knows how to raise issues without cutting off questions and how to convey information when that is necessary. She provided her students with the conceptual framework for intellectual property law and with a consistent focus: what will be the effect on innovation? And she was always great to teach with.



1

Charles L. Denison Professor of Law, NYU School of Law xvi

Rochelle Dreyfuss

xvii

Our teaching partnership began in a predictable place, a seminar on antitrust and intellectual property, but in 1997 the focus broadened. Under Rochelle’s leadership, the law school began one of the early efforts to bring outside scholars to the law school to discuss their current scholarship, around the table with students and interested local academics and lawyers. This was the ‘Colloquium on Innovation Policy.’ The focus of the first iteration, jointly taught by Rochelle, Diane, and me, was no less than the ‘core issues relating to innovation: What is innovation and why do we want it? What are the incentive structures for innovation and how do various legal regimes affect these incentive structures?’ We had 14 speakers, one each week (a crazy number!) from around the country, and then built out the Colloquium to a meeting in Italy the following year, followed by a volume of articles based on the papers given at that event. And then we did it a second time, with a volume of articles based on papers given at a later Colloquium and meeting. This really is the model not just for scholarship, but for teaching in a way that affects students and advances a field. The last time Rochelle and I taught the Colloquium we focused on ‘intellectual property crime’. Our goal was ‘to explore the extent to which the criminal law is or should be used to protect against the non-consensual appropriation of information’. This involved ‘thinking about the nature of intellectual property rights, the effects of criminalization on incentives to innovate and access to knowledge, and the costs and benefits of using the institutions of criminal enforcement’. This version of the Colloquium subsequently led to a jointly taught seminar (without outside speakers) and to a draft casebook that will bring our teaching to students outside of NYU. In our intellectual property crime efforts, perhaps even more so than in other courses, Rochelle’s intellectual property perspective and her concern for the effects of legal rules on innovation has proved extremely valuable to her students and to me. Criminal law is, in a sense, even less well-connected to intellectual property goals; Rochelle offered constant reminders that its application could have decidedly perverse effects if our goal is innovation. I have internalized her teaching and I think our students did as well.

BUILDER The Colloquium on Innovation Policy ties into the three institutional pillars of intellectual property law that Rochelle has built at NYU law school. The first pillar is our intellectual property faculty; the second, our graduate LL.M. program; and the third, the Engelberg Center. I start with the faculty. Rochelle has built by inclusion, not exclusion. She recognized that intellectual property law was a growth area and pushed our colleagues on the faculty to hire more intellectual property teachers so

xviii

Improving intellectual property

that the law school could be an internationally recognized centre for the study of intellectual property. This included an international law dimension, bringing in Hauser Global Professors from around the world, an area that recognized Rochelle’s own scholarship in international procedure, treaties, and organizations. The second pillar of NYU’s program is the LL.M. Originally titled the LL.M. in ‘Trade Regulation’ and subsequently renamed as the ‘Competition, Innovation, and Information Law LL.M. Program,’ the Program has recognized the intertwined areas of intellectual property and competition law. Its goal has been to train students in both areas, on the theory that future lawyers and scholars will need some purchase on both if they are to advise clients and forge a legal system that will advance innovation. For many years, Rochelle and I served as Co-Directors of the Program, convincing students from around the world to come and study at NYU and helping them through what could be a very difficult year for them. Of course, it was Rochelle who gave them invaluable advice not just on IP courses, but on how to study at a US law school. The third pillar is the Engelberg Center. The Center began in 1994 with a grant from Alfred Engelberg, a storied patent lawyer with a vision of a Center that would advance public policy not the goals of any specific group of patent holders. Rochelle was the first director of the Center and worked closely with Al to set the Center on the broad scholarly and policy path that it continues to follow today. To say that Rochelle and Al each had their own strong ideas about the Center’s activities would be an understatement, but their work built something that has grown and lasted. The Colloquium that the Center supported continues to be the crown jewel of the IP Program and the LL.M. Program. The Center’s other scholarly efforts continue to be impressive, its leadership in IP critical, and its ability to attract and nurture the future scholars in the area vital. The three pillars on which the IP Program at NYU rests are not physical, but they are the intellectual infrastructure for this law school. It’s the house that Rochelle built.

SCHOLAR This volume is testament to Rochelle’s scholarly impact. Article by article, book by book, Rochelle has shaped intellectual property law. Friends and colleagues from around the world have benefitted from the work that she has done.

Rochelle Dreyfuss

xix

FRIEND I met Rochelle when we recruited her to join our faculty. Since that time we have not only been professional colleagues, but we have also become friends. The my-daughter-will-babysit-your-daughter kind of friends; the attend-each-other’s-simchas kind of friends; the do-things-with-spouses kind of friends. I know that many of the contributors to this volume see Rochelle as a friend as well. I am sure that they are as grateful as I am for that friendship. These four attributes don’t describe everything about Rochelle Dreyfuss, of course. Nor do they sum up the (how many?) years that I have known Rochelle. What’s even better, they only describe her work and our relationship up to now. There is plenty more to come, I have no doubt.

Acknowledgements We, the editors, thank Temitope Kuti, doctoral candidate, Faculty of Law, Te Herenga Waka Victoria University of Wellington and Myranda Buiquy, J.D. candidate, Seattle University School of Law, Class of 2023 for their outstanding research assistance.

xx

List of common citations Berne Convention – Berne Convention for the Protection of Literary and Artistic Works (signed 9 September 1886, entered into force 5 December 1887) 1161 UNTS 31 Doha Declaration – World Trade Organization, Ministerial Declaration on the TRIPS Agreement and Public Health of 14 November 2001, WTO Doc. WT/MIN(01)/DEC/1, 41 ILM 746 (2002) European Patent Convention/EPC – Convention on the Grant of European Patents (adopted 5 October 1973, entered into force 7 October 1977) 1065 UNTS 199 OJ L – Official Journal of the European Union Paris Convention – Paris Convention for the Protection of Industrial Property (signed 20 March 1883, entered into force 7 July 1884) 828 UNTS 305 Rome Convention – International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (signed 26 October 1961, entered into force 18 May 1964) 496 UNTS 43 TRIPS Agreement or TRIPS – Agreement on Trade-Related Aspects of Intellectual Property Rights Marrakesh Agreement Establishing the World Trade Organization, Annex 1C (signed 15 April 1994, entered into force 1 January 1995) 1869 UNTS 299 UPOV – International Convention for the Protection of New Varieties of Plants (adopted 2 December 1961, entered into force 10 August 1968) 815 UNTS 89 WPPT – WIPO Performances and Phonograms Treaty (adopted on 20 December 1996, entered into force 20 May 2002) 2186 UNTS 203

xxi

List of common abbreviations AI BITs CJEU DSB DSU EPC EPO EU FDI FRAND FTAs GATS GATT IIAs IP IPRs ISDS OECD R&D UK US USPTO WHO WIPO WTO

Artificial Intelligence Bilateral Investments Agreements Court of Justice of the European Union Dispute Settlement Body Dispute Settlement Understanding European Patent Convention European Patent Office European Union Foreign Direct Investment Fair, Reasonable and Non-Discriminatory terms Free Trade Agreements General Agreement on Trade in Services General Agreement on Tariffs and Trade International Investment Agreements Intellectual Property Intellectual Property Rights Investor State Dispute Settlement Organisation for Economic Co-operation and Development Research and Development United Kingdom United States (adj.) United States Patent and Trademark Office World Health Organization World Intellectual Property Organization World Trade Organization

xxii

1. Introduction Graeme B. Dinwoodie and Susy Frankel In the current technological, social and political climate, improving intellectual property law is almost inevitably a ‘global project’. Intangible goods cross borders with ease, free trade deals and the internet have facilitated the creation of transnational markets, and technological advance has made it easier to exploit and to copy intellectual content. This book, through its range of both authors and topics alone, demonstrates the global nature of our endeavour. Scholars and policymakers disagree widely as to the changes in law, institutions, and governance mechanisms that would improve intellectual property law. Even at the national level, improving intellectual property is of itself a hugely contentious and difficult endeavour. And many of the chapters in this volume address the question at the national level, albeit with regard to many different nations and from a wide variety of perspectives But what does it mean to improve intellectual property ‘globally’? As an initial matter, even a reform initiative grounded in a national problem or proposed national solution can contribute to such a global project. The growing worldwide network of scholars and policymakers who contribute to the debate, and the inevitably inter-dependent nature of national laws in the climate of trans-nationalism described above, alone make this possible. Indeed, one of the important lessons of the international intellectual property debate over the last few decades has been the role of the national or subnational initiatives in framing, and in providing input to, the global or international solution. National problems, and national reforms, often provide the raw data that informs more ambitious international efforts. Indeed, such a bottom-up approach to a global reform project may be not only possible, but in fact desirable. Given the increasingly diverse range of states with stakes in the global intellectual property game, a single uniform top-down solution is unlikely to reflect the array of prescriptive and normative commitments or put in place an optimal solution that works for all. One size does not fit all. Of course, this is not to say that improvement in intellectual property law cannot be accelerated or facilitated by initiatives that are of a different character. Multilateral international treaties have been an important part of efforts to improve intellectual property for 140 years, most notably with the adoption 1

2

Improving intellectual property

of the Paris Convention and the Berne Convention in the 1880s. One of the leading drivers for improvement since then has been the international treaty, both with successive revision of those Great Conventions and more recently the conclusion of the TRIPS Agreement under the auspices of the World Trade Organization. The ongoing work of the World Intellectual Property Organization (WIPO), rendered a specialized agency of the United Nations 55 years ago, speaks to continued vitality of this mechanism. The role that treaties – even the same treaty – plays in different countries may vary. For some states, the quid pro quo of certain treaties provides important impetus for nudging them into the global club of intellectual property respecting nations. For others, treaties help overcome difficulties of domestic political economy or provide a template for domestic policymakers. And increasingly, treaties may provide the outline of a transnational solution for what are inherently transnational problems or where national solutions have not emerged. For example, the Marrakesh Treaty for Access to Works for the Visually Impaired created a global solution that took advantage of economies of scale to increase the range of works available to the visually impaired by facilitating cross-border co-operation. And although ongoing negotiations to conclude treaties to protect traditional knowledge and genetic resources draw on national experiences, few comprehensive national law models exist on which to draw models from; the international process, even though not concluded, is already driving the development of some national regimes. In any event, the nature of even multilateral intellectual property treaties is that they represent points in time, typically reciting minimum standards upon which different states build, by resort to national policymaking choices or prompted by other regional or bilateral arrangements. The global project pursued through this mechanism is dynamic. The multilateral treaty process is also non-exclusive. It works in tandem with a range of other mechanisms that also further the global project. Akin with developments in international law generally over the last few decades, the global project of improving international intellectual property law has relied on soft law projects. Again, this encompasses multilateral soft law at the global level, such as the range of non-binding recommendations on aspects of trademark law developed by the WIPO Standing Committee or model copyright laws adopted by WIPO two decades earlier. But it can also include soft law developed at the national level with an eye to transnational application. Understood in these terms, the global project encompasses the activities of academics and national policy institutions. Consider in this regard the response to the failure 20 years ago of the Hague Conference on Private International Law to conclude a jurisdiction and judgments convention that included treatment of intellectual property. (Narrower Hague treaties later concluded in the field have likewise tended to stay clear

Introduction

3

of the intellectual property dilemma.) In the United States, the American Law Institute undertook a seven-year project to develop Principles Applicable to the Adjudication of Transborder Intellectual Property Disputes, appointing its first ever foreign academic as a Reporter and including foreign jurists and academics as Advisers to the Project. That initiative developed in parallel to a project of (mostly) European academics convened under the auspices of the Max Planck Institute, resulting in a competing (but complementary) output. Similar projects were pursued in Japan and Korea, and ultimately by the International Law Association. While each had greater representation from particular geographic areas, all had global aspirations and all developed in dialogue with each other. Finally, one should not ignore the role of private actors in this global project, whether conscious of their role or not. As cross-border markets expand and commercial interests clamour for similar solutions in different countries, the private policies of large market players (and especially intermediaries) have effected a homogenization of applicable rules on issues such as notice and takedown in ways that political negotiations might have found difficult. Likewise, the scourge of cybersquatting, identified by WIPO in 1998 as ‘unfair competition’ under Article 10bis of the Paris Convention, has been effectively regulated at the global level through the Uniform Domain Name Dispute Resolution Process, a set of norms adopted by ICANN (formally a not-for-profit California corporation) and enforced through a mix of contract and technology. The 46 chapters in this book are divided into ten parts that address multiple aspects of the global intellectual property puzzle, with differing perspectives connected by a common admiration of Rochelle Cooper Dreyfuss’s impressive and significant body of scholarship. Overall, the book reflects the breadth of Rochelle’s publications and research expertise. It begins with chapters suggesting ways to address boundaries of intellectual property and redress imbalance of protection and access. As a result of the diverse approaches to intellectual property and its dynamic nature, the boundaries of rights and concomitant flexibilities can change. Part I addresses how balance among competing interests often is revisited to restore some kind of equilibrium or perhaps to work around imbalance, for example, through freedom to operate (Chon), the existence of negative space (Sprigman) and the recognition of human rights concerns (Helfer). Part II focuses on issues of public health, pandemics and other potential crises. As COVID-19 has all too graphically demonstrated, the effects of intellectual property rights should not be underestimated. Innovative vaccines, diagnostics and therapeutics have been and remain key to fighting the pandemic, but distribution and control over access have proved to be ongoing challenges. Many commentators and scholars consider that to be reflective

4

Improving intellectual property

of aspects of intellectual property’s imbalance. This has caused considerable debate over ways to improve access such as waiving rights and more effectively using compulsory licences. Part II tackles these issues in a number of ways, such as patterns of interaction in which there are losing and winning pairings of norms and networks in approaches to access to medicine (Drahos), the COVID crisis (Ho), the fitness of compulsory licences (Matthews, van Zimmerman and Minssen), and the consideration of potential food crises (Van Overwalle). As the authors in Part III suggest, there are many other challenges for patent law in particular. This part addresses issues including liability rules (Reichman and Rutschman), protection of biomedical research (Nicol and Nielsen), royalties (Kono), compulsory licensing as a policy tool (Bagley) and registration challenges (Takenaka). Rochelle has combined expertise in intellectual property and civil procedure to tackle the issues of specialist courts and dispute settlement. Part IV includes discussion of the US Federal Circuit as a specialized court (Fromer) and specialization in the patent ecosystem more broadly (Wasserman Rajec and Wasserman), the emerging Unified Patent Court in Europe (Riis), transnational judicial competition (Trimble) and arbitrating intellectual property disputes (Lauriat). Contemplating who benefits from intellectual property and why is it central to a healthy innovation system? Part V includes chapters that remind us of the importance of both copyright and attribution rights for authors (Ginsburg), that take a fresh look at moral rights (Ghidini and Moscati) and that assess the impact of artificial intelligence – including the role of human agency (Sherman) and whether inventors can be artificial (Gervais). Parts VI and VII pay tribute to Rochelle’s work on trademarks and information. Several chapters in Part VI address her important article on ‘expressive genericity’ (Senftleben, Beebe and Tan) and this them is developed by discussing patent exhaustion as expressive freedom (Burk). And a group of economists discuss whether trademarks assist global fabless manufacturing (Petrie, Kollmann, Thomson, Codoreanu and Webster). The authors in Part VII have been inspired by Rochelle’s scholarship to analyse the importance of the availability of information and data. They characterise Dreyfuss as an ‘information pioneer’ (Sandeen) and underscore the importance and difficulties of information’s role for civic communication (Richardson), for confidential data (Lee), as research data (van Eechoud) and as clinical regulatory data (Zemla-Pacud). Part VIII approaches the question of non-discrimination that pervades the global system from four angles; how the rules apply to remuneration rights (Hugenholtz), to trade marks (Bently), the limits of non-discrimination (Kur) and how the principle of national treatment can be discriminatory (Frankel).

Introduction

5

Part IX looks at the development of international intellectual property law and related investment law, and at the institutions and political drivers that are part of that complex international system. Paying tribute to Rochelle’s enormous contribution to our understanding of how norms are made and by whom, the authors in this part tackle the topics of global administrative law (Fischman Afori); the economic impact of free trade agreements (Maskus and Ridley), as well as offer three perspectives on investment law’s intersection with intellectual property (Yu, Chandler and Geiger). In the concluding Part X, the institutions and political drivers of intellectual property take centre stage: authors here justify the public side of patent law (Murray); stress the importance of being alert to the enforcement approach of WIPO ALERT (Peukert); critique scholarly understandings of the process of international norm formation (Hughes and Okediji); assess claims of new mercantilism (Benoliel); and disucss IP pluralism (Burstein) and culminating with the everlasting question (from Grosse Russe-Khan) ‘Does IP Improve the World?’ This complex picture of the global project of improving intellectual property is entirely appropriate as the vehicle for a tribute to the work of Rochelle Dreyfuss by some of the many scholars around the world whose own work has been enriched by Rochelle’s innovative research over four decades. Rochelle’s work has shown a rare sophistication in its understanding of the complexity of global innovation. She has written extensively on the dynamics discussed in this Introduction. She has cautioned against the one size fits all instinct of international policymakers and has advocated for restraint in interpreting international instruments that might fail to account for the different interests of different states. Her work has been at the forefront of developing alternative mechanisms for pursuing the global project of improving intellectual property. And she was one of the first to recognize that intellectual production of what we call intellectual property might occur best without intellectual property law or intellectual property rights. In this Global Project, she has been a Global Leader.

PART I

ADDRESSING BOUNDARIES AND IMBALANCE

2. Prioritizing intellectual property’s freedom to operate Margaret Chon1 1. INTRODUCTION Intellectual property (IP) rights are often viewed as a default,2 to which exceptions might be applied under certain conditions. As Professor Rochelle Cooper Dreyfuss has observed: There has been a baseline change in intellectual property thinking. Competition was the norm and intellectual property rights . . . the exception. However, in recent years, the ‘labor-equals-property’ principle has come to dominate, with the result that the . . . baseline has been to protect all manner of creativity.3

This chapter proposes an important extension to the freedom to compete baseline of which Professor Dreyfuss reminds us: Freedom to operate. Generally viewed as a term of art specific to patent practice,4 this chapter defines freedom to operate as freedom from restrictions imposed by exclusive rights across different IP categories, not only patents. Moreover, and significantly, this freedom is comprised of both market and non-market uses, the latter of which are often under-weighed in IP’s policy balance.

1 Thanks to the participants of the 2022 Philosophical Methods in IP Colloquium, the 2022 MOSAIC IP Law and Policy Roundtable, and to my co-editor Susy Frankel for their incisive comments, as well as to Myranda Buiquy and Katie Lee (class of 2023) for their excellent research support. 2 Ian Kerr, The Devil is in the Defaults, 4 Critical Analysis of Law 91 (2017) (describing importance of defaults in artificial intelligence technology). 3 Rochelle Cooper Dreyfuss, TRIPS – Round II: Should Users Strike Back, 71 U. Chi. L. Rev. 21 (2004); accord Robert P. Merges, The Uninvited Guest: Patents on Wall Street (2003); William W. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 23 (2003). 4 Patent practitioners engage in freedom to operate searches, by which they assess the risk of infringement by their clients’ inventions.

7

8

Improving intellectual property

First explaining why freedom to operate is important from both descriptive and normative perspectives, this chapter provides evidence based on US caselaw that this type of freedom undergirds IP, although it is largely unacknowledged as foundational. It then suggests some reasons why IP’s freedom to operate has been obscured through the enactment of positive law, whether statutory or treaty law. It finally explores the impacts of explicitly recognizing a freedom to operate baseline. Prioritizing freedom to operate does not spell the demise of IP. Instead, it would more easily square IP with its overall purpose for social advance, including commercial progress, not merely commercial success per se.

2.

WHY FREEDOM TO OPERATE?

Knowledge is valuable for its own sake but is even more valuable because of the various and often simultaneous uses to which it can be put.5 The legal rights to any chunk of knowledge, whether through copyright, patent, or other form of IP, are never absolute. Throughout every area of IP, the IP-holders’ rights are always qualified by defenses, exceptions, limitations, and/or scope of protection. The consensus is that qualified rights are an essential part of the IP social bargain because of the nature of knowledge, which can be deployed in so many meaningful ways. No one questions the basic premise that the diffusion of knowledge generally throughout society advances social welfare because of the profoundly generative characteristic of knowledge. Yet legal rights to exclude are widely viewed as necessary incentives for the creation and eventual commercialization of knowledge goods.6 IP is typically justified on the premise that market-based exclusive rights in so-called intangible property spur inventions, marks, and works that might not otherwise come into existence. The over-reliance on incentive theory by some lawmakers to rationalize a one-way

5 This characteristic of knowledge is often described through the economic term ‘non-rivalrous,’ that is, that one person’s use of knowledge does not conflict with another’s. This view of non-rivalry has been criticized as over-simplistic and misleading. See Oren Bracha & Talha Syed, Beyond the Incentive-Access Paradigm? Product Differentiation & Copyright Revisited, 92 Tex. L. Rev. 1841, 1849–50 (2014); see generally James Stern, The Myth of Non-Rivalry (unpublished paper on file with author) (arguing that many IP uses are in fact rivalrous). 6 Bracha & Syed, supra note 5 at 1850 (‘Nonexcludability contributes to the appropriability problem for which IP rights are one possible solution, while nonrivalrousness points to a problem with that solution. And from an economic point of view, the core task for IP policy is to balance the need for appropriability with the costs of underuse.’).

Prioritizing intellectual property’s freedom to operate

9

ratchet of ever-increasing IP rights7 has increasingly concealed the IP baseline of freedom to operate. Despite incentive theory’s general dominance, it does not warrant IP over-protection or explain how creativity flourishes in IP’s absence.8 Moreover, a literal ‘if value, then right’9 approach to IP inevitably ignores or minimizes the myriad benefits and interests that attach to the non-enforcement of those rights, whether they flow from applying an exception, limiting IP’s scope, or raising a successful defense. And significantly, incentive theory does not capture non-market uses of IP-eligible goods, for example, the numerous non-commercial uses of these knowledge goods, described in more detail below. The IP policy balance signifies non-market uses by the ‘public interest,’ ‘public access,’ or ‘public domain,’10 or by characterizing knowledge as a public good.11 These categories of non-market uses do not fully convey that these uses not only contribute to the ‘Progress’ of knowledge underlying IP, but also often actively catalyze it. Moreover, these terms lump non-market uses together with market uses (by a putative but potentially excused infringer). Yet IP undeniably covers and impacts many activities and uses that can be, but do not need to be, commercially grounded or monetized. Furthermore, market-based activities do not preclude the same IP-eligible goods from also being simultaneously and intrinsically involved with non-market-based uses. Some of these uses create private value, in addition to the private benefit of monetization from IP—significant value such as personal growth and development from engagement with a work, invention, or even a mark.12 Other benefits redound to the public, in the form of increased social welfare measured 7 Ruth L. Okediji, Public Welfare and the Role of the WTO: Reconsidering the TRIPS Agreement, 17 Emory Int’l L. Rev. 819, 914 (2003). 8 See Christopher Sprigman’s chapter in this volume; Elizabeth L. Rosenblatt, A Theory of IP’s Negative Space, 34 Colum. J.L. & Arts 317 (2011). 9 Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the Pepsi Generation, 65 Notre Dame L. Rev. 387, 405 (1990) (coining term ‘if value, then right); see also Brett M. Frischmann, Evaluating the Demsetzian Trend in Copyright Law, 3 Rev. L & Econ. 649 (2007). 10 Jessica Litman, The Public Domain, 39 Emory L. J. 965 (1990); Pamela Samuelson, Enriching Discourse on Public Domains, 55 Duke Law Journal 783 (2006). 11 Joseph E. Stiglitz, Knowledge as a Global Public Good, in Global Public Goods: International Cooperation in the 21st Century (Inge Kaul, Isabelle Grunberg & Marc Stern eds. 1999). 12 Cf. Hugh Breakey, Intellectual Liberty: Natural Rights and Intellectual Property 2 (2012) arguing that natural justice principles establish that: [i]ntellectual property … is a set of limited and tentative exceptions to much larger and more fundamental rights like the right to free speech and (as I will argue) the right to intellectual liberty – the right to apprehend, investigate and

10

Improving intellectual property

through non-economic means such as capabilities,13 the creation of necessary social infrastructure,14 the reinforcement of shared societal values such as equality,15 and/or just distribution of resources.16 A unilateral focus on individual market actors fails to capture significant cultural and social dimensions of knowledge production and exchange.17 Yet non-market factors are absolutely essential to the proper weighing of IP’s social benefits and costs. Interestingly, some US court decisions announce these non-market-based factors in their decisions, despite the lack of supporting statutory text. For example, Google v. Oracle18 might seem to concern only market-based activity within the fast-moving and highly lucrative industry of smartphones, by contrast to examples of non-market creativity such as non-profit educational uses or fan-based art. Yet the US Supreme Court identified an important source of creativity embedded within the widespread use by programmers of software, such as the APIs at issue, to create new applications. Within that clearly commercial context, the Court’s unmistakable recognition of significant ‘risk of creativity-related harms to the public’19 is a jurisprudential turn of great consequence. And in assessing the US copyright law’s fourth fair use factor, the Court intentionally reached beyond the statute’s plain language,20 to reach and evaluate what it concluded was a non-trivial, non-market harm to the public. While the Court dressed its concern in the legal language of market competition, its decision should be viewed as implicating significant non-market concerns, specifically with protecting the collective knowledge, skills, and experiences of a public that should not be tethered to a proprietary scheme. Google was not relying on its own employees to generate innovation but rather on third-party developers, whose collective knowledge had value apart from Oracle’s IP. The activities of these developers created important follow-on

learn about the world around us, and for our learning to inform our choices, words and actions. 13 Margaret Chon, Intellectual Property and the Development Divide, 27 Cardozo L. Rev. 2821 (2006); Madhavi Sunder, From Goods to a Good Life (2012). 14 Brett M. Frischmann, Infrastructure: The Social Value of Shared Resources (2012). 15 Jessica Silbey, Against Progress: Intellectual Property and Fundamental Values in the Internet Age (2022). 16 Peter S. Menell, Property, Intellectual Property, and Social Justice: Mapping the Next Frontier, 5 Brigham-Kanner Prop. Rts. Conf. J. 147 (2016). 17 Margaret Chon, Sticky Knowledge and Copyright, 2011 Wisc. L. Rev. 177 (discussing social dimensions of knowledge, including tacit knowledge). 18 Google LLC v. Oracle Am., Inc., 141 S. Ct. 1183 (2021). 19 Id. at 1208. 20 17 U.S.C. § 107 (‘the effect of the use on the potential market for or value of the copyrighted work.’).

Prioritizing intellectual property’s freedom to operate

11

innovation, and the Court recognized that ‘to allow enforcement of Oracle’s copyright here would risk harm to the public.’21 Non-market value was also fundamental to the Court’s decision in Kirtsaeng v. John Wiley.22 Couched in the language of commerce, the Court decided that the first sale doctrine applies to goods first manufactured and sold outside the United States, effectively announcing a rule of international exhaustion for copyright-protected goods. Its decision was driven less by the language of the statute, which was conspicuously ambiguous, and more by the various harms that would be inflicted upon the public from adopting a rule of national exhaustion. For example, the functioning of key cultural custodians such as libraries and museums (who were not parties to the suit) would have been severely interrupted by a strictly territorial approach to exhaustion. Tremendous social benefit arises from interoperability of global exchange systems involving cultural artifacts such as literature and art, which are the basis for learning and other forms of knowledge transmission. Courts have also repeatedly recognized a related non-market concern—the overlap of copyright with public expressive activities, whether expression for its own sake (such as protected First Amendment speech) and/or expressive use that itself qualifies as copyright-eligible.23 They have also identified other non-market benefits such as access provided to members of the visually impaired public through digital versions of literary works,24 or the benefits of text-mining, translation, and other non-display uses, in order to expand the horizons of human knowledge via Big Data generated by digital networked technologies.25 Like its copyright counterpart, the US patent statute does not include specific considerations of optimizing non-market public benefit. Yet in its controversial subject matter jurisprudence, the Court has not hesitated via

21 Google LLC, supra note 18, at 1208; accord Lotus Dev. Corp. v. Borland Int’l, 49 F.3d 807, 819-20 (1st Cir. 1995) (Boudin, M., concurring) (observing that much of the value of Lotus’s menus was created by the efforts of those who used the 1-2-3 program). 22 Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. 519, 133 S. Ct. 1351 (2013). 23 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 114 S.Ct. 1164 (1994); Andy Warhol Found. For the Visual Arts, Inc. v. Goldsmith, 11 F.4th 26 (2d Cir. 2021), cert. granted, 142 S. Ct. 1412 (2022). 24 Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir. 2014). 25 Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015). Courts have also suggested layering a scienter requirement on the strict liability copyright framework, in response to the architecture of digital networks. Cartoon Networks v. CSC Holdings, 536 F.3d 121, 131 (2d. Cir. 2008).

12

Improving intellectual property

federal common law26 to carve out swathes of patent-eligible subject matter on the grounds that ‘[l]aws of nature, natural phenomena, and abstract ideas are ‘the basic tools of scientific and technological work|”’ and has ‘“repeatedly emphasized this … concern that patent law not inhibit further discovery by improperly tying up the future use” of these building blocks of human ingenuity.’27 Moving from scope to remedies, the Court acknowledged non-market public benefit when it refused to allow automatic injunctions in patent cases, instead relying on a series of factors including ‘the public interest.’28 Some non-market considerations cut in the direction of IP enforcement.29 Copyright law is permeated with privacy interests in addition to commodification interests, most obviously manifested through the historical divide between published and unpublished works.30 Moral rights safeguard non-market benefits such as the right of attribution and the right of integrity.31 The ‘invention’ requirement of patent law holds powerful symbolic as well as potential remunerative import regarding one’s social status as an ‘inventor.’32 However, public benefits in the form of collective experience, expression, and experimentation are always experienced simultaneously as non-market private benefits. When the US Supreme Court grappled with the private use of reproduced television programming in the SONY decision, it disaggregated the usual conflation of public and private non-market benefit.33 Its deference to the private benefit of more convenient entertainment (even if not considered a ‘productive’ use) was striking. But other private uses not typically acknowl-

26 Adam Mossoff, Statutes, Common Law Rights, and the Mistaken Classification of Patents as Public Rights, 104 Iowa L. Rev. 2591, 2611–12 (2019) (listing various common law doctrines recognized by courts within the statutory framework). 27 Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 134 S. Ct. 2347 (2014) (citing Mayo). Analogously, international proposals would mandate disclosure of prior art consisting of plant genetic resources to preserve the public protection of indigenous knowledge. Margo A. Bagley, Of Disclosure ‘Straws’ and IP System ‘Camels’: Patents, Innovation, and the Disclosure of Origin Requirement, in Protecting Traditional Knowledge: The WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (Daniel F. Robinson, Ahmed Abdel-Latif, Pedro Roffe eds., 2017). 28 eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 126 S. Ct. 1837 (2006). 29 See Stern, supra note 5 (describing conflicting albeit ‘non-rivalrous’ uses). 30 Harper & Row, Publrs. v. Nation Enters., 471 U.S. 539, 105 S. Ct. 2218 (1985). 31 Roberta Rosenthal Kwall, The Soul of Creativity: Forging a Moral Rights Law for the United States (2009). 32 Colleen V. Chien, Inequality, Innovation, and Patents (2018), https://​ digitalcommons​.law​.scu​.edu/​facpubs/​955. 33 Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984).

Prioritizing intellectual property’s freedom to operate

13

edged by courts can include reading or privately performing and/or displaying to satisfy curiosity, further illumination, or even experiencing joy.34 The patent statute’s space for private experimentation and research exists through the judicial doctrines of experimental use,35 permissible repair,36 and exhaustion.37 Again, the judicial deviation from the statute is a significant signpost to important non-market private uses. And in both copyright and patent law, equitable doctrines such as misuse38 are also significant pointers to the overall context within which exclusive rights operate. While some might describe these decisions as artifacts of judicial activism, common law gap-fillers, equitable add-ons, glimpses of legal pluralism,39 or policy-driven reasoning, something more is at work. Courts are grappling with and pointing to freedom to operate.

3.

FREEDOM TO OPERATE: HIDING IN PLAIN SIGHT

As the previous section shows, judicial interpretation of US statutes often moves past the statutory text to grab onto IP’s public purposes. This occurs over the terrain of IP’s scope as well as its defenses, exceptions, and limitations. Although it is important to note that some of these doctrines add to IP’s exclusive rights,40 the vast majority of them are carve-outs from them. A common judicial approach is to invoke the constitutional language of Article 1, Section 1, clause 8,41 so that the constitutional imperative drives the statutory analysis. It is striking how often even non-consequentialist jurists feel compelled to move beyond the plain meaning of the statute to considerations

34 Jessica Litman, The Exclusive Right to Read, 13 Cardozo Arts & Ent. L.J. 29 (1994); Julie E. Cohen, Configuring the Networked Self: Law, Code, and the Play of Everyday Practice (2012) (discussing critical importance of play in human development); Madhavi Sunder, Intellectual Property in Experience, 117 Mich. L. Rev. 197 (2018). 35 Madey v. Duke Univ., 307 F.3d 1351 (Fed Cir. 2002). 36 Jazz Photo Corp. v. ITC, 264 F.3d 1094 (Fed. Cir. 2001). 37 Impression Products, Inc. v. Lexmark International, Inc., 137 S.Ct. 1523 (2017). 38 Margaret Chon and Olufunmilayo Arewa, Abuse of Copyright: Interventions into Racial Inequity? (unpublished paper on file with author). 39 Margaret Chon, A Rough Guide to Global Intellectual Property Pluralism, in Working Within the Boundaries of Intellectual Property (Rochelle Dreyfuss, Harry First and Diane Zimmerman, eds., 2010). 40 These add-ons include secondary liability in copyright and the doctrine of equivalents in patent law. 41 U.S. Const. art. I, § 1, cl. 8.

Improving intellectual property

14

suggested by vague linguistic containers such as ‘Progress.’42 And it is an arguably uncommon method of statutory interpretation. As explored above, market and non-market benefits and harms are often conflated and not easily parsed from each other. This is especially true when commerce is in the driver’s seat, as it is in most societies today.43 Of course, the seeming inexorability of exclusive rights is also a function of who is sitting at the legislative drafting table and/or who has lobbying power.44 Finally, freedom to operate may be overlooked because of the incomplete analogy of IP’s exclusive rights to absolutist views of private property despite ‘profound and numerous’ differences noted by nuanced property scholars45 and despite attempts to reverse this trend, for example, by positing a commons approach to IP.46 Within these conditions, US courts often perceive the risk of ‘monopoly’ posed by over-extension of IP rights.47 Therefore, when commercial harm to competition aligns with non-market-based harm to freedom to operate, no conflict arises. But conflict can and does arise when market-based benefits intersect with significant non-market-based harms. This all suggests a logical fallacy when exclusivity is prioritized over freedom to operate. The commonplace error is understandable given the current primacy of an arguably skewed utilitarian version of incentive theory,48 a rationale that does not account adequately for the many social spillovers of knowledge. It may also have its roots in an historical period when global IP’s dominant justification was mercantilist, reinforced today through strong international trade pressures.49 Regardless, the net result is that IP law and

See, e.g., Alice Corp. Pty. Ltd., supra note 27 (opinion by Justice Thomas). Harper & Row, Publrs. v. Nation Enters., 471 U.S. 539, 592, 105 S. Ct. 2218 (1985) (Brennan, J., dissenting) (many uses such as news reporting ‘are generally conducted for profit in this country’). 44 Jessica D. Litman, Copyright Compromise and Legislative History, 72 Cornell L. Rev. 857 (1986–1987); Pamela Samuelson, The U.S. Digital Agenda at WIPO, 37 VA. J. Int’l L. 369, 430-31 (1997); Susan K. Sell, Private Power, Public Law: The Globalization of Intellectual Property Rights (2003). 45 Menell, supra note 16, at 154; Cf. Robert P. Merges, What Kind of Rights Are Intellectual Property Rights?, in The Oxford Handbook of Intellectual Property Law (Rochelle Dreyfuss & Justine Pila eds. 2017). 46 Michael J. Madison, Brett M. Frischmann & Katherine J. Strandburg, Knowledge Commons, in Routledge Handbook of the Study of the Commons (Blake Hudson, Jonathan Rosenbloom, Dan Cole eds. 2019). 47 Google LLC, supra note 18, at 1198. 48 Jeremy Waldron, From Authors to Copiers: Individual Rights and Social Values in Intellectual Property, 68 Chi.-Kent L. Rev. 841, 862 (1993) (shifting focus of moral justification in intellectual property law from authors to copiers). 49 Ruth L. Okediji, The Limits of International Copyright Exceptions for Developing Countries, 21 Vand. J. Ent. & Tech. L. 689 (2019). 42 43

Prioritizing intellectual property’s freedom to operate

15

policy-making bodies invariably codify exclusive rights as the default, and treat the narrowing or non-enforcement of those rights as a questionable derogation. Yet, at least in the US, courts have frequently ventured outside of the boundaries of statutory texts, to prioritize freedom over exclusion. This shows that non-market factors are not subservient to competition-based considerations, but rather absolutely essential to weighing IP’s social benefits and costs. The most apropos theoretical grounding for a global baseline of freedom to operate is the capabilities paradigm, which views IP institutions as embedded within other international and transnational institutions—including non-market institutions—for the purpose of generating global public goods.50 These global public goods, such as education or communicable disease control (and indeed knowledge production itself) often depend primarily upon knowledge diffusion rather than exclusion. Importantly, these public goods, operating in tandem with IP, are pre-requisites for the individual freedom to make choices that lead to the full realization of human capabilities, essential in turn to the functioning markets that IP assumes. Normatively, the ‘wiggle room’51 or ‘calibration’52 in existing statutory and treaty law should be amplified where possible to make space for a priori freedoms around knowledge diffusion—the freedoms to learn, to experiment, to be curious about, and to advance overall social well-being through follow-on innovation (whether market-based or not). This approach means that ‘human development concerns are not sheltered through exceptions and limitations [to IP] but instead are viewed as integral to the IP endeavour.’53 What would be some practical results of prioritizing this zone of freedom? When decision-making bodies are faced with proportionality tests, or with open-textured standards as opposed to rules, a freedom default can guide decisions to optimize both market and non-market benefits, or to reduce harms. In copyright, this would have immediate ramifications, for example, in the application of the US fair use doctrine. It would also directly impact the inter50 See, e.g., Chon, supra note 13; Brett M. Frischmann, Spillovers and Intellectual Progress: Toward a Human Flourishing Theory for Intellectual Property, 14 Review of Economic Research on Copyright Issues 1 (2017). 51 Jerome H. Reichman, Securing Compliance with the TRIPS Agreement after US v. India, 1 J. Int’l Econ. L. 585 (1998). 52 Daniel J. Gervais, (Re)structuring Copyright: A Comprehensive Path to International Copyright Reform 279-80 (2017). 53 J. Janewa Osei Tutu, A ‘Human Development’ Approach to Intellectual Property Law, in Handbook of Intellectual Property Research: Lenses, Methods, and Perspectives, 640, 650 (Irene Calboli & Maria Lillà Montagnani eds. 2021); accord Gervais, supra note 52, at 280 (viewing IP as ‘part of a broader landscape of innovation policies . . . [that] allows all of us better to comprehend the social costs of certain forms of IP and allow mitigation where necessary’).

Improving intellectual property

16

pretation of the mandatory global fair use doctrine pursuant to Berne Article 10(1),54 according to the principles and objectives of TRIPS.55 For example, a decision maker could consider directly normative values such as freedom of expression, distributive justice principles,56 and other non-market benefits even in the absence of statutory or treaty text.57 In areas of IP where statutory exceptions or limitations are currently narrowly drawn, as in US patent law, judicial doctrines such as the experimental use or repair exceptions would have steadier foundations, so long as these exceptions comply with the three-step test of TRIPS Article 30.58 Article 30 itself would be subject to this default position, ‘taking into account the legitimate interests of third parties’59—including the interests of not only competitors but also members of the public who engage in non-market-based uses. Indeed, IP as a subset of trade law should not be ‘read in ‘clinical isolation’ from public international law.’60 Incorporating non-market factors would not always tilt against exclusion. These factors would also help courts recognize significant concerns expressed by human rights, moral rights, personality-based doctrines, and/or cultural integrity norms and values, whether within national or other legal systems.61 These important non-market considerations would point in the direction of IP enforcement.

Tanya Aplin & Lionel Bently, Global Mandatory Fair Use: The Nature Scope of the Right to Quote Copyright Works (2020). 55 TRIPS Agreement, art. 7 & 8. 56 Shlomit Yanifsky Ravid, The Hidden Though Flourishing Justification of Intellectual Property Laws: Distributive Justice, National Versus International Approaches, 21 Lewis & Clark L. Rev. 1 (2017). 57 Aplin & Bently, supra note 54, at 159-67. 58 TRIPS Agreement art. 30; Susy R. Frankel, The WTO’s Application of ‘the Customary Rules of Interpretation of Public International Law’ to Intellectual Property, 46 Va. J. of Int’l L. 20-23 (2005) (discussing the application of TRIPS arts 7 and 8 to Article 30 in the context of the Vienna Convention on the Law of Treaties). 59 Id. While beyond the scope of this short chapter to discuss, the same is true of the trademark space under the TRIPS Agreement art. 17. Panel report, Australia– Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, WTO Doc. WT/DS435/R, WT/DS441/R, WT/DS458/R, WT/DS467/R (June 28, 2018). 60 Appellate Body Report, United States—Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R (adopted May 20, 1996)). 61 See, e.g., Trevor G. Reed, Fair Use as Cultural Appropriation, 109 Cal. L. Rev. 1373 (2021). 54

and

Prioritizing intellectual property’s freedom to operate

17

4. CONCLUSION As Jeremy Waldron wrote, ‘an institution like intellectual property is not self-justifying; we owe a justification to anyone who finds that [they] can move less freely than he would in the absence of the institution.’62 The judicial gestures described in this chapter underscore a fundamental normative point: Prioritizing freedom to operate, along with a stronger awareness of non-market benefits and harms, ultimately is more consistent with IP’s role as a set of knowledge-facilitating legal tools than is the current market-driven prioritization of exclusive rights.

Waldron, supra note 48, at 887.

62

3. Are negative spaces likely to be fragile? Christopher Jon Sprigman1 1. INTRODUCTION Back in what now seems the distant past—2006—Kal Raustiala and I wrote on innovation in the fashion industry.2 In that article, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, Kal and I described how fashion design firms in the United States had long been and remained highly innovative despite having virtually no copyright protection for their designs. We argued that in fact the relative freedom to copy in that industry did not impede innovation, but instead helped fuel it. Coining a term, we observed that the fashion industry operated in copyright’s ‘negative space’—i.e., fashion design was creative work that copyright could regulate but, for mostly incidental reasons, did not. As a consequence, we saw a lot of copying. And yet we also observed a lot of fashion design creativity, season after season, decade after decade. In the closing pages of The Piracy Paradox, we offered some thoughts on whether other areas of creativity could also flourish in IP’s negative space. Other scholars also explored that question,3 and the scholarship eventually 1 The author thanks Susy Frankel, Graeme Dinwoodie, Maggie Chon, Jens Hemmingson Schovsbo, Barbara Lauriat, and Temitope Kuti for organizing this volume and for inviting me to contribute. Thanks also to Rochelle Dreyfuss for the enormous contribution she has made, over many years, in the IP field, and also in taking the time to comment insightfully and constructively on my work and to help expand and improve it. 2 Kal Raustiala and Christopher Jon Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 Va L. Rev. 1687 (2006). 3 See generally Elizabeth Rosenblatt, A Theory of IP’s Negative Space, 34 Columbia J. of L. & the Arts 317 (2011). For a survey of works in the field, see Kal Raustiala & Christopher Jon Sprigman, When are IP Rights Necessary? Evidence From Innovation in IP’s Negative Space, in Research Handbook on the Economics of Intellectual Property Law (Vol. I – Theory) (Peter Menell & Ben Depoorter, eds., Edward Elgar Publishing, 2019).

18

Are negative spaces likely to be fragile?

19

grew into an established sub-field within IP, one which has produced additional studies of the fashion industry, as well as studies of cuisine, fan fiction, pornography, 19th-century US commercial publishing, video games featuring significant user-generated content, stand-up comedy, roller derby, software, jam bands, tattoos, magic, and the flu vaccine. This literature details an extraordinary variety of creative and innovative work, and shows the many ways in which creative production can flourish in innovation environments where IP rights are not at the center. Related studies of scientific innovation document communal practices that emphasize sharing, and resist the full potential for propertization of research.4 And as Eric von Hippel and others have shown, a lot of innovation is generated in contexts as varied as extreme sports, surgery, library science, and commercial high-tech manufacturing, by users who work mostly in the absence of IP incentives, and who often share the fruits of their creativity with others.5 Those negative spaces show other factors beyond formal IP that support creativity: market incentives, cognitive psychology, social norms, first-mover advantages, path-dependency, or even plain happenstance. The challenge ahead is to map out these factors across fields that vary enormously in terms of markets, participants, practices and norms. Professor Rochelle Dreyfuss was one of the early commenters on the negative space work, first in a short 2007 commentary, Fragile Equilibria,6 and then in a longer essay published in 2010, Does IP Need IP? Accommodating Intellectual Production Outside the Intellectual Property Paradigm.7 As is typical, Dreyfuss was generous with the work of (mostly, at the time) junior scholars trying to make sense of an interesting innovation puzzle. And as is also typical, when she focused on the arguments Kal and I had made in The Piracy Paradox, she adumbrated them with far greater economy than we had managed: As the authors tell it, negative space works for the fashion industry because the goods send status (positional) signals, these signals decay over time (obsolescence),

4 See, e.g., Katherine J. Strandburg, Curiosity-Driven Research and University Technology Transfer, in 16 University Entrepreneurship And Technology Transfer: Process, Design, And Intellectual Property: Advances in the Study of Entrepreneurship, Innovation and Economic Growth 93 (Gary D. Libecap ed., 2005). 5 See, e.g., Fred Gault & Eric von Hippel, The Prevalence of User Innovation and Free Innovation Transfers: Implications for Statistical Indicators and Innovation Policy 17 (MIT Sloan Sch. of Mgmt. Research Paper No. 4722-09, 2009), available at http://​papers​.ssrn​.com/​sol3/​papers​.cfm​?abstract​_id​=​1337232. 6 Va. L. Rev. In Brief (January 22, 2007). 7 31 Cardozo L. Rev. 1437 (2010) (hereinafter, ‘DIPNIP’).

Improving intellectual property

20

and both the status and the decay are, in a sense, caused by the free-wheeling copying made possible by the absence of intellectual property protection (anchoring).8

The result of these dynamics was, in both our telling and Dreyfuss’, an equilibrium permitting rapid innovation in the US fashion industry with little support from copyright protection. That said, although Dreyfuss credited our core argument, she also immediately posed some difficult questions about it. She asked first about how far the negative space arguments could go: Could we imagine non-IP innovation incentives displacing IP? She wondered also what the domain of the negative space argument was: Were there likely to be other important areas of creativity that could function in the negative space of copyright or other IP rights? And finally, there was the question that animated the title of Dreyfuss’s 2007 commentary: Would negative space equilibria endure? Or would they tend to break down in favor of IP-focused innovation? In this chapter I’ll offer a few thoughts on each of these questions, and particularly on the final one, which is (at least to me) the most interesting. The bottom line is that the questions Dreyfuss raised about the negative space scholarship are not yet resolved. As I shall explain, however, some of what we have seen in the years since suggests that the potential domain of IP’s negative space may be somewhat broader than Dreyfuss initially suspected—in part because non-IP incentives are unlikely, on the whole, to displace IP rules, but rather to complement and, to an extent, limit them. And on the third question, there are some developments that suggest that negative space equilibria are more likely to endure than Dreyfuss may initially have thought—and also, on the other side of the coin, that IP-based innovation equilibria may be fragile in the right (or, maybe more properly, the wrong) circumstances.

2.

WHAT IS THE POTENTIAL REACH OF NEGATIVE SPACE INNOVATION?

Dreyfuss raised important questions in the early days of negative space scholarship, when some were wondering (perhaps too optimistically) whether non-IP incentives could displace IP altogether across most or even all of the full breadth of creativity currently protected by some form of IP. This evangelizing aspect of the early negative space scholarship is reflected in the title of her 2010 essay, which includes a phrase that has become attached to this branch of scholarship: ‘Intellectual production without intellectual property.’ In fact, almost every field that has been studied in the negative space scholarship reflects a mix of IP and non-IP incentives. That was true of the fashion



8

Fragile Equilibria, at 1.

Are negative spaces likely to be fragile?

21

industry as Kal and I described it in The Piracy Paradox. The US industry enjoys very little copyright protection. Copyright covers fabric designs as well as illustrations or appliques printed on or attached to garments. But it does not product the shape or cut of a garment; i.e., the central elements of a fashion design. And yet IP is not absent from the fashion industry. Fashion firms police trademarks heavily, even as their designs are open to copying. As Dreyfuss noted, although we did argue in The Piracy Paradox that ‘relationships in the fashion industry are cemented by trademark protection,’9 we did not describe the role of trademarks in any detail.10 We remedied that in a follow-up piece, The Piracy Paradox Revisited:11 In The Piracy Paradox we did not focus on trademarks per se, but they played an important subsidiary role in our analysis. Labels and marks are essential to many apparel buyers, and not only in relation to the paradigmatic consumer search cost and producer reputation concerns that undergird the economics of trademark…. The central point is that while fashion design operates in a low-IP regime, it does not operate in a no-IP regime. Rather, while copyright protection for fashion designs is almost entirely absent, the apparel industry is strongly protected by, and invested in, trademark law. The existence of powerful brands is an important aspect of the economics of fashion. Once a trend becomes widely adopted, its days are usually numbered. But in the interim, as the trend is building, buyers face a plethora of similar designs. To a large degree consumers choose among these based on price, quality, and the like. But they also choose based on labels.12

Thus, the presence of trademark protection supports innovation in the absence of copyright protection. Trademark law helps channel gains from innovation, even if it does not make them fully and exclusively recoupable by the innovator. What we get is a delicate balance between IP and non-IP incentives, one which preserves a wider freedom to copy than a fully-IP-driven equilibrium would likely present, but which also provides some protection to firms that invest in innovation over the long-haul in the form of reputational returns protected by trademark. Thus the correct response, in my view, to Dreyfuss’s first and second questions is to note that her skepticism of the most ambitious low-IP account has merit, and to direct the main thrust of the negative space scholarship, instead,

Id. at 3. See DIPNIP, supra note 21, at 1450 (‘Raustiala and Sprigman make a strong case for why fashion can function in the absence of copyright, but they largely ignore the role played by trademarks.’). 11 Kal Raustiala & Christopher Jon Sprigman, The Piracy Paradox Revisited, 61 Stan. L. Rev. 1201 (2009). 12 Id. at 1215 (footnotes omitted).

9

10

22

Improving intellectual property

toward describing how non-IP incentives can complement IP or limit the need for it. This is the narrative that emerges, for example, when we compare the low-IP US regime for regulating databases with the higher-IP EU regime. We see in the US only marginal regulation of databases by copyright: i.e., copyright does not protect the factual content of most databases but only narrowly protects original schemes of selection, coordination, or arrangement—and generally only against exact or near exact copying. This narrow IP protection complements technological and contractual protections (themselves only partial and subject to leakage), as well as state misappropriation law. Again, this illustrates a low-IP arrangement, but not a no-IP one. In contrast, the 1996 EU Database Directive imposes a community-wide sui generis right in the contents of databases. This high-IP regime was intended to spur database development in the EU, which was seen as lagging behind the US industry. Those benefits have failed to materialize,13 and the Directive is now under review and may eventually be narrowed or scrapped.14 The story in the field of open educational resources, or ‘OER,’ is similar in some important ways. OER, which started in the early 2000s as a global movement to make inexpensive, openly-licensed instructional materials widely available, has now gone mainstream, with some of the most widely-used K-12 instructional materials in the US available under one of a variety of open licenses. One example is Eureka Math, also known as ‘EngageNY,’ which is licensed under a Creative Commons license permitting free non-commercial use. Introduced in the 2013–14 school year, a RAND Corporation 2016 survey identified Eureka Math as the most widely-adopted math curriculum in the United States.15 That said, while OER resources have transformed the education publishing market, it would be wrong to say that OER has ‘displaced’ traditional edu-

13 EU reviews of the Directive in 2005 and 2018 found no measurable positive impact on the production of databases. See Dg Internal Market And Services Working Paper, First evaluation of Directive 96/9/EC on the legal protection of databases, 12 December 2005, available at https://​ec​.europa​.eu/​info/​sites/​ default/​files/​evaluation​_report​_legal​_protection​_databases​_december​_2005​_en​.pdf; COMMISSION STAFF WORKING DOCUMENT Evaluation of Directive 96/9/ EC on the legal protection of databases, Brussels, 25.4.2018 SWD(2018) 146 final, available at https://​digitalstrategy​.ec​.europa​.eu/​en/​library/​staff​-working​-document​-and​ -executive​-summary​-evaluation​-directive​-969eclegal​-protection​-databases. 14 See Estelle Derclaye & Martin Husovec, Sui Generis Database Protection 2.0: Judicial and Legislative Reforms, 44 (6) Eur. I.P. Rev. 323 (2022). 15 Nicole Gorman, Survey Reveals New York Math Curriculum Most Widely Used in the Country, Education World (Apr. 21, 2016), https://​www​.educationworld​.com/​ a​_news/​survey​-reveals​-new​-york​-math​-curriculum​-most​-used​-country​-492126618.

Are negative spaces likely to be fragile?

23

cational publishing and its reliance on copyright protection. Both forms of publishing co-exist and compete. Indeed, Great Minds, which created Eureka Math, now markets a wide array of curricula made available under a variety of licenses.16 Some Great Minds curriculum is openly-licensed. Other curriculum, including the new Great Minds math curriculum, is made available under a standard copyright licensing arrangement.17 OER has not displaced copyright in the market for curriculum, but it has disrupted that market in ways that have made it more competitive and innovative. The market had previously been dominated by a small group of large incumbent publishers. The entry of low-IP players seems to have unlocked a lot of dynamism. The story in databases is, at a general level, similar, although we are comparing legal rules in two different jurisdictions, rather than different business strategies within a single market. Does the success of low-IP approaches suggest that we don’t need any form of propertization in either databases or curriculum? No. The US approach to databases is ‘low-IP,’ not ‘no-IP.’ And OER is, like open-source software, a form of private ordering, rather than a legal rule imposed from above. Low-IP innovation in this field may serve as a competitive check on firms that engage in IP-driven innovation. Thus a valuable role for low-IP innovation to play is not to displace IP, but rather to discipline its use. Indeed, that is a central part of the story with open-source software. Many, including Dreyfuss, have noted that the most important open-source project, Linux, is subsidized by a titan of IP-driven innovation, IBM.18 That is true, but it is also a fact that, at least in my view, shows why low-IP innovation remains vibrant in the software field: because it is a way to prevent important markets from being dominated by firms with dominant IP. That is, IBM supports Linux because the alternative is Microsoft’s dominance in server operating systems, which would threaten IBM’s ability to compete both as a provider of software and enterprise computing services. IBM’s support for the open alternative servers that Linux provides is likely to endure as long as the alternative is a closed environment proprietary to Microsoft within which IBM would compete at a sharp disadvantage. Of course, nothing lasts forever. But, as we shall see, that is true of IP-focused innovation equilibria as well.

16 Note that the author serves on the Board of Directors of Great Minds and has provided legal counsel to that company. 17 See generally www​.greatminds​.org. 18 See DIPNIP at 1451.

Improving intellectual property

24

3.

ARE NEGATIVE SPACE EQUILIBRIA LIKELY TO BE FRAGILE?

This brings us to Dreyfuss’s third question, which is whether negative space innovation has staying power. ‘[A]ny system that depends on norms,’ Dreyfuss, stated, ‘is vulnerable to their breakdown.’19 It’s difficult to argue against that statement as a general matter. But it’s also difficult to argue that negative space innovation equilibria are inevitably subject to breakdown. The US fashion industry, which now produces something close to half a trillion dollars per year in revenues, has been innovating in a low-IP equilibrium at least since the fall of the Fashion Originators’ Guild in the 1940s—i.e., for the entirety of the modern US fashion industry. From time to time, bills are introduced that would change that. None of them have yet passed. The Supreme Court’s decision in Star Athletica v. Varsity Brands,20 which some predicted would disrupt the low-IP equilibrium, appears thus far to have had little effect. It should command our attention that a creative industry that dwarfs such high-IP industries as motion pictures (approximately $45 billion in US revenues) or the recorded music industry (approximately $15 billion in US revenues) has long operated within a low-IP equilibrium and continues to do so. That a large part of the US software industry (approximately $375 billion in revenues) also operates in a low-IP environment—a situation that, again, has been stable for decades—also stands against the notion that low-IP equilibria are inevitably fragile, even when, as in software, low-IP and IP-focused innovation co-exist and compete. We see a similar story of stability in other long-standing negative space creative fields. Comedians have been operating in an informal, norms-based low-IP equilibrium ever since they began the move from the no-IP ‘corn exchange’ of free appropriation in the mid-1960s.21 Other long-standing low-IP equilibria—for example those governing elite chefs and open-source software programmers—have also shown staying power and resilience to technological change. And even some of the areas low-IP innovation that previously have been identified as under threat have survived. In narrowing the scope of business method patents, the Supreme Court’s opinion in Bilski v. Kappos22 arguably helped arrest a drift toward propertization in such areas See DIPNIP at 1458. Star Athletica L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017). 21 See Dotan Oliar & Christopher Jon Sprigman, There’s No Free Laugh (Anymore): The Emergence of Intellectual Property Norms and the Transformation of Stand-Up Comedy, 49 Va L. Rev. (2008). 22 561 U.S. 593 (2010). It should be noted that comedians continue, as they long have, occasionally to press IP claims against infringers who are not comedi19 20

Are negative spaces likely to be fragile?

25

as surgical methods and tax avoidance strategies. And as Dreyfuss has noted, despite the Bayh-Dole Act and the growth of university patenting and ‘tech transfer’ initiatives, academics engaged in scientific research continue to ignore patents for the most part.23 This may be in part because the patent gold rush that many in academia had hoped for failed to materialize for most researchers and institutions.24 But the persistence of a low-IP innovation environment in scientific research may also be traced to the persistence of Mertonian norms of sharing in science that are resistant to the temptations of IP. This resistance is buttressed by institutions like the NIH, which, as Dreyfuss notes, recommends, along with a coalition of universities, that academics work to ensure that all of their patent licenses leave research tools developed with NIH funds open to public use.25 So, are low-IP equilibria fragile? Ultimately the only way to answer that question is comparatively—i.e, to ask whether IP-focused equilibria can also be fragile. The leading story of a fragile low-IP equilibrium is International News Service v. Associated Press (INS v. AP),26 the case that led the Supreme Court to create the tort of misappropriation. The classic account27 is that newspapers had long operated according to a strong norm that allowed morning papers to appropriate stories from editions sold the previous evening and vice ans. The recent lawsuits against streaming services are an example. See Chris Cooke, Pandora responds to comedy copyright lawsuits, dubs comedian rights agency a ‘cartel’, Complete Music Update (May 9, 2022), https://​completemusicupdate​.com/​ article/​pandora​-responds​-to​-comedy​-copyright​-lawsuits​-dubs​-comedian​-rights​-agency​ -a​-cartel/​. 23 DIPNIP at 1470. See also Wesley M. Cohen & John P. Walsh, Real Impediments to Academic Biomedical Research, 8 Innovation Pol’y & Econ. 1, 11 (2007). 24 Jon Marcus, Think Universities Are Making Lots of Money From Inventions? Think Again, The Hechinger Report (Jan. 17, 2020), https://​ hechingerreport​ .org/​ think​-universities​-are​-making​-lots​-of​-money​-from​-inventions​-think​-again/​ (‘US colleges and universities are producing a surprisingly small proportion of the nation’s patents and startups and making so little money from licensing inventions that, at many schools, it doesn’t even cover the cost of managing them.’). 25 DIPNIP at 1470. See also Principles and Guidelines for Recipients of NIH Research Grants and Contracts on Obtaining and Disseminating Biomedical Research Resources: Final Notice, 64 Fed. Reg. 72,090, 72,093 (Dec. 23, 1999): Access to research tools is a prerequisite to continuing scientific advancement. Ensuring broad access while preserving opportunities for product development requires thoughtful, strategic implementation of the Bayh-Dole act [sic]. The NIH urges Recipients to develop patent, license, and material sharing policies with this goal in mind, realizing both product development as well as the continuing availability of new research tools to the scientific community. 26 248 U.S. 215 (1918). 27 Richard A. Epstein, International News Service v. Associated Press: Custom and Law as Sources of Property Rights in News, 78 Va. L. Rev. 85 (1992).

26

Improving intellectual property

versa, but it did not allow papers published at the same time to copy from one another. The thirst for immediate access to news created by World War I, however, led to the break-down of that norm. The lawsuit succeeded in creating a misappropriation-based property right in so-called ‘hot news.’ As Dreyfuss has observed, there is an alternative explanation, based not in changing norms but in technological shifts: [P]rior to the time of INS, news was distributed on large networks of leased telegraph lines. Because the cost of maintaining these networks was so high, a newspaper that owned them enjoyed a strong competitive edge. But in the early twentieth century, technological improvements reduced distribution costs. As a result, the advantage of owning leased lines disappeared, and the industry shifted its attention to the ownership of content. [T]he INS case was constructed in order to create a property right in news, which all of the papers then needed to recover their costs and earn a profit.28

This is a plausible story, but it is perhaps too simple. For as we look at the newspaper business from the perspective of 2022, we see all around us the ruins of the IP-focused equilibrium that INS built. And again, it was technological change that undermined the equilibrium. This happened on several fronts, all of which were connected to the growth of the Internet. Craigslist snatched away much of the classified advertising business that supported newspapers. Google and social networks like Facebook made off with much of the commercial advertising. And perhaps most significantly, Internet distribution of newspapers themselves means that elite newspapers like the New York Times, Wall Street Journal, and Washington Post are now effectively competing with second-tier papers, not to mention third-tier newspapers in hundreds of smaller cities and regions. The result is a concentration of power in a small number of outlets, a decimation of the bulk of the market, a collapse of local news coverage, and, arguably, a democratic crisis. If that isn’t a story about the fragility of a high-IP equilibrium, I’m not sure what is. In fact, we now see efforts in many localities—The Texas Tribune29 and Charlottesville Tomorrow30 are two prominent examples—to turn local and regional journalism toward a non-profit, grant-funded model in which journalism is framed explicitly as a public service and copyright is basically irrelevant. That is, we may be seeing low-IP green shoots emerging from the burned-over soil of the high-IP equilibrium in journalism. 28 DIPNIP at 1457; see also Douglas G. Baird, The Story of INS v. AP: Property, Natural Monopoly, and the Uneasy Legacy of a Concocted Controversy, in Intellectual Property Stories 9 (Jane C. Ginsburg & Rochelle Cooper Dreyfuss eds., 2006). 29 See The Texas Tribune, https://​www​.texastribune​.org/​about/​ 30 See Charlottesville Tomorrow, https://​www​.cvilletomorrow​.org/​about

Are negative spaces likely to be fragile?

27

4. CONCLUSION For the moment, the comparative fragility of low-IP innovation incentives is far from self-evident. That said, as this short chapter has tried to make clear, many of the questions Dreyfuss raises about the reach of the negative space scholarship, and whether low-IP equilibria can operate in markets that traditionally have been governed by IP, are still pending.

4. The Marrakesh Treaty: Using the tools of intellectual property law to advance human rights Laurence R. Helfer 1. INTRODUCTION Over the last two decades, scholars have extensively debated the relationship between human rights and intellectual property. I have long been a proponent of harmonizing the two legal regimes. I reject the claim that the regimes are fundamentally in conflict—a contention advanced by some actors in the UN human rights system. Instead, I view human rights and intellectual property as asking the same basic question: how to give authors and inventors sufficient incentives to create and innovate while providing the public with adequate access to the fruits of their intellectual efforts. This approach sees the two regimes as coexisting roughly in the same policy space, but as sometimes in tension over how to strike the balance between incentives on the one hand and access on the other. Viewing intellectual property through the lens of human rights helps to highlight—and provides arguments to expand—the regulatory space available to governments via the use of flexibility mechanisms in domestic IP legislation and international agreements such as TRIPS.1

1 See, e.g., Laurence R. Helfer and Graeme W. Austin, Human Rights and Intellectual Property: Mapping the Global Interface (Cambridge University Press 2011); Laurence R. Helfer, Human Rights and Intellectual Property: Mapping an Evolving and Contested Relationship in The Oxford Handbook of Intellectual Property Law 117 (Rochelle C. Dreyfuss & Justine Pila eds., 2018); Laurence R. Helfer, The New Innovation Frontier? Intellectual Property and the European Court of Human Rights, 49 Harv. Int’l L.J. 1 (2008); Laurence R. Helfer, Human Rights and Intellectual Property: Conflict or Coexistence? 5 Minn. Intel. Prop. Rev. 47 (2003). Other prominent scholars have similarly argued that human rights ‘are effective tools to guarantee a balanced development and understanding of IP rights and a remedy for the overprotective tendencies of lobby-driven legislation.’ Christophe Geiger, Constitutionalising Intellectual Property Law? The Influence of Fundamental

28

The Marrakesh Treaty

29

Professor Rochelle Dreyfuss has been more skeptical of a human rights approach to intellectual property. She argues that IP standards are determined principally by applying the tools of utilitarianism and welfare economics to evaluate the tradeoffs between providing incentives to create and innovate while encouraging public access to protected works. International human rights law, in contrast, specifies the negative and positive obligations of states to respect and promote the fundamental rights and freedoms of all individuals. To label something as a ‘human right’ thus implies a rhetoric of absolutes and categorical entitlements that, Dreyfuss contends, are ill-suited to developing and revising intellectual property law and policy in response to new technologies and changing economic circumstances.2 These arguments deserve serious consideration. Yet I suspect that Dreyfuss and I would agree that constructive engagement between the two regimes can occur when governments deploy the doctrines of IP law to further human rights ends. Strategies to promote research on neglected diseases—such as prizes, orphan drug schemes, and public-private partnerships—provide a paradigmatic example. These strategies work within the existing IP system rather than against it, redirecting incentives for innovation and creativity and channeling market forces toward socially desirable outcomes. Rather than revisiting the well-known debates surrounding pharmaceutical patents, the human right to health, and access to medicines—topics that Dreyfuss and other scholars have explored at length3—I will focus on a more recent example: the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired or otherwise Print Disabled (Marrakesh Treaty or Treaty).4 This multilateral agreement provides an impor-

Rights on Intellectual Property in the European Union, 37 Int’l Rev. Intell. Prop. & Competition L. 371, 388 (2006). 2 See Rochelle Dreyfuss, Patents and Human Rights: Where is the Paradox? in Intellectual Property and Human Rights: A Paradox 72–96 (Willem Groscheide ed., Edward Elgar Publishing 2009); Rochelle Cooper Dreyfuss, Patents and Human Rights: The Paradox Reexamined in Intellectual Property and Access to Science and Culture: Conflict or Convergence? 54–65 (Christophe Geiger ed., CEIPI-ICTSD Publication Series on Global Perspectives and Challenges for the Intellectual Property System 2016). Other leading scholars have questioned the relationship between the two fields. See, e.g., Ruth L. Okediji, Does Intellectual Property Need Human Rights? 51 N.Y.U. J. Int’l L. & Pol. 1 (2018). 3 See, e.g., Balancing Wealth and Health: Global Administrative Law and the Battle Over Intellectual Property and Access to Medicines in Latin America (Rochelle Dreyfuss & César Rodríguez-Garavito eds. 2014). 4 The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled, WIPO Doc. VIP/DC/8, 27 June 2013 (entered into force 30 September 2016).

30

Improving intellectual property

tant conceptual and practical illustration of how to use the tools and doctrines of IP law to advance human rights objectives. The discussion that follows builds on my coauthored work analyzing the origins, evolution, and implementation of the Marrakesh Treaty, including The World Blind Union Guide to the Marrakesh Treaty: Facilitating Access to Books for Print-Disabled Individuals (WBU Guide).5 Section 2 discusses the background to the Treaty. Section 3 summarizes the negotiation of the Treaty and its entry into force. Section 4 summarizes the Treaty’s principal obligations and highlights several issues relating to how states meet those obligations. Section 5 reviews recent developments regarding implementation. Section 6 closes with a few reflections on what the Treaty may portend for the future relationship between human rights and intellectual property.

2.

ORIGINS OF THE MARRAKESH TREATY

The origins of the Marrakesh Treaty date back to 1967 to the Stockholm Revision of the Berne Convention, when the member states of the Berne Union codified the right of reproduction and the well-known three-step test for exceptions and limitations to copyright.6 The drafters of the Stockholm Revision recognized that certain longstanding exceptions and limitations in national laws were presumptively compatible with the three-step test.7 One of these was the reproduction in special characters and sound recordings of literary works for use of the blind. A plurality of Berne Union members permitted persons with visual disabilities to create or share copies in these accessible formats, and these states wanted to ensure that the exceptions would continue to be permissible under the Berne Convention’s reproduction right.8 5 See Laurence R. Helfer, Molly K. Land, Ruth L. Okediji & Jerome H. Reichman, The World Blind Union Guide to the Marrakesh Treaty: Facilitating Access to Books for Print-Disabled Individuals (Oxford University Press 2017) (WBU Guide); Laurence R. Helfer, Molly K. Land & Ruth L. Okediji, Copyright Exceptions Across Borders: Implementing the Marrakesh Treaty, 42(6) Eur. Intell. Prop. Rev. 332 (2020). 6 Berne Convention, Stockholm Revision, done on July 14, 1967. 7 Berne members agreed in Stockholm to a compromise that codified the exclusive reproduction right in exchange for delineating the three-step test as the common outer boundary to domestic exceptions and limitations to copyright. See, e.g., WBU Guide, supra note 5 at 69-70; Martin Senftleben, Copyright, Limitations and the Three-Step Test: An Analysis of the Three-Step Test in International and EC Copyright Law 81–82 (2004). 8 Prior to the 1967 Stockholm conference, WIPO prepared a list of exceptions limitations as they then existed. Berne members understood this list to constitute ‘certain special cases’ under the three-step test. Notably, the list included two provisions benefitting print-disabled individuals: ‘reproductions in special characters for the use of

The Marrakesh Treaty

31

The adoption of the Marrakesh Treaty nearly half a century later arose from several interrelated factors. First, reports published in the mid-2000s by the World Health Organization and civil society organizations documented the pervasive lack of access to literary works by people with visual disabilities. The World Blind Union (WBU) coined the phrase ‘book famine’ to highlight this problem. The organization identified two interrelated aspects of the book famine: that nearly 300 million people are blind or have visual disabilities, 90 percent of them in developing or least-developed countries; and that only 5 percent of published works are available in formats accessible to those individuals.9 More recently, the WBU found that access to such works has been significantly limited during the COVID-19 pandemic, in part due to copyright restrictions.10 A second factor that facilitated the negotiation of the Marrakesh Treaty was the development of new technologies for disseminating copyrighted works in accessible formats, such as electronic Braille, Daisy, screen readers, text-to-speech functions, e-readers, and large print books.11 With the rise of these new technologies and online communication platforms to distribute them, it no longer made economic sense for each country to create its own repository of accessible format works. It would be far more efficient to permit transfers of accessible format works across borders, provided that such sharing could be accomplished while also ensuring adequate legal protection for copyright owners. A third development was the adoption in 2006 of the Convention of Rights of Persons with Disabilities (CRPD). Article 30 of this UN human rights treaty provides requires states parties to ‘take all appropriate steps, in accordance with international law, to ensure that laws protecting intellectual property rights do not constitute an unreasonable or discriminatory barrier to access by persons with disabilities to cultural materials.’12 The CRPD, which entered into force very quickly and has been ratified by nearly all UN members, became

the blind’ and ‘sound recordings of literary works for the use of the blind.’ Doc. S/ 1, Records 1967, at 112 n.1 (cited in Senftleben, supra note 7, at 48). 9 See, e.g., Asia IP, The Fight Against the ‘Book Famine’ (22 February 2018) (Asia IP), at https://​www​.asiaiplaw​.com/​index​.php/​article/​the​-fight​-against​-the​-ldquobook​ -faminerdquo; World Health Organization and World Bank, World Report on Disability at 10 (2011). 10 World Blind Union, Amplifying Voices: Our Lives, Our Say (August 2020), https://​worldblindunion​.org/​covid​-19​-amplifying​-voices​-our​-lives​-our​-say/​. 11 See, e.g., SeeWriteHear, An Explanation of Alternative Formats, https://​www​ .seewritehear​.com/​learn/​an​-explanation​-of​-alternative​-formats/​. 12 Convention on the Rights of Persons with Disabilities, G.A. Res. 61/106, U.N. Doc. A/RES/61/106 (24 January 2007) art. 30(3).

32

Improving intellectual property

a focal point for highly organized disabilities rights organizations to mobilize on behalf of their members.

3.

NEGOTIATING THE MARRAKESH TREATY

In 2007, the World Intellectual Property Organization (WIPO)’s Standing Committee on Copyright and Related Rights published a study identifying several impediments to the ability of print-disabled persons to access books and cultural materials. Only a third of WIPO members had adopted exceptions to benefit these individuals, and many of those countries did not permit cross-border transfers of accessible format copies or imposed burdensome licensing requirements.13 In response, the Standing Committee recommended that WIPO member states adopt an international instrument on limitations and exceptions for persons with print disabilities. Discussions initially foundered over whether the instrument should be a binding treaty or a nonbinding recommendation. The United States and European Union ultimately agreed with most developing countries that a binding multilateral convention was appropriate to address the needs of a discrete, vulnerable group of persons.14 Unlike most intellectual property agreements, the Marrakesh Treaty was not the product of closed-door negotiations driven primarily by IP industries. Instead, a diverse coalition of civil society groups—including disability rights organizations, library associations, and book sharing initiatives—actively campaigned for the treaty’s adoption.15 At the diplomatic conference in Marrakesh in June 2013, a core group of states hammered out the compromise text of a multilateral agreement and more than 50 countries signed the treaty at the conference’s conclusion. Library organizations, disability rights groups, and the WIPO have actively encouraged states to ratify the agreement, which entered into force in September

13 World Intellectual Property Organization, Study on Copyright Limitations and Exceptions for the Visually Impaired, SCCR/15/7 (Feb. 20, 2007). 14 Margot E. Kaminski & Shlomit Yanisky-Ravid, The Marrakesh Treaty for Visually Impaired Persons: Why a Treaty Was Preferable to Soft Law, 75 U. Pitt. L. Rev. 255 (2014). 15 See Vera Franz, ‘The Miracle in Marrakesh: Copyright Reform to End the ‘Book Famine’’, Open Society Foundation — Voices (28 June 2013), https://​www​ .op​ensocietyf​oundations​.org/​voices/​miracle​-marrakesh​-copyright​-reform​-end​-book​ -famine.

The Marrakesh Treaty

33

2016.16 As of December 2022, 116 states and the European Union were Contracting Parties.17

4.

KEY PROVISIONS OF THE MARRAKESH TREATY

The Marrakesh Treaty is the first international agreement to require exceptions and limitations to copyright. It is also the first such agreement to create a mechanism to facilitate the cross-border exchanges of accessible format works. The Treaty requires all Contracting Parties to adopt such exceptions, specifies the contours of those exceptions, and expands them to include all print-disabled individuals. Taken together, these provisions significantly reduce the financial and practical barriers to creating literary and cultural materials in accessible formats and to sharing those materials among countries. Before providing an overview of the Marrakesh Treaty’s substantive provisions, it may be helpful to provide a concrete example.18 Imagine a person with visual impairments or a group that represents such persons in Cameroon, a country in sub-Saharan Africa that has very few books in accessible formats. This person or group submits a request to an authorized entity, say a library for the blind in France, which has a large repository of accessible format materials in French. That request triggers a more or less automatic transfer of the materials to the requesting party. It is no longer necessary—even if it were ever realistically possible—for the government or disability rights groups in Cameroon to create libraries of accessible format works. In essence, the Marrakesh Treaty establishes the legal and institutional architecture needed to create a global pool of copyrighted works in accessible formats that can be shared with print-disabled individuals. At the same time,

16 See, e.g., European Blind Union, ‘Campaigns and Activities — The Marrakesh Treaty (2019) (EBU, ‘Campaigns and Activities’), http://​www​.euroblind​.org/​campaigns​ -and​-activities/​current​-campaigns/​marrakesh​-treaty. 17 The 116 Contracting Parties includes the 27 member states of the European Union, which ratified the agreement on their behalf. WIPO-Administered Treaties, Marrakesh VIP Treaty, https://​wipolex​.wipo​.int/​en/​treaties/​ShowResults​?search​_what​ =​C​&​treaty​_id​=​843. 18 This hypothetical is inspired by cross-border sharing that occurred soon after the Marrakesh Treaty entered into force. See Accessible Books Consortium, First Cross-Border Book Transfer by ABC Following Entry Into Force of Marrakesh Treaty (30 Sept. 2016), https://​www​.acces​siblebooks​consortium​.org/​news/​en/​2016/​news​ _0010​.html; Krista L. Cox, University of Toronto Makes First International Transfer of Accessible Books to Kyrgyzstan under Marrakesh Treaty (17 May 2018), https://​www​ .arl​.org/​news/​university​-of​-toronto​-makes​-first​-international​-transfer​-of​-accessible​ -books​-to​-kyrgyzstan​-under​-marrakesh​-treaty/​.

Improving intellectual property

34

the Treaty includes safeguards to help ensure ‘that non-qualifying individuals, groups, and organizations’ cannot access materials shared with these individuals or their representatives.19 This framework is created by Articles 4, 5, and 6 of the Treaty. Article 4 requires that national copyright laws include a limitation or exception to the rights of reproduction, distribution, and making available to the public to facilitate the availability of accessible format copies, including by making any technical modifications necessary for accessibility. Articles 5 and 6, respectively, require Contracting Parties to allow the export and import of copies in accessible formats. States may implement these provisions in a variety of ways, including by relying on general fair use or fair dealing doctrines. The WBU Guide urges Contracting Parties to adopt the bespoke exceptions in Articles 4, 5 and 6. These ‘safe harbor’ exceptions are presumptively compatible with other IP agreements and with the three-step test. Choosing these exceptions also enhances certainty and predictability and facilitates cross-border exchanges of accessible format copies by standardizing national implementation rules.20 Article 4 contains two optional clauses that restrict the availability of copyrighted works to print-disabled individuals. The first clause allows states to condition the creation, distribution or making available of accessible format copies upon the payment of a royalty or license fee to the copyright holder. The second allows states to prohibit the creation of such copies if the copyright holder has already made them commercially available upon reasonable terms. The WBU Guide recommends that states reject both of these options. They would introduce needless complexity and financial burdens that would deter print-disabled persons and entities such as libraries for the blind from making or sharing accessible format copies. These concerns are especially paramount for the millions of print-disabled persons in developing and least-developed countries.21 The Marrakesh Treaty also contains capacious definitions of ‘beneficiary persons’ (in Article 3) and ‘authorized entities’ (in Article 2(c)). With respect to the Treaty’s beneficiaries, the WBU Guide recommends that states recognize visual impairments that are consistent with the CRPD’s evolving concept of disability. With respect to authorized entities, the Treaty includes not only organizations whose primary mission is to provide services to the blind, but also public and non-profit bodies—such as schools, libraries, and

WBU Guide, supra note 5, at 30. WBU Guide, supra note 5, at 111–115, 136–39. 21 WBU Guide, supra note 5, at 119–26. 19 20

The Marrakesh Treaty

35

universities—that benefit society as a whole, including individuals with print disabilities. Finally, the WBU Guide emphasizes that the Marrakesh Treaty provides a floor, not a ceiling. For example, states may extend the treaty to other physical or mental disabilities or adopt exceptions for other public interest uses. Such measures must, however, be consistent with the human rights and intellectual property agreements to which these states are parties.22

5.

IMPLEMENTING THE MARRAKESH TREATY

According to recent studies by WIPO and the Association of Research Libraries, Contracting Parties have generally given effect to the Marrakesh Treaty in one of two ways.23 Some states have ratified the agreement without modifying national law. Other countries have revised their copyright statutes before or after joining the Treaty. In both groups of states, the act of ratification alone has facilitated cross-border sharing of accessible format works among print disabled individuals and authorized entities. Nearly three dozen Contracting Parties have joined the Marrakesh Treaty without revising their national laws. More than half of these states—primarily developing countries in Africa, the Middle East, and Latin America—lack an explicit copyright exception for print-disabled individuals. Other states in this group enacted exceptions benefitting the blind long before the Treaty was adopted in 2013. However, many of these pre-Marrakesh exceptions are narrower than the agreement requires.24 Stalled efforts to revise existing copyright laws have impeded ratification of the Treaty in some jurisdictions. In South Africa, such delays triggered a suit by disability rights groups alleging that the absence of an exception for the print-disabled in the 1978 Copyright Act violates that country’s constitution.25

WBU Guide, supra note 5, at 90. WIPO, Revised Scoping Study on Access to Copyright Protected Works by Persons with Disabilities, SCCR/38/3 (13 March 2019) (prepared by Blake E. Reid and Caroline B. Ncube) (‘Revised Scoping Study’), https://​www​.wipo​.int/​meetings/​ en/​doc​_details​.jsp​?doc​_id​=​431197; Association of Research Libraries, National Implementations of the Marrakesh Treaty by Countries That Have Ratified or Acceded to the Treaty (15 January 2021) (prepared by Jonathan Band and Krista Cox), https://​ accessibility​.arl​.org/​marrakesh​-treaty​-implementation/​national​-implementations​-of​ -the​-marrakesh​-treaty​-by​-countries​-that​-have​-ratified​-or​-acceded​-to​-the​-treaty/​. 24 See Helfer, Land & Okediji, supra note 5, at 335–36. 25 Nathan Craig, ConCourt judgement: Blind SA fight apartheid Copyright Act, The South African (13 May 2022), https://​www​.thesouthafrican​.com/​news/​constitutional​ -court​-blind​-sa​-fight​-for​-rights​-against​-copyright​-act​-section27/​. 22 23

Improving intellectual property

36

At least 50 Marrakesh Contracting Parties have adopted legislation to give effect to the Treaty. These laws are quite diverse. Some countries have transposed key provisions of the agreement into their national copyright statutes. Other states have modified preexisting exceptions for the blind to reflect the Marrakesh Treaty’s broader definitions of accessible format copies, beneficiary persons, and authorized entities. Still other countries have clarified that these exceptions apply to the import and export of accessible format copies.26 Significantly, only a handful of Contracting Parties have adopted the optional commercial unavailability and remuneration requirements that the WBU Guide disfavors. The Marrakesh Treaty has also provided the impetus for sharing accessible format copies even in the absence of implementing legislation. For example, on the day the Treaty entered into force on September 30, 2016, a WIPO official hailed ‘the first cross-border exchange[s] … among Brazil, Chile and Argentina’—countries that have copyright exceptions for the blind but do not permit import or export of accessible format copies.27 Similarly, Bookshare has made its library of more than 700,000 accessible ebooks available to authorized entities and beneficiary persons in other Marrakesh Contracting Parties regardless of whether they have adopted implementing legislation.28 These examples reveal that private ordering offers an important additional way to achieve the Marrakesh Treaty’s accessibility goals.

6.

THE MARRAKESH TREATY AND FUTURE ENGAGEMENTS BETWEEN HUMAN RIGHTS AND INTELLECTUAL PROPERTY

The Marrakesh Treaty is a resounding success. Ratification has been rapid and geographically extensive, encompassing both industrialized and developing countries. Only a decade after the ‘miracle in Marrakesh,’29 the number of print-disabled individuals who can create and share accessible format copies is substantial and increasing. This is a striking achievement, especially during an era when the protection of human rights has become increasingly precarious.30

See Helfer, Land & Okediji, supra note 5, at 336–38. Asia IP, supra note 9, at 7; see Revised Scoping Study, supra note 23, at 7–8, 21, 30-31. 28 Natalie Abbott, Marrakesh Treaty in Action, Library Journal at 32, 34 (May 2019), at https://​www​.libraryjournal​.com/​?detailStory​=​Marrakesh​-Treaty​-in​-Action. 29 Franz, supra note 15. 30 See, e.g., Laurence R. Helfer, Populism and International Human Rights Institutions: A Survival Guide in Human Rights in a Time of Populism: Challenges and Responses 218 (Gerald L. Neuman, ed. 2020). 26 27

The Marrakesh Treaty

37

The Marrakesh Treaty provides a compelling practical example of how to reconcile human rights and intellectual property. The Treaty is situated at the intersection of the two regimes and links them in innovative ways. By mandating exceptions to copyright law for the benefit of print-disabled individuals, the Treaty employs the legal and policy tools of intellectual property to advance human rights objectives. Framing copyright exceptions in human rights terms played a significant role in facilitating the negotiation and ratification of the Marrakesh Treaty. A human rights frame challenged the traditional structure of multilateral IP agreements, in which economic rights of private actors are broad and mandatory while public interest exceptions are narrow and discretionary. The Treaty’s proponents also raised compelling normative and empirical arguments, highlighting the negative impact of the book famine on the wellbeing and rights of millions of individuals. Bolstered by the CRPD, this human rights frame helped to forge consensus around a simple yet compelling idea: that intellectual property should be used to reduce, not exacerbate, inequality.31 Does the Marrakesh Treaty provide a template for other areas where human rights and intellectual property overlap? Efforts are already underway in several countries to extend copyright exceptions to individuals with auditory and cognitive disabilities.32 Whether the agreement provides a model for other public interest exceptions to copyright—such as those benefitting educational institutions, libraries, and archives—is, however, far less certain. The Marrakesh Treaty was the product of a confluence of distinctive political, factual, and legal factors. It also required sustained advocacy by a highly motivated coalition of sympathetic civil society organizations. Similar facilitating circumstances are unlikely to arise for a multilateral instrument codifying other public interest exceptions, at least in the near term. Yet the more that the Treaty’s practical application takes account of the reasonable concerns of copyright owners as well as the needs of users, the more it may serve as a template for future accommodations of human rights and intellectual property.

Helfer, Land & Okediji, supra note 5, at 339–40. See Caroline B. Ncube, Blake E. Reid, and Desmond O. Oriakhogba, Beyond the Marrakesh VIP Treaty: Typology of Copyright Access-enabling Provisions for Persons with Disabilities, 23 J. World Intell. Prop. J. 149 (2020). 31 32

PART II

PUBLIC HEALTH, PANDEMICS AND CRISES

5. Winning and losing pairings in access to medicines: A practical guide Peter Drahos 1. INTRODUCTION A combination of public regulation and private ordering has always shaped the relationship between access to medicines and intellectual property. Specific contexts have affected whether the rules of regulation have been more an expression of public interest than the servant of private benefits. In 1917 when the United States entered World War I, it passed a law seizing crucial German pharmaceutical patents. The patents were placed under the control of the Federal Trade Commission. It, with the assistance of the National Research Council, the Public Health Service and the American Medical Association ran a strictly controlled patent licensing regime aimed at the production of essential drugs for the war effort.1 Law and regulation combined to serve the US public interest in access to medicines and developing industrial capabilities in organic chemistry so as to free the US from dependence on German pharmaceutical cartels. The twentieth century has other instructive examples of how public regulation and private ordering have shaped access to medicines. The tetracycline conspiracy is a case in point. Using patents and licences to coordinate collusive behaviour, a group of pharmaceutical manufacturers set global prices for broad spectrum antibiotics for decades, escaping for the most part prosecutorial consequences of the antitrust suits brought against them.2 The tetracycline conspiracy is an old example of concentrated interests trumping diffuse interests. Digital technologies have affected the classic logic of collective action because they have changed patterns of communication 1 Dale Cooper, ‘The Licensing of German Drug Patents Confiscated During World War I: Federal and Private Efforts to Maintain Control, Promote Production, and Protect Public Health’ (2012) 54 Pharmacy in History 3. 2 Peter M Costello, ‘The Tetracycline Conspiracy: Structure, Conduct and Performance in the Drug Industry’ (1967–1968) 1 Antitrust L & Econ Rev 13.

39

Improving intellectual property

40

and organization. As a result, contests between concentrated pharmaceutical interests and the diffuse interests of citizens have become more networked, more visible and so much more complex. In this chapter I want to focus on the choice of norms and type of network in these contests. More particularly, I want to suggest that the last four decades or so of networked conflicts over access to medicines and intellectual property reveal a pattern of interaction in which there are losing and winning pairings of norms and networks. For present purposes winning for proponents of access means shifting access in the direction of marginal cost pricing and increasing social value while winning for pharmaceutical monopoly capital means extracting more private value from social value. The pairings and their outcomes are derived from these recent decades of experience and represent probabilistic outcomes. In other words, in future contests between these pairings the outcomes I describe here can be thought of as more likely than not, a probabilistic rule of thumb as it were. As guides they do not deliver certainty, something that only games based on clear rules, limited moves and perfect information can offer. Access to medicines cannot be described as a game, but rather is a systems struggle riven by inequalities and asymmetries of power and information. In short form the pairings are as follows: i. ii. iii. iv. v.

Principles > Rules Rule Complexity > Principles Private Rule Complexity > Public Rule Complexity Targeted Public Informal Networks > Private Rule Complexity The Private-Public Monopoly Network > Public Health Network

The sign ‘>’ stands for the proposition ‘is/are likely to be of greater value than’.

2.

THE PAIRINGS IN DETAIL

2.1

Principles > Rules

The intuitive idea behind this pairing is that in some contests between principles and rules principles may generate a win for their supporters because of a special quality possessed by principles. There are at least three ways in which one might specify this special quality. One might claim, as Dworkin does, that principles have a dimension of weight that rules do not,3 or one might claim,



3

Ronald M Dworkin, ‘The Model of Rules’ (1967) 35 U Chi L Rev 14, 25.

Winning and losing pairings in access to medicines: A practical guide

41

as Raz does, that principles are not context specific.4 A third way in which to specify the difference is to argue that principles possess framing power.5 For the purposes of the present analysis it is not necessary to settle on which of these specifications of difference is best and, in fact, it may be that principles possess a number of functional faces. The decade of the 1990s offers a good example of a conflict between principles and rules in which principles eventually generate a win for their proponents. Briefly, the TRIPS Agreement introduced a product patent rule for all its members, (although some developing and least-developed countries gained the benefits of delayed implementation).6 During the 1990s the implications of TRIPS rules, especially the product patent rule for medicines, became clearer. These implications were discussed by much wider circles than the narrow business circle responsible for the text of TRIPS.7 By the end of the 1990s civil society organizations like Médecins Sans Frontières had launched an access-to-medicines campaign. In the following decade, the principle of access to medicines had a centripetal effect as it came to be linked to human-rights related principles such as inclusion, equality and accountability.8 The access principle became a flag bearer for policies aimed at countering the exclusivity effects of the product patent rule. These policies included more emphasis on the use of compulsory licences, the use of patent licensing pools, and support for alternative institutional arrangements such as the use of prizes to reward drug discovery. It would be a mistake to reduce the complexity of the debates and politics surrounding TRIPS to just a principle versus rule contest, but at the same time one cannot ignore the mobilizing effect of the access principle, particularly on public health networks. The three functional faces of principles – normative weight, broad contextual application and reframing power – can all be seen in the operation of the access principle for medicines. The access principle and its associated mobilization laid the foundation, I think it is not implausible to claim, for the Declaration on the TRIPS Agreement and Public Health that

Joseph Raz, ‘Legal Principles and the Limits of Law’ (1972) 81 Yale LJ 823. Peter Drahos, ‘Does Dialogue Make a Difference? Structural Change and the Limits of Framing’ (2008) 117 Yale LJ Pocket Part 268, http://​yalelawjournal​.org/​ forum/​does​-dialogue​-make​-a​-difference​-structural​-change​-and​-the​-limits​-of​-framing. 6 See ‘WTO members agree to extend TRIPS transition period for LDCs until 1 July 2034’ https://​www​.wto​.org/​english/​news​_e/​news21​_e/​trip​_30jun21​_e​.htm. 7 For the history, see Peter Drahos and John Braithwaite, Information Feudalism: Who Owns the Knowledge Economy (Earthscan 2002). 8 See, e.g., Lisa Forman and Jillian Clare Kohler (eds), Access to Medicines as a Human Right: Implications for Pharmaceutical Industry Responsibility (University of Toronto Press 2012). 4 5

42

Improving intellectual property

was adopted in 2001 by members of the World Trade Organization (Doha Declaration).9 2.2

Rule Complexity > Principles

The Doha Declaration presents a vivid illustration of how rule complexity can turn victories of principle into symbolic victories. After the Doha Declaration the TRIPS Council had to find a solution to the problem of how developing countries that lacked manufacturing capacity in the pharmaceutical sector could make use of the flexibilities of TRIPS, when TRIPS itself imposed a limit on export under compulsory licence. Essentially, where a patented good had been manufactured under a compulsory licence in a country, the use of that good had to be ‘predominantly for the supply of the domestic market’.10 As a result of this restriction the export capacity of generic producers would be left underutilized – a problem, especially in a pandemic situation. The solution that eventually made it into TRIPS took the form of a system of rules encased in an article, an annex and an appendix to the annex.11 As measured by indicators of legal rule complexity such as density, technicality and conditionality the system is complex.12 It has none of the virtues that simple rules might bring to a complex world.13 It has also not worked. According to the World Trade Organization’s (WTO) notification website, the system has been used once. 14 The one company that has made use of the system, a Canadian generic company, did so because it felt a moral obligation to respond to the scale of the HIV/AIDS crisis. It was never seen, I learnt from interviews with representatives from the Canadian generic industry, as a commercially viable solution. Outside the circle of experts who understood the unworkability of the solution, it did allow the WTO to claim publicly that its custody of the multilateral trading system had served public health.

9 See https://​www​.wto​.org/​english/​thewto​_e/​minist​_e/​min01​_e/​mindecl​_trips​_e​ .htm. 10 See TRIPS Agreement, art 31(f). This condition does not apply where the compulsory licence is issued as part of an anti-competitive remedy, see art 31(k). 11 See ibid art 31bis. 12 Peter Schuck, ‘Legal Complexity: Some Causes, Consequences, and Cures’ (1992) 42 Duke LJ 1. 13 Richard Epstein, Simple Rules for a Complex World (HUP 1995). 14 See World Trade Organization, ‘Canada, Notification under Paragraph 2(C) of the decision of 30 August 2003 on the implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health’ (8 October 2007) IP/N/10/ CAN/1.

Winning and losing pairings in access to medicines: A practical guide

2.3

43

Private Rule Complexity > Public Rule Complexity

We cannot easily grasp the systems of private rule complexity that exist in global capitalism. The point is that these systems were designed to be opaque. Whether it is tax and transfer pricing, investment and arbitration, company structures and beneficial ownership or the generation of patent portfolios around the ownership of technology, the arranged opaqueness that private law can provide is seen by private players as more a virtue than a vice. Of course, states do regulate systems of private rule complexity with systems of public rule complexity. But the outcomes of these systems contests are highly contingent, dependent upon the regulatory capabilities of a state, as well as the integrity of its institutions in the face of special interest group politics. The private ordering of intellectual property rights around medicines is a large and dynamic universe. Public rule interventions in this universe trigger innovative responses that in turn regulators have to evaluate. A good example of the interaction of private and public processes of ordering comes from US in the form of the Drug Price Competition and Patent Term Restoration Act of 1984 (known as the Hatch-Waxman Act). One of its key aims is to streamline the entry of generic drug products into the market since, at least in theory, this should push prices in the direction of marginal cost. The US experience with generic drug products reveals how the regulatory task remains one of constant struggle and catch-up in a world where the high volume of granted patents and freedom of contract create lots of private ordering options for pharmaceutical firms. The US Federal Trade Commission (FTC) has over the last two decades examined many hundreds of patent settlements between brand and generic companies, involving, for example, the payment of compensation by brand companies to generic producers, agreements over the structuring of royalties, restrictions on generic entry into the market and the grant of licences to particular patents.15 When it comes to conflicts over access to medicines the system of private rule complexity has advantages of speed and resources. Pharmaceutical companies can develop multiple responses at multiple levels using private law expertise. For example, patent attorneys will experiment with different formats for claiming products and processes in the chemical and biotechnology fields and, as these become accepted by patent offices, there emerges a suite of

15 Agreements Filed with the Federal Trade Commission under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 Overview of Agreements Filed in FY 2017: A Report by the Bureau of Competition, https://​www​.ftc​ .gov/​news​-events/​news/​press​-releases/​2020/​12/​ftc​-staff​-issues​-fy​-2017​-report​-branded​ -drug​-firms​-patent​-settlements​-generic​-competitors.

44

Improving intellectual property

technical drafting formulae to meet the changing needs of pharmaceutical monopoly capital.16 Obviously my argument is not that public rule complexity is a futile enterprise, but rather it points to the need for regulators to have the capacity to grow continually their knowledge about the adaptive responses coming from the system of private rule complexity. The example of the FTC’s long engagement with pay-for-delay patent settlement disputes shows how well-endowed a state has to be with regulatory institutions and enforcement capacity if public rule complexity is to have any chance of delivering equitable access to medicines. 2.4

Targeted Public Informal Networks > Private Rule Complexity

This pairing is based on a real-world example that I came across in doing interviews with health officials involved in the procurement of pharmaceuticals. I present it here without identifying information because of its sensitive nature. A pharmaceutical company may be the monopoly supplier of a medicine or a group of companies may be oligopoly suppliers of similar therapeutic molecules. One obvious response on the part of the state might be to act as a monopsony buyer of medicines it regards as essential for the purposes of its national public health system. In bargaining games over price, information about bottom lines is everything. In this type of price negotiation one way for public health officials to improve their position is to create an informal club made up of public health price negotiators from those countries who are interested in sharing information and experiences about pharmaceutical price negotiations. For health officials from small- to medium-sized states joining an informal network of this kind is a chance to improve their outcome when they face pharmaceutical monopolists across the negotiating table. It is important to distinguish this particular pairing from the broad literature on the role of transgovernmental regulatory networks in global governance.17 These types of networks draw their membership from national regulatory agencies and operate as a distinct collective entity in international fora to address issues such as tax evasion by multinationals, problems of cartels, regulation of systemically risky banks and a host of other problems on which progress is difficult if regulators only act as disconnected nodes within a border. These more conventional transgovernmental networks may well incorporate private interests since their membership is drawn from national agencies that have

16 Peter Drahos, The Global Governance of Knowledge: Patent Offices and Their Clients (CUP 2010) 79–90. 17 See eg Anne-Marie Slaughter, ‘Global Government Networks, Global Information Agencies, and Disaggregated Democracy’ (2003) 24 Mich J Int’l L 1041.

Winning and losing pairings in access to medicines: A practical guide

45

long institutional histories of engagement, sometimes through a revolving door, with private sector stakeholders.18 In the particular pairing I have described here the public informal network is highly selective in terms of its membership, operating, not surprisingly, as invisibly as it can and, most importantly, constituted as a forensic lance aimed at the core issue in access to medicines – price. 2.5

The Private-Public Monopoly Network > Public Health Network

The most obvious example of this last pairing comes from the genesis of TRIPS itself. TRIPS is a case where a transnational pharmaceutical network allied itself with the US government to produce a set of minimum standards on patents with which all present and future members of the WTO would have to comply. When a powerful state allies itself with pharmaceutical monopoly capital to form an intellectual property standards cartel to pursue innovation primacy and trade gains (the cartel gaining the benefit of oligopoly rents) the resulting standards will travel in the direction of protectionism for the members of the network. Of all the pairings, this pairing is by far the most dangerous for citizens. Medicines and their access form a means to the capabilities of life and bodily health.19 These capabilities are a necessary pillar for others. When a state allies itself with a network devoted to monopolistic expansion over medicines it thereby grants state authority and legitimacy to private dominion over means that are essential to individual planning for desired ends. Aside from the foundational threat that private-public monopoly networks pose to core human capabilities they can, through their spread through public health institutions change the incentives of those institutions, bending them away from their public purpose. The threat here is to institutional integrity. An example of this general claim took place in the mid-1980s at the beginning of the HIV/AIDS epidemic when medical scientists from the Institute Pasteur in France and the National Cancer Institute in the US became embroiled in litigation over patents claiming the ownership of blood test kits for AIDS.20 Cooperation among scientific researchers rather than fighting over patent roy-

18 For how intellectual property owners use transgovernmental networks, see Natasha Tusikov, ‘Transnational Non-state Regulatory Regimes’ in Peter Drahos (ed), Regulatory Theory: Foundations and Applications (ANU Press 2017) 339. 19 Martha C Nussbaum, Women and Human Development: The Capabilities Approach (CUP 2000) 78. 20 Howard L Singer, ‘Institut Pasteur v. United States: The AIDS Patent Dispute, the Contract Disputes Act and the International Exchange of Scientific Data’ (1989) 15 Am J L & Med 439.

46

Improving intellectual property

alties, one might have thought, is a more likely path to a deeper understanding of an exponentially-scaling virus. In this particular instance, the patent brawling came to an end in 1987 when President Reagan and Prime Minister Chirac struck a deal for sharing the patent rights.

3.

IS THE SMART REGULATION OF ACCESS POSSIBLE?

I stated at the outset that access to medicines is a systems struggle riven by inequalities and asymmetries of power and information. The system from which these pairings are extracted is characterized by a high degree of regulatory globalization of intellectual property (meaning the progressive convergence of states upon the same standards of intellectual property protectionism) and the emergence of a global and concentrated pharmaceutical industry devoted to maintaining and extending this protectionism. Five countries and their firms account for around two-thirds of the global economic value of pharmaceutical production.21 The large players in this industry have the advantage of being able to draw on the legitimating values of private law (e.g., the freedom of contract, the fundamental – or in more extreme versions the absolute or natural – status of the right of property), as well as the tools of private law such as the veil of commercial-in-confidence or trade secrets, to increase the complexity of the regulatory task facing the state. Private law in many ways erodes the rule of public health. Over the last two to three decades a better understanding of the range of potential regulatory tools through which to improve access to medicines has emerged. In a survey Kettler et al. identify some 40 regulatory interventions for improving the goals of access, including the promotion of voluntary licensing, the use of patent pools, the use of tiered pricing, pooled procurement, price subsidies, improving World Health Organization prequalification, regional regulatory harmonization, supply chain support, demand forecasting, grand challenge explorations, technical assistance etc.22 And, as Rochelle Dreyfuss has pointed out, public, private and supranational institutions have to be part of any agenda aimed at improving innovation performance.23

21 The countries are United States, Japan, Germany, France and the United Kingdom, see World Health Organization, The World Medicines Situation (WHO 2004) 3. 22 Hannah Kettler, Susanna Lehtimaki and Nina Schwalbe, ‘Accelerating Access to Medicines in a Changing World’ (2020) 98 Bull World Health Organ 641. 23 Rochelle C Dreyfuss, ‘The Challenges Facing IP Systems: Researching for the Future’ in Hanns Ullrich, Peter Drahos and Gustavo Ghidini (eds), Kritika: Essays on Intellectual Property, (vol 3, Edward Elgar 2018) 1, 29–45.

Winning and losing pairings in access to medicines: A practical guide

47

Within the field of regulatory studies, a recognized problem has been arranging and sequencing regulatory tools in ways that maximize complementarities among the tools for a given regulatory domain. This approach to regulation, pioneered by Gunningham et al. under the label of smart regulation, does require the state to be committed to the search and testing of regulatory mixes in order to arrive at optimal ones and avoid counterproductive ones.24 Almost two decades after its first development, the use of smart regulation by states has turned out to be somewhat weak and faltering, primarily because the politics of regulation has too often gained ascendancy over the evidence-based steering on which the complementarities of smart regulation depend.25 For the community of public health workers, the smart regulation approach probably has intuitive appeal because it emphasizes careful diagnosis of a given problem and then deploying instruments of intervention in ways that work holistically to fix the problem. The challenge for any evidence-based approach to intervening in the intellectual property system is that regulators are intervening in a politically organic system, or more accurately a geo-politically organic system. Property rights are enclosures of exclusivity upon which the very existence of a state depends. Moreover, and strikingly so, at this moment in world capitalism’s history the various political capitalisms of the world system have entrenched the institution of intellectual property as the primary driver of capitalism’s commodification processes. The authoritarian capitalism of China may continue to display public allegiance to the ideology of Marxism-Leninism, but this has not stopped it from building the world’s biggest patent office or its telecommunications companies from becoming the biggest users of the Patent Cooperation Treaty.26 In this respect the contrast between China’s approach to intellectual property and the former Soviet Union, which designed its own institutions for intangibles, is truly remarkable.27 It is an acknowledgement that no matter its stripes no political capitalism can stay out of the globalized processes of commodifying intangibles. What then are the prospects for the smart regulation of access to medicines? The long list of regulatory tools identified by Keller et al. form the basis of a smart regulation approach in which one might, for example, encourage voluntarism on the part of pharmaceutical firms backed by the use of infor-

24 Neil Gunningham, Peter Grabosky and Darren Sinclair, Smart Regulation: Designing Environmental Policy (OUP 1998). 25 See Neil Gunningham and Darren Sinclair, ‘Smart Regulation’ in Drahos (n18), 133. 26 Wenting Cheng and Peter Drahos, ‘How China Built the World’s Biggest Patent Office: The Pressure Driving Mechanism’ (2018) 49 IRIPCL 5. 27 For an analysis of the Soviet system, see Svitlana Lebedenko, ‘Russian Innovation in the Era of Patent Globalization’ (2022) 53 IRIPCL 173.

48

Improving intellectual property

mational regulatory strategies (e.g., an access to medicines index for firms28) along with the use of targeted threats of compulsory licensing. But the smart use of regulatory tools to improve access to medicines does have to contend with a world system in which diverse political capitalisms compete for investment, for technology, for the growth of entrepreneurship, a competition in which the rules of intellectual property are accepted as the basis for calculating and extracting value from intangibles. Medicines and medical data can only have a commodified and extractive future under these conditions. The spread and strengthening of data exclusivity regimes around the countries of the world post-TRIPS is one important example of how the rules around the commodification of intangibles are changing to accommodate the convergence of big data analytics, biotechnology and digital technology for the production of medicines.29 Smart regulation on its own is not enough because at times no matter the wealth of high-quality evidence to support a public health regulatory initiative, the contest over access to medicines becomes part of the politics of commodification. This politics, it is reasonable to suppose, will intensify as the globalization of intellectual property meets rising demands for access to medicines in developing countries, as well as global crises such as pandemics and the antibiotic resistance crisis.

4. CONCLUSION The pairings I have set out represent what has been learnt about the likely effects or impacts of interventions in complex systems of political capitalisms when one intervention is paired against another. In this short chapter the pairings are shorn of nuances. It may, for example, be better not to risk entry into a contest in which the access principle is likely to be a loser. Arguably Australia took a huge risk when it allowed its Pharmaceutical Benefits Scheme to become part of the Australia-United States Free Trade Agreement since the PBS is central to Australia’s principle of equitable access to medicines.30 The pairings represent a start to thinking about what may go right and what may go wrong with interventions in the processes of commodification that

28 For an example of such an index, see https://​access​tomedicine​foundation​.org/​ access​-to​-medicine​-index. 29 On the rise of data exclusivity, see Owais H Shaikh, Access to Medicine Versus Test Data Exclusivity: Safeguarding Flexibilities Under International Law (Springer 2016). 30 See Annex (Annex 2-C – Pharmaceuticals) to Chapter 2 (National Treatment and Market Access for Goods) of the Agreement. There is also a side letter dealing with the listing of medicines on the Pharmaceutical Benefits Scheme.

Winning and losing pairings in access to medicines: A practical guide

49

operate around medicines and their related data. They should be thought of as an addition to strategies of smart regulation, not a replacement. The selection of pairings is rooted in the experience of access to medicines over the last four or so decades, but, as I have said, they reflect probabilities rather than causalities. Finally, only one pairing, pairing v. in which the state allies itself with pharmaceutical monopoly capital has delivered structural change, change that has deeply favoured pharmaceutical monopoly capital. For the most part, the other pairings have to date been more about altering the outcomes of individual contests.

6. COVID crisis underscores IP imbalance Cynthia M. Ho 1. INTRODUCTION The COVID crisis has laid bare problems with international and domestic norms concerning IP. Even when IP rights restricted supplies of needed treatments, both companies and countries resisted modifying usual IP norms, alleging that any modifications would stifle future innovation.1 This obviously ignores the reality that future innovation is of no value to those who need treatments today to combat a highly infectious pandemic that is subject to continuing mutations. This resistance to modifying IP rights reflects a problematic conception of IP as primarily an asset of companies, rather than its traditional role as a policy lever for countries to promote innovation while also ensuring other societal goals are met. In other words, IP traditionally has been a means, or lever, for effectuating the policy goal of promoting innovation while still recognizing other goals such as promoting access to affordable medicine. Problems during COVID underscore the problems with the imbalance in IP norms that scholars have previously noted need adjustment.2 This chapter contrasts the current situation to the historical role of IP, explains how the current situation developed, uses recent examples from the COVID crisis to show the

1 E.g., WTO, Council for Trade-Related Aspects of Intellectual Property Rights, Minutes of Meeting, IP/C/M/103, para 83 (Jan 6, 2022); PhRMA, Pharma Statement on WTO TRIPS Intellectual Property Waiver (May 15, 2021), https://​www​.phrma​ .org/​coronavirus/​phrma​-statement​-on​-wto​-trips​-intellectual​-property​-waiver; Siva Thambisetty, Opposition to the TRIPS Waiver: Dispatches from the Frontline, LSE (Dec 20, 202), https://​blogs​.lse​.ac​.uk/​politicsandpolicy/​trips​-waiver​-one​-year​-on/​. Two companies agreed in early 2022 to share COVID treatments with some countries, but not others. E.g., Ed Silverman, Pfizer Criticized Over Patent Strategy for Covid-19 Pill, Despite a Deal to Broaden Access In Poor Countries, Stat (Feb 17, 2022), https://​ www​.statnews​.com/​pharmalot/​2022/​02/​17/​pfizer​-covid19​-paxlovid​-patents. 2 E.g., Rochelle Dreyfuss, TRIPS-Round II: Should Users Strike Back?, 71 U. Chi. L. Rev. 21 (2004).

50

COVID crisis underscores IP imbalance

51

extent of the problem, and provides some thoughts about how to move forward to address the current imbalance.

2.

IP POLICY – PRESENT AND PAST

IP rights are often presumed essential to promote innovation and domestic economic prosperity. IP rights – and especially stronger IP rights – tend to primarily promote more IP activity, but not necessarily more innovation.3 For example, ‘new’ drugs are often not substantial therapeutic improvements.4 In addition, innovative new drugs are often protected by a literal thicket of patents that increases barriers to competition from lower-cost options like generics.5 Companies also engage in anti-competitive action by paying off potential generic competitors to delay launching their drugs. This conduct is consistent with the trend of treating patents as assets but ignoring that they have serious public health ramifications in blocking affordable access and legitimate competition. Moreover, this approach is dramatically different than historical norms and rationale for IP rights. Until recent decades, many countries were more cautious about granting IP rights for fear that exclusivity could have problematic ramifications. A substantial number of countries including India, Canada, and even Spain previously considered ensuring access to affordable drugs of primary societal value and thus elected not to patent drug compounds, or else imposed automatic compulsory licenses on food and drugs to ensure that patent rights did not bar affordable access.6 Moreover, patent rights historically were not just about balancing innovation against affordable and essential inventions, but also focused on promoting technology sharing.7 The focus was dissemination of technical knowledge within the patent-granting country and not about ensuring IP owners were compensated. Even when TRIPS was negotiated, many countries had rules that required patent owners to ‘work’ their inventions in the

3 E.g., Bronwyn H. Hall, Patents and Patent Policy, 23 Oxford Rev. Econ. Pol’y 568, 574 (2007). 4 E.g., a recently approved Alzheimer’s treatment is of questionable value., Pam Belluck et al., How an Unproven Alzheimer’s Drug Got Approved, NY Times, (Oct. 20, 2021). 5 E.g., US House of Representatives, Drug Pricing Investigation ix–x (2021). 6 Jayshree Walat, Intellectual Property Rights in the WTO and Developing Countries 109 (2001). 7 E.g., Paul Champ & Amir Attaran, Patent Rights and Local Working under the WTO TRIPS Agreement: An Analysis of the U.S.-Brazil Patent Dispute, 27 Yale J. Int’l L. 365, 370–71 (2002).

Improving intellectual property

52

patent-granting countries or else be subject to a compulsory license.8 Despite language in TRIPS that can support local working, the United States brought a WTO challenge against Brazil.9 Although the United States withdrew this challenge before a panel decision, the US approach likely reflects an approach to patents and other IP as simply assets.

3.

HOW DID WE GET HERE?

The current imbalance between the historical use of IP as a policy lever and its current use as an asset for companies stems in large part from the WTO mandate to incorporate IP pursuant to TRIPS for most countries of the world. Completely contrary to the prior GATT agreement that recognized IP could be a barrier to trade, TRIPS mandates all countries provide minimum levels of IP protection, largely imposed by the Global North at the behest of IP-intensive industries.10 TRIPS reinforced a conception of IP rights as an entitlement of IP-owning companies. Companies in the United States and EU persuaded their countries that nations without ideal IP rights were ‘stealing’ their IP. Although these claims became part of the international landscape pursuant to TRIPS, treating IP as an asset is contrary to traditional conceptions of IP rights as a policy lever that should be used not only to promote innovation, but also to promote other policies such as technology sharing and ensuring access to affordable drugs. In addition, TRIPS is not the only example of IP being considered an asset, rather than an innovation incentive. Rather, international agreements protecting investments have entrenched the view of IP rights as assets.11 Moreover, the conclusion of TRIPS was simply one step towards cementing a conception of IP rights that deviated from historical practice. As international IP scholars know, after the conclusion of TRIPS, there has been a proliferation of TRIPS plus agreements that further restrict even the limited policy space under TRIPS. Moreover, there are also international agreements that reinforce the conception that IP is simply an asset of companies without any need for policy interests through agreements permitting foreign companies to bring disputes against countries that allegedly compromise their IP investments pur-

Graeme B. Dinwoodie & Rochelle C. Dreyfuss, A Neofederalist Vision Trips: The Resilience of the International Intellectual Property Regime (2012), 43–44; Rochelle Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law is Reconceptualizing Intellectual Property, 36 Mi. J. In’tl L. 557, 576–77 (2015). 9 Id. 44–45. 10 Susan Sell, Private Power, Public Law (2003). 11 Dreyfuss & Frankel at 559, 571–75. 8

of

COVID crisis underscores IP imbalance

53

suant to unique claims provided under international agreements.12 No company has yet threatened to bring a dispute against a country for modifying IP rights during COVID.13 However, there is at least one dispute based on domestic actions during COVID and companies have previously asserted claims against countries that address crisis situations, such as Argentina’s financial crisis and the Arab Spring.14 Companies have previously asserted that IP rights were investments that entitled them to challenge domestic measures limiting IP for public health while seeking millions in compensation. Simply the threat of such a dispute that can cost millions to defend has caused nations to resist domestic measures with strong policy foundation. Nations have backed off from eliminating use of trademarks on tobacco products as well as revoked regulatory approval of a generic due to the threat of such disputes.15 The financial threat of a dispute can be substantial – Eli Lilly sought $500 million in compensation from Canada after Canada invalidated its patents pursuant to a judicial interpretation of what is ‘useful’ that was completely consistent with TRIPS flexibilities.16 Although Canada ultimately prevailed, it was primarily because Eli Lilly could not provide adequate evidence for its claim that there was a dramatic change in domestic law, and not because the panel rejected the previous assumption that nations have discretion to modify their own laws.17

12 Rochelle C Dreyfuss, Hedging Bets with BITS, in Global Intellectual Property Protection and New Constitutionalism 157, 159 (Jonathan Griffiths & Tuomas Mylly, eds. 2021). 13 However, investment disputes based on IP are not immune. E.g., Rochelle Cooper Dreyfuss, ISDS and Intellectual Property in 2020 – Protecting Public Health in the Age of Pandemics, in Investment Claims (Lisa Sachs et al, eds 2021) 11.14–11.24. 14 E.g., French Consortium Kicks off an ICSID claim against Chile after USD 37 million loss due to COVID-19 Pandemic, Investment Treaty News, (Mar. 23, 2021) https://​www​.iisd​.org/​itn/​en/​2021/​03/​23/​french​-consortium​-kicks​-off​-an​-icsid​ -claim​-against​-chile​-after​-usd​-37​-million​-loss​-due​-to​-covid​-19​-pandemic/​; see also Dreyfuss, supra note 13, at para 11.14; Agata Zwolankiewicz, The Brave New World of Foreign Investment in the Wake of Covid-19: Current Situation and Potential Disputes, 2 CIFILE J. Intl L 1, 9 (2021). 15 James Gathii & Cynthia Ho, Regime Shifting of IP Lawmaking and Enforcement from the WTO to the International Investment Regime, 18 Minn. J. L. Sci & Tech. 427, 452 (2017); Luke Eric Peterson & Zoe Williams, Gilead Pharma Corp Withdraws Investment Arbitration After Ukraine Agrees to Settlement of Dispute over Monopoly Rights to Market Anti-viral Drug, IA Reporter (Mar. 16, 2017), republished at ISDS Bilaterals, https://​www​.isds​.bilaterals​.org/​?gilead​-pharma​-corp​-withdraws. 16 Eli Lilly & Co. v. Canada, ICSID Case No. UNCT/14/2, Notice of Arbitration (Sept. 12, 2013), http://​www​.italaw​.com/​cases/​1625. 17 Cynthia M. Ho, TRIPS Flexibilities under Threat from Investment Disputes: A Closer Look at Canada’s Win Against Elil Lilly, bilaterals.org (Apr. 27, 2017), https://​www​.bilaterals​.org/​?trips​-flexibilities​-under​-threat.

54

4.

Improving intellectual property

EXAMPLES OF IP IMBALANCE UNDER DOMESTIC LAW

On the domestic level there are many examples during COVID of how IP is no longer treated as a policy lever to promote innovation alongside other social goals, but instead as an entitlement of companies to increase profits. For example, despite the need for affordable treatments during COVID, many have protested use of US laws that could do so such as march-in rights, as well as government use of patents.18 In addition, although most nations have laws permitting compulsory licenses, they have been under-utilized during COVID. Each of these will be considered in turn. The US failure to use march-in rights for federally funded inventions to address inadequate supplies of treatments during COVID is not surprising considering the US stance on strong IP rights that often mirrors the views of multinational companies. The National Institutes of Health (NIH) has consistently declined to grant march-in petitions when prices have skyrocketed. This is due to a restrictive reading of march-in rights when needed to ‘alleviate health or safety needs which are not reasonably satisfied’ 19 that considers needs satisfied if there is a product on the market, regardless of whether or not it is affordable.20 Some thought that this previously toothless provision would finally be used for COVID, when over 30 state attorneys general requested the government exercise march-in rights after FDA emergency approval of remdesivir to address the fact that the price of over $3000 was too high.21 However, that did not happen. During the pandemic, the Trump administration proposed rules to firmly close the door on using march-in rights to address exorbitantly priced drugs with a proposed ‘clarification’ that failure to provide a product to the public on reasonable terms could not be used to address price.22 This proposed rule

18 Sally C. Pipes, The Remdesivir Patent Isn’t State Property, Wall St. J., Sept 1, 2020; see also Adam Mossoff, The COVID-19 IP Waiver: Threats to US Innovation, Economic Growth and Nationalism, Heritage Foundation (Sept 17, 2021), https://​www​ .heritage​.org/​economic​-and​-property​-rights/​report/​the​-covid​-19​-intellectual​-property​ -waiver​-threats​-us​-innovation. 19 35 U.S.C. 203. 20 E.g., John R. Thomas, March-In Rights Under the Bayh-Dole Act, Congressional Research Service (2016). 21 Ryand Davis, How COVID-19 Could Spur the Govt to Seize Patents, Law 360 (Mar. 31, 2020), https://​www​.law360​.com/​articles/​1258140/​how​-covid​-19​-could​-spur​ -the​-gov​-t​-to​-seize​-patents. 22 Rights to Federally Funded Inventions and Licensing of Government Owned Inventions, 86 Fed. Reg. 35 (Jan 4, 2021).

COVID crisis underscores IP imbalance

55

reflects not only industry desire, but a broader coalition with similar interests.23 The Biden administration has paused this approach.24 However, that does not guarantee that the NIH will take a different approach in the future, especially since not only companies but individuals, advocate against this.25 The US failure to use its ability to engage in government use of any patented invention during COVID is in some ways more surprising. Whereas march-in rights only apply to federally funded inventions and must fit within certain criteria that could be narrowly interpreted, there is a clear statutory basis for the government to use any patented (or copyrighted) invention without restriction, subject to payment of reasonable compensation.26 Nonetheless, despite pleas by advocates, the US never used this lever, for example, to increase access to remdesivir treatment when it was thought to be a helpful COVID treatment.27 Although there are recent requests that the Secretary of Health and Human Services take a new approach to COVID treatment Paxlovid as well as other needed, yet expensive drugs, it is unclear whether this will succeed since the government has taken no action in the months since a March 2022 request.28 If IP were considered a policy lever to promote innovation amidst other priorities, the arguments for government use of IP related to COVID treatment

23 Sarah Karlin-Smith, New Group Aims to Stop Use of Bayh-Dole Act for Drug Pricing Moves, Prescription Pulse (Feb 21, 2020), https://​www​.politico​.com/​ newsletters/​prescription​-pulse/​2020/​02/​21/​new​-group​-aims​-to​-stop​-use​-of​-bayh​-dole​ -act​-for​-drug​-pricing​-moves​-488381; see also https://​bayhdolecoalition​.org. 24 White House, Executive Order on Promoting Competition in the American Economy, https://​www​.whitehouse​.gov/​briefing​-room/​presidential​-actions/​2021/​07/​ 09/​executive​-order​-on​-promoting​-competition​-in​-the​-american​-economy/​ (suggesting a pause on finalizing those provisions). 25 Mark Reisenauer, Inappropriate March-in Rights Would Jeopardize Public-Private Partnerships that Make Lifesaving Medicines Possible, Stat (Mar 3, 2022) https;//www​.statnews​.com/​2022/​03/​03/​inappropriate​-march​-in​-actions​ -jeopardize​-public​-private​-partnerships/​. 26 28 U.S.C. 1498. 27 E.g., Christopher Morten et al, A Powerful Law Gives HHS The Right to Take Control of Remdesivir Manufacturing and Distribution, STAT (July 2, 2020), https://​ www​.statnews​.com/​2020/​07/​02/​powerful​-law​-gives​-hhs​-right​-to​-control​-remdesivir​ -manufacturing​-distribution/​. 28 Letter to Secretary Becerra from Make Medicines More Affordable (Mar. 24, 2022), https://​www​.citizen​.org/​article/​make​-meds​-affordable​-petition/​; Thomas Sullivan, What are They and Why Are they Relevant?, Policy & Med. (June 12, 2022) https://​www​.policymed​.com/​2022/​06/​attention​-on​-march​-in​-rights​-what​-are​-they​-and​ -why​-are​-they​-relevant​.html. A bicameral letter of over 100 Congress members to HHS was submitted in June 2022 reiterating government action, Letter to Secretary Becerra (June 2022). It is unclear if the government will respond especially since a premise of that letter was government inability to negotiate drug prices, which has been mediated somewhat by the Inflation Reduction Act that permits some price negotiation.

56

Improving intellectual property

should be robust where the government substantially funded the innovation. After all, the traditional argument is that IP is needed to ensure that companies are willing to undertake risky research. However, if the government is already subsidizing the research, are typical IP rights needed?29 The World Health Organization (WHO) did not seem to think so; it recommended that nations ensure publicly funded COVID treatments would be affordable to all by ensuring contract provisions promote access to sharing of IP.30 Nations did not heed that call. Similarly, nations have not used a traditional patent policy lever to address public interest: compulsory licenses. If IP were considered a policy lever, granting these licenses should not be considered radical. At an earlier time in history when patents were viewed as a fundamental policy lever, compulsory licenses were imposed when a patent owner was not using the patented invention in the patent-granting country. However, in recent times there is widespread pressure against use of these licenses. For example, the 2020 US Annual Special 301 Report issued just a few months after COVID was declared a global pandemic, criticized countries that issued or considered issuing compulsory licenses.31 Although this report was criticized for being tone-deaf and the US did remove compulsory license complaints from its 2021 Special 301 report, nations are still hesitant to issue compulsory licenses.32 In the wake of COVID, many nations modified their compulsory license provisions to make them easier to use,33 but countries have still been reluctant

29 Arguably IP rights could have played a role in promoting innovation before the COVID pandemic that provided building blocks for relatively rapid development of COVID vaccines. E.g., Peter Yu, IP Paradoxes in Pandemic Times, in 71 GRUR Int’l (2022), https://​papers​.ssrn​.com/​sol3/​papers​.cfm​?abstract​_id​=​4001504. However, given that the government stepped in to fund clinical trials that are generally the most expensive part of drug development, it seems questionable that IP owners should be entitled to full patent rights. 30 WHO, Solidarity Call to Action: Making the Response to COVID-19 a Public Common Good, (Mar. 29, 2020) https://​www​.who​.int/​initiatives/​covid​-19​-technology​ -access​-pool/​solidarity​-call​-to​-action. 31 Office of the US Trade Representative, Special 301 Report 5, 14, 48, 50,62, 75 (2020) (criticizing Indonesia, India and Chile and Turkey for potential threat of compulsory licenses). 32 Luis Gil Abinader, 2020: USTR Publishes a Tone-deaf Special 301 Report, repeats Old Complaints, KEI (Apr 30, 2020), https://​www​.keionline​.org/​32862. 33 Adam Houldworth, The Key COVID-19 Compulsory Licensing Developments so far, iam (Apr 7, 2020), https://​www​.iam​-media​.com/​coronavirus/​the​-key​-covid​-19​ -compulsory​-licensing​-developments​-so​-far. Hungary, and Russia did issue licenses for domestic manufacture, but with industry criticism, MSF, Compulsory Licenses, the TRIPS Waiver and Access to COVID-19 Medical Technologies, Briefing Document (May 2021).

COVID crisis underscores IP imbalance

57

to issue them despite public health needs and the fact that they are permissible under TRIPS. During a deadly COVID surge, India nonetheless resisted pleas by its own courts to issue any compulsory license on COVID treatment or vaccine.34 The lack of licenses could be due to the fact that India’s 2012 compulsory license on a previously unaffordable cancer treatment35 resulted in India being listed as a ‘priority watch’ country in several years of annual Special 301 Reports.36 In 2022 there were some requests for compulsory licenses of a COVID pill in Chile and Ecuador and also advocates pressuring for a license in Columbia and Peru – unless Pfizer willingly licenses the patent.37 At the same time, the pharmaceutical industry has criticized countries for considering compulsory licenses, and also criticized intergovernmental organizations such as the WHO and United Nations Conference on Trade and Development (UNCTAD) for encouraging such licenses.38 Criticism of intergovernmental organizations is new even though industry criticism of compulsory licenses in submissions to annual Special 301 Reports is not, and even though intergovernmental organizations have previously recommended use of compulsory licenses by developing countries. This may suggest an even stronger push by companies to emphasize their view that IP is simply an asset, rather than a policy lever.

5.

INTERNATIONAL IMBALANCE DURING COVID

The conception of IP primarily as an asset, rather than a policy lever is frequently seen during discussion of IP rights impeding access to needed treatments, diagnostics, and vaccines during COVID. The repeated arguments against consideration of a waiver of international obligations under TRIPS 34 In re Distribution of Essential Supplies and Services During Pandemic, Supreme Court of India Motu Writ Petition Nol. 3 (Apr. 30, 2021), https://​main​ .sci​.gov​.in/​supremecourt/​2021/​11001/​11001​_2021​_35​_301​_27825​_Judgement​_30​ -Apr​-2021​.pdf; Zulfiquar Memon, The Indian Dilemma on Compulsory Licensing of the COVID-19 Vaccines, Mondaq (Nov. 4, 2021), https://​ www​ .mondaq​ .com/​ india/​operational​-impacts​-and​-strategy/​1126130/​the​-indian​-dilemma​-on​-compulsory​ -licensing​-of​-the​-covid​-19​-vaccines; Shan Kohli, India’s Private Assurance to USIBC on Compulsory Licensing, SpicyIP (Mar 14, 2016), https://​spicyip​.com/​2016/​03/​indias​ -private​-assurance​-to​-usibc​-on​-compulsory​-licensing​.html. 35 Gireesh Babu, IPAB upholds Natco’s Compulsory License on Nexavar, Business standard (Mar. 5, 201)3, https://​www​.business​-standard​.com/​article/​companies/​ipab​ -upholds​-natco​-s​-compulsory​-license​-on​-nexavar​-113030500400​_1​.html. 36 E.g., Kohli, supra n 34. 37 Ed Silverman, Chilean Health Ministry is Urged to issue a Compulsory License for the Pfizer COVID Pill, Stat (Jan 6, 2022), https://​www​.statnews​.com/​pharmalot/​ 2022/​01/​06/​pfizer​-covid​-paxlovid​-chile​-pandemic​-coronavirus/​. 38 PhRMA, Special 301 Submission 15 (2022).

58

Improving intellectual property

seem to reflect a perception of IP as a sacrosanct asset that cannot be modified.39 This position is ironic since even traditional notions of property laws have exceptions. After all, it is well known that the government can exercise rights over typical property rights, such as eminent domain. However, the analogous patent law concept of compulsory licensing is vehemently objected to and regularly considered stealing.40 Of course, there are valid criticisms of the original TRIPS waiver for COVID proposed by South Africa and India in terms of its limited ability to efficiently promote more vaccine manufacturers given that the waiver would still not mandate owners of trade secret methods of making the vaccines to share them.41 However, not only is it possible to develop alternative methods to unshared trade secrets, but the problem of trade secret methods does not apply to all COVID needs. For example, a pill to treat COVID would be unlikely to have this issue since a pill, unlike more complex compounds such as vaccines can generally be reverse engineered.42 However, a waiver of TRIPS obligations for non-vaccines during COVID seems unlikely because although the WTO agreed to consider such treatments by November 2022, the recently agreed-upon waiver of patent rights for COVID vaccines by some member countries was difficult to achieve.43 Although there is now a limited WTO waiver of usual TRIPS rights for COVID vaccines, that could nonetheless create a different problem that further 39 Letter from the Subcomm. on Cts., Intell. Prop., and the Internet, U.S. H.R., to Ambassador Katherine C. Tai, U.S. Trade Rep. (May 4, 2021)(noting that waiver would permit competitors to steal ‘crown jewels of many American businesses’); Watch out for a Vaccine Patent Heist, Wall St J (Mar 28 2021)(arguing waiver of TRIPS is intended to bully companies and undermines innovation), Hans Sauer, Waiving IP Rights During Times of COVID: A “False Good Idea,” IP Watchdog (Apr 19, 2021) (characterizing proposed waiver as affirmative expropriation). Even after WTO members agreed to a limited waiver, the industry characterizes the agreement as an asset transfer. PhRMA, Pharma Statement on TRIPS Waiver (June 18, 2022), https://​phrma​.org/​resource​-center/​Topics/​Trade/​PhRMA​-Statement​-on​-the​-TRIPS​ -Waiver​-Agreement (stating Biden administration ‘gave away valuable technology to foreign competitors’). 40 Pipes, supra note 18; Ronald A. Cass, Op-Ed., Patent Remedy, Wall St. J. Asia, Aug. 28, 2007, at 13. 41 Ana Santos Rutschman, The COVID-19 Vaccine Patent Waiver: The Wrong Tool for the Wright goal, Bill of Health (May 5, 2021), https://​blog​.petrieflom​.law​ .harvard​.edu/​2021/​05/​05/​covid​-vaccine​-patent​-waiver/​. 42 Arvind K. Bansal & Vishal Koradia, The Role of Reverse Engineering in the Development of Generic Formulations, 29 Pharm. Tech. 50, 50, 54 (2005). 43 WTO, Ministerial Declaration on the TRIPS Agreement, WT/MIN(22)/30 (June 2022). Notably, although the United States supported this proposal, it has never supported modifying TRIPS obligations for non-vaccines and other countries such as the UK and Germany were initially reluctant to even modify IP rights for vaccines.

COVID crisis underscores IP imbalance

59

reflects IP imbalance – a potential dispute for violating international investment rights. In particular, countries could be liable to companies for investment disputes. And, problematically, whereas policy makers are all aware of the TRIPS waiver discussion, there is virtually no mention about the threat of investment disputes that could exist with such a waiver beyond Dreyfuss’ work and a few blog posts.44

6.

WHAT’S NEXT?

The COVID crisis has made the whole world aware of the need to better prepare for future pandemics as reflected by the initiation of negotiations for a Pandemic Treaty negotiation. This presents a prime opportunity to recognize that requesting that companies and countries ensure global equity through voluntary sharing of IP rights does not work and instead impose new norms under this Pandemic Treaty or other instrument. It seems essential to recognize that IP legally constrains production of necessary supplies. Accordingly, a waiver of international laws under not only TRIPS, but all post-TRIPS IP chapter in free trade agreements, including those requiring protection of foreign investments seems essential so that countries can then modify usual IP laws without liability.45 Of course, achieving consensus on this will be a tall order. Not only would this be contrary to interests of multi-national companies, but even some countries. In other words, the same factors motivating some countries to resist the TRIPS waiver for COVID could continue to pose barriers. In addition, although companies have continued to make fervent claims about the need for ‘strong’ IP rights, there may be some growing recognition of a need to recalibrate at least at the domestic level. For example, although the United States has for decades been a leader in strong IP rights, soaring drug prices seem to have raised awareness that something must be done. Of course, changing domestic laws and even opinions may be difficult. On the other hand, 44 E.g., Dafina Atanasova, They Concern You More than You Know: On the Perils and Potential of International Investment Agreements for the Agreement on TRIPS and COVID-19 Discussions at the WTO, Investment Treaty News (Dec, 20, 2021), https://​www​.iisd​.org/​itn/​en/​2021/​12/​20/​they​-concern​-you​-more​-than​-you​-know​-on​-the​ -perils​-and​-potential​-of​-international​-investment​-agreements​-for​-the​-agreement​-on​ -trade​-related​-aspects​-of​-intellectual​-property​-rights​-and​-covid​-19​-discussi/​; Cynthia Ho, Potential Claims Related to IP and Public Health in Investment Agreements: COVID-19, the Proposed TRIPS Waiver and Beyond, South Centre Investment Policy Brief (Dec, 2021), https://​www​.southcentre​.int/​investment​-policy​-brief​-no​-24​-9​ -december​-2021/​. 45 E.g., Cynthia Ho, COVID “Compromise” on International IP Underscores Need for a New Approach, Bill of Health, (Apr. 6, 2022), https://​blog​.petrieflom​.law​ .harvard​.edu/​2022/​04/​06/​covid​-trips​-compromise​-ip​-global​-public​-good/​.

60

Improving intellectual property

even without new legislation, the US could use existing laws such as march-in rights to promote better balance, as not only public health advocates but some members of Congress have recommended. It seems likely that pharmaceutical companies will continue to push hard to protect what they consider to be their IP assets. But, perhaps it is possible to use knowledge gained from COVID that unduly respecting Pharmaceutical Research and Manufacturers of America (PhRMA) views about the sanctity of IP is dangerous to public health. Perhaps this can help halt further entrenchment of the PhRMA views and move closer, even if not entirely back to the original conception of IP as a policy lever.

7. Using compulsory licences as a governance tool: The need for greater effectiveness and policy coherence Duncan Matthews, Esther van Zimmeren and Timo Minssen1 1. INTRODUCTION On 17 June 2022, the 12th World Trade Organization (WTO) Ministerial Conference (MC12) agreed a landmark Decision on the TRIPS Agreement.2 The Decision was far removed from a TRIPS waiver originally proposed by India and South Africa in October 2020, which would have entailed a suspension of provisions of the TRIPS Agreement necessary for the prevention, containment and treatment of COVID-19.3 That proposal had envisaged setting aside WTO Member obligations to enforce copyright and related rights, industrial designs, patents, and the protection of undisclosed information by means of a temporary waiver during the pandemic. Instead the WTO Decision resembled the European Union (EU) communication of 4 June 2020, which emphasized inter alia the availability of compulsory licensing provisions as a policy tool that could be used during the

1 With thanks to Maciej Padamczyk, Doctoral Associate, Queen Mary University of London, for research assistance. Timo Minssen’s research for this paper was supported, in part, by a Novo Nordisk Foundation grant for a scientifically independent Collaborative Research Programme in Biomedical Innovation Law (grant agreement number NNF17SA0027784). 2 Draft Ministerial Decision on the TRIPS Agreement (17 June 2022) WT/ MIN(22)/W/15/Rev.1. 3 Waiver from certain provisions of the TRIPS Agreement for the prevention, containment and treatment of Covid-19, Communication from India and South Africa (2 October 2020) IP/C/W/669, https://​docs​.wto​.org/​dol2fe/​Pages/​SS/​directdoc​.aspx​ ?filename​=​q:/​IP/​C/​W669​.pdf​&​Open​=​True.

61

62

Improving intellectual property

pandemic.4 The WTO Decision created a new, limited exception to existing obligations contained in Article 31(f) of TRIPS which states that exports under compulsory licence must be restricted to the non-predominant part of the authorized product.5 The Decision remained limited to COVID-19 vaccines, to the exclusion of diagnostics and therapeutics. In this and other respects it was an underwhelming outcome that satisfied neither the research-based pharmaceutical industry nor public health activists.6 While it is not the intention of this chapter to analyse the likely effectiveness of the mechanism created by the WTO Decision, this focus on compulsory licensing demonstrates its importance as a governance tool that can be deployed to safeguard access to technologies. This in turn shows the importance of effective use of compulsory licences as instruments of governance, both as tools to facilitate negotiations on fair pricing and to enhance access to essential technologies in times of need. Whether or not compulsory licensing can fulfil these policy objectives, however, remains fiercely debated. Against this backdrop, we examine the extent that WTO Members are, in practice, able to effectively ensure access to technologies through compulsory licences. We argue that greater policy coherence is required to ensure the effectiveness of compulsory licensing to address major challenges such as access to medicines in emergencies or the crucial technologies needed to battle climate change. We further stress that compulsory licences are part of the wider policy toolkit; they are not a standalone solution for governments acting in the public interest. In order to present the international and legal context for this analysis, Section 2 will set out the international legal framework in which compulsory licensing regimes operate by virtue of the Paris Convention, the TRIPS Agreement, and national legal provisions. In Section 3, we highlight 4 European Commission, ‘EU proposes a strong multilateral trade response to the Covid-19 pandemic’ (Press Release, 4 June 2021), https://​ec​.europa​.eu/​commission/​ presscorner/​detail/​en/​IP​_21​_2801. 5 See Jayashree Watal, ‘Analysis of the 12th Ministerial Conference Decision on the TRIPS Agreement’ (EJIL: Talk!, 8 July 2022), https://​www​.ejiltalk​.org/​analysis​ -of​-the​-12th​-wto​-ministerial​-conference​-decision​-on​-the​-trips​-agreement/​. See also James Love, ‘The June 17, 2022 WTO Ministerial Decision on the TRIPS Agreement’ (Knowledge Ecology International, 17 June 2022), https://​www​.keionline​.org/​37830. See also, ‘The WTO Covid-19 TRIPS Decision: Some Observations’ (Medicines Law & Policy, 17 June 2022), https://​m​edicinesla​wandpolicy​.org/​2022/​06/​wto​-covid​-19​ -trips​-decision​-some​-observations/​. 6 ‘Pharmaceutical Industry Expresses Deep Disappointment with the decision on waiving of intellectual property rights at the World Trade Organization Ministerial Conference’ (IFPMA, 17 June 2022), https://​www​.ifpma​.org/​resource​-centre/​ pharmaceutical​-industry​-expresses​-deep​-disappointment​-with​-decision​-on​-waiving​ -intellectual​-property​-rights​-adopted​-at​-the​-world​-trade​-organization​-ministerial​ -conference/​.

Using compulsory licences as a governance tool

63

problems with the implementation of compulsory licence regimes in practice and, in Section 4, we endorse the work of Professor Rochelle C. Dreyfuss, who has argued convincingly that institutional design matters.7 Building on this institutional design approach, we argue that greater coherence can help ensure that compulsory licences can be an effective policy tool.

2.

LEGAL FRAMEWORK

A competent authority may grant a compulsory or non-voluntary licence to a third party, allowing the exploitation of the patented invention during the patent term without the authorization of the right holder. In particular, a third party may be permitted to use, sell or import the patent-protected product or process without the patent owners’ consent. This authorization may also be granted to a government agency or a third party authorized to act on behalf of the government, in which case such authorization is ‘government use’. Reasons for granting compulsory licences may include balancing the rights of patent holders with the public interest, enabling access to dependent patents, achieving public health objectives, or addressing anti-competitive behaviour. 2.1

International Legal Framework

Article 5A of the Paris Convention recognizes the right of each country of the Paris Union to take legislative measures providing for the grant of compulsory licences to prevent abuses which might result from the exercise of excluding rights conferred by the patent, for example, failure to work the invention. Most countries already provided for some form of compulsory licences at the time the TRIPS Agreement was negotiated. Paris Union Member countries are free to define what constitutes ‘abuses which might result from the exercise of exclusive rights conferred by the patent’ or ‘failure to work’. However, controversy over the appropriate scope of compulsory licensing is cited as one of the reasons TRIPS negotiations were initiated.8

7 Graeme B. Dinwoodie and Rochelle C. Dreyfuss, A Neofederalist Vision of TRIPS: The Resilience of the International Intellectual Property Regime (Oxford University Press 2012). Rochelle C. Dreyfuss, ‘Introduction: Designing Intellectual Property Institutions for the Twenty-First Century’ (2009) 12(5) JWIP 341–347; Graeme B. Dinwoodie and Rochelle C. Dreyfuss, ‘Designing a Global Intellectual Property System Responsive to Change: The WTO, WIPO and Beyond’ (2009) 46 Houston L Rev 46, Rochelle C. Dreyfuss, ‘In Search of Institutional Identity: The Federal Circuit Comes of Age’ (2008) 23(2) Berk Tech L J 787, 800. 8 Duncan Matthews, Globalising Intellectual Property Rights: The TRIPS Agreement (Routledge 2002) 12.

64

Improving intellectual property

The TRIPS Agreement obliges Members to observe a set of minimum standards of protection, including the obligation to grant patents in all fields of technology.9 Yet the TRIPS Agreement also contains flexibilities that could be utilized as safeguards for public health. Such flexibilities enable governments to mitigate, by enacting appropriate legislation and regulations, the negative impact that patents and other intellectual property rights may have on access to health products and related technologies. The TRIPS Agreement, Article 2.1, requires that WTO Members comply with Article 5A of the Paris Convention concerning compulsory licences. In addition, under Article 31 of the TRIPS Agreement, a WTO Member may allow, under stipulated conditions, ‘other use’ than that allowed under Article 30 without authorization of the right holder. Those uses include compulsory licences and government use. The Declaration on the TRIPS Agreement and Public Health provides some guidance for the interpretation and application of Article 31.10 The Declaration states, while reiterating the commitment to the TRIPS Agreement, the WTO Members affirmed that the Agreement can and should be interpreted and implemented in a manner supportive of the WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.11 In this connection, the Members reaffirmed the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.12 Paragraph 5(b) of the Doha Declaration confirmed with respect to compulsory licences that ‘[e]ach Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted’. Additionally, Paragraph 6 of the Declaration recognized the limitations with compulsory licences for WTO Members with no or insufficient manufacturing capacity in pharmaceuticals. Article 31(f) also required that medicines produced under compulsory licence should be predominantly for the supply of the domestic market of the Member authorizing such use. This 9 TRIPS Agreement, art 27.1. Carlos Correa and Duncan Matthews, ‘The Doha Declaration Ten Years on and Its Impact on Access to Medicines and the Right to Health’ (2011) UNDP Discussion Paper 5. 10 Duncan Matthews, ‘The WTO Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: A Solution to the Access to Essential Medicines Problem?’ (2004) 7(1) JIEL 73–107. 11 Rochelle C. Dreyfuss, TRIPS-Round II: Should Users Strike Back?’ (2004) 71 U Chi Law Rev 21, 23; Graeme B. Dinwoodie and Rochelle C. Dreyfuss, ‘Diversifying Without Discriminating: Complying with the Mandates of the TRIPS Agreement’ (2007) 13 Mich Telecomm Tech L Rev 445, 446. 12 WTO ‘Doha Ministerial Declaration on the TRIPS agreement and public health’, https://​www​.wto​.org/​english/​thewto​_e/​minist​_e/​min01​_e/​mindecl​_trips​_e​.htm.

Using compulsory licences as a governance tool

65

constituted a major problem for WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector, since these WTO Members would be unable to make effective use of compulsory licensing because an exporting producer might be limited in the quantity of medicines it could export pursuant to a compulsory licence. The Article 31(f) problem was partially resolved in August 2003 when WTO Members agreed to change TRIPS to make it easier for countries to import cheaper generics made under compulsory licence if they are unable to manufacture the medicines.13 After protracted and often acrimonious negotiations, WTO Members agreed on a temporary waiver to Article 31(f) and (h) to allow for the export of medicines under compulsory licence conditions.14 A waiver of Article 31 (h) was important because it could have led to the patent owner being paid in both the importing and the exporting country under compulsory licencing conditions. However, this involved only a temporary waiver and, on 6 December 2005, an agreement was reached to amend the TRIPS Agreement and make permanent the waiver of Article 31(f) and (h).15 The amendment was subject to the approval by two-thirds of the WTO Members and this was finally achieved on 23 January 2017.16 The amendment added Article 31bis which also included new and substantial requirements on anti-diversion measures, labelling, and notifications that significantly affected the efficiency and effectiveness of the procedure. In the almost two decades that the waiver has existed, it has been used once by Rwanda for a generic fixed-dose-combination HIV medicine from a Canadian manufacturer Apotex. This procedure took four years and required significant civil society involvement. Stakeholders have called the procedure ‘unworkable’. In addition, the waiver system can only be used on a case-by-case basis making it inefficient. It is difficult to generate economies of scale and to safeguard predictability of market prospects when they are exploiting a compulsory licence.17 This does not bode well for the June 2022 WTO Decision which 13 Duncan Matthews, ‘From the August 30, 2003 WTO Decision to the December 6, 2005 Agreement on an Amendment to TRIPS: Improving Access to Medicines in Developing Countries?’ (2006) 2 IPQ 91–130. 14 WTO ‘Implementation of paragraph 6 of the Doha Declaration on the TRIPS Agreement and public health’ (1 September 2003) WT/l/540 and Corr.1, https://​www​ .wto​.org/​english/​tratop​_e/​trips​_e/​implem​_para6​_e​.htm. 15 WTO ‘Amendment of the TRIPS Agreement’ (8 December 2005) WT/L/641, https://​www​.wto​.org/​english/​tratop​_e/​trips​_e/​wtl641​_e​.htm. 16 WTO ‘WTO IP rules amended to ease poor countries’ access to affordable medicines’, (WTO News Items, 23 January 2017) https://​www​.wto​.org/​english/​news​_e/​ news17​_e/​trip​_23jan17​_e​.htm. 17 See also Susy Frankel, ‘COVID-19, Vaccines and International Knowledge Governance on Trial’ (2022) 12(4) QMJIP 441, 454.

66

Improving intellectual property

focuses narrowly on the use of compulsory licences during the COVID-19 pandemic. Non-governmental actors criticized the amendment making permanent the waiver of Article 31(f) and (h) on grounds that it was burdensome, slow to use and likely to fail in its objective of improving access to medicines.18 Also, high-income WTO Members, including EU Member States were criticized for opting out of importing under the 2003 Decision and the permanent waiver.19 Such criticisms notably resurfaced during the first wave of COVID-19 in early 2020.20 2.2

National Legal Framework and Use of Compulsory Licences in WTO Members

As Paragraph 5(b) of the Doha Declaration confirmed WTO Members have the freedom to determine the grounds upon which such licences are granted, flexibility is given to countries in tailoring compulsory licences and government use provisions in their national (patent) law. Although Article 31 refers to a number of specific grounds (i.e., national emergency, anti-competitive practices, public non-commercial use, dependent patents) it does not limit discretion to include other grounds in national (patent) law. As noted above, the grounds included in the Paris Convention are also incorporated into TRIPS. These grounds include abuse of patent rights, failure to work or insufficient working. It is important to note, however, that a key condition in Article 31(b), the requirement to engage in ‘reasonable efforts to negotiate a licence’, does not apply to national emergencies or other circumstances of extreme urgency, cases of anti-competitive practices and non-commercial government use. Another key condition relates to the adequate remuneration of the right owner. This adequate remuneration is generally determined by a judge or minister and has a significant impact on the normal prerogatives of the patent owner to set prices for licensing out. Moreover, the actual method that is used for determin-

18 ‘WTO Members Should Reject Bad Deal on Medicines’ (Joint Statement by NGOs on TRIPS and Public Health, 3 December 2005), www​.cptech​.org/​ip/​wto/​p6/​ ngos12032005​.html. 19 Matthews (n 13) 114. 20 Christopher Garrison, ‘Never say never – Why the High Income Countries that opted-out from Art. 31bis WTO TRIPS system must urgently reconsider their decision in the face of the Covid-19 pandemic’ (Medicines Law and Policy, 8 April 2020), https://​m​edicinesla​wandpolicy​.org/​2020/​04/​never​-say​-never​-why​-the​-high​ -income​-countries​-that​-opted​-out​-from​-the​-art​-31bis​-wto​-trips​-system​-must​-urgently​ -reconsider​-their​-decision​-in​-the​-face​-of​-the​-covid​-19​-pandemic/​.

Using compulsory licences as a governance tool

67

ing what is ‘adequate’ has not been standardized. Although the World Health Organization (WHO) has issued some guidelines indicating best practices in various jurisdictions,21 WTO Members and their competent authorities have flexibility in selecting a method for calculating ‘adequate’ remuneration. Prior to the COVID-19 pandemic it had been anticipated that compulsory licences would be a key measure to address what are termed in Article 31(b) of the TRIPS Agreement ‘a national emergency or other circumstances of extreme urgency’. Specific measures can be taken to deal with an emergency and maintained as long as the underlying situation persists. Moreover, no formalities are set out for deciding what constitutes a national emergency or other circumstances of extreme urgency and no formal declaration or justification is prescribed. A similar flexibility exists for compulsory licences for ‘abuse’. TRIPS Article 8(2) states that measures ‘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’. This provision is augmented by Article 31(k) which states that Members are not obliged to apply the conditions in subparagraphs (b) and (f) on negotiation with the right holder and manufacture predominantly for the supply of the domestic market where such use is permitted to remedy a practice is judicially or administratively determined to be anti-competitive.22 What amounts to ‘abuse’ or ‘anti-competitive’ is left to competent national authorities to decide. Failure to work, in the Paris Convention, is an example of ‘abuse’ and means that the patent owner is not or insufficiently exploiting the patented invention. The Paris Convention imposes a period of four years from the date of filing or three years from the date of the grant of the patent, whichever period expires last. It also provides that a compulsory license for failure to work or insufficient working must be refused if the patent owner justifies the inaction by legitimate reasons. There is no internationally agreed meaning of what constitutes ‘no or insufficient working’, thus leaving Members with substantial discretion when deciding such grounds. The holder of a patent in Brazil is required to ‘work’ the subject matter of a patent within a specified period of time, either by producing the patented product in the country, or by allowing the patented process to be used in 21 James Love, ‘Remuneration guidelines for non-voluntary use of a patent on medical technologies’ 2005 WHO/TCM/2005.1, https://​apps​.who​.int/​iris/​handle/​ 10665/​69199. 22 Duncan Matthews and Olga Gurgula, ‘Patent Strategies and Competition Law in the Pharmaceutical Sector: Implications for Access to Medicines’ (2016) 11 EIPR 661–667.

68

Improving intellectual property

Brazil.23 In January 2001, the United States (US) requested that the WTO Dispute Settlement Body (DSB) establish a panel to resolve its complaint against Brazil in relation to the incompatibility of this local working requirements with Article 27.1 of the TRIPS Agreement.24 Brazil argued its law was compatible with the Paris Convention and was essential as a bargaining tool to achieve the most cost-effective price for drugs when negotiating with multinational pharmaceutical companies. Moreover, Brazil highlighted that Articles 204 and 209 of Title 35 of the US Patent Code, which specified local manufacturing of publicly financed patented products and products patented by the US government, were remarkably similar to those that the United States had challenged. In June 2001 in the face of enormous negative publicity from international and Brazilian NGOs and legal arguments, the US withdrew the complaint. It did so after receiving assurances that it would be notified before any products patented by or exclusively licensed to US companies were subject to compulsory licensing in Brazil.25 This example shows that the mere existence of compulsory licensing provisions in national patent laws can be an essential bargaining tool in negotiations regarding essential medicines and potentially also for other essential products. Often compulsory licences are presented as a kind of ‘last resort’ mechanism. This term is not used explicitly in Article 31 of the TRIPS Agreement. Instead, Article 31(b) provides that compulsory licences can be deployed in any circumstances where, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a WTO Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use (art 31(b)). The use of the ‘last resort’ terminology may therefore erroneously give some national and international policymakers the impression that compulsory licences can only be used in exceptional circumstances. However, in reality, compulsory licences cannot be granted as a regularized mainstream government policy due to the fact that the TRIPS Agreement requires a case-by-case evaluation. Nevertheless, the actual role of compulsory licences as a negotiation tool should not be underestimated.

23 Lei 9.279/96 da Propriedade Industrial, translated in British Industrial Property Law 23 (1998), art 68. 24 Brazil – Measures Affecting Patent Protection, Request for the Establishment of a Panel by the United States (9 January 2001) WT/DS199/3. 25 Brazil – Measures Affecting Patent Protection, Notification of Mutually Agreed Solution (19 July 2001) WT/DS199/4.

Using compulsory licences as a governance tool

2.3

69

Compulsory Licences and COVID-19: National Legislation and Use

Despite the fact that there is flexibility for compulsory licences and that most countries have included compulsory licences in their national patent legislation, compulsory licences seem to be under-utilized. In practice stakeholders and countries tend to be quite reluctant to apply for and to grant compulsory licences. Compulsory licences are typically used as a bargaining tool in negotiations, as a defence in patent litigation and as an exceptional mechanism which is only rarely invoked. Whereas a considerable number of compulsory licences have been granted in middle- and low-income countries, only a relatively small number of examples exist where courts or governments in high-income countries have granted compulsory licences. In a study published in 2018, ‘t Hoen et al. identified 100 compulsory/ public non-commercial use licences, including two granted by developed countries.26 Whereas ‘t Hoen et al. claim that they are more frequently used than is regularly assumed, we would argue that the actual global number of granted compulsory licences is relatively low in view of the global needs to access essential medicines. When the COVID-19 pandemic began, expectations were high in some countries that compulsory licences could provide an effective solution to manufacturing and supply chain problems associated with protective materials, diagnostic equipment, treatments, and vaccines.27 Several countries reacted to the onset of the pandemic by amending (or attempting to amend) their national laws and procedures to facilitate the use of compulsory licences. In March 2020 a resolution supported by the Chilean Chamber of Deputies declared support for compulsory licensing of COVID-19 medicines and vaccines.28 The same month, the Ecuadorian National Assembly Commission on Education, Culture, Science and Technology passed a resolution asking the Minister of Health to issue compulsory licences over COVID-19 related technologies.29 In Germany, amendments to the Act on the Prevention and Control of Infectious 26 Ellen F. M. ‘t Hoen and others, ‘Medicine procurement and the use of flexibilities in the Agreement on Trade-Related Aspects of Intellectual Property Rights, 2001–2016’ (2018) 96(3) BWHO 185–193. 27 Duncan Matthews, ‘The Covid-19 pandemic: Lessons for the European Patent System’ (2022) 4 EIPR 221–230. 28 Ed Silverman, ’Chilean lawmakers support compulsory licensing for coronavirus medicines and vaccines’ (Pharmalot, 18 March 2020), https://​www​.statnews​.com/​ pharmalot/​2020/​03/​18/​chile​-compulsory​-licensing​-coronavirus​-covid19​-vaccines/​. 29 Luis Gil Abinader, ‘Legislative Committee in Ecuador approves resolution on compulsory licensing of patents relating to the coronavirus’ (Knowledge Ecology International, 20 March 2020), https://​www​.keionline​.org/​32429.

70

Improving intellectual property

Diseases in Humans were introduced in April 2020 to expedite the issuance of compulsory licences if required.30 Despite these legislative initiatives, no compulsory licences were ever issued in these countries in response to COVID-19, in spite of public outcry about widespread shortages of health products and technologies during the pandemic. Only Israel issued a compulsory licence during the pandemic, and this was for a pre-existing HIV/AIDS antiretroviral drug, Kaletra, which was thought initially to be an effective treatment for COVID-19 but subsequently transpired to be of little benefit.31 On 11 May 2021, Bolivia formally notified the WTO of its need to import COVID-19 vaccines under the system introduced in 2017.32 However it later turned out that none of the 50 WTO Members with legislative provisions in place to export under compulsory licensing conditions were willing or able to arrange for the manufacture and export of the required COVID-19 vaccines to Bolivia. The message, therefore, was clear: compulsory licences, the key safeguard mechanism in TRIPS Agreement, was not in fact an effective tool that could be used to address public health during the pandemic. This unfortunate conclusion is well-aligned with the experience of Rwanda and Canada.

3.

THE WAY FORWARD

The limited global use of compulsory licences leads us to question their effectiveness as a policy tool. The adoption of the WTO Decision as a compromise solution and its associated conditions and limitations are no reason to scale back our inquiry in this regard. We are unconvinced that compulsory licences as they currently exist in many countries will be able to deal in an effective manner with future health emergencies or situations of extreme urgency, high prices for medicines and wider access to health-care related technologies.

30 Gesetz zur Verhütung und Bekämpfung von Infektionskrankheiten beim Menschen – Infektionsschutzgesetz – IfSG. See Simon Klopschinski, ‘German government plans possibilities to limit patents in view of Corona pandemic’, (Kluwer Patent Blog, 24 March 2020) http://​patentblog​.kluweriplaw​.com/​2020/​03/​24/​german​ -government ​ - plans​ - possibilities​ - to​ - limit​ - patents​ - in​ - view​ - of​ - corona​ - pandemic/​ . Simon Klopschinski, ‘Update on Patent-Related Measures in Germany in View of Corona Pandemic’ (Kluwer Patent Blog, 2 April 2020), http://​patentblog​.kluweriplaw​ .com/​2020/​04/​02/​update​-on​-patent​-related​-measures​-in​-germany​-in​-view​-of​-corona​ -pandemic/​. 31 Ed Silverman, ‘AbbVie will allow generic copies of its HIV pill in Israel after the government approved a license’ (Pharmalot, 20 March 2020), https://​www​.statnews​ .com/​pharmalot/​2020/​03/​20/​abbvie​-israel​-hiv​-kaletra​-coronavirus​-covid19/​. 32 WTO ‘Bolivia outlines vaccine import needs in use of WTO flexibilities to tackle pandemic’ (News Item, 12 May 2021), https://​www​.wto​.org/​english/​news​_e/​news21​_e/​ dgno​_10may21​_e​.htm.

Using compulsory licences as a governance tool

71

Neither do we think that the current approach towards compulsory licences alone will be able to fulfil all the hopes that some authors have had to ensure access to key mitigating technologies for dealing with climate change.33 Nonetheless, we consider that compulsory licences will continue to be used as an important negotiating tool. Yet, the strength of that negotiating tool will depend on its institutional design. For instance, which authority is responsible for granting compulsory licences, which ground is invoked as a basis to grant the compulsory licence and how is that ground interpreted and applied? Finally, who determines what is adequate compensation and how do they determine that? A recent expert report, regarding compulsory licences for dealing with expensive medicines, should highlight the importance of the institutional design for the effectiveness of compulsory licences as a policy tool.34 This report is focused on Belgium but includes findings that could be relevant to other countries. Belgium is a small country with a well-developed pharmaceutical industry. It shows some particular challenges for small, developed countries in responding effectively to increasing prices of new medicines and the complex power dynamics of the pharmaceutical sector. To achieve more policy coherence, effectiveness, and bargaining power for such small countries, it will not only be important to explore opportunities for better coordinating agencies and stakeholders involved in compulsory licensing, but also to explore initiatives for granting compulsory licences at the EU level or with other countries. The European Commission is currently investigating this approach. Moreover, since the adoption of the Unitary Patent Package in 2012 the European patent community has been waiting for its final entry into force, planned for 2023. It seems contradictory that for unitary patents there is no unitary compulsory licensing mechanism. At the very least, better coordination of requests for granting compulsory licenses regarding unitary patents would be desirable. In the long term, such coordination for unitary patents may lead to coordination for European patents. Better coordination is also needed among non-European countries.

33 For a critical analysis, see also Charles R. McManis and Jorge L. Contreras, ‘compulsory licensing of intellectual property: A viable policy lever for promoting access to critical technologies?’ (2014) American University, WCL Research Paper No. 2014-16, https://​ssrn​.com/​abstract​=​2342815. 34 Esther van Zimmeren, Timo Minssen and others, ‘Compulsory licensing for expensive medicines’ (Health Care Knowledge Centre (KCE), 2022), https://​kce​.fgov​ .be/​en/​compulsory​-licensing​-for​-expensive​-medicines.

72

Improving intellectual property

In addition to an extensive analysis of the grounds for granting compulsory licences and suggestions for concrete procedural improvements, the report further notes that it will be important to reconsider the limited scope of compulsory licensing in the area of patent law. If compulsory licences are to become truly enabling and effective policy tools, more thought should be spent on the question of ‘if’, ‘under which circumstances’ and ‘how’ the scope of compulsory licences can and should be extended to encompass data exclusivities, know-how and trade secrets.35 This will be particularly important with regard to more complex biologic drugs and advanced therapies that involve much trade secret protected know-how.36 These are complex discussions which need to be guided by both a well-informed understanding of the sensitive innovation ecosystem, and the need for utilitarian and realistic solutions to address pressing issues of major public concern. Hence, the report stresses that compulsory licences remain an important policy and negotiating tool but requires use on a case-by-case basis. The actual grant of compulsory licences will need to be carefully assessed by the competent authorities and after consultation of a mixed group of experts. These must be capable of balancing the public interest needs with private interests, as well as the micro- and macro-economic policy implications. Yet, compulsory licensing can and should continue to play a key role as a negotiation tool in the ‘power-play’ between private and public stakeholders, a role which cannot be underestimated. A modernized, sustainable, and effective system for compulsory licences is an essential part of the wider toolbox. In that regard, the report highlights the need for more transparency, exchange of data, coordination between agencies and a strengthening of other mechanisms such as the pharmacy exception.37

35 On the matter of trade secrets, see also Olga Gurgula and John Hull, ‘Compulsory licensing of trade secrets: ensuring access to COVID-19 vaccines via involuntary technology transfer’ (2021) 16(11) JIPLP 1242. 36 Van Zimmeren, Minssen and others (n 34). 37 ibid.

Using compulsory licences as a governance tool

4.

73

CONCLUDING REMARKS

The WTO Decision reignited the debate about the role and effectiveness of compulsory licences. For more than 20 years, the intense focus on compulsory licensing provisions under TRIPS has erroneously given the impression that, in case of a global crisis, access to health-care technologies would be safeguarded by this mechanism. During the COVID-19 pandemic WTO Members issued almost no compulsory licences. One must wonder whether this limited use can at least partially be attributed to the poor institutional design of the national compulsory licensing mechanisms, augmented by lack of technical capacity and bilateral political or trade pressure.38 In our view, many of the procedures and the criteria used for assessing the grounds on which compulsory licences are granted, whether those grounds be public interest, emergency, abuse, or failure to work or to address anti-competitive practices, are burdensome and lack sufficient clarity. Moreover, the scope for compulsory licences is limited to patents and ignores the impacts of data and market exclusivity and trade secrets on the effectiveness of compulsory licences. Further, competent authorities appear to have limited expertise to determine what constitutes grounds for issuing compulsory licences to address anti-competitive practices, what adequate remuneration payable to the right holder should be, and so on. Enhanced levels of inter-agency coordination among, for example, medicines agencies, patent offices, national health authorities and competition authorities could generate needed expertise, particularly if led by multilateral organizations, such as the WIPO or the WHO. Despite shortcomings, national compulsory licensing regimes remain of continued importance as a means to achieve well-calibrated solutions in negotiations for essential technologies in the health sector and beyond, such as essential technologies to mitigate the effects of climate change. A critical and sustained review of the effectiveness of compulsory licences and the WTO Decision must be undertaken. As Dreyfuss has demonstrated, institutional design matters for this kind of policy tool in order to ensure that compulsory licences can be used as a mechanism to ensure access to vital technologies without fear of retaliation by companies or other WTO Members.39 Greater coherence is needed for compulsory licences to be effective policy tools to

38 Duncan Matthews, ‘TRIPS Flexibilities and Access to Medicines in Developing Countries: The Problem with Technical Assistance and Free Trade Agreements’ (2005) 27 EIPR 420. 39 Rochelle C. Dreyfuss, ‘Introduction: Designing Intellectual Property Institutions for the Twenty-First Century’ (2009) 12 (5) JWIP 341.

74

Improving intellectual property

respond to the global challenges of the 21st century, including public health, ageing populations, climate change, and national security concerns.

8. Food security, food crisis and boundaries to intellectual property Geertrui Van Overwalle 1. INTRODUCTION In May 2022, farmers from the cooperative Colzaco in Megchelen, a township in the South-East of the Netherlands, proudly presented a bottle of rapeseed oil. Today glass bottles filled with this oil can be found in almost any shop in the Netherlands. With the high prices for raw materials and the scarcity of sunflower oil because of the war in Ukraine, rapeseed farmers suddenly seem to have gold in their hands.1 Imagine Colzaco farmers cannot fulfil the demand for rapeseed oil in the Netherlands; could a shortage of rapeseed oil, amount to food insecurity? Across the border, in Ghent, Belgium, the BASF Innovation Center is developing wheat varieties that can thrive in more extreme conditions and deliver a higher and stable yield through genome editing.2 Imagine a plant disease making all current wheat varieties unfit for farming on Belgian soil, could that qualify as a food crisis? Food security is generally understood to exist ‘when all people, at all times, have physical and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life’.3 Food insecurity can be experienced when sufficiency, access, safety and healthiness, or stable availability4 is compromised.5 A food crisis emerges 1 De Volkskrant, ‘Boerengeluk: akkers vol geel goud’ [‘Farmer’s Luck: Fields Full of Yellow Gold’], https://​www​.volkskrant​.nl/​. 2 See at, https://​www​.basf​.com/​be/​en/​media/​featured​-topics/​Wheat​-research​ -innovation​-center​-gent​.html. 3 ‘Rome Declaration on World Food Security’ (World Food Summit, 13-16 November 1996), https://​www​.fao​.org/​3/​w3613e/​w3613e00​.htm. 4 ‘Food Production and Food Security: The Incomplete Truth’, Position Paper Working Group Metaforum (University of Leuven) 2015, https://​www​.kuleuven​.be/​ metaforum/​visie​-en​-debatteksten. 5 See FAO, ‘Hunger and Food Insecurity’, https://​www​.fao​.org/​hunger/​en/​.

75

Improving intellectual property

76

when acute malnutrition increases, leading to illnesses and deaths, and when families sell livelihood essentials, like oxen, or consider selling a daughter into marriage.6 Reflecting on these definitions suggests that a shortage of oil, resulting from war, could lead to some (low) level of food insecurity, but would not be likely to amount to a food crisis. In contrast, a shortage of wheat resulting from an environmental shock may bring about a high level of food insecurity and ultimately lead to a food crisis. This chapter will examine the interface between food (in)security, food crisis and IP, and inquire to what extent IP law can be moulded to respond to the urgent need for food, particularly vegetable crops. This contribution will investigate existing measures within IP law which can mitigate the exclusionary effect of IP rights on vegetable crops in developed regions, notably Europe and the United States. In doing so, the chapter contributes to the work of Rochelle Dreyfuss in her prominent book Working within the Boundaries of Intellectual Property.7

2.

INTELLECTUAL PROPERTY PROTECTION FOR FOOD

Food insecurity and food crisis propel the notion of plant breeder’s rights and patents for food from the margins to the centre of the IP debate. 2.1

Plant Breeder’s Rights

The TRIPS Agreement prescribes that Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof.8 In the context of the TRIPS Agreement, it was usually understood that the reference in Article 27(3)(b) to a sui generis system pertained to the system of plant breeder’s rights, based on the International Convention for the Protection of New Varieties of Plants of 1961.9 The 1961 Convention created a Union for the Protection of New Varieties of Plants, commonly known under its French abbreviation UPOV (Union pour la Protection des Obtentions Végétales), and which was drastically revised in 1991.



See https://​www​.ipcinfo​.org/​. Rochelle C. Dreyfuss, Diane L. Zimmerman and Harry First (eds), Working within the Boundaries of Intellectual Property: Innovation Policy for the Knowledge Society (Oxford University Press 2010) 524. 8 TRIPS Agreement, art 27(3)(b). 9 See Daniel Gervais, The TRIPS Agreement: Drafting History and Analysis (Sweet & Maxwell 2003) 229. 6 7

Food security, food crisis and boundaries to intellectual property

77

In Europe, the 1991 UPOV Convention formed the basis for the European plant breeder’s rights system. The EC Regulation on Community Plant Variety Rights10 (PVR Regulation) introduces a community plant variety right, which offers the opportunity to a breeder to get an exclusionary right valid throughout the Community, through submission of only one application. The UPOV Convention was also the basis of the introduction of a system of national plant breeder’s rights in many countries all over the world. In turn, in the United States, a system of plant breeder’s rights was introduced in 1970 with the enactment of the Plant Variety Protection Act (PVPA), offering protection for sexually reproduced plants, other than fungi or bacteria.11 The US ratified UPOV 1991 in January 1999.12 UPOV offers protection for plant varieties. A plant variety is defined as ‘a plant grouping within a single botanical tax on of the lowest known rank which grouping can be defined by features characterizing a given genotype or combination of genotypes, and is distinguished from any other plant grouping by the expression of at least one of the said characteristics’.13 Similarly, the PVR Regulation offers protection for plant varieties,14 applying a definition of plant variety which matches UPOV 1991. 2.2 Patents The TRIPS Agreement, in Article 27(3)(b), states that Members may exclude from patentability plants and animals other than microorganisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. The optional nature of that provision has resulted in a variety of approaches to the patent protection of plants worldwide. The EPC15 stipulates that patents shall be granted for any invention with the exception of plant varieties.16 The case law of the EPO confirmed that subcellular fragments (like DNA sequences, genes, plasmids and vectors),

[1994] OJ L227/1. The full text of the PVPA is available at https://​www​.law​.cornell​.edu/​uscode/​ text/​7/​chapter​-57/​subchapter​-II/​part​-D. 12 7 USC §2402(a), see https://​upovlex​.upov​.int/​en/​notifications. 13 UPOV 1991, art 2(i). 14 PVR Regulation, art 5(1). 15 Convention on the Grant of European Patents (European Patent Convention), 1065 UNTS 199 (adopted on 5 October 1973 and entered into force on 7 October 1977) (EPC). 16 EPC, art 52(1). 10 11

Improving intellectual property

78

microorganisms, plant cells and plants per se17 could be the subject of patent protection. This approach was strengthened by the European Parliament in 1998, with the adoption of a Directive on the legal protection of biotechnological inventions18 (the EU Biotechnology Directive) and the incorporation of this Directive into the EPC in 1999,19 thus providing more detailed guidelines with regard to the patenting of biotechnological inventions and plants for the EPO. Essentially, two protection systems are available for plant breeding innovations: plant breeder’s rights and patents. Plant breeder’s rights mainly protect plant varieties, whereas patents provide protection for plants. In the United States, three protection systems for plant innovations coexist: a newly developed sexually reproducing plant or plant variety, different from a hybrid, can be protected in the framework of the Utility Patent Act (UPA) or Plant Variety Protection Act (PVPA), whereas a newly developed asexually reproducing plant or plant variety can be protected in the framework of the UPA or Plant Patent Act (PPA).20 A hybrid variety can only be protected under the UPA. 2.3

Two Cases

Turning back to our two cases, it is safe to say that in Europe the rapeseed variety at hand can be protected with a plant breeder’s right,21 and the newly

17 Technical Board of Appeal, 13 October 1997 (T 1054/96 – Novartis), Official Journal EPO, 1998, 511 https://​www​.epo​.org/​law​-practice/​case​-law​-appeals​.html; Enlarged Board of Appeal, 20 December 1999 (G 1/98 – Novartis) Official Journal EPO, 2000, 111-141 https://​www​.epo​.org/​law​-practice/​case​-law​-appeals/​eba​.html; Technical Board of Appeal, 6 December 2000 (T 1054/96 – Novartis), https://​www​ .epo​.org/​law​-practice/​case​-law​-appeals​.html. 18 Directive 98/44/EC of 6 July 1998 of the European Parliament and of the Council on the legal protection of biotechnological inventions [1998] OJ L213/13. 19 Notably by a decision of the Administrative Council of 16 June 1999, inserting what is now Chapter V. Biotechnological Inventions (Rule 26 – Rule 34) in the Implementing Regulations of the EPC. 20 The full text of the PPA is available at https://​www​.law​.cornell​.edu/​uscode/​text/​ 35/​part​-II/​chapter​-15. 21 Rapeseed has been the subject of plant breeder’s rights in Europe before. As a matter of example, EU plant variety rights have been granted for Brassica napus L. emend. Metzg. (denomination Calida) to Bayer Seeds on February 5 2001, and for Brassica napus L. var. napobrassica (L.) Rchb (denomination Skerne) to Elsoms Seeds (representative Bejo Zaden) on April 9 2018, https://​cpvo​.europa​.eu/​en/​applications​ -and​-examinations/​cpvo​-varieties​-database.

Food security, food crisis and boundaries to intellectual property

79

pest resistant transgenic wheat, developed by BASF can be protected with a patent.22 The same most likely applies in the United States.

3.

FOOD CRISIS AND BOUNDARIES TO INTELLECTUAL PROPERTY PROTECTION

A moderate to high food insecure situation calls out for reflection on integrated approaches to prevent, anticipate and solve food crises, also targeting the IP system, as IP rights might hamper production of indispensable crops. Important flexibilities may take the form of exemptions, exhaustion and compulsory licensing. 3.1 Exclusions/exemptions 3.1.1 Plant breeder’s rights In the United States, a remarkable example of exclusion of crops from IP protection was included in the PVPA which offers protection for new varieties of sexually reproduced plants, other than fungi or bacteria.23 Initially, six crops (okra, celery, tomatoes, peppers, carrots and cucumbers) were excluded from PVPA protection.24 Two arguments were used to justify this exclusion. First, the vegetable industry conducted crop research and it was not useful to protect crops which were not part of the commercial circuit.25 Second, the big soup companies feared that PVPA protection would multiply the price of necessary vegetables.26 The lack of protection resulted in research mainly focusing on hybrid varieties.27 In an effort to end this trend and supply US agriculture with the best seeds (‘The discrimination against breeders of varieties of these crops must be terminated, if American agriculture is to receive the best seeds avail-

22 BASF has a history in protecting plant innovations with patents. As a matter of example, a European patent has been granted for herbicide resistant wheat (Triticum) to BASF on January 5 2011, EP 965 265 B1 entitled ‘AHAS-inhibiting herbicide resistant wheat and method for selection thereof’, see https://​worldwide​.espacenet​.com/​patent/​. 23 7 USC §2402(a)). 24 See Reid G. Adler, ‘Can Patents Coexist with Breeder’s Rights? Developments in US and International Biotechnology Law’ (1986) 17(2) IIC 198; Robert E. Evenson, ‘Intellectual Property Rights and Agribusiness Research and Development: Implications for the Public Agricultural Research System’ (1983) 65(5) American Journal of Agricultural Economics 967, 971. 25 See Senate Report, nr. 1246, 91st Congress, 2nd Session, 1970, 116 Congressional Records, 1970, https://​www​.govinfo​.gov/​app/​details/​GPO​-CRECB​-1970​-pt1/​. 26 See the remarks from Wampler, 116 Congressional Records, 10.885, 1980, https://​www​.govinfo​.gov/​app/​details/​GPO​-CRECB​-1970​-pt1/​. 27 IP Cooper, Biotechnology and the Law (Deerfield 1992) §9.02, 9-6.

Improving intellectual property

80

able for all crops’28), the soup vegetables fell within the scope of the PVPA in 1980, and the so-called soup vegetable exclusion was repealed.29 A similar crop exemption does not figure in current European plant breeder’s right but might exist in national plant breeder’s rights systems. 3.1.2 Patent law The US Plant Patent Act (PPA), introducing patent protection for asexually reproduced plants, excludes tuberpropagated plants or plants found in an uncultivated state from its application.30 Tuberpropagated plants comprise plants multiplied by tubers (mainly potatoes and Jerusalem artichokes), with the exclusion of sweet potato.31 The reasons for this exclusion were two. First, it was considered in the public interest that the production of tubers which can reproduce with parts of the plant which can also be sold as food, would be hampered by a monopoly.32 Second, from an agricultural point of view it was feared that plants propagated via tubers would lose rapidly their specific properties.33 In 1959, an attempt was made to bring the potatoes within the scope of the PPA, but without success.34 A similar vegetable exemption does not exist in current European patent law but might appear in national patent Acts. In that regard, an exclusion for certain crops might have been construed based on a broad interpretation of the concept of ‘ordre public’, as including the right to food. Academic scholarship

Report from the Senate (n 25) 96-1115. Act 22 December 1980, 94 Stat. 3352, Public Law 96-574, art 20, 3352 (https://​ www​.govinfo​.gov/​content/​pkg/​USCODE​-2010​-title7/​html/​USCODE​-2010​-title7​ -chap57​.htm). See Donald S. Chisum, Patents: A Treatise on the Law of Patentability – Validity and Infringement (LexisNexis 1993) §1.05[2], 1-274; Cooper (n 27) §9.02, 9-6. 30 35 USC section 161. 31 See report Senate Commission, 2 April 1930, as included in Anthony William Deller, Walker on Patents, Deller’s Edition (1st ed, 1947) 82. See also Chisum (n 29) §1.05[1], 1-254. 32 See report Senate Commission, 2 April 1930, as included in Deller (n 30) 82. See also Cooper (n 27) §8.03[2]; Joseph Rossman, ‘Plant Patents’ (1931) 13 JPOS 7, 16. 33 Piet Verhulst, ‘Octrooibescherming op het gebied van de landbouw en bosbouw’ (Patent Protection in the Field of Agriculture and Forestry) [1951] Bijblad Industriële Eigendom 99, 104. 34 Sean Williams, ‘Securing Protection for Plant Varieties in the USA’ [1981] EIPR 222, 223. Also see Geertrui Van Overwalle, ‘Patent Protection for Plants: a Comparison of American and European Approaches’ (1999) 39 IDEA-Journal of Law and Tech 143-194. 28 29

Food security, food crisis and boundaries to intellectual property

81

and policy-oriented research has already reflected on such a human rights/right to food-based approach.35 3.1.3 Two cases Visualise an agricultural research company, such as Bayer, holding a plant breeder’s rights on a rapeseed variety with features forming an interesting alternative to sunflower oil. Or a biotechnology research company, such as BASF, holding a patent on transgenic wheat that is resistant to a new plague that ravages Europe. At present no food exemptions carving out certain vegetable varieties from plant breeder’s rights protection such as rapeseed exist in Europe. Nor has a specific panoply of plants been excluded from European patent protection. So, the current boundaries to plant breeder’s rights or patent law, cannot be the problem. However, the European Commission and/or the EPO might kick-start a legal initiative excluding certain crops from patent protection in cases of substantial food insecurity in preparation for a food crisis. 3.2 Exhaustion In times of crises, limitations on the scope of rights become even more important. A discussion of exhaustion of rights in the plant context cannot be ignored. 3.2.1 Plant breeders’ rights Under UPOV 1991 plant breeders’ rights provide the exclusive right to produce reproductive material of the plant variety for the purpose of sale and to sell this material within a particular territory for a given period.36 European breeder’s rights law provides an exclusive right comparable to the 1991 UPOV protection.37 The exhaustion principle is built into 1991 UPOV providing that a breeder's right shall not extend to acts concerning any material of the protected variety which has been sold or otherwise marketed by the breeder or with his/her consent in the territory of the contracting party concerned, or any material

35 Olivier de Schutter, Report of the Special Rapporteur on the Right to Food, 2009 http://​www​.srfood​.org/​en/​seeds; Sonali Khatri, ‘Balancing IPRs on Agro-Biotechnology with the Right to Food’, (2015), https://​ ssrn​ .com/​ abstract​ =2​622933; Geertrui Van Overwalle, ‘A Man of Flowers: A Reflection on Plant Patents, the Right to Food and Competition Law’, in Joseph Drexl (ed), Technology and Competition: Contributions in Honour of Hanns Ullrich (Larcier 2009). 36 UPOV, art 14(1)(a). 37 PVR Regulation, art 13.

Improving intellectual property

82

derived from that said material.38 Most 1991 UPOV signatory states, including EU member states, have implemented this provision in their national laws, thus embracing the exhaustion principle. In those countries, the plant variety breeder is not entitled to a claim against a farmer selling the harvested crops, as the rights of the plant breeder are exhausted in respect of the material which was sold by the plant breeder with his/her consent to the farmer.39 A UPOV signatory state may restrict the breeder’s right to the protected variety in order to permit farmers to use for propagating purposes, on their own holdings, the product of the harvest which they have obtained by planting the protected variety.40 Thus, the UPOV regime leaves it up to signatory states whether they allow the introduction of a so-called farmer’s privilege. Under such a regime, farmers would be able to collect the seeds from their harvests to sow them, and then sell the crops.41 3.2.2 Patent law In line with TRIPS,42 Europe introduced exhaustion of patents on biological material with the EU Biotechnology Directive.43 All EU member states have transposed the EU Biotechnology Directive in their national patent legislation. The exhaustion principle is applicable once a patented object is put on the market with the owner’s consent and can be resold and freely circulated, since the patent is exhausted with the sale of the seed. No obligation to sell to a particular customer can then be derived from patent law. A farmer’s sale to customers is legitimate.44 In theory, the exhaustion principle does not stretch to the seeds obtained from the harvested material, but only applies if the material obtained is not subsequently used for other propagation or multiplication. Thus, exhaustion

UPOV, art 16. Geertrui Van Overwalle ‘Comparative Remarks on Farmer’s Rights’ in Christine Godt and others (eds), Boundaries to Information Property (Intersentia 2022). 40 UPOV, art 15(2). 41 Van Overwalle (n 39). 42 TRIPS Agreement, art 28(a) sets forth that a patent right shall confer on its owner the exclusive right, where the subject matter of a patent is a product, to prevent third parties not having the owner’s consent from the acts of making, using, offering for sale, selling, or importing for these purposes that product (emphasis added). 43 The EU Biotechnology Directive, art 10, states that patent protection shall: ‘not extend to biological material obtained from the propagation or multiplication of biological material placed on the market in the territory of a Member State by the holder of the patent or with his consent, where the multiplication or propagation necessarily results from the application for which the biological material was marketed, provided that the material obtained is not subsequently used for other propagation or multiplication’. 44 Van Overwalle (n 39). 38 39

Food security, food crisis and boundaries to intellectual property

83

only applies if the crops (= material obtained) are not further used for multiplication (= sowing). However, the use of farm-saved seed, harvested in the framework of the farmer’s privilege,45 will depend on whether or not a farmer’s privilege has been implemented in patent law in the EU Member State, and what crop is involved, as the farmers’ privilege is often limited to a certain number of plant species. 3.2.3 Two cases A farmer who purchases rapeseed from a breeding research company holding a plant breeder’s right on that rapeseed variety, grows that variety and sells rapeseed oil on the marketplace, does not infringe that plant breeder’s right. The sale of rapeseed oil results from the authorised use, namely the purchase from the breeder of the seed of the protected rapeseed variety. A farmer who purchases transgenic seeds from a biotechnology company – assuming that the biotechnology company is willing to sell seeds to all farmers – then grows transgenic crops in his fields, and thereupon sells the harvested crops on the marketplace, does not infringe that patent either. 3.3

Compulsory Licenses

The COVID-19 pandemic has motivated governments to introduce or optimise a compulsory license regime, as well as reinvigorate the debate as to when, and on what grounds, a compulsory license could or should be granted.46 3.3.1 Plant breeders’ rights law UPOV provides restrictions on the exercise of the breeder’s right, but does not explicitly use the term compulsory licensing. UPOV stipulates that the free exercise of a breeder’s right may be restricted for reasons of public interest,47 without providing guidance, however, as to what may constitute such public interest. The PVR Regulation provides that the Community Plant Variety Office (CPVO) may grant a compulsory license only on the ground of public interest.48 The PVR Regulation offers some guidance on the meaning of the public

UPOV, art 15(2). See eg Carlos Correa and Reto Hilty (eds), Access to Medicines and Vaccines. Implementing Flexibilities Under Intellectual Property Law (Springer 2022); Alberto Musso, ‘Basic and Improvement Patents in COVID-19 Vaccines’ (2022) 71 GRUR International 393. 47 UPOV, art 17. 48 PVR Regulation, art 29 stipulates, ‘Compulsory exploitation rights shall be granted to one or more persons by the Office, on application by that person or those 45 46

84

Improving intellectual property

interest in the preamble which mentions that ‘safeguarding agricultural production’ may constitute a public interest.49 Further guidance can be found in the Proceedings Regulation,50 which stipulates that the following grounds may in particular constitute a public interest: (1) protection of life or health of humans, animals and plants, (2) need to supply the market with material offering specific features, and (3) need to maintain the incentive for continued breeding of improved varieties.51 By mentioning ‘in particular’ the Proceedings Regulation does not set forth an exhaustive list of circumstances which can constitute a public interest, so food security concerns could be included. In 2018 the CPVO rejected a claim for a compulsory license, which was based on the need to supply the market with material offering specific features.52 The evocation of healthy lifestyle or reference to climate change by the applicant were insufficient for the CPVO to grant a compulsory license. However, the opinion of the Administrative Council was telling as it stated that, ‘As a theoretical example, a variety containing a unique resistance gene that shows effectiveness towards a sudden and devastating new race of a plant disease with implications for food security, might serve a better case for granting a compulsory license.’53 3.3.2 Patent law Without explicitly referring to compulsory licensing, TRIPS provides for a regime or issuing a compulsory license in situations of national emergency or

persons, but only on grounds of public interest and after consulting the Administrative Council’. 49 PVR Regulation stipulates in its Preamble ‘Whereas, the exercise of Community plant variety rights must be subjected to restrictions laid down in provisions adopted in the public interest; Whereas this includes safeguarding agricultural production (…)’. 50 Commission Regulation (EC) 874/2009 establishing implementing rules for the application of Council Regulation (EC) No 2100/94 as regards proceedings before the Community Plant Variety Office [2009] OJ L251/3 (Proceedings Regulation). 51 ibid art 41(3). 52 CPVO Decision NCL001 (CPVO Decision) [2018] (unpublished). The applicant was a UK company specialising in the processing of fruit and supplying juice not from concentrate (NFC) claiming that a compulsory license should be granted on the basis of the need to supply the market with material offering specific features. For a detailed analysis of this case, see Geertrui Van Overwalle and Amandine Léonard, ‘The Public Interest in Compulsory Licensing: Examining the Complementarity Between IP and Competition Law’, in Christine Godt and Matthias Lamping (eds), A Critical Mind in the Triangle of Internal Market Law, Intellectual Property and Competition Law – Liber Discipulorum for Hanns Ullrich (Springer 2022). 53 CPVO Decision (n 52), [80], fn 53.

Food security, food crisis and boundaries to intellectual property

85

extreme urgency,54 anti-competitive behaviour, dependency,55 and some export of pharmaceutical products.56 Of relevance here is the use of compulsory licensing in the framework of food insecurity or food crisis. In Europe, compulsory licenses are issued at national level. Some countries have explicitly included the public interest as a ground for issuing a compulsory license, even though the exact meaning and scope of the public interest has not been clearly defined. In those jurisdictions interpretation could include nutrition or environmental concerns, or questions of access and supply of certain products on a market.57 In contrast, other countries have opted for a panoply of specific grounds, encompassing dependency, lack or insufficient exploitation, unsatisfied demand, anti-competitive behaviour, national economy, public health, and national defence.58 Only a few countries have explicitly listed nutrition or food concerns, most notably Denmark and Portugal.59 3.3.3 Two cases The public interest figures more as a ground for granting a compulsory license in plant breeder’s right law than it does in patent law. Under current IP law, a compulsory license might be successful to produce the protected rapeseed variety. A compulsory license is relevant if the rapeseed right holder is unwilling to provide a license to seed producers to enable them to supply the market, in an attempt to enhance production by farmers. Whether a compulsory license would be granted in the case of the patent holder of the unique wheat variety, being unwilling to license third parties, to provide the market with wheat seeds, is less clear.

4.

CONCLUDING THOUGHTS

The COVID-19 pandemic demonstrated the need for coordinated action to respond to health emergencies. It revealed gaps in demand and supply, as well as preparedness. In response, initiatives to be better prepared to deal with

TRIPS Agreement, art 31(b). ibid art 31(1). 56 ibid art 31bis. 57 See Van Overwalle and Léonard (n 52). 58 ibid. 59 See WIPO – Standing Committee on the Law of Patents SCP/30/3 ‘Draft reference document on the exceptions regarding compulsory licensing’ (WIPO 2019), https://​www​.wipo​.int/​edocs/​mdocs/​scp/​en/​scp​_30/​scp​_30​_3​-main1​.pdf. 54 55

86

Improving intellectual property

serious cross-border health threats – by enabling rapid availability, access and distribution of needed countermeasures – are taking shape.60 To be better prepared for food insecurity and food crises resulting from environmental shocks or armed conflict in the decades to come, similar initiatives should be contemplated to deal with food threats. General preparedness scenarios should be considered, more research performed, and attention drawn to IP measures for safeguarding access to sufficient and healthy food, such as crop exemptions and compulsory licenses for food in both plant breeder’s rights law and patent law. As regulatory institutions, the patent and plant variety system’s overall acceptance rests on a delicate interplay of privileges and responsibilities, and their operation must also accommodate public policies and interests, such as food security.61

60 In Europe, the establishment of a European Health Emergency Preparedness Response Authority (HERA) is in the making, https://​ ec​ .europa​ .eu/​ info/​ law/​ better ​ - regulation/​ h ave​ - your​ - say/​ i nitiatives/​ 1 2870​ - European​ - Health​ - Emergency​ -Preparedness​-and​-Response​-Authority​-HERA​-​_en. In the US, the Biomedical Advanced Research and Development Authority (BARDA) has been established within the same aim https://​www​.me​dicalcount​ermeasures​.gov/​barda. 61 cf Declaration on Patent Protection. Regulatory Sovereignty under TRIPS, Max Planck Gesellschaft, Munich, Max Planck Institute for Innovation and Competition, 2014, at https://​www​.ip​.mpg​.de/​en/​research/​research​-news/​declaration​-on​-patent​ -protection​.html.

PART III

PATENT CHALLENGES

9. The case for a liability rule to stimulate investment in sub-patentable innovation Jerome H. Reichman and Ana Santos Rutschman 1. INTRODUCTION The global intellectual property law system – covering copyrights, patents, trademarks and industrial designs – rests largely on a distinction between exclusive property rights and free competition.1 Exclusive rights vary in strength and intensity, but the opposite of protection is almost always free competition.2 Distinctions of intensity are drawn in terms of the length of protection given to different subject matters, in addition to variable lists of exceptions and limitations to the exclusive rights granted by specific regimes.3 1 Cfr. Rochelle Cooper Dreyfuss, Does IP Need IP? Accommodating Intellectual Production Outside the Intellectual Property Paradigm [hereinafter Does IP Need IP?], 31 Cardozo L. Rev. 1437 (2010) (noting the limitations of this dichotomy and criticizing ‘one-size-fits-all’ approaches). For in-depth discussions of models going beyond the IP/no IP dichotomy, see generally Dreyfuss, ibid., Nancy Gallini & Suzanne Scotchmer, Intellectual Property: When Is It the Best Incentive System?; in 2 Inn. Pol’y & Econ. 51 (2002); Amy Kapczynski & Talha Syed, The Continuum of Excludability and the Limits of Patents, 122 Yale L. J. 1900 (2013); Daniel Hemel & Lisa Larrimore Ouellette, Beyond the Patents–Prizes Debate, 92 Texas L. Rev. 303 (2013); Rochelle Cooper Dreyfuss, Tailoring Incentives: A Comment on Hemel and Ouellette's beyond the Patents-Prizes Debate, 92 Texas L. Rev. See Also 131 (2013). 2 Scholars have identified several areas where, in practice, this premise – which continues to drive law- and policymakers around the world – does not hold true. See e.g., Kal Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 Va. L. Rev. 1687 (2006); David Fagundes, Talk Derby to Me: Intellectual Property Norms Governing Roller Derby Pseudonyms, 90 Texas L. Rev. 1093 (2013). 3 See e.g., Andrew F. Christie, Maximising Permissible Exceptions to Intellectual Property Rights, in The Structure Of Intellectual Property Law: Can One Size Fit All (A. Kur & V. Mizaras, eds., 2011).

88

The case for a liability rule to stimulate investment in sub-patentable innovation

89

Where there is exclusivity, free competition is deferred for a statutorily defined period of time. By the same token, when protection is not available under any existing intellectual property regime, free competition normally prevails. The prevailing use of exclusive rights as the backbone of intellectual property law has overshadowed the possibility of alternative approaches that may better reflect the needs of contemporary innovation policy. Professor Rochelle Cooper Dreyfuss has long been a trailblazer in this area, constantly exploring news ways of fine-tuning existing intellectual property regimes.4 Inspired by her career-spanning questioning of the balance between current embodiments of intellectual property standards and sound innovation policy, we outline here a proposal for the creation of an alternative legal regime – one based on the use of liability rules in place of exclusive rights5 that would carve out an intermediate system of protection for qualifying products and processes.

4 See e.g., Rochelle C. Dreyfuss, Jane Nielsen & Dianne Nicol, Patenting Nature—A Comparative Perspective, 5 J. L. Biosci. 550 (2018) (calling for a ‘nuanced approach’ to the reform of patent eligibility law in the U.S.); Graeme B. Dinwoodie & Rochelle C. Dreyfuss), Designing a Global Intellectual Property System Responsive to Change: The WTO, WIPO, and Beyond, 46 Hous. L. Rev. 1187 (2009) (arguing for the ‘continuing need to recalibrate the rules applicable to knowledge production’); Rochelle Dreyfuss, Are Business Method Patents Bad for Business?, 16 St. Clara High Tech. L.J. 263 (2000) (presciently arguing for the patentability of new and non-obvious software, but not of the underlying business model implemented by that software). 5 Our proposed approach builds on the distinction between exclusive rights and liability rules as first recognized by Calabresi and Melamed. See Guido Calabresi & A. Douglas Melamed, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev. 1089 (1972). See also Jack M. Balkin & Ian Ayres, Legal Entitlements as Auctions: Property Rules, Liability Rules, and Beyond, 106 Yale L. J. 703, 704 (1996). For further exploration of the Calabresi-Melamed property/liability rules distinction, see Jerome H. Reichman, Of Green Tulips and Legal Kudzu: Repackaging Rights in Subpatentable Innovation, 53 Vand. L. Rev. 1743–1798 (2000); Id., Legal Hybrids Between the Patent and Copyright Paradigms, 94 Colum. L. Rev. 2432 (1994) [hereinafter Legal Hybrids]. For applications of the Calabresi-Melamed framework in specific areas, see Jerome H. Reichman & Tracy Lewis, Using Liability Rules to Stimulate Local Innovation in Developing Countries: Application to Traditional Knowledge, in International Public Goods and Transfer of Technology Under a Globalized Intellectual Property Regime 337 (Maskus & Reichman eds., 2005) (discussing the potential role of liability rules in the context of traditional knowledge); Jerome H. Reichman, A Compensatory Liability Regime to Promote the Exchange of Microbial Genetic Resources for Research and Benefit Sharing, in Designing the Microbial Research Commons, Proceedings of an International Symposium 43 (Paul F. Uhlir ed., 2011) (discussing the potential role of liability rules in the context of genetic resources); Ana Santos Rutschman, The Vaccine Race in the 21st Century, 61 Ariz. L. Rev. 729 (2019) discussing the potential role of liability rules in the specific context of the transfer of vaccine technology).

90

Improving intellectual property

As further detailed below, our goal is to incentivize investment in socially valuable innovation without triggering the overly exclusionary effects of patent rights – namely, the patentee’s ability to refuse to license a patented invention for a long period of time, even in cases in which the production of the patented invention by multiple competitors would be socially desirable. Our proposal to accomplish this goal is rooted in a liability regime specifically envisioned to incentivize investment in sub-patentable innovation, a concept to which the chapter now turns.6

2.

WHY INCENTIVIZE SUB-PATENTABLE INNOVATION?

At present, patent protection becomes available to innovators who succeed in meeting the cumulative criteria of novelty, utility and non-obviousness.7 We term ‘sub-patentable innovation’ those products and processes that meet the criteria of novelty and utility, but nonetheless fail to qualify for patent protection under the non-obviousness requirement.8 Under current legal paradigms, free competition may limit the incentives to invest in risky sub-patentable innovation for which no legal protection from free-riding is available once the end-product is put on the market. By definition, successful innovations failing to qualify for some form of intellectual property protection obtain no exclusive rights. The very success of any given innovation stimulates competitors to enter the market without incurring the financial costs and risks of innovation. This, in turn threatens to impede that innovator’s ability to recuperate investment costs. Yet, sub-patentable innovations have significant social value. Once a novel and useful product or process actually rises to the level of an innovation properly defined, then an argument can be made that intellectual property law should provide some legal incentive through an appropriately calibrated regime. We pause here to emphasize the notion that our proposal is designed to incentivize innovation, as opposed to merely trivial contributions. This, in turn, requires a legally operative definition of the concept of innovation as qualifying for legal protection. In a separate work, we propose a definition of ‘innovative contribution’ as ‘a demonstrable technological advancement or 6 See infra, section 2 (defining ‘sub-patentable’ for purposes of our proposal as innovation that meets the novelty and utility criteria but fails to meet the non-obviousness standard of patent law.) 7 TRIPS Agreement, art. 27. These requirements are reflected in domestic patent laws; see e.g., 35 U.S.C. § 101–103. 8 Cfr. 35 U.S.C. § 103.

The case for a liability rule to stimulate investment in sub-patentable innovation

91

step beyond the prior art that does not rise to the level of non-obviousness’9 but meets the novelty and utility criteria as commonly understood in patent law.10

3.

CODIFYING A LIABILITY REGIME FOR SUB-PATENTABLE INNOVATION

A liability rule operates as a ‘take-and-pay’ rule instead of an exclusive property right.11 As such, it constitutes an intermediate form of protection that recognizes the rights of an innovator while enabling second-comers to enter the market without eliciting claims of free-riding.12 We contend that lawmakers should codify a liability regime to stimulate investment in sub-patentable innovation. Such a regime would protect investors from a system of unbridled and efficient competition, i.e., unrestrained copying that may drive the originator off the market or, at least, inhibit its ability to recuperate the cost of an initial risky investment.13 However, it would not reward the innovator with a lengthy period of exclusivity. Instead, the proposed liability rule would allow copiers to freely enter market in return for payment of a reasonable royalty. Revenues from such a codified liability regime would thus constitute a reward to the sub-patentable innovator. The more that free-market copiers exploit the innovation in question, the bigger the reward to the sub-patentable innovator for its otherwise risky investment in sub-patentable innovation to begin with. Another way to put it is that this proposal codifies a statutory compulsory license from the outset that rewards innovative contributions to industrial property that otherwise fail to meet the standard of non-obviousness. A compulsory license embodies a limitation to the principle of exclusivity inherent to intellectual property. It allows for the use of protected subject matter without the

9 Jerome Reichman & Ana Santos Rutschman, Codifying Liability Rules (on file with authors). 10 Under current patent law, non-obviousness refers to situations in which, even though an existing single source does not disclose each and every component of the claimed invention, that invention nonetheless results from an unpredictable combination of components disclosed in more than one pre-existing source. See Jonathan S. Masur & Lisa Larrimore Ouellette, Patent Law: Cases, Problems, and Materials (2021), at 121–122. 11 See e.g., Reichman, Legal Hybrids, supra note 5. 12 Id. 13 In a separate work, we analyse the arguments in support of a short term for liability regimes for sub-patentable innovation in greater depth. See, Codifying Liability Rules, supra note 9.

92

Improving intellectual property

need to obtain the consent of the rightsholder.14 Codified compulsory licenses already exist at the domestic law level in copyright regimes.15 Traditionally, the primary justifications for compulsory licensing regimes revolve around efficiency arguments – particularly the reduction of transaction costs in cases in which an actor, absent a compulsory license, would have to negotiate with a high number of rightsholders.16 Our proposal, by contrast, is less focused on efficiency concerns and uses compulsory licensing as a tool to maintain an equilibrium between intellectual property protection and follow-on innovation. 3.1

A Term of Protection to Stimulate Investment in Sub-patentable Innovation

The object of the proposed liability regime is to reward sub-patentable innovators – as defined in the previous section – without hindering competition. To avoid the detrimental effects of over-protection, the duration of such protection should logically be shorter than that provided by exclusive property rights. An optimal term for a liability regime targeting sub-patentable innovation could arguably fall somewhere between two and four years,17 in contrast to lengthier terms of exclusive property rights given to patents and industrial designs.18 Nevertheless, the proposed regime does envision a relatively short period of exclusivity at the outset, i.e., one to two years at the outset – to facilitate market entry. The liability period would then begin, and second-comers would become free to exploit the protected innovation in return for a specified royalty to be paid the innovator for a relatively short period of time. All would-be users of the protected innovation in that period would be under a similar duty to pay the specified royalty to the qualifying innovator. In sum, the proposed regime should not block access to, or use of, sub-patentable innovation once it is legally protected. On the contrary, the

14 See e.g., Robert P. Merges, Of Property Rules, Coase, and Intellectual Property [hereinafter Of Property Rules], 94 Colum. L. Rev. 2655 (1994); Jacob Victor, Reconceptualizing Compulsory Copyright Licenses, 72 Stan. L. Rev. 915 (2020). 15 17 U.S.C. §115. 16 See Merges, Of Property Rules, supra note 14, at 2661 (1994); Kristelia A. García, Private Copyright Reform, 20 Mich. Telecomm. & Tech. L. Rev. 1, 39 (2013). But see Victor, Reconceptualizing Compulsory Copyright Licenses, at 918 (surveying the literature criticizing compulsory licensing in U.S. copyright law). 17 In separate work, we analyse the arguments in support of a short term for liability regimes for sub-patentable innovation in greater depth. See, Codifying Liability Rules, supra note 8. 18 See TRIPS Article 26.3 (establishing a term of protection for industrial designs of at least ten years) and TRIPS Article 33 (establishing a term of protection for patents of at least 20 years counted from the filing date).

The case for a liability rule to stimulate investment in sub-patentable innovation

93

objective is to maximize the commercial use of sub-patentable innovation while requiring follow-on users to pay a small royalty to the protected innovator. On this approach, the social benefits from sub-patentable innovations are widely spread in the sense that anyone can freely use them so long as they pay a reasonable royalty rate to the innovators who made them possible. 3.2

Principles of Compensation

The principle of payment of a reasonable royalty rate to the rightsholder would apply to the proposed regime, much in line with general principles of intellectual property law. Our proposal, however, does not articulate a specific royalty rate to be paid under the codified liability regime, as methods for calculating royalties are complex and percentages vary from industry to industry.19 We offer nonetheless a few thoughts about a possible approach to royalty setting. On the one hand, because the proposed liability rule would only apply to sub-patentable innovation, there is an argument that the royalty should be set towards the lower end of the spectrum. On the other hand, the proposed liability rule only lasts for a relatively short period of time while there is a built-in opportunity for rewarding the innovator with lottery effects if multiple producers distribute the same product in the open market. 3.3

Social Benefits of Codified Liability Regimes

Under the proposed approach, risk-averse sub-patentable innovators are enabled to benefit from their initial investment without blocking the ability of competitors to exploit innovative outcomes in the public interest. Second-comers are free to exploit the protected innovation once put on to the market in return for a specified royalty for a relatively short period of time. By the same token, all would-be users of the same innovation would be under a similar duty to pay the specified royalty to a qualifying innovator for the statutory period of time. The public benefits from this approach because it obtains access to a socially valuable sub-patentable innovation available to all who enter the market. The legal machinery adopted to reward sub-patentable innovators does not hinder would-be competitors’ access to that innovation, so long as they are willing to

19 See generally Christopher B. Seaman, Reconsidering the Georgia-Pacific Standard for Reasonable Royalty Patent Damages, 2010 BYU L. Rev. 1661 (2010); Thomas F. Cotter, Four Principles for Calculating Reasonable Royalties in Patent Infringement Litigation, 27 Santa Clara Computer & High Tech. L. J. 725 (2011); Mark A. Lemley & Carl Shapiro, A Simple Approach to Setting Reasonable Royalties for Standard-Essential Patents, 28 Berkeley Tech. L. J. 1135 (2013).

94

Improving intellectual property

pay a reasonable royalty rate to the innovator for a relatively short period of time.

4. CONCLUSION An intellectual property right built around a liability rule may be regarded as embodying an ex ante compulsory license. In effect, once a liability rule for sub-patentable innovation has been codified, the entire protectionist regime is structured around this same codified compulsory license from the outset. If this seems like a radically different approach, it is only because legislators have been fixated on the hereditary resort to exclusive rights as a preferred incentive mechanism. The time has come, instead, to implement an appropriate intermediate regime based on a liability rule from the outset, so that we can in fact empirically evaluate the benefits of such a regime with the minimum costs to public welfare.

10. How do we protect biomedical research in the evolving intellectual property environment? Dianne Nicol and Jane Nielsen1 1. INTRODUCTION The early 2000s saw a flurry of commentary debating the need to better protect research uses of patented subject matter from infringement actions. In the United States, in particular, Rochelle Dreyfuss and other eminent patent law academics called for legislative and other responses to concerns that the growing number of broad patents over foundational technological developments could stall the research effort.2 Concerns about the adverse effects of patents on research were particularly pronounced in biomedicine, both because of the potential for this research effort to have a transformative impact on the health and welfare of the community, but also because there was already

1 This research is funded by a grant from the Australian Research Council, DP180101262. 2 Rochelle C. Dreyfuss, ‘Protecting the Public Domain of Science: Has the Time for an Experimental Use Defense Arrived?’ (2004) 46 Arizona LR 457; Katherine Strandburg, ‘What Does the Public Get? Experimental Use and the Patent Bargain’ (2004) Wisconsin LR 81; Donna M. Gitter, ‘International Conflicts Over Patenting Human DNA Sequences in the United States and the European Union: An Argument For Compulsory Licensing and a Fair-Use Exemption’ (2001) 76 NYULR 1623; Janice Mueller, ‘No “Dilettante Affair”: Rethinking the Experimental Use Exception to Patent Infringement for Biomedical Research Tools’ (2001) 76 Washington LR 1; Maureen A. O’Rourke, ‘Toward a Doctrine of Fair Use in Patent Law’ (2000) 100 Columbia LR 1177. See also the earlier commentary by Rebecca S. Eisenberg, ‘Patents and the Progress of Science: Exclusive Rights and Experimental Use (1989) 56 UCLR 1017. For a comprehensive review of the primary and secondary literature, see Henrik Holzapfel and Joshua D. Sarnoff, ‘A Cross-Atlantic Dialog on Experimental Use and Research Tools’ (2010) 48 IDEA—IPLR 123.

95

96

Improving intellectual property

evidence of aggressive patent exclusivity practices in the research context, and fears that these could escalate.3 Calls for better protection of research uses from patent enforcement actions lost traction following decisions of the highest courts in the US and Australia holding that claims to DNA sequences in their natural state were not patent eligible.4 Coincidentally, both decisions related to the same family of patent claims to DNA sequences that had been shown to be linked with increased risk of developing breast cancer (the so-called BRCA patents). In both jurisdictions, there was some evidence of threats of BRCA patent enforcement in diagnostic and research contexts.5 Although the cases focused specifically on DNA sequences, they potentially had broader application to other subject matter, depending on how they were subsequently interpreted. In the years since these US and Australian decisions, patent offices and courts have grappled with the scope of these new eligibility doctrines, both for DNA sequences and other subject matter in biomedicine and other fields.6 In both jurisdictions, there has been a gradual narrowing of the types of biomedical subject matter that fall foul of the eligibility requirements.7 What is, and is not, a protected research use is thus still very much a live and important question for biomedical researchers. Despite this there is little new academic or policy consideration of this question. Indeed, amongst the most recent commentary we have found, one particularly thoughtful contribution is by Dreyfuss herself.8 The contributions of Dreyfuss and others in the early 2000s,

3 Mueller (n 2) 2-4; John P. Walsh, Ashish Arora and Wesley M. Cohen, ‘Effects of Research Tool Patents and Licensing on Biomedical Innovation’ in Wesley M. Cohen and Stephen A. Merrill (eds), Patents in the Knowledge-Based Economy (National Academies Press 2003) 285, 332–335. 4 Association for Molecular Pathology v Myriad Genetics Inc 133 S Ct 2107 (2013); D’Arcy v Myriad Genetics Inc [2015] HCA 35. 5 Secretary’s Advisory Committee on Genetics, Health and Society (‘SACGHS’), Gene Patents and Licensing Practices and their Impact on Patient Access to Genetic Tests (2010); Walsh and others (n 3); Australian Law Reform Commission (ALRC), Genes and Ingenuity: Gene Patenting and Human Health (2004) Report 99; Dianne Nicol, Jane Nielsen and Verity Dawkins, ‘D’Arcy v Myriad Genetics: The Impact of the High Court’s Decision on the Cost of Genetic Testing in Australia’ (2018) Centre for Law and Genetics Occasional Paper 9/2018. 6 Rochelle Dreyfuss, Jane Nielsen and Dianne Nicol, ‘Patenting Nature – A Comparative Perspective’ (2018) 6 J of L and the Biosciences 1. 7 Dianne Nicol and Jane Nielsen, ‘Non-invasive Prenatal Testing and the Resilience of the Patent System’ in Naomi Hawkins (ed), Revolutions in Technology: Legal and Ethical Implications for Patent Law (Edward Elgar 2022) 43. 8 Rochelle Dreyfuss, ‘Reconsidering Experimental Use’ (2017) 50 Akron L Rev 699. See also Jennifer Carter-Johnson, ‘Defining Limits to the Application of the

How do we protect biomedical research in the evolving intellectual property environment?

97

together with Dreyfuss’s more recent work, remain as influential now as they were when they were first published. In this chapter, we examine whether biomedical research is appropriately protected from patent enforcement and other commercial practices so that it can be allowed to flourish. Before we commence this analysis, we provide some context with historical accounts of the growing concerns about patent enforcement in biomedical research and the ways in which research uses are protected. In light of the lack of harmonisation in approaches to protection of research use at law,9 we examine the approaches in the United States, Europe and Australia, because they exemplify this diversity. We then evaluate whether existing protections are adequate and appropriate. In the course of this evaluation, we consider both patent-based and non-patent-based factors.

2.

CONCERNS ABOUT PATENT ENFORCEMENT IN BIOMEDICAL RESEARCH

At the turn of the 21st century, biomedical research was advancing apace. Sequencing of the human genome was almost complete and links between genetic mutations and diseases were announced routinely. Concomitantly, fears were growing that biomedical research could be stifled by enforcement of patent rights, particularly when essential research tools were the subject matter.10 As far back as 1975, Roche Limited commenced actions against universities and research institutes for infringement of its patent on taq polymerase. Taq is an enzyme that is a crucial component of the polymerase chain reaction (PCR), a method that was becoming as ubiquitous then as it is now for anything involving DNA sequencing.11 Roche was not alone – patents applying to other so-called research tools were also being granted and enforced in disparate research areas such as oncology, stem cell technology, hepatitis and many others.12

Statutory Experimental Use Exception within the Agricultural Biotechnology Industry’ (2015) Michigan State L Rev 509. 9 Richard Gold and Yann Joly, ‘The Patent System and Research Freedom: A Comparative Study’, in Lionel Bently and others (eds), Exclusions from Patentability and Exceptions and Limitations to Patentees’ Rights (2010) Study Prepared for the WIPO Standing Committee on the Law of Patents, ch 6. 10 See eg US National Institutes of Health Working Group on Research Tools, Report of the National Institutes of Health (NIH) Working Group on Research Tools (1998). 11 Mueller (n 2) 2–4. 12 National Research Council, Intellectual Property Rights and Research Tools in Molecular Biology (National Academy of Sciences 1997); Walsh and others (n 3).

98

Improving intellectual property

In the United States, concerns about patent enforcement were such that, by 1999, the National Institutes of Health (NIH) had developed a set of principles in an attempt to ensure use of patented subject matter resulting from research funded by them.13 Specific best practice standards for licensing genomic-related subject matter followed later.14 In Europe, in contrast, debate about how better to protect biomedical research was more muted, perhaps in part because a statutory experimental use exception already existed in a number of European states (as discussed below). Less exposure to patent enforcement actions also doubtless had a role to play in reducing the perceived urgency of policy responses.15 Australia fell midway between these jurisdictions. Aside from claims that Roche had attempted to enforce its taq polymerase patent, there was little other evidence of enforcement actions in the research context in Australia.16 Despite this, there was a growing fear that these could be imminent, particularly in the context of patents claiming DNA sequences.17 In response, the Australian government provided a reference to the Australian Law Reform Commission (ALRC) to undertake an inquiry into the impact of gene patenting on human health.18 These three jurisdictions, then, provide interesting examples of national specificity in terms of the potential patent problems encountered in biomedical research, and policy responses.

13 US National Institutes of Health, ‘Principles and Guidelines for Recipients of NIH Research Grants and Contracts on Obtaining and Disseminating Biomedical Research Resources: Final Notice’ (1999) 64:246 Federal Register 72090. 14 US National Institutes of Health, ‘Best Practices for the Licensing of Genomic Inventions: Final Notice’ (2005) 70:68 Federal Register 18413; Organisation for Economic Co-Operation and Development, Guidelines for the Licensing of Genetic Inventions (2006); Association of University Technology Managers, ‘In the Public Interest: Nine Points to Consider in Licensing University Technology’ http://​www​ .autm​.net/​AUTMMain/​media/​Advocacy/​Documents/​Points​_to​_Consider​.pdf. 15 Sibylle Gaisser and others, ‘The Phantom Menace of Gene Patents’ (2009) 458 Nature 207; Naomi Hawkins, ‘The Impact of Human Gene Patents on Genetic Testing in the United Kingdom’ (2011) 13 Genetics in Medicine 320. 16 Dianne Nicol and Jane Nielsen, Patents and Medical Biotechnology: An Empirical Analysis of Issues Facing the Australian Industry (Centre for Law and Genetics 2003). 17 Nicol and Nielsen (n 16). 18 Australian Law Reform Commission (n 5).

How do we protect biomedical research in the evolving intellectual property environment?

3.

99

LEGAL PROTECTIONS FOR RESEARCH USES

The United States, Europe and Australia are also illustrative of the diversity of legal protections afforded to research uses of patented subject matter. It has often been said that the use of patented subject matter for research purposes does not amount to infringement. In the 1813 US case of Whittemore v Cutter, Justice Story highlighted two distinct aspects of the protection afforded to research use. The first protects philosophical (or non-commercial) experimentation of any kind (including ‘research with’ the patented subject matter). The second protects experimentation on the subject matter of the patent (‘research on’ the patented subject matter). Despite the ongoing push for detailed global standards for intellectual property laws, as exemplified by the TRIPS Agreement, there is little guidance in TRIPS or other international instruments on the scope of exceptions for research purposes. Article 30 of TRIPS simply states that exceptions are allowed and provides broad parameters for them. The exception of uses for non-commercial purposes may be justified on the basis that the patent grant should only allow exclusion from exploitation. It is acknowledged, however, that where the line falls between commercial and non-commercial uses is not always clear.19 Enforcement of patents in ways that stifle non-commercial research could negate the incentive goal of the patent system, by deterring rather than facilitating inventive activities. Furthermore, a narrow ‘research on’ exception may be justified on the basis that such activities are a logical extension of the disclosure goal of the patent system (people should be allowed to test the validity of the patent and the adequacy of disclosure) and the incentive goal (people should be allowed to improve on the patented invention). Even a broader ‘research with’ exception, not limited to non-commercial uses, is arguably justifiable on these grounds and is reinforced by a temporal factor – the requirement for patent disclosure at the outset of the patent term rather than at the end.20 Both the non-commercial and ‘research on’ exceptions are recognised in the patent legislation of a number of European countries.21 Until recently, Australia lacked both statutory provisions and common law authority protecting research use of any kind. However, one outcome of the inquiry by the ALRC was the introduction of an experimental use exception in Australian patent law, albeit limited to ‘research on’ the patented subject matter.22

19 Rebecca S. Eisenberg and Richard R. Nelson, ‘Public vs. Proprietary Science: A Fruitful Tension’ (2002) 77 Academic Medicine 1392. 20 Eisenberg (n 2) 1022. 21 Holzapfel and Sarnoff (n 2) 149–152. 22 Patents Act 1990 (Cth) section 119C.

100

Improving intellectual property

The United States, in contrast, continues to rely on the common law. In the influential decision of the US Court of Appeals for the Federal Circuit in Madey v Duke University23 the Court focused specifically on non-commercial uses of patented subject matter. The Court followed the line of precedent from Whittemore v Cutter limiting the exception to actions performed for ‘amusement, to satisfy idle curiosity, or for strictly philosophical inquiry’.24 The Court concluded that this does not include use that is in any way commercial in nature or conduct that is ‘in keeping with the alleged infringer's legitimate business, regardless of commercial implications’.25 On this basis, a public research institution could not rely on the exception when a researcher used patented subject matter in a research project, because such use furthered that institution’s legitimate business objective of doing research.26 This suggests that research undertaken at universities and research institutes could never be considered non-commercial, since the legitimate business of these entities is always to do research (as well as teaching, in the context of universities). The Court in Madey did not consider the aspect of experimental use canvassed by Justice Storey in Whittemore v Cutter involving ‘ascertaining the sufficiency of the machine to produce its described effects’ (the ‘research on’ component). There appears to be no further guidance from the judiciary in recent times as to the scope of this aspect of the common law exception in the United States. In Europe and Australia, in contrast, the statutory provisions relating to experimental use make it very clear that ‘research on’ patented subject matter is not infringing, and that this exception applies irrespective of whether the research is non-commercial or commercial in nature. Yet the role of the non-commercial use exception in Europe in protecting ‘research with’ patented subject matter (e.g., use of a patented research tool) remains largely unexplored, and this exception is absent in Australia. The final legal protection afforded to research use of patented subject matter is for acts undertaken to fulfil the requirements for regulatory approval of marketing of subject matter protected by a patent. The rationale for protecting such acts is to ensure that generic versions of patentable subject matter are available to the public immediately after the patent expires. All three jurisdictions provide some form of statutory protection, primarily directed towards regulatory approval of pharmaceuticals.27 However, the extent of the protec 307 F.3d 1351 (Fed. Cir. 2002). ibid 1362. 25 ibid. 26 ibid. 27 US: Hatch-Waxman Act, (1984) (amending 21 U.S.C. § 355 and 35 U.S.C. § 271(e); Patents Act 1990 (Cth) sections 119A and 119B. For the various provisions in Europe see Holzapfel and Sarnoff (n 2), 159 and 191–193. 23 24

How do we protect biomedical research in the evolving intellectual property environment?

101

tion has been the subject of some debate, particularly whether it is afforded to early-stage research leading towards regulatory approval, and there remain significant differences between jurisdictions as to the scope of protection.28 The United States case of Integra Lifesciences I, Ltd v Merck KGaA provides some guidance in that jurisdiction, indicating that, like Madey, the exception is narrow, and that it would not protect basic research undertaken without the intention to develop a particular drug or a reasonable belief that the compound would induce the intended physiological effect.29 The Court did, however, hold that pre-clinical research may be protected provided that there is a reasonable basis to believe that the experiments will produce the types of information relevant to submission to the regulator.30 This 2005 Supreme Court decision thus did provide some relief from Dreyfuss’s 2004 interpretation of the protection afforded to research in the US, ‘a rather small defense for generic drug approval processes, and otherwise, virtually no experimental use defense at all’.31

4.

RESEARCH ON AND RESEARCH WITH PATENTED SUBJECT MATTER

If the United States were to enact some sort of research exception, as most commentators seem to agree is appropriate, there are real questions about what form it would take and whether it could provide adequate protection, without creating a disincentive for other research and product development. One of the difficulties in the United States is that the distinction between ‘research on’ and ‘research with’ has not been clearly articulated in the case law. The various commentators proposed a diverse range of options, but few made this clear distinction.32 Notably, however, Katherine Strandburg proposed an exception for ‘research on’ and a compulsory licensing scheme for ‘research with’.33 Although not wholeheartedly accepting this proposal, Dreyfuss has clearly accepted the need to distinguish between ‘research on’ and ‘research with’.34 There has been some useful analysis of what constitutes ‘research on’ the subject matter of a patent in the European context. Jaenichen and Pitz, for example, examined the applicability of this exception to biomedicine across Europe, concluding that there is ‘sufficient room for research activities 30 31 32 33 34 28 29

Holzapfel and Sarnoff (n 2) 124–126, 139–144, 159 and 191–193. 545 U 193, 205–206 (Supreme Court 2005). ibid 199. Dreyfuss (n 2) 461. See summary by Dreyfuss (n 2) 470–471. Strandburg (n 2) 119–122. Dreyfuss (n 8).

102

Improving intellectual property

to promote innovation’.35 They further suggested that outsourced research activities would be covered, as would preparatory acts but not use of research tools, because the research tools themselves are not ‘the objects of the study’.36 Likewise, Holzapfel and Sarnoff suggested that the European exceptions are broad in scope.37 These analyses certainly present an optimistic outlook on the situation in Europe. Quite whether the Australian provision would be interpreted so broadly, or whether the United States legislature would consider creating such a broad carve out for ‘research on’ the subject matter of the patent, remains untested. Solving the research tools problem is more intractable. A non-commercial research exception, extending to both ‘research on’ and ‘research with’ might provide appropriate protection, but this would require a much broader exception than is currently available in the United States post-Madey. Considering the increasingly applied focus of much university research, it is difficult to see how such an exception might work in practice. Various other options, including self-declared waivers, compulsory licensing and statutory licensing schemes have also been proposed,38 but these have not yet found favour in anything but academic discourse. One of the significant problems with a non-commercial use exception is, of course, that it ceases to be effective once commercial. The ‘research on’ exception does not suffer from this problem, as it currently stands in Europe and Australia, because it applies irrespective of whether the research is commercial or non-commercial in nature. But this ‘research on’ exception, and even a broader ‘research with’ exception would become ineffective once the use is no longer experimental.39 In other words, once the outcome of an experimental procedure has been achieved, a licence would be required to practice the follow-on development whether it was intended for commercial use or not. In the meantime, empirical evidence suggests that working solutions are being found to ensure that research and subsequent product development are not blocked.40 In biomedicine, many but not all foundational technologies tend to be non-exclusively licensed for small fees, for the benefit of owners and

35 Hans-Rainer Jaenichen and Johann Pitz, ‘Research Exemption/Experimental Use in the European Union: Patents Do Not Block the Progress of Science’ (2015) 5(2) Cold Spring Harbor Perspectives in Medicine 1. 36 ibid 4. 37 Holzapfel and Sarnoff (n 2) 61–75. 38 See generally (n 2). 39 Karen Walsh, Andrea Wallace, Mahtilde Pavis, Natalie Olszowy, James Griffin and Naomi Hawkins, ‘Intellectual Property Rights and Access in Crisis’ (2021) 52 IIC 379, 402. 40 See particularly Walsh and others (n 2) 287.

How do we protect biomedical research in the evolving intellectual property environment?

103

users alike. NIH, AUTM and OECD licensing guidelines support these types of approaches. Yet the risk remains that patent owners could refuse to license or license on restrictive terms. As such, there continues to be a need to consider policies aimed at ensuring research access to core technology remains open, whether in the context of non-commercial research, research aimed at testing and improving the patented subject matter or, indeed, any research using patented subject matter.

5.

RESEARCH EXCEPTIONS, DATA, KNOW HOW AND MATERIALS

Protecting biomedical research from infringement would undoubtedly go some way toward freeing up the research effort. However, simply removing patent fetters is only part of the picture. There is more to research than protecting use of subject matter disclosed in patent claims from enforcement actions. Access to data, know-how and tangible materials may also be required, none of which feature in the patent application. Know-how and other confidential information is protected under the law of trade secrecy in the United States, and the EU, and under actions for breach of confidence (and/or contract law) in Australia. It is not required to be divulged even once a patent expires.41 There are many forms of data or knowledge that might be protected through trade secrecy, such as manufacturing know-how, genomic data (whether aggregated or otherwise),42 and the outcomes of experimentation (including negative outcomes).43 These forms of data are often difficult, if not impossible to replicate, and duplication is likely to take considerable time. This fact makes research in areas dense with trade secret protection (or rather gaps in what is publicly disclosed) an unattractive proposition. Trade secrecy will often be relied on in conjunction with other forms of intellectual property protection (including patenting). Unlike patent law, however, there are few legal mechanisms to compel access to trade secrets.44 Taken together, these factors may negate any benefit brought about by reliance on patent exceptions. 41 W Nicholson Price II, ‘Expired Patents, Trade Secrets, and Stymied Competition’ (2017) 92 Notre Dame L Rev 1611, 1620–1632. 42 Dan Burk, ‘Patents as Aggregators in Personalized Medicine’ (2015) 21 BUJ Sci & Tech L 233. 43 David S Levine, ‘Trade Secrets and the Battle Against COVID’ (2020) 15(11) JIPLP 849, 850. 44 Olga Gurgula and John Hull, ‘Compulsory Licensing of Trade Secrets: Ensuring Access to COVID-19 Vaccines via Involuntary Technology Transfer’ (2021) 16(11) JIPLP 1242; Jane Nielsen and Dianne Nicol, ‘The Legal Vacuum Surrounding Access to Gene-Based Research Materials and Data’ (2016) 24 Journal of Law and Medicine 72.

104

Improving intellectual property

Furthermore, in addition to processes and other information, research exceptions do not provide access to tangible biological materials such as cells, cell lines, or tissue samples.

6.

AN INTRACTABLE PROBLEM?

The issues that have prompted debate around research exceptions have persisted and are seemingly intractable in the face of an unwillingness to contemplate a broad ‘research with’ exception. One difficulty is a lack of international consensus in relation to permissible research activities, leading to concerns from US scholars that innovators will opt for more ‘research-friendly’ jurisdictions.45 Attempts to harmonise experimental use exceptions have not been successful and the United States has maintained its exceedingly narrow common law defence.46 Even a research exception that is jurisdictionally consistent, however, is still likely to be uncertain in its application. The nature of the beast is that exceptions for research activities will always be contentious. More clarity around what should be included in a research exception is desirable but not necessarily possible. And even a broad exception that includes ‘research with’ patented subject matter may not include all research tools uses. Particular uses of a technology may be exempt while others constitute infringement. For example, cell lines, antibodies and nucleotides may be useful as research tools, but also for screening or diagnostic tools, or for development of therapeutic products.47 A further issue is that the nature of research tools is changing as biomedical technologies evolve and patent claims become more complex. New technologies are emerging at the interface of different disciplines, such as synthetic biology and computational methods including bioinformatics.48 Finally, it is clear that even a broad ‘research with’ exception will not necessarily provide a clear pathway to product development, if access to essential know-how and other trade secrets and materials is blocked. Despite the seemingly intractable nature of this problem, we should not shy away from attempting to solve it. A robust, internationally harmonised

Dreyfuss (n 8) 716–717. Ofer Tur-Sinai, ‘The Trans-Pacific Partnership: Experimental Use of Patents on the International Agenda’ (2014) 16 NC JL & Tech 63. 47 Christopher E. Jeggers and Lawrence J. Carroll, ‘Research Tool Patents: Have Reports of their Death Been Greatly Exaggerated?’ in AUTM (ed), Technology Transfer Practice Manual, vol 4 (3rd edn, AUTM 2010) 5–7. 48 Anna Nowogrodzki, ‘The Automatic-Design Tools That Are Changing Synthetic Biology’ (2018) 564 Nature 291. 45 46

How do we protect biomedical research in the evolving intellectual property environment?

105

‘research on’ exception is an important first step. More uniform adoption of best practice licensing standards, as articulated by the NIH, AUTM and the OECD would also provide assistance. We also need to continue to listen to and heed the guidance provided by esteemed scholars like Dreyfuss.

11. The validity of patent royalties after patent expiration: Brulotte/Kimble from the viewpoint of Japanese private international law Toshiyuki Kono 1. INTRODUCTION A patent expires after 20 years from the date on which the application for the patent was filed.1 This term however does not necessarily coincide with the period during which the patent brings about profits to its holder. If making a patented product takes too much time from the beginning of the patent term, the patent holder may want to license the patent for a period that extends beyond the patent term, in order to ensure sufficient profits from the patent. Antitrust law and the patent law are two approaches to evaluating the legality of such a contractual practice in relation to the principle that a patent shall expire after a fixed term. Dedicated to Professor Rochelle Dreyfuss, who specializes in (among other topics) patent law and conflicts of law, this chapter will take a patent law rather than antitrust approach. In this context, the US Supreme Court elaborated its views in Brulotte v. Thys2 and Kimble v. Marvel Entertainment, LLC.3 This chapter examines how these cases should be evaluated in a cross-border case related to Japan and offers this author’s view.

2.

THE CASES

In Brulotte, the owner of various patents for hop-picking sold a machine for a flat sum and issued a license for its use.4 The licenses issued to each buyer listed 12 patents relating to hop-picking machines, but only seven were incor 3 4 1 2

35 U.S.C. § 154(a)(2); Japanese Patent Act, Art.67 (1). 379 U.S. 29 (1964) at 176–182. 135 S.Ct. 2401 (2015). 379 U.S. 29 (1964) at 177. 106

The validity of patent royalties after patent expiration

107

porated into the machine sold. These seven patents expired on or before 1957, although the licenses issued to the buyers continued for terms beyond the dates of expiration.5 Refusing to pay royalties, the buyers argued that the patents were misused through the extension of the license agreements beyond the expiration date of the patents. The US Supreme Court concluded that ‘a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se. If that device were available to the patentees, the free market visualized for the post-expiration period would be subject to monopoly influences that have no proper place there’.6 The Brulotte rule was challenged in Kimble v. Marvel Entertainment, LCC. In Kimble, Marvel Entertainment’s corporate predecessor agreed to buy Kimble’s patent in exchange for a lump sum plus a 3 percent royalty on future sales.7 The agreement set no end date for royalties.8 As the end of the term of the patent approached, Marvel sought a declaratory judgment that it could stop paying Kimble royalties based on Brulotte.9 According to the US Supreme Court, the Brulotte rule may prevent some parties from entering into deals they desire,10 but parties can often find ways to achieve similar outcomes. For example, Brulotte leaves parties free to defer payments for pre-expiration use of a patent, tie royalties to non-patent rights, or make non-royalty-based business arrangements.11 However, such alternatives were not enough for Kimble, hence Kimble asked the US Supreme Court to overrule Brulotte.12 Stressing that Brulotte is a patent rather than an antitrust case,13 the US Supreme Court held that ‘we would need a superspecial justification to warrant reversing Brulotte. But the kinds of reasons we have most often held sufficient in the past do not help Kimble here.’14 Thus, for reasons of stare decisis, the Brulotte rule was re-affirmed. As a result, US case law seems to read patent laws as preventing patentees from receiving royalties for sales made after their patents’ expiration.

7 8 9 5 6

12 13 14 10 11

Id.,178. Id., 179. 135 S.Ct. 2401 (2015), 2406. Id. Id. Id., 2408. Id. Id. Id., 2413. Id., 2410.

Improving intellectual property

108

3.

OVERRIDING MANDATORY RULE

Should a dispute occur over a license agreement that allows the licensor to receive royalties after the expiration of the relevant patent, the Brulotte/ Kimble rule would apply to a license agreement of a US patent within the territorial scope of the US patent law.15 If the same dispute occurred outside the United States, for instance, if the choice of forum clause in a license agreement designates a country other than the United States, or if both licensor and licensee are non-American companies with the headquarters outside the United States, then it is likely that litigation would be filed outside the United States. In such a case, the court should first identify the law applicable to the license agreement independently from the patent law of patents subject to the license. Leading opinions, such as the International Law Association’s Kyoto Guidelines, would allow parties to the license agreement to choose the applicable law.16 Hence, it is possible that a court would apply non-US law to a license agreement covering US patents. How should a court of the forum state deal with the Brulotte/Kimble rule? Should Brulotte/Kimble affect the validity of the license agreement? One legal technique for a court to apply law other than the applicable law and/or the forum state’s law is the application of so-called overriding mandatory law. This legal technique to apply foreign overriding mandatory rules in a third country was invented and developed by continental European legal scholarship17 and was adopted in some national legislation such as Article 19 of the Swiss Federal Act on Private International Law18 as well as in Article 9 (3) of the Rome I Regulation. The Rome I Regulation defines overriding mandatory provisions as: provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organization, to such an

15 This does not necessarily mean that the license agreement is invalid. Because the Kimble acknowledged that Brulotte had left some room to keep such an agreement valid. See 135 S.Ct. 2401 (2015), 2408. 16 For instance, ILA’s Guidelines on Intellectual Property and Private International Law (Kyoto Guidelines), Article 21 and comments, J. of Intel. Prop. Info. Tech. & Electronic Commerce L. (JIPITEC), Vol.12, issue 1, 2021, pp.1–93, at 48–50. 17 See, for instance, Kristina Mühlbauer, Berücksichtigung der ausländischen Eingriffsnormen im Art.9 Rom I-VO (2021) 371, 41–55 (https://​edoc​.hu​-berlin​.de/​ handle/​18452/​23698) 18 See https://​www​.fedlex​.admin​.ch/​eli/​cc/​1988/​1776​_1776​_1776/​en.

The validity of patent royalties after patent expiration

109

extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract.19

The codified Japanese private international law, the Act on General Rules for Application of Laws (Act on General Rules),20 is silent as to when mandatory laws of a foreign jurisdiction may apply directly notwithstanding the parties’ choice of Japanese law, except in two specific circumstances (where consumer protection law or employment law is at issue). Although there was discussion about introducing a provision to allow direct application of certain foreign mandatory laws, that provision was not codified into the Act on General Rules. The majority of Japanese legal scholars conclude that there is no other instance where direct application of foreign mandatory laws is allowed. However, a group of Japanese law scholars argues that foreign mandatory laws can become overriding and apply directly, claiming that it may be appropriate to characterize certain foreign mandatory laws as overriding and to directly apply those foreign mandatory laws of third countries. Their school of thought is inspired by the ‘Sonderanknüpfung’ (special connection) theory in Germany. According to this theory, to be connected, those laws or rules are so-called ‘“overriding” foreign mandatory rules’ (gaikoku zettaiteki kyōkō hōki), which shall be applied directly irrespective of the parties’ choice of applicable law. The Tokyo District Court recently dealt with the applicability of the Argentinian National Emergency Act. In 1997, the Argentinian Government had issued state bonds in several countries, including Japan. Due to its financial crisis since 1999, the Argentinian Government passed the Act on the National Emergency and the Reform on Foreign Exchanges Systems (National Emergency Act)21 to cope with the emergency state in the fields of social, economic, administrative, financial, and currency policy. On February 6, 2002, an order was issued to restructure obligations and debts payment of the Argentinian Government. The National Emergency Act was extended until December 31, 2015. On June 29, 2009, the plaintiff sued the Argentinian Government for payment of the bonds. The main private international law issue was whether the state bonds, which were governed by Japanese law, should be subject to the Argentinian National Emergency Act.

19 Article 9(1) of the Rome I Regulation https://​eur​-lex​.europa​.eu/​legal​-content/​ EN/​TXT/​PDF/​?uri​=​CELEX:​32008R0593. 20 Act No. 78 of June 21, 2006. 21 No.25.561 on January 6, 2002.

Improving intellectual property

110

The Tokyo District Court refused to apply the National Emergency Act directly notwithstanding the parties’ choice of Japanese law as the governing law. The court ruled as follows: [t]he defendant argued that the National Emergency Act was an ‘absolute mandatory rule’ and that it overrode the due date under Japanese Law. Both the applicable law to contractual issues of the state bonds concerned and lex fori are Japanese law. The Argentinian Act, which deferred the payment, would be the law of a third country. However, Article 7 of the Act on General Rules allows the parties to agree on the law applicable and stipulates only two special rules on consumer contracts and labor contracts as the exceptions to that rule. Under the Act on General Rules, there is no provision that might justify an application of the law of a third country. In the drafting process of the Act on General Rules at the Advisory Council on the Legal Systems, there was an opinion that applying mandatory rules of a third country requires a clear black-letter rule. And the Council decided not to create any rule concerning the direct application. From the legislative history of the Act on General Rules, it is difficult to determine that the application of mandatory rules of a third country was to be expected.

The foreign mandatory rule in the Argentine Bonds Case was the National Emergency Act in Argentina, which should be understood to be one of the most important regulatory laws in Argentina at that time. Despite the importance of the National Emergency Act, the Tokyo District Court did not even discuss whether it was overriding, and refused to directly apply the Act.

BRULOTTE/KIMBLE AS AN OVERRIDING MANDATORY RULE?

4.

Despite the above-mentioned recent judgment of the Tokyo District Court on the Argentinian bonds, for the sake of academic discussion, let us suppose that Japanese private international law may accept the direct applicability of foreign overriding mandatory rules. Then, a question is whether Brulotte/ Kimble is an overriding mandatory rule in the sense that private international scholars in Europe have been using it. Due to the territorially limited scope of application of the mandatory rules and the restricted function of public policy as a tool to protect the interests of the forum state, scholars of private international law in continental Europe thought that they needed a legal technique that enables the court to take the interests of foreign countries into consideration, besides the interests in lex fori and lex causae.22 It is based on the idea that a forum state may accept the strong political will of the lawmakers of a third country that is embodied in specific

Mühlbauer (n 17) 27–55.

22

The validity of patent royalties after patent expiration

111

statutory provisions.23 It leads to another question, i.e., whether case law (as contrasted with statutory law) would fall under this concept? To clarify this point, it is worth seeing the history of the transition from the Convention on the Law Applicable to Contractual Obligations (1968 Convention), the predecessor instrument of the Rome I Regulation to the Rome I Regulation. The 1968 Convention used language like ‘mandatory rules’ in English, ‘zwingende Bestimmungen’ in German, and ‘dispositions imperatives’ in French.24 The term ‘rules’ in English seem to allow an interpretation that case law would fall under it, since for instance, as in a court ruling. The language ‘rules’ was kept in the draft of the Rome I Regulation but it was amended to ‘provisions’ at the Committee on Legal Affairs of the European Parliament.25 Thus Article 9 of the Rome I Regulation uses ‘provisions’ in English, ‘Vorschrift’ in German, and ‘disposition’ in French. The language of the Rome I Regulation and the drafting history of its Article 9 support that case law would not fall under the concept of overriding mandatory rule in EU law.26 In Japanese law, on the other hand, since the Act on General Rules is silent in terms of the applicability of foreign mandatory rules, there is no hurdle in its language. Hence, let us make another assumption for the sake of academic discussion that case law can be interpreted as an overriding mandatory rule in Japanese private international law. The mandatory nature of a rule stems from social policy objectives (typically the protection of weaker parties), economic policy objectives (regarding competition, international trade, exchange controls, the surveillance of economic sectors, sanctions), and/or other objectives (including human dignity, health, cultural property, the environment).27 Since the Brulotte/Kimble rule is concerned with the patent monopoly and a license agreement, it is about an economic policy objective. In Brulotte, the US Supreme Court examined the terms and conditions of the license contracts and concluded that the: contracts are, therefore, on their face a bald attempt to exact the same terms and conditions for the period after the patents have expired as they do for the monopoly

23 Yasushi Nakanishi/ Aki Kitazawa/ Dai Yokomizo/ Takami Hayashi, Kokusaishihou [Private International Law] Ver.3 (2022), 135. 24 Convention on the Law Applicable to Contractual Obligations Article 7. 25 Compromise amendment 29 by Cristian Dumitrescu, PE 393.856v01-00 (2007), 1-34, at 23. 26 Some scholars argue that Article 9 should be interpreted to cover case law. Mühlbauer (n 17) 150. 27 Gabrielle Kaufmann-Kohler, International Arbitration, Law and Practice in Switzerland (2015), 1–561 at 383.

Improving intellectual property

112

period … [b]ut an attempt to project it [the patent monopoly] into another term by continuation of the licensing agreement is unenforceable.28

More than 50 years later, the Kimble opinion observed that ‘a longer payment period will typically go hand-in-hand with a lower royalty rate.’29 And as the Court stated, ‘[d]uring the patent term, those reduced rates may lead to lower consumer prices, making the patented technology more competitive with alternatives.’30 And after the patent expiration, further benefits follow: Absent high barriers to entry, ‘the licensee’s continuing obligation to pay royalties encourages new companies to begin making the product, figuring that they can quickly attract customers by undercutting the licensee on price.’31 The US Supreme Court acknowledged that a ‘broad scholarly consensus supports Kimble’s view of the competitive effects of post-expiration royalties.’32 However, to overrule Brulotte, two questions had be resolved. First, does the Brulotte Court’s economic mistake suffice to overcome stare decisis? Second, was Brulotte actually founded on an analysis of competitive effects?33 The Kimble Court concluded that ‘[i]f Brulotte were an antitrust rather than a patent case, we might answer both questions as Kimble would like … [b]ut Brulotte is a patent rather than an antitrust case.’34 And ‘[b]y contrast with the Sherman Act, the patent laws do not turn over exceptional law-shaping authority to the courts. Accordingly, statutory stare decisis – in which this Court interprets and Congress decides whether to amend – retains its usual strong force.’35 Hence, the US Supreme Court refused to overrule Brulotte. Although the US Supreme Court did not overrule Brulotte, the Court did not seem to remain convinced by Brulotte’s economic policy considerations. Brulotte itself, as Kimble pointed out, acknowledged possibilities that would make a license agreement valid where the licensee is obliged to pay royalties after the expiration of the patent. Kimble even stated that the Brulotte Court had made a mistake in terms of economic analysis. Hence, the economic policy objective of Brullote/Kimble is not so firm and strong that it should directly affect the validity of post-patent-expiry royalties. And so, it is questionable even in Japanese law to consider Brulotte/Kimble as an overriding mandatory rule.

30 31 32 33 34 35 28 29

Id., 179, 180. 135 S.Ct. 2401 (2015), 2412. Id. Id. Id. Id. Id. Id.

The validity of patent royalties after patent expiration

5.

113

HOW TO TAKE THE BRULOTTE/KIMBLE RULE INTO CONSIDERATION IN JAPANESE LAW?

As Brulotte illustrated, royalties payable beyond the date of the expiration of the patent without specifying the end of such royalties can cause many issues. The Brulotte/Kimble rule does not have direct effects on the license agreement from the viewpoint of Japanese private international law. However, that does not mean that Brulotte/Kimble can be ignored. Adjusting imbalances between the licensor and the licensee is a factor in Japanese law as well. If a license agreement is too unfair for the licensee, it should be corrected by the law applicable to the agreement, through the general clause in lex causae. ‘General clause’ originates from the term ‘Generalklausel’ in German law and refers to fundamental provisions of the law such as a ‘due process’ or ‘good faith’ principles. Although a ‘general clause’ provides the fundamental principles, the elements and application of those principles are provided in an abstract manner, such that judges carry the responsibility to interpret and apply them as appropriate. Under Japanese law, general clauses include the public policy in Article 90 of the Civil Code and the good faith principle in Article 1(2) of the Civil Code.36 The Iranian Carpets case demonstrates that the goals of foreign mandatory rules and the facts in each case will be carefully examined before deciding whether a violation of foreign mandatory law constitutes a violation of public policy within the meaning of Article 90 of the Japanese Civil Code.37 In the Iranian Carpets case, the plaintiff arranged to ship 25 Iranian carpets from Japan to the US, although at that time special permission from the US Department of Treasury had to be obtained to ship more than five Iranian carpets. The issue in the case was whether the shipping contract, which was governed by Japanese law, but which violated US regulations, was invalid. If the shipping contract was invalid, the insurance contract would then be void, because the legitimate insured interest would be absent. The Tokyo District Court found that the importation without a special permission violated the US regulation and that paying the insurance claim was, consequently, prohibited. The Tokyo District Court explained that if the insurer was required to cover the loss of the carpets concerned and to make an equivalent payment, it would not only promote illegal acts, but also positively

36 See Articles 1(2) and 90 at https://​www​.ja​paneselawt​ranslation​.go​.jp/​en/​laws/​ view/​3494. 37 Tokyo District Court, May 13, 1998, Hanreijiho 1676-129; Tokyo High Court, February 9, 2000, Hanreijiho 1749-157.

Improving intellectual property

114

create an illegal act. Therefore, the court determined that the insurance contract was invalid, and dismissed the claim.38 The Tokyo High Court (as the court of second instance in Japan) reversed the District Court’s decision. According to the Court’s decision, shipping the carpets to the United States did not violate the laws of Japan. Even if the United States regulatory rule required special permission, the rule was a temporary regulation implemented by the US administration. The Court explained that the carpets were of a different nature from drugs or weapons and found that it was not necessary to invalidate the shipping contract in this case for the sake of thorough restriction. Consequently, the Tokyo High Court held that the shipping contract did not violate the public policy of Japan.39 The Tokyo High Court’s decision demonstrates that the use of a general clause of the applicable law, such as Article 90 of the Civil Code, was not prohibited. On the other hand, however, the Court emphasized that ‘even if bringing the cargo concerned would be illegal according to the law of the country of destination, the degree of illegality differs. Hence it is not possible at all to understand that contracts related to the shipping shall always be invalidated.’40 The Tokyo High Court clearly stated that the shipping in that case was only part of the overall movement of goods from Japan to the US. The court observed that even if the insurance contract were interpreted to be a valid contract, it did not generally facilitate contraband or promote it, so that the public policy in Japan did not require the contract to be invalidated.41 The Brulotte/Kimble holdings can be handled in the same manner as the analysis of the validity of the insurance contract by the Tokyo High Court, which took the US regulatory rule into consideration. First, a general clause in lex causae should be identified. Then various facts in each case should be taken into consideration in the framework of the general clause. For instance, the following factors may negatively affect the validity of the contract: That royalties continue to be payable after the expiration of patents without specifying when the payment obligation ends, and that the royalties remain unchanged before and after the expiry of the patents. On the other hand, if the payment after the expiry of the patents concerns not the patents per se, but the provision of know-how from the licensor, the contract may be valid. It would not be appropriate to determine the validity of the contract without paying due attention to the facts and circumstances in each case.

40 41 38 39

Tokyo District Court, id. Tokyo High Court, id. Id. Id.

The validity of patent royalties after patent expiration

115

6. CONCLUSION The Brulotte/Kimble line of cases raises a fundamental issue concerning patent law, i.e., how to balance the patent monopoly, its limits, and business considerations of the patent holder and the patentee. If a US patent is licensed and a dispute on the license agreement arises outside of US territory, how would Brulotte/Kimble affect the license agreement? One view of Japanese private international law is that if the US law is not lex causae, then the Brulotte/Kimble rule does not automatically apply to the license agreement. Even assuming that case law would fall under the concept of an overriding mandatory rule, Brulotte/Kimble would not satisfy the nature of an overriding mandatory rule. Hence, the only possible way to take Brulotte/Kimble into consideration in Japan is to apply a general clause in lex causae and to pay due attention to the facts and circumstances in each case.

12. ‘Tool Time’: The continuing relevance of compulsory licensing as a patent policy tool Margo A. Bagley1 1. INTRODUCTION In ‘Patent Barbarians at the Gate: The Who, What, When, Where, Why, and How of Patent Subject Matter Eligibility Disputes,’2 I described myriad factors contributing to the rise in patent subject matter eligibility challenges in the courts and why such challenges were likely to persist in the future. I also noted that according to Professor Rochelle Dreyfuss, one of the factors was that ‘the traditional tools for balancing public and private interests are largely broken’ thus ‘it is no wonder, then, that subject matter challenges have been on the upswing.’3 To what tools was she referring, and how are they broken? In her article, Dreyfuss mentions the tools of the experimental use exception, compulsory licensing, and antitrust scrutiny among others, in the specific context of gene patents.4 The unavailability of such tools seemingly contributed to the lawsuit resulting in the US Supreme Court’s Ass’n for Molecular Pathology v. Myriad Genetics, Inc., decision constricting patent subject matter eligibility for inventions characterizable as products of nature.5 However, her insights

1 This chapter borrows from Margo A. Bagley, The Morality of Compulsory Licensing as an Access to Medicines Tool, 102 Minn. L. Rev. 2463 (2018). 2 Patent Barbarians at the Gate: The Who, What, When, Where, Why & How of U.S. Patent Subject Matter Eligibility Challenges, in Patent Law in Global Perspective (Ruth L. Okediji & Margo A. Bagley eds., Oxford University Press 2014). 3 Id. at 171 (citing Rochelle C. Dreyfuss, Implications of the DNA Patenting Dispute: A U.S. Response to Dianne Nicol, 22 J. L. Info. & Sci. 1 (2012)). 4 Rochelle C. Dreyfuss, Implications of the DNA Patenting Dispute: A U.S. Response to Dianne Nicol, 22 J. L. Info. & Sci. 1 (2012). 5 See Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013); see also Emma Barraclough, What Myriad Means for Biotech, WIPO

116

‘Tool Time’

117

have a much broader application across technological subject matter areas. The ‘brokenness’ of the tools derives largely from the negligibility of their use due to either lack of codification or narrow judicial constructions of the conditions to which they apply. This short chapter will explore aspects of one particular tool, compulsory licensing, its ‘brokenness’ in the context of pharmaceutical patents, and its continuing salience for patent law and policy in the US and abroad. Compulsory licensing is indeed a traditional public policy tool, but it has never been warmly embraced in this country6 and its use by low- and middle-income countries (LMICs) to address public health challenges has often been ridiculed or prevented. Yet a robust, carefully crafted compulsory licensing regime can be a critical element in a country’s policy toolbag that can support both public health and the growth of innovative activity.

2.

THE RELEVANCE OF COMPULSORY LICENSING

Through the patent mechanism, a government grants an inventor the right to exclude others from making, using, selling, offering to sell, or importing a patented invention into a country for the patent term, nominally 20 years from the filing date.7 Patent rights are territorial, so inventors must apply in each country or region where they desire protection and the resulting patent is only valid in that territory.8 The right to exclude granted by a patent is widely considered essential to pharmaceutical investment. Moreover, the deadweight losses that patents create are generally considered justifiable for pharmaceuticals, as companies need to price above marginal cost to recoup significant fixed development expenses.9 However, these exclusionary rights translate to soaring drug prices in both rich and poor countries,10 despite global calls for access to affordable Magazine (Aug 2013) (‘PUBPAT attorney Dan Ravicher says the groups targeted Myriad because of the company's reluctance to license its patents to competitors.’) 6 For a list of specific US compulsory licensing provisions, most never used, See CP-Tech, Chapter IV, Misc. Compulsory Licensing Programs, available at http://​www​ .cptech​.org/​ip/​health/​cl/​us​-misc​.html. 7 TRIPS Agreement, Arts 28 and 33. 8 Paris Convention for the Protection of Industrial Property Art. 4, Mar. 20, 1883, 828 U.N.T.S. 305 (1979). 9 See Joseph A. DiMasi, Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs, 47 J. Health Econ. 20, 21 (May 2016). 10 See, e.g., Sharon Begley, Cancer drugs are unaffordable in the developing world, STAT, June 06, 2016; Joanna M. Shepherd, Biologic Drugs, Biosimilars, and Barriers to Entry, 25 Health Matrix 139, 159 (2015).

118

Improving intellectual property

medicines.11 The problem is exacerbated by the fact that biologics, which can be covered by a web of patents,12 and cost an average of 22 times as much as a small molecule drug for treating the same condition,13 comprise an increasing proportion of new drugs in development. Yet efforts by governments to reduce costs, using mechanisms like compulsory licenses, routinely meet with censure threats, and the dire predictions that new drug developments to treat the world’s ills will cease.14 Through compulsory licensing, a government allows a third party to practice a patented invention without the patent owner’s permission, and requires the third party to pay a royalty to the patent owner.15 A compulsory license does not require the patent owner to do anything except sit back and receive the royalties. But it does prevent the patent owner from stopping that third party from practicing the invention. The laws of many countries include fairly robust compulsory licensing provisions. However, as noted by the US Supreme Court, ‘compulsory licensing is a rarity in our patent system.’16 The federal government does have the right to use any patented invention and authorize third parties to do so under its auspices, and there are a few, narrowly circumscribed and unused provisions such

11 E.g., Goal 3.B of the United Nations Sustainable Development Goals 2030 includes the targets of providing ‘access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on TRIPs Agreement and Public Health.’ UN Sustainable Development Goals 2030. See also Report of the United Nations Secretary-General’s High-Level Panel on Access to Medicines 8 (Sept. 2016) (‘Despite … noteworthy progress, millions of people continue to suffer and die from treatable conditions because of a lack of access to health technologies.’). 12 See, e.g., Cynthia Koons, This Shield of Patents Protects the World’s Best-Selling Drug, Bloomberg News, Sept. 7, 2017 (describing the web of over 100 patents covering AbbVie’s $16 billion/year blockbuster biologic Humira); Jayne O’Donnell, Biologic Drugmakers Use Patents, Suits, to Thwart Generic Competition, USA Today, Aug. 4, 2016 (‘Biologic makers have been ‘asserting many, many patents to protect their franchise’’). 13 Anthony D. So & Samuel L. Katz, Biologics Boondoggle, N.Y. Times, Mar. 7, 2010, at A23. 14 See, e.g., William W. Fisher III and Talha Syed, Infection: The Health Crisis in the Developing World and What We Should Do About It, ch. 6 (Stanford University Press, forthcoming) (noting several reasons for the infrequent use of compulsory licenses despite the need for cheaper drugs, including that ‘the pharmaceutical firms disadvantaged by compulsory licenses and the governments of the countries in which those firms are based sometimes retaliate (or threaten to retaliate) against the countries that use them.’). 15 Compulsory Licenses Under TRIPS: An Introduction, in Cynthia M. Ho, Access to Medicine in the Global Economy: International Agreements on Patents and Related Rights 127 (Oxford University Press 2011). 16 Dawson Chem. Co. v. Rohm & Haas Co., 448 U.S. 176, 215 (1980).

‘Tool Time’

119

as in the Clean Air Act, Atomic Energy Act, and Bayh-Dole Act that could pass as compulsory licensing provisions. However, as Dreyfuss has noted ‘US law does not include [broad] compulsory licensing provisions that might prevent patentees from withholding permission to use their inventions.’17 The legitimacy of compulsory licenses under international law is clear. Moreover, the United States and several European countries have issued numerous explicit and de facto compulsory licenses in various technological areas over the years.18 Importantly, the 1995 World Trade Organization Agreement on Trade Related Aspects of Intellectual Property (TRIPS) explicitly allows compulsory licenses under certain conditions.19 Nevertheless, the use of compulsory licenses to lower the cost of drugs by LMICs has been repeatedly met with condemnation, threats of trade sanctions, and the mischaracterization of such actions as ‘theft’ and expropriation.20 There has also been a push, by large pharmaceutical interests, to misinterpret international law in a way that improperly constrains countries’ abilities to rightfully issue compulsory licenses. Such misinterpretations are illustrated in

17 Rochelle C. Dreyfuss, Implications of the DNA Patenting Dispute: A U.S. Response to Dianne Nicol, 22 J. L. Info. & Sci. 1 (2012). See Dawson Chem. Co. v. Rohm & Haas Co., 448 US 176, 215, n. 21 (1980) (‘Compulsory licensing of patents often has been proposed, but it has never been enacted on a broad scale. … Although compulsory licensing provisions were considered for possible incorporation into the 1952 revision of the patent laws, they were dropped before the final bill was circulated.’). 18 See, e.g., Knowledge Ecology International, Recent Examples of Compulsory Licensing of Patents, KEI RN 2007:2, (2007) (describing the issuance or threat of issuance of compulsory licenses by a variety of countries). See also James Love, Knowledge Ecology International (KEI), written comments and notice of intent to testify at the Special 301 Public Hearing Monday, Feb. 24, 2014 at the offices of USTR (Feb. 7, 2014): The United States itself is [a] major user of compulsory licenses. … [This includes] the extensive non­voluntary uses of patents and copyrights under 28 USC 1498, … and the growing number of compulsory licenses granted by federal judges, when they forgo the granting of injunctions in patent infringement cases … [per] eBay Inc. v. MercExchange. 19 TRIPS Agreement, Art. 31. 20 See e.g., Letter from Livia Leu, Swiss Ambassador, to Dr. Carolina Gomez, Adviser, Colombian Ministry of Health and Social Protection (May 26, 2015) (criticizing Colombia’s plan to issue a compulsory license on the cancer drug Gleevic). I challenge the validity of theft rhetoric in relation to compulsory licenses in Margo A. Bagley, The Morality of Compulsory Licensing as an Access to Medicines Tool, 102 Minn. L. Rev. 2463 (2018).

Improving intellectual property

120

a 2021 statement by the Biotechnology Innovation Organization (BIO) to the United States Trade Representative (USTR): BIO strongly believes governments should grant CLs only in accordance with international rules and as a last resort in exceptional circumstances. Decisions should be made on public health emergency grounds through fair and transparent processes that involve participation by all stakeholders and consider all the facts and options, including less harmful but effective alternatives to CLs … BIO recognizes lawful, proportionate, and temporary exercise of government emergency powers is available to respond to genuine emergencies or other extraordinary circumstances that cannot be addressed collaboratively between a government and an IP rightsholder; … Compulsory licensing decisions are largely avoidable and should be made through a fair and transparent process that involves participation by all stakeholders.21

Several aspects of this statement are troubling. BIO’s ‘beliefs’, as highlighted in the italicized language, are simply not in accordance with international law. Article 31 of TRIPS governs the use of compulsory licenses by its 164 member governments. Article 31 states, in pertinent part: Article 31 – Other Use Without Authorization of the Right Holder Where the law of a Member allows for other use of the subject matter of a patent without the authorization of the right holder, … the following provisions shall be respected: … b. Such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement [to try to obtain authorization from the right holder] may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.22

The text is clear: compulsory licenses may be granted by countries without any effort to obtain authorization from the right holder in advance, not only in the case of a national emergency, or in another circumstance of extreme urgency, but also in cases of public non-commercial use. That includes cases where the government is authorizing the license for its normal public health purposes. The BIO letter further castigates specific countries and regions for compulsory licensing plans in relation to the COVID-19 pandemic and other public health concerns, despite the fact that these countries are acting well within the TRIPS Agreement parameters. For example, after criticizing the Malaysian

Biotechnology Innovation Organization, 2021 Special 301 Submission (2021). TRIPS Agreement, Art 31 (emphasis added).

21 22

‘Tool Time’

121

government’s issuance of a compulsory license on a Hepatitis C drug, it states that ‘the Malaysian government has the opportunity to send a positive signal to US biopharmaceutical companies seeking to bring innovative medical products for Malaysians by assuring them that compulsory licenses will not be used until absolutely necessary as a measure of last resort.’23 But why should the Malaysian government grant such an assurance? TRIPS does not require compulsory licenses to be used as a measure of last resort. Any country that ties its hands in this way emasculates the potentially robust tool of compulsory licensing, rendering it ineffective for use in many reasonable situations. The letter concludes by urging the USTR to act against compulsory licensing efforts, even during a pandemic, with the power of its Section 301 trade sanction apparatus.24 The result of such tactics? LMICs who seek to employ compulsory licenses for drug products do so at their peril, rendering the tool largely broken and ineffective. While not surprising, it is troubling to see industry actors pushing the US government to threaten countries using compulsory licenses for public non-commercial uses, especially in light of the fact that the United States agreed to the 2001 Doha Declaration on the TRIPS Agreement and Public Health. 25 According to a study by the WHO and WTO, this Declaration ‘emphasizes that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health and reaffirms the right of Members to use, to the full, the provisions of the TRIPS Agreement which provide flexibility for this purpose.’26 The Declaration also affirms that ‘Each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted.’27 Repairing and empowering this public policy tool would require powerful governments to

Id. at 10 (emphasis added). This is not new. As a WHO-WTO Study notes: [A]t the end of the Uruguay Round, at least one WTO Member, the United States, did not accept that the standards of protection of intellectual property provided for in the TRIPS Agreement were necessarily adequate and decided that it would continue to seek higher standards of protection through other means, including its procedures under the Special Section 301 of its Trade Act. WTO Agreements and Public Health, A Joint Study by the WHO and WTO Secretariat 109 (2002). The United States later stated its intention to refrain from challenging the use of flexibilities in relation to the HIV/AIDs crisis; nevertheless, the Section 301 process has, on multiple occasions, targeted countries that issue drug-related compulsory licenses. 25 WTO, Declaration on the TRIPS Agreement and Public Health, WT/MIN (01)/ DEC/2 (2001) (hereinafter Doha Declaration). 26 WHO-WTO Study, supra n. 24. 27 Doha Declaration, para 5(c). 23 24

122

Improving intellectual property

give full effect to this language, and refrain from threatening LMICs considering employing compulsory licenses. Nevertheless, compulsory licensing is not a panacea; even a robust compulsory licensing regime would address only some of the access to medicines ills many countries face today. The COVID-19 pandemic illustrates well the limits of compulsory licensing in this regard while also illuminating ways this tool can be invigorated for increased benefit. In October of 2020, the governments of India and South Africa submitted to the TRIPS Council a proposal to waive patent, copyright, industrial design, and trade secret rights temporarily on all technologies necessary to combat COVID-19 for the duration of the pandemic.28 Such an unprecedented waiver was deemed necessary in part because compulsory licensing restrictions under TRIPS (both explicit and implied) would stymie the ability of many countries to obtain the wide range of products needed to both prevent and treat COVID-19 in an efficient and expeditious manner. Unsurprisingly (considering the power of the pharmaceutical and biotech industry lobbies), no such waiver was approved. Instead, what WTO members ultimately agreed to in a June 2022 Decision, was something quite different and much, much narrower: a loosening of the compulsory licensing strictures only for COVID vaccines, for a period of five years, and in the limited context of the onerous and negligibly used TRIPS Article 31bis procedure for exporting products to countries with insufficient manufacturing capacity.29 This WTO Decision is disappointing in many respects,30 including that it is directed to compulsory licensing in relation to products for which such licenses are not well suited: vaccines. Vaccines are biologics,31 products that require significant know-how, which is generally protected by trade secrets and not

28 Council for Trade-Related Aspects of Intellectual Property Rights, ‘Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19: Communication from India and South Africa’ (IP/C/W/669, 2 October 2020). 29 Ministerial Decision on the TRIPS Agreement, Ministerial Conference Twelfth Session, WT/MIN(22)/30/WT/L/1141 (Jun. 2022) [hereinafter Ministerial Decision]. 30 See James Love, The June 17, 2022 WTO Ministerial Decision on the TRIPS Agreement, Knowledge Ecology International (Jun. 2022) (detailing problems with the Decision and why it is unlikely to be used to increase COVID vaccine production or supply) available at https://​www​.keionline​.org/​37830. 31 According to the US Food and Drug Administration (FDA): [Biologics] include a wide range of products such as vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues, and recombinant therapeutic proteins. Biologics … may be living entities such as cells and tissues. Biologics … may be produced by biotechnology methods and other cutting-edge technologies.

‘Tool Time’

123

disclosed in patents, for mass production. The products for which compulsory licensing is expected to be more useful, small-molecule therapeutics to treat COVID-related conditions, are not currently included in the Decision, although the agreement obligates members to decide whether to extend the provision to diagnostics and therapeutics within six months of the Decision date.32 The Decision does, however, make explicit certain compulsory licensing flexibilities that were already available to countries, but which some LMICs have been hesitant to use, due in part to the kinds of theft rhetoric and threats noted earlier. These flexibilities should always have clearly and explicitly been part of the compulsory licensing framework available for countries to use for a wide range of medical products, and not limited to the COVID pandemic. Thus, a silver lining to this Decision lies in the hope that it will provide the basis for these clarified compulsory licensing flexibilities to be broadly included in future interpretations and iterations of TRIPS compulsory licensing provisions. The increasing proliferation33 and importance of biologic drugs may cause some to wonder if compulsory licensing still matters since, as noted above, compulsory licenses do not affect the trade secrets that are often necessary for the mass production of biologic products. But Moderna Inc.’s recent invocation of compulsory licensing as a defense to a charge of patent infringement involving its mRNA COVID-19 vaccine shows that the doctrine retains cogency even in the age of biologic medicine. In February 2022, Arbutus Biopharma Corp. and Genevant Sciences sued Moderna for patent infringement, claiming the lipid nanoparticle casing used by Moderna as a delivery vehicle in its Spikevax™ vaccine infringed patents owned by Arbutus and licensed to Genevant.34 In response, Moderna moved to dismiss the lawsuit claiming that its contract with the government effectively created a compulsory license on any third-party patents Moderna would need to infringe in producing its vaccine. The statutory provision incorporated in the contract is 28 U.S.C. §1498, which authorizes a patent holder to sue the US Food and Drug Administration, What Are ‘Biologics’? Questions and Answers, https://​www​.fda​.gov/​AboutFDA/​CentersOffices/​Offi​ceofMedica​lProductsa​ ndTobacco/​CBER/​ucm133077​.htm. 32 Ministerial Decision at para. 8. 33 Ameet Sarpatwari, Jerry Avorn, and Aaron S. Kesselheim, Progress and Hurdles for Follow-On Biologics, 372 N. Engl. J. Med. 2380 (2015) (‘Though [biologics] account for less than 1% of all prescriptions dispensed in the United States, expenditures on them amount to 28% of prescription drug spending, and both their use and cost are forecast to grow sharply.’). 34 Arbutus Biopharma Corporation et al v. Moderna, Inc. et al, case number 1:22-cv-00252 (D. Del.); see also Amruta Khandekar, Arbutus Files Patent Infringement Lawsuit Against Moderna Related to COVID Shot, reuters.com (Feb. 2022).

124

Improving intellectual property

US government for damages when its patent is used by or for the government without license. Whether Moderna’s defense will be successful remains to be seen, but the fact that patents relating to a biologic are involved is noteworthy.35 Compulsory licensing remains a potentially useful tool for balancing innovation and access concerns, and it is long overdue for repair.

3. CONCLUSION The contributions of Rochelle Dreyfuss to our understanding of intellectual property, particularly patent doctrines and policy, are numerous and varied. Her insights into the way constraints on traditional patent safety valves like compulsory licensing can have unintentional effects on other doctrines continue to inform both scholarship and practice. Her facility with international and comparative patent regimes has enriched the understanding of readers in the United States and abroad. As she notes after pointing out the vibrancy of ‘traditional tools’ in other countries like Europe, ‘the United States should be paying more attention to developments elsewhere [such as the availability of compulsory licensing] – not vice versa.’36 I also believe her accomplishments as a research chemist inform her scholarly insights. When gases expand in a confined space, the pressure can increase to an unacceptable level that requires release, and sometimes that happens through an explosion that damages or destroys the container. Uncontrolled explosions often have unintended, and unanticipated consequences.37 Having a safety valve in place to release the pressure is a prudent precaution in such a scenario. So it is with the patent system. Patent policy tools such as the ones highlighted by Dreyfuss have the ability, when properly designed, to release pent-up pressure that builds up from forces both endogenous and exogenous to the patent system. The traditional tool of compulsory licensing may not be completely broken for pharmaceuticals, but it is damaged from improper threats abroad and brittle

35 See Kathryn Ardizzone, Moderna Claims Compulsory License from U.S. Government to Use Third Party Patents in its Covid-19 Vaccine, Knowledge Ecology International online (May 2022). 36 Rochelle C. Dreyfuss, Implications of the DNA Patenting Dispute: A U.S. Response to Dianne Nicol, 22 J. L. Info. & Sci. 1, 15 (2012). 37 The AMP v. Myriad Genetics decision can be analogized to such an explosion caused by the lack of robust tools to address Myriad’s licensing practices. See generally Jorge L. Contreras, The Genome Defense, Inside the Epic Battle to Determine Who Owns Your DNA (Algonquin Books of Chapel Hill 2021).

‘Tool Time’

125

from lack of use at home. It is past time for its repair and restoration to the tool bag of real policy options governments can and should use to meet important and pressing public health concerns. A better calibration of the scope and elements of a range of policy tools, along with a recognition of the valuable purposes they serve, should enable the preservation of important patent incentives while also supporting innovative endeavors and public health goals.

13. US patent reform 2.0: Simplifying first-inventor-to-file novelty Toshiko Takenaka 1. INTRODUCTION The author still clearly remembers a comment at the inaugural conference for the Engelberg Center at New York University that no US lawyer believed that the US patent system would give up the first-to-invent (‘FTI’) system.1 Thanks to activities (such as that conference) to familiarize US lawyers with systems used in Europe and Asia, the US finally gave up the FTI system by adopting the first-inventor-to-file (‘FITF’) system to determine novelty, following extensive debates, through the enactment of the America Invents Act (AIA).2 This chapter examines novelty under the FITF system (‘FITF novelty’) that is now in its tenth year since the FITF novelty provision came into effect on March 16, 2013.3 The European Patent Office recently published a report on the grace period, in examining whether to expand exceptions to the novelty under their first-to-file (‘FTF’) system.4 Congress set multiple goals for the AIA to make US patentability law transparent, objective, predictable, and simple by bringing the best aspects of the FTI and the FTF systems together through the definition of the prior art based 1 Papers presented at the conference were published in 29 N.Y.U. J. of Int’l L. & Pol. 1–270 (1997). This conference was where the author met Professor Rochelle Dreyfuss for the first time. 2 Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (Sept. 16, 2011). The debate started as early as 1966. See generally George E. Frost, The 1967 Patent Law Debate – First-to-Invent vs. First-to-File, 5 Duke L.J. 923 (1967). 3 Most provisions became effective on Sept. 16, 2012, but the first-to-file provision became effective on Mar. 16, 2013. See Leahy-Smith America Invents Act, supra note 2. 4 European Patent Office, The European Patent System and the Grace Period, An Impact Analysis (June 2022), https://​documents​.epo​.org/​projects/​babylon/​ eponet​.nsf/​0/​319​885A87F357​435C125886​20043B592/​$File/​european​_patent​_system​ _and​_the​_grace​_period​_study​_en​.pdf [https://​perma​.cc/​MQ7L​-QWMT] [hereinafter 2022 EPO Grace Period Report].

126

U.S. patent reform 2.0: Simplifying first-inventor-to-file novelty

127

on the effective filing date while maintaining the one-year grace period.5 This chapter reviews AIA’s legislative history and discusses goals that Congress and the drafters intended to accomplish. The chapter examines whether such goals were achieved and proposes minor reforms to accomplish the goals more completely.

2.

CONGRESSIONAL GOALS

On September 16, 2012, the AIA took effect following extensive congressional debates over the proposal to adopt the FTF system.6 One of the most controversial aspects of the AIA was the replacement of the FTI system with the FITF system because the FITF system models the FTF system, which universities and small inventors viewed as harmful for their licensing activities and businesses due to their limited budget for filing patent applications early.7 To address these concerns, Congress adopted a modified version of the FTF system, adopting the best aspects of the FTF and the FTI systems, efficiency, and equity, discussed below.8 Although the AIA aimed to move US patent system closer to a FTF system by modeling the European Patent Convention (EPC), which is a model for many FTF systems in Asia and Europe,9 Congress developed a unique FTI and FTF hybrid system by adopting major features of the FTF system while retaining the inventor- and collaboration-friendly features of the FTI system through exceptions to exclude pre-filing disclosures.10 Within this big picture, the first congressional goal was to enhance the efficiency of the FTF system by making the objective filing date most relevant to US patentability law.11 In the FTI system, the filing date is decided objectively based on a USPTO record showing when an application for the claimed invention is filed. In contrast, pre-AIA FTI patentability was deter-

5 H.R. Rep. No. 112-98, pt. 1, at 40–43, 112th Cong., 1st Sess. (2011), https://​ www​.congress​.gov/​congressional​-report/​112th​-congress/​house​-report/​98 [hereinafter 112th H.R. Rep]. 6 Leahy-Smith America Invents Act, supra note 2. The debate started as early as 1966. See generally Frost, The 1967 Patent Law Debate, supra note 2. 7 Eric P. Vandenburg, America Invents Act: How It Affects Small Businesses, 50 Idaho L. Rev. 201 (2014). 8 112th H.R. Rep., supra note 5, at 42. 9 European Patent Convention, art. 54(2), Oct. 5, 1973, 1065 U.N.T.S. 255, 275–76 (amended Nov. 29, 2000) [hereinafter EPC]. 10 Robert A. Armitage, Understanding the America Invents Act and Its Implications for Patenting, 40 AIPLA J. 1, 21 (2012), https://​patentlyo​.com/​media/​docs/​2012/​10/​ armitage​_pdf​.pdf [https://​perma​.cc/​F6JK​-9CZC] [hereinafter Armitage, Understanding AIA]. 11 112th H.R. Rep., supra note 5, at 40.

128

Improving intellectual property

mined on the actual invention date.12 A determination of the invention date was fact-specific because the FTI priority rule required taking into account the dates to conceive the claimed invention and reduce it to practice, to question whether the invention was abandoned, suppressed, or concealed, and whether the first-to-conceive inventor had shown reasonable diligence to reduce the invention to practice.13 When the actual invention date was disputed between inventors, the USPTO determined the date through interference proceedings which were lengthy and costly because of the extensive discovery process for collecting the facts involved in inventive activities.14 The second congressional goal was to eliminate all types of secret prior art by adopting a bright-line rule, which provides that only disclosures which are publicly available on the filing date qualify as prior art.15 The FTF system does not provide for any secret prior art because the novelty requirement functions to exclude inventions that were publicly available on the filing date regardless of inventorship and thus were part of the state of the art.16 The content of patent applications as filed is not technically prior art because it was not publicly available on the filing date and becomes publicly available only when the application is published 18 months from the effective publication date or sooner if the applicant requests early publication.17 Although the EPC includes the content of unpublished patent application as prior art,18 it is distinguished from publicly available prior art and can be cited only for lack of novelty.19 In contrast, the FTI novelty provision provided private information only known to inventors or their employers at the invention date as prior art.20 This novelty requirement functioned differently from the novelty requirement under the FTF by excluding inventors who were not the first-to-invent (‘FTI inventor’) instead of relying on the novelty of claimed inventions. Under the FTI system, the claimed inventions were rejected if there were prior inventions by another inventor even if both the claimed invention and the prior inventions were not publicly available and thus new on the invention date. This exclusion of inventions made by the same inventor is called the common inventorship

Pre-AIA 35 U.S.C. § 102(a) and (e) (2012). Pre-AIA 35 U.S.C. § 102(g). For the priority rule under the first-to-invent system, see Donald S. Chisum, 3A Chisum on Patents, at § 10.03 (1999) [hereinafter Chisum on Patents]. 14 112th H.R. Rep., supra note 5 at 41. 15 112th H.R. Rep., supra note 5 at 43. 16 EPC art. 54(2). 17 EPC art. 93. 18 EPC art. 54(3). 19 EPC art. 56. 20 Armitage, Understanding AIA, supra note 10, at 21. 12 13

U.S. patent reform 2.0: Simplifying first-inventor-to-file novelty

129

exception and resulted in inventorship-dependent prior art.21 Such secret prior art included (1) inventions described in an unpublished patent application pending with the USPTO,22 (2) derived inventions,23 and (3) inventions which are not abandoned, suppressed, or concealed.24 Moreover, the pre-AIA FTI novelty provision was titled as ‘Conditions for Patentability; Novelty and Loss of Right to Patent’ and provided a different type of prior art as the statutory bar, separately and independently from the novelty prior art.25 Congress codified the case law into statutory bar prior art so that inventors may lose the right to patent their inventions if they have used the invention while delaying to file patent applications although they were the FTI inventors.26 Such use included inventors’ sale of their inventions by making offers and their commercial use of the inventions, regardless of confidentiality of the inventions.27 These multiple types of secret prior art brought inefficiency in examination and uncertainty of validity of patents that the USPTO issued. The USPTO did not have access to secret prior art unless inventors and their employer assigness disclosed their secret prior inventions to patent examiners.28 Thus, the AIA drafters intended to remove all types of secret prior art and make the examination efficient, which would improve the certainty of patent validity. The third congressional goal was to maintain the best aspect of FTI novelty, the one-year grace period, which protects inventors and their employers with limited filing budgets.29 The AIA encouraged early publication and adopted a First-To-Publish (‘FTP’) rule to protect inventors from any intervening disclosures between their first disclosure and the filing date during the grace 21 For the common inventorship exception, see Amy R. Motomura, Innovation and Own Prior Art, 72 Hastings L.J. 565, 579 (2021) [hereinafter Motomura, Innovation]; Toshiko Takenaka, Unravelling Inventorship, 21 Chi.-Kent J. of Intell. Prop.  71 (2022), https://​ssrn​.com/​abstract​=​4070977 [hereinafter Takenaka, Inventorship]. 22 Pre-AIA 35 U.S.C. § 102(e). 23 Pre-AIA 35 U.S.C. § 102(f). 24 Pre-AIA 35 U.S.C. § 102(g). 25 Pre-AIA 35 U.S.C. § 102(b)–(d). For a general discussion of the statutory bar prior art, see Chisum on Patents, supra note 13, Ch. 6. 26 Pennock v. Dialogue, 27 U.S. 1, 23–24 (1892). For the policy underlying the statutory bar prior art, see Toshiko Takenaka, Rethinking the United States First-to-Invent Principle from a Comparative Law Perspective: A Proposal to Restructure § 102 Novelty and Priority Provisions, 39 Hous. L. Rev. 621, 630 (2002), https://​digitalcommons​.law​ .uw​.edu/​faculty​-articles/​349. 27 Pre-AIA 35 U.S.C. § 102(b). 28 US Patent System imposes on inventors, and anyone involved in patent prosecution, a duty to disclose information material to patentability of claimed invention under examination. 37 C.F.R. § 1.56. 29 Id.

130

Improving intellectual property

period.30 In other words, inventors can establish their invention date during the grace period while limiting the evidence to establish the actual invention date only through disclosures. Many FTF countries have a six-month or one-year grace period with varying scope of disclosures excluded from prior art.31 However, the exceptions under the FTI are in stark contrast to the FTF grace-period systems which exclude only inventor-originated disclosures from the prior art. The FTF system does not award the priority to anyone other than the FTF inventor by refusing to exclude third-party independent disclosure from prior art, which would result in the priority based on the earliest disclosure.32 The European patent community is particularly concerned about the negative impact from an unrestricted grace period because of the legal uncertainty resulting from the determination of a factual question as to whether a disclosure originates from the inventor and thus can be excluded from prior art and a policy question as to whether a third party who used the subject matter of the inventor-originated disclosure in good faith should have any right to continue using the invention.33 Unfortunately, these concerns were not clearly addressed by AIA drafters during the Congressional debates.

3.

REVIEW OF CURRENT FITF NOVELTY

3.1

Definition of Prior Art

Despite the Congressional goals, US patentability law remains more complex than that of a typical FTF system, such as the EPC’s, because the FITF novelty provision inherited the basic statutory structure from the pre-AIA FTI novelty provision. This FTF system remains unpredictable because the availability of some types of prior art remained inventorship-dependent, and determination

30 Joseph D. Matal, A Guide to the Legislative History of the America Invents Act: Part I of II, 21 Fed. Cir. B.J. 435, 480 (2012), https://​www​.uspto​.gov/​sites/​default/​ files/​aia​_implementation/​guide​-to​-aia​-p1​.pdf [https://​perma​.cc/​6RUT​-YCWS] hereinafter AIA Legislative History Guide]. 31 Europe Economics, Economic Analysis of the Grace Period (Nov. 2014), http://​documents​.epo​.org/​projects/​babylon/​eponet​.nsf/​0/​c4a​001f6453f3​d48c1257e0​ b0034cb2b/​$FILE/​europe​_economics​_esab​_grace​_period​_20112014​_en​.pdf [https://​ perma​.cc/​K9BM​-XPCG]. 32 Emmanuel Roucounas, The Debate Regarding the Grace Period in International Patent Law: A Reminder, ALLEA Biennial Yearbook 2006, New Perspectives in Academia 31 (2006), https://​allea​.org/​wp​-content/​uploads/​2016/​02/​Roucounas​ _Debate​_Grace​_Period​.pdf [https://​perma​.cc/​PP27​-66LS]. 33 2022 EPO Grace Period Report, supra note 4, at 25.

U.S. patent reform 2.0: Simplifying first-inventor-to-file novelty

131

of inventorship is unpredictable and frequently called muddy.34 Moreover, the AIA could not make US patentability law sufficiently transparent because it could not eliminate all types of secret prior art. On its face, section 102(a) defines two types of prior art relative to the effective filing date. However, the FIFT definition of prior art is more complex than the EPC definition of the state of the art.35 The first type is a hybrid of pre-AIA sections 102(a) and (b), requiring public availability of the invention in the defined prior art before the filing date of the claimed invention.36 Section 102(a)(1) corresponds to EPC Article 54(2) requiring public availability of the invention on the filing date. However, section 102(a) lists specific means for making the invention publicly available (as ‘patented, described in a printed publication, in public use, or on sale’) and concludes with the catch-all term ‘otherwise available to the public.’ This starkly contrasted to the EPC definition emphasizing that the invention is prior art regardless of any means to make the invention publicly available. AIA drafters tried to simplify the pre-AIA novelty provision by eliminating overlapping definitions of prior art while keeping the basic statutory structure and key terms in the old definitions for preserving the heritage from pre-AIA patent statutes.37 As a result, the terms ‘public use’ and ‘on sale’ which defined statutory bar prior art in the old definitions are retained although the new term ‘otherwise available to the public’ imposes an overarching public accessibility requirement on these old terms. AIA drafters also subtracted the ‘loss of rights’ from the title of the new provision to signal their intent to eliminate pre-AIA statutory bar prior art.38 Despite the drafters’ intent, the US Supreme Court applied the pre-AIA statutory bar case law to interpret the term ‘on sale’ in the new novelty provision and thus preserved statutory bar secret prior art.39 The Court assumed

34 A district court commented on the theory of inventorship: ‘It is one of the muddiest concepts in the muddy metaphysics of the patent law.’ Mueller Brass Co. v. Reading Indus., Inc., 352 F. Supp. 1357, 1372 (E.D. Pa. 1972), aff’d, 487 F.2d 1395 (3d Cir. 1973); see also Chisum on Patents, supra note 13, § 2.02[2]; W. Fritz Fasse, The Muddy Metaphysics of Joint Inventorship: Cleaning Up After the 1984 Amendments to 35 U.S.C. § 116, 5 Harv. J.L. & Tech. 153, 159 (1992). 35 EPC art. 54. 36 35 U.S.C. § 102(a)(1) (2012). 37 Armitage, Understanding AIA, supra note 10, at 41, 46. 38 Id. at 56. AIA also eliminated derived inventions and inventions which are not abandoned from prior art. 39 Helsinn Healthcare S.A. v. Teva Pharm. USA, Inc., 139 S. Ct. 628 (2019). The Court applied pre-AIA § 102(b) case law and found an on sale bar where the patentee had a purchase agreement with a pharmaceutical company, even where the invention was kept confidential.

132

Improving intellectual property

that Congress adopted the pre-AIA statutory construction when the same terms were adopted in the AIA and deemed the term ‘otherwise available in the public’ as insufficient to overturn the construction established through ‘settled body of law.’40 Accordingly, the AIA did not provide the efficiency of an FTF system completely by adopting the bright line rule to determine prior art. Moreover, the AIA maintained another type of secret prior art: Section 102(a)(2) states that inventions described in patent applications or patents with an earlier filing date than that of the claimed invention are prior art even though the patent applications and patents are not publicly available on the filing date of the claimed invention41—instead, they are published through patent issuance42 or publication 18 months from the filing date.43 At a glance, section 102(a)(2) prior art is analogous to EPC Article 54(3) in that it includes inventions disclosed in the content of patent applications filed before the filing date as prior art. However, there are important differences: (1) the common inventorship exception; and (2) availability as prior art for nonobviousness (inventive step).44 The common inventorship exception and secret prior art concepts are inherited from the FTI novelty policy to decide the FTI inventor.45 Section 102(a)(2) prior art stems from the 1926 Supreme Court Milburn decision,46 and has been confirmed as obviousness prior art under pre-AIA case law.47 By overhauling US patentability law, unpublished section 102(a)(2) prior art should not function as prior art except for a prior right to signify the FTF priority. Although USPTO can access section 102(a)(2) prior art, the public does not have access to such prior art until the applications are published, which results in imperfect transparency of prior art and a departure from the plain language that an invention is not new even if the invention is not publicly available.

Id. at 634. 35 U.S.C. § 102(a)(2). 42 35 U.S.C. § 151. 43 35 U.S.C. § 122(b). 44 In re Bass, 474 F.2d 1276, 1286 (C.C.P.A. 1973). 45 See supra text accompanying note 21. 46 Alexander Milburn Co. v. Davis-Bournonville Co., 270 U.S. 390 (1926). The Court confirmed the availability of using an invention described in an unpublished application for the purpose of novelty. 47 Hazeltine Research, Inc. v. Brenner, 382 U.S. 252, 255 (1965). 40 41

U.S. patent reform 2.0: Simplifying first-inventor-to-file novelty

133

3.2 Exceptions 3.2.1 Inventorship dependent exceptions While making prior art relevant to the filing date, the AIA made the disclosure date relevant to exclude pre-filing disclosures from prior art during the one-year grace period. Unlike the filing date, the disclosure date cannot be determined objectively based on records at USPTO. Neither the public nor USPTO has information about pre-filing disclosures until applicants submit an affidavit or declaration, where the pre-filing disclosures are cited as prior art to reject claimed inventions.48 Moreover, AIA adopted the new terms ‘disclosures’ and ‘disclosed’ without defining them and which did not exist in the pre-AIA FTI novelty provision. Thus, these terms can be interpreted to include any communication of the invention to a third party without a confidentiality requirement regardless of the means of communication.49 Exceptions under the FITF novelty are inventorship-dependent because they distinguish between inventor-originated disclosures and third-party independent disclosures, and they apply exceptions respectively to both publicly available inventions and inventions described in unpublished applications. The first type of exceptions excludes disclosures during the grace period when the same inventor invented the subject matter of the disclosures and the claimed invention, and thus originated from the inventor regardless of who disclosed the subject matter.50 Thus, the inventor-originated disclosure exceptions function like the FTI novelty prior art under pre-AIA § 102(a), which included only publicly available prior inventions by another to ensure that the inventor was the first-to-invent. The exceptions are available only one year from the filing date, which is the same as inventors’ own disclosures under the FTI novelty because they became pre-AIA section 102(b) statutory bar prior art if inventors failed to file patent applications within one year. In short, the inventor-originated disclosure exceptions maintained the scope of the pre-AIA grace period.51 The second type of exceptions exclude disclosures when a third party independently invented the subject matter of the disclosures and thus USPTO and the courts need to decide whether the inventor of the claimed invention or the third-party inventor of the subject matter of the invention has priority. AIA adopted the FTP rule and thus a priority is awarded to the inventor of the claimed invention if the inventor can establish a possession of the subject 48 USPTO, Manual of Patent Examining Procedure, § 2155 [hereinafter MPEP]; 37 CFR 1.130. 49 Armitage, Understanding AIA, supra note 10, at 68. 50 35 U.S.C. §§ 102(b)(1)(A), 102(2)(A). 51 Armitage, Understanding AIA, supra note 10, at 72.

134

Improving intellectual property

matter prior to the third-party disclosure.52 In other words, the AIA continues to award a patent to FTI inventors when they establish their prior inventions with evidence of disclosure. 3.2.2 Common ownership-joint research agreement exceptions The AIA maintained the common ownership exception and joint research agreement exception under section 102(c).53 These exceptions were introduced to address the problem caused by the multiple types of secret prior art under pre-AIA: Because prior inventions were prior art even if they were secret, inventors’ prior inventions and knowledge of their research teammates’ prior inventions effectively prevented the patenting of inventions resulting from the same research project, because they are frequently closely related and obvious in light of each other.54 Although the common inventorship exception excluded inventors’ own prior inventions from prior art, the inventive entity theory limited the exception for joint inventions. The common inventorship exception only applies when all individual inventors are the same for both the prior and claimed inventions.55 The 1984 Patent Amendment added the common ownership exception to remove secret prior art for the purpose of obviousness.56 This amendment also introduced an inclusive inventorship standard to expand the common inventorship exception for joint inventions.57 In 2004, the Cooperative Research and Technology Enhancement (CREATE) Act was enacted to expand the scope of obviousness prior art exceptions to cover works resulting from collaboration under joint research agreements.58 These new exceptions extensively overlapped with the common inventorship exception because courts interpreted the new inclusive standard to encompass inventors in the same inventive entity in the same research team, which enabled inventors to take advantage of the common inventorship exception to exclude secret prior art.59 As a result, the

AIA Legislative History Guide, supra note 30, at 477. Pre-AIA 35 USC, § 103(c)(1). 54 The secret prior art problem was highlighted in Bass. In re Bass, 474 F.2d 1276, 1290 (C.C.P.A. 1973). 55 Chisum, supra note 13, at §  2.03[1]. 56 Patent Law Amendments Act of 1984, Pub. L. No. 98-622, 98 Stat. 3383 (1984). 57 See Takenaka, Inventorship, supra note 21, at 29. 58 Cooperative Research and Technology Enhancement (CREATE) Act of 2004, Pub. L. No. 108-453, 118 Stat. 3596 (2004). A terminal disclaimer requirement applies to obvious-type patents resulting from the joint research agreement exception. 59 For a discussion of problems caused by secret prior art, see Takenaka, Inventorship, supra note 21, at 36. 52 53

U.S. patent reform 2.0: Simplifying first-inventor-to-file novelty

135

current FITF provision inherited from the FTI novelty is a ‘complex and haphazardly developed statutory framework.’60

4.

REFORM PROPOSALS

Relatively minor reforms can address these insufficient transparency and unpredictability issues to achieve the Congressional goals more completely while addressing the European patent communities’ concerns. First, section 102(a)(1) should be revised to adopt a simple definition of ‘prior art’ that would include everything publicly available before the filing date. This includes removal of any term from the pre-AIA novelty provision to clearly repeal the statutory bar case law, which included inventorship-dependent secret prior art. The new definition should clearly signal to courts the public accessibility requirement overarching all types of prior art and exclude all types of statutory bar secret prior art. Second, section 102(a)(2) should be revised to limit availability of a disclosure in an unpublished application only with respect to novelty prior art and remove ‘names another inventor’ to eliminate the common inventorship exception.61 The inventor’s prior art should apply to the claimed invention to prevent double-patenting just like prior rights under the EPC.62 The adoption of the overarching public accessibility requirement should have resulted in the repeal of the doctrine that the Supreme Court had developed for establishing a prior invention under the FTI novelty.63 Removal of section 102(a)(2) prior art for the purpose of nonobviousness rejection further simplifies FITF novelty by removing the common ownership and joint research agreement exceptions, which are no longer necessary for effectively patenting related inventions resulting from the same research project. Thus, section 102(c) should be removed. Third, section 102(b) should be revised to make the availability of the exceptions independent from inventorship and limit availability of disclosures during the grace period for the purpose of novelty rejections only. The exceptions should be revised to allow inventors relying only on their own disclosures to establish the FTP disclosure, and to prevent them from relying on a third-party disclosure where the third party obtained the claimed invention through private communication. The revised exceptions exclude both the inventor’s own disclosures and third-party disclosures following the FTP

Motomura, Innovation, supra note 21, at 603. See 35 U.S.C. § 102(a)(2). 62 EPC art. 54(3). 63 See supra text accompanying notes 46–47. 60 61

136

Improving intellectual property

disclosures only if the same subject matter is contained in these disclosures within the scope of the exceptions intended by the AIA drafters.64 The FTP subject matter can be used as prior art only for the purpose of novelty so that the exceptions under FITF novelty should award patents to not only the FTP inventors but also a third party if they developed obvious inventions regardless of their origins. If a third party does not obtain a patent, and instead the inventor obtains a patent including the variant, courts may grant an equitable right to the third party to continue to practice the invention.65 Thus, the proposed FTP rule truly encourages inventors to publish early while protecting interests of third parties who developed a variant of the FTP subject matter in good faith.

5. CONCLUSION Because the AIA was the first major overhaul of the US patent system since the Patent Act of 1952, Congress spent six years from the time the first bill was introduced before passing the law on September 8, 2011. The FITF novelty resulted from three decades of US industries’ efforts to harmonize US patentability with the rest of the world and to make fundamental principles understandable for not only experienced patent attorneys but also inventors with limited patent knowledge. It might be too soon for more reform because cases interpreting the novelty provision are scarce due to the short period since the very first patent issued under the FITF novelty provisions. However, a review of the current system in order to propose a possible reform is a great topic for honoring Professor Rochelle Dreyfuss’s scholarship and celebrating her contributions to the US and international patent systems. Today’s international exchanges among patent academics would not have existed without her leadership as the co-director of the Engelberg Center on Innovation Law and Policy.

Armitage, Understanding AIA, supra note 10, at 74. Australia provides a similar equitable right, a prior user right, to protect interests of third parties. See 2022 EPO Grace Period Report, supra note 4, at 26. 64 65

PART IV

DISPUTE SETTLEMENT AND COURT SPECIALIZATION

14. The Federal Circuit’s reach as a specialized court beyond patent law Jeanne C. Fromer1 1. INTRODUCTION Professor Rochelle Dreyfuss’ scholarship is both voluminous and influential. There is rarely a question about any of the many aspects of intellectual property law on which she has not written thoughtfully and prominently. One of the first articles by Dreyfuss that I ever read was her seminal article evaluating the Federal Circuit as a specialized court.2 In it, she evaluates the successes, failures, promise, and peril of this court, both through a lens of substantive patent law and a lens of civil procedure. One of her many important insights is about how the Federal Circuit should consider handling legal issues beyond patent law that arise in patent cases. She has seen the importance of this issue since the outset of the court, yet the court’s thinking here has barely evolved or matured. Given the ongoing developments in the Federal Circuit on innovation and competition issues beyond patent law—including in copyright, preemption, and antitrust—it is high time for the court to heed her recommendations for more thoughtful development of these areas of law.

2.

THE FEDERAL CIRCUIT

The course of US patent law changed significantly in 1982 in the shadow of a secondary finding by the Hruska Commission, appointed to study a caseload

1 I gratefully acknowledge support from the Filomen D’Agostino and Max E. Greenberg Research Fund. 2 Rochelle Cooper Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. Rev. 1, 6 (1989).

138

The Federal Circuit’s reach as a specialized court beyond patent law

139

crisis of the federal courts.3 The commission found that patent law decision making in the federal courts was askew.4 As Dreyfuss vividly explains: Statistics demonstrate that in the period 1945–1957, a patent was twice as likely to be held valid and infringed in the Fifth Circuit than in the Seventh Circuit, and almost four times more likely to be enforced in the Seventh Circuit than in the Second Circuit.5

As a result of these differential outcomes, forum shopping was prevalent as was legal uncertainty about any patent’s validity and any third party’s infringement.6 Although the Supreme Court could in theory have reviewed more patent cases to stabilize and clarify the law, it was not.7 Congress sought to solve these problems through passage of the Federal Court Improvements Act of 1982, which created the US Court of Appeals for the Federal Circuit.8 As the law stands, the Federal Circuit has exclusive jurisdiction: of an appeal from a final decision of a district court of the United States, the District Court of Guam, the District Court of the Virgin Islands, or the District Court of the Northern Mariana Islands, in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents or plant variety protection.9

No matter the district court in which a plaintiff brings a patent claim, the appeal of any final decision arising under patent law would lie in the Federal Circuit, rather than the corresponding regional circuit court of appeals. The Federal Circuit was also granted exclusive jurisdiction over most appeals from decisions of the Patent Trial and Appeal Board of the US Patent and Trademark Office (PTO) (such as regarding patent applications).10 The establishment of the Federal Circuit’s exclusive jurisdiction over these patent cases sought to eliminate the forum shopping plaguing patent cases and smooth out the courts’ patent law decisions, bringing more uniformity and clarity to the law.11 By honing its expertise in patent law and issuing more pre Id. at 6. Id. 5 Id. at 7. 6 Id. 7 Id. at 6. 8 Pub. L. No. 97-164, 96 Stat. 25 (relevant provisions codified as amended in scattered sections of 28 U.S.C.). 9 28 U.S.C. § 1295(a)(1). 10 Id. § 1295(a)(4)(A). 11 Dreyfuss, supra note 2, at 7. 3 4

140

Improving intellectual property

dictable decisions, it was thought that the Federal Circuit would do a better job of accomplishing patent law’s goals of encouraging investment in technological innovation.12 Moreover, removing the complex and time-intensive patent cases from the regional circuit courts of appeal could improve their workload.13 Even though the Federal Circuit has exclusive jurisdiction over most patent appeals, it does not adjudicate only patent cases. Congress also conferred exclusive jurisdiction in the Federal Circuit over appeals of final decisions of the US Court of Federal Claims, certain decisions as to trademark applications originating in the US Patent and Trademark Office, final decisions of the US Court of International Trade, final decisions of the Merit Systems Protection Board, and final decisions of an agency board of contract appeals, among other things.14 The Federal Circuit has ruled that it will adjudicate non-patent law issues on appeal in cases that arise under patent law, even if there are no patent claims on appeal.15 As to choice of law for non-patent issues, the court held that it ‘shall review procedural matters, that are not unique to patent issues, under the law of the particular regional circuit court where appeals from the district court would normally lie.’16 The court reasoned that it chose to do so ‘to minimize confusion and conflicts,’ elaborating that ‘[s]ince our mandate is to eliminate conflicts and uncertainties in the area of patent law, we must not, in doing so, create unnecessary conflicts and confusion in procedural matters.’17 It has ruled similarly that regional circuit law too governs substantive non-patent matters on appeal to the Federal Circuit.18

3.

ANALYSIS OF THE FEDERAL CIRCUIT AS A SPECIALIZED PATENT COURT

While the Federal Circuit has been nearly synonymous with patent law since its establishment, scholarly analysis of the Federal Circuit as a specialized court has been synonymous with Dreyfuss. In a seminal 1989 article published

Id. Id. 14 28 U.S.C. § 1295(a). 15 Atari, Inc. v. JS & A Grp., 747 F.2d 1422, 1429-38 (Fed. Cir. 1984) (en banc); Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1572 (Fed. Cir. 1984) (per curiam). 16 Panduit, 744 F.2d at 1574–75. 17 Id. at 1575. 18 Atari, 747 F.2d at 1439–40. 12 13

The Federal Circuit’s reach as a specialized court beyond patent law

141

seven years after the court’s establishment, Dreyfuss analyzes the Federal Circuit as a specialized court.19 Dissecting the expected benefits of the Federal Circuit, Dreyfuss finds that indeed due to the inability to forum shop on appeals, the Federal Circuit had made patent law more precise by producing greater horizontal equity across similar cases.20 An important way to achieve this equity was by formulating what Dreyfuss describes as ‘[b]right line rules, objective criteria, and minimal exceptions,’ which ‘may not make for accurate adjudication (the ‘right’ result in every case), but they create a body of law that is easier to apply uniformly and to predict with certainty.’21 Dreyfuss also finds that the Federal Circuit was issuing more accurate decisions on patent law than the regional circuits, in the sense of ‘formulat[ing] rules that reflect sensitivity to the needs of the technology industry’ and therefore innovation.22 Relatedly, she also emphasizes that because the Federal Circuit had exclusive jurisdiction over appeals of patent infringement and validity decisions from the district courts and of patentability decisions from the PTO, for the first time, a single court could synthesize patent law across patentability and enforcement.23 Dreyfuss additionally finds that five years after the Federal Circuit’s establishment, filings in district courts had not slowed down, even if one might have expected them to do so because there was less value to relitigation.24 In fact, Dreyfuss wonders if the Federal Circuit was so successful that it was attracting more court filings to resolve issues of patent law that might have been resolved extrajudicially in the past.25 Turning to the expected costs of the Federal Circuit, Dreyfuss explores the worries that ‘[t]he repetitious nature of the docket might lead to greater coherency but it would take patents out of the mainstream of legal thought, expose the court to a one-sided view of the issues, and discourage qualified people from serving as judges.’26 She finds reason to substantiate these worries. There was generally a perception of pro-patentee bias in the Federal Circuit, though Dreyfuss with careful nuance explores whether some of that might owe to changes in the law and other circumstances and whether there is as much pro-patentee bias as others worry.27 She also locates less reason to fear lack of

Dreyfuss, supra note 2. Id. at 8–14. 21 Id. at 8. 22 Id. at 14–20. 23 Id. at 21–23. 24 Id. at 23–25. 25 Id. at 24. 26 Id. at 25. 27 Id. at 26–30. 19 20

142

Improving intellectual property

balance on patent issues because of strong lawyering on both sides of patent cases.28 Dreyfuss also analyzes the procedural complexities arising from the creation of the Federal Circuit: what makes something a patent case over which the Federal Circuit gets exclusive appellate jurisdiction,29 and how should the Federal Circuit address the non-patent issues that arise in patent cases? As to the first question, Dreyfuss emphasizes the lack of fully settled law, but indicates that so long as a well-pleaded complaint arises under patent law, the court would take jurisdiction over appeals even when the patent issues had been severed or dismissed from the case.30 As to the second question, Dreyfuss reasons that the court’s decision to use regional circuit law to resolve these questions31 ‘is not illogical, [but] the result it has reached—which is almost unique in federal jurisprudence—is objectionable.’32 For one thing, it will frequently be difficult to distinguish substantive patent law, where the Federal Circuit would apply its own law, from procedural law, where it would apply regional circuit law.33 It might similarly be difficult to distinguish substantive patent law issues from substantive non-patent law issues, such as with regard to preemption.34 Moreover, Dreyfuss observes that there will be many instances in which the regional circuit court will not have previously considered the precise issue on which the Federal Circuit must apply the regional circuit law, especially when there are issues that will frequently arise along with patent claims as the Federal Circuit ‘has largely displaced the regional circuits on issues that normally arise in conjunction’ with them.35 This means that the Federal Circuit, as per Dreyfuss, ‘will now have to guess how a regional circuit would have decided a question that it never did, will, or could face.’36

Id. at 29–30. Id. at 30–37. 30 Id. at 32 (citing, inter alia, Atari, Inc. v. JS & A Group, Inc., 747 F.2d 1422 (Fed. Cir. 1984) (en banc); Interpart Corp. v. Italia, 777 F.2d 678, 680-81 (Fed. Cir. 1985)). 31 Supra text accompanying notes 15–18. 32 Dreyfuss, supra note 2, at 38. 33 Id. at 38–41. 34 Id. at 41. 35 Id. at 42. 36 Id. at 43. 28 29

The Federal Circuit’s reach as a specialized court beyond patent law

143

Dreyfuss highlights as an example issues that will tend to arise in antitrust law at the interface between patent and antitrust.37 She elaborates: 38 If a case arises in a circuit that has not revised its position on antitrust law, then the [Federal Circuit] is paralyzed; it cannot apply new theories to the antitrust issues, despite the fact that its own analysis of the same problem in the patent law context yields a different result. Even if a case comes up in a circuit that has generally re-evaluated its notions of antitrust policy, it is unlikely that the regional court will have considered how the analysis should operate when there are patent interests at stake from several perspectives.

Dreyfuss indicates that the court could cure these concerns by crafting and applying its own law to non-patent issues.39 That said, she recognizes that this creates other problems, of a district court being bound to look to either the regional circuit law or Federal Circuit law depending on whether the non-patent issue is bound up in a case arising under patent law.40 Ultimately, she concludes that the Federal Circuit: will not develop expertise in, or appreciation for, competition issues unless it is required to analyze for itself the rules that it is called upon to apply. But empowering the court to interpret the law is not a drawback to extending its jurisdiction. Rather, it is a significant benefit.41

Relatedly, she insists that ‘freeing the [Federal Circuit] from regional circuit law would put the court’s experience to better use,’ such as when patent protection overlaps with other forms of intellectual property, whether copyright, trademark, or state protections.42 Over the years, Dreyfuss has periodically returned to reevaluate her foundational scholarship on the Federal Circuit. In 2004, for the court’s 20th anniversary, she points out some of the continuing perceived concerns, such as internal and external consistency, and some potential solutions, such as expanding the court’s jurisdiction and designating more visiting judges from other courts to rule in Federal Circuit cases.43 In 2008, for the court’s 25th anniversary, Dreyfuss underscores how ‘now that the court is established, it is no longer required to prove its bona fides. It has the luxury to step back, intro Id. at 43–44. Id. at 43. 39 Id. at 44–45. 40 Id. at 45. 41 Id. at 59. 42 Id. 43 Rochelle Cooper Dreyfuss, The Federal Circuit: A Continuing Experiment in Specialization, 54 Case W. Res. L. Rev. 769 (2004). 37 38

144

Improving intellectual property

spectively assess its role in patent lawmaking, and develop new norms and fresh approaches to crafting its decisions,’ especially if judges with extensive practice experience before the court will be appointed.44 In 2010, she writes how the Federal Circuit and the US Supreme Court can teach one another.45 That same year, she considers how the Federal Circuit, more than Congress or the Supreme Court, is well placed to reinterpret patent law in light of the immense technological changes that have occurred.46 In 2013, for the 30-year anniversary of the Federal Circuit, Dreyfuss considers how the court has lacked percolation on patent issues, but how recent legal changes offer up more opportunity for valuable percolation.47 One year later, she responds skeptically to Judge Diane Wood’s recommendation to abolish the Federal Circuit.48

4.

THE FEDERAL CIRCUIT’S REACH BEYOND PATENT LAW IN PATENT CASES

Dreyfuss’s foundational and continuing work studying the Federal Circuit as a specialized court has been crucial in so many ways to evaluate the court’s effect on patent law and beyond. In the court’s earliest years, she had the foresight to lay out foundational issues with which the court is still wrestling. Herein, I focus on the Federal Circuit’s choice to apply regional circuit law to non-patent issues in patent cases. Over the nearly four decades now of the Federal Circuit’s existence, there have been several non-patent areas that tend to crop up in cases involving patent law. That is, there are many other areas of law that tend to recur when there are patent issues. In addition to procedural issues, these recurring areas tend to relate broadly to innovation and competition. Prominent among these are three areas that Dreyfuss pointed out in her earliest work: preemption, antitrust, and copyright. Preemption of state law by federal patent law gets at the heart of innovation and competition by ensuring that states cannot give protection that, as the Supreme Court puts it, ‘clashes with the objectives of federal patent laws,’

44 Rochelle Cooper Dreyfuss, In Search of Institutional Identity: The Federal Circuit Comes of Age, 23 Berkeley Tech. L.J. 787, 792 (2008). 45 Rochelle Cooper Dreyfuss, What the Federal Circuit Can Learn from the Supreme Court—and Vice Versa, 59 Am. U. L. Rev. 787 (2010). 46 Rochelle Cooper Dreyfuss, The Federal Circuit as an Institution: What Ought We to Expect?, 43 Loyola L.A. L. Rev. 827 (2010). 47 Rochelle Cooper Dreyfuss, Percolation, Uniformity, and Coherent Adjudication: The Federal Circuit Experience, 66 SMU L. Rev. 505 (2013). 48 Rochelle Cooper Dreyfuss, Abolishing Exclusive Jurisdiction in the Federal Circuit: A Response to Judge Wood, 13 Chi.-Kent J. Intell. Prop. 327 (2014).

The Federal Circuit’s reach as a specialized court beyond patent law

145

such as a patent term extension.49 It is therefore unsurprising that when a plaintiff brings a patent infringement claim, the plaintiff might add on a state law claim that, if successful, would grant similar relief, or that the defendant might counterclaim on the basis of state law to shield itself from liability. Indeed, preemption claims often come up in patent cases.50 Early in its existence, the Federal Circuit applied its general rule to preemption claims, that it would apply the law of the regional circuit court to this non-patent issue.51 Yet in 1999, the Federal Circuit took a step toward absorbing Dreyfuss’s fundamental claim, that some of the non-patent aspects of a patent case can implicate fundamental aspects of patent law and applying regional circuit law could thus be detrimental. In 1999, the Federal Circuit ruled that certain matters like preemption that it had previously considered non-patent matters—to which it would apply regional circuit law—were truly patent matters—to which it would need to make and apply its own law.52 It reasoned that ‘[i]n order to fulfill our obligation of promoting uniformity in the field of patent law, it is … important to apply our construction of patent law to the questions whether and to what extent patent law preempts or conflicts with other causes of action.’53 The court concluded that this was good policy consistent with the reasons for creating the Federal Circuit in the first place:54 If we simply follow regional circuit law in deciding questions involving the interaction between patent law principles and other legal remedies, other courts will not have the benefit of our analysis of the substance and scope of patent law in such cases. Such abdication, we think, would in the end disserve the interest in attaining coherence and consistency in the law relating to patents.

The Federal Circuit made a similar move in 1998 in the context of antitrust claims. Antitrust claims frequently come up in patent cases because a patent grant can impede competition in ways that extend beyond the scope of a valid

49 Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 230–31 (1964). See generally Jeanne C. Fromer, The Intellectual Property Clause’s Preemptive Effect, in Intellectual Property and the Common Law 265 (Shyamkrishna Balganesh ed., 2013). 50 See, e.g., Amgen Inc. v. Sandoz Inc., 877 F.3d 1315 (Fed. Cir. 2017); Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356 (Fed. Cir. 1999) (en banc in relevant part), abrogated on other grounds by TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 28 (2001). 51 Cable Elec. Prods., Inc. v. Genmark, Inc., 770 F.2d 1015, 1029, 1033 (Fed. Cir.1985). 52 Midwest Indus., 175 F.3d at 1358–59. 53 Id. at 1360. 54 Id. at 1361.

146

Improving intellectual property

patent.55 The Federal Circuit has held that ‘[a]s a general proposition, when reviewing a district court's judgment involving federal antitrust law, we are guided by the law of the regional circuit in which that district court sits.’56 Yet it changed its tune for some antitrust claims and applied its own law to ‘an antitrust claim premised on stripping a patentee of its immunity from the antitrust laws.’57 These have been baby steps toward Dreyfuss’ idea that important issues of competition and innovation could fruitfully be those for which the Federal Circuit thoughtfully crafts its own law rather than disconnectedly applying regional circuit law or, worse yet, attempting to divine what the regional circuit would say about an issue it has not yet decided.58 The substantive area where this is currently of great concern is copyright law, which governs matter also currently protectable by patent law in two critical industries. The first—software—has been and is being ruled on by the Federal Circuit in crucial ways by applying regional circuit law. The second— design (fashion and otherwise)—is an area that might see increasing activity in the Federal Circuit. Copyright and patent protection for software have respectively expanded and contracted over the years.59 Yet the contours of that protection in both patent and copyright law remain contested. In blockbuster litigation that unfolded over more than a decade, Oracle sued Google in the Northern District of California for patent and copyright infringement of Oracle’s Java Application Program Interface (API) by Google’s Android mobile operating system.60 The jury found no patent infringement, nor did Oracle appeal that finding.61 Yet by virtue of the patent infringement claims, the Federal Circuit 55 See, e.g., C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent Settlement as a Regulatory Design Problem, 81 N.Y.U. L. Rev. 1553, 1556–57 (2006). 56 Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1067 (Fed. Cir. 1998) (en banc). 57 Id. 58 To be sure, those who worry about substantive law being disproportionately decided by one court, as with the Federal Circuit and patent law, might similarly become anxious about the Federal Circuit crafting its own law in other areas. Ronald S. Katz & Adam J. Safer, Should One Patent Court Be Making Antitrust Law for the Whole Country?, 69 Antitrust L.J. 687 (2002) (sharing this fear for antitrust law). 59 Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014) (patentability); Comp. Assocs. Int’l, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992) (copyrightability). For a helpful tracing of the waxing and waning of software copyrightability and patentability, see Sonia K. Katyal, The Paradox of Source Code Secrecy, 104 Cornell L. Rev. 1183, 1191–25 (2019). 60 Oracle Am., Inc. v. Google Inc., 750 F.3d 1339, 1347 (Fed. Cir. 2014) [hereinafter Oracle I]. 61 Id.

The Federal Circuit’s reach as a specialized court beyond patent law

147

had jurisdiction over Oracle’s appeals of the district court’s determination that the API’s so-called ‘declaring code’—the names of each operation (or method) contained in the API and the methods’ organization—was not copyrightable and that Google’s copying was fair use.62 The Federal Circuit stated it was applying the law of the regional circuit, here the Ninth Circuit, to resolve these copyright questions.63 The court then proceeded to reverse both district court findings, concluding that the API declaring code is copyrightable and that Google’s copying did not constitute fair use.64 (Ultimately, the Supreme Court reversed the Federal Circuit, finding fair use but expressing no view on copyrightability.65) With regard to each legal issue, there was no Ninth Circuit case law squarely on point. The Federal Circuit claimed to be applying the closest Ninth Circuit analogues, which seemed to disfavor copyrightability and favor fair use, yet it reasoned its way to the opposite outcomes in what might best be described as legal goulash. One speculates that this is precisely what Oracle wanted. Whether Oracle inserted its patent claims strategically to confer exclusive appellate jurisdiction in the Federal Circuit or this was a mere happy coincidence that got it to the Federal Circuit on its copyright appeal, it likely hoped that a court frequently perceived as being pro-patentee would favor copyright owners as well. Regardless of the Federal Circuit’s outcome, a much cleaner, more constructive, and more honest approach would have had the court crafting its own law—by thinking through the legal and policy issues, including by looking to similarities and differences with patent law and reflecting on the overlaps in protection of patent and copyright in this context. Questions about the scope of copyright law—be they about copyrightability or fair use—remain distinct from questions about patent scope. Yet both copyright and patent laws are fundamentally grounded in promoting innovation and creation.66 And from that vantage point, the Federal Circuit’s own considered views would be enormously helpful. The Google case is not an isolated one and might indeed be a harbinger of important software copyright cases that will head to the Federal Circuit because of a coinciding patent infringement claim. Indeed, a critical follow-up to Google about the copyrightability of statistical analysis software is currently

62 Id. at 1348; Oracle Am., Inc. v. Google Inc., 886 F.3d 1179, 1189-90 (Fed. Cir. 2018) [hereinafter Oracle II]. 63 Oracle II, 886 F.3d at 1190; Oracle I, 750 F.3d at 1353. 64 Oracle II, 886 F.3d at 1196–1210; Oracle I, 750 F.3d at 1354–71. 65 Google LLC v. Oracle Am., Inc., 141 S. Ct. 1183 (2021). 66 U.S. Const. art. I, § 8, cl. 8; Jeanne C. Fromer & Mark A. Lemley, The Audience in Intellectual Property Infringement, 112 Mich. L. Rev. 1251, 1262-73 (2014).

148

Improving intellectual property

pending before the Federal Circuit because the case also involves patent infringement.67 Another overlap between patent and copyright laws where the Federal Circuit may see increasing activity concerns design, such as in the fashion industry. Design patent cases head to the Federal Circuit on appeal just as utility patent cases do.68 Recently, the Supreme Court expanded the copyrightability of design by construing narrowly the useful article doctrine that limits the availability of copyright protection.69 It has become more likely that design can be the subject matter of utility and design patents as well as copyright.70 As the Federal Circuit begins to review such cases, it would be similarly helpful for the court to bring its own expertise in patent law to bear on the requisite copyright issues, including the innovation- and competition-inflected policy concerns of overlapping forms of protection for design.

5. CONCLUSION In her seminal work studying the Federal Circuit as a specialized court, Dreyfuss foresaw how the court could be structured to helpfully rule on competition and innovation questions bound up in or connected to patent law, even if they are not directly about patent law. She has rightfully sounded this note for years. Now with increasing numbers of copyright issues on its horizon, the Federal Circuit ought to draw on Dreyfuss’ insights to develop and apply its own law for issues that are not directly about patent law but implicate issues of innovation and competition.

67 SAS Inst. Inc. v. World Programming Ltd., 496 F. Supp. 3d 1019 (E.D. Tex. 2020), appeal docketed, No. 2021-1542 (Fed. Cir. Jan. 13, 2021). See generally Mark A. Lemley and Pamela Samuelson, Interfaces and Interoperability After Google v. Oracle, 100 Tex. L. Rev. 1 (2021). 68 Braun Inc. v. Dynamics Corp. of Am., 975 F.2d 815, 819 (Fed. Cir. 1992). 69 Star Athletica, LLC v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017). 70 Jeanne C. Fromer & Mark P. McKenna, Claiming Design, 167 U. Pa. L. Rev. 123 (2018).

15. Specialization everywhere: Increasing adjudicator specialization in the patent litigation ecosystem Sarah R. Wasserman Rajec and Melissa F. Wasserman 1. INTRODUCTION Although modern society has embraced specialization, the federal judiciary continues to prize the generalist jurist.1 This disconnect is at the core of the growing debate on the optimal level of specialization in the judiciary. In 1982, Congress infused specialization into the appellate level of the patent litigation ecosystem when it created the US Court of Appeals for the Federal Circuit (Federal Circuit), which has near exclusive jurisdiction over patent appeals.2 Yet, the creation of the Federal Circuit only intensified the debate regarding the optimal level of specialization in the patent system. Commentators, including one of us, have argued that the specialized tribunal at the Patent & Trademark Office (PTO) should have more control in developing substantive patent law.3 Others have urged that specialization should occur at the district 1 Federal judges themselves often comment on the desirability of being a generalist. E.g., Richard A. Posner, Will the Federal Courts of Appeals Survive Until 1984? An Essay on Delegation and Specialization of the Judicial Function, 56 S. Cal. L. Rev. 761, 777–89 (1983) (defending the generalist jurist); Guido Calabresi, Address, The Current, Subtle—and Not So Subtle—Rejection of an Independent Judiciary, 4 U. Pa. J. Const. L. 637, 639 (2002) (‘Judges are generalists who deal with a variety of matters and there are very good reasons why they should do so.’); Deanell Reece Tacha, The Federal Courts in the 21st Century, 2 Chap. L. Rev. 7, 15 (1999) (‘[T]he federal courts have been courts of generalist judges. I firmly believe they should remain so.’); Diane P. Wood, Generalist Judges in a Specialized World, 50 Smu L. Rev. 1755, 1756 (1997) (‘[W]e need generalist judges more than ever for the United States federal courts.’). 2 See Paul R. Gugliuzza, Rethinking Federal Circuit Jurisdiction, 100 Geo. L.J. 1437, 1453–64 (2012) (summarizing the Federal Circuit’s jurisdiction). 3 See, e.g., Melissa F. Wasserman, The Changing Guard of Patent Law: Chevron Deference for the PTO, 54 Wm. & Mary L. Rev. 1959, 2007–19 (2013) (arguing that

149

150

Improving intellectual property

court level, where arguably technical expertise may be more easily harnessed to make fact findings.4 Still others have suggested ways to decrease the specialization of appellate court judges hearing patent appeals through allowing litigants a choice between the Federal Circuit and their geographic circuit court5 or expanding the DC Circuit’s jurisdiction to also include patent cases.6 This chapter does not weigh in on the optimal level of specialization within the patent litigation ecosystem or whether the Federal Circuit has been a success. Professor Rochelle Dreyfuss has written the series of seminal articles examining the Federal Circuit and its specialization.7 Instead our claim is more modest: that specialization of patent adjudicators has substantially increased since the creation of the Federal Circuit and this trend of specialization at both the trial and appellate levels bears further analysis. In 1982, the Federal Circuit was formed with nationwide jurisdiction over patent cases to bring uniformity to patent law. At that time, only a handful of patent validity cases were appealed to the Federal Circuit from the specialized patent judges at the PTO rather than from the federal district courts. Beginning in 2016, the Federal Circuit began to docket more appeals from decisions of patent administrative judges than from the federal district courts.8 And although there has always been some forum shopping at the district court level, there has been a steady increase in the clustering of patent cases within specific districts from comparative advantage perspective the PTO has more expertise and not subject to more capture than the Federal Circuit); Michael Burstein, Rules for Patents, 52 Wm & Mary L. Rev. 1747 (2011) (advocating for the PTO to be given substantive rulemaking power); John M. Golden, Patentable Subject Matter and Institutional Choice, 89 Tex. L. Rev. 1041 (2011) (arguing that the PTO should be given substantive rulemaking authority over patentable subject matter only). 4 Sapna Kumar, Judging Patents, 62 Wm. & Mary L. Rev. 871, 916–27 (2021) (proposing increasing technical expertise in federal district court judiciary by utilizing technically trained judges or staff and streamlining US patent litigation into a group of urban district courts, which would employ neutral technical experts). 5 Hon. Diane P. Wood, Is It Time to Abolish the Federal Circuit’s Exclusive Jurisdiction in Patent Cases?, 13 Chi.-Kent J. Intell. Prop. 1, 9–10 (2013). 6 John F. Duffy & Craig Allen Nard, Rethinking Patent Law’s Uniformity Principle, 101 Nw. U. L. Rev. 1619, 1625 (2007) (proposing that D.C. Circuit should also have jurisdiction over patent appeals). 7 See, e.g., Rochelle Cooper Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. Rev. 1 (1989); Rochelle Cooper Dreyfuss, In Search of Institutional Identity: The Federal Circuit Comes of Age, 23 Berkeley Tech. L.J. 787 (2008); Rochelle Cooper Dreyfuss, What the Federal Circuit Can Learn from the Supreme Court – and Vice Versa, 59 Am. U. L. Rev. 787 (2010); Rochelle Cooper Dreyfuss, Percolation, Uniformity, and Coherent Adjudication: The Federal Circuit Experience, 66 SMU L. Rev. 505 (2013). 8 Jason Rantanen, The Federal Circuit and Appeals from the Patent Office, PATENTLYO, https://​patentlyo​.com/​patent/​2016/​12/​federal​-circuit​-appeals​.html.

Specialization everywhere

151

since the establishment of the Federal Circuit.9 By competing for patent cases, typically through the creation of favorable procedural rules, a few judges have been able to attract plaintiffs to file in their districts, hearing a widely disproportionate number of patent cases.10 Finally, as one of us has documented, the Federal Circuit has further specialized through opinion specialization.11 A handful of judges write a disproportionate number of patent opinions and within those, some even specialize within patent technologies.12 The result is a substantial increase in the specialization of patent adjudicators within the patent litigation ecosystem. This chapter proceeds by outlining the costs and benefits of specialization of adjudicators and then turns to documenting the increase in specialization of patent adjudicators at the PTO, district court, and appellate court level in the patent system.

2.

COSTS AND BENEFITS OF SPECIALIZATION

The primary benefits associated with specialization are expertise, certainty, and efficiency. Specialization increases expertise by repeatedly exposing jurists to particular subject matters. Experts are more likely to write high-quality opinions that increase legal accuracy, meaning the legal rule is consistent with the underlying policy of the legal regime.13 Further, specialized jurists are more familiar with the overall statutory scheme, enabling them to draft opinions that are more coherent and consistent with the policies underlying the law they administer.14 In technically complex areas, specialists have a greater

9 See Mark A. Lemley, Where to File Your Patent Case, 38 AIPLA Q.J. 401 (2010) (discussing the most advantageous forums in which to file patent suits). 10 Daniel Klerman & Greg Reilly, Forum Selling, 89 S. Cal. L. Rev. 241, 247–285 (2016) (discussing forum selling in patent cases and the Eastern District of Texas); J. Jonas Anderson, Court Competition for Patent Cases, 163 U. Penn. L. Rev. 631, (2019). 11 Melissa F. Wasserman and Jonathan D. Slack, Can There Be Too Much Specialization? Specialization in Specialized Courts, 115 Nw. U. L. Rev. 1405, 1440–41, 1445–47 (2021) (documenting opinion specialization in patent law and within patent technologies). 12 Id. 13 We draw this term from the work of Rochelle Dreyfuss. Rochelle Cooper Dreyfuss, In Search of Institutional Identity: The Federal Circuit Comes of Age, 23 Berkeley Tech. L.J. 787, 796 (2008). Empirical evidence suggest that specialization does increase accuracy of outcomes, at least as defined by Supreme Court affirmance on issues that have divided circuits. Eric Hansford, Measuring the Effects of Specialization with Circuit Split Resolutions, 63 Stan. L. Rev. 1145, 1169–71 (2011). 14 David P. Currie & Frank I. Goodman, Judicial Review of Federal Administrative Action: Quest for the Optimum Forum, 75 Colum. L. Rev. 1, 67 (1975) (arguing that expert jurists are ‘less likely to make accidental errors’).

152

Improving intellectual property

understanding of not only the legal doctrine but also the underlying non-legal principles, such as scientific or economic facts.15 Uniformity in decision-making is another potential benefit of specialization, leading to greater certainty for participants.16 The goal of bringing uniformity to patent law was one of the reasons for the formation of the Federal Circuit, with proponents arguing that ‘channeling patent cases into a single appellate forum would create a stable, uniform law and would eliminate forum shopping,’ with this resulting certainty and predictability ‘foster[ing] technological growth and industrial innovation and… facilitate[ing] business planning.’17 Specialization can also promote institutional efficiency.18 Scholars argue that the federal judiciary, as it is currently structured, cannot support the growing volume of litigation. Judicial specialization could help alleviate the burgeoning caseloads facing courts of general jurisdiction. Judges who sit on courts with narrow subject matters will gain expertise in that field. This expertise, in theory, should enable judges to adjudicate cases faster.19 The literature on specialized tribunals also highlights two recurring concerns: myopia and politicization. Concerning myopia, specialization may limit the breadth of cases jurists review. This tunnel vision may cause jurists to overly preference the policy furthered by the law they administer at the expense of competing law and policy.20 Further, because specialized jurists have fewer peer-level tribunals, competition to write persuasive opinions may be diminished.21 Moreover, the lack of dialogue between peer-level tribunals

15 See Henry J. Friendly, Federal Jurisdiction: A General View 158 (1973) (‘[A patent-specialized judge] is … likely to know a good deal more about radioactivity than someone like the writer, whose college specialty was European history and who avoided science courses because of lack of real comprehension.’). 16 Richard L. Revesz, Specialized Courts and the Administrative Lawmaking System, 138 U. Pa. L. Rev. 1111, 1116 (1990) (‘Supporters of judicial specialization maintain [] that specialized courts will enhance the uniformity of decisions by eliminating review in multiple circuits under a legal regime in which there is no intercircuit stare decisis.’). 17 Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. REV. 1, 7 (1989) (discussing formation of Federal Circuit) (citations omitted). 18 See, e.g., Meador, An Appellate Court Dilemma and a Solution Through Subject Matter Organization, 16 U. Mich. J.L. Reform 471, 475–82 (1983). 19 For empirical evidence of this assertion, see Decio Coviello, Andrea Ichino, & Nicola Persico, Measuring the Gains for Labor Specialization, 62 J. L. & Econ. 403 (2019) (estimating that specialization increases judges’ efficiency in processing cases without having a negative impact on quality, as measured by the probability of an appeal). 20 Richard Posner, The Federal Courts 157 (1985). 21 Rochelle Cooper Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. Rev. 1, 3 (1989); Rochelle Cooper Dreyfuss, What the Federal

Specialization everywhere

153

may also inhibit the percolation, sharpening, and exchange of ideas, degrading the quality of opinions.22 The second common objection to specialization is its vulnerability to politicization. Commentators argue that the one-dimensional docket may allow for ideological appointments.23 Concentrating judicial power in a small subset of judges enables interest groups to consolidate and focus their energy and resources towards appointments of that court.24 Moreover, the repetitive nature of the workload may make specialized judges vulnerable to interest groups that routinely argue before them. Repeat litigants are especially poised to exploit this vulnerability.

3.

INCREASING SPECIALIZATION IN THE PATENT ECOSYSTEM

This section documents increasing specialization of patent adjudicators at all levels of the patent litigation ecosystem since the creation of the Federal Circuit. More specifically, it notes that administrative patent judges, who have scientific expertise, are increasingly adjudicating the validity of already issued patents, there has been an increase in specialization of district court judges deciding patent cases, and there has been an increase in specialization within the Federal Circuit through the largely unnoticed phenomena of opinion specialization. 3.1

Patent Trial and Appeal Board

At the time of the creation of the Federal Circuit, the PTO had an adjudicatory board, which comprised scientifically trained administrative judges, and had the authority to reconsider the Agency’s decision to grant an already-issued

Circuit can Learn from the Supreme Court-and Vice Versa, 59 Am. U. L. Rev. 787, 803 (2010). 22 Rochelle C. Dreyfuss, Percolation, Uniformity, and Coherent Adjudication: The Federal Circuit Experience, 66 SMU L. Rev. 505, 507 (2013) (discussing ‘the high cost of eliminating intercircuit debate from the adjudicatory system’). 23 E.g., Posner, supra note 20, at 153–56. 24 See Paul D. Carrington, Crowded Dockets and the Courts of Appeals: The Threat to the Function of Review and the National Law, 82 Harv. L. Rev. 542, 591 (1969) (explaining that a specialized court ‘limited to a few kinds of matters’ may cause ‘those involved in the litigation’ to ‘make an extraordinary effort to control the selection of its judges’); Sarang Vijay Damle, Note, Specialize the Judge, Not the Court: A Lesson from the German Constitutional Court, 91 Va. L. Rev. 1267, 1283 (2005) (discussing how a specialized court enables interest groups to target their resources more effectively to ‘ensure the appointment of favorably disposed judges’).

154

Improving intellectual property

patent. However, these post-grant proceedings suffered from severe limitations set on third-party participation, narrow substantive grounds for review, and strict estoppel provisions, and hence were never very popular.25 As a result, administrative patent judges (APJs) rarely adjudicated the validity of already issued patents.26 Validity challenges were more frequently brought as counterclaims in infringement actions or through declaratory judgment actions in federal district courts. That changed in 2011 when Congress created three novel procedures for private parties to challenge issued patents before the newly-formed Patent Trial and Appeal Board (PTAB).27 These new PTAB adjudicatory proceedings were designed to create a cheaper, faster alternative to district court patent litigation.28 Each proceeding provides third parties with a procedurally robust, streamlined way to contest the legitimacy of issued patents directly through the Patent Office.29 A panel of at least three APJs with scientific expertise conducts the initial review of the patent and makes trial-level determinations.30 PTAB adjudication has proven immensely popular. Since late 2012, the Patent Office has received nearly 8,500 post-grant petitions—over three times the anticipated quantity.31 The agency has hired a record-breaking number of APJs to staff these proceedings, tripling the size of its adjudicatory workforce to nearly 300 APJs. It is undeniable that the PTAB volume of work pales in 25 Melissa F. Wasserman, The Changing Guard of Patent Law: Chevron Deference for the PTO, 54 Wm. & Mary L. Rev. 1959, 1975 n.71 (2013). 26 The adjudicatory board at the PTO has long had the authority to hear patent denials. 27 Leahy-Smith America Invents Act, Pub. L. No. 112–29, 125 Stat. 284 (2011); § 6 (codified at 35 U.S.C. §§ 311–319, 321–329) (post-grant review proceedings), § 12 (codified at 35 U.S.C. § 257) (supplemental examination), § 18 (codified at 35 U.S.C. § 321) (transitional program for covered business method patents). 28 The House Report on the AIA states that the Act intended to ‘convert[] inter partes reexamination from an examinational to an adjudicative proceeding’ while establishing a new agency procedure known as post-grant review that ‘would take place in a court-like proceeding,’ H.R. Rep. No. 112–98, pt. 1, at 46, 68 (2011). 29 These new proceedings share a host of common features that make them viable alternatives to litigation in federal courts and distinguish them from the Patent Office’s prior adjudicatory system. Wasserman, supra note 3. 30 35 U.S.C. § 6(a)–(b)(1). 31 U.S. Patent & Trademark Office, Performance and Accountability Report, Fiscal Year 2013, at 23 (noting that the ‘tremendous inflow of new proceedings is higher than initially estimated’); U.S. Patent & Trademark Office, Performance and Accountability Report, Fiscal Year 2014, at 3 (noting that PTAB ‘received nearly 1,500 petitions for AIA trials in FY 2014, which was three times the expected number); U.S. Patent & Trademark Office, Performance and Accountability Report, Fiscal Year 2015, at 70; U.S. Patent & Trademark Office, Performance and Accountability Report, Fiscal Year 2016, at 71.

Specialization everywhere

155

comparison to that of the Patent Office’s prior internal adjudicatory board.32 For the first time since its inception, the Federal Circuit has docketed more patent appeals arising from the Patent Office through PTAB proceedings than from the district courts. The popularity of PTAB proceedings have injected additional specialization of adjudicators into the patent litigation ecosystem. 3.2

District Courts

There has also been increased specialization at the district court level through both informal mechanisms and more intentional, formal mechanisms. Federal district courts have general jurisdiction, but districts where patent-intensive industries are located often have correspondingly higher concentrations of patent litigation, leading to increased specialization in districts like the Northern District of California. Competitors located in industry hubs are most likely to litigate in that location, and as a result, judges specialize, developing both efficiency and expertise in the law. The Northern District of California was the first to adopt local patent rules in 2001, making the litigation process more predictable. Judges also develop their own mechanisms for handling larger cases once they feel comfortable with the strategies and the law, such as a ‘showdown’ strategy that Judge Alsup developed in cases that involved numerous patents and claims that required litigants to pick their strongest claims—and defend against their opponent’s strongest claims in order to winnow down the issues.33 Geographic considerations do not explain most of the concentration of patent litigation in a few district courts over the years since the formation of the Federal Circuit.34 Rather, some district courts have informally developed specialization in patent law through their reputations as having ‘rocket dockets’

32 The Patent Office’s prior adjudicative board was named the Board of Patent Appeals and Trials. Michael Wagner, An Introduction to Administrative Patent Judges at the Patent Trial and Appeal Board, 62 Fed. Law. 36 (May 2015). 33 The strategy involved having the accused infringer pick the weakest of the asserted claims for an early decision on validity, while the patent owner plaintiff picked the strongest claim for infringement for an early summary judgment motion. The judge then suggested that an early infringement ruling could lead to a preliminary injunction against the accused infringer, while an early invalidity ruling could lead to sanctions against the patent holder. By forcing the parties to litigate their strongest and weakest claims, respectively, patent holders are encouraged to only bring strong claims. William Alsup, The 2018 Supreme Court IP Review Address, 18 Chi.-Kent J. Intell. Prop. 111, 122–23 (2019) (describing procedure that required parties to reduce number of claims at issue). 34 J. Jonas Anderson, Court Competition for Patent Cases, 163 U. Pa. L. Rev. 631, 650 (2015).

156

Improving intellectual property

that ensure speedy resolutions. The Eastern District of Virginia has a reputation for speed across cases. Court districts are divided into smaller divisions, and litigants can choose to file in particular divisions. The Alexandria division of the Eastern District of Virginia became especially attractive to patent litigants because the US Patent and Trademark Office is located there, as are many patent-focused law firms, leading to judges and juries that are familiar with—and generally supportive of—patent rights. In contrast, the Eastern District of Texas has developed a reputation specific to patent law despite having no geographic ties to patents or patent-heavy companies. The district developed patent rules including short discovery timelines and became known for the massive jury verdicts delivered, resulting in ever-increasing filings.35 Concentrations of patent filings have fallen off in both districts, with the Eastern District of Virginia intentionally reassigning patent filings within the district to judges outside the Alexandria division in order to become less attractive for patent litigants and their complex cases that consume so much court time, and in the case of the Eastern District of Texas, with the Supreme Court decision in TC Heartland that promulgates strict venue requirements. More recently the Western District of Texas has developed a reputation for patent specialization, particularly the Waco division, which includes only a single judge. Patent case filings have increased there from the single digits in 2016 to over 700 in 2020, comprising well over 20 percent of patent filings nationwide that year and the most in any district in the country.36 A more formal type of specialization has also been tried at the district court level through the Patent Pilot Program (PPP) that ran from 2011–2021. Congress created the program to increase expertise in patent litigation.37 The program was designed so that certain districts could opt in as pilot districts, with certain judges choosing to participate as pilot judges. Those judges agreed to take all patent cases initially assigned, and any that their non-pilot colleagues chose to pass along. Many of the districts that developed natural specialization also chose to participate in the PPP. Participation in the PPP varied between 13 and 14 districts over the course of the experiment, as did the number of judges, though even when it began, the program had 85 district court judges and 16 magistrates.38 Separate from any substantive advantages

Id. at 653. J. Jonas Anderson & Paul R. Gugliuzza, Federal Judge Seeks Patent Cases, 71 Duke L. J. 419, 447–48 (2021). 37 28 U.S.C.A. § 137 note, Pub. L. No. 111-349, 124 Stat. 3674 (Jan. 4, 2011). 38 Amy Semet, Specialized Trial Courts in Patent Litigation: A Review of the Patent Pilot Program's Impact on Appellate Reversal Rates at the Five-Year Mark, 60 B.C. L. Rev. 519, 571 (2019). 35 36

Specialization everywhere

157

litigants might perceive, specialization at the district court often came with increased certainty as to schedule and process of patent litigation.39 3.3

Federal Circuit

In addition to the specialization that motivated the formation of the Federal Circuit in the first place, appellate specialization in patent law has not stopped there. One underappreciated form of judicial specialization is opinion specialization.40 Wasserman and Slack studied opinion specialization at the Federal Circuit and found that it regularly occurs. A handful of judges at the Federal Circuit write a disproportionate number of patent opinions whereas a near equal number of judges at the Federal Circuit display an aversion to writing patent opinions.41 The study also found technology specialization within patent law, with Judge Lourie demonstrating the greater preference to write opinions on patents involving drugs and medical technology.42

4. CONCLUSION The formation of the Federal Circuit in 1982 was an experiment in appellate specialization—one that was arguably necessary to bring speed, accuracy, and certainty to a complex area of law governing rights over scientifically complex subject matter. While much has been written about whether the court is meeting those aims, the landscape of patent litigation has become much more specialized at every level. It is no longer the situation that cases are initially heard entirely by generalist judges throughout the country. Instead, many validity challenges now come to the court from adjudication at the PTAB, decided by judges whose entire docket is patent cases. And even on the

39 One judge who had participated noted that the participating judges had been ‘sharing our experiences in how we’re managing our cases, where the problem areas are, and how we’re addressing them,’ giving examples of having the litigants identify and argue about validity and infringement claims for sample claims in complex cases. Ryan Davis, As Patent Pilot Program Ends, Judges Give Mixed Reviews, Law360 (June 24, 2021) https://​www​.sternekessler​.com/​sites/​default/​files/​2021​-06/​as​_patent​ _pilot​_program​_ends​_judges​_give​_mixed​_reviews​.pdf. 40 Although opinion specialization is undertheorized in comparison to the specialized courts, recent scholarship by one of us argued there are reasons to be skeptical of opinion specialization within specialized courts. Melissa F. Wasserman and Jonathan D. Slack, Can There Be Too Much Specialization? Specialization in Specialized Courts, 115 Nw. U. L. Rev. 1405, 1440–42, 1445–47 (2021) (documenting opinion specialization in patent law and within patent technologies). 41 Id. 42 Id. at 1445–47.

158

Improving intellectual property

district court side, we see that the efficiencies that come from specialization have driven judges and litigants together in ways that concentrate patent cases in certain districts. Moreover, once cases are appealed to the Federal Circuit, the opinions that provide precedent for the patent world are specialized among the judges. This chapter has described the new patent ecosystem in the hopes that it is a starting point for studies that acknowledge how this specialization at multiple levels may amplify benefits and costs that accompany it.

16. The Unified Patent Court: A new patent troll haven Thomas Riis 1.

THE ‘PATENT PACKAGE’

A common European patent has been discussed for many decades. Initiatives have been launched and subsequently failed.1 Finally, in 2012, the EU countries and the European Parliament agreed on the ‘patent package’ which consists of two regulations and an international Agreement on a Unified Patent Court (UPCA). These legal instruments enable enhanced cooperation among, currently, 24 member states. The purpose of the enhanced cooperation is eventually to introduce a European patent with unitary effect and a new European Court, the Unified Patent Court (UPC) bestowed with exclusive competences to decide most cases concerning European patents. There have been obstacles and delays in implementation of the UPC and the unitary patent including the United Kingdom’s withdrawal from the EU in 2020 and several German constitutional challenges.2 The UPCA will enter into force on the first day of the fourth month following the deposit of the 13th instrument of ratification or accession. It is a further condition that among the 13 instruments are the three member states where the highest number of European patents had effect in 2012, Germany, France and Italy. The 13th contracting state, Austria, deposited its instrument of ratification in January 2022, the Provisional Application Period started and the European Patent Organisation announced on its website that the new system will start late in 2022.

1 Cf. e.g., Federica Baldan and Esther Van Zimmeren, ‘The Future Role of the Unified Patent Court in Safeguarding Coherence in the European Patent System’ (2015) 52(6) CMLR 1529, 1556 ff; Erika Ellyne, ‘European Unitary Patent: Are We There Yet’ (2014) 4 QMJIP 57, 57ff; and Anna Wszołek, ‘Still Unifying? The Future of the Unified Patent Court’ (2021) 52 IIC 1143, 1145ff. 2 See e.g., Wszołek (n 1) 1144 and 1148ff.

159

160

Improving intellectual property

The patent package should address the weaknesses of the existing fragmented European patent system that requires a bundle of national patents, involving substantial costs, including translations to the language of each member state. Furthermore, cross-border enforcement of patent rights is complicated and burdensome because it happens on a national basis, normally requiring multiple disputes. According to the European Commission, the patent package will create huge benefits for EU companies. In its press release, the Commission stated that unitary patent protection will foster scientific and technological advances by making access to the patent system easier, less costly and legally secure.3 In addition, Commissioner Barnier claimed that the patent package will reduce, by up to 80 per cent, translation and related costs for obtaining EU patent protection.4 The primary purposes of the unitary patent are to reduce the cost and complexities of obtaining patent protection and to enable more effective enforcement in the contracting states. It is not certain whether patenting costs will be reduced. However, based on the UPCA and the Rules of Procedure, there is no reason to doubt that enforcement will be more effective compared to the existing system. The patent package has also been criticized as favouring patentees, increasing the cost and complexity of patent litigation and likely harming the ability and rights of SMEs to defend infringement actions.5 This chapter focuses on the risk of misuse of the system. The more effective the system of enforcements, the larger the risk of misuse. I will analyse the rules on jurisdiction in the UPCA and how they, in combination with the language of proceedings and very short time limits for submitting pleadings, work in favour of the patent holder and consequently provide a propitious basis for the activities of patent trolls/non-practicing entities.6 I will also point

Council Press Release No 17824/12 PRESSE 534, 17 December 2012. Commissioner Barnier, Press Release No IP/11/470, 13 April 2011. (cf.) Jochen Pagenberg, ‘Unitary Patent and Unified Court — What Lies Ahead?’ (2013) 8(6) JIPLP 480, 481ff. 5 E.g., Aurora Plomer, ‘The Unified Patent Court and the Transformation of the European Patent System’ (2020) 51 IIC 791, 795ff; and Pagenberg, ibid 480ff. See also UC Louvain, ‘Position Paper on the Unified Patent Court’ (2020), https://​uclouvain​.be/​ fr/​instituts​-recherche/​juri/​crides/​actualites/​upc​-alternatives​.html. 6 See generally, Kelli Larson, ‘Enforcement: Legal Implications of the European and Unitary Patent Systems for Non-practicing Entity Patent Enforcement in Europe’, in Rosa Maria Ballardini, Marcus Norrgård and Niklas Bruun (eds), Transitions in European Patent Law. Influences of the Unitary Patent Package (Wolters Kluwer 2015) 147–165. 3 4

The Unified Patent Court: A new patent troll haven

161

to procedural ways to reduce the risk of misuse, while still maintaining a court structure which is effective, accessible and fair to patentees.

2.

THE INTERNATIONAL JURISDICTION OF THE UPC

Article 32(1) of the UPCA lists the exclusive competences of the UPC, including actions for infringement, declarations for non-infringement, revocation of patents, provisional and protective measures and other remedies. According to Article 32(2), the national courts shall remain competent for actions relating to patents and supplementary protection certificates which do not come within the exclusive competence of the UPC. The Brussels I Regulation governs international jurisdiction of national courts of the EU member states in patent cases. Article 31 of the UPCA similarly provides that international jurisdiction of the Court is decided under the Brussels I Regulation7 or, where applicable, the Lugano Convention.8 This solution ensures that the same principles of jurisdiction apply to national courts.9 However, in order to regulate the relationship between the Brussels I Regulation and the UPCA amendments were needed to clarify that the UPC is a ‘court’ within the meaning of the Brussels I Regulation.10 Where the defendant is not domiciled in a member state, Chapter II of the Brussels I Regulation on ‘Special jurisdiction’ (including locus delicti) applies, regardless of the defendant’s domicile.11

7 Regulation (EU) 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) [2012] OJ L 351. 8 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2007] OJ L 339, including any subsequent amendments. 9 Fabrizio Marongiu Buonaiuti, ‘The Agreement Establishing a Unified Patent Court and Its Impact on the Brussels I Recast Regulation’ (2016) 8 Cuadernos DERECHO Transnacional 208, 212. 10 Regulation (EU) 542/2014 of the European Parliament and of the Council of 15 May 2014 amending Regulation (EU) No 1215/2012 as regards the rules to be applied with respect to the Unified Patent Court and the Benelux Court of Justice [2014] OJ L163. In general, see Pedro A. De Miguel Asensio, ‘Regulation (EU) No. 542/2014 and the International Jurisdiction of the Unified Patent Court’ (2014) 45 IIC 868. 11 Brussels I recast Regulation, art 71(b)(2).

162

2.1

Improving intellectual property

The Internal Allocation of Proceedings among the Divisions of the Court of First Instance

The UPC comprises a Court of First Instance, a Court of Appeal and a Registry. The Court of First Instance consists of two central divisions, one regional division and 12 local divisions scattered around several EU member states. The Court of Appeal is in Luxembourg. The Agreement regulates the distribution of competences of the Court of First Instance among the divisions. In the UPCA, Article 33 (1), there are two main forum rules of the same standing applicable to infringement cases.12 The first rule (a), allows actions before the local/(regional) division hosted by the contracting state where the actual or threatened infringement has occurred or may occur (locus delicti). The second rule, (b), provides that actions shall be brought before the local/(regional) division in the contracting state where the defendant has its residence, or principal place of business, or in the absence of these, its place of business. In comparison, jurisdiction in patent infringement cases under the existing system and of other intellectual property rights is determined by the Brussels I Regulation. The main rule in Article 4(1) stipulates that persons domiciled in a member state shall, whatever their nationality, be sued in the courts of that member state. This traditional rule on jurisdiction reflects the policy that as the plaintiff initiates the litigation it is more reasonable that the plaintiff comes to the defendant than the other way around. For infringement cases there is an addition rule on ‘special jurisdiction’ in Article 7(2) that a person can be sued ‘in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur’. The UPCA thus deviates from the main rule where the principal forum is the place of residence of the alleged infringer, and locus delicti is a specialized jurisdictional rule. It appears that the plaintiff litigating a unitary patent right, in practice, has many divisions to choose among when initiating infringement litigation. Whether this is the case, depends on how the UPC will interpret the locus delicti provision.

12 Cf. Ana Alba Betancourt, ‘Cross-Border Patent Disputes: Unified Patent Court or International Commercial Arbitration’ (2016) 32 Utrecht J. Int’l & Eue L 44, 51, who describes the locus delicti as the basic rule for establishing where the claimant may start the proceedings.

The Unified Patent Court: A new patent troll haven

2.2

163

Locus Delicti and Forum Shopping

The prominence of the locus delicti rule in the UPCA is concerning because it increases the scope for forum shopping.13 There are good reasons to reduce forum shopping. Firstly, it creates venue unpredictability and unreliability if different fora interpret the rules differently. The institutional set up of the UPC aims to eliminate interpretative differences between the divisions by requiring that divisional panels of judges shall have a multinational composition and a minimum number of judges who are not nationals of the contracting state where the division is located. The non-national judges are allocated on a case-by-case basis.14 However, there is still a risk that the legal culture where the division is located impacts the practice of the court and that diverging practices could emerge where the division has discretion, for instance, in respect of what constitutes ‘reasonable evidence’ for the award of a preliminary injunction15 or a court decision about whether to bifurcate a case if a counterclaim is raised.16 Another risk is that diverging practices develop over time. Secondly, forum shopping may lead to courts being overly friendly to patent holders so as to attract more litigants.17 Thirdly, forum shopping can be abused by raising costs to force settlement. Thus, the plaintiff can choose the forum that is the most inconvenient to the defendant, because of the geographical distance between the defendant and the chosen forum or the language of proceedings which under the UPCA, as the main rule is the official language of the state where the division is located.18 2.3

Locus Delicti under the Brussels I Regulation

In several judgments concerning infringement of personality rights and intellectual property rights, the CJEU has interpreted Article 7(2) of the Brussels

13 ibid 52; see also Brian Jacobsmeyer, ‘Forum Shopping in Patent Cases: Lessons for the Unified Patent Court’ (2018) 25 Mich. Tech. LR 131, 135, ‘The UPC, somewhat surprisingly, greatly enhances the opportunity to forum shop within the new system compared to the current European system.’ 14 UPCA, arts 8, 9 and 18(3). 15 ibid art 62(4). 16 ibid art 33(3), cf. Sofia Kopelevich, ‘The Impact of the Unitary Patent and the Unified Patent Court on the Prevalence of Patent Trolls in the European Union’ [2017] Law School Student Scholarship 895, https://​scholarship​.shu​.edu/​student​_scholarship/​ 895 and Krista Rantasaari, ‘Growth Companies and Procedural Safeguards in European Patent Litigation’ (2018) 25(2) Maastricht J of Eur and Comp L 168, 186. 17 Jacobsmeyer (n 13) and Betancourt (n 12) 52. 18 Larson (n 6) 158.

164

Improving intellectual property

I Regulation very broadly. For instance, Wintersteiger19 was about a possible infringement of national trade mark rights. A German company, Products 4U, had registered Wintersteiger, a registered Austrian trade mark owned by a company of the same name, as a search word in Google Ads. Consequently, Google searches for Wintersteiger triggered ads for Product 4U. With reference to earlier CJEU case law concerning personality rights,20 the Court held that the ‘place where the harmful event occurred or may occur’ in the Regulation (now art 7(2)) was intended to cover both where the damage occurred (place of effect) and where the event giving rise to it (place of action), so that the defendant may sue the defendant, in the courts for either place.21 If the plaintiff sues at the place of action (Germany), which normally coincides with the place of establishment of the defendant, the competent court will have full jurisdiction. Full jurisdiction implies that the court has the power to determine all the damage allegedly caused to the proprietor of the protected right because of an infringement and to hear an application seeking cessation of all infringements.22 However, if the plaintiff sues at the place of effect (Austria), the competent court will have limited jurisdiction to determine the damage caused within the member state in which it is situated.23 Controversially, the CJEU does not require any additional connecting factors other than website accessibility for jurisdiction over intellectual property infringements in the online environment. Since a website, normally, is accessible in all member states, the plaintiff can in practice choose among courts in all member states. This result is contrary to the suggestions of the European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP)24 and the American Law Institute.25 The CLIP principles recommend additional connecting factors for the competent court for the purpose of ensuring predictability and reduce forum shopping.26 The next question is then

19 C-523/10 Wintersteiger [2012] ECLI:​ EU:​ C:​ 2012:​ 220. Similar results in C-170/12 Pinkney [2013] ECLI:​EU:​C:​2013:​635; C-441/13 Pez Hejduk [2015] ECLI:​ EU:​C:​2015:​28; C-387/12 Hi Hotel [2014] ECLI:​EU:​C:​2014:​215. 20 Case C‑68/93 Shevill v Presse Alliance [1995] ECLI:​EU:​C:​1995:​61, and joined Cases C‑509/09 and C‑161/10 eDate Advertising [2011] ECLI:​EU:​C:​2011:​685. 21 ibid [19]. 22 ibid [28]. 23 ibid [27]. 24 ‘Principles on Conflict of Laws in Intellectual Property’ in European Max Planck Group on Conflict of Laws in Intellectual Property, Conflict of Laws in Intellectual Property. The CLIP Principles and Commentary (Oxford University Press 2013) 1–22. 25 American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (ALI 2008). 26 The CLIP principles (n 24) art 2:202 reads: Disputes concerned with infringement of an intellectual property right:

The Unified Patent Court: A new patent troll haven

165

whether the UPC will follow the case law of the CJEU or opt for the CLIP principles or similar principles. 2.4

Locus Delicti under the UPC

It seems obvious that the UPC is not bound to follow the case law of the CJEU on the interpretation of Article 7(2) of the Brussels I Regulation in the internal allocation of proceedings among the divisions of the UPC. However, it would be confusing and impractical to have a locus delicti rule for the internal allocation of proceedings that differs substantially from the locus delicti rule that establishes international jurisdiction under the Brussels I Regulation. This chapter claims that the CJEU has interpreted the provision on locus delicti too broadly and in a very rightsholder-friendly way; thereby creating unpredictability and increasing the risk of forum shopping. Consequently, the UPC should not repeat that mistake and should require more substantial connecting factors for the application of the rule. It is debatable whether that advice will be followed. The political context for the unitary patent and the UPC is to establish a patent that is more enforceable in the contracting states than under the existing system. One way to ensure effective rights-enforcement is to broadly interpret locus delicti.27 One could doubt that the UPC will take back the procedural benefits that the CJEU has bestowed on the IP rightsholders. New provisions in the amended Brussels I Regulation provides patent holders in the UPC system with beneficial jurisdictional rules that only are available in cases before the UPC and Benelux Court of Justice (‘common courts’). In particular, under Article 71(b) (3) in an infringement dispute of a European patent causing damage within the Union, a common court may also exercise jurisdiction over damage arising outside the Union, provided that property belonging to the defendant is located in any contracting state and that the dispute has a sufficient connection with any such state. It seems that the UPC has unrestricted jurisdiction over the whole infringement based on Article 7(2) of the Brussels I Regulation. In this way the UPC gives broader jurisdiction than national courts that relies on the distinction between the place of action and the place of effect.28

a person may be sued in the courts of the State where the alleged infringement occurs or may occur, unless the alleged infringer has 1. Not acted in that State to initiate or further the infringement and 2. His/her activity cannot reasonably be seen as having been directed to that State. 27 Cf. the joined cases C‑509/09 and C‑161/10 eDate Advertising, paras 46–48. 28 Asensio (n 10) 886, who describes the provision as ‘questionable’; Alberto Miglio, ‘The Jurisdiction of the Unified Patent Court: A Model for the Application of the Brussels Ia Regulation to non-EU Disputes?’ in Alexander Trunk and Nikitas

166

Improving intellectual property

Since the political background, the wording of the UPCA and the provisions of the amended Brussels I Regulation substantiate that enforcement of unitary patents right shall be more effective and more patent holder-friendly than the enforcement of other patent rights, it seems unlikely that the UPC will apply a stricter interpretation than the CJEU. If that is correct, the owner of a unitary patent right can, based on Article 33(1)(a) of the UCPA, choose freely to sue at whatever local or regional division the patent holder finds most expedient. The only condition for suing is that the alleged infringer has a website offering goods or services that arguably infringe the unitary patent right.29 The broad scope for forum shopping is problematic, but these harmful effects are exacerbated by the provisions on language and time limits.

3.

THE LANGUAGE OF PROCEEDINGS AND TIME LIMITS

The plaintiff’s choice of forum may affect the use of language for the proceedings.30 Written evidence, shall be lodged in the language of the proceedings.31 Also, oral hearings shall be conducted in the language of the proceedings.32 The main rule in Article 49(1), stipulates that the language of proceedings before the local and regional division is the official language of the member state, where the local or regional division is located.33 The contracting states may designate one or more of the official languages of the European Patent Office as the language of proceedings of their local or regional division (art 59(2)).34 The parties may also agree on the language in which the patent was granted as the language of proceedings (art 49(3) and (4)). For the local Danish division of the Court of First Instance the language of proceeding is Danish. Therefore, a Danish patent troll may, relying on the locus delicti rule, be able to sue a Romanian SME before the Danish division; thereby forcing the Romanian SME to litigate in Danish which obviously would be convenient for the Danish patent troll and onerous for Romanian

Hatzimihail (eds), EU Civil Procedure Law and Third Countries: Which Way Forward? (Bloomsbury Publishing 2021) 84ff. 29 Peter-Ulrik Plesner, ‘The Unified Patent Court, in Particular the Draft Rules of Procedure: General Comments from a Danish Perspective’ [2015] Nordiskt Immateriellt Rättsskyd 90, 94. 30 UPCA art 49. 31 Rules of Procedure of the Unified Patent Court (18th draft), Rule 7(1). 32 ibid Rule 112(5). 33 ibid Rule 14. 34 The Swedish-Baltic regional division have used this option and chosen English as the language of proceedings.

The Unified Patent Court: A new patent troll haven

167

SME.35 The President of the Court of First Instance may, on grounds of fairness and taking into account all relevant circumstances, including the position of parties and particularly that of the defendant, decide the language of proceedings should be the language in which the patent was granted. It is too early to say how the President will administer this exception but the wording suggests that it will only be used in exceptional cases, suggesting it will not be a safeguard against misuse. Strict time limits for submission of pleadings in the Rule of Procedure also work in the plaintiff’s favour. The preamble states that:36 proceedings shall be conducted in a way which will normally allow the final oral hearing on the issues of infringement and validity at first instance to take place within one year whilst recognising that complex actions may require more time and procedural steps and simple actions less time and fewer procedural steps.

Furthermore, the procedural system is ‘front loaded’ as ‘Parties shall cooperate with the Court and set out their full case as early as possible.’37 In order to satisfy these objectives, strict time limits are necessary. Also, there are limited possibilities of submitting additional substantive matters38 which makes it important for the parties to have all known and relevant substantive matters in their first pleadings. The procedural setup is a huge advantage for the plaintiff who in practice has unlimited time to prepare the statement of claim. In comparison, the defendant may within one month lodge a preliminary objection concerning the formalities, including the jurisdiction and competence of the court.39 The defendant has three months from service to lodge a Statement of Defence.40 Often a party being sued for patent infringement, will respond by claiming that the patent in question is invalid. If the Statement of Defence includes an assertion of invalidity, this would include a counterclaim for revocation of the patent.41 A counterclaim for revocation does not automatically extend the filing three-month limit.42

35 Cf. Wszołek (n 1) 1157: ‘The costs of proceedings and legal assistance in a foreign country, as foreseen in the UPCA, might be economically disruptive and cumbersome for SMEs, especially for those based in the poorer countries of the EU.’ 36 Recital 7. 37 ibid. 38 Rules of Procedure (n31) Rule 263. 39 ibid Rule 19(1). 40 ibid Rule 23. 41 ibid Rule 25. 42 Plesner (n 29) 93.

168

Improving intellectual property

Rule 9(3)43 gives the Court powers to extend and shorten most of the time periods mentioned in the Rules. However, the prescribed time periods are presumed to be fair in ordinary cases and therefore it is likely that extension requires extraordinary circumstances.

4.

FEE SHIFTING AS A SAFEGUARD AGAINST MISUSE

The official website of the UPC, states it will not be easier for patent trolls to sue innovative companies primarily because of the rule on fee shifting.44 UPCA Article 69 stipulates that the unsuccessful party shall bear reasonable and proportionate legal costs and other expenses of the successful party, unless equity requires otherwise. The provision should reduce the number of frivolous suits. However, there are limits to fee shifting45 including, a possible ceiling established under the Rules of Procedure. The Administrative Committee adopted ‘Guidelines for the determination of Court fees and the ceiling of recoverable costs of the successful party’ that provide Court fees and the ceiling of recoverable costs shall be based on the value of actions. Even though the Guidelines are not binding, the value of the actions is a very imprecise proxy for the defendant’s actual legal costs46 and most likely the Guidelines will leave the winning defendant with a substantial deficit. Fee shifting does make business more difficult for patent trolls. However, one could doubt whether the existing provision, including a ceiling, is sufficiently effective.47 Nevertheless, to reduce misuse of the procedural system of the UPC, I recommend that the UPC is not restrictive in awarding legal costs against the defendant. Fee shifting does not help the defendant to cope with the strict time limits which may result in the defendant losing the case altogether.48 Hence, a second recommendation is to extend the time limits in the Rules of Procedure or, if not, for the UPC to use its powers under Rule 9(3) to the same effect.

Rules of Procedure (n 31), Rule 334(1)(a). See https://​www​.unified​-patent​-court​.org/​faq/​impact​-upc​-0. 45 Rantasaari (n 16) 179ff. 46 Örjan Grundén, ‘Rules of Procedure for the Unified Patent Court. General Comments from a Swedish Perspective’ (2015) 96 Nordiskt Immateriellt Rättssky 100. 47 Cf. Case C-57/15 United Video Properties, para. 30: ‘…at the very least, a significant and appropriate part of the reasonable costs actually incurred by the successful party are borne by the unsuccessful party’. 48 The defendant may also be restrained in its defence by shortage of liquidity. 43 44

The Unified Patent Court: A new patent troll haven

169

5. CONCLUSION Recommendations to reduce misuse of the system are for the UPC; firstly, not to follow the case law of CJEU concerning the locus delicti rule but instead require further connecting factors; and secondly, require that the plaintiff presents more evidence of patent validity and infringement before allowing an infringement suit to proceed. In the worst case the UPC and its associated procedural system will attract dubious businesses (patent trolls) that acquire patents, perhaps of uncertain validity, for the sole purpose of suing SMEs in the contracting states in an attempt to force the defendant into settlements. Even if such businesses will not ensue, the procedural system of the UPC seems unbalanced and creates incentives for larger otherwise legitimate businesses and patent holders to litigate their rights more actively and within a broader geographical scope than they would have done under the existing system. Therefore, some suggest that the likely beneficiaries of the unitary patent and UPC will be transnational corporations outside Europe.49

Plomer (n 5) 796.

49

17. Transnational judicial competition in intellectual property law Marketa Trimble1 1. INTRODUCTION Among the aspects of intellectual property (‘IP’) law to which Professor Rochelle Dreyfuss has contributed is the intersection of IP law and conflict of laws—conflict-of-laws issues that arise in transactions and disputes involving IP.2 The intersection, often neglected in the past,3 has garnered significant interest in the last two decades and motivated several teams of experts to propose principles and guidelines to assist courts and legislators in handling complex issues arising at the intersection. Together with Professors Jane Ginsburg and François Dessemontet, Dreyfuss served as a co-reporter for the earliest of the projects, the project of the American Law Institute (‘ALI’),4

1 The author thanks for research support Associate Professor Youngwoo Ban of the Wiener-Rogers Law Library at the William S. Boyd School of Law and research assistant Ms. Della Lyle (JD ‘23). The author is indebted to Gary A. Trimble for his invaluable editing suggestions. 2 See, e.g., Rochelle C. Dreyfuss & Jane C. Ginsburg, Draft Convention on Jurisdiction and Recognition of Judgments in Intellectual Property Matters, 77 Chi.-Kent L. Rev. 1065 (2002); Rochelle Dreyfuss & Linda Silberman, Misappropriation on a Global Scale: Extraterritoriality and Applicable Law in Transborder Trade Secrecy Cases, 8 Cybaris An Intel. Prop. L. Rev. 265 (2017). 3 Cf. 2 Carl Ludwig von Bar, Theorie und praxis des internationalen privatrechts 231–91 (1889); Eugen Ulmer, Die Immaterialguterrechte im internationalen privatrecht: rechtsvergl, schriftenreihe zum gewerblichen rechtsschutz (1975). 4 Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes, American Law Institute, Philadelphia, 2008 (the ‘ALI Principles’). See also Rochelle Dreyfuss, The ALI Principles on Transnational Intellectual Property Disputes: Why Invite Conflicts?, 30 Brook. J. Int’l L. 819 (2005).

170

Transnational judicial competition in intellectual property law

171

which inspired and informed further projects in other countries5 and also an International Law Association (‘ILA’) project.6 The projects covered many aspects of jurisdiction, choice of law, and the recognition and enforcement of foreign judgments. In designing their principles and guidelines, the project experts needed to address many complex problems, including problems in the area of recognition and enforcement of foreign judgments, which is typically less controversial than are the other areas. Discussions in all of the projects concentrated on many of the same issues, but the issues received varying degrees of attention in the different projects, which was understandable given the different composition of the project experts, the varying viewpoints of the experts, and the different timing of the projects. One topic that generated much discussion in the ILA project, in which Dreyfuss also actively participated, was the recognition problem that arises when two or more pre-existing mutually inconsistent foreign judgments7 exist. This problem is far from academic and lies at the core of transnational judicial competition.8 The problem occurs when a court is presented with multiple foreign judgments and must decide which, if any, of the judgments it will recognize. Rather than the typical ‘simple’ recognition scenario, in which a court in country A determines whether it will recognize a judgment from a court in country B, in the more complex scenario the court in A must choose between a judgment from B and an inconsistent judgment from a court in country C

5 Transparence Proposal on Jurisdiction, Choice of Law, Recognition and Enforcement of Foreign Judgements in Intellectual Property, Transparency of Japanese Law Project, (2009), http://​www​.tomeika​.jur​.kyushuu​.ac​.jp/​ip/​pdf/​ Transparency​%20RULES​%20​%202009​%20Nov1​.pdf; Korean Private Int’l Law Assoc., Principles on International Intellectual Property Litigation (2010) (on file with author); Conflict of Laws in Intellectual Property: The CLIP Principles and Commentary, European Max Planck Group on Conflict of Laws in Intellectual Property, Oxford, 2013 (the ‘CLIP Principles’). 6 International Law Association’s Guidelines on Intellectual Property and Private International Law, 12:1 Journal of Intellectual Property, Information Technology, and Electronic Commerce Law (2021), p. 1 et seq. (the ‘ILA Guidelines’). 7 The author of this chapter had the privilege of serving on the ILA Committee on Intellectual Property and Private International Law that drafted the ILA Guidelines on Intellectual Property and Private International Law. The 79th Biennial ALI Conference in Kyoto approved the Guidelines on December 13, 2020. 8 See S. I. Strong, Recognition and Enforcement of Foreign Judgments in U.S. Courts: Problems and Possibilities, 33 Rev. Litig. 45, 117 (2014) (‘One of the key problems facing international litigants is the possibility of irreconcilable judgments or proceedings arising out of parallel litigation.’).

172

Improving intellectual property

(or among more than two inconsistent foreign judgments).9 The foreign judgments can be in direct conflict, such as a judgment of patent infringement and a declaratory judgment of non-infringement of the same patent,10 or the foreign judgments may be mutually inconsistent without being in direct conflict, such as a judgment awarding damages for copyright infringement and a judgment on bankruptcy. It might seem that IP law cases would seldom be subject to multiple inconsistent foreign judgments;11 IP rights are primarily territorial, and IP litigation should be neatly addressable within one country’s borders. However, transnational litigation of IP rights does exist, as does competition among courts in IP matters, and transnational litigation has led to conflicting and inconsistent judgments not only in the classical cases of infringement judgment versus non-infringement declaration, but also in cases such as disputes concerning FRAND licenses to standard essential patents (‘SEPs’). In these disputes, courts in countries such as the United States (US), the United Kingdom (UK), and China have competed to set global licensing rates for SEPs.12 Courts in different countries might set the rates differently; different courts might also issue inconsistent judgments if one awards ongoing licensing fees for a patent while another court holds that same patent invalid. Conflicts or inconsistencies may arise not only between or among final judgments but also between or among interlocutory devices, such as an anti-suit injunction and an anti-anti-suit injunction, which courts have also granted, for example, in SEP FRAND cases.13 When multiple inconsistent foreign judgments are before a court, the court might be able to dispose of one or all of the judgments if there is a ground on which the court must not or might not recognize the judgments.14 Among 9 The conflicts need not stop at two judgments. See, e.g., Byblos Bank Eur., S.A. v. Sekerbank Turk Anonym Syrketi, 885 N.E.2d 191 (2008) (involving judgments from three countries). 10 In this scenario, the patent would be the same patent—not a parallel patent. 11 Even outside IP law, scenarios involving multiple foreign judgments might be infrequent. See Showlag v. Mansour [1995] 1 A.C. 431, p. 161, para. 7 (Lord Keith of Kinkel noting that in this case, ‘the Jersey court [was] faced with the unusual situation that there are two incompatible foreign judgments…’). 12 On SEP FRAND litigation in various countries see, generally, Jorge L. Contreras, The New Extraterritoriality: FRAND Royalties, Anti-Suit Injunctions and the Global Race to the Bottom in Disputes over Standards-Essential Patents, 25 B.U. J. Sci. & Tech. L. 251 (2019). 13 See, e.g., Jorge L. Contreras, Anti-Suit Injunctions and Jurisdictional Competition in Global FRAND Litigation: The Case for Judicial Restraint, 11(2) N.Y. J. Intell. Prop. & Enter. L. 171 (2021). 14 Some grounds of non-recognition are discretionary. E.g., Uniform Foreign-Country Money Judgments Recognition Act, Section 4(c).

Transnational judicial competition in intellectual property law

173

the typical grounds for non-recognition are deficiencies in due process in the proceeding that led to the foreign judgment,15 lack of jurisdiction of the court that issued the foreign judgment,16 non-finality of the foreign judgment,17 and manifest incompatibility of the foreign judgment with the public policy of the forum of the recognizing court.18 Courts will also deny recognition of a foreign judgment if the judgment conflicts with another, domestic judgment—a judgment issued by the recognizing court or by another court in the same jurisdiction as the recognizing court.19 If there are no grounds for denying the recognition of one or more foreign judgments, a court must decide which foreign judgment the court will recognize; presumably, when judgments are inconsistent, the court can give effect to only one of them. One option is to give preference to the judgment that was issued first in time; another option is to give preference to the judgment issued last in time. For foreign judgments rendered ‘between the same parties and having the same cause of action,’20 the ILA Guidelines have opted for the first-in-time rule,21 but the choice was made only after robust discussion. 15 E.g., Uniform Foreign-Country Money Judgments Recognition Act, Sections 4(b)(1), and (c)(1), (2), (7), and (8); Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (‘Brussels I Regulation (recast)’), OJ L 351, 20.12.2012, p. 1–32, Article 45(1)(b); ALI Principles, §403(1)(a), (b), (c) and (d); CLIP Principles, Article 4:401(2); ILA Guidelines, Guideline 34(1)(b) and (c). 16 E.g., Uniform Foreign-Country Money Judgments Recognition Act, Section 4(b) (2) and (3); ALI Principles, §403(1)(f) and (g) and (2)(a); ILA Guidelines, Guideline 34(1)(f). 17 Uniform Foreign-Country Money Judgments Recognition Act, Section 3(a)(2); ILA Guidelines, Guideline 32(2). 18 E.g., Uniform Foreign-Country Money Judgments Recognition Act, Section 4(c)(3); ALI Principles, §403(1)(e); CLIP Principles, Article 4:401(1); Brussels I Regulation (recast), Article 45(1)(a); ILA Guidelines, Guideline 34(1)(a). On the public policy exception in the recognition and enforcement in IP cases see Marketa Trimble, The Public Policy Exception and International Intellectual Property Law, AIDA—Annali Italiani del Diritto D’Autore, Della Cultura e Dello Spettacolo 268 (2021). 19 E.g., Uniform Foreign-Country Money Judgments Recognition Act, Section 4(c) (4); Brussels I Regulation (recast), Article 45(1)(c); ALI Guidelines, Guideline 34(1) (d). 20 ILA Guidelines, Guideline 34(1)(e). See also CLIP Principles, Article 4:501(4). 21 Not all sets of rules on the recognition and enforcement of foreign judgments address the scenario of two inconsistent foreign judgments. See also Brussels I Regulation (recast), Article 45(1)(d); CLIP Principles, Section 5(4). The ALI Principles limit provisions on the recognition of inconsistent foreign judgments to scenarios in which one of the judgments is issued by the court of ‘consolidation’ as it is defined in the ALI Principles. ALI Principles, §403(2)(d). The Uniform

174

2.

Improving intellectual property

FIRST-IN-TIME OR LAST-IN-TIME? A COMPARISON

An analysis of the differences between the first-in-time rule and the last-in-time rule for the recognition of inconsistent foreign judgments is an excellent comparative law opportunity because the analysis crystallizes the differences among legal systems. Furthermore, the recognition of the differences and their impact helps identify the policy principles that the choice should reflect. The ILA Committee of 35 scholars from 20 jurisdictions22 that prepared the draft ILA Guidelines was exceptionally well positioned for this comparative law undertaking. Both of the rules pursue important goals—finality, legal certainty, fairness, and judicial economy.23 The first-in-time rule appears better suited than the last-in-time rule for promoting these goals, not only in any particular case but also in general, by setting expectations for future litigation. The rule works well when courts operate with mutual trust and rely on each other to enforce res judicata diligently. The rule is suitable for jurisdictions with an inquisitorial system of procedure where courts guard the functioning of res judicata sua sponte. The last-in-time rule seems better suited for jurisdictions with an adversarial system of procedure, which places on litigants the burden of raising res judicata; if a party has failed to raise res judicata or lost its res judicata argument in a later proceeding, it is to the detriment of the party, and the later judgment will prevail.24 The last-in-time rule is criticized where a later judgment results from re-litigating the merits, for example when a first judgment of patent infringement conflicts with a later declaration of non-infringement by the same party and of the same patent. In such situations, the application of the

Foreign-Country Money Judgments Recognition Act includes a single provision that addresses conflicts between judgments without expressly stating whether the provision concerns a foreign judgment and a domestic judgment, or two foreign judgments. Uniform Foreign-Country Money Judgments Recognition Act, Section 4(c)(4). 22 Toshiyuki Kono, Axel Metzger, & Pedro de Miguel Asensio, Editorial, 12:1 Journal of Intellectual Property, Information Technology, and Electronic Commerce Law (2021), p. 1. 23 A commentator observed that ‘none of the policy concerns for finality of litigation, res judicata, judicial resources, fundamental fairness, territoriality, sovereignty, and so on compels either a first-in-time rule or a last-in-time rule.’ Ed Morgan, Cyclops Meets the Privy Council: The Conflict in the Conflict of Laws, 33 CAN. Y.B. INT'L L. 3, 27 (1995). 24 The first-in-time rule ‘punishes’ the later court for not following res judicata principles; the last-in-time rule ‘punishes’ the litigant who did not pursue diligently his or her rights in the later litigation.

Transnational judicial competition in intellectual property law

175

last-in-time rule condones undesirable re-litigation of the merits in the second litigation. In some cases, the application of the last-in-time rule is eminently reasonable; for example, the recognition of a later judgment is logical in a case involving two conflicting judgments awarding ongoing patent royalties when between the two judgments the patents at issue have lost their SEP status. Judgments that are not in direct conflict but are inconsistent with each other may also present circumstances in which the application of the last-in-time rule promotes a more just outcome. For instance, depending on the circumstances of a case, a later bankruptcy judgment might more accurately capture the current state of affairs between the parties than an earlier copyright infringement judgment that had awarded royalties. In general, Europeans prefer the first-in-time rule. The current European Union (EU) Brussels I Regulation (recast) on the recognition and enforcement of foreign judgments that applies to ‘civil and commercial matters,’ including IP matters, embodies the first-in-time rule; when courts are faced with two foreign judgments, and provided that the earlier foreign judgment ‘fulfils the conditions necessary for its recognition’ in the country of the forum, a court will recognize the earlier foreign judgment over the later foreign judgment.25 The adoption of the first-in-time rule is sensible in combination with the uniform rules that exist in the EU on jurisdiction and lis pendens,26 supported by the underlying principle of ‘[m]utual trust in the administration of justice.’27 Because the courts of all EU countries adhere to the EU rules, all judgments by courts in the EU should be issued in accordance with these rules, and adherence to the rules is promoted by a diligent and consistent practice of recognizing the first judgment. The UK Privy Council sitting on an appeal from Jersey, has also adopted the first-in-time rule; Lord Keith of Kinkel endorsed the application of the first-in-time rule in 1994 in Showlag v. Mansour.28 He found the rule consistent with UK statutes,29 which did not address a scenario with two foreign judgments, but the statutes ‘indicate[d], at the lowest, a preference for the earlier in date of two foreign judgments’.30 Lord Keith also noted that the

25 Brussels I Regulation (recast), Article 45(1)(d). The rule in the Regulation applies to judgments issued by courts of EU member countries. The national laws of EU countries provide rules concerning non-EU judgments. Id., Article 2(a). 26 Id., Articles 4–35. 27 Id., Recital 26. 28 Showlag v. Mansour [1995] 1 A.C. 431. 29 Id., para. 10, p. 163. 30 Id.

176

Improving intellectual property

Brussels Convention,31 the predecessor of the EU Brussels I Regulation (recast) mentioned above, included the first-in-time rule, and although Jersey, where Showlag v. Mansour was brought, was not bound by the Convention,32 Lord Keith found ‘some persuasive effect’ of the Convention, and opined that the same rule should apply in the courts of Jersey.33 He foresaw a departure from the first-in-time rule only ‘[i]f there are circumstances connected with the obtaining of the second judgment which make it unfair for the party founding on the first to seek to enforce it’.34 Under Showlag v. Mansour, a rule that was designed and adopted for judgments from ‘friendly’ foreign jurisdictions was extended to judgments from any jurisdiction. Courts and commentators have cited Showlag v. Mansour as establishing the first-in-time rule for non-EU judgments.35 It is notable, however, that the rule was adopted in a case that did not involve a genuine two-foreign-country judgment scenario. The first of the two foreign judgments brought before the Jersey court in Showlag v. Mansour was from England, which from the Jersey perspective could be viewed more as equivalent to a sister-state judgment than a foreign-country judgment, given that Jersey is a possession of the British Crown. It would seem that the same considerations that led to the adoption of the first-in-time rule in the EU would have resulted in the same outcome in the US. However, when resolving disputes between sister-state judgments, US courts have adopted the last-in-time rule, a rule that seems antithetical to the mutual trust and respect expected among US courts under the Full Faith and Credit Clause of the US Constitution. Nevertheless, the last-in-time rule is consistent with the adversarial system of procedure in the US because parties are charged with raising res judicata as an affirmative defense to avoid any undesirable outcomes in later judgments. The US Supreme Court approved the application of the last-in-time rule in its 1886 decision in Dimock v. Revere Copper Co., and again in its 1939 decision in Treinies v. Sunshine Mining Co. These cases involved conflicts between federal and state judgments (Dimock) and between sister-state judg-

31 Brussels Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, 1968, OJ L 299, December 31, 1972, pp. 32–42 (‘Brussels Convention’). 32 Jersey, one of the Channel Islands, has had a limited relationship with the EU. Act Concerning the Conditions of Accession and the Adjustments to the Treaties, OJ L 73, March 27, 1972, pp. 14 ff., at p. 19, Article 25(c). 33 Showlag v. Mansour [1995] 1 A.C. 431, para. 12, p. 164. 34 Id., para. 9, p. 162. 35 Dicey, Morris and Collins on The Conflict of Laws (14th ed., 2006), para. 14-028, p. 580.

Transnational judicial competition in intellectual property law

177

ments (Treinies), respectively.36 In Dimock the Court confirmed that the later judgment prevails if the party ‘failed to present to a court … all of the defences which he might have made.’37 In Treinies the Court went even further, stating that ‘[e]ven where the decision against validity of the original judgment [was] erroneous, it [was] a valid exercise of judicial power by the second court.’38 Although the Supreme Court did not expressly formulate the last-in-time rule in the two decisions, three restatements included the rule:39 The 1942 Restatement of Judgments,40 where it was apparently adopted without much, if any discussion;41 the 1971 Restatement (Second) of Conflict of Laws,42 where it was refined following a vigorous debate;43 and the 1982 Restatement (Second) of Judgments.44 The Supreme Court again confirmed the applicability of the last-in-time rule for sister-state judgments in 1986.45 A hotly debated aspect of the rule, as reflected in a comment to the 1971 Restatement (Second) of Conflict of Laws,46 was whether the last-in-time rule should also apply to foreign-country judgments. Initially, nothing indicated that the rule should not apply to foreign-country judgments; an 1873 treatise used as an illustration for the application of the rule a case involving two Mexican grants for the same land that were confirmed on different dates.47 However, in an influential 1969 article, Ruth Bader Ginsburg (at that time a professor at Harvard Law School) noted that ‘current authority point[ed] away from a last-in-time rule’ in cases involving foreign-country judgments.48 She identified a preference in international conventions for the first-in-time rule in cases where a first judgment was issued in the recognizing court’s juris-

36 Dimock v. Revere Copper Co., 117 U.S. 559 (1886); Treinies v. Sunshine Mining Co., 308 U.S. 66 (1939). 37 Dimock v. Revere Copper Co., 117 U.S. 559, 566 (1886). 38 Treinies v. Sunshine Mining Co., 308 U.S. 66, 78 (1939). 39 Kevin M. Clermont, Limiting the Last-in-Time Rule for Judgments, 36 Rev. Litig. 1, 20 (2017). 40 Restatement of Judgments §42 (1942). 41 Clermont, supra note 39, 20. 42 Restatement (Second) of Conflict of Laws §114 (1971). 43 Clermont, supra note 39, 24. 44 Restatement (Second) of Judgments §15 (1982). 45 Parsons Steel, Inc. v. First Ala. Bank, 474 U.S. 518 (1986). 46 Restatement (Second) of Conflict of Laws §114 (1971), cmt. d. 47 A.C. Freeman, A Treatise on the Law of Judgments §332 (1873), at 294 (if ‘the confirmee of the first grant, being a party to the second confirmation, fail[ed] to assert the former decree in his favor as a bar, his rights [were] divested by the second decree’). See also Clermont, supra note 39, 18 (reviewing the origins of the rule in the US). 48 Ruth B. Ginsburg, Judgments in Search of Full Faith and Credit: The Last-in-Time Rule for Conflicting Judgments, 82 Harv. L. Rev. 798, 804 (1969).

178

Improving intellectual property

diction (i.e., in cases where country A and country B in the earlier hypothetical were the same country) and cited, among the conventions, a preliminary draft of the later Brussels Convention.49 To the extent that Professor Ginsburg’s article influenced the course of US thinking about the US rule, the Brussels Convention rules (and consequently the EEC rules at the time) made an important imprint on the course of US thinking about the optimal rule. Among the sources that Professor Ginsburg cited as supporting the first-in-time rule for foreign-country judgments was the 1962 Uniform Foreign Money-Judgments Recognition Act, which was later replaced by the 2005 Uniform Foreign-Country Money Judgments Recognition Act. In fact, neither the 1962 Act nor the 2005 Act express any preference for either rule; they both provide only that ‘[a] foreign judgment need not be recognized if … the judgment conflicts with another final and conclusive judgment.’50 In 2008, the Court of Appeals of New York interpreted the provision (enacted with identical language in a New York statute)51 as giving discretion to New York courts.52 In a case that involved three foreign-country judgments (from Belgium, Turkey, and Germany),53 the court rejected the application of the last-in-time rule,54 noting that in cases involving foreign-country judgments, the last-in-time rule ‘need not be mechanically applied.’55 The court justified the application of the first-in-time rule in the case by the fact that ‘the last-in-time court departed from normal res judicata principles by permitting a party to relitigate the merits of an earlier judgment.’56 In accord with the developing views, a comment to the Restatement of the Foreign Relations of the United States was changed from ‘[c]ourts are likely to recognize the later

49 Id., 804, fn. 33 (1969). Ginsburg’s article was published in the February 1969 issue of the Harvard Law Review; the Brussels Convention was signed on September 27, 1968. 50 Uniform Foreign Money-Judgments Recognition Act, 1962, Section 4(b)(4); Uniform Foreign-Country Money Judgments Recognition Act, 2005, Section 4(c) (4). See similarly Restatement (Third) of Foreign Relations Law of the United States §482(2)(e) (1987), replaced by Restatement (Fourth) of Foreign Relations Law of the United States §484(d) (2018). 51 CPLR 5304(b)(5). 52 Byblos Bank Eur., S.A. v. Sekerbank Turk Anonym Syrketi, 885 N.E.2d 191, 193 (2008) (‘[U]nder CPLR 5304(b)(5), the court may recognize the earlier judgment, the later judgment or neither of them.’). 53 Id. 54 Id., 194. 55 Id., 193. 56 Id., 194. See also Clermont, supra note 39, 29 (advising that ‘American courts should be wary about extending the last-in-time rule to foreign-nation judgments.’).

Transnational judicial competition in intellectual property law

179

of two inconsistent foreign judgements’57 (in its 1987 version) to ‘[courts have] discretion to recognize the later judgment, to recognize the earlier judgment, or to recognize neither’58 (in its 2018 version).

3. CONCLUSION The development of the approaches to the rule on the recognition of inconsistent foreign judgments demonstrates the complexity of selecting a single rule to cover all circumstances in which a court must select between or among inconsistent foreign-country judgments. In practice, specific facts may influence a court’s decision about which foreign judgment should be given preference. Directly conflicting foreign judgments may present different considerations than inconsistent but not directly conflicting foreign judgments. Countries may prefer one of the two rules according to their adherence to either of the systems of inquisitorial or adversarial procedure; however, foreign judgments appearing in their courts can originate in systems different from their own where different principles and expectations apply. When they opted for the first-in-time rule, the authors of the ILA Guidelines chose the same limitations that appear in the Brussels Convention, the Brussels I Regulation (recast), and the 2019 Hague Convention.59 The Guidelines limit the provision on the recognition of inconsistent foreign judgments to foreign judgments in direct conflict—judgments that involve the same parties and the same causes of action.60 For the ILA Guidelines the first-in-time rule serves an important role in reinforcing the functioning of the Guidelines’ other rules; a foreign judgment may be recognized when the proceeding that led to the judgment complied with the Guidelines on jurisdiction, which are designed to prevent inconsistent judgments. The choice of the first-in-time rule in the ILA Guidelines is sensible given the limited scope of the application of the rule and the setting in which the rule is designed to function, but the choice cannot be easily extrapolated to different scopes and different settings.

57 Restatement (Third) of Foreign Relations Law of the United States §482 cmt g (1987) 58 Restatement (Fourth) of Foreign Relations Law of the United States §484 cmt f (2018). 59 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, 2019, Article 7(1)(f). 60 ILA Guidelines, Guideline 34(1)(e); Brussels Convention, Article 27(5); Brussels I Regulation (recast), Article 45(1)(d).

18. Navigating public, private, national, and global: International commercial arbitration of patent disputes Barbara Lauriat 1. INTRODUCTION While there has been much heated debate in recent years over the arbitration of intellectual property (IP) disputes between investors and states,1 there has been less interest in the merits, and potential broader impacts, of arbitrating international IP disputes between commercial parties. If anything, the IP community has been broadly supportive of resolving commercial IP disputes—even those involving issues of patent validity and infringement—through private means.2 Yet, for many years, a general view was held that patent disputes were not arbitrable due to the public nature of the rights involved.3 While not directly involving arbitrability, it was clear that the holding of the US Supreme Court in Lear v Adkins, ‘[t]he national policy expressed in the patent laws, favoring free competition and narrowly limiting monopoly, cannot be frustrated by private

1 See eg, Rochelle Dreyfuss and Susy Frankel, ‘From Incentive to Commodity to Asset: How International Law is Reconceptualizing Intellectual Property’ (2015) 36 Mich. J Intl L 557; Peter Yu, ‘The Investment-Related Aspects of Intellectual Property Rights’ (2016) 66 Amer U L Rev 829; Bryan Mercurio, ‘Awakening the Sleeping Giant: Intellectual Property Rights in International Investment Agreements’ (2012) 15 JIEL 871; Ruth Okediji,‘Is Intellectual Property “Investment”? Eli Lilly v. Canada and the International Intellectual Property System’ (2014) 35 U Penn J Intl L 1121. 2 Jacques de Werra, ‘Arbitrating International Intellectual Property Disputes: Trying to Look Beyond the Issue of (Non)Arbitrability’ (2012) 3 Intl Bus L J 3, 299. 3 Gary Born, International Commercial Arbitration (3rd edn, Wolters Kluwer 2020) 1029 (‘Claims touching on patent rights were deemed to involve the public interest, and thus to be inappropriate for arbitration.’). Zip Manufacturing Co v Pep Manufacturing Co, (1930) 44 F2d 184 (D Del). But see John F Robb, ‘Arbitration Procedure Compared with Court Litigation in Patent Controversies, Contemporary Problems’ (1952) L & Contemporary Problems 679.

180

Navigating public, private, national, and global

181

agreements among individuals, with or without the approval of the state’4 also applied to private agreements to arbitrate patent disputes.5 As the world of international commercial arbitration grew more sophisticated, and the public interest in encouraging arbitration as a means of dispute resolution was recognized by states, the case for allowing IP disputes—even questions of patent ownership, validity, and infringement—to be determined privately by independent tribunals gained supporters. The long delays and high costs of patent litigation, not to mention the burden that these complex cases placed on national court systems, persuaded parties and states alike that patent arbitration was worth trying. In 1975, the Swiss IP office decisively allowed arbitration of patent validity.6 Not long after, and partly in response to a significant backlog in the federal courts, efforts were made to allow arbitration of patent disputes in the United States. In 1983, the US Patent Act was amended to expressly allow for arbitration of patent validity and infringement disputes.7 In addition to reducing the burden on national courts, patent arbitration is seen to have many potential advantages over litigation for the parties involved in such disputes. For disputes involving multiple jurisdictions and large patent portfolios containing different national patents, there are some clear benefits. Parties can select the composition of the arbitral tribunal in a manner that avoids perceived, or actual, national biases, and the tribunal can be empowered to engage in transnational decision-making that would be unavailable to national courts. Parties may also choose rules and expert decision-makers particularly suited to the situation and subject matter, though it is not clear that this regularly occurs—or is even considered advantageous—in many patent cases. International arbitration can be, though is not necessarily, less costly and more expeditious, partly due to the lack of an appeal process.8 The widespread adoption of the New York Convention on the Recognition and Enforcement of

Lear v Adkins (1969) 395 US 653, 677. Immersion Corp v Sony Computer Entertainment Assoc (2016) 188 FSupp 3d 960, 974 (ND Cal) (finding that an agreement to arbitrate could potentially violate public policy under Lear if it prevented a patent validity challenge). 6 Decision of 15 Dec 1975, Swiss Rev Indus Prop & Copyright 36 (1976). See also Robert Briner, ‘The Arbitrability of Intellectual Property Disputes with Particular Emphasis on the Situation in Switzerland’ [2.2] in Worldwide Forum on the Arbitration of Intellectual Property Disputes (3–4 March 1994) (WIPO), https://​www​.wipo​.int/​ amc/​en/​events/​conferences/​1994/​briner​.html. 7 35 USC §294; Philip J Moy, ‘Arbitration of United States Patent Validity and Infringement under 35 U.S.C. 294’ (1983) 17 George Washington J Intl L & Econ 637. 8 David Herrington, Zachary O’Dell and Leila Mgaloglishvili, ‘Why Arbitrate Intellectual Property Disputes?’ [2021] Global Arb Rev, https://​glo​balarbitra​tionreview​ .com/​guide/​the​-guide​-ip​-arbitration/​first​-edition/​article/​why​-arbitrate​-international​-ip​ -disputes. 4 5

182

Improving intellectual property

Foreign Arbitral Awards (1958) (New York Convention) means that it is often far easier to enforce a foreign arbitral award than the judgment of a foreign court. Confidentiality of proceedings, and even as to the very existence of the proceedings, is not inevitable or obligatory but is a widely-accepted norm that can be attractive to commercial parties. Yet, confidentiality and the limited effects of an award could also be seen as a disadvantage if a patentee’s strategy relies on prominently and publicly exercising its rights as a means of discouraging other potential infringers. Other possible disadvantages to arbitral proceedings from the perspective of the parties are the tribunal’s limited powers of compulsion when it comes to obtaining injunctive relief—often an important priority in patent litigation—and commercial arbitration’s traditionally restrained approach to discovery. Nevertheless, submitting a patent dispute with a validity challenge to arbitration may still be strategically worthwhile for a patentee wanting to avoid a judgment of invalidity with general applicability; the patentee can thus avoid risking its ‘crown jewels’ in the form of highly commercially valuable patents that might be successfully challenged in court.9 With these potential benefits in mind, international commercial arbitration as a means of resolving patent disputes has gained momentum over the past decades. Recognizing the opportunities offered by private dispute resolution, in 1994, the World Intellectual Property Organization (WIPO) created its own specialist arbitration and mediation centre and hosted a Worldwide Forum on the Arbitration of Intellectual Property Disputes.10 In response to these developments (and potential competition), the International Chamber of Commerce (ICC), which operates the International Court of Arbitration, responded by commissioning its own Report on Intellectual Property Disputes and Arbitration. Unsurprisingly, the ICC Report concluded that ‘[a]rbitration is a most desirable method for settling disputes arising out of intellectual property transactions. There are no substantive differences in arbitrations arising from intellectual property disputes as in other areas’.11 In October 2004, the ICC, the American Arbitration Association (AAA), and the International Center for the Settlement of Investment Disputes (ICSID) Joint Colloquium on International Commercial Arbitration dedicated a panel to discussing IP and arbitration and responding to the WIPO Rules.12 9 David Caron, ‘The World of Intellectual Property and the Decision to Arbitrate’ (2003) 19 Arb Intl 441, 443. 10 Worldwide Forum on the Arbitration of Intellectual Property Disputes, WIPO (3–4 March 1994). 11 Final Report on Intellectual Property Disputes and Arbitration, (May 1998) 9.1 ICC International Court of Arbitration Bulletin [1.5]. 12 Caron (n 9) at 442.

Navigating public, private, national, and global

183

This flurry of interest amongst the major arbitral institutions brought some academic attention. In 1996, William Grantham directly addressed this ‘putatively inarbitrable’ area of IP law, arguing that there was no fundamental policy reason why IP cases should not be arbitrated.13 In fact, it appears that they were being arbitrated. The ICC Report determined that ‘[i]n the six-year period from 1990 to 1995, 11.7% of arbitration cases filed at the ICC Court contained a significant intellectual property aspect. Parties with 50 different nationalities were involved in these 199 cases, either as claimants or defendants’.14 The WIPO Centre opened a Singapore office in 2010, and in 2014, the Singapore International Arbitration Centre announced its own specialist IP panel. By 2016, IP lawyers in the United Kingdom were observing a rise in patent arbitration in the United States and claiming that Europe was not far behind.15 Hong Kong amended its arbitration law in 2017 to allow expressly for the arbitration of IP disputes. In 2020, the London Court of International Arbitration reported 5 per cent of its 444 referrals were IP-based.16 Yet, in 2003,17 2006,18 and more recently,19 we still see claims of perceived hesitancy to resolve IP disputes through arbitration. Due to the confidentiality of many proceedings—which often extends to their very existence—it is near-impossible to produce definitive data on the number or substance of patent arbitrations. It is clear, however, that not hearing about them does not mean they are not occurring. Despite the practical challenges of research in this area, and the obvious advantages of arbitration in some areas, it is important that IP scholars be aware that legitimate policy concerns about arbitrating

13 William Grantham, ‘The Arbitrability of International Intellectual Property Disputes’ (1996) 14 Berkeley J Intl L 173. 14 ICC Report (n 11) [1.15]. 15 David Perkins and Richard Price, ‘A European Perspective on the Arbitration of Patent Disputes’(Kluwer Arbitration Blog, 29 March 2016), http://​arbitrationblog​ .kluwerarbitration​.com/​2016/​03/​29/​a​-european​-perspective​-on​-the​-arbitration​-of​ -patent​-disputes/​. 16 2020 LCIA Annual Casework Report 11, https://​www​.lcia​.org/​media/​download​ .aspx​?MediaId​=​855. 17 Caron (n 11) 44 (discussing the ‘perceived hesitancy’ to resolve IP disputes through arbitration). 18 ‘Despite amendments to the Patent Act to embrace arbitration and acceptance of arbitral awards by the courts, arbitration has not yet been embraced widely by patent litigators and clients involved in intellectual property litigation.’ David Berry, ‘Harnessing the Sport of Kings: Using Pre-Dispute Arbitration Agreements to Control Discovery in Patent Disputes’ (2006) 9 W Mich Cooley J Practice & Clinical L 1, 9. 19 Clive Thorne, ‘Practitioners Overlook Arbitration When Resolving Patent Infringement’ RPC (4 April 2014); Alessandra Emini, ‘Patent Arbitration: The Underutilized Process for Resolving International Patent Disputes in the Pharmaceutical and Biotechnology Industries’ (2017) 9 Arb L Rev 323.

Improving intellectual property

184

patent disputes do exist, and critically consider whether these concerns are being addressed, before recommending arbitration as a desirable, default, or even mandatory,20 option for resolving certain patent disputes.

2. ARBITRABILITY The traditional objections against IP arbitration rested on issues of the arbitrability of such disputes as a matter of public policy.21 Since IP rights, particularly registered rights such as patents, are national grants on limited terms derived from a local sovereign power, questions about the existence and scope of those rights can be, and in some jurisdictions still is, viewed as being under the sole jurisdiction of the national courts.22 Following this line of reasoning, the arbitration of disputes involving patents should generally be avoided since they nearly always touch on matters of ownership, validity, and/or infringement: questions of national law that must be determined by national courts. According to this view, even if an arbitral tribunal produces a competent, reasoned award, there are compelling public policy reasons—such as legal certainty and the strong interest in publicly challenging invalid patents—for decisions on the validity of patents to be made by sovereign authorities with erga omnes effect. For decades, the legal world has been moving away from this idea that public policy renders IP disputes inarbitrable. Many jurisdictions avoid this arguable public-private conflict by requiring arbitral tribunals to resolve the disputes before them, even those concerning validity of patents, solely inter partes, not with the erga omnes effect that would arise from a national court or administrative body with jurisdiction over patent matters. Proponents of this view note that the tribunal is not exercising any power to grant an award on terms that the parties would not themselves been empowered to reach through settlement. Grantham, for example, takes the position that such decisions cannot be seen as encroaching on state sovereignty: Thus, the defendant’s noninfringement is predicated not on legal invalidity–on which the arbitration tribunal can make no finding erga omnes–but on an adjudication inter partes that the defendant’s use of the intellectual property is non-infringing. The arbitrator, thus, awards the defendant something analogous to an equitable remedy: a right to use the disputed intellectual property. The arbitrable

20 Richard Arnold, ‘SEPs, FRAND, and Mandatory Global Arbitration [2021] GRUR 123. 21 Grantham (n 13) 180–82. 22 ICC Report (n 11).

Navigating public, private, national, and global

185

award simply regulates the enforceability of rights between the parties. It does not invalidate them generally.23

For IP lawyers who view the nature of a patent as a bundle of exclusionary rights, or competition lawyers worried about abusive enforcement of invalid patents, this might be seen as a distinction without a difference. Even with an award having carefully limited effects between the parties, there could be impacts on third parties, for example, competitors who are at a disadvantage because they must still pay for a license to use the patent in question. Moreover, it may be desirable for decision-makers in some patent cases to consider other values and interests that may not be raised by the parties to a dispute, given the public nature of the rights involved. A commercial arbitrator would generally not be expected, or necessarily even authorized, to consider or address public policy concerns not raised by the parties. Is arbitrability still a concern for parties who might be seeking to arbitrate their patent disputes? While it is no longer a serious hurdle in most cases, it cannot be entirely dismissed. While there has been a growing acceptance of patent arbitration over the past decades, national arbitration and patent laws still differ in their approaches to arbitrability. While in Switzerland, the decision of an arbitral tribunal on patent validity could, in fact, have erga omnes effect, in some countries, such as China and South Africa,24 issues of patent validity are inarbitrable. The New York Convention provides very limited grounds for challenging arbitral awards, but public policy—narrowly construed—can form a basis for a challenge or opposition to enforcement in national courts. Thus, the selection of an arbitral seat can be of critical importance to parties wanting to enforce an arbitration agreement or award; the national law where the patent right was granted may be relevant, but it is usually less important when it comes to the question of enforcement.25 If the law of the seat does not allow for the arbitrability of patent validity,26 a party objecting to jurisdiction could later challenge the award or object to enforcement of the award that

Grantham (n 13) 187. See Trevor Cook and Alejandro Garcia, International Intellectual Property Arbitration (Kluwer 2010) 68. 25 See ICC Award 6097 (1993) 4/2 ICC Intl Ct of Arb Bull 80, in which a tribunal sitting in Geneva declared a German patent void but emphasized that the award was only binding upon the parties and could not effect the revocation of the patent erga omnes. 26 The agreement to arbitrate itself would still be valid even if elements of the dispute based on the doctrine of separability. See John Barceló, ‘Who Decides the Arbitrators’ Jurisdiction? Separability and Competence-Competence in Transnational Perspective’ (2003) 36 Vand J Transnat’l L 1115, 1116. 23 24

Improving intellectual property

186

included a determination on the question of validity.27 Yet, it is not always the law of the seat that would be guiding; parties have great flexibility and tribunals increasingly feel free ‘to make determinations of this kind independently, untethered from local law and practice’.28 This form of private ordering may be efficient but can lead to unpredictability; the location of future enforcement is not known at the time of an agreement, and national policies on IP arbitrability are not always clear or consistent.29 While they often overlap conceptually, public policy regarding the arbitrability of the dispute is a different question than public policy in terms of the enforceability of the award. The arbitrability question arises from the initial agreement between the parties—and can be raised at that point of enforcing the agreement—yet an inarbitrable agreement can also be seen as contrary to public policy. Thus, public policy as it affects the initial arbitrability of a dispute can be raised later as a defence against enforcement, as well as public policy alone as a defence against enforcement or as the basis for a challenge. Otherwise, a situation like the following hypothetical could arise: a patent registered in Switzerland, Spain, Germany and South Africa can be fully invalidated by an arbitral tribunal in the first, whereas in the other two, the decision would only be enforced, at best, with inter-partes effect. Finally, in the last, enforcement would be rejected.30

Ultimately, it would be difficult to succeed in a solely public policy-based challenge to an award related to a patent dispute. The leading treatise on IP arbitration takes a dim view of the probable success of such challenges, noting that ‘[i]n general, one fails to see how arbitrating IP disputes, including issues of invalidity in personam, may offend the most basic notions of morality and justice of any jurisdiction’.31 Nevertheless, the existing divergences in arbitrability of patent issues when comparing jurisdictions should attract the attention of legal academics and policymakers, as well as conscientious practitioners.

27 Patrick Rohn and Phillip Groz, ‘Drafting Arbitration Clauses for IP Agreements’ (2012) 7 JIPLP 652, 653. 28 George Berman, ‘The Self-Styled “Autonomy” of International Commercial Arbitration’ (2020) 36 Arb Intl 221, 228. 29 Miquel dels Sants Mirambell Fargas, ‘The Economics of Arbitrability in International IP Contracting’ (2019) 37 J L & Com 179, 206. 30 ibid 218. 31 Cook and Garcia (n 24) 76.

Navigating public, private, national, and global

3.

187

ARBITRATING PATENT LICENSE AGREEMENTS

While it is possible for parties to enter into a post-dispute submission agreement to arbitrate a patent dispute, it is much more common for patent arbitration proceedings to arise from a pre-existing legal relationship containing an arbitration clause—usually a patent licensing agreement. For global SEP licensing disputes, arbitration has been strongly recommended.32 Whether arising from an existing agreement or involving negotiations for a new license on FRAND terms, the complexity of these cases, which often involve large portfolios of patents from many jurisdictions and conflicting national laws, make arbitration particularly attractive. While complex commercial contract disputes, even those involving patents, would seem to be an uncontroversial subject for arbitration, it is difficult to avoid validity issues because they are often raised defensively and/or as a reason to object to the existing terms or royalty rates. Legal systems have taken very different approaches to patent licensing disputes, even in traditional litigation. Maintaining an appropriate balance of market power between parties, while also accounting for the public interest in challenging invalid patents, has been no easy feat. Prior to Lear, US law had generally followed the doctrine of licensee estoppel. In Lear, the public interest in challenging valid patents was deemed too important to prevent licensees, who might be in the best position informationally and economically, from challenging patents they believed to be invalid.33 When the US Patent Act was amended to allow for arbitration of patent disputes, one concern was that the Lear doctrine prohibited parties from contracting around the public interest in challenging invalid patents. To address this issue, a reporting requirement was included in the amendment requiring disclosure to the PTO of any arbitral awards relating to US patents.34 The fact that this requirement is rarely complied with in practice, and can easily be avoided, should draw greater attention. The effects of patent revocation or expiration on existing licensing agreements, and the question of whether license agreements can require royalty payments beyond the legal protection offered by a patent without conflicting with national competition laws, is another area where the arbitration of such disputes can add complications. In Europe, requiring a patent licensee to pay

32 See Mark Lemley and Carl Shapiro, ‘A Simple Approach to Setting Reasonable Royalties for Standard-Essential Patents’ (2013) 28 Berkeley Tech LJ 1135; Arnold (n 20). 33 Lear (n 4). 34 35 USC § 294 (c)–(e).

188

Improving intellectual property

royalties for the entire duration of the agreement, notwithstanding the absence of infringement or the revocation of the licensed patent or patents, is not itself a violation of Article 101 TFEU, provided that the licensee is able to terminate the agreement upon reasonable notice.35 The US courts have taken a different approach, placing greater emphasis on the federal power to grant patents and the public interest in temporal and substantive limitations on their enforcement. A license agreement for royalties extending beyond the expiration date of the patent, or for an invalid or non-patent, would be unlawful,36 though characterizing post-expiration payments as deferred pre-expiration royalties or non-royalty joint ventures may be allowed.37 Well-meaning attempts to consider the public interest as a third party in patent licensing doctrines can shift the balance of power and allocation of risk back and forth between patent owners and licensees in ways that are not always desirable.38 The availability of an alternative means of challenging validity through inter partes review in front of the US Patent Trial and Appeals Board certainly diminishes the Lear public policy argument. Yet, there is the active question of whether agreements to arbitrate can contract out of the availability of inter partes review.39 Maneuvering between private rights of contract and the public interest in a functioning patent system in patent licensing disputes already poses a challenge to courts; when the resolution of the licensing disputes itself is privatized through the mechanism of contract it adds another layer of complexity. Due to the arbitrability issues discussed above, there is an incentive to avoid raising validity as an issue. Even if patent validity is on the table, confidentiality of proceedings means that there is limited, if any, public access to resulting awards. In the United States, the reporting requirement is easily avoided, and compliance is disincentivized. If an arbitral tribunal finds a patent invalid—or even if it just takes likely invalidity ‘into consideration’ when determining a portfolio royalty rate—the prevailing user achieves its desired result and avoids the work and expense of invalidating a patent only to have its competitors gain the same advantage. A patent holder, naturally wanting to avoid

[C-567/14] Genentech v Hoechst [2016] 526. Brulotte v Thys (1964) 279 US 29, 32. Kimble v Marvel (2015) 576 US 446. 37 Kimble (n 36). 38 Rochelle Dreyfuss and Lawrence Pope, ‘Dethroning Lear? Incentives to Innovate After MedImmune’ (2009) 24 Berkeley Tech L J 969. 39 ROHM Semiconductor v MaxPower Semiconductor Inc (2021) 17 F4th 1377 (Fed Cir); MaxPower Semiconductor v ROHM (2021) 569 FSupp 3d 1013 (ND Cal 2021); Luke Ali Budiardjo, ‘The Effect of Arbitration Agreements on the America Invents Act’s Inter Partes Review Procedure’ (2018) 118 Columbia L Rev 83. 35 36

Navigating public, private, national, and global

189

risking its broad exclusionary power over one contractual dispute, is unlikely to insist upon transparency.40 In the case of SEP licensing, the same problems exist, but they are exacerbated by the essential nature of the technology, the size of the portfolios, conflicting national laws, and the parties’ desire to withhold information about licenses and rates that may put them at a disadvantage in future negotiations. With arbitration touted as the solution to global SEP disputes, it is important to remember that they raise the same concerns as other patent licenses, but with increased public policy stakes and a greater need for transparency.

4. CONCLUSION While some arbitration scholars have claimed that ‘the special nature of IP arbitration is not really all that special’,41 patent arbitration raises concerns of risk allocation, incentivization, access to information, and competition that go beyond the straightforward party autonomy-versus-public interest questions arising from other commercial transactions. As tempting as it can be to encourage private parties, particularly in disputes over global patent licenses, to use their own resources to resolve their disputes privately, removal of these disputes from the public sphere can create new problems—for individual parties and for the broader IP system. Courts and lawmakers struggle to interpret and structure the law in a way that fairly allocates risk between patent-holders and licensees, while also taking account of third-party competitors, the market, and the public interest. Their decisions may be reasonably subject to criticism, but their decision-making is sufficiently transparent for it to be criticized. Any economic and social effects of widespread private resolution of patent disputes might not raise concerns until long after the negative impacts are felt.

Fargas (n 29) 237. William W Park, ‘Irony in Intellectual Property Arbitration’ (2003) 19 Arb Intl 451, 451. 40 41

PART V

AUTHORS AND INVENTORS

19. Authors’ copyright (?) Jane C. Ginsburg 1. INTRODUCTION This chapter takes inspiration from Professor Rochelle Dreyfuss’ important early article on United States’ copyright’s works made for hire doctrine, The Creative Employee and the Copyright Act of 1976.1 Bucking the tide of law and economics analyses of intellectual property rights, Dreyfuss contended that ‘attention to nonpecuniary, author-based interests is necessary in order to take full advantage of the talents of the creative and to, in the words of the Constitution, “promote the Progress of Science and useful Arts”.’2 She demonstrated that even when authors have little economic stake in the control of their creative outputs, ‘vesting the creative with copyright ownership produces nonpecuniary benefits both to the creative and to the public.’3 Indeed, ‘[s]evering financial considerations from other creative concerns harms not only the interests of authors in the integrity of their work and in their reputation, but those of the public in high-quality, accessible, creative material.’4 Professional authors reinforce Dreyfuss’ insights. Pulitzer Prize-winning playwright Doug Wright explained that he makes money from writing screenplays (over which he will have no creative control), But if I have a truly original idea, one I’ve dredged up from my soul, I’m saving it for the stage. I have to protect my heart. … [C]opyright guarantees us only one thing, one ephemeral, fleeting, but indispensable thing: our singularity as artists. … Because of copyright, I get to be the CEO of my own imagination. When I create a work, copyright acknowledges that it belongs to me as fully as a newborn belongs to its mother. And just like a parent, I am granted responsibility for its future. … Copyright acknowledges that fearless act of creation and self-disclosure, and gives it

54 U. Chi. L. Rev. 590 (1987). Id. at 591. 3 Id. at 593. See also Id. at 604: ‘the concerns that flow from an intellectual commitment range far beyond the purely financial and may have only a fragile connection to economic expectations.’ 4 Id. at 606. 1 2

191

Improving intellectual property

192

worth. It says, ‘This play is the result of one man’s wish to forge a universal human truth from his own hardship, his own pain, and bequeath it to us in a meaningful and generous way. For the health of the culture, we must honor that gesture. We must give it value.’ … [C]opyright keeps our art, the theater … alive. For playwrights like me, copyright doesn’t provide incentives; it is the incentive.5

Dreyfuss and Wright concur that vesting copyright in authors favors creativity because authors care not only about making a living, but also, and especially, about controlling how their works are disclosed and exploited. We ignore authors’ non-pecuniary interests at the peril of our culture. This chapter builds on their exploration of authors’ copyright, but extends the inquiry to economic as well as non-pecuniary rights.

2.

NON-PECUNIARY RIGHTS

In the Anglo-American system, copyright enabled the public to have what Thomas Babington Macaulay heralded as ‘a supply of good books’ and other works that promote the progress of learning.6 Copyright did this by assuring authors ‘the exclusive Right to their … Writings’—that is, a property right giving authors sufficient control over and compensation for their works to make it worth their while to be creative.7 Vesting copyright in authors—rather than exploiters—was an innovation in the 18th century.8 It made authorship the functional and moral fulcrum of the system. US copyright today starts with authorship: copyright ‘subsists in original works of authorship fixed …’9 Exclusive rights arise with the creation of the work; it is no longer necessary to comply with formalities such as notice, registration, or deposit, for copyright to attach.10 The exclusive rights are primarily pecuniary rights, but the right to ‘do and to authorize’ acts of reproduction, preparation of derivative works, dis-

5 Doug Wright, Playwrights and Copyright, 38 Colum J. L. & Arts 301, 304, 306-07 (2015) (emphasis in original). 6 Thomas B. Macaulay, Speech before the House of Commons (Feb. 5, 1841), in Macaulay: Prose and Poetry 733–34 (G. M. Young ed., 1970). 7 U.S. Const. art. I, § 8, cl. 8. Both the Statute of Anne (England 1710), and the U.S. Constitution’s copyright clause highlight the role of exclusive rights in promoting the progress of learning. 8 Before the Statute of Anne, the printing privilege system in force in many European states generally conferred the monopoly on printers, though authors too might receive privileges. Nonetheless, the Statute of Anne was the first legislation systematically to vest authors with exclusive rights. 9 17 U.S.C. se c. 102(a). 10 Though for US works, registration remains a prerequisite to bringing an infringement action, id. sec. 411(a).

Authors’ copyright (?)

193

tribution, public performance and display,11 encompasses the right to decline to permit those acts, as well as, at least in theory, to set the terms under which those acts may be undertaken. Control over the making of derivative works, in particular, allows the author to determine whether or how the work may be exploited in different media, in different arrangements and other variations from sequels to videogame adaptations and beyond. But US copyright does not cover what may be the most intuitive author’s right of all, a general right to be recognized as the author of one’s writings and other works. Yet, the interest in being identified with one’s work is fundamental, whatever one’s conception of the philosophical or policy basis for copyright. The basic fairness of giving credit where it is due advances both the author-regarding and the public-regarding aspects of copyright. In fact, most ordinary folk, and for that matter, authors themselves (as the Wright quote attests) think that authors do enjoy the right to be credited for their works. And in any country other than the US, they probably would be correct, since the ‘right to claim authorship’ has long formed part of the authors’ rights bundle under the now 181-member Berne Convention for the Protection of Literary and Artistic Works.12 The importance of attribution in stimulating and supporting creativity underscores its centrality to the broader public interest. We all benefit from the author’s ‘sacrificial days devoted to … creative activities.’13 The lack of a right to be recognized as the author of their works, particularly in an era of pervasive exposure to works of authorship, may discourage sacrificing those creation-devoted days. As Buccafusco and Fagundes have contended, coining the term ‘incentive-based harms,’ many authors are driven to create in order to receive public recognition for their efforts. They may value recognition entirely apart from any financial benefit that it conveys. Accordingly, if others repeatedly use their works without attributing them to their authors (a practice that copyright law generally allows), those authors may be less willing to create in the future.14

17 USC sec. 106. For contracting parties, see https://​wipolex​.wipo​.int/​en/​treaties/​ShowResults​ ?search​_what​=C ​& ​ t​reaty​_id​=1​ 5. Art. 6bis establishes the right to claim authorship; in the US, however, Berne norms are not self-executing, see Pub. L. No. 100-568, 102 Stat. 285, sec. 2, and Congress has specifically declared that adherence to the Berne Convention does not expand the right to claim authorship beyond any rights generally existing in US statutory or common law, id. sec. 3. 13 Mazer v. Stein, 347 U.S. 201, 219 (1954). 14 Christopher Buccafusco & David Fagundes, The Moral Psychology of Copyright Infringement, 100 Minn. L. Rev. 2433, 2485 (2016) (arguing for a broader conception of harm under the fourth fair use factor by recognizing non-financial incentives behind creation). 11 12

194

Improving intellectual property

Beyond attribution as an incentive to creativity, the public also has an interest in knowing who created a work of authorship so that readers, viewers, listeners (etc.), can continue to enjoy past or future works by authors who have earned its approbation.15 Without the essential information that ties a work to its author, and to her public, the absence of attribution rights doubly deprives: an author cannot build a ‘following,’ and her audience cannot follow her work. US copyright law contains three highly incomplete sources of attribution rights. The first is the requirement in section 409 that the application for copyright registration name the author.16 But, according to the Compendium of Copyright Office Practices, ‘author’ means the statutory author,17 which means that employee creators and certain freelancers have no entitlement to be named in the application.18 Moreover, section 409 applies only to the registration process; it does not require that publicly-distributed or publicly exhibited copies name the author.19 The second is the Visual Artists Rights Act (VARA), whose scope is extremely limited. The third is the section 1202 protection of copyright management information against knowing removal or alteration. Although section 1202’s knowledge threshold is high, this provision could afford a source of attribution rights, especially to authors who embed author-identifying information in digital copies of their works. The extremely narrow scope of the VARA renders it of very little assistance to authors in general, and even to visual artists. One problem is the stinting definition of a ‘work of visual art,’ limited to physical originals and up to 200 signed and consecutively numbered copies of a painting, drawing, print or sculpture.20 VARA confines protectable photographs to up to 200 signed and consecutively numbered copies of ‘a still photographic image produced for exhibition purposes only,’ a category that does not in fact exist and that gives rise to many practical difficulties.21 For example, an image created for purposes of publication in a fashion magazine would not qualify; if the photographer subsequently produced a limited edition printing of those images for purposes of exhibition (and sale), it appears that VARA would spurn that printing because the image (rather than the particular printed impression) was originally produced for purposes other than exhibition. Worse, suppose the

15 See, e.g., Jane C. Ginsburg, The Author’s Name as a Trademark: A Perverse Perspective on the Moral Right of ‘Paternity’?, 23 Cardozo Arts & Entertainment L. Rev. 379 (2005). 16 17 U.S.C. § 409(2). 17 Compendium (2021), section 405. 18 See infra, section 3. 19 17 U.S.C. § 409. 20 Id. § 101. 21 Id.

Authors’ copyright (?)

195

image were originally produced for exhibition purposes only, but subsequently the photographer authorized the production of mass multiples. The subsequent copies in excess of 200 (or any copy not signed and consecutively numbered up to 200), not only fall outside VARA, but also might retroactively disqualify the original limited printing because the image (as opposed to the copy) will no longer have been ‘produced for exhibition purposes only’ (emphasis supplied). The scope of attribution rights in works that do qualify as ‘works of visual art’ mirrors the miserly coverage of the definition. The acts that infringe the attribution right turn on the definition of work of visual art, which means that if an unauthorized copyist produces a run of 201 or more copies of a work of visual art, the copies will not be ‘works of visual art’ and VARA will provide no remedy if the copyist leaves off the artist’s name, or attributes the copies to someone else.22 Protection of authors’ attribution interests under section 1202 of the copyright act is at least as imperfect. Section 1202 prohibits the knowing removal or alteration of ‘copyright management information’ (CMI) (which can include the name of the author), or the dissemination of copies knowing its CMI was removed, but only if the actor knows, or has reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any right under this title.23 Apart from the extremely limited coverage of VARA, authorship attribution is not a ‘right under this title.’ Removal of authorship information does not violate section 1202 unless it facilitates infringement of an economic right. If the creator no longer owns, or never did own, exclusive economic rights under copyright, the creator would have no claim.24 The possibility that authorized exploiters would remove or alter author-identifying information is not negligible, but an authorized exploiter is not a copyright infringer, so, unless the author can demonstrate that the absence or alteration of author-identifying information would facilitate infringement by unauthorized downstream users, she would have no section1202 claim.25

Id. § 106A(1)(a). 17 U.S.C. § 1202 (emphasis added). 24 National law should prohibit authorized exploiters deleting authorship-identifying information as the WIPO Copyright Treaty requires, which forbids the knowing removal or alteration of copyright management information having reasonable grounds to know that the removal or alteration will facilitate infringement of ‘any right covered by this Treaty or the Berne Convention,’ WIPO Copyright Treaty Art. 12(1) (emphasis added), and authorship attribution rights are Berne Convention rights under Art 6bis and indirectly under Art 10(3), but Berne is not self-enforcing in the US. 25 See 17 U.S.C. § 1203(a) (civil action by ‘any person injured by a violation of section … 1202’). 22 23

196

Improving intellectual property

Even were a copyright owner to include the author’s name within the copyright management information ‘conveyed in connection with copies or phonorecords of a work or performances or displays of a work,’26 removal or alteration of the author’s name standing alone does not suffice. Under section 1202(a), provision of false CMI does not violate the statute unless done with the intent to aid infringement.27 Under section 1202(b), the wrongful act entails a showing that those who distribute, perform or display the work: (1) have known that the attribution was removed or altered without the copyright owner’s authorization, and (2) that those who remove or alter the attribution, or who distribute or perform works whose attribution has been removed or altered, do so ‘knowing, or … having reasonable grounds to know that it will induce, enable, facilitate, or conceal an infringement of any right under this title.’28 Thus, even intentional removal or alteration of authorship attribution is not unlawful unless the plaintiff can show that the person who removed or altered the information, or who performed or distributed the changed work, should have known that the removal or alteration would encourage or facilitate copyright infringement.29 The cases suggest that the second level of intent is most likely to be established when the defendant, having removed or altered the CMI, thereby disguises its own infringement,30 or distributes the work without the accompanying information (or with altered information) to third parties, who will in turn make the work available to the public.31 A 2019 Copyright Office Study acknowledged that ‘that the dual intent standard raises a high bar and excludes a large amount of misconduct that should at least raise the potential of civil liability.’32 Thus, at the fundamental level of non-pecuniary attribution rights (rights which nonetheless engender pecuniary repercussions), US copyright largely

Id. § 1202(c). Courts have held that simply placing a work on a website without authorization does not convey false CMI because mere posting does not imply assertion of copyright ownership of the posted content. See Tomelleri, 2015 U.S. Dist. LEXIS 165007 at *36–37; Pers. Keepsakes, Inc. v. Personalizationmall.com, Inc., 975 F. Supp. 2d 920, 929 (N.D. Ill. 2013). 28 17 U.S.C. § 1212(b). 29 See, e.g. Stevens v. CoreLogic, 899 F.3d 666 (9th Cir. 2018); Gordon v. Nextel Commc'ns, 345 F.3d 922 (6th Cir. 2003). 30 Michael Grecco Prods. v. Alamy, Inc. 372 F.Supp.3d 131 (E.D.N.Y. 2019). 31 See, e.g., McClatchey v. Associated Press, 2007 U.S. Dist. LEXIS 17768, at *1 (W.D. Pa. March 9, 2007); Gardner v. CafePress, Inc., 2014 U.S. Dist. LEXIS 173726, at *10 (S.D. Cal. Dec. 16, 2014); Agence France Presse v. Morel, 2014 U.S. Dist. LEXIS 112436, at * 23 (S.D.N.Y. Aug. 13, 2014). 32 Authors, Attribution, and Integrity: Examining Moral Rights in the United States, A Report of the Register of Copyrights (April 2019) at 97. 26 27

Authors’ copyright (?)

197

fails as a law of authors’ rights. To the extent US law accommodates general non-pecuniary rights of integrity,33 authors must, perhaps perversely, rely on the pecuniary right of control over derivative works to enforce conformity of adaptations to their artistic vision.34 Whether creators in fact enjoy derivative work rights or any exclusive rights under copyright raises the next question to which this chapter turns: To what extent is the US Act a law of ‘authors’ [pecuniary] copyright?’

3.

ECONOMIC RIGHTS: AUTHORS AND COPYRIGHT OWNERSHIP

Copyright vests in a work’s creator as soon as she ‘fixes’ it in any tangible medium of expression.35 But for many authors, ownership is quickly divested, and for some, it never attaches at all. The latter group of creators are ‘employees for hire,’ either (1) salaried authors who create works in pursuit of their employment, or (2) freelancers commissioned to create certain statutorily-listed kinds of works, and who sign a contract specifying that the work will be ‘for hire.’36 US courts on the whole have vigilantly verified compliance with both prongs of the first type of work for hire, to ensure that a true employment relationship covers the creator,37 and that the employee in fact produced the work within the scope of her employment.38 Similarly, with respect to commissioned works, US courts have interpreted the statute’s criterion of a writing stating

33 The Visual Artists Rights Act (VARA), 17 USC sec. 106A, sets out a very narrow right of integrity, restricted to a tightly-defined class of ‘works of visual art,’ and applicable only to alterations made to the physical original or certain limited physical copies. 34 Or to decline to authorize adaptations altogether. See, e.g., Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010) (infringement claim against unauthorized sequel to The Catcher in the Rye); Castle Rock Ent. v. Carroll Pub., 955 F. Supp. 260 (S.D.N.Y. 1997) (Jerry Seinfeld declined to authorize ‘Seinfeld Aptitude Test’trivial quiz book). 35 See 17 U.S.C. § 102(a) (2006). 36 Id. at §§ 101, 201(b). 37 See, e.g., Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989) (warning against converting commissioned artists into employees, and setting out a test for assessing the existence of an employment relationship); Horror Inc. v. Miller, 15 F.4th 232 (2d Cir. 2021) (membership in Writers Guild union does not of itself make screenwriter an ‘employee’ of the producer of Friday the 13th movie series) 38 See, e.g., TD Bank N.A. v. Hill, 928 F.3d 259, 273 (3d Cir. 2019): allowing parties to deem a work as ‘for hire’ without fulfilling the statutory requirements would undercut the Copyright Act’s protection of those termination and moral rights and would negate the difference between a work for hire and an assigned work. That difference underscores why an employee’s work created outside the scope of employment cannot simply be ‘deem[ed]’ for hire.’

Improving intellectual property

198

that the work will be ‘for hire’ and signed by both parties to require execution of the writing before the creator produces the work.39 Judge Posner cautioned that ‘The writing must precede the creation of the property in order to serve its purpose of identifying the (non-creator) owner unequivocally.’40 Without that safeguard, belated formalization could provide the commissioning party the means to extort execution of the writing in return for paying the commission on a now-completed work.41 An author who is not an employee for hire starts out with rights that she may transfer by contract; unlike many continental European laws, US copyright law places few limitations on the scope of the rights she may transfer.42 Moreover, unlike those foreign laws, the US Copyright Act contains few mandatory remuneration provisions.43 But the law imposes some constraints on the validity and scope of a grant. Section 204(a) provides that: a transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.

Because section 101 defines ‘transfer of copyright ownership’ to include both assignments and exclusive licenses, a grant of an exclusive license of any

Moonstruck Design, LLC v. Metz, 2002 U.S. Dist. LEXIS 14583 *14 (S.D.N.Y. August 7, 2002) (jewelry design not created within scope of employment when employee hired to sell jewelry, not to design it) 39 See, e.g., Schiller & Schmidt. v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992); Estate of Stanley Kauffmann v. Rochester Institute of Technology 932 F.3d 74 (2d Cir. 2019). 40 Schiller & Schmidt, 969 F.2d at 413. 41 It also could, years later, retroactively divest creators of works whose copyrights vested upon creation, thus unsettling a variety of expectations in the work, see Estate of Kauffmann, 932 F.3d at 78: To give the 2004 Agreement the significance adopted by the District Court would risk endorsing a fiction of ‘two separate authors,’ … one during the five-year interval before the Agreement was executed and another thereafter. It would also render uncertain several aspects of the copyright in each article, such as its duration, renewal rights, and termination rights. 42 Compare id. at § 204(a) (grant of exclusive rights must be in writing and signed by grantor) with France, Code of Intellectual Property, arts L 131-1–L 131-9, L 132-1–L 132-34, available at http://​www​.wipo​.int/​wipolex/​en/​text​.jsp​?file​_id​=​179120 (detailed provisions concerning contracts, including rules protecting authors against overreaching transfers). 43 Certain compulsory licenses include mandatory set-asides or percentages for certain classes of creators. See, e.g., 17 U.S.C. § 114(g)(2) (‘Proceeds From Licensing of Transmissions’).

Authors’ copyright (?)

199

of the rights or subdivisions of rights in section 106 must be manifested in a signed writing if it is to be effective, by virtue of section 204(a).44 Equally significantly, the US Copyright Act now clearly provides that the author’s rights are ‘divisible,’ that is, that ‘[a]ny of the exclusive rights comprised in a copyright, including any subdivision of any of the rights specified by section 106, may be transferred as provided by clause (1) and owned separately.’45 The combination of divisibility and the requirement of assigned writing may justify a presumption that, when the author assigns something less than all her rights, the scope of a grant made in or after 1978 (effective date of the 1976 Act) should be interpreted narrowly. It then would follow that the grant of any of the exclusive rights, for example, the right to reproduce the work in copies, does not, absent express statement in the signed writing, carry with it the right to perform the work publicly. By the same token, given the statute’s specification that ‘any subdivision’ of exclusive rights can be the object of a transfer, the grant of the exclusive right to perform a work through one medium of communication, such as broadcasting, would not extend to other media, such as webcasting. The author may, of course, authorize exploitation in multiple media, but if the contract does not clearly cover the exploitation at issue, the proposed presumption would exclude it from the scope of the transfer. Importantly, this presumption would replace the prior caselaw addressing the ‘old license/new media’ problem. Under the prior, 1909, Copyright Act, many cases arose in which, after the passing of years and the development of a commercially remunerative new technology, the parties disputed whether the grant of rights extended to the new technology, that may have been unknown or at least not commercially viable at the time of the conclusion of the agreement. The issue came to the fore first when the contract assigned dramatization rights prior to the advent of motion pictures, and later when the assignment covered film rights prior to the advent of television.46 Subsequently, there have been disputes about whether the grant of film rights included the right

44 The 1976 Act, however, sets out no rules regarding the conditions for a valid grant of non-exclusive rights—e.g., separate grants to several production companies to perform a dramatic work. Such licenses will be valid even without a signed written memorial (although, of course, the practicing attorney will routinely give or take such a license by written agreement). Courts have held that non-exclusive licenses may be oral or inferred from conduct. See, e.g., Effects Assocs., Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1990). On the other hand, relevant state statutes of frauds, such as those applicable to agreements whose value exceeds $500, might nonetheless require certain grants of non-exclusive rights to be in writing. 45 17 U.S.C. § 201(d). 46 See, e.g., Bartsch v. Metro-Goldwyn-Mayer, Inc., 391 F.2d 150 (2d Cir. 1968).

200

Improving intellectual property

to make and distribute videocassettes and DVDs of the film,47 and whether magazine or book publishing rights embraced digital versions in eBook form.48 All of these disputes required construction of contracts concluded before the effective date of the 1976 Copyright Act. Under the 1909 Act, questions going to the scope of the grant were thought not to ‘arise under’ federal copyright law; given the absence of federal copyright rules on transfers of rights, these questions did not go to the construction of that Act’s provisions.49 Rather, the court decisions generally purported to apply state law rules of contract interpretation and did not form a consistent pattern: some courts emphasized the lack of awareness of the new technology and the obligation of the drafter (usually the large media company) to make its intentions clear;50 other courts asserted that new technologies will ordinarily be facilitated through a contract presumption favoring transfer of rights.51 By contrast, under the 1976 Act’s provision of some uniform federal rules of copyright transfers, matters going to the validity and scope of the transfers should be considered to ‘arise under’ federal copyright law, and the proposed presumption, or rule of strict contract interpretation, should govern. Nonetheless, it is possible for a US author, ‘for good and valuable consideration’ (which could be the mere fact of disseminating the work) to assign ‘all right, title and interest in and to the work, in all media, now known or later developed, for the full term of copyright, including any renewals and extensions thereof, for the full territory, which shall be the Universe.’52 A contract of this kind presents no ambiguity as to the scope of the grant, and therefore no room for the presumption of strict interpretation construing ambiguities against the grantee. Worse, with one exception, this is a valid contract. The exception is not the extra-terrestrial aspect; authors can, it seems, validly grant rights for Mars (although, under principles of territoriality, the law applicable to the

47 Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481 (2d Cir. 1998); Cohen v. Paramount Pictures Corp., 845 F.2d 851 (9th Cir. 1988). 48 HarperCollins Pubs. LLC v. Open Road Integrated Media LLP, 7 F. Supp. 3d 363 (SDNY 2014); Random House, Inc. v. Rosetta Books, L.L.C., 150 F. Supp. 2d 613 (S.D.N.Y. 2001). 49 See, e.g., T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir.1964). 50 E.g., Cohen v. Paramount Pictures Corp., 845 F.2d 851 (9th Cir. 1988) (music incorporated in motion picture, later distributed in videocassettes). 51 E.g., Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481 (2d Cir. 1998) (Stravinsky’s transfer of music rights for Disney film Fantasia, later distributed in videocassettes) (relying on Bartsch v. Metro-Goldwyn-Mayer, Inc., 391 F.2d 150 (2d Cir. 1968)). 52 For examples of these kinds of contracts, see Keep Your Copyrights, Clauses about General Assignment of Copyright, http://​ keepyourcopyrights​ .org/​ contracts/​ clauses/​by​-type/​10/​overreaching (last visited 23 April 2022).

Authors’ copyright (?)

201

substantive copyright matters covered for that territory of the extra-planetary grant may well be Martian53). The exception concerns the author’s inalienable right to terminate grants of rights 35 years after the grant was executed. Thus, even if the contract purports to grant rights in perpetuity and for a lump sum, the author can nonetheless retrieve most of her US rights 35 years after the conclusion of the contract.54 This is a very important US legislative nod to authors’ weak bargaining position. Unfortunately, authors or their heirs have not always fared well in court when they seek to enforce their termination rights. For example, courts have upheld some grantees’ assertions that the work was ‘for hire’ and therefore not subject to termination,55 and they have invalidated termination attempts for failure to comply with the statute’s many prerequisites to effective exercise of the right.56 A recent study of US authors’ exercise of their termination rights concludes that ‘the U.S. termination laws are of limited use to creators.’57 But 53 See International Law Association, Kyoto Guidelines on Intellectual Property and Private International Law, Guideline 21, pp 48-50, http://​www​.law​.kyushu​-u​.ac​.jp/​ programsinenglish/​kyoto​-guidelines/​download/​jipitec​-12​_1​_2021​.pdf. 54 See 17 U.S.C. § 203. For extensive historical and doctrinal analysis of authors’ reversion rights, see, e.g., Lionel Bently and Jane C. Ginsburg, ‘The sole right shall return to the Author’: Anglo-American Authors’ Reversion Rights from the Statute of Anne to Contemporary U.S. Copyright, 25 Berk. Tech. L.J. 1475 (2011). 55 See, e.g., Marvel Characters, Inc. v. Kirby, 726 F.3d 119, 143 (2d Cir. 2013) (concluding that Kirby’s comic book characters were works made for hire, and therefore Kirby had no right to terminate transfer of copyright to Marvel); Siegel v. Warner Bros. Entm’t, 542 F. Supp. 2d 1098, 1064–79 (C.D. Cal. 2008) (finding that certain ‘Superman’ works were works made for hire, and therefore not within scope of termination right); Fifty-Six Hope Road Music Ltd. v. UMG Recordings, Inc., 99 U.S.P.Q. 1735, 2010 WL 3564258, at *9 (S.D.N.Y. 2010) (finding that certain works by Bob Marley were works made for hire, and therefore heirs were not entitled to renewal term). 56 See, e.g., DC Comics v. Pacific Pictures Corp., 545 Fed. App’x 678, 680 (9th Cir. 2013), cert. denied, 135 S. Ct. 144 (2014) (holding that agreement between copyright transferee and beneficiary of life pension granted to ‘Superman’ co-creator Joseph Shuster waived right to termination by statutory heirs of termination right); Siegel, 542 F. Supp. 2d at 1118, 1126 (holding that portions of ‘Superman’ materials were outside the scope of termination notices due to time limitations and statutory heirs of co-creator Jerry Siegel failed to terminate copyright grants as to those materials); Burroughs v. Metro-Goldwyn-Mayer, Inc., 683 F.2d 610, 622 (2d Cir. 1982) (holding that termination notice’s failure to list five Tarzan titles failed to terminate the copyright interest in those titles). See generally Bently & Ginsburg, supra note 54 at 1572–86 (discussing caselaw construing termination rights); 1586–87 (concluding that legal limits on scope of transfers might serve authors better than termination rights). 57 Joshua Yuvaraj, Rebecca Giblin, Daniel Russo-Batterham, and Genevieve Grant, U.S. Copyright Termination Notices 1977–2020: Introducing New Datasets, 19 Journal of Empirical Legal Studies 250, 285–86 (March 2022). See also Public

202

Improving intellectual property

that assertion may be unduly pessimistic because it does not take into account that authors and their grantees may be bargaining in the shadow of the author’s inalienable termination right.58 That is, as Congress anticipated, the statutory termination provisions ‘would not prevent the parties to a transfer or license from voluntarily agreeing at any time to terminate an existing grant and negotiating a new one ...’59 The statute even provides an incentive to grantees to propose a better deal as soon as the author has filed a notice of termination, which she may serve up to ten years and no less than two years preceding the effective date of termination (35–40 years from the execution of the grant), because during this pre-termination period, the author may not agree to make a future grant, unless with the original grantee or its successor in title.60 Of course, the grantee need not wait 25 years to propose a revocation and re-grant (which will restart the 35-year termination clock). There appears currently to be no empirical study of revocations and re-grants following the filing of a notice of termination, nor in advance of any filing, but anecdotal evidence suggests that such renegotiations occur frequently, particularly in the music publishing business.61 That said, given its cumbersome implementation, its carve-outs for works made for hire and for derivative works created under authority of the grant before its termination,62 and its long delay in vesting, the US termination right offers a highly imperfect means of redressing author-grantee bargaining imbalances. Studies of the termination right have proposed a variety of improvements, including vesting of the right 25 rather than 35 years from execution of the grant, automatic reversion, elimination of the derivative works carve-out, and inclusion of employees for hire.63 Since extensive industry Knowledge, Making Sense of the Termination Right: How the System Fails Authors and How to Fix It (Dec. 2019), https://​publicknowledge​.org/​wp​-content/​uploads/​2021/​ 11/​Making​-Sense​-of​-the​-Termination​-Right​-1​.pdf (visited 23 April 2022). 58 As the authors recognize, Yuvaraj et al. at 266: Finally, we note the Catalog only documents situations in which termination notices have been filed. It casts no light on how creators are using the existence of termination rights to unofficially negotiate return of their rights or a better deal from existing rightsholders. As documented by the Authors’ Alliance (n.d.), such negotiations are certainly taking place. Given the expense and complexity of a formal termination, we hypothesize that most of those who file to terminate transfers via the § 203 or 304 processes did so because attempts to do so informally were rebuffed. 59 H.R. Rep. No. 94-1476, 94th Cong., 2d sess. at 127 (1976). 60 17 USC sec. 203(b)(4). 61 Email from Eric J. Schwartz, Esq., partner, Mitchell Silverberg & Knupp, to Jane Ginsburg, March 1, 2022, 2:15 PM [EST], on file with author. 62 17 U.S.C. sec. 203(b)(1). 63 See studies cited supra, note 57.

Authors’ copyright (?)

203

lobbying during the drafting of the 1976 Act brought about these features, any amendments may be most unlikely to pass. Still for those authors who benefit directly or indirectly from the termination right, that right’s ‘second bite of the apple’ leads US copyright a few steps along the path to becoming a ‘law of authors’ rights.’ It is, at the least, better than nothing.

20. Authors’ moral rights in the Berne Convention Gustavo Ghidini and Laura Moscati 1.

COPYRIGHT’S INDUSTRIAL GENESIS AND TYPICAL ENTREPRENEURIAL DESTINATION

It is well known that the attribution to the author of her own exploitation rights on created works occurred with the birth of the publishing industry, following the invention (in the Western world1) of movable type printing by Gutenberg, and reduced format editions inaugurated by Aldo Manuzio. This attribution was not really new in legal terms, as it was preceded by the granting of industrial patents in Venice during the 15th century, well before the famous privilege of the printer Johann von Speyer; in fact, several reproducible technologies had preceded printing. It is noteworthy that such attribution occurred after and in the wake of the one in favour of printers and booksellers (lato sensu: publishers), the original recipients of book privileges,2 and not only in Venice. In England the printers, who through the Stationers’ Company had held printing privileges since the 16th century, seized the political opportunity to support the cause of authors as an additional argument for advancing their own interests.3 Their support of authors was also basically due to the structural need to stimulate, with the personal economic incentive, an increase in the production of new works (‘content’, as we say today) and their diffusion, as the potential of the new publishing industry allowed and required. This potential could not be adequately satisfied by relying on printing the traditional (and very expensive) works so 1 Fernand Braudel, Capitalism and Material Life, 1400–1800 (New York 1973) 260ff., reminds that movable type print was first introduced in China. 2 Edward Wyndham Hulme, ‘History of the Patent System under the Prerogative and at Common Law’, (1896) 12 LQR 151-154 and (1900) 16 LQR 44–56, writes that the first patents were found in Venice, Italy, where they were issued ‘close upon the heels of printers’ copyright’: ibid 44. 3 Sceptical, on this hypothesis, William R. Cornish, Intellectual Property: Omnipresent, Distracting, Irrelevant? (Oxford University Press 2004) 42.

204

Authors’ moral rights in the Berne Convention

205

far produced by scribes4 for the benefit of the happy few: from translations of the Bible to those of Greek and Latin literary and philosophical classics, to the works of a few other famous scholars, dramatists and poets. This genesis also explains the indisputable fact that modern copyright was born, and has remained for over a century (two centuries, in truth, if we consider international rules), totus oeconomicus, i.e., entirely consisting of a series of exclusive faculties of economic exploitation (productive and distributive) of intellectual works.5 Precisely, authors’ copyright was born as a (solely) patrimonial private right of disposition/authorization: as such fully negotiable, hence functional to the alienation, by contract (assignment in time or transfer6) to the publisher. The latter is the typically necessary successor in title of the author. With few exceptions, it is only the publishing firm that has the technical, professional and financial resources to create value from the work on a commercial scale. As a rule, then, only through alienation will the author be able to obtain a concrete remuneration for her work,7 freeing herself from the need to seek the ‘salty bread’ (Dante) of patrons and protectors, as in pre-industrial times. And only thanks to that transfer, will the publisher be able to dispose of new contents to feed her production and distribution business. 4 Their frequent intervention in the drafting of texts is recalled by Professor Luciano Canfora in his Il copista come autore (Palermo 2019). 5 The expression meant ʻliterary and artistic worksʼ until the second half of the last century, when copyright protection was extended to the so-called information technologies, primarily computer programs. This is what the original text of the Berne Convention (art 1) succinctly stated, and then offered (art 4) an extensive illustrative (non-exhaustive) catalogue (infra, in the text and n 8) which includes works of a scientific nature. Works, therefore, characterized by the common denominator of purely intellectual use, since the second half of the 20th century, except with the advent of technology copyright: computer programs and industrial design. On the other hand, according to the classic division of intellectual property rights (into industrial and intellectual), works of utilitarian use, such as industrial inventions, can be protected exclusively through patents for invention or model (Paris Convention, art 1.2). The purely intellectual nature of the enjoyment of a product made it possible and still makes it possible to distinguish the functional technological means from the representative result (as in the field of videogames). This distinction is consistent with the traditional principle according to which copyright protects expressions and not ideas, TRIPS Agreement, art 9.2. 6 The first type corresponds to the publishing contract; the second type corresponds to the alienation (cession), of all exclusive rights (not allowed in some legal systems, such as Germany). 7 Limited exceptions are, e.g., direct sales of individual works by the artist to art dealers or collectors, or the sale of individual works in digital format (which are usually not complex to produce and/or represent) generated by users of telematic networks (user generated content).

206

2.

Improving intellectual property

FULL ECONOMIC EXPLOITATION

Thanks to the illustrative, i.e., flexible nature of the catalogue(s) of works protected by authors’ exclusive rights – catalogue(s) offered both by national laws prior to the Berne Convention and by the latter – transferability could embrace all productions in the literary, scientific and artistic fields, whatever their mode or form of expression.8 All kinds of works, therefore, can be gradually exploited through all the technical means of production and dissemination that have been produced over time: photography, phonography, cinematography, television, internet and so on. And not only, all kinds of works, but also – and separately9 – all the single exclusive faculties through which economic exploitation can be achieved, both at the production10 and distribution level.11 And of course, such autonomy of the individual faculties in copyright, acknowledged by undisputed principles and praxis, facilitates alienation to the publisher. It should be further recalled that, as regards the productive profile, the author’s economic rights also cover derivative works produced by third parties: for example, the adaptation of a novel for young readers, or its transposition into a screenplay. Thus, the author (and therefore the publisher as successor in title) has an exclusive right of authorization also on the exploitation of such derivative works. In short, all the economic interests of authors in the exploitation of their works were elevated to the rank of authors’ patrimonial rights, and hence predestined to the publishers’ hands.

3.

‘MORAL’ RIGHTS: A TROUBLED COMPROMISE

It was more than 40 years after its creation (and almost two centuries after continental philosophers and jurists had intertwined moral and economic moti-

8 See Berne Convention, art 2.1. The provision, after listing the various types of protected literary and artistic works, concludes by mentioning ‘enfin, toute production quelconque du domaine littéraire, scientifique ou artistique’ (‘every production in the literary, scientific and artistic domain’). 9 This is an undisputed principle at international level. The autonomy of the individual faculties making up the prism of exclusive rights facilitates their alienation to the publisher. 10 Eg reproduction, translation, reduction, adaptation into another form of expression, etc. 11 Eg direct publication or by license, sale, generalized or selective distribution, diffusion by any means of communication to the public, etc.

Authors’ moral rights in the Berne Convention

207

vations in supporting the cause of authors12) that the Berne Convention, at its revision conference in Rome in 1928, came to recognize authors’ own moral rights, autonomous from the economic ones. Rights, in other words, pertaining only to authors, not transferrable inter vivos – and therefore not assignable to publishers: thus, in proper sense, ‘personal’ rights, as they were often called in lieu of ‘moral’. In essence, this attribution established a dual right to respect (droit au respect: French was the international diplomatic language up to WWII) for both the true authorship and the integrity of the work vis-à-vis modifications or other manipulations detrimental to the honour and13 reputation of the author.14 Dual right, we say, rather than ‘two rights’: as they are jointly based on the author’s unitary interest that her cultural personality always be respected in connection with the publication and circulation of her work. It is important to emphasize that the Berne Convention, in 1928, recognized as rights only these two – however primary – moral interests of authors. Not any others: thus, the Convention refused to accept proposals (mostly Italian

12 According to Immanuel Kant, in an article against book counterfeiting, ‘Von der Unrechtmäßigkeit des Büchernachdrucks’ (1785) 5 Berlinische Monatsschrift 403ff., the work is, on the one hand, a corporeal object, and on the other hand, an immaterial creation. The first profile corresponds to a real right, the second to a personal and inalienable right. And Johann Gottlieb Fichte too, again in an article of 1793 against the counterfeiting of literary works, ‘Beweis der Unrechtmäßigkeit des Büchernachdrucks. Ein Räsonnement und eine Parabel’, in Gesamtausgabe der Bayerischen Akademie der Wissenschaften, Werke, I, 1791–1794, (Berlinische Monatsschrift 1964) 413, distinguishes between the corporeal element and the spiritual element, the latter being the object of an innate right. These statements gave rise to the German dualist doctrine of Immaterialgüterrecht, developed in the second half of the 19th century by Josef Kohler. In France, droits moraux began to be considered after the French Revolution, following some arrêts of 1814 and the reflections of jurists such as Pardessus and Renouard, who, by outlining certain moral authorial faculties, separated intellectual property from material property: see Stig Strömholm, Le droit moral de l’auteur en droit allemand, français et scandinave avec un aperçu de l’évolution internationale. Étude de droit comparé, I, L’évolution historique et le mouvement international (CUP 1967). As for the English legal system, some jurisprudential pronouncements of the 18th century are noteworthy for the identification of a right of unpublished works: see Mark Rose, Authors in Court: Scenes from the Theater of Copyright (Harvard University Press 2016) 11–35. Among the precursors of the recognition of authors’ subjective rights are John Milton, who, in advocating freedom of the press, extolled the value of creativity, and John Locke, who affirmed the author’s ownership of her work, limiting its duration for her heirs. On the historical origins of these rights see in general Laura Moscati, ‘Origins, Evolution and Comparison of Moral Rights between Civil and Common Law Systems’ (2021) 32 EBLR 25–51. 13 Textually, but improperly: ‘or’. 14 Berne Convention, art 6 bis.

208

Improving intellectual property

and French) about ‘le droit de décider si l’œuvre doit paraître’;15 so, the right to withdraw the work from the market where serious moral reasons exist16 never had any chance of recognition. Such limited recognition was the result of a battled compromise between the representatives of European countries, Italy and France in particular, which supported a broad recognition of moral interests, while English-speaking countries (except Canada) opposed tout court the idea of an international protection of those kinds of interests. That hostility, rooted in a dominant publisher-friendly Anglo-Saxon legal culture, in fact subsisted and subsists, notwithstanding the formal adhesion to the Berne Convention, and, in the United States, the Visual Artists Right Act, preceded by some state laws.17 Even at the international level, the TRIPS Agreement requires compliance with Articles 1–21 of Berne but excepts Art 6 bis.18

4.

A HYPOTHESIS ON THE SUBSTANTIVE REASONS FOR THE LIMITED RECOGNITION OF AUTHORS’ MORAL RIGHTS IN THE BERNE CONVENTION

A preliminary caveat: economic and moral interests of authors cannot be separated with a clean sweep of the sword.19 The interests in publishing, translating, reducing, transforming the work into another kind of representation, and circulating it throughout the market in all possible ways, are clearly economic by nature, as they all concern activities that potentially multiply the author’s earnings. But it is also evident that the exercise of these activities corresponds to a moral interest of the author herself: in short, to see her name fly and spread her cultural message within and beyond the borders of the country of first publication. The determination of the sale price of a book, for example, may well involve not only economic but also

Proceedings of the Rome Conference 7 May–2 June 1928, Berne, 1929, 173. As attributed by the 1925 Italian Decree on authors’ and publishers’ rights, RDL n. 1950/1925, art 15. 17 See e.g., – also for further references – the vibrant article (kindly brought to our attention by Rochelle Dreyfuss) by Amy Adler ‘Against Moral Rights’ (2009) 97 Cal L Rev 263ff. 18 TRIPS Agreement, art 9.1. 19 Also because of this intertwining, the moral interests of authors, elevated to personal rights, are often also (or exclusively) defended by the publishers themselves who are the beneficiaries of the economic rights, and who are equally interested in avoiding the commercial failure of the works. 15 16

Authors’ moral rights in the Berne Convention

209

moral interests of the author, with respect to both a too low price, symbolic of a work of little value, and a too exorbitant one, a brake on its dissemination.20 It is perhaps not too far-fetched to think that the very same original direct attribution of economic rights to the author, as a means of enabling her to earn a living through the fruit of her creative work instead of seeking the patronage of Maecenas, also objectively satisfied a fundamental moral interest of the author: personal intellectual independence. Symmetrically, the two author’s moral interests, elevated to the rank of personal rights in 1928, also have obvious economic significance. The usurpation of paternity, in fact, may well translate, hoc ipso, into the diversion of paying readers, to the benefit of the plagiarist and her publisher. Similarly, the loss of reputation can easily (albeit not necessarily21) cause the loss of public favour and, therefore, the reduction or even collapse of sales. Thus, moral and economic interests are like Siamese twins, whose separation occurs when the legislator intervenes to elevate one rather than the other to a full right. And the cut made by the 1928 Convention was the clearest and most revealing support of the author’s moral interests. We will now submit a hypothesis about the substantive reasons why, albeit reluctantly, the representatives of English-speaking countries agreed to a compromise on the recognition of just two authors’ moral interests that the Berne Convention finally elevated to rights, whereas, as noted above, all authors’ interests to economic exploitation of their work – transferable to the publisher – were in contrast elevated to full property rights.22 A substantive explanation stretching beyond exegetical exercises can be attempted, considering that the interests of the defence of authorship and reputation of the author are typically non-conflicting with the economic interests of the publisher, to whom the various rights of exploitation are typically transferred by the author. The publisher has no interest in seeing her author’s work plagiarized, nor her reputation tarnished: such events tend to result in a fall or even collapse of sales. On this level, authors’ and publishers’ respective interests coincide. In contrast, recognizing other moral interests of the author can well create actual occasions of conflict with the economic rights transferred by the author. Just think, for example, conflicts about choice of a translator, or the chance 20 An interest that Italian Copyright Law elevates to a right to prior consultation and even to opposition, art 131. 21 The ‘scandal’ can create a morbid interest (succès de scandale), as has repeatedly occurred in literature. 22 See Rome Conference (n 15) 179. The general reference to the moral interests of authors will re-emerge more than twenty years later in the UN Universal Declaration of Human Rights, adopted 10 December 1948 UNGA Res 217 A(III) (UDHR), art 10.

210

Improving intellectual property

of having the work translated in countries with regimes loathed by the author, or over whether to edit a version for children, or to promote the adaptation of a novel into a screenplay, and so on. These and similar hypotheses clearly involve relevant moral interests of the author, well distinct from, and beyond, only the two recognized in 1928. Nevertheless, the Berne Convention’s final compromise ruled that such interests should remain integrated (no Siamese twins’ separation) in the economic rights assigned to the publisher. Hence, their possible satisfaction would remain entrusted to the sole publisher’s discretionary choices.23 The compromise solution adopted in Berne is not only limitative of authors’ personal/private moral interests (also in their intertwined economic projection). There is more: such as the possibility that a publisher might refuse to have the work translated in one or other country, or that she might choose a mediocre translator. Now, unless otherwise specifically agreed, the Berne Convention and the ensuing national laws do not grant authors the right to influence – not even in a consultative way – the publisher’s decision about having the work translated, or about the choice of the translator, for the long duration of copyright. We hold that this normative solution is also potentially prejudicial to the US constitutional aim ‘to promote science and the useful arts’. Indeed, along with the author’s interest in having her cultural message more diffused, and not humbled by a bad translation, the general interest in the diffusion and valorization of a work of culture – translation being of course the main instrument for the international circulation of culture – would also be wounded. It might be of some interest to recall that the present normative situation (dating from Berne’s Revision Conference of 1908) marks a clear regression in comparison with both the original 19th century Berne texts (1886 and 1896) and some previous national laws, in particular the Austro-Hungarian Sovereign Patent of 1846. A regression equally prejudicial to authors and the general interest in the circulation of culture. In Article 5 of the original 1886 Berne text, the duration of the exclusive right of translation was detached from the general term of copyright: ten years after the first publication. In the partial revision brought about by the Acte Additionnel of 1896, article 1.III, the duration of the right was aligned with the general one, but the exclusivity would lapse if the authors, publishers or ‘leurs ayants cause’ did not have the work translated within ten years after the first publication.

23 This, of course, without prejudice to the possibility of establishing a specific agreement, recognizing the author’s actual contractual strength.

Authors’ moral rights in the Berne Convention

211

That special regime of translation was inspired by the regulatory approach of the quoted fundamental Sovereign Patent of 19 October 1846 of the Austro-Hungarian Empire ‘to protect the literary and artistic property’. The legislator of the multinational Austrian empire (so far the most united and efficient European community) wisely considered the circulation of culture between peoples of different languages as an eminent factor of international social and political cohesion. Accordingly, said legislator excluded in principle – please note – that even an unauthorized activity of translation might constitute counterfeiting (art 5). There was a limited exception to that rule, an exclusive right of translation for the author (hence, also for the assignee publisher) only if the translation would have taken place within one year from the publication of the original work (and as long as the author had made an express reservation in that regard). The Berlin Revision Conference of 1908 rejected such limitation, obviously contrary to the interests of the publishers.24 Thus, the regime of translation was fully aligned, without any distinction in terms of duration, to that of all the other authors’ economic rights transferrable to the publisher.

5.

A WEAK EUROPEAN COMMUNITY FRAMEWORK, AND THE UN UNIVERSAL DECLARATION OF HUMAN RIGHTS

A lack of incisive reform proposals emerges, both on the regulatory and the hermeneutical level about author’s moral rights. This can be said also of those proposals presented by the eminent jurists who in 2010 gave birth to the European Copyright Code (Wittem Project25) as a model for future European and individual state legislation. In that project, the moral rights guaranteed by the Convention are more precisely defined, but without substantially expanding the range rights (while limiting the temporal duration of the rights themselves). The same can be observed with respect to the current European Community framework, which is quite reluctant to include moral rights different from and additional to the (agreed) classic ones of authorship and integrity. The 1988 Green Paper on Copyright leaves the fate of moral rights to national laws.26

24 Much more than the authors’. Indeed, that limitation actually tended to hasten the translation of works assigned to publishers. 25 The Wittem Group, ‘European copyright code’ (2010), https://​ www​ .ivir​ .nl/​ copyrightcode/​european​-copyright​-code/​. 26 Green Paper on Copyright and the Challenge of Technology – Copyright Issues Requiring Immediate Action, COM (88) 172 final, 7 June 1988; see also ‘Working

212

Improving intellectual property

And there was silence on moral rights in the 2019 Copyright Directive,27 and the explicit statement of the official documents accompanying the 2016 proposal declared: ‘Moral rights are not harmonized at EU level’.28 In the attempt to put forward some more incisive reform proposals at the international level, we would start from the United Nations Universal Declaration of Human Rights, that explicitly and broadly supports authors’ ‘moral interests’, without limitations of type.29 The broad principle set out in the UN Declaration should encourage national Berne Convention Members to promote a revision of Art 6 bis aimed at widening the area of moral rights within a balanced composition of the interests at stake: among which, eminent for their constitutional rank, are the collective ones in the dissemination of culture.

6.

IN SEARCH OF REFORM: AN ADEQUATE SPACE FOR ‘REPENTANCE’ RIGHTS

As hinted, the protection of the author’s interest in her own identity as author and in the integrity of her work is an acknowledgement of her right to safeguard her own ‘cultural personality’ at all times, before or after the publication, and erga omnes, i.e., vis-à-vis third parties and assignee-publishers alike. It is self-evident that the two rights sanctioned in the Rome Revision of 1928, while certainly fundamental, are not an exhaustive expression of that safeguard. One example will suffice: the author’s interest in not having re-edited or reprinted a novel that was written in the past and inspired by totalitarian and/or racist ideas that she later repudiates. In the present regime, unless her fame allows her to dictate conditions, the decision is only the publishers’. The example suggests the expediency of an appropriate reform broadening to include rights of repentance, the attribution of which alone – in addition to the two rights under Article 6 bis – can fully guarantee adequate compliance with that safeguard. The fullest compliance would include a reasonable degree of satisfaction of the authors’ interests in the valorization of their work by pub-

programme of the Commission in the field of copyright and neighbouring rights. Follow-up to the Green Paper’ COM (90) 584 final. 27 Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC (Text with EEA relevance) [2019] OJ L130/92. 28 Cf. ‘Commission Staff Working Document Impact Assessment on the Modernisation of EU Copyright Rules Accompanying the Document Proposal for a Directive of the European Parliament and of the Council on Copyright in the Digital Single Market’ COM (2016) 593, 6. 29 UDHR (n 22) art 27.2.

Authors’ moral rights in the Berne Convention

213

lishers. But given the current reluctant atmosphere about moral rights, even in Europe, we postpone that issue to a future discussion and remain on the more positive ground of respect for authors (droits au respect). In short, the author should be granted, even after the alienation of rights to the publisher: (a) the right to withdraw her consent to publish the work; (b) the right to modify the work before the publication of the first edition and any subsequent editions or reprints; (c) the right to have the work withdrawn from the market after the publication of the first or subsequent editions or reprints; (d) by way of analogy, we would add the right to oppose the translation into the language of a country in which has become dominant a political regime, or a cultural milieu, that she considers in serious conflict with the ethical values informing her current cultural and political personality. In the framework of a fair balance of the parties’ legitimate interests, the exercise of such rights of repentance should only be permitted for serious moral reasons.30 And (unless otherwise agreed by the parties) it should be accompanied by the author’s duty to indemnify the publisher both for all expenses incurred, and for any loss of commercial opportunities that her decision to repent might entail.

This condition is laid down by art 142 of the Italian Copyright Law.

30

21. AI machines as inventors: The role of human agency in patent law Brad Sherman 1. INTRODUCTION In recent years, there has been growing concern about the impact artificial intelligence (AI) machines are having on how we live and work. Questions have also arisen about how the law will deal with AI and what impact AI will have on the law. While the status of AI machines as patentable subject matter has been clear for some time (they are treated like other computer-related inventions), following a series of test patents lodged in different jurisdictions to clarify the standing of AI machines as inventors,1 questions have arisen as to whether AI machines qualify as inventors in patent law. In countries where the matter has been litigated, the short answer to this question has been no.2 While the question of whether AI can be an inventor raises ‘glamorous’ questions about agency and invention, these decisions have turned on a straightforward interpretation of the relevant patent statutes.3 This has not stopped commentators from rushing to proclaim the downfall of the patent system. We are told, for example, that ‘artificial intelligence is breaking patent law’4 and that ‘traditional patent law has become outdated, inapplicable and irrelevant with

1 As part of this test case, patent applications (for a food container and a flashing light) were lodged by Stephen Thaler in various countries. A feature of these applications was that they listed an artificial intelligence creative machine owned by Thaler and known as DABUS as the inventor. 2 These include decisions in the UK (Thaler v Comptroller General of Patents Trade Marks And Designs [2021] EWCA Civ 1374); Australia (Commissioner of Patents v Thaler [2022] FCAFC 62); United States (Thaler v Hirshfeld 2021 WL 3934803 (2 Sept 2021) under appeal). The patent was granted in South Africa. 3 Thaler v Comptroller (n 2). 4 Alexandra George and Toby Walsh, ‘Artificial Intelligence is Breaking Patent Law’ (2022) 606 Nature 616.

214

AI machines as inventors

215

respect to inventions created by AI systems.’5 While these accounts rest on a simple historical claim, namely that AI machines create novel and unprecedented problems for the law, they are largely ahistorical. This chapter aims to begin the process of rectifying this oversight. To do this, I examine one of the assumptions that is supposedly being challenged by AI-machines, namely the idea that inventorship in patent law is an exclusively human activity or that ‘[p]atent law is based on the assumption that inventors are human.’6 More specifically, I look at the strategies US patent law used in the early to mid-part of the twentieth century to embrace the non-human agency associated with the generation of chemical compounds and what this means for AI machines as inventors.

2.

CHEMICAL COMPOUNDS AS THE HANDIWORK OF NATURE

In a series of articles written for legal and scientific audiences from 1939 to 1941, Charles E. Ruby, who was a Member of the Massachusetts and US Federal Bars, mounted what was effectively a single-handed and unsuccessful campaign against chemical product patents in the US. Following the publication of an article in Science which set out his basic argument that chemical compounds should not be entitled to patent protection because they were not inventions, Ruby wrote to the readers of the Journal of Chemical Education alerting them to his article with the aim of eliciting ‘criticisms pro and/and or con’ from the readers of the journal as he was preparing an ‘exhaustive treatment of the thesis and [Ruby] want[ed] to ‘incorporate all such criticism in this proposed longer paper’.7 This longer paper eventually emerged as a series of articles where Ruby argued that patents for ‘true chemical compounds’, such as US patent No 644,077 for acetylsalicylic acid (aspirin),8 were an abuse of the patent system, or as he put it, ‘the most preposterous patent monopoly that have ever been foisted upon the public with ... the sanction of some of our courts’.9 While Ruby accepted that true chemical compounds were ‘indubita-

5 Shlomit Ravid and Xiaoqiong Liu, ‘When Artificial Intelligence Systems Produce Inventions: The 3A era and an alternative model for patent law’ (2018) 39 Cardozo L Rev 2215. 6 George and Walsh (n 4). 7 Charles E. Ruby, ‘Patents for Acts of Nature’ (1939) Journal of Chemical Education 498. 8 Charles E. Ruby, ‘Patents for Acts of Nature’ (1939) 89 Science 387, 388; republished (1939) Journal of the Patent Office Society 538. 9 ibid.

Improving intellectual property

216

bly’ compositions of matter, he felt they constituted a special kind of composition of matter that did not deserve to be protected. The reason why Ruby believed product patent protection should not be available for chemical subject matter was because they were ‘not “inventions” as defined … in the patent law in the United States’.10 Rather, chemical compounds were ‘quintessentially discoveries’.11 For Ruby, an invention was ‘a specifically human affair’ that evolved out of the inner consciousness of its creator who then embodied it in a tangible substance: the immaterial (conception) was created by the human inventor and then given shape in a material tangible form. As he said, an invention was: necessarily a creating or contriving by man – some things or some actions or series of actions performable upon materials that man can, and does, make or perform – in short, a purely human accomplishment; it is above all not something that nature, and only nature, can create.12

Here, Ruby drew upon the comment of the Supreme Court in United States v Dubilier Condesor Corporation that invention is the ‘result of an inventive act; the birth of an idea and its reduction to practice; the product of original thought; a concept demonstrated to be true by practical application or embodiment in tangible form’.13 Given that inventions were conceptions that ‘evolved from the inner consciousness of “inventors” and embodied in a tangible substance’, they were not only predeterminable and predictable, the conception also necessarily preceded the embodiments chronologically.14 For Ruby, for something to qualify as an invention, it was necessary to be able to show that the human agent had exercised ‘substantial control’ in its development:15 without which there could be no ‘true’ reduction to practice of the alleged invention.16 While ‘the role of the discoverer is essentially a passive one, for the discovery itself is never the creation of the discoverer, who merely

10 Charles E. Ruby, ‘Are True Chemical Compounds, As Such, Inherently Unpatentable Subject Matter: Part I’ (1940) Temple University Law Quarterly 27, 31. 11 Charles E. Ruby, ‘Are True Chemical Compounds, As Such, Inherently Unpatentable Subject Matter: Part II’ (1941) Temple University Law Quarterly 321, 335. 12 Ruby (n 8) 388. 13 US v Dubilier Condesor Corporation 289 US 178, 53 Sup Crt 554 (1933). 14 Ruby (n 11) 335. 15 Ruby (n 10) 50. 16 ibid.

AI machines as inventors

217

observed it in his act of discovery’,17 in contrast, the role of the inventor was ‘essentially an active one’.18 As Ruby said: the inventor creates or contrives to create his invention according to a conception thereof evolved by him out of his inner consciousness. This doctrine implies that the inventor knows exactly what he is inventing, that he truly participates creatively in the act of inventing. He actually imparts to his invention its existence, he exercises choice, albeit limited in scope, in selecting the appropriate means, materials, operating conditions, etc, in order to effectuate his invention, and he exercises a substantial measure of control over all of the factors of the act of inventing and of his invention itself.19

While Ruby believed that mechanical and electrical innovations satisfied this definition of invention, he considered this was not the case with chemical compounds. As he said, if ‘there is one thing that man cannot “invent”, it is a true chemical compound’.20 Ruby’s argument against protection largely turned on how he saw chemical compounds. Drawing on the law of ‘the constant composition of chemical compounds’ developed by the French chemist Joseph Proust in 1794, Ruby argued chemical compounds were unchanging ‘invariants’ that were ‘predetermined by violations of nature’;21 they were ‘unique molecularly-homogenous substances of invariant composition and fixed properties, unalterable by man’.22 Although the processes by which chemical compounds were ‘first ushered into existence’ were ‘almost invariably … man contrived’,23 Ruby believed chemical compounds remained the product of the handiwork of nature. While a chemist could select the appropriate reactive materials and ‘contrive suitable conditions of operation which yielded novel chemical compounds’, the resulting compounds were always expressions of the work of nature rather than that of the chemist.24 This was because if ‘properties of matter alter when substances are subjected to treatments in man-contrived processes, such alterations of properties of matter are not caused by man himself, but occur in obedience to the laws of nature’.25 As Ruby said, the intense sweetness of saccharine did not evolve out of the inner consciousness of its ‘inventor’ Professor Ira Remsen in 1879. Rather the unique ensemble of properties ‘embodied in ibid 36. ibid. 19 ibid 37. 20 Ruby (n 8) 388. 21 Ruby (n 11) 336. 22 Ruby (n 8) 388. 23 ibid. 24 Ruby (n 11) 334. 25 Ruby (n 10) 60. 17 18

218

Improving intellectual property

matter’ and known as saccharin was ’qualitatively and quantitatively indissoluble’26 … ‘nature, and only nature, can create and embody in, or impart to, matter those properties intrinsic to matter itself’.27 That is, it was nature, not Remsen, that created saccharin.28 The fact that chemical compounds were ‘determined, not by the will of man (the chemist), but by the violation of nature’ meant they could not ‘evolve out of the inner consciousness of the chemist’.29 The invariant nature of chemical compounds also meant that chemists were unable to ‘exercise even the most limited choice in determining the actual structure of any novel true chemical compound’.30 Because chemical compounds were the ‘handiwork of nature’31 rather than the result of the work of a human agent, Ruby said it was ‘fatuous’ to speak of someone inventing a chemical compound.32 The upshot of which was that chemical compounds were nothing more ‘than an ensemble of unpatentable properties of matter, created and quantitatively embodied in tangible substances solely by nature’. As chemical compounds were ‘inherently a principle of nature, or an ensemble of principles of nature’ they were ‘unpatentable subject matter’.33 To accept chemists as inventors, for Ruby, was to give them an attribute of the Deity.34 Much like contemporary accounts of the challenges AI machines pose for patent law, for Ruby the problems posed by chemical compounds was that because chemical compounds were the product of non-human agency, they did not qualify as inventions.

3.

NON-HUMAN AGENCY AND CHEMICAL COMPOUNDS

Overall, the response to Ruby’s argument that chemical compounds did not qualify for patent protection because they were not inventions was muted. To the extent that his arguments were addressed, they certainly did not get any traction with patent examiners, judges, or policy makers.35 While Ruby’s arguments against product patent protection for chemical compounds were Ruby (n 11) 340. ibid 342. 28 ibid. 29 ibid 326. 30 ibid 333. 31 ibid 327. 32 ibid. 33 Ruby (n 10) 39. 34 ibid 58. 35 Federico said that Ruby’s ‘argument that all new compounds exist implicitly or potentially in nature, and hence cannot be “invented”, but only discovered, has been presented in an endeavour to make the prohibition appear more logical’. P. J. Federico, 26 27

AI machines as inventors

219

unsuccessful, nonetheless they are still important as they highlighted a key question: namely, how was it that chemical compounds, with all their specific and unique qualities, were able to be treated as inventions? For the most part the standing of chemical compounds as inventions was ignored. Instead, commentators were able to rely on the inertia that arose because chemical compounds had been part of the patent system since its outset and that ‘new compounds and results of chemical reactions had been continuously patented’,36 to simply assert that chemists were inventors.37 In line with this, and in contrast to Ruby who saw the development of chemical compounds as inherently non-patentable discoveries, there was also a willingness to accept ‘discoveries’ as patentable subject matter.38 This is reflected in the comment in Badische Anilin and Soda Fabric v Kalle that in chemistry, where ‘prevision was not certain’ and ‘progress … was reached largely through experiment’, patents were ‘often upheld where the inventor stumbles upon a discovery’.39 Another tactic that enabled chemical compounds to be treated as inventions was to shift the focus of attention away from the role chemists played in the development of compounds, as Ruby had done, to focus on chemical compounds as ends in their own right. This approach was used, for example, by Professor of Physical Chemistry at the Pennsylvania State College, J. H. Simons, to challenge Ruby’s argument that chemical compounds were not human creations but ‘entirely acts of nature’, saying that in this regard Ruby was ‘entirely incorrect’. In a letter written to Science, Simons argued that although many chemical compounds were naturally occurring; the synthetic methods of chemistry enable many very useful pure substances to be produced that are not found in nature. The conception and eventual construction of new and useful chemical compounds are accomplished only and entirely through the

‘Patents for New Chemical Compounds’ (1939) 21 Journal of the Patent Office Society 544, 546. 36 ibid 547. 37 ‘[A]lmost every research chemist is an inventor in the legal sense, in that he is making patentable improvements’. Harold E. Potts, Patents and Chemical Research (University Press of Liverpool 1921) 141. 38 A ‘chemical invention is what the patent statute refers to as a patentable discovery as distinguished from inventions which are mechanical in nature’. Edward Thomas, ‘An Outline of the Law of Chemical Patents’ (1927) 19 Industrial and Engineering Chemistry 176, 177. 39 94 Fed 163 (CCSD NY 1899). See also Dow Chemical Company v Coe 545 OG 905, 55 USPQ 166 (1942).

Improving intellectual property

220

application of human mental and physical activity. This most certainly constitutes invention.40

While Ruby had focused on the relationship between inventors and their outputs (requiring the invention to emanate from the inventor and that the inventor needed to exercise control over the shape, function or form of the resulting invention), Simons sidestepped the question of the role the chemist played in creating a compound to focus on the novelty of the compound. Justice Joseph McKenna was even more explicit about this in the Diamond Rubber decision when he said a ‘patentee may be baldly empirical seeing nothing beyond his experiments and his results; yet if he added a new and valuable article to the world’s utility he is entitled to the rank and protection of an inventor’.41 Another reason why chemical compounds were accommodated as inventions within patent law related to the way the labour of the chemist was viewed. This is evident in the writings on chemical compounds by the influential nineteenth century treatise writer, William Robinson. For Robinson, inventions were ‘a class of agencies employed by man for the production of physical effects’.42 Like Ruby, Robinson believed that every ‘invention has its origin in man. It is his addition to the agencies already existing in nature, and owes to him its generation, its birth, and its application to the purposes for which it was designed’.43 While Robison and Ruby both shared a belief that invention was the product of the agency of the human inventor, they differed in terms of how agency (and thus invention) was viewed.44 In particular, while Ruby’s view of agency was modelled on mechanical invention (an approach Robinson called ‘crude notions of physical agencies’) in contrast Robinson, who was writing some 40 years before Ruby, argued that the idea of agency, and with it the invention, had to change to accommodate new types of scientific and technical innovation. For Robinson, a chemical compound was ‘a force applied’ which depended on ‘the union and co-operation of certain other forces which are manifested through the properties of the individual ingredients’. While Ruby’s belief 40 J. H. Simons, ‘Patents for Chemical Compounds’ (June 9, 1939) Science 535; republished as ‘Compounds as Inventions’ (1939) 21 Journal of the Patent Office Society 542. 41 Diamond Rubber Company of New York v Consolidated Rubber Tire Company 220 US 428, 435, (1911). 42 William C. Robinson, The Law of Patents for Useful Inventions (Volume 1, Little Brown and Co, 1890) 115. 43 ibid. 44 ‘In asserting that chemical compounds cannot be inventions, Dr. Ruby proposes to narrow a meaning of the word “invention”’. Federico (n 35) 549, note 10.

AI machines as inventors

221

in the invariant nature of chemical compounds meant that chemists were unable to exercise any creativity in the development of new compounds, Robinson argued that a chemist be creative. As he said, the ‘inventive act by which the composition is created … consists in the discovery of the ability of these elemental forces to unite in the production of the new force, and the contrivance of such a method of commingling them as will develop the new force desired’.45 For Robinson, the ‘invention lay in the (act of) relation,’ in ‘the creative act of bringing components together’ to unleash ‘some new or as yet unawakened energy’.46 That is, Robinson was willing to accept that the chemists’ art consisted of ‘managing populations of molecules in order to bring about the desired reactions’.47 At the same time, Robinson was willing to accept that the chemist’s art also consisted in identifying when a valuable new compound had been created. As he said: ‘the patient labours of a lifetime, the unpremeditated flash of an original thought upon the mind, the revelation made to an appreciative intellect by some trivial accident all stand upon equal footing both in character and merit and are entitled to the same reward’.48 Much like the French chemist Antoine Lavoisier, who saw elements as ‘actors in chemical operations’ that were ‘defined by how they act and react in a network of relations with other chemical actors’,49 Robinson saw the process of inventing a chemical compound as a collaborative or joint effort between the chemist and nature. The joint-invention of chemical compounds (which Ruby recognised if only to ridicule)50 occurred either when an inventor ‘sets into operation certain forces acting on certain materials and so conditions the force in action that their resultant produces a new product in consequence of

Robinson (n 42) 412. ibid 228. 47 In this context, we can think in ‘terms of elements’ (which were seen as actors in chemical operations which were defined by how they act and react in a network of relations with respect to other chemical actors) ‘in so far as these abstract entities can serve as useful working tools’. Bernadette Bensuade-Vincent and Jonathan Simon, Chemistry: The Impure Science (2nd edn, Imperial College Press 2012) 202. 48 Robinson (n42) 127. 49 Bensaude-Vincent and Simon (n 47) 203. 50 This was because to be valid a patent had to be signed and sworn by every ‘first and true inventor’: which was not possible here. Ruby (n 11) 349. Ruby also spoke of nature as sole inventor: if chemical compounds are solely the handiwork of nature, and are not in the slightest measures, the products of man’s inventive ability, then, by inexorable logic, we arrive at the faintly amusing conclusion that nature, or whatever entity directs the scheme of things is the sole inventor of each and every true chemical compound. Ruby (n 11) 349. 45 46

222

Improving intellectual property

intra-molecular changes, he has made a patentable invention’,51 or when the inventor recognised those new products. By configuring invention as a process whereby the chemist could work alongside nature in the generation of chemical compounds, Robinson was able to justify the recognition of chemical compounds as patentable inventions. The reconfiguration of the invention as a way of accommodating chemical compounds proposed by Robinson was adopted by the Court of Custom Patent Appeals in Smith v Bousquet52: a dispute about the priority of an invention for the use of a chemical compound as an insecticide. Drawing on Robinson, the court said that in the ‘experimental science of chemistry’ the ‘element of unpredictability frequently prevents a conception separated from actual experiment and test. Here the work of conception and reduction to practice goes forward in such a way that no date can be fixed as subsequent to conception but prior to reduction to practice.’53 This meant that the fact that someone had formed a hypothesis that a group of chemical compounds might exhibit insecticidal activity did not matter. This was because conception did not occur until the inventor successfully completed experiments that showed the feasibility of the idea. As a result, in this context conception and reduction to practice were inseparable. Following Robinson’s lead, the Court saw the invention of a chemical compound as a collaborative effort between the chemist and nature.

4. CONCLUSION As this account has shown, patent law used several different techniques to accommodate the idiosyncrasies of chemical subject matter. While accepting that discoveries were potentially patentable, patent law also shifted its attention away from the nature of the relationship between inventor and invention (or chemist and chemical compound) to focus on the invention as an end in its own right. Another strategy used to accommodate chemical inventions was to reconfigure the process of invention so that it was seen as a collaborative or joint effort between chemist and nature. My reason for highlighting how patent law accommodated the non-human agency associated with the development of chemical compounds is not to suggest that this might act as a precedent for how patent law will treat inventions created by AI machines (although it may offer some useful lessons). Nor is it to suggest that AI machines do not pose challenges for the law. Rather the 51 George S. Ely, ‘Chemical Inventions and Discoveries’, Paper read before the Examining Corps of the United States Patent Office, (Washington DC, 23 Nov 1916) 18. 52 Smith v Bousquet 111 F2d 157 (CCPA 1940), 45 USPQ 347. 53 ibid 159 (quoting the opinion of Examiner of Interferences).

AI machines as inventors

223

purpose of looking at how patent law dealt with the idiosyncrasies of chemical subject matter is to show that inventorship in patent law is not an exclusively human activity and that patent law has been willing to accept that non-human agency plays a role in the creation of inventions. While the idea that inventions may be the product of non-human agency may be novel when it comes to machine-based subject matter, it has long been a part of the way that patent law engages with chemical compounds. (It has also figured prominently in the way patent law interacted with biological subject matter.) Instead of rushing to look for policy solutions to deal with the perceived problems created by AI technologies, it might be more beneficial to pause and consider what is at stake in these debates. A useful starting point might be to acknowledge that what is in issue is how we represent and think about patent law. More specifically, what is at stake is the assumption that machine-based inventions and the accompanying mechanical jurisprudence define patent law: it is Watt’s steam engine rather than Hofmann’s formaldehyde or Burbank’s Santa Rosa plum that are taken as quintessential subject matter. While the debates about whether AI machines qualify as inventors may eventually be resolved by non-glamorous (but important) bureaucratic considerations, one of the unexpected benefits of these debates is that they might lead to a more nuanced and accurate understanding of patent law. And that would not be a bad thing.

22. Artificial inventors Daniel Gervais 1. INTRODUCTION As everyone can plainly see, Artificial Intelligence (AI) is the technology that will redefine all our tomorrows. It is poised to have a profound impact on basic human processes (cognition) and more complex human systems (e.g., governance, politics). Many countries want to ride the highest possible wave of AI development and become leaders in the broad field of AI, or at least part of it. In implementing this lofty objective, two policy goals enter into apparent conflict.1 The first goal is to develop an industrial policy designed to grow AI industries and research at all costs, ideally by seeding the kind of innovation cluster that is often the most effective form of innovation accelerant.2 In doing so, policy makers may also harbor the dubious hope of developing some form of control or even a sense of ownership over AI technologies. This leads to the second policy goal, which may conflict with the AI acceleration goal, namely the need for humans to develop and grow, that is, at the most basic level, to continue their evolution. Education (primary, secondary, tertiary but also lifelong learning outside of formal education) is but one facet of this second goal, which is both multi-layered and highly consequential. It is through education that citizens can more fully participate in public life and form part of a well-working polity. As AI development is accelerated and AI technology used to create more of the news, nonfiction, and (increasingly) fiction and art given to us to consume, and rank-order what we see, watch or listen to online, the two goals may pull in opposite directions.

1 At the risk of irritating the reader the footnotes contain many references to my prior work. As this is a short chapter, which adds to but also forms part of a body of work in this area, I provide links to readers who wanted to see more on some of the areas on which I tried to contribute. 2 See Daniel Gervais, Of Clusters and Assumptions: Innovation as Part of a Full TRIPS Implementation, 77 Fordham L. Rev. 2353-2363-2368 (2009).

224

Artificial inventors

225

When examining the relationship between AI and intellectual property (IP) more specifically, one may ask whether those two goals clash. They do. Accelerating the deployment of AI in the literary and cultural space, which seems inevitable, will replace several human creators, novelists, journalists, songwriters and others. Regulators are mostly powerless to stop the technology—and in any event stopping any technology runs counter to the deeply-embedded Western ethos of free enterprise, regulators cannot regulate AI; they can merely try to regulate some aspects of the behavior of the humans who build and deploy it.3 Set against this rather gloomy backdrop, there is an IP-specific policy decision we can make: Not granting copyright protection to AI productions because doing so would put the full force of the market behind the acceleration of the replacement of human creators.4 I assert that we can and should decide whether that is a good idea or not. Granted, even without copyright protection AI developers may flood the market with free (both copyright-free and free as in free beer, as Linus Torvald might say) literary and artistic material in hopes of killing the competition (human creators) just as a popular mobile ride-hailing company tried to put an end of the taxi industry. Which news outlet owner or music label wouldn’t be happy to be able to stop paying human authors, and get rid of all their moral rights, reversion rights, droit de suite and other free market horrors? But let us be careful, for this is but phase I. Phase II is to start charging higher prices once human literary and artistic craftspeople, like human cab drivers, have become a matter for museologists. That risk is very real and explains why, in my view, we should not pour the fuel of copyright protection on the fire because giving copyright protection to productions without human cause is pregnant with risks of irreparable damage to human development.5 In this brief chapter, I will turn the spotlight towards a different area of IP, namely patents, to see whether the same rationale applies. Let me disclose 3 See generally Daniel Gervais, Towards an Effective Transnational Regulation of AI, 36 AI & Society (2021). 4 See Daniel Gervais, The Machine as Author, 105 Iowa L. Rev. 2053 (2020) (reviewing arguments for and against protecting AI-produced literary and artistic material and concluding that both doctrinally and normatively this protection is unsound.) For a different analysis leading to a similar conclusion, see Jane C. Ginsburg and Luke Ali Budiardjo, Authors and Machines, 34 Berkeley Tech. L.J. 343 (2019). 5 I develop the idea that copyright should not be granted to productions that do not have a human proximate cause in Daniel Gervais, The Human Cause, in Research Handbook on Intellectual Property and Artificial Intelligence (R. Abbott, ed. 2022). See also Shyamkrishna Balganesh, Causing Copyright, 117 Colum. L. Rev (2017) (developing a theory of authorial causation connecting human agency to the expression embodied in a copyrighted work).

226

Improving intellectual property

my bias, in case it isn’t clear enough from the above. I have always assumed, perhaps incorrectly—some might hasten to add naively—that many IP scholars do what they do because they believe that a properly calibrated IP regime ultimately can foster human development. They do not believe that technological change qua technological change (keeping in mind that change and progress are not synonyms) is not the true aim of IP done well.6 The idea behind IP is to increase the percentage of change that constitutes progress, for example, a new and effective cancer treatment. While I do not want to put unintended words at the end of her pen, I believe that Professor Rochelle Dreyfuss is among those who have used human progress, not mere technological novelty, as their lodestar.

2.

THE PURPOSE OF IP PROGRESS

Take Dreyfuss’s provocatively titled piece, Does IP Need IP?7 In it, she considers areas of human activity in which protection from free-riders (by granting a form of exclusivity as an IP right) does not seem to be necessary, from fashion to stand-up comedy, magic, cuisine, and software to the Mertonian communalism that pervades (or at least used to pervade) academic practices.8 Her normative sextant in that article is set clearly on the need for human creative endeavors to flourish and it is within that framework that she rightly questions whether exclusive rights are always the best way forward.9 Or consider Dreyfuss’s discussion of how the human rights framework does not mesh well with patents.10 In that piece, she refutes the theory according to which patents should be viewed as forming part of this framework in part because other societal interests—some of which could in fact be protected as 6 Change happens no matter what, progress not necessarily. The United States Constitution is a useful reminder and a rather unique constitutional document in that it identifies the purpose of IP, namely ‘the Progress of Science and Useful Arts’ U.S. Const, Art. 1, §8, cl. 8. 7 Rochelle Cooper Dreyfuss, Does IP Need IP? Accommodating Intellectual Production Outside the Intellectual Property Paradigm, 31 Cardozo L Rev. 1437 (2010). 8 See id at 1437. She also notes the fragility of many of those norms, however. See id. at 1458–1459. 9 See id. 10 See Rochelle Cooper Dreyfuss, Patents and Human Rights: Where is the Paradox? Molengrafica Series,, N.Y.U. Law and Economics Research Paper No. 06-38, available at https://​ ssrn​ .com/​ abstract​ =​ 929498. She fired another salvo a decade later in Rochelle Cooper Dreyfuss, Patents and Human Rights: The Paradox Reexamined in Intellectual Property And Access To Science And Culture: Conflict Or Convergence? (C. Geiger, ed. 2016), Available at https://​ ssrn​ .com/​ abstract​=​2654301.

Artificial inventors

227

human rights—might clash with a high level of patent protection. (I would add to this that, last time I checked, human rights were for humans, not machines.11) In the piece, Dreyfuss quotes Thomas Jefferson: That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation.12

Jefferson also wrote that ‘[s]ociety may give an exclusive right to the profits arising from [inventions], as an encouragement to men to pursue ideas which may produce utility.’13 With those words echoing deep in the US constitutional landscape, it is difficult and perhaps insanely reckless to read the Progress Clause as suggesting that technology should be developed for its own sake, even if that means—to turn the knob all the way—killing every human on the planet. Put differently, yes, of course patents are best viewed through a utilitarian prism, but which kind of utility? What did Jefferson have in mind? And what does Dreyfuss consider to be optimal utility? Before risking an answer to the latter question, a third example of Dreyfuss’ scholarship may be useful: Her article coauthored with Professor Susy Frankel on the assetization of IP.14 In that article, the co-authors note that: intellectual products have strong cultural, competitive, and educational dimensions as well as health, safety, and environmental implications. How far the interest in

11 According to the United Nations, ‘[h]uman rights are rights inherent to all human beings.’ United Nations, Global Issues: Human Rights, online: online https://​www​.un​ .org/​en/​global​-issues/​human​-rights. 12 VI Writings of Thomas Jefferson, at 180–181 (Washington ed.) (emphasis added), cited in Graham v. John Deere, Co., 383U.S. 1, 9 (1966). One should read Professor Dreyfuss’s take on the Framers’ view of IP. See Rochelle Cooper Dreyfuss, A Wiseguy’s Approach to Information Products: Muscling Copyright and Patent into a Unitary Theory of Intellectual Property, 1992 Sup. Ct. Rev. 195, 231–233 (1992) (noting for example that ‘At the time of the Constitutional Convention, exclusive rights were not conflated with the notion of monopoly because theorists understood monopolies as privatizing matter already in use by the public while exclusive rights were for newly developed material.’) 13 Jefferson, Id [emphasis added]. 14 Rochelle Cooper Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law is Reconceptualizing Intellectual Property, 36 Mich. J. Int’l 557 (2015).

Improving intellectual property

228

protection must give way to these other interests has been highly contested as has been the best approach to safeguarding public access imperatives.15

As this quote illustrates, the calibration of IP is all about its impact on human life and flourishing, rather than maximizing the growth of one or more technologies for their own sake, as it were.16 The ‘rationality’ of doing science for science (or because we are discussing patents, I should say technology for technology) is perhaps not quite it, as Dreyfuss noted in the conflict between exclusive rights in pharmaceuticals and access to those products in developing countries. We do not want IP just to develop new drugs that only the wealthiest tranche of humans can access. This over-arching IP policy goal may seem obvious, but it probably needs to be rearticulated as AI takes over human efforts, or at least becomes a hugely important assistant in many forms of human-led research and development (R&D). On both sides of the Atlantic and in other parts of the word, a broad and solid foundation exists on which to erect the edifice of a philosophy of science providing moorings for future AI development and growth. In a nutshell, I suggest (and I would like to believe that Dreyfuss would agree on the broad outline at least) that both the existence and scope of IP rights in AI or on products of AI should be guided by the lodestar of human progress, not just the acceleration of AI or growth of Silicon Valley fortunes.17

3.

AI, PATENTS, AND PROGRESS

In the remaining pages, I first provide arguments against the grant of patents on AI inventions, using the traditional patent bargain as my starting point. Second, I make a somewhat novel argument about why there could be a high risk in protecting inventions without a human cause, for a reason that has not emerged before in human history. My aim is not so much to convince once and for all (for who could do so?) that patents on AI outputs are a bad idea as to spark a necessary conversation. Before tackling the two topics, let me first sketch out for illustrative purposes the role AI plays in a few areas in which AI ‘invention’ is happening. AI

Id. at 561. See Daniel Gervais, IP Calibration, in Intellectual Property, Trade And Development, 2d ed. (D. Gervais, ed.) 86 (2014). 17 Many patents are granted on digital technologies simply because venture capital forms, especially in Silicon Valley, expect to see a patent (or at least an application) when they look at a start-up. See Darian M. Ibrahim, Financing the Next Silicon Valley, 87 Wash. U. L. Rev. 717, 750 (2010) (‘[P]rivate VCs look to a start-up’s patent portfolio as a proxy for its quality.’). 15 16

Artificial inventors

229

(typically in the form of machine-learning or deep learning) is now routinely used to accelerate and reduce the costs of pharmaceutical research, e.g., by performing in silico research.18 AI machines can find hidden patterns within large datasets and automate many predictions.19 Outputs from AI in pharmaceutical research include disease diagnosis, prediction of drug efficacy,20 and support for drug design.21 AI machines can choose which molecules possess suitable characteristics to address biological targets of interest.22 AI can identify the optimal chemical structures to reduce toxicity and satisfy metabolic requirements, both of which can be costly and data-intensive processes.23 AI can improve personalized medicine based on genetic markers.24 AI’s potential to identify novel drugs that human researchers alone cannot detect has attracted investment from both start-ups and established pharmaceutical companies.25 Also noteworthy, in what was perhaps a publicity stunt, Google announced that its AI machines can both make new inventions and apply for patents.26 What could possibly be bad about any of those examples?

18 See Nic Fleming, How Artificial Intelligence Is Changing Drug Discovery, 557 Nature 55 (2018). 19 See generally Ajay K. Agrawal, Joshua S. Gans, & Avi Goldfarb, Prediction Machines: The Simple Economics Of Artificial Intelligence (Harv. Bus. Press, 2018). 20 See Gregor Guncar et al., An Application Of Machine Learning To Hæmatological Diagnosis, 8 Scientific Reports 411 (2018), online: https://​bit​.ly/​3qrclyS. 21 See Hongmin Chen et al., The Rise Of Deep Learning In Drug Discovery, 23 Drug Discovery Today, 1241–1250 (2018). 22 See id. 23 See id. 24 See Kit-Kay Mak & Mallikarjuna Rao Pichika, Artificial Intelligence In Drug Development: Present Status And Future Prospects, 24:3 Drug Discovery Today 773 (2019). 25 See Lou Bowen & Lynn Wu, Artificial Intelligence And Drug Innovation: A Large Scale Examination Of The Pharmaceutical Industry 2 (2020), online: https://​ papers​.ssrn​.com/​sol3/​papers​.cfm​?abstract​_id​=​3524985 26 See Rose Hughes, Deepmind: First Major AI Patent Filings Revealed, IPKat, June 7, 2018, online http://​ipkitten​.blogspot​.com/​2018/​06/​deepmind​-first​-major​-ai​ -patent​-filings​.html. The reverse use of AI is true, namely, to defeat patent applications based on obviousness (to an AI expert) or novelty, by massive preemptive public disclosure of novel subject matter together with its utility. On the former, see Ryan Abbott, Everything Is Obvious, 66 UCLA L. Rev. 2, 40 (2019). On the latter issue, see Daniel Gervais, Exploring the Interfaces Between Big Data and Intellectual Property Law, 10:3 J. Intell. Prop., Inf. Tech. & E-Comm. L. (2019), online: https://​www​.jipitec​.eu/​ issues/​jipitec​-10​-1​-2019/​4875.

230

Improving intellectual property

The patent bargain narrative provides a normative grounding for patents, despite the fact that neither patent examiners nor courts need to have societal utility in mind when deciding whether to grant a patent or confirm its validity. Jeffersonian utility has long been jettisoned from the patent system—at least in the United States—as any stand selling fake orange juice at the closest shopping mall can attest.27 Even if we set utility aside, however, the core of this bargain (or social contract) is that the grant of a patent makes sense when the public interest is served by the grant of an exclusive right to a new product or process that would not otherwise exist and that normally resulted from significant time, expense or effort. This is the fundamental role of the patent incentive. The ability of AI machines to make predictions based on current data is generally far superior to that of humans—though humans can sometimes make predictions in ways they do not fully understand such as intuition. What is the role of the patent incentive in that context? We may need incentives to develop new AI systems that can ‘invent’ or assist humans in R&D (e.g., the aforementioned in silico research). Granting rights on those systems is a valid proposition, but the point I am making here is to ask whether we should grant what could be termed ‘filial’ or second-degree patents on inventions produced by the products or processes protected by a first-degree (aka, what was ‘normal’ up to now) patent on the AI machine or process. Once an AI machine has been created and rendered operational, why would we grant exclusive rights on its output? Surely in many cases, some knowledge or product of value will be produced, but why should we default to the propertization and grant of exclusive right on anything of value if the incentive is not necessary? And if we do grant such rights, then to whom? Add to this policy conundrum the potential creation by AI machines of variations, too many to count, on a particular existing technology that could, if all were patented, be used to block their use, or lead to massive trolling. For whose benefit? While admittedly this is a mere impressionistic picture, there seems to be no current evidence of a lack of investment in AI due to low level of IP protection in AI outputs, especially in light of the uncertainty about the protection of AI

27 On the notion of Jeffersonian utility, see supra note 12. As to the reference to the orange juice stand, I am referring to the Federal Circuit genuinely bubbly take on utility in Juicy Whip, Inc. v. Orange Bang, Inc., the luminous case in which the court famously declared with evident pride (referring to a prior decision in the same case: ‘this court in Juicy Whip I rejected Orange Bang's contention that the claimed invention lacked utility under 35 U.S.C. §  101 because its purpose was to deceive the public’—in case we didn’t get it the first time. Juicy Whip, Inc. v. Orange Bang, Inc., 292 F.3d 728, 745 (Fed. Cir. 2002).

Artificial inventors

231

inventions.28 Should we go back to basics and ask whether granting patents not on the outputs of AI systems will actually get us to a better place even if the analysis is limited to ‘pure innovation’—leaving aside the broader human development yardstick suggested above? The word uncertainty may have caught the reader’s eye. Is there any such uncertainty? As of 2022, courts in Australia, the UK, and the United States, as well as with the European and US patent offices have decided that a machine cannot be a named inventor on a patent application.29 In that context, the DABUS cases (or provocations?), have been a useful adjuvant to the debate about patenting AI outputs. Though as of this writing, the highest courts in the above jurisdictions still have to rule on the issue, one may hope that those courts eventually will get to the same (correct) conclusion as lower courts. Ideally, they would make the point even more clearly: Invention, as a matter of patent law, is a human activity. Existing court opinions injected a small degree of uncertainty by prohibiting the naming of a machine as inventor. Informed by this relatively limited uncertainty, many patent applicants are likely not disclosing the role of AI systems in producing inventions on which they are seeking patents. But if the principle is that a machine cannot be an inventor as a matter of patent law, then naming a proxy human who in fact did not co-invent amounts to making a false statement in a patent application. If this surfaces during litigation (in the United States, typically during the discovery phase), then that patent may be invalid.30 That is the real uncertainty. A second wave of AI-related patent cases (DABUS being the first wave) regarding the validity of the practice of naming human proxies on patent applications is the one to watch. The cases in which no significant human inventorship exists may be few and far between now, but technology is progressing quickly, and law will inevitably follow. Quite welcome at this juncture is the decision by the Australian Federal Court

28 Some venture capitalists might expect a return on patent exclusivities. See supra note 17. See also Jeff Loucks, Susanne Hupfer, & David Jarvis, Future In The Balance? How Countries Are Pursuing An AI Advantage Insights From Deloitte’s State of AI In The Enterprise, 2nd Edition survey, Delotite, May 1, 2019, online: https://​www2​ .deloitte​.com/​us/​en/​insights/​focus/​cognitive​-technologies/​ai​-investment​-by​-country​ .html. 29 In the United States, see Thaler v. Vidal, 2022 WL 3130863 (Fed. Cir. 2022).). In the UK, see Thaler v. Comptroller-General, UK Court of Appeals, 21 Sept. 21, 2021. An Australian decision on the same point is discussed below. 30 This is a principle as old as patent law itself: ‘It is obvious, therefore, that if the patentee has not invented the matter or thing of which he represents himself to be the inventor, the consideration of the Royal grant fails.’ R v. Wheeler 106 ER 392, 395 (1819).

Improving intellectual property

232

of Appeals, which essentially found that an inventor must be human. In what is music to my ears, the court wrote: The inventor […] is the person who is responsible for the ‘inventive concept’. Such an inventor is the person, or one of the people, who materially contributes to the inventive concept as described in the specification and the subject of the claims […] Identification of the inventor […] is of central relevance to the operation of the Patents Act and is intertwined with concepts material to the validity of patent applications and patents. […] If a relevant misrepresentation is material to the grant, the patent may be revoked.31

In centuries of debates about patents, we have asked a central, utilitarian question, as explored in the preceding paragraphs: What do we, as potential users of new products and processes, get by granting an exclusive right to x in exchange for the disclosure of invention y? We should keep asking that question, indeed with renewed force as applications concerning AI-made inventions pile up in examiners’ inboxes in patent offices all around the world. But we must now ask a second, novel question. We must, for the first time, ask whether we should grant patents on ‘inventions’ by a new ‘species,’ our first ever competitors on the technological stage as producers of new knowledge, products and processes. We must ask not just whether patents are good policy because a new product or process will improve our condition (as consumers or users), but also whether it makes sense to surrender our monopoly as the only species with the higher mental faculties (up to this point in human history) able to produce inventions. Call it the producer’s perspective. Machines are not incentivized by money. Exclusive rights mean nothing to them. They can do science, technology, or both. They can replace human researchers in both copyright and patent, up to a point. There is a reason we picked humans to be inventors, and only humans, and it is not (just) the patent bargain. It is the human bargain.

4.

BACK TO THE FUTURE OF PROGRESS

I, for one, do not for a second believe that Dreyfuss will spend this period infelicitously called retirement on a lounge chair sipping margaritas. If she tries, I give her few weeks tops, and she will get bored. Why? Because I know her enough to know that she wants to pursue higher goals, both for the sake of her own development and in order to make contributions to our collective development. This is an essential, nay, ontological human function. We should

Commissioner of Patents v. Thaler [2022] FCAFC 62, at paras 100–102.

31

Artificial inventors

233

think clearly before we use the force of patent law to delegate it and replace humans in a space that has fundamentally defined us as a species.

PART VI

EXPRESSIVE GENERICITY AND FREEDOMS

23. Patent exhaustion as a canon of expressive freedom Dan L. Burk1 1. INTRODUCTION Intellectual property poses a threat to expressive freedom. This tension has been well recognized and extensively studied in the literature on copyright law.2 Copyright is explicitly directed to expressive works, so the impediments to expressive freedom entailed in copyright exclusivity are fairly apparent. Numerous courts and commentators have explored this conflict, often looking to copyright’s user privileges and exceptions as concessions to accommodate expressive freedom.3 In particular, in the United States, copyright’s fair use doctrine has repeatedly been touted as a mechanism to ameliorate the American First Amendment’s otherwise capacious prohibition against governmental regulation of speech.4 Only very recently has this same tension been recognized in the law of utility patents, which ostensibly extends only to technical subject matter, and not to expressive subject matter.5 But as Professor Rochelle Dreyfuss recognized many years ago, copyright and patent are not distinct categories

1 I thank Zackory Burns, Alex Camacho, Seth Davis, Jonathan Glater, Stephen Lee, and Leah Litman for helpful discussion in the formulation of this chapter. 2 See, e.g., Robert C. Denicola, Copyright and Free Speech: Constitutional Limitations on the Protection of Expression, 67 Cal. L. Rev. 283 (1979); Paul Goldstein, Copyright and the First Amendment, 70 Colum. L. Rev. 983, 983 (1970); Melville B. Nimmer, Does Copyright Abridge the First Amendment Guarantees of Free Speech and Press?, 17 UCLA L. Rev. 1180 (1970). 3 See Eldred v. Ashcroft, 537 U.S. 186 (2003); Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985); see also Michael Birnhack, Copyright Law and Free Speech after Eldred v. Ashcroft, 76 So. Cal. L. Rev. 1275 (2003); Alfred Yen, Eldred, The First Amendment, and Aggressive Copyright Claims, 40 Hous. L. Rev. (2003). 4 Eldred, 537 U.S. at 219–20; Harper & Row. 471 U.S. at 560. 5 See Tun-Jen Chiang, Patents and Free Speech, 107 Geo. L.J. 309 (2019); Dan L. Burk, Patents and the First Amendment, 96 Wash. U. L. Rev. 197 (2018).

235

236

Improving intellectual property

of legal purview.6 Rather, the subject matter of informational goods lies on a continuum that includes patent and copyright, meaning that the two domains inevitably shade into one another.7 Where informational goods are concerned there is no clean way to separate the technical from the expressive, so that digitized expression in particular is likely to run afoul of the patent system. Thus, not surprisingly, the intersection of patents and expression first became manifest in the anomalies surrounding the protection of computer software.8 But once this intersection was recognized, it became clear that patent law impacts a host of devices and processes integral to expression: printing presses, mobile phones, telecommunications protocols, advertising methods, methods of recordation.9 At times a patent may burden expression itself, and at other times it may burden the conduits of expression, but in either case the burden of state-sponsored patent rights on speech cannot be ignored. Moreover, unlike copyright, patent law has few if any user privileges that might readily serve to buffer the impact of patent exclusivity on expressive activity.10 Certainly no analogue to copyright fair use exists in patent law (although the addition of patent fair use has at times been suggested).11 Several patent doctrines, such as experimental use, that might perform some of the same functions have in the United States been almost completely hollowed out by adverse judicial holdings.12 Perhaps due to the naïve assumption that patents, unlike copyright, will never burden expression, patent law is largely bereft of the doctrinal tools needed to blunt its impact on freedom of speech. One of the few doctrinal tools that might remain to accommodate patent law to expressive guarantees is the doctrine of patent exhaustion. The scope and character of patent exhaustion has been in flux, as the subject of a series of recent US Supreme Court decisions. In this chapter I suggest that exhaustion may have a crucial role to play at the intersection of patent law and expressive freedom, paralleling the analysis of user privileges and exemptions in copyright. Moreover, that the US Supreme Court may – probably inadvertently

6 Rochelle Cooper Dreyfuss, A ‘Wiseguy’’s Approach to Information Products: Muscling Copyright and Patent into a Unitary Theory of Intellectual Property, 1992 Sup. Ct. Rev. 195. 7 Id. at 222. 8 Dan L. Burk, Patenting Speech, 79 Tex. L. Rev. 99, 102 (2000). 9 Burk, supra note 5, at 208. 10 Id. at 217–18. 11 Katherine J. Strandburg, Patent Fair Use 2.0, 1 U.C. Irvine L. Rev. 265 (2011); Maureen O’Rourke, Toward a Doctrine of Fair Use in Patent Law, 100 Colum. L. Rev. 1177 (2000). 12 See Rochelle Cooper Dreyfuss, Rochelle, Reconsidering Experimental Use, 50 Akron L. Rev. 701 (2017).

Patent exhaustion as a canon of expressive freedom

237

– have in its recent jurisprudence fashioned a version of exhaustion well suited to this role.

2.

PATENTS AND EXPRESSION

The First Amendment to the US Constitution prohibits Congress from enacting laws that abridge freedom of speech or of the press.13 Patent law may not be intended as such an abridgement; an oft-stated purpose of patent law is to expand access to technical knowledge that might otherwise remain the undisclosed subject of trade secrecy.14 But patent law restricts what it discloses; the incentive for such disclosure is a 20-year moratorium on use of the disclosed invention.15 Consequently, a patent encompassing my printing press, my mobile telephone, or my word processor potentially interferes with my ability to use my own physical property to communicate my message. Thus, patents are clearly laws that abridge freedom of speech or the press: Governmental promulgation of patents authorizes state-enforced interference with the ability to speak and communicate. Indeed, patents may be said to intersect with, and interfere with, expression in at least three categories of patent-eligible subject matter. The first of these encompasses devices that enable expression: printing presses, cellular telephones, computer systems, and other conduits of speech.16 The second category relates most directly to expression, which is the category of patents directed to expression itself: methods of advertising or methods of writing or methods of organizing information. The third category lies somewhere in the middle: computer software, which has been pithily characterized as ‘text that behaves,’ constitutes both the coded expression of concepts and also a mechanism that is integral to the workings of a digital processor.17 One response to this observation might be that patents constitute private property, and private property is largely exempt from constitutional guarantees of expressive liberty.18 I am generally not required to allow a rally to be held on my land, or to loan my mobile phone to a neighbor so that she can get her political message out. The choice to use privately held property for communication is typically deemed private action. The First Amendment curtails

US Const. amend. I. Dan L. Burk, The Law and Economics of Intellectual Property: In Search of First Principles, 8 Ann. Rev. L & Soc Sci. 397, 404–05 (2012). 15 35 U.S.C 271(a) (2012). 16 Burk, supra note 5, at 208 17 Id. at 213; Burk, supra note 8. 18 John R. Thomas, Liberty and Property in Patent Law, 39 Hous. L. Rev. 569, 587–99 (2002). 13 14

238

Improving intellectual property

only governmental regulation of speech, and although property rights exist as a matter of governmental recognition, the interposition of private control over the disposition of the property places it in the domain of private rather than state action. Stated differently, First Amendment jurisprudence frequently looks to the availability of alternative means of communication in determining whether expressive regulation is permissible. If the speech can be communicated in some other way, unrestricted by regulation, then the burden of regulation seems less onerous.19 Private ownership of property generally leaves ample alternative conduits for speech. If I cannot gain permission to stage a performance at this theater venue, I can seek alternate venues. If I cannot rent space for my message on that billboard, I can look for space on other billboards. Only when private control reaches the level of regulatory monopoly usually associated with the state does First Amendment law treat private owners as if they were the state.20 But even though intellectual property may constitute a species of private ownership, its character departs radically from that of private property in this context. The limits of patent exclusivity are determined not by the hard edges of tangible property, but by the semantic content of the patent’s text. Patent rights therefore extend to entire classes of objects or methods rather than to individual objects.21 The patent holder gains dominion not over a particular bullhorn or a particular mobile phone, but over the use, manufacture, sale, and importation of all the bullhorns, or all the telecommunication protocols of the type described in the patent claims. Thus, a speaker whose use of a device is restricted by a patent cannot simply find another unregulated device of the same class; that device, too, will be covered by the patent. To escape the patent restriction, the speaker will need to find another conduit of speech entirely. This again implicates competition law, and antitrust policing is expected to ensure healthy competition in markets where patents are exercised. But antitrust largely acquiesces in the underlying premise that patent owners are awarded exclusivity in the class of objects described in the patent claims.22 This peculiar control over entire classes of objects has further implications for private ownership of those objects. A patent is unusual because it inverts See Hill v. Colorado, 530 U.S. 703, 726 (2000). Marsh v. Alabama, 326 U.S. 501 (1946). 21 See Dan L. Burk, Copyright and the New Materialism in Intellectual Property and Access to Im/material Goods 44, 59 (Jessica Lai & Antoinette Maget eds., 2016). 22 See Frank H. Easterbrook, Intellectual Property Is Still Property, 13 Harv. J.L & Pub. Pol’y 108, 109–110 (1990). 19 20

Patent exhaustion as a canon of expressive freedom

239

the usual logic regarding the private disposition of property, in that patents facilitate interference with expressive (or other) uses of private chattel property. As already recognized, I am generally not required to allow a rally to be held on my land, or to loan my mobile phone to a neighbor so that she can get her political message out. But the patent covering my mobile phone potentially allows someone else – the patent holder – to prevent me from using my own property to get my own message out. This implicates a well-known conflict between the exclusive rights of the patent owner and the rights of use and disposition held by the chattel’s owner. But where expressive activity is concerned, an additional conflict between patent rights enabled by the state and freedom of speech guaranteed to the citizenry is involved. The question is not so much whether constitutional guarantees of expressive freedom interfere with the patent owner’s property, but whether the patent owner’s assertion of intellectual property interferes with the expressive freedom guaranteed to the owner of a patented device.

3.

EXHAUSTION AMERICAN STYLE

Enter the doctrine of patent exhaustion, which negates the ability of the patent owner to interfere with the private use of lawfully acquired patented devices.23 Exhaustion is generally viewed as a solution to the first conflict identified above, that regarding the use or disposition of chattel property. The consumer lawfully acquires a particular chattel: a computer or cellular telephone or bullhorn. In general we would want the owner of the item to fully control the disposition of their property, to sell or trade or gift away title of the object they own. The patent potentially encumbers that disposition, so we negate or ‘exhaust’ that encumbrance after an authorized transfer of the item. In a world of information goods, where the sale and transfer of patented items has become common,24 exhaustion has taken on new significance. Jurisdictions across the globe have struggled with the peculiar mixture of ownership created by intellectual property exclusivity.25 In the United States, the Supreme Court has in recent years issued a series of opinions addressing and redefining the parameters of exhaustion. These cases may address not only

23 See John F. Duffy & Richard Hynes, Statutory Domain and the Commercial Law of Intellectual Property, 102 Va. L. Rev. 1, 1–2 (2016). 24 See Aaron K. Perzanowski, & Jason Schultz, Digital Exhaustion, 58 UCLA L. Rev. 889 (2011). 25 See Shubha Ghosh & Irene Calboli, Exhausting Intellectual Property Rights: A Comparative Law and Policy Analysis (2018) (collecting perspectives on exhaustion from multiple jurisdictions).

Improving intellectual property

240

the known tension between intellectual and chattel property rights, but also the second conflict concerning expressive freedom identified above. 3.1

Exhausting Methods

This new trajectory for exhaustion jurisprudence first became apparent from the Court’s opinion in Quanta Computer Inc. v. LG Electronics, Inc.26 In Quanta, the owner of certain electronic process patents had licensed those patents to Intel, which produced computer hardware chipsets designed to perform the processes. Although the patents did not cover the hardware, the hardware would execute the patented processes whenever they were used. The license authorizing the chipset manufacture specified that the Intel products were authorized only for use with other Intel hardware. When Intel sold chipsets to computer manufacturers who paired the devices with other hardware outside the license authorization, the patent owner sued the computer manufacturers for infringement. The manufacturers defended on grounds of exhaustion, arguing that the sale of the chipsets had terminated the patent owner’s rights over the components. The patent owner claimed that pairing the chipsets with unauthorized components negated the license, so that any such use was unauthorized and infringing. Although the intermediate appellate court accepted this argument, it was subsequently rejected at the Supreme Court.27 A first notable outcome of the Quanta decision was the extension of exhaustion doctrine to cover patentable processes. This application of the doctrine was somewhat counterintuitive. The US statute lists as categories of patent eligible subject matter processes, machines, compositions of matter, and articles of manufacture.28 The latter three categories encompass product patents, as the designate particular physical objects for patent eligibility. The first category, encompassing process patents, designates relationships among physical objects as potentially patentable, and it was not immediately obvious how exhaustion might apply to such intangible processes – processes are not physically transferred or possessed by a purchaser, and so do not seem to be owned in the same way as a tangible chattel. But because the devices that were transferred effectively instantiated the patented processes, the Court tied the exhaustion of the process to exhaustion of the associated product by which the processes were executed.29

28 29 26 27

553 U.S. 617 (2008). 577 U.S. at 638. 35 U.S.C § 101 (2012). 577 U.S. at 631–32.

Patent exhaustion as a canon of expressive freedom

241

The chipsets sold in Quanta were designed to execute the licensed patented processes. The hardware could only be used to perform those processes; they had no other substantial use. Had they not been licensed, their sale might have constituted contributory infringement, aiding and abetting the direct infringement of users who ran the patented processes on the devices. But the question in Quanta was what, if anything, a purchaser of the authorized hardware could possibly do with it – and the answer was that a purchaser could only use them to execute the patented processes. Thus, the Court held that exclusivity in the patented processes was exhausted with an authorized sale of the implementing hardware; executing the patented processes was the only possible use of such hardware.30 3.2

Exhausting Uses

A second notable result of the Quanta opinion was its application of exhaustion to a broad range of exclusivity. Exhaustion curtails or negates certain exclusive rights of the patent holder, and Quanta broke new ground in extending exhaustion to statutorily articulated exclusive rights. The American patent statute confers upon a patent holder the exclusive rights to make, use, offer for sale, and import the claimed invention.31 Exhaustion had long been understood to address restraints on alienation, that is, to negate the patent holder’s exclusivity to sell or offer for sale a consumer’s particular instantiation of the claimed invention. In contrast, the right to make new instantiations of the invention was never considered to become exhausted; a consumer purchasing an authorized instantiation of the invention was limited to disposition of that particular chattel item. Prior Supreme Court decisions considering the exhaustion doctrine had relied upon explicit or implied licenses to effectuate a consumer’s right to use the instantiation of the claimed invention. Decisions such as the Aro Manufacturing cases32 had relied upon implicit licensing to excuse certain uses of the claimed invention – in particular, where the court found an implicit license to repair a particular patented device after an authorized sale. Rather than exhaustion, authorized use in those cases was based upon an implicit license conveyed when purchasing the patented item.33 Exhaustion in those

577 U.S. at 630–31. 35 U.S.C. 271(a) (2012). 32 Aro Manufacturing Co. v. Convertible Top Replacement Co., 365 U.S. 336 (1961) (‘Aro I’); Aro Manufacturing Co. v. Convertible Top Replacement Co., 377 U.S. 476 (1964) (‘Aro II’). 33 Aro II, 377 U.S. at 483–84. 30 31

242

Improving intellectual property

decisions appeared to be confined to the terminating the exclusive right to sell, and possibly to offer for sale. Relying on the logic of such cases, patent holders had developed a strategy of field of use restrictions based on explicit licenses that premised authorization on compliance with particularly articulated uses. Because an explicit license always overrides an implicit license, the patent holders imposing such licenses purported to control uses of a patented article even after an authorized sale. The lower courts long agreed. In cases such as Mallinckrodt v. Medipart, the Federal Circuit intermediate appellate court upheld a ‘single use’ restriction on the sale of a patented item.34 The court reasoned that the patent holder had not conveyed via sale an unfettered authorization use of the item, but instead had explicitly retained exclusivity over all but a single use. Any re-use would under this logic constitute an unauthorized use, and hence patent infringement. The Quanta opinion adopted a new and different take on exhaustion, extending it without qualification to the patentee’s exclusive right to use.35 As in the Aro analysis, the Court in Quanta might easily have implied a license to use the chipsets to run the patented processes – that was their intended purpose and they were useless for any other application, so an implied license to use them for that purpose might have been inferred. Instead, the court relied upon an expanded application of exhaustion to allow such uses, holding that the effect of the patent doctrine operated independently of any express or implied license. Therefore the exhaustion of the exclusive right to use the process patents was not modified or negated by the parties’ contractual agreement.36 Any doubt that Quanta was a sport or was somehow limited to its facts was dispelled by the subsequent Lexmark decision.37 Lexmark, a manufacturer of patented printer toner cartridges, sold the cartridges to consumers under a mass-market ‘single use’ license. When used and refurbished cartridges appeared on the market, Lexmark sued the refurbishing firms that had purchased used cartridge housings and refilled them with dry ink for resale, alleging patent infringement. The refurbishing firms had not been the initial purchasers, and so could not be in privity with Lexmark for the terms dictated by the mass-market license. But Lexmark asserted that because the terms of sale did not convey a right to re-use the patented devices, any subsequent use was unauthorized and so by definition infringing.38

976 F.2d 700 (Fed. Cir. 1992). 577 U.S. at 638. 36 Id. at 637. 37 Impression Products, Inc. v. Lexmark International, Inc. 137 S. Ct. 1523, 198 L. 2d 1 (2017). 38 Id. at 1530. 34 35

Patent exhaustion as a canon of expressive freedom

243

Citing Quanta, the Supreme Court rejected this reasoning.39 Again, the Court differentiated the potential breach of the use license from the exhaustion of the exclusive right to use the patented item.40 The Court reasoned that rights to use and resell chattel property are always conveyed with the sale of the chattel.41 Prior to sale of a patented item, such rights are restricted by the operation of the patent. But because patent exclusivity is exhausted by an authorized sale, the rights attending lawful possession of the chattel operate as they would in the absence of a patent. Contractual terms of sale might provide a separate remedy but were ineffective to curtail the effects of patent exhaustion.42 Under patent law, exclusive rights in the uses of the article were exhausted, even if the purchaser might have contractually agreed to refrain from otherwise permissible uses.

4.

EXHAUSTION AND EXPRESSION

These recent Supreme Court decisions radically reshape the older understanding of patent exhaustion in cases such as Aro Manufacturing. While the shift in position under Quanta is justified in largely dogmatic terms, the stated social policy drivers behind change seem clear by the time Lexmark was issued: An increasingly wide range of consumer products are covered by one or more patents, and consumers cannot realistically be expected to keep track of which products are covered by which patents, or to know which rights are reserved by the patent holder via mass market license.43 Consumers especially cannot be expected to know or track which patent rights over their chattel property may have been reserved by contractual agreements several steps up the supply chain, previous to their purchase. As Justice Roberts points out, extending patent rights beyond an authorized sale would ‘clog the channels of commerce.’44 But this logic points toward another compelling but unexplored rationale for a capacious patent exhaustion doctrine, which is the deployment of individual chattel embodiments of the claimed invention for expressive purposes. Exhaustion of patent control over discrete devices after an authorized sale frees those devices for expressive uses by the owners of the chattel. Significantly in this respect, the Quanta and Lexmark decisions incorporate into their ambit Id. at 1533. Id. at 1531. 41 Id. at 1534. 42 Id.; see also Quanta, 577 U.S. at 637 n. 7 (suggesting that contract remedies might be available apart from patent remedies). 43 137 S. Ct. at 1532. 44 Id. 39 40

244

Improving intellectual property

exhaustion of the exclusive right to use the particular device, not merely exhaustion of the right to re-sell the particular device. Additionally, extending the scope of exhaustion to cover methods incorporates the large number of patents on communicative processes that might otherwise raise more serious First Amendment conflicts. Similarly, by embedding exhaustion in patent law rather than contract law, the Supreme Court freed consumer disposition of a patented article from the vagaries of implied agreements. Lexmark sidesteps the logic of lower court opinions such as Mallinkrodt, which would have allowed patent holders to withhold authorization for certain uses by declining to transfer some exclusive rights vested in a patented product. Such an end-run around exhaustion would have made patent exclusivity once again the basis for constraining consumer disposition of their chattel property, including expressive uses. As Dreyfuss might say, contract remains available to allocate risks between the commercial parties,45 but not to constrain downstream expressive uses of the chattel that are unnecessary to the innovator’s investment.46 There is of course not a word about expressive freedom anywhere in these patent exhaustion opinions, but a somewhat stronger connection can be inferred from the Court’s parallel jurisprudence in copyright exhaustion. The Lexmark patent opinion, in particular, draws heavily upon the reasoning and precedent of Supreme Court’s copyright exhaustion opinions. Like patent law, copyright arises out of Congress’ enumerated power to ‘Promote the Progress of Science and the Useful Arts.’47 The contemporaneous copyright exhaustion decision in Kirtsaeng v. John Wiley & Sons48 displays the same concern found in Lexmark regarding consumer autonomy, but expressive freedom plays a more overt role. The Court in Kirtsaeng is explicit in its concern that a regime of partial exhaustion will severely burden the activities of libraries, booksellers, art museums, and similar conduits of expression;49 all of these play a key role in effectuating First Amendment values. As I have noted above, exceptions such as exhaustion have long been understood to play a role in mediating between copyright and expressive freedoms. After the decisions in Quanta and Lexmark, some of the same mediation may now be available for patent law.

45 See Rochelle Cooper Dreyfuss, Dethroning Lear: Licensee Estoppel and the Incentive to Innovate, 72 Va. L. Rev., 677, 742–43 (1986). 46 Dreyfuss, supra note 6 at 226–27. 47 U.S. Const. art. I, § 8, cl. 8. 48 568 U.S. 519 (2013). 49 Id. at 540–41

Patent exhaustion as a canon of expressive freedom

245

5. CONCLUSION This chapter shows how recent changes in the US law of exhaustion buffer the censorial effects of patent exclusivity. To be clear, I am in no way suggesting that the US Supreme Court had this rationale in mind when developing their exhaustion jurisprudence. In fact, one might well question whether they had any coherent rationale in mind in developing the current patent doctrine on exhaustion. But as Jessica Silbey has persuasively argued, patent law is not divorced from the broader weft of the law, and shares with the general raft of jurisprudence a commonality grounded in fundamental social values.50 In its exhaustion jurisprudence, the court was concerned with the general interest in individual autonomy and control over personal property, which is capacious enough to accommodate expressive freedom. Thus, the breadth of exhaustion doctrine under the Supreme Court’s recent decisions appears, perhaps by happenstance, well-suited to helping accommodate expressive latitude in the patent system.

50 Jessica Silbey, Against Progress: Intellectual Property Values in the Internet Age (2022).

and

Fundamental

24. Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss Martin Senftleben 1. INTRODUCTION In her 1990 landmark article Expressive Genericity: Trademarks as Language in the Pepsi Generation,1 Dreyfuss discusses the need for trademark rules that offer breathing space for the use of expressive meanings of strong brands that symbolize a particular lifestyle or attitude. These expressive meanings may be the result of investments made by the trademark proprietor.2 The richness of associations and meanings may also follow from consumer activity. The consuming public frequently imbues trademarks with connotations distinct from the advertising messages conveyed by the trademark owner.3 More than 30 years after publication, Dreyfuss’ text has lost nothing of its relevance and power of persuasion. She identified a strong need to keep expressive use of the associations and meanings triggered by iconic trademarks free. Otherwise, the loss of the ability to use trademarks may impede the ability to communicate.4 In her words, trademarks: have become products in their own right, valued as indicators of the status, preferences, and aspirations of those who use them. Some trademarks have worked 1 Rochelle Cooper Dreyfuss, ‘Expressive Genericity: Trademarks as Language in the Pepsi Generation’ (1990) 65 Notre Dame L Rev 397. 2 cf Jane C. Ginsburg, ‘Intellectual Property As Seen by Barbie and Mickey: The Reciprocal Relationship of Copyright and Trademark Law’ (2018) 65 Journal of the Copyright Society of the USA 245, 254–255. 3 Dreyfuss (n 1) 415 and 424; Jessica Litman, ‘Breakfast with Batman: The Public Interest in the Advertising Age’ (1999) 108 Yale LJ 1717, 1732–1733; Deborah R. Gerhardt, ‘Consumer Investment in Trademarks’ (2010) 88 North Carolina L Rev 101; Steven Wilf, ‘Who Authors Trademarks?’ (1999) 17 Cardozo Arts and Entertainment LJ 1, 4–5. 4 Dreyfuss (n 1) 415–418.

246

Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss

247

their way into the English language; others provide bases for vibrant, evocative metaphors. In a sense, trademarks are the emerging lingua franca: [W]ith a sufficient command of these terms, one can make oneself understood the world over, and in the process, enjoy the comforts of home.5

Trademarks, thus, constitute focal points of communication.6 They may be capable of evoking ‘vibrant, evocative metaphors.’7 However, the fact that trademarks may become information shortcuts that condense a highly complex amalgam of connotations does not mean that they are generic in the sense of the traditional concept underlying Article 6quinquies(B) No. 2 of the Paris Convention. Traditional genericity relating to use as a generic term in a current language or trade practice differs markedly from the expressive genericity concept that Dreyfuss describes. She distinguishes between use of the ‘signalling function’ of trademarks – corresponding with the traditional function of indicating the commercial origin of goods or services,8 and use of the ‘expressive function’ of trademarks, which concerns use of the trademark as a shortcut for a certain image, lifestyle or attitude: In referring to ‘Barbie’ in order to indicate that she was treated like a beautiful but empty-headed accessory, [Joan] Kennedy exploited a set of meanings that are quite different from the ones invoked by Mattel, and I label this use of the trademark ‘expressive.’9

Hence, ‘expressive genericity’ does not mean that the trademark as such has become a generic element of the current language. By contrast, it refers to a specific form of using trademarks in a metaphorical sense: not as identifiers of commercial source but as symbols of personal or societal conditions.10 Despite the connotations allowing this play, the trademark serves as a reliable and distinctive indicator of commercial source. The distinction between a trademark’s ‘signalling function’ and its ‘expressive function’ is of particular importance. It allows traditional trademark protection of the signalling func-

ibid 397–398. ibid 415. 7 ibid 397–398. 8 cf Case C-1/81 Pfizer vs. Eurim-Pharm [1981] ECLI:​EU:​C:​1981:​291, para 8; Case C-206/01 Arsenal v. Reed [2002] ECLI:​EU:​C:​2002:​651, para 48. 9 Dreyfuss (n 1) 400. 10 cf Katya Assaf, ‘The Dilution of Culture and the Law of Trademarks’ (2008) 1 IDEA: Intellectual Property Law Review 49, 58–61. 5 6

Improving intellectual property

248

tion of iconic trade symbols, while still offering room for freedom to use the expressive, metaphorical aspect of trade symbols.11 As Dreyfuss concludes: [I]t should be possible to build upon the defences that trademark law has constructed for the competitive vocabulary a parallel set of principles to protect expressive speech. In a regime that recognized the facility to compartmentalize, signaling functions would be analysed according to the conventional Polaroid principles, and the newly developed doctrines would operate to allocate rights when trademarks are used expressively. Proprietary rights to marks would then be protected across the entire signaling spectrum, except in instances in which expressive communication was suppressed by the loss of vocabulary.12

Hence, a central point of Dreyfuss’ analysis is this: Expressive use of trademarks is different and should be treated differently. Instead of rendering the verdict of infringement on the basis of standard infringement tests, expressive use should be assessed in the light of specific criteria that lend sufficient weight to the metaphorical context in which the use takes place.

2.

HONEST PRACTICES IN INDUSTRIAL OR COMMERCIAL MATTERS

Unfortunately, this central lesson – the insight that the application of standard infringement criteria is unlikely to yield satisfactory results – is still not fully understood on the other side of the Atlantic. With the 2015 reform of EU trademark law, a peculiar guideline for reconciling trademark protection with freedom of artistic expression made its way into Recital 27 of the EU Trade Mark Directive (‘TMD’)13 and Recital 21 of the Trade Mark Regulation (‘EUTMR’):14 ‘[u]se of a trade mark by third parties for the purpose of artistic expression should be considered as being fair as long as it is at the same time in accordance with honest practices in industrial and commercial matters.’15 This fairness rule supplements the provisions on limitations of trademark rights. Article 14(1) EUTMR and Article 14(1) TMD exempt several types of use from the control of trademark proprietors, including forms of use that may become relevant in the context of artistic expression. Article 14(1)(c) EUTMR

ibid 79–80. Dreyfuss (n 1) 418. 13 Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to Approximate the Laws of the Member States Relating to Trade Marks [2015] OJ L336/1. 14 Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union Trade Mark (codification) [2017] OJ L154/1. 15 EUTMR, Recital 21; TMD, Recital 27. 11 12

Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss

249

and Article 14(1)(c) TMD, for instance, permit referential trademark use without prior authorization of the trademark owner. Article 14(1)(b) EUTMR and Article 14(1)(b) TMD prevent the trademark owner from invoking trademark rights against descriptive use and non-distinctive use.16 All these limitations of trademark rights, however, only apply ‘where the use made by the third party is in accordance with honest practices in industrial or commercial matters.’17 With regard to artistic expression, the fairness rule in Recital 21 EUTMR and Recital 27 TMD, thus, confirms that the honest practices test is fully applicable. The fact that artistic expression is at stake does not exempt the artist from the obligation to meet the honest practices test.

3.

INAPPROPRIATE ASSESSMENT CRITERION

As Dreyfuss demonstrated more than 30 years ago, it is highly problematic to align a fairness rule for expressive use with the requirement of honest industrial and commercial practices. Instead of providing a specific set of infringement criteria for expressive use, the honest practices test is a prime example of a ‘conventional Polaroid principle’18 that can be traced back to the ban on unfair commercial practices in Article 10bis(2) of the Paris Convention.19 In the light of Dreyfuss’ analysis, this regulatory design raises the question whether the standard of honesty ‘in industrial and commercial matters’ can ever be an appropriate yardstick for the assessment of expressive use in an artistic context. From the outset, the fair use analysis may be doomed to fail because industrial and commercial considerations are inapt to clarify the legitimacy of use in the artistic domain. Practical (section 3.1), socio-cultural (section 3.2) and legal-doctrinal (section 3.3) considerations militate against reliance on industrial and commercial standards when artistic expression is at stake.

16 For a more detailed discussion, see Martin Senftleben, ‘Robustness Check: Evaluating and Strengthening Artistic Use Defences in EU Trademark Law’ (2022) 53 IRIPCL 567, 581–585. 17 EUTMR, art 14(2); TMD, art 14(2). 18 Dreyfuss (n 1) 418. 19 cf Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging (28 June 2018) WT/DS435/R, WT/DS441/R WT/DS458/R, WT/ DS467/R (Panels Reports), para 7.2666; Sam Ricketson, The Paris Convention for the Protection of Industrial Property – A Commentary (Oxford University Press 2015) paras 13.33–13.43.

250

3.1

Improving intellectual property

Practical Concerns

It is not practical to expect an artist to be aware of behavioural standards in industry and commerce. The proviso of honest practices in industrial and commercial matters is impractical and disadvantageous for artists because they do not have the knowledge necessary to comply with these standards. The information deficit weakens the strategic position of artists in infringement proceedings. Even if the burden of establishing dishonest practices is placed on the trademark proprietor,20 the artist must ascertain which behavioural norms are applicable to successfully rebut dishonesty arguments. As a trader, the trademark owner can be expected to be well acquainted with standards of honesty in industrial and commercial matters. The use of industrial and commercial standards as a yardstick for the assessment of expressive use in the artistic domain, thus, causes an information imbalance that gives the trademark proprietor an advantage and disregards the specific metaphorical context in which the use occurs. In contrast to the artist, the trademark owner can remain in her own sector and play a home game. 3.2

Theoretical Concerns

Recital 21 EUTMR and Recital 27 TMD, however, also give rise to a more fundamental issue. The subordination of artistic expression to an industrial and commercial assessment standard is highly undesirable. It obliges artists to align their work with commercial standards of fairness and honesty that are inappropriate in the case of cultural productions. Cultural sociology sheds light on the serious risk of eroding art autonomy that arises from the current configuration of the fairness test for artistic expression in EU trademark law. Pierre Bourdieu’s sociological analysis of the field of literary and artistic production leaves no doubt that a thriving literary and artistic sector – capable of unmasking deficiencies in society and providing impulses for the improvement of social and political conditions21 – requires independence of artists from economic and political powers. Refining Niklas Luhmann’s concept of relatively closed social systems with a distinct identity and a boundary between them and their environment,22 Pierre Bourdieu developed the concept of ‘fields’ in society. Although constituting 20 Cf. Annette Kur and Martin Senftleben, European Trade Mark Law – A Commentary (Oxford University Press 2017) paras 6.78–6.79. 21 Cf. Martin Senftleben, The Copyright/Trademark Interface – How the Expansion of Trademark Protection Is Stifling Cultural Creativity (Wolters Kluwer 2020) 54–66. 22 Niklas Luhmann, Soziale Systeme: Grundriß einer allgemeinen Theorie (Suhrkamp 1984) 31 and 35–70.

Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss

251

an autonomous social space with individual rules, dominance structures and an established set of opinions, a field is not isolated from other social spaces and processes surrounding it. According to Bourdieu, the structure of a field results from constant internal fights of competing players for predominance and leadership.23 A field’s degree of autonomy, then, depends on the extent to which external players can influence these internal fights.24 For the assessment of the autonomy of a given field, it is thus necessary to examine its relationship with the social environment in which it is embedded at a given point in time.25 Applying this theoretical model to the field of literary and artistic production, Bourdieu assumes that the field’s autonomy rests on the rejection of the capitalism of the bourgeoisie. The specific ‘nomos’ of the literary and artistic field lies in the independence from economic and political powers.26 Instead of aligning her work with commercial or political considerations, an autonomous artist aims at internal recognition within the field. The artist emancipates herself from the focus on commercial necessities and rewards.27 As a result, the consecration mechanisms in the literary and artistic field – the power to set quality standards and dominate the internal discourse – become self-referential: l’art pour l’art. The field of literature and art becomes a universe countering the profit logic that impregnates the economic and political discourse in society.28 The break with commercial and political powers constitutes the basis of an artist’s independent, autonomous existence.29 It allows artworks to critically reflect on societal conditions and pave the way for necessary reforms.30 This cultural sociology perspective offers an important theoretical confirmation of Dreyfuss’ plea for a specific set of criteria to assess expressive use in trademark law. It follows from this configuration of the field of literary and artistic production that an artist must not be obliged to align her work with behavioural standards that stem from another field of society. From this perspective, it is intolerable that EU trademark law pressures artists to observe standards of honesty in industrial and commercial matters. Recital 21 EUTMR 23 Pierre Bourdieu, Die Regeln der Kunst. Genese und Struktur des literarischen Feldes (Suhrkamp 1999) 253–255 and 368. 24 P. Bourdieu, R. Chartier and R. Darnton, ‘Dialog über die Kulturgeschichte’, Freibeuter – Vierteljahreszeitschrift für Kultur und Politik (Verlag Klaus Wagenbach 1985) 22, 28. 25 Bourdieu (n 23) 134. 26 ibid 103–105. 27 ibid 344. 28 cf Alexander Peukert, ‘Fictitious Commodities: A Theory of Intellectual Property Inspired by Karl Polanyi’s Great Transformation’ (2019) 29 Fordham Intell. Prop. Media & Ent L.J. 1151, 1178–1179. 29 Bourdieu (n 23) 105. 30 ibid 342.

252

Improving intellectual property

and Recital 27 TMD appear as an institutionalized subordination of cultural productions to the predominant commercial orientation of modern capitalist societies.31 The potential corrosive effect of this legislative decision must not be underestimated. On the basis of his analysis of the power relations in the literary and artistic field, Bourdieu painted an alarming picture of the field’s degree of autonomy 30 years ago – two years after the publication of Dreyfuss’ landmark article. In the light of reduced state subsidies for cultural productions and the rise of sponsoring by enterprises, Bourdieu warned of an increasing mutual penetration of the world of art and the world of money: He saw more and more literary and artistic productions becoming subject to entrepreneurial marketing strategies and commercial pressures.32 Therefore, he predicted the loss of autonomous literary and artistic productions.33 Considering the growing influence of commercial players and profit rationales, he feared that commercial influences would finally suppress the critical thinking that is necessary for independent avant-garde works.34 Considering these insights from cultural sociology, it becomes evident that the reference point chosen in Recital 21 EUTMR and Recital 27 TMD is wrong. The requirement of use in accordance with behavioural norms in the industrial and commercial sector cements the supremacy of trade and commerce over the field of art and culture: Even if use appears fair and legitimate in the light of artistic standards, it may still amount to trademark infringement when established industrial and commercial practices point in the opposite direction. The legislator allows the logic of commerce and trade to prevail over the l’art pour l’art logic of culture and art – an alarming decision that encourages the erosion of the autonomy of literary and artistic productions. 3.3

Legal-doctrinal Concerns

The problem becomes greater when legal-doctrinal developments are factored into the equation. The Court of Justice of the European Union (‘CJEU’) tends to determine compliance with honesty in industrial and commercial matters on the basis of the same criteria that inform the analysis of prima facie infringement in trademark confusion and dilution cases.35 This jurisprudence strength cf Senftleben (n 16) 581–585. Bourdieu (n 23) 530. 33 ibid 533. 34 ibid 531. 35 Martin Senftleben and others, ‘The Recommendation on Measures to Safeguard Freedom of Expression and Undistorted Competition: Guiding Principles for the Further Development of EU Trade Mark Law’ (2015) 37 EIPR 337, 339. 31 32

Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss

253

ens concerns that, examining artistic expression in the light of the honest practices proviso, industrial and commercial standards will prevail and finally erode art autonomy. As currently applied, the inquiry into honest commercial practices is far from including values from other societal domains, such as the field of literary and artistic production. Instead, the CJEU simply replicates infringement criteria that belong to the canon of standard behavioural norms in the sector of industry and commerce. In Gillette, the Court held that use would fail to comply with honest practices in industrial and commercial matters if, for example: • it is done in such a manner as to give the impression that there is a commercial connection between the third party and the trade mark owner; • it affects the value of the trade mark by taking unfair advantage of its distinctive character or repute; • it entails the discrediting or denigration of that mark; • or where the third party presents its product as an imitation or replica of the product bearing the trade mark of which it is not the owner.36 While some of these assessment factors can be traced back to EU legislation about comparative advertising,37 the prohibition of use that gives the impression of a commercial connection with the trademark owner, and the ban on use that damages or takes unfair advantage of the mark’s distinctive character or repute, correspond to infringement criteria in the field of trademark protection against confusion and dilution.38 The risk of circularity is obvious: by copying almost literally the criteria for establishing prima facie infringement, the CJEU subjects defences to additional scrutiny in the light of the same criteria that enabled the trademark owner to bring the infringement claim in the first place.39 This circular line of reasoning may render defence arguments for artistic expression, such as the specific character of expressive, metaphorical use of trademarks, moot in practice.40 The requirement of use in accordance

Case C-228/03 Gillette v LA-Laboratories [2005] ECLI:​EU:​C:​2005:​177, para

36

49.

37 Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 Concerning Misleading and Comparative Advertising (codified version) [2006] OJ L376/21, art 4(d), (f), (g) and (h). cf Kur and Senftleben (n 9) para 6.72. 38 EUTMR, art 9(2)(b) and (c); TMD, art 10(2)(b) and (c). 39 cf Case C-558/08 Portakabin Ltd v Primakabin BV, para 69. 40 cf Kur and Senftleben (n 20) para 6.73; Senftleben and others (n 35) 339; Ilanah Simon Fhima, ‘The Role of Legitimacy in Trade Mark Law’ (2012) 65 Current Legal Problems 489, 501–502.

Improving intellectual property

254

with honest practices in industrial and commercial matters degenerates into a torpedo, which the trademark proprietor can employ to neutralize limitations of trademark rights that provide defence arguments for artists. The symmetry of criteria for assessing prima facie infringement and determining honesty in industrial and commercial matters can easily lead to a situation where a finding of a likelihood of confusion or dilution foreshadows the denial of compliance with honest commercial practices. Once again: Instead of developing, in line with Dreyfuss’ recommendation, individual infringement criteria to properly assess the special situation that arises in the case of expressive use, the approach that has evolved in EU trademark law and practice leads to the opposite result. Expressive use is exposed to an assessment in the light of conventional infringement criteria that may fail to attach weight to the specific expressive context.

4.

A WAY OUT OF THE DILEMMA

Is it possible to alleviate the problems arising from a fairness rule for artistic expression that is aligned with conventional infringement criteria and behavioural standards in the industrial and commercial domain? After the 2015 trademark law reform in the EU, there is no planned legislative initiative for the adoption of a specific ‘parallel set of principles to protect expressive speech.’41 EU legislation is unlikely to revisit the expressive use question any time soon. Hence, the only remaining option is the creation of a specific set of trademark rules for expressive use cases on the basis of the existing legislative text, including the honest practices proviso. Interestingly, the debate on the 2015 amendment of EU trademark law offers a reference point for this solution. Seeking to provide guidance for the reform, the Recommendation on Measures to Safeguard Freedom of Expression and Undistorted Competition in EU Trade Mark Law42 proposed solving the problem of circularity in the honest practices jurisprudence as follows: The only way to make sense of the wording would be to clarify that although the basic concepts (likelihood of confusion, abuse of reputation) informing the evaluation of honest business practices are the same as those governing infringement, their application is different in that the leeway for using a basically conflicting mark is much broader where applications or limitations apply, thereby confining the proprietor’s right to oppose such use to cases of disproportionate harm.43

Dreyfuss (n 1) 418. Senftleben and others (n 35) 341–343. cf Kur and Senftleben (n 20) para 6.74. 43 Senftleben and others (n 35) 339. 41 42

Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss

255

In the debate, Annette Kur added the following, more detailed explanation: It is therefore important to emphasize that instead of applying those factors in the same way as when infringement is prima facie established, the interpretation must proceed in a more fine-grained fashion, taking account of the countervailing interests safeguarded by the limitations.44

The argument is thus: even if the assessment of honesty in industrial and commercial matters rests on the same criteria that have previously been used to establish prima facie infringement, the outcome can still be different when the criteria are applied in a more flexible way. The required flexibility can be derived from the values underlying the allegedly infringing use, such as freedom of artistic expression. Weighing the interests of the trademark owner against the interests of the defendant, judges can attach particular importance to the values that support the defendant and avoid the verdict of infringement. When a trademark is used for the purpose of artistic expression, these guidelines allow the artist to prevail for at least two reasons: – the need to reconcile trademark protection with freedom of expression and freedom of the arts; and – the disproportionality of enforcing trademark rights even though artistic use is unlikely to imperil the ‘signalling function’45 of trademarks, which corresponds with the traditional function of indicating the commercial origin of goods or services. As to the first point, artistic expression enjoys protection on the basis of the constitutional guarantee of freedom of expression and freedom of the arts in Articles 11 and 13 of the EU Charter of Fundamental Rights (‘CFR’).46 The artist and the trademark proprietor, thus, meet at eye level. While the trademark owner can invoke the right to property, including the recognition of intellectual property in Article 17(2) CFR, the artist can rely on Articles 11 and 13 CFR. The legal position of the artist is not a priori weaker than the status that the trademark owner enjoys.47 44 Annette Kur, ‘Yellow Dictionaries, Red Banking Services, Some Candies, and a Sitting Bunny: Protection of Color and Shape Marks from a German and European Perspective’ in Irene Calboli and Martin Senftleben (eds), The Protection of Non-Traditional Trademarks – Critical Perspectives (Oxford University Press 2018) 89, 105. 45 Dreyfuss (n 1) 418. 46 Charter of Fundamental Rights of the European Union [2000] OJ L364/1. 47 cf Lisa P. Ramsey and Jens Schovsbo, ‘Mechanisms for Limiting Trade Mark Rights to Further Competition and Free Speech’ (2013) 44 IRIPCL 671; Wolfgang Sakulin, Trademark Protection and Freedom of Expression – An Inquiry into the

256

Improving intellectual property

In addition, use of trademarks in an artistic setting is use in an expressive, metaphorical sense: The trademark is employed as a symbol of personal or societal conditions. Use of trademarks in art concerns a metaphorical play with the associations evoked by a trademark in the minds of consumers and the societal conditions that a trademark reflects.48 This insight has a deep impact on the balancing exercise to be conducted in the light of the principle of proportionality. As the artist does not use the trademark as a badge of origin, the detriment to the trademark proprietor, by definition, is reduced. Artistic use may still do harm by mocking and criticizing the trademark owner, or using the trademark for a critique of societal conditions that the trademark owner finds irreconcilable with the favourable brand image she wishes to maintain.49 Nonetheless, the fact remains that artistic use does not encroach upon the signalling function of the trademark. From this perspective, the detriment to the trademark owner is limited from the outset.

5. CONCLUSION Taking the described insights together – the anchorage of artistic expression in constitutional freedoms and the proportionality of harm flowing from a metaphorical play with trademarks – it becomes possible to weave a general bias in favour of artistic expression into the fabric of the honest practices test: a legal bias in the sense of a legal presumption of fair use that allows use of a trademark for the purpose of artistic expression to routinely survive scrutiny in the light of the honest practices proviso. Following this maxim, use of trademarks should be deemed fair in artistic contexts unless the trademark proprietor manages to overcome the legal presumption by presenting individualized facts50 that provide proof of unusually grave trademark harm. More specifically, the trademark owner should demonstrate that, despite the artistic setting, the use explicitly misleads consumers as to the commercial origin of the artwork. In the case of a trademark with a reputation that enjoys protection against dilution in the EU,51 the trademark owner should show that the use deliberately blurs, tarnishes or exploits in an unfair manner the distinctive-

Conflict between Trademark Rights and Freedom of Expression under European Law (Kluwer 2010) 247-282; Christophe Geiger, ‘Trade Marks and Freedom of Expression – the Proportionality of Criticism’ (2007) 38 IRIPCL 317. 48 Cf. Dreyfuss (n 1) 418. 49 See the case law overview in Kur and Senftleben (n 20) paras 5.267 and 6.59–6.70. 50 Yochai Benkler, ‘Free as the Air to Common Use: First Amendment Constraints on Enclosure of the Public Domain’ (1999) 74 NYULR 354, 362-363. 51 Cf. Kur/Senftleben (n 19) paras 5.201–5.204.

Expressive genericity revisited: What EU policymakers can learn from Rochelle Dreyfuss

257

ness or repute of the trademark with a reputation.52 As the words ‘explicitly’ and ‘deliberately’ indicate, the threshold for a finding of dishonest practices should thus be higher than in the regular confusion or dilution analysis.53 This approach is in line with the above-described strategy for remedying the circularity in CJEU jurisprudence and Dreyfuss’ recommendation to develop specific rules when expressive use is at issue. Although assessment criteria are used that have already supported a finding of prima facie infringement, the outcome of the honest practices analysis can be different because the criteria are applied in a modified way – in a way that lends weight to freedom of expression and freedom of the arts.

52 TMD, art 10(2)(c); EUTMR, art 9(2)(c). Cf. Kur/Senftleben (n 19) paras 5.182–5.192. 53 For a more detailed discussion, see Senftleben (n 21) 432–456.

25. The sensibility of ‘expressive genericity’ and the rise (and potential fall) of Rogers v. Grimaldi in American trademark law Barton Beebe 1. INTRODUCTION Professor Dreyfuss is justifiably celebrated as one of the leading patent law scholars in the world, but trademark people such as myself know her differently. For us, she is the author of one of the most important essays on trademark law of the late twentieth century: Expressive Genericity: Trademarks as Language in the Pepsi Generation.1 The essay was published in 1990, but now even three decades later, trademark scholars recognize in it most of the themes that continue to motivate trademark commentary. Dreyfuss observes that trademarks ‘have become products in their own right.’2 They are ‘the emerging lingua franca’3 of global culture. In a mode of analysis that would now perhaps be most familiar to European scholars, the essay explains that trademarks engage in different functions, among them what Dreyfuss calls the ‘signaling function,’4 by which marks indicate the source of the goods to which they are affixed, and the ‘expressive function[],’5 by which marks may convey a wide variety of cultural meanings. The essay closely attends to cases in which third parties unauthorizedly seek to take advantage of what Dreyfuss calls the ‘surplus value’ of a well-known mark—that is, the capacity of a mark, through its expressive function, to convey a meaning that is ‘in

1 See Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the Pepsi Generation, 65 Notre Dame L. Rev. 397 (1990). 2 Id. at 397. 3 Id. 4 Id. at 400. 5 Id.

258

The sensibility of ‘expressive genericity’

259

excess to, or a surplus over, its function as a signal about [source].’6 Today we are especially aware of the significance of such ‘hybrid usages’7 of trademarks, particularly in the United States. So much of leading American trademark case law currently focuses on precisely such situations in which third parties engage in critical appropriations of prominent marks to parody the marks or satirize consumer cultural more generally.8 Building on this theme, the essay provides, as trademark law scholarship has ever since, numerous examples of the damage expanding trademark rights have inflicted on freedom of expression.9 Dreyfuss’s 1990 essay is still so timely, its themes so familiar, that scholars new to the field could be forgiven for failing to realize (as I once did) that when the essay first appeared, it was pathbreaking. It largely inaugurated much of what we are now accustomed to in trademark commentary. Most significantly, it brought to trademark law a particular style of thinking about trademarks and their role in contemporary culture, a sensibility that recognized that brand names were more than merely designations of source or advertising devices. They had emerged as preeminent cultural reference points in consumer society, the means by which individuals made sense of the world and discovered and expressed their values, their aesthetics, and their politics. US trademark commentators of the time had of course analyzed the conflict between the First Amendment and trademark law, but they tended to do so in the style of a straight First Amendment analysis.10 In Expressive Genericity, Dreyfuss invoked linguistics and indirectly the field of cultural studies, which was then at its height, to speak in a new voice. As she wryly observed near the end of her essay, ‘[a]pparently, the graduates of the American educational system are no longer acquainted with the classic literature that in the past formed the basis for rhetorical and literary allusion. Betty Crocker has replaced Hestia in the public consciousness.’11 The essay is full of such insights.

Id. at 402. Id. at 409 8 See, e.g., Hermès International v. Rothschild, __ F.Supp.3d __, No. 22 Civ. 384, 2022 WL 1564597 (S.D.N.Y. May 18, 2022); Nike, Inc. v. MSCHF Product Studio, Inc., No. 21 Civ. 1679 (E.D.N.Y. April 1, 2021); Vans, Inc. v. MSCHF Product Studio, Inc. No. 22 Civ. 2156, 2022 WL 1446681 (E.D.N.Y. April 29, 2022). 9 See, e.g., Dreyfuss, supra note 1, at 422 (discussing L.L. Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 26 (1st Cir. 1987)). 10 For two leading examples from the time of high-quality analyses of the interaction between the First Amendment and trademark law, see Robert Denicola, Trademarks as Speech: Constitutional Implications of the Emerging Rationales for the Protection of Trade Symbols, 1982 Wis. L. Rev. 158 (1982) and Robert N. Kravitz, Trademarks, Speech, and the Gay Olympics Case, 69 B.U. L. Rev. 131 (1989). 11 Dreyfuss, supra note 1, at 424. 6 7

Improving intellectual property

260

This sensibility, which I think most trademark law commentators now take as standard, helps to explain why Dreyfuss could write so eloquently in the essay about the then-recent Supreme Court case San Francisco Arts & Athletics Inc. v. United States Olympic Committee.12 There, the Court found no violation of the First Amendment in a federal law that authorized the United States Olympic Committee (USOC) to prohibit in its discretion certain uses of the word ‘Olympic.’ The USOC sought in particular to prevent the use of the term ‘Gay Olympic Games’ by the petitioner, a gay rights organization that had the temerity to associate the culture of ancient Greece with homosexuality. As Dreyfuss suggested, for such a political speaker, there was no other term in American culture that could come close to conveying the power, the ‘surplus value,’ of the ‘Olympic’ brand.13 In this contribution in honor of Dreyfuss’s scholarly career, my goal is briefly to consider the impact on American trademark law of the cultural sensibility represented by Expressive Genericity. To do so, I focus on the case of Rogers v. Grimaldi14 and its progeny.

THE RISE OF ROGERS V. GRIMALDI

2.

Expressive Genericity appeared just after the Second Circuit Court of Appeals issued its opinion in Rogers v. Grimaldi and did much to reinforce the opinion’s influence. Ginger Rogers had sued the producers of the Federico Fellini film Ginger and Fred on the ground that the film’s title violated her trademark rights and New York state right of publicity. The Second Circuit ruled in favor of the producers. The court recognized the tension between trademark law and the First Amendment, especially in the context of artistic expression. It explained: ‘We believe that in general the [Lanham] Act should be construed to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression.’15 It then formulated what became the basis for the Rogers v. Grimaldi test: In the context of allegedly misleading titles using a celebrity’s name, that balance will normally not support application of the Act unless the title has no artistic relevance to the underlying work whatsoever, or, if it has some artistic relevance, unless the title explicitly misleads as to the source or the content of the work.16

483 U.S. 522. Dreyfuss, supra note 1, at 417. 14 875 F. 2d 994 (1989). 15 Id. at 999. 16 Id. 12 13

The sensibility of ‘expressive genericity’

261

Courts subsequently parsed this language to form the rule that unauthorized expressive uses of trademarks will not be found infringing if (1) the use of the mark is artistically relevant to the product in connection with which the mark is used, and (2) the use does not explicitly mislead consumers as to the source or nature of the product. It was largely the Ninth Circuit Court of Appeals that then developed the test into a powerfully defendant-friendly shield against liability for unauthorized expressive uses of trademarks. In the video game case E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc.,17 the Ninth Circuit expanded the application of the test beyond the titles of expressive works to the contents of those works.18 It also established that with respect to the first prong of the Rogers v. Grimaldi test, the level of artistic relevance ‘merely must be above zero.’19 This has since proven to be an exceedingly easy standard to satisfy. Since E.S.S., no defendant has failed to meet it.20 In Brown v. Electronic Arts, Inc.,21 the Ninth Circuit then dramatically narrowed the second prong of the Rogers v. Grimaldi test. In Brown, the famous American football player Jim Brown sued the video game maker Electronic Arts on the ground that the contents of its football simulation game infringed his trademark rights.22 The Ninth Circuit found that Brown’s claims failed under the second prong: To be relevant, evidence must relate to the nature of the behavior of the identifying material’s user, not the impact of the use. Even if Brown could offer a survey demonstrating that consumers of the Madden NFL series believed that Brown endorsed the game, that would not support the claim that the use was explicitly misleading to consumers.23

Here, the Ninth Circuit apparently read into the second prong something akin to an intent standard, and one in which the necessary intent was not simply to indirectly or implicitly confuse consumers, but to explicitly do so.24 These 547 F.3d 1095 (9th Cir. 2008). Id. at 1099. 19 Id. at 1100. 20 In Parks v. LaFace Records, 329 F.3d 437 (6th Cir. 2003), which preceded E.S.S., the court found an issue of fact under the first prong. See id. at 458: There is a genuine issue of material fact whether the use of Rosa Parks’ name as a title to the song and on the cover of the album is artistically related to the content of the song or whether the use of the name Rosa Parks is nothing more than a misleading advertisement for the sale of the song. 21 Brown v. Electronic Arts, Inc., 724 F.3d 1235 (9th Cir. 2013). 22 For reasons explained in the opinion, the court did not consider the packaging of the video game. See id. at 1247 n. 6. 23 Id. at 1246. 24 Id. 17 18

262

Improving intellectual property

and other appellate court cases eventually led most commentators to conclude that, as applied, the Rogers v. Grimaldi test was overwhelmingly defendant friendly.25 It was akin to strict scrutiny in constitutional law. It was a test that was strict in theory but fatal in fact to a plaintiff’s claims of infringement. Through the course of the development of the Rogers v. Grimaldi test from 1989 to the late 2010s, courts increasingly approached expressive use cases in trademark law with a sensibility consistent with if not directly inspired by Expressive Genericity. They recognized that marks could carry ‘surplus value’ beyond their source-indicating function. They rejected the view that if a mark did develop such surplus value, then the owner of the mark should have the exclusive right to control that value, what Expressive Genericity criticized as the ‘‘if value, then right’ theory.’26 The result was that, propelled forward by First Amendment values, American trademark doctrine evolved into one of the most pro-speech bodies of trademark doctrine in the world.27

3.

THE POTENTIAL FALL OF ROGERS V. GRIMALDI

Perhaps unsurprisingly, the rise and rise of Rogers v. Grimaldi has not lasted. In recent years, courts have begun to undercut or outright ignore the test and have deviated from the teachings and sensibility of Expressive Genericity. They have relapsed back to older, less nuanced, less culturally-aware modes of analysis of expressive uses of trademarks. This retreat first began in 2018 with the Ninth Circuit opinion in Gordon v. Drape.28 The defendant published greeting cards using the plaintiff’s catch phrase, which the plaintiff had registered as a trademark at the U.S. Patent and Trademark Office. The defendant claimed the mantel of ‘artistic expression’ and asserted that it could not be liable under the Rogers v. Grimaldi test. The Ninth Circuit took pains to declare that ‘[t]he Rogers test is not an automatic safe harbor for any minimally expressive work that copies someone else’s mark,’29 though it then admitted that ‘on every prior occasion in which we have applied the test, we have found that it barred an infringement claim as

25 See, e.g., Twentieth Century Fox TV v. Empire Distribution, Inc., 875 F.3d 1192 (9th Cir. 2017). 26 Dreyfuss, supra note 1, at 405. 27 While the Rogers v. Grimaldi test was at the time reliably pro-speech and defendant-friendly, it was and remains another matter whether a defendant could afford to vindicate its rights under Rogers v. Grimaldi in court. 28 909 F.3d 257 (9th Cir. 2018). 29 Id. at 261.

The sensibility of ‘expressive genericity’

263

a matter of law.’30 Gordon, however, was a case whose facts clearly suggested a defendant acting in bad faith and for profit to misappropriate another’s expression. Having accepted without comment that Gordon held exclusive trademark rights in his catch phrase, the Ninth Circuit needed to find a way to rule in his favor, which here would take the form of reversing the District Court’s grant of summary judgment to the defendant. The Ninth Circuit did so by reading into the second prong of Rogers v. Grimaldi something akin to a transformativeness test: Did the defendant use the mark at issue in the same way as the plaintiff did or did the defendant instead add some minimal artistic expression of its own?31 This has proven to be a controversial amendment to the Rogers v. Grimaldi test, but scholars have generally accepted that overall the court reached the right result. The real trouble has come more recently, in a series of opinions out of the district courts of the Second Circuit. Each case involved ‘hybrid usage’ facts like those Dreyfuss had in mind in Expressive Genericity decades earlier. In the 2021 case Nike, Inc. v. MSCHF Product Studio, Inc.,32 the defendant was a Brooklyn-based art collective that sold modified versions of the plaintiff’s running shoes invoking satanism. These facts called out for an easy application of the Rogers v. Grimaldi test. Yet the District Court for the Eastern District of New York granted the plaintiff’s motion for a temporary restraining order. In a brief opinion, the court made no reference to Rogers v. Grimaldi and simply concluded that ‘based on the limited record’33 at that stage of the litigation the defendant had not yet met its burden of persuasion on its ‘First Amendment defense.’34 Subsequent opinions have been more troubling. In the 2022 case Vans, Inc. v. MSCHF Product Studio, Inc.,35 the art collective produced parody versions of the plaintiff’s casual shoes, facts that again would appear to easily fit within the ambit of the Rogers v. Grimaldi test. This time the Eastern District judge wrote a thorough opinion granting the plaintiff’s motion for a temporary restraining order and preliminary injunction. But in the opinion, the court failed to make any mention whatsoever of the Rogers v. Grimaldi test, not even to reject its application. Instead, inexplicably, the court adopted the mode of analysis presented by the Fourth Circuit in Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, which seeks in essence to determine if the defendant’s work

32 33 34 35 30 31

Id. Id. at 271. No. 21 Civ. 1679 (E.D.N.Y. April 1, 2021). Id. at 3. Id. No. 22 Civ. 2156, 2022 WL 1446681 (E.D.N.Y. April 29, 2022).

264

Improving intellectual property

constitutes a ‘successful parody.’36 This is a far more plaintiff-friendly mode of analysis than that made available by the Rogers v. Grimaldi test. The potential fall of Rogers v. Grimaldi, however, has come in the form of a Southern District opinion in the 2022 case Hermès International v. Rothschild.37 Rothschild was producing non-fungible tokens referring to images he had developed depicting Hermès products.38 In denying Rothschild’s motion to dismiss, the District Court dutifully applied the Rogers v. Grimaldi test. But it ruled that the appropriate way to determine under the second prong if the defendant’s conduct was ‘explicitly misleading’ was to apply ‘the venerable Polaroid factors,’39 a fact-intensive inquiry, the court explained, that required that the case proceed. The Polaroid factors are the eight factors that Second Circuit courts use to determine in a standard, non-expressive use case if the defendant’s conduct will create a likelihood of confusion as to source among consumers.40 In returning to the Polaroid factors to analyze the second, ‘explicitly misleading’ step in the Rogers analysis, the District Court followed the example the Second Circuit set in its 1993 opinion in Twin Peaks Productions, Inc. v. Publications International, Ltd., which came four years after Rogers. And in fairness to the District Court, Twin Peaks remains good law. But the danger is that the Hermès court may merely apply the Polaroid factors as is without due recognition of the First Amendment values at stake or, more specifically, the ‘explicitly misleading’ standard established in Rogers. If that approach takes hold, the Second Circuit’s treatment of expressive uses of trademarks would regress three decades back to a time before Expressive Genericity when such uses were severely constricted under the law.41

4. CONCLUSION Expressive Genericity has proven to be the kind of classic scholarly work that goes through periods of influence and importance. When it first appeared, it 36 507 F.3d 252 (4th Cir. 2007). The Vans court cited a Southern District opinion that had included a reference to Haute Diggity Dog. See Vans, Inc. v. MSCHF Product Studio, Inc., 2022 WL 1446681, at *6 (quoting Louis Vuitton Malletier, S.A. v. My Other Bag, Inc., 156 F. Supp. 3d 425, 434–35 (S.D.N.Y. 2016)). The Vans court then ended up adopting the Haute Diggity Dog approach, apparently without realizing that the Rogers v. Grimaldi analysis should instead apply in the Second Circuit. 37 __ F.Supp.3d __, No. 22 Civ. 384, 2022 WL 1564597 (S.D.N.Y. May 18, 2022). 38 Id. at *2. 39 Id. at *5 (quoting Twin Peaks Prods., Inc. v. Publ’ns Int’l Ltd., 996 F.2d 1366, 1379 (2d Cir. 1993)). 40 See Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961). 41 See, e.g., Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200 (2nd Cir. 1979).

The sensibility of ‘expressive genericity’

265

gave crucial momentum to a new way of thinking about the expressive uses of trademarks, one more informed by social science and humanities understandings of the workings of language and culture than by the far narrower tradition of legal writing about the First Amendment. By the early 2010s, the sensibility of the essay had basically prevailed. The urgency with which we had initially embraced its teachings was replaced with a perhaps overly complacent sense of victory. But recent Federal Court opinions make clear that the essay remains an indispensable resource, both in substance and even more importantly in sensibility, for preserving freedom of expression in a culture whose most meaningful signs are often the subject of intellectual property rights.

26. Trademarks as language in the 21st century David Tan 1.

LAYING THE FOUNDATION – EXPRESSIVE GENERICITY: TRADEMARKS AS LANGUAGE IN THE PEPSI GENERATION

Scholars in the field of intellectual property across the world are unquestionably familiar with the illustrious career of Professor Rochelle Dreyfuss and her influential scholarship, which spans the spectrum from patents to right of publicity. As a scholar based in Singapore, my own work on an interdisciplinary cultural analysis of intellectual property rights has been significantly inspired by her iconic article published over 30 years ago titled Expressive Genericity: Trademarks as Language in the Pepsi Generation.1 In his 2004 article, The Semiotic Analysis of Trademarks, Professor Barton Beebe comments that ‘Rochelle Cooper Dreyfuss was among the first to observe that trademarks had become independent commodities’.2 As Dreyfuss remarks, Trademarks have come a long way. Originating in the stratified economy of the middle ages as a marketing tool of the merchant class, these symbols have passed into popular culture. During the journey, ideograms that once functioned solely as signals denoting the source, origin, and quality of goods, have become products in their own right, valued as indicators of the status, preferences, and aspirations of those who use them.3

Indeed today, it is widely recognised that a trademark is as symbolic as it is functional: It does much more than designate source or origin of goods.

1 Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the Pepsi Generation, 65 Notre Dame L. Rev. 397 (1990). It has been cited almost 300 times, according to Westlaw, as of the start of 2022. 2 Barton Beebe, The Semiotic Analysis of Trademark Law, 51 UCLA L. Rev. 621, fn 178 (2004). 3 Dreyfuss, supra note 1, at 397.

266

Trademarks as language in the 21st century

267

A trademark is often identified by distinctive visual elements; it embodies a bundle of affective values for the consumer, and its meaning is shaped by producers and consumers. Building on Dreyfuss’ thesis, Professor Megan Richardson observed in 2004: ‘[T]rade marks tell stories. Their expressiveness is the basis of commercial activity, the trader-author the conduit of meaning, and the market-audience the monitor and arbiter of taste.’4 Similarly, Jason Bosland notes that: From a cultural perspective trade marks are vitally important. Not just an aid to consumers searching for desirable goods and service, trade marks also constitute a rich form of cultural expression—a language that cuts across social and political divides to provide a wealth of material with which to identify, negotiate and augment cultural meanings and subjectivities.5

It is fair to say that Expressive Genericity has been a springboard to more writings that interrogate the non-source-designating functions of a trademark (i.e., beyond the ‘signaling’ function of the mark6) by drawing upon interdisciplinary approaches such as from cultural studies, literary studies or semiotics. Dreyfuss’ prescient comment in Expressive Genericity reads like it was written today: Some trademarks have worked their way into the English language; others provide bases for vibrant, evocative metaphors. In a sense, trademarks are the emerging lingua franca: with a sufficient command of these terms, one can make oneself understood the world over … . 7

In particular, Professor Dreyfuss highlights that it is the hybrid usages of trademarks, which exist along the spectrum between what might be called their signaling and expressive functions, that have caused most of the difficulties in the cases before the court.8 In trademark dilution cases, such uses today tend to be resolved in favour of the defendant under the non-commercial use exception

4 Megan Richardson, Trade Marks and Language, 26 Sydney L. Rev. 193, 196 (2004). 5 Jason Bosland, The Culture of Trade Marks: An Alternative Cultural Theory Perspective, 10 Media & Arts L. Rev. 99, 99 (2005). See also Megan Richardson, Trade Marks and Language, 26 Sydney L. Rev. 193, 213 (2004). 6 Dreyfuss, supra note 1, at 400. 7 Id. at 397–8. 8 Id. at 401.

Improving intellectual property

268

so long as the courts find an expressive component (such as parody or satire) albeit in a commercial context.9 Back in 1990, Dreyfuss had intimated: Because so many trademark usages are hybrid, free speech interests are deeply implicated by this migration. If investment is dispositive of the trademark owner’s right to control, then the public’s ability to evoke the expressive dimension of marks is in danger of significant restriction. Furthermore, fallacies in the fundamental assumptions made by courts that have approved this ‘if value, then right’ theory mean that the right lacks a coherent limit.10

In Dreyfuss’ analysis of the US Supreme Court’s decision in San Francisco Arts & Athletics, Inc. v. United States Olympic Committee,11 her engagement with cognitive and linguistic studies is instructive in laying the ground for the study of the semiotic nature of marks. Dreyfuss explains as follows: [S]ome words have core denotations (definitions that can be found in a dictionary), and a set of connotations that depend upon their history, derivation, and identification with users. These peripheral meanings are often highly individualized to the speaker, the listener, and possibly to the method by which they interact or perceive one another. When such words are used, they become infused with the listener’s own associations, and their message is incorporated into the listener’s own frame of reference.12

Although Expressive Genericity focuses on ‘words’ and is concerned with a cost-benefit analysis of producing and developing words versus public access to marks for expressive purposes, its observations are also relevant to symbols. Dreyfuss modestly states: To provide protection to the expressive vocabulary that is equivalent in range to that provided for competitive speech, the full array of trademark defenses would have to be reconstructed, a task beyond the scope of this Article … [T]he new inquiry would establish the set of denotations and connotations associated with a mark and determine whether there exists another effective mechanism for invoking that set. Because acceptance into the fabric of ordinary language would indicate both that a mark possessed an expressive dimension and that the public found this dimension a useful (and, possibly, needed) addition to the vocabulary, it would also be helpful

9 E.g. Justin J. Gunnell, Evaluation of the Dilution-Parody Paradox in the Wake of the Trademark Dilution Revision Act of 2006, 26 Cardozo Arts & Ent. L. J. 441 (2008); Alexandra E. Olson, Dilution by Tarnishment: An Unworkable Cause of Action in Cases of Artistic Expression, 53 B.C.L. Rev. 693 (2012). 10 Dreyfuss, supra note 1, at 405. 11 483 U.S. 522 (1987). 12 Dreyfuss, supra note 1, at 413.

Trademarks as language in the 21st century

269

to look at the information that linguists use to decide whether a borrowing has been fully received into the language … .13

2.

SEMIOTIC ANALYSIS OF MARKS IN THE 21ST CENTURY

By the 21st century, judicial and scholarly treatments of trademark law are increasingly making reference to the semiotic nature of trademarks. Semiotics is fundamentally the study of signs.14 Semiotics seeks to understand the operation of a given system or process by observing the function of signification, expression, representation and communication.15 Generally semiotics has followed two independent lines: the linguistic tradition of Ferdinand de Saussure, and the logical tradition of Charles Sanders Peirce.16 The Swiss linguist Ferdinand de Saussure, widely credited as the most influential scholar in the field of semiotics, emphasised the nature of the sign as the coded association of a material signifier, such as the sound of a word, with a signified or preconceived meaning.17 Umberto Eco describes semiotics as a social science discipline that studies ‘everything that can be taken as a sign’.18 A sign is simply a thing that stands for something else. Although it has its origins in the study of language, semiotic analysis is a trans-linguistic activity19 that can be applied to the inquiry of ‘[a system] of structural codes … that engages with culture, consumption, and communication in the marketplace.’20 In his oft-cited work on the semiotic analyses of consumer cultures, Mythologies, Roland Barthes explains that ‘any semiology postulates a relation between two terms, a signifier and a signified’21 and that a sign ‘is the associative total of the first two terms.’22 A ‘myth’ is thereby created when meaning within

Dreyfuss, supra note 1, at 421. E.g. John Deely, Introducing Semiotic: Its History and Doctrine 133 (1982). See also Ferdinand de Saussure, Course in General Linguistics 113–14 (Wade Baskin trans., 1959). 15 Michael Pulos, A Semiotic Solution to the Propertization Problem of Trademark 53 UCLA L. Rev. 833, 844, (2006). 16 Id. at 844; Beebe, supra note 2, 661. 17 See generally Ferdinand de Sausurre, The Course in General Linguistics (Cours de linguistique générale) (trans Roy Harris) ([1916] 1983). 18 Umberto Eco, The Theory of Signs 7 (1979). 19 Roland Barthes, Elements of Semiology 11 (trans Annette Lavers and Colin Smith) ([1964] 2000). 20 Laura R. Oswald, Marketing Semiotics: Signs, Strategies, and Brand Values 47 (2012). 21 Roland Barthes, Mythologies 111 (Annette Lavers trans, 1972) (1957). 22 Id. 13 14

270

Improving intellectual property

a semiological system is transformed into form as represented by a sign;23 each sign becomes naturally associated with a set of meanings or ‘historical intention’24 that is ultimately consumed. For famous trademarks, the mark signifier/ signified relationship would have become universally codified for consumers; the consumers will automatically and consistently think of the coded meanings and values (the signified) when they are exposed to the mark signifiers. Recent applications of semiotics tend to adopt the triadic model in order to explain trademark law. According to this model’s structure, a trademark is broken down into three component parts: (1) the word or symbol (signifier), (2) the firm’s goodwill associated with the word or symbol (signified), and (3) the good or service sold (referent). For example, the LOUIS VUITTON marks can be understood semiotically thus: The words ‘Louis Vuitton’ and/ or the ‘LV’ or ‘LV Monogram’ symbols comprise the signifier, the goodwill of Louis Vuitton Malletier, is the signified, and the products being sold (handbags, clothes, fashion accessories etc) are the referents. Beebe observes that ‘trademark producers have made a mockery’ of the assumptions underlying this triadic structure, noting that ‘the triadic structuration is being attacked … by the granting of protection to trademarks as products themselves’.25 So it appears that when courts grant trademark protection to words or symbols that are not used to identify products, but rather are the products themselves, the courts are merging the referent and the signified. In respect of trademark dilution, Beebe considers that dilution relies on a recognition of semiotic notions of value, and ‘necessarily involves global intermark relations of value in addition to local intramark relations of signification.’26 Essentially, in according a trademark the status of a ‘famous’ mark,27 one is implicitly recognising that it is the differential distinctiveness of signifiers from other signifiers that ‘makes possible the signifier’s distinctiveness of its signified and referent.’28 A luxury fashion trademark is perhaps one of the best examples of the status-signifying power of the mark in contemporary society. I have argued that well-known brands like Louis Vuitton, Apple and Nike are alpha brands that carry significant ‘semiotic freight,’ and they possess particular configurations of meanings and can ‘offer peculiarly powerful affirmations of belonging, recognition, and meaning in the midst of the lives of their [consumers].’29 Id. at 131. Id. at 142. 25 Id. at 656–657. 26 Id. at 701. 27 Lanham Act § 43(c), 15 U.S.C.A. § 1125(c). 28 Beebe, supra note 2, at 702. 29 David Tan, The Semiotics of Alpha Brands: Encoding/Decoding/Recoding/ Transcoding of Louis Vuitton and Implications for Trademark Laws 32 Cardozo Arts & Ent. L. J. 221, 224 (2013). 23 24

Trademarks as language in the 21st century

271

Thus the trademark, or brand logo, on goods and services does much more than simply designate the origin of the producer, but it also functions as a visual signifier of a set of signified meanings. It is precisely this symbolic nature of the Saussurean sign which ‘embeds structural semiotics in the culture of consumers’30 that will drive consumption behaviour in modern society. Laura Oswald also contends that ‘[t]he brand system resembles la langue, the term that Ferdinand de Saussure gives to the system of linguistic codes that defines the range of possibilities for producing discourses.’31 A famous brand like Louis Vuitton transcends clothing, bags, and accessories to take on political, pedagogical, and cultural meanings, in much the same way as McDonald’s transcends ground beef and potatoes.32 Similarly, the Disney mark is not a source designation for cartoons and family entertainment, but has become ‘synonymous with the notion of childhood innocence’ and a semiotic sign for ‘a pristine never-never land in which children’s fantasies come true, happiness reigns, and innocence is kept safe through the magic of pixie dust.’33 Expressive Genericity has inspired me to approach the study of luxury brands, in particular the Louis Vuitton mark, as ‘ideograms that once functioned solely as signals denoting the source [which have] become products in their own right, valued as indicators of the status, preferences, and aspirations of those who use them.’34 The Louis Vuitton brand, founded in 1854, is today worth more than Tiffany, Fendi, Cartier, Rolex and Chanel combined.35 Louis Vuitton products are the systematised significations of capitalist consumption and heightened social status, and are rarely, if ever, consumed or desired for their utilitarian functions. Recognising the essential function of a trademark as a designation of source or origin, however, does not preclude an acknowledgment that a trademark may have other functions. The European Court of Justice noted that the ‘trade mark acquires a life of its own, making a statement … about quality, reputation and even, in certain cases, a way of seeing life.’36 In Barthesian terms, the alpha brand can be seen to be a cultural narrative or

Id. Oswald, supra note 20, at 50 (internal citations omitted). 32 Tan, supra note 29, at 227. 33 Henry A. Giroux and Grace Pollock, The Mouse That Roared: Disney and the End of Innocence 17 (2010) . 34 Dreyfuss, supra note 1, at 397. 35 Mark Ritson, Louis Vuitton: The World’s Strongest Luxury Brand, Luxury Society (Mar. 25, 2011), http://​luxurysociety​.com/​articles/​2011/​03/​louis​-vuitton​-the​ -worlds​-strongest​-luxury​-brand. 36 Arsenal Football Club Plc v. Reed, Case C-206/01, 2002 E.C.R. I-10273, at I-10286. 30 31

272

Improving intellectual property

signifier that is synonymous with the dominant culture.37 In his critique of consumption, Jean Baudrillard contends that the consumer ‘no longer relates to a particular object in its specific utility, but to a set of objects in its total signification.’38 Increasingly, when consumers buy Louis Vuitton products, they are not making consumption decisions based on the functional or utilitarian nature of these products but they are buying into the significations of these commodities in the construction of their self-identities39 – more of a communicative experience than a consumptive experience. Similarly, Jeremy Sheff notes that the modern brand is ‘a social phenomenon’ and ‘[a]s consumers, we use brands [or trademarks] as tokens of social differentiation, identification, and expression.’40 Stacey Dogan and Mark Lemley have emphatically stated: ‘Brands, then, don’t just help trademark owners speak; they help all of us speak.’41 Today, the analysis of how trademarks are used in everyday language – often metaphorically to refer to particular brand attributes or values – is often done through the lens of semiotics. Semiotics is a useful methodology to show that a mark has acquired distinctiveness (i.e., the sign has acquired a set of stable meanings after a period of use that distinguishes it from other signs),42 that a mark is used to express meanings different from the original mark whether as a parody,43 as critical commentary,44 or as political speech.45 I have observed that it is important to study how objects of intellectual property, such as works and marks, are used to ‘construct a social narrative of ourselves as

37 Patrick Fuery and Kelli Fuery, Visual Cultures and Critical Theory 93, 101 (2003). 38 Jean Baudrillard, The Consumer Society: Myths and Structures 27 (Chris Turner trans, first published 1970, 1998 ed) [trans of: La Socièté de Consummation]. 39 See also Zygmunt Bauman, Postmodernity and Its Discontents (1997); Zygmunt Bauman, Consuming Life (2007). 40 Jeremy N. Sheff, Brand Renegades 1 NYU J. Intellectual Property & Ent. Law 128, 129 (2011); see also Jeremy N. Sheff, Velben Brands 96 Minn. L. Rev. 769 (2012). 41 Stacey L. Dogan and Mark A. Lemley, Parody as Brand, 47 UC Davis L. Rev. 473, 494 (2013). 42 E.g. Angel Alonso-Cortes, A Case Study of Semiotic Distinctiveness in Brand Names 29 International J. Semiotics of Law 635 (2016); Christian Louboutin SA v. Yves Saint Laurent America, Inc, 696 F.3d 206 (2nd Cir. 2012). 43 E.g. Hormel Foods Corporation v. Jim Henson Productions, 73 F.3d 497 (2nd Cir. 1996); LL Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 26 (1st Cir. 1987). 44 E.g. Radiance Foundation v. National Association for the Advancement of Colored People, 786 F.3d 316 (4th Cir. 2015); Louis Vuitton Malletier SA v. Haute Diggity Dog LLC, 507 F.3d 252 (4th Cir. 2007). 45 E.g. Lucasfilm Ltd. v. High Frontier, 622 F.Supp 931 (DDC 1985); San Francisco Arts & Athletics, Inc v. United States Olympic Committee, 483 U.S. 522 (1987); Matal v. Tam, 137 S.Ct. 1744 (2017); In Re: Elster, 26 F.4th 1328 (Fed Cir. 2022).

Trademarks as language in the 21st century

273

part of a particular social group and the use of specific IP narratives or signs helps to reify group identity in a particular way.’46 The semiotic signification of Barbie – both the doll and the trademark – has been discussed by the Ninth Circuit Court of Appeals on several occasions.47 In particular, in Mattel Inc. v. Walking Mountain Productions, the court found that ‘Barbie, and all the associations she has acquired through Mattel’s impressive marketing success, conveys these messages in a particular way that is ripe for social comment.’48 Generally, the US decisions have demonstrated a willingness on the part of the courts to accept a semiotic reading of trademarks as cultural signs when assessing likelihood of confusion for trademark infringement or evaluating the availability of the non-commercial use exception in a trademark dilution claim for the purposes of parody, satire or political speech. US Courts of Appeals have consistently declined to find liability against defendants who engaged in non-illegal cultural jamming: Aqua’s Barbie Girl,49 Thomas Forsythe’s Barbie photographs,50 Haute Diggity Dog’s Chewy Vuiton dog toy51 and My Other Bag’s tote bags depicting drawings of Louis Vuitton bags.52 In an earlier decision, the court in Girl Scouts of the United States of America and Boys Scouts of America v. Bantam Doubleday Dell Publishing Group, Inc., noted that commentators have observed ‘that courts frequently overprotect trademarks at the expense of First Amendment interests’, citing Dreyfuss.53 The court then proceeded to tilt the scales in favour of First Amendment concerns by applying the artistic relevance test articulated in Rogers v. Grimaldi,54 and concluded that ‘this Court is unable to find that there is a likelihood of confusion between Plaintiffs’ protected trademarks and 46 David Tan, De(Re)Constructing Narratives in Intellectual Property Law: Transformative Play, Culture Jamming, and Poststructural Disruptions, 32 Law & Lit. 75, 80 (2020). 47 Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002); Mattel, Inc. v. Walking Mountain Productions, 353 F.3d 792 (9th Cir. 2003). 48 Mattel, Inc. v. Walking Mountain Productions, 353 F.3d 792, 802 (9th Cir. 2003). 49 Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894 (9th Cir. 2002). 50 Mattel, Inc. v. Walking Mountain Productions, 353 F.3d 792 (9th Cir. 2003). 51 Louis Vuitton Malletier SA v. Haute Diggity Dog LLC, 507 F.3d 252 (4th Cir. 2007). 52 Louis Vuitton Malletier SA v. My Other Bag, Inc., 674 Fed. Appx. 16, No. 16-241-cv (22 Dec 2016). 53 Girl Scourts of the United States of America and Boys Scouts of America v. Bantam Doubleday Dell Publishing Group, Inc., 808 F.Supp. 1112, 118 (SDNY 1992) (citing Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the Pepsi Generation, 65 Notre Dame L. Rev. 397, 398 (1990)). 54 Id. at 1119. It should be noted that the Ninth Circuit had also adopted this test. See Mattel, Inc. v. MCA Records, 296 F.3d 894 (9th Cir. 2002); Mattel, Inc. v. Walking

274

Improving intellectual property

Defendants’ children’s books sufficient to overcome the First Amendment value of protecting creative works such as Defendants’ books.’55 When the US Supreme Court declared that the disparagement clause of Lanham Act56 violated the First Amendment, Justice Alito wrote that trademarks are private speech,57 and the prohibition of the registration of such offensive trademarks constituted constitutionally impermissible viewpoint discrimination.58 In a separate judgment by Justice Kennedy, with whom Justices Ginsburg, Sotomayor and Kagan joined, it was observed that, ‘[i]n the realm of trademarks, the metaphorical marketplace of ideas becomes a tangible, powerful reality … These marks make up the expression of everyday life …’.59 Following that, the Iancu v. Brunetti majority held that the ‘immoral or scandalous’ bar in Lanham Act 15 U.S.C. § 1052(a) similarly discriminated on the basis of viewpoint, thus violating the First Amendment doctrine, and was therefore invalid.60 More recently, when Steve Elster sought to register the phrase ‘TRUMP TOO SMALL’ in standard characters for use on shirts, the Federal Circuit commented that the registration could not be denied as ‘the government has no valid publicity interest that could overcome the First Amendment protections afforded to the political criticism embodied in Elster’s mark.’61 The political agenda of brand renegades, counterpublics, or subaltern groups may be best communicated to mainstream society through the use of widely recognised trademarks to which the public has ascribed particular representative values or characteristics. We are all speaking the same language through the consumption of marks. The public act of ‘consuming’ a brand can in itself be a form of commentary on or critique of the coded social meanings in that

Mountains Prods., 353 F.3d 792 (9th Cir. 2003); VIP Products LLC v. Jack Daniel’s Properties, Inc, 953 F.3d 1170 (9th Cir. 2020). 55 Id. at 1130. 56 Lanham Act 15 U.S.C. § 1052(a). The disparagement clause prohibits the registration of trademarks that may disparage or bring into contempt or disrepute any persons, living or dead. 57 Matal v. Tam, 137 S.Ct. 1744, 1760 (2017). 58 Id. at 1763. 59 Id. at 1768. The applicant Simon Tam has argued that he wanted to use ‘The Slants’ to ‘supplant a racial epithet, using new insights, musical talents, and wry humor to make it a badge of pride’, thus subverting ‘an offensive term for the positive purpose of celebrating all that Asian-Americans can and do contribute to our diverse Nation.’ Id. at 1766–1767. 60 Iancu v. Brunetti, 139 S.Ct. 2294 (2019). 61 In Re: Elster, 26 F.4th 1328, 1338 (Fed Cir. 2022).

Trademarks as language in the 21st century

275

brand thus rendering it an ‘expressive’ act.62 Judge Kozinski in Mattel, Inc. v. MCA Records, Inc., opined that: [O]nce imbued with such expressive value, the trademark becomes a word in our language and assumes a role outside the bounds of trademark law … Were we to ignore the expressive value that some marks assume, trademark rights would grow to encroach upon the zone protected by the First Amendment. Simply put, the trademark owner does not have the right to control public discourse whenever the public imbues his mark with a meaning beyond its source-identifying function.63

When the commercial parodist draws on the semiotic meanings encoded in a famous mark to disrupt the myths or provide social commentary, US courts appear willing to construe the defences more generously. For instance, the Ninth Circuit upheld a commercial song parody directed at Mattel’s Barbie Doll observing that ‘with Barbie, Mattel created not just a toy but a cultural icon . . . [and] with fame often comes unwanted attention.’64

3. CONCLUSION Famous trademarks, as well as well-known copyrighted works and celebrity personalities, can function like Barthesian myths with universal ideological codings that are recognised globally, enabling them to be read as polysemous texts that invite semiotic recodings. In the words of Dreyfuss, these marks ‘provide bases for vibrant, evocative metaphors’65 and today have become the ‘lingua franca: with a sufficient command of these terms, one can make oneself understood the world over.’66 In the global trademark system, Beebe argues that it is populated ‘by globally famous ‘hypermarks’ that are not so much designations of source as commodified simulations of such designations, simulations that are themselves the focus of consumption rather than the underlying product, if any, to which they are affixed.’67 Audiences inevitably engage with marks, works and celebrities via ‘textual signification’ and ‘connect with [them] through interpretive and affective processes of semiotic engagement.’68 Dreyfuss ends her Expressive Genericity article with a modest wish: ‘My hope is that the direction that I have taken, which recognizes trademark law as

Sheff, supra note 40, at 153–158. Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 900 (9th Cir. 2002). 64 Id. at 898–899. 65 Dreyfuss, supra note 1, at 397. 66 Id. at 397–398. 67 Barton Beebe, Intellectual Property Law and the Sumptuary Code, 123 Harv. L. Rev. 809, 884 (2010). 68 Ian MacRury, Advertising (2009) at 190. 62 63

276

Improving intellectual property

the principal jurisprudential tradition for analyzing the significance of words, will be pursued by others.’69 At the time of writing, Expressive Genericity is still being referenced by scholars in the leading law reviews.70 I dare say her hope has been fulfilled as her iconic scholarship has laid invaluable foundations in place for a kaleidoscope of writings over the last three decades, and there is certainly much more interdisciplinary research and writing to be done in the 21st century.

Dreyfuss, supra note 1, at 424. E.g., Jennifer E. Rothman, Navigating the Identity Thicket: Trademark’s Lost Theory of Personality, the Right of Publicity, and Preemption, 135 Harv. L. Rev. 1271, 1293 fn 93 (2022); Amy Adler and Jeanne C. Fromer, Taking Intellectual Property into Their Own Hands, 107 Calif. L. Rev. 1455, 1497 fn 228 (2019). 69 70

27. Do trademarks assist global fabless manufacturing? Stephen Petrie, Trevor Kollmann, Russell Thomson, Alexandru Codoreanu and Elizabeth Webster1 1. INTRODUCTION The hallmark of Professor Rochelle Dreyfuss’ work is her capacity to think beyond existing circumstances to suggest improvements to economic and legal institutions. Her work deftly maps how the opportunities and challenges through which new technologies and ways of organising the economy align with IP institutions.2 One of these new forms of organisation, which is still on the ascendency, is fabless manufacturing. A fabless manufacturer is a business that designs, researches, develops, retails, and/or markets a product, but does not assemble or fabricate. Apple Inc., which leads in the design, development, and sale of phones and computers, is an example par excellence. Managers in Cupertino, California have de facto control over the daily activities of more than one million employees of Taiwanese-owned Foxconn in Shenzen, China, but Apple itself does little manufacture, export, or foreign investment.3 Similarly, Qualcomm, which designs chips that run Android phones; NVIDIA which designs chips 1 We would like to thank the participants at the Asia Pacific Innovation Conference, Beijing, China; 10–11 October 2019, 5th Geography of Innovation Conference, Stavanger, Norway; 29–31 January 2020, seminar participants at the United States Patent and Trademark Office, Copenhagen Business School and University of Liverpool, for helpful comments. Funder the Australian Research Council and IP Australia. Grant LP160100776. 2 Rochelle C Dreyfuss, ‘The challenges facing IP systems: researching for the future’ in Peter Drahos, Gustavo Chidini and Hans Ullrich (eds), Kritika: Essays on Intellectual Property (vol 3, Edward Elgar 2020). 3 For example, if the value-added of Apple IP were to be recorded as a US export, it would contribute 3.7 per cent to total US exports: Yuqing Xing, ‘Global value chains and the “missing exports” of the United States’ (2020) 61 China Economic Review 1.

277

278

Improving intellectual property

that control most of the graphics card market; and AMD, which designs CPU chips that compete against Intel and GPU chips that compete against NVIDIA—all are examples of chip designers that use third-party manufacturing such as TSMC. As businesses are classified by national statistical agencies according to the activity that contributes the largest share of their value-added, these fabless goods-producing businesses can often be classified within the wholesale trade, professional services sectors, and even rental and hiring services,4 rather than manufacturing. Although we know of the existence of this new model of production, we know less about how related business models, which rely heavily on intangible capital, establish financial viability. It is our contention that the business leading the value chain creates families of trademarks, patents, and design rights, to encircle and control their intangible activities. Although the boundaries around the intellectual property (IP) rights defined in patents and designs are quite circumsubscribed, recent research has found that the scope of protection afforded by trademarks is more elastic. Trademarks can be used to protect investments into product quality, content, distribution networks, and other intangible value generating assets.5 We know, a priori, that a strong commercial imperative exists to obtain trademarks in new markets intended for sales or manufacture.6 The low cost and ease of granting trademarks make them widely used tools. Trademarks also cover a wide range of economic activity. Although many trademarks are associated with consumer products, they are also applied to intermediate inputs and capital goods. Malmberg7 shows that between 1945 and 1960, Ericsson obtained trademarks over half of their professional and component products as well as every consumer product. In this chapter, we focus on the role international trademarks appear to play in complementing global fabless manufacturing business models. We use a new dataset of US businesses’ international trademark filings (called TM-Link) and demonstrate that these data provide a novel perspective on the use of trademark families by fabless manufacturers in the United States.8 4 Non-Financial Intangible Assets (Except Copyrights) Leasing can be included in the rental and hiring industries. 5 Nicholas Economides, ‘The economics of networks’ (1996) 14(6) International Journal of Industrial Organization 673–699. Kelvin Lancaster, ‘The economics of product variety: A survey’ (1990) 9 Marketing Science 189. 6 Marco S. Giarratana and Salvatore Torrisi, ‘Foreign entry and survival in a knowledge-intensive market: Emerging economy countries’ international linkages, technology competences, and firm experience’ (2010) 4 Strategic Entrepreneurship Journal 85. 7 Claes Malmberg, ‘Trademark Statistics as Innovation Indicators? - A Micro Study’ (2005) CIRCLE Electronic Working Paper Series 2005-17. 8 TM-Link is publicly and free online, https://​www​.tmlink​.net​.au/​.

Do trademarks assist global fabless manufacturing?

279

But first, we establish the expected finding that industries engaging in the traditional activities of export and foreign investment also tend to own more international trademarks. We then burrow further into the data to examine the characteristics of industries and businesses that possess excessive international trademarks and find indirect evidence suggesting they are global fabless manufacturers.

2.

HOW PREVALENT IS FABLESS MANUFACTURING?

The extent to which businesses are engaged in global value chains is an important measure as it is used as both a determinant and outcome of regional patterns of economic development.9 Orthodox measures of internationalisation consist of exports, foreign direct investment (FDI), and IP royalties. Each measure tells part of the story, but each has limitations. Export data, for instance, do not capture goods assembled in third countries and gross export data overestimate a country’s international activity because partly finished goods are shipped back and forth across borders, often with little domestic value-added. International royalty payments and trade in IP also tell part of the story, though these are not widely available at the industry or business level. Even where data are available, it is perennially hard to verify whether the IP price is a true reflection of the value of intangible assets, especially where trade occurs between affiliates. Evidence suggests 5 per cent of the revenue from smartphone sales is formally accounted as a return to IP but a further 40 per cent is captured via the high retail price margin.10 In the typical fabless manufacture, fabrication of products is outsourced, often offshore, but the business maintains control of the production process, owns the associated IP, and bears the entrepreneurial risk. Critical to this business model is the capture of profits through control over the whole course of

9 Ronald W. Jones and Henryk Kierzkowski, ‘A framework for fragmentation’ (2000) Tinbergen Institute Discussion Paper No. 00-056/2, Gary Gereffi, John Humphrey and Timothy Sturgeon, ‘The governance of global value chains’ (2005) 12(1) Review of International Political Economy 78, Richard Baldwin and Anthony J. Venables, ‘Spiders and snakes: Offshoring and agglomeration in the global economy’ (2013) 90(2) Journal of International Economics 245, Andrew B. Bernard and Teresa C. Fort, ‘Factoryless goods producing firms’ (2015) 105(5) American Economic Review 518 and Masayuki Morikawa, ‘Factoryless goods producers in Japan’ (2016) 40 Japan and the World Economy 9. 10 World Intellectual Property Organization World Intellectual Property Report 2017: Intangible Capital in Global Value Chains (Geneva 2017).

280

Improving intellectual property

production: knowledge, ownership of materials, design, and quality. Important loci of control are ownership of brand and distribution channels.11 Given the limitations of official data, evidence for the prevalence of these new business models has centred on industry-specific micro measures of offshored outsourcing, dedicated surveys, (confidential) tax records, and service exports.12 Although these data are limited by confidentiality, coverage, or geographic granularity, the collated evidence indicates that fabless international business models are widespread and growing. Bernard and Fort13 estimate that by 2007, 12 per cent of businesses in the US wholesale industry were factory-less goods producers. The US Census Bureau estimates that manufacturing value-added would have been 5 to 20 per cent greater in 2007 if all factory-less goods producers were reclassified to manufacturing.14

3. DATA To estimate whether trademark families are part of the armoury used by fabless manufacturers, we constructed TM-Link, a database of all trademark applications filed by US businesses in five foreign jurisdictions for marks that are ‘equivalent’ to their domestic marks. As such, trademark equivalents, or families, are trademark applications filed in different legal jurisdictions by the same company to protect the same product or service. To test the relationship between international trademarking and the global footprint of corporations, we link TM-Link with export and outward FDI data, viz: • Linked equivalent international trademark applications by US domiciled businesses for the period 1996–2018 from TM-Link. • Exports by industry-state-level (4-digit NAICS), from US International Trade Administration database (2003–2018).

11 Gary A. Knight and Peter W. Liesch, ‘Internationalization: From incremental to born global’ (2016) 51 Journal of World Business 93 and B. Herz and R. Thomson, ‘Retail Foreign Direct Investment by Brand Manufacturers’ (2021) CTI Working Paper. 12 Bernard and Fort (n 9), K. Bayard, D. Byrne, and D. Smith, ‘The Scope of U.S. “Factoryless Manufacturing”’, in Susan N. Houseman and Michael Mandel (eds), Measuring Globalization: Better Trade Statistics for Better Policy: Factoryless Manufacturing, Global Supply Chains, and Trade in Intangibles and Data, (vol 2,WE Upjohn Institute 2015) 81 and Robert C. Johnson, ‘Measuring global value chains’ (2018) 10 Annual Review of Economics 207. 13 Bernard and Fort (n 9). 14 Bayard, Byrne, and Smith (n 12).

Do trademarks assist global fabless manufacturing?

Table 27.1

281

Summary of internationally-linked trademark applications

Trademark applications

US applications by US domicile businesses, 2003–2018

Total with international equivalents indicated by Madrid with international equivalents indicated by Legal Priority with international equivalents indicated by TM-Link

4,695,583 64,513 69,261 563,961

Source. TM-Link. The TM-Link data is available online at https://​www​.tmlink​.net​.au/​.

• Outward FDI series at the industry-state-level (4-digit NAICS), from the Financial Times FDI Markets (2003–2018). TM-Link was constructed using a neural network linking algorithm to identify similar trademarks across five jurisdictions: the United States, Canada, Australia, New Zealand, the UK, and the EU. Trademark equivalence is assessed through algorithmic comparison of the following: trademark text (the words or text depicted in the trademark), filing date, Nice classification, and applicant name. Once we cleaned the data from each national office and consolidated duplicate records, we algorithmically identify equivalent trademarks across jurisdictions – i.e., families of trademarks from a given business filed across different national offices. The linking algorithm we developed to identify these families was applied to all applications that contain trademark text. Our linking algorithm involves two main facets: a binning algorithm and neural network classification algorithm.15 Table 27.1 above shows that of the 4.7 million trademark applications filed in the US Patent and Trademark Office between 2003–2018 by US domiciled businesses, 64,513 filed via the Madrid Protocol; 69,261 claimed international legal priority; but 563,961 had an algorithmically linked mark. That is, 12 per cent of US trademarks filed by US domiciled businesses within this time frame had an equivalent mark in one of the other five jurisdictions.

15 Further details of the linking algorithms can be found in Stephen M. Petrie and T’Mir D. Julius, ‘Representing text as abstract images enables image classifiers to also simultaneously classify text’ (2020), https://​arxiv​.org/​abs/​1908​.07846, Stephen Petrie and others, ‘TM-Link: An Internationally Linked Trademark Database’ (2020) 53(2) Australian Economic Review 254 and Stephen Petrie and others, ‘Do trademarks assist global fabless manufacturing?’ (2022) Centre for Transformative Innovation Working Paper, Swinburne University of Technology, Appendix A.

Improving intellectual property

282

3.1

International Trademarks and Activity of US Businesses

Our primary interest in modelling international trademarks is to show the importance of these trademarks for the business strategy of entities involved in exporting and foreign investment. Secondarily, we aim to demonstrate how international trademarks are used as part of the global fabless manufacturing business model. We model the ratio of international trademarks to total trademark applications within a US state-industry group as a function of exports, FDI and off-shore manufacturing in Equation 27.1. As we do not observe fabless manufacturing directly, the extent of fabless manufacturing will be captured in the error term in Equation 27.2.

where i is the four-digit NAICS industry group, s is the US state and t is year. We log these values and add quadratic terms and the number of establishments within the 4-digit industry and state to control for changes in scale of the industry. Details of how the NAICS-Nice Concordance was constructed is found in Petrie and others.16 Table 27.2 presents the estimations of Equation (27.1). As shown in Column (1), export and FDI activity is strongly positively correlated with international trademarking intensity. In addition, the squared terms suggest that relationships increase at an increasing rate. This result holds when we include control variables for both within industry-group and wholesale establishments as well as a series of US state, year and industry fixed-effects [Columns, (2)–(5)]. Petrie and others (n 15).

16

Do trademarks assist global fabless manufacturing?

Table 27.2

283

Dependent variable = log (share of international trademarks), United States, 2003–2018, OLS

Log Real Gross Exports

(1)

(2)

(3)

(4)

(5)

0.390***

0.421***

0.287***

0.292***

0.145***

(0.007)

(0.006)

(0.006)

(0.006)

(0.010)

Log Real Gross Exports

0.028***

0.031***

0.019***

0.020***

0.009***

Squared

(0.001)

(0.001)

(0.001)

(0.001)

(0.001)

Log Real Outward FDI

0.271***

0.203***

0.160***

0.154***

0.204***

(0.025)

(0.023)

(0.019)

(0.018)

(0.017)

Log Real Outward FDI

0.016***

0.011***

0.011***

0.010***

0.015***

Squared

(0.002)

(0.002)

(0.002)

(0.002)

(0.002)

Log Wholesale

4.569***

4.438***

Establishments

(0.391)

(0.354)

Log Establishments

-0.009

0.552***

14.882***

(0.015)

(0.030)

11.867***

-29.570***

30.668***

Constant

11.685*** (0.147)

(0.155)

(0.172)

(3.551)

(3.224)

Year Effects

N

Y

Y

Y

Y Y

State Fixed Effects

N

N

Y

Y

Industry Fixed Effects

N

N

N

N

Y

Adj. R squared

0.066

0.0243

0.509

0.516

0.603

N

81,600

81,600

81,600

77,742

77,742

Note: * p < 0.10, ** p < 0.05, *** p < 0.01. Dependent Variable: Share of Trademark Applications with International Links (International Orientation of Industry). Unit of analysis is Industry Group (4-digit NAICS)-State-Year. Sample are industry groups within the manufacturing subsector (NAICS 31-33) and wholesaling subsector (NAICS 42) between 2003 and 2018 (inclusive). Log transformations add one to the value to avoid dropping observations with no exports, FDI, etc. Gross Exports and FDI are adjusted for inflation using the Consumer Price Index for all urban consumers (CPI-U) with 2012 set as the base year.

The pattern of residuals from Column (1) should indicate US states and industry groups that are engaged in high levels of global fabless manufacturing. As shown in Table 27.3 below, the East North Central Division, which includes the rust belt states of Michigan, Ohio, and Indiana, have the largest residual, indicating that many of the businesses domiciled in that division are likely engaging in offshore manufacturing. New England has the second highest average residual. The lowest residuals are in the West South Central and Mountain regions. The results suggest that US states that have had long histories of manufacturing and stronger union laws are also the states that are shifting to new business models for manufacturing, characterised by offshoring and arms-length international outsourcing.

Improving intellectual property

284

Table 27.3

Census Division

Average residual value by U.S. census division and selected summary statistics (Mean Value) Residual

International Trademarking

Exports

Outdoing FDI

Intensity New England

2.01

14.08

79.82

7.62

Mid-Atlantic

0.65

14.38

383.79

33.21

East North Central

4.46

17.98

369.58

37.79

West North Central

0.97

13.14

78.28

4.54

South Atlantic

0.21

12.97

187.56

7.05

East South Central

-1.72

10.93

169.99

2.31

West South Central

-3.13

9.61

573.98

17.07

Mountain

-1.97

9.81

61.46

3.01

Pacific

-1.92

10.53

391.71

25.95

Note: The Residual column indicates the average value of the residuals across industries within a U.S. Census division derived from Column (1) in the primary regression results in Table 27.2. See Petrie and others (2022) Appendix C for variable definitions. Rankings are robust to the specification.

The regional differences amongst the residuals closely mirror results found by Fort, Pierce and Schott,17 who found that manufacturing employment since the late 1970s fell the most among businesses located in New England, Mid-Atlantic, and the East North Central divisions. Crucially for our purpose, their results also found that manufacturing businesses continued to increase their employment in their non-manufacturing establishments. The average residual by selected 4-digit industry shows that highest residuals are seen in the following manufacturing categories: Other Transportation Equipment Manufacturing, Motor Vehicle Body and Trailer Manufacturing, Electric Lighting Equipment Manufacturing, and Ventilation, Heating, Air-Conditioning, and Commercial Refrigeration Equipment Manufacturing. These types of manufacturing therefore are predicted to be most heavily engaged in offshore, third-party manufacturing global business models. Also, as expected, the results indicate that those least likely to engage in these business models are commodity producers such as Animal Slaughtering and Processing, Printing and Related Support Activities, Pulp, Paper, and Paperboard Mills, and Fruit and Grain and Oilseed Milling.18

17 Teresa C. Fort, Justin Pierce and Peter K. Schott, ‘New perspectives on the decline of US manufacturing employment’ (2018) 32(2) Journal of Economic Perspectives 47. 18 The full set of average residuals is available in Petrie and others (n 15).

Do trademarks assist global fabless manufacturing?

285

The rankings of residuals by industry group are also related to product complexity. Felipe and others19 find that product complexity, as measured by Hidalgo and Hausmann’s method of reflections, is highest in chemicals, machinery and transportation goods, but lowest in textiles, foodstuffs, and leather. Although the correlation is not perfect, it nonetheless suggests that industries that manufacture complex goods are amongst those that find partnerships with foreign third-party manufacturing businesses. As we saw in Table 27.3, regional differences exist across all industry groups, thus we should expect those regional differences to persist within industry groups. To visualize these differences, Figure 27.1 below plots the average residuals in an industry group against the corresponding average share of trademarks in that industry group for all observations within a US Census Region and 3-digit NAICS subsector (Northeast, Midwest, South and West). The vertical line was chosen based on the constant value in the linear regression, but it is not intended to be a strict demarcation of industries within each classification. The share of trademarks with international links roughly corresponds to the international orientation of that industry’s region. Higher levels suggest more businesses within that region are engaged in overseas business. As suggested by Model (1), a high residual corresponds to industry groups engaging in the new emerging global business models that utilise offshore, fabless manufacturing. We classify industries that have both a high residual and are highly integrated internationally (as measured by the share of trademarks with international links) as the leading industries in these emerging business models. Conversely, if they are highly integrated internationally, but have a small residual, that would be indicative that the industry is still reliant on traditional exporting, FDI, and domestic contract manufacturing. Lastly, industries that are not as highly integrated internationally and have low residuals are those with a more domestic focus and without typically strong branding, such as commodities. Figure 27.1 further highlights that the regional differences found in Table 27.3 cannot be fully attributed to compositional differences in industries. Even among subsectors with strongly positive residuals such as Transportation Manufacturing (336), significant variation exists amongst the regions. Businesses within Midwest transportation manufacturing appears to be more connected to modern international business models when compared to their Southern and Western counterparts. This is again consistent with the findings

19 Jesus Felipe and others, ‘Product complexity and economic development’ (2012) 23 Structural Change and Economic Dynamics 36.

Improving intellectual property

286

Figure 27.1

Relationship between international orientation of industries and global business models by US Census Region

Note: Residual indicates the average value of the residuals within a 3-digit industry group-state within a U.S. Census Region and 3-digit NAICS subsector based on the results from Column (1) in the primary regression results in Table 27.2. The Northeast Census Region corresponds to the New England and Middle Atlantic Census Divisions, the Midwest Census Region corresponds to the West North Central and East North Central Census Divisions, the South Census Region corresponds to the West South Central, East South Central, and South Atlantic Census Divisions, and the West Census Region corresponds to the Pacific and Mountain Census Divisions.

of Fort, Pierce and Schott,20 who strongly suggested that the historic manufacturing bases in the Northeast and Midwest were among the first areas to begin to diversify their businesses to include non-manufacturing jobs and shift away from in-house manufacturing. 3.2

Properties of Key International Trademarking Businesses

To obtain more granular evidence that internationally linked trademarks provide a novel window into the nature of businesses’ operations, we took a closer look at key businesses. We undertook a detailed examination of the top 50 US businesses that hold the largest portfolio of internationally linked

Fort, Pierce and Schott (n 17).

20

Do trademarks assist global fabless manufacturing?

287

trademarks but that are not traditional manufacturers. We first identify those US-owned businesses classified in Bureau van Dijk as being primarily in the wholesaling sector. We then use Bureau van Dijk global ultimate owner tables to exclude businesses that have an ultimate owner business with a primary classification of manufacturing. Finally, we search Google Patents to identify whether each business in this list owns at least one patent and, with limited exceptions, excluded those without a patent. Wholesale businesses with a patent portfolio are unlikely to be traditional ‘forklift’ wholesalers (i.e., mere brokers between agents). These top 50 businesses span several different industries, including apparel, consumer electronics, cosmetics, home appliances, pharmaceuticals, inter alia. Our priority is that these businesses – all of which are classified as wholesalers – are product-focused businesses with strong involvement in contract or offshore manufacturing. They are businesses which lead in the design development of consumer products made using fabless business models and arms-length international contract manufacturing. For all businesses in the top 50, we examined company websites and/or annual reports to identify whether the business claims to lead product design and subsequent contract or offshore fabrication. Company statements were then verified using information from Dun and Bradstreet’s company database where possible. Of the top 50, we find that all but three businesses are heavily engaged in product design, indicating these businesses control product development and manufacturing – even in cases where they do not themselves own physical manufacturing plants or equipment assets. At least 70 per cent of businesses in the list claim to have arms-length contract manufacture. These findings support the view that international trademark applications provide a novel indicator that these businesses control or lead global production networks. Details of these businesses are found in Petrie and others.21

4.

CONCLUDING COMMENTS

Technology has ushered in new manufacturing methods that have permanently altered the distribution and organisation of global production and how the subsequent revenue streams are collected. Value is no longer created and controlled at the point of manufacture. Anecdotally, we know that revenue for select businesses and industries can accrue at the upstream (research and development) or downstream (sales and service) ends of the production chain, yet we have limited systematic evidence for the bulk of businesses and industries. Petrie and others (n 15).

21

Improving intellectual property

288

In this chapter, we investigate whether international trademarking is part of the business model of fabless manufacturers. It is plausible that trademarks are being used by businesses as wrap-around proprietary tools for their imprecise and intangible activities. About 12 per cent of US trademarks filed by US domiciled businesses have an equivalent mark in one of the other five jurisdictions included in this study. We show that the share of international trademarking is positively associated with both exports and outward FDI. We show that the remaining variation in international trademarking activity (after controlling for outward FDI and exporting) conforms to known patterns of arms-length offshoring (by US state and by industry). Perhaps our most striking result is that variation in international trademarking activity, after controlling for exports and outward FDI, maps closely to product complexity measures such as those developed by Felipe and others.22 As complex final goods are likely to contain numerous parts and components, it is reasonable that businesses within these industries have more opportunities to deal with overseas suppliers in at least some proportion of their supply chains. To the extent this fabless mode of production is significant, relying on export and FDI measures to calculate comparative industry advantage or industrial capabilities of regions or nations will be inaccurate. Trademarks also offer an opportunity to understand innovations in service industries, a limitation that has often hampered research in patents.

Felipe and others (n 19).

22

PART VII

INFORMATION/DATA AND CONFIDENTIALITY/PUBLICITY

28. Information law pioneer Sharon K. Sandeen 1. INTRODUCTION Labels are a funny thing. Although designed to describe someone or something, they often obscure a lot and can be very limiting in the information they convey. For instance, to say that Professor Rochelle C. Dreyfuss’ areas of research are ‘Civil Procedure, Criminal Intellectual Property Law, Intellectual Property Law (Patents and Trade Secrecy Law), International Intellectual Property Law and Dispute Resolution,’ as the NYU Law website does, obscures the richness and complexity of her research and her tremendous contributions to legal scholarship and academic collaboration. Dreyfuss has not just taught, researched, and written about the above-listed areas of law, she has demonstrated an insatiable desire to understand how these areas of law intersect and interact in the United States and internationally, and not just in legal terms but also in economic, philosophical, social, and practical terms. Unlike many IP scholars, Professor Dreyfuss’ scholarship is not focused on just one area of IP. She has written extensively in all areas of IP law and related fields like unfair competition, privacy, and licensing. That is why a more apt label for Dreyfuss is ‘Information Law Pioneer’ and in this chapter I prove my case.

2.

WHAT IS AN INFORMATION LAW PIONEER?

Since labels can be misleading, let’s begin by defining ‘Information Law Pioneer.’ Pioneer is the easy part. The Oxford English Dictionary defines a pioneer as ‘a person who is the first to study and develop a particular area of knowledge, culture, etc. ...’ According to Merriam-Webster, a pioneer is ‘a person who helps create or develop new ideas, methods, etc. ...’ Thus, individuals can be pioneers in many different fields of study, either broad or narrow. The pioneering nature of Dreyfuss’ work depends upon understanding the meaning of information law.

290

Information law pioneer

291

Many scholars have explored the meaning of information law.1 Law schools and institutes around the world use the term, but their definitions vary. When IP legal scholars speak about information law, often they focus on copyright, privacy, and trade secret laws; laws that are designed to protect various types of information. Other legal scholars speak of laws that promote or secure information flows—like freedom of speech principles, media law, internet law, and freedom of information laws—or laws that deal with the regulation of communication networks. Less often, patent and trademark law are recognized as part of information law. Rarely is civil procedure included in the mix, even though many rules of civil procedure concern the protection and flow of information. In Information Law, Governance, and Cybersecurity, David S. Levine and I acknowledge the different conceptions of information law and the difficulty of defining the phrase, but offer the following definition: ‘[I]nformation law’ concerns the laws that govern how information (broadly defined) is created, collected, organized, protected, secured, accessed, shared, transmitted, used, and discarded, primarily by businesses and governments. It also concerns related public policy issues that should inform policymaking, primarily the public interests in information access, diffusion, and transparency and each of our individual interests in information privacy.2

With this definition in mind, it is easy to see how Dreyfuss is an information law scholar. She has written extensively about a multitude of different information laws. But what is it about Dreyfuss’ information law scholarship that makes it pioneering? There are several answers. First, Dreyfuss saw very early the growing importance of information in our society. In one of her first articles, written in 1987 (a full seven years before the commercial use of the internet began and nine years before Nimmer’s book on the topic), she wrote about what she labeled ‘information products,’ presciently observing: ‘It is folly to make predictions about the future, especially in writing. Nonetheless, I will venture to suggest that, as plastics may have been the ‘growth industry’ of the twentieth century, information products will be that of the twenty-first.’3

1 See Jacqueline Lipton, A Framework for Information Law and Policy, 82 Or. L. Rev. 695 (2003); Raymond Nimmer, Information Law, which was first published in 1996; Peter Seipel, Information Law Revisited, 7 J. Media L. & Prac. 51 (1986); Jon Bing, Information Law: A Brief Introduction, 5 J. Media L. & Prac. 134 (1984). 2 Sharon K. Sandeen and David S. Levine, Information Law, Governance, and Cybersecurity (2019) 39. 3 Rochelle Cooper Dreyfuss, Information Products: A Challenge to Intellectual Property Theory, 20 N.Y.U. J. INT'L L. & POL. 897 (1987–1988).

Improving intellectual property

292

That same year, in a foreword to a book on privacy, Dreyfuss and her co-author grounded privacy in information law when they defined privacy as ‘the right to control information about oneself.’4 Nearly 35 years later, her prediction has proven true, but it is the quality and breadth of her information law scholarship over the course of those 36 years that is of greater import. Second, Dreyfuss is a pioneer in exploring the interconnectedness and sources of all forms of information law. For instance, in a 1989 article she referenced unfair competition law, privacy law, rights of publicity, sui generis laws, and trade secret law, in addition to the standard IP topics of patent, copyright, and trademark law.5 Her first foray into the international aspects of information law was in a 1997 article on the TRIPS Agreement.6 Third, Dreyfuss was writing about privacy and trade secret law before they were cool, years before the now prominent names in those fields entered the academy.7 In a 1986 article, she observed that ‘patentability is not the sole measure of the national interest in encouraging innovation, but that state trade secret law is also relevant to these objectives.’8 She wrote about privacy law so early that she had to be drawn back to that scholarship in 1999 after observing (also presciently) that: To most, interests in law and order, in easy access to credit, in reducing the cost of insurance, and even in preserving U.S. preeminence in the information-processing and direct-marketing industries, were more important than the interest in privacy.

4 Rochelle Cooper Dreyfuss and David W. Leebron, Foreword: Privacy and Information Technology, 1986 Ann. Surv. Am. L. 495, 495–496 (1986). 5 Rochelle Cooper Dreyfuss, Warren and Brandeis Redux: Finding (More) Privacy Protection in Intellectual Property Lore, 1999 Stan. Tech. L. Rev. 8 (1999); see also, Rochelle Cooper Dreyfuss, Does IP Need IP - Accommodating Intellectual Production outside the Intellectual Property Paradigm, 31 Cardozo L. Rev. 1437, 1466–67 (2010) and Graeme B. Dinwoodie and Rochelle C. Dreyfuss, A Neofederalist Vision of TRIPS: The Resilence of the International Intellectual Property Regime (2012). 6 Rochelle Cooper Dreyfuss and Andreas F. Lowenfeld, Two Achievements of the Uruguay Round: Putting TRIPS and Dispute Settlement Together, 37 Va. J. Int’l L. 275 (1997). 7 In a 1989 overview of the IP system, trade secrecy and unfair competition claims are discussed. Rochelle Cooper Dreyfuss, General Overview of the Intellectual Property System, in Owning Scientific And Technical Information (Weil and Snapper eds.). Her first privacy work was a forward for a volume on Privacy and Information Technology. Dreyfuss and Leebron, supra, note 4. 8 Rochelle Cooper Dreyfuss, Dethroning Lear: Licensee Estoppel and the Incentive to Innovate, 72 Va. L. Rev. 677, 683 (1986); see also Rochelle C. Dreyfuss, Trade Secrets: How Well Should We Be Allowed To Hide Them? The Economic Espionage Act of 1996, 9 Fordham Intell. Propr. Media & Ent. L.J. 1 (1998).

Information law pioneer

293

As a result, I came to believe that it was senseless to spend my time or energy advocating a new legal order; there was no political will to make such a change.9

3.

MARKING THE WAY FOR THOSE WHO FOLLOW

As further elaborated below, Dreyfuss’ pioneering work can also be seen in five important themes that run throughout her information law scholarship, beginning with her earliest articles in the late 1980s. In so doing, she laid the markers that all information law scholars should follow: (1) Value does not equal right.10 Dreyfuss has consistently noted that the value of information (including IP) should not equal rights. Rather, other reasons must exist to justify the protection of information and these justifications often serve as important limitations on the scope of applicable rights, thereby preserving information flows; (2) Information laws should account for the public interest.11 Dreyfuss’ scholarship always stresses the need for information laws to balance protection with the public interest. Collectively, her works present a comprehensive description of the public’s interest in information; (3) Information laws cannot be considered in isolation. Dreyfuss takes a holistic and interdisciplinary approach to information law and policy, often discussing the interrelationships of multiple laws and considering research in other fields, including economics and science; (4) Information laws are of global concern. Largely because information flows across borders, Dreyfuss has long considered the cross-border ramifications of information laws; and (5) Information laws must be dynamic. Law is dynamic but information laws must be dynamic for two reasons that Dreyfuss often highlights: changes in technology and societal needs.

Dreyfuss, Warren and Brandeis Redux, supra, note 5, at ¶1 (1999). Professor Dreyfuss labeled this issue ‘The Question of Justifications’ in her book chapter General Overview of the Intellectual Property System, in Owning Scientific And Technical Information supra, note 7. 11 Professor Dreyfuss labeled this issue ‘The Question of Balancing’ and, consistent with her holistic approach to information law, noted that balancing can come in many forms. Dreyfuss, General Overview of the Intellectual Property System, in Owning Scientific And Technical Information supra, note 7. 9

10

Improving intellectual property

294

3.1

Value does not Equal Right

Many who want stringent protection for information rely upon Lockean labor theory to support their point of view, arguing that those who create and collect information should be entitled to own and protect it. But that is not the law and the so-called ‘sweat of the brow’ doctrine has been largely rejected, particularly in the United States.12 Instead, the general rule is that information is not protected unless the law says it is.13 Dreyfuss often emphasizes a corollary to the general rule: just because information (or some alleged IP) has value, does not mean there should be rights attached to it.14 In an article in 2000, Dreyfuss explained the policy choices with respect to information this way: Ray Nimmer has impressed us all with his talk about the value of information products. But do not let yourself be seduced into thinking that generating value is the only focus of law. The function of intellectual property law is to assign value, to decide who gets it and for what purpose. True, traditional intellectual property laws do operate in a way that converts wealth generated by innovation into producer surplus. But they do that only to provide adequate incentives to innovate. Providing adequate incentives has never been thought to require that all of the surplus go to innovators. In fact, one of the major benefits that the public derives from innovation comes from such things as spill-over effects—from the ability of the public to utilize information in ways that the original innovators never considered.15

As a society, we need to decide what information is worth protection and then define the scope of that protection. As Dreyfuss noted: ‘[t]he choice of justifications affects not only whether an exclusive right is created, … but its contours as well.16 She also explained: ‘[a]t the heart of many pivotal disputes in intellectual property law [and by extension, information laws] are questions

12 J. H. Reichman & Pamela Samuelson, Intellectual Property Rights in Data, 50 Vand. L. Rev. 49, 62 (1997). 13 Herbert Zech, Information as Property, 6 J. Intell. Prop. Info. Tech. & Elec. Com. L.192, 195–96 (2015). 14 See, e.g., Dreyfuss, Warren and Brandeis Redux supra, note 5, at ¶17 (1999), citing two earlier works: Rochelle C. Dreyfuss, Expressive Genericity: Trademarks as Language In the Pepsi Generation, 65 Notre Dame L. Rev. 397, 405 (1990); Rochelle C. Dreyfuss, We Are Symbols and Inhabit Symbols, So Should We Be Paying Rent? Deconstructing the Lanham Act and Rights of Publicity, 20 Colum.-VLA J.L. & Arts 123, 124 (1996). 15 Rochelle Cooper Dreyfuss, UCITA in the International Marketplace: Are We about to Export Bad Innovation Policy, 26 Brook. J. Int’l L. 49, 56–7 (2000). 16 Dreyfuss, General Overview of the Intellectual Property System, Owning Scientific And Technical Information, supra, note 7, at 21.

Information law pioneer

295

as to whether exclusivity is justified in a particular case, and if so, on what theory.’17 There are obvious costs to the choices we make about IP and information protection. Dreyfuss has steadfastly noted the potential adverse effects on innovation, competition, and democracy that result when access to information is denied. ‘Since knowledge is cumulative, exclusive rights have always had the paradoxical effect of slowing progress in the name of promoting it.’18 Moreover, the principal problem with the ‘if value, then right’ theory of IP and information protection is that the resulting right ‘lacks a coherent limit.’19 3.2

Information Laws Should Account for the Public Interest

Throughout her career, Dreyfuss has stressed the need for limits and balance in the design of information laws. As she posed the issue in 1989: ‘Even if a particular objective were universally accepted, questions would remain concerning the extent to which the agreed goal should be compromised in favor of other social interests.’20 More recently, she explained, ‘The law, in short, has long been premised on balance, balance among generations of innovators and between creators and those who would benefit from the works they produce.21 A primary concern of Dreyfuss is ‘access-regarding principles.’ As she and her co-author cleverly explained, we must pay attention to both the sea and the islands, ‘… the political economy of intellectual property tends to favor the enlargement of the islands, with the result that the important contributions made by the sea—the domain of accessible knowledge—needs to be more explicitly established and protected.’22 One access-regarding principle discussed in Dreyfuss’ scholarship is the importance of information to the innovation process itself. ‘Exclusive rights have an inevitable impact on creativity, and the more closely they can be con-

17 Dreyfuss, General Overview of the Intellectual Property System, in Owning Scientific And Technical Information, supra, note 7. 18 Rochelle Cooper Dreyfuss, Does IP Need IP supra, note 5, at 1441. 19 Dreyfuss, Expressive Genericity, supra, note 14, 405 (1990). 20 Dreyfuss, General Overview of the Intellectual Property System, in Owning Scientific And Technical Information, supra, note 7. 21 Rochelle Cooper Dreyfuss, In Praise of an Incentive-Based Theory of Intellectual Property Protection, in Framing Intellectual Property Law In The 21st Century: Integrating Incentives, Trade, Development, Culture, And Human Rights 1 (Rochelle Cooper Dreyfuss and Elizabeth Siew-Kuan Ng, eds., 2018) 22 Dinwoodie and Dreyfuss, supra, note 5, at 181.

Improving intellectual property

296

trolled, the more they can interfere with the ability of future innovators to push the frontiers of knowledge forward.’23 But it is not just the interests of innovators that are of concern. In another article Dreyfuss explained: ‘I have long criticized the divorce of right from rationale on the theory that the copying baseline is of critical importance: it opens business opportunities and promotes consumer welfare.’24 Earlier, she and her co-author wrote: In each case, the benefits of acquiring information are easily articulated, for it is a basic tenet of our political and economic systems that more knowledge makes for better decisionmaking. Accordingly, high priorities have been placed on the acquisition of information and on the development of technologies that improve the ability to collect, maintain, disseminate and use it efficiently.25

Importantly, although a proponent of information and IP rights in many situations, Dreyfuss typically frames such rights as an exception to the above principles, and not the other way around. Indeed, In Praise of an Incentive-Based Theory of Intellectual Property Protection, she argues that vigilance about whether IP laws lead to desired behaviors is a means to limit the scope of such laws and improve access to knowledge.26 Because free flowing and accessible information adds to the store of knowledge and is needed for innovation, creativity, and competition (among other interests), policymakers and information law scholars should always ask the critical question: What does the public get in return for the protection of information? Relatedly, if some type of information is deserving of legal protection, how much protection is needed to ensure the claimed benefits? 3.3

Information Laws Cannot be Considered in Isolation

Since information is needed to spur innovation and creativity, facilitate competition, and preserve democracy, then we must pay attention to all information laws, not just some. This is particularly so when two or more bodies of information law overlap to protect the same object and when articulating

23 Rochelle Cooper Dreyfuss, Do You Want to Know A Trade Secret? How Article 2b Will Make Licensing Trade Secrets Easier (but Innovation More Difficult), 87 Cal. L. Rev. 191, 207 (1999). 24 Dreyfuss, Warren and Brandeis Redux, supra, note 5 at 1 (1999). 25 Dreyfuss and Leebron, supra, note 4, at 497 (noting that information is ‘a peculiar commodity for several reasons.’) 26 Dreyfuss, In Praise of an Incentive-Based Theory of Intellectual Property Protection, supra, note 21, 1

Information law pioneer

297

justifications and defining limitations on the scope of protection. Dreyfuss saw this early, writing: But when there are state laws that establish wider rights, innovators must deal with another, more subtle, question concerning justifications: [D]oes the adoption of one theory of protection exclude the application of the other rationales? The exchange-for-secrecy rationale [of patent law] is, for example, somewhat inconsistent with a regime of trade secrecy that helps inventors keep their discoveries to themselves.27

If we are not careful, limits established in one area of law may be undermined by another area of law. For instance, it makes little sense to carefully define a trade secret if other tort claims exist to protect information that does not qualify for trade secret protection.28 Another reason a cross-disciplinary approach to information law is important is because the question of the protectable status of information arises in many non-IP settings. Explaining the problem in the context of her examination of the Federal Circuit, Dreyfuss wrote: ‘[T]he Federal Circuit is not well-positioned to think about how patents fit into the overall economy or to see when patent doctrine has deviated from general rules of law.’29 Information law scholars should fill the gaps in understanding. 3.4

Information Laws and Policy are of Global Concern

If we care about information flows, particularly due to the benefits that the public can derive therefrom in the form of increased knowledge, innovation, and creativity, then we need to understand how information is shared and controlled across borders too. Writing about The Hague Judgments Convention in 2001, Dreyfuss explained: Digitization, computerization, and the ubiquity of the Internet have altered the delicate balance between creators and users of intellectual property, forcing legal theorists and lawmakers to reconceptualize the substance of intellectual property law. These same developments also affect procedure. Improvements in dissemination technology mean that the owners and users of copyrighted works, trademarks, trade

27 Dreyfuss, General Overview of the Intellectual Property System, in Owning Scientific And Technical Information, supra, note 7, at 22–23. 28 For instance, see Section 7 of the Uniform Trade Secrets Act, which was designed to preclude this outcome. 29 Rochelle Cooper Dreyfuss, What the Federal Circuit can Learn from the Supreme Court - and Vice Versa, 59 Am. U. L. Rev. 787, 800 (2010).

Improving intellectual property

298

secrets, patents, and like property can find themselves prosecuting or defending actions at every situs at which these new distribution technologies are available.30

Importantly, because different countries have different needs at different times, and different public policy issues are relevant, Dreyfuss is not a proponent of a one-size-fits-all solution. Rather, she believes that countries should have sufficient flexibility to tailor information laws to their unique needs while adhering to certain basic principles. Among these basic principles are access-regarding principles designed to ensure information flows.31 3.5

Information Law must be Dynamic

Most laws are dynamic, but information laws should be particularly so. Consider, for instance the four themes above. First, with respect to value— although value does not make right, what society values can change, as can the justifications for protecting what is perceived as value. Dreyfuss explored this concept in an early work when she and her co-author observed that: [I]t might be that we value privacy (whether as a mediate or ultimate value) no more than our forebears, but that less is available without resort to legal protections. Second, we may as a society attach greater value to privacy (or the recognition of privacy rights may produce more value) than in earlier times.32

One need only compare the original US copyright act with the current act or the Restatement (First) of Torts definition of a trade secret with the Uniform Trade Secret Act definition to see that the value that society places in information can change over time, sometimes broadening the definition of protected information and sometimes narrowing it. Second, the need to balance the protection of information against the public interest can change as societal needs and technology change. An obvious example is with respect to privacy where demands for more stringent privacy protection increased with the advent of more sophisticated data gathering and surveillance techniques. As Dreyfuss explained: Modern developments in information assembly drastically alter the access of third parties to personal information, decrease the costs of obtaining information, and

30 Rochelle Cooper Dreyfuss, An Alert to the Intellectual Property Bar: The Hague Judgments Convention, 2001 U. Ill. L. Rev. 421, 422 (2001). 31 Dinwoodie and Dreyfuss, supra, note 5. 32 Dreyfuss and Leebron, supra, note 4, 500.

Information law pioneer

299

increase the costs of secrecy. Thus, they require us to reexamine the amount of legal protection necessary to maintain a desired level of privacy.33

This does not mean that it is easy to change existing laws, but at the very least we need to re-evaluate existing laws in accordance with changed and changing circumstances. Third, because information law is a field that benefits from a holistic and interdisciplinary approach, changing one type of information law may require adjustments to other information laws. Writing in 2000 about ‘computer programs and computerized data bases,’ Dreyfuss explained: These materials either fall in the gap between the copyright and patent regimes, or never reach the level of creativity required for federal protection. Yet these are works that are expensive to create but easy to copy; it is necessary to find some mechanism to prevent free riders from undermining the incentives needed to produce them.34

The need for adjustments is particularly important if research in other fields, such as economics, suggests that the justifications for information laws are not valid or demonstrates a greater need for certain types of information flows. Fourth, if one looks at information policy through an international lens, it should be obvious that changes to international information laws can also necessitate changes in US law. The EU’s General Data Protection Regulation (GDPR) is an obvious example. Knowing what is going on in the rest of the world allows information law scholars, from everywhere, to better anticipate problems and find solutions because we can all learn from each other.

4. CONCLUSION My thesis is Dreyfuss is an information law pioneer. By identifying and highlighting the markers she left for others to follow, I have shown her deep and consistent interest in information law, the contributions she has made to the field, and her prescient identification of critical issues. Hers is an important lead for all information law scholars and policymakers to follow.

Dreyfuss and Leebron, supra, note 4, at 502. Dreyfuss, UCITA in the International Marketplace, supra, note 15.

33 34

29. The right of publicity as civic communication Megan Richardson1 1. INTRODUCTION In ‘Expressive Genericity: Trademarks as Language in the Pepsi Generation’,2 Rochelle Dreyfuss made the stunning and utterly compelling observation that trade marks may be used not just to denote the trade origins of goods or services but as forms of language contributing to wider social and political debates, arguing that US trade mark law should do more to reflect and support this. It is an argument that I have taken in a slightly different direction in some of my own writing.3 In the discussion below, I switch to the US right of publicity, a doctrine that in my view especially lends itself to expressivity, to pursue further my line that right-holders themselves may want to deploy their distinctive signs for civic communicative purposes and the law should do more to reflect and support this. Thus, in much the same way that Dreyfuss argued in 1990 that ‘[t]rademark law has not kept pace with trademark practice’,4 I argue in 2022 that right of publicity law has not kept pace with the paradigm shift going on in terms of right of publicity practice – offering yet another example of law lagging behind social change and adapting less quickly and transparently to fit with the times.

2.

PARADIGM SHIFT

And I would say there is a paradigm shift. A decade or so ago, communication scholars Jay G. Blumer and Stephen Coleman observed that ‘since the 1990s, much of the generative ground from which political communication emanates 1 With grateful thanks to Graeme Dinwoodie, Susy Frankel, Julia Powles and Trung Quatch. 2 (1990) 65 Notre Dame L Rev 397. 3 Megan Richardson, ‘Trade Marks and Language’ (2004) 26 Syd L Rev 193. 4 Dreyfuss (n 2) 398.

300

The right of publicity as civic communication

301

does seem to have changed appreciably’.5 Now, in the 2020s, the shifts that Blumer and Coleman observed in the 2010s have resulted in a marked increase in civic communication, taking advantage of the digital environment’s numerous and multifarious channels of communication flows.6 Specifically, celebrities and micro-celebrities are becoming political influencers deploying their ‘epistemic power’ to pursue their agendas for better or worse.7 And their choice of the right of publicity as a legal adjunct is not that surprising.8 In a world in which ‘rival players struggle to get their messages across’ and intense competition exists over ‘agenda control’,9 the ability to rely on a legal right over personal identity to give extra credibility to a claim of being wronged by bad actors and those who support and enable them clearly holds strong appeal – especially in the United States where the right of publicity has a distinctive place in the pantheon of intellectual property rights.10 At the same time, the diversification and democratisation of available channels of communication contribute in their own way to the discourse surrounding their efforts. So, in the examples discussed below (both, at time of writing, still ongoing), the launch of civil proceedings is matched by plaintiffs’ personal engagements with their publics via disparate news and other media websites: outlining their legal positions and arguments, insisting on their rights in the face of defendants’ incursions, and emphasising their political and social activism. On the other hand, as also highlighted in the discussion below, we see plaintiffs being still only partially successful in persuading courts to render judgments in their favour and judges themselves continuing to stick as closely as possible to the traditional language of the right of publicity.

5 Jay G. Blumer and Stephen Coleman, ‘Paradigms of Civic Communication’ (2013) 7 Int J Commun 173, 175. 6 Ibid. 7 See Alfred Archer and others, ‘Celebrity, Democracy, and Epistemic Power’ (2020) 18 Perspect Polit 27; Magdalena Riedl, Carsten Schwemmer, Sandra Ziewiecki and Lisa M Ross, ‘The Rise of Political Influencers - Perspectives on a Trend Towards Meaningful Content’ (2021) 6 Front Commun 1; Alfred Archer and Amanda Cawston, ‘Celebrity Politics and Democratic Elitism’ (2022) 41 Topoi 33. 8 As Archer and others (n 7) 36 put it, ‘Today’s celebrities are well equipped to manage their image and thus control the public’s knowledge, not (only) of issues and facts, but of the celebrity’s personality and individual qualities. Many have ready access to public relations consultants and media experts’, and I might add here of lawyers. 9 Blumer and Coleman (n 5) 176. 10 Hepp v Facebook 14 F 4th 204 (3rd Cir, 23 September 2021).

302

2.1

Improving intellectual property

Karen Hepp’s Reflexive Modernisation

Fox news anchor Karen Hepp may seem an unlikely candidate for feminist activism. But in Hepp v Facebook,11 we see her drawing on her right of publicity under Pennsylvania law to strongly object to and resist the exploitation of her image in advertisements for dating websites and erectile dysfunction treatment hosted on Facebook and other named social media platforms. In her brief filed in December 2020, Hepp plays into what Blumer and Coleman in 2013 described as ‘a growing (and appropriate) cultural sensitivity to matters of gender, ethnic, class, age, and subcultural inclusion’12 which forms part and parcel of the ‘reflexive modernization’ of the modern social order.13 Hepp accuses Facebook and other named digital platforms of engaging in the ‘sexualization of Hepp’s image and its use for “prurient and illicit purposes” causing “serious, permanent and irreparable harm to [her] image and reputation”’.14 At the same time, she maintains that her complaint against Facebook and other defendants is consistent with the family values platform she espouses as a public-facing journalist and television host with a strong internet presence and large conservative following. As she summarises it, she is ‘a well-known public figure who has spent years honing her skills as a professional television broadcaster’, is ‘well-regarded in the Philadelphia community’, and has ‘earned an excellent reputation as a moral and upstanding community leader and public person’, who does not deserve to suffer defendants’ ‘usurpation of her image’.15 Similar themes of resistance to misogyny coupled with family values come through in Hepp’s carefully curated media statements. As she is quoted by Hollywood Reporter writer Eriq Gardner, ‘[t]his case is about owning your own identity’, adding that ‘[i]t’s insulting that someone can do this and hijack your life’.16 Or as Victor Fiorillo summarises it in Philadelphia

Ibid. Blumer and Coleman (n 5) 178. 13 Ibid., citing Ulrich Beck, Anthony Giddens and Scott Lash, Reflexive Modernization: Politics, Tradition and Aesthetics in the Modern Social Order (SUP 1994). 14 Karen Hepp Plaintiff-Appellant v Facebook, Inc, Imgur, Inc., Reddit, Inc and WGCZ, SRO Defendants-Appellees, On Appeal from the United States District Court for the Eastern District of Pennsylvania in Civil Action No 2:19-cv-4034-JMY (Brief and Appendix for Plaintiff-Appellant, Vol I, 7 December 2020) 15. 15 Ibid. 16 Eriq Gardner, ‘Is a Famous Face a Form of Intellectual Property?’ (Hollywood Reporter, 18 June 2021), https://​www​.hollywoodreporter​.com/​business/​business​-news/​ news​-anchors​-fight​-facebook​-sag​-aftra​-1234968110/​. 11 12

The right of publicity as civic communication

303

Magazine, ‘she’s an open book. An everywoman. Not the woman those internet companies chose to sell their products’.17 Likewise, Hepp’s argument that Facebook should take responsibility for the conduct of those internet companies ties in with the ethos of self-reliance that Hepp espouses. Facebook’s attempt to rely on the immunity accorded to digital platforms for material that others choose to post on the platform, under § 230 of the Communications Decency Act 1996,18 is presented by Hepp as an attempt to avoid responsibility not just for the conduct of companies posting advertisements but its own conduct geared to the sexualisation of her image. In her framing of her harm as to her ‘image and reputation’, she positions her right of publicity as a product of her mental labour and investment expended in building a valuable image and reputation, befitting its status as intellectual property which is exempted from immunity under the terms of § 230.19 As she explains it, ‘professionals like Hepp, who are merely attempting to protect their coveted brands from unauthorized and harmful attacks to their collective public persona on the Internet’ should be allowed to claim the benefit of the § 230 intellectual property exemption again internet companies like Facebook, which attempt to use § 230 to immunise their pursuit of profitable business activities.20 This pseudo-traditional treatment of her case as a mere attempt to protect her brand apparently persuaded the Third Circuit, which rejected Facebook’s application for dismissal of her claim on § 230 grounds in September last year: per the Court, § 230 CDA does not restrict its intellectual property exception to federal intellectual property, and the right of publicity under state law is widely regarded as intellectual property.21 Indeed, ‘if likeness 17 Victoria Fiorillo, ‘Now It Can Be Told: Karen Hepp Opens Up About Her Battle With Facebook’ (Philadelphia Magazine, 12 February 2022), https://​www​.phillymag​ .com/​news/​2022/​02/​12/​karen​-hepp​-vs​-facebook/​. 18 See § 230(c)(1) of the Communications Act of 1934 (47 USC 230; commonly known as the 'Communications Decency Act of 1996', or ‘CDA’): ‘No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider’. 19 See § 230(e)(2) CDA: ‘Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property’. 20 Karen Hepp v Facebook, Inc (n 14) 17. 21 Hepp v Facebook (n 10) 214, here declining to follow the Ninth Circuit in Perfect 10, Inc v CCBill LLC, 488 F 3d 1102 (9th Cir, 2007). Given this split in Circuit decisions, it will be interesting to see what comes of the argument of Australian billionaire businessman Andrew (Twiggy) Forrest in his own case against Facebook in California, alleging inter alia breach of his right of publicity (see Dr Andrew Forrest v Facebook, Inc, Case No 21-CIV-05055 (Sup Ct San Mateo Cal, 17 September 2021). Specifically, Forrest argues that illegal cryptocurrency advertisements posted on the platform featuring his name harm his reputation (as well as harming those who invest on the strength of the advertisements), and moreover that ‘Facebook is aware of illegal, manipulative,

304

Improving intellectual property

interests are disregarded on the internet [in cases such as this], the incentives to build an excellent commercial reputation for endorsements may diminish’ (in the same way that without property rights markets may diminish).22 Nevertheless, the Court’s judgment tells us less about Hepp’s use of her right of publicity as a mode of communication. In its response to Facebook’s rather dubious argument that valuable First Amendment protected free speech would be imperilled if the right of publicity could claim the benefit of the intellectual property exception to § 230 CDA, the Court said flatly that ‘Hepp’s statutory right of publicity claim against Facebook is about the commercial effect on her intellectual property, not about protected speech’.23 We might have hoped to have seen a more robust defence of free speech here – in particular, that if there is any valuable speech worth protecting, it is Hepp’s deployment of her right of publicity to call out the powerful and pervasive imagery of misogynistic advertising on platforms like Facebook, whose business models may even benefit from providing wide exposure for extreme speech. Balanced against that, any effort on the part of Facebook to proffer its support for misleading and prurient advertisements on the platform as contributing to public debate could fairly be judged a low-value, even no-value, contribution to public debate compared to Hepp’s speech.24 But the Court did not come out and say this directly. Instead, it maintained, somewhat disingenuously, that the focus of the right of publicity is ‘on the right of the individual to reap the reward of his endeavors’.25 And more recently Facebook itself appears to have abandoned its free speech argument, resorting instead to a more traditional position that as a platform ‘it was simply a mere conduit for [the] distribution’ of material posted by others, in

and otherwise inauthentic behavior on its platform, and maintains publicly that it takes actions to “impose limitations on [scammer’s] ability to use [Facebook]” or ban those actors entirely’, yet despite this: Facebook’s principal goal is keeping its users engaged with information and advertisements that interests them enough to keep them coming back. Facebook is therefore incentivized to, and does, elicit material from advertisers and other providers (both illegal and legal content) to keep its users engaged, and makes aggressive use of this content in conducting its business Dr Andrew Forrest, Plaintiff v Facebook, Inc, Defendant and Does 1 through 20 Inclusive, First Amended Complaint (Superior Court of the State of California, County of San Mateo, 12 December 2021) 2–3. 22 Hepp v Facebook (n 10) 211, citing Zacchini v Scripps-Howard Broad Co 433 US 562, 573 (1977). 23 Ibid., 214. 24 See David Tan, The Commercial Appropriation of Fame: A Cultural Analysis of the Right of Publicity and Passing Off (CUP 2017) ch 6. 25 Hepp v Facebook (n 10) 211, citing Zacchini v Scripps-Howard Broad (n 22) 573.

The right of publicity as civic communication

305

an effort to remove itself from liability.26 As Eric Goldman puts it succinctly, ‘Ugh’.27 2.2

Making Corporate Institutions Accountable: Political Activism of Cat Brooks and Rasheed Shabazz

While Hepp in her case against Facebook addresses the issue of ‘the working and effects of power’ in the hands of private corporate institutions,28 Brooks and Shabazz take this to another level in their case against data broker Thomson Reuters, deploying their right of publicity under California law. Indeed, as civil rights activists, their agenda is making powerful corporate institutions accountable ‘to the sovereignty of the people’.29 In Brooks v Thomson Reuters Corporation,30 they reject the data broker’s assertion that it is perfectly legitimate business practice for it to use its CLEAR platform to construct comprehensive dossiers of personal information to order – including information ‘not ascertainable via public records or traditional search engine queries’, ‘facts hidden online’, ‘key proprietary and public records’, and ‘information from third-party data brokers and law enforcement agencies’, including live cell phone records, location data license plate detections, real-time booking information and ‘historical arrest records and intake photos’.31 Much of their complaint filed in December 2020 concerns the breach of their right to privacy.32 And the Northern District Court in August last year refused Thomson Reuter’s effort to dismiss them,33 holding that § 230 immunity is not available where the

Hepp v Meta Platforms, Inc, 2:19-cv-04034-JMY (ED Pa April 22, 2022). Eric Goldman, ‘Facebook Can’t Shake Publicity Rights Claim–Hepp v. Facebook, May 3, 2022, https://​blog​.ericgoldman​.org/​archives/​2022/​05/​facebook​-cant​ -shake​-publicity​-rights​-claim​-hepp​-v​-facebook​.htm. 28 Blumer and Coleman (n 5) 180. 29 Ibid. 30 Brooks v Thomson Reuters Corporation, United States District Court, ND California, August 16, 2021. 31 Ibid 7. 32 See Cat Brooks and Rasheed Shabazz, individually and on behalf of all others similarly situated, Plaintiffs, v Thomson Reuters Corporation, Defendant, Class Action Complaint (Superior Court of the State of California, County of Alameda, 3 December 2020) 13 (‘Thomson Reuters knows that its aggregation and sale of personal data without consent implicate significant privacy concerns’); 17 (‘Thomson Reuters’ appropriation and sale of the plaintiffs’ and class members’ names, photographs, likenesses, and personal information without their consent injured the class members by violating their privacy’). 33 In this case, framed in terms of unfair business practices in violation of California’s Unfair Competition Law, Cal Bus & Prof § 17200, et seq, and unjust enrichment. 26 27

306

Improving intellectual property

claim concerns its actions in collecting and compiling dossiers.34 On the other hand, plaintiffs’ separate right of publicity claim was dismissed by the Court. Here we see a clear split between the argument of Brooks and Shabazz as plaintiffs accustomed to thinking in terms of public activism and communication and the position adopted by Judge Edward Chen considering traditional right of publicity law. As Brooks and Shabazz put it in their complaint, the right of publicity ‘protects a person’s name and likeness against appropriation by others for their commercial advantage’.35 Therefore, logically the right should broadly be able to be relied on to address the issue of ‘Californians’ identities [being] … up for sale without their knowledge, let alone consent’ in the hands of data broker Thomson Reuters.36 In the eyes of Judge Chen, however, appropriation of name or likeness requires ‘[t]he use of a person’s name and likeness to promote a product or service’ other than ‘that which pertains to the person themselves’.37 The reasoning suggests a significant constraint on the use of the right of publicity as a tool of civic communication. As Brooks explains, as an activist who has spent years fighting police violence, particularly in communities of colour, she is ‘[c]oncerned for her safety and that of her family, … [she] works hard to maintain ownership and control over her personal information’.38 Or, as Shabazz puts it on his Facebook page, ‘I do not want this corporation selling my identity while putting me at risk’.39 Nevertheless, the Court held that ‘the injury Plaintiffs suffered here – although deeply concerning and perhaps a violation of their privacy is not a violation of their right of publicity because their name or likeness is not being “appropriated” and used to advertise a separate product or service’.40 In short, what plaintiffs were unsuccessful in arguing before the Court was that the ready sale of dossiers of their personal information to their political enemies, who may seek seek to target and threaten their activist agendas, was not only an attack on their identities but on their power as identity right-holders to deploy their identities expressively for political and social purposes – and Brooks v Thomson Reuters (n 30) 11. Ibid., 2, citing Downing v Abercrombie & Fitch 265 F 3d 994, 1001 (9th Cir 2001). 36 Cat Brooks and Rasheed Shabazz v Thomson Reuters Corporation, Class Action Complaint (n 32) 1. 37 Brooks v Thomson Reuters (n 30) 3–4, citing White v Samsung Elecs, Am, Inc, 971 F 2d 1395, 1398 (9th Cir 1992, as amended 19 August 1992). 38 Ibid. 39 STOP-Surveillance Technology Oversight Project, ‘California Activists Sue Thomson Reuters for Selling Personal Data’ (Facebook, 22 March 2021), https://​m​ .facebook​.com/​STOPSpyingNY/​photos/​a​.264170707858207/​775373863404553/​?type​ =​3​&​_se​_imp​=​0Q7qIF7DbOqEKxhRd​.im. 40 Brooks v Thomson Reuters (n 30) 11. 34 35

The right of publicity as civic communication

307

moreover that this fell within the parameters of California right of publicity law. In dismissing the claim on the basis of lack of appropriation of the use of a person’s name or likeness to promote a product or service (other than pertaining to the person themselves), the Court avoided the need to discuss these issues of the proper boundaries of the right of publicity in support of political activism. And in later cases, although the language of ‘cognizable injury’ may be preferred over Judge Chen’s language of ‘appropriation’,41 there still seems to be a preference for commercial injury over more personal or political injuries – although, as Eugene Volokh points out, at least under California broadly-framed right of publicity law, we might expect injury to be conceived quite broadly.42

3.

CONCLUDING COMMENTS

In this short chapter I contend that, while the cases of Hepp v Facebook and Brooks v Thomson Reuters show plaintiffs pushing back in different ways against the marketisation, which (in the words of Blumer and Coleman) ‘has played a regrettable part in undermining the sociability and solidarity upon which democratic culture flourishes’,43 the law is still slow to follow. It may take further cases and even legislative reform to achieve real change in the political-legal dynamics. Yet, at the very least, these examples show how plaintiffs who take on the mantle of political influencers may use their cases and the publicity surrounding them as vehicles for their arguments for the need for new approaches even within existing legal frameworks. Their efforts may face criticism for seeking to push the right of publicity beyond its traditional contours – or as ‘traditional’ as one could be about a right whose traditionality is highly contestable.44 There are also good reasons, as Dreyfuss argued in her early article on ‘expressive genericity’,45 for allowing media and publics significant latitude for their own expressive speech. Even so, I argue, this privilege need not be restricted to defendants in right of publicity cases and 41 See Kellman v Spokeo, Inc, United States District Court, ND California, April 19, 2022; Callahan v PeopleConnect, Inc, United States District Court, N.D. California, November 1, 2021; Jackson v Robinhood Markets, Inc, United States District Court, ND California, San Francisco Division, June 15, 2021. 42 Eugene Volokh, ‘Inadequately Amend Your Complaint, End Your Complaint’, The Volokh Conspiracy, 20 September 2021 (discussing Jackson v Robinhood (n 40), https://​reason​.com/​volokh/​2021/​09/​20/​inadequately​-amend​-your​-complaint​-end​-your​ -complaint/​). 43 Blumer and Coleman (n 5) 183. 44 See Jennifer E Rothman, The Right of Publicity: Privacy Reimagined for a Public World (HUP 2018). 45 Dreyfuss (n 2).

308

Improving intellectual property

should be extended as well to plaintiffs who rise to the normative challenge of speaking out against abuses of power using all the tools at their disposal.

30. Governing valuable confidential data in the EU: Transparency as fairness Nari Lee 1. INTRODUCTION There are increasing calls globally for regulation of data, data producers, and data intermediaries. In Europe, valuable data drives further harmonized policies within the Union seen in the EU Digital Strategy and also EU’s policy programme for the 2030 Digital Decade.1 Data may even be comparable to the upstream inventions, and may be considered basic building blocks for research and industry and therefore should not be subject to exclusive rights.2 On the other hand, digitalization allows us to separate data from information and conflates downstream innovations and upstream data. Their simultaneous and concurrent use lead to claims for rights based on their values.3 In the axiomatic words of Professor Rochelle Dreyfuss, indeed, value seems to create the expectation for a right.4 The question on how to frame such a right has led to various proposals for data governance—whether it should be an exclusive right akin to intellectual property (IP), access right, personal right to privacy, or a sui generis right. This chapter questions whether such rights-focused framing of data governance

1 See among others, Commission, ‘Proposal for a decision of the European Parliament and of the Council establishing the 2030 Policy Programme ‘Path to the Digital Decade’’ COM (2021) 574 final. 2 See Rochelle C. Dreyfuss, ‘Are Business Method Patents Bad for Business?’ (2000) 16 Computer and High Tech LJ 263. See also Rochelle C. Dreyfuss, ‘Implications of the DNA Patenting Dispute: A US Response to Dianne Nicol’ (2013) 22 JL Info & Sci 1. 3 See Dreyfuss ‘Implications’ (n 2) 8. 4 Rochelle C. Dreyfuss, ‘Expressive Genericity: Trademarks as Language in the Pepsi Generation’ (1990) 65 Notre Dame L Rev 397, 405 (noting ‘If value, then right theory of intellectual property’).

309

310

Improving intellectual property

is useful, inspired by Dreyfuss’s critical reflection on this very challenge.5 Through an overview of different overlapping EU data laws, this chapter observes that regulatory competition among agencies would fragment the process of clearance and block meaningful uses of these data. Taking the cue from Dreyfuss’ observation,6 this chapter argues that data governance should focus on the institutions and their competence, imbuing principles of administrative law to create institutional comity among the agencies.

2.

EU DATA LAW

EU data governance is emerging in parallel within three distinctive policy spaces: innovation, data protection, and public access. As a part of innovation policy, data may be governed as an object of IP and other similar rights, which captures the value and incentivizes the investment. As a part of data protection policy, data are governed through a personal right against unauthorized processing or claim for continuity of data processing through contract. When data are part of transparency policy, sharing and access are highlighted. Each policy space is governed under different legal instruments and diverse institutions. 2.1

Data in IP and Trade Secret Law

Data without additional processing may not be visible or meaningful as human creativity or ingenuity protected by IP law. Data may be technical and functional between the devices that communicate, but they become cognitive when they are communicated. In data science, these differences are expressed as syntactic data (raw or data code), distinguished from semantic information (encoded and processed information and ideas). Personal and clinical health data are semantic information, as they may identify persons or correlate to health conditions. In contrast, data that smart devices such as autonomous vehicles collect or generate may be syntactic and functional until processed and so communicated as semantic information or cognitive data to the drivers. Understanding data as abstract syntactic signals underlying an invention or creative expression may be why most treatises on IP law teach that data are

5 Rochelle C. Dreyfuss, ‘The Challenges Facing IP Systems: Researching for the Future’ in Peter Drahos, Gustavo Ghidini and Hans Ullrich (eds), Kritika: Essays on Intellectual Property, vol 4 (Edward Elgar 2020) 3. 6 Rochelle C. Dreyfuss, ‘Fostering Dynamic Innovation, Development and Trade: Intellectual Property as a Case Study in Global Administrative Law’ [2009] Acta Juridica 237. See also Dreyfuss (n 5) 29–45.

Governing valuable confidential data in the EU

311

outside the protection of IP, and that no exclusive right to data exists.7 However, closer examination reveals that some exclusive rights may extend to some aspects of data. First, when data is collected and compiled to form a database, EU offers sui generis protection to investment-intensive databases.8 Copyright also provides a thin protection for ‘structured, non-trivial compilations of data (i.e., selected and organized data).’9 The Court of Justice of the EU (CJEU) treats digital data recorded or fixed in a data carrier as relevant to the copyright doctrine of exhaustion applied to a digital copy.10 Moreover, when there is an exclusive right over semantic information, that may require protection against the duplication of the dataset for the same semantic information. For example, if there is image data, copyright over the image arguably reaches to the reproduction of the exact data underlying it. In an analogue context, an image is copied only by reproducing the analogue creative expression of the image; in the digital context, a reproduction might mean the reproduction of the data set. Similarly, patent law may also protect digital data. Data are not explicitly excluded subject matter under the European Patent Convention (EPC). The European Patent Office (EPO) current practice suggests that functional data are technical and thus not excluded, whereas cognitive data are considered not to have technical effect and therefore are excluded subject matter under EPC 52(2)(d).11 Moreover, specific types of data such as genetic data may be patentable if appropriately described in the patent claims. For example, data on DNA sequences that are isolated and existing in nature are excluded subject matter under EPC. However, a claim may be directed to another type of data such as a nucleotide sequence and thus may be a patent eligible invention.12 7 See Josef Drexl, ‘The (Lack of) Coherence of Data Ownership with the Intellectual Property System’ in Niklas Bruun and others (eds), Transition and Coherence in Intellectual Property Law - Essays in Honour of Annette Kur (CUP 2021) 213–223. See also Herbert Zech, ‘Building a European Data Economy—The European Commission’s Proposal for a Data Producer’s Right’ (2017) 9 Zeitschrift für Geistiges Eigentum 317. 8 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases [1996] OJ L77/20. 9 See Michael Birnhack, ‘Who Controls Covid-Related Medical Data? Copyright and Personal Data’ (2021) 52 IIC 821–824. 10 Case C-128/11 UsedSoft v. Oracle [2012] EU:​C:​2012:​407, Case C- 174/15 VOB v. Stichting [2016] ECLI:​EU:​C :2016:856, Case C-263/18 NUV v. Tom Kabinet [2019] EU:​C:​2019:​1111. Reto M Hilty, ’Legal Concept of ‘Exhaustion’: Exhausted?’ in Bruun and others (n 7). 11 EPO Examination Guideline, https://​www​.epo​.org/​law​-practice/​legal​-texts/​html/​ guidelines/​e/​g​_ii​_3​_7​.htm. 12 Noting this duality, Rochelle Dreyfuss, ‘The Patentability of Genetic Diagnostics in U.S. Law and Policy’ in Josef Drexl and Nari Lee (eds), Pharmaceutical Innovation, Competition and Patent Law - A Trilateral Perspective (Edward Elgar 2010) 7.

312

Improving intellectual property

As data can be used in a process claim, if the function of the data is described as an essential element of an invention, that element would fall within the scope of the claimed invention. Intermediary data produced by using a patented process may be one example. EPC 64.2 provides for a right conferred by process claims to extend to the products directly obtained by such a process. A version of this right is also found in the EU Biotechnology Directive.13 Any automated data or information processing resulting in a processed data set or information, could be considered to be directly obtained by the process. Whether patents extend to these intermediate data sets has been disputed in national courts in Europe.14 Whether trademark protection reaches digital data has become more relevant with the investment in Non-Fungible Tokens (NFTs). The definition of trademark in the EU Trademark Regulation does not include or exclude data.15 Digital data for an image of a sign can function as a different sign: a token for a ledger. Recent trademark disputes involving NFTs illustrate where the digital data uses of images and shapes, referencing or associating with a known sign, may be contrasted against the use of analogue signs.16 The metaphysical use of a trademark representing one product data as a meta-token representing another data set, which is the function of NFTs, may seem like ‘transcendental nonsense’17 and yet relevant. Trade secret laws, harmonized by the EU Trade Secret Directive (EUTSD), protect data. Such protection is not tied to data’s semantic level description but rather to the manner of its protection.18 Thus any data, regardless of format or forms, may be protected against commercially dishonest acquisition, use, and disclosure, so long as it is kept secret and therefore valuable.19

13 Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions [1998] OJ L213/13, art 8. 14 MPEG-2-Videosignalcodierung, Decision of the Federal Supreme Court (Bundesgerichtshof), Judgement 21 August 2012, X ZR 33/10. 15 Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (Text with EEA relevance) [2017] OJ L154/1. 16 For example, Hermes International, et al., Plaintiffs, v. Mason Rothschild, Defendant (2022) US District Court SDNY Case 1:22-cv-00384. 17 Felix S. Cohen, ‘Transcendental Nonsense and the Functional Approach’ (1935) 35 Columbia Law Review 809–849. 18 See Nari Lee, ‘Open Yet Secret: Trading of Tangible Goods and Trade Secrets’ in Bruun and others (eds) (n 7). 19 Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (hereafter EUTSD) [2016] OJ L157/1, art 4.

Governing valuable confidential data in the EU

313

In sum, data in varying degrees of concreteness may be protected as creative expressions, patentable inventions, and signs.20 If the protection of each category of IP eventually reaches the data underlying each class of subject matter, then the IP taxonomy might become meaningless. A conflation of IP categories would render inefficient the doctrines of limitations and exceptions, calibrated carefully to each exclusive right, and further exacerbate the problem of overlapping claims. 2.2

Data Protection Regulation

Data can also be described and categorized by the nature of the sources or the purpose of the application. Data protection governance rests upon fundamental rights over one’s own personal data. The General Data Protection Regulation (GDPR)21 and Free Flow of Non-Personal Data Regulation (NPDR)22 create a uniform EU set of rights to personal data for data subjects. In addition to EU law, member states have national data protection laws, which may be aligned with EU law. Integrity and confidentiality of data are core data processing principles and embedded in the GDPR.23 The GDPR frames data protection as a personal right to privacy and not an exclusive right to property. Likewise, the NPDR does not create economic rights to non-personal data, as the Regulation governs data mobility within the EU. Yet it is unclear whether these regulations reject data ownership.24 Both treat the right to control the data as belonging to the data subject or the contract holder of the data processing service. The personal data subject’s right to data portability is an example where a conflation of a right to privacy with a right to move data across platforms exists.25 Likewise in the NPDR, prohibition of

20 See Josef Drexl, ‘On the Future Legal Framework for the Digital Economy: A Competition-based Response to the ‘Ownership and Access’ Debate’ in Sebastian Lohsse, Reiner Schulze and Dirk Staudenmayer (eds), Trading Data in the Digital Economy: Legal Concepts and Tools (Nomos 2017). 21 Regulation (EU) 2016/679 Of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) [2016] OJ L119/1. 22 Regulation (EU) 2018/1807 of the European Parliament and of the Council of 14 November 2018 on a framework for the free flow of non-personal data in the European Union [2018] OJ L303/59. 23 See for example, art 5.1(f) the principle of ‘integrity and confidentiality,’ which is reiterated as a duty of data processor under art 28.3(b), and data security under art 32.1(b). 24 Drexl (n 7) 220–223 25 GDPR, art 20.

314

Improving intellectual property

data localization seems to create a right of enjoyment of the content as a data processing service across different EU territories. Thus the notion of possessive control seems to be embedded in the consent of data subjects and data processing service buyers as the data holders. The GDPR creates an administrative agency at the EU level and mandates one at member states’ national levels and the actor level. Furthermore, the GDPR creates a duty to have data protection officers (DPOs) for the data controller/processors, independent supervisory authorities (ISAs) in member states, and a European Data Protection Board (EDPB).26 This institutional set-up creates several layers of agencies at different levels of administration, which call for clear coordination as well as hierarchy of decision-making to avoid institutional competition.27 2.3

Confidential Data in Access and Transparency Regulation

EU’s data access and transparency policy is based on the FAIR (Findable, Accessible, Interoperable, and Reusable) data principle. Notably three Regulations and one Directive are in force and target privately and publicly held data: the Open Data Directive,28 Public Access Regulation (PATR),29 Data Governance Act (DGA),30 and Data Act (DA Proposal).31 DGA and DA create data sharing obligations on private entities and public sector bodies. In addition to these instruments, other access rules in several sector specific instruments may affect data in online gatekeepers and platform competition in the digital market.32

GDPR, art 68. See Dreyfuss (n 6). 28 Directive (EU) 2019/1024 of the European Parliament and of the Council of 20 June 2019 on open data and the re-use of public sector information [2019] (Open Data Directive) OJ L172/56. 29 Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents (Public Access and Transparency Regulation) [2001] OJ L145/43. 30 Regulation (EU) 2022/868 of the European Parliament and of the Council of 30 May 2022 on European data governance and amending Regulation (EU) 2018/1724 (Data Governance Act) [2022] OJ L152/1. 31 ‘Proposal for a Regulation of The European Parliament and of The Council on Harmonised Rules on Fair Access to and Use of Data (Data Act)’ COM (2022) 0047 Final. DA creates sharing obligation on data held by private entities excluding confidential data, IPRs and personal data. 32 For example, ‘Proposal for a Regulation of The European Parliament and of the Council on contestable and fair markets in the digital sector (Digital Markets Act)’ COM (2020) 842 final; Regulation (EU) 2019/1150 of the European Parliament and of 26 27

Governing valuable confidential data in the EU

315

The Open Data Directive regulates access to public sector documents and publicly funded research data33 and sets out conditions for the re-use of the data held by public sector bodies. The Directive flows from its predecessor,34 and is applicable to publicly held documents. Following the principle of ‘as open as possible, and as closed as necessary,’35 the documents that are protected with third party IPR or business confidentiality are excluded from the scope,36 and the accessibility obligation is conditioned to the standard of protection in the international IP conventions. The DGA, which entered into force in June 2022, creates a sharing obligation on data held by public sector bodies, including confidential data, IPRs, and personal data. It includes prohibition of an exclusive right to re-use data37 and extraterritorial reach of EU IP law in the case of re-use in the third countries as a condition.38 Such extraterritorial protection may raise the question of choice of law problems as seen before in trade secrets.39 The PATR provides a right of access for citizens and natural or legal persons resident in the EU to documents, broadly defined, with exceptions for IP and confidential information.40 As the PATR does not define IP, data could be included as IP or commercial interests.41 Some hints can be garnered from the Trade Secrets Directive, which declares that trade secrets claims should not affect transparency and disclosure obligations of the member states, explicitly pinpointing the PATR. Two decisions concerning the relationship between confidential data and the disclosure obligation seem to highlight that commercial confidentiality cannot be presumed to trump transparency.42

the Council of 20 June 2019 on promoting fairness and transparency for business users of online intermediation services [2019] OJ L186/57. 33 Open Data Directive, arts 1 and 10. 34 Directive 2003/98/EC on the re-use of public sector information (PSI Directive) [2003] OJ L345/90. 35 Open Data Directive, art 10 and Recitals 28 and 54. 36 ibid art 1.2(c), 1.2(d), 1.5 and Recitals 54–55. 37 DGA, art 4.1 and 4.2. 38 Data Governance Act, art 5.12. 39 Cf. Rochelle Cooper Dreyfuss and Linda Silberman ‘Misappropropriation on a Global Scale: Extraterritoriality and Applicable Law in Transborder Trade Secrecy Cases’ (2017) 8 Cybaris Intell. Prop. L. Rev. 265. 40 PATR, art 4(2). 41 Regulation (EU) No 536/2014 of the European Parliament and of the Council of 16 April 2014 on clinical trials on medicinal products for human use, and repealing Directive 2001/20/EC (EU Clinical Trials Regulation) [2014] OJ L158/1, art 81(4). 42 MasterCard, Inc. and Others v. European Commission [2014] ECLI:​EU:​T:​2014:​ 759; PTC Therapeutics International Ltd v. European Medicines Agency (EMA) II [2020] ECLI:​EU:​C:​2020:​23.

316

3.

Improving intellectual property

LESSONS FROM GLOBAL ADMINISTRATIVE LAW PRINCIPLES

EU data law is regulated in layers, following different policy goals and differing logics. As observed, the policy of data access and re-use should be coordinated with other policies of exclusive rights to incentivize innovation and protect fundamental rights over personal and non-personal data. In the instruments examined above, data subject to exclusive rights is treated as exceptions to the rules of sharing and access. Personal data also is subject to a separate rule to preserve the principles in the GDPR. These exceptions require coordination since conditions and the boundaries must be set on what are shared, sharable, and excluded data. In her study of dynamic international IP norm development, Dreyfuss applied principles of global administrative law, notably transparency and accountability, to IP norms in order to foster dynamic innovation, development, and trade.43 She noted that expert agencies allow dynamic delegation of decision-making, but when competence is divided among peer institutions, checks and balances should be in place among them. She observed that good administrative practice means that the agency must have the requisite expertise, be open to input from all relevant stakeholders, reach reasoned decisions, and be free of corruption.44 Furthermore, as the agencies’ opportunistic practices would be harmful, it would be also important to prevent regulatory competition and forum shopping among multiple agencies. She also noted how decision-making by the global expert agencies may be viewed as a derogation rather than an expression of sovereignty by nation states. Her observations apply to the multi-layered regulation and governance of data in the EU. Two developments in the evolution of EU data law are noticeable, namely, the emergence of agencies that govern data uses as ’expert agencies’ and the increasing extraterritorial reach of EU data law, as technological reality makes the compartmentalized regulation of data flow nearly impossible.45 The confluence of these two developments calls for coordination of the competences of the emerging data agencies, as they have impacts in EU and globally, due to the extraterritorial reach of EU law. As seen above, several strands of regulation over commercially valuable data with contrasting policy objectives and different agencies are involved. 43 Dreyfuss (n 6) 240. See Benedict Kingsbury and others, ’Foreword: Global Governance as Administration - National and Transnational Approaches to Global Administrative Law’ (2005) 68 Law and Contemporary Problems 1, 4 44 Dreyfuss (n 6) 241. 45 See eg Anu Bradford, The Brussels Effect: How the EU Rules the World (OUP 2020).

Governing valuable confidential data in the EU

317

When data is governed as a part of IP or similar right, the target of regulation is actions between peers, the right is a private right, and the law entrusts the private entities with enforcement of their rights. In this space, expert agencies already exist, namely IP offices with competence and expertise on the validity of rights, rather than the issues related to access to data. 46 In contrast, data governance through data protection law has created several layers of expert agencies at different levels: DPOs within data controllers and processors, ISAs in member states, and the EDPB in the EU. Similarly, data access, re-use, and sharing policy spaces operate with several existing public sector bodies and EU institutions and agencies, and simultaneously require creation of new designations of private entities (data intermediation service providers, altruism entities) and expert agencies as competent bodies or a single informational point in member states, and the EDIB in the EU. Each legislative proposal does consider existing legislation in other policy spaces as exceptions. And some agency actions are coordinated within their policy spaces. Yet, as examined above, there seems to be some overlap of competence with little coordination as to how each policy area should evolve. Each instrument aims to create horizontal rules governing the data space and thus to apply cross-sectorally in an industry and technology-neutral manner. Yet each instrument has limited scope and different goals. As there is no clear hierarchy or established institutional comity among the agencies, courts could be called to intervene47 to create a case-by-case hierarchy of substantive norms. Moreover, there may be some suspicion of supranational EU data agencies as a derogation and not an expression of sovereign decision-making of the member states. The lessons of global administrative law on expert agencies and institutional design should well be heeded in EU data law. In particular, substantive overlapping coverage may cause the agencies to engage in regulatory competition, which could create forum shopping. Dreyfuss’s proposal is twofold: either coordination through design (e.g., through the creation of a supranational organization with exclusive authority) or through practice to ensure institutional comity and coordinated decision-making by different agencies. To a certain extent such comity occurs among peer agencies, and institutions, as the CJEU, EU Commission and EU Council all pay deference to the decisions made within the agencies’ competence. However, when it comes to the plethora of agencies in different policy spaces and at different levels, it is 46 For discussion of the layers of European institutions making patent law see, Antonina Bakardjieva Engelbrekt, ‘Jurisdictional and Institutional Aspects of Stem Cell Patenting in Europe (EC and EPO)’ in Aurora Plomer and Paul Torremans (eds), Embryonic Stem Cell Patents: European Patent Law and Ethics (OUP 2010). 47 PTC II (n 42).

318

Improving intellectual property

unclear to what extent such deference is paid either by design or by practice. In developing norms on EU data law, administrative principles of transparency and accountability should be applied to each expert agency at different levels and to the holistic flow of administrative decision-making. It would ensure that these multiple agencies are given mandates to avoid regulatory competition. Institutional comity may even require administrative review by the supranational agencies, namely the EDPB and EDIB, in coordination with an EU agency at the highest level, the Commission.

4. CONCLUSION Data governance is complex. The emerging EU data laws show that it is crucial to examine not only the substantive question of how to regulate data, but also how to govern the decision-makers, namely agencies and institutions that oversee the various rights, exceptions, duties, obligations, and privileges that these multi-layered regulations create. Against this backdrop, the question of ontology of the right to data seems misguided because rights talk tends to suggest that access and sharing be resolved through exceptions. Data governance both for efficient protection and for optimal access, sharing, and re-use requires a transparent and accountable set of procedural rules. Clearly defining the competence of the governing institutions would avoid regulatory competition and may promote access to data more efficiently. In sum, fairness may be better served through transparency and accountability of decision-making by these institutions,48 rather than devising substantive rules to create rights and exceptions that will overlap and require deliberation to figure out their boundaries and scope. In other words, deciding who should decide49 is crucial to ensure fairness in data law.

48 Michael D. Birnack, ‘A Process-Based Approach to Informational Privacy and the Case of Big Medical Data’ (2019) 20 Theoretical Inquiries in Law 257. 49 Neil K. Komesar, Imperfect Alternatives (University of Chicago Press 1997).

31. FAIR, FRAND and open – The institutionalization of research data sharing under the EU data strategy Mireille van Eechoud 1. INTRODUCTION Long gone are the days when the exchange of research data took place almost exclusively via informal networks of academics. In Europe, access and use of publicly funded research data is subject to institutionalization and regulation by the European Union (EU), despite its modest legislative competences in science. Furthermore, the terms and conditions under which academics must make research data available are increasingly informed by, or even set by, European institutions. The roll-out of the so-called European Strategy for Data plays a large role in this: in particular, the Open Data Directive and the soon to be adopted Data Governance Act and the Data Act. What key concepts feature in these instruments, and where does this leave researchers and their academic freedom?

2.

NOTHING NEW UNDER THE SUN?

Institutional arrangements for data sharing are not new. A good example is CERN, the international joint research centre focused on high-energy particles and famous for its Large Hadron Collider. CERN has always been a site for collaborative work and arrangements for the sharing of data and research outputs. More recently, CERN instituted ‘open data’ policies making part of the data generated freely available to the world. From its inception, CERN was built on the idea of exchange. Under the 1953 Convention for the Establishment of a European Organization for Nuclear Research, member states undertake to exchange not just scientific staff but also scientific and technical information.1



1

‘The history of CERN’, https://​home​.cern/​about/​who​-we​-are/​our​-history. 319

320

Improving intellectual property

Fast forward four decades, another world-famous example of collaboration and sharing emerges: the Human Genome Project. In little more than a decade, the United States, the UK, German, French, Japanese and Chinese researchers worked to create a DNA sequence of the entire human genome and of five other species. When it was decided in 1996 that all DNA-sequence data that the Human Genome Project generated would be released into the public domain (‘Bermuda Principles’), this was seen as a radical but necessary step. This data policy was considered essential to achieve the desired speed and quality of work, to address concerns about gene patents impeding scientific advancement and to ensure there were minimal restrictions on data access.2 The Human Genome Project and the Large Hadron Collider research are two examples of initiatives that were large-scale, international, collaborative, and generative of large amounts of data. From that perspective it is not surprising that institutional arrangements for data sharing were made. In fields such as molecular biology and astronomy, data sharing has a long history.3 Today, the classic model for sharing research through journals, papers and other publications is increasingly complemented by making raw or derived data when results are published. This serves to verify outcomes but also enables re-use of data for other projects. It is not yet common for data to be released while the research is ongoing because it does not sit well with the competitive nature of scientific research and the premium put on original publications. Another factor slowing early data release is that the same data set may be used for multiple publications. Nevertheless, ex-post publication of research data under open access conditions is set to become the norm. Such data can be held in commercial or non-profit electronic repositories, covering single or multiple institutions. Some are generalist like Figshare (commercial, Springer Nature) and Zenodo (non-profit, operated by CERN); others are domain-specific like the Endangered Languages Archive or the Polar Data Catalogue. There are thousands of repositories, set up by many different communities and companies. DataCite, the non-profit organization that provides persistent identifiers (Digital Object Identifiers or DOI) for unique data sets, already caters to some 2,300 repositories worldwide. Repositories, although key, are only one element of research infrastructures needed to build

2 Kathryn Maxson Jones, Rachel A. Ankeny and Robert Cook-Deegan, ‘The Bermuda Triangle: The Pragmatics, Policies, and Principles for Data Sharing in the History of the Human Genome Project’ (2018) 51 J Hist Biol 693. 3 See Jones and others (n 2) for a historical overview in the field of genetics; and for astronomy: Alberto Pepe and others, ‘How Do Astronomers Share Data? Reliability and Persistence of Datasets Linked in AAS Publications and a Qualitative Study of Data Practices among US Astronomers’ (2014) 9(8) PLoS ONE e104798.

FAIR, FRAND and open

321

the so-called science cloud.4 This partially explains the movement towards a top-down approach.

3.

THE TOP-DOWN TURN TO OPEN ACCESS

Since the launch of the Human Genome Project, its principal funders – the US National Institutes of Health (NIHS) and the UK’s non-profit Wellcome Trust – have adopted the policy that research data generated in all projects they fund be shared as openly as possible. The EU has followed such a path as well. The latest multi-billion framework programme Horizon Europe (2021–2027) requires research data of funded projects to be FAIR (Findable, Accessible, Interoperable, and Reusable) (defined in more detail below) and open by default. Earlier programmes focused primarily on open access to publications. It was during 2007 that the European Commission drafted its first policy, ultimately resulting in the 2012 Recommendation on access to and preservation of scientific information. This non-binding instrument was updated in 2018, with stricter guidelines for research data. Open science policies of governments around Europe include a similar approach to research data, but they can no longer choose their own path. By mid-2021, all EU member states must have policies in place that mandate that research data made available in repositories is also available for re-use by others, including commercial re-use. This follows from the 2019 Open Data Directive, discussed below. In the past years, the European Commission has also steadily developed a science data space, the European Open Science Cloud. This is now part of the larger EU data strategy to create ‘common European data spaces’ in areas such as health, agriculture, and mobility. This shows a growing institutionalization of research data management and sharing, driven to a substantial degree by the power of external science funders. The latter have become so important that they are able to dictate when and how researchers must share. This leverage exists even though, in many countries, direct government funding of research through universities accounts for a much larger share of research funding.

4.

FROM PUBLICATIONS TO DATA

At first glance, there is a clear logic to mandating open access to research data. After opening up access to publications comes opening up data and other

4 European Commission, ‘Prompting an EOSC in practice: final report and recommendations of the Commission 2nd High Level Expert Group on the European Open Science Cloud (EOSC)’ 2018 https://​data​.europa​.eu/​doi/​10​.2777/​112658.

322

Improving intellectual property

products of research. Indeed, the narrative of sharing research data mimics that of open access publishing. The so-called Plan-S (2018) is an excellent example of that narrative, and of the outsized influence of funders on academic publishing. Funders and EC policy makers had become impatient with the snail’s pace at which academic publications became open access. Universities were struggling to reach agreements with large publishers, which control back catalogues and license e-journals as part of package deals, also known as Big Deals. Pressed by the European Commission and supported by the European Research Council (ERC), a number of national research funding organizations from 12 European countries launched an ambitious plan to accelerate the transition. The stated ambition of this Coalition-S is that from 2021 ‘all scholarly publications… must be published in Open Access Journals, on Open Access Platforms, or made immediately available through Open Access Repositories without embargo’.5 The funders undertook to impose these obligations on researchers and their institutions through grant agreements. According to the plan, authors or their institutions should ‘retain copyright’ to their publications. Yet, at the same time, all publications are expected to be published under a Creative Commons Attribution license (‘CC BY’) or similar open license. Plan-S follows the so-called Berlin Declaration that called for the rapid transition to open access publishing of academic publications and the use of Creative Commons attribution licenses. Initially conceived at an international gathering of a dozen universities, libraries, research organizations and public funders, the Berlin Declaration now has over 700 signatories.6 The language of both the Berlin Declaration and Plan-S clearly illustrates that a major driver behind open access movements is the wish to roll back the control that commercial publishers have gained over science publication systems. In the words of Plan-S, it is necessary to ‘to regain ownership of the rules governing the dissemination of scientific information’. Publication paywalls limit access, which ‘constitutes an absolute anomaly’ because ‘no science should be locked behind paywalls!’7 It is also evident that copyright plays a major role.

5 See https://​www​.coalition​-s​.org/​about/​. Research funders from the UK, Quebec (Canada) and Jordan also formally endorsed Plan-S. 6 The Berlin declaration (https://​openaccess​.mpg​.de/​Berlin​-Declaration) took inspiration from the Budapest Declaration (https://​www​.budapest​openaccess​initiative​ .org/​), spearheaded by the Open Society Institute (2001), and the Bethesda Declaration (http://​legacy​.earlham​.edu/​~peters/​fos/​bethesda​.htm), which promoted open access specifically for the biomedical community (2003). 7 ibid.

FAIR, FRAND and open

323

The framing of open access as authors taking back control is however double-faced. The insistence on the use of open licenses like the Creative Commons Attribution 4.0 license8 indeed prevents academic publishers from controlling copyright. What it does not achieve is to return any meaningful control to authors. Using CC BY means anyone in the world can use the work, for free, for any purpose, as long as the author is credited. CC Zero, also called a public domain dedication, goes further by relinquishing copyright and similar rights to the fullest extent permitted by law. It is worth flagging that publishers continue to play a crucial role in steering author behaviour. In large part, this is due to the publish or perish nature of academia, where the individual author has no bargaining power and journals run a take it or leave it system. In the past, the publisher was able to acquire copyright from the author in lieu of publication. Now, the publisher prescribes that the author must not transfer her copyright to the publisher, but instead pay to be published and license the use of her work freely to the entire world. The one great advantage for the author is that access to her work is wider. The downside is that the author has no more control over her work than if a publisher owned the copyright. Increasingly, journals demand that the research data on which articles are based is made available in a repository, also under an open license. Funders and libraries recognize that it is more efficient and fair to have a system where individual authors do not have to pay article processing or book production fees themselves. But buying fees off collectively is no easy task, as science publishers seek to maximize returns.9 All the while, the publishing industry has been steadily expanding its reach to new business models around data analytics, metrics, research management and performance tools.10 Meanwhile, academic communities are concerned that increased dependence on commercial data analytics providers (often academic publishing conglomerates), data processing and cloud service providers (often big technology firms) threatens their autonomy and ultimately their capacity to produce 8 CC-BY and CC-0 are the most commonly imposed by journals and funders, but less permissive Creative Commons Licenses also exist, see https://​creativecommons​ .org. 9 Transformative agreements (‘publish and read’ agreements) combine access to journal portfolios with immediate open access without additional payment of fees. Negotiations are tough, see e.g., in Germany https://​www​.projekt​-deal​.de/​about​ -deal/​ and in The Netherlands https://​www​.univer​siteitenva​nnederland​.nl/​en​_GB/​open​ -science​-agreement​-with​-elsevier​.html. 10 Elsevier’s parent RELX e.g., says: ‘We leverage deep customer understanding, combining leading content and data sets with powerful global technology platforms, to build sophisticated analytics and decision tools that deliver enhanced value to our customers’: RELX Annual Report 2021.

324

Improving intellectual property

quality research.11 Who controls research data, and who is able to create value from it is a matter of public interest. Surveys among researchers show that key concerns around data sharing are about the risk of misuse of openly shared data, a lack of recognition/attribution and legal uncertainty around intellectual property implications. So how do EU data policies effect research?

5.

RESEARCH DATA IN THE EU DATA STRATEGY

It is important to understand the open access movement for publications because its narrative plays a major role in the drive towards open access to research data. Until recently, open access at EU level was unregulated.12 EU copyright law itself, although largely harmonized, says little about initial ownership, transfers and copyright contract law. Some member states have provisions in their copyright contract law that allow researchers to make their works available in repositories even when the copyright is owned by publishers or others, but EU copyright law is silent on this.13 No significant changes to the Database Directive14 are foreseen. All that the European Commission has proposed is that Internet of Things data should somehow be excluded from attracting right under the Database Directive.15 As it stands then, collections of research data (data sets even) might attract intellectual property. All the same, research data governance sits in an increasingly complex web of legislation. The 2019 Open Data Directive16 brought research data into the ambit of the general framework for re-use of public sector information, although not all its rules apply. Member states’ implementation of this law is slow, but once complete, researchers can benefit from wider availability of public sector data. However, as holders of data, research performing organ11 See eg Leiden Principles on the role of research-intensive universities as the world emerges from the COVID-19 pandemic, May 2022; ‘LERU Data Statement’ December 2021, https://​www​.leru​.org/​publications/​is​-university​-autonomy​-threatened​ -by​-eu​-data​-policy​-and​-law. 12 The text- and data-mining exception of Article 3 ‘DSM Directive’ (Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC [2019] OJ L130/92) has no direct bearing on open access. 13 E.g., the Dutch Copyright Act has had such a clause since 2015. 14 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases [1996] OJ L77/20. 15 See European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council on harmonised rules on fair access to and use of data (Data Act)’ COM (2022) 68 final, art 7. 16 Directive (EU) 2019/1024 of the European Parliament and of the Council of 20 June 2019 on open data and the re-use of public sector information (recast) [2019] OJ L 172/56.

FAIR, FRAND and open

325

izations including universities and their staff also come under obligations to allow others re-use. Since it is a most important piece of legislation, it pays to have a closer look. 5.1

The Open Data Directive

The current Open Data Directive replaced the 2013 Directive on the re-use of public sector information, which in turn contained a tightening of the rules of the original 2003 Directive.17 Its roots can be traced back to the European Commission’s Guidelines for improving the synergy between the public and private sectors in the information market of 1989. These aimed to make more data produced in the public sector available for commercial exploitation by the nascent database industry. Often mentioned were legal information (legislation, court decisions), meteorological data, statistics and mapping data. It was actually the private sector who lobbied for a commercial right of access to public sector databases. The idea was there should be an EU instrument that would oblige public sector bodies to allow commercial exploitation of their information resources, and that would also ban them from providing information services that the private sector was able to offer. Publicly funded academic research and publications did not appear to be on the radar of policy makers back then and did not come fully into view for another 30 years. The key impact of the Open Data Directive is to oblige member states to ensure that public sector bodies make the information they hold (‘any content whatever its medium’) available for commercial and non-commercial re-use at non-discriminatory terms. This obligation only applies to information collected or produced in the course of public tasks and to which public access is allowed, e.g., on the basis of (national) freedom of information acts. The idea that there is additional, external value to be derived from information resources created in the course of public tasks has always been central to the project. The initial focus was on the development of new commercial pan-European services it would facilitate, and the instrument was based on the EU’s legislative competence to further the common market. Allowing re-use was said to serve a host of other goals as well, such as improving public service delivery and public accountability. That the Directive now has Open Data prominently in the title shows its aspirations. In a broad sense, open data means data that ‘anyone can freely access, use, modify, and share for any purpose (subject, at most, to require-

17 Directive 2003/98/EC of the European Parliament and of the Council of 17 November 2003 on the re-use of public sector information [2003] OJ L 345/90, as revised by Directive 2013/37/EC [2013] OJ L175/1.

Improving intellectual property

326

ments that preserve provenance and openness)’.18 To enable this, data must be unencumbered by intellectual property restrictions (that is, be legally open) and be technically open. The latter means it must at least be machine-readable and available in an open format. Public sector bodies must do this wherever possible.19 The current Directive stipulates that re-use must be allowed with as few restrictions as possible. If terms and conditions are imposed, these must be non-discriminatory (treat similar users equally), transparent and wherever possible standardized and electronically available. Recital 44 emphasizes that open licences ‘should play an important role’ in this respect. Also, public sector bodies are banned from exercising any sui generis database rights they might have to restrict re-use beyond the limits set by the Open Data Directive (art 1(6)). Of note, the Directive does not apply to documents held by public sector bodies, if third parties hold intellectual property rights in them. Another key principle is that re-use should be free; no royalties or other use charges should be levied. The Open Data Directive only explicitly regulated academic research data in 2019. Earlier versions of the Directive contained a messy basket of exceptions while applying its terms to a broad range of public sector bodies. It is still not crystal clear which academic organizations are covered, but research branches of public universities, publicly funded research performing organizations and university libraries are included. There is now one provision specifically targeting research data. Under Article 10, publicly funded and publicly deposited research data ‘shall be re-usable’ under the same general provisions as other public sector data. In addition, member states must develop ‘open access’ policies for research data that is produced with (partial) public funding. Such policies must be in line with the Commission’s revised Recommendation on access to and preservation of scientific information (2018) and be directed at domestic research organizations and funders. In a roundabout way, what started out as urgent advice from the European Commission has now become law. Like the Recommendation, Article 10 allows legitimate commercial interests, knowledge transfer activities and pre-existing intellectual property rights to be considered when crafting open access policies. Article 10 also asks that research data be made FAIR. That acronym represents the four key characteristics of well-managed research data, which enable discovery, evaluation and downstream reuse: Data must be Findable,

See for a definition of open: https://​opendefinition​.org/​. Open Data Directive, art 5(1).

18 19

FAIR, FRAND and open

327

Accessible, Interoperable and Reusable.20 These four aspects are elaborated in 11 guiding principles, drafted by a diverse group of academics, institutions and some private sector bodies (such as publishers).21 The principles focus on technical qualities of datasets, metadata, repositories and on communication protocols and tools. In several ways, these guidelines are similar to the technical principles in the Open Data Directive aimed at easy identification and exchange of data. The Open Data Directive also sets out legal conditions, which is something FAIR does not directly address, just as it does not address ethical or moral aspects of openness.22 The Directive thus recognizes that it is difficult for universities to maximize the release of research data while also fulfilling the ‘valorization’ tasks many have, including the commercialization of research outputs through knowledge transfer to the commercial sector or state companies. There is a growing body of research on the effects of open versus proprietary dissemination of data on follow on research and innovation. In areas where data play an important role in the ability to successfully patent a process or product, data release policies could impact research institute’s ability to commercialize research. On the other hand, intellectual property (and restrictive licensing terms) can also hinder follow-on research and innovation.23 5.2

Data Governance Act and Data Act

The Data Governance Act24 requires public sector bodies to make available, with appropriate clearances, data that is not subject to the Open Data Directive due to data protection, commercial secrecy and third-party intellectual property constraints. Research communities are meant to be a major beneficiary. 20 These elements have been identified by authors and institutions in various disciplines, but FAIR has gotten particular traction, see Mark D. Wilkinson and others, ‘The FAIR Guiding Principles for Scientific Data Management and Stewardship’ (2016) 3 Scientific Data 160018. 21 ibid. 22 Barend Mons and others, ‘Cloudy, increasingly FAIR; revisiting the FAIR Data guiding principles for the European Open Science Cloud’ (2017) 37(1) Information Services & Use 54. 23 The Human Genome Project and its private sector competitor Celera Genomics provide an interesting comparison. Celera managed to commercialize unique sequencing data (without intellectual property) because medical companies and other clients would not wait for the HGP data to become freely available. See Heidi L. Williams, ‘Intellectual Property Rights and Innovation: Evidence from the Human Genome’ (2013) 121(1) Journal of Political Economy 1–27. 24 Regulation (EU) 2022/868 of the European Parliament and of the Council on European data governance (Data Governance Act), OJ 2022, L 152 (effective from 24 September 2023).

328

Improving intellectual property

Further, by introducing a light regulatory regime for data altruism organizations, the EU also hopes to increase data pools for research and other public interest purposes. The third important instrument in the EU data strategy is the (proposed) Data Act. It sets out various rules geared towards developing data spaces, such as the European Open Science Cloud. But it also creates obligations for data holders with respect to licensing terms, regardless of whether their obligation to provide access to data derives from the Data Act or any other Union legislation, including implementing laws. The concept the Data Act uses for licensing terms is FRAND: Fair, Reasonable and Non-Discriminatory terms. This is borrowed from the licensing of standard essential patents,25 and less far-reaching than what the Open Data Directive mandates for public sector data. Under the Data Act, the data holder is free to set the terms of data access – as long as they are FRAND – but cannot contract around the provisions on data access to the detriment of the data recipient. The obligation to provide access does not force data holders to divulge trade secrets but would task the European Commission to develop non-binding model contractual terms on data access and use.

6. CONCLUSION Access and re-use of research data is fast becoming institutionalized at the EU level. This development is driven by a combination of research funders exercising their power to impose rules, legislation implementing the EU data strategy, and the creation of a European Science cloud. Questions can be raised about whether applying generic instruments like the Open Data Directive and the proposed Data Act to (publicly) funded research is actually the right approach. The Open Data Directive is a generic instrument designed for government information, not for academic research data created in highly competitive environments that put a premium on private-public cooperation and commercialization of research outputs (technology transfers, etc.). More importantly, both the Directive and research funders push open content licenses, particularly Creative Commons Attribution licenses, as the gold standard for licensing data sets and other research products, not just academic publications. But these licenses are not well-suited to data. Making one private ordering licensing scheme a key building block of government open science policy in Europe is a curious move. Finally, the upcoming Data Act seems to

25 On the benefits of FRAND (and other private ordering mechanisms) to counter problems of the current IP system, see Rochelle Dreyfuss, ‘The Challenges Facing IP Systems: Researching for the Future’ in Peter Drahos, Gustavo Ghidini and Hans Ullrich (eds), Kritika: Essays on Intellectual Property (vol 2, Edward Elgar 2020).

FAIR, FRAND and open

329

create new powers and obligations that cut through the policies of the Open Data Directive and rely on member states to enact open science policies. Strikingly, scant attention is being paid to the impact on academic freedom of individual researchers and teams. Lip service is paid to Article 13 of the Charter of Fundamental Rights of the EU, which guarantees that ‘arts and scientific research shall be free of constraint’ and that ‘academic freedom shall be respected’. But the rhetoric around open research data seems to primarily echo frustrations about the stranglehold that large academic publishers have had over university libraries. ‘No science should be behind paywalls!’ as research funders exclaimed, does not begin to address the complexities of safeguarding academic freedom in a data-driven world.

32. A shifting paradigm of regulatory data transparency in Europe: How to reconcile the irreconcilable Żaneta Zemła-Pacud 1. INTRODUCTION Regulatory data relating to life science innovations contains information on products and technologies of key importance in the protection of human and animal health, food safety and environmental security. Access to such data is necessary for public health and nutrition interests and vital for the independent scientific verification of it. Concurrently, this data is protected as intellectual property, fundamental for achieving and maintaining a competitive advantage in the market. Thus, inevitably, conflicts arise between the imperative to protect commercially confidential information and the principle of public disclosure. The extraordinary development of highly advanced technologies in life science fields has gradually transformed the way in which technological knowledge is protected by available legal instruments. The higher the degree of the technological complexity of these innovations, the less likely they are to be replicated through reverse engineering. Consequently, patent protection is less likely to constitute a sufficient incentive to disclose otherwise confidential data, for which more effective protection can be ensured under a trade secret regime. For this reason, patents are no longer standalone instruments used to protect technological knowledge in life sciences; emphasis is increasingly being placed on both the protection of data as trade secrets and on safeguarding the confidentiality of regulatory data submitted to proper authorisation agencies. Analogously, the underlying legal framework for accessing protected knowledge is not adequate for contemporary innovations. Patent law requirements concerning sufficient disclosure do not correspond to the complex and technologically specific solutions in the pharmaceutical or biotechnological areas and the multiplicity of patents protecting one final product. In this sense, 330

A shifting paradigm of regulatory data transparency in Europe

331

the paradigm of granting a patent monopoly, in return for enabling the disclosure of an invention, no longer holds true. Access to a substantial amount of data can, however, be sought on the grounds of regulatory data transparency provisions. Thus, in an era, when ‘data is the new oil,’ the principles of regulatory data protection in the life sciences gain particular importance for all stakeholders: Innovators, imitators and the public. The current legal framework of regulatory data protection in the European Union (EU) encompasses two aspects: data exclusivity and data confidentiality. This chapter presents recent changes in EU policies, legislation, and jurisprudence, all striving to create a well-balanced framework of regulatory data transparency and their confidentiality. It points to the diverse rules of data confidentiality currently binding life science industries in particular, and recommends achieving their greater uniformity. It also proposes interpretations of the current normative framework that would lead to greater coherence in access to protected knowledge under emergency circumstances.

2.

GENERAL RULES ON TRANSPARENCY OF DATA SUBMITTED IN EU REGULATORY PROCEEDINGS

Access to regulatory data within the central procedures of marketing authorisation in the EU is fundamentally based on the Treaty on the Functioning of the European Union (TFEU)1 and on the Regulation (EC) No 1049/2001, regarding public access to European Parliament, Council and Commission documents.2 The latter guarantees the broadest public access possible to documents held by the EU administrative bodies. Such access is, however, subject to exceptions. According to Article 4(2) of this Regulation, EU institutions are to refuse access to a document where disclosure would undermine, inter alia, the protection of commercial interests of a natural or legal person, including intellectual property, unless there is an overriding public interest in disclosure of the document in question. Furthermore, additional specific rules on transparency and the confidentiality of regulatory data, as regards particular life science sectors, result from both EU regulations as well as the policies and guidelines issued by the EU

1 See Consolidated version of the Treaty on the Functioning of the European Union [2012] OJ C 326/47, art 15(3). 2 See Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents [2001] OJ L145/43, art 2.

332

Improving intellectual property

administrative bodies. Finally, rules on regulatory data submitted to national agencies are additionally influenced by domestic laws and jurisprudence.

3.

DATA CONFIDENTIALITY IN LIFE SCIENCE AUTHORISATION PROCEEDINGS

3.1

Medicinal Products

The full registration dossier for a medicinal product includes, inter alia, qualitative data pertaining to the product components and manufacturing processes, non-clinical data with regard to physical, chemical and biological properties, as well as animal testing results and clinical trials data.3 Undoubtedly, these types of data may constitute information that qualifies as a trade secret. Until 2010, pharmaceutical companies invoked a general presumption of confidentiality of registration dossiers,4 the violation of which could result in the disclosure of business secrets and jeopardise their commercial interests. In 2010, the confidentiality paradigm began to shift towards transparency when the European Medicines Agency (EMA) published its Policy 0043 allowing anyone to request clinical and other documents from the EMA, thereby authorising it to release data reactively. The new transparency framework was completed five years later with the EMA Policy 0070. The latter introduced an obligation to publish regulatory clinical documents after a medicinal product has received a marketing authorisation and conferred upon the EMA the authority to proactively publish data, including clinical trials results on an online sharing portal.5 The access to clinical reports was governed by the Terms of Use, which obliged the users to only exploit the Clinical Reports provided in the EMA database for academic and non-commercial research purposes, and specifically not to use them to support a marketing authorisation (MA) application, including extensions or variations for a product anywhere in the world, nor to make any unfair commercial use of the clinical reports.

3 Annex I (requirements of particulars and documents accompanying an application for marketing authorisation for all categories of medicinal products) to the Directive 2001/83/EC of the European Parliament and of the Council of 6 November 2001 on the Community code relating to medicinal products for human use [2001] OJ L311/67. 4 See Daria Kim, ‘Transparency policies of the European Medicines Agency: has the paradigm shifted?’ (2017) 25(3) Medical LR 456–483. 5 However, on 5 December 2018 the Agency suspended the release of clinical data under Policy 0070 due to the effects of Brexit and EMA’s relocation. The suspension is still in place in light of the COVID-19 pandemic.

A shifting paradigm of regulatory data transparency in Europe

333

The practical significance of this policy vanished when, in 2018, the EMA suspended it due to the effects of Brexit and the relocation of the EMA, and later extended the suspension as a result of the COVID-19 pandemic. As regards national authorisation procedures, the EMA, in collaboration with the Heads of Medicines Agencies Group of the EU, has further issued a number of guidelines, including the ‘Guidance document on the identification of commercially confidential information and personal data within the structure of the marketing authorisation application – release of information after the granting of a marketing authorization’6 (CCI Guidelines). The CCI Guidelines specify, in detail, exactly what information should or may be kept confidential and, in this respect, attempt to harmonise the practice of national authorities in this regard. Nevertheless, the final decision to disclose certain data to a third party is at the discretion of the competent national or EU authority, taking into consideration the relevant national and EU regulations. This situation raises the obvious question of whether the differences between national approaches of what constitutes CCI may result in ‘agency shopping,’ i.e., applying for a MA in those countries where the data is subject to a more restrictive policies on disclosure. In terms of the overall nature of registration dossiers, the Court of Justice of the EU (CJEU) has taken the view that, regardless of the type of procedure by which the MA of a medicine was granted, dossiers no longer enjoy the presumption of confidentiality and should be made available as public information. This opinion was expressed by the CJEU in a series of rulings issued in 2018: T-235/15,7 in which the disclosure of information on the similarity and superiority of an orphan drug was sought; T-718/15,8 concerning the disclosure of a clinical study report; and T-729/15 ,9 in which access to five toxicology study reports was disputed. In all three cases, the CJEU imposed the same high standard of proof on plaintiffs seeking to keep portions of the information confidential. It required them to describe, in detail, the professional and commercial significance of 6 HMA/EMA Guidance Document on the Identification of Commercially Confidential Information and Personal Data Within the Structure of the Marketing Authorisation (MA) Application-Release of Information after the Granting of a Marketing Authorisation, https://​www​.ema​.europa​.eu/​en/​documents/​other/​heads​ -medicines​-agencies/​european​-medicines​-agency​-guidance​-document​-identification​ -commercially​-confidential​-information​_en​.pdf. 7 Case T-235/15 Pari Pharma GmbH v European Medicines Agency v European Medicines Agency (EMA) [2018] ECLI:​EU:​T:​2018:​65. 8 Case T-718/15 PTC Therapeutics International Ltd v European Medicines Agency (EMA) [2018] ECLI:​EU:​T:​2018:​66. 9 Case T-729/15 MSD Animal Health Innovation GmbH and Intervet international BV v European Medicines Agency (EMA) [2018] ECLI:​EU:​T:​2018:​67.

334

Improving intellectual property

the information and its usefulness to other companies that might subsequently examine and use it, by showing specifically and factually how, once the documents were disclosed, competitors might enter the market. The CJEU’s view was that for documents to be considered confidential, the risk of harm to a protected interest must be reasonably foreseeable. 3.2

Clinical Trial Data

Data from clinical trials is not registration data sensu stricto in the sense that it does not necessarily underlie products introduced into the market. It equally may concern clinical trials that failed and did not lead to the commercialisation of a product or clinical trials that were conducted for non-commercial purposes. Regulation 536/2014, on clinical trials of medicinal products for human use (CTR),10 aims to ensure a sufficient level of transparency in the clinical trials by creating a database, the Clinical Trials Information System (CTIS), in which all relevant information as regards the clinical trial shall be published from 30 January 2023 onwards. As the CTIS is publicly accessible and the data contained therein is presented in easily searchable formats, the protection of commercially confidential information is ensured by two mechanisms: first, the option to defer the publication of documents submitted through the EU portal and second, the possibility to redact data justified per the CCI. In both cases, the CCI Guidelines adopted by the EMA carefully map out the limits to the CCI exception to the general principle of the disclosure of clinical trial data established in Article 81(4) CTR.11 The confidentiality of commercially sensitive information contained in the EU clinical trials database is limited by the existence of an overriding public interest justifying disclosure (art 81(4)(b) of the Regulation). However, documents issued by the EMA, implementing the Clinical Trials Regulation, only briefly explain which situations may necessitate the use of an ‘overriding

10 Regulation (EU) No 536/2014 of the European Parliament and of the Council of 16 April 2014 on clinical trials on medicinal products for human use, and repealing Directive 2001/20/EC [2014] OJ L158/1. 11 The principle of disclosure is implemented in the CTIS in such a way that certain data must always be published, whereas the deferral of documents or redactions of information contained therein is considered to be justified in limited circumstances. See EMA, Draft proposal for an addendum, on transparency, to the ‘Functional specifications for the EU portal and EU database to be audited – EMA/42176/2014, EMA/641479/204.

A shifting paradigm of regulatory data transparency in Europe

335

public interest in disclosure’ exception to confidentiality rules, referencing ‘a very serious safety incident.’12 The CTR significantly changed the rules when it comes to disclosing all clinical trials carried out in the EU. Prior to its entry into force, third persons could have access to clinical trial data only following the conclusion of the regulatory decision-making process in the frame of centralised marketing authorisation procedures.13 The pre-CTR framework left a broad range of conducted clinical trials beyond public access, which had obvious negative consequences for public health interest with regards to public scrutiny and the possibility of conducting secondary analyses of the data. 3.3

Novel Food and GMOs

The application for an authorisation to place a novel food on the market in the EU includes a detailed composition, a description of the production process of the novel food, as well as scientific evidence demonstrating that the novel food does not pose a risk to human health.14 An applicant may request confidential treatment of the information contained therein. Relatively recently, on 27 March 2021, the existing rules of access to scientific data were updated by Regulation (EU) 2019/1381 of the European Parliament and of the Council on the transparency and sustainability of EU risk assessment in the food chain,15 strengthening the transparency of risk assessments in a proactive manner. According to the newly introduced rules, all scientific data supporting requests for authorisations or approvals are made publicly available in a proactive

12 EMA, Appendix on disclosure rules to the ‘Functional specifications for the EU portal and EU database to be audited, EMA/228383/2015. 13 Clinical reports contained in withdrawn applications are also, in principle, published under Policy 0070, subject to an exceptional situation where there is a confirmed re-submission date or re-submission of the application has already taken place. See EMA, External guidance on the implementation of the European Medicines Agency policy on the publication of clinical data for medicinal products for human use, EMA/90915/2016 Version 1.4, pp. 6–7. 14 Regulation (EU) 2015/2283 of the European Parliament and of the Council of 25 November 2015 on novel foods, amending Regulation (EU) No 1169/2011 of the European Parliament and of the Council and repealing Regulation (EC) No 258/97 of the European Parliament and of the Council and Commission Regulation (EC) No 1852/2001 (Text with EEA relevance) [2015] OJ L327/1, art 10(2). 15 Regulation (EU) 2019/1381 of the European Parliament and of the Council of 20 June 2019 on the transparency and sustainability of the EU risk assessment in the food chain and amending Regulations (EC) No 178/2002, (EC) No 1829/2003, (EC) No 1831/2003, (EC) No 2065/2003, (EC) No 1935/2004, (EC) No 1331/2008, (EC) No 1107/2009, (EU) 2015/2283 and Directive 2001/18/EC [2019] OJ L231/1.

336

Improving intellectual property

manner and are made easily accessible at the earliest opportunity, subject to confidentiality exceptions.16 Currently, when granting confidentiality of certain information contained in an application, the European Food Safety Authority or the European Commission examining the application apply the general rule,17 according to which confidentiality may be granted only for narrowly defined information, where the applicant demonstrates that the disclosure of such information may significantly harm its interests: information concerning the production or manufacturing process, commercial links, commercial information revealing the sources of supply and the quantitative composition of the product, except for information that is relevant to the safety assessment. In a subsidiary manner, Article 23(4) of Regulation 2015/2283 applies, according to which the Authority or the Commission may agree to keep other information confidential, including those cases where the applicant demonstrates that the disclosure of such information may harm its interests detailed in that provision.18 Regulation 2019/1381 has rebalanced the right of the public to transparency in the risk assessment process with the rights of applicants. Previously, the emphasis was placed on ensuring the appropriate confidentiality of certain information (previous wording of Article 23(5) of Regulation 2015/2283), whereas now primacy is placed on wide access to documents provided by applicants for the purposes of the food authorisation procedure that is highlighted. Similar rules apply to genetically modified foods,19 and to plant protection products. Interestingly, among the several authorisation procedures it is only the plant protection product regulation that explicitly names two exceptions to data confidentiality: Otherwise confidential information shall be made public (1) when it relates to foreseeable effects on human or animal health or on environment, and (2) where urgent action is essential to protect them, such as in emergency situations. 16 See Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety [2002] OJ L31/1, art 38. 17 See ibid. art 39(2), which sets out confidentiality rules by way of derogation from art 28 on transparency. 18 E.g., detailed information on how to manufacture the novel food, on the nature and composition of the food and on the variability and stability of individual production batches. 19 Regulation (EC) No 1829/2003 of the European Parliament and of the Council of 22 September 2003 on genetically modified food and feed (Text with EEA relevance) [2003] OJ L268/1.

A shifting paradigm of regulatory data transparency in Europe

4.

337

COMMENTS AND RECOMMENDATIONS

Currently, according to the established case law of the CJEU, regulatory data is not entitled to a presumption of confidentiality. On the contrary, it is covered by the principle of disclosure, which is intended to foster a policy of data transparency. The subject of the confidentiality of regulatory data may be determined as information that cannot be disclosed due to the protection of the commercial interests, including intellectual property, of a natural or legal person, where there is no overriding interest opposing it.20 The criterion of commercially confidential information differs amongst national authorisation procedures even though in all of them, emphasis is put on the potential usage of disclosed data in generic, hybrid, or bibliographic authorisations and its possible, negative consequences for the period of data exclusivity utilised by the holder of a MA for the innovative medicine. From the perspective of legal clarity, it is highly recommended to unify the confidentiality criteria of regulatory data from different life science sectors. This will make possible the application of uniform principles of interpretation devised by the CJEU and prevent attempts to shift the confidentiality boundary in isolation from the uniform principles. Streamlining the confidentiality criteria for registration data will also be important in view of the ever-increasing range of innovative products authorised on the basis of high-value registration dossiers and the consequent proliferation of random confidentiality criteria for those data. Apart from the internal incoherencies within the system, another problem lies in the different approaches to said rules in particular EU jurisdictions. Final decisions on whether to disclose or withhold key clinical data are left to national authorities, which may result in different standards of disclosure or availability. This problem could be mitigated by issuance of EMA’s guidelines specifying the criteria of disclosure. The exception of overriding public interest is also lacking uniform interpretation throughout the regulatory regimes. Importantly, interpretation of this notion has not yet been considered by the EU authorisation agencies, nor by the CJEU, in relation to emergency circumstances. In the context of the COVID-19 pandemic, and the experienced lack of instruments of compulsory data sharing within the framework of regulatory data protection,21 health 20 In terms of the Clinical Trials Regulation, this exception to granting confidentiality is referred to as an ‘overriding public interest’, whereas in, e.g., Regulation No 178/2002, confidential information may be disclosed to protect ‘human health, animal health or the environment’. 21 See Gabriela Lenarczyk and Żaneta Zemła-Pacud, ‘IP and access to COVID-19-relevant medicines - in search of an optimal legal framework’ (2020) ZNUJ PPWI No 4.

338

Improving intellectual property

emergencies, especially on a global scale, should certainly be considered as such overriding public interests. The lesson learned from the pandemic is that compulsory licences, or other forms of overcoming patent monopoly, do not provide access to the comprehensive information necessary for implementing cutting-edge inventions such as biological drugs, including vaccines. The newly issued waiver does not change the situation as, due to its limited application, it does not have any automatic legal effect on the EU internal legislation. In order to achieve greater coherence among various intellectual property rights, grant of a compulsory license by any EU member state should be regarded as the prerequisite for limiting confidentiality and granting access to the relevant regulatory data.22 Such interpretation would be in accordance with Article 39(3) of TRIPS, explicitly naming protection of the public as a justified exception to confidentiality of data. In terms of practical consequences, research-based industry claims that the disclosure of data, even for non-commercial research purposes, impedes innovation incentives. They emphasise that each month of delayed market entry of a competitor without having access to the applicant’s proprietary information constitutes a considerable commercial advantage, even if it is not precisely quantifiable.23 Paradoxically, research shows that, whilst opposing the EU policy for access to data, pharmaceutical companies have been the most active users of the system.24 Last but not least, access to regulatory data becomes particularly important in light of artificial intelligence (AI) having the potential to transform the R&D for new medicines, their manufacture methods, or therapies. AI can ably use data collected in earlier tests for, inter alia, hypothesis generation, risk modelling, and counterfactual simulation within R&D processes.25 However, for effective use of AI solutions to aggregate data and perform meta-analyses, raw data rather than summaries are needed.26 In this respect even the newest legislation on clinical data already is outdated and need adjusting to AI operational standards.

See in this regard art 63. Kim (n 4) 476. 24 Peter Doshi and Tom Jefferson, ‘The first two years of the European Medicines Agency’s policy on access to documents: secret no longer’ (2013) 173(5) JAMA Internal Medicine 380. 25 E. Hope Weissler and others, ‘The role of machine learning in clinical research: transforming the future of evidence generation’ (2021) 22 Trials 537. 26 Rebecca S. Eisenberg, ‘Data secrecy in the age of regulatory exclusivities’ in Rochelle C. Dreyfuss and Katherine J. Strandburg (eds), The Law and Theory of Trade Secrecy. A Handbook of Contemporary Research (Edward Elgar 2012) 487. 22 23

A shifting paradigm of regulatory data transparency in Europe

339

The shifting paradigm in the transparency of data is likely to change industry approaches of patentability, and of trade secret protection. Earlier moments of publication and broader scope of details, especially within the clinical trials system, may force innovative companies to take an even more cautious approach as regards early patenting strategies. This deviation may result in a greater number of patent or provisional patent applications, where applicable,27 filed to avoid depriving the potential invention of the claim of novelty. A greater transparency of regulatory data will also, to some extent, diminish the significance of trade secret protection, as only genuinely commercially important information will remain protected by regulatory data confidentiality. A substantial amount of less significant data will be subject either to access on request or automatic disclosure for the public. This, interestingly, is likely to reinforce the role of patents as fundamental means of protection.

27 In the EU this instrument is provided in patent law of Portugal and Austria and currently considered in Poland.

PART VIII

NON-DISCRIMINATION ISSUES

33. Remuneration rights and national treatment P. Bernt Hugenholtz 1. INTRODUCTION On 28 April 2022, following Uganda’s accession to the Berne Convention, membership of the Berne Union amounted to 181 countries1 – just 12 short of the number of states composing the United Nations.2 Whereas near-universal adherence to Berne makes national treatment in standard international copyright cases almost a given, the application of national treatment at the outskirts of the Convention remains controversial. The exercise of rights or subject matter situated at the margins of the traditional copyright domain, where national laws tend to diverge, has challenged the robustness of the Convention’s core principle. Indeed, Berne itself provides for various exceptions to national treatment: works of applied art,3 term of protection,4 and droit de suite (artist’s resale right).5 Rights of remuneration are especially problematic. While the Convention refers to rights of remuneration in just three provisions,6 remuneration rights of various kinds have become important instruments to protect the pecuniary interests of authors in many Berne Union states. Since statutory rights of remuneration are spread unevenly over the globe – with jurisdictions of the author’s right tradition more receptive to this legal construct than copyright states – disputes about the application of national treatment to remuneration rights that have no solid basis in the Berne Convention, have regularly arisen.7

Berne Convention. https://​www​.un​.org/​en/​about​-us. 3 Berne Convention (n 1) art 2(7). 4 ibid art 7(8). 5 ibid. art 14ter(2). 6 ibid. art 11bis(2) {(re)broadcasting}, art 13(1) {recording of musical works} and art 14ter {artist’s resale right}. 7 E. Steup, ‘The rule of national treatment for foreigners and its application to new benefits for authors’ (1978) 25(4) Bulletin of the Copyright Society of the USA 279, 280. 1



2

341

342

Improving intellectual property

While the application of national treatment to remuneration rights based on exceptions to exclusive rights, such as levies for private copying, no longer seems contentious, the emergence of new, more complex ‘residual’ remuneration rights in various EU countries8 raises new and difficult questions. For example, from August 2022 Belgian law accords a non-transferable and non-waivable collectively managed right of equitable remuneration to the authors of an audiovisual work, contingent upon the transfer of the right of communication to the public to a film producer, which can be exercised against audiovisual streaming services, such as Netflix or Disney Plus.9 A draft bill proposing a similar right is under discussion in the Netherlands.10 Whereas proponents extol the virtues of residual rights as an effective means of compensating authors in asymmetric bargaining positions,11 opponents fear that most of the new revenue will not benefit local authors but will instead line the pockets of American film makers, since most content on popular streaming services originates in the United States. Another reason for (re)visiting national treatment in respect of remuneration rights, is the EU Court of Justice’s decision in the RAAP case.12 According to the CJEU, EU Member States may not require reciprocity, as permitted under the Rome Convention and the WPPT,13 and may deny national treatment to non-EU performing artists claiming remuneration for secondary uses of sound recordings, unless EU law expressly allows this.14 As a consequence, the European Commission is currently reassessing its portfolio of IP directives and regulations in the light of national treatment provisions in international treaties. 8 ‘Comment of the European Copyright Society Addressing Selected Aspects of the Implementation of Articles 18 to 22 of the Directive (EU) 2019/790 on Copyright in the Digital Single Market’, 11 (2020) JIPITEC 132. 9 Act of 19 June 2022 implementing Directive (EU) 2019/790 art 62, Belgisch Staatsblad/Moniteur Belge 1 August 2022, no. 189. 10 See https://​www​.internetconsultatie​.nl/​aut​eurscontra​ctenrecht/​details. The proposed bill is based on a study conducted for the Dutch Ministry of Justice: Stephan van Gompel a.o., ‘Evaluatie Wet Auteurscontractenrecht Eindrapport’ (2020). 11 Raquel Xalabarder, ‘The equitable remuneration of audiovisual authors: a proposal of unwaivable remuneration rights under collective management’ (2018) 255 RIDA 5ff. 12 Case C265/19 Recorded Artists Actors Performers Ltd v Phonographic Performance (Ireland) Ltd and Others ECLI:​EU:​C:​2020:​677. 13 International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome Convention); WIPO Performances and Phonograms Treaty (WPPT). 14 See Ole-Andreas Rognstad, ‘Performing artists’ right to remuneration – on the junction of external treaty competence, national treatment, material reciprocity and fundamental rights: RAAP’ (2021) 58(5) CMLR 1523–1546.

Remuneration rights and national treatment

343

This chapter examines the extent of national treatment obligations to rights of remuneration found in national copyright law.

2.

TAXONOMY OF REMUNERATION RIGHTS

Statutory remuneration rights exist in great variety. For the purpose of our analysis, four categories are to be distinguished: remunerated exceptions; rights to remuneration per se; rights to fair remuneration in exploitation contracts; and residual rights.15 2.1

Remunerated Exceptions

The first category concerns rights that compensate authors for losses from statutory limitations and exceptions. A well-known example is the right to remuneration for private copying that obliges manufacturers and importers of recordable media or recording equipment to remunerate authors by way of levy schemes that currently exist in more than 70 countries.16 Other examples are rights to remuneration that many laws provide for educational copying, library copying, or photocopying (‘reprography’).17 Remuneration rights of this kind directly relate to the exclusive rights that the statutory exception restricts. Where no use within scope of the exclusive right occurs, no right to remuneration arises. The policy rationales of these statutory rights are diverse, and include the right to privacy18 (e.g., private copying), the general public interest (e.g., educational copying) and the impracticability of individual licensing (e.g., reprography).

15 This taxonomy is in line with the classification developed by M. Ficsor, ‘Collective Rights Management from the Viewpoint of International Treaties, with Special Attention to the EU “Acquis”’ in Daniel Gervais (ed), Collective Management of Copyright and Related Rights (3rd edn, Kluwer, 2016) 52–53; see also Thomas Riis, ‘Remuneration Rights in EU Copyright Law’ (2020) 51(4) IIC 446–467. 16 https://​www​.cisac​.org/​sites/​main/​files/​files/​2020​-11/​Private​%2BCopying​-EN​ -web​.pdf. 17 Lucie Guibault, ‘The Reprography Levies across the European Union’ 2003 Institute for Information Law. 18 Natali Helberger and P. Bernt Hugenholtz, ‘No Place Like Home for Making a Copy: Private Copying in European Copyright Law and Consumer Law’ (2007) 22(3) BTLJ 1061–1098.

344

2.2

Improving intellectual property

Remuneration Rights Per Se

The second category of remuneration rights comprises statutory rights to compensation that go beyond the catalogue of exclusive rights found in most copyright laws. Typically, these rights are intended to reward authors for uses that are outside the scope of copyright protection, but nevertheless may cause financial harm. The best-known example of a remuneration right per se is the artist’s resale right (droit de suite), which is optional under the Berne Convention19 and exists in over 70 countries.20 The right secures artists a percentage of the proceeds of each public resale of an original work of visual art. It thus goes beyond the scope of the right of distribution, which is exhausted following the authorised first sale of a copy of a work. Another example is the public lending right that compensates authors for public libraries lending books and other published media. Public lending rights exist throughout Europe21 and in a handful of other countries.22 Like the artist’s resale right, it remunerates authors for a use that is outside the scope of the right of distribution. A third example is the neighbouring right of performing artists and phonogram producers to equitable remuneration for ‘secondary uses’, which was at the centre of the RAAP case.23 Rights of this kind exist in all 111 countries that have ratified the WPPT.24 The main rationale for this type of remuneration right is to allow authors or other right holders to financially benefit from certain uses of their work, without burdening the market with an exclusive right. 2.3

Right to Fair Remuneration in Exploitation Contracts

The third category encompasses statutory rights to ‘equitable’, ‘appropriate’, ‘proportionate’ or ‘fair’ remuneration in exploitation contracts. These are non-overridable rights that purport to guarantee that authors are properly

Art 14ter(2). https://​www​.adagp​.fr/​en/​indicative​-list​-countries​-whose​-legislation​-provides​ -resale​-right. 21 Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property [2006] OJ L376/28. 22 https://​en​.wikipedia​.org/​wiki/​Public​_Lending​_Right. 23 Rome Convention, art 12; WPPT, art 15. 24 https://​www​.wipo​.int/​treaties/​en/​ip/​wppt/​. 19 20

Remuneration rights and national treatment

345

remunerated in cases where contracts provide for the assignment or exclusive license of some or all of the author’s copyright prerogatives. Rights of this kind are commonly found in jurisdictions of the author’s rights tradition, such as France, Germany, Italy, Spain and Latin-American countries.25 With the adoption in 2019 of the Copyright in the Digital Single Market (DSM) Directive, all EU Member States are obliged to ‘ensure that where authors and performers license or transfer their exclusive rights for the exploitation of their works or other subject matter, they are entitled to receive appropriate and proportionate remuneration’.26 Also, additional remuneration is due ‘when the remuneration originally agreed turns out to be disproportionately low compared to all the subsequent relevant revenues derived from the exploitation of the works …’.27 The right to receive fair remuneration under an author’s contract is predicated upon a general principle of fairness and equity. Similar in purpose to consumer protection or some tenancy laws, the right seeks to redress the structurally weaker bargaining position of individual creators vis-à-vis the copyright industry. In contrast to the other categories, however, rights of this kind can be invoked only against the author’s contractual counterparts (possibly including successors in title) – not against third parties. 2.4

Residual Rights of Remuneration

The fourth, and most recent variant of remuneration right is the residual right, ‘a right to remuneration (usually of authors and performers) that survives the transfer of certain exclusive rights’.28 These are statutory rights awarded to authors and performers in situations where (broad) transfers of rights have become the norm, such as film production or recording contracts. The best-known example is the unwaivable right to remuneration for acts of commercial rental accorded to authors and performers under the European Rental and Lending Rights Directive.29 The remuneration right for audiovisual authors mentioned in the introduction of this contribution, is a more recent

25 See Lucie Guibault and P.Bernt Hugenholtz, ’Study on the conditions applicable to contracts relating to intellectual property in the European Union’ (2002) European Commission Report, https://​www​.ivir​.nl/​publicaties/​download/​final​-report2002​.pdf. 26 Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC [2019] OJ L130/92 (DSM Directive), art 18(1). 27 DSM Directive, art 20(1). 28 Ficsor (n 15) 52–53. 29 Directive 2006/115/EC (n 21).

Improving intellectual property

346

example.30 While statutory residual rights are gaining in popularity among national lawmakers, rights of this kind presently exist in only a few countries. Unsurprisingly, they are not mentioned in the Berne Convention or other treaties. Residual rights are contingent upon an exclusive right (e.g., the right of commercial rental or the right of making available on video on demand (VOD) services) being granted to the author’s contractual counterpart. Absent a transfer, the author has no remuneration right for he still enjoys the full scope of the exclusive right.31 Nevertheless, the right to remuneration is not directed solely, or even primarily, against the author’s counterpart. Following the transfer, the right can be exercised against any person or entity engaging in the acts circumscribed by the statutory provision, e.g., each company broadcasting or streaming the audiovisual work under a license from the transferee (e.g., the film producer). The purpose of these residual rights, therefore, is to ensure that authors receive proper remuneration for economically significant uses of their works that they no longer control, having transferred their rights to a producer. Like the right to fair remuneration in exploitation contracts, these rights are intended to compensate creators for underpayment arising from the asymmetric bargaining positions that commonly exist in the film and music industries.

3.

REMUNERATION RIGHTS AND NATIONAL TREATMENT

The principle of national treatment is enshrined in Article 5(1) of the Berne Convention: Authors shall enjoy, in respect of works for which they are protected under this Convention, in countries of the Union other than the country of origin, the rights which their respective laws do now or may hereafter grant to their nationals, as well as the rights specially granted by this Convention.

The TRIPS Agreement more broadly mandates national treatment in respect of the entire catalogue of intellectual property rights within the scope of the agreement,32 while the WIPO Copyright Treaty incorporates the Berne Convention national treatment rule by reference.33

See generally Xalabarder (n 11) 5ff ibid 50. 32 TRIPS Agreement, art 3(1). 33 WIPO Copyright Treaty, 2186 UNTS 121 (signed 20 December 1996, entered into force 6 March 2002), art 3. 30 31

Remuneration rights and national treatment

347

The principle of national treatment enshrined in Article 5 is, first and foremost, a rule of non-discrimination that prohibits Berne Union states from discriminating against foreign right holders based on nationality. Whether national treatment also implies a rule of applicable law (conflicts law), obliging Union states to apply the law of the protecting country (lex protectionis), is a matter of academic debate that exceeds the scope of this contribution. It is clear from the Berne text that the rule of national treatment applies not only to rights that existed at the national level at the time of the creation of the Convention (most recently the Paris Act 1971) or are enumerated as minimum rights, but also to new rights not mentioned in Berne.34 Whether a statutory remuneration right is subject to national treatment, therefore, ultimately depends on whether the right is to be qualified as a copyright ‘right’ within the meaning of Article 5(1). This calls for an autonomous interpretation of the treaty.35 Whether or not a right is characterised as copyright under national law, is not decisive.36 Apart from the exclusive rights expressly enumerated in the treaty, the Berne Convention does not define or describe conventional ‘rights’ within the meaning of Article 5(1). Logically, the notion also encompasses other exclusive rights similar to the Convention rights that national law grants to authors with respect to uses of their works.37 It is equally obvious that ‘rights’ do not extend to government grants and other subsidies to authors, such as tax benefits or cultural funding schemes.38 What, then, elevates a statutory remuneration claim to a ‘right’? Apart from a few incidental references to remuneration, the Berne Convention text offers few clues. In response to the emergence of remuneration rights in the second half of the twentieth century, several commentators have come up with definitions or criteria. According to Elisabeth Steup, a right qualifies as a copyright right if it is ‘granted to (1) a person in his capacity as author (2) of a determined work, and, (3) the right being related to the utilization of that work’.39

34 See Peter Burger, ’The New Photocopy Remuneration Provisions in the Federal Republic of Germany and their Application to Foreign Authors under International Copyright Law’ [1988] IIC 490. 35 Steup (n 7) 284. 36 Eugen Ulmer, ‘The “Droit de Suite” in International Copyright Law’ (1975) 6 IIC 12, 22. 37 Burger (n 34) 500. 38 Steup (n 7) 284. 39 ibid 284.

Improving intellectual property

348

Building on Steup’s definition, Peter Burger proposes a somewhat more refined test: [A] copyright right is comprised of at least (1) a right (2) granted to an individual author (3) to authorize a use of his/her work, or for remuneration in connection with a use of the work if the legislature statutorily limits the exclusivity of the right. If the right does not contain the three elements necessary to be a copyright right, national treatment will not apply, and foreign authors will not benefit.40

Referring to Burger, Professor Goldstein formulates three more abstract requirements: Characterized at the highest useful level of abstraction, an economic right subject to national treatment under the 1971 Berne Paris Act consists of three elements: it is effective against the world at large; it enables the author to control, or benefit from, the use of a literary or artistic work; and it values the use of the work, however roughly, proportionately to the work’s success or prospective success in the marketplace. The presence in a domestic compensation system of any one of these attributes will indicate that national treatment may be required; the presence of all three will indicate that it must be extended.41

These definitions have in common that the Berne Convention ‘right’ extends beyond traditional exclusive rights and allows some room for statutory rights to remuneration. Considering the criteria developed by Steup, Burger and Goldstein, I will now attempt to qualify the four remuneration rights previously distinguished. 3.1

Remunerated Exceptions

The first category, remunerated exceptions, is the least problematic. These are remuneration rights that directly correspond to the exclusive rights the exceptions curtail. Since the exclusive rights, such as the right of reproduction, squarely fall within Article 5(1), this is a powerful argument for according rights status to the corresponding remuneration rights. The rights are granted to individual authors or other right holders and can be invoked against the world. The fact that some rights of this kind, such as private copying levies, can only be exercised collectively, does not alter their status as individual rights.

Burger (n 34) 501. Paul Goldstein and P. Bernt Hugenholtz, International Copyright (4th edn, OUP 2019) 100. 40 41

Remuneration rights and national treatment

349

Nevertheless, some commentators have questioned the rights status of levy schemes because authors receive payment from a fund rather than directly from users of their works. According to Professor Vaver [t]he author would have a ‘right’ against the fund but it would not be in respect of a particular use by a particular user, any more than paying the proceeds of a tax levied on the manufacturers of handguns to the victims of gun crimes would be considered a victim’s right against gun manufacturers. This sort of ‘right’ may well be beyond the concept of ‘rights’ contemplated by Article 5 (1); if so, it would not be subject to the principle of national treatment.42

However, applying Burger’s and Goldstein’s criteria, even such levy-based rights probably qualify as Article 5(1) rights, because levies are usually distributed proportionately to estimated usage or to the work’s success in the marketplace.43 3.2

Rights to Remuneration Per Se

Rights to remuneration per se, such as droit de suite and public lending rights, are more difficult to qualify. These are not remuneration claims originating in exclusive rights, but independent statutory claims in respect of uses of works that justify compensation. In the past, the place of both droit de suite and public lending right in the Berne Convention has been debated – with different outcomes. Whereas Article 14ter(1) embraces droit de suite as ‘the inalienable right to an interest in any sale of the work subsequent to the first transfer by the author of the work’, Article 14ter(2) subjects the right to material reciprocity, not national treatment. By contrast, despite discussions in the years preceding the WIPO Copyright Convention, public lending rights have not received international convention status, and there is no international consensus on whether such rights are covered by national treatment under the Berne Convention.44 Applying the tests developed by Burger and Goldstein to this type of remuneration right leads to dissimilar results. Whereas remuneration rights per se fall short of Burger’s definition, because the rights are not derived from an exclusive right, Goldstein’s more abstract criteria do allow qualification of this type of remuneration right as a right subject to national treatment.

42 David Vaver, ‘The National Treatment Requirements of the Berne and Universal Copyright Conventions [Part Two]’ [1986] IIC 715, 717–718. 43 Goldstein and Hugenholtz (n 41) 100. 44 Silke von Lewinski, International Copyright and Policy (OUP 2008) para 7.29.

350

3.3

Improving intellectual property

Right to Fair Remuneration in Exploitation Contracts

By contrast, rights to remuneration prescribed by author's contract law, do not qualify as Berne rights as they are not rights that can be invoked against the world, but solely against the authors’ contractual counterparts or perhaps their successors in title.45 Moreover, as Hilty and Peukert point out, applying national treatment to statutory rules regarding author’s contracts might be difficult to reconcile with conflicts rules regarding international contracts. Hence, they conclude ‘it does not seem possible or desirable to incorporate copyright contract law into the existing conventions’.46 Instead, contract conflicts law will determine the application of national author’s contract rules to international author’s contracts, most likely by applying either the law of the author that has executed the transfer or the law of the transferee to the contract at issue.47 Consequently, many authors residing in countries where author’s contract rules do not exist will not have a statutory claim to fair remuneration in foreign countries where such rights subsist.48

4.

RESIDUAL RIGHTS

Residual rights of remuneration are the most difficult to qualify. In contrast to the rights of the first and second category, these rights are contingent upon the transfer of copyright from an author to a producer or other exploiter. The remuneration claim therefore originates in the contract and transfer between author and exploiter, while its purpose is to ensure the author is fairly compensated for transferring the right to the producer in addition to the payment the producer makes directly.

See e.g., DSM Directive, art 20.1. Reto M. Hilty and Alexander Peukert, ‘“Equitable Remuneration” in Copyright Law: The Amended German Copyright Act as a Trap for the Entertainment Industry in the U.S.?’ (2004) 22(2) CAELJ 401, 443. 47 Goldstein and Hugenholtz (n 41) 135–136. Note that contract conflicts law is generally national law, except for regional unifications such as Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I Regulation) [2008] OJ L177/6. 48 Publishers and other exploiters will be tempted to avoid the application of the right to fair remuneration, by way of contractual choice-of-law clauses pointing to less author-friendly jurisdictions. However, the EU DSM Directive in conjunction with the Rome I Regulation does not allow such circumvention. DSM Directive, art 23(1) and Recital 81; Rome I Regulation, art 3(4). 45 46

Remuneration rights and national treatment

351

Absent a contract entailing a transfer, residual rights do not exist. Rights of these kind are not based on statutory limitations and exceptions,49 since they leave the exclusive right that is transferred intact. Nor does their scope exceed any existing economic rights. This gives the residual right a character fundamentally different from remuneration rights of the first and second kind. However, the residual right differs from contractual rights of the third category in that the right can be invoked against third parties that are not party to the author’s contract. For example, the residual right under discussion in the Netherlands gives authors a right of remuneration against VOD providers that are licensed by the film producers but have no direct contractual ties to the authors of the film. Is this a right that can be exercised ‘against the world at large’? While the right can be invoked against some third parties, it does not have the erga omnes force of an exclusive right or of the remuneration rights of the first and second kind, which can be exercised against any user of the work. The residual right can only be invoked against third parties that are licensed by the transferee following the initial rights transfer by the author. The obligation to fairly compensate the author for the transfer of the right is, as it were, partially shifted to the licensee. All this makes the residual right a hybrid legal construct that eludes straightforward qualification. Although the right’s aim is to bring about fair compensation for authors that have transferred their rights, it can be invoked against qualified third parties. Moreover, the amount of remuneration is proportionate to its actual use. With that said, the residual right does not meet the Burger test, but the more abstract criteria developed by Goldstein might still leave room for national treatment under Article 5(1). Leaving these criteria aside, a normative analysis points us further away from national treatment. As explained above, residual and contractual rights to remuneration share the same public policy rationale. Both are justified by the desire to compensate creators for underpayment due to the asymmetric bargaining positions that, unfortunately, are common to many sectors of the copyright industry. But this justification does not warrant indiscriminate application. In respect of author’s contracts governed by the law of countries where other mechanisms of securing proper income for authors are firmly in place, claiming a residual right in a foreign country would lead to unjustified payment. This may well be the case, for example, for authors of films produced 49 For an opposing view, see Roma Leuyerink, ‘Het beginsel van nationale behandeling en de VOD-vergoeding’ (2022) 2 Auteursrecht 85, 95, arguing that the residual right for VOD services proposed in the Netherlands compensates film authors for a statutory limitation of their exclusive rights, because of the presumption of transfer rule enshrined in Dutch law.

352

Improving intellectual property

in the United States, where the Guild Agreements secure proportionate remuneration to screen writers and directors, for uses both in the United States and elsewhere. Since the residual right shares its rationale and some of its characteristics with the right to fair remuneration in exploitation contracts, there are compelling reasons not to apply national treatment to this type of right. Moreover, even if national treatment were accorded, the residual right’s direct connection to the underlying author’s contract and initial transfer, would justify application of the law governing the underlying contract or transfer rather than lex protectionis. Otherwise, application of the law of the protecting country to the residual right might lead to inconsistent outcomes, for example, where a contract or transfer is deemed invalid under the governing law, but the statutory residual right remains intact.

5. CONCLUSION In conclusion, not all remuneration rights should be treated the same. While remunerated exceptions and remuneration rights per se merit national treatment, statutory claims arising from author’s contracts, such as the right to fair remuneration in exploitation contracts and statutory residual rights, are not ‘rights’ contemplated by the Berne Convention subject to lex protectionis. Instead, remuneration rights like these are to be governed by the law of the contract or transfer that gave rise to the claim.

34. The limits of national treatment Annette Kur 1. INTRODUCTION It is one of the great and early achievements of intellectual property (IP) law that tendencies of national legislatures to discriminate against foreign nationals have been banned by the international conventions. The principle of national treatment was implanted as a cornerstone at the end of the 19th century in the Paris and Berne Conventions and has been carried on from there into the trade-oriented framework of TRIPS.1 However, national treatment also has its limits. Some are implemented in the Conventions themselves. Furthermore, as a matter of course, national treatment is inapplicable to subject matter which does not fall within the ambit of IP as defined in the pertinent agreements. Lastly, it can be doubted whether national treatment is mandatory where subject matter is properly defined as IP, but where the regulations at stake exceed the prescribed level of minimum protection set forth in the relevant Convention(s).2 In this contribution, an overview is given on the three categories of limits addressed above.

2.

THE LIMITS OF NATIONAL TREATMENT

2.1

Limits Inherent in the Conventions

The principle of national treatment is enshrined in Art. 2(1) Paris Convention, Art. 5(1) Berne Convention and Art. 3(1) TRIPS. Regarding industrial property rights, Art. 2(3) Paris Convention exempts from that principle only ‘provisions … relating to judicial and administrative procedure and to jurisdiction, and to the designation of an address for service or the appointment of an 1 In addition to the principle of national treatment, TRIPS also relies on the trade law principle of Most Favoured Nation treatment (MFN). The MFN principle and its relationship with national treatment are not considered here any further. 2 See on this point below, 3; see also in Hugenholtz Ch 33 and Frankel Ch 35, this volume.

353

354

Improving intellectual property

agent’. Requesting that persons resident or established abroad must designate an agent within the country where protection is sought (or where litigation is brought) is therefore allowed, even where national residents are under no such duty. Under Art. 3(2) TRIPS, that principle is qualified by the additional requirement that making such exemptions is only permitted if that is necessary to safeguard compliance with laws and regulations that are compatible with TRIPS, and where those requirements are not applied in a manner constituting a disguised trade impediment. Otherwise TRIPS embraces all reservations from the national treatment principle that are set forth in the pre-existing international Agreements on IP (subject to a duty of notification in case of reservations under Art. 6 Berne Convention or Art. 16 Rome Convention). A number of those reservations are found in the Berne Convention.3 Pursuant to Art. 2(7) Berne Convention, Member States are only obliged to grant protection under design legislation for subject matter which in the country of origin is likewise only eligible for such protection instead of qualifying for protection under copyright. Also quite importantly, Art. 7(8) Berne Convention limits the duration of protection for works to the period provided in the country of origin (unless legislation in the country of protection provides otherwise). Furthermore, a dispensation from national treatment is available under Art. 6 Berne Convention where a work is first published in a Member State (and thus qualifying for protection under the Convention) and authored by a person or persons who, at the time of first publishing, are nationals or residents of a non-Member State which does not grant sufficient protection to nationals of Berne Member States. A comparison of reservations against national treatment for industrial property on the one hand and copyright on the other shows a clear difference between the two fields. The sweeping concept in copyright of automatic and potentially world-wide protection post creation, together with the wide definition of eligible subject matter and the generous term of protection, account for a sizeable need for containment of the national treatment principle in various aspects. By contrast, the need appears less prevalent in industrial property where protection typically requires individual registration subject to the conditions imposed by domestic law, providing for a higher level of control by national authorities.

3 Even more reservations are found in the Rome Convention. It is not necessary for the purposes of this chapter to go into detail about that.

The limits of national treatment

2.2

355

Subject Matter Falling Outside the Conventions (Sui Generis Rights)

It is trite to state that the mandatory requirements set forth in the international IP Conventions (including national treatment) only apply to subject matter conforming to the definitions found in Art. 1(2) Paris Convention, Art. 1 and 2 Berne Convention and Art. 1(2) TRIPS respectively. For instance concerning the right to open and conduct a business or the acquisition of (real) property, states are free to discriminate between their own nationals4 and those of other countries, and to impose specific requirements and duties for the latter, unless that is ruled out by other types of international treaties (in particular trade and/or investment treaties5). More difficult to answer is the question of whether rights sui generis fall within or outside the definition of rights covered by the Conventions. These are rights aimed at protecting achievements – or investments – in the intellectual sphere, without conforming to the conditions and structures of the established categories of industrial or IP rights. An early example of a right sui generis is the title granted to breeders of new plant varieties. Furthermore, under the narrow definition of what constitutes a work of authorship under the Berne Convention, the achievements of persons bringing a work to life by performing it, or by investing in the production of phonograms, or in the broadcasting of works (‘neighbouring rights’) are likewise conceived as sui generis rights. More recent examples of sui generis rights are the layout design of integrated circuits (‘chips’), or, in the EU,6 Supplementary Protection Certificates (SPCs) aiming to prolong the duration of patent protection for certain products, protection of non-original databases, and press clippings.7 Notably, the issue does not arise in regard to geographical indications and denominations of origin. It is true that the special, registration-based kind of protection granted in the EU is often characterized as a sui generis regime. However, as geographical indications are listed in the definition of industrial property in Art. 1(2) Paris Convention as well in Part II of the TRIPS Agreement, they belong within the catalogue of industrial/intellectual rights, meaning that applicability of the national treatment principle is

4 In the following, the term ‘nationals‘ includes natural and legal persons who are habitually resident/established in the respective countries. 5 For the role of non-discrimination standards (national treatment and MFN treatment) in international investment law and beyond IP, see Simon Klopschinski, Christopher S. Gibson and Henning Grosse Ruse-Khan, The Protection of Intellectual Property Rights under International Investment Law (OUP 2021) 200ff. 6 For the USA, one can point to the Vessel Hull Design Protection Act (VHDPA), 17 U.S.C. Ch. 13. 7 Further on that legislation see below.

356

Improving intellectual property

not in doubt.8 The same applies, after TRIPS, to the layout design of computer chips, which is addressed in Arts 35–38. Before TRIPS, however, the matter was considered by the United States not to be covered by the Paris Convention, so that protection was made dependent on reciprocity.9 A specific international treaty was concluded in 1989 to settle the matter (Treaty on Intellectual Property in Respect of Integrated Circuits [IPIC]). The same route – conclusion of separate international treaties – was also chosen with regard to plant varieties (International Convention for the Protection of Breeders of Plants [UPOV]) and neighbouring rights (Rome Convention; WIPO Performances and Phonograms Treaty). Those treaties employ their own version of the national treatment principle (Art. 5(1) IPIC; Art. 4(1) UPOV and Art. 2(1) Rome Convention, with the latter being subject to number of reservations). No specific agreement was needed to ensure national treatment in case of SPCs. The SPC Regulations10 were conceived as a European response to patent legislation in the United States and Japan prolonging the term of patent protection for pharmaceutical products in order to compensate patent holders for the time lost due to market authorisation procedures. As it was impossible at the relevant time to regulate the conditions and extent of prolongation in the framework of the European Patent Convention (EPC),11 the EU legislature chose the alternative route of establishing a regime sui generis outside patent law. It might be debated whether in consequence of that legal manoeuvre the argument could have been made that SPCs are not ‘patents’ in the meaning of the Paris Convention, so that the national treatment principle would not apply. However, there was no interest on the European side to even open that debate. It was clear anyhow that insisting on reciprocity would not make sense; on the contrary, the very goal of the legal initiative was for European law to catch up with the level of additional protection already granted in the United States and Japan. Furthermore, the debate would most likely have come to the conclusion that SPCs, in spite of being flagged as sui generis rights so as to escape restric-

8 Applicability of the national treatment principle was therefore taken for granted in the WTO panel report European Communities - Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs (15 March 2005) WT/DS/174; see also below. 9 Semiconductor Chip Protection Act of 1984; 17 U.S.C. Sec. 901-914. 10 Regulation (EC) 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate for medicinal products [2009] OJ L 152/1 (first version enacted in 1992) and Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products [1996] OJ L198/30. 11 The original version of the EPC only permitted patent prolongation in certain emergency situations (EPC 1973, Art. 63).

The limits of national treatment

357

tions under the EPC, fall within the wide definition of ‘patents’ in Art. 1(2) Paris Convention and thereby under the national treatment clause.12 Different from the catch-up situation in the case of SPCs, EU lawmakers considered themselves the vanguard of modern forms of IP when they enacted the database directive (DBD)13 with its sui generis right for makers of non-original databases (Art. 7 DBD). In order to secure a privileged position for Europe-based database industries, and certainly also in the hope to incentivise similar legislation in the United States and other major jurisdictions, protection under the directive was restricted to right-holders that are nationals or residents of a Member State (Art. 11(1) DBD). For all others, the grant of protection was made subject to reciprocity14 or to conditions established in bilateral agreements with the EU (Art. 11(3) DBD). As is well known by now, neither did the United States follow suit in its own legislation, nor did the DBD boost the position of European industries vis-à-vis others.15 However, that experience did nothing to chill more recent efforts within the framework of the Digital Single Market Directive (DSMD)16 to establish another kind of sui generis right, namely the right of press publishers to prohibit reproduction and communication to the public of ‘snippets’ from newspaper articles. Again, the entitlement is restricted to Europe-based industries, namely to publishers of press publications established in an EU Member State (Art. 15(1) DSM Directive). In the international debate following enactment of the DBD, it has been questioned whether denying national treatment is actually compatible with the Paris Convention. After all, the origin of that right appears to lie in unfair competition (in the form of misappropriation), which is included in the notion

12 The pertinent arguments are considered more extensively in Roberto Romandini and others, Study on the legal aspects of supplementary protection certificates in the EU (SPC Study), https://​ec​.europa​.eu/​docsroom/​documents/​29524/​attachments/​ 1/​translations/​en/​renditions/​native. See also Annette Kur, ‘Measuring the Scope of Obligations Under International Treaties – (To What Extent) are IP Conventions Binding on Paris- or TRIPS-Plus Legislation?’ in Axel Metzger and H. Grosse Ruse-Khan (eds), Intellectual Property Beyond Borders (CUP 2022). 13 Directive 96/9/EC of the European Parliament and of the Council on the legal protection of databases [1996] OJ L 77/20. 14 Recital 56. 15 DG Internal Market and Services Working Paper of 12 December 2005, First evaluation of Directive 96/9/EC on the protection of databases 5; see also Commission Staff Working Document of 25 April 2018, Executive Summary of the Evaluation of Directive 96/9/EC on the protection of databases, SWD 146 final 1. 16 Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the digital single market [2019] OJ L 130/92.

358

Improving intellectual property

of industrial property as defined in Art. 1(2) Paris Convention.17 A similar argument could be made for the press publishers’ right. It could further be of note in that context that the press publishers’ right is intimately connected with copyright, as it is exactly tailored upon copyright pertaining to the article from which the excerpts are taken. However, although not implausible per se, neither argument stands further scrutiny.18 While the press publishers’ right emulates the shape of copyright, its objectives and attributes are entirely different. Furthermore, the mere fact that sui generis protection (also) serves the overall goal of safeguarding fairness in commercial transactions does not allow concluding that the requisite subject matter falls within the definition of IP under the Paris Convention. Otherwise the same would have been true also for plant variety protection or even for protection of neighbouring rights, which serve the same fairness-related goal, yet which were nevertheless not considered as covered by the Paris-informed notion of industrial property. This means that compatibility with international law of the decision by the EU legislature to withhold national treatment in case of the database makers’ and press publishers’ rights is not seriously disputable. It is another question, however, whether the decision is a wise one or whether it only follows the raw political impulse to ‘keep the foreigners out’. It is true that national treatment cannot form the general rule in international trade law dealing with the conditions of market access or direct financial subsidies. However, the situation is different for sui generis rights adjacent to IP. Those rights are not a one-dimensional kind of trade benefit proffered by the state, but they form the result of complex, fairness-based considerations involving the interests not only of beneficiaries, but also of users, and the public at large. Those considerations do not become meaningless simply because a potential beneficiary has a different nationality or domicile. Furthermore, as a matter of sound and efficient policy it should be noted that, as observed by Rochelle Dreyfuss and Graeme Dinwoodie in their ‘Neofederalist Vision of TRIPS’, the aim of propagating the (allegedly) beneficial effect of extensions or new types of (quasi-) IP rights is much better served by broad application of the national treatment principle than by coercing the adaption to specific substantive standards through trade deals.19

17 Jerome Reichman, ‘Statement Concerning H.R. 2652 Before the Subcommittee on the Judiciary, House of Representatives, 105th Cong. 15–16 (1997)’, referred to by Graeme Dinwoodie, ‘The Development and Incorporation of International Norms in the Formation of Copyright’ (2001) 62 Ohio State Law Journal 734, 745 note 48. 18 For more detailed considerations see Kur (n 12). 19 Rochelle C. Dreyfuss and Graeme Dinwoodie A Neofederalist Vision of TRIPS (OUP 2012) 84. On the other hand it is noted by Klopschinski, Gibson and Grosse-Ruse Khan (n 4) that if national treatment is applied broadly so as to encompass, by default,

The limits of national treatment

2.3

359

What about TRIPS-Plus Elements?

Finally, what about the situation that IP rights granted exceed the minimum level of protection prescribed in the Conventions? Is it possible to deny national treatment to ‘TRIPS-Plus’ aspects of a right which otherwise clearly falls within the ambit of the Conventions? The spontaneous answer to that question is negative – granting more rights than the minimum does not change the fact that the Conventions, including the national treatment principle, apply. However, the matter may be more complex than it appears at first glance. It is by no means sure that obligations set forth in international Conventions remain fully binding in all their aspects vis-à-vis TRIPS-Plus elements of IP rights. The matter was of relevance in the context of debates concerning the introduction into EU law of limitations in the SPC regulations for purposes of export and stockpiling.20 As is well-known, the stockpiling limitation in Canadian patent law was declared by a WTO panel as incompatible with the three-step test in Art. 30 TRIPS.21 If SPCs are qualified as patents in the meaning of the Paris Convention – as was suggested above – this might mean that the same reservation must be made there as well. Another scenario raising the issue concerns potential registration requirements for copyright as a prerequisite for enjoying protection beyond the prescribed minimum term, or on a higher (regional) level. Third, the issue also concerns the legitimacy of restricting the term of protection for the EU species of unregistered Community designs (UCDs) to three years after first publication in the EU.22 In all those cases, the answer is much less certain than concerning the question posed above. Although it is not an established feature of international law, there is some inherent logic in the consideration that the greater option includes the lesser. Transposed to the situations depicted above that could mean that the freedom not to protect copyright for more than 50 years after the death of the author (p.m.a.), or not to grant SPCs or UCDs, includes the freedom to modify the conditions and extent of protection of those rights in a manner which, as such, appears incompatible with (other) stipulations of the pertinent Convention.

new IP-like sui generis rights that are not covered by TRIPS strictu sensu, this would at least partly deprive national treatment-clauses in Free Trade Agreements and Bilateral Investment Treaties of their effects. However, that does not render the suggestion wrong. 20 Regulation (EU) 2019/933 of the European Parliament and of the Council of 20 May 2019 amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate for medicinal products [2019] OJ L 153/1. 21 Canada - Patent Protection of Pharmaceutical Products - Complaint by the European Communities and their Member States, WT/DS114/R. 22 On the indirect discrimination resulting from that decision see below.

360

Improving intellectual property

If that argument has merits – which it certainly does to some extent23 – why should it then not also be possible to deny national treatment with regard to TRIPS-Plus elements? Giving an answer to that question requires a thorough discussion that cannot be presented in the framework of this contribution.24 The short version of the position endorsed here is that while the argument that ‘the greater includes the lesser’ can be of use for measuring the scope of residual obligations relating to TRIPS-Plus elements of IP protection, it cannot legitimise clashes with essential features of the Conventions. ‘Essential’ in that sense are features that constitute the backbone of the international IP system, corresponding mutatis mutandis to constitutional principles in national jurisdictions. Espousing that hypothesis raises the need to find a bright line of distinction between obligations that form part of the ‘constitution’ of international IP law and those that are rather accessory features. An important contribution to that task was made by Rochelle Dreyfuss and Graeme Dinwoodie who have identified an ‘aquis’ of basic principles forming the background norms animating the IP system.25 While not ranking at the same level as customary law, those principles are so firmly established in the common understanding of international IP that they cannot be discarded by national lawmakers or in international negotiations, even if black-letter rules would not be violated thereby. Without going into further detail, the horizontal distinction suggested in Dreyfuss’ and Dinwoodie’s work between ‘backbone’ principles and other, more malleable rules shaping the attributes of protection confirms the intuitive finding that national treatment, as the most crucial feature within the architecture of international IP law, is immune against the argument that ‘the greater includes the lesser’. Further confirmation can be found in the international Conventions themselves. If it were actually so that national treatment is not obligatory where protection exceeds the minimum rules, the ‘comparison of terms’ stipulated in Art. 7(8) Berne Convention would be unnecessary and redundant. It follows from the logic of that provision that it becomes only relevant when copyright in a Berne Member State is protected for more than 50 years p.m.a., thus granting ‘greater’ protection than the prescribed minimum. Nevertheless, Art. 7(8) allows the conclusion e contrario that without an express reservation anchored in the Convention, the same term would have to be applied to all ‘foreign’ works as well, irrespective of copyright duration in the country of origin of such works. Lastly, the finding that national treatment 23 That does not mean that it permits any kind of deviation from the pertinent rules. The details of the matter are quite unclear and contentious (but not concerning national treatment), where the answer is clear; see below. 24 For more detailed arguments see Romandini and others (n 12) and Kur (n 12). 25 Dreyfuss and Dinwoodie (n 19) 176ff.

The limits of national treatment

361

cannot be set aside for TRIPS-Plus aspects of IP protection is also corroborated by the WTO Panel’s report concerning the EU GI protection system in its original state (Reg. (EEC) No. 2081/92).26 As may be recalled, the GI Regulation in its original form provided an option for protection of geographic indications pertaining to non-EU localities under the condition that requirements for protection had been tested and were affirmed in national proceedings equating those performed, on the basis of the GI Regulation, in EU Member States. This was considered by the United States and Australia – and condemned by the Panel – as an indirect form of discrimination which was incompatible with Art. 3(1) TRIPS. The Panel took it for granted that the obligation to extend ‘no less favourable treatment’ to non-EU nationals was not affected in any manner by the fact that the registration-based EU GI regime with its far-reaching scope of protection constitutes a TRIPS-Plus element. The Panel Report should extend a warning to the EU legislature concerning the provision of Art. 11 in conjunction with Art. 110a(5) of the Community Design Regulation (CDR), which makes protection of UCDs dependent on first publication ‘within the territory of the EU’. Different from stipulations concerning the three-year term of protection, which may be justifiable under the principle of ‘the greater includes the lesser’, attaching the existence of the right, and thereby the availability of protection against imitation without registration, on first publication in the EU (without granting a grace period) could amount to a covert form of discrimination. There is no doubt that although the provision de jure applies indiscriminately to EU and non-EU nationals alike, it results de facto in less favourable treatment of the latter, who will typically publish novel designs in their own countries of origin before entering the EU market. Whether that amounts to a violation of international obligations depends on whether the discriminatory effect resulting therefrom appears as ‘wrong and unjustifiable’.27 Without embarking on a detailed discussion here,28 a more commendable solution would be to attach the commencement of UCD protection to the date of first marketing in the EU, with the grace period applying mutatis mutandis irrespective of whether first publication took place within or outside the EU. That way, early marketing activities in the EU would

European Communities (n 8). Pursuant to the WTO Panel in Canada – Patents (n 21) a de facto discrimination is found if an ostensibly neutral measure transgresses a non-discrimination norm because its actual effect is to impose differentially disadvantageous consequences on certain parties, and because those differential effects are found to be wrong or unjustifiable‘ para. 7.101 (emphasis added). 28 For a more in-depth consideration see Annette Kur, ‘Publication “within the territory of the EU” – noxious, flawed and outdated?’ in Frantzeska Papadopoulou and others (eds), Festskrift För Marianne Levin (2022). 26 27

362

Improving intellectual property

be encouraged, and the interests of all actors on the EU market whose designs are subject to copying would safeguarded without a risk of discrimination.

3.

CONCLUDING REMARKS

Two strands of arguments have been addressed in the limited space of this chapter to the book dedicated to Rochelle Dreyfuss. First, regarding sui generis rights adjacent to established categories of IP rights, legislatures would be well-advised in the interest of equity and fairness in international relations if equal treatment of non-nationals is regarded as the rule rather than the exemption. Even without being compelled by international IP law, discrimination as to nationality should remain reserved to specific situations where differential treatment is motivated by sound and firm policy reasons. Second, concerning ‘canonical’ IP rights, the principle of national treatment must be respected even regarding TRIPS-Plus protection elements such as, in the example presented above, the UCD provided in EU law as an additional option for design protection which is not prescribed in TRIPS.

35. Discriminatory non-discrimination Susy Frankel 1. INTRODUCTION The main non-discrimination principles in international intellectual property law are national treatment and most-favoured nation (MFN). Subject matter non-discrimination was added to this list when the Canada Pharmaceuticals WTO dispute settlement panel found that the patent subject matter provision applied to all other TRIPS Agreement patent provisions and, particularly, the three-step test.1 To the trade lawyer the notion of subject matter discrimination, as distinct from other non-discrimination principles, may seem peculiar. Intellectual property related non-discrimination, however, while having an important relationship to goods in trade (governed by GATT) and services in trade (governed by GATS) and their non-discrimination principles,2 is different. It attaches to the ‘protection of intellectual property’,3 which a footnote defines as including ‘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.’4 In effect this means that the point of attachment of non-discrimination rules is intellectual property rights and flexibilities, rather than either goods or services to which intellectual property relates (both tangible and digital).5 This creates consequences that can sometimes be discriminatory, thus creating discrimination in the name of non-discrimination. MFN in the TRIPS Agreement has contributed to the spread of higher standards of protection, particularly those that arise from free trade agreements

1 Canada - Patent Protection of Pharmaceutical Products - Complaint by the European Communities and their Member States, (17 March 2000) WT/DS114/R. 2 GATT, arts I (MFN) and III (national treatment); GATS, arts II (MFN) and XVII (national treatment). 3 TRIPS Agreement, art 3.1 4 ibid. 5 See eg ibid arts 3 and 4.

363

364

Improving intellectual property

(FTAs).6 When there is increased intellectual property protection in FTAs, MFN (with few and limited exceptions7) provides a lever to spread the effects of those increases beyond those directly party to the FTA and, eventually, that spread can have global impacts.8 The absence of an all-encompassing exception from MFN has meant this trajectory cannot be directly or easily mitigated.9 The broad challenge that arises from increased levels of protection is where countries must comply with standards that sometimes are not a good fit for their stage of development, and they cannot easily create flexibilities to reduce the impacts of these standards. Patent standards, for example, have resulted in problems for states, particularly developing and least developed countries, trying to establish domestic innovation and sometimes even to access developed world innovation.10 National treatment contributes to that problem, but the problem is not the existence of national treatment but of the too high standards of protection. An additional challenge arises where countries choose not to apply national treatment because they deem their law to be outside the scope of existing ‘intellectual property’ by using the label sui generis (standalone) and, consequently, outside the scope of national treatment. The European Union (EU), 6 See eg Graeme B. Dinwoodie and Rochelle C. Dreyfuss, A Neofederalist Vision of TRIPS (OUP 2012) 103; see also Susy Frankel, ‘The Legitimacy and Purpose of Intellectual Property Chapters in FTAs’ in Ross Buckley, Vai Io Lo and Laurence Boulle (eds), Challenges to Multilateral Trade: The Impact of Bilateral, Preferential and Regional Agreements (Wolters Kluwer 2008). 7 TRIPS Agreement, art 4 (c) is, in effect, a narrow MFN exception ‘in respect of the rights of performers, producers of phonograms and broadcasting organizations not provided under this Agreement’. 8 See Rochelle Dreyfuss and Susy Frankel, ‘From Incentive to Commodity to Asset: How International Law is Reconceptualizing Intellectual Property’ (2015) 36 Mich J Int’l L 557. 9 Such exceptions are found in GATT, art XXIV and GATS art II.2. Reichman initially analysed that the GATT exception could apply to TRIPS but this has not occurred, see Jerome H. Reichman, ‘Universal Minimum Standards of Intellectual Property Protection under the TRIPS Component of the WTO Agreement’ (1995) 29 The International Lawyer 345, 348–349. 10 These are key themes of Dreyfuss’ scholarship. See e.g., Rochelle C. Dreyfuss, ‘Intellectual Property Lawmaking, Global Governance, and Emerging Economies’, in Ruth L. Okediji and Margo A. Bagley (eds), Patent Law in Global Perspective 53 (Oxford University Press 2014); Rochelle Dreyfuss, ‘The Battle over Intellectual Property Laws and Access to Medicines in Latin America: A Primer on Global Administrative Law, in Rochelle C. Dreyfuss and César Rodríguez-Garavito (eds), Intellectual Property, and Political Contestation, in Balancing Wealth and Health: The Battle over Intellectual Property and Access to Medicines in Latin America 1 (Oxford University Press, 2014).

Discriminatory non-discrimination

365

for example, has used the creation of sui generis rights to avoid national treatment and this approach, in effect, weaponises exceptions to national treatment. This chapter contends that sui generis claims to avoid national treatment obligations only work for the strong to exclude other strong competitors and tend to have adverse effects, both short and long term, on smaller and developing economies. Before turning to the details of these challenges some fundamentals about national treatment and minimum standards set the scene.

2.

NATIONAL TREATMENT, MFN AND MINIMUM STANDARDS

At its simplest, national treatment means that foreign intellectual property owners must be treated the same, that is given the same rights and enforcement options, as domestic intellectual property owners.11 For example, country R and country D are both members of a copyright treaty which provides that the owners of certain types of copyright works have exclusive rights: ‘Unus’, ‘Duo’ and ‘Tres’. Country R, because of national treatment, must provide those rights to authors originating from country D.12 This understanding of national treatment has been confirmed in WTO dispute settlement reports. The scope of national treatment, under TRIPS, was one of the issues in the Havana Club dispute over United States laws that prevented legal recognition of any interests of Cuban nationals in trade marks and names relating to goods that had been confiscated in Cuba.13 Such trade marks could not be registered, renewed or enforced in the United States without the consent of the original owner. The European Communities alleged that the laws in question treated non-US nationals less favourably than US nationals and were, therefore, a violation of national treatment. The WTO Appellate Body found that there was an extra hurdle for foreign nationals, compared to US nationals, in seeking consent of the original owners and, consequently, a violation of national treatment under both TRIPS and the Paris Convention.14 A WTO panel also considered the meaning of national treatment in the disputes over the EU system of registering geographical indications (GIs).15

See Annette Kur’s chapter in this volume. For a full list of eligibility criteria see Berne Convention, art 3. 13 WTO Appellate Body, United States — Section 211 Omnibus Appropriations Act of 1998 (1 February 2002) WT/DS176/AB/R. 14 Ibid., [268]. 15 WTO Panel Report, European Communities—Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R (15 March 2005) WT/DS174/R. 11 12

366

Improving intellectual property

Australia and the United States complained that the EU system that only permitted foreigners to register GIs in the EU if they could also do so at home, was a national treatment violation. The complainants succeeded in establishing that aspects of the EU laws violated the national treatment provision because they embodied different requirements for EU and non-EU nationals.16 When national treatment is combined with minimum standards of protection, in a multilateral agreement, a consistent minimum level of protection (but not harmonised in its detail) is found the world over. This is the framework of the Berne Convention and the Paris Convention and was adopted and cemented in TRIPS. That framework continues to expand via FTAs. On the face of it, such a framework for spreading intellectual property norms is very effective. However, as standards have increased and flexibilities are concomitantly more limited (and that flexibility often has to be fought for at domestic level), the framework is called into question because it supports the one-way ratchet of more extensive protection, rather than equal development of rights and flexibilities. This is so even though the international framework has scope for flexibilities. TRIPS and other international agreements allow members to provide their nationals with greater protection than the standards found in the treaty.17 When a member provides more extensive protection at domestic law, the question arises whether or not that member is required to extend that protection to foreigners because of national treatment. The short answer is ‘yes’. If country D above, in addition to ‘Unus’, ‘Duo’ and ‘Tres’, provides exclusive rights ‘Quattuor’ and ‘Quinque’, a copyright owner from country R may claim all the exclusive rights (assuming there are no legitimate exceptions) in relation to her work in country D, even though ‘Quattuor’ and ‘Quinque’ are not available in her country of origin, country R. The trouble comes with the qualifications to that ‘yes’ because of a possible desire on the part of country D to give to country R’s authors only what they would receive at home (as examples show in the discussion below). The opposite of national treatment is material reciprocity; colloquially ‘you only get what you give’. If material reciprocity applied to the above example, the copyright owner would only receive the benefits of exclusive rights ‘Unus’, ‘Duo’ and ‘Tres’, in country D, because that is all country R provides. When there is an exception to national treatment, in effect, reciprocity substitutes for national treatment.18 The EU’s approach to copyright term shows this. The copyright term national treatment exception is found in the Berne Convention

Ibid. TRIPS Agreement art 1.1, Berne Convention art 19, Paris Convention art 19. 18 Berne Convention, arts 6 and 7.8. 16 17

Discriminatory non-discrimination

367

and the EU exercises it to give a longer than internationally required term only to works originating from countries that also provide that longer term.19

3.

STANDARDS THAT ARE OUT OF SYNC WITH DEVELOPMENT

Dreyfuss has frequently pointed out the inequities that arise when standards of protection required by TRIPS and FTAs are out of sync with a nation’s stage of development.20 Without a doubt, the kind of trade-offs where a country agrees to provide certain intellectual property protection in exchange for market access are problematic because they interfere with a country’s ability to generate local innovation. More broadly, trade-offs of this kind create an entirely different rationale for intellectual property protection from that of encouraging innovation locally. That different rationale is the intellectual property is a bargaining chip for other trade needs. This problem is difficult to solve both because it is complex and dynamic, but it also provides an opportunity to examine the rationale for national treatment from two angles. First, when a country has to apply standards that are norms created through FTAs, the contribution that national treatment (often working in concert with MFN) makes to the problem is stark. It is the national treatment rule that means the standard has to be applied to both domestic and foreign rights holders. This means, for instance, foreign owned patents can prevent local working and local development and the market must be served instead by imports.21 This raises legitimate questions, such as why a country has to protect vaccine patents when it cannot manufacture its own vaccines or import affordable ones during a pandemic.22 In short, this is the innovation access and/or capacity problem. But consider a different related consequence, why is it that a developed country importing goods from a country that is less developed cannot generally be more flexible with national treatment? This might encompass recognising the product made in the exporting country, may infringe an intellectual property right in the importing country, but may not have been infringing where it was made. Put differently, if those goods infringed an intellectual property right when imported, but did not do so where they were made then why is the

19 Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights, art 7. 20 See, e.g., Dinwoodie and Dreyfuss (n 6), 10–12 and Rochelle Dreyfuss, ‘TRIPS—Round II: Should Users Strike Back?’ (2004) 71 U Chi L R 21 (noting the vulnerability of developing countries in the current system). 21 Dreyfuss and Frankel (n 8), 576. 22 Susy Frankel, ‘COVID-19, Vaccines and International Knowledge Governance on Trial’, (2022) 12(4) QMJIP 441.

368

Improving intellectual property

import not always permitted? After all, permitting such imports could improve the economic growth of the less developed country from where the import came. Such imports might be permissible, in any event, if the country applied international exhaustion and allowed parallel imports,23 but not all nations wish to allow all parallel imports for various reasons, including to protect domestic interests or to comply with FTAs. The other, more radical way to permit such import, without having to open up the whole scope of international exhaustion, would be to allow such infringements as an exception to national treatment. This would be the intellectual property equivalent of allowing low or no tariffs on goods from some countries but not others. That approach to goods occurs as a result of FTAs (where the GATT or GATS MFN exception can apply) and has also occurred under what was known as GATT’s ‘enabling clause’.24 An equivalent approach to intellectual property has long since been rejected. A kind of exception that matched the enabling clause would be so far removed from the international intellectual property framework that adding it now may have unintended consequences. But at its simplest it would support the ability of countries to capacity build and add to the innovation of a country rather than channelling capacity building through the current investment structure and its problematic related dispute settlement.25 The goal of intellectual property is, after all, not just to allow countries to access foreign innovation but to become innovative themselves. Favouring imports from a least developed country would amount to an MFN violation (there is no general intellectual property MFN exception)26 and it cannot even be achieved as an exception to national treatment as a kind of sui generis regime. This is because the emergence of claimed sui generis regimes only work for the strong to exclude other strong competitors. And the sui generis shield can allow strong economies to evade national treatment, but this does not help developing economies. 23 TRIPS Agreement, art 6 effectively allows countries to choose their parallel import rules. For a full discussion see Susy Frankel and Daniel Gervais, ‘International Intellectual Property Rules and Parallel Imports in Irene Calboli (ed) Research Handbook on Intellectual Property Exhaustion and Parallel Imports (Edward Elgar 2016). 24 WTO, ‘Differential and more favourable treatment reciprocity and fuller participation of developing countries’, https://​www​.wto​.org/​english/​docs​_e/​legal​_e/​ enabling1979​_e​.htm. 25 See generally, Rochelle C. Dreyfuss and Susy Frankel, ‘Reconceptualizing ISDS: When Is IP an Investment and How Much Can States Regulate It?,’ (2019) 21 Vand J Ent & Tech L 377. 26 An exception is found in TRIPS Agreement, art 4(c), see above (n 7); Reichmann (n 9), 348

Discriminatory non-discrimination

4.

369

TRIPS PLUS AND CLAIMS TO SUI GENERIS STATUS

While countries must apply the minimum standards of TRIPS (and its incorporated Berne and Paris Conventions) on a national treatment basis, what falls within the scope of ‘intellectual property’ under TRIPS, and what might not, is sometimes thorny to resolve. It is generally accepted that TRIPS applies to all the categories of rights listed in it.27 Article 1.1 of TRIPS allows countries to provide ‘more extensive protection’; when they do so the protections beyond the TRIPS minimums are often called TRIPS-plus. When any more extensive protection relates to something caught by the scope of intellectual property under TRIPS, national treatment would be the usual rule. But when the additional protection somehow falls outside the scope of ‘intellectual property’ under TRIPS, some countries would claim that TRIPS and consequently national treatment does not apply. To illustrate, copyright term beyond the Berne minimum of 50 years post mortem auctoris is more extensive. But an exception to national treatment exists that allows countries to limit the application of the extended term.28 A patent term that extends beyond the TRIPS required minimum standard of 20 years29 would likewise be more extensive and, there is no exception equivalent to the copyright one, so national treatment should apply to any lengthier term of patent protection granted in a member state. As Kur explains, the EU’s laws creating supplementary protection certificates (SPC), although they had to be enacted outside the European Patent Convention, are not really sui generis within the meaning of the international system.30 Others have asserted that adopting a sui generis approach at the national or regional level will mean that the law should have sui generis status under international law.31 But that is not inevitably so. The TRIPS Agreement allows members to implement laws in their own ways,32 showing that sui generis status at home is not the decisive factor. The tendency to claim sui generis See Hugenholtz and Kur in this volume (n 13). Berne Convention (n 18). 29 TRIPS Agreement, art 33. 30 See Kur in this volume, who also notes that geographical indications cannot be treated as sui generis because protection is required by TRIPS. 31 Examining why this approach is incorrect see, Susy Frankel TRIPS and Post-TRIPS Trade Agreements and Their Impact on Innovation’, in Rafal Sikorski and Zaneta Zemla-Pacud (eds), Patents as an Incentive for Innovation (Wolters Kluwer 2021). 32 TRIPS Agreement, art 1.1 provides, ‘Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice’. 27 28

370

Improving intellectual property

status to avoid TRIPS obligations is concerning because it does not create better circumstances for those whose stages of development are out of sync with TRIPS standards (discussed above), rather it more likely creates further divisions in innovation opportunities, even in developed countries. The EU SPC regime (a kind of patent term extension for some pharmaceutical products), for example, created some difficulties for EU based generic companies to compete. This led to exceptions to SPCs (sometimes called a waiver) to enable manufacture for export while the SPC is current, and supply of the EU market on the day after the SPC expires, of biosimilars (the generic versions of biological pharmaceuticals).33 The policy reasons for the exceptions was so that EU biosimilars could compete in the United States and other foreign markets, as well as in the EU in a timely manner.34 The application of national treatment to the grant of SPCs means that foreign owners of patents in the EU can also apply for SPCs. The application of national treatment to the SPC waiver would mean that foreign companies operating in the EU would also be able to make use of the waiver. Not applying national treatment, however, on the basis that the law is sui generis and outside the scope of TRIPS national treatment could prevent foreign companies from benefiting, in the first instance, from SPCs and, in the second instance any waiver to manufacture and export from the EU. This situation has not yet arisen but is entirely plausible both because some commentators seem to insist that SPCs are not governed by TRIPS35 and, more broadly, how the waiver will play out is not yet clear.36 What is clear is that the EU has a track record of claiming sui generis status in an attempt to maximise exceptions to national treatment to its own advantage. This EU has claimed sui generis status of some laws relating to databases. The protection of databases that fell short of being ‘intellectual creations’

33 The exception is for making and storing otherwise infringing medicinal products or products for the purpose of export, Regulation of the European Parliament and of the Council amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate for medicinal products. 34 Max Planck Institute, Study on the Legal Aspects of Supplementary protection Certificates in the EU, Final Report (European Union 2013), 3.2. 35 See, Xavier Seuba, The Export and Stockpiling Waivers: New Exceptions for Supplementary Protection Certificates, (2019) 14 J Intell Prop L and Prac 876, 880–82. 36 See Patrick Wingrove, ‘SPC Trends to Watch in 2022: An EU Review, The Waiver, Article 3c’, ( Managing IP, 22 December 2021) stating , ‘Although the waiver came into effect on July 1, 2019, it will only start to apply to a significant number of SPCs after July 2022, and counsel from innovator and generic drug businesses are getting ready for that change – as well as the spate of litigation that’s likely to follow.’

Discriminatory non-discrimination

371

were protected from unfair extraction by the EU Database Directive.37 The EU database regime is treated as sui generis and thus beyond national treatment. But is it really? TRIPS governs databases provided they ‘constitute intellectual creations’.38 By protecting other sorts of databases, this is more extensive protection of a certain subject matter, some of which is included in TRIPS, rather than entirely separate protection outside the ambit of TRIPS. The latter argument seems to have been accepted, but it remains questionable and is illustrative of the broader problem. Both the Database Directive and the development of SPC’s and exceptions to them were designed to assist the EU economy, and particularly were a response to competition with the United States, which on the face of it is entirely unobjectionable. The effects on third parties are not, however, negligible. The important difference between the Database Directive and SPC waivers is that one adds new rights (unfair extraction) and the other creates exceptions. The idea that exceptions (that are not explicitly agreed as international exceptions to national treatment, like copyright term) can be sui generis because they stem from standards that are more extensive protection than the TRIPS minimums is to undermine national treatment and ignore its non-discriminatory purpose. Weaponising reciprocity by claiming a national treatment exception is also inconsistent with requirements of treaty interpretation. Using the Vienna Convention principles of interpretation, a treaty should be interpreted in good faith.39 Overstating the scope of what is sui generis is arguably not a good faith approach. Ordinary meaning, following the Vienna rules, also requires giving weight to context.40 Relevant context is that exceptions to national treatment are prescribed under TRIPS, Article 3 and additional ones cannot be read into the agreement. That is different from matters that truly are outside TRIPS, and not close relatives of the TRIPS minimum standards. Matters that are wholly outside TRIPS are not necessarily easy to pinpoint.41 Rights found in

37 Directive 96/9/EC of the European Parliament and of the Council on the legal protection of databases [1996] OJ L 77/20. 38 TRIPS Agreement, art 10.2. See also, Bernt Hugenholtz, ‘Implementing the European Database Directive’, https://​www​.ivir​.nl/​publicaties/​download/​PBH​-HCJ​ -LIB​.pdf. 39 Vienna Convention on the Law of Treaties, 23 May 1969, 1115 UNTS 331 (entered into force 27 January 1980), art 31.1. 40 ibid. 41 The system of plant variety rights deemed sui generis by the TRIPS Agreement, art 27.3 is one example. One area that may be truly outside TRIPS would be certain aspects of traditional knowledge such as requirement of access and benefit sharing when traditional knowledge is used for inventions. However, where those requirements

372

Improving intellectual property

subsequent treaties may qualify but not if they are related directly to TRIPS obligations.

5. CONCLUSION All exceptions to national treatment allow those providing stronger rights on their home territory to apply weaker protection to foreigners. This is frequently aimed at competitors in strong nations, but it also impacts competitors from other countries. Invoking exceptions to national treatment to limit the ambit of exceptions to intellectual property rights is an emerging tactic. Calling frameworks sui generis can also be a manoeuvre around the scope of national treatment obligations. It does not do justice to the proper interpretation of national treatment where the plain wording and having defined exceptions points to them being narrowly construed. The central purpose of national treatment is to facilitate the embedding of minimum standards. It can also function to embed more extensive protection but removing national treatment does not necessarily solve the problems caused by high standards being out of sync with development needs. The absence of national treatment, through the assertion of sui generis status, will not facilitate flexibilities but rather facilitates protection and turns national treatment (which should function as a non-discrimination principle) into a tool to facilitate discrimination. Therefore, exceptions to national treatment should be interpreted carefully and should not be added to by self- judging sui generis status.

are interfaced with intellectual property obligations, such as a disclosure requirement in making patent applications, those arguments are more complex and less sui generis.

36. Non-discrimination as to the field of commerce as a norm of international trade mark law Lionel Bently 1. INTRODUCTION Over its history, the United Kingdom (UK) has often treated trade mark holders differently according to the nature of the goods to which the marks have been applied. When the register was first created in 1875, the sheer number of marks used in the textile sector meant it proved necessary to introduce special rules to establish the registrability, including the distinctiveness, of textile marks.1 Following the First World War, explicit rules were adopted controlling the registrability of marks comprising names used for chemical products, designed to ensure that a publicly-usable description was always available.2 Just after the Second World War, the Trade Mark Registry, which at the time possessed a statutory discretion to refuse an application, did so in one application for the word JARDOX for disinfectant where, while confusion with an existing mark (JARDEX for meat extracts) was a remote possibility, the consequence of such confusion with the applicant’s goods, disinfectant, would be very serious indeed.3 Are such rules and decisions, based clearly on the character of the applicant’s goods/services, compatible with international trade mark law? Should they be?

1 Trade Marks Rules, 1876, rules 57–63 (created under Trade Marks Registration Act 1875, s 7); Trade Marks Act 1905, s 64(10) (excluding word marks) discussed in Phillip Johnson, ‘The Rise and Fall of Honest Concurrent Use’ in I. Simon (ed), Trade Mark Law and Sharing Names (Edward Elgar 2009) 35–39. 2 Trade Marks Act 1919, s 7; Trade Marks Act 1938, s 15(3) (a single chemical element or compound), discussed in L. Bently, ‘Limitations on Pharmaceutical Trade Marks in Great Britain in the Twentieth Century’ in B. Beebe and H. Sun (eds), Charting Limitations on Trademark Rights (OUP (forthcoming)). 3 In re the Application of Lewis Thomas Edwards (1946) 63 RPC 19 (Asst Comptroller of Patents).

373

374

Improving intellectual property

This short chapter explores how far there is a principle of non-discrimination as to goods/services in international trade mark law, and if not, whether such a rule would be desirable. It will be suggested that such a principle would (or should) allow for flexible, but justified, national responses in relation to problems arising in particular sectors.

2.

NON-DISCRIMINATION BY SECTOR IN INTERNATIONAL PATENT AND TRADE MARK LAW

Article 27 of TRIPS declares that patents ‘shall be available and patent rights enjoyable without discrimination as to … the field of technology.’ Although the provision appears under the heading ‘patentable subject matter’, in Canada- Patent Protection of Pharmaceutical Products,4 in which the EC challenged a Canadian provision permitting the use of patented subject matter to provide information to a regulatory body,5 the Panel concluded that the prohibition applied not just to questions of subject matter, but also compulsory licensing and exceptions.6 Although the Panel went on to reject the submission that the Canadian provision violated Article 27.1, the conclusion that Article 27.1 was relevant at all was criticised by Professors Dreyfuss and Dinwoodie, initially in an article and later in their reconceptualization of TRIPS as ‘neo-federalist’.7 In particular, they argued that the Panel had been wrong to view non-discrimination as a ‘structural’ feature,8 affecting all aspects of patent law, as opposed merely to issues of subject matter, such as exclusions from patentability of pharmaceutical products and food which had historically driven its adoption. Non-discrimination within the field of a particular intellectual property (IP) right has appeared on the international agenda subsequently in the context of trade marks and the fiercely contested permissibility of laws that regulate the packaging of tobacco products (so-called ‘plain packaging’ rules). Here the arguments have been built around, inter alia, Article 15(4) of the TRIPS Agreement which states that ‘The nature of the goods or services to which

(17 March 2000) WT/DS114/R. Patents Act, RSC 1985, c. P-4, s 55.2(1) (Can). 6 WT/DS114/R [7.91]. 7 Graeme B. Dinwoodie and Rochelle C. Dreyfuss, ‘Diversifying without Discriminating: Complying with the Mandates of the TRIPS Agreement’ (2007) 13 Mich Telecomm & Tech L Rev 444; A Neofederalist Vision of TRIPS: The Resilience of the International Intellectual Property Regime (2012) ch 4. 8 A Neofederalist Vision (n 7) 66–71, 105. 4 5

Non-discrimination as to the field of commerce as a norm of international trade mark law

375

a trademark is to be applied shall in no case form an obstacle to registration of the trademark.’ In Australia – Certain Measures Concerning Trademarks and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging,9 Cuba, the Dominican Republic, Honduras and Indonesia together argued that Article 15(4) of TRIPS precluded Australia’s prohibitions on use of certain marks on the packaging of tobacco products. Honduras argued that the rules prevented non-distinctive marks from acquiring distinctiveness, while Cuba contended that the rules prevented the trade mark owner from acquiring rights required to be conferred by Article 16. In so doing, it was said, the rules were ‘obstacles’ to the registration of trade marks, Cuba arguing that registration encompassed the rights flowing from the administrative act of registration.10 The Panel described this as a general obligation ‘to confer protection on the same terms and conditions in relation to trademarks notwithstanding the nature of the product’.11 The Dominican Republic described Article 15.4 as a ‘form of non-discrimination obligation’. The Panel rejected these arguments. Crucially, the Panel treated the term ‘trademark’ in Article 15(4) as defined by Article 15(1),12 and thus as referring to signs that meet the distinctiveness requirement. Contracting Parties, therefore, had no obligation to permit registration of non-distinctive signs (and certainly no obligation to permit the use of non-distinctive signs in a way which would render them distinctive.) Moreover, the Panel noted that Contracting Parties are free to specify conditions for eligibility for registration beyond distinctiveness, as recognised in Article 15(2) and (3). Therefore, Article 15(4) meant that ‘for a sign that is capable of constituting a trademark and eligible for registration, the nature of the goods or services to which it is intended to be applied cannot be an obstacle to its registration’’13 As a result, the Article did not require that use be permitted of non-distinctive signs so that they could acquire distinctiveness.14 In relation to Cuba’s more ambitious argument, the Panel found that ‘registration’ in Article 15(4) referred the ‘action of registering’,15 rather than to the rights flowing from registration.16 9 WT/DS435/R, WT/DS441/R, WT/DS458/R, WT/DS467/R (28 June 2018) (Panel Report). The Panel decision was appealed in relation to other grounds unsuccessfully: WT/DS435/AB/R and WT/DS441/AB/R (9 June 2020), [4.1], [6.544] n 1444. 10 Panel Report (n 9) [7.1788]. 11 ibid [7.1898]. 12 ibid [7.1830]. 13 ibid [7.1847]. 14 ibid [7.1894]. 15 ibid [7.1903]. 16 ibid [7.1902].

376

Improving intellectual property

It was confirmed in this view by the legislative history pertaining to Article 7 of the Paris Convention on which Article 15(4) of TRIPS had been modelled (in substance extending the rule to services).17 Particularly relevant was the attempt to extend its application to renewals and duration (at Lisbon in 1958) had been unsuccessful. This history clearly implied that the narrow conception of ‘registration’ as the act of registering the mark was the correct interpretation of Article 7 Paris and thus Article 15(4) TRIPS.18 The proposition that Article 15(4) TRIPS is a non-discrimination provision was also raised – and rejected – in domestic proceedings in the UK.19 The claimant cigarette manufacturers argued that the Standardized Packaging of Tobacco Products Regulations 2015,20 which implemented (but also went beyond) the EU Tobacco Products Directive 2014,21 were invalid including that the provisions were incompatible with TRIPS, particularly Article 15(4). The tobacco companies again sought to present Article 15(4) as expressing a broader principle of non-discrimination and more specifically that (a) the nature of a product is irrelevant to its registration and (b) once registered the principle of non-discrimination as between types and categories of product means that it is unlawful to impose restrictions on the use of tobacco related trade marks. Green J rejected the argument. To begin, he found that Article 15(4) TRIPS is expressly drafted in terms of rights to registration only; and says nothing about the rights which flow from registration. Moreover, as to the broader claim that the principle extended to limit product-specific controls over use of a mark, nothing in the TRIPS Agreement, in case law or literature supported such a proposition.22 The Court of Appeal affirmed,23 Lewison LJ declaring that the ‘limit of’ Article 15(4) was that ‘if the mark is distinctive, it may be registered’.24 If the mark is not distinctive, there is no right for aspirant trade mark holders to use the mark so that it becomes distinctive.

ibid [7.1910]–[7.1912]. ibid [7.1908]. 19 R (on the application of British American Tobacco (UK) Ltd and Ors) v Secretary of State for Health [2016] EWHC 1169 (Admin), [2016] EWCACiv 1182. 20 SI 2015/829. 21 Directive 2014/40/EU of the European Parliament and of the Council of 3 April 2014 on the approximation of the laws, regulations and administrative provisions of the Member States concerning the manufacture, presentation and sale of tobacco and related products and repealing Directive 2001/37/EC [2014] OJ L 127/1. 22 [2016] EWHC 1169 (Admin), [916] (viii). 23 [2016] EWCA Civ 1182. 24 ibid [147]. 17 18

Non-discrimination as to the field of commerce as a norm of international trade mark law

3.

377

TOWARDS A PRINCIPLE OF NON-DISCRIMINATION BY SECTOR IN INTERNATIONAL TRADE MARK LAW?

The WTO Panel, English High Court and Court of Appeal have therefore rejected the idea that the principle of non-discrimination, recognised in relation to patents in the WTO’s interpretation of Article 27(1) TRIPS, has any parallel in trade mark law. The conclusion is all the-more convincing when one contrasts the word ‘registration’ (in Art 15(4) of TRIPS) with the key terms in Article 27(1) – ‘rights enjoyable’ – that motivated the Panel in Canada – Pharmaceutical products to treat the provision as ‘structural’. There might also be said to be good reasons to leave members of the WTO with flexibility to modulate different aspects of trade mark law by reference to commercial sector. For example, in sectors where marks are inherently highly descriptive and there are many operators, it might make good sense for notions such as similarity or confusion to be interpreted more narrowly than in other sectors.25 There is some evidence that this was the position in England under the law of passing off in the context of newspaper titles.26 Indeed, today’s EU (and UK) registered trade mark law explicitly recognises the possibility that the ‘average consumer’ of particular goods or services might be more observant, informed or circumspect than the average consumer of other goods – and reflects this in the narrower scope of protection afforded to trade marks for such goods.27 Nevertheless, the idea of applying the non-discrimination rule to trade marks has, at least, two attractive features. The first is that it would provide a more rational approach than the current provisions in Article 7 of the Paris Convention and Article 15(4) of the TRIPS Agreement, which are now a rather complicated mess. The second attractive feature is that a non-discrimination– properly understood – would neither introduce inflexibilities (of the sort the tobacco industry advocated), nor prevent adaptation of the law. Firstly, the Panel’s limitation of Article 15(4) to the procedural act of registration – ‘the action of registering’ – leads to situations that can hardly be regarded as satisfactory.28 In particular, such a restriction presents the possibility that a country may be required to register a trade mark which can then 25 Compare A Neofederalist Vision (n 7) 71 (noting that core doctrines of patent law necessarily distinguish by fields of technology). 26 L. Bently, ‘The Confusion, Uncertainty, and Dissatisfaction with the Legal Protection of Newspaper and Periodical Titles in Nineteenth-Century England’ (2018) 51(4) Victorian Periodicals Review 692, 703-4. 27 L. Bently and others, Intellectual Property Law (5th edn, OUP 2018) 1043–104. 28 Panel Report (n 9) [7.1834], [7.1903] (‘the action of registering’) [7.1908] (‘the step of registering’), [7.1911] (‘specifically procedural meaning’).

378

Improving intellectual property

immediately be vulnerable to invalidation. This is so especially in countries which treat validity of a registered trade mark as dependent on the applicant having had a ‘bona fide intention to use’ the mark. If the use of a mark for certain goods or services is prohibited in such a country because the sale or provision of the goods or services is itself prohibited, how can an applicant be said to have a bona fide intention to use the mark? It has sometimes been argued that the application of such a rule of invalidity would clearly be contrary to ‘the spirit’ of Article 15(4) of TRIPS (and Art 7 of the Paris Convention).29 Perhaps for this reason, the plain packaging legislation in both Australia and the UK went out of its way to avoid such consequences – effectively introducing a rule of positive discrimination in favour of tobacco manufacturers than enabled them to retain registrations in circumstances where other trade mark proprietors would be liable to lose theirs.30 However, the ruling of the Panel suggests this was unnecessary: ‘registration’ is limited to the administrative act.31 Secondly, the Panel’s interpretation of Article 15(4) leaves a number of puzzles as to the meaning and operation of Article 7 of the Paris Convention. This is because the basis on which the WTO limited the effect of Article 15(4) primarily involved interpreting it in the context of Article 15 as a whole, in particular, Article 15(1). However, in interpreting the term ‘trade mark’ in Article 7 of the Paris Convention (as such), such a route is less obviously available. This presents the possibility of divergent interpretations of essentially the same words. Consider, for example, common rules for assessing distinctiveness, including situations where word marks are descriptive of goods, or even generic in relation to such goods. The ordinary meaning of Article 7, that the nature of the goods is ‘in no case’ to form an obstacle to registration, would seem to catch such situations: the word APPLE cannot be registered for fruit but can be registered for computers precisely because of the nature of the goods for which the registration is sought. Of course, in the context of TRIPS, this situation is unproblematic, because Article 15(4) only applies if the sign has already been deemed capable and eligible – so one can differentiate between goods/

29 In the 1960s, a proposal that the UK should abolish trade marks for pharmaceutical products was opposed on the basis it would involve breaching Art 7, and the Board of Trade also indicated that a ban on using such marks might be contrary to the spirit of the Convention: W. Wallace (Board to Trade) to G. G. Hulme (Ministry of Health), 21 Dec 1967, TNA: MH 104/97. See Bently (n 2). 30 Tobacco Plain Packaging Act 2011, s. 28 (Aust.); Standardized Packaging of Tobacco Products Regulations 2015, SI 2015/829, reg. 13(2)(d)–(e). 31 Occasionally, the Panel’s language is less restrictive: Panel Report (n 9) [7.1856], [7.1912] (referring to ‘the availability of protection.’ Indeed it might be said that the Panel’s conclusions did not depend on the narrow reading it offered of registration.

Non-discrimination as to the field of commerce as a norm of international trade mark law

379

services when determining those matters. However, in the context of the Paris Convention, it is less obvious how to reach the same conclusion (even if trade mark scholars assume that such a conclusion must be reached).32 Article 6(1) of the Paris Convention, which states that the ‘conditions for the filing and registration of trademarks shall be determined in each country of the Union by its domestic legislation’, is of no help here, because (as the Appellate Body has stated) this is ‘subject, of course, to the other obligations of Paris Union countries under the Paris Convention’,33 and thus, presumably, Article 7. Probably the most obvious way to limit the applicability of Article 7 is by reference to Article 6quinquies(B) which regulates the grounds on which a Contracting Party may reject an application for a mark which has already been registered in the home territory.34 More specifically, it allows for rejection of non-distinctive, descriptive and generic signs.35 While the reach of Article 6quinquies(B) and Article 7 are different, since Article 7 also applies to applications that are not based on registration in the country of origin, it might be said that it is clear that Article 7 cannot prevent a rejection that is explicitly permitted under Article 6quinquies(B), and thus by implication, cannot affect rules on distinctiveness.36 The same reasoning would apply to a refusal to register a mark because the goods for which it is proposed to be used are liable to ‘tarnish’ the reputation of the goods for which earlier trade mark rights exist (so-called ‘goods antagonism’):37 Article 6quinquies(B)(i) explicitly permits rejection where a mark is ‘of such a nature as to infringe rights acquired by third parties in the country where protection is claimed’.

32 Sam Ricketson, ‘The Trade Mark Provisions of the Paris Convention’ in Irene Calboli and Jane C. Ginsburg (eds), Cambridge Handbook on International and Comparative Trade Mark Law (CUP 2020) 18; Annette Kur, ‘Marks for Goods or Services (Trademarks)’ in Carlos M. Correa (ed), Research Handbook on the Protection of Intellectual Property Under WTO Rules (Edward Elgar 2010) 408, 420 (considering marks that are deceptive (such as COTTONELLE on polyester clothes) or contrary to public policy (such as SCREW YOU for t-shirts, there being no such objection to its use on sex toys) because of the goods on which they are proposed to be used). 33 (2 January 2002) WT/DS176/AB/R [139]. 34 Graeme Dinwoodie and Annette Kur, ‘Non-conventional Marks and the Obstacles of Functionality – WIPO’s role in fleshing out the telle quelle rule,’ in Sam Ricketson (ed), Research Handbook on the World Intellectual Property Organization (Edward Elgar 2020). 35 Paris Convention, Art 6quinquies(B), esp. (ii). 36 Art 6quinquies(B) was adopted at the Washington Revision Conference in 1911, so was in place when Art 7 was extended to prohibit rejection of ‘registrations’ based on the nature of the goods, a change adopted in 1925. 37 Bently and others (n 27) 1064.

380

Improving intellectual property

Nevertheless, although there is no consensus,38 it has been argued that Article 6quinquies is, in fact, a very narrow provision: it only concerns the ‘form’ of trade marks.39 40 Such an interpretation seems to render Article 6quinquies(B) almost wholly without practical application;41 in turn, if correct, it is hard to see how Article 6quinquies then can form a basis for treating non-distinctiveness and goods-antagonism as falling categorically outside of Article 7. In effect, it leaves us with the problem of explaining why some good-specific refusals are not precluded by Article 7.42 Alternatively, despite the provision’s clear imperative that goods should ‘in no case’ be an obstacle to registration, it may be that the qualifier ‘only’ is implicitly present in Article 7, so that the prohibition applies where a rejection from registration is by reason ‘only’ of the nature of the goods, rather than the mark-goods relationship. Some support for this can be found in the historical context. Article 7, when adopted in 1883 was as a rule governing applications, and precluded statutory or administrative rules that prohibited applications relating to particular goods. Unfortunately, the same rules were not in terms prohibited for countries that did not reject applications until they had been examined. As a result, to achieve the same result for both registration/deposit and examination systems, in 1925, at the Hague Revision Conference, Article 7 was extended registration. The records reveal no suggestion of any intention to alter the impact of the rule, just to make it as applicable to examination countries as the original rule was to application countries.43 As a result, it must 38 Ricketson (n 32) 11–13, and The Paris Convention, [12.16]-[12.18] (the position is ambiguous); Dinwoodie and Kur (n 34) 131 (arguing that from 1911 onwards, with the introduction of paragraph (B), Art 6quinquies could no longer be regarded as limited to form (as opposed to content) of marks). 39 Ng-Loy Wee Loon, ‘Absolute Bans on the Registration of Product Shape Marks: A Breach of International Law?’ in Irene Calboli and Martin Senftleben, The Protection of Non-traditional Marks: Critical Perspectives (OUP 2018) 147. 40 The WTO Appellate Body seemed to accept this in United States—Section 211 Omnibus Appropriations Act of 1998 (2 January 2002) WT/DS176/AB/R [122]-[148]; but Dinwoodie and Kur observe that the Appellate Body indicated, at [136], that Art 6quinquies applied ‘at least’ to the form of the mark. 41 Dinwoodie and Kur (n 34) 148. 42 Of course, if two countries in dispute are Members of the WTO, it might be that, as Dinwoodie and Kur (n 34) argue, Art 15(1) of TRIPS effectively requires a different interpretation of Art 6quinquies. If this is the case, then the scope of Art 7 is equally narrowed, so that its interpretation is consistent with that offered by the Panel of Art 15(4). However sensible such a conclusion, the Membership of TRIPS and Paris (in its Stockholm version) are not identical: there are 177 members of the Paris Union compared to 164 of TRIPS. 43 ‘Rapport de la Commission de Rédaction a la séance pléniere,’ in Actes de la Conférance de la Haye, 8 Octobre-6 Novembre 1925 (1926) 545. The proposal came from the International Chamber of Commerce and was not discussed further.

Non-discrimination as to the field of commerce as a norm of international trade mark law

381

have been understood to be a rule that did not depend on an individualised appraisal (e.g., of the sign-goods relationship), but was limited in application to rules that focused only on the goods. The existence of all these difficulties and uncertainties suggest that it might have been preferable had the panel sought an interpretation of Article 15(4) TRIPS that could also apply also to Article 7 of Paris, rather than one that turned so directly on the context of the rest of Article 15 of TRIPS. One way to make sense of both Article 7 and Article 15(4) which would have avoided the narrow interpretation of ‘registration’, but made sense of the apparent potential breadth of its application, might have been as suggested by Cuba, the Dominican Republic and the tobacco companies: that in determining whether to register (or maintain registration) of a mark, a Party shall not discriminate on the basis of the goods/services. In the final section, I suggest that treating Article 7 as a non-discrimination norm (like that in Art 27 for patents), would almost certainly accommodate all the very sensible goods-related exclusions from registrability raised in this section.

4.

THE NATURE OF SECTORAL NON-DISCRIMINATION RULES

In the context of Article 27(1) of TRIPS, the Panel in Canada – Pharmaceutical Products recognised that discrimination is a complex concept.44 In the context of a provision that did not in terms specify that it applied only to a particular field of technology,45 the Panel considered whether it might involve ‘de facto’ discrimination against pharmaceutical technologies. Importantly, the Panel looked both to ‘effects’ and ‘purposes’. The Panel first asked, as a matter of effects, ‘is there differentially disadvantageous treatment?’ and second, as a matter of purpose, ‘is it justifiable?’46 On the basis of the evidence, the Panel found that it had not been shown that the regulatory review exception was in practice differentially disadvantageous to those holding pharmaceutical patents.47 Dinwoodie and Dreyfuss support the Panel’s reasoning that de facto differentiation should be capable of justification and suggest that this should be by reference to the purposes of TRIPS generally and the specific goals of the field (in that context, patents). It might equally be argued that rules that facially WT/DS114/R [7.94]. ibid [7.99] (no de jure discrimination). 46 ibid [7.101]. 47 ibid [7.102]. Note footnote 439, leaving open whether explicit differential treatment might be found non-discriminatory by virtue of being ‘special measures needed to restore equality of treatment to the area of technology in question.’ 44 45

382

Improving intellectual property

differentiate (de jure rules) should also be capable of being defended (even if the onus is placed more squarely on the jurisdiction adopting such a rule).48 As Dinwoodie and Dreyfuss highlight, such differentiation is not necessarily discriminatory:49 indeed it might be discriminatory to treat different situations in the same way.50 Consider, for example, the rules in EU trade mark law relating to retail services, which require an applicant to specify the sort of goods to which the retailing relates (for example, ‘retail trade in building, home improvement, gardening and other consumer goods for the do-it-yourself sector’).51 This is an additional obstacle for these applicants, but its effect is to produce an equivalent level of specificity in the specification as is required of other applicants. In effect, this is differentiation without discrimination. Moreover, even if a provision were discriminatory, that might be justifiable on the basis that it pursues a legitimate end in a proportionate way. In discrimination law more generally, the possibility of justification is usually available: discrimination means treating differently matters that are in a relevantly similar situation without an objective and reasonable justification.52 It is not obvious why de jure discriminatory provisions (at least in this subject-matter-oriented form discussed here) in international intellectual property law should be treated differently. The retail services rule (just described), even if regarded as de jure discriminatory, pursues the goal of legal certainty in a rational and proportionate manner. Reading the notion of ‘justifiability’ into non-discrimination would also align it with other provisions of TRIPS, such as Article 20, that explicitly references justifiability (there in relation to ‘encumbrances’). Were Article 7 of Paris understood as a non-discrimination rule of this type, then, the effect would not be to create ‘an immutable and unyielding principle’, as Green J put it.53 Although he ruled out a non-discrimination principle, he acknowledged the importance of flexibility in terms that are entirely consistent with just such a principle: ‘TRIPS’, he observed ‘is not to be construed as preventing the adoption … of focused and proportionate legislative measures which curb the use of specific product specific trade marks where those trade marks, but not others, cause harm to health’.54 A rule on non-discrimination 48 Cf A Neofederalist Vision (n 7) 107 (‘in order to encourage countries to enact facially neutral laws’): 109. 49 Diversifying without discriminating (n 7) 450. 50 Opinion 1/17, EU:​C:​2019:​341 [176]–[177] (30 April 2019, CJEU) (defining equal treatment before concluding that ISDS provisions of CETA did not breach principle of equal treatment in Art 20). 51 ibid [50]. 52 Nachova v Bulgaria App No 43577/98, [145] (ECtHR, 6 July 2005); Willis v United Kingdom, App No 36042/97 (ECtHR, 11 June 2002) [39]. 53 [2016] EWHC 1169 (Admin), [916] (viii). 54 Ibid.

Non-discrimination as to the field of commerce as a norm of international trade mark law

383

would mean that Parties could not refuse to treat applications less favourably because of the goods/services to which they relate unless there was some objective reason for doing so and the refusal of registration was a proportionate application of that reason. Decisions to exclude particular signs as non-distinctive, descriptive, deceptive or functional (shapes which ‘result from the nature of the goods themselves’) may all depend on the nature of the goods/ services, but are easily justified (as might the historical rules described in the opening paragraph of this chapter). A subject matter non-discrimination rule would thus not only make sense of international trade mark law, but would be able to accommodate balance, diversity and historical contingency – the three values that Dinwoodie and Dreyfuss see as crucial to their vision of international intellectual property law.55

A Neofederalist Vision (n 7) 814.

55

PART IX

MAKING INTERNATIONAL IP AND INVESTMENT LAW

37. Proceduralism is not fetishism – International intellectual property lawmaking and global administrative law Orit Fischman Afori 1. INTRODUCTION In a comment Professor Rochelle Dreyfuss published in 2013 regarding the Max Planck Institute for Intellectual Property and Competition Law’s Principles for Intellectual Property Provisions in Bilateral and Regional Agreements (MPI Principles), she contextualized this initiative as fitting into the Global Administrative Law (GAL) framework.1 After framing the MPI Principles within the broader GAL framework, Dreyfuss raised concerns about whether the GAL procedural principles can furnish developing countries with the operative means for better promoting their interests. Her fear was that these countries lack the ability to confront US and EU pressure in the process of negotiating international agreements, and that mere full transparency of the process is not enough. Dreyfuss’s comment sheds light on an aspect that has been neglected in the intellectual property (IP) literature. Procedural justice principles are a building block of public law2 and yet absent from the international IP discourse. If this is a pervasive failure of international negotiations in general, in the international IP arena, there are particularly sound reasons for introducing higher

1 Rochelle C. Dreyfuss, The Max Planck Principles as an Aspect of Global Administrative Law, 44 Int’l Rev. Intell. Prop. & Competition L. 906 (2013). 2 Stephen Breyer, Administrative Law & Regulatory Policy (3rd ed. 1992); U.S. Administrative Procedure Act (1946). See also Lawrence Alexander, The Relationship Between Procedural Due Process and Substantive Constitutional Rights, 39 U. Fla. L. Rev. 323, 325 (1987). For a comprehensive analysis of the underlying rationale of procedural justice principles, see Lawrence B. Solum, Procedural Justice, 78 S. Cal. L. Rev. 181 (2004).

385

386

Improving intellectual property

standards of procedural justice into the process. International IP agreements do not merely govern the relations between states but also set standards of local substantive law. By the end of the 19th century, the unique nature of IP assets as intangible had already led to the creation of an international framework for anchoring minimum and largely uniform standards of protection on a global level. Effective protection of IP assets must be borderless. Therefore, international IP agreements focus on designing the contours of IP rights (IPRs), including the embedded exceptions and limitations (E&L) to these rights, aimed at promoting the public good. Much has been written about the balance of powers (or the lack thereof) between the so-called global north and the south in tailoring the scope of IPRs in the international IP regime, and Dreyfuss has contributed significantly to this corpus in her writings.3 The IP literature has also extensively discussed the lack of adequate protection of the interests of developing countries and of basic human rights; in this regard, Dreyfuss has also written about the complex nexus of patent rights and the fundamental right to health.4 The GAL discourse may add important aspects to the discussion of IP and human rights. GAL focuses on contemporary trends aimed at building legitimacy for organizations acting in the transnational arena and on fostering their functioning in a way that meets public law standards. GAL perceives ‘proceduralism’ as an important building block of good governance, and it rejects its description as nothing more than a lawyers’ fetish.5 Proceduralism includes the principles of ‘due process’ and procedural justice, which are essential for protecting human rights against the power of the state.6 Public law fundamentals include not only declarations on human rights in constitutional instruments, but also administrative law principles that provide guarantees for the maintenance of the rule of law.7 Therefore, aside from the growing discourse pertaining to the necessity of introducing safeguards for substantive human rights in designing the various

3 See e.g. Graeme B. Dinwoodie & Rochelle C. Dreyfuss, A Neofederalist Vision Of Trips: The Resilience of the International Intellectual Property Regime (2012). 4 See Balancing Wealth and Health: The Battle Over Intellectual Property And Access to Medicines in Latin America (Rochelle C. Dreyfuss & César Rodríguez-Garavito eds., 2014); Framing Intellectual Property Law in the 21st Century: Integrating Incentives, Trade, Development, Culture, and Human Rights) ( Rochelle C. Dreyfuss & Elizabeth Siew-Kuan Ng eds.,2018). 5 Nicholas Bagley, The Procedure Fetish, Mich. L. Rev. 345, (2019). 6 See, supra note 2. 7 See, supra note 2.

Proceduralism is not fetishism

387

IPRs,8 the procedural part of public law should not be neglected. Procedural justice plays a significant role in protecting human rights and promoting a fair and just IP regime. International IP mechanisms, whether operated through bilateral, regional, or international negotiations, have much to gain by being conducted according to basic principles of procedural public law, which consist of more than mere transparency. These processes should also meet the accountability threshold applied by public agencies in democratic societies.

2.

GLOBAL ADMINISTRATIVE LAW

GAL emerged two decades ago and conceptualized the principles of administrative law, on both descriptive and normative levels, as facilitating ‘good governance,’ applied by various supra-national organizations.9 It originated in the context of the growing importance of supra-national bodies that set rules and standards affecting countries and individuals worldwide. Many were established to monitor or coordinate global behavior. The various supra-national bodies may be classified by their governmental or non-governmental nature.10 Governmental bodies may be further classified according to various features, such as the source of their foundation: whether they are an international organization established by a treaty (e.g., the United Nations, UN) or by other intergovernmental agreements (e.g., the World Trade Organization, WTO), or a sub-organization of an already established international or intergovernmental organization (e.g., World Intellectual Property Organization, WIPO).11 Supra-national organizations that are linked in one way or another to states or governments may be perceived as an arm of the state,12 yet they have become 8 See e.g., supra note 4. See also, Laurence R. Helfer & Graeme W. Austin, Human Rights and Intellectual Property: Mapping the Global Interface (2011). 9 Benedict Kingsbury, Nico Krisch & Richard B. Stewart, The Emergence of Global Administrative Law, 68 law & contemp. probs. 15 (2005). 10 For a different taxonomy, see Id, at 20. 11 Sabino Cassese & Elisa D’Alterio, Introduction: The Development of Global Administrative Law, in Research Handbook on Global Administrative Law, 1, 5 (Sabino Cassese and Elisa D’Alterio eds., 2016); Benedict Kingsbury & Richard B. Stewart, Legitimacy and Accountability in Global Regulatory Governance: The Emerging Global Administrative Law and the Design and Operation of Administrative Tribunals of International Organizations, in International Administrative Tribunals in a Changing, 1, 5 (Papanikolaou ed. 2008). 12 A. von Bogdandy, Philipp Dann & Matthias Goldmann, Developing the Publicness of Public International Law: Towards a Legal Framework for Global Governance Activities, 9 German Law Journal, 1375, 1376 (2008); Benedict Kingsbury and Lorenzo Casini, Global Administrative Law Dimensions of International Organizations Law, 6 Int’l Org. L. Rev. 319, 324 (2009).

388

Improving intellectual property

independent and therefore have complex relationships with their ‘founding’ states or governments.13 Non-governmental international organizations usually include not-for-profit organizations, with a wide range of purposes, such as trade and professional associations, private regulatory bodies, and global funds aimed at promoting public goals on the international level.14 Common examples are the International Olympic Committee (IOC),15 the International Standardization Organization (ISO),16 and the Internet Corporation for Assigned Names and Numbers (ICANN).17 GAL addresses the legal governing rules of these bodies.18 Kingsbury, Krisch, and Stewart, in their seminal article, defined GAL as comprising ‘the mechanisms, principles, practices, and supporting social understandings that promote or otherwise affect the accountability of global administrative bodies, in particular by ensuring they meet adequate standards of transparency, participation, reasoned decision, and legality, and by providing effective review of the rules and decisions they make’.19 The inception of GAL was prompted by the observation that, paradoxically, although these supra-national organizations were established to facilitate the accomplishment of public goals, including human rights, they nevertheless were not operating in an accessible and transparent manner.20 The first principle of administrative law is the general notion of ‘accountability,’ which is translated into the sub-requirements of transparency, providing reason to decisions, and objective oversight of decisions.21 The GAL discourse stresses the idea that accountability should be

13 Cassese and D’Alterio, supra note 11, at 7; Krisch & Stewart supra note 11, at 29–31. Examples of such organizations are the International Monetary Fund and the World Bank. 14 Cassese and D’Alterio, supra note 11, at 5. 15 https://​www​.olympic​.org/​about​-ioc​-olympic​-movement. For the special acknowledgement of an international legal entity under Swiss law, see David J. Ettinger, The Legal Status of the International Olympic Committee, 4 Pace Y.B. Int’l L. 97 (1992). 16 https://​www​.iso​.org/​about​-us​.html. 17 https://​www​.icann​.org. 18 See the various materials on GAL at www​ .iilj​ .org. See also Kingsbury, Krisch & Stewart, supra note 9; Sebastian Lopez Escarcena, Contextualizing Global Administrative Law, 21 Gonz. J. Int’l L. 57 (2018); Christoph Mollers, Ten Years of Global Administrative Law, 13 Int’l J. Const. L. 469 (2015); Susan Marks, Naming Global Administrative Law, 37 N.Y.U. J. Int’l. L. & Pol. 995 (2005); Richard B. Stewart, U.S. Administrative Law: A Model for Global Administrative Law, 68 Law & Contemp. Probs. 63 (2005). 19 Kingsbury, Krisch & Stewart, supra note 9, at 17. 20 Cassese and D’Alterio, supra note 11, at 8. 21 Kingsbury, Krisch & Stewart, supra note 9, at 37–40.

Proceduralism is not fetishism

389

applied outside the traditional and narrow scope of state vs. individuals, and extended to the transnational arena.22 GAL’s underlying rationale is to strengthen the legitimacy of supra-national regulatory organizations.23 Legitimacy is gained by the adherence to the rule of law, which is a fundamental principle in the supra-national domain as well; promotion of social welfare; and promotion of structured, systematic, and deliberative decision-making processes.24 Another important element of building legitimacy and trust is fidelity to the purposes for which the decision-making power was granted.25 Rigorous procedural justice measures, therefore, enhance the legitimacy of governance and the exercise of power, whether conducted by the state or by a supra-national organization.26 The administrative requirements of accountability reflect essential elements of procedural justice guarantees.27 But transplanting the national accountability principles to the supra-national arena results in transformed standards adapted to a global environment. GAL practices continually evolve in an incremental and decentralized manner. Because GAL is still in its first stages of implementation, it is not yet uniform.28 The disorderly development of GAL has produced diversity and fragmentation, which in turn created complexity in the understanding and study of this emerging legal field.29 Scholarship on GAL has been growing extensively, and new ramifications, approaches, and observations are emerging.30 This scholarship has included controversies over 22 Id, at 9, at 17. See also, Danielle Hanna Rached, Doomed Aspiration of Pure Instrumentality: Global Administrative Law and Accountability, 3 Glob Con 338 (2014); David Dyzenhaus, Accountability and the Concept of (Global) Administrative Law, 2009 Acta Juridica 3 (2009); Simon Chesterman, Globalization Rules: Accountability, Power, and the Prospects for Global Administrative Law, 14 Global Governance 39 (2008). 23 Cassese and D’Alterio, supra note 11, at 8; Kingsbury, Krisch & Stewart, supra note 9, at 16–17; Kingsbury and Stewart, supra note 11, at 15–19. 24 Daniel C. Esty, Good Governance at the Supernational Scale: Globalizing Administrative Law, 115 Yale L.J. 1490, 1515-1521 (2006); Kingsbury, Krisch & Stewart, supra note 9, at 44–51. 25 Benedict Kingsbury, Megan Donaldson & Rodrigo Vallejo, Global Administrative Law and Deliberative Democracy, in Oxford Handbook of International Legal Theory, 1, 5 (A. Orford & F. Hoffmann eds., 2016). 26 Daniel C. Esty, Good Governance at the Supernational Scale: Globalizing Administrative Law, 115 Yale L.J. 1490, 1522 (2006). 27 Stephen Breyer, Administrative Law & Regulatory Policy (3rd ed. 1992); U.S. Administrative Procedure Act (1946). 28 Cassese and D’Alterio, supra note 11, at 8. 29 Id, at 1; Kingsbury and Stewart, supra note 11, at 5. 30 See Research Handbook on Global Administrative Law (Sabino Cassese ed., 2016); von Bogdandy, Dann & Goldmann, supra note 12, at 1377; Escarcena, supra note 18, at 70–75.

390

Improving intellectual property

a range of issues, 31 such as the legal basis of GAL32 and its relation to substantive constitutional standards.33 Nevertheless, one of the virtues of GAL is its openness to seeking new legal frameworks, outside the classical dichotomic perceptions of national/international or mandatory/voluntary regulation.34

3.

THE POLITICAL ECONOMY OF INTERNATIONAL PROPERTY: AT A CROSSROADS

IPRs protect intangible assets, including literary and artistic works through copyright law and inventions through patent law.35 The basic justification of IPRs stems from the failure of the market to protect authors and inventors against concurrent uses of their works and inventions without reimbursement.36 In economic terms, works and inventions are public goods.37 Therefore, to provide adequate incentives to invest in the production of works and the development of inventions, works and inventions must be commodified and protected by IPRs. In the 19th century IPR holders already wished to expand the geographic scope of IP commodification, seeking a cross-border protection.38 As a first step, they achieved such expansion through bilateral agreements.39 At the end of the 19th century, this development culminated with the groundbreaking adoption of two multilateral IP agreements: the 1883 Paris Convention for the Protection of Industrial Property,40 and the 1886 Berne Convention for the

For a review of the various controversies, see Escarcena, supra note 18, at 70–75. Edoardo Chit, Where Does GAL Find Its Legal Grounding, 13 Int’l J. Const. L. 486 (2015). 33 Christoph Mollers, Ten Years of Global Administrative Law, 13 Int’l J. Const. L. 469, 471 (2015); Escarcena, supra note 18, at 70. 34 Kingsbury, Donaldson, & Vallejo, supra note 25, at 2. See also Escarcena, supra note 18, at 80; Jose Alvarez, ‘Beware: Boundary Crossings’ – A Critical Appraisal of Public Law Approaches to International Investment Law, 17 J. World Invest. Trade 171, 227 (2016). 35 See, e.g., 35 U.S.C. § 101; 35 U.S.C.§ 154. 36 William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law, 18 J. Legal Stud. 325 (1989); William M. Landes & Richard A. Posner, The Economic Structure of Intellectual Property Law 294–310 (2003). 37 Id. 38 Sam Ricketson & Jane C. Ginsburg, International Copyright And Neighboring Rights: The Berne Convention And Beyond ,19 (2006); Rochelle Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law Is Reconceptualizing Intellectual Property, 36 Mich. J. Int’l L. 557 (2015). 39 Id. at 42–43. 40 21 U.S.T. 1583. 31 32

Proceduralism is not fetishism

391

Protection of Literary and Artistic Works.41 These international instruments were unique because they set a mandatory standard for member states regarding their domestic legislation concerning IPRs. Since then, local IPRs and their boundaries have been determined by international agreements, whether bilateral or multilateral. The international IP arena is an active one.42 The agreements of the 19th century have been amended periodically, and many newer international agreements adopted.43 After the establishment of WIPO as a UN agency in 1967,44 many international agreements have been developed under its framework.45 The hyperdynamic international activity in the 20th century culminated with the adoption of the TRIPS Agreement, in 1994, as part of the WTO negotiations.46 This complicated the international mechanism of IP norm setting, as it involved two main international organizations: WIPO and WTO.47 The political economy of international IP lawmaking is extensively discussed by academics, civil society organizations, and policymakers. This literature stresses the power gap between countries in the process of designing IPRs, and its main complaint is that international IP law serves mainly the strong and rich countries.48 As the outcry by and on behalf of developing countries grew, the process of setting international standards came to the forefront of political discourse. The developing countries urged redefining the ‘rules of the game,’ with particular emphasis on the need to bring the process in line with public

25 U.S.T. 1341. Henning Grosse Ruse-Khan, The Protection of Intellectual Property in International Law, 5 (2016). 43 For example, the Berne Convention, supra note 41, was revised and amended in 1896, 1908, 1914, 1928, 1948, 1967, 1971, and 1979. In 1891, the Madrid Agreement Concerning the International Registration of Marks was adopted. 44 The Convention Establishing the World Intellectual Property Organization, 14 July 1967. 45 See e.g., the 1970 Patent Corporation Treaty and the 1996 WIPO Copyright Treaty. Today, WIPO administers twenty-six treaties, including the WIPO Convention, see https://​www​.wipo​.int/​about​-wipo/​en/​. 46 TRIPS Agreement , art. 2. 47 See Laurence R. Helfer, Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking, 29 Yale J. Int’i L. 1 (2004). 48 See, e.g., Peter K. Yu, Intellectual Property, Global Inequality and Subnational Policy Variations, in Intellectual Property, Innovation and Global Inequality (Daniel Benoliel, Francis Gurry, Keun Lee & Peter K. Yu eds., 2021); Ruth L. Okediji, Public Welfare and the Role of the WTO: Reconsidering the TRIPS Agreement, 17 Emory Int’l L. Rev. 819 (2003). 41 42

392

Improving intellectual property

law standards, so that negotiations under the WIPO or WTO umbrella should meet basic procedural, in addition to substantive, requirements.49 This public discourse has triggered some reforms of WIPO and WTO to democratize their decision-making processes. The endorsement of a countervailing interest of developing countries, almost two decades ago, known as the ‘Development Agenda,’ called for limiting the scope of IPRs for the benefit of developing countries.50 As a result, significant constraints have been imposed on the ability of strong countries, headed by the US and the EU, to introduce their agenda through the WIPO and WTO framework. These countries turned to negotiating IPRs on a bilateral or regional level, usually through the mechanism of Free Trade Agreements (FTAs).51 These direct negotiations, that in fact bypass WIPO and WTO frameworks, are known as ‘TRIPS-plus’ agreements, denoting the obligation of countries to provide greater protection than the TRIPS minimum standards.52 More than 350 FTAs have been signed since 2000.53 A prominent example demonstrating the culmination of the trend to circumvent the WIPO and the WTO frameworks was the Anti-Counterfeiting Trade Agreement (ACTA). This highly controversial agreement, concerning enforcement of IPRs, was adopted by eight countries: Australia, Canada, 49 Helfer, supra note 47, at 5–6 (stressing that the ‘regime shifting’ in international IP lawmaking is aimed at allowing the developing countries to improve their bargaining position). 50 See Proposal by Argentina and Brazil for the Establishment of a Development Agenda for WIPO, WIPO General Assembly, Thirty-First (15th Extraordinary) Session, Geneva, September 25 to October 4, 2004, WO/GA/31/11 Add; Inter-Sessional Intergovernmental Meeting On A Development Agenda for WIPO, Second Session, Geneva, June 20–22, 2005, IIM/2/10/Prov. 2, Sec. 20; Doha WTO Ministerial Declaration. 51 See e.g. Henning Grosse Ruse-Khan, Effects of Combined Hedging: Overlapping and Accumulating Protection for Intellectual Property Assets on a Global Scale, in The Transformation of Global Intellectual Property Protection in: Global Intellectual Property Protection and New Constitutionalism, 36–39 (Jonathan Griffiths & Tuomas Mylly eds., 2021); Ruth L. Okediji, Back to Bilateralism? Pendulum Swings in International Intellectual Property Protection, 1 U. Ottawa L. & Tech. J. 127 (2004). 52 Rochelle Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law Is Reconceptualizing Intellectual Property, 36 Mich. J. Int’l L. 557, 558–560 (2015); Henning Grosse Ruse-Khan, From TRIPS to FTAs and Back: Re-Conceptualising the Role of a Multilateral IP Framework in a TRIPS-Plus World, in Netherlands Yearbook of International Law, 48 (P. Amtenbrink, D. Prévost, & R Wessel eds., 2017). 53 Mira Burri, Maria Vasquez Callo-Müller and Rodrigo Polanco, TAPED: Trade Agreements Provisions on Electronic Commerce and Data, (25 Jan. 2022) https://​unilu​ .ch/​taped.

Proceduralism is not fetishism

393

Japan, Morocco, New Zealand, Singapore, South Korea, and the US.54 ACTA aimed at bolstering both enforcement and deterrence.55 It was criticized both for its lack of transparency in the negotiation process and for its potentially severe ramifications for the integrity of the existing international IP regime.56 One commentator has described ACTA as a ‘country club agreement,’ open only to a select few developed countries with strong economies, while the rest of the world remains subordinate to their interests through bilateral agreements.57 ACTA, eventually, did not enter into force. Yet, the clash of interests between developed and developing countries, has created a deadlock that impedes the inclusion of further agreements under the framework of these organizations.58 This resulted in the need to seek alternative international fora to WIPO and WTO,59 such as FTAs, reflecting the depth of the political battle between the developed and developing worlds.60

4.

APPLYING GLOBAL ADMINISTRATIVE LAW PRINCIPLES TO ALL FORMS OF INTERNATIONAL INTELLECTUAL PROPERTY LAWMAKING

As noted above, GAL discourse claims that the legitimacy of ‘international public authority’ activities lies in the applicability of both substantive and

Anti-Counterfeiting Trade Agreement, http://​www​.ustr​.gov/​acta. For example, with respect to remedies in the copyright law arena, Article 9 (3) of ACTA provided that ‘each Party shall also establish or maintain a system that provides for one or more of the following: (a) pre-established damages; or (b) presumptions for determining the amount of damages sufficient to compensate the right holder for the harm caused by the infringement; or (c) at least for copyright, additional damages,’ Anti-Counterfeiting Trade Agreement, art. 9, Dec. 3, 2010, available at http://​www​ .mofa​.go​.jp/​policy/​economy​_i​_property/​pdfs/​acta1105​_en​.pdf. 56 Peter Yu, ACTA and Its Complex Politics, 3 WIPO J. 1, 16 (2011). 57 Daniel Gervais, China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights, 103 Am. J. Int’l L. 549, 555 (2009). 58 WTO.ORG, Members Confront Doha Road Deadlock with Pledge to Seek Meaningful Way Out, Apr. 29, 2011 (statement of the WTO General Director, of April 2011, on the failure of the Doha negotiations to adopt the Development Agenda into the WTO Agreements); Inter-Sessional Intergovernmental Meeting on a Development Agenda for WIPO, Second Session, Geneva, June 20 to 22, 2005, IIM/2/10/Prov. 2, Sec. 20. 59 Peter K. Yu, Six Secret (And Now Open) Fears of ACTA, 64 Smu. L. Rev. 975, 988 (2011). 60 Orit Fischman Afori, The Evolution of Copyright Law and Inductive Speculations as to Its Future, 19 Journal of Intellectual Property, 231 (2012). 54 55

394

Improving intellectual property

procedural public law standards.61 GAL is flexible and aimed at democratizing supra-national organizations, ensuring that they meet ‘adequate standards of transparency, participation, reasoned decision, and legality.’62 Therefore, the call of developing countries to enhance their participation in shaping IPRs and to introduce substantive and procedural safeguards into WIPO and WTO conduct could be framed as a call to introduce the GAL principles into the decision-making process of these supra-national organizations. No one can imagine a process of legislating a new national law in a democratic country without adequate procedural safeguards. Legislation must include some basic stages aimed at ensuring that the public participates in the process and that the process, in turn, is conducted in a transparent way, according to the rule of law.63 The forging of international agreements that necessitate the enactment of national laws to accommodate the international standard should abide by the same principles, safeguards, and democratic values. In the IP world, the mandate to legislate new laws is effectively delegated to the governments that are signatories to the international agreements. In many cases, the national legislation stage is mainly an implementation of the international agreements that have been adopted, with some national leeway. Therefore, democratic procedural principles should be applied to the process of the international agreement setting. WIPO and WTO are governmental supra-national organizations that have arguably adopted, at least to a certain extent, the GAL procedural standards.64 But bilateral and regional agreements are not subject to these standards. In 2013, the MPI Principles were drafted, calling for the introduction of democratic procedural principles into the process of negotiating IPRs outside the WIPO and WTO frameworks.65 The MPI Principles reflect that bilateral or regional negotiations bypass the GAL principles because there is no supra-national organization involved in the process and therefore there is no procedural framework for the decision-making process. In this situation, countries are left exposed to unrestrained pressure on the part of strong countries. Under these political circumstances, countries may Bogdandy, Dann & Goldmann, supra note 12, at 1380. See supra note 19. 63 US Constitution, Article 1 Section 1; https://​ www​ .house​ .gov/​ the​ -house​ -explained/​the​-legislative​-process. 64 Regarding the WTO procedures aimed at enhancing participation and transparency, see at, https://​www​.wto​.org/​english/​thewto​_e/​whatis​_e/​tif​_e/​org5​_e​ .htm​#notification; https://​docs​.wto​.org/​dol2fe/​Pages/​FE​_Browse/​FE​_B​_007​.aspx​ ?MetaCollection​=​2​&​TopLevelId​=​5945h; The WIPO decision-making procedures are at https://​www​.wipo​.int/​policy/​en/​index​.html​#bodies all. 65 Henning Grosse Ruse-Khan, Introducing the Principles for Intellectual Property Provisions in Bilateral and Regional Agreements, 44 International Review of Intellectual Property and Competition Law (IIC), 873 (2017). 61 62

Proceduralism is not fetishism

395

be compelled to align with higher standards of IPRs than those required under ‘institutionalized’ agreements, such as TRIPs. Although occasionally some of the FTAs do stress the need to adopt a balanced system of IPRs, these clauses have remained aspirational, and the main goal of these agreements remains the enforcement of IPRs and expanding their scope of protection.66

5. CONCLUSION GAL principles are not about requiring transparency for the sake of transparency. They emphasize that when a norm is determined at a supra-national level, with a binding effect on obligations and entitlements at the national level, all procedural guarantees provided by public-law norms at the national level should be in force. The process of IP lawmaking, in whichever form it takes place, must be democratized. International IP law and public policy communities have much to gain from GAL insights. Thus, Rochelle Dreyfuss's comment from 2013 regarding the need for greater accountability in the international norm-setting process is still deeply relevant today.

Burri, Vasquez Callo-Müller & Rodrigo Polanco, supra note 55.

66

38. Early findings on the economic impacts of intellectual property-related trade agreements Keith E. Maskus and William Ridley1 1. INTRODUCTION Among the more controversial elements of global IPRs policy is the introduction of highly protective standards for rights owners into preferential trade agreements (PTAs), including bilateral investment treaties (BITs). Professor Rochelle Dreyfuss has led the scholarly criticism of such standards, often termed ‘TRIPS-plus’ rules, by questioning, for example, whether they are appropriate for emerging and developing countries (EDCs), which might otherwise adopt weaker rights. Such rules could, in principle, support market monopolization by foreign rights holders and slow down the imitation and follow-on innovation that have been an important channel of learning and technological development, even as they may stimulate formal technology transfer.2 TRIPS-plus provisions in PTAs raise challenges for both policymakers and analysts. For example, should EDCs in such agreements strengthen their competition policies to offset potential increases in prices and market power in pharmaceuticals and other key sectors? Should they adopt more access-oriented rules in digital goods and media platforms? How much of their scarce public resources should be devoted to meeting the enforcement obligations regarding IP in PTAs? These important tasks animate much of the 1 We are delighted to contribute to this volume honoring Rochelle Dreyfuss Her work is highly insightful for economists. Maskus recalls many conferences discussing the meaning of theoretical and empirical results about intellectual property rights. Rochelle both welcomes such findings and subjects them to scrutiny based on a deep understanding of how IP is supposed to work in the economy – and how it often comes up short. 2 On such tradeoffs, see Keith Maskus, Private Rights and Public Problems (Peterson Institute for International Economics 2012) 25.

396

Early findings on the economic impacts of intellectual property-related trade agreements

397

discussion raised by legal scholars and members of civil society. For their part, economists also wonder whether such elevated IPRs standards in PTAs affect important economic transactions, such as international trade, investment, and technology transfer, as discussed below.

2.

DEFINING INTELLECTUAL-PROPERTY RELATED PTAS

In recent decades, PTAs have evolved considerably from exercises in discriminatory tariff cutting to deeper and broader commitments to set minimum standards in a variety of regulatory areas, such as financial services, digital trade, competition policy, and investment regulations.3 Intellectual property rights are central to this regulatory expansion. Such agreements, which have been labelled IP-Related PTAs, or IPAs,4 build on the minimum standards required by the World Trade Organization (WTO) in its foundational TRIPS Agreement. TRIPS itself marked a considerable international convergence in rules covering IPRs in WTO contracting parties. However, the primary demandeur parties, the United States (US) and the European Union (EU), increasingly have demanded even stronger TRIPS-plus protection in the PTAs they negotiate. For example, the US has PTAs with Peru, Australia, South Korea, and other countries that contain, compared to TRIPS, substantively tighter standards of patent protection for pharmaceuticals, new regulations for copyrights in digital goods, and expanded penalties for infringing IPRs. Such rules exist also in the US-Mexico-Canada Agreement, which supplanted NAFTA.5 The 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) added further requirements, including for the enforcement of trade secrets.6 In 2014, Canada and the EU ratified their bilateral Comprehensive Economic and Trade Agreement, containing an extensive chapter on intellectual property with elevated standards.7 3 The balance of this chapter is based on Keith E. Maskus and William Ridley, ‘Trade Impacts of Intellectual-Property Related PTAs’ (2021) World Bank Policy Research Working Paper no 9659. 4 Maskus and Ridley (n 3). 5 Agreement between the United States of America, Mexico and Canada (signed 30 November 2018, entered into force 1 July 2020) (USMCA), https://​ustr​.gov/​trade​ -agreements/​free​-trade​-agreements/​united​-states​-mexico​-canada​-agreement. 6 (Signed 8 March 2018, entered into force 13 December 2018), https://​www​.dfat​ .gov​.au/​trade/​agreements/​in​-force/​cptpp/​official​-documents. 7 (Signed 30 October 2016, not yet in force save for provisional application of some of its provisions) chapter 20, https://​policy​.trade​.ec​.europa​.eu/​eu​-trade​ -relationships​-country​-and​-region/​countries​-and​-regions/​canada/​eu​-canada​-agreement​ _en.

398

Improving intellectual property

To demonstrate the current widespread reach of PTAs with chapters covering detailed IPRs, we use data from the World Bank’s database of deep trade agreements.8 The database details the provisions of comprehensive PTAs covering 18 different areas of trade policy and regulation, including IPRs. The project also categorizes PTAs according to whether they are legally enforceable within each area, based on language in the provisions. Summarizing that data, the number of IPAs rose from fewer than 20 in 2000 to 100 in 2015, while the number of countries involved now exceeds 100. Thus, currently around two-thirds of WTO contracting parties are members of at least one IPA, as defined here. The US has relatively few IPAs, reflecting its limited number of PTAs overall. Notably, the establishment of the CAFTA-DR Agreement in 20059 raised the number of countries, currently around 20, in US-partnered agreements. Growth has been faster in IPAs negotiated by the EU and the European Free Trade Association, which together are party to more than 40 enforceable IPAs. Turning specifically to TRIPS-plus, as of 2015 there were 25 IPAs, involving around 53 countries, identified as possessing at least three of 18 core provisions of this sort as identified elsewhere.10 These core standards range from patents for new uses of a product or process to criminal procedures for misappropriating trade secrets. Agreements of this most elevated type began to proliferate from around the mid-2000s onward and continue to increase steadily. More recently, such IPAs have been negotiated by countries other than the US and the EU/EFTA, such as Japan, South Korea, and Australia. This points to the increasing centrality of IPRs in these countries’ trade-policy priorities. Table 38.1 below offers perspective on the nature of various definitions of IPAs as of 2015 in the World Bank database. The database identifies 130 detailed IPRs provisions, broken into 16 broad categories and coded as either 0 (absent in the PTA) or 1 (present). Panel A lists eight broad categories covering all provision types that are not simply procedural or do not strengthen existing national IPRs. For example, there are 15 international treaties or conventions covering intellectual property that members of IPAs might be required to ratify. The US often demands this, with the average agreement listing 11.5 conventions, compared to 3.3 for the EU/EFTA IPAs and 2 for the others.

8 See https://​datatopics​.worldbank​.org/​dta/​table​.html. See also the DESTA database described in Andreas Dür, Leonardo Baccini, and Manfred Elsig, ‘The Design of International Trade Agreements: Introducing a New Dataset’ (2014) 9 Review of International Organizations 353–375. 9 (Signed 5 August 2004, will fully enter into force on 1 January 2025), https://​ www​.cbp​.gov/​trade/​free​-trade​-agreements/​cafta​-dr​#:​~:​text​=​Most​%20CAFTA​%2DDR​ %20goods​%20currently​,implemented​%20on​%20January​%201​%2C​%202025. 10 Maskus and Ridley (n 3).

Early findings on the economic impacts of intellectual property-related trade agreements

Table 38.1

399

Summary of IPRs Provisions in Legally Enforceable IP-Related PTAs as of 2015

Panel A: all IPR provisions

US LE IPAs (13) Avg

Min

Max

EFTA LE IPAs (45) Avg

Min

Max

Other LE IPAs (42) Avg

Min

Max

Accession/Ratification(n=15)

11.5

2

14

3.3

0

13

2.0

0

13

National Treatment (n=2)

2.0

2

2

0.9

0

2

0.6

0

2

Trademarks (n=15)

9.4

4

15

1.6

0

7

1.5

0

11

Geographical Indications (n=7)

2.6

0

4

2.0

0

7

0.7

0

3

Patents (n=14)

4.8

1

13

1.0

0

3

0.7

0

10

Data Protection (n=5)

2.8

0

5

0.9

0

2

0.1

0

5

Copyrights (n=14)

10.5

4

14

2.0

0

12

1.9

0

12

Enforcement (n=23)

17.2

4

20

7.6

0

17

4.8

0

17

Panel B: TRIPS+ provisions

US LE IPAs (13)

EU/EFTA LE IPAs

Other LE IPAs (42)

(45) Avg

Min

Max

Avg

Min

Max

Avg

Min

Max

Trademarks (n=4)

2.3

2

4

0.2

0

2

0.4

0

4

Geographical Indications (n=3)

0.9

0

1

0.8

0

3

0.3

0

2

Patents (n=5)

1.2

0

4

0.4

0

1

0.2

0

3

Data Protection (n=5)

2.8

0

5

0.9

0

2

0.1

0

5

Copyrights (n=6)

5.6

1

6

1.0

0

6

0.8

0

6

Enforcement (n=10)

7.1

1

9

3.1

0

7

2.0

0

7

Clearly, IPAs involving the US embed considerably more provisions within nearly all categories than do the others. This difference stands out particularly in trademarks, patents, test data protection, copyrights, and enforcement. Panel B considers a subset of categories and, within those, lists the number of provisions that are widely considered to be TRIPS-plus.11 These provisions were selected because they feature prominently in international debates over IPRs. By this accounting, there are five TRIPS-plus provisions in patents and five in test data protection. The largest group is in enforcement, reflecting the fact that TRIPS essentially committed countries to a best-efforts approach, while some recent IPAs require such policies as injunctive relief and criminal sanctions for willful infringement. Further perspective is provided in Figure 38.1 below, which breaks down the US-based and EU/EFTA-based IPAs into the number of agreements fea A full list of these TRIPS-plus standards may be found in Maskus and Ridley (n

11

3).

400

Improving intellectual property

turing certain broad provisions as of 2015.12 The US places great emphasis on assuring patent and copyright protection for its own nationals’ inventions and creative works in foreign markets and negotiates its international agreements accordingly. The EU and EFTA do so as well but emphasize even more the protection of geographical indications (GIs). American agreements require administrative extensions for delays in the patent approval process, linkage rules requiring that the originators of a product be notified when a potential producer of an identical generic product applies for marketing approval, and requirements for test data confidentiality for pharmaceuticals and chemicals. Despite this emphasis on TRIPS-plus rules there are exceptions to strong patent scope. For example, a small number of US-involved PTAs allow parties to exempt from patentability plants and animals, surgical or therapeutic procedures, or inventions that disrupt ordre public. The EU agreements are relatively more lenient in this regard and tend to exempt microorganisms from patent eligibility, reflecting domestic legal systems in that region.

Figure 38.1

Number of US- and EU/EFTA-partnered IP-related trade agreements by presence of specific provisions

This review shows that the US is easily the top demandeur of TRIPS-plus standards, especially in data protection, copyrights, and enforcement. The EU/ EFTA IPAs are considerably less prescriptive and are comparatively more focused on GIs and enforcement. The rules on GIs, patents, data protection,

12 See Keith E. Maskus and William Ridley, ‘Intellectual-Property Related Preferential Trade Agreements and the Composition of Trade’ (2018) University of Colorado Boulder Working Paper.

Early findings on the economic impacts of intellectual property-related trade agreements

401

and copyrights are far less prevalent in the IPAs involving countries other than the US and EU/EFTA.

3.

RECENT EMPIRICAL EVIDENCE ON TRADE IMPACTS

There is an emerging empirical literature aimed at asking how PTAs with strong IPRs standards affect international trade flows, which is the subject of this chapter. Given the potentially disruptive impacts of TRIPS-plus rules on domestic development processes, how they change merchandise trade may seem a secondary concern. However, this is an important question that can be addressed with available data, whereas policy lags and inconsistent reporting make it difficult to assess impacts on domestic prices, competition, market structure, and public health. Thus, economists are beginning the long process of policy evaluation in this area by studying whether elevated IPRs standards in PTAs are, in fact, trade-related. The early evidence suggests that they are, in that trade in IPR-intensive industries is expanded by membership in such agreements. However, this is a preliminary finding that will need to be subjected to further study going forward. Before reviewing this work, an important point needs to be stressed. There is a potentially significant difference between the trade effects of joining a PTA per se versus joining one with strong IPRs provisions. Specifically, traditional studies of how PTAs influence trade flows focus on the fact that the tariff cuts they embody amount to discriminatory reductions in trade barriers between members, to the detriment of non-members. Thus, they emphasize bilateral or within-agreement trade-creation effects, accounting also for trade-diversion impacts that reduce trade with outside countries.13 When considering IPRs, however, the logic is different because the TRIPS Agreement requires countries to establish and enforce standards that are applied without discrimination, embodying both national treatment and the most-favored nation principle.14 Accordingly, when a country strengthens its IPRs because of the provisions in a PTA, it must extend this treatment to all WTO members, regardless of whether they are in the particular trade agreement. That is, it cannot discriminate between rights holders from member countries and others. Indeed, it makes little practical sense for nations to discriminate across the origins of applications for intellectual property protection. 13 See, e.g., John Romalis, ‘NAFTA’s and CUSFTA’s Impact on International Trade’ (2007) 89(3) Review of Economics and Statistics 416–435 and Scott Baier and Jeffrey Bergstrand, ‘Do Free Trade Agreements Actually Increase Members’ International Trade?’ (2007) 71 J Inter’l Econ 72–95. 14 TRIPS Agreement, arts 3 and 4.

402

Improving intellectual property

Thus, in principle, rights holders from countries not party to a PTA are affected legally under the same terms as their counterparts from member countries. This fact suggests that the effects of TRIPS-plus intellectual property norms in PTAs spread beyond the agreements’ members de jure, though the situation may not prevent de facto discrimination. This insight suggests that any differential trade effects of such standards may be difficult to identify. The first study to address the trade impacts of IP-related PTAs distinguished between those trade agreements with IP chapters and those without them.15 This approach failed to account for the strength of the IP provisions in the former and, in particular, did not consider TRIPS-plus standards. Various goods were categorized as high-IP intensive versus low-IP intensive. Using a variety of econometric approaches, the authors found that both agreement types had positive impacts on bilateral trade flows, accounting for whether trade partners were members. Moreover, trade in both high-IP goods and low-IP goods were stimulated by both agreement types, a perplexing finding in principle. Breaking down trade partners into developed and developing countries, they found that the positive trade effects were larger among developed economies across both sectors. However, there was little effect on exports of developing countries. They interpreted this outcome to reflect a bias in all trade agreements toward expanding commerce among developed nations over that of poorer countries. A notable extension was to estimate the impacts of PTAs on trade in certain patent-intensive sectors (pharmaceuticals, chemicals, and machinery and electrical equipment), allowing for a five-year lag from implementation of each agreement. Here, they found differentially larger and positive effects on bilateral trade in such goods. While intriguing, these findings suffer from several drawbacks, including the binary definition of IPAs, as opposed to a measure of IPAs based on the intensity of required reforms. A recent project addressed this question by exploiting the World Bank’s database, described above.16 The authors adopted an econometric approach in which the trade effects in countries that are members of certain high-protection IPAs were compared with trade flows of countries not in those agreements. These ‘treatment’ IPAs included those with the US, the EU, or EFTA as a partner country, all other IPAs in which IPRs provisions were deemed legally enforceable by the World Bank, and a subset of IPAs focused on core TRIPS-plus provisions. These trade impacts were estimated using the bilateral trade of countries in a selection of ‘high-IP’ industry

15 Mercedes Campi and Marco Duenas, ‘Intellectual Property Rights, Trade Agreements, and International Trade’ (2019) 48 Research Policy 531–545. 16 Maskus and Ridley (n 2).

Early findings on the economic impacts of intellectual property-related trade agreements

403

clusters used elsewhere in the literature.17 These clusters included analytical instruments (AI), biopharmaceuticals (BIO), chemical products (CHEM), information and communication technologies (ICT), medical devices (MED), production technologies (PT), and a group of other patent-intensive goods (OTHER). Also included in the regressions was a cluster of industries that make lesser use of IPRs, called low-IP. To eliminate the potential for simultaneity bias arising from the fact that countries may join IPAs because they already have high trade flows with other partners, the authors estimated impacts on trade with third countries outside the relevant trade agreements. Further, to avoid conflating PTA impacts with those of TRIPS itself, a variable for years of membership in the latter was included. Finally, estimation allowed for differences in income groups across countries, defined as high-income (HI), upper-middle-income (UMI), lower-middle-income (LMI), and lower-income (LI). Several other controls were included in a rigorous gravity estimation framework. In brief, this was a ‘differences in differences’ approach designed to identify the specific additions of IPA membership on high-technology trade patterns, relative to those arising from other trade determinants. That study has several interesting results but there are too many to cover in this short chapter. Focusing on the bilateral trade in industrial clusters, the authors reached the following conclusions. First, as expected, there were no indications of an effect on trade in low-IP goods, suggesting that IPAs do not influence international commerce in them beyond other factors. Second, the effects of membership in one of the US/EU/EFTA agreements was to significantly and consistently raise third-country exports in the most patent-sensitive industries (BIO, CHEM, and MED) of the HI and UMI groups, which have extensive innovation and production capacities in these sectors. Indeed, the positive stimulus to BIO exports was found across all income groups, including the LI countries in which there is at least domestic assembly and packaging capacity. In contrast, there was little evidence of an induced increase in imports of such goods from non-member countries, except in the high-income countries. In brief, the US/EU/EFTA IPAs seem to encourage third-party exports of high-IP goods that are particularly the subject of TRIPS-plus protection. A third finding was that other legally enforceable IPAs, which do not involve the US, the EU, or EFTA, seem not to expand systematically the exports or imports of these high-technology clusters. This result suggests that there is a qualitative difference between these treatment IPAs: where a major demandeur partner is involved, the provisions of the IPAs are pro-trade in

17 See Mercedes Delgado, Margaret Kyle and Anita McGahan, ‘Intellectual Property Protection and the Geography of Trade’ (2013) 61 J of Industrial Econ 733.

404

Improving intellectual property

sectors called out by TRIPS-plus expectations, but this does not seem to be the case for other IPAs. While intriguing, such results beg the question of what mechanisms may underlie such differences. To explore that question, the authors incorporated data on the operations of affiliates of US-parent multinational enterprises in recipient countries, using a rough and more aggregated match of the high-technology sectors. They found that local affiliate sales of the high-technology sectors in IPAs with the US as a partner significantly expanded after implementation of the agreements, with a relatively short time lag. Some of those sales presumably were exported to third countries, consistent with the econometric finding above. Thus, to some degree the estimated export growth may be the outcome of greater local production capacity in affiliates within US-based IPAs. However, this result remains preliminary and should be treated with caution.

4

CONCLUDING REMARKS

Empirical analysis of the trade effects of intellectual-property-related trade agreements is just beginning and it will be some time before confident inferences may be drawn. The early findings reviewed here indicate that there may be an expansion in exports of particular high-technology sectors from member countries to non-member countries. This is especially the case for biopharmaceuticals, chemicals, and medical devices, among the most prominent subjects of TRIPS-plus protection standards in IPAs, but only in those agreements involving the US, the EU or EFTA. Preliminary evidence suggests this may be the result of additional production capacity located in affiliate countries within such IPAs. Other legally enforceable IPAs, which are considerably less focused on TRIPS-plus rules, do not seem to encourage additional exports or imports over those associated with other factors, whether tariffs, growth, market structure, or just the PTAs themselves. Beyond trade, there are additional impacts that need to be sorted out, most prominently on entry into new markets, innovation, and technology transfer, both within IPAs and on external countries. This agenda is broad and remains wide open.

39. The changing chemistry between intellectual property and investment law Peter K. Yu 1. INTRODUCTION The past decade has seen investment law entering the intellectual property domain. Welcome or not, this area of law has raised questions and concerns about the future of the international intellectual property regime.1 It is too soon to tell whether investment law will have the same transformational impact as trade law,2 which barged into the intellectual property domain two decades ago through the TRIPS Agreement of the World Trade Organization (WTO). At this point, it is also unclear how frequently multinational corporations will use investor-state dispute settlement (ISDS) to resolve cross-border intellectual property disputes.3

1 For Rochelle Dreyfuss’ work in this area, see sources cited infra note 8. For book-length treatments, see Simon Klopschinski, Christopher Gibson & Henning Grosse Ruse-Khan, The Protection of Intellectual Property Rights Under International Investment Law (2021); Emmanuel Kolawole Oke, The Interface Between Intellectual Property and Investment Law: An Intertextual Analysis (2021); Pratyush Nath Upreti, Intellectual Property Objectives in International Investment Agreements (forthcoming 2022); Lukas Vanhonnaeker, Intellectual Property Rights as Foreign Direct Investments: From Collision to Collaboration (2015). 2 Peter K. Yu, The Second Transformation of the International Intellectual Property Regime, in Global Intellectual Property Protection and New Constitutionalism: Hedging Exclusive Rights 176 (Jonathan Griffiths & Tuomas Mylly eds., 2021) [hereinafter New Constitutionalism]. 3 Peter K. Yu, State-to-State and Investor-State Copyright Dispute Settlement, in Le droit d’auteur en action: Perspectives internationales sur les recours 421 (Ysolde Gendreau ed., 2019); Peter K. Yu, The Pathways of Multinational Intellectual Property Dispute Settlement, in Intellectual Property and International Dispute Resolution 123 (Christopher Heath & Anselm Kamperman Sanders eds., 2019).

405

406

Improving intellectual property

As far as international intellectual property dispute settlement is concerned, Rochelle Dreyfuss has provided important contributions for more than two decades, with works tracing back to the implementation of the TRIPS Agreement in the late 1990s. While she and Andreas Lowenfeld provided one of the foundational works on the WTO dispute settlement process,4 her later works on the TRIPS Agreement,5 choice-of-law questions,6 and patent law harmonization7 are equally illuminating. Since the mid-2010s, Professor Dreyfuss has devoted considerable effort to studying developments emerging from the use of ISDS in the intellectual property area.8 Focusing on these developments, this chapter explores the changing 4 Rochelle Cooper Dreyfuss & Andreas F. Lowenfeld, Two Achievements of the Uruguay Round: Putting TRIPS and Dispute Settlement Together, 37 Va. J. Int’l L. 275 (1997). 5 E.g., Graeme B. Dinwoodie & Rochelle C. Dreyfuss, A Neofederalist Vision of TRIPS: The Resilience of the International Intellectual Property Regime (2012); Graeme Dinwoodie & Rochelle Cooper Dreyfuss, WTO Dispute Resolution and the Preservation of the Public Domain of Science Under International Law, in International Public Goods and Transfer of Technology Under a Globalized Intellectual Property Regime 861 (Keith E. Maskus & Jerome H. Reichman eds., 2005); Rochelle C. Dreyfuss, TRIPS and Essential Medicines: Must One Size Fit All? Making the WTO Responsive to the Global Health Crisis, in Incentives for Global Public Health: Patent Law and Access to Essential Medicines 35 (Thomas Pogge, Matthew Rimmer & Kim Rubenstein eds., 2010); Graeme B. Dinwoodie & Rochelle C. Dreyfuss, Diversifying Without Discriminating: Complying with the Mandates of the TRIPS Agreement, 13 Mich. Telecomm. & Tech. L. Rev. 445 (2007); Graeme B. Dinwoodie & Rochelle C. Dreyfuss, TRIPS and the Dynamics of Intellectual Property Lawmaking, 36 Case W. Res. J. Int’l L. 95 (2004); Rochelle Cooper Dreyfuss, TRIPS-Round II: Should Users Strike Back?, 71 U. Chi. L. Rev. 21 (2004). 6 E.g., Rochelle Cooper Dreyfuss, An Alert to the Intellectual Property Bar: The Hague Judgments Convention, 2001 U. Ill. L. Rev. 421; Rochelle C. Dreyfuss & Jane C. Ginsburg, Draft Convention on Jurisdiction and Recognition of Judgments in Intellectual Property Matters, 77 Chi.-Kent L. Rev. 1065 (2002). 7 E.g., Rochelle Dreyfuss & Jerome Reichman, WIPO’s Role in Procedural and Substantive Patent Law Harmonization, in Research Handbook on the World Intellectual Property Organization: The First 50 Years and Beyond 108 (Sam Ricketson ed., 2020); Rochelle C. Dreyfuss & Daniel Benoliel, Technological Self-Sufficiency and the Role of Novelty Traps, 24 Vand. J. Ent. & Tech. L. 441 (2022); Jerome H. Reichman & Rochelle Cooper Dreyfuss, Harmonization Without Consensus: Critical Reflections on Drafting a Substantive Patent Law Treaty, 57 Duke L.J. 85 (2007). 8 E.g., Rochelle C. Dreyfuss, Hedging Bets with BITS: The Impact of Investment Obligations on Intellectual Property Norms, in New Constitutionalism, supra note 2, at 157; Rochelle Cooper Dreyfuss, ISDS and Intellectual Property in 2020: Protecting Public Health in the Age of Pandemics, in Yearbook on International Investment Law & Policy 2020, at 206 (Lisa E. Sachs, Lise J. Johnson & Jesse

The changing chemistry between intellectual property and investment law

407

chemistry between intellectual property and investment law. Specifically, it discusses future developments in four areas: (1) international trade and investment agreements; (2) investor-state disputes involving intellectual property claims; (3) new developments in intellectual property law; and (4) external considerations outside the intellectual property and investment domains.

2.

INTERNATIONAL TRADE AND INVESTMENT AGREEMENTS

International trade and investment agreements provide the vehicle through which investment law enters the intellectual property domain. These agreements cover issues ranging from the minimum standard of treatment to performance requirements to ISDS. With the rise of intellectual property claims in investor-state disputes, observers in the intellectual property area have begun to pay greater attention to the negotiation of international investment agreements and investment chapters in international trade agreements. Particularly notable were the investment-related negotiations surrounding the Trans-Pacific Partnership (TPP),9 the Regional Comprehensive Economic Partnership (RCEP),10 and other bilateral or regional agreements, such as the Canada–EU Comprehensive Economic and Trade Agreement,11 the EU–Vietnam Free Trade Agreement,12 and more recently the China–EU

Coleman eds., 2022) [hereinafter Dreyfuss, ISDS and IP]; Rochelle Cooper Dreyfuss, Protecting Fundamental Values in International IP Disputes: Investor-State vs. WTO Adjudication, in Research Handbook on Intellectual Property and Investment Law 318 (Christophe Geiger ed., 2020) [hereinafter Research Handbook]; Rochelle Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law Is Reconceptualizing Intellectual Property, 36 Mich. J. Int’l L. 557, 566–75 (2015) [hereinafter Dreyfuss & Frankel, From Incentive to Asset]; Rochelle Dreyfuss & Susy Frankel, Reconceptualizing ISDS: When Is IP an Investment and How Much Can States Regulate It, 21 Vand. J. Ent. & Tech. L. 377 (2018) [hereinafter Dreyfuss & Frankel, Reconceptualizing ISDS]. 9 Trans-Pacific Partnership Agreement, Feb. 4, 2016, https://​ ustr​ .gov/​ trade​ -agreements/​free​-trade​-agreements/​trans​-pacific​-partnership/​tpp​-full​-text [hereinafter TPP Agreement]. 10 Regional Comprehensive Economic Partnership Agreement, Nov. 15, 2020, https://​rcepsec​.org/​legal​-text/​ [hereinafter RCEP Agreement]. 11 Comprehensive Economic and Trade Agreement Between Canada and the European Union and Its Member States, Can.-EU, Oct. 30, 2016, https://​ www​ .international​.gc​.ca/​trade​-commerce/​trade​-agreements​-accords​-commerciaux/​agr​-acc/​ ceta​-aecg/​text​-texte/​toc​-tdm​.aspx​?lang​=​eng. 12 European Union–Vietnam Free Trade Agreement, EU-Viet., June 30, 2019, https://​policy​.trade​.ec​.europa​.eu/​eu​-trade​-relationships​-country​-and​-region/​countries​ -and​-regions/​vietnam/​eu​-vietnam​-agreement/​texts​-agreements​_en.

408

Improving intellectual property

Comprehensive Agreement on Investment.13 While critics have lamented how ISDS has provided ‘an oversized public insurance scheme for companies that are unwilling to assume the normal risks of doing business’,14 many developing countries—including most likely the hypothetical country of Patria15—fear that investment protections will create ‘regulatory chill’ that prevents host states from adopting legislation to protect the public interest.16 Although Professor Dreyfuss, like these critics, are concerned about the problems posed by ISDS in the intellectual property area, she does not reject the mechanism outright. Instead, she and Susy Frankel advocated for reforms, such as a greater focus on in-state investment in investor-state disputes involving intellectual property claims,17 the substitution of expectation damages with compensatory relief,18 and the creation of a central appellate body for these disputes.19 To provide arbitrators with a broader context for resolving ISDS disputes, they also called for ‘[m]ore transparency, receptivity to amicus briefing, consultation with other international organization ... and references to the decisions of other tribunals’.20 Interestingly, the recently established international trade and investment agreements seem to have responded to these criticisms and suggestions. Although the investment chapter in the TPP Agreement includes an ISDS mechanism,21 which became part of the Comprehensive and Progressive

13 EU-China Agreement: Milestones and Documents, Eur. Comm’n, https://​policy​ .trade​.ec​.europa​.eu/​eu​-trade​-relationships​-country​-and​-region/​countries​-and​-regions/​ china/​eu​-china​-agreement/​milestones​-and​-documents​_en. 14 Maude Barlow, CETA Changes Make Investor-State Provisions Worse, Huffington Post (Feb. 2, 2016), http://​www​.huffingtonpost​.ca/​maude​-barlow/​ceta​ -changes​_b​_9130538​.html. 15 Graeme B. Dinwoodie, Rochelle C. Dreyfuss & Annette Kur, The Law Applicable to Secondary Liability in Intellectual Property Cases, 42 N.Y.U. J. Int’l L. & Pol. 201, 206–09 (2009); Rochelle Cooper Dreyfuss, Coming of Age with TRIPS: A Comment on J.H. Reichman, the TRIPS Agreement Comes of Age: Conflict or Cooperation with the Developing Countries, 33 Case W. Res. J. Int’l L. 179, 183–85 (2001); Dreyfuss & Lowenfeld, supra note 4, at 284–86. 16 Lone Wandahl Mouyal, International Investment Law and the Right to Regulate: A Human Rights Perspective 67–68 (2016); Kyla Tienhaara, Regulatory Chill and the Threat of Arbitration: A View from Political Science, in Evolution in Investment Treaty Law and Arbitration 606 (Chester Brown & Kate Miles eds., 2011); Peter K. Yu, The Investment-Related Aspects of Intellectual Property Rights, 66 Am. U. L. Rev. 829, 859 (2017). 17 Dreyfuss & Frankel, Reconceptualizing ISDS, supra note 8, at 402–09. 18 Id. at 410–11. 19 Dreyfuss & Frankel, From Incentive to Asset, supra note 8, at 601. 20 Id. at 599. 21 TPP Agreement, supra note 9, ch. 9.

The changing chemistry between intellectual property and investment law

409

Agreement for Trans-Pacific Partnership22 following the United States’ withdrawal from the regional pact,23 the RCEP Agreement has gone in the opposite direction. The latter agreement still contains an investment chapter, but it does not establish an ISDS mechanism.24 Instead, Article 10.18 of the RCEP Agreement memorializes the signatories’ agreement to ‘enter into discussions on … the settlement of investment disputes between a Party and an investor of another Party … no later than two years after the date of entry into force of this Agreement’.25 While the divergent approaches taken by the CPTPP and RCEP signatories suggest an unsettled international landscape at the intersection of intellectual property and investment law, the biggest blow to the increased push for ISDS in international trade and investment agreements came from the United States– Mexico–Canada Agreement (USMCA).26 Unlike Chapter 11 of the North American Free Trade Agreement (NAFTA), which provided Canada, Mexico, and the United States with a mechanism to resolve investor-state disputes,27 the USMCA eliminated the use of that mechanism in US–Canada disputes three years after the new agreement has taken effect.28 With respect to US–Mexico disputes, Chapter 14 further limited the use of ISDS to mostly five specific areas: oil and gas, power generation, telecommunications, transportation, and infrastructure.29 Given the United States’ heavy involvement in the USMCA negotiations, one has to wonder whether countries across the world will follow its lead in slowing down negotiations for ISDS provisions in bilateral, regional, and plurilateral agreements. Even if those negotiations continue, it will be interesting to see whether countries will include more carve-outs for intellectual property claims, similar to those for financial services and tobacco control measures in the TPP Agreement.30 22 Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Mar. 8, 2018, https://​www​.mfat​.govt​.nz/​assets/​Trade​-agreements/​CPTPP/​Comprehensive​ -and​-Progressive​-Agreement​-for​-Trans​-Pacific​-Partnership​-CPTPP​-English​.pdf. 23 Peter K. Yu, Thinking About the Trans-Pacific Partnership (and a Mega-Regional Agreement on Life Support), 20 SMU Sci. & Tech. L. Rev. 97, 101–10 (2017). 24 RCEP Agreement, supra note 10, ch. 10. 25 Id. art. 10.18.1. 26 United States–Mexico–Canada Agreement, Can.-Mex.-U.S., Nov. 30, 2018 [hereinafter USMCA]. 27 North American Free Trade Agreement, Can.-Mex.-U.S., arts. 1115–1139, Dec. 17, 1992, 32 I.L.M. 289 (1993). 28 USMCA, supra note 26, ch. 14, annex 14-C. 29 Id. ch. 14, annex 14-E.6. 30 TPP Agreement, supra note 9, arts. 9.3.3, 29.5; Peter K. Yu, Conceptual and Institutional Improvements to Investor-State Dispute Settlement, in Research Handbook, supra note 8, at 366, 381–82.

410

3.

Improving intellectual property

INVESTOR-STATE DISPUTE CASES

Like the negotiation of international trade and investment agreements, investor-state disputes have garnered growing attention from intellectual property scholars, including Professor Dreyfuss. In early 2010s, Philip Morris used the ISDS mechanism in bilateral investment agreements to challenge the tobacco control measures in Uruguay and Australia.31 Eli Lilly quickly followed suit by utilizing the NAFTA to seek compensation for the Canadian courts’ invalidation of its patents on the hyperactivity drug Strattera (atomoxetine) and the anti-psychotic drug Zyprexa (olanzapine).32 A few years later, the Japanese Bridgestone Group mounted yet another ISDS complaint following the Supreme Court of Panama’s decision to fine its subsidiaries for their wrongful opposition of a potentially infringing trademark.33 While the length of this chapter does not allow for further analysis of these cases, the greater use of ISDS in the intellectual property area is problematic in three ways. First, because arbitral panels focus on the relevant bilateral, regional, or plurilateral agreements, host states involved in investor-state disputes, especially those in the developing world, will be unable to take full advantage of the limitations, flexibilities, and safeguards in multilateral agreements.34 Second, owing to their different orientation, ISDS arbitrators tend to overemphasize intellectual property rights as investors’ rights,35 similar to how WTO panels put a trade gloss on intellectual property norms.36 Investor-state disputes involving intellectual property claims may therefore perpetuate the short-sighted ‘if value, then right’ approach that Professor Dreyfuss has repeatedly criticized.37 Third, the ISDS mechanism empowers multinational corporations to sue host states directly, notwithstanding the fact that many of

31 Philip Morris Asia Ltd. v. The Commonwealth of Australia, UNCITRAL, PCA Case No. 2012-12, Notice of Claim (June 22, 2011); Philip Morris Brands Sàrl v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Request for Arbitration (Feb. 19, 2010). 32 Eli Lilly & Co. v. Government of Canada, ICSID Case No. UNCT/14/2, Notice of Arbitration (Sept. 12, 2013). 33 Bridgestone Licensing Services, Inc. v. Republic of Panama, ICSID Case No. ARB/16/34, Request for Arbitration (Oct. 7, 2016). 34 Yu, supra note 2, at 184; Yu, supra note 16, at 857. 35 Dreyfuss & Frankel, From Incentive to Asset, supra note 8, at 589. 36 Yu, supra note 2, at 181. 37 Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the Pepsi Generation, 65 Notre Dame L. Rev. 397, 405–06 (1990); Dreyfuss & Frankel, From Incentive to Asset, supra note 8, at 586.

The changing chemistry between intellectual property and investment law

411

these countries are already struggling considerably under the existing international trading and intellectual property systems.38 Since the COVID-19 pandemic, the use of ISDS in the intellectual property area has grounded to a halt. Although investor-state disputes over COVID-19 relief measures have already surfaced in developing countries, no new ISDS complaint has been filed in the intellectual property area.39 This pause provides a good opportunity to take stock of ISDS cases in this area. Are those cases indicative of how investor-state disputes involving intellectual property claims are to be resolved, or do they represent only the 1.0 version of those cases? If the latter, what will the 2.0 version look like? How much time will we have before those new cases arrive? As the global economy recovers, will we encounter another barrage of ISDS cases in the intellectual property area? If not, have the victories by Australia, Canada, Panama, and Uruguay discouraged multinational corporations from filing ISDS complaints?

4.

INTELLECTUAL PROPERTY LAW

The development of intellectual property law and policy, whether influenced by investment law or not, has always been dynamic. Intellectual property rights tend to co-evolve with changing technology, social norms, and market conditions. For instance, the TRIPS Agreement set new multilateral norms for the protection of undisclosed test or other data developed by pharmaceutical and agrochemical companies.40 The proliferation of digital communication technologies has also challenged countries to embrace new laws, institutions, and business models.41 In addition, new forms of intellectual property rights continue to emerge. Even though ISDS cases in this area have thus far involved patent and trademark claims, nothing prevents this mechanism from being used to address disputes involving geographical indications, traditional knowledge, or traditional cultural expressions—areas in which the Global South enjoys more favourable intellectual property norms.42 Traditional intellectual property rights aside, the fast-evolving Big Data environment has brought new issues and challenges. As our reliance on data and data-driven innovations continues to increase, such reliance may eventu-

Yu, supra note 2, at 181; Yu, supra note 16, at 860–61. Dreyfuss, ISDS and IP, supra note 8, at 213. 40 Jayashree Watal, Intellectual Property Rights in the WTO and Developing Countries 4 (2001); Peter K. Yu, Data Exclusivities and the Limits to TRIPS Harmonization, 46 Fla. St. U. L. Rev. 641, 648 (2019). 41 National Research Council, The Digital Dilemma: Intellectual Property in the Information Age (2000). 42 Yu, supra note 16, at 905–06. 38 39

412

Improving intellectual property

ally result in the creation of new intellectual property rights.43 Although the European Commission no longer considers the proposal to establish a new data producer’s right to protect nonpersonal, anonymized machine-generated data,44 that or other similar proposals could be adopted in the future. Should new rights emerge in this area, the right holders may opt for the use of ISDS to resolve investment disputes.45 After all, it is not uncommon to find intellectual property law extending protection to investments.46 Another fast-expanding area in which ISDS disputes could arise involves cutting-edge technologies, such as machine learning, artificial intelligence, virtual and augmented reality, and blockchain and cryptography. Because the development of these technologies requires considerable investments, it would not be far-fetched to assume that some technology developers will use ISDS to protect their intellectual property assets. In their report outlining the latest trends in international arbitration, Freshfields attorneys noted their ‘expect[ation] to see an increase in international arbitrations involving blockchain, [artificial intelligence] and augmented or virtual reality as these technologies become more mainstream’.47

5.

ISSUES OUTSIDE THE INTELLECTUAL PROPERTY AND INVESTMENT DOMAINS

While the continuous evolution of intellectual property and investment law will change the relationship between these two bodies of law, additional changes may emerge from the outside. The past three years alone have provided two highly illustrative examples.

43 Peter K. Yu, Fitting Machine-Generated Data into Trade Regulatory Holes, in Trade in Knowledge: Intellectual Property, Trade and Development in a Transformed Global Economy 738 (Antony Taubman & Jayashree Watal eds., 2022); Peter K. Yu, Data Producer’s Right and the Protection of Machine-Generated Data, 93 Tul. L. Rev. 859 (2019) [hereinafter Yu, Data Producer’s Right]. 44 European Commission, Building a European Data Economy, at 13, COM (2017) 9 final (Oct. 1, 2017); Dev S. Gangjee, The Data Producer’s Right: An Instructive Obituary, in The Cambridge Handbook of Private Law and Artificial Intelligence (Ernest Lim & Phillip Morgan eds., forthcoming 2023). 45 Yu, Data Producer’s Right, supra note 43, at 923–25. 46 TRIPS Agreement, art. 39.3; Council Directive 96/9, art. 7(1), 1996 O.J. (L 77) 20. 47 Freshfields Bruckhaus Deringer LLP, International Arbitration in 2022: Illuminating the Top Trends 19 (2022), https://​www​.freshfields​.us/​ 490835/​globalassets/​our​-thinking/​campaigns/​arbitration​-top​-trends​-2022/​international​ _arbitration​_top​_trends​_2022​.pdf.

The changing chemistry between intellectual property and investment law

413

The first example concerns global pandemics and other regional and international health exigencies. Emerged in winter 2019, the COVID-19 pandemic has created wide devastation and disruption around the world. To respond to this pandemic, countries have taken a diverse array of emergency relief measures. A considerable number of WTO members, in both the developed and developing worlds, have also championed a proposal, advanced by India and South Africa, to partially waive the TRIPS Agreement to facilitate the ‘prevention, containment or treatment of COVID-19’.48 Thus far, foreign investors have not filed any complaint to challenge the intellectual property measures taken during the pandemic—be they the temporary closure of intellectual property offices, the issuance of compulsory licenses,49 or the use of emergency powers granted by statutes such as the US Defense Production Act.50 Yet, commentators have remained concerned about the potential ISDS complaints challenging these measures. They have also explored whether the proposed COVID-19 TRIPS waiver would violate obligations under bilateral, regional, and international investment agreements.51 Another example concerns armed conflicts, with the 2022 war between Russia and Ukraine immediately coming to mind. A few years before this war, and in the wake of Russia’s annexation of Crimea, Ukraine filed a WTO complaint against Russia challenging the latter’s restrictions on traffic in transit 48 Council for Trade-Related Aspects of Intellectual Property Rights, Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19: Communication from India and South Africa, WTO Doc. IP/C/W/669 (Oct. 2, 2020); Council for Trade-Related Aspects of Intellectual Property Rights, Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19: Revised Decision Text, WTO Doc. IP/C/W/669/Rev.1 (May 25, 2021); Peter K. Yu, A Critical Appraisal of the COVID-19 TRIPS Waiver, in Intellectual Property Rights in the Post Pandemic World: An Integrated Framework of Sustainability, Innovation and Global Justice (Taina E. Pihlajarinne, Jukka Mähönen & Pratyush Upreti eds., forthcoming 2023). 49 Compulsory Licenses, the TRIPS Waiver and Access to COVID-19 Medical Technologies 5–6, Médecins Sans Frontières (May 26, 2021), https://​msfaccess​.org/​ compulsory​-licenses​-trips​-waiver​-and​-access​-covid​-19​-medical​-technologies. 50 Peter K. Yu, Modalities, Challenges, and Possibilities: An Introduction to the Pharmaceutical Innovation Symposium, 7 Tex. A&M J. Prop. L. 1, 26 (2021). 51 Bryan Mercurio & Pratyush Nath Upreti, The Legality of a TRIPS Waiver for COVID-19 Vaccines Under International Investment Law, 71 Int’l & Compar. L.Q. 323 (2022); Carlos M. Correa, Nirmalya Syam & Daniel Uribe, Implementation of a TRIPS Waiver for Health Technologies and Products for COVID-19: Preventing Claims Under Free Trade and Investment Agreements (South Centre, Research Paper No. 135, 2021); Henning Grosse Ruse-Khan & Federica Paddeu, A TRIPS-COVID Waiver and Overlapping Commitments to Protect Intellectual Property Rights Under International IP and Investment Agreements (South Centre, Research Paper No. 144, 2022).

414

Improving intellectual property

that had impeded the flow of Ukrainian goods.52 Particularly noteworthy in the resulting WTO panel report is the panel’s analysis of the national security exception under Article XXI of the General Agreement on Tariffs and Trade.53 During the more recent conflict, Russia made an unprecedented move by adopting Decree No. 299, which allowed for the suspension of protections for patents, utility models, and industrial designs held by rights holders in unfriendly nations.54 Such suspension has raised questions under both WTO rules and international investment agreements. Issues relating to armed conflicts are notoriously complicated because international trade and investment agreements do allow countries to protect national security, a fundamental right and a primary responsibility of a sovereign state. Article 73 of the TRIPS Agreement, for instance, allows a WTO member to take any action that ‘it considers necessary for the protection of its essential security interests … in time of war’.55 The TPP Agreement provides a similar national security exception.56 Nevertheless, it remains debatable whether the suspension of intellectual property protection for non-military purposes goes beyond what is necessary to protect a country’s essential security interests. Going beyond Russia and Ukraine, there are also intriguing but difficult questions concerning the WTO and ISDS implications of sanctions imposed by the European Union, the United States, and other third countries. Will intellectual property–related sanctions be permissible under the exception that allows countries to fulfil their obligations to maintain international peace and security?57 If not, will these sanctions attract TRIPS and ISDS complaints?

6. CONCLUSION Although the arrival of investment law in the intellectual property domain is a rather recent development, the link between intellectual property and foreign

52 Request for Consultations by Ukraine, Russia—Measures Concerning Traffic in Transit, WTO Doc. WT/DS512/1 (Sept. 21, 2016). 53 Panel Report, Russia—Measures Concerning Traffic in Transit, WTO Doc. WT/ DS512/R (adopted Apr. 5, 2019). 54 James A. Shimota & Adrian Gonzalez Cerrillo, The Kremlin’s Intellectual Property Cold War: Legalizing Patent Theft with Decree 299, Nat’l L. Rev. (Mar. 28, 2022), https://​www​.natlawreview​.com/​article/​kremlin​-s​-intellectual​-property​-cold​-war​ -legalizing​-patent​-theft​-decree​-299. 55 TRIPS Agreement, art. 73(b); Panel Report, Saudi Arabia—Measures Concerning the Protection of Intellectual Property Rights, ¶ 7.4, WTO Doc. WT/DS567/R (adopted June 16, 2020). 56 TPP Agreement, supra note 9, art. 29.2. 57 Id. art. 29.2(b); TRIPS Agreement, art. 73(c).

The changing chemistry between intellectual property and investment law

415

investment traces back decades to at least the 1960s.58 Yet, the past decade has seen a vibrant debate on the impact of investment law on intellectual property law and policy. As these two bodies of law continue to interact with each other, their chemistry will evolve. Amid such evolution, we are very fortunate to have Professor Dreyfuss guide us through the ISDS developments in the intellectual property area, just like the past insights she provided into the TRIPS Agreement and WTO dispute settlement. A chemist by training, she understands the importance of breaking down complex legal questions, identifying the relevant elements and properties, and exploring their reactions and potential ramifications. Her lectures, publications, and conference presentations have taught us the changing chemistry between intellectual property and investment law.

Yu, supra note 16, at 837–38.

58

40. Investment treaties and public health: Time to rethink the strategy? Dhanay Cadillo Chandler 1. INTRODUCTION Climate change seems to be a reality we are all living through. However, agreeing on policies to mitigate a global catastrophe is a different and unsuccessful story.1 The Climate Change Summit in 2021 showed the difficulties in reaching global agreement on climate change, regardless of its categorization as a ‘global emergency that goes beyond national borders.’2 Climate change also affects innovation, investment, and public health. TRIPS flexibilities play a role in allowing member countries to protect public health-climate related concerns. A question arises to what extent countries that are party to investment treaties will be able to make use of such flexibilities, for the sake of climate change, when in recent years host states taking measures to protect public health or interest have been subject to investment dispute claims.3 Thus, the chapter begins with a brief overview of the links between public health and climate change. It then analyses how public health has been ‘defined’ through investment disputes (Philip Morris 1 Laura Quiñones, ‘COP26 Closes with ‘Compromise’ Deal on Climate, but it’s Not Enough, says UN chief change Summit 2021, failure to reach agreement amongst nations’ (UN News, 13 November 2021), www​.news​.un​.org/​en/​story/​2021/​11/​ 1105792. 2 United Nations Climate Action, ‘What is Climate Change?’, www​.un​.org/​en/​ climatechange/​what​-is​-climate​-change. 3 This question is particularly important considering the DOHA Declaration on the TRIPS Agreement and Public Health and the policy space given to country members to define what constitutes a national emergency and other circumstances of extreme urgency, and also the ‘flexibility’ to interpret/read TRIPS provisions in light of objectives and purposes of the Agreement, which in itself is part of the TRIPS flexibilities. Additionally, scholars have already pointed to ISDS threatening the use of flexibilities. See Cynthia. M. Ho, ‘The Intersection Between ISDS and TRIPS Flexibilities’ in Christophe Geiger (ed), Research Handbook on Intellectual Property and Investment Law (OUP 2021).

416

Investment treaties and public health

417

v. Australia,4 and Eli Lilly v. Canada),5 to highlight their impact, including its effect on the 2019 Australia – Hong Kong Investment Agreement. The chapter concludes with the challenges posed to countries’ policy space to define and amend national laws about climate change, if the latter does not fall within the scope of an investment defined ‘public health concern’.

2.

LINKING PUBLIC HEALTH TO CLIMATE CHANGE AND INVESTMENT TREATIES

Mitigating climate change requires several approaches. Important for this chapter are effective policy incentives that lead to investments in innovation. Investments are generally protected in the context of international investment agreements (IIAs), bilateral investments agreements (BITs) and/ or free trade agreements (FTAs) that at the same time regulate intellectual property rights (IPRs). Investors want to protect their investments from expropriation without compensation, discrimination or treatment that is not fair and equitable.6 IIAs, BITs and FTAs treat IPRs as investments.7 The challenge with this is that host states have become subject to investor state dispute settlement (ISDS) when using policy space to issue measures that protect public health. Thereafter, the cases briefly addressed below – Eli Lilly v. Canada; and Philip Morris v. Australia – demonstrate that flexibility to interpret is also highly dependent on the language used within IIAs, BITs and FTAs themselves. To date climate change is not understood primarily as a public health issue. Emerging concerns about the impact of climate change on human health point to an expansion of the traditional ‘public health’ concept beyond access to medicines.8 Without a doubt, heat, air pollution and allergens, extreme weather events, and infectious diseases are public health-related climate risks9 that will both put pressure on public health care systems and the possibility of

4 Philip Morris Asia Ltd v. The Commonwealth of Australia, ICSD Case No. 2012-12, Final Award (8 March 20217). 5 Eli Lilly and Co. vs. The Government of Canada, ICSID Case No. UNCT 14/02, Final Award (16 March 2017). 6 OECD, ‘The Impact of Investment Treaties on Companies, Shareholders and Creditors’ in OECD Business and Finance Outlook 2016 (OECD Publishing 2016). 7 Carlos Correa and Jorge E. Viñuales, ‘Intellectual Property Rights as Protected Investments: How Open are the Gates?’ (2016) 19 JIEL 91, 120 8 Stephanie Armour, ‘Climate Change to be Treated as Public-Health Issue’ (TWSJ, 13 August 2021), www​.wsj​.com/​articles/​climate​-change​-to​-be​-treated​-as​ -public​-health​-issue​-11630315800. 9 Jill Krueger and Colleen Healey Boufides, ‘The Public Health Sector’s Challenges and Responses’ in Michael Burger and Justin Gundlach (eds), Climate Change, Public Health, and the Law (CUP 2018).

418

Improving intellectual property

countries adopting trade-related climate policies.10 If we consider the available TRIPS flexibilities, namely compulsory licenses, these are commonly used in the context of access to medicines and not access to technologies needed to address public health-related climate emergencies. National and international policymaking, including negotiating BITs, plays a fundamental role in fostering innovation to both prevent and tackle public health-related climate emergencies. Additionally, the recent report by the Intergovernmental Panel on Climate Change, acknowledged both the incompatibility between BITS and the implementation of commitments under the Paris Agreement, and the ‘chilling-effect’ these agreements have on the adoption of mitigation policies.11 By July 2021, UNCTAD noted the existence of at least 33 known ISDS claims initiated against developed and developing countries relating to public health matters.12 The same policy note highlights that at least three cases challenged the legitimacy of host states’ regulatory measures concerning the relationship between environmental protection and human health/public health.13 Scholars have pointed to the recent trend in challenging directly, or indirectly, the inconsistency of health-related measures with treaty commitments,14 resulting in a potential threat to TRIPS flexibilities.15 For instance, in Eli Lilly v. Canada while the investor raised a direct claim because of the invalidation of its pharmaceutical patents, indirectly also it challenged Canada’s policy space.16 In Philip Morris v. Australia, the investor raised a direct claim against the public health measure taken by the host state

10 IPCC, 2022, ‘Summary for Policymakers’ in P.R. Shukla and others (eds), Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change, Climate Change 2022: Mitigation of Climate Change (CUP 2022). 11 IPCC, 2022, ‘Climate Change 2022: Mitigation of Climate Change’ in P. R. Shukla and others (eds), Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (CUP 2022). 12 UNCTAD, ‘International Investment Policies and Public Health’ (2021) 2 IIA Issue Note. 13 See, SD Myers Inc v. Government of Canada, UNCITRAL and NAFTA, Partial Award 1 (13 November 2001), and Partial Award 2 (21 October 2002) – regulatory action for hazardous waste. Also See, Chemtura Corporation v. Government of Canada, UNCITRAL (formerly Crompton Corporation v. Government of Canada) Final Award (2 August 2010) – for the prohibition to use pesticides; and Perenco Ecuador Ltd. v. Republic of Ecuador and Empresa Estatal Petróleos del Ecuador (Petroecuador), ICSID Case No. ARB/08/6 – protection of the environment and human health. 14 Bryan Mercurio, ‘International Investment Agreements and Public Health: Neutralizing a Threat Through Treaty Drafting’ (2014) 92 Bulletin of the World Health Organization 520. 15 Ho (n 3) 6. 16 ibid.

Investment treaties and public health

419

– plain packaging law – and also raised a direct claim for the protection of its investment. In both cases the approach toward public health/interest protection yielded a legislative or treaty reform, that to an extent seems to constrict public health concerns to access to medicines. Henceforth, this endangers the use of TRIPS flexibilities for purposes related to public health-related climate risks.

3.

ELI LILLY V. CANADA AND PHILIP MORRIS V AUSTRALIA: RECASTING PUBLIC HEALTH CONCERNS

The disputes briefly analysed in this chapter concern measures taken by host states to protect public health; one modified its national trade mark law to disincentivize tobacco consumption and the other interpreted patentability requirements in a manner supportive of public health concerns. In both cases, the policy space allowed for TRIPS flexibilities was confronted as an indirect expropriation or as limiting their IPRs. 3.1

Eli Lilly v. Canada

This dispute is essentially an attack on TRIPS flexibilities.17 Traditionally, when addressing flexibilities in the context of public health, the narrative focuses on compulsory licenses. TRIPS establishes that all patent regimes must meet certain requirements, however it does not define what each of them should entail. This in essence is a flexibility that allows member countries to also define what an innovation is.18 Eli Lilly argued that Canada’s definition of a utility requirement for patentability was a new standard that was radically different to what was known before.19 It argued that this change in national legislation amounted to an uncompensated expropriation.20

ibid. Rochelle Dreyfuss, ‘TRIPS and Essential Medicines: Must One Size Fit All? Making the WTO Responsive to the Global Health Crisis’ in Thomas Pogge, Matthew Rimmer and Kim Rubenstein (eds), Incentives for Global Public Health: Patent Law and Access to Essential Medicines (CUP 2010). 19 Daniel Gervais, ‘Investor-State Dispute Settlement and intellectual property: Lessons from Lilly v. Canada’ in Christophe Geiger (ed), Research Handbook on Intellectual Property and Investment Law (OUP 2021). 20 NAFTA, art 1110 Article 1110: Expropriation and Compensation 1 No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment (‘expropriation’), except: (a) for a public purpose;’ (emphasis added). 17 18

420

Improving intellectual property

Eli Lilly, in a way, argued that the pharmaceuticals at issue, olanzapine (brand name Zyprexa) and atomoxetine (brand name Strattera), had marked superiority over known antipsychotics, thus the company should obtain patent for secondary medical uses.21 Canada’s Patent Office regarded these applications as presumptively valid, however, this was challenged in court and later invalidated by the Federal Court. The Government of Canada in its Statement of Defence, agreed with the Federal Court’s decision and argued that any other outcome would have undermined the policy behind Canada’s Patent Act.22 The patents were considered speculative, since in both cases the claimant failed to demonstrate marked superiority, and to fulfil the utility requirement. Granting these patents would have implied extending statutory monopoly in detriment of the public’s right to access the innovation.23 In the final award, the investment tribunal concluded that Eli Lilly had failed to show, how the invalidation of the Zyprexa and Strattera Patents amounted to an expropriation claim or a claim for a violation of the minimum standard of treatment under NAFTA.24 The dispute and final award show two important points in relation to public health and exceptions (TRIPS flexibilities). First, legitimizing TRIPS interpretation through ISDS can lead to fragmentation; and that national policy goals are potentially treated by investment tribunals as prohibitions can amount to expropriation.25 However, when these agreements contain or incorporate TRIPS itself or language referring to TRIPS provisions, and these are challenged, the outcome may be an interpretation by the arbitration tribunal that is not necessarily based on WTO law,26 in addition to a ‘jurisdictional’ clash with the WTO DSU system. Access in the context of pharmaceutical innovation is generally associated with public health or access to medicines; public health concerns also emerge

21 Eli Lilly and Co. v. The Government of Canada, ICSID Case No. UNCT 14/02, Notice of Arbitration. (12 September 2013). 22 Eli Lilly and Co. v. The Government of Canada, ICSID Case No. UNCT 14/02, Statement of Defence (30 June 2014) ¶4. 23 Ibid. ¶19, ¶64, ¶112 24 Eli Lilly and Co. v. The Government of Canada, ICSID Case No. UNCT 14/02, Final Award (16 March 2017), 469. 25 Rochelle Dreyfuss and Susy Frankel, ‘From Incentive to Commodity to Asset: How International Law is Reconceptualizing Intellectual Property’ (2015) 36 Mich. J. Int’l L. 557. 26 Rochelle Cooper Dreyfuss, ‘Protecting Fundamental Values in International IP Disputes: Investor-State vs. WTO Adjudication’ in Christophe Geiger (ed), Research Handbook on Intellectual Property and Investment Law (Edward Elgar 2020), and Mercurio (‎n 14) 522.

Investment treaties and public health

421

regarding tobacco, food, and dietary transitions.27 Philip Morris v. Australia concerned tobacco regulation. 3.2

Philip Morris v. Australia

Australia’s Tobacco Plain Packaging Act 2011 requires cigarettes to be sold under strict packaging requirements with health warnings, and not displaying logos or figurative trademarks. This legislation seeks to disincentivise tobacco consumption, by prohibiting ‘the use of all tobacco industry logos, brand imagery, colours and promotional text on the retail packaging of tobacco products.’28 Phillip Morris argued there was an indirect expropriation of its investments, including its trademarks. The final award does not shy away from acknowledging that the dispute targets Australia’s policies in matters of public health. In fact the award reads ‘the Respondent emphasizes that Philip Morris sought to challenge a public health measure that is of a critical importance to Australia.’29 Traditionally, counter-norms protect public interest, however, BITs have erected a robust hedge around intellectual property rights since they are defined as investments.30 Separately from the investment dispute the World Trade Organization (WTO) panel and Appellate Body required to analyse whether the measure taken by Australia constituted an unjustified encumbrance in violation of TRIPS Articles 20–21.31

27 Ronald Labonté, ‘Trade, Investment and Public Health: Compiling the Evidence, Assembling the Argument’ (2019) 15 Global Health 28. 28 The legislation’s purpose and background highlight tobacco consumption as the leading preventable causes of death and disease in Australia. Thus, public health concerns are driving the policy objective in this reform. See, Tobacco Plain Packaging Bill 2011 (Cth); and also see, 3. Object of this act, Tobacco Plain Packaging Act 2011 (Cth) no. 148/2011. 29 Philip Morris Asia Ltd v. The Commonwealth of Australia, ICSD Case No. 2012-12, Final Award (8 March 2017), ¶93, ¶99, ¶101. 30 Rochelle Dreyfuss, ‘Hedging Bets with BITS: The Impact of Investment Obligations on Intellectual Property’ in Jonathan Griffiths and Tuomas Mylly (eds), The Constitutional Transformation of Global IP Protection (OUP 2021). 31 See TRIPS Agreement, art. 20; also see WTO, Australia: Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging – Reports of the Panels (28 June 2018) WT/DS435/R, WT/DS441/R WT/DS458/R, WT/DS467/R, ¶ 7.3.5.5; WTO, Australia: Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging – Reports of the Appellate Body (20 June 2020) WT/DS435/AB/R WT/ DS441/AB/R, ¶6.664, ¶ 6.666.; and Susy Frankel and Daniel Gervais, ‘Plain Packaging and the Interpretation of the TRIPS Agreement’ (2013) 46 Vand. J. Transnat’l L. 1149.

422

Improving intellectual property

Philip Morris did not stop with its claim against Australia; it also challenged the Uruguayan Government. As part of its claim it argued for the company’s right to use its marks under the TRIPS Agreement.32 Interestingly enough, the complaint focused on how the ‘regulation undermined the expectations that Philip Morris had when it invested in the Uruguayan market, denied it fair and equitable treatment, and amounted to a denial of justice’.33After pondering on the factors affecting both the trademark and investment, the Tribunal concluded that the protection of public health was a valid exercise of Uruguay´s police powers.34 Even when the Tribunal ruled in favour of public health/ interest, one could ponder on whether the language used in BITS is partly to blame for the proliferation of investor-state disputes. To this end, scholars have pointed to the three types of language than can be used to precisely curtail a country’s policy space in defining national laws.35 The fact that amending national laws to protect health could be, for instance, an indirect expropriation of the investment, will lead tribunals to place weight on competing rights36 and furthermore carry out an interpretative role that is not necessarily within their competence, thereafter increasing the chances of fragmented TRIPS interpretation by arbitral tribunals. Notably what seems a ‘one size fits all’37 provision, may have more harmful than beneficial effects when thinking of BITs drafting and use of flexibilities, particularly because in the context of ISDS, the focus is on the protection of private interests,38 and not on the policy balance afforded by the public interest component in the patent system itself.39

32 Philip Morris and Abal Hermanos vs. The Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Award (8 July 2016). 33 ibid ¶ 12, also see Dreyfuss (n 30) 163. 34 ibid ¶ 291; and ¶ 307. 35 Alison Giest, ‘Interpreting Public Interest Provisions in International Investment Treaties’ (2017) 18 Chicago Journal of International Law 321, 352. 36 ibid 336. 37 Rochelle Dreyfuss, ‘TRIPS and Essential Medicines: Must One Size Fit All? Making the WTO Responsive to the Global Health Crisis’ in Thomas Pogge, Matthew Rimmer and Kim Rubenstein (eds), Incentives for Global Public Health: Patent Law and Access to Essential Medicines (CUP 2010). 38 Gervais (n 19). 39 Vadi Valentina, ‘Towards a New Dialectics - Pharmaceutical Patents, Public Health and Foreign Direct Investments’ (2015) 5 NYU J of Intell Prop & Enter L 83.

Investment treaties and public health

4.

423

BITS LANGUAGE AND NEW GENERATION OF INVESTMENT TREATIES: HONG KONG– AUSTRALIA BIT (2019) CONSTRAINING OR FACILITATING THE USE OF FLEXIBILITIES?

The language used in BITs is troublesome in the context of future public interest crises that may require patented innovations to be shared and disclosed for the sake of public health-climate related concerns. Admittedly the language in the agreements plays a significant role in delimiting the scope of the exceptions themselves as it has been observed in the disputes analysed in the chapter. Traditionally, policy space is found within the TRIPS Agreement, thus allowing countries to take measures enabling promotion and protection of national policy goals.40 However, agreements may include provisions such as ‘nothing within this agreement prevents States from taking measures to protect human, animal or plant life or health’;41 followed by reference to an IP chapter in the respective FTA; and recognition that compulsory licenses to address health concerns shall not be an expropriation.42 In some cases, the preamble already recognizes states’ right to regulate, and also the preservation of flexibilities for the protection of ‘legitimate’ public welfare objectives.43 Such provisions can be the main challenge when deciphering or interpreting the language in BITs. Thereafter, the tribunal will be required to evaluate what is a legitimate objective, including how competing interests should be weighed, and to what extent a state’s law-making powers be scrutinized.44 Thus, Australia–Hong Kong Free Trade Agreement and associated Invested Agreement from March 2019, that replaces the previous BIT from 1993, is an important example on the use of language that can potentially constrain public health exceptions to access to medicines related matters. This 2019 reform emerges in an era of new generation treaty drafting, highlighting the impact that ISDS disputes have had on treaty interpretation. The Australia–Hong Kong BIT (2019) actively references TRIPS, and also creates a linkage to the FTA’s IP chapter. This incorporates directly TRIPS language and the agreement itself into the BIT. For instance, Article 10(5) Australia– Hong Kong BIT (2019) provides that compulsory licenses granted in relation 40 Henning Grosse Ruse-Khan, ’Policy Space for Domestic Public Interest Measures under TRIPS’ (2009) South Centre Research Paper No.22. 41 Mercurio (n 14). 42 Australia–Hong Kong BIT (2019), art. 10(5). 43 Australia–Hong Kong BIT (2019), preamble. 44 Giest (n 35) 363, and also See Philip Morris and Abal Hermanos vs. The Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Award (8 July 2016) ¶ 181, ¶188, and ¶382.

424

Improving intellectual property

to IPRs in accordance with TRIPS are not considered to be expropriated, if the measure is consistent with the FTA’s Chapter 14 or TRIPS.45 When reviewing the FTA, Article 14 (4) 1 states that parties recognize the principles and flexibilities established in the Doha Declaration on the TRIPS Agreement and Public Health (the declaration). Notwithstanding, it goes a step further in delimiting the way the declaration or measures on basis of the declaration should be interpreted, in this regard, emphasizing that measures to protect public health ‘can and should be interpreted and implemented in a manner supportive of each Party’s right to protect public health, in particular, to promote access to medicines for all’.46 Considering that the DOHA Declaration is largely about access to medicines, and that this is expressly mentioned in the FTA and its link with the Investment Agreement, we shall ask whether the new generation of FTAs and BITs are constraining policy space for new public health regulations,47 by restraining the use of flexibilities to access to medicine-related concerns. Even when access to medicines is central to the declaration, public health is not and should not be limited to access to medicines. The 2019 reform, by offering a guideline to interpret and validate the legitimacy of a measure, and furthermore the need for parameters to be used if passing a necessity test, seems to ‘gently’ influence or steer interpretation of BITs provisions, thereafter, potentially constraining policy space.48

5.

SOME CONCLUDING REMARKS: ADVOCATING FOR POLICY SPACE TO DEFINE PUBLIC HEALTH EXCEPTIONS BEYOND ACCESS TO MEDICINES

Limiting the interpretation of public interest exceptions to health or health emergencies as defined in BIT’s and ISDS, may render current TRIPS flexibilities obsolete in future scenarios when a global emergency strikes again – e.g., Australia–Hong Kong Free Trade Agreement, Chapter 14, Art. 14.4:1. ibid. 47 Labonté (n 27) 48 An example of ‘guiding’ or constraining interpretation in the context of public health is found in footnote 43 from the II Annex of the Australia–Hong Kong Investment Agreement. For greater certainty and without limiting the scope of this subparagraph, regulatory actions to protect public health include, among others, such measures with respect to the regulation, pricing and supply of, and reimbursement for, pharmaceuticals (including biological products), diagnostics, vaccines, medical devices, gene therapies and technologies, health-related aids and appliances, and blood and blood-related products. 45 46

Investment treaties and public health

425

climate related. True, policy considerations to protect the environment are foreseen within TRIPS. However, environmental concerns do not seem to fall within the scope of public health as defined within the scope of public health concerns in ISDS. In fact, disputes concerning the environment or climate, so far, have not gained world attention like the Philip Morris or the Eli Lilly disputes. There is strong indication that ISDS initiated due to climate or environmental protection will be settled before reaching an arbitral award.49 While Eli Lilly and Philip Morris brought to the spotlight the challenges in protecting policy space, they also highlighted the approach towards protecting public health concerns through BITs and IIAs. Case in point, the Australia–Hong Kong BIT from 2019 reform narrows down the use of compulsory licenses to access to medicines and health.50 This chapter aims to raise awareness of the dangers that investment agreements and disputes may represent for the use of TRIPS flexibilities in the context of climate change. While ensuring the flow of trade is paramount for development, the same trade rules that incentivize the adoption of policies prompting climate change mitigation technologies, are also likely to limit countries’ use of policy space to adopt trade-related climate policies.51 To prevent this predicament and future ISDS, the inclusion of specific provisions in treaty drafting related to the right to regulate is paramount.52 Particularly since climate change related challenges are predominantly associated with environmental protection, and this seems to be secondary to trade,53 the trading system has instead largely focused on eliminating barriers to trade.

UNCTAD (n 12). Articles from Australia–Hong Kong BIT. 51 IPCC, 2022: ‘Summary for Policymakers’ (n 10). 52 ‘CETA serves as useful example for a general reference: Under art 8.9.1, the Parties ‘reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity’. See Henning Grosse Russe-Khan and Teemu A. Putio, A Handbook on Negotiating Development Oriented Intellectual Property Provisions in Trade and Investment Agreements (United Nations 2017). 53 Ronald R Labonté and others, ‘Trade, Investment and the Global Economy: Are We Entering a New Era for Health?’ (2018) 18 Global Social Policy 28. 49 50

41. Excluding intellectual property from bilateral trade and investment agreements: A lesson from the global health crisis Christophe Geiger 1. INTRODUCTION Once delicate balances were needed and compromises negotiated multilaterally within international organizations when elaborating intellectual property (IP) rules, ensuring that flexibilities were preserved for States to regulate in order to safeguard competing public interest values. Now the bilateral rulemaking process reflects power-games and untransparent compromises. For the European Union (EU), the dynamic of signing bilateral free trade and investment agreements (‘FTAs’ and ‘BITs’ or a mix of both) with third countries has grown. An example is the controversial Comprehensive Economic and Trade Agreement (CETA) signed between Canada and the EU in 2016 and partially entered into force in 2017,1 mirroring other bilateral treaties signed by the EU. These agreements contain provisions dedicated to IP but their principal characteristic lies in the inclusion of IP rights in the list of investments protected by a specific investment chapter. When implemented, the enforcement of this protection is entrusted to arbitration tribunals or – in the case of CETA – to a special court for the protection of investments that is yet to be set up, via Investor-State Disputes Settlement (ISDS). Hence, the question arises whether the EU’s regulation of IP, in a way that would affect the scope of rights held by some large private companies, could be a potential threat to their investments protected by these BITs. If this is so, proceedings could be brought against the EU or one of its Member States, leading to the risk of considerable limitations

1 Comprehensive Economic and Trade Agreement between Canada, of the One Part, and the European Union and Its Member States, of the Other Part [2017] OJ L11/23.

426

Excluding intellectual property

427

being imposed on legislators in the necessary implementation of a balanced innovation ecosystem. This is highly problematic, as it is essential for the EU to be able to regulate IP to create the most attractive framework for economic players, particularly in the context of the post-pandemic economic recovery plans, but also to implement a balanced innovation ecosystem considering ethical values codified in its founding EU treaties, and that citizens accept.2 This is even more so when it is crucial that the EU use all flexibilities of the international IP regime to promote values such as public health, sustainability and safeguarding human rights when establishing its innovation policy.3 The question is highly relevant to the global fight against the pandemic. A proposal to waive certain IP obligations to address the COVID-19 crisis was introduced at the WTO in May 2021, aiming to require suspension of certain IP obligations of the TRIPS Agreement to allow Member States to alter the IP protection otherwise available for COVID-19 medical technologies.4 Would any domestic measures implementing the waiver be compatible with the implementing State’s obligations to protect IP rights established under IP and investment chapters of FTAs and BITs? Would the EU or its Member States be able to implement a waiver without risking ISDS for direct expropriation? More profoundly, as Dreyfuss and Frankel have convincingly argued, the understanding of IP as investment induced by these bilateral treaties reflects 2 For discussion before the pandemic, see Christophe Geiger, ‘Moving out of the Economic Crisis: what Role and Shape for Intellectual Property Rights in the European Union?’ in Harri Kalimo and Max S. Jansson (eds), EU Economic Law in a Time of Crisis (Edward Elgar 2016) 135. 3 On flexibilities, the public interest and human rights through the object of purpose of TRIPS, see Christophe Geiger and Luc Desaunettes-Barbero, ‘The Revitalisation of the Object and Purpose of the TRIPS Agreement, The Plain Packaging Reports and the Awakening of the TRIPS Flexibility Clauses’ in Jonathan Griffiths and Tuomas Mylly (eds), Global Intellectual Protection and New Constitutionalism, Hedging Exclusive Rights (OUP 2021) (Hedging Exclusive Rights) 267. 4 Waiver from certain provisions of the TRIPS Agreement for the prevention containment and treatment of COVID-19, World Trade Organization – Council for Trade-Related Aspects of Intellectual Property Rights (IP/C/W/669/Rev.1, 25 May 2021). The final Agreement of 17 June 2022 is narrower in scope than the initial waiver proposals. It centers around clarifying rules relating to compulsory licensing in TRIPS and it only covers COVID-19 vaccines, see WTO, Ministerial Conference, Twelfth Session, Draft Ministerial Decision on the TRIPS Agreement, WTO Doc. WT/ MIN(22)/W/15/Rev.2 (17 June 2022), which prompted many commentators to consider the Agreement not as a waiver of IP rights but more as a clarification of TRIPS flexibilities, see eg Reto M. Hilty and others, ‘Position Statement of 5 July 2022 on the Decision of the WTO Ministerial Conference on the TRIPS Agreement adopted on 17 June 2022’ Max Planck Institute for Innovation and Competition, https://​www​.ip​.mpg​ .de/​fileadmin/​ipmpg/​content/​stellungnahmen/​2022​-07​-05​_​_2​.​_Position​_Statement​ _Covid​_IP​_Waiver​.pdf.

428

Improving intellectual property

a more fundamental change and is the sign of a broader reconceptualization through international law of IP from a mechanism to incentivize innovation to a commodity and finally to an asset.5 This is a worrying trend; in fact, protecting IP as an ‘investment’ under international investment law, leads to a change in the rationale of the IP system and thus to a major risk of an enforcement of IP rights beyond their limits and their raison d’être6. Flexibilities the international IP framework leaves to States in order to incentivize innovation in an ethical manner through the safeguard of human rights are at risk and could be called in question if the rationale of the protection has become mainly the return on investment and the profit-making of large corporations.7 This chapter draws on Professor Rochelle Dreyfuss’ rich scholarship on the interface of IP and investment law8 to propose solutions that safeguard the social function of the IP system. More generally, it demonstrates that the paradigm shift of IP to an investment-protection mechanism lies at the core of many current problems of the IP system today and, therefore, progressive phasing out of the investment protection rationale is needed in order to help shape an ethical framework for innovation that both safeguards the link between the creators, their productions and society, while simultaneously enables the originators of creative outputs to receive fair remuneration for work.

5 Rochelle Dreyfuss and Susy Frankel, ‘From Incentive to Commodity to Asset: How International Law Is Reconceptualizing Intellectual Property’ (2015) 36 Mich J Int’l L 557. 6 See, Tuomas Mylly, ‘Human Rights and Intellectual Property in Investor State Dispute Settlement’ in Christophe Geiger (ed), Research Handbook on Intellectual Property and Investment Law, (Edward Elgar, 2020) (Investment Handbook) 436, arguing that investment treaty norms ‘protect IP investment from the limiting effects of other laws, hence shielding positive use rights around the negative rights protected by traditional IP norms’, participating to the establishment of ‘regulatory innovation that reinforces economic interests by limiting the available policy options’. 7 See eg Cynthia M. Ho, ‘The Intersection of ISDS and TRIPS Flexibilities’, in Investment Handbook (n 6) 207. This development leads to a broken social contract regarding the protection of intangibles, see C. Geiger, ‘Implementing Intellectual Property Provisions in Human Rights Instruments: Towards a New Social Contract for the Protection of Intangibles’ in Christophe Geiger (ed), Research Handbook on Human Rights and Intellectual Property (Edward Elgar 2015) 662. 8 See eg Simon Klopinski, Christophe Gibson and Henning Grosse Ruse-Kahn, The Protection of Intellectual Property Rights Under International Investment Law (OUP 2020); Emmanuel Kolawole Oke, The Interface between Intellectual Property and Investment Law: An Intertextual Analysis (Edward Elgar 2021); Investment Handbook (n 6).

Excluding intellectual property

2.

429

IP, INVESTMENT PROTECTION AND THE RIGHT TO REGULATE

There is not much to be gained for regulators from including IP in the investment chapters of FTAs and BITs. 9 Such FTAs contain (sometimes very) detailed chapters on IP protection that bind the States signing them and which have their own balances and rationales. Consequently, I have argued that IP should be excluded from the list of investments protected by these agreements in order to safeguard the regulatory power of the EU and its Member States.10 For the same purpose, Dreyfuss and Frankel have made proposals to make ISDS less attractive in IP disputes and, along with other scholars, proposed a narrow understanding of IP as an investment to open the way to ISDS procedures only under very strict conditions.11 Either way, banning or strongly reducing ISDS in the context of IP seems crucial. IP law entails balances that are highly relevant to public policy which investment law seems (at least for now) not appropriately equipped to consider.12 European values embedded in the current IP system could be endangered by focussing exclusively on investments, such as, the commitment to a protection mechanism based on the 9 Christophe Geiger, ‘Regulatory and Policy Issues Arising from Intellectual Property and Investor-state Dispute Settlement in the EU: A closer look at the TTIP and CETA’ in Investment Handbook (n 6), 505; ‘The TTIP and its Investment Protection: Will the EU still be able to regulate intellectual property?’ (2018) 49 IIC 631; ‘Bilateral Trade and Investment Agreements and the Harmonisation of Copyright Law at International Level: Lessons to be learned from the TTIP’ in Tatiana-Eleni Synodinou (ed), Pluralism or Universalism in International Copyright Law (Kluwer 2019) 279. 10 Geiger, ‘Regulatory and policy issues’ (n 9) 631. More generally on the limitations of regulatory powers by States via investment agreements, see Cynthia. M. Ho, ‘Sovereignty Under Siege: Corporate Challenges to Domestic Intellectual Property Decisions’ (2015) 30 Berkeley Tech LJ 213. 11 Rochelle C. Dreyfuss and Susy Frankel, ‘Reconceptualizing ISDS: When is IP an Investment and How Much Can States Regulate It?’ (2018) 21 Vand. J. Ent. & Tech. L (Reconceptualizing ISDS) 377, proposing how to ameliorate the situation, such as discouraging ISDS by making the damages less lucrative and only protecting IP rights that reflect significant involvement in the host state (thus aligning the interests of investors with local interests). See Ruth L. Okediji, ‘When is Intellectual Property an ‘Investment’?’ in Investment Handbook (n 6) 94 stating ‘to enhance the power of the state to define for itself the contours of IP rights, investment arbitration invoked to contest IP laws should be permitted only under a prescribed set of conditions’, such as making investor-state arbitration only available ‘after a final determination of the validity of the IP right has been made by local administrative and judicial processes’. 12 On this issue see Christophe Geiger, ‘The Social Function of Intellectual Property Rights, Or how Ethics can Influence the Shape and Use of IP law’ in Graeme B. Dinwoodie (ed), Methods and Perspectives in Intellectual Property (Edward Elgar 2013) 153.

Improving intellectual property

430

creative input of creators rather than on the financial input of a legal entity or a producer. Of course, in many of the agreements, safeguards have been foreseen. In CETA for example, Article 8.12 provides: for greater certainty, the revocation, limitation or creation of intellectual property rights, to the extent that these measures are consistent with the TRIPS Agreement and Chapter Twenty (Intellectual Property), do not constitute expropriation. Moreover, a determination that these measures are inconsistent with the TRIPS Agreement or Chapter Twenty (Intellectual Property) does not establish an expropriation.

However, these can hardly be considered sufficient. As Dreyfuss underlines: there are matters closely related to IP that are not mentioned. The list is expressly non-exhaustive, but tribunals may require the state to show more when it is furthering such objectives as education, jobs, security, freedom of expression, or promoting innovation, which are not specifically listed’.13

It is also not easy to determine at the outset if a measure is consistent with TRIPS. TRIPS has numerous open concepts in order to provide flexibility and some policy space. The scope of these flexibilities is not always clear, and it is not rare that the WTO is called upon to clarify them.14

13 Rochelle Dreyfuss, ‘Hedging Bets with BITS: The Impact of Investment Obligations in Intellectual Property Norms’ in Hedging Exclusive Rights (n 3) 157. 14 Such as e.g., in the ‘Plain Packaging’ decision of the WTO panel. See, WTO Panel Report, Australia - Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, WT/DS435/R, WT/DS441/R, WT/DS458/R, WT/DS467/R, WTO Panel Report, 28 June 6 2018) and, confirmed by the Appellate Body Report (WT/ DS435/AB/R, WT/DS441/AB/R (9 June 2020). See also Dreyfuss (n 13) 165, which perceives the two tobacco disputes as a ‘vivid demonstration of the extra protection ISDS offers rights holders and the obstacles it imposes on counter-norm development, augmenting the risk of forum shopping’, as ‘Philip Morris required both Australia and Uruguay to defend themselves in domestic courts and in ISDS. Furthermore, there is reason to believe that the WTO case (in which Uruguay participated as a third party) was also instigated by the tobacco industry. Defending in three fora is daunting in and of itself. The cost alone could easily discourage countries from adopting counter norms’. See also Cynthia M. Ho, ‘A Collision Course Between TRIPS Flexibilities and Investor-State Proceedings’ (2016) 6 UC Irvine LR 74 and Rochelle Dreyfuss, ‘Protecting Fundamental Values in International IP disputes: investor-State vs. WTO adjudication’ in Investment Handbook (n 6) 318.

Excluding intellectual property

431

Also, as Dreyfuss rightly emphasizes, what is very problematic is that:15 instead of considering sovereign authority as the general rule, CETA makes the right to regulate the exception to a norm favoring investment protection. Thus, while CETA does not mention the allocation of the burden of proof, the respondent state may well be required to prove that its regulatory objective is legitimate and that the measure is an appropriate approach to furthering it.

This might not always be evident and might require substantial and costly efforts to demonstrate. And as exceptions tend to be interpreted in a restrictive way, in the case of doubt, the principle of investment protection might prevail over the exception.16

3.

IP, INVESTMENT PROTECTION AND PUBLIC HEALTH IN THE CONTEXT OF THE GLOBAL PANDEMIC

The recent global pandemic has added new urgency to the debate. As Dreyfuss has underlined, ‘the COVID-19 pandemic, which has led to the rapid enactment of laws to ensure access to treatments and vaccines demonstrates how crucially important it is for states to have the flexibility necessary to protect their populations notwithstanding the formidable hedges imposed by international investment law’.17 Several authors have analysed if international investment law could alter whether States take those measures, in particular in the context of the proposal at the WTO to waive IP obligations in TRIPS to address the COVID pandemic. Dreyfuss has expressed concerns that the waiver would leave unaffected possible claims of investors under international investment law against COVID-related measures, which could thus be challenged in ISDS: 18 Many of the countries that would suspend their obligations pursuant to a waiver were also subject to other international obligations, including free trade and investment agreements that included independent obligations that would not be directly affected by the WTO’s waiver of TRIPS commitments. Dreyfuss (n 13) 157. See Geiger (n 9) 517. 17 Dreyfuss (n 13) 175. 18 Rochelle C. Dreyfuss, ‘From Parallel Play to Constructive Engagement: A Proposal for Plan B’ in Gustavo Ghidini and Valeria Falce (eds), Reforming Intellectual Property Law (Edward Elgar 2022 (forthcoming)). See also Rochelle C. Dreyfuss, ‘ISDS and Intellectual Property in 2020—Protecting Public Health in the Age of Pandemics’ in Lisa E. Sachs, Lise J. Johnson and Jesse Coleman (eds), Yearbook on International Investment Law & Policy 2020 (OUP 2021). 15 16

432

Improving intellectual property

Others have been more optimistic. According to Grosse Ruse-Khan and Paddeu, the right to regulate for public health reasons would be preserved by specific BITS provisions and, in their absence, results from customary international law.19 Mercurio and Upreti, after analysing the grounds upon which investors could make a case in ISDS and possible State defences, also conclude that ‘it would be difficult for investors to succeed in claiming that measures taken in response to a TRIPS waiver breach any substantive protection provision contained in an international investment agreement’.20 They concede that there is still some legal uncertainty and thus recommend that ‘States should, however, seek additional security by revisiting existing treaties and adding additional layers of safeguards to ensure legitimate and nondiscriminatory measures taken in response to a TRIPS waiver do not lead to investor claims.’21 Likewise, Oke considers that the TRIPS waiver is ‘largely compatible with international investment law’,22 but bases his analysis on the WTO decision of June 2022 that is far less intrusive for right holders and was largely considered not as a ‘waiver’ but more as an implementation of the flexibilities already in the TRIPS Agreement to address public health challenges.23 Even in this context, there is uncertainty regarding claims based on the expropriation standard when there is no carve-out that excludes measures relating to IP rights from the scope of expropriation in the relevant investment treaty. In this case, Oke recommends an intertextual approach where ‘the rules of international intellectual property law should be taken into account when interpreting the terms and provisions of investment treaties in disputes involving intellectual property rights (in line with Article 31(3)(c) of the VCLT)’.24 Even if an investment-claim against a State implementing a temporary IP waiver in the pandemic context would be unlikely to succeed, it should not be forgotten that the mere threat of ISDS by a multinational corporation and related pressure can be sufficient to disincentivize some States to take public health measures. Only very few cases are taken to ISDS. Mostly the threat of a claim made by powerful economic players has been sufficient to convince States, particularly in the developing world, not to pass any measure that 19 Henning Grosse Ruse-Khan and Frederica Paddeu, ‘A TRIPS-COVID Waiver and Overlapping Commitments to Protect Intellectual Property Rights Under International IP and Investment Agreements’ (2022) South Center Research Paper 144. 20 Bryan Mercurio and Pratush Nath Upreti, ‘The Legality of a TRIPS Waiver for Covid 19 Vaccines under International Investment Law’ (2022) 71 ICLQ 323. 21 ibid. 22 Emmanuel Kolawole Oke, ‘Assessing the Compatibility of the TRIPS Covid-19 Waiver Decision with International Investment Law: An Intertextual Perspective’ (2022) 5 JIPS 44, 65. 23 ibid. 24 ibid 65.

Excluding intellectual property

433

would be detrimental to IP right owners. For these reasons (and others), ISDS has never been more contested in public opinion and has even become ‘the most controversial form of international litigation’,25 as it enables economic actors ‘that have no standing in fora where states can adjudicate compliance with international IP norms (such as the WTO dispute settlement system)’26 to take their enforcement interest in their own hands. They can put significant pressure on States to prevent them taking measures that investors consider detrimental to their interests, no matter how legitimate the measures are in the light of the public interest of fundamental rights involved.27 As Dreyfuss and Frankel have noted, ‘the appetite for investment protection has not diminished. More cases are emerging, and newer international instruments do not appear (…) to be carving out IP from their investment chapters’.28 As I have argued elsewhere, however, this carving-out is the only appropriate response to safeguard the coherence of the international IP regime and its raison d’être,29as equating IP with (mere) investment protection is fundamentally ill-conceived.

4.

IP AND INVESTMENT PROTECTION, ‘A MISLEADING EQUATION’30

Without doubt, important investments are often needed to generate creative outputs. However, the IP system does not protect them as such; investments are only indirectly protected through the possibility of exploiting and monetising creators’ rights as a counterpart to the collective enrichment generated by the access to the work. If the investment (however substantial) does not lead to a creative output, no protection is granted. IP rights have the purpose of encouraging creativity to enable access to science and culture while protecting ‘the material and moral interests of creators’, as international human rights

25 Robert Howse, ‘International Investment Law and Arbitration: A Conceptual Framework’ (2017) IILJ Working Paper 2017/1 (MegaReg Series), iii. 26 Henning Grosse Ruse–Khan, ‘Challenging Compliance with International Intellectual Property Norms in Investor-state Dispute Settlement’ (2016) 19 JIEL 241, 242. 27 See James Gathii and Cynthia Ho, ‘Regime Shifting of IP law Making and Enforcement from the WTO to the International Investment Regime’ (2017) 18 Minn J of L, Sci and Tech 427, 428. 28 Reconceptualizing ISDS (n 11) 378. 29 See Geiger (n 9) 526. 30 See Christophe Geiger, ‘Intellectual Property and Investment Protection: A Misleading Equation’ in Veronica Fischer and others (eds), Gestaltung der Informationsrechtsordnung - Festschrift für Thomas Dreier zum 65. Geburtstag, (Beck 2022) 7 (the following paragraph draws on this article).

434

Improving intellectual property

treaties have put it.31 Society, which requires intellectual production to ensure its cultural, economic, technological, social development and progress, grants a reward to the creator in the form of an IP right, enabling him to exploit and draw benefits from his work. In return, the creator, by rendering his creation accessible to the public, enriches society. This is known as the social contract between the creator and society. The social functions include values incorporated in human rights and matters of public interest.32 The protection of a mere investment therefore potentially reverses the starting logic of IP protection and, as Dreyfuss and Frankel have argued, protecting IP through FTAs and BITs progressively convert IP ‘into an investment asset’, potentially leading to ‘a fundamental reconceptualization’ of the international IP system. 33 This is however not a fatality: a carve-out of IP in future investment treaties is possible, and even more radically, a progressive phasing-out of the investment protection-rationale from IP could be envisaged; as we have repeatedly argued, this could be done by a proper constitutional framing of IP within the Human Right to Science and Culture, Freedom of Expression34 and/or within a new fundamental right to research.35

5. CONCLUSION This chapter argued that the inclusion of IP in the investment chapters of FTAs and in BITs poses a serious threat to a balanced and ethical innovation system in the EU (and potentially elsewhere). The pressure on States, arising from controversial ISDS procedures, when regulating IP to foster non-economic interests and uncertainty regarding room to manoeuvre, leads to a potential disincentive for legislators and courts to limit the existing broad rights of 31 Universal Declaration of Human Rights, art 27(2), International Covenant on Economic, Social and Cultural Rights, art 15(3). See Christophe Geiger, ‘Taking the right to culture seriously: time to rethink copyright law’ in C. Geiger (ed), Intellectual Property and Access to Science and Culture: Convergence or Conflict? (CEIPI/ ICTSD 2016) 84; Geiger (n 7) at 661. 32 Geiger (n 12). 33 Dreyfuss and Frankel (n 5) 559. 34 Christophe Geiger, ‘Building an Ethical Framework for Intellectual Property in the EU: Time to Revise the Charter of Fundamental Rights’ in Ghidini and Falce (eds) (n 18). 35 Christophe Geiger and Bernd J. Jütte, ‘Conceptualizing a “Right to Research” and its Implications for Copyright Law: An International and European Perspective’ (2022) 38 Amer Uni Int’l LR (forthcoming); ‘The Right to Research as Guarantor for Sustainability, Innovation and Justice in EU Copyright Law’ in Taine Pihlajarinne, Jukka Mähönen and Pratyush Upreti (eds), Rethinking the Role of Intellectual Property Rights in the Post Pandemic World: An Integrated Framework of Sustainability, Innovation and Global Justice (Edward Elgar 2022).

Excluding intellectual property

435

IP owners to protect human rights and matters of public interest, even when the international IP system provides flexibilities to do so. The recent pandemic health crisis showed how important it might be for the EU, the global community and for individual States to provide ways to access vaccines and treatments to save lives, and how unacceptable it might be for transnational corporations to oppose investment protection mechanisms in these contexts. However, the EU Member States can still change the situation, for example, to set a precedent in the context of CETA, by not ratifying its investment chapter.36 At a moment when most EU citizens consider IP to protect only the ‘elites’ (e.g., large companies and famous artists),37 such a measure can only reinforce the legitimacy and acceptance of the IP system in the long run. However, this would only be a first step, as a more profound change is needed in the EU to secure an ethical innovation framework for the future. To achieve this goal, ‘EU institutions would be well advised to take fully into consideration their responsibilities as guardians and promoters of the European legal space, to review their investment policy approaches, and to take into account the concerns expressed by various stakeholder groups for actual and future treaty negotiations.’38

36 Regarding CETA, when 90 per cent of the Agreement is in force, the remaining 10 per cent, the investment chapter and the ISDS mechanism, must be ratified by the 27 Member States as a shared competence with the EU. At this time of writing, only 16 Member States have ratified. France, Germany, Italy and the Netherlands have not. Moreover, in 2018 Canada abolished ISDS between Canada and the United States in the United States–Mexico–Canada Agreement (USMCA), so it is hard to understand why it should be kept it in CETA. See Rainer Geiger, ‘The Compliance of Investment Protection Mechanisms in Free Trade Agreements with EU Law’, in Investment Handbook (n 6) 490. 37 EUIPO Report, European Citizens and Intellectual Property: Perception, Awareness and Behaviour (March 2017) 9. 38 Rainer Geiger (n 37) 491.

PART X

INSTITUTIONS AND POLITICAL DRIVERS

42. Justifying the public law of patents Kali Murray 1. INTRODUCTION Patent law is often understood as a category of private law; after all, it involves the relationship of the inventor to other individuals and private entities and is ordered through the legal mechanisms of contract, property, and tort.1 Increasingly, however, we also understand patent law as public law, that is, a body of law that establishes the powers and responsibilities of governments, the rights and duties of individuals in relation to sovereign governments, and that the law governs relations between and among nations.2 Our understanding of patent law as public law is due, in many ways large and small, to the scholarly work of Professor Rochelle Cooper Dreyfuss. Through her careful study of the administrative and judicial institutions that generate patent law, she has made visible the roles those public bureaucracies play in the doctrinal formation of patent law. This chapter supplements Rochelle’s scholarly projects of public law, by focusing on her contributions to one subject: How states legitimate their regulation of patents. The question of political legitimation—the justifications offered for the individual, judicial, and democratic adherence to bureaucratic regimes—is a central question of administrative law. The political legitimation of intellectual property regimes is often based on justifying the intellectual property right from the perspective of the creator; Rochelle’s study of political institutions in patent law, however, suggests another ground for the political legitimation of patent law, namely, the actions of political institutions, such as specialized patent courts and agencies, that regulate patents. In this chapter, after focusing on Rochelle’s contributions to an institution-based account of patent law, I outline alternative ways we can see the project of political legitimation, that is how institutional actors generate and produce different bureau-

1 John C. P. Goldberg, Introduction, Pragmatism 1640–1663 (2012). 2 Id. at 1640.

437

and

Private Law,

438

Improving intellectual property

cratic products such as statutes, treaties, and other regulatory information, in justifying the public law of patents.

2.

INSTITUTIONAL LEGITIMATION IN PATENT LAW

Instrumentalist accounts of intellectual property legitimation justify its grant of rights to authors, inventors, and other creators based on the normative claim that we incentivize innovation by protecting individual creation.3 Intellectual property, therefore, is justified because it prompts socially positive investments via the creative rights afforded to authors, inventors, and other creators of intellectual property goods. This justification reflects what I term rights-based legitimation, which justifies intellectual property law in light of the correlative relationship between rights, immunities, duties, and obligations that can be imposed on categories of actors, creators, users, and infringers. Scholarly models of right-based legitimation are diverse. Kenneth Einar Himma, Adam Mossoff, Eric Claeys, and Adam Moorehave explored the relationship of classical and modern natural rights theories on the existence, scope, and limits of creators’ (authors’ and inventors’) rights.4 Madhavi Sunder and Janewa Osei-Tutu,5 respectively, have explored a rights-based approach based in human flourishing and human autonomy, emphasizing the ways in which intellectual property rights promote participation in discourse, equality, and livelihood. Abraham Drassinower has explored what he terms ‘the juridical structure’ of copyright law, which

3 Mark A. Lemley, Faith-Based Intellectual Property, 62 UCLA L. Rev. 1328, 1347 (2015); see also Michael Kanning, A Philosophical Analysis of Intellectual Property: In Defense of Instrumentalism, PH.D (2012). 4 Kenneth Einar Himma, The Justification of Intellectual Property: Contemporary Philosophical Disputes, 59 J. of the Am. Soc. for Inform. S. and Tech. 1143–1161 (2008) (assessing the actor-centric justifications from the framework of moral philosophy); Adam Mossoff, Is Copyright Property?, 42 San Diego L. Rev. 29, 44 (2005) (assessing natural rights reasoning in copyright theory); Eric R. Claeys, On Cowbells in Rock Anthems (and Property in IP): A Review of Justifying Intellectual Property, 49 San Diego L. Rev. 1033, 1037 (2012) (exploring utility of property principles for rights-based reasoning intellectual property law); Adam D. Moore, A Lockean Theory of Intellectual Property Revisited, 49 San Diego L. Rev. 1069,1075 (2012) (assessing rights-based theory from a Lockean perspective) 5 J. Janewa Osei-Tutu, Humanizing Intellectual Property: Moving beyond the Natural Rights Property Focus, 20 Vand. J. Ent. & Tech. L. 207, 212 (2017) (assessing rights-based reasoning from the perspectives of human rights); Madhavi Sunder, From Goods to the Global Life: Intellectual Property and Global Justice 17 (2012) (assessing rights-based reasoning from a human flourishing perspective).

Justifying the public law of patents

439

attempts ‘to understand copyright in its own terms’ as a way of supporting ‘the inherent dignity of authorship’.6 Rochelle’s larger scholarly project, however, suggests a second way to legitimate intellectual property law. Intellectual property law can be justified because of why and how judicial, bureaucratic, and democratic institutions regulate intellectual property goods. Her scholarship has introduced two insights that have shaped our understanding of the public law of patents. First, Rochelle has focused our attention on the various institutions that make patent law. Her groundbreaking work on the US Court of Appeals for the Federal Circuit (‘the Federal Circuit’)7 raised important questions as to how specialized courts that administer patent law function. Subsequent scholarship has built on her initial contribution to this area.8 Rochelle’s key insight is that any coherent account of patent law’s doctrinal formation needs to consider the institutional incentives of any given regulatory actor and how these institutional incentives are directly tied to the regulatory material produced by that actor. Thus, her scholarship points towards what has become an essential

Abraham Drassinower, What’s Wrong with Copying? 7 (2015). Rochelle Cooper Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. Rev. 1 (1989); see also Rochelle Cooper Dreyfuss, In Search of Institutional Identity: The Federal Circuit Comes of Age, 23 Berkeley Tech. L.J. 787 (2008); Rochelle Cooper Dreyfuss, The Federal Circuit: A Continuing Experiment Specialization, 54 Case W. Res. L. Rev. 769 (2004); Rochelle Cooper Dreyfuss, The Federal Circuit as an Institution: What Ought We to Expect, 43 Loy. L. A. L. Rev. 827 (2010). 8 See generally Saurabh Vishnubhakat, The Field of Invention, 45 Hofstra L. Rev. 899 (2017) (assessing the USPTO’s administration of the field of invention in patent classification); John M. Golden, The USPTO's Soft Power: Who Needs Chevron Deference, 66 S.M.U. L. Rev. 541, 558 (2013) (assessing the existing substantive administrative power under the Patent Act of 1952); Sarah Tran, Administrative Law, Patents, and Distorted Rules, 80 Geo. Wash. L. Rev. 831, 884 (2012) (assessing the United States Court of Appeals for the Federal Circuit’s refusal to according sufficient deference to the United States Patent and Trademark Office); Melissa F. Wasserman, The Changing Guard of Patent Law: Chevron Deference for the PTO, 54 Wm. & Mary L. Rev. 1959 (2013) (assessing the increased use of deference in judicial review;); assessing the shift towards significant Chevron deference after the passage of the America Invents Act of 2011); Sapna Kumar, The Other Patent Agency: Congressional Regulation of the ITC, 61 Florida L. Rev. 529–580 (2009) (assessing judicial review of the International Trade Commission’s determination of intellectual property issues); Kali Murray, First Things, First: A Principled Approach to Patent Administrative Law, 42 J. Marshall L. Rev. 29 (2008) (assessing the historical use of Skidmore deference in patent administrative law); Arti K. Rai, Who's Afraid of the APA - What the Patent System Can Learn from Administrative Law, 95 Geo. L.J. 269, 336 (2007) (assessing how deference to patent agency decision-making should be understood in the Mead-Chevron Framework). 6 7

440

Improving intellectual property

element of patent reform: experimental institutional design. For example, she has published an important study of reform-oriented experimental institutional design, examining how inter partes proceedings and post-grant proceedings disrupt the boundaries maintained between the period before a patent is issued and after it is issued.9 Second, Rochelle’s scholarship stresses that domestic, regional, and international patent law is public law because of the ways it intersects with public health and drug regulation, competition policy, and even human rights.10 Seeing patent law as an interdisciplinary endeavor, integrated with other highly regulated areas, disrupts the claim that patent law is an area of private law. Moreover, the Dreyfussian insight into the interdisciplinary nature of the patent regime led to another important impact on patent reform at the international and transnational level: Examining how other domestic, transnational and international regimes such as public health, human rights, environmental, and right to information regimes are necessary correctives to the trade-based TRIPs regime.11 The often despairing outlook on the impact of TRIPS on international law can—indeed, has been—cabined by the ways in which other international treaty regimes have expanded how we understand the substantive content of intellectual property. Seeing patent law as an institutional, intersectional and interdisciplinary endeavor, therefore, disrupts the claim that patent law is an area of private law, which primarily serves the interests of the creator (and perhaps, competitors of the creators). This is particularly true, as I noted in The Politics of Patent Law: Crafting the Participatory Patent Bargain,12 since understanding patent law as private law, justified by rights-based reasoning, does not offer sufficient explanatory force to describe why stakeholders besides the patent owner believe they have a stake in the patent system. Indeed, rights-based reasoning does not often contemplate that patent law needs to consider third-party interests in ways that are equal to the stake in the system enjoyed by the creator in

9 Rochelle Cooper Dreyfuss, Giving the Federal Circuit a Run for Its Money: Challenging Patents in the PTAB, 91 Notre Dame L. Rev. 235, 240 (2015). 10 Rochelle Cooper Dreyfuss, TRIPS and Essential Medicines: Must One Size Fit All? Making the WTO Responsive to the Global Health Crisis, in Incentives for Global Public Health: Patent Law and Access to Essential Medicines (Thomas Pogge, Matthew Rimmer & Kim Rubenstein eds., 2010) 11 See, e.g., Graeme Dinwoodie and Rochelle Cooper Dreyfuss, International Intellectual Property Law and the Public Domain of Science, (7)(2) J of Int’l Econ. L. 7.2 431–448 (2004) (contending that TRIPS should be interpreted with ‘fluidity’ given other competing treaty regimes. 12 Kali Murray, The Politics of Patent Law: Crafting the Participatory Patent Bargain 13–21 (2013).

Justifying the public law of patents

441

order to be justified.13 Institutional accounts of regulators—a central element of Rochelle’s scholarship—offer an alternative story of how intellectual property can be justified. Intellectual property regulators do more than simply grant intellectual property rights; Rochelle has shown us that intellectual regulators serve broad public goals such as the dissemination of information, the regulation of competition, and the provision of open forums to manage conflict between stakeholders. Research in intellectual property, then, needs to confront how the actions of public regulators serve to justify the grant of intellectual property rights to epistemic and civil society stakeholders besides creators.

3.

A TAXONOMY OF INSTITUTIONAL LEGITIMATION IN PATENT LAW

To further understand how institutional legitimation is embodied in patent law, in The Politics of Patent Law,14 I suggested a taxonomy of political models that could be used to understand how politics are conducted in patent law since different models offered different accounts as to where the primary political conflicts may occur within the broader patent regime. Rochelle’s insistence on the practical utility of institutional design in patent law offers an important supplement to my taxonomy of public law in patent law. If, as Rochelle contends, one way to achieve patent reform is through the experimental design of patent institutions, then we need to consider how the decisions of patent institutions are legitimated. My taxonomy identified four existing models of politics: the politics of state, the politics of regulation, the politics of publics, and the politics of governance.15 The first model, politics as state, describes politics that emerge over the sovereign capacity of the state to govern an intellectual property object;16 think, here, of the recent debates in international intellectual property law over whether vaccine protection can be waived by a country in order to ensure safety or public health.17 This model is tied most intimately with administrative and constitutional law. The second model, politics as regulation, describes the power of a given regulatory authority over discrete subject matter assigned

Id. Id. Id. Id. at 13. World Trade Organization, Council for Trade-Related Aspects of Intellectual Property Rights, Waiver from Certain Provisions of the Trips Agreement for the Prevention, Containment and Treatment of Covid-19, Communication from India, and South Africa, IP/C/W/669 (October 2, 2020). 15 16 17 13 14

442

Improving intellectual property

by the legislator.18 An example of regulatory politics might be disputes over how to govern internal proceedings in the office of a patent regulator, or how regulatory authority is shared by regulators over the competitive impacts of a patent, or the relationship of a patent owner to the rights granted by food and drug law.19 The corresponding public law is domestic statutory law at the federal or state level. The third model examines politics as publics, which claims that the discourse over regulatory decision-making builds institutional legitimation.20 The public law that relates to this model again is varied, ranging from international environmental law to information law. The fourth model, politics as governance, looks at how the patent or subsidiary patent administration interacts with private ordering of patents, for instance, the ways the relationship between patent law and private standard-setting can be understood as raising governance issues.21 Asking ourselves why stakeholders in a bureaucratic regime adhere to regulatory decisions is, then, a crucial question in understanding how different conceptions of the political order shape our understanding of the public law of patents. Coupled with Max Weber’s standard account of bureaucratic legitimacy, Rochelle’s focus on the role of experimental institutional design in legitimatizing intellectual property regulation offers a key insight that bureaucratic legitimacy is built through the actions internal, expert practice of administrative actors.22 But many different ways exist by which administrative actors can be legitimated. I contend that my taxonomy of political models finds roughly parallel models of legitimations. Structural legitimation parallels the politics as state; administrative legitimation parallels politics as regulation; discursive legitimation parallels politics as publics; and governance legitimation parallels the politics of governance (see Figure 42.1 below). It is likely we can comfortably speak of a public law of patents to the extent that we view patent law controversies as mapping onto these forms. These models and their accompanying bases for legitimation, suggests what Hugh Murray, Politics of Patent Law, supra note 12, at 16–17. Id. at 19–21. 20 Id. at 21–33. 21 Id. 22 Modern legitimation theory begins with the work of Max Weber. Weber identified three grounds of legitimacy of rule: (1) customary legitimacy, by which individual belief is ‘sustained through time immemorial and by habitual observation’; (2) charismatic legitimacy, by which individual belief is sustained because of ‘absolutely personal devotion and personal trust in revelation, in heroism or other leadership qualities of an individual’; (3) legal legitimacy, where ‘the virtue of the belief in the validity of a legal statute and the validity of “competence”’ that is based on rationally created rules’. John Dreijamnis, Max Weber’s Complete Writings on Academic and Political Vocations 157 (Trans. Gordon C. Wills 2008). 18 19

Justifying the public law of patents

Figure 42.1

443

The four models of political legitimation

Breakey terms compatibility,23 because they share certain premises that offer a ‘common-sense reason a given person might marshal to justify his or her respect for a given set of norms.’24 The first model, structural legitimation, suggests that the actions of regulators are legitimated because of the competing controls asserted by the executive, judicial, or legislative branch over the exercise of the fourth branch.25 Constitutional law plays an important role in structural legitimation because legitimacy is built through its integration into a constitution document through affirmatively protecting intellectual property as a constitutional right26 or, by 23 Hugh Breakey, It’s Right, It Fits, We Debated, We Decided, I Agree, It’s Ours, and It Works: The Gathering Confluence of Human Rights Legitimacy, 37 L and Phil. 1–21 (2018). 24 Id. 25 See, e.g., Josh Chaftez, Congress’s Constitution: Legislative Authority and the Separation of Powers 15-42 (2018) (examining structural accounts of political institutions in administrative law). 26 In The Politics of Patent Law, I identify two different ways that a constitution can affirmatively protect an intellectual property right: a negative or affirmative con-

444

Improving intellectual property

allocating authority of over through legislative, judicial, and executive oversight and constitutional access regimes.27 Two opinions of the Supreme Court of the United States, Eldred v. Ashcroft28 and Golan v. Holder,29 both rely on a structural legitimation claim to justify Congressional determinations made under the Uruguay Rounds Agreement Act.30 For instance, in Eldred, Justice Ginsburg noted that once the Copyright Term Extension Act complied with the textual limits of the Intellectual Property Clause of the US Constitution,31 that Clause should be understood to offer significant deference to Congress in its enactment of legislative authority. The second model, administrative legitimation, suggests that the administrative state is legitimated through the actions of an expert administrator, using reasoned assessment of the available information to reach a determination on any given issue; consequently, administrative law plays an important role in determining the role of the relevant bureaucratic authority over a category of intellectual property or an intellect property embedded good.32 The Supreme Court’s holding in Cuozzo Speed Techs., LLC v. Lee,33 in which the Court upheld the validity of inter partes review and ex parte proceedings, adopted this model of legitimation. Justice Stephen Breyer’s majority opinion found that the United States Patent and Trademark Office (USPTO) could give a patent claim its broadest claims construction, as opposed to a narrower textual construction, because its regulations were owed deference under Step One of the Chevron framework.34 This approach to administrative review counsels deference where Congress has granted an agency the ability to resolve statutory ambiguity. Cuozzo is based on a standard account of administrative legitimation. Congress delegated the power to an agency (the USPTO) to conduct its proceedings; an ambiguity existed within the statute as to what stitutional property right or a common property claim enjoyed by sovereign indigenous community. Murray, Politics of Patent Law, supra note 12, at 75. 27 Id. at 70. 28 Eldred v. Ashcroft, 537 U.S. 186, 204–05 683 (2003). 29 Golan v. Holder, 565 U.S. 302, (2012) (‘Congress determined that exemplary adherence to Berne would serve the objectives of the Copyright Clause. We have no warrant to reject the rational judgment Congress made.’). 30 Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1995). 31 U.S. Const. Art. 1, §8, Cl. 8. 32 Kali N. Murray, The Cooperation of Many Minds: Domestic Patent Reform in a Heterogeneous Regime, 48 IDEA 289 (2007) (assessing the allocation of administrative authority over patent law). 33 Cuozzo Speed Techs., LLC v. Lee _U.S., _, 136 S. Ct. 2131, 2133, 195 L. Ed. 2d 423 (2016). (We conclude that the regulation represents a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.). 34 Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 2778–79, 81 L. Ed. 2d 694 (1984).

Justifying the public law of patents

445

type of claim construction was owed; and, finally, the regulation issued by the agency was a reasonable exercise of the agency’s authority. My taxonomy of legitimation, however, identifies two other bases of legitimation: the politics of governance and the politics of publics. For different reasons, both remain relatively undertheorized and therefore, relatively unrecognized as sources of legitimation. The politics of publics and its corresponding form of institutional legitimation, discursive legitimation, is premised on dialogue in the process of policy formation, that is, a dialogic discourse between lawmakers and citizens, where the citizens act as interlocutors rather than supplicants.35 Discursive legitimation presupposes that agency behavior is legitimatized when the agency engages in certain types of discursive behavior, whether it be formalized discursive processes like third-party patent review, or more other more informal mechanism like advisory committees. Discursive legitimation faces a normative challenge insofar as it does not offer an intuitive account of regulation to publics. Instead it relies on the discursive dynamics of ‘insiders,’ that is, the regulator and the regulated community, rather than upon broader democratic mechanisms such as voting. The politics of governance and its corresponding form of institutional legitimation, governance legitimation, speaks to the ways in which patent law can legitimated through a web of private and public interactions that amount to flexible governance of an intellectual property-protected good. For the most part, governance models are discussed most frequently in the field of international intellectual property law. For instance, Esther van Zimmeren and I36 argue we need understand patent governance as dynamic, that is the subject of contest between committed epistemic ‘insiders’ and civil society at different formal institutional sites (what we term ‘nodes’), while Margaret Chon has focused on the relationship between governance models and the emerging soft law such as norms and standard-setting, which bridges formal and informal dimensions.37 Governance models pose a challenge for models of legitimation because governing activities over the object of regulation are dynamic, floating between private ordering activities that may have collective, public effect (i.e., a license agreement that binds multiple parties) and more public formal behav-

35 Annemarie Bridy, Copyright Policymaking as Procedural Democratic Process: A Discourse-Theoretic Perspective on ACTA, SOPA, and PIPA, 30 Cardozo Arts & Entertainment L. 153, 155 (2012). 36 Kali Murray & Esther van Zimmeren, Dynamic Patent Governance in Europe and the United States: The Myriad Example, 19 Cardozo J. Int’l & Comp. L. 287 (2011). 37 Id. at 294–297; Margaret Chon, Global Intellectual Property Governance (under Construction), 12 Theoretical Inq. L. 349, 355 (2011).

446

Improving intellectual property

ior that fits closely with more standard accounts of state action. Governance models necessarily complicate the binary model of private law and public law that we very often use as an organizational framework. These models build a dynamic relationship between what we might see as private conduct and public action, thus confusing the neat distinction we make between the forms of law. Thus, our understandings of the politics as governance have yet to find a corresponding model of legitimation because of the difficult of thinking through such dynamic legitimation. Patents pose an even more specific challenge to this mode of legitimation because they rest on a simultaneous continuum of deeply private order governance activities as to the creation, use, exclusion, and transfer of a patent, and deeply public activities such as the grant of a patent and its subsequent competitive effect. Consequently, the work of Rochelle is absolutely vital to understanding the problems of legitimation within the context of governance. Her recent examination with Susy Frankel of how international law has witnessed a shift in understanding intellectual property goods as an incentive to commodity to an asset to be traded38 provides an exemplary example of the difficulty associated with legitimation models based on governance.39 The shift from an incentive-based framework to an asset-based framework, for instance, has resulted in a significant change to the primary public international institutions that manage intellectual property goals. While the World Intellectual Property Organization has tended to approach patents as public goods, by contrast, the World Trade Organization, and its mechanism of investment arbitration, means that a patent is being treated as a private asset rather than a public good.40 This regime shift, thus, potentially undermines the flexibilities (such as those related to public health or environmental goods) that may be necessary to effectuate public goals.41 Dreyfuss and Frankel make an important linkage regarding how the institutional design of the institutional fora can reflect and shape the normative commitments within a governance model.

4. CONCLUSION Openly acknowledging that patent is public law is an important step, one that we would have likely not made without the influence of Rochelle’ enduring scholarship. Her work not only provides an inspiration for further scholar38 Rochelle Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law Is Reconceptualizing Intellectual Property, 36 Mich. J. Int’l L. 557 (2015). 39 Id. at 560–66. 40 Id. at 570. 41 Id.

Justifying the public law of patents

447

ship in this area, but also points to the considerable task ahead. As she has demonstrated, the legitimating project of patent law is a complex one because it centers patent law in the middle of different disciplines. Moreover, a descriptive account of modes of legitimation is a historically contingent one because institutional legitimation draws on competing concepts related to the act of governing and the regulated object. Luckily, we have in Rochelle’ corpus of scholarship a vast resource that can be continually used to invigorate future scholarship.

43. WIPO alert – A reason to be alerted? Alexander Peukert 1. INTRODUCTION A major theme in Professor Rochelle Dreyfuss’ oeuvre is the ‘mismatch between the territoriality of intellectual property law and the global dimension of intellectual production, exploitation, and use’.1 This problem is particularly acute online. Whereas intellectual property (IP) subject matter can, in principle, be made available to a global audience at virtually no cost via the Internet,2 IP rights (IPRs) remain strictly territorial in nature.3 One mechanism to mitigate the transaction costs following from this global legal IP mosaic are international IP treaties, which make it possible to acquire 190+ local IPRs in, e.g., a motion picture or a well-known mark.4 Yet when it comes to the enforcement of these rights, ‘on the whole, territoriality governs.’5 IPRs

1 Rochelle C. Dreyfuss, Enforcing Intellectual Property Claims Globally When Rights Are Defined Territorially, in The Internet and the Emerging Importance of New Forms of Intellectual Property 15, 16 (Susy Frankel & Daniel Gervais eds., 2016). 2 Google Inc v. Equustek Solutions Inc., SCC 34 (2017), 1 SCR 824 (2017), (‘The Internet has no borders — its natural habitat is global.’). But see Jerker B. Svantesson, Private International Law And The Internet 57–8 (2016) (relative borderlessness of the Internet). 3 Alexander Peukert, Territoriality and Extraterritoriality in Intellectual Property Law, in Beyond Territoriality: Transnational Legal Authority in an Age of Globalization 189, 189–91 (Günther Handl, Joachim Zekoll & Peer Zumbansen eds. 2012). 4 See, Graeme B. Dinwoodie & Rochelle C. Dreyfuss, A Neofederalist Vision of TRIPS: The Resilience of the International Intellectual Property Regime (2012). 5 Dreyfuss, supra note 1, at 33. On conflicts of laws in IP matters see, American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (2008); Dreyfuss et al, International Law Association's Guidelines on Intellectual Property and Private International Law (‘Kyoto Guidelines’): Jurisdiction, 12 J. Intell. Prop. Info. Tech. & Elec. Com. L. 13, 13 (2021).

448

WIPO alert – a reason to be alerted?

449

requiring registration, such as patents, can be adjudicated in full only in the country of registration. Multi-state copyright infringements may be decided by the courts in the defendant’s domicile, but even these universally competent courts are bound to apply all IP laws of the states for which protection is sought. Proposals to reduce the number of laws applicable to ubiquitous online copyright infringements to one governing law, namely the law of the closest connection with the (direct) infringement, have not yet been taken up by any court or legislator.6 All the more important then are transnational rules beyond formal IP laws, that is, other rules implemented by non-state actors.7 In the following, I want to shine a spotlight on a fascinating yet unexplored example of this approach, which brings together private parties from different branches (rights holders and the online advertising industry), member state authorities, and the World Intellectual Property Organization (WIPO) as an international organization: WIPO ALERT.8

2.

CONTEXT: TRANSNATIONAL IP ENFORCEMENT ON THE INTERNET

Before taking a closer look at WIPO ALERT, it would be useful to locate this initiative in the broader context of transnational IP enforcement schemes on the Internet. These initiatives can be classified into two categories according to their point of attachment and geographical effect.9 2.1

Source-related Measures

One category of measures targets the source of an infringement. If a certain URL or content is taken down or deleted, no one is able to access it, irrespec-

American Law Institute, supra note 5, § 321(1); Annette Kur, in Conflict Laws in Intellectual Property, The CLIP Principles and Commentary paras 3:603.C01​-3:​604​.C22 (European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP) ed. 2013). 7 See generally Philip C. Jessup, Transnational Law 2 (1956); Alexander Peukert, Transnational Intellectual Property Governance on the Internet, in The Law of Global Digitality 50–73 (Matthias Kettemann, Alexander Peukert & Indra Spiecker eds., 2022). 8 WIPO ALERT, https://​www​.wipo​.int/​wipo​-alert/​en/​. As of 7 April 2022, searches for ‘WIPO ALERT’ in German legal information databases, Westlaw International, and Google Scholar did not produce any significant results. See also Research Handbook On The World Intellectual Property Organization: The First 50 Years And Beyond (Sam Ricketson ed., Edward Elgar Publishing, 2020). 9 See Peukert, supra note 7. 6

of

450

Improving intellectual property

tive of the location of the recipient and the legality of the content under the law of that country. Accordingly, source-related enforcement measures tend to have a transnational and possibly even a global effect. One example of this type of IPR enforcement are court orders to cease and desist making a certain content available on the Internet. If such an order is executed or complied with, all Internet users lose the possibility of accessing the respective source data. Unless explicitly limited by the court, takedown orders thus have de facto global effects.10 The same is true if online intermediaries adopt source-related measures on the basis of transnational regulations and/or their own terms of service. The classic case for this scenario is the Uniform Domain Name Dispute Resolution Policy (UDRP), which allows for the expulsion of bad faith trademark ‘cybersquatters’ from the global domain name system.11 Host providers also operate at the source of an infringement. By preventing uploads ex ante, by taking them down and by making sure they stay down, they are able to prevent IPR infringing communication ab initio.12 Similarly, search engines can reduce the findability of an illegal source by removing infringing URLs from the search index.13 These IPR removals typically have service-wide and thus transnational effects. In particular, United States big tech companies have globalized their homegrown notice and takedown procedures for all countries in which they operate.14 Finally, ‘follow the money’ initiatives involving online payment services like PayPal, Visa, or Mastercard also target the source of an infringement. If counterfeiters and pirates are cut off from the online payment system, their illegal business models collapse. This strategy is pursued by an initiative called RogueBlock®, which was launched in 2012 under the auspices of the US government and now includes many of the biggest payment providers in the world. RogueBlock® offers members of the International AntiCounterfeiting Coalition (IACC) the possibility of reporting online sellers of counterfeit or pirated goods directly to credit card and financial service companies, with 10 Marketa Trimble, The Territorial Discrepancy Between Intellectual Property Rights Infringement Claims and Remedies, 23 Lewis & Clark L. Rev. 501, 503–04 (2019). 11 Dreyfuss, supra note 1, at 27. 12 Cf. 17 U.S.C. §512(c); CJEU Case C-324/09, L’Oréal SA and Others v. eBay International AG, ECLI:​EU:​C:​2011:​474, paras 125–144; Directive 2019/ 790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC, 2019 O.J. (L 130) 92. 13 17 U.S.C. §512(d); CJEU Case C-131/12, Google Spain v. AEPD, ECLI:​EU:​C:​ 2014:​317, paras 80–88; Google Inc v. Equustek Solutions Inc, supra note 2. 14 Peukert, supra note 7, with further references.

WIPO alert – a reason to be alerted?

451

the goal of facilitating prompt action against those merchants. According to the IACC, the program has terminated over 5,000 merchant accounts and impacted over 200,000 websites.15 The geographical scope of the scheme is global in the sense that it does not matter where the ‘rogue’ websites are hosted or the ‘rogue’ merchants domiciled.16 Instead, RogueBlock® is triggered as soon as goods offered through a website do not comply with IP laws in either the country of origin or the country of destination/recipients.17 In sum, source-related IP enforcement measures (domain name cancellations, takedowns, delistings, terminations of payment accounts) are typically transnational or even global in geographical scope. From a legal perspective, this can be justified with the focus of all regimes on plain infringements (cybersquatters, piracy, counterfeiting, ‘rogue’ merchants). There appears to be a rough global consensus that such activity should have no place on the Internet.18 2.2

Recipient-related Measures

The second category of transnational IP enforcement initiatives attaches to the endpoint of an infringing online communication. Whereas the source remains intact, recipients are prevented from receiving certain information. The geographical scope of such a measure tends to be more limited than a source-related measure because it targets recipients acting in a real-world location. The prime example for this type of IP enforcement concerns measures implemented by access providers. After the general abandonment of ‘graduated response’ procedures targeting hard-core file sharers, which were not well received by the general public,19 website blocking gained prominence. The landmark Court of Justice of the European Union ruling in UPC Telekabel

15 IACC RogueBlock, https://​www​.iacc​.org/​online​-initiatives/​rogueblock; Annemarie Bridy, Internet Payment Blockades, 67 Fla. L. Rev. 1523, 1529–30 (2015); Aniket Kesari and others, Deterring Cybercrime: Focus on Intermediaries, 32 Berkeley Tech L.J. 1093, 1128 (2017). 16 Thomas Hoeren & Guido Westkamp, Study On Voluntary Collaboration Practices In Addressing Online Infringements Of Trade Mark Rights, Design Rights, Copyright And Rights Related To Copyright 346 (2016). 17 Critical of this extraterritorial effect Bridy, supra note 15 (calling for a ‘zoning’ of online payment blockades to only apply to transactions involving US customers). 18 On the concept of ‘rough consensus and running code’ see David G. Post, In Search of Jefferson’s Moose 136–7 (2009); Gralf-Peter Callies & Peer Zumbansen, Rough Consensus and Running Code 135–6 (2010). 19 See Christophe Geiger, Honourable Attempt but (ultimately) Disproportionately Offensive against Peer-to-Peer on the Internet (HADOPI) – A Critical Analysis of the

452

Improving intellectual property

supports collaboration between rights holders and access providers to ensure that blocking measures are effective, even if the infringing content is moved to another domain.20 The geographical reach of such schemes is, however, rather limited. The reason is that only the customers of certain access providers who offer their services within clearly defined areas, typically within a nation state, will be affected. Website blocking thus occurs country-by-country, based on the local IPR regime.21 Less rooted in the physical layer of the Internet yet also recipient-related are enforcement initiatives aimed at advertisements appearing on infringing websites. Although there is no established case law holding advertisers and/ or providers of online ad services such as Google AdSense indirectly liable for IP infringements committed by the owners of websites on which ads are displayed,22 the online ad industry has become another target of ‘follow the money’ approaches.23 In several countries, rights holder associations, advertisers (brand owners), and providers of online ad and consumer tracking services have agreed to procedures that aim to avoid the placement of ads on IP infringing websites ‘which have no substantial legitimate uses,’ thereby restricting the flow of revenue to such sites.24 To this end, rights holders, sometimes in collaboration with public authorities such as the London Police Intellectual Recent Anti-File-Sharing Legislation in France, 44 Intl. Rev. of Intell. Prop. and Comp. L. 457, 457 (2011). 20 See CJEU Case C-314/12, UPC Telekabel Wien v. Constantin Film Verleih, ECLI:​EU:​C:​2014:​192, paras 32, 64; Hoeren & Westkamp, supra note 16, 269. (Danish code of conduct); for Germany see https://​cuii​.info (‘Clearing House Copyright on the Internet’). 21 See, e.g., Dirk Visser, Conclusions Sought: Blocking Orders – A View from the EU, in Copyright in Action, 326-9 (Ysolde Gendreau ed., 2019) (describing how rights holders achieved that the ‘Pirate Bay’ website was blocked by all Dutch access providers). 22 Cf. Matthias Leistner, in Urheberrecht § 97 UrhG, paras 138–209 with further references (Ulrich Loewenheim et al. eds., 2020); CJEU Cases C-236/08 to C-238/08, Google France and Google, ECLI:​EU:​C:​2010:​159, paras 55–56, 116–120 (Google does not ‘use’ signs as part of its AdWords service and benefits from the host provider safe harbor provision in the E-Commerce Directive); see also Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788 (9th Cir. 2007) (no indirect IP infringement liability of payment services). 23 European Commission, Towards a modern, more European copyright framework, COM (2015) 626 final; at 11 (9. Dez. 2015); European Commission, Report on the functioning of the Memorandum of Understanding on online advertising and intellectual property rights, SWD (2020) 167 final/2, at 3; Bridy, supra note 15, 1529–1530. 24 EU Memorandum of Understanding (MoU) on online advertising and IPR, Section I 1, (2018), https://​ec​.europa​.eu/​docsroom/​documents/​30226; WIPO Advisory Committee on Enforcement, The building respect for intellectual property database project, WIPO/ACE/14/9, para 2 (June 18, 2019) (‘pirate websites’).

WIPO alert – a reason to be alerted?

453

Property Crime Unit, compile databases of infringing websites and share this information with advertisers, who in turn instruct online intermediaries (e.g., Google) to prevent the appearance of ads on blacklisted outlets.25 Despite the fact that the ad industry has economic interests in applying blacklisting practices across its services, the self-regulatory codes on IP enforcement explicitly take a country-by-country approach. A European Commission memorandum is limited to services provided in the European Economic Area. Similarly, an Austrian ethics code only covers pirate websites directed to an Austrian audience, the UK Good Practice Principles apply to websites targeting UK users, and so on.26 Thus, IP ad blacklists mirror the fragmented global IPR landscape.

3.

THE WIPO ALERT PROJECT

This fragmentation is where WIPO ALERT comes into play. Throughout its existence, WIPO has successfully ‘shepherded the international intellectual property regime through major political and institutional changes.’27 For quite some time, these efforts have included the establishment and maintenance of public-private partnerships (PPPs) that ‘allow the enterprise sector and civil society to share their expertise to tackle borderless global challenges.’28 In this context, WIPO acts as a kind of broker that brings together holders of IPRs or of IP-related information and interested users, in particular in the areas of medicine and green technologies.29 WIPO ALERT can also be understood as a PPP matching service which connects holders of information about copyright infringing websites (‘Authorized 25 Hoeren & Westkamp , supra note 16, 103 et seq. (Austrian ‘ethics code’), 147 et seq. (UK ‘Good Practice Principles for the Trading of Digital Display and/or Audio Advertising’); WIPO Advisory Committee on Enforcement, supra note 24, para 2; Joanne Gray, Google Rules 120–1 (2020). 26 EU MoU, supra note 24, para 2; European Commission, Study On The Impact Of The Memorandum Of Understanding On Online Advertising And Intellectual Property Rights On The Online Advertising Market 9 (2020); Hoeren & Westkamp, supra note 16, 111, 180; WIPO Advisory Committee on Enforcement, supra note 24, para 2. 27 Dreyfuss/Reichman, WIPO’s Role in Procedural and Substantive Patent Law Harmonization, in Research Handbook On The World Intellectual Property Organization: The First 50 Years And Beyond 108 (Sam Ricketson ed. 2020). 28 See https://​www​.wipo​.int/​cooperation/​en/​. 29 See https://​www​.wipo​.int/​pat​-informed/​en/​; https://​www​.wipo​.int/​research/​ en; https://​www3​.wipo​.int/​wipogreen/​en/​. See also The Cambridge Handbook Of Public-Private Partnerships, Intellectual Property Governance, And Sustainable Developmente (Margaret Chon, Pedro Roffe & Ahmed Abdel-Latif eds., Cambridge University Press, 2018).

454

Improving intellectual property

Contributors’) with actors in the online ad industry who want to avoid these outlets (‘Authorized Users’). The project, initially named the ‘Building Respect for Intellectual Property Database (BRIP Database),’ was initiated in September 2017, when the WIPO Secretariat invited a group of Member States ‘active in the field’ of ad-related enforcement schemes ‘to discuss the possibility of establishing an online platform to coordinate the sharing of information about copyright-infringing websites with the advertising sector.’30 At that time, the European Commission also worked on its MoU ‘on online advertising and IPR,’ which was signed in June 2018.31 Since then, the WIPO Secretariat has maintained close cooperation with the European Commission.32 WIPO ALERT eventually went live in September 2019.33 Its key features can be summarized as follows: To be able to upload infringing sites to the WIPO ALERT database, ‘Authorized Contributors’ have to sign a ‘Letter of Understanding’ with WIPO.34 Details for six of the ten contributors are published ‘in the interests of transparency’, as shown below in Table 43.1.35 This overview of WIPO ALERT Contributors procedures first confirms that advertisement and website blocking initiatives are structured in parallel. Both rely on blacklists of infringing websites that the ad industry or access providers implement on a recipient-based, country-by-country approach. Second, the table shows that neither the substantive criteria nor the procedural rules for blacklisting a website are uniform.36 As to substantive copyright law, WIPO expressly refuses to claim ‘that any particular site has, as a matter of

WIPO Advisory Committee, supra note 24, para 6. Memorandum of understanding on online advertising and IPR, https://​ec​.europa​ .eu/​growth/​industry/​strategy/​intellectual​-property/​enforcement​-intellectual​-property​ -rights/​memorandum​-understanding​-online​-advertising​-and​-ipr​_de. 32 WIPO Advisory Committee, supra note 24, para 24. 33 Id., para 27. 34 Id., para 9. 35 https://​www​.wipo​.int/​wipo​-alert/​en/​operating​_procedures​.html. In January 2021, WIPO reported that contributors from Brazil, Ecuador, Peru and the Ukraine also participated in WIPO ALERT; see https://​www​.wipo​.int/​wipo​-alert/​en/​news/​2021/​ news​_0001​.html. 36 WIPO Advisory Committee, supra note 24, para 11 (‘criteria applied may differ’). 30 31

WIPO alert – a reason to be alerted?

Table 43.1

455

Details of six contributors to WIPO ALERT

Authorized

Legal status

Contributor

Website selection

Procedure

criteria Amount of infringing

Request of removal

Italian Communication

works, actuality,

filed with AGCOM,

Regulatory Authority

announcements of

request communicated

(AGCOM)

provider, revenues

to website host, order

Italy:

Public authority

addressed to Italian access providers to disable access to website, order can be challenged in the administrative courts Japan:

Non-public (rights

Scale and seriousness

‘Infringing Website

Content Overseas

holder association)

of infringements,

List’ is updated

Distribution Association

willingness of the site

approximately once

(CODA)

operators to remove

every two months with

infringing content on

data provided by CODA

request

member companies and associations

Lithuania:

Public (independent

Purpose and principles

Application by rights

Radio and Television

body accountable to

of the website at stake,

holders, blocking order

Commission of

parliament)

type of information

by RTCL, mandatory

published, attitude of

approval by the Vilnius

website operator

Administrative Court

Lithuania (RTCL)

within three calendar days, RTCL and website operator can appeal Republic of Korea:

Non-public

> 70% copyright

KCOPA adds site to

Korea Copyright

(government-affiliated

infringing content

the ‘Infringing Website

Protection Agency

rights holder

and the purpose of the

List’, taking into

(KCOPA)

association)

website is to distribute

account decisions of the

such content

Korea Communication Standards Commission (public authority)

Improving intellectual property

456

Authorized

Legal status

Contributor

Website selection

Procedure

criteria Website repeatedly

Rights holders apply

Federal Service

published infringing

to Moscow City Court

for Supervision of

content or information

for an interim or

Communications,

on how to infringe

permanent blocking

Information Technology

copyright

order, the Court orders

Russian Federation:

Public

and Mass Media

Roskomnadzor to block

(Roskomnadzor)

access to the website, Roskomnadzor notifies host provider of order, Roskomnadzor orders Russian access providers to block the website Copyright-infringing

Rights holder applies

Directorate General

content is made

for blocking order with

for Cultural Industries,

available and not

DGCI, DGCI notifies

Intellectual Property

removed upon request,

website operator, DGCI

and Cooperation of the

unsuccessful efforts

applies for an order from

Ministry of Culture and

to remove infringing

an Administrative Court,

Sport of Spain (DGCI)

content

Court orders access

Spain:

Public

providers to suspend access to website for a year

law, infringed copyright’.37 Instead, WIPO only speaks of ‘sites of concern’, defined as: an online location which is reasonably suspected by an Authorized Contributor of deliberately infringing or facilitating the infringement of copyright and related rights, whether in its country of establishment or elsewhere.38

A footnote39 explains that this definition is ‘inspired’ by section 115A(1) of the Australian Copyright Act, which allows for ‘injunctions against carriage service providers providing access to online locations outside Australia’ on the condition that the primary purpose of the respective website is to infringe copyright, ‘whether or not in Australia.’40 This reference reaffirms the close links between website and ad blocking measures. Id., para 10. Id. 39 Id., at fn. 5. 40 Copyright Act 1968 (Cth) Sect. 115A(1) (Austl.), https://​www​.legislation​.gov​ .au/​Details/​C2017C00180. 37 38

WIPO alert – a reason to be alerted?

457

As for users, the WIPO ALERT database is open to ‘any genuine advertising industry business.’41 According to WIPO’s Performance Report, eight ad intermediaries had joined the initiative by 2020.42 Before authorizing a user, WIPO undertakes a ‘bona fides’ check and requires the acceptance of ‘User Agreement’ that the data obtained through WIPO ALERT will be used exclusively for preventing the misplacement of advertising on copyright-infringing websites and will be kept confidential.43 The blocking effect is ideally achieved ‘entirely seamless[ly]’ and without human intervention.44 An advertiser’s algorithm consults the WIPO ALERT database, and if the database replies that the site is listed, the algorithm will not serve an ad to that site.45 The geographical scope of WIPO ALERT is thus potentially global, reaching beyond the territory of the WIPO copyright acquis.

4. CONCLUSION A critical assessment of WIPO ALERT must acknowledge, on the one hand, that the scheme addresses a real problem and that it has been smoothly operating for years without producing significant complaints about false positives. This indicates that WIPO ALERT is, irrespective of the small number of active contributors supported by a rough global consensus, which is generally sufficient for transnational cyberlaw.46 And indeed, effectively all states agree that making a current motion picture available on the Internet without the authorization of the respective rights holders is illegal.47 Regarding ‘copyright piracy on a commercial scale,’ Article 61 of TRIPS even obliges all WTO Members to provide for criminal procedures and penalties. In light of this international law acquis, private global enforcement measures against hardcore IP infringements also appear acceptable. On the other hand, the impact of WIPO ALERT on global communication is too significant for it to continue to operate below the radar of scholarly and https://​www​.wipo​.int/​wipo​-alert/​en/​faqs​.html. WIPO Program and Budget Committee, WIPO Performance Report (WPR) 2020, WO/PBC/32/2, 41 (2021). 43 WIPO Advisory Committee, supra note 24, para 13; https://​ www​ .wipo​ .int/​ wipo​-alert/​en/​faqs​.html. It is, however, possible to check whether a domain name has been listed on WIPO ALERT via a publicly accessible search form; see WIPO ALERT Database Search, https://​www​.wipo​.int/​wipo​-alert/​en/​database​-search​.jsp. This feature apparently has the purpose of enabling website operators to check whether they are blacklisted. 44 WIPO Advisory Committee, supra note 24, para 22. 45 Id. 46 Callies & Zumbansen, supra note 18. 47 Trimble, supra note 10, 540–41. 41 42

458

Improving intellectual property

general public attention. A first reason for concern is that WIPO ALERT is only based on an assumption that a website of concern infringes unspecified copyrights, be it under the law of the country of the contributor that flagged the site or under any other copyright law.48 Further, WIPO asserts that ‘in practice the sites targeted by national databases are invariably flagrant facilitators of copyright infringement.’49 Yet this focus on hardcore copyright pirates is merely a shared practice of contributors, not a consequence of WIPO rules. The legitimacy of WIPO ALERT as a global enforcement mechanism can also not be based on the fact that most contributor states are contracting parties to the Berne Convention, the WCT, the WPPT, and the Beijing Treaty on Audiovisual Performances, which oblige them to grant authors, performers, and producers of phonograms exclusive rights on the Internet.50 The reason is that the geographical scope of WIPO ALERT depends on the place of activity of the users of the system, i.e., the ad industry. Their participation in the system may well affect online communication in countries that have not signed WIPO’s Internet treaties. The second reason for concern is that the system’s rules and operations are opaque. WIPO’s standard letters/agreements vis-à-vis contributors and users are not public. This level of secrecy appears inadequate for a specialized agency of the UN, also compared to the mandatory disclosure requirements to which private copyright collective management organizations are subject under EU law.51 At a minimum, the WIPO Secretariat should prepare an annual report of WIPO ALERT operations. In addition, all WIPO Member States should have access to the blacklist in order to be able to check whether their local online communication might be affected. And this effect can be significant. Being blacklisted for advertising purposes can substantially impact the operation of a website. The other recipient-related enforcement measure – website blocking via access providers – is considered by the European Court of Human Rights an ‘extreme measure’ that ‘deliberately disregards the distinction between the legal and illegal information the website may contain, and renders inaccessible large amounts of content which has not been identified as illegal.’52 To cut off a website from the global ad market can and indeed is meant to have this very effect. Accordingly, the

Supra note 42. WIPO Advisory Committee, supra note 24, para 11. 50 See https://​wipolex​.wipo​.int/​en/​treaties/​summary. 51 Cf. Directive 2014/26 of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market, 2014 O.J. (L 84) 72. 52 Flavus v. Russia, App. No. 10795/14, Eur. Ct. H.R. para 37 (2020). 48 49

WIPO alert – a reason to be alerted?

459

EU MoU ‘on online advertising and IPR’ stresses that it recognizes ‘other fundamental rights, in particular freedom of expression and information and freedom to conduct a business,’ and that it is not intended to impede ‘the freedom of commercial communication and competition at all levels of trade, including the purchasing and selling of advertising.’53 In order to safeguard these legitimate third-party interests, WIPO should define and implement via the ALERT authorization process uniform substantive and procedural standards that have to be met if a new ‘site of concern’ is added to the database. Thereby, WIPO ALERT would not only facilitate the efficient protection of copyright ‘throughout the world’, but also contribute to the harmonization of transnational law in this field.54

EU MoU, supra note 24, at 1. Cf. Convention Establishing the World Intellectual Property Organization art. 4(i), July 14, 1967, 21 U.S.T. 1749, 828 U.N.T.S. 3. 53 54

44. A scholarly look at international IP – Idealistic and pragmatic Justin Hughes and Ruth L. Okediji 1. INTRODUCTION Like other academics, law professors are sometimes said to be overly idealistic and out of touch with practical considerations. But most law professors do have a lot of practical experience with the legal system – they clerk for judges, often practice before becoming faculty, take on pro bono cases, serve as expert witnesses, and file amici briefs. The same cannot be said of the average law professor’s interaction with international law, including international intellectual property. International intellectual property (IP) law is a world in which there are few ‘cases,’ many of the actors are diplomats and government officials with little formal IP training, and both the operation of international organizations and the development of new legal norms can be quite opaque. Despite these challenges, over the years Professor Rochelle Dreyfuss has been an especially thoughtful commentator on the international IP system. Her views on different topics have evolved, but there has also been a lot of consistency in Dreyfuss’ vision of international IP. Beginning in the 1990s, Dreyfuss was among the small number of American legal academics who focused on the impact of the World Trade Organization (WTO) on the development of international IP law. Her exemplar article on the WTO’s dispute settlement process predicted at the outset that interpreting the TRIPS Agreement would involve experimentation in balancing specialized trade law regimes (such as antidumping law) and public law regimes (such as competition law) with IP law, thus yielding an unpredictable landscape for the evolution of global IP norms.1 That much has proven true, though several of the dispute settlement scenarios the article highlighted have not played out. Rather, pragmatic considerations have dominated the relationship between 1 Rochelle Cooper Dreyfuss & Andreas F. Lowenfeld, Two Achievements of the Uruguay Round: Putting TRIPS and Dispute Settlement Together, 37 Va. J. Int’l L. 275 (1997).

460

A scholarly look at international IP

461

international trade and IP, and between the primary norm-setting institutions – the WTO and the World Intellectual Property Organization (WIPO). Much of Dreyfuss’ work has been on understanding, critiquing, and defining interpretive approaches to the TRIPS Agreement. Writing with different co-authors, she has consistently been cautious about further harmonization of IP norms; instead, she has advocated for national variation and experimentation to secure local conditions in which innovation and access to its fruits can best be sustained.2 To this end, writing with Graeme Dinwoodie, she has emphasized institutional conditions that best promote national flexibility and global coherence in IP development. In 2012, they proposed an international acquis – a framework within which contests over IP norms can be resolved at the local level with global rules supplying flexible boundaries for state action. They described this structure as ‘neofederalist,’ stemming from a view that firmly rejects TRIPS’ as a supranational code of IP norms: We regard the code view of TRIPS as descriptively incorrect, normatively flawed, and pragmatically misguided. It is inconsistent with the historical development of international intellectual property law and blind to the impact of strong protection on distributive and cultural interests, and it leaves the international intellectual property system unable to respond nimbly to change. More specifically, these accounts fail to appreciate the benefits of allowing states to structure their innovation policies to reflect the nature of their local creative communities, to pursue their own social and political priorities, and to experiment with responses to new social or technological challenges.3

But in this regard, legal academics may often be too idealistic about the processes and fora in which international IP norms are developed. Having worked on IP issues in regional and multilateral environments, we thought it might be useful to offer reflections on scholars’ understanding of, and concerns about, the process of legal norm formation in international IP, particularly in Geneva’s principal IP fora.

2 See, e.g., Graeme B. Dinwoodie & Rochelle C. Dreyfuss, International Intellectual Property Law and the Public Domain of Science, 7 J. Int’l Econ. L. 431, 433 (2004); Jerome H. Reichman & Rochelle C. Dreyfuss, Harmonization without Consensus: Critical Reflections on Drafting a Substantive Patent Law Treaty, 57 Duke L.J. 85, 125 (2007) [hereinafter Reichman and Dreyfuss, Harmonization] (advocating ‘gaining experience and data from living within the parameters set out by the TRIPS Agreement during a prolonged period of open-minded experimentation’); Graeme B. Dinwoodie & Rochelle C. Dreyfuss, A Neofederalist Vision of TRIPS: The Resilience of the International Intellectual Property Regime (2012) (hereinafter, A Neofederalist Vision). 3 A Neofederalist Vision, supra note 2, at 201.

Improving intellectual property

462

2.

IP IDEALS AND TRADE REALITIES

Dreyfuss has regularly expressed concern about alloying the international IP system to the international trading system through the TRIPS Agreement. In 2009, she and Dinwoodie wrote: Because the focus of the WTO is trade, the TRIPS Agreement tends to view intellectual property very much as a commodity. Lost in the drafting process was the sense that intellectual property embodies cultural values, that it encompasses the building blocks of education and future technological development, or that it protects goods essential to social welfare.4

They offered the intriguing idea that ‘an intellectual property sensibility [was] currently lacking in the WTO.’5 Of course, TRIPS does have an ‘intellectual property sensibility,’ just not one with which everyone agrees. The TRIPS ‘sensibility’ might be, in Dinwoodie and Dreyfuss’ words, a ‘strong commitment to a particular vision of proprietary rights—and, on the patents side, to technological neutrality.’6 Moreover, in several writings, the authors express concern that viewing IP through a lens of international trade ‘sidesteps’ difficult normative judgments.7 These intuitions perhaps point to a better, more candid understanding of why legal academics are uncomfortable with IP norms being woven into the international trade system. Often the concern is about the particular IP norm that was accepted in TRIPS. But there is also the separate problem of our own inability, as academics, to judge the WTO Members’ decision to accept that legal norm. In the case of ‘pure’ IP agreements, i.e., the multilateral treaties that WIPO administers, academics can criticize each international legal norm on its own terms. Is it too strong? Too weak? Does it not go far enough? Does it fail to account for some group or future contingency? But the decision is taken out of our sandbox when the international IP norm was accepted as part of a compromise package including tariffs on commodities, tariffs on manufactured goods, non-tariff barriers to entry on manufactured goods, trade norms in relation to sanitary standards, etc.

4 Graeme B. Dinwoodie & Rochelle C. Dreyfuss, Designing a Global Intellectual Property System Responsive to Change: The WTO, WIPO, and Beyond, 46 Hous. L. Rev. 1187, 1194–1195 (2009) [hereinafter Dinwoodie & Dreyfuss, Designing a Global IP System]. 5 Id. at 1195. 6 Id. at 1189. 7 A Neofederalist Vision, supra note 2, at 81.

A scholarly look at international IP

463

As Dreyfuss has recognized, these trade-offs exist and might be hard for outside observers to measure and calibrate.8 Perhaps that is part of what we really do not like – that these trade-offs in the trade context invariably move the discipline in directions less obviously related to the overall objective of promoting innovation through precise and well-reasoned applications of doctrinal rules. Moreover, in dispute settlement decisions the trade-offs are made not by judges attuned to the complexities of innovation policy but by a panel of persons whose neutrality vis-à-vis competing interpretations of TRIPS provisions might make them susceptible to applications that vindicate the multilateral bargain rather than innovation goals. For example, we do not like the long lists of geographical terms that many developing countries have been asked to surrender in their acceptance of bilateral trade deals with the European Union (EU).9 As a matter of IP policy, it seems wrong that a country like South Africa would agree that its robust agricultural sector would be forbidden use of 250 terms for cheese, wines, meats, vegetables, and oils.10 But we also accept that we cannot judge the value of the trade-off between reduced tariffs on exports to the EU versus a developing country’s promise to give exclusive rights to a few hundred words. Indeed, a rational developing country policymaker may say it is a good deal: the EU will lower its tariffs (something easy to monitor and enforce), while the developing country will protect EU geographical indications (GIs) by statute and probably not add additional resources to IP enforcement on the ground. The

8 See, e.g., Reichman and Dreyfuss, Harmonization at 85 (‘With TRIPS, at least, these countries obtained side payments (in the form of trade concessions) to offset the rising costs of knowledge products.’); Id. at 100: Of course, the TRIPS Agreement adopted some relatively high standards, and various bilateral and regional free trade agreements impose even higher ones. But in those negotiations, there is, at least theoretically, the prospect that advanced industrialized countries will exchange higher intellectual property standards for trade concessions in other areas which fosters some degree of equity. The rents to be extracted from a highly protectionist intellectual property regime would thus be offset (to some extent) by new market access opportunities. 9 Although neither of us is opposed to legal protection of geographical indications (GIs). See, e.g., Ruth L. Okediji, The International Intellectual Property Roots of Geographical Indications, 82 Chi.-Kent L. Rev. 1329 (2007); Justin Hughes, Champagne, Feta, and Bourbon: The Spirited Debate about Geographical Indications, 58 Hastings L. J. 299 (2006). 10 Annex 1 (List geographical indications of South Africa and the EU) of Protocol 3 (Geographical indications and trade in wines and spirits) of the Economic Partnership Agreement between the European Union and its Member States, of the one part, and the SADC EPA States, of the other part (2014), Official Journal of the European Union (EPA), L 250/3 (16 September 2016), at https://​trade​.ec​.europa​.eu/​ doclib/​docs/​2015/​october/​tradoc​_153915​.pdf.

464

Improving intellectual property

developing country policymaker may also note that nobody was using most of those words in their market anyway (which is likely how the Europeans feel when they agree to protect much less known African geographical names).11 Or a least-developed country policymaker, like many in sub-Saharan Africa, might conclude that lower tariffs on commodity exports will help thousands of small farmers or mine workers, while exclusive rights on GIs – even when enforced – will only raise prices on some goods that are part of elite, urban lifestyles. Described that way, it is a perfectly reasonable policy decision. Indeed, it is a developing country exploiting the politically understandable but economically irrational adamance of the EU when it comes to GIs. While the trade-offs of a comprehensive trade deal that includes IP may be opaque, the legal academic can still take the principled view that the trade-offs themselves are the problem, i.e., that certain principles and interests are simply too important to be compromised. We accept, for example, that that would be legitimate grounds to oppose integration of any IP norms into international trade. But as legal academics, we are not qualified to evaluate the net welfare gain that might be possible from wholesale bargains in which certain principles of IP are ignored in favor of trade concessions. This is a reality we both have faced when working with negotiators in Geneva.

3.

OVERESTIMATING THE WTO AS A FORUM FOR IP LEGAL NORM FORMATION

Dreyfuss and Dinwoodie have attributed the lack of absence of new norm formation at the WTO to ‘stasis in the WTO’ and ‘a disconnect between the WTO’s objective of enhancing economic welfare through free trade and the values embodied in intellectual property law.’12 They have also posited that WIPO has an ‘institutional design that could make the international intellectual property system more responsive to changing needs.’13 We agree and elaborate on that point.14 There are structural reasons why the WTO’s role in making new international legal norms post-TRIPS has been limited to global health care crises (HIV and COVID). These structural reasons make WIPO a more hospitable environment for careful discussion and deliberation of IP issues along the

11 Id. While South Africa agreed to protect 250 EU GIs, the EU pledged to protect approximately 100 South African geographical terms, most of which are probably not used in any EU-South Africa trade. 12 Dinwoodie & Dreyfuss, Designing a Global IP System, supra note 4, at 1190. 13 Id. at 1193. 14 Id. at 1193–1194.

A scholarly look at international IP

465

lines that most concern Dreyfuss, namely establishing global norm-coherence within a framework that meaningfully supports innovation.15 The WTO lacks WIPO’s system of standing committees dedicated to different areas of IP. As recently as the 1990s, when the time seemed ripe for the development of new international legal norms in some area of IP, WIPO would convene an ad hoc ‘committee of experts’ to work on the issue. As more and more delegations and observers (representing civil society and industry) participated, the accreditation process for individuals and delegations to attend these meetings became an increasing burden on WIPO staff. The solution was to create separate ‘standing committees’ dedicated to patents, to copyright and neighboring rights, and to trademarks, industrial design, and geographical indications. Over time, the approach expanded to include committees on traditional knowledge and traditional cultural expression [the ‘Inter-Government Committee’ (IGC)], a Committee on Development and IP, and an ‘Advisory Committee on Enforcement’ (ACE).16 The WTO’s closest counterpart is the ‘TRIPS Council,’ which is the organ responsible for monitoring compliance with TRIPS provisions. Monitoring compliance could be understood to confer broader norm-setting authority than Dreyfuss’ views might accommodate. In one view, the compliance mandate operates as ‘an explicit grant of authority to, in the first instance, interpret and give full force and meaning’ to the TRIPS Agreement and to foster its ongoing development.17 This generous view of the TRIPS Council finds support in Article 68 of TRIPS: The Council for TRIPS shall monitor the operation of this Agreement and, in particular, Members’ compliance with their obligations hereunder, and shall afford Members the opportunity of consulting on matters relating to the trade-related aspects of intellectual property rights. It shall carry out such other responsibilities as assigned to it by the Members, and it shall, in particular, provide any assistance requested by them in the context of dispute settlement procedures. In carrying out its functions, the Council for TRIPS may consult with and seek information from any source it deems appropriate. In consultation with WIPO, the Council shall seek to establish, within one year of its first meeting, appropriate arrangements for cooperation with bodies of that Organization.

15 A Neofederalist Vision, supra note 2, at 177 (‘[C]oherence is essential to robust innovation: creativity cannot flourish without a greater degree of certainty than the current regime permits.’) 16 Sisule F. Musungu and Graham Dutfield, Multilateral Agreements and a TRIPS-plus World: The World Intellectual Property Organisation (WIPO 6, Quaker United Nations Office (QUNO), Geneva (2003) (describing the committee structure at WIPO). 17 Ruth Okediji, WIPO-WTO Relations and the Future of Global Intellectual Property Norms, 39 Netherlands Yearbook of Int’l L. 69 (2008).

466

Improving intellectual property

Despite this broad language, Dreyfuss’ scholarship reflects a preference for WIPO as a more hospitable forum for the development of global IP norms. The consultative nature and regular cadence of WIPO’s committee structure make her preference defensible. Importantly, at least so far, the WTO has conceded deliberation over pure IP norms – including the role of international IP in fostering innovation - to WIPO and its mature standing committees.18 There is much about WIPO’s standing committee system that can be criticized as wasteful, but we agree that it creates a better framework for discussion and deliberation of issues in a community in which there are IP experts present. The WTO has lurched toward amendment of TRIPS on only two occasions – both of which were high-profile international public health crises that triggered front-page scrutiny in the developed world. In contrast, WIPO’s standing committee system works deep in the weeds of IP, producing the Patent Law Treaty (2000), the Singapore Treaty on the Law of Trademarks (2006), the Beijing Treaty on Audiovisual Performances (2012), and the Marrakesh Treaty for the Blind (2013) – not to mention significant interpretative work on international IP legal norms, including ‘joint recommendations’ on well-known marks, trademark licensing, and protection of trademarks on the internet.19 Moreover, two new potential agreements are on the horizon – one on design law and one on genetic resources and traditional knowledge.20 All these are products of the WIPO standing committee system. In 2007, Dreyfuss and Reichman advocated ‘gaining experience and data from living within the parameters set out by the TRIPS Agreement during a prolonged period of open-minded experimentation.’21 While the TRIPS Council may scrutinize specific national IP laws through its periodic review processes, at WIPO the standing committees regularly commission comparative law studies and bring together more genuine national ‘experts’ in IP.

18 See id. at 100–4 (describing three models of WIPO-WTO relations: (1) an expert agency model; (2) a presumptive peer-to-peer model; and (3) an explicitly hierarchical model). 19 WIPO, Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks (1999), at https://​www​.wipo​.int/​edocs/​pubdocs/​en/​marks/​833/​ pub833​.pdf; WIPO, Joint Recommendation Concerning Trademark Licensing (2000), at https://​www​.wipo​.int/​edocs/​pubdocs/​en/​marks/​835/​pub835​.pdf; WIPO, Joint Recommendation Concerning Provisions on the Protection of Marks, and Other Industrial Property Rights in Signs, on the Internet (2001), at https://​www​.wipo​.int/​ edocs/​pubdocs/​en/​marks/​833/​pub833​.pdf. 20 See WIPO Member States Approve Diplomatic Conferences for Two Proposed Accords, Geneva, July 21, 2022 PR/2022/893, https://​www​.wipo​.int/​pressroom/​en/​ articles/​2022/​article​_0009​.html. 21 Reichman and Dreyfuss, Harmonization, supra, note 2 at 129.

A scholarly look at international IP

467

Finally, except for the HIV and COVID crises, negotiations at WTO have historically been structured in terms of trade-offs, i.e., complementary concessions by different countries or groups of countries. In contrast, negotiations at WIPO are more focused on the pros and cons of individual legal norms – and whether new norms in a particular area are achievable through consensus. Such consensus takes years to develop, and often reflects input from national experience and evidence-based conclusions that the norm is ripe for international action. In short, WIPO is the only forum in which the granular, data-driven, and time-tested evolution of IP norms can mimic legislative action at the national level. As both Dreyfuss and Dinwoodie acknowledge, rarely is an international IP norm the result solely of multilateral engagement.22 In this regard, WIPO norm-setting almost always borrows from and builds on national law; its efforts are largely limited to coordinating diverse interests of member states, cajoling members of the diplomatic corps, organizing seminars and other activities that facilitate dialogue, and nudging negotiators to reach compromise.

4.

NEITHER WTO PANELS NOR WIPO CAN BE ‘ACTIVIST’

One general theme in scholarly writing about international IP is a desire for more active, policy-oriented efforts by institutional participants. At some junctures Dreyfuss has fallen in this group, advocating ‘[g]reater input from WIPO’ at the WTO and suggesting that ‘WIPO could serve as a vehicle for keeping WTO law abreast of the evolving demands of both producers and consumers of innovation, as well as the varied needs of the WTO’s membership.’23 She suggested this in the belief that WIPO ‘along with the agreements it administers, brings to the table an intellectual property sensibility that is currently lacking in the WTO.’24 The calls for WIPO to be more activist often seem to envision WIPO as an agency, like an executive branch agency, with its own decision-making capacity. This is understandable and admirable, but it should be remembered that WIPO is an international organization in which the membership jealously guards their prerogatives, often curtail initiatives from WIPO leadership, and – because of different viewpoints among WIPO Members – draw narrow limits on WIPO’s freedom of action. WIPO’s initiative with model laws offers a good example.

See generally A Neofederalist Vision, supra note 2, chps. 2, 3, 4 and 7. Dinwoodie & Dreyfuss, Designing a Global IP System, supra note 4 at 1194. 24 Id. at 1195. 22 23

468

Improving intellectual property

In the 1960s and 1970s WIPO developed model copyright and patent laws that were directed at developing countries emerging from colonial rule. WIPO moved away from that work after critiques of its strategies to incorporate developing countries into the IP system gained traction in other UN agencies addressing economic development concerns. Today, WIPO disclaims having a model copyright law to present to developing countries because that would require making choices on issues where Members have deep and passionate disagreements, i.e., moral rights, exceptions and limitations. The 2007 ‘Development Agenda’ 25 did not change this at all; if anything it has made WIPO’s Secretariat more cautious in relation to Member States’ conflicting agendas. The 45 recommendations of the Development Agenda repeatedly characterize WIPO as a ‘member-driven’ organization26 and that ‘norm-setting activities’ should occur ‘through a member-driven process promoting the participation of experts from Member States, particularly developing countries and LDCs.’27 Indeed, the Development Agenda marked an occasion when all WIPO Member States agreed that future norm-setting, ‘be in line with the principle of neutrality of the WIPO Secretariat.’28 The bottom line is that on any hot-button issues, if WIPO’s membership is not in substantial agreement, WIPO itself – that is, the WIPO Secretariat – would be ill-advised to take a position. Its ability to continue serving as the focal point for global IP norm-setting inevitably demands such disciplined and strategic constraint.

5.

CALLING ALL POLITICAL SCIENTISTS

Recognition of a strong North/South dynamic in international IP only goes so far. Other basic dynamics in bilateral, plurilateral, and multilateral negotiations for IP legal norms include disparities in capacity, disparities in expertise, or disparities in domestic politics. It is important to understand that these disparities do not cut cleanly across North/South lines. When it comes to domestic politics, the diplomats representing India, Brazil, Nigeria, South Africa, or Mexico may have just as or more complicated politics in their home capitals as the Americans face in Washington or the Australians in Canberra. In India, library constituents may go toe-to-toe with Bollywood representatives and generic drug manufacturers may have complicated agendas as they look to move up the value chain. In the past decade of 25 The 45 Adopted Recommendations under the WIPO Development Agenda, at https://​www​.wipo​.int/​ip​-development/​en/​agenda/​recommendations​.html​#e. 26 Id. at Recommendations 15, 21, 43, 44. 27 Id. at Recommendation 21. 28 Id. at Recommendation 15.

A scholarly look at international IP

469

the Standing Committee on Copyright, the main proponents of a new broadcasting right have been Japan and South Africa – because the South African broadcasters believe their signals are being taken and retransmitted though sub-Saharan Africa. And this is not new. In 2000, the diplomatic conference that attempted to complete what later became the 2012 Beijing Treaty on Audiovisual Performances ran aground because of what was commonly viewed as an EU/US disagreement about protecting film producers’ interests. But it was actually the US and India that opposed the EU position29 – because the Indian film producers felt they had the same issues as their California counterparts. Nollywood film producers also felt similarly, and Nigeria only recently ratified the Beijing Treaty after the film industry agreed not to block its adoption. In contrast, smaller developing jurisdictions lack meaningful policy discussions at home – often because they lack organized stakeholders. The country’s ‘position’ may simply be the position taken by a Minister, a sub-cabinet officer, or even just a political officer in that country’s mission in Geneva. That reality contributes to the voting bloc structure at WIPO. Among the 55 members of the ‘Africa Group,’ some will have sophisticated consultation processes in their capitals, but many will rely on the development of an Africa Group position in Geneva – which then may or may not get communicated to respective capitals for approval. Separate from the disparities in their domestic politics, there are also [a] great disparities among countries in diplomatic capacity and [b] great disparities among countries in expertise in IP issues. When it comes to diplomatic corps, Argentina, Brazil, Mexico, and South Africa have deep bench teams that can rival or surpass those of many developed countries. At the 2012 Beijing Diplomatic Conference, South Africa sent a delegation of 17 people and Brazil sent a nine-person delegation, while Australia sent four persons, Germany sent two persons, and Canada did not attend.30 At the 2013 Marrakesh Diplomatic Conference, South Africa sent a nine-person delegation, Brazil sent a ten-person delegation, and India sent six people; in contrast, Japan sent only five people and Canada only three.31 It has been common knowledge for

29 For background on the negotiation of the Beijing Treaty, see Justin Hughes, Actors as Authors in American Copyright Law, 51 Conn. L. Rev. 1, 7–15 (2019). 30 WIPO Document AVP/DC/INF/2, https://​www​.wipo​.int/​edocs/​mdocs/​copyright/​ en/​avp​_dc/​avp​_dc​_inf​_2​.pdf. 31 WIPO Document VIP/DC/INF/2, https://​www​.wipo​.int/​edocs/​mdocs/​copyright/​ en/​vip​_dc/​vip​_dc​_inf​_2​.pdf.

470

Improving intellectual property

years that Brazil’s diplomatic corps is superb32 – as well or better trained than foreign service officers from developed countries. It is difficult to discuss publicly these differences in capacity – scholars only gingerly mention qualitative differences among judges or legislators in different national legal systems.33 Discussing countries’ different respective diplomatic capacities may be even harder. But understanding the challenges faced by smaller developing countries requires some frankness. A smaller developing country may have just a couple diplomatic officers in Geneva that have to shuttle among the alphabet soup of Geneva meetings – ILO, ITU, OHCHR, UNHCR, UPOV, WHO, WIPO, WMO, etc.34 Such a diplomat has a hard enough time just reporting back to capital what is happening, let alone soliciting their capital’s views, then actively participating in formation of proposals and group positions. There are also distinct differences in the substantive expertise that different countries can bring to different IP discussions. Again, ‘expertise’ does not always follow a North/South divide. At the meetings of WIPO’s ‘Inter-Governmental Committee’ (IGC) which discusses traditional knowledge (TK) and traditional cultural expression (TCE), Thailand, Indonesia, Mexico, Nigeria, and Egypt are among the countries that can send true experts in their field. While developed countries and China may have the greatest expertise in patent law, expertise in copyright and trademark is more evenly spread among jurisdictions. And among developed countries, there is great variation in their experience with TK/TCE issues: Australia and New Zealand have much more experience on these issues than, say, Germany, Japan, or Italy.

32 In fact, Brazil’s diplomatic corps training school now trains diplomats from other Lusophone countries. Gustavo Augusto-Vieira, The Brazilian School of Diplomacy, Atlantico, 17 June 2015, at https://​atlanticoonline​.com/​en/​the​-brazilian​-school​-of​ -diplomacy/​. 33 See, e.g., Margo A. Bagley, ‘Ask Me No Questions’: The Struggle for Disclosure of Cultural and Genetic Resource Utilization in Design, 20 Vand. J. Tech. & Ent. L. 975, 1003 (2018) (noting many low- and middle-income countries ‘may lack the sophisticated interpretive tools high-income countries use to creatively and favorably implement treaties in national law.’); Hans-Bernd Schäfer, Rules versus Standards in Rich and Poor Countries: Precise Legal Norms as Substitutes for Human Capital in Low-Income Countries, 14 Supreme Court Econ. Rev. 113 (2006) (noting that developing countries with insufficiently experienced judges may be better off with precise legal rules instead of flexible legal standards). 34 See, e.g., Peter Yu, Realigning TRIPS-Plus Negotiations with UN Sustainable Development Goals, in Intellectual Property and Sustainable Markets 38, 52 (Ole-Andreas Rognstad & Inger B. Ørstavik eds., 2021) (describing developing countries’ ‘whose limited negotiating personnel is often stretched between negotiations inside and outside the multilateral fora …’).

A scholarly look at international IP

471

When a developing country has strength in its diplomatic corps or its substantive IP experts, the country’s ability to affect the multilateral process changes. For example, the substantive proposals that were needed to complete the 2012 Beijing Treaty on Audiovisual Performances were submitted by a cluster of countries that included Brazil, India, Kenya, Mexico, Nigeria, and Turkey, in addition to the EU and the United States.35 Similarly, Nigeria’s lead IP diplomat in Geneva played a central role in drafting the proposal for a Diplomatic Conference that was adopted at the July 2022 WIPO General Assemblies for an agreement on genetic resources and traditional knowledge disclosure in patent applications. While only a first step in the recognition of TK, TCE and genetic resources in the international IP system, this was a long-sought victory for a broad coalition of WIPO Member States.36 No one expected, much less believed that such a deal was possible at all, and certainly not soon. True, some IP academics instinctively frown at the possibility of new IP treaties that potentially ‘enclose’ what many view as the public domain or that ostensibly further erect barriers to scientific inquiry. But in the dynamic context of multilateral IP negotiations, such deals are inevitable, always evolving, and reflect trade-offs or commitments already decided nationally, even if not wisely in our academic view.

6. CONCLUSION The international IP system has grown in complexity and importance since the conclusion of the TRIPS Agreement. Professor Dreyfuss has cautioned us in her rich and wide-ranging body of work on TRIPS that this complexity risks weakening the efficacy of national IP laws to promote innovation while reinforcing the tendency for global IP norm-setting processes to destabilize

35 See Agreed Statement to Article 1, Diplomatic Conference on the Protection of Audiovisual Performances, Beijing, June 20 to 26, 2012. Proposal by Brazil, the European Union and its Member States, Kenya, Mexico, Nigeria, Turkey and the United States of America, WIPO Document AVP/DC/9, https://​www​.wipo​.int/​ edocs/​mdocs/​copyright/​en/​avp​_dc/​avp​_dc​_9​.pdf; Agreed Statement to Clarify the Relationship between Article 13 and Article 15 of the Treaty, Diplomatic Conference on the Protection of Audiovisual Performances, Beijing, June 20 to 26, 2012. Proposal by Brazil, Mexico, and the United States of America, WIPO Document AVP/DC/10, https://​www​.wipo​.int/​edocs/​mdocs/​copyright/​en/​avp​_dc/​avp​_dc​_10​.pdf; Agreed Statement on Article 15 Technological Measures, Diplomatic Conference on the Protection of Audiovisual Performances, Beijing, June 20 to 26, 2012. Proposal by the European Union and its Member States, Kenya and Nigeria, WIPO Document AVP/ DC/11, https://​www​.wipo​.int/​edocs/​mdocs/​copyright/​en/​avp​_dc/​avp​_dc​_11​.pdf. 36 See supra note 19.

472

Improving intellectual property

the tenuous balance between incentives to create and access to knowledge goods. Like Dreyfuss, we also prefer a more innovation-focused and equitable international IP regime, wherever the source. In the end, however, the proposals and insights academics and commentators offer compete with the difficult trade-offs policymakers must make for other perhaps more immediate priorities. We realize that the desirability of those trade-offs cannot fairly be subject to the deeply held convictions we share about the role of IP in promoting a better and more inclusive global knowledge economy. Despite the best efforts of scholars, these pragmatic trade-offs are a risk of both the ‘code view’ associated with the WTO and the more idealized, deliberative, and innovation-attuned institutional context of WIPO.

45. IP in an era of new mercantilism Daniel Benoliel 1. INTRODUCTION Economists essentially agree that international trade should be free.1 Of course, there are market deficiencies. Nonetheless, tariffs taxing imports are rarely considered the optimal solution to such problems. Global trade’s ambiguous welfare effects have burst during the Presidency of Donald Trump to a new mercantilist era, a disdain for international cooperation, and a rejection of multilateralism in various parts of the world.2 Institutional let down noticeably witnessed with the deadlock, which ended the 11th WTO Ministerial Conference.3 The de-globalization meme was no longer just a ‘political’ concept.4 After five decades of leading struggles to ease international trade barriers, in 2018, the United States (US) enacted numerous waves of higher tariff on various products and countries. Import tariffs increased from 2.6–16.6 percent on 12,043 products covering $303 billion (12.7 percent) of annual US imports.5 In response, trade partners imposed reciprocal tariffs on US exports. These countermeasures increased tariffs from 7.3–20.4 percent on 8,073 export products covering $127 billion (8.2 percent) of annual US exports.6

1 For example, see the survey on free trade in Initiative on Global Markets, http://​www​.igmchicago​.org/​surveys/​free-trade. 2 For discussion concerning Trump-era new mercantilist policies across the development divide, see Joseph E. Stiglitz, Trump and Globalization, 40 J. of Policy Modeling 515 (2018); Marcello Minenna, The Halt in Global Trade Growth and The Rise of Neo-Mercantilism, Social Europe, Aug. 25, 2016. 3 Raghavan Chakravarthi, WTO Ministerial Talks Collapse in Disarray, Guardian Feb. 14, 2018. 4 See Minenna, supra note 2. 5 Pablo D. Fajgelbaum, Pinelopi K. Goldberg, Patrick J. Kennedy & Amit K. Khandelwal, The Return to Protectionism, 135(1) The Quarterly Journal of Economics 1, 41 & Table 1 (2020). 6 Id.

473

474

Improving intellectual property

This return to protectionism is unprecedented in the postwar era,7 due to the size of the countries involved, the magnitude of the tariff increases, and the breadth of tariffs across sectors.8 From an IP and innovation policy standpoint, this new mercantilist sway is unique for another reason which this chapter analyzes. During the 1970s and early 1980s, similar apprehensions were raised following US exposure to noteworthy concurrence by advanced countries such as Japan, Germany, and France in terms of technology and productivity. This caused great concern among US policy circles, most markedly the Ronald Reagan administration. Yet, as opposed to the recent focus on protectionist measures, the Reagan government introduced a research and development (R&D) tax credit scheme in 1981 for the first time in US history. The US protectionist policy pursued by the Trump administration thus offers an opportunity to evaluate the effect on innovation outputs as reflected (albeit in part) by patenting activity nationally and overseas.

2.

IP AND NEW MERCANTILISM: AN OVERVIEW

Trade theory offers no definitive presumption regarding the effects of tariffs on output or the trade balance.9 The impact depends on a host of factors, including the timing and expected duration of the tariff shock, the performance of real wages and exchange rates, and institutional factors like the degree of capital mobility and the exchange rate regime.10 More recent work has either focused on understanding the impact of trade liberalization or trade openness on currency movements and the trade balance,11 or on productivity and output.12 The impact of trade policies has also related to inequality, that is, upon the relative significance of trade and technology in driving inequality.13 That research notably used firm-level data to understand the impact of commercial policy

Id. Id. 9 See Davide Furceri, Swarnali A. Hannan, Jonathan D. Ostry & Andrew K. Rose, Macroeconomic Consequences of Tariffs (IMF, Working Paper No. WP/19/9, 2018). 10 Jonathan D. Ostry & Andrew K. Rose, An Empirical Evaluation of the Macroeconomic Effects of Tariffs, 63 J. of Int’l Money and Fin., 63 (1992). 11 See Jiandong Ju, Yi Wu and Li Zeng, The Impact of Trade Liberalization on the Trade Balance in Developing Countries, 57(2) IMF Staff Papers 427 (2010). 12 James Feyrer, Distance, Trade, and Income – The 1967 to 1975 Closing of the Suez Canal as a Natural Experiment (NBER, Working Paper No. 15557, 2009); Francisco Alcalá & Antonio Ciccone, Trade and Productivity, 119(2) The Quarterly J. of Economics 613 (2004). 13 Elhanan Helpman, Globalization and Wage Inequality (NBER Working Paper No. 22944, 2016). 7 8

IP in an era of new mercantilism

475

on wage inequality.14 Lately, high-frequency trade policy data was used to study the impact of trade policies on macroeconomic fluctuations related to temporary trade barriers.15 In the last two decades, economists have begun to quantify the role of firms’ investments in technology adoption or R&D as a component of the productivity-export link. Many recent papers using micro-level data document this link. They found that a firm’s export-market entry, incentivized by reductions in trade costs, is associated with increased domestic innovation. Following the work of economists Andrew Bernard and J. Bradford Jensen,16 or Mary Hallward-Driemeier, Giuseppe Iarossi, and Kenneth Sokoloff,17 economists find evidence that exporting is also correlated with firm investment in R&D or adoption of new technology that can also affect productivity.18 Complementing this evidence, Chiara Criscuolo, Jonathan Haskel, and Matthew Slaughter,19 analyze survey data collected for EU countries and find that firms that operate globally devote more resources to assimilating knowledge from abroad and generate more innovations and productivity improvement. A key implication of these studies is that the technology and export decisions are interdependent, and both channels may endogenously affect the firm’s future productivity. The logic as regards IP policy is clear. As with standard trade barriers, patent rights may be awarded and exploited in such a way as to discriminate against foreign interests.20 Governments typically want the strongest possible protection in foreign countries in order to maximize returns to domestic

14 E.g., Erhan Artuç John McLaren, Trade Policy and Wage Inequality: A Structural Analysis with Occupational and Sectoral Mobility, 97(2) J. of Int'l Economics 278 (2015). 15 Alessandro Barattieri, Matteo Cacciatore, & Fabio Ghironi, Protectionism and the Business Cycle, 129 J. of Int’l Econ. 1 (2021). 16 Andrew B. Bernard & J. Bradford Jensen, Exporters, Skill Upgrading, and the Wage Gap, 42(1–2) J. of Int’l Econ. 3 (1997). 17 Hallward-Driemeier, Mary, Giuseppe Iarossi & Kenneth L. Sokoloff, Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data (National Bureau of Economic Research, Working Paper No. 8894, 2002). 18 See Bee Yan Aw, Mark J. Roberts & Daniel Yi Xu, R&D Investment, Exporting, and Productivity Dynamics, 101(4) American Economic Rev. 1312 (2011); Paula Bustos, Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinean Firms, 10(1) Amer. Econ. Rev 304 (2011). 19 Chiara Criscuolo, Jonathan E. Haskel & Matthew J. Slaughter, Global Engagement and the Innovation Activities of Firms, (NBER, Research Paper No. 11479, 2005). 20 Keith E. Maskus, Lessons from Studying the International Economics of Intellectual Property Rights, 53 Vand. L. Rev. 2219 (2000).

476

Improving intellectual property

firms.21 They similarly want the weakest possible protection for foreign firms in their domestic markets to accelerate free-riding on imported technologies.22 In the postwar era, economists Ufuk Akcigit, Sina Ates, and Giammario Impullitti measured patenting activity as a proxy for domestic innovation, and assessed the effect of protectionist measures on US innovation output. That follows the convergence of advanced countries, including Japan, Germany, and France, over technology and productivity, which the United States was exposed to during the 1970s and early 1980s. Consistent with the theoretical claims regarding the relationship between trade and innovation relation, they showed that patent applications by US residents, used as a proxy for domestic innovation, declined in absolute terms during the second half of the 1970s. United States Patent and Trademark Office (USPTO) data revealed that the ratio of foreign patents to total patents doubled between 1975 and 1985.23 While the United States held 70 percent of US patent applications in 1975, this share declined to around 55 percent ten years later.24 Their conclusion was that protectionist measures decrease the incentives for domestic firms to invest in defensive innovation,25 because they reduce domestic firms’ exposure to foreign competitive demands.26 Gradually, this dynamism leads to a long-run welfare decline.27 While patent applications provide a more direct measure of innovation, output R&D expenditure is a nominal variable. That said, in the long run, R&D subsidies stimulate domestic innovation and increase welfare without

21 Susan Scotchmer, The Political Economy of Intellectual Property Treaties, 20(2) J. of L., Econ. and Organization 415 (2004). 22 Id. 23 Ufuk Akcigit, Sina T. Ates & Giammario Impullitti, Innovation and Trade Policy in a Globalized World 2 & Figure A.1 in App. A.1 (NBER, Working Paper No. 24543, 2018). 24 Id., at 2; Giammario Impullitti, International Competition and US R&D Subsidies: A Quantitative Welfare Analysis, 51(4) Int’l Economic Rev. 1127 (2010). 25 Ufuk Akcigit, Sina T. Ates & Giammario Impullitti, Innovation, Trade Policy, and Globalization, FEDS Notes 2 & Figure 3B (Sep. 30, 2019) https://​www​.federalreserve​ .gov/​econres/​notes/​feds​-notes/​innovation​-trade​-policy​-and​-globalization​-20190930​ .htm. 26 Id., but see for indications on mixed results on import competition in advanced economies and especially the US, in Pian Shu & Claudia Steinwender, The Impact of Trade Liberalization on Firm Productivity and Innovation, 19 Innovation Policy and the Economy 39, 39, 51 (2019). 27 FEDS Notes, supra note 25. For the Trump-era context see Robbie Gramer, Economists Take Aim at Trump Trade Theory - Again, Foreign Policy, March 6, 2017; Ana Swanson, Trump Rails Against Trade Deficit, But Economists Say There's No Easy Way For Him To Make It Go Away, Washington Post, March 12, 2017.

IP in an era of new mercantilism

477

jeopardizing the gains from trade.28 In the 1970s and early 1980s, the United States lagged advanced countries such as Japan, Germany and France, in terms of technology and productivity outputs.29 But rather than implement protectionist measures, the Reagan administration set a historic precedent presenting an R&D tax credit scheme in 1981. This was followed by additional support from individual states. Subsequently, R&D and innovation activity picked up in the US30 The Trump administration’s new mercantilism opted for different choices. It combined intense protectionist measures with the most year-over-year federal R&D funding increase since 2009’s Recovery Act known as the Consolidated Appropriations Act of 2021.31 Yet, in contrast to the Reagan administration’s reaction to the trade deficit, no comparable R&D tax credit scheme was enacted. Instead, the Trump administration’s Tax Cuts and Jobs Act of 2017 marked the first-time R&D expenses could not be deducted immediately in the US since 1954.32 The exact short-term effect of Trump’s R&D policy offers a complex empirical challenge, especially when assessed in comparison with the Reagan administration’s more consolidated alternative. However, the following findings indicate that unlike the Reagan administration, Trump-era protectionism did not offer a substantive balance of trade advance, nor did it provoke a domestic innovation rate increase.

3.

THE IMPACT OF TRADE ON IP

Recent US protectionist policy has had three main effects on IP-related trade policy. Sapna Kumar observed two effects.33 These are the adoption by trade partners of US-style IP treaty law adhering to US-led strict IP protection and the strengthening of local US patent activity. However, both US protectionist effects did not take account of the US innovation market effect. This means that an account of the US innovation market reaction to Trump-era protectionism should also be assessed in appraising protectionist-based economic growth. This section thus follows with a third observation. It includes a preliminary review of core empirical findings whereby in the short-term, US innovation measured through national and international patenting has been indifferent to FEDS Notes, Id. Akcigit, Ates & Impullitti, supra note 25. 30 Id., at 3 & Fig. 3; FEDS Notes, supra note 25, at Fig. 2 and accompanying text. 31 E.g., The Consolidated Appropriations Act of 2021 (H.R. 133). 32 Kevin Pinner, Trump-Era R&D Expensing Rule to Cut $45B Growth, Study Says, Law 360 (Sep. 9, 2021). 33 Sapna Kumar, Innovation Nationalism, 51 Conn. L. Rev. 205 (2019). 28 29

478

Improving intellectual property

new mercantilism in the Trump era. In such a way, US domestic innovation arguably failed to produce the objectives underlying the new mercantilism. 3.1

Adoption of US-style IP Treaty Law

The first effect of trade on IP policy compels trading partners to adopt US-style patent and international IP treaty law for trade concessions.34 The international IP system left much discretion for US-led regulation at the national level. Consequently, US mercantilist frustrations with the international IP system have also inspired the limitations imposed mostly on Global South’s partners, mainly in bilateral, regional, or plurilateral settings. Examples include the Comprehensive Economic and Trade Agreement (CETA),35 the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP),36 the Regional Comprehensive Economic Partnership (RCEP),37 and the United States–Mexico–Canada Agreement (USMCA).38 All of these initiatives incorporated US-led provisions on strict IP protection. In addition, the Trump era witnessed a renewed US-led activity in WIPO, including adopting

34 Jerome H. Reichman, The TRIPS Component of the GATT's Uruguay Round: Competitive Prospects for Intellectual Property Owners in an Integrated World Market, 4 Fordham Intell. Prop. Media & Ent. L.J. 171, 255–58 (1993); Josef Drexl, The Concept of Trade-Relatedness of Intellectual Property Rights in Times of Post-TRIPS Bilateralism, in TRIPS Plus 20: From Trade Rules to Market Principles 53, 63 (Hans Ullrich et al. eds., 2016). 35 Comprehensive Economic and Trade Agreement Between Canada and the European Union and Its Member States (CETA), Can.-EU, Oct. 30, 2016, https://​www​ .international​.gc​.ca/​trade -commerce/trade-agreements-accords-commerciaux/agr-acc/ ceta-aecg/text-texte/toc-tdm .aspx?lang=eng eliminated 98 percent of the tariffs between Canada and the EU. 36 Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Mar. 8, 2018, https:// www .mfat .govt .nz/assets/Trade-agreements/CPTPP/Comprehensiv e-and-Progressive-Agreement-for-Trans-Pacific-Partnership-CPTPP -English .pdf is a trade agreement between 11 countries making the CPTPP the third largest free trade area in the world by GDP after the North American Free Trade Agreement and European Single Market. 37 Regional Comprehensive Economic Partnership Agreement, Nov. 15, 2020, https://​rcepsec​.org/​legal​-text/​[hereinafter RCEP Agreement] is a free trade agreement (FTA) between the member states of the Association of Southeast Asian Nations (ASEAN) and others including Australia and New Zealand. 38 United States–Mexico–Canada Agreement, Can.-Mex.-U.S., Nov. 30, 2018 [hereinafter USMCA].

IP in an era of new mercantilism

479

the Marrakesh Agreement,39 and invigorated negotiations over the protection of genetic resources and traditional knowledge.40 These policies primarily focused on problems that the advanced economies directed by the US were encountering. That is mainly due to technological changes after TRIPS went into effect. For example, the advent of internet-based communications gives rise to the need for digital transmissions rules. Computerization creates new avenues to misappropriate trade secrets, leading to a greater interest in protecting confidential information. The development of biologics requires practices geared to the particular challenges involved in finding, testing, and producing them. The modifications made in the new IP instruments deal quite effectively with these issues. To illustrate, the CPTPP includes entire chapters on telecommunications and electronic commerce and provisions on the digital transmission of creative works.41 It also adds an obligation to criminalize computer hacking.42 The conditions in the USMCA on undisclosed data have particularized rules for biologics.43 While the interests of the creative industries in building on earlier works are taken into account in these instruments,44 for the most part, they reflect the North’s desire to strengthen protection and increase incentives to innovate domestically. 3.2

Strengthening Domestic Patent Rights

The second effect trade protectionism has on IP is strengthening domestic patent rights. The US pharmaceutical industry provides the clearest example of domestic protectionist patent policy.45 The industry uses the cost of R&D to justify extending drug protection through additional patents or regulatory exclusivities.46 It also uses this argument to successfully resist price controls found in other countries. Consequently, US consumers pay much higher prices than the rest of the world and thereby subsidize pharmaceutical companies.47 39 The Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled, WIPO Doc. VIP/DC/8, 27, June 2013 (entered into force 30 September 2016). 40 See, WIPO, Recent developments in the WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC), at https://​www​.wipo​.int/​tk/​en/​igc/​snapshot​.html. 41 CPTPP, Chs. 13 & 14; art. 18.71(2). 42 Id., art. 18.78(2). 43 USMCA, art. 20.F.13(1)(a)(ii) and note 42 and art. 20. F. 14. 44 See, e.g., CPTPP, art. 18.66. 45 Kumar, supra note 33, at 235. 46 Id. 47 Id.

480

Improving intellectual property

Sapna Kumar discusses two US bills on this account.48 These are the bipartisan STRONGER Patents Act of 2019,49 and the Restoring American Leadership in Innovation Act of 2021.50 First, in 2018, the bipartisan STRONGER Patents Act was reintroduced in the House, which would make it considerably harder for third parties to challenge bad patents and make it easier for patent holders to obtain injunctions.51 The bill explicitly linked strong patents to innovation, asserting that ‘the United States needs to uphold strong patent protections to maintain its position as the world’s premier innovative country.’52 Second in line, the proposed Restoring American Leadership in Innovation Act of 2021 went one step further. The bill changes the US patent system back to a first-to-invent system.53 Prior to the Leahy-Smith America Invents Act (AIA) in 2011, the first-to-invent system explicitly discriminated against foreign inventors, by restricting proof of invention to activity that occurred in the United States.54 The Bill was enacted in order ‘[t]o promote the leadership of the United States in global innovation,’ and was said to abolish the Patent Trial and Appeal Board, making it harder to invalidate bad patents.55 To conclude, trade policy affects IP and especially patent law twofold. At the international level, TRIPS-compliant treaty law expanded the adoption process of US-style IP laws. At the national level, Congressional bills opted for strengthening domestic patent rights. However, the latter process was subtler and is still incomplete and marred with imminent legislative uncertainty. Effective protectionist trade policy should consider a third trade-IP nexus concerning the domestic innovation market effects of trade protectionism. The following section empirically examines and explains why US domestic innovation measured through patenting activity remained indifferent in the short term to new mercantilist protectionism.

48 On the historical protectionist roots in US Patent Law, see William Hubbard, Competitive Patent Law, 65 Fla. L. Rev. 341, 356 (2013). 49 STRONGER Patents Act of 2019 (H.R.3666) — 116th Congress (2019-2020). 50 Restoring America's Leadership in Innovation Act of 2021 (H.R. 5874). 51 See Steve Brachmann, STRONGER Patents Act Introduced in House, Seeks to Strengthen a Crippled Patent System, IP Watchdog, March 26, 2018. See also STRONGER Patents Act of 2018, H.R. 5340, 115th Cong. (2018). 52 STRONGER Patents Act of 2018, S. 1390, 115th Cong. § 101(8) (2018). 53 US Congress - Bill summaries, Summary: H.R.5874 — 117th Congress (2021–2022). 54 See R. Carl Moy, Essay: Patent Harmonization, Protectionism, and Legislation, 74 J. Pat. & Trademark Off. Soc’y 777, 783–88 (1992). 55 Restoring American Leadership in Innovation Act of 2018, H.R. 6264, 115th Cong. (2018).

IP in an era of new mercantilism

3.3

481

Increase in Patenting Activity

In theory, an increase in US export rates should have witnessed soaring rates of resident- (and possibly abroad-) patenting rates, in support of excessive technology export rates, etc. Instead, the imposition of tariffs had arguably little short-term effect on US patenting activity.56 Such that is regularly measured is due to domestic patent statutory reforms,57 patent cases by litigation rates,58 or economic crises.59 The following findings assesses a panel of World Intellectual Property Organization (WIPO) annual patent application data that spans the USPTO and the EPO between 2000–2020. It separately reviews the three types of patent counts for China, Japan, Germany, UK., France and the US The types reviewed are patent applications by US resident, by patent office, and patent applications filed abroad by national origin. The empirical analysis further considers industry-specific primary US export industries. These are US originated patent applications filing to the EPO by medical technology, biotechnology, computer technology, telecommunications and pharmaceuticals. The findings are divided into US national and international patenting activity. 3.3.1

National activity

3.3.1.1

Indifference or mild decline in resident patent applications filing to USPTO60 My research has shown that since 2013 no increase in patent applications locally in the United States has been observed. A steady number of patent applications around 290,000 has been filed by United States residents to the USPTO every year. This finding may indicate an indifference, or, even a mild decline in the US national patenting activity. It can also be observed that non-resident patent activity in the USPTO largely grew steadily and did not reflect a sharp increase due to 2017 onwards US protectionist trade policy.61 56 See e.g., Gregory G. Brunk & G. Demark, Short-run Trends in U. S. Patent Activity, Scientometrics 12(1-2) 111 (1987). 57 See e.g., Albert G.Z. Hua., Peng Zhang & Lijing Zhao, China as Number One? Evidence from China’s Most Recent Patenting Surge, Journal of Development Economics 124 (2017) 107 (2017), at 108 & Fig. 1 (for China); Daniel Benoliel & Michael Gishboliner, Novelty Traps, Kiwis, and other Flightless Birds, Mich. State L. Rev. Vol. 2020:5, (2022) (forthcoming) (for New Zealand). 58 See Owen Byrd, Patent Case Trends and the Business of Litigation, Lex Machina (February 5th, 2015). 59 See, Daniel Benoliel & Michael Gishboliner, The Effect of Economic Crises on Patenting Activity Across Countries, 14 Chi-Kent J. Intell. Prop. 316 (2015). 60 See Fig. 1, at: bit​.ly/​benoliel1. 61 Id., Fig. 2.

Improving intellectual property

482

3.3.1.2 Increase in rate of foreign patenting activity in the USPTO62 It can be observed that the share of patent applications filed by foreign applicants to USPTO demonstrates steady and significant growth, increasing from 44 percent in 2000 to about 55 percent in 2020. Since 2009 the share of foreign origin patent applications in the US has exceeded 50 percent and has been rapidly growing since 2013. This might indicate that incentivizing US national patenting activity via trade policy was not reflected in the market. Instead, the rate of foreign patent applications in the US increased faster than domestic ones.63 The same research illustrates the largely indifferent growth trends in the four WIPO (IPC)’s industries detailed above between 2018–2020. The chemical engineering and telecommunications industries maintained approximately 5,000 patents; the computer technology and electrical machinery, apparatus, and energy industries, respectively, grew steadily during these years from 21,216 to 26,695 and from 15,1594 to 17,639 patents. 3.3.1.3

Decrease in US resident patenting activity relative to China and other countries64 It follows that resident patent application rates in the US and Europe remain steady, showing a decline in Japan and a sharp growth in China. The comparison shows a mild relative decline in US patenting activity nationally. The US finding is possibly comparable to a broader mild patenting recession foreseen after the subprime 2008 economic crisis globally, with China’s exception. 3.3.2

International activity

3.3.2.1 Recession or slight decline in US originated patent filing abroad65 The observations indicate a global recession in filing patent applications abroad by American applicants since 2015, after a period of significant growth (except 2008–1010, probably because of the global recession). In the years 2019–2020, there is even a slight decline in American patenting rates abroad. Only China indicates an upward trend in Chinese patent filings abroad. 3.3.2.2 Increase in US origin patenting activity at EPO by technologies66 In my research the graphs that point to US search patenting rates in EPO by five types of technology indicate a continuous increase in the rates of 64 65 66 62 63

Id., Fig. 3. Id., Fig. 4. Id., Fig. 5. Id., Fig. 6. Id., Fig. 7.

IP in an era of new mercantilism

483

American patenting in the EPO, specifically, especially since 2016 (except in telecommunications). This could explain that as global trade based on international patenting activity expands, the expansion still focuses on specific Northern markets and notably the European ones. This work tentatively show how patenting activity (as a proxy of domestic innovation) is dependable in global trade, especially with the US’ European trade partners which were excluded from the Trump-era China-US trade war. These findings further indicate that the Trump-era protectionist trade policy had little or no effect on local patenting activity.

4. CONCLUSION Trade policy advanced by statutory law affected IP and especially patent law twofold. At the international level, TRIPS-compliant treaty law expanded the adoption process of US-style IP treaty law. At the national level, Congressional bills opted for strengthening domestic patent rights. However, innovation markets as proxied by local US patenting activity remained unaffected in the short term. Effective protectionist trade policy, thus, failed to advance a complementing domestic innovation market effect. Trade theory offers no conclusive presumption regarding the effects of tariffs on output depending on a host of factors. However, the timeliness of innovation-related outputs (proxied by patenting activity) may exclude a short-term market effect. This finding joins earlier findings whereby protectionist measures decrease the incentives for domestic firms to invest in defensive innovation because they reduce domestic firms’ exposure to foreign competitive demands. However, the chapter’s contribution upholds that protectionist measures dynamism leading to welfare effects are not witnessed in the short term for policymakers and constituents considering economic and political gain.67

See, Appendix: Regression and Correlation Analysis, at: bit​.ly/​benoliel1.

67

46. Toward pluralism in United States intellectual property Michael J. Burstein In this chapter, I articulate and defend a vision of IP pluralism that can be traced through several of Professor Dreyfuss’ writings. It is a vision that recognizes that IP and non-IP innovation incentives can and should exist side-by-side, and it is undergirded by context sensitivity within IP doctrine, boundary-crossing, and attention to institutional alternatives outside the positive law IP regimes. This vision should inspire two lessons for contemporary IP scholars—one methodological and one substantive. Methodologically, as some IP scholarship continues to turn toward empiricism, we should embrace methods that surface and center context and institutional structure. Substantively, our conversations about institutional design ought to focus on field-specificity no less than our conversations about IP doctrine and policy. Dreyfuss’s 2010 article Does IP Need IP? Accommodating Intellectual Production Outside the Intellectual Property Paradigm is her clearest statement of this pluralist vision.1 This article is a response to several related developments in IP scholarship. The first is the exploration of what Chris Sprigman and Kal Raustiala first called IP’s ‘negative space,’2—those areas of: creative art, craft, or act that do[] not enjoy or at least do[] not ordinarily rely upon IP rights against copyists, either because IP is formally inapplicable or because something—perhaps a social norm against IP enforcement, or a legal or economic barrier that discourages resort to formal IP—limits its salience.3 1 Rochelle Cooper Dreyfuss, Does IP Need IP? Accommodating Intellectual Production Outside the Intellectual Property Paradigm, 31 Cardozo L. Rev. 1437 (2010). 2 Kal Raustiala & Christopher Sprigman, The Piracy Paradox: Innovation and Intellectual Property in Fashion Design, 92 Va. L. Rev. 1687, 1762 (2006). 3 Kal Raustiala & Christopher Jon Sprigman, When Are IP Rights Necessary? Evidence from Innovation in IP’s Negative Space, in 1 Research Handbook on the Economics of Intellectual Property Law 309, 311 (Ben Depoorter & Peter S. Menell, eds. 2019); see also Elizabeth L. Rosenblatt, Intellectual Property’s Negative Space: Beyond the Utilitarian, 40 Fla. St. U. L. Rev. 441, 442 (2013) (defining ‘neg-

484

Toward pluralism in United States intellectual property

485

Through detailed study of comedians, French chefs, roller derby players and others, scholars have sought to understand a phenomenon that the classic economic theory of IP suggests shouldn’t happen—the production of appropriable creative works in the absence of exclusive rights.4 Similarly, Yochai Benkler has demonstrated the potential of distributed, commons-based peer production of intellectual goods as an alternative both to market-based production mediated by exclusive rights and government production.5 Meanwhile, in the management literature, several scholars have focused on ‘user innovation’ within distinct communities6 and the use of open innovation models as an innovation strategy. Together, these developments represent a stark challenge to the rationale behind exclusive rights and often form the basis for a normative argument that, in its weak form, argues against further expansion of IP or, in its strong form, suggests that IP ought to be abolished altogether.7 Dreyfuss takes a different approach in her article. She acknowledges the importance of open innovation regimes but argues that they are more limited than their most ardent proponents presume.8 They may be functionally dependent on positive IP law, as in the case of copyleft or defensive licenses.9 They also may be quite contingent—on characteristics of the particular technology at issue or the industrial structure of the endeavor, or even on the shared norms of the innovative community, which are themselves malleable in response to changes in the first two stimuli.10 Indeed, Dreyfuss identifies several factors that may contribute to the devolution of open innovation to more closed models.11 She identifies a critical gap that open innovation models may have difficulty filling relative to closed models—the development of intellectual and human capital.12 Finally, they may have unappreciated normative down-

ative spaces’ as ‘areas where creation and innovation thrive without significant formal intellectual property protection’). 4 See Raustiala & Sprigman, supra note 3, for an overview of the relevant literature. 5 See, e.g., Yochai Benkler, Coase’s Penguin, or, Linux and The Nature of the Firm, 112 Yale L.J. 369 (2002). 6 See, e.g., Eric von Hippel, Democratizing Innovation (2005). 7 For a synthesis of these literatures, see Michael J. Burstein, Open Innovation and Ex Ante Licensing, in 1 Research Handbook on the Economics of Intellectual Property Law, supra note 3, at 330. 8 See Dreyfuss, supra note 1, at 1448–52. 9 See id. at 1448–52. 10 See id. at 1452–53, 145560; see also Rochelle Dreyfuss, Response: Fragile Equilibria, 2007 Va. L. Rev. In Brief 2 (2007) (‘History reveals many examples of innovation communities that have moved from IP’s negative to positive space.’). 11 See Dreyfuss, supra note 10. 12 See Dreyfuss, supra note 1, at 1453–55.

486

Improving intellectual property

sides such as producing an amount of innovation that isn’t socially optimal,13 encouraging the use of secrecy and therefore failing to produce dynamic welfare gains that other regimes might,14 or they may exploit certain classes of knowledge workers such as the dramaturg plaintiff in Thomson v. Larsen.15 Given this extensive critique, one might assume that Dreyfuss favors closed over open innovation. But that is not so. Dreyfuss’ scholarship engages fully with the flaws inherent in exclusive rights regimes—the deadweight loss associated with super-competitive pricing, and the dynamic social welfare losses that result from raising the cost of inputs to future research and development.16 Her conclusion, therefore, is not that one or another model is superior in all circumstances. Instead, she writes, ‘while the potential for intellectual production outside the intellectual property paradigm can potentially solve many of the problems associated with exclusivity, it is unlikely to produce optimal levels of innovation across a full range of intellectual endeavors.’17 Because neither regime is optimal in all circumstances, Dreyfuss takes the view that exclusive rights should not be structured in a such a way as to squelch more open forms of innovation. She reprises a theme she first developed in a 1990 article about trademark and free expression to argue that we should not so quickly jump from value to right;18 and she argues for changes to IP law that would support and protect open innovation where it does thrive such as an expanded experimental use exception from patent infringement, and greater attention to the conflicts between open and closed innovation that can arise because of forking and other licensing issues. In short, she advocates a legal structure that is accommodating of different innovation paradigms. Though this article is perhaps her most explicitly pluralist, there are three themes that run through Dreyfuss’ scholarship that inform and undergird this approach. The first is attention to the contexts in which innovation problems arise. In her writings on IP and biotechnology, for example, Dreyfuss often collaborates with working scientists or scholars of science outside of our discipline. These collaborations greatly enrich the legal analysis. In an article she wrote shortly after the Supreme Court decided in Bilski v. Kappos19 that business methods were only patentable if they did not constitute abstract ideas, but

See id., at 1460–62. See id. at 1462–63. 15 See id. at 1463–65 (citing Thomson v. Larson, 147 F.3d 195 (2d Cir. 1998)). 16 See id. at 1441–43. 17 Id. at 1465. 18 Id. at 1465–66 (citing Rochelle Cooper Dreyfuss, Expressive Genericity: Trademarks as Language in the Pepsi Generation, 65 Notre Dame L. Rev. 397 (1990)). 19 Bilski v. Kappos, 561 U.S. 593 (2010). 13 14

Toward pluralism in United States intellectual property

487

before it took up the application of this concept to diagnostic methods in Mayo v. Prometheus,20 Dreyfuss and James Evans, a geneticist at UNC, tackled the question what ‘preemption’ might mean with respect to genetic diagnostics.21 They dove deep into the science and practice of diagnostic tools to identify several indicators—likely to be context-specific even within the umbrella category of genetic diagnostics—that courts might use to give content to the question when a patent so ‘preempts’ a field as to be unpatentable subject matter. Their factors included the ability to invent around, interoperability, breadth, and the identity of the inventor.22 Second, within the framework of positive IP law, Dreyfuss moves across boundaries. One common theme of her work, for example, is that there is no necessary reason why value standing alone should give rise to exclusive rights. She first developed this insight in trademark law, arguing in a seminal article that the non-rivalrous nature of intellectual works makes a fallacy of the axiom ‘if value, then right.’23 This insight formed a core part of her criticism of trademark dilution, an expansion of exclusive rights with seemingly little justification other than capturing the maximum possible value of a mark rather than avoiding consumer confusion. But the argument ‘if value then right’ is also found in other parts of IP law, and Dreyfuss has touched them as well. She is skeptical, for example, of business method patents on this ground.24 More recently, in an article on the Economic Espionage Act of 1996,25 Dreyfuss and Orly Lobel identified a shift in the rhetoric deployed by government actors and others seeking to enhance the protection of trade secrets, including through criminal sanctions. That rhetoric, focused on espionage and national security threats, is a stark departure both from the language of innovation incentives more recently associated with trade secrecy and from the traditional positioning of misappropriation as a kind of economic tort.26 They see this shifting rhetoric affecting more than just the case for proactive trade secret regulation. They see it affecting the incentives that university researchers have to innovate in the face of potential criminal liability, and potentially Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012). Rochelle C. Dreyfuss & James P. Evans, From Bilski Back to Benson: Preemption, Inventing Around, and the Case of Genetic Diagnostics, 63 Stan. L. Rev. 1349 (2011). 22 See id. at 1370–75. 23 Dreyfuss, supra note 18, at 407. 24 See Rochelle Cooper Dreyfuss, Are Business Method Patents Bad for Business?, 16 Santa Clara Computer & High Tech. L.J. 263 (2000). 25 Rochelle Cooper Dreyfuss & Orly Lobel, Economic Espionage as Reality or Rhetoric: Equating Trade Secrecy With National Security, 20 Lewis & Clark L. Rev. 419 (2016). 26 See id. at 445–46. 20 21

488

Improving intellectual property

chilling innovation in the complex ecosystems of technology hubs, where knowledge workers’ movement among firms, academia, and government is a critical driver of economic dynamism.27 Finally, Dreyfuss pays close attention to institutional arrangements outside of traditional IP that bear on innovation. Her analysis of alternatives to intellectual property is nuanced and context-specific. In 2013, Daniel Hemel and Lisa Ouellette published an article reframing the standard economic debate over which innovation incentive is optimal—patents, prizes, grants, or (in a non-traditional addition to the triumvirate) tax credits.28 Hemel and Ouellette argued that the choice among incentives could be made by reference to three questions: who decides on the reward, when is it provided, and who pays for it? In a response to this paper,29 Dreyfuss praised the ‘value in simplicity’ and ‘helpful diagramming,’ but found ‘more detail’ required in two respects. Dreyfuss advocated first for including government intramural innovation as an alternative to seeking innovation through the private sector at all. She argued that government can serve as an honest broker detached from private sector incentives, and that it may be uniquely positioned to do work that private sector innovators lack incentive to undertake; for example, bridging the ‘“valley of death” that separates fundamental health sciences research from downstream pharmaceutical products.’30 She also suggested that a fuller evaluation of innovation incentives required attention to factors beyond Hemel and Ouellete’s tripartite framework, such as the extent of disclosure and the facilitation of learning and human capital formation, and the enforcement of obligations that would create innovation incentives.31 Dreyfuss’s focus on institutional factors outside of IP law found additional voice in her writings on licensing, where sensitivity to the business and commercial context in which parties transact is critical, regardless of the contours of the specific IP regime that may provide the objects of the license. Dreyfuss and Lawrence Pope, a transactional lawyer, centered this commercial context in their 2009 article Dethroning Lear? Incentives to Innovate After MedImmune.32 In Lear, Inc. v. Adkins,33 the Supreme Court abrogated the

See id. at 451–68. See Daniel J. Hemel & Lisa Larrimore Ouellette, Beyond the Patents-Prizes Debate, 92 Tex. L. Rev. 303 (2013). 29 Rochelle Cooper Dreyfuss, Tailoring Incentives: A Comment on Hemel & Ouellette’s Beyond the Patents-Prizes Debate, 92 Tex. L. Rev. 131 (2014). 30 See id. at 132–34. 31 See id. at 134–38. 32 Rochelle Cooper Dreyfuss & Lawrence S. Pope, Dethroning Lear? Incentives to Innovate After MedImmune, 24 Berkeley Tech. L.J. 971 (2009). 33 395 U.S. 653 (1969). 27 28

Toward pluralism in United States intellectual property

489

common law doctrine of licensee estoppel in patent cases, allowing licensees to challenge the validity of the underlying patents they licensed upon breach. The Court reasoned that licensees were sometimes in the best position to challenge patent validity, and that such challenges to invalid patents were socially desirable.34 In MedImmune, Inc. v. Genentech, Inc.,35 the Court extended this rationale to the declaratory judgment context, holding that licensees in good standing could file actions challenging the patents they licensed without breaching the license agreement. Although this decision was consistent with Lear’s rationale—one approved by many in the academy—and with the Supreme Court’s declaratory judgment doctrine more broadly, Dreyfuss and Pope found it out of step with commercial practice. They wrote that ‘[i]t effects a dramatic change in the rules of the licensing game by substantially enhancing the bargaining position of the licensee to the detriment of the patent holder.’36 The problem is that in an ex ante negotiation, a patent holder must now take account of the possibility that her licensee will unilaterally hold her up for a better bargain with a validity challenge, while incurring relatively little risk.37 This dynamic, they argued, may reduce the incentives to licensing and, in turn, the benefits to innovation policy from such arrangements.38 Indeed, this effect may overwhelm any public benefit obtained by weeding out invalid patents. Dreyfuss’ vision of innovation policy is one that is deeply informed by context, and self-aware of legal and—particularly—institutional alternatives to IP. Her pluralism is not just a call for IP- and non-IP innovation mechanisms to stand side-by-side.39 It is instead a call to consider the institutional design of innovation policy. Institutional design is, after all, less about the substantive legal rules that institutions produce and more about who makes the rules and how they do it. And if innovation policy decisions are as complex and context-specific as Dreyfuss’ scholarship suggests they are, then those questions really come to the fore. I want to conclude, then, by drawing two lessons about institutional design from this account—one methodological, and one substantive. Those of us who take inspiration from Dreyfuss’ pluralism would be well advised to adopt methodologies that uncover context specificity. The last decade of IP scholarship has seen an explosion in the use of empirical methods,

See id. at 670–71. 549 U.S. 118 (2007). 36 Dreyfuss & Pope, supra note 32, at 973. 37 See id. 38 See id. 39 Cf. Daniel J. Hemel & Lisa Larrimore Ouellette, Innovation Policy Pluralism, 128 Yale L.J. 544 (2019) (arguing for conceptual separation of IP’s incentive and allocation functions and mixing of IP- and non-IP tools to optimize balance between them). 34 35

490

Improving intellectual property

particularly quantitative and experimental methods. While such approaches have much to commend them, they are not especially well-suited to examining the nuance and context required of a more pluralist, inclusive account of the role that IP plays in fostering innovation. Dreyfuss’ engagement with practice and her recognition that innovation in the world generally does not stay confined to a single legal discipline suggest that much can be learned from case studies, ethnography, and the rest of the toolkit developed by qualitative social scientists. Several scholars have adopted these methods for the study of knowledge commons;40 they are relevant to the full range of IP scholarship. As a substantive matter, Dreyfuss’ work suggests that the institutional features that accompany IP law might have to be tailored to specific technologies just as the rules of patent or copyright often are. It has become common to observe that the tradition of technological neutrality in IP law frequently is honored in the breach. Dan Burk and Mark Lemley have written about how even facially neutral rules of patent scope and validity can, when applied in common law adjudication, result in legal rules tailored to specific technologies.41 In the copyright space, there are both technologically specific statutes and doctrines. But this recognition that context and specificity may shape legal rules has yet to make its way into the study of the legal institutional structure of IP. I offer two examples of complex problems that may benefit from a context-specific approach. The first is standing. The question who has constitutional standing to challenge the validity of an existing patent has become fraught with uncertainty. As described above, Dreyfuss is skeptical about the desirability of broad declaratory judgment jurisdiction for licensees.42 The Federal Circuit, in apparent agreement, recently limited the scope of MedImmune, holding that it did not create a per se rule that licensees had Article III standing to challenge the validity of licensed patents.43 At the same time, however, MedImmune has been used to expand the jurisdiction of courts hearing challenges to patent validity from public interest groups who may at times be the only plaintiffs with incentive to challenge weak patents.44 Yet the statutory mechanisms for promoting patent validity

40 See Michael J. Madison, Brett M. Frischmann & Katherine J. Strandburg, Constructing Commons in the Cultural Environment, 95 Cornell L. Rev. 657 (2010). 41 See Dan L. Burk & Mark A. Lemley, Policy Levers in Patent Law, 89 Va. L. Rev. 1575 (2003). 42 See supra notes 33–38 and accompanying text. 43 See Apple Inc. v. Qualcomm Incorporated, 992 F.3d 1378 (Fed. Cir. 2021). 44 See Association for Molecular Pathology v. United States Patent & Trademark Office, 689 F.3d 1303, 1323 (Fed. Cir. 2012); for an argument defending this broader standing, see Michael J. Burstein, Rethinking Standing in Patent Challenges, 83 Geo. Wash. L. Rev. 498 (2015).

Toward pluralism in United States intellectual property

491

determinations create another wrinkle. Although the administrative inter parties review process is open to any party who seeks to invalidate a patent on specific grounds,45 only those parties who can establish Article III standing are able to appeal the Patent Trial and Appeal Board rulings in federal court.46 This creates a one-way ratchet where losing patent holders may appeal the cancellation of their patents, but unsuccessful challengers cannot appeal the denial of their petitions for review. Context-specific analysis that is sensitive to parties, incentives, and economic structure may help to untangle this mess. Or consider the ongoing debates about the proper functioning of the inter parties review process and the PTAB. While some have praised the administrative review mechanism for expanding access to challenge patent validity others have called the PTAB a ‘patent death squad’ whose mission seems to be consistently to invalidate the patents that come before it. In reality of course, the PTAB is neither wholly good nor wholly bad. But these arguments also do not necessarily have to operate at the level of all mechanisms for post-grant review of issued patents. Procedures can be tailored to specific industries or types of patents. Indeed, Congress did just that with respect to business method patents, creating a separate review mechanism subject to different rules.47 In some ways, this manner of analysis would close a circle, harkening back to Dreyfuss’ early work on specialized courts in the context of the Federal Circuit.48 Her scholarship has always sought context and specificity. It has consistently turned away from the doctrinaire or the dogmatic, seeking practical knowledge and solutions to the legal and economic challenges of promoting innovation. It has been pluralist—recognizing that innovation does not spring forth from one legal tool but from the use in concert of a wide range of legal and non-legal mechanisms. As debates over the scope of IP protection become polarized, Dreyfuss’ scholarship offers an alternative path forward if we are willing to proceed down the path that she has pioneered.

See 35 U.S.C. § 311. See Consumer Watchdog v. Wisconsin Alumni Res. Found., 753 F.3d 1258 (Fed. Cir. 2014); cf. Personal Audio, LLC v. Electronic Frontier Fdn., 867 F.3d 1246 (Fed. Cir. 2017) (holding that a prevailing petitioner need not demonstrate Article III standing to defend PTAB judgment against appeal by patentholder). 47 Leahy-Smith America Invents Act, Pub. L. No. 112-29, 125 Stat. 284 (2011) § 18. 48 See supra note 1. 45 46

47. Does IP improve the world? Henning Grosse Ruse-Khan 1. INTRODUCTION A history of the origins of modern patent protection could be summarised by highlighting how the patent system evolved from its medieval origins to become a policy tool that aimed to provide incentives for innovation, and so served as an instrument for technological development and societal welfare in early modern Europe at the advent of industrialisation and modernity.1 While the mid-nineteenth century saw heated debates on whether patent monopolies unduly obstructed research, innovation and free trade,2 international treaties consolidated and globalised the idea of intellectual property (IP) rights in general and patent rights in particular as incentive means for utilitarian ends.3 Indeed, Art.7 TRIPS proclaims that IP protection and enforcement ‘should contribute to the promotion of technological innovation and to the transfer and dissemination of technology’, so as to benefit both ‘producers and users of technological knowledge’ and hence operate ‘in a manner conducive to social and economic welfare’. Despite their partial codification in the most relevant global instrument of IP protection, the utilitarian objectives of the IP system remain contested. Similar to the mid-nineteenth century, debates focus on whether patent protection actually leads to more ‘technological innovation’ and ‘dissemination of tech1 On the history of the (English) patent system, see Christine MacLeod, Inventing the Industrial Revolution: The English Patent System 1660–1800 (CUP 1988); Harold Dutton, The Patent System And Inventive Activity During the Industrial Revolution, 1750–1852 (Manchester University Press 1984). 2 Brad Sherman and Lionel Bently, The Making of Modern Intellectual Property Law (CUP 1999) 50–56. 3 IP rights, especially copyright protection, have been justified on the basis of a broad range of other (primarily deontological) arguments (see Michael Spence, ‘Justifying Copyright’ in Karsten Schubert and Daniel McClean (eds), Dear Images: Art, Copyright and Culture (Ridinghouse 2002) 389–403), those arguments have not been cast into international law in the same way as the utilitarian objectives set out in TRIPS.

492

Does IP improve the world?

493

nology’ – or whether more openness and lesser (or no) protection is to be preferred. Empirical evidence for measurable improvements on welfare – which after all should form the basis for policies that pursue utilitarian objectives – has long been inconclusive when it comes to the patent system as a whole.4 It is therefore perhaps not surprising that, at a global level with territorial patent protection operating in vastly different socio-economic circumstances, the common denominator that most seem to be able to agree on is that ‘one size does not fit all’.5 This chapter is not about what, if any, level of IP protection is most welfare enhancing in any given context. Rather it questions an assumption that underpins the utilitarian objectives of IP protection generally, and patent rights specifically, as incentive tools. TRIPS – and conventional utilitarian IP theory – suggests that technological innovation and the dissemination of technology should be ‘conducive to social and economic welfare’. Is it though? We operate under the assumption that coming up with new technologies, their use and transfer is welfare-enhancing – but do we ever consider whether that is actually the case? An IP perspective would prima facie answer an unambiguous no. As checking the benefits and downsides of the technologies incentivised seems not part of our conventional analysis in drafting or reviewing IP laws, is there a sound basis to assume that new technologies and our use of them generally does promote socio-economic welfare? And in any case: whose welfare are we seeking to maximise? The next section takes a critical look at the consequences of promoting innovation and dissemination of technology as part of broader narratives of materialism and progress (or its more recent proxies, such as ‘sustainable development’). Section 3 then questions whose welfare is being increased – in particular, the extent to which that includes any living beings on this planet other than humans; and if confined to human welfare, whether the benefits resulting from new technologies are evenly shared Section 4 finally asks should IP protection be concerned with these broad questions? And if so, what can be done within the IP system?

4 See Fritz Machlup, ‘An Economic Review of the Patent System’ (1958) https://​ cdn​.mises​.org/​An​%20Economic​%20Review​%20of​%20the​%20Patent​%20System​_Vol​ _3​_3​.pdf. 5 See e.g., Michael Carroll, ‘One Size Does Not Fit All: A Framework for Tailoring Intellectual Property Rights’ (2009) 70(6) Ohio State Law Journal 1361. See generally, Mario Cimoli and others (eds), Intellectual Property Rights: Legal and Economic Challenges for Development (OUP 2014).

494

2.

Improving intellectual property

CONSEQUENCES OF PROMOTING INNOVATION AND THE DISSEMINATION OF NEW TECHNOLOGIES

My question here is whether – by and large – the technology whose development and transfer IP purports to incentivise actually has been ‘conducive to socio-economic welfare’. An immediate response, especially from a lawyer, would be ‘that depends’ – not only what we mean by ‘technology’ and ‘socio-economic welfare’, but primarily how technology has been utilised. Here, I rely on a broad concept of technology to capture all modes of utilising and/or applying scientific knowledge to solve a problem.6 More importantly, this section questions the conventional view of technology being ‘neutral’ which is implied in the ‘it depends’ reply suggested above. Technology can be (and often is) political and normative – because its intended application implies certain normative choices or favours some over others; and because unintended consequences of technology have become the norm. The technological worldview humanity has (willingly or not) embraced since European enlightenment,7 industrialisation and colonisation is inherently political: a mode of understanding that frames our perception of the natural world and our interaction with others – where technology is an end in itself, rather than just a mere instrument or neutral tool.8

6 For a discussion on different concepts of technology, see Jan Beating, ‘Technological Impacts on Human Rights: Models of Development, Science and Technology, and Human Rights’ in C. G. Weeramantry (ed), The Impact of Technology on Human Rights: Global Case-studies (United Nations University Press 1993), https://​ archive​.unu​.edu/​unupress/​unupbooks/​uu08ie/​uu08ie04​.htm. 7 The emergence of modern technology and its large-scale deployment since industrialisation appears multi-causal and complex – and has been linked to the Christian outlook on nature (as something to be subordinated), power-struggles between the Catholic Church and secular rulers (leading to a rational type of control by the state and the emergence of bureaucracy) and in particular natural philosophy which perceives reason and its application as principal tool for human development and progress suggesting that, nature must become ‘the slave of mankind’; her secrets are to be extracted and squeezed out – by the (then) new sciences as means to conquer and subdue nature – for a brief review, see Beating (n 6) (discussing, inter alia, Max Weber’s analysis and the works of Francis Bacon and René Descartes). 8 See Martin Heidegger, Die Frage nach der Technik, in Vorträge und Aufsätze, 1954 – translated as ‘The Question Concerning Technology’, in: The Question Concerning Technology and Other Essays, W. Lovitt (trans.) (Harper and Row 1977) 3–35. A basic reading of Heidegger in the context of our ‘climate catastrophe’ is offered by Aaron James Wendland, ‘Why our relationship with technology is destroying the planet’ (The New Statesman 9 September 2019), https://​ www​ .newstatesman​ .com/​ politics/​2019/​09/​why​-our​-relationship​-technology​-destroying​-planet.

Does IP improve the world?

495

Let’s first look at the ‘net sum’ consequences of humanity’s head-on embracing of technology. Of course: technology has rescued its beneficiaries from hardship and starvation, has enabled improved living conditions for many around the globe, has been the principal driver of human ‘progress’ in terms of advances in all aspects of human life, has often facilitated democracy and liberty, and has led to immense material gains. At the same time, it also has left us with significant negative consequences. To begin with a general point, new technologies brought about since the first industrial revolution have severely impacted on our environment – in the form of air, water, soil and other types of pollution and by depleting a broad range of natural resources (mainly as a result of industrial-scale agriculture, mining, water usage for industry and consumption of fossil fuels, all of which have been enabled by advancements in technology). In terms of some individual examples, consider the use of chlorofluorocarbons (CFCs) as coolant in refrigeration, air conditioning and aerosol spray cans, invented by Thomas Midgley in the 1920s – leading to the depletion of the ozone layer in the Earth’s stratosphere which absorbs ultraviolet radiation that otherwise would reach the surface of Earth. CFCs had initially been selected because these compounds are inert and essentially nontoxic for humans; while ‘these same characteristics, however, also made them a danger to life on Earth’.9 Of course, subsequent global regulation of CFC use is commonly seen as an effective way to address the problem – but that only occurred once real and present dangers (in form of significant increases in the incidence of skin cancer) alarmed the public in most influential western countries and pushed their policy makers into international action.10 A similar story can be told about the insecticide Dichlorodiphenyltrichloroethane (DDT): initially hailed as a miracle product in the 1940/50s (for which its inventor, Paul Herrmann Mueller, received a Nobel prize in 1949), its impact on the natural world as an environmental killer (famously documented by Rachel Carson, in ‘Silent Spring’ in 1962) led to its ban in the United States in 1972 (while a formal worldwide prohibition for use in agriculture was only effected in 2004).11 Or consider the discovery of penicillin and subsequent development of antibiotics and other anti-microbials (which save millions of lives) – but whose irresponsible use has been a principal cause of antimicrobial resistance

9 American Chemical Society, ‘Chlorofluorocarbons and Ozone Depletion’, https://​www​.acs​.org/​content/​acs/​en/​education/​whatischemistry/​landmarks/​cfcs​-ozone​ .html. 10 ibid. 11 See generally https://​en​.wikipedia​.org/​wiki/​DDT.

496

Improving intellectual property

(AMR), which the WHO considers one of the top global public health threats facing humanity.12 Another example – one where humanity is still struggling to grasp the impact on ecosystems and all forms of life on earth, let alone taking coordinated action to address this impact – concerns our omnipresent addiction to plastics. Usually derived from fossil-fuel based chemicals, the adaptability, durability, light weight and inexpensive production of plastics has led to their universal application, including revolutionising medicine with life-saving devices, making space travel possible, and lightening cars and aircrafts. With (expensive and ineffective) recycling still no feasible alternative to (cheap) production, especially single-use plastics now accumulate as trash in our oceans, pollute as micro-particles soils, sediments and freshwater around the world, and have eventually found their ways into guts, lungs and other organs of animals and humans.13 Even if effective global regulation – for example in the form of a circular economic model for plastics use and developing less harmful alternatives – was put in place soon, the extremely long periods for many plastic additives to break down are likely to affect our planet for hundreds of years to come. One could go on with specific technologies and their impact – but instead, let me point to some broader studies on the dangers of technological advances for human survival. In 2003, Sir Martin Rees, labelled ‘Britain's most distinguished theoretical astrophysicist’, published ‘Our Final Century: Will the Human Race Survive the Twenty-First Century?’ in which he estimates that the probability of human extinction before the year 2100 is around 50 per cent, based on the possibility of malign or accidental release of destructive technology – or simply because the pace of technological change outstrips our ability to control it.14 Relatedly, the University of Cambridge has established a ‘Centre for the Study of Existential Risks’ where researchers from all types of disciplines are primarily worried about ‘risks associated with human technology and activity, such as nuclear war, engineered pandemic, climate change,

12 See WHO, ‘Antimicrobial Resistance’ (17 November 2021), https://​www​.who​ .int/​news​-room/​fact​-sheets/​detail/​antimicrobial​-resistance. 13 See e.g., UNEP, ‘Plastic Planet: How Tiny Plastic Particles are Polluting our Soil’ (22 December 2021), https://​www​.unep​.org/​news​-and​-stories/​story/​plastic​-planet​-how​ -tiny​-plastic​-particles​-are​-polluting​-our​-soil and Damian Carrington, ‘Microplastics Found Deep in Lungs of Living People for First Time’ (The Guardian, 6 April 2022), https://​www​.theguardian​.com/​environment/​2022/​apr/​06/​microplastics​-found​-deep​-in​ -lungs​-of​-living​-people​-for​-first​-time. 14 See e.g., a review by Oliver Morton, ‘Is the End Nigh?’ (The Guardian, 14 June 2003), https://​www​.theguardian​.com/​books/​2003/​jun/​14/​featuresreviews​ .guardianreview10.

Does IP improve the world?

497

ecological collapse, or advanced artificial intelligence’.15 In fact, all but one risks identified as most threatening to human survival are directly resulting from specific technologies: including risks resulting from synthetic biology and other bio-technologies, threats posed by artificial intelligence (AI) via accidents (safety) or misuse (security), and – of course – the consequences of human-induced climate change.16 Taking a look at the looming climate meltdown, the Intergovernmental Panel on Climate Change (IPCC) has recently issued its Sixth Assessment Report – where Working Group II assesses the impacts of climate change, looking at ecosystems, biodiversity, and human communities at global and regional levels, and reviews vulnerabilities and the capacities and limits of the natural world and human societies to adapt to climate change;17 while Working Group III provides an updated global assessment of climate change mitigation progress and examines the sources of global emissions.18 The Group II report finds that human-induced climate change has already caused widespread adverse (and in part irreversible) impacts for nature (in form of a critical loss of biodiversity) and people – with the most vulnerable people and systems disproportionately affected and half of the world’s current population (around 3.5 billion people) living in areas ‘highly vulnerable’ to climate change.19 Limiting temperature rise to no more than 1.5C above pre-industrial levels therefore constitutes a ‘critical level’ beyond which the impacts of the climate crisis accelerate strongly and become increasingly irreversible. However, the Group III report warns that that exceeding 1.5C is ‘almost inevitable’, and suggests ‘negative emissions’ technologies (such as carbon capture and storage (CCS) or direct air capture) are likely to be necessary. 20 The problem is that such technologies are largely experimental and are likely to involve interventions

15 Centre for the Study of Existential Risk, ‘Managing extreme technological risks’, https://​www​.cser​.ac​.uk/​research/​managing​-extreme​-technological​-risks/​. 16 The only risk not directly linked to technology concerns ‘global injustice: profound inequality, corruption, and structural discrimination’ – but, as discussed further in section 3 below, such injustice is frequently the result of unequal access and exposure to technologies that help the rich, while devastating the environment and living conditions for the poor. 17 Summaries as well as the full (3675 page long) report are online at https://​www​ .ipcc​.ch/​report/​ar6/​wg2/​. 18 Again, the full (‘only’ 2913 page long) report and summaries are online at https://​ www​.ipcc​.ch/​report/​ar6/​wg3/​. 19 ‘Summary for Policy Makers Headline Statements’ 28 February 2022, https://​ www​.ipcc​.ch/​report/​ar6/​wg2/​resources/​spm​-headline​-statements/​. 20 ibid.

498

Improving intellectual property

with a significant potential for unforeseen consequences21 – while there is no time to take a precautionary approach. The sad story of climate change then is emblematic for a common narrative on the impact of modern technology: developed to serve human needs and wants, technologies are applied in a way which tend to produce (at times predictable, at times unforeseeable) severe consequences – here in form of global warming, largely due to CO2 emissions resulting from energy-intensive technology production and consumption patterns. While market mechanisms usually allocate the benefits of technology to those with sufficient means (whose economic potency usually also has the most say in what technologies will be developed), negative impacts are often primarily affecting the poor. Industrialisation and the technologies it brought about allowed the global North to develop and, reaping the benefits of technological progress, colonise most of the remaining ‘other’. Climate change as one of the principal consequences, however, is predominantly felt among other peoples too poor to protect themselves against the ensuing climate disasters by means of ‘adaptation technologies’. This, finally, reveals another common reflex: currently humanity’s default response to an identified problem with technology is to rely on ‘better’ technology to fix that ‘glitch’. There is of course nothing wrong in aiming to improve technological solutions – but how can we be sure that these improved technologies actually are solutions, and not just part of the problem? Looking at our track record over the centuries since industrialisation and the consequences of large-scale deployment of technologies, there is little to suggest that reliance on new technology to mitigate the impact of earlier technology will all of a sudden stop having the side effects which got us into this mess in the first place. In the age of the Anthropocene (where human conduct is the main determinant for the fate of life on Earth), past experience suggests we cannot any longer afford a ‘trial and error’ approach in deploying technology at scale to save us from the problems earlier technologies have created. Rather, because of our technology-based capability to wipe all life off the face of the earth, the solutions we employ to deal with the crises we have created should, when again based on technologies and their application on a global scale, be viewed rather sceptically. In sum, based on our historical experience, there is no reason to believe that propagating new technologies around the globe for widespread use (at least by those who can afford them) will necessarily enhance our welfare. In fact,

21 See Committee on Developing a Research Agenda for Carbon Dioxide Removal and Reliable Sequestration, Negative Emissions Technologies and Reliable Sequestration: A Research Agenda, (National Academies Press 2019).

Does IP improve the world?

499

there is plenty of evidence that, by and large, our use and abuse of technology is an – if not the – principal cause of most of the essential risks to our survival as a species on this planet. That in itself should call IP’s uncritical embracing of ‘technological innovation’ as well as its ‘transfer and dissemination’ into question. And this bleak conclusion has not even considered the uneven impact of our technologies on some of us, and on other living beings with whom we share this planet – an aspect briefly discussed in the next section.

3.

NARROWLY DISTRIBUTED BENEFITS AND UNEVENLY SHARED CONSEQUENCES

To the extent that IP incentivises technology which also has benefits, a further question would be whether these benefits are evenly distributed, or at least widely shared so that we could consider them to be ‘utilitarian’? Without attempting to delve into the philosophical debates about defining utility, let’s take the classical approach of bringing about ‘the greatest amount of good for the greatest number’.22 If we then define ‘good’ simply as what is desirable in that it materially benefits humans (noting that excludes other living beings with whom we share this planet, and the usually detrimental impact of modern technology on them),23 is IP at least operating so as to promote the welfare of all humans? This of course depends on whether the technologies and other advances incentivised via the IP system are likely to benefit all, or at least most human beings living on this planet. IP operating as an incentive tool is generally premised on a market economy framework where demand determines the ability to recoup investments into R&D and to make a profit. Hence, the type of technology incentivised and disseminated is, in principle, equally market driven. Only economically potent demand for technology offers IP owners an opportunity for a return on investment – and anticipating this demand (including demand created by influencing consumer choice) determines what technology will be developed. IP rights then make investing into these technologies economically worthwhile, but its legal protection cannot incentivise if there is no reasonable expectation of economic returns. The technologies promoted through the combined operation of markets and the IP system hence are primarily ones serving the needs of market actors with economic clout. That is to say: among humankind, the welfare focused on is the welfare of those whose desires IP-incentivised 22 On the history of utilitarianism as a consequentialist moral philosophy, see https://​plato​.stanford​.edu/​entries/​utilitarianism​-history. 23 On approaches to include animals in utilitarian analysis, see Peter Singer (ed), Animal Liberation (Avon Books 1990) and Peter Harrison, ‘Do Animals Feel Pain?’ (1991) 66/255 Philosophy 25–40.

500

Improving intellectual property

technology caters for. Without intervention (via subsidies, advance purchase commitments, etc) the technology promoted therefore will primarily serve the needs of a few – and in case it does serve the needs of all, it is likely available only to those who can afford it. Affordability in turn will depend on the availability of competing substitutes – which of course the IP system limits by virtue of the exclusivity it affords to the IP owner. The technology incentivised and disseminated via the combination of markets and IP rights therefore is normative and political in that it reflects qualitative (what technology is developed) and distributive (who has access) value judgements. While this could be argued to result primarily from the social and economic systems within which technology is embedded (social determinism of technology), some counter that certain technologies constitute ‘political phenomena in their own right’.24 This can be the case for technology that establishes long-lasting public infrastructures, is deployed at scale or sets standards – and in that way implements, reinforces and possibly also ‘locks in’ (i.e., safeguards against social change) value judgements.25 One might add that to the extent IP incentivises technological development and transfer, as a system, it is normative and political as well: in that IP continuously pushes humanity towards technology and technological solutions (rather than alternative ones – such as reducing consumption and checking one’s own wants). Technology in turn can reinforce specific value judgements or power relations and is thereby part of power and authority. As a meta-system driving technological innovation, IP protection is promoting an approach that singles out technological solutions as the default solutions we are relying on – while history shows that despite its immense benefits, this is by no means justified without qualification.

4.

A ROLE FOR IP IN ADDRESSING THE CONSEQUENCES OF TECHNOLOGY?

Both the historic consequences of technology for our planet and its current risks suggest that we should at least question whether the IP system should remain unreservedly pro innovation. This then arguably depends on (1) the existing tools within the IP system to deal with ‘dangerous’ technologies; and 24 Langdon Winner, ‘Do Artifacts Have Politics?’ (1980) 109(1) Daedalus 121–136, at 123. See also Sheila Jasanoff, The Ethics of Invention: Technology and the Human Future (Norton 2016) – challenging the common assumption that technology is an apolitical and amoral force. 25 A common example is that of parkways in New York with low hanging overpasses that exclude buses (and thereby the poor, often non-white communities) from accessing beauty spots at the beach; see ibid 124–125.

Does IP improve the world?

501

(2) the effectiveness of mechanisms external to IP addressing those dangers. Exploring these points in detail is way beyond this short chapter. Suffice to say on (2), that there are of course plenty of regulations ranging from prohibiting certain technologies altogether (such as land mines or human cloning), via regulating their use and dissemination so as to minimise risks, to systems of liability for damage caused by technology.26 Much depends on specific regulation for specific technologies – but the sober assessment of the current state of affairs in section 2 suggests that we have not been very successful in preventing harm. That is certainly facilitated by the general absence of effective regulation on the global level (except perhaps regarding nuclear non-proliferation) – which allows technology producers, users and investors to shift activities to jurisdictions with no or less regulation. Turning back to (1), IP protection and its inherent pro-technology incentive mechanism is of course globally regulated. In fact, it is only the incentive-producing aspects of the IP system (what has to be protected and how) that are internationally harmonised – while the relevant options for intervention are facultatively left for individual countries to adopt (with, of course, limits as to how far interventions can go). The TRIPS Agreement, for example, includes in Art.27:2 an allowance to deny patents for inventions whose commercial exploitation is harmful, including for human, animal or plant life or health and the environment. But at the time of grant it will not often be sufficiently clear whether exploitation is harmful, so that the practical application is limited to specific sensitive areas (cloning, nuclear) where technology threats are well understood or very severe. One could consider a stricter test – for example under the utility / industrial application criterion – for a prima facie case that an invention has a predominant application which is helpful and not harmful; and perhaps even introduce a commitment to license ‘helpful’ technology on FRAND (or equivalent) terms. But again: who is going to decide this, at the time of grant? If the main issue is how technologies are used, it then might be best to intervene by restricting the uses that can be licensed (and contractually tie licensees to sub-license on equivalent terms, akin to a ‘creative commons’ model)? But how to monitor adherence to such terms, and what if the licensee does not comply? The very cursory review above shows that there are no straightforward answers in resolving the paradox between the IP system’s inherent assumption that incentivising new technologies will be welfare enhancing and the reality that our use of technology has also brought about unmeasurable harm for many on this planet, other species, and the earth’s ecosystem. As regulation of tech-

26 For an overview, see Herbert Zech, Einführung in das Technikrecht (Trier 2021), in particular chapters 3–5.

502

Improving intellectual property

nology outside IP does not seem effective and regulation within IP currently appears unwilling and/or unable to address the negative consequences of technologies, it may come down to individual producers and users of technology taking up responsibility. That finds support in Art.7 TRIPS when the objectives for international IP protection refer to both of these groups and calls to balance their rights and obligations. However, until such responsibilities are legally defined in more detail, this primarily remains a moral and ethical responsibility for all of us. Ethical or moral codes for developers and users of technology of course already exist, so it seems more a matter of actually adhering to them – or making them relevant.27 In my view, one thing is clear: there is no reason to continue with an IP system that is unambiguously pro technological innovation without critically reviewing its impact on the continued destruction of our planet. That destruction shows there is no basis to assume new technologies can – all of a sudden – offer solutions without substantial side effects.

27 See e.g., the idea of a Hippocratic oath for mathematicians – raised by Dennis Müller, Maurice Chiodo and James Franklin, ‘A Hippocratic Oath for Mathematicians? Mapping the Landscape of Ethics in Mathematics’ (2021), https://​arxiv​.org/​abs/​2112​ .07025.

Index academic research see research data access-regarding principles access to data confidential data 314–15 research data 321 access to medicines 41, 51, 117–18, 228 see also compulsory licensing accountability 388–9, 395 adjudicator specialization see specialization administrative law 316–18, 444 advertising 26, 452–3 see also WIPO ALERT Africa Group 469 agency 445 AI machines 214–15, 222–3 see also artificial inventors Akcigit, Ufuk 476 alpha brands 271 American Law Institute (ALI) 3, 164, 170 Anthropocene 498 Anti-Counterfeiting Trade Agreement (ACTA) 392–3 antibiotics 495–6 Apple Inc. 277 arbitration 180–1 academic attention 183 advantages over litigation 181 arbitrability 184–6 challenging arbitral awards 185 confidentiality of proceedings 182, 183 desirability 182 enforcement of awards 182 erga omnes effect 184, 185 investor-state dispute settlement see investor-state dispute settlement objections to 184 patent licensing disputes 187–9 public interest

public policy objectives 184, 186 risk allocation 189 WIPO Centre 182, 183 Argentina 109–10 armed conflicts 414–15 artificial intelligence (AI) 214–15, 222–3 new medicines and 338 artificial inventors 224–6 competing aims of AI and intellectual property 225 copyright 225 patents 225, 228–32 purpose of IP progress 226–8 artistic expression 248–9 artistic relevance 261, 273 aspirin 215 assetization 227–8, 428, 434, 446 Ates, Sina 476 attribution 193–6, 207 Australia 48 exceptions for research uses 98, 99, 100, 102 Hong Kong–Australia BIT 423–4 Philip Morris v. Australia 421–2 website blocking 456–7 author’s copyright 191–2 attribution 193–6 divisibility 199 dramatization rights 199–200 economic rights 197–203 moral rights see moral rights non-pecuniary rights 192–7 termination rights 201–3 Barbie 273, 275 Barthes, Roland 269, 275 Beebe, Barton 266, 270 Belgium 342 Benkler, Yochai 485 Berlin Declaration 322 Bernard, Andrew B. 280, 475 503

504

Improving intellectual property

Berne Union 30, 341, 347, 360 Big Data 412 bilateral investment treaties (BITs) 396, 417, 418 Hong Kong–Australia BIT 423–4 investment protection 429, 434 power to regulate in order to safeguard public interest 426, 427 biologic drugs 122–3, 479 biomedical research 95–7 concerns about patent enforcement 97–8 difficult issues 104–5 legal protection for research uses 99–101 research exceptions, data, know-how and materials 103–4 research on and research with patented subject matter 101–3 Biotechnology Innovation Organization (BIO) 120 Blumer, Jay G. 300, 301 Bosland, Jason 267 bottom-up approach 1 Bourdieu, Pierre 250–1, 252 Brazil 469, 470 Breakey, Hugh 443 Brooks, Cat 305–7 Buccafusco, Christopher 193 Burger, Peter 348, 349, 351 Burk, Dan 490 Canada 418, 419–20 CETA 425, 426, 431, 435 capitalism 47, 48 Carson, Rachel 495 celebrities 301 CERN 319–21 CETA 425, 426, 431, 435 CFCs 495 chemical compounds handiwork of nature 215–18 non-human agency 218–22 China 47 chlorofluorocarbons (CFCs) 495 Chon, Margaret 445 civic communication 300, 301–8 paradigm shift 300–2

political activism: Cat Brooks and Rasheed Shabazz 305–7 reflexive modernization: Karen Hepp 302–5 civil society organizations 41, 453 Claeys, Eric 438 climate change 416–17, 497–8 public health and investment treaties 417–19, 425 clinical trial data 334–5 Coleman, Stephen 300, 301 commodification 390, 428 common ownership 134–5 commons-based peer production 485 Community Plant Variety Office (CPVO) 84 competing interests 3 competition 89 see also transnational judicial competition Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) 478, 479 Comprehensive Economic and Trade Agreement (CETA) 425, 426, 431, 435 compulsory licensing 61–3, 91–2, 94, 116–17, 124–5 COVID-19 pandemic 69–70, 122–3 food crisis 83 patents 85 plant breeders’ rights 84–5 international legal framework 63–6 national legal framework 66–9 negotiating tool 71, 72 relevance 117–24 role and effectiveness 73–4 computer chips 355, 356 computer hacking 479 confidential data 309–10 EU data law 309, 310, 318 access and transparency regulation 314–15 data in IP and trade secret law 310–13 Data Protection Regulation 313–14 global administrative law principles 316–18

Index

FAIR 314 intermediary data 312 Conflict of Laws in Intellectual Property (CLIP) principles 164–5 conflict of laws issues 170–3 first-in-time or last-in-time 174–9 constitutional law 443–4 copyright absence of protection see negative spaces AI productions 225 exhaustion 81–3 fair use doctrine see fair use doctrine first sale 11, 344 moral rights see moral rights non-market considerations 11, 12 piracy 457, 458 remuneration see remuneration rights software 146–7 see also authors’copyright copyright management information (CMI) 195, 196 corporate accountability 305–7 counterfeiting 207 Anti-Counterfeiting Trade Agreement (ACTA) 392–3 International Anti-Counterfeiting Coalition (IACC) 451 courts 4 see also United States Court of Appeals for the Federal Circuit COVID-19 pandemic 3–4, 31, 86, 413 compulsory licensing 122 drugs 69–70 food 83, 86 vaccines 122–3 investor protection 427, 431–3 investor-state disputes over COVID-19 relief measures 411 IP imbalance and need for affordable treatment 50–1, 53–60 TRIPS waiver 58–9, 61–2, 413, 427, 432 see also compulsory licensing CPTTP 478, 479 Craigslist 26

505

Creative Commons 22, 322, 323, 329 Criscuolo, Chiara 475 cross-border disputes see investor-state dispute settlement (ISDS) cross-border markets 3 Cuba 365, 375 cultural sociology 250–1 cultural studies 259, 267 cybersquatting 3, 450 data see confidential data; data protection; data transparency; information law; research data data protection 313–14 data transparency 330–1 clinical trial data 334–5 comments and recommendations 337–9 EU regulatory proceedings 331–2 medicinal products 332–4 novel food and GMOs 335–6 databases 22, 280–1 international trademarks and activity of US businesses 281–6 national treatment 357, 370–1 properties of key international trademarking businesses 287 DDT 495 derivative works 206 design patents 148 developing countries 367–8, 386, 391–2, 396, 463 North/South divide 468–71 traditional knowledge (TK)/ traditional cultural expression (TCE) 470 Development Agenda (2007) 392, 468 digital transmission 479 digitalization 309 Dinwoodie, Graeme 358, 360, 374, 381, 382, 383, 461, 462, 464–7 diplomatic corps 469–70, 471 disabilities rights 31–2 discriminatory treatment 361–2 see also non-discrimination dispute resolution see arbitration; investor-state dispute settlement (ISDS) district courts 155–7 divisibility 199

506

Improving intellectual property

DNA sequences 96, 97, 320 Dogan, Stacey 272 domain name system 450 Drassinower, Abraham 438 Dreyfuss, Rochelle Cooper 3, 4, 5, 7, 19–21, 23–7, 89, 95–7, 139–148, 170–1, 191–2, 226–7, 246–57, 258–60, 266–69, 277, 290–99, 309–10, 385–6, 405–6, 427–31, 460–6, 484–91 author-based interests 191 balancing public and private interests 116, 427–8, 430, 433 conflict of laws issues 170–1 criticism of preferential trade agreements (PTAs) 396 critique of exclusive rights 226 critique of TRIPS Agreement 461, 462, 463, 471 critique of WTO 464–7 dispute settlement 407, 408, 410, 429 evaluation of US Federal Circuit 138, 139, 140–4, 148, 150 expressive use of trademarks 246–8, 249, 251, 257, 258–60, 263, 266, 267, 268, 275–6, 307 Global Administration Law (GAL) 385 human rights approach skepticism 29, 226–7 institutional design 441, 442, 446–7, 484, 488, 490 legitimation, regulation and governance 441, 442, 446–7 national treatment principle 358, 360, 367 negative space work 19–20, 21, 24, 26 non-discrimination 374, 381, 382, 383 open innovation regimes 485–6 pioneering work 290–3 cross-disciplinary approach 296–7, 299 global concerns 297–8 information laws and public interest 295–6 legal dynamism 298–9

value does not equal right 294–5 pluralist vision 484, 486–91 protecting research uses of patented subject matter 95, 97, 101 public law of patents 437, 439–40 publicity as civic communication 300 territoriality issues 448 understanding of patent doctrines and policy 124 value and rights 309 droit de suite 341, 344 drugs see medicines; pharmaceutical companies Dworkin, Ronald M 40 Eco, Umberto 269 economic rights 197–203 education publishing market 22–3 Elster, Steve 274 emerging and developing countries (EDCs) see developing countries empirical methods 489–90 enforcement 449 recipient-related measures 451–3 source-related measures 450–1 WIPO ALERT 449, 453–9 epistemic power 301 Ericsson 278 ethics 502 Eureka Math 22, 23 equilibrium 24–6 European Copyright Code 211 European Food Safety Authority 336 European Medicines Agency (EMA) 332, 333, 334, 337 European Open Science Cloud 321, 329 European Patent Office 126 European Union CETA 425, 426, 431, 435 data law 309, 310, 318 access and transparency regulation 314–15 clinical trial data 334–5 Data Government Act and Data Act 328 data in IP and trade secret law 310–13

Index

Data Protection Regulation 313–14 global administrative principles 316–18 medicinal products 332–4 novel food and GMOs 335–6 Open Data Directive 324–7, 328, 329 research data 319, 321, 322–9 transparency of data submitted in EU regulatory proceedings 331-2 first-in-time rule 175, 176 geographical indications (GI) regime 361 patent licensing disputes 187–8 ‘patent package’ 159–61 see also Unified Patent Court (UPC) power to regulate in order to safeguard public interest 426–7 Supplementary Protection Certificates (SPCs) 355, 356, 359, 369, 370 unregistered Community designs (UCDs) 359 exclusive rights 14–17, 88–90, 192, 226, 227, 228, 487 data 311 exhaustion 242–3 innovation and 486 residual rights and 346 experimental use 100 exports 475 expressive freedom 11, 235–9, 243–4, 307 artistic expression 248–9 expressive use of trademarks 246–8, 258–60, 264–5, 266–9 artistic relevance 261, 271 assessment criteria 249–54 flexible approaches 254–6 honest industrial and commercial practices 249–56 honest practices in industrial or commercial matters 248–9 ‘hybrid usages’ 259, 263, 267

507

legal-doctrinal concerns 252–4 luxury brands 270–1 Polaroid factors 264 practical concerns 250 Rogers v. Grimaldi test 260–4, 273 semiotic analysis 267, 268, 269–75 theoretical concerns 250–2 expressive genericity 246–8 fabless manufacturing 277–80, 287–8 data 280–1 international trademarks and activity of US businesses 281–6 prevalence 279–80 properties of key international trademarking businesses 287 Facebook 302–4 Fagundes, David 193 FAIR (Findable, Accessible, Interoperable, and Reusable) 314, 321, 327 fair use doctrine 15–16, 147, 248, 249, 250, 254 family values 302 fashion industry design patents 148 freedom to copy 18 low-IP equilibrium 24 trademark protection 21 Federal Circuit see United States Court of Appeals for the Federal Circuit fee shifting 168 feminist activism 302 Fichte, Johann Gottlieb 207 file sharers 451 film industry 469 first-in-time rule 174–9 first-inventor-to-file (FITF) 126, 127 common ownership–joint research agreement exception 134–5 definition of prior art 130–3 inventorship dependent exceptions 133–4 nonobviousness 135 novelty 130-6 first sale 11, 344

508

Improving intellectual property

first-to-file (FTF) 126, 127, 128, 130, 132 first-to-invent (FTI) 126, 127, 128, 129, 130, 133, 135 first-to-publish (FTP) 129, 133, 135 food crisis 76, 86 compulsory licences 83 patents 85 plant breeders’ rights 84–5 exclusions/exceptions patent law 80–1 plant breeders’ rights 79–80 exhaustion of rights 81 patent law 82–3 plant breeders’ rights 82 hypothetical cases 81, 83, 85–6 food safety 335–6 food security 75–6, 86 patents 77–8 plant breeders’ rights 76–7 foreign judgments 170–3, 179 first-in-time or last-in-time 174–9 Fort, Teresa C. 280 forum shopping 139, 150 locus delicti 163 FRAND (Fair, Reasonable and Non-Discriminatory) 172, 187, 328, 501 Frankel, Susy 227, 408, 427, 429, 433, 446 free-riders 226 free trade agreements (FTAs) 363–4, 366, 367, 368, 392, 417 investment protection 429, 434 power to regulate in order to safeguard public interest 426 freedom of expression see expressive freedom freedom to operate 7–8 exclusivity and 14–17 importance 8–13 judicial approaches 13 qualified rights 8 gene patenting 98 generic drug products 43, 51 genetic data 311 genetic diagnostics 487 genetically modified foods 336

geographical indications (GI) 361, 365–6, 463–4 Ginsburg, Ruth Bader 177, 178 Global Administrative Law (GAL) 316–18, 385, 386, 387–90, 393–5 global pandemics 413 see also COVID-19 pandemic global public goods 15 GMOs 336 Goldstein, Paul 348, 349, 351 Google 146–7 Google AdSense 452 governance models 445–7 governmental bodies 387 Grosse Ruse-Kahn, Henning 432 Hague Conference on Private International Law 2 Hague Revision Conference (1925) 380 Hallward-Driemeier, Mary 475 Haskel, Jonathan 475 Hemel, Daniel J. 488 Hepp, Karen 302–5 Hilty, Reto M. 350 Himma, Kenneth Einar 438 HIV/AIDS 42, 45 Holzapfel, Henrik 102 honest industrial and commercial practices 249–55 Hong Kong–Australia BIT 423–4 Hruska Commission 138 Human Genome Project 320 human rights 28–30, 36–7, 41, 226–7 investor protection and 434 procedural justice 386–7 Iarossi, Giuseppe 475 ‘if value, then right’ 9, 262, 268, 295, 410, 487 implicit licensing 241–2 Impullitti, Giammario 476 incentive theory 8–9, 14 incentivizing sub-patentable innovation 90–1 IP and non-IP incentives 20, 22 incentives 90, 193–4, 224, 484 India 122 film industry 468, 469 influencers 301

Index

information law 4, 290–2 cross-disciplinary approach 296–7, 299 dynamism 298–9 global concerns 297–8 public interest 295–6 value does not equal right 294–5 innovation 90, 224, 476 incentives 90, 193–4, 224, 484 see also sub-patentable innovation institutional design 5, 484, 488, 490 intangible capital 278 intellectual property law (IPL) 5 absence of protection see negative spaces assetization 227–8, 428, 434 commodification 390, 428 competition see transnational judicial competition data see confidential data; information law disputes see arbitration enforcement 449 recipient-related measures 451–3 source-related measures 450–1 WIPO ALERT 449, 453–9 food see food crisis; food security freedom see freedom to operate global project 1 historical norms and rationale 51–2 human rights and 28–30, 36–7, 41, 226–7 ideals and trade realities 462–4 imbalances 52–3 domestic law 54–7 international law 58–9 investment law and see investment law investment protection see investment protection justification of IP rights 8–9, 14 medicines see medicines objectives and consequences 492–3 narrowly distributed benefits and unevenly shared consequences 499–500

509

promoting innovation and dissemination of new technologies 494–9, 500–2 pluralism 484–91 political economy 390–3 procedure see procedural justice protectionism see protectionism technological neutrality 490 technology and 411–12 trade agreements see free trade agreements (FTAs); investment treaties; preferential trade agreement (PTAs) Intergovernmental Panel on Climate Change (IPL) 418, 497 International AntiCounterfeiting Coalition (IACC) 451 International Chamber of Commerce (ICC) 182 international investment agreements (IIAs) 417 International Law Association (ILA) 3, 171, 179 international trade and investment agreements 407–10 international treaties 2 internet-based communications 479 Internet Corporation for Assignment Names and Numbers (ICANN) 3, 388 inventions 216–23 see also artificial inventors investment law 405–7, 415 international trade and investment agreements 407–10 issues outside the IP and investment domains 413–15 investment protection 428, 433–5 CETA 426, 431 public health and global pandemics 431–3 right to regulate and 429–31 investment treaties public health and 416–17, 424–5 climate change 416–19, 425 Eli Lilly v. Canada 418, 419–20 Hong Kong–Australia BIT 423–4

510

Improving intellectual property

Philip Morris v. Australia 421–2 investor-state dispute settlement (ISDS) 405–11, 422, 423, 425, 426 Covid-related measures 431–3 investment protection 429, 434 Jaenichen, Hans-Rainer 101 Japanese law 109–11, 113–15 Jefferson, Thomas 227 Jensen, J. Bradford 475 Jersey 175–6 joint research agreements 134–5 journalism 26 judicial competition see transnational judicial competition Kant, Immanuel 207 Kingsbury, Benedict 388 know-how 103 Kohler, Josef 207 Krisch, Nico 388 Kumar, Sapna 477, 480 Kur, Annette 255, 369 language of proceedings 166–8 Large Hadron Collider 319, 320 last-in-time rule 174–9 Lavoisier, Antoine 221 legal certainty 139, 184, 230–1 legitimacy 389, 393, 441–7 Lemley, Mark 272, 490 lex protectionis 352 liability regimes 91–2 principles of compensation 93 social benefits 93–4 term of protection 92–3 licensee estoppels 489 licensing agreements 187–9, 488 implicit licensing 241–2 life science innovations 330–1 confidentiality of registration dossiers clinical trial data 334–5 medicinal products 332–4 novel food and GMOs 335–6 transparency of data submitted in EU regulatory proceedings 331–2

linguistics 259 lis pendens 175 Lobel, Orly 487 Locke, John 207, 294 locus delicti 163–6, 169 London Court of International Arbitration 183 low- and middle-income countries (LMICs) 117, 121, 122 Lowenfeld, Andreas 407 Luhmann, Niklas 250 luxury brands 270–1 Macaulay, Thomas Babington 192 Malaysia 120–1 Malmberg, Claes 278 Manuzio, Aldo 204 Marrakesh Treaty for Access to Works for the Visually Impaired 2, 28–30, 479 future engagements between human rights and intellectual property 36–7 implementation 35–6 key provisions 33 negotiations 32–3 origins 30–2 material reciprocity 366 Mattel 273, 275 Max Planck Institute 3, 164 Principles for Intellectual Property Provisions in Bilateral and Regional Agreements (MPI Principles) 385, 394 medicines access to 41, 51, 117–18, 228 see also compulsory licensing antibiotics 495–6 biologics 122–3, 479 confidentiality of registration dossiers 332–4 COVID-19 pandemic and need for affordable treatment 50–1, 53–60 generic drug products 43, 51 pharmaceutical companies 43–4, 47–8, 60, 117, 119, 228 Eli Lilly v. Canada 418, 419–20 public regulation and private ordering 39–40

Index

principles > rules 40–2 private-public monopoly network > public health network 45–6 private rule complexity > public rule complexity 43–4 rule complexity > principles 42 targeted public informal networks > private rule complexity 44–5 regulation of access to 46–8 mercantilism 473–4 IP and new mercantilism 474–7 see also protectionism Mercurio, Bryan 432 Midgley, Thomas 495 Milton, John 207 minimum standards 366, 371, 397 misogyny 302 Moderna Inc. 123–4 monetization 9 monopolies 44, 45, 49 Moorehave, Adam 438 moral rights 12 alienation 205 attribution 207 Berne Convention 207, 208–11 compromises 206–8 ‘cultural personality’ 212 derivative works 206 droits au respect 213 droits moraux 207 economic interests and 209 European Copyright Code 211 full economic exploitation 206 industrial genesis of copyright 204–11 publishers’ economic interests and 204, 208, 209–10, 212–13 repentance rights 212–13 right to withdraw the work 208 subjective rights 207 translation rights 209–11 Universal Declaration of Human Rights 212 Mossoff, Adam 438 most-favoured nation (MFN) 363–4, 366 violation 368 Mueller, Paul Herrmann 495 multilateral international treaties 1–2

511

national initiatives 1 National Institutes of Health (NIH) 25, 54, 55, 98, 103, 105 national treatment 353, 362, 365–7 discriminatory treatment 361–2 geographical indications (GI) 361, 365–6 limits inherent in the Conventions 353–4 subject matter falling outside the Conventions (sui generis) 355–8, 364–5, 368 TRIPS-plus elements 359–62, 369–72 material reciprocity and 366 nation’s stage of development 367–8 non-discrimination 363–5, 373 remuneration rights 341–3, 346–8, 352 residual rights 350–2 right to fair remuneration in exploitation contracts 350 rights to remuneration per se 349 nature 215–18 negative spaces 18–20 fragile equilibrium 24–6 potential reach of negative space innovation 20–3 Netherlands 342, 351 newspapers 26 Nigeria 469 non-commercial use 100 non-discrimination by sector 373-83 national treatment 4, 363–5, 373 Non-Fungible Tokens (NFTs) 312 non-governmental organizations 388 non-human agency 218–22 non-market considerations 9–13, 16 non-obviousness 91 non-pecuniary rights 192–7 norm-setting 467, 468, 472 novel food 335–6 novelty 126, 129, 130–6 NVIDIA 277–8

512

Improving intellectual property

online ad industry 452–3 see also WIPO ALERT online payment services 450–1 open access to research data 321, 322 open educational resources (OER) 22–3 open innovation regimes 485–6 open-source software 23 Oracle 146–7 Osei-Tutu, Janewa 438 Oswald, Laura 271 Ouellette, Lisa Larrimore 488 Paddeu, Frederica 432 Pardessus, Jean-Marie 207 Paris Union 63 patent exhaustion 239–40, 245 exhausting methods 240–1 exhausting uses 241–3 exhaustion and expression 243–4 patent law 4, 5 ‘patent package’ 159–61 see also Unified Patent Court (UPC) Patent Pilot Program (PPP) 156 Patent Trial and Appeal Board (PTAB) 153–5 patent trolls 166, 168, 169 patents adjudicator specialization see specialization artificial intelligence (AI) 214–15, 222–3, 225, 228–32 see also artificial inventors as assets 51, 446 chemical compounds 215–23 compulsory licensing see compulsory licensing data and 311 design patents 148 expressive freedom and 236–9, 243–4 Federal Circuit cases see United States Court of Appeals for the Federal Circuit food crisis compulsory licensing 85 exclusion/exemptions 80–1 exhaustion of rights 82–3 food security 77–8 health ramifications 51 human rights and 226–7

licensing agreements 187–9 non-market considerations 11–12 patent applications as measure of innovation 476 plants and animals 77–8 protectionism and 479–83 public law 437–8 institutional legitimation 438–46 reform-orientated experimental institutional design 440 research uses of patented subject matter see biomedical research software 146–7 standard essential patents (SEPs) 172, 175, 187, 189 validity 490–1 validity after expiration 106 case law: Brulotte/Kimble 106–8, 115 Japanese law 109–11, 113–15 overriding mandatory rule 108–13 see also sub-patentable innovation paywalls 323 Peirce, Charles Sanders 269 penicillin 495 personal information 305–7 personality rights 164 Peukert, Alexander 350 pharmaceutical companies 43–4, 47–8, 60, 117, 119, 228 Eli Lilly v. Canada 418, 419–20 piracy 457, 458 piracy paradox 18 Pitz, Johann 101 Plan-S 322 plant breeder’s rights food crisis compulsory licensing 84–5 exclusions/exemptions 79–80 exhaustion of rights 82 food security 76–7 see also life science innovations plants 77–8 plastics 496 pluralism 484–91 political activism 305–7 political economy 390–3

Index

political influences 301 Pope, Lawrence 488, 489 preemption claims 145 preferential trade agreements (PTAs) 396–7 defining IP-related PTAs 397–40 empirical evidence on trade impacts 400–4 Principles Applicable to the Adjudication of Transborder Intellectual Property Disputes 3 printing 204 prior art 126, 129 definition 130–3, 135 novelty prior art 135–6 obviousness prior art 134 secret prior art 134, 135 privacy 292, 305, 313 private benefits 12–13 private property 237–9 procedural justice accountability 388–9 Global Administrative Law (GAL) 385, 386, 387–90, 393–5 legitimacy 389, 393 productivity–export link 475 propertization 24–5, 47 proportionality tests 15 protectionism 474, 476, 477–8 adoption of US-style IP treaty law 478–9 increase in patenting activity 481–3 strengthening domestic patent rights 479–81 welfare effects 473, 483 public benefits 9–10, 12 public domain 9, 320, 323, 471 public goods 446 global public goods 15, 386 public health 3, 44, 47, 51, 117 investment treaties and 416–17, 424–5 climate change 416–19, 425 Eli Lilly v. Canada 418, 419–20 Hong Kong–Australia BIT 423–4 Philip Morris v. Australia 421–2

513

TRIPS 52, 57, 58–9, 60, 416, 418, 419, 420, 422, 423–4 investor protection and 431–3 public interest 181 information law and 295–6 public law patents 437–8 institutional legitimation 438–46 public policy 184, 186 public–private partnerships (PPPs) 453, 454 public regulators 441 publicity law 300, 303, 304, 305–6, 307 see also civic communication publishing industry 204, 208, 209–10, 212–13 Qualcomm 277 qualified rights 8 R & D 474, 475, 476–7 Raustiala, Kal 484 Raz, Joseph 41 Reagan, Ronald 474, 477 Rees, Sir Martin 496 regulatory studies 47 institutional accounts of regulation 441, 442 public regulators 441 Reichman, Jerome H. 466 Remsen, Ira 217–18 remuneration rights fair remuneration in exploitation contracts 344–5 national treatment and 341–3, 346–8, 352 remunerated exceptions 348–9 residual rights 350–2 right to fair remuneration in exploitation contracts 350 rights to remuneration per se 349 remunerated exceptions 343, 348–9 remuneration rights per se 344, 349 residual rights 345–6 Renouard, Charles 207

514

Improving intellectual property

repentance rights 212–13 res judicata 174 resale right (droit de suite) 341, 344 research data 319 CERN 319–21 Data Governance Act and Data Act 328 EU data law 319, 321, 322–9 clinical trial data 334–5 Open Data Directive 324–7, 328, 329 FAIR 321, 327 FRAND 328 Plan-S 322 publications 322–4 top-down approach vs open access 321 research uses see biomedical research Richardson, Megan 267 right of publicity 300, 303, 304, 305–6, 307 see also civic communication rights of remuneration see remuneration rights rights theories 438, 440 Robinson, William 220–2 Roche 97, 98 RogueBlock® 450–1 Ruby, Charles E. 215–20 Russia 414 saccharin 218 Sarnoff, Joshua D. 102 Saussure, Ferdinand de 269, 271 science cloud 321, 328 secret prior art 134, 135 semantic information 311 semiotics 267, 268, 269–75 Shabazz, Rasheed 305–7 Sheff, Jeremy 272 Silbey, Jessica 245 Simons, J. H. 219, 220 Singapore International Arbitration Centre 183 Slaughter, Matthew 475 social benefits and costs 10 sub-patentable innovations 90, 93–4 socially valuable innovation 90 sociological analysis 250–1 software 146–7

Sokoloff, Kenneth 475 South Africa 122 specialization 4 district courts 155–7 Federal Circuit 149–51, 157–8 costs and benefits of specialization 151–3 opinion specialization 157 Patent Trial and Appeal Board (PTAB) 153–5, 157 Speyer, Johann von 204 Sprigman, Chris 484 standard essential patents (SEPs) 172, 175, 187, 189 Steup, Elisabeth 347 Stewart, Richard B. 388 Strandberg, Katherine 101 sub-patentable innovation codifying a liability regime 91–2, 94 principles of compensation 93 social benefits 93–4 term of protection 92–3 incentivization 90–1 subjective rights 207 subsidies 474, 476–7 sui generis rights 355–8, 364–5, 368, 369–72 Sunder, Madhavi 438 Supplementary Protection Certificates (SPCs) 355, 356, 359, 369, 370 supra-national organizations 387–9, 394, 395 ‘take and pay’ rules 91 tariffs 473 see also protectionism tax credits 474, 476–7 technological change 411–12, 479 technology impacts and risks 494–9, 500–2 neutrality 490 sharing 51 television programming 12 termination rights 201–3 territoriality 448 Thomson Reuters 305–7 TM-Link 280–1 tobacco products 374–6, 410 Philip Morris v. Australia 421–2

Index

trade agreements see free trade agreements (FTAs); investment treaties; preferential trade agreements (PTAs) trade barriers 473, 475 trade secrecy 103, 292, 310–13, 479, 487 trade theory 474 impact of trade on IP 477–83 trademarks 4 data and 312 expressive use 246–8, 258–60, 264–5, 266–9, 275–6 artistic relevance 261, 273 assessment criteria 249–54 flexible approaches to 254–6 honest practices in industrial or commercial matters 248–56 ‘hybrid usages’ 259, 263, 267 legal-doctrinal concerns 252–4 luxury brands 270–1 Polaroid factors 264 practical concerns 250 Rogers v. Grimaldi test 260–4, 273 semiotic analysis 267, 268, 269–75 theoretical concerns 250–2 fabless models of production see fabless manufacturing fashion industry 21 non-discrimination by sector 373–83 scope of protection 278 traditional knowledge (TK)/traditional cultural expression (TCE) 470 transaction costs 448 translation rights 209–11 transnational IP enforcement 449 recipient-related measures 451–3 source-related measures 450–1 WIPO ALERT 449, 453–9 transnational judicial competition 170–3, 179 first-in-time or last-in-time 174–9 trans-nationalism transparency 393, 394, 395 see also data transparency TRIPS Agreement 2, 16, 41, 42, 45, 391, 405 armed conflict and 414–15

515

compulsory licensing and 120, 121,122 critiques 461, 462, 463 databases 371 exceptions for research uses 99 flexibilities 430 harmful exploitation 501 impact on international law 440 minimum standards 371, 397 most-favoured nation (MFN) 363–4, 366 national treatment 346, 353, 354, 356, 359–62, 363, 369–72 non-discrimination 363, 373, 374, 376, 377, 378, 381, 382 plant breeder’s rights 76 public health and 52, 57, 58–9, 60, 416, 418, 419, 420, 422, 423–4 TRIPS-plus rules national treatment 359–62, 369–72 preferential trade agreements (PTAs) 396, 397, 398–9, 400, 402 waiver 58–9, 61–2, 413, 427, 432 see also compulsory licensing TRIPS Council 465 Trump, Donald 473, 477, 479 Ukraine 414 uncertainty 139, 230–1 Unified Patent Court (UPC) 4 fee shifting as a safeguard against misuse 168 international jurisdiction 161 internal allocation of proceedings among the divisions of the Court of First Instance 162 locus delicti and forum shopping 163 locus delicti under the Brussels I Regulation 163–5 locus delicti under the UPC 165–6 language of proceedings and time limits 166–8 ‘patent package’ 159–61 patent trolls 166, 168, 169 recommendations to reduce misuse 169

516

Improving intellectual property

Uniform Domain Name Dispute Resolution Policy (UDRP) 3, 450 Union for the Protection of New Varieties of Plants (UPOV) 77, 82, 84, 356 United Kingdom London Police Intellectual Property Crime Unit 453 Privy Council 175 United Nations Conference on Trade and Development (UNCTAD) 57, 418 United States America Invents Act (AIA) 126, 127, 129–36, 480 compulsory licensing 118–19 Constitution 444 copyright 192–203 dispute with Cuba 365 district courts 155–7 exceptions for research uses 99, 101, 102, 104 FITF see first-inventor-to-file (FITF) international trademarks and activity of US businesses 281–6 investor–state dispute settlement (ISDS) 409 key international trademarking businesses 287 last-in-time rule 176–9 National Institutes of Health (NIH) 25, 54, 55, 98, 103, 105 patent licensing disputes 187, 188 Patent Trial and Appeal Board (PTAB) 153–5, 157, 491 plant varieties 77, 78, 79, 80 preferential trade agreements (PTAs) 399 protectionism 474, 476, 477–8 adoption of IP treaty law 478–9 increase in patenting activity 481–3 strengthening domestic patent rights 479–81 welfare effects 474, 483 validity of patent royalties after patent expiration 107–8, 112, 115

United States Court of Appeals for the Federal Circuit 4, 100, 138–40, 148, 439, 490 adjudicator specialization 149–51, 157–8 costs and benefits of specialization 151–3 opinion specialization 157 as specialized patent court 140–4, 491 reach beyond patent law in patent cases 144–8 United States–Mexico–Canada Agreement (USMCA) 409, 478, 479 United States Olympic Committee (USOC) 260 United States Patent and Trademark Office (USPTO) 128, 129, 132, 133,139, 149, 154, 444 annual patent application data 481–2 Universal Declaration of Human Rights 212 unregistered Community designs (UCDs) 359 Upreti, Pratush Nath 432 user innovation 485–6 utilitarianism 14, 232, 492, 493 utility 227, 230 vaccines 122–3 Van Zimmeren, Esther 445 Vaver, David 349 visually impaired public 2, 11 Waldron, Jeremy 17 Weber, Max 442 website blocking 452 see also WIPO ALERT welfare effects 473, 483, 494, 498, 501 World Bank 398 World Blind Union (WBU) 31 World Health Organization (WHO) 56, 57, 67 World Intellectual Property Organization (WIPO) 2, 182, 183, 391, 392, 394, 446, 472 annual patent application data 481, 482

Index

Copyright Treaty 346 Inter-Governmental Committee 470 Marrakesh Treaty 32 norm-setting 467, 468 standing committee system 465, 466 WIPO ALERT 449, 453–9 World Trade Organization (WTO) 2, 42, 122, 391, 392, 394, 446 Appellate Body 365, 421

517

Dispute Settlement Body (DSB) 68, 365, 406, 421, 460 limited role in IP legal norm formation 464–7 minimum standards 366, 371, 397 non-discrimination by sector in international trademark law 377, 378 TRIPS see TRIPS Agreement Wright, Doug 191–2