Perry 2016

MarkPerry Editor
Global Governance
of Intellectual
Property in the
21st Century
Reflecting Policy Through Change
Global Governance of Intellectual Property

in the 21st Century
ThiS is a FM Blank Page
Mark Perry
Editor
Global Governance of
Intellectual Property
in the 21st Century
Reflecting Policy Through Change
Editor
Mark Perry
School of Law
University of New England
Armidale, Australia
ISBN 978-3-319-31176-0
ISBN 978-3-319-31177-7
DOI 10.1007/978-3-319-31177-7
(eBook)
Library of Congress Control Number: 2016940952

Springer International Publishing Switzerland 2016
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For Priti
Preface
This book is aimed at reaching all people interested in the global evolution of
intellectual property. This probably means every thinking person, as who could not
be interested in one of the underlying foundations of the diverse societies that
coexist today? Readers who are inventors, artists, and marketers will no doubt
gravitate to the parts that focus on patent, copyright and trade marks, but this would
be a narrow approach. The editor asks readers to contemplate the work as a whole,
and to see how the authors who come from Australia, Canada, China, India, Italy,
Nepal, Thailand, the United Kingdom, and the United States of America reflect
on issues in the globalised world of intellectual property. Other states are also
considered by the authors in their various chapters, giving a broad international
perspective.
The provenance of this work started with the idea for a collaboration between
Beijing Foreign Studies University and the University of New England (Australia)
for a conference in the area of intellectual property. This rapidly developed into a
conference in May 2015, Intellectual Property Facing the 21st Century: Flux in the
Force, with a theme following the changes in the foundations of intellectual
property as seen through developments in a wide span of jurisdictions. Over the
last decade, approaches to intellectual property have been in a state of flux.
Although fundamental precepts remain the same, the emphasis on the directions
being taken are changing around the world. This in turn led to the chapters in this
book. Not all speakers are authors of this work, and not all contributors were
speakers, but they have seized the idea of representing changes in the jurisdictions
that they examine, which can be seen as allegories for changes in the global
governance of intellectual property.
Readers may be surprised at the diversity of approaches to intellectual property
in what is often portrayed as a globalised collection of rights over the intangible,
and this is addressed in the first chapter. The following chapters are roughly
grouped by area of intellectual property addressed, but there is no clear-cut line
as intellectual property rights are not living in isolated silos. They could have been
grouped by type of state or geographical region, but again there are very strong
vii
viii
Preface
interrelationships between national intellectual property developments. The threads

and connections between chapters are left to the reader. The themes include the
exercise of power by governments and industry, dominant states in governance,
health, innovation, disability, the Internet, branding, crime, investment and
patentomics. Readers should find issues on which they sympathise, agree and
dissent and others for which they are upset and happy. It is after all the reader
that makes the book.
Armidale, NSW, Australia
January 2016
Mark Perry
Acknowledgements
A work such as this depends on the direct input from many people and indirect
influences from thousands. However, convention suggests that most would like
mention in person, and although this is not possible, there are some to thank
specifically. Starting temporally at the end, Springer clearly has had a great role
in bringing this work to your hands or screen, in particular Dr Brigitte Reschke,
Executive Editor Law, for taking on this project and Manuela Schwietzer for her
editorial assistance to get the work to press. The beginning of this project has its
origin at Beijing Foreign Studies University, with Dean Meng Wan and Associate
Professor Lijuan Liu co-hosting the IP Flux conference at their university in 2015
together with the University of New England. There has been a great deal of work
done by many people in between these two times, taking a year, and in addition to
the contributors, thanks must go to those peer reviewers who remain anonymous
and often unthanked for their quick work in providing excellent feedback on the
chapters herein.
Dr Kylie Lingard, apart from co-authoring a chapter with me, provided immense
assistance in preparing the materials. To the many others who helped, including my
relatively new colleagues and friends at the University of New England, Armidale,
NSW, Australia, who often provide assistance without even knowinga word, or a
thought-provoking commentI give my thanks. Of particular importance is Dr
Priti Krishna for her encouragement and her own stamina for scholarly pursuit that
provides daily inspiration.
I thank you all.
ix
Contents
The Changing Face of Intellectual Property: Global Forces and

Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark Perry
Prior Art Defence in the Chinese Patent System . . . . . . . . . . . . . . . . . .
Lijuan Liu
Bio-Patent Pooling and Policy on Health Innovation for Access to
Medicines and Health Technologies that Treat HIV/AIDS: A Need for
Meeting of [Open] Minds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sunita Tripathy
Patent Exhaustion on Trial in the United States . . . . . . . . . . . . . . . . . . .
Shubha Ghosh
Code, Autonomous Concepts and Procedure: Stepping Stones for
European Law? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alison Firth
The Harmonisation of EU Copyright Law: The Originality Standard . . .
Thomas Margoni
1
11
29
51
71
85
International Copyright: Marrakesh and the Future of Users

Rights Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Margaret Ann Wilkinson
Moments of Flux in Intermediary Liability for Copyright Infringement
in Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Nicolas Suzor, Rachel Choi, and Kylie Pappalardo
The Evolution of Domain Names and Their Impacts on Trade Mark
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Heather Ann Forrest
xi
xii
Contents
Non-conventional Trademarks Under United States Law:

An Unbounded New Frontier of Branding . . . . . . . . . . . . . . . . . . . . . . . 173
Llewellyn Joseph Gibbons
The ASEAN Single Market: A Perspective on Thailands Trade Mark
Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Kanya Hirunwattanapong
Intellectual Property Rights and Foreign Direct Investment
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Ramesh Karky
Innovation Cartography and Patentomics: Past, Present and Future . . . 225
Kylie Lingard and Mark Perry
Brief Information on Contributors
Rachel Choi recently completed Bachelor degrees in Law and Film, TV and
Screen from the Queensland University of Technology in Brisbane, Australia.
With a working knowledge of film production and film festivals, Rachels enthusiasm for the arts underpins her interest in intellectual property, media and Internet
law. Rachel is a law graduate at a national law firm where she started as a paralegal
in the Intellectual Property and Technology group.
Alison Firth originally studied physics, but curiosity about patents led her into the
law, first into legal practice at the English Bar, then to academic posts. Her research
interests cover the laws of intellectual property and their interaction with other areas
of law, such as contract and competition law. She is Vice-President of the British
Literary and Artistic Copyright Association. She enjoys swimming and visiting wellstocked law libraries. Topics of recent papers, talks and publications include developments in UK patent law and procedure, copyright exceptions for libraries and
archives, co-authorship and co-ownership of copyright in musical works, European
trademark norms in the context of the proposed Transatlantic Trade and Investment
Partnership and the Trans-Pacific Partnership, reception of EU trade mark laws in
New Zealand, the account of profits in relation to the EUs IP enforcement directive,
essential facilities and other issues of competition in copyright.
Heather Ann Forrest is the Vice Chair of ICANNs Generic Names Supporting
Organization (GNSO) Council representing the Non-Contracted Parties House. She
is a member of the leadership of ICANNs Intellectual Property Constituency (IPC)
and represents the IPC on the GNSO Council. She serves as a co-chair of the CWG
on the Use of Country and Territory Names as Top-Level Domains. She is an
Associate Professor at the University of Tasmania. Her research focusses on the
interaction of international law, particularly relating to rights in names, and Domain
Name System policy. Her doctoral thesis, Protection of Geographic Names in
International Law and Domain Name System Policy, is recognised as the global
authority on legal rights in geographic names and their use in the Internet Domain
Name System.
xiii
xiv
Shubha Ghosh is the Crandall Melvin Professor of Law and Director of the
Technology Law Center at Syracuse University College of Law in Syracuse,
New York. He has written well-cited articles in the fields of intellectual property
policy, doctrine and commercialisation. He earned his BA from Amherst College,
his MA and PhD in Economics from Michigan and his JD from Stanford. He has
travelled extensively in Asia and Europe, learning and lecturing about the design of
social institutions for the promotion of innovation, openness and distributive
justice.
Llewellyn Joseph Gibbons researches in the area of the intersection of law and
technology in creating new governing structures as well as their effect on economic
and cultural development. Llewellyn Joseph Gibbons is a professor of law at the
University of Toledo where he coordinates the intellectual property law
programme. He is also a fellow at the Intellectual Property Center of Zhongnan
University of Law and Economics (Wuhan, China). Llewellyn Joseph Gibbons has
written articles in the areas of intellectual property and economic development, the
governance of cyberspace, the role of mass market contracts in ecommerce transactions and the use of arbitration as a means on online dispute resolution. Llewellyn
Joseph Gibbons articles have been cited by federal and state courts in the United
States.
Kanya Hirunwattanapong is the Assistant Dean for Foreign Affairs at the
Faculty of Law and the Head of the European-ASEAN Legal Studies Unit at
Chiang Mai University, Thailand. She has taught intellectual property law and
the European Union law and is actively involved in organising IP activities
with both the Central Intellectual Property and International Trade Court and the
Intellectual Property Department. She has been a guest lecturer on IP and EU and
ASEAN Law. She earned her BA and MA in Law at Chulalongkorn University
and MA in Law (European Union Law) at Exeter University, UK. She has currently
written the following: (1) the series of Thai Intellectual Property Laws (the first
one in the series is Thai Patent Law, and the second book is Thai Trade Mark Law)
and (2) The Judicial Control in the European Union: Lessons for the ASEAN
Community (first draft).
Ramesh Karky specialises in the international economic law, intellectual
property law and biotechnology law areas and has served as an international expert
consultant, Visiting Professor of Law, researcher and lawyer. Karky holds Diploma
in Law (LLB) from Tribhuvan University in Kathmandu, LLM from the Vrije
Universiteit Brussels and SJD from Golden Gate University in San Francisco and
completes three years postdoctoral training in Law at Western University, Canada.
He was also an Invited Researcher at the Japanese Institute of Intellectual Property
(part of Japanese Patent Office).
Kylie Lingard is a Postdoctoral Research Fellow with the Australian Centre for
Agriculture and Law, at the University of New England (Australia). Her research
areas include legal measures to better support the interests of indigenous peoples in
their traditional resources and knowledge, legal duties to consult indigenous
xv
peoples in land-use decision-making and equitable management policies for plant

material collections. Lingards PhD research looked at strategies to advance the
interests of Aboriginal and Torres Strait Island peoples in the commercialisation of
their traditional foods.
Lijuan Liu is Associate Professor, Beijing Foreign Studies University Law
School, in Beijing, China. Lijuan has a PhD from Chinese Academy of Social
Science and a Master from Beijing University Law School. Research includes
especially trademark and unfair competition law. Teaching includes intellectual
property law for undergraduates, trademark law for postgraduates and intellectual
property law frontiers for postgraduates.
Thomas Margoni is a Lecturer/Assistant Professor at the School of Law, University of Stirling, UK. His research and teaching interests concentrate on the relationship between law and new technologies from an EU, comparative and
international point of view. He has published extensively in the field and teaches
courses in intellectual property and internet law. Dr. Margoni is a regular speaker at
national and international conferences, is a Marie Curie grant holder and conducts a
variety of studies for EU and international institutions, including the European
Commission, the Organisation for Economic Co-operation and Development
(OECD), the Office for Harmonisation in the Internal Market (OHIM) and the
Japanese Patent Office.
Kylie Pappalardo researches in intellectual property and innovation law, focussing primarily on the intersection between copyright and creativity and on the rights
of copyright users. She is a Lecturer in the Law School at the Queensland University of Technology (QUT), where she leads the research programme on copyright
law and creative communities. Kylie has recently completed her PhD on the
regulation of ISPs and other Internet intermediaries for online copyright infringement. She holds degrees in Law and Creative Writing from QUT and a Masters of
Law from Georgetown University in Washington D.C. Kylie has been a senior
researcher with the Open Access to Knowledge (OAK) Law Project and with
Creative Commons Australia. She has also worked with the Arts Law Centre of
Queensland and served on the board of Youth Arts Queensland.
Mark Perry is Professor of Law at the University of New England, Australia and
Barrister and Solicitor of the Law Society of Upper Canada. He is also Professor
Emeritus of Computer Science at Western University in Canada. His research is on
the nexus of Science and Law, in particular focussing on biotechnology and
intellectual property. Professor Perry has prelected audiences around the world,
including Brazil, Bhutan, China, Italy, India, Japan, New Zealand, the United
States, the United Kingdom and Australia. He has been an invited and keynote
speaker at many international conferences regarding technology and law. Along
with invitations to speak, he has organised several global conferences in Canada,
Australia and China and has been an advisor on other symposia overseas. Professor
Perry has published widely in both law and technology journals and has supervised
xvi
many postdoctoral, graduate and undergraduate students, who have gone on to work
at law firms, industry, non-governmental organisations or taken positions in
universities.
Nicolas Suzor researches the regulation of networked society. He is a Senior
Research Fellow in the Law School at Queensland University of Technology in
Brisbane, Australia, and a Chief Investigator of QUTs Digital Media Research
Centre, where he leads a programme of research on the regulation and governance
of the Internet and social media. His research examines the governance of social
networks, the peer economy, digital copyright and knowledge commons. Nic is also
the Legal Lead of the Creative Commons Australia project.
Sunita Tripathy is Assistant Professor at the Jindal Global Law School as well as
Assistant Director of Centre for Intellectual Property and Technology Law at the
O.P. Jindal Global University, India. She earned her LLM in Intellectual Property
Law as a NALSAR-Western Scholar while studying at the Faculty of Law, University of Western Ontario, London, Canada, and NALSAR University of Law,
Hyderabad, India, in 20102011; she has a degree in Bachelor of Socio-Legal
Sciences and Law (BSL, LLB) from the Symbiosis Law School, Pune, India.
Tripathy enjoys advanced scholarship and research about law and its role in society
with special focus on its nexus with technology, intellectual property and public
policy. She has published on issues interfacing intellectual property law and
competition policy, led seminars and lecture series on traditional and alternate
approaches to intellectual property protection and management and has spoken in
several intellectual property conferences and forums in India and overseas.
Margaret Ann Wilkinson trained as both a lawyer and a librarian, practised law
before joining Western University and remains a member of the Law Society of
Upper Canada. She has been awarded the Ontario Library Associationss Les
Fowlie Intellectual Freedom Award. Co-author of Canadian Intellectual Property
Law (Toronto: Emond Montgomery; 2013)), she has counseled the International
Federation of Libraries and Institutions [IFLA] at several World Intellectual
Property Association Subcommittee on Copyright and Related Rights [SCCR]
meetings considering the proposed Treaty for Limitations and Exceptions for
Libraries and Archives. Appointed to the Faculty of Law and affiliated with
graduate programmes in both law and health information science, Dr. Wilkinson
teaches, speaks and writes on pharmaceutical and health regulation, professional
ethics, intellectual property and information law. She is currently funded through
Canadas Social Sciences and Humanities Research Council for research into data
protection, personal data protection and confidential information protection.
Abbreviations
ACMA
API
ARV
ASEAN
AWGIPC
BITs
CJEU
CLM
COBI
DNA
DNS
EC
ECHR
ECJ
EPO
EU
FDA
FDC
FDI
GATT
GPML
ICANN
IFLA
IP
IPR
ISP
JPO
LDC
LMIC
MPAA
Australian Communications and Media Authority

Active Pharmaceutical Ingredient
Anti-retro Viral
Association of Southeast Asian Nations
ASEAN Working Group on Intellectual Property Cooperation
Bilateral Investment Treaties
Court of Justice of the European Union
Committee on Copyright and other Legal Matters (IFLA)
Cobicistat
Deoxyribonucleic acid
Domain Name System
European Commission
European Court of Human Rights
European Court of Justice
European Patent Office
European Union
Food and Drug Administration (United States)
Fixed Dose Combinations
Foreign Direct Investment
General Agreement on Tariffs and Trade
Globally Protected Marks List
Internet Corporation for Assigned Names and Numbers
International Federation of Library Associations and Institutions
Intellectual Property or Internet Protocol
Intellectual Property Rights
Internet Service Provider
Japan Patent Office
Least developed countries
Low-and middle-income countries
Motion Picture Association of America
xvii
xviii
MPP
NAFTA
NDA
NGO
NTIA
OECD
PRB
PTIAs
RIAA
SCCR
TDF
TFEU
TLD
TLIB
TPP
TRIMs
TRIPS
TTIP
UDHR
UDRP
UNCTD
UNESCO
URL
USPTO
WCT
WHO
WIPO
WPPT
WTO
Abbreviations
Medicines Patent Pools

North American Free Trade Agreement
National Drug Authority (India)
Non-governmental organisation
National Telecommunications and Information Administration
Organisation for Economic Co-operation and Development
Patent re-examination board
Preferential Trade and Investment Agreements
Recording Industry Association of America
Standing Committee on Copyright and Related Rights (WIPO)
Tenofovir disoproxil fumarate
Treaty on the Functioning of the European Union
Top level domains
Treaty for Libraries and Archives
Trans-Pacific Partnership
Agreement on Trade-Related Investment Measures
Trade-Related Aspects of Intellectual Property Rights
Transatlantic Trade and Investment Partnership
Universal Declaration of Human Rights
Uniform Domain Name Dispute Resolution Policy
United Nations Convention on Trade and Development
United Nations Educational, Scientific and Cultural Organization
Uniform Resource Locator
United States Patent and Trademark Office
WIPO Copyright Treaty
World Health Organization
World Intellectual Property Organization
WIPO Performances and Phonograms Treaty
World Trade Organization
The Changing Face of Intellectual Property:

Global Forces and Compliance
Mark Perry
Abstract Over the last three decades there has been constant pressure on developing nations to conform with the intellectual property ideals of the developed
world, in particular, it can be argued, those of the United States of America. Despite
this, many jurisdictions have managed to maintain at least some part of their own
inherent approach to how intellectual creations, whether invention, expression, or
marketing concept, should be dealt with in their state. It can be argued that some
states where governance can be said to be in disarray are, on the other hand, readily
adopting protectionist international norms to validate their statehood.
It should also be noted that even in countries that are seen as having a very solid
view of how intellectual property rights, and the enforcement of those rights, should
be structured, there are still areas of uncertainty as how to implement their laws in
the face of changing technologies and changing global relationships.
1 Introduction
The last 150 years has seen accelerated activity at key times for what is called
global harmonisation of intellectual property rights by some, or the imposition of
colonialist/imperialist ideals for the propertisation of the expression of human
intellect on developing nations. The English Statute of Monopolies 1623 followed
by the Statute of Anne 1710 introduced the foundations of what we know today as
patent and copyright, in the common law world at least. There were many changes
over the centuries, but by the end of the nineteenth century we can see the first
major attempts to provide basic global norms of intellectual property protection
expressed in the Paris Convention for the Protection of Industrial Property (1883)
828 U.N.T.S. 305, with its initial 11 signatories (WIPO n.d.), and the Berne
Convention for the Protection of Artistic and Literary Works (1886)
828 U.N.T.S. 221, starting with eight signatories (WIPO 2015a). These
M. Perry (*)
School of Law, University of New England, Armidale, NSW 2350, Australia
e-mail: mark.perry@une.edu.au
M. Perry (ed.), Global Governance of Intellectual Property in the 21st Century,
DOI 10.1007/978-3-319-31177-7_1
M. Perry
international agreements have had significant impact and amendments over the
years with the former now standing at 176 contracting parties (WIPO 2015b), and
the latter currently 168 parties (WIPO 2015a). In recent decades other international
multilateral agreements have been introduced, such as Agreement on Trade-Related
Aspects of Intellectual Property Rights (1994) 1869 U.N.T.S. 299 (Annex 1C))
(TRIPS) under the World Trade Organisation (WTO), the many other agreements under the auspices of the World Intellectual Property Organisation (WIPO).
Some say that this movement to multinational compliance is driven by the notion of
natural law (Oddi 1996), although much political, and even court (Mazer v. Stein
(1954) 347 U.S. 201),1 interpretation has been to treat the issue as a utilitarian
question.
This brief introduction raises the question as to how effective international
multiparty agreements have been in creating a homogenised approach to global
intellectual property governance. The survey below introduces some of the issues
raised by the scholars contributing to this work, albeit through the eyes of this
chapters author.2
2 Harmonisation and Differentiation

A review of the current state of play in terms of international agreements, whether
under the auspices of WTO or WIPO is available via many fine publications and
sources. For example, the introduction given by WTO on that website as to the
importance of intellectual property rights, which is also reflected in the material
provided by WIPO, and the many scholastic articles analysing in-depth the changes
in various agreements and relationships between various agreements, such as the
Berne Convention 1886 and WIPO Copyright Treaty 1996. There is probably less
focus put on the divergence inside states. In other chapters of this book you will find
a range of discussions that are introduced in this chapter that illustrate the continuing diversity, and sometimes increased diversity, amongst the way nations treat
intellectual property.
In Prior Art Defence in the Chinese Patent System (Chapter 2), Lijuan Liu
discusses an aspect of the two streams of governance in patent disputes that are
embedded in the Chinese system, a bifurcated approach that is to the surprise of
some no doubt. On the one hand it is the courts that decide on patent infringement
issues, but the Patent Re-examination Board and two specific courts deal with
patent validity. The problem arises in the area of prior art as to whether a patent
1
The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gain is the best way to
advance public welfare through the talents of authors and inventors in Science and useful Arts.
2
It should be noted that this chapter presents the views of this author, and perspectives presented
may not coincide with those of the other chapters. The reader, no doubt, with have their own
interpretation and views.
The Changing Face of Intellectual Property: Global Forces and Compliance
is questionable, in which case an infringement hearing needs to be suspended and

returned to the Board for determination. This type of procedure is not contemplated
in international agreements, as they do not deal with this kind of detailed jurisdictional hearing procedure. In 2014, the total patent filings, both from residents and
abroad, reached 837,817 in China, an increase by a factor of ten over the decade,
and outstripping the United States of Americas 509,521 (WIPO 2014). This trend
is reflected in other IP filings in China, and realising that it is now the leading nation
for filing intellectual property registrations it is possible that the pressure for reform
to an effective system will bring more analysis for more effective governance from
that nation in the future.
India, on the other hand, has placed more emphasis on tailoring its intellectual
property regime to meet the needs of its own peoples directly, albeit within the
confines of TRIPS. This can be seen in a range of actions, whether addressing seed
saving, preventing patent evergreening,3 or the issues of access to drugs, which
were not patentable in India prior to TRIPS. In Bio-Patent Pooling and Policy on
Health Innovation for Access to Medicines and Health Technologies that Treat
HIV/AIDS: A Need for Meeting of [Open] Minds (Chapter 3), Sunita Tripathy
looks at a novel arrangement for patent pooling drugs, known as Medicine Patent
Pools (MPP). Pre-TRIPS, when India had no patent protection for drug products,
the nation was a global leader in generic drug production. It was also provided for
modern drugs at extremely low cost to patients. The adoption of TRIPS has changed
the market in India, and as discussed in the chapter, good solutions to making
available anti-viral drugs more widely available such as the MPP can also have
unintended outcomes. India has adopted an approach to patenting, despite the
strictures of TRIPS, that still limits that power of large pharmaceuticals to maximise their profits, for example see Novartis v. Union of India (2013) S.C. 1311.4
The drug patent arena is not the only realm where India is criticised by other nations
for taking a less extreme approach to intellectual property protection, indeed the
nation falls within the United States Trade Representatives Special 301 list
(Froman 2014) under the category priority watch list i.e. a country that has
serious intellectual property rights deficiencies. The 2014 Report to Congress
criticises India for its compulsory licensing policy on green technologies, and for
trade mark counterfeiting and copyright piracy (Froman 2014, 19). Of course, it
is fair to say that most developing nations have issues with enforcement, and worth
noting that the report is heavily influenced by commentary encouraged from
3
Evergreening is the term used in the patent environment to describe the attempts by patent
holders, especially in the drug arena, to prolong the patent period of the basic compound by
seeking new patents on altered formulations, dosage types, data retention and other business
techniques (see Gaudry 2011).
4
Wherein the Indian Supreme Court upheld the decision on the rejection of a patent application by
Novartis for its beta crystalline form of Imatinib Mesylate (Glivec).The Court observed Novartis
to be indulging a strategy that led to ever-greening of its patents, a practice intended to extend the
term of the patent on the same compound; which is impermissible given the patented invention
ought to expire after the stipulated term of 20 years.
M. Perry
interested stakeholders, typically those involved in the intellectual property

industry that would benefit from greater global compliance with the United States
perspective on rights protection.
The United States of America has its own internal struggles with determining
what falls within the boundaries of intellectual property protection as well. This is
illustrated by Shubha Ghosh in Patent Exhaustion on Trial in the United States
(Chapter 4), where he looks to an area that is not legislated in the United States but
rather relies on development in the common law tradition of cases. Exhaustion is a
doctrine that in effect protects the market from reach-through rights after the
patented item is sold, so that the vendor cannot later claim on the purchaser.
However, there is a fine balance between selling a patented item and licensing its
use, and the limitation that the doctrine doesnt apply to self-replication products
such as patents in sequences in seeds, Monsanto v. Bowman (2011) 657 F.3.d 1341,
1347or perhaps limited to seed (Chapter 4). The limits on exhaustion doctrines
are also under review in the printer cartridges of Lexmark, which is currently in the
courts in the United States of America and discussed herein (Chapter 4).
Another front for challenge and change in the United States can be seen in
Llewellyn Joseph Gibbons Non-Conventional Trademarks Under United States
Law: An Unbounded New Frontier of Branding (Chapter 10), where trademark is
evolving to include attributes such as appearance, motion, scent, sound, smell, taste
and touch. In other common law countries, Trade Mark of such attributes of a brand
are often protected under the common law of passing off, classically in Perry
v. Truefitt (1842) 49 E.R. 749 where the Master of Rolls, Lord Langdale, expressed:
A man is not to sell his own goods under the pretence that they are the goods of another
man; he cannot be permitted to practice such a deception, nor to use the means which
contribute to that end. He cannot therefore be allowed to use names, marks, letters, or other
indicia, by which he may induce purchasers to believe, that the goods which he is selling are
the manufacture of another person.
Some legislation, such as Canadian Trade-Marks Act (1985) section 7, bring

passing off into a codified form, but the United States of America has taken a
different tack, for example in free trade agreements that insist on protection of
scents and sounds (Chapter 10, footnote 16). The Trans Pacific Partnership (TPP)
also adds requirements for sounds and best efforts to register scents (see
e.g. Office of the United States Trade Representative 2015).
Even in Europe, where civil law governs the great majority of jurisdictions, there
have been movements in the development of intellectual property that can be
attributed to the interpretation of the law by the courts, in particular by the adoption
of autonomous concepts as discussed by Alison Firth in Code, Autonomous
Concepts and Procedure: Stepping Stones for European Law? (Chapter 5). The
introduction of detail and transparency, citing previous case-law and even
distinguishing earlier cases seems to be the adoption of aspects of the common
law doctrine of precedent, which will give a new twist to the governance of
intellectual property rights in the European Union. How these developments,
along with the aim of further harmonisation of European Union intellectual
property governance, such as the proposed unitary patent system, in part brought
into effect by procedural reformation, will be interesting to watch over the coming
decade.
Staying with the European Union, Thomas Margoni in The Harmonisation of
EU Copyright Law: The Originality Standard (Chapter 6) delves into the originality requirement in copyright, from the changing common law standard, which
started with only origination from an author, to civil law countries where more
importance is placed on the personal relationship and inputs to the work in question.
The vertical harmonisation of the originality standard of authors own intellectual
creation in software, photographs and databases, combined with horizontal adoption of the standard in other areas of copyright. Furthermore there has been
feedback into the legislation of member states (Chapter 6). Margoni also discusses
the significant influence of the courts, particularly the ECJ, is having in setting
norms of originality in the worlds largest single market (see also European
Commission 2014).
One area of copyright that seems to get little attention is exposed in detail by
Margaret Ann Wilkinson in International Copyright: Marrakesh and the Future of
Users Rights Exceptions (Chapter 7), a treaty aimed at mandating limitations and
exception of users. The Marrakesh Treaty to Facilitate Access to Published Works
for Persons Who Are Blind, Visually Impaired, or Otherwise Print Disabled (2013)
(WIPO 2016),5 as Wilkinson points out, provides many interesting aspects of
intellectual property development on the international scene, including its incorporation of the TRIPS three-step-test, and also being a treaty focused on providing
user exceptions.
Copyright has seen dramatic expansion over the last couple of decades, in part to
face the challenges of digital technologies combined with global access to information at the push of a button.6 Nicolas Suzor et al. in Moments of Flux in
Intermediary Liability for Copyright Infringement in Australia (Chapter 8), examine the regulatory shift in Australia with respect to addressing internet service
providers liability. Providing systems of governance for copyright in the Internet
age is clearly not trivial, and many nations have struggled to find the balance
between crushing the sharing of socially useful information and allowing a copyright free zone. Suzor et al. discuss the three major changes that were implemented
in Australia in 2015 and how these illustrate the struggle to find a governance norm
that can satisfy constitutional values and the value attributed to rightsholders, and
address the pressing question of how individual rights can be protected in a
protectionist environment (Chapter 8). Staying within the Internet environment,
Heather Ann Forrest in The Evolution of Domain Names and their Impacts on
Trademark Rights (Chapter 9) explores the issue of the changing meaning of
When Wilkinson was writing there were eight ratifications and accessions of the treaty, now
standing at 13.
6
Of course, providing that you have access to world networks, the local infrastructure and at least
some equipment.
M. Perry
domain names over the last 20 plus years. Moving from a simple system of naming
machine locations to one that has challenged the courts as to how such names
reflect on branding (for an early discussion see Perry 1998, 1999). Forrest discusses
the relationship between Trade Mark holders and their uneasy relationship with
domain names, especially where there is the Trade Mark associated with a site
dedicated to complaining about the brand, as with the so-called x-sucks sites.
From the intellectual property perspective it is interesting how a non-profit body
such as The Internet Corporation for Assigned Names and Numbers, and an
interjurisdictional non-judicial body, such as those used under the Uniform Dispute
Resolution Process, and rightsholders of Trade Marks, all interact in a way that
could not have been predicted in the foundation days of the Internet. Forrest also
discusses how the new generic Top Level Domains are changing Internet user
perceptions.
Trade Mark issues are also of concern in the Association of South-East Asian
Nations (ASEAN), as reviewed by Kanya Hirunwattanapong in The ASEAN
Single Market: A Perspective on Thailands Trade Mark Development
(Chapter 11). The ASEAN Single Marked was targeted to take effect from
December 2015, although full implementation of a unified trading space will likely
take some time. There is still much divergence amongst ASEAN countries as to
their approach to intellectual property rights, for example only few are members of
the Madrid Protocol (Chapter 11). Following the experiences that European countries have had, it is not that surprising that forming a trading group is easy to say,
hard to achieve politically, and extremely difficult in practice.
It is clear that intellectual property rights have inroads into much policy and
international agreements outside those treaties that directly deal with them. One
area of importance is the number of agreements, multilateral and bilateral, dealing
with foreign direct investment. Ramesh Karky, in Intellectual Property Rights and
Foreign Direct Investment Agreements (Chapter 12), takes a close look at the
relationship between investment and intellectual property. Like TRIPS, the Agreement on Trade-Related Investment Measures (1999) is something of a compromise
between the dichotomy posed by the developing and developed nations. However,
most of the progress with investment has been made by bilateral arrangements, and
sometimes these include specific terms relating to intellectual property, such as the
Agreement between Australia and China on the Reciprocal Encouragement and
Protection of Investments (1988) (Chapter 12). As Karky notes, today often it is
intellectual property based investment that is fuelling development, so the relationship between these two areas should not be overlooked.
A relatively new area of intellectual property analysis comes in the form of
patentomics,7 and this comes under scrutiny (and development) by Kylie Lingard
7
Following the recent history of development of the omics age, patentomics can be considered
to be the systematic study of the structure, function and evolution of a select body of patents. The
tools are now developing that allow this to be done in a high throughput and readily
accessible way.
and Mark Perry in Innovation Cartography and Patentomics: Past, Present and
Future (Chapter 13). The patented databases that are now available online provide
researchers, innovators, businesses and governments access to a wealth of information as to the type of patented innovation happening at any given time, and who
is working in which field. As test case for patentomic exploration the authors have
looked at the crop innovation landscape as expressed through patents. Patent
cartography, patentomics, is bringing a chest of tools available to anyone with the
skills and time to make discoveries about discoveries, for example, by exploring which companies are focusing on which sector, or where in a particular field is
innovation receiving a large number of patents.8
3 The Future
Despite pressures for conformity, sovereign states still try to work as independent
actors, where there is room for them to negotiate or legislate variations, and attempt
to protect their own interests. The changes in intellectual property that are occurring
around the globe can provide a practical touchstone to show the condition of
development of a state. How the topic has become internationalised, a part of
trade, an icon of prosperity and culture development, shows international
approaches to a topic that firstly has been fundamental to development and nationhood, and secondly one that has felt the increasing pressure to treat creations of
human intellect, or some may argue animals and computers too, as a property right
much the same as other property rights.
The issues discussed in this work are not the only areas where intellectual
property is being recast due to the pressures of technology, the courts, business
and policy directions. There are multitudes of instances where the tension is
apparent. In India for example, Super Cassetts Industries Ltd. v Music Broadcast
Pty. Ltd. (2012) Civil Appeal Nos. 4196-4197 seeks to clarify the compulsory
licensing provisions of the Indian Copyright Act (1957), section 31. Even in the
United States of America, which has for decades been feted for promoting patents
for human endeavour, such flux is evident. As noted in the Committee Reports
accompanying the 1952 Act telling us that the United States Congress intended to
include anything under the sun that is made by man in the subject matter for
patent (S.Rep. No. 1979, 82d Cong., 2d Sess., 5 (1952); H.R.Rep. No. 1979, 82d
Cong., 2d Sess., 6 (1952)), the United States has generally been a jurisdiction that
makes it easy to get a patent. However, even this is subject to interpretation and
Some equate patents with innovation, however in this authors view this is not the case. Patents
represent invention that is patented. A lot of innovation is not patented.
M. Perry
refinement as seen in Association for Molecular Pathology v. Myriad Genetics

(2013) 569 U.S. ___,9 where the court rejected the BRCA patents. Australia has also
recently altered its position on gene patents in its version of the same case, DArcy
v. Myriad Genetics & Anor [2014] F.C.A.F.C 115.10 In the last two years we have
seen a number of instances where the utilitarian perspective is promoted, for
example in the negotiations for international agreement attempting to give more
protection to drug companies (Trans Pacific Partnership). On the other hand, some
courts, such as the Supreme Court of Canada in CCH, have started to recognise the
rights of users (of intellectual property) (CCH Canadian Ltd. v. Law Society of
Upper Canada (2004) S.C.C. 13). Copyright reforms in Australia to block web
sites, Chinas political determination to dominate the innovation sector through
patent, the global struggles at the political level to find leverage through intellectual
property rights. It is fair to say that the great protection for intellectual property
rights agenda is strongly promoted by the United States, which focuses on getting
other countries to come to their own perspective. Effects are global, for example the
governance of intellectual property in Arab countries has seen an unprecedented
wave of legislative reforms aimed at meeting their obligations under [TRIPS and
free trade agreements] (Elmahjub 2016).
Even Switzerland, for example, cannot escape the wrath of the United States
Special 301 Trade commentaries:
The United States continues to have serious concerns regarding Switzerlands system of
online copyright protection and enforcement. The United States strongly encourages
Switzerland to demonstrate its commitment to copyright protection and to combating
online piracy by taking steps to ensure that rights holders can protect their rights (Froman
2014, 21).
In another dimension of the intellectual property spectrum there has been

increased normalisation of the use of an open philosophy for sharing works, at
least based in part on one of the jurisprudential underpinnings of intellectual
property that in order to progress the Arts and Sciences there must be, minimally,
access to the materials, and the more open the access the greater societal benefit.
The Creative Commons licences are a good example of this, as is the Open Science
movement and efforts by independent groups such as Cambia. These individual
instances can be seen as pointing away from an international norm of a fixed,
harmonised, and possibly the more protectionist extreme view of rights in the
underpinnings of intellectual property. Indeed, there is a flux in the force.
Justice Thomas: We hold that a naturally occurring DNA segment is a product of nature and not
patent eligible merely because it has been isolated, but that cDNA is patent eligible because it is
not naturally occurring.
10
The Australian High Court (the highest court in the judicial system) allowed the appeal from the
Federal Court of Appeal. Interestingly the latter court had openly criticised the United States
Supreme Court judgement Association for Molecular Pathology v. Myriad Genetics.
References
Elmahjub, Ezieddin. 2016. Intellectual property and development in the Arab world: A development agenda for Libyan intellectual property system. Arab Law Quarterly 30(2016): 133.
European Commission. 2014. EU position in world trade. http://ec.europa.eu/trade/policy/euposition-in-world-trade/. Accessed 20 Jan 2016.
Froman, Michael B.G. 2014. 2014 Special 301 Report. Washington: Office of the United States
Trade Representative.
Gaudry, Kate S. 2011. Evergreening: A common practice to protect new drugs. Nature Biotechnology 29: 876878.
Oddi, Samuel. 1996. Nature and scope of the agreement TRIPS: Natural rights and a Polite Form
of Economic Imperialism. Vanderbilt Journal of Transnational Law 29: 415470.
Office of the United States Trade Representative. 2015. TPP full text. https://ustr.gov/tradeagreements/free-trade-agreements/trans-pacific-partnership/tpp-full-text. Accessed 20 Jan
2016.
Perry, Mark. 1998. Cybersquatters or entrepreneurs: When is legal intervention appropriate?
New Zealand Business Law Quarterly 4: 111117.
Perry, Mark. 1999. Another look at appropriation of digital persona: Domain names at the costs
hearing in Oggi Advertising v McKenzie et al. New Zealand Business Law Quarterly 5: 712.
WIPO. 2014. Statistical country profiles. http://www.wipo.int/ipstats/en/statistics/country_profile/#C.
Accessed 20 Jan 2016.
WIPO. 2015a. WIPO-administered treaties: Berne convention. http://www.wipo.int/treaties/en/
ShowResults.jsp?langen&treaty_id15. Accessed 20 Jan 2016.
WIPO. 2015b. WIPO-administered treaties: Paris convention. http://www.wipo.int/treaties/en/
ShowResults.jsp?langen&treaty_id2. Accessed 20 Jan 2016.
WIPO. 2016. Marrakesh treaty to facilitate access to published works for persons who are blind,
visually impaired or otherwise print disabled. http://www.wipo.int/treaties/en/ip/marrakesh/.
Accessed 20 Jan 2016.
WIPO. n.d. Paris convention for the protection of industrial property. http://www.wipo.int/treaties/
en/ip/paris/. Accessed 20 Jan 2016.
Prior Art Defence in the Chinese Patent

System
Lijuan Liu
Abstract The prior art defence in China is quite different from that of most
countries. It is complicated and cannot be easily understood, requiring researchers
to explore deeply into the legal system and specific circumstances of China. There
is currently a duel stream system in place that is addressed in this chapter. The prior
art defence is regarded by the Supreme Peoples Court as a tool to solve the problem
of prolonged patent infringement litigation, and has acquired a different purpose
from that of the defence in other countries. There are many disputes in the patent
arena occurring both before and after the establishment of the prior art defence in
China. With the evolution of Chinas general legal system and the intellectual
property regime, it is likely that the prior art defence will develop into a more
globally standard form, although with particular Chinese characteristics.
1 A Case and Disputes Related

1.1
A Case
A relatively recent case heard by the Supreme Peoples Court of the Peoples
Republic of China in 2010 is of key importance (Bridgestone Corporation v
Zhejiang Hang Ting Dun Bull Rubber and Beijing Bang Li Xin Tire (2010) Civil
Ruling No. 189).1 The complaint was from a tyre tread design patent owner,
Bridgestone Corporation, a famous Japanese tyre-producing company. The alleged
infringer was a small rubber-related products producer,2 which was manufacturing
hh
ii[Bridgestone Corporation v. Zhejiang Hengtingdun Rubber Ltd [Design Patent Infringement Case], [The Supreme Peoples Court] (2010) 189 [Min Ti Zi
No. 189].
2
So small that the company does not even seem to have a website.
1
L. Liu (*)
Faculty of Law, Beijing Foreign Studies University, Beijing, China
e-mail: liulijuanbfsu@163.com
DOI 10.1007/978-3-319-31177-7_2
11
12
L. Liu
a type of tyre that had a tread design similar to that of the complainant. The
defendant raised the prior art defence when it was sued for design patent infringement. Given that there were severely different opinions among the courts on how to
decide the prior art defence, the Supreme Peoples Court issued writ of certiorari to
hear the tyre case by itself and made a decision that established the rule on prior art
that corrected the lower courts opinions.
The main difference between the Supreme Peoples Court and the lower courts
in this case was whether the comparison should be made between the alleged design
and the prior design, or between the alleged design, the prior design and the
patented design; in other words, whether the patented design should be included
when making prior art defence comparison. The two lower courts of the first
instance and the appeal held that the comparison should be made just between the
alleged design and the prior design and there is no need to involve the patented
design, as this was the meaning given in the words of Chinese Patent Law article 62.
The Supreme Court overruled that decision and held that the comparison should be
made with the patented design partially involved.
1.2
Disputes on Prior Art Defence
There have been many different opinions in China on how the prior art defence should
be interpreted and operate. Those opinions are still influencing the ways in which the
defence is implemented. The arguments mainly concern these issues: The first, is it
literal infringement or equivalent infringement that prior art defence should be applied
to? The second, is the prior art defence to be established for the allegedly infringing
product in terms of whether it is identical or similar? The key issue is whether or not the
patent itself should be involved in the prior art defence comparison.
The starting point is that the defence may apply only when an equivalent
infringement is established, as it has been regarded as a way to prevent patent
owners from broadening the scope of the patent to cover prior art through this
equivalent infringement doctrine. With this kind of the prior art defence there is no
need to check the validity of patents, and it would not authorise courts to examine
the validity of the patents themselves and therefore would not harm the current
patent authorities (He 2008). This is the reason why this line of reasoning was
supported by Patent Re-examination Board (hereafter referred to as Board) and
Beijing Higher Peoples Court, the latter being a very important court in patent
cases since it is the only appeal court for all cases that rest on the validity of patents.
In its 2001 version of Guidelines for Determination of Patent Infringement,3 the
3
The Guidelines by the Beijing High Peoples Court are not considered as Interpretations, part of
statutes only coming from the Supreme Peoples Court. The Guidelines are rather a generalised
publication of certain regional courts official opinions aimed at guiding the judges of that specific
court on specific issues and informing the public of the attitude of the court as a whole. Guidelines
have quasi-binding effect for the judges of that specific court and are not binding for other courts,
although they do have a persuasive effect.
Prior Art Defence in the Chinese Patent System
13
Beijing Higher Peoples Court provided in article 100 that when the allegedly
infringing product is regarded as an equivalent product to that covered by the
patent, the prior art defence can be utilised if the alleged infringer can prove that
the product fell within a prior art under this opinion. However, under this interpretation, prior art defence would have a rather limited role in the patent system, which
is the exact reason why it has been abandoned by the Supreme Peoples Court.
This conservative thought of never breaking the current distribution of authorities, however, still holds sway. This was the reason for the other opinion of the
Beijing First Intermediate Peoples Court, which was the court of first instance in
the Bridgestone. According to this Courts opinion, the defence could apply in both
literal and equivalent infringements, but the comparison should be made only
between the alleged art and the prior art, in other words, the patented art should
not be included as a factor for consideration.
Another important view was proposed by the plaintiff, the patent owner, in
Bridgestone and supported by some other courts. This line of reasoning holds that
the prior art defence is established only when the prior art is identical to the alleged
art. However, when the prior art is not identical but similar to the alleged art, the
court should not decide directly that the prior art defence has been established.
What the court should do in this situation is to follow the current distribution of
power, that is to say, to suspend the infringement case and wait for the decision of
the Board on the validity of the patents in question. The reason for this narrow
application of the defence is based on the belief that the courts should not be
allowed to examine the validity of the patents during the patent infringement
cases, since it is inevitable to involve the patented art into the comparison in the
similar situation while there is no need to do this in the identical situation.
Other courts, in contrast, insist that it is necessary to compare the prior art with
the patented art and thus it is therefore inevitable that the novelty or inventiveness
of the patented art be examined, as this is the real basis for the prior art defence.
From this perspective, the prior art defence should definitely be aimed at breaking
the current distribution of authorities by letting courts examine novelty and even
inventiveness during patent infringement cases (First Intermediate Peoples Court
of Beijing 2011, 22). They insist that this is the norm in all other countries.
2 Introduction of China Prior Art Defence

Chinese patent law protects three kinds of subject matter, namely inventions, utility
models and designs. The first two are technologies and the third is basically a
question of aesthetic appearance of industrial products, similar to Industrial Design
laws in other countries, such as Australia. The prior art defence is therefore divided
into two categories: the prior technology defence and the prior design defence. The
two defences are not always confronting same issues, although the term prior art
defence is used to address the basic issues in China.
14
L. Liu
The prior art defence was not available in previous versions of China Patent Law
(1984, 1992, and 2000), and it was not until the promulgation of the revision in
2008 that it was introduced. The defence was added in article 62:
In a patent infringement dispute, if the alleged infringer can prove that the technology or
design exploited is actually practicing a prior art, the exploitation shall not constitute a
patent infringement.
According to article 62, if the defendant under a patent infringement challenge

can find a prior art that is the same or similar to the alleged infringing art, the court
shall not support the patent infringement complaint because the accused would be
considered just in using a prior art, which should be already freely available and
thus not excluded from the public domain by the patentee.
If a prior art is found, the alleged infringer may also challenge the validity of the
patent in China at the same time, which was the only way to fight against a patentee
before the 2008 Revision. Both mechanisms are available after 2008, but they are
dealt with through different channels. The prior art defence is raised by the alleged
infringer to deny the infringement complaint during the patent infringement litigation. The defence is addressed by the same judges in the same court, and the
conclusion addresses whether the accused could avoid the infringement claim
without considering the validity of the patent. The alleged infringer may, however,
choose not to propose the prior art defence and instead challenge the validity of the
patent directly. However, once they challenge the validity of the patent, the court
has to suspend the infringement case to wait for the decision of patent validity,
which is determined by the Board (as this is currently the only authority enjoying
the power to examine the validity of patents). The court is not allowed to examine
the validity of a patent during an infringement case. Furthermore, the validity of a
patent may also be challenged by almost anyone, other than the alleged infringer,
and may be based on all the patentability conditions, which extends the basis of
potential challenges to a much wider range of issues than prior art.
Article 62 is too basic to provide any specific information, but a subsequent
interpretation on patent infringement by the Supreme Peoples Court in 2009 provides some further detail in article 14:
Where all the alleged technical features fall within the scope of patent protection and are
identical to or without material difference from one of the corresponding technical features
in an existing technical proposal, the trialling peoples court shall conclude that the
technologies applied by the alleged infringer are the existing technologies under article
62 of the Patent Law (Lehman 2009).
Where the alleged infringing design is identical to or without material difference

from an existing design, the Peoples Court at trial shall conclude that the design
used by the alleged infringer is the existing design under Article 62 of the Patent
Law. The prior technology part of this Interpretation has been made clearer through
a subsequent important case. In 2012, The Supreme Peoples Court published
15
Zetian Machinery v. Yancheng Greater Machinery (2012) Civil Ruling No. 184 in
which the Court clarified the application of the prior technology defence (see
Xiaodu 2014). The Court held that the comparison in the prior technology defence
is supposed to be made with reference to the claims of the patent. It should be
between the technical features of the alleged infringing technology falling within
the extent of protection of the patent and the prior art, instead of between whole
technical features of the alleged infringing product and the prior art, since the latter
would result in ridiculous and non-logical conclusions. The Court stressed that it
does not mean the validity of the patent would be examined in the Court. The patent
is regarded as a reference to specify which technical features are to be compared
with the prior art, given the alleged infringing products are usually specific products
or processes which comprise much more technical features than the prior art.
The Interpretation is less informative with regard to prior design defence. It
basically just says that if the alleged infringing design is identical or having no
substantial disparities from the prior design, the defence would be established.
However, this design did not concern technology, and thus not involve comparing
any technologies. So the Zetian doctrine cannot be applied in the prior design
defence. The tyre case is even more complicated and will be discussed specifically
later.
3 Prior Art Defence in Other Countries

Prior art defence seems quite different in other countries.
3.1
Prior Art Defence in US
Prior art defence has been clarified clearly through two cases delivered by the
United Stated Court of Appeals for the Federal Circuit: Wilson Sporting Goods
v. David Geoffrey & Associates (1990) 904 F.2d 677 and Tate Access Floors
v. Interface Architectural Resources (2002) 279 F.3d 1357. Generally speaking,
prior art can be used to dispute equivalent infringement instead of literal
infringement.
According to the Court in Wilson Sporting Goods v. David Geoffrey & Associates, the prior art defence can be used to dispute equivalent infringement:
4
hhii
[Zetian Machinery Co., Ltd. v. Yancheng Gereite Machinery Co., Ltd [Utility Model Patent
Infringement Case], [The Supreme Peoples Court], [2012] 18 [Min
Shen Zi No. 18].
16
L. Liu
There can be no infringement if the asserted scope of equivalency of what is literally
claimed would encompass the prior art (Wilson Sporting Goods v. David Geoffrey &
Associates (1990)).
Tate addressed this point more logically:

The doctrine of equivalents expands the reach of claims beyond their literal language. That
this expansion is guided and constrained by the prior art is no surprise, for the doctrine of
equivalents is an equitable doctrine and it would not be equitable to allow a patentee to
claim a scope of equivalents encompassing material that had been previously disclosed by
someone else (Tate Access Floors v. Interface Architectural Resources (2002)).
The prior art defence is, in short, aimed at constraining the extent of patents
broadened through the doctrine of equivalents instead of challenging the validity of
patents.
In Tate, the Court made it clear that the prior art defence cannot be used to
overturn a literal infringement complaint:
The presence of the prior art and its relationship to the patent claim language matters for
invalidity (Tate Access Floors v. Interface Architectural Resources (2002)).
And:
Where such claim language clearly reads on prior art, the patent is invalid (Tate Access
Floors v. Interface Architectural Resources (2002)).
If the prior art were allowed to be a defence against literal infringement, the
accused infringers would be able to do the following:
Flout the requirement of proving invalidity by clear and convincing evidence by asserting a
practicing prior art defence to literal infringement under the less stringent preponderance
of the evidence standard (Tate Access Floors v. Interface Architectural Resources (2002)).
They would be able to do this because:

Law requires patent challengers to prove invalidity by clear and convincing evidence.
Where an accused infringer is clearly practicing only that which was in the prior art, and
nothing more, and the patentees proffered construction reads on the accused device,
meeting this burden of proof should not prove difficult (Tate Access Floors v. Interface
Architectural Resources (2002)).
Both patent validity and prior art defence are heard in the same litigation by the
same court in the United States.
In China, however, the prior art defence applies not just in equivalent infringement but also in literal infringement cases and the comparison is made between the
alleged infringing art and the prior art, which is not permitted in the United States.
Then under the literal infringement case, the accused may raise prior art defence as
well as challenge the validity of the patent in China. But in the latter situation, the
courts are supposed to suspend the infringement case to let the challenger go to
Board to doubt the validity of the patent, since the courts hearing patent infringement cases do not enjoy the power to examine the validity of patent. This ability
belongs exclusively to Board.
3.2
17
Prior Art Defence in Japan5
In Japan, the prior art defence is also used by the accused to dispute patent
infringement claims. That the accused art is the same as a prior art would definitely
result in the conclusion that the accused art is not infringing the patent for it
obviously just used an art existing earlier than the patent. The comparison made
here is similar to that in China, that is, between the alleged infringing art and a prior
art, and is different from that in the United States. The reason is that Japan has a
similar dichotomy of authorities between patent infringement and validity.
The prior art defence was weakened in 2004 when the defence of definite
invalidation of patent was established into the new version of Japan Patent Act,
article 104.3. The new legislation provides for the following:
Where, in litigation concerning the infringement of a patent right, the said patent is
recognised as one that should be invalidated by a trial, the patent may not be exercised
against the adverse party (Japanese Patent Act (2004) article 104.3).
Given the accused party challenges the validity of the plaintiffs patent, the trial
court may examine the validity of the patent and refuse to support the patentee to
exercise their patent when the patent is found by the court as one that should be
invalidated. However, it is different from the system in the United States as the trial
court is still not allowed to invalidate the patent directly, but rather authorise the
examination of the patent and decide whether to support the plaintiffs infringement
claims based on a presumed future conclusion of the Japanese Patent Office
(JPO). When the patent should be invalidated for not meeting some substantial
patentability conditions, the court may decide that the defence has been established
and refuse to support the plaintiff instead of announcing the invalidity of the patent.
This mechanism of defence applies only in obvious situations, that is, where the
patent would obviously be invalidated by the JPO. In China, this is seen as a
defence of definite invalidation of patent.
The defence of definite invalidation of patent is breaking the serious dichotomy
of patent-related powers and can be seen as great progress. Some scholars believe
that the invalidity defence would completely take the place of the prior art defence,
while more scholars insist that the two defences are applied in different situations.
The invalidation defence applies under the whole patentability situation, even
involving prior art, whereas the prior art defence can be established when the
alleged infringing product is the same as a prior art and the invalidation defence
can be established when the patented art is same or similar to a prior art.
It can be concluded that Chinas current prior art defence is more like that of
Japan than that of the United States. The reason is that the two countries have
similar division of power dichotomy in the patent system, as well as having similar
general legal systems, being Civil Law countries. However, the prior art defence is
5
Information on Japanese relevant systems comes mostly from Yang (2012) and Tumura (2010),
257266.
18
L. Liu
addressing much simpler situations in Japan after the invalidation defence has been
formally established, while the prior art defence is still confronting an extremely
complicated environment in China where the invalidation defence doesnt exist in
the same way. In China, the courts depend heavily on prior art defence to solve
serious problems.
4 Complicated Situation in China

4.1
The Real Issues: Behind the Veneer
All disputes, no matter how they are presented, are rooted in Chinas specific
mechanism of power and even in Chinese culture: the powerful administrative
branch.
There has been a steady dichotomomy between patent-related authorities in
patent infringement cases (civil cases) and patent validity examining cases (administrative cases). Administrative decisions may also be reviewed judicially but only
through special administrative litigation in which the administrative authority is
always the defence. The Board and the two Beijing courts (that is, the Beijing First
Intermediate Peoples Court and the Beijing High Peoples Court) are in the same
jurisdiction. They form the only route to examine and decide the validity of patents,
and this is basically an issue under administrative power. The intellectual property
Judges in more than 70 local intermediate courts enjoy the power to hear patent
infringement cases, but they are not permitted to examine the validity of patents
(administrative cases) during patent infringement cases (civil cases).
This system should work well, at least theoretically, since the Board is made up
of professionals from various technological areas and is believed to be more
capable in examining the validity of patents that involve essentially technological
issues. Decisions on the validity of patents would be more consistent when coming
from the single channel, that is, the Board and the two Beijing courts, rather than
from more than 70 regional courts. This system does have these above advantages
except for one problem: the overly complex and protracted processes. In most
patent infringement cases, the defendant would challenge the validity of the patent.
Once that happens, the case has to be suspended to wait for the decision of Board on
the validity of the patent. If one of the parties does not accept Boards decision, the
only relief provided is to raise an administrative litigation to challenge Boards
decisions.6 So, the complete procedures of a typical patent infringement case in
6
Administrative litigations are different kind of cases from civil cases since the defendants are
always administrative authorities who make administrative orders about something, in this case,
the validity of patents. What is discussed here is not even a normal kind of administrative litigation
because the only defendant is the Board located in the jurisdiction of Beijing First Intermediate
Peoples Court who therefore becomes the only court of first instance to review the Boards
decision and Beijing High Peoples Court who become the only appeal court.
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China would be, first, civil infringement case of first instance (heard by local
intermediate courts), which is to be suspended once the validity of the patent is
challenged by the defendant, then the examining procedure of the validity of the
patent by Board, and then the administrative litigation by Beijing First Intermediate
Court of the first instance on the decision of Board concerning the validity of the
patent, and then the appeal administrative litigation, which is normally the final
decision on the validity of the patent unless the case is accepted by the Supreme
Peoples Court, which rarely happens. Following this, the case would return back to
the original patent infringement litigation to decide whether the infringement exists.
Any party dissatisfied with the decision on the infringement could still appeal. The
decision of the appeal court on the patent infringement is normally the end of this
whole litigation unless the civil infringement case is accepted by the Supreme
Peoples Court to review. Quite a lot of patent infringement cases will go through
all the above procedures as long as the party can afford it. It is not unusual in China
for a company to be struggling in those endless procedures.
The real issue underneath all the different views on prior art defence, we might
find, is a question of power distribution: Should we keep the Board and the two
relevant Beijing courts as the only channel to check the validity of patents? Or
should we allow the 70 or more regional courts to step in through prior art defence
to check the validity of patents? People have different thoughts on that. Some
believe that it is a worldwide and unavoidable trend to let courts check the validity
of patents during civil infringement cases (Huaiwen 2008). Others insist that it is
more realistic in China to limit the power of checking the validity of patents to the
only channel given the special situation.
The real purpose and value of the prior art defence in China, at least for the
Supreme Peoples Court, on behalf of the many local courts hearing patent infringement cases, is to let the judge decide directly whether the patent has been infringed
without suspending the case and thus shortening the processes of patent infringement cases and freeing the parties from litigation sooner.
4.2
The Supreme Peoples Courts Way to Apply Prior Art

Defence
The Supreme Peoples Court expressed its attitude of the way to apply the defence
in the Zetian and Bridgestone. The tyre case will be analysed here since it reflects
the complicated situation of a typical defence.
First, the Court believed that the defence should not be limited to the identical
situation and should also be applicable to the similarity situation, otherwise the
defence would have a rather limited role since the alleged art is rarely identical to
the prior art. When an alleged design is similar to a prior design, however, the result
would be ridiculous if comparing the alleged design with the prior design without
involving the patented design. We could see this ridiculous situation in
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L. Liu
Bridgestone. In this case, comparing only the alleged design with the prior design,
shows a good degree of similarity. At the same time the patented art was found to
have some important differences from the prior design, which means that patent
validity would probably be sustained by the Board. The allegedly infringing art was
actually using the features which the patented art had but the prior art didnt have,
which means a real infringement exists. However, the prior art defence was still
established to relieve the infringer according to the courts of first instance and the
appeal, which believed that the prior art could be established as long as the alleged
design is found similar to the prior design and no need to involve the patent design.
The reason for this dilemma is the conscious or unconscious denying, or
ignorance, of the fact by our judges and analysts that Chinas current prior art
defence has the same roots in novelty or even inventiveness of patents, an understanding that is not lacking in other countries such as the United States. Whether we
admit it or not, the logic of Chinas prior art defence is still that the patent should
not be granted in the first place if there is a prior art, and of course then there is no
possibility of infringement. When the allegedly infringing art is identical to the
prior art, the result of the prior art defence after comparing the prior art with the
alleged one is in consistent with the result of validity of the patent: if the allegedly
infringing art is identical or similar to the patented art, the prior art will be identical
or similar to the patented art too, which definitely means the patent should not have
been granted for the lack of novelty or inventiveness, and of course then there is no
infringement. This is why there is no need to involve the patented art into the prior
art comparison in the identical situation. When, however, the alleged art is not
identical but similar to the prior art, the situation become much more complicated.
If the prior art defence is established only because the two are similar, this result
would probably be in conflict with the result of patent infringement. There exists a
real chance that the prior art is not so similar to the patented art so the patent would
not be revoked, and at the same time the alleged art is similar to the patented art so
the infringement should be established. When this happens the prior art defence is
not justified at all.
This is why Bridgestone was accepted by the Supreme Peoples Court to review.
The Court was trying to correct the way of making comparison by the two lower
courts. The means that the Court adopted, however, was very careful. First, it held
that when the alleged design is identical to the prior one, there is no need to involve
the patent. The courts could decide directly that the prior design defence is
established. When, however, the alleged design is not identical but looks similar
to the prior design, it is necessary to involve the patented design to make the
comparison. The correct way is to first compare the prior design with the patented
design to find the differences between them, that is, the features that the patented
design has but the prior design has not, then to check whether the allegedly
infringing design embodies those differences. If so, those differences would also
be the differences between the alleged design and the prior design. It is then to be
decided whether those differences, when compared with the similarities between
the alleged design and the prior design, have obvious influence on the whole image
of the two designs from the view of the general consumers. If so, the alleged design
21
is regarded as being not similar to the prior design and the prior art defence is not
established. If not, the alleged design is similar to the prior design and the prior art
defence establishes.
We can see that the Supreme Courts way is rather complex. The reason that the
means of involving the patented design into the comparison is so indirect lies in that
courts are only authorised by the article 62 of the Patent Law to compare the alleged
art with the prior art, and courts are not allowed to create new laws in China
although they can explain them. More fundamentally, the Court was trying to
involve the patented design into the comparison without breaking the current
distribution of authorities, the power distribution, by avoiding any direct decision
on the validity of the patent in the infringement case.
4.3
Which Opinion Is More Justified?
Analysts from Board argue that the Supreme Courts way broadens the defence so
widely that it demolishes the exclusive authority of the Board to examine patents,
which should be done by the legislative branch, the Peoples Congress, instead of
the Supreme Peoples Court itself (Peng and Guozhen 2009). They argue that prior
art defence could still play important role even without involving the patent. They
believe the defence should be limited to the identical situation, that is, the alleged
art is identical or essentially identical to the prior art. In this case, the result of the
prior art defence would be logical even without involving the patented art into the
comparison, and therefore there would be no direct harm to the current distribution
of authorities.
Choosing the best approach is not easy. First, there exists the need to ensure that
the validity of patents is judged by professional experts. There are similar arrangements in other countries, like Japan, Germany. Even in the United States, the
establishment of the Court of Appeal for the Federal Circuit was aimed at unifying
the implementation of patent law through making it the appeal court for all patent
cases. In China, there is not one appeal court for all patent cases. Different kinds of
patent cases have different channels to process. The more than 70 local intermediate
courts, including those located in the capital of all provinces and others designated
(by the Supreme Peoples Court), are authorised to hear patent infringement cases
at the first instance. Of course, dozens of higher courts of all provinces are the
appeal courts for these cases. If we allow these local courts to enjoy the power to
examine the validity of patents, which would result from involving the patent in a
prior art defence comparison, the severe result would be not only mean the
inconsistency of decisions on the validity of patents between different courts and
Board, but also chaos and unfairness since local courts are much more easily
influenced by all kinds of powers and interests.
On the other hand, there is definitely the need to let courts decide, at least to
some extent, the validity of patents during patent infringement or other patent
related cases. When courts find that it is so obvious that the patent should not
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have been granted since, for instance, it fails due to a prior art, it is unnecessary to
suspend the case and wait for the decision of Board and the two Beijing courts,
which might take years. There is a strong need to relieve those obviously innocent
defendants from the long-lasting legal procedures as soon as possible, which this
author believes is the main reason why prior art defence has already existed in the
judicial practice before the 2008 Revision, and was finally written into the 2008
Patent Law although with strong resistance from Board and relevant courts.
4.4
Transformation of the Beijing High Peoples Courts

Attitude
The Beijing High Peoples Court, the appeal court in Bridgestone, is a very
important court dealing with patent and trade mark disputes, that has changed its
position in its 2013 version of the Guidelines for Determination of Patent Infringement, which replaced the previous 2001 version of the same Guidelines. In article
125 of the 2013 Guidelines, the Beijing Higher Court provided that if all technical
features of the alleged product falling within the scope of the patent are identical or
equivalent to a prior art . . . the alleged product belongs to prior art and the patent
infringement cant established. In a book (Beijing High Peoples Court 2014)
aimed at interpreting the Guidelines, and written by judges of Beijing High
Court, prior art defence is accepted and explained almost as what is held in Zetian
and Bridgesone by the Supreme Peoples Court.
4.5
What Prior Art Defence Is Like Currently in China
After all the efforts of the Supreme Peoples Court through the Interpretation and
the two cases and the following of Beijing High Peoples Court, prior art defence is
becoming more consistent, which is as follows below.
First, the prior art defence may be applied in both literal infringement and
equivalent infringement situations. Second, the steps to apply the defence would
be comparing the allegedly infringing product with a prior art directly without
having to decide whether patent infringement is established or not. In other words,
prior art defence can be decided immediately after the comparison and not
preconditioned on the establishment of patent infringement. Third, the prior art
defence is established when the alleged art is both identical and similar to a prior
art, although the ways to compare are different in the prior technology defence and
the prior design defence, and in the identical situation from the similar situation.
Zetians way to decide prior technology defence is accepted by most courts as the
correct and authoritative method and Bridgestoness way to decide prior design
23
defence is persuasive if not binding.7 In both Zetian and Bridgestones, it was held
that it is inevitable to involve the patent into the comparison. The validity of the
patent would inevitably be examined, to some extent and in some indirect way.
5 The Future of the Prior Art Defence in China

The prior art defence, although mostly settled rule, however, is facing new
criticisms.
5.1
5.1.1
Vital Criticisms
Shadow Tactics Distorting the Law
As we have seen, the Supreme Peoples Court seems to be the final winner of
disputes on the prior art defence, deliberately abandoning the rather simple previous
version of the prior art defence, which was aimed at constraining the extent of
equivalent infringement, and which was insisted upon by the Board and Beijing
High Peoples Court. The reason for the Supreme Court to establish this new rule is
that a new object, which is to ease and shorten the unbearable prolonged patent
related procedures, seems more important and urgent in China today. For this
purpose, the Court broadened its extent of application through insisting that the
prior art defence does not apply to just equivalent infringement but also literal
infringement, and established it not just under identical situation but also under a
similar (or substantially identical) situation. However, it becomes inevitable for a
broadened prior art defence to include the patent into the comparison, for otherwise
the result of the defence would be in conflict with the result of patent validity and
infringement, which means that the validity of patent has to be examined in the
prior art defence comparison, at least to some extent. This would, no doubt, offend
the dichotomy of judicial and administrative power on patent-related disputes
settlement. This is why the Court was taking such a cautious approach. Or else
the Court would be facing strong and devastating criticisms coming from scholars,
administrative branches, even legislative branches of crossing the border of its own
power, which the Court is really not able to resist given judicial branches in China
are still not as strong as what they are in western countries. The Court can be said to
be employing some shadow tactics. The patents are included into the prior art
defence comparison in a very indirect way, which is quite complicated, especially
Bridgestone was not chosen to be one of the officially advisory cases which are considered as
binding. So the decision is, strictly speaking, just persuasive instead of binding and local courts are
free to decide whether to follow it or not.
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in the prior design defence situation. In the meanwhile the Court has been announcing that the validity of patent should not be examined even though the patent is
involved to make the comparison. The Court also declared that the decision of the
prior art defence is limited in the specific case as a way to determine whether to
support patent infringement claims or not. Judges hearing other cases involving the
same patent shall make their own decision without being bound by the decision of
previous cases. The official invalidation of the patent still remains in the authority
of Board and the two exclusive courts.
Even if the purpose is justified, the Courts way of applying the defence is,
however, rather complicated and not easy to understand. It distorts the law, some
commentators argued (Yudong and Yulong 2011). The defence cant be understood
only through the words of the legislation and even what it says in the cases. The real
meaning can be found only through discovering the hidden content behind what it
said overtly.
No doubt, the complicated and distorted situation of applying prior art defence
would result in some kind of misunderstanding and inconsistency when cases are
heard in dozens of local courts. And the poor quality of judges of local courts was
the very reason for not allowing judges hearing patent infringement cases to
examine the validity of patent through prior art defence.
5.1.2
Distrust of Judges in Local Courts
There have been three main justifications for opponents against involving patents
into the prior art defence comparison (Li 2014). First is the division of the whole
legal system into public law and private law, the basic division of the European
Continental legal system transplanted into China hundreds of years ago.
Concerning patents, patent infringement disputes are between private entities and
are considered as private disputes, while the validity of patents is about whether to
grant a privilege, which is between an authority and private entities, considered as
disputes in the area of public law. Second is the presumed validity of administrative
decisions and acts, meaning that administrative decisions and acts are presumed
valid unless overturned by the relevant authorities through official channels. Third
is the division between judicial power and administrative power.
The three logical explanations are experiencing some adjustments and not that
unyielding any more. They are not so much of the main points for the opponents.
The serious and real concern is the distrust on judges hearing patent infringement
cases.
In China, the 70 plus local intermediate courts are located in the capitals of all
provinces and are enjoying the jurisdiction to hear patent infringement cases, while
only the Board and Beijing First Intermediate Peoples Court (first instance) and
Beijing High Peoples Court (appeal) enjoy jurisdiction to examine the validity of
patents. Given the high professionalism required to examine the validity of patents,
judges in the local intermediate courts are unlikely to have the relevant technology
background. They have also not had much experience examining patents. Clearly, it
25
is not easy for more than 70 intermediate courts to keep their consideration of patent
matters consistent. More importantly, local judges are less trusted with their loyalty
to justice, for they are more easily influenced by various forces and interests, which
was testified by the chaos of well-known trade marks in China. Well-known marks
were regarded as an advertising tool by companies and as a display of achievements
by local government, which caused a lot of ugly phenomena. Trade mark lawyers
colluded with local judges to make up cases to let the judges hold that the mark is
well known; local governments commanded some marks have to be declared well
known, and so on (Xiangjun 2009, 383388). However, China is certainly now
heading to be a country ruled by law. Along the way, however, it would be more
rational to base policies and rules on real circumstances.
5.1.3
Doubt About the Real Effect of The Defence
Some commentators (Yudong and Yulong 2011) doubted the real effect of the prior
art defence. They found that the defence, even with the Supreme Courts methodology, could not dramatically solve the problem of prolonged procedures but at the
same time it raises many new problems. They found that the defendants would not
tend to challenge the validity of patents if they might be excused from the infringement claims, which would make those questionable patents still valid and be able to
harass other users of the patent because prior art defence only matters in the specific
case. They also believed that the prior art defence examined the validity of patents
in the name of infringement decisions, which would blur the different considerations between patent validity and patent infringement processes. For them, however cautious the Supreme Court is, it is inevitable to involve the patent into the
prior art defence comparison, and consequently inevitable to bring about the
criticisms of breaking the current judicial-administrative power division. Why not
face and address the problem in direct way, which is to expressly allow the courts to
examine and invalidate patent under some obvious situation and refuse to support
them in patent infringement cases, just like what Japan does with the defence of
definite invalidation of patents.
6 Conclusion
The concerns with poor quality of judges in local courts would probably be eased by
the new big change happening in Chinas intellectual property arenathe establishment of intellectual property courts. In 2014, three special intellectual property
courts were formed in Beijing, Shanghai and Guangzhou to exclusively hear all
intellectual property cases in their own regions (Xiaoming 2015). The main purpose
of establishing special intellectual property courts, among others, is to unify the
jurisdiction of patent and trademark related civil infringement litigation and administrative validity-examining litigation through letting one court, or even same
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L. Liu
judges, hear the related case whether civil or administrative. At least in these three
cities, the most developed areas in China, the quality of intellectual property judges
will be trusted and the standard of applying law will be much easily unified. The
time to break the civil and administrative power dichotomy seems ripe, at least to
some extent. Just like what the Chief Justice of the intellectual property division of
the Supreme Peoples Court, Song Xiaoming, said:
Given improved experience ability of intellectual property judges after the establishment of
intellectual property courts, we could explore to check the validity of patents and trademarks once they are challenged by the accused infringers. We may reject protection of
intellectual property under some obvious situation in which the patent should not have been
granted without waiting for the result of administrative litigation on the validity of
intellectual property (Xiaoming 2015).
That is much like what the defence of definite invalidation of patent in Japan is
and will be a bigger progress than the current prior art defence.
If Japanese-like intellectual property invalidation defence become true someday,
prior art defence would become less important, if not disappear completely. Presumably, it would return back to its original role to constrain the extent of
equivalent infringement just as what it is in United States, Germany, Japan, etc.
However, the system of special intellectual property courts is still exploring its
way and not completed yet in China. The three intellectual property courts are just
unifying intellectual property cases in their respective regions and limited
neighbouring provinces. In other regions all over China, local general courts are
still hearing patent, trademark infringement cases. The concerns of the poor quality
of local judges are not vanishing even though parties of the cases could figure out
ways to let their cases be heard in the special intellectual property courts of the three
cities. Other than that, a unified appeal court, like United Stated Court of Appeals
for the Federal Circuit in United States or the Intellectual Property High Court of
Japan, is not established yet although the plan is under the discussion. Before the
time is ripe for the invalidation defence, we may expect the current prior art defence
would be still heavily counted on by the courts to address patent infringement
litigation more efficiently. The current form of the prior art defence, after all, is just
a temporary measure and will lapse someday.
References
Beijing High Peoples Court. 2014. Understanding and applying guidelines for determination of
patent infringement of Beijing High Peoples Court. Beijing: China Legal Publishing House.
First Intermediate Peoples Court of Beijing. 2011. Defences on patent infringement. Beijing:
Intellectual Property Publishing House.
Huaiwen, He. 2008. Technology comparison in application of prior-art defence. China Patent and
Trademarks 3: 5563.
Lehman, Lee, and Xu. 2009. Judicial interpretation of the Supreme Peoples Court concerning the
application of the laws in patent infringement cases. http://www.lehmanlaw.com/resourcecentre/laws-and-regulations/general/judicial-interpretation-of-the-supreme-peoples-court-
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concerning-the-application-of-the-laws-in-patent-infringement-cases.html. Accessed 22 Nov

2015.
Li, Zhu. 2014. Revisions on the dichotomy of the two authorities and procedures addressing patent
civil infringement and administrative invalidation. Intellectual Property 3: 3743.
Peng, Zhang and Guozhen, Cui. 2009. Analysis on the ways and standards of comparison in prior
art defence. Intellectual Property 1: 6167.
Tumura, Yoshiyuki. 2010. Intellectual property in Japanese. Beijing: Intellectual Property Publishing House.
Xiangjun, Kong. 2009. Trademark and unfair competition law: Theories and cases. Beijing: Law
Press of China.
Xiaodu, Zhang. 2014. Ways to examine prior art defence: Comments on Yancheng Zetian
Machinery v. Yancheng Greater Machinery. China Patent and Trademark 2: 103105.
Xiaoming, Song. 2015. Chinas exploration of IP courts. China Patent and Trademark 2: 35.
Yang, Li. 2012. The principle of the defense of definite invalidation of patent in Japan and its
implication. Journal of Northwest University of Political Science and Law 1: 168177.
Yudong, He and Fu Yulong. 2011. Rethinking about the prior art defense against literal patent
infringement. Law Science Magazine 4: 4750.
Bio-Patent Pooling and Policy on Health

Innovation for Access to Medicines
and Health Technologies that Treat
HIV/AIDS: A Need for Meeting
of [Open] Minds
Sunita Tripathy
Abstract With terminal illnesses such as HIV/AIDS taking lives of millions of

patients, health innovation and drug distribution require robust licensing models that
enable the inventor and the patient to receive benefits from the successful transfer of
health technologies. This Chapter argues that the patent pooling cross-licensing
arrangement envisaged under UNITAIDs Medicine Patent Pools can address issues
of exorbitant drug pricing and distribution in developing countries through Indian
bio-generics. Furthermore, it is proposed that the adoption of reforms such as the open
prosecution of patents through the crowdsourcing of experts can improve public health
management and technology transfer to meet the demands of research, drug development and distribution of essential medicines in developing economies such as India.
1 Introduction
According to the World Health Organisation (WHO), over 1.2 million people died
from HIV related causes in 2014. The patient death toll continues to increase as a
scientifically proven cure for the terminal disease still remains to be found. The
only way to medically control the infections is through effective first, second and
follow-on lines of treatment with antiretroviral (ARV) drugs (see Medecins Sans
Frontie`res 2015).1 On an average, every year an estimated 23 % of patients on life1
A trial of a vaccine for HIV has just begun at the University of Maryland (University of Maryland
2015).
S. Tripathy (*)
Jindal Global Law School, O.P Jindal Global University, Narela Road, Near Jagdishpur
Village, Sonipat, Haryana 131001, India
Centre for Intellectual Property and Technology Law, Jindal Global Law School, Narela Road,
Near Jagdishpur Village, Sonipat, Haryana 131001, India
e-mail: stripathy@jgu.edu.in; http://jgu.edu.in
DOI 10.1007/978-3-319-31177-7_3
29
30
S. Tripathy
sustaining ARV need to switch to newer and more potent drug combinations once
they develop resistance or side effects to the first line treatment (UNITAID 2015a;
see also Yolanda Tayler ed. 2004, 8; Daniel 2003). WHO estimates that by the year
2016, over one million people around the world will need second-line treatment for
HIV/AIDS (see WHO 2014, 2015b; UNAIDS 2015). Therefore, innovation in the
field of research and development for essential medicines deserves focused attention worldwide.
In 2006, the World Intellectual Property Organisation (WIPO), one of the
specialised agencies of the United Nations created to primarily promote the protection
of intellectual property, reported that incentivising innovations in the pharmaceutical
sector through patents has not materially favoured the public interest (CIPIH 2006;
UNDP 2010, 9). Essentially, despite the adoption of the World Trade Organisations Agreement on Trade-Related Aspects of Intellectual Property Rights (1994)
1869 U.N.T.S. 299 (Annex 1C)) (TRIPS), commercialisation or effectual working
of patents owned by innovator companies, by way of cross-licensing, to meet the
demand for pharmaceutical medicines and diagnostics, seems to have remained elusive.
The pre-TRIPS era, which was one without product patenting for pharmaceuticals in India, addressed the crises of unavailability of affordable medicines through
mass generic production of ARVs. Indian bio-generics created fixed-dose-combinations (FDCs) from two or more medicines which were effective in terms of
patient adherence, reduction of the risk of resistance, simplification of the supply
chain management and ensured low pricing of the medicines. (see Hoen et al. 2011;
Laurent et al. 2004). Thus, India came to be the global pharmacy of the world.2
Post-TRIPS, foreign pharmaceutical companies used their patents and employed
monopolistic control over the market, giving rise to issues of accessibility and
affordability. With a population of over 1.27 billion (World Bank 2015a),3 and
approximately three million suffering from HIV related illnesses,4 India has been
2
Globally, the generic drug industry in India accounts for 3rd in volume and 14th in value, making
it one of the largest generic suppliers of pharmaceuticals in the world (see Sakthivel and Nabar
2010; see also Pai 2015; Ayyangar 1959 (Ayyangar Report)). Several recommendations of the
Ayyangar Report culminated into The Patents Act 1970. A notable recommendation included
India ought to adopt a patent system that enabled access to resources at affordable prices.
3
Comparative data from China is 1.3574 billion in 2013 (World Bank 2015b), which places both
India and China on the same economies of scale addressing the same concerns of restricted access
to medicines and healthcare facilities for the patients.
4
National adult HIV prevalence in India is 0.36 %, which corresponds to 2 to 3.1 million people
living with HIV (PLHIV) and on ART (see National AIDS Control Organisation (NACO 2014)).
For comparing the status of PLHIV in India in 2012, see World Bank 2012: The Government of
India estimates that about 2.40 million Indians are living with HIV (1.933.04 million) with an
adult prevalence of 0.31 % (2009). Children (<15 years) account for 3.5 % of all infections, while
83 % are the in age group 1549 years. Of all HIV infections, 39 % (930,000) are among women.
For a discussion on the statistics related to PLHIV in China, see Burkitt (2015): Chinas health
officials reported 104,000 new HIV/AIDS infections in China in 2014, according to Chinas staterun Xinhua News Agency, citing Wang Guoqiang, Vice head of the official National Health and
Family Planning Commission. The number marks a 14.8 % increase from a year earlier [. . .]
Bio-Patent Pooling and Policy on Health Innovation for Access to Medicines. . .
31
looking for sustainable solutions within its policy for fostering innovation in the
health industry (see generally Baker and Vawda 2013). The erstwhile Planning
Commission of India recommended adoption of a social policy framework based on
the principles of universalism, equity, efficiency and quality, which would enable
access to healthcare and medicines. Such aims ought to be achievable in a balanced
way without weakening the patentability criteria or non-fulfilment of the
harmonisation standards prescribed by the global trade rules under TRIPS (see
Abbott 1998).
Given that improved healthcare and access to affordable medicines is a social
and developmental goal for all nation states (United Nations 2015, 68),5 it is
imperative to look into the ways that have led to resolving the causes that impede
access to cost-effective health innovation, especially those in the nature of first,
second and follow-on treatment for terminal illnesses such as HIV/AIDS (see
generally Baker and Vawda 2013). Resolving public interest concerns by
implementing regulatory measures requires a conscious approach. The strategies
to engage with the industry to dissuade abuse of pharmaceutical patents can lead to
sound intellectual property policy and improved working of patents.
Patent-pooling is one approach which was made practicable through voluntary
licensing arrangements between the United Nations supported initiative founded in
2010 known as Medicine Patent Pools (MPP), and innovator pharmaceutical companies as well as generic pharmaceutical companies. MPP claims that within five
years of its initiation, the organisation has made significant progress, signing voluntary licences on 12 priority ARVs with six patent holders and 59 sub-licences with
14 generic manufacturers. Its generic partners have supplied more than six million
patient-years of WHO-recommended ARVs in 117 countries, including 41 countries
that were previously unable to benefit from generic competition for such medicines.
The organisations licences have saved the international community US$79 million
through lower prices of ARVs, equivalent to 1-year of treatment for 625,000 people
Chinese health officials have said that nearly half a million Chinese people are living with AIDS or
HIV.
5
People who are vulnerable must be empowered. Those whose needs are reflected in the Agenda
include all children, youth, persons with disabilities (of whom more than 80 % live in poverty),
people living with HIV/AIDS, older persons, indigenous peoples, refugees and internally
displaced persons and migrants [. . .] To promote physical and mental health and well-being, and
to extend life expectancy for all, we must achieve universal health coverage and access to quality
health care. No one must be left behind. We commit to accelerating the progress made to date in
reducing newborn, child and maternal mortality by ending all such preventable deaths before
2030. We are committed to ensuring universal access to sexual and reproductive health-care
services [. . .] accelerate the pace of progress made in fighting malaria, HIV/AIDS, tuberculosis,
hepatitis, Ebola and other communicable diseases and epidemics, including by addressing growing
anti-microbial resistance and the problem of unattended diseases affecting developing countries.
Also see Sustainable Development Goals on p. 14: Goal 3. Ensure healthy lives and promote
well-being for all at all ages with item 3.3. dedicating that By 2030, end the epidemics of AIDS,
tuberculosis, malaria and neglected tropical diseases and combat hepatitis, water-borne diseases
and other communicable diseases (emphasis added).
32
S. Tripathy
(see especially MPP 2015a; see generally Yolanda Tayler ed. 2004). In the coming
years, it is expected to generate total savings of between USD 1.18 and 1.4 billion
(MPP 2015a; Yolanda Tayler ed. 2004). Notably, this new approach was utilised by
pharmaceutical giant Gilead Sciences, which became the first originator company to
subscribe and pool its patents for sublicensing life-saving medicines to Indian
bio-generic companies through MPP. One important aspect of the first Gilead/MPP
sub-licensee agreement for its tenofovir disoproxil fumarate (TDF) compound is that
a patent for TDF has not been granted by the Indian Patent office. MPPs facilitation
of the cross-licensing arrangements for invalid or non patents with Indian
bio-generics is curious. When exploring similar questions for reforming the existing
methods for enabling access to patented knowledge, research and bio-based technology, it has been presumed that the ultimate goal of any such measure is to maintain the
function of patent law as an incentive for the production of the new medicines and
therapies important in healthcare and to remedy some of the adverse effects resulting
due to abuse of the limited monopoly granted to a patentable invention (Overwalle
2009; see also Overwalle et al. 2006).
This chapter, while studying the approach of bio-patent pooling, which is voluntarily adopted by pharmaceutical companies for contracting with generic drug companies by means of cross-licensing agreements facilitated by MPP, argues that private
contractual agreements may have come to be utilised for circumventing the national
policy requirements of effective working of patents and adherence to legal standards
for patentability in countries like India. It asserts the need for adopting a renewed
approach to empower the intellectual property offices responsible for granting patents
to worthwhile inventions, administering and reviewing the requirement for working
of patents through expert participation. Such an approach which embraces the positives of peer-review and transparency in the process of granting patent (especially
pharmaceutical patents) shall facilitate access to patented knowledge as a strategy for
conducting the business of biomedicine in an open, fair and ethical way.
The central question is whether cross-licensing arrangements of patent pooling
between Gilead Sciences and the MPP for sublicensing the TDF compound essential for the treatment of HIV/AIDS to Indian bio-generics is unlawful in India. The
question is constrained to ascertain whether such measures lead to making
healthcare technologies affordable and accessible for patients living with HIV in
India and importing countries. As a policy prescription a reformatory measure at the
level of prosecuting patents is proposed to resolve the concerns related to obtaining
a valid patent in India, such that it also paves the way for freedom to operate for
other pharmaceutical companies innovating in the area of essential medicines.
In essence, the chapter questions the effectiveness of liability regimes such as
patent pooling facilitated by MPP as a viable method to achieve the aims of
technology transfer. It explores the option of researching the effectiveness information brokerage through crowdsourcing in enhancing technical education in
patents and affecting the public domain by involving the incubators of original
inventiveness that are research universities. This approach is indicative of resolving
cost-related hurdles in pharmaceutical drug development as well as the costs related
to patent litigation. The discussion is structured thus: The first part explains the
33
workings of UNITAIDs MPP and the liability regime envisaged within its crosslicensing methods aimed at improving the drug delivery system, especially in
relation to terminal illnesses such as HIV/AIDS; The second part delves into the
relevant legal aspects pertaining to pharmaceutical product development and delivery while highlighting nuances of Indian patent law, policy and healthcare system;
The third part is devoted to elaborating the details of the first Gilead Sciences/MPP
licence, its incongruent application within the law and licensing strategies effecting
India; and the paper concludes by proposing a possible strategy known as Open
Patent India to address the concerns and challenges identified in the preceding
parts of the Chapter.
2 MPP: The Business Model

The MPP was founded and remains fully-funded by UNITAID as part of its strategy
to increase access to better and more affordable HIV medicines. UNITAID was
formed in 2006 at the 61st Session of the United Nations General Assembly by the
governments of Brasil, Chile, France, Norway and the United Kingdom to aid funding
to combat HIV/AIDS, malaria and tuberculosis, and was joined by 24 other countries
(see generally UNITAID 2015b). The IP management strategy within MPPs HIV
Treatment model is fostered through product-development partnerships between
industry and public health actors such as UNITAID, DNDi, the Gavi Alliance, the
Global Fund and the Medicines for Malaria Venture. These partnerships are realised
through brokering voluntary licensing schemes into public-health oriented agreements aiming to lower drug pricing and facilitate better product development such
as simplified FDCs which are better-adapted HIV treatments. Essentially, it is a patent
pool that seeks to facilitate the innovation and production of ARVs in developing
countries by establishing licensing agreements between Innovator pharmaceutical
companies (referred to as Originator Companies) and bio-generic units. A range of
stakeholderscommunities of people living with HIV, governments, industry and
international organisationsare engaged in this activity.
The MPP 2014 Annual Report, published during the week of the 68th World
Health Assembly in May 2015,6 shows that the MPP has signed licensing agreements for 12 ARVs for countries home to 8793 % of people living with HIV in the
developing world. With over 14 bio-generic sub-licensees being involved in over
40 projects for the manufacture of MPP-licenced ARVs which are to be made
accessible to LMICs (low and middle income countries), a noticeable increase in
production has been estimated (MPP 2015c). The MPP model for meeting the
growing demand for ARVs through the new WHO-recommended HIV therapy
The MPP released its 2014 Annual Report on 20 May 2015 highlighting significant steps to
increase access to WHO-recommended HIV medicines in low and middle income countries (see
MPP 2015b).
34
S. Tripathy
(see WHO 2015c) thrives on the capacity of these sub-licensees to develop generic
versions, bio-similar and combination drugs. The increased supplier base of
bio-generics is to be instrumental in meeting international goals for treatment
scale-up as a consequence of dynamic efficiency of the competing generics,
which will drive down drug prices over the long run (MPP 2015c). Currently:
MPP generic partners have distributed 2.18 billion treatments of generic medicines to
117 countries, the equivalent of six million patient-years. The organisation estimates that
generic versions of its licenced ARVs could save the international community between
USD 1.18 and 1.4 billion over the next decade (MPP 2015c, quoting Greg Perry, MPP
Executive Director).
The model is considered to be innovative as it brings together collaborative

efforts of the Originator Company and the bio-generics to consistently maintain the
supply of the existing medicines for the first line treatment as also create newer
versions to cater to the requirement of patients in need of second and follow-on
lines.
A typical MPP-licensing agreement has the geographical scope or field of use
clearly identified for the contractual arrangement to be executed. In the clause
pertaining to the geographical scope in a voluntary licensing agreement, the
countries (mostly middle income countries) that the sub-licensees can supply are
identified. The clause also identifies parts of the world where ARV manufacture can
be successfully carried out. The Agreements include the section wherein Originators list patents either inside this geographical scope or outside it. Since the
Originator negotiates the terms and conditions of the licence solely with MPP,
the MPP acts as an intermediary and furthers the Originators offer for interested
bio-generics. MPP assists bio-generics to obtain pre-qualification at the WHO.
Originators can delegate or sub-licence certain market areas to generics through
MPP, which in turn reaps royalties while working their patents (see Saez 2015). The
Originators do not apprehend market risks in areas operationalised by these
pre-qualified sub-licensees. The licences are meant to be TRIPS compliant and
have no express restriction in responding to compulsory licences outside the
territory defined in the licensing agreements. Further, the sub-licensees are required
to supply the public sector and are entitled to exclusively supply the private sector
at higher prices. The aim as claimed by MPP is to ensure that demands of similarly
situated economies of scale can be met by effectively operationalising these
MPP-engineered voluntary licences.
Being non-exclusive in nature, these sub-licences increase competition amongst
the bio-generics and help create a market for affordable generic versions,
bio-similars and combination drugs. In order to enter into the MPP-sub-licensing
scheme, every interested bio-generic must tender a pre-qualification certifying as a
quality check from the WHO, United States Food and Drug Administration (FDA)
or European Medicines Agency. The prerequisite of pre-qualification on behalf of
the applicant bio-generics ensures that only credible and approved bio-generics are
delegated the responsibility to meet the growing demands for innovative solutions
to terminal illnesses such as HIV/AIDS.
35
In facilitating the licensing between the innovator pharmaceutical company and

the bio-generic company, MPP has to comply with the applicable legal prescriptions and practices of the specified jurisdiction. Legally, the patentability standards
(novelty, non-obviousness, industrial application and patentable subject-matter) in
the places of manufacture and distribution of the medicine and that of the place
where the medicine is imported and consumed ought to be complementary for
cross-licensing arrangements to be practicable. A patent is required to be formally
applied for, before the respective patent offices of countries where the patentee
desires to locally work the patent. Given that countries vary in their interpretation
of what is patentable and in costs involved in filing the application and maintaining
the patent, the decision to apply for a patent is serious and strategic.
3 The Indian Patent Law, Policy and the Healthcare

System
Since the 1980s, patents have begun to play a significant role in the Indian
healthcare system. Historically, product patents were not granted in India, which
kept patent applications for medicines out of patentability; the law then allowed an
applicant to only seek a limited monopoly right on the processes involved in
manufacturing pharmaceuticals and medical instruments. Indias international
trade commitments, particularly TRIPS Articles 27, 31 and 33 that lay down the
provisions for patentable subject matter, the exceptions thereto and the term of
protection for such patents, have led to amending the patenting system in India,
transforming it from a process to include a product patent regime in the 1990s.
The change brought about by Indias international trade commitments, has
arguably resulted in less availability of generic drugs in India and exorbitant pricing
by innovator pharmaceutical companies7; thereby raising concerns regarding the
effectiveness and appropriateness of government methods for achieving price
control and procurement of medicines, including ones needed for treatment of
life-long diseases such as HIV/AIDS in India. Further, the post-TRIPS judicial
decisions in the matter of Bayer v. Natco (2013) I.P.A.B. 20,8 leading to the
issuance of the first compulsory licence in favour of a generic company in India,
as well as Novartis v. Union of India (2013) S.C. 1311,9 where the application for a
7
Ayyangar (1959) made recommendations for adopting a patent system that balances the interests
of right-holders and users.
8
The decision of the I.P.A.B. and Bombay High Court upholding the decision of the Controller of
the Patents for grant of Compulsory Licence to an Indian pharmaceutical company, namely
NATCO Pharma Limited for Bayers Indian patent on Sorafenib Tosyalte (Nexavar). For a
detailed reasoning on the importance of accessible medicines in India, see Sridevan (2013).
9
Wherein the Indian Supreme Court upheld the decision on the rejection of a patent application by
Novartis for its beta crystalline form of Imatinib Mesylate (Glivec). The Court observed Novartis
to be indulging a strategy that led to ever-greening of its patents, a practice intended to extend the
36
S. Tripathy
mere improvement in a patented drug was struck down as non-patentable by the

Supreme Court of India, further indicate that India is experiencing high healthcare
cost pressures (see especially Prinja et al. 2012; see also Shah 2011), including the
costs of drug patent litigation (Gokhale and Chandru 2015).10
India currently also features high on the watch list of the United States Trade
Representative (The 2013 Special 301 watch list) as one having a weak IPR legal
framework for having emphasised enhanced clinical efficacy and local working of
patents as a means to invalidate new use patents and check against patent trolls which
have a bearing on the cost of such pharmaceuticals.11 Having continued to employ its
potential and manufacturing capacity to cater to the health needs of several other
member States of the WTO through its bio-generic industry, to now being listed as a
protectionist economy, India is poised to frame a policy that balances the interests of
the pharmaceutical innovators to recoup their research and development costs and the
interests of the patient populace by ensuring that the pharmaceutical innovators
comply with the requisite patentability criteria and also perform their necessary
obligation of enabling access to such patented technology on reasonable licensing
terms during the limited term of such patent; and honour the exceptions thereto without
attempting to hoard upon the basic research tools essential for developing generic
versions or discouraging follow on innovations through abuse of the patent right.
The draft National IPR Policy of India 2015 clearly states:
Indias statutory framework [for IP] is in consonance with national development priorities
while being in conformity with international treaties, conventions and agreements to which
India is a party. . .India has adopted a balanced approach towards patent law. It is
committed to protect innovation while promoting the larger goal of welfare of its citizens.
Courts and tribunals have upheld key provisions of Indias patent law by their authoritative
term of the patent on the same compound; which is impermissible given the patented invention
ought to expire after the stipulated term of 20 years.
10
A majority of the product patents started getting granted only in 2009. As a result, the innovator
foreign drug companies started filing infringement suits against domestic pharma manufacturers,
which led to a sudden increase in patent litigation in the pharma space.
11
For the US perspective on the Indian Courts decisions as regards the standard for patentability,
see Marantis (2013). See especially, Shamnad Basheer v. Union of India, W.P.(C) 5590/2015.,
which is a recent development in Indian patent practice, where the Delhi High Court on September
2015 has issued notice on a patent working public interest litigation seeking compliance on the
part of pharmaceutical companies to mandatorily submit their local working data in Form 27 as
required by section 83 under The Patents Act 1970. Since failure to submit Form-27 data can be a
ground for the grant of compulsory licence by the Controller of Patents, this public interest
litigation is expected to emphasise upon the importance of local working requirements as an
inseverable part of the social bargain between the inventor and the State within the patent regime.
Admittedly, a grant of a patent ought to result in net benefits to the public so a failure on the part
of the Pharmaceutical company to work the invention within 3 years of the patent grant ought to be
discouraged. Furthermore section 85 of The Patents Act 1970 provides that the Controller can go to
the extent of revoking a patent if the invention has not been worked in India even after 2 years from
the date of grant of a compulsory licence. Importantly, Form-27 data helps in checking patent trolls
which are non-practicing entities looking to sue legitimate innovators who have unknowingly
infringed such inactive patent for damages, thereby impeding the manufacturing activity.
37
pronouncements. The system of pre-grant and post-grant oppositions introduced in 2005

ensures that only deserving patents are granted. Many of the procedural issues that arose
from these amendments have been resolved. It is expected that there would be a steady
evolution of patent jurisprudence in India. Patent filings too have gone up by 10.56 % from
20082009 to 20132014. Over 75 % of patent filings are by foreign entities (IPR Think
Tank 2015 pp. 34 (emphasis added); see also Banerjee et al. 2015).
Given the draft policy for adopting a balanced approach that protects innovation
and promotes public interest, an objective discussion on whether the enduring
problem of pharmaceutical innovation, varying patentability standards, access
and availability of invented products as also bio-generics has been resolved since
2010 through the phenomenon of bio-patent pooling facilitated by the MPP. The
next segment elaborates upon the same.
4 Gilead Sciences/MPP Licence: Incongruency of

Applicable Law and the Licensing Strategy
In the year 2011, Gilead Sciences entered into agreement with MPP to become the
first pharmaceutical company to enter into sub-licensing agreements with Indian
bio-generics for the manufacture of ARVs (see Gilead 2015).12 Several other
pharmaceutical companies joined MPP thereafter.13 It is contended that these
voluntary licences were part of Gileads strategy to introduce pharmaceutical products (TDF in particular) that are deemed to be non-patentable in India. The original
TDF compound and its antiviral properties were discovered in 1985, prior to the
advent of the TRIPS era, when countries such as India did not grant patents on
pharmaceutical products. Post-TRIPS, Gilead filed divisional applications for process and product related patents for varying aspects of medical inventions in select
jurisdictions depending on the suitability in terms of the applicable law, enforcement
mechanisms to check infringement and the socio-economic conditions which influence the consumer-base as well as domestic production capacity (see MPP 2011;
Baker 2011). These varying aspects have in recent times included patenting of active
pharmaceutical ingredients (APIs), the dosage, the formulation and method of
delivery, the use, the combinations of two or more medicines into one pill as well
as patenting of the process for manufacturing the product (Hoen et al. 2011).14
Viread (tenofovir disoproxil fumarate) and Truvada (emtricitabine/tenofovir disoproxil

fumarate) are recommended by the World Health Organisation as components of antiretroviral
therapy.
13
For example, on 11 December 2013, Bristol-Myers Squibb Company entered into an agreement
with the MPP for sub-licensing their patented HIV/AIDS drug Atazanavir (see MPP 2013a). For
the terms of the technology transfer agreement see MPP (2013b). See also Datta (2013).
14
APIs account for over 80 % of the total cost of production of TDF based products; therefore
limiting access to APIs for production of TDF based products will inevitably keep the price
artificially high.
12
38
S. Tripathy
On 15th February 2007 an antitrust enquiry was instituted on Gilead Sciences

(see Love 2007),15 when it was alleged that the pharmaceutical company had been
using patents on a government funded HIV/AIDS drug (emtricitabine) invented at
Emory University to cut-off low cost supplies of APIs to more than 100 other
countries, and control the market for a second HIV/AIDS medicine (TDF) that is
generally off-patent in developing countries, including India (see Rai 2001; Chang
1995). MPPs negotiations with Gilead Sciences resulted in licence terms that
would enable sublicensing TDF-based products to potential bio-generics, while
excluding middle-income countries from accessing affordable generic versions
of TDF.
The Gilead Sciences patent landscape reveals that one Indian process patent has
been granted in favour of the pharmaceutical company, while the divisional applications for patenting disoproxil prodrug and the fumarate salt pertaining to TDF
products has not yet led to a grant in India (MPP Patent Status Database 2015).16
The claims on both disoproxil prodrug and the fumarate salt lack novelty and
inventive step, as also involve variations of existing chemical entities which offer
no significant therapeutic efficacy as required by Indian Patent law.17 The Indian
15
In this 2007 letter by Knowledge Ecology International to the Federal Trade Commission, KEI
state: KEI request for investigation into anticompetitive aspects of Gilead Voluntary Licences for
patents on Tenofivir and Emtricitabine (. . .[G]ilead is leveraging patent protection in developing
countries on the US government funded invention Emtricitabine to segment and control the global
market for generic APIs for both Tenofivir and Emtricitabine. This segmentation and control
extends even beyond the licence Territory. This action imposes higher costs for AIDS drugs in
more than 150 developing country markets. The United States government is the largest purchaser
of AIDS drugs in the developing world, and is harmed by this anticompetitive practice. . .).
16
Gilead has been granted patents for TDF-based products in 45 LMICs, including China and
Mexico, which have been excluded from the Gilead/MPP licence. Patent rights for TDF-based
products have been denied in several middle income countries; ones with especially high instance
of HIV/AIDS such as Argentina, Brasil, Chile, Colombia, Malaysia, Peru, Philippines, Ukraine
and Uruguay feature in this list; while no TDF-based product patent applications were filed in
109 of the 111 countries, which feature as the Gilead/MPP sub-licensees. It implies, in effect that
Gilead Sciences has adopted a strategy that will recoup royalties from bio-generics in 109 countries
without filing an application for patent, while the 45 countries which have granted the patent have
been excluded from the MPP model altogether to create differential pricing of APIs leading to
dominant market power.
17
The same is the fate of TDF product patent applications in LMICs in North Africa, Asia and
Latin America (see Baker 2011: Of the 111 countries included in the geographical scope of the
TDF/MPP licence, Gilead has patent applications pending or granted in only 2 of the licenced
countries, India and Indonesia. Moreover, some of Gileads patent applications for tenofovir have
been rejected In India under its strict definitions of and exclusions from patentability, which
prevent patenting of variations of known chemical entities unless they show a significant therapeutic advantage. [. . .] As revealed in the Patent Status Chart below, not only has Gilead never
patented tenofovir in 109 of the 111 countries in the TDF-licenced territories, it has also failed to
secure tenofovir patents in a number of excluded middle-income countries with a high HIV-burden
including Argentina, Brasil, Chile, Colombia, Malaysia, Peru, Philippines, Ukraine, and Uruguay.
Unfortunately, tenofovir is patented in some of the 45 excluded low- and middle-income countries,
including important markets in Mexico and China. The patent status of tenofovir in the other
34 excluded countries remains unclear.).
39
Supreme Court has in Novartis clarified that pharmaceutical patent applicants desirous of a patent grant in India ought to satisfy the pre-requisite of clinical efficacy as
provided under section 3(d) of The Patents Act 1970 (see Novartis v. Union of India
(2013)). The doctrine of precedent adopted by the common law system in India
dictates that Gileads divisional applications be rejected. Such pre-supposition
requires examination of the licence agreements for TDF, the Indian patent law as
applicable. An analysis of the abovementioned terms of the agreement between
Gilead Sciences and MPP for sublicensing APIs for TDF products will explain
whether the legality of such cross-licensing practice is questionable.
4.1
Gilead Sciences/MPP/Licensee Agreements

and the Applicable Law
In the case of Gilead/MPP/Licensee agreements for TDF, the applicable law and the
licence strategy is incongruent. The field of use as defined in these agreements
covers products for any use that is consistent with use approved by pre-qualifiers
such as the FDA. For products using TDF as the sole ingredient it is HIV and
Hepatitis B. Therefore, any use can be interpreted as any new use of known
products (inclusive of new treatments) which when discovered will be requiring
royalty payments in favour of the Originator Company on the part of the
bio-generics; further the terms of licence for the original use or treatment will
dictate the way the new use or treatment is distributed. Thereby, restricting the entry
of these new use products to only territories pre-determined and preferred by the
Originator company as the market for licensing ART.
Legally, the Originator company ought to apply for patents for such new use in
countries where the applicable law allows it to do so, before transferring a patentlike right by way of a licensing contract. While the term does not encourage new
use patents per se, it does effectively grant one for all purposes of the Gilead/MPP/
Licensee removing the possibility of a new treatment being developed by the
bio-generic without attracting the consideration of a royalty payment in favour of
Gilead. Indian patent law does not permit new use patents; this position was
reaffirmed by the Supreme Court of India while disallowing Novartis attempts
for evergreening of its new use patent on Gleevec (Novartis v. Union of India
(2013)). Therefore the extended field of use terms, which render the agreement
illegal in India, need to be amended; for the agreement is silent upon offering any
opportunity for the bio-generic to opt out of the any use term singularly, without
having to terminate the licence of a product so transferred as a whole.
Moreover, Gilead/MPP licence recognises the function of MPP as a licensee
facilitating the cross-licensing between Gilead and the bio-generics on agreed
terms. Principles of Contract law require that for a valid agreement, the licensor
can and should licence only those rights that it enjoys or will be enjoying under the
operation of law where the contract is intended to be performed (Anson 1880,
40
S. Tripathy
175).18 In the absence of a patentability standard which allows any use of known
products to be patent-eligible under The Patents Act, Gilead cannot create a
pecuniary interest in its favour by way of royalties for the benefits accrued from
transferring a right which it does not enjoy; similarly, MPP featuring as Gileads
licensee cannot sub-licence a right which Gilead does not have in the first place.
While Clause 3.1 of the Agreement provides, Exclusively for ultimate use in
the Field in the Territory, where the phraseology of use may justify royalties
payable by bio-generics in furtherance of enabling access to the API under the
MPP; it is imperative that the said clause be read along with section 48, The Patents
Act 1970, which describes the rights granted to a patentee in India.19 The section
confers upon the product patentee the exclusive right to prevent third parties, from
the act of making, using, offering for sale, selling or importing for those purposes
that product in India, without express consent from the patentee. The act of using
as provided in the section is not conditioned by any purpose. Therefore, exclusively for ultimate use in the Field in the Territory has little significance as far as
India is concerned. Thus, if the medicine is found to be useful in the treatment of
any other ailment or disease, in some distant future, then this clause may not
preclude the licensee or sub-licensee from using the medicine for that new purpose
in India. However, this clause will have the intended implications only in countries
that provide for use patents, such as China.20
The Licensed Patent Rights in Gilead/MPP/Licensee terms emanates from
both patents and patent applications. Schedule B entitled Licensed Patent Rights
sets out rights for both granted patents and pending patent applications (MPP 2012).
Therefore, the terms require royalty to be paid even in markets where patent
applications are pending. In effect, even though Gilead does not have patents for
TDF-based products in almost every country in the licence, through this agreement
they can extract rents without such rights. Accordingly, Indian generic manufacturers will have to pay royalty both in case of granted patents and pending patent
18
The modes in which law expresses its disapproval of certain objects of contract may roughly be
described as follows: (1) Prohibition by Statute; (2) Prohibition by express rules of Common Law;
(3) Prohibition through the Interpretation by the Courts of what is called the policy of the law; so
that illegal agreements may be (1) agreements in breach of Statute, (2) agreements in breach of
express rules of Common Law, (3) agreements contrary to public policy.
19
Right of patentees: Subject to the other provisions contained in this Act and the conditions
specified in section 47, a patent granted under this Act shall confer upon the patentee(a) where
the subject matter of the patent is a product, the exclusive right to prevent third parties, who do not
have his consent, from the act of making, offering for sale, selling or importing for those purposes
that product in India; (b) where the subject matter of the patent is a process, the exclusive right to
prevent third parties, who do not have his consent from the act of using that process, and from the
act of using, offering for sale, selling or importing for those purposes the product obtained directly
by that process in India.
20
It is worthwhile to recall that China is excluded from the list of recipient countries; therefore this
example is merely illustrative of the attempts made by Gilead Sciences to stifle the generic
industry and the burgeoning API market in China and other middle income economies, despite
having law that agrees to their licensing sensibilities.
41
applications. Neither does the Indian patent law, nor does the practice of licensing
contracts provide for creation of pecuniary interest (which is the payable royalty) in
favour of the Originator Company in the absence of a legally enforceable right,
which in this case is the transfer of APIs facilitated by MPP. Therefore, the
underlining effect of these voluntary licensing agreements between Gilead Sciences
and MPP are indicative of the Originator Pharmaceutical Companies potential of
not only circumventing the legal standards of patent-eligibility of its inventions in
sub-licensing countries but also creating extra-legal monopoly rights akin to patents; and influencing anti-competitive activities by wielding control over the supply
of HIV/AIDS drugs and creation of market power in select jurisdictions, while
morphing it as an altruistic service towards improving public healthcare under the
MPP. These terms agreed by the MPP raise concerns over its role as an independent
arbiter for increasing global access to affordable medicines.21 Administering such
anticompetitive licence terms, which include payment of royalty, on any new uses
of known products, even where patent rights do not exist, is effectively validating
such new uses. A private understanding between parties that disregards the law and
policy of the recipient country is void and unenforceable. In the event that the
Gilead/MPP licensing terms are not harmonised as per the applicable law, it would
effectively enable and validate new uses of known products leading to the
potential weakening of stricter patentability criteria in countries like India, which
in turn has serious socio-economic implications. The following section discusses
the resultant impact of the anti-competitive practices.
4.1.1
Gilead Sciences and MPP Licensing in the Indian Context: A

Legal Analysis
The International obligation under Article 40, TRIPS allows member countries to
adopt legislation to prevent or control anti-competitive practices. Provisions of The
Patents Act 1970 as well as the Indian Competition Act 2002 are in consonance so far
as evolving an innovation policy on patent pooling for pharmaceuticals is concerned.
The nature of the market, the technology and the business practices that are at stake
are determinants of whether intellectual property rights limit or enhance the application of competition law (Ghosh 2013, 349). The importance of technology transfer as
a means to achieve health innovation and IP management while prohibiting anti-
21
Civil society action groups such as the International Treatment Preparedness Coalition (ITPC)
which is a global network of community organisations, local NGOs, researchers and activists
united to promote access to treatment for people living with HIV, and the Initiative for Medicines,
Access & Knowledge (I-MAK) which is a team of lawyers and scientists increasing access to
affordable medicines by challenging unmerited patents, increasing patent transparency and
reforming the patent system, have made joint statements against unfair licensing terms being
administered under the MPP, especially since initially MPP charged 5 % of the royalty fee from
Gilead Sciences for identifying licensees and administering the licences on agreed terms. This
clause has been subsequently removed due to civil society retaliation.
42
S. Tripathy
competitive licensing practices and conditions has been emphasised generally in

Article 8.2, and specifically in Article 40, TRIPS.22
Article 8.2 provides general recognition that appropriate measures may be
needed to prevent the abuse of IPRs by right holders, while the permissive language
of Article 40 recognises the consequential negative effects due to licensing practices that restrain competition, thereby restraining trade and impeding technology
transfer or technology diffusion (Article 40(1), TRIPS). Furthermore, members are
permitted to specify anti-competitive practices constituting abuse of IPRs and
thereafter adopt measures to prevent or control such practices. Such practices
may include exclusive grant-backs, clauses preventing validity challenges and
coercive package licensing and the like. The measures adopted to address such
actionable abuses under Members competition law must be consistent with other
provisions of the Agreement.
As per the licence terms, only Indian bio-generics have been permitted to access
the licence to TDF-based APIs and products; Such India-centric licensing practice
enables the strategic splitting and tying-up of the market for APIs, consequentially
facilitating Gileads strategy to partition the developing world in half, and licence
certain companies to sell TDF and emtricitabine in one part of the world on the
condition that companies restrict the buying or selling of APIs with companies who
sell in the other part of the world.
By partitioning the market in this way, Gilead has made generic suppliers of
APIs less efficient (Baker 2011). The number of competitive suppliers in all
markets has reduced, leading to higher prices for purchase and distribution of
HIV/AIDS drugs in the developing world, which are in turn purchased by US
government funded health programs as well, thereby leading to affordability concerns world-wide. The agreement which requires Indian bio-generics to only access
APIs from either the Gilead-authorised API suppliers or the Originator Companys
own integrated API manufacturing division or from another Indian bio-generic that
is a Gilead/MPP/Licensee, allows Gilead to not only co-op generic manufacturers
and benefit from other economies-of-scale from their API supply when they only
sell or buy APIs with companies approved by Gilead, but strategically exclude the
development of a robust generic industry by restricting access to other major API
supplier companies in Asia (such as China) as well as least-developed countries
(LDCs) in Latin America and Africa, which are well-poised to benefit from the
22
Though the Chapter does not discuss compulsory licensing as a way to fulfil certain goals
pertaining to healthcare policy, a mention of important clauses of TRIPS Article 30 which sets out
detailed conditions for the granting of compulsory licences aimed at protecting the legitimate
interests of right holders is discussed for positing the relevance of licensing practices and their
impact on health innovation. Article 31(k) especially provides for the non-application of two such
conditions where a compulsory licence is granted to remedy a practice determined after judicial
or administrative process to be anti-competitive. Further Articles 31(b) and (f) provide that the
conditions which may thereby be rendered non-applicable include: (1) the requirement to first seek
a voluntary licence from the right holder; and (2) the requirement that use pursuant to a compulsory licence be predominantly for the supply of the domestic market.
43
2016 LDC TRIPS waiver23 on patenting pharmaceutical products. This leads to

adverse effects on the API market globally.
In order for any bio-generic to receive a licence to use the Emory patents in
45 countries, the licence facilitates payment of royalties on approved sales in countries
where Gilead does not hold a patent, and requires the bio-generics to not compete in
countries that collectively have 2.5 billion residents. Moreover, the licence prevents
bio-generic sub-licensees from engaging in additional sales in unapproved markets
even where tenofovir and emtricitabine and their combinations are not patented.
The Gilead/MPP licence has been misused: for profit-maximisation still reigns
supreme through terms that effectuate market partition and limit access to APIs and
TDF-based products. Efforts to make LMICs self-sufficient with respect to medicines for terminal illnesses through technology transfer have been deliberately
frustrated. Gilead has engaged in some practices that must be and can be addressed,
failing which the cost of HIV/AIDs drugs in the developing world would continue
to increase, despite the public-health oriented model envisaging a bio-patent
pooling schema under the MPP.
4.2
Possible Strategy for Meeting of the Minds
Hereinafter a set of suggestions on how certain strategic decisions on the part of the
recipient countries that are the users of this technology transfer can ensure beneficial outcomes.
A nuanced understanding of the object behind the MPP licence terms which aim
at addressing the inherent notion of meeting of the minds in a valid contractual
relationship brings forth two specific licence terms which can be invoked to
maximise global access to generic versions of TDF. First, the licence-terms that
allows potential bio-generics to unbundle the licence for a particular API from
others and deploy it selectively, and second, licence terms which allow potential
bio-generics to supply to countries where existing TRIPS-compliant flexibilities
have resulted in the grant of the required compulsory licence for TDF based
products. These are favourable terms that would enable improved access that is
prima facie restricted in the Gilead/MPP licence.
Indian bio-generics can respond to the Gilead/MPP/Licensee by utilising the first
of the aforementioned licence terms to reject the TDF/API sub-licence by
unbundling it from the remainder ARVs.24 This rejection will be considered
23
A communication dated 23 February 2015 from Bangladesh on behalf of the LDC group
conveyed that LDCs being disproportionately exposed to health risks associated with poverty
and patent protection contributes to high costs, placing any critical treatments outside the reach of
LDCs proposing to extend the 2016 LDC TRIPS waiver from IPR enforcement past the deadline
of 2016 (Bangladesh 2015; see also UNAIDS and UNDP 2013; Medecins Sans Frontie`res 2015).
24
The licence term offers the opportunity for the bio-generic to opt out of a specific product, but not
of the extra-legal terms such as the any use terms discussed in the next segment of the paper.
44
S. Tripathy
valid, given the requisite patentability criteria under Indian law still remains to be
satisfied by TDF which render the putative claims filed by Gilead meritless before
the Indian Patent Office and Courts. Therefore, there is no legal basis for restricting
the sale of TDF-based products in existing licenced countries as well as other
LMICs which have been excluded by Gilead. Opting out of the TDF/API licence
will not preclude the possible development of co-formulations of TDF with other
Gilead APIs in COBI/EVA/QUAD25 licenced territories as well. As a compensatory strategy, excluded countries can become importers of APIs and medicines from
exporter countries which are either sub-licensees themselves or where compulsory
licences have been granted for manufacturing and distribution of HIV/AIDS medicines (Baker 2011). While this may appear to be a patent opposition campaign on
the part of the excluded countries, it will yield practicable solutions to cater to the
larger public interest.
In the event that the patent comes to be denied, or is struck down by the Courts at
a future date, these bio-generics will have been burdened with excessive investment
costs for such API manufacture and distribution across the licenced territories.
Court awarded damages in favour of the bio-generics cannot make good the harm
suffered due to the intended performance of a licensing contract based upon illegal
terms and conditions, driven purely with the intent of profiteering by restricting
access to first and second lines of treatment essential for sustaining the lives of the
terminally ill patient populace.
In essence, the possible risks encountered within the MPP model is that it will
eventually divide the markets for innovation from the markets of access, thereby
diverting the workability of guaranteed public-interest oriented healthcare systems
being dependent on fundamental changes to the patent systems of recipient countries. It is also an abuse of the principle of territoriality and will result in
overthrowing the IP system towards dark ages. As a side, some experts view that
the model pre-supposes cooperation from Originator companies on a voluntary
basis and inadvertently discredits the use of compulsory licences (see Baker 2011).
As such, the impact on the follow on research and development incentives remains
uncertain as well. Therefore, a need to devise a clearer mandate that characterises a
meeting of minds and fosters collaboration, minimises risks and encourages
sustainability of innovation in healthcare is the need of the hour.
India must indeed invest in creating a sustainable innovation climate for reviving
drug development. The first step towards creating better systems ought to begin at
the stage for patent scrutiny. The next segment proposes a conceptual framework of
what can be referred to as Open Patent Prosecution in India as one approach that
can be utilised to standardise the cross-licensing arrangements by regulating the
activities of originator companies, the MPP like facilitators as well as aid
bio-generics to make informed decisions without having to circumvent the
established systems to prejudice public interest.
25
Drugs and drug combinations.
45
5 Open Patent Prosecution in India: The Solution Based

Approach
A right to exclude others is not permissible with an invalid patent. As discussed in
the above segments, Gileads TDF related patent was not approved as satisfying the
pre-requisites of patentability in India. Despite that it was being cross-licenced
through the MPP bio-patent pooling initiative. Not granting the patent would imply
that other manufacturers were not to be encountering monopoly pricing at all. On
the contrary, this Gilead/MPP/Sublicensing arrangement, which fosters anticompetitive practices, wrongly suppresses the manufacture, sale and distribution or use
by others of the pharmaceutical ideas embodied in the non-granted patent application and creates a right akin to patents in favour of Gilead. Furthermore, controlling
the licensing of API in ways that are arbitrary, can delay the entry of select generics
into the market. If these kind of licensing practices continue unchecked, without the
pre-requisite of a patent and a post-facto denial of patent grant, then generics, which
have borne the economic burden of developing, distributing and marketing the
generic versions of a non-patentable invention, will further have to recompense the
users of such generic versions. Even if the pharmaceutical company is directed to
award damages to the generic company, the patients will have had suffered to a
great degree as consumers of generics of an illegal drug. Such practices can lead to
distorting the health-delivery system and disadvantage the entire value chain and
hence need to be proactively refuted.
The primary reasons that a patent may be not granted is the failure to comply
with the pre-requisites of novelty, non-obviousness, utility and patentable subjectmatter on the part of the patentee, however another important reason that can be
factored in is the information asymmetry that affects the process of patent prosecution by the patent office. This being a rational defect can be remedied by capacity
building and empowering the patent office with relevant technical expertise. In
order to do so, it is proposed that a newer system for pre-grant investigation and
scrutiny of patent applications enabled by crowdsourcing of experts through software application be adopted. The primary objective is to utilise the expertise of this
pool of experts to ensure that there is pre-meditation on the entire technology
transfer process. It is in the interest of all stakeholders involved in the pharmaceutical sector to ensure that invalid patents are not monetised through private and
anticompetitive arrangements such as those adopted by the impugned Gilead
Sciences licence for the TDF compound.
This approach envisages calling upon participation from a wide-range of experts
ranging from those in the industry to university-based researchers within the
process of pharmaceutical patenting, prior to the grant of such patents for open
deliberations on the feasibility of the impact of granting such a patent.26 The
26
Similar concepts have been previously piloted as Peer to Patent in the United States, Australia,
Japan, Korea, Great Britain and Canada. The chapter discusses a variation of the concept to suit the
operations of the Indian Patent system.
46
S. Tripathy
approach that is modelled on open innovation can be referred to as Open Patent

Prosecution in India.
Indias patent application system requires the Patent Office to publish the
inventors application for public scrutiny and objection for a stipulated period of
time during the pre-grant stage.27 This brings forth the opportunity to bring together
peers in the nature of experts from industry and university researchers to come
together, engage and discuss the claims in the patent application. Scholars that have
debated on the peer-review mechanism for patents have in the past agreed that
while the patent office can attest to the threshold validity of a patent, an efficient
peer-review mechanism, which is transparent and holistic, will strengthen the
scrutiny procedure and also minimise patent litigation (Soobert 1998; Lemley
2000; Janis 1997, 1529; Noveck 2006, 130-18).
Normally, patent examiners will be conducting all prior art search and the results
will be utilised to decide whether the application meets the tests for patentability.
Herein a software application capable of identifying relevant peers will be housed
with the Research University or even the Indian Intellectual Property Office, which
will mobilise experts comprising of University researchers and faculty from the
Science, Technology and Law departments via the networks of the Research
Centres for IP and Technology Law across India, to initiate and aid the prior art
submissions for the benefit of patent examination. This set of experts will analyse
the patent applications in the relevant field and contribute expertise to the dialogue
being processed by the said software application. Finally a ranked list of publicly
available authorities which the peers identify as most closely related to the claims in
the patent application being examined will be mapped. This expert list will be
submitted with the Patent Office for aiding the relevant examiner to seek clarity by
way of an expert memo on patent eligibility during the process of patent examination. The mechanism proposed herein involves ex ante patent validation by inviting
participation of peers in the nature of experts at a pre-grant stage of patent
prosecution. The peers will be responsible for drafting a preparatory memo describing the advantages and pitfalls of the invention from a technical, socio-legal and
economic viewpoint. The memo will also be accompanied by a questionnaire
specifically requiring the applicant to make clarifications as regards the invention.
This memo along with the questionnaire when submitted to the patent office will aid
the patent office in its findings for suitability of the application; reduce errors while
granting pharmaceutical patents, eliminate issuance of overbroad claims. Further, if
an already granted patent is challenged for its validity on grounds of not being
novel, unobvious or useful in the way disclosed in the patent application, this expert
memo will ensure transparency in the workings of the patent office as also serve the
27
Patent Amendment Act 2005 sections 25(1)(a)(k) provide for pre-grant opposition in India.
Under the provision any person or any third party or Government may challenge the application of
grant of patent and inform to the controller of Patents for opposition, in writing against the grant of
a patent after the application for a patent has been published but before the grant of a patent.
Pre-grant opposition acts as a defensive shield to conform the validity of the patent applications
before patents are granted to them.
47
evidentiary purpose for the Court deciding the validity of the patent so challenged.
One emerging view explains that benefits of a pre-grant opposition mechanism will
outweigh the concerns related to frivolous delays in the process by ensuring
accuracy in the grant process (Ali 2016). A systematic introduction of peer-review
mechanism into the pre-grant opposition proceedings of patent scrutiny has been
advocated as being agreeable with the Common law understandings of an adversarial system of fact-finding (Ali 2016).
For the purpose of operationalising the above to especially check abusive practices
by Originator companies in dominant position, a functional National Drug Authority
(NDA) having regulatory powers is required. The NDA could be authorised to
maintain an inventory enlisting bio-generics that have the government approval to
enter into sub-licensing arrangements with the foreign partners such as the MPP. A
regulatory requirement for MPP like facilitators to contract with the government-listed
bio-generics only can be drafted. This practice will bring forth standardisation in the
process of contracting with facilitators such as the MPP. The primary mandate of the
NDA would be to work with the Patent Office in realising that patent scrutiny is aided
through the crowd-sourcing technology housed with the Research University and that
the consequent technology transfer with bio-patent pooling agents such as MPP is a
result of informed decisions on the part of Indian bio-generics. Such regulatory checks
and balances will ensure that instances of post-facto patent invalidation as well as
anticompetitive practices circumventing these processes are not encouraged.
Following Novartis v. Union of India (2013), it is submitted that this investigative model for pre-grant examination adopting a crowdsourcing methodology will
reduce the costs for the pharmaceutical patent products as well as the non-patented
[generic] pharmaceutical versions and thereby improve the economics of healthcare
delivery, for the benefit of patients in the importing countries such as United States
as well as populated countries like China and India. This new approach which seeks
to achieve the aims of access, affordability and availability of pharmaceutical drugs
and related facilities to the patients in India through concerted nation-wide efforts
can serve well in the long run.
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Patent Exhaustion on Trial in the United

States
Shubha Ghosh
Abstract This chapter examines intellectual property exhaustion policy and doctrine with a focus on the parallels between copyright and patent law.
Specifically, the chapter addresses where similar doctrines of exhaustion should
apply to both patent and copyright law, particularly in the area of international
trade, starting with the United States. The chapter concludes with a discussion of
the ongoing dispute, in the United states in particular, between Lexmark and
providers of reuse printer cartridges, which raises issues of contractual limits on
exhaustion and global exhaustion principles.
1 The History of Patent Exhaustion

In the United States, patent exhaustion originates in judicial decisions. Unlike
copyright exhaustion (Copyright Act, U.S. Code 17, section 109), patent exhaustion
has not been codified. Instead, case law, based on a mixture of patent law, anti-trust
law and common law principles of property, continues to be the basis for applying
the patent exhaustion doctrine. Recent United States Supreme Court decisions have
addressed novel issues of patent exhaustion, demonstrating both the doctrines
continued viability and its evolution.
The grant of a patent in a useful, novel, and nonobvious invention is one step in
the development of a free and competitive marketplace. The exclusive rights to
make, use, sell, and offer to sell provided by Patent Act, U.S. Code 35, section 154
(a)(1), and enforced through section 271(a), allow the patent holder to distribute the
patented invention and enter into transactions that permit dissemination of the
protected product through a chain of manufacture and into the hands of many
users. In this way, the existence of a patent is no different from the existence of
any other legal rule that facilitates the working of a vibrant market. Like the rules of
property, contract, tort, and sundry federal and state statutory schemes that protect
S. Ghosh (*)
Syracuse University College of Law, Syracuse, NY, USA
e-mail: shubhaghosh@gmail.com
DOI 10.1007/978-3-319-31177-7_4
51
52
S. Ghosh
consumers, investors, and manufacturers, patent law (like its cousin copyright law)
sets ground rules for competition.
The patent exhaustion doctrine is one of the key elements of these ground rules.
Under the patent exhaustion doctrine, once the invention is distributed through a
lawful transaction, the invention passes into the hands of the purchaser, no longer
subject to the exclusive rights of the patent holder. Like any other commodity, a
patented invention, once first sold, enters into commerce and can be further
distributed without the original patent holderseller encumbering and raising the
costs of subsequent transactions. Put simply, the principle underlying the exhaustion doctrine is that the patent holder gets one bite at the apple, so to speak, by
permitting the patent holder to extract the commercial returns from the first sale of a
patented invention (on the basis of a national monopoly market situation) and by
preventing that patent holder from erecting a tollgate at each subsequent transaction
(each subsequent transaction taking place on the basis of a fully competitive open
market).
While copyright exhaustion extinguishes the distribution right after the first sale
(see Kirtsaeng v. John Wiley & Sons, 133 U.S. 1351 (2013)), patent exhaustion
applies to both the patent owners exclusive right to sale and the right to use (see
Aro Manufacturing v. Convertible Top Replacement, 365 U.S. 336 (1961)). On the
last point, the purchaser of a patented invention has an implied license to use the
patented invention for the purposes intended (see Aro Manufacturing v. Convertible
Top Replacement, 365 U.S. 336 (1961)). In addition, the purchaser has the right to
repair the invention in order to preserve its fitness for use (Aro Manufacturing
v. Convertible Top Replacement, 365 U.S. 336 (1961)). However, courts distinguish
a reconstruction from repair, holding the former to be an impermissible making of
the invention if done without the patent holders permission: reconstruction entails
the making another copy of the patented invention while repair entails
reconstituting an existing invention (see Aro Manufacturing v. Convertible Top
Replacement, 365 U.S. 336, 345 (1961)).
Courts have recognised that the patent exhaustion doctrine is important for a
functioning market shaped by patent law. The broad contours of the doctrine were
first articulated in Bloomer v. McQuewan, 55 U.S. 539, 549 (1852):
The inventor might lawfully sell it to him, whether he had a patent or not, if no other
patentee stood in his way. And when the machine passes to the hands of the purchaser, it is
no longer within the limits of the monopoly. It passes outside of it, and is no longer under
the protection of the act of Congress.
In Adams v. Burke, 84 U.S. 453 (1873), the United States Supreme Court
recognised the patent exhaustion doctrine as essential to the nature of transactions
transferring patented inventions. In Adams v. Burke, the Court was faced with a
territorial use restriction on the manufacturer-assignee, who was not permitted to
distribute patented coffin lids outside a ten-mile radius of the City of Boston. When
a subsequent assignee of the patent owner sued an undertaker who had purchased
the lids and removed them from the territory, the Court found that patent exhaustion
barred the claim. This out-of-territory purchaser, the Court reasoned, had acquired
Patent Exhaustion on Trial in the United States
53
the right to use that coffin for the purpose for which all coffins are used (Adams
v. Burke, 84 U.S. 453, 456 (1873)). [I]n the essential nature of things, the Court
wrote, when the patentee, or the person having his rights, sells a machine or
instrument whose sole value is in its use, he receives the consideration for its use
and he parts with the right to restrict that use (Adams v. Burke, 84 U.S. 453,
456 (1873)). The protected work passes without further restriction on account of
the monopoly of the patentees (Adams v. Burke, 84 U.S. 453, 456 (1873)).
What makes the doctrine essential is the way in which the patent owner
collects the reward for producing and disseminating the invention. As the Court
explained in Adams v. Burke, the patentee or his assignee having in the act of sale
received all the royalty or consideration which he claims for the use of his invention
in that particular machine or instrument, it is open to the use of the purchaser
without further restriction on account of the monopoly of the patentees (Adams
v. Burke, 84 U.S. 453, 456 (1873)). The exhaustion doctrine forces the patent owner
to negotiate the consideration once and allows the purchaser to make the permitted
use of the invention, including further dispositions, without further compensation
owed to the patentee. Allowing the patentee to impose post-sale restrictions on use,
the Court said, would be to engraft a limitation upon the right of use not contemplated by the statute nor within the reason of the contract to say that it could only be
used within the ten-miles circle (Adams v. Burke, 84 U.S. 453, 456 (1873)). In
other words, the patentee cannot negotiate terms in the first sale transaction that
would expand its rights under the Patent Act and that would be unreasonable under
contract law.
The exhaustion doctrine, in patent as well as copyright law, rests on a carefully
constructed balance between property and contract rights. The doctrine recognises
that transactions between patent or copyright owners and purchasers of their
patented products or copyrighted works will be subject to a myriad of negotiated
terms. In Bobbs-Merrill v. Straus, 210 U.S. 339 (1908), for example, the Court
applied the first sale doctrine to sales without restriction. This qualifying language recognises that the copyright or patent owner can impose contractual restrictions on the initial purchaser, including, presumably, clear limitations on the right
of the initial purchaser to resell the intellectual property. In this way, for example,
the owner can create a rental market for intellectual property analogous to rental
markets for real or personal property. But as the Federal Circuit itself has acknowledged, patented articles when sold become the private individual property of the
purchasers, and are no longer specifically protected by the patent laws. The fact
that an article is patented gives the purchaser neither more nor less rights of use and
disposition (Jazz Photo Corporation v. International Trade Commission, 264 F3d
1094, 1102 (2001) (quoting Mitchell v. Hawley, 83 U.S. 544, 548 (1873)). In other
words, limitations imposed in the sale of a patented invention are a matter of
contract law, not patent law. The exhaustion doctrine lets a purchaser of a patentprotected work and all subsequent parties in the chain of distribution know that the
work has been transferred free of any patent claims of the original owner on the use
or disposition of the work, although not necessarily of contract claims.
54
S. Ghosh
The exhaustion doctrine should not be understood as a limitation on rights, but as

an essential legal doctrine for the construction of competitive markets based on
intellectual property monopolies. There are many ways in which the first sale
doctrine promotes competition. By permitting unencumbered resale, the first sale
doctrine permits competition through the creation of rental markets and markets for
second-hand products. Manufacturers at various stages of a production chain can
negotiate without fear of interference from patent owners who have obtained their
reward through the first negotiation. Creditors can assess the business assets and
contracts of business entities and determine appropriate valuation for the purposes
of secured or unsecured lending.
Both the Bloomer and Adams decisions were rendered before the enactment of
the Sherman Anti-Trust Act (1890). With the enactment of this foundational statute
of United States anti-trust law, the doctrine of patent exhaustion found further roots
in federal competition law (Commerce and Trade Act, U.S. Code 15, sections 17).
Under early decisions interpreting the anti-trust laws, the exhaustion doctrine was
held not to apply to restrictions imposed on a manufacturing licensee (United States
v. General Electric, 272 U.S. 476, 479 (1926)). Such an exception to anti-trust law
has been explained by the fact that a manufacturing licensee is equivalent to the
patentee who can, of course, impose resale restrictions on itself (United States
v. General Electric, 272 U.S. 476, 484 (1926)). Purchasers who buy from the
manufacturing licensee in knowing violation of the restriction on the licensee
(i.e., who make unauthorised purchases) may be held liable for patent infringement.
Allowing infringement suits against knowing unauthorised purchasers of a
manufacturing licensee is a relatively narrow and explicable exception to the
exhaustion doctrine (United States v. General Electric, 272 U.S. 476,
484 (1926)). Nor is the doctrine undercut by the fact that it only applies to sales,
and not to licenses without the incidents of a sale (although the distinction may be
difficult to make in some cases) because without the incidents of a sale the issue of
free transferability of property embodying patented inventions does not arise.
The Supreme Courts decision in United States v. Univis Lens, 316 U.S. 241
(1942) illustrates how the exhaustion doctrine complements the anti-trust treatment
of use restrictions. At issue in United States v. Univis Lens was an alleged anti-trust
violation arising from resale restrictions imposed by a manufacturer patentee. The
manufacturer argued under the rule of United States v. General Electric,
272 U.S. 476, 484 (1926) it was engaged in a licensing transaction that allowed it
to impose the resale restrictions. The Court found that the transactions was a sale,
and not a license, and therefore was outside the scope of the patent monopoly. The
Court reasoned:
[W]here one has sold an uncompleted article which, because it embodies essential features
of his patented invention, is within the protection of his patent, and has destined the article
to be finished by the purchaser in conformity to the patent, he has sold his invention so far as
it is or may be embodied in that particular article. The reward he has demanded and
received is for the article and the invention which it embodies and which his vendee is to
practice upon it. He has thus parted with his right to assert the patent monopoly with respect
55
to it and is no longer free to control the price at which it may be sold either in its unfinished
or finished form (United States v. Univis Lens, 316 U.S. 241, 250251 (1942).
In short, the exhaustion doctrine made the legal issue a pure question of how the
contractual restriction would be treated under anti-trust law. This approach to the
patent exhaustion doctrine, through the lens of anti-trust law, was affirmed by the
Supreme Courts 2008 decision in Quanta Computer v. LG Electronics,
553 U.S. 617 (2008) and is the subject of the recent decision in Bowman
v. Monsanto, 569 U.S. ___ (2013).
In Quanta Computer v. LG Electronics, LG Electronics licensee, to quote the
language from United States v. Univis Lens, had sold an article that embodies
essential features of the patented invention and has destined the article to be
finished by the purchaser in conformity to the patent (United States v. Univis Lens,
316 U.S. 241, 250251 (1942)). LG Electronics had acquired a large patent
portfolio of technologies used in the manufacture of computer chips. After a dispute
with Intel, the chip manufacturer, respondent entered into a complex licensing
agreement with Intel that allowed Intel to use the technology in the construction
and sale of chips. These chips in turn were sold to petitioners and incorporated as
components in computer hardware systems. LG Electronics subsequently sought to
enforce its patent rights against the petitioners based on their alleged violation of
conditions placed on the original agreement with Intel.
The patent exhaustion doctrine was designed to prohibit precisely this type of
reach-through by the patent owner to enforce its patent rights. Accordingly, in
Quanta Computer v. LG Electronics the Supreme Court affirmed the long
recognised patent exhaustion doctrine. Citing precedents at the intersection of
anti-trust and patent laws, the Court stated the first sale doctrine broadly, holding
that [t]he authorized sale of an article that substantially embodies a patent exhausts
the patent holders rights and prevents the patent holder from invoking patent law to
control post sale use of the article (Quanta Computer v. LG Electronics,
553 U.S. 617, 631 (2008)).
In its decision, the Court also rejected an exception to the exhaustion doctrine for
process or method claims, stating that such an exception would violate the
longstanding principle that, when a patented item is once lawfully made and
sold, there is no restriction on [its] use to be implied for the benefit of the patentee
(Quanta Computer v. LG Electronics, 553 U.S. 617, 624 (2008), citing Adams
v. Burke, 84 U.S. 453, 457 (1873)); see also Ethyl Gasoline Corporation v. United
States, 309 U.S. 436 (1940), finding exhaustion of process patent). The Court
upheld a strong and robust patent exhaustion doctrine on the grounds that exceptions based upon distinctions between the types of patent or technology would lead
to gamesmanship by patent applicants as they would draft patent claims to invoke
such an exception. Applicants would have incentive to engage in such strategic
patent claim drafting in order to be able to impose downstream restrictions that
would be the basis for claims of patent infringement. Technology-based exceptions
that would treat process patents differently from other patents, or self-replicating
56
S. Ghosh
technologies differently from other technologies, would undermine the broad patent
exhaustion doctrine historically recognised by the Court.
In Bowman v. Monsanto, 569 U.S. ___ (2013), the Supreme Court considered the
applicability of patent exhaustion to genetically modified seeds. At issue in the case
were two patents owned by Monsanto, which concern a type of gene and a type of
synthase, respectively. A gene is a molecular unit of heredity, and a synthase is an
enzyme that catalyses the synthesis of a substance. It was uncontested before the
Court that Roundup Ready (RR) seeds for which Monsanto owned the patents
substantially embody the patented gene and the patented synthase, along with a
bevy of other genes, enzymes and matter intrinsic to soybean seeds generally.
Monsantos patent claim was limited to its chimera gene sequence that allows the
resulting plant to be pesticide resistant. Monsanto sells the genetically modified
seeds directly to purchasers and licenses its patent to seed producers to manufacture
and sell the genetically modified seeds.
However, Monsanto did restrict, through contract, the right of the purchaser of
the seeds from replanting the second-generation seeds from the germinated plant.
The patented gene sequence is sold and licensed subject to an agreement which
states (1) that the purchaser will plant the seed for only one growing season; (2) that
the purchaser not supply the seed to any other grower for planting; (3) that the
purchaser will not save any crop from the planting for replanting or transfer the crop
to the a third party for replanting; and (4) that the purchaser will not use the seed or
allow the seed to be used for research, crop breeding, or crop production. Bowman,
a soybean farmer, planted seeds he had obtained from grain elevators to which other
farmers had sold the second-generation seeds. Monsanto sued Bowman for patent
infringement.
Bowman raised an exhaustion defence along the lines of the Supreme Courts
ruling in Quanta. The United States Court of Appeals for the Federal Circuit
rejected the defence on two grounds. First, the court reasoned that the exhaustion
doctrine would not apply to self-replicating technologies, like genetically modified
seeds (Monsanto v. Bowman, 657 F3d 1341, 1347 (2011), citing Monsanto
v. Scruggs, 459 F3d 1328, 1336 (2006)). Applying exhaustion, the court reasoned,
would permit reuse and thereby limit the patent owners ability to profit from the
patented technology. Second, the Federal Circuit reasoned that exhaustion would
not apply to Bowman because exhaustion permits reselling the seed and not making
another copy of the patented technology. By growing a third generation of plants
containing the seeds, the Federal Circuit concluded, Bowman went beyond his
rights under the exhaustion doctrine to make an unauthorised copy of the patented
technology.
In its decision finding for Monsanto, the Federal Circuit creates an exception to
the patent exhaustion doctrine for the sui-generis category of self-replicating
technologies. The court repeated its reasoning in Monsanto v. Scruggs that [a]
pplying the first sale doctrine to subsequent generations of self-replicating technology would eviscerate the rights of the patent holder (Monsanto v. Scruggs, 459 F3d
1328, 1336 (2006)). Effectively, the court has created an exception from the patent
57
exhaustion doctrine for self-replicating technologies, meaning inventions that recreate themselves through reproduction.
The Federal Circuit rejected Bowmans argument that the seed sold by
Monsanto contained all future generation seeds and thereby embodied Monsantos
patent fully for two reasons. First, the court characterised the reproduction from the
seed of a new plant as constructing an essentially new article, infringing the patent
owners right to exclude others from making the patented invention. Second, the
court rejected Bowmans argument that the only reasonable and intended use of the
seed was for replanting them to create new seeds. The court suggested other use of
the seeds, such as for feed. Consequently, the court rejected the exhaustion argument because the patented technology at issue is one that recreates itself. The
application of the patent exhaustion doctrine to such a technology, the Federal
Circuit concluded, would eviscerate patent rights over such technology.
The creation of a technology-based exemption to the patent exhaustion doctrine
is inconsistent with Congress technology neutral view of patent law, dating back at
least to the enactment of the 1952 Patent Act. Such a technology neutral view of
patent law is mandated by and consistent with article 27(1) of the TRIPS Agreement (Agreement on Trade-Related Aspects of Intellectual Property Rights (1994)
1869 U.N.T.S. 299 (Annex 1C)) which imposes on World Trade Organisation
members the obligation that patents shall be available and patent rights be enjoyable without discrimination as to. . .the field of technology. The Federal Circuits
exception for self-replicating technologies creates such discrimination based on
field of technology.
The Federal Circuit distinguished Supreme Court precedent on patent exhaustion, discussed above, in Bowmans case by first stating that there are other uses for
the patented seed than for planting and, second, finding that the replication of the
seed is unauthorised making of the patented invention. Both distinctions are
suspect.
First, while it is true that there are many uses of any invention, such as
Monsantos patented seed, the question is identifying the only and intended use.
In Univis, the fitted lenses might be used for many things; for example, they could
be used for recycling the glass. But their only and intended use was for eyeglasses.
The Federal Circuit points out that Monsanto seeds could be used for feed. But the
primary reason Monsanto produced the seeds, and farmers like Bowman would buy
the seeds, is to plant them. That use is their only and intended use in the sense of the
Courts language in Univis, as affirmed in Quanta where the Supreme Court
described Quantas use of LG Electronics patent as follows:
Here, LGE has suggested no reasonable use for the Intel Products other than incorporating
them into computer systems that practice the LGE Patents. Nor can we discern one: A
microprocessor or chipset cannot function until it is connected to buses and memory. And
here, as in Univis, the only apparent object of Intels sales to Quanta was to permit Quanta
to incorporate the Intel Products into computers that would practice the patent (Quanta
Computer v. LG Electronics, 553 U.S. 617, 632 (2008)).
Likewise, a genetic trait cannot function until it is inserted into the germplasm of
a seed. The trait is like the LGE patents and the seed is like the microprocessor.
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S. Ghosh
Monsanto sells both the input and the end product in this case, but the patent lies
only with the input, which has no use unless it is incorporated into the end product
seed, whether that seed is sold as feed, for planting, or for any other purpose. But
again there is the same question whether the patent is necessarily practiced when
sold for purposes other than planting.
Second, the Federal Circuit characterised the planting of the seed and its
generation in a replica as an unauthorised making of the patented invention. But
if the intended use of the seed is for planting, then the generation would be
implicitly authorised as part of the expected use of the patented invention. The
Federal Circuits definition of unauthorised making of the patented invention
ignores the purchasers use rights protected under the exhaustion doctrine. Once
the seed is planted as intended a new plant is produced carrying the next generation
of seed. This reproductive technology is inherent to the chimera gene strain that is
the subject of Monsantos patent. Monsanto has no exclusive right to prevent the
farmers expected and intended use of the unpatented reproductive capacity of the
seed contained the patented gene strain.
The Federal Circuits limitation on the exhaustion doctrine does not have a
business justification in preventing what the court ominously describes as the
evisceration of the patent right. If the concern is with the price competition created
by the second generation of seeds, the business response is to charge a higher price
for the first generation of seeds upfront. This practice parallels that of book
publishers who sell expensive first editions of books knowing that there will be
competition from used versions of the book in the future.
If the concern is with proliferation of a readily replicable invention, a lesson is
available from the software industry, which engages in effective product differentiation and efficient third degree price discrimination. Furthermore, the threat of
replicability is arguably greater for software since an entire suite of users can be
satisfied with one disk containing the program. By contrast, the threat of replicability is not as great for seeds as it is for software since an individual seed can
produce only a limited number of replicas while software is replicable without
limit. Nonetheless, the first sale doctrine has been recognised for the sale of
software (Vernor v. Autodesk, 621 F3d 1102 (2010)).
The restrictions imposed by the Federal Circuit would have adverse consequences on downstream markets. Once the patented genetic material is propagated
through seeds and plants, downstream growers and granaries cannot distinguish
between plants and seeds that contain the patented sequence and those that do not. If
the restrictions were upheld downstream, contra the patent exhaustion doctrine,
downstream users may be chilled in using unpatented seeds and plants for fear of
patent litigation. Such a muddying of the marketplace is inconsistent with the
balance within patent law between innovation and competition. Such adverse
consequences can be avoided through a strict application of the patent exhaustion
doctrine and protection of Monsantos patent rights in the genetic sequence through
its price structure and through product differentiation as in other industries subject
to problems of replication. Through these creative practices that do not hinge on
expanded patent rights, both the interests of Monsanto and of downstream market
59
participants can be protected and the primary goal of patent law to promote progress
in the useful arts is enhanced.
The Supreme Court affirmed the Federal Circuits ruling in favour of Monsanto
although through different reasoning. Writing for a unanimous court, Justice Kagan
concluded:
Under the patent exhaustion doctrine, Bowman could resell the patented soybeans he
purchased from the grain elevator; so too he could consume the beans himself or feed
them to his animals. Monsanto, although the patent holder, would have no business
interfering in these uses of Roundup Ready beans. But the exhaustion doctrine does not
enable Bowman to make additional patented soybeans without Monsantos permission
(either express or implied) (Bowman v. Monsanto, 569 U.S. ___ (2013)).
Citing precedent from 1882 (see American Cotton-Tie v. Simmons, 106 U.S. 89
(1882), the Court reasoned that the exhaustion doctrine did not permit the making of
another copy of the patented invention without the patent owners permission. As
the Court explained:
[I]f simple copying were a protected use, a patent would plummet in value after the first sale
of the first item containing the invention. The undiluted patent monopoly, it might be said,
would extend not for 20 years (as the Patent Act promises), but for only one transaction.
And that would result in less incentive for innovation than Congress wanted. Hence our
repeated insistence that exhaustion applies to the particular item sold, and not to reproductions (Bowman v. Monsanto, 569 U.S. ___ (2013).
While the Courts reasoning parallels that of the Federal Circuit in its concern
with the possibility of boundless copying after the first sale under an application of
exhaustion to the planting of the seed to make another generation, the Supreme
Court falls short of adopting an exception to patent exhaustion for self-replicating
technologies. The Court concludes its opinion by stating that the holding is
limited to the particular facts of the Bowman case. As for other types of selfreplicating technologies, such as software or digital content, the articles selfreplication might occur outside the purchasers control. Or it might be a necessary
but incidental step in using the item for another purpose (Bowman v. Monsanto,
569 U.S. ___ (2013). Therefore, the Supreme Courts decision leaves open the
question of how the patent exhaustion doctrine would apply to cases other than
genetically modified soybeans.
One controversy left open by the Courts decision is the source of a farmers
right to plant the genetically modified seed. In an elaborate footnote, the Court
states that its conclusion about exhaustion is applicable regardless of how a farmer
acquires the patented seed. Whether the farmer bought the seed directly from the
patent owner or indirectly from a granary, the farmer cannot plant the seed to grow
another generation of the patented germplasm. The Court does point out that a
purchase directly from the patent owner could be subject to an express license. But
even absent such an express license, the Court suggests, the farmer might reasonably claim that the sale came with an implied license to plant and harvest one
soybean crop (Bowman v. Monsanto, 569 U.S. ___ (2013). The language about
implied license is confusing. It is not clear whether the Court is saying that
exhaustion is a matter of implied or express license rather than a matter of rights
60
S. Ghosh
of the purchaser to be free from restraints on alienation. The possible existence of

an implied license suggests that the patent owner could further restrict the farmer in
the use of the patented seeds through contractual restrictions. How far a patent
owner can limit the exhaustion doctrine through contract is therefore now an
unclear question under the Courts recent patent exhaustion decision in Bowman.
While the applicability of patent exhaustion to genetically modified seeds
remains controversial, one point that is clear is the principle of national exhaustion
under United States patent law. A court in 1893 described the state of law as
follows:
A purchaser in a foreign country, of an article patented in that country and also in the United
States, from the owner of each patent, or from a licensee under each patent, who purchases
without any restrictions upon the extent of his use or power of sale, acquires an unrestricted
ownership in the article, and can use or sell it in this country. The cases which have been
heretofore decided by the Supreme Court in regard to the unrestricted ownership by
purchasers in this country of articles patented in this country, and sold to such purchasers
without limitation or condition, lead up to this principle [citations omitted]. A purchaser in
a foreign country of an article patented in that country and also in the United States, from a
licensee under the foreign patent only, does not give the purchaser a right to import the
article into, and to sell it in, the United States, without the license or consent of the owner of
the United States patent [citations omitted] (Dickerson v. Matheson, 57 2d Cir. 524 (1893).
The court in Dickerson, quoted above, cited the Graff case, which the Supreme
Court decided in 1890. At issue in the latter was the importation of a lamp patented
in both the United States and Germany. The importer bought the lamp in Germany
and attempted to import and resell the lamp in the United States. The Court held that
this was patent infringement because the authority granted under German patent
law did not provide rights to the purchaser under United States patent law. In other
words, the competitive rationale that justified patent exhaustion within the U.S. did
not apply to cross-border transactions. National exhaustion continues to be the law
today under U.S. patent law.
2 Patent Exhaustion, Conditional Sales and Global Sales

However, one lower court in the United States has suggested that under the
Supreme Courts holding in Quanta, patent exhaustion would apply to foreign
sales authorised by the patent owner. In LG Electronics v. Hitachi, the court from
the Northern District of California stated
Drawing such a distinction between authorized domestic sales and authorized foreign sales
would negate the Supreme Courts stated intent in Quanta to eliminate the possibility of a
patent holder doing an end-run around the exhaustion doctrine by authorizing a sale,
thereby reaping the benefit of its patent, then suing a downstream purchaser for patent
infringement. District courts may not follow circuit court precedent where a subsequent
Supreme Court decision has undercut the theory or reasoning underlying the prior circuit
precedent in such a way that the cases are clearly irreconcilable (LG Electronics v. Hitachi,
655 ND Cal. 1036 (2009).
61
The court in LG Electronics distinguished the Supreme Courts decision in

Boesch:
In [Boesch], the unauthorized foreign sale of the device did not exhaust the United States
patent holders rights to enforce the patent with respect to sales in the United States. The
present case, in contrast, involves an authorized sale made pursuant to a license under a
United States patent. Boesch does not speak to this issue (LG Electronics v. Hitachi,
655 ND Cal. 1036 (2009).
While no other reported decision follows this reasoning, there seems to be some
legal argument for finding a principle of international patent exhaustion under
United States case law. In 2013, the Supreme Court refused to review the Federal
Circuits decision in Ninestar v. International Trade Commission, 667 F3d 1373
(2012). The alleged patent infringer sought review from the U.S. Supreme Court on
the question of international patent exhaustion in light of the Supreme Courts 2013
decision in Kirtsaeng, regarding international copyright exhaustion. The Court, in
Ninestar, declined to grant review. The Federal Circuit is currently holding an en
banc hearing to consider the impact of Kirtsaeng and Quanta on issues of international patent (Lexmark v. Impression, 785 F3d 565, 2015).
Lexmark is a patent holder and major manufacturer of printers, which also sells
cartridges (Lexmark International v. Ink Technologies Printer Supplies, (SD Ohio
2014)). The company offers two types of printer cartridges, one that can be refilled
and reused and one that cannot. The restrictions on cartridges are imposed by
licensing terms that limit the purchasers rights to reuse the cartridges through
refilling and to resell them. Distributors are restricted in their ability to refill and
resell used cartridges through their contracts with Lexmark. Impression and other
companies not in contract with Lexmark obtain used cartridges and resell them.
Lexmark sued these resellers for patent infringement.
The district court rejected Impressions defence of exhaustion to Lexmarks
infringement claim (Lexmark International v. Ink Technologies Printer Supplies,
(SD Ohio 2014)). Specifically, Impression had argued that patent exhaustion
applies to sales that occur anywhere in the world. The resellers sued for infringement had purchased the used cartridges overseas in countries to which Lexmark
exported new cartridges. The district court rejected this global notion of exhaustion.
The ruling is on appeal to the Federal Circuit (Lexmark v. Impression, 785 F3d
565, 2015) and that court has been asked to address two issues. First, does Quanta
apply to sales that are conditioned by contract such as Lexmarks contractually
imposed restrictions on resale and reuse? This question has been analysed in part in
the discussion of patent exhaustion presented in the previous section. Most likely,
the courts answer to this question will be no since, as demonstrated above, the
policy of exhaustion to promote unencumbered distribution of goods cannot be
overridden by contract. The second question before the Federal Circuit in Lexmark
is whether the rule of global exhaustion adopted by the Supreme Court in copyright
law applies also to patent law. The next section addresses this question and comes
to the conclusion that what the courts answer to this question will be remains
uncertain. But, given the Courts close reliance on statutory analysis in its ruling in
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S. Ghosh
favour of global exhaustion for copyright (Lexmark v. Impression, 785 F3d

565, 2015), it will likely hold that global exhaustion does not apply to patent law.
However, a more policy minded judicial reasoning might lead to a finding of global
exhaustion, as subsequent sections of this chapter demonstrate.
3 A Comparison with International Copyright Exhaustion

Doctrine
This version of exhaustion, referred to as the first sale doctrine, was re-codified in
Copyright Act, U.S. Code 17, section 109(a), which has been in effect from 1978 to
the present. This section provides that the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is
entitled, without the authority of the copyright owner, to sell or otherwise dispose of
the possession of that copy or phono-record. The statute expressly states that this
term is a limitation on the exclusive right of the copyright owner to distribute
copies or phono-records of the copyrighted work to the public by sale or other
transfer of ownership, or by rental, lease, or lending under section 106(3).
While the understanding of section 109(a) points to the lawfulness of reselling a
copy of a copyrighted work that someone has lawfully purchased (e.g., reselling a
purchased book or DVD), the statutory language is fairly byzantine. Although
section 109(a) is presented as a limitation on section 106(3), the limitation does
not apply to the portion of section 106(3) that provides an exclusive right for
rental, lease, or lending. This limitation on a limitation, so to speak, is an inference
from the use of the word owner in section 109(a). Someone who obtains possession through rental, lease or lending would not be an owner of the copy. Section 109
(d) clarifies this reading by expressly stating that section 109(a) does not apply to
rental, lease or lending.
Exhaustion principles arise in other provisions of section 109. These further
limitations illustrate the work- and industry-specific nature of copyright exhaustion.
Section 109(b) provides that the copyright owner retains the rental right in
copyrighted software and phono-records even after a first sale. This retention of
rights effectively prohibits a rental market for software and phono-records unless
authorised by the copyright owner even if a purchaser buys a copy of software or a
phono-record. Section 117, however, does allow the owner of a copy of software to
make copies for archival purposes or for booting up or running requisite hardware.
Under section 117, the owner is also allowed to make copies for the purpose of
maintaining or repairing a machine that contains authorised copies of the software.
Section 109(c) allows a purchaser of a pictorial, graphic or sculptural work to
publicly display the work without needing to obtain a license from the copyright
owner. Furthermore section 109(e) allows the purchaser of an electronic audiovisual game, which was lawfully made under this title, to publicly perform and
display the copyrighted content in the game although this right does not extend to
63
any content that might be infringing within the game, i.e. content that the creator of
the game infringed.
Lower courts in the United States have addressed issues of copyright exhaustion
in response to particular industry practices (UMG Recordings v. Augusto, 628 F3d
1175 (2011); MDY Industries v. Blizzard Entertainment, 629 F3d 928 (2010).
Courts have found that copyright exhaustion applies when there is a sale based on
the economic and business realities of a transaction (see discussion in Vernor
v. Autodesk, WL 3516435 (9th Cir., 2010). Therefore, exhaustion has applied to a
transaction in which resale rights were purportedly limited by contractual provisions (Vernor v. Autodesk, WL 3516435 (9th Cir., 2010)). Such contractual
limitations on resale do not apply if the court finds under the circumstances that
the copyright has transferred its rights in a particular copy to the acquiring party
(Vernor v. Autodesk, WL 3516435 (9th Cir., 2010)). However, right to resell digital
content, that is works subject to technology protection measures, is an ongoing
issue in the United States. The one district court ruling against exhaustion of digital
works based its decision on the recopying of the work by the purchaser in reselling
the technologically protected work (Capitol Records v. Redigi, WL 1286134
(SDNY, 2013)). According to the court, copyright exhaustion does not permit
recopying the work since unlimited copying would lower the demand for the
original work. However, the purchaser could resell the protected work as embodied
in a physical medium (such as a digital player or a personal computer) as long as no
new copies were made. The application of copyright exhaustion to digital works
will be of continued importance as more content migrates to electronic formats.
The contemporary version of copyright exhaustion in the United States has roots
that go back at least a century and illustrates the tailoring of the doctrine to specific
works and uses. One overarching question that was resolved by the Supreme Court
in 2013 is the application of copyright exhaustion to cross-border transactions.
Although this question had been controversial for over a decade, the Court decided
in favour of the principle of international exhaustion in its decision in Kirtsaeng
v. John Wiley & Sons, 133 U.S. 1351 (2013).
The debate over international copyright exhaustion had its origins in the case of
Quality King v. LAnza, 523 U.S. 135 (1998). Here, a controversy arose over the
grey market sales of cosmetics bearing labels copyrighted in the United States. The
facts in Quality King entailed the resale in the U.S. of cosmetics bearing
copyrighted labels by a parallel importer who had bought these products overseas
and was arbitraging the global price differential for the products. The products
themselves were initially exported from the United States, but made their way back
into the American market through the round trip of global sales. While the owner
of the copyright in the labels (also the manufacturer of the cosmetics) claimed that
the act of importing the products into the United States was a violation of the
distribution right, the importer asserted the exhaustion doctrine through the first sale
defence. However, it was not clear as a matter of statutory interpretation whether
the first sale doctrine under section 109(a) applied to the importation right under
section 601. For the courts, the issue was purely one of statutory interpretation.
Since section 109(a) was stated as a limitation on section 106(3), it was not clear
64
S. Ghosh
that the limitation would apply to the separate statutory provision establishing the
importation right. The Supreme Court ultimately ruled in Quality King that section
109(a) was a limitation on the rights under section 601 since section 601 was
written to be a part of the distribution rights under section 106(3).
Although a relatively straightforward matter of statutory interpretation, several
controversies were buried within the Quality King case. First, the United States
government position in the case was that the first sale defence did not apply to the
importation right as importation entailed the movement of goods across borders as
distinct from the sale of goods. The Court in Quality King rejected this view since
the first sale doctrine would then apply to the sale of a work. Application of the first
sale doctrine would then rest on whether there had been a sale triggering exhaustion. Whether there was a separate importation right involving the movement of
goods would not negate any application of exhaustion to the sale of the imported
goods.
Although the 1998 Court in Quality King seemingly gave a definitive negative
response to the U.S. governments view in that case, Justices Kagan and Alito in the
2013 Kirstaeng decision authored a concurrence suggesting that perhaps the United
States government in Quality King had been correct. So, it appears that the issue
about the treatment of importation as physical movement of goods still potentially
remains open.
The second controversy in Kirtsaeng arises from the nature of the transaction
triggering exhaustion. At issue in the earlier Quality King case was a round trip,
meaning that the goods were originally exported from the United States before,
after several transactions overseas, being imported back into the country. Justice
Ginsburg in a separate opinion stated that the first sale doctrine applied only to this
scenario (Quality King v. LAnza, 523 U.S. 135, 154 (1998)). Subsequently, lower
courts followed Justice Ginsburgs analysis to conclude that the first sale doctrine
applied only to goods that originated from the United States (see, e.g., Omega SA
v. Costco Wholesale Corporation, 541 F3d 982 (2008)). Some courts adopted even
a stronger limitation: to require that the copyrighted works be manufactured in the
United States in order for exhaustion to apply to the importation of the goods into
the country (see, e.g., Columbia Broadcasting Systems v. Scorpio Music Distributors, 569 F Supp 47 (ED Pa, 1983). A few courts, however, have held that the first
sale doctrine applied to all copyrighted goods regardless of place of manufacture or
sale (see, e.g., Denbicare USA v. Toys R Us, 84 F3d 1143 (1996). This last position
is referred to as international exhaustion, which is the principle adopted by the
Court in the 2013 Kirstaeng decision.
At issue in Kirstaeng was the purchase overseas of text books manufactured and
marketed by the copyright owner, Wiley Publishers, for the Thailand market.
Kirstaeng, a Thai student in the U.S., had bought large quantities of the text
books at the low price for which they sold in Thailand and imported them into
the United States for resale at the higher price obtainable in the United States
market. Wiley, as copyright owner, asserted violation of its importation and distribution rights. Kirstaeng asserted exhaustion through the first sale doctrine. The
majority of the Supreme Court found for Kirstaeng on the grounds that there was no
65
geographic limitation on the first sale doctrine in the statute, in case law, or from a
policy perspective.
With respect to the statute, the Court addressed the language lawfully made
under this title, which some courts had interpreted to mean made in the United
States. The Court rejected this reading because under this title does not have a
geographic meaning. Instead, the phrase refers to the source of legal authority for
making a work. Such legal authority would not extend to pirated or counterfeited
works. But in this case Wiley had authorised the manufacture and sale of the books
in Thailand.
Further, the roots of the first sale doctrine in case law did not support a
geographic limitation. On this point, the Court majority refers to Bobbs-Merrill
and the broad policy goals of dissemination to the public articulated in that
precedent (Kirtsaeng v. John Wiley & Sons, 133 U.S. 1351, 1363 (2013)).
Finally, as a policy matter, the Court majority expressed concern with the
uncertainty created in domestic markets about the applicability of the first sale
doctrine to copyrighted works that would involve many countries of origin with
respect to either manufacture or sale (Kirtsaeng v. John Wiley & Sons,
133 U.S. 1351, 1365 (2013)). For example, if there is a geographic limitation, a
purchaser of a product containing copyrighted software may not be able to resell the
item domestically if the software originated overseas. International exhaustion was
held by the majority to be consistent with the statute, judicial precedent, and
copyright policy.
The three dissenting judges (Justices Ginsburg, Scalia, and Kennedy) read the
statute as limiting first sale to works that originated in the United States. They
emphasised that limiting copyright owners rights to prevent imports would allow
unscrupulous importers to bring works produced without the authority of the United
States copyright owner into the country. Therefore, the three justices advocated for
a much narrower exhaustion principle, one limited to national boundaries. Even
though Justices Kagan and Alito, in concurring with the majority, agreed with the
majority on adopting international exhaustion, their concurring opinion expresses
sympathy with the dissenting argument. But ultimately, Justices Kagan and Alito
concluded that adopting international exhaustion was consistent with precedent.
However, their concurrence, taken together with the opinion of the three dissenters,
suggests that the issue of international exhaustion may be settled only temporarily.
4 Aronson v. Quick Point and the Preemption Issue

As further illustration of the range of incentives that inform intellectual property
systems in the United States, consider the Supreme Courts decision in Aronson
v. Quick Point Pencil, 440 U.S. 257 (1979). At issue in this 1979 ruling is the
interplay between contract and patent law in terms of the incentives to create and
propagate new technologies. Just as Eldred v. Ashcroft, 537 U.S. 186 (2003), in the
copyright context, does not directly confront the question of exhaustion, so
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S. Ghosh
Aronson, in respect of patent, deals with a separate issue, that of the conflict
between federal and state law under the American system of federalism. Both
Eldred and Aronson, however, teach about incentives and have implications, as
will be addressed in the next section, for limitations on intellectual property rights
and the perceived loss of incentives.
When Aronson invented a new key chain, consisting of a sliding ring locking
onto a curved metal holder, she did not realise that her acts and the ensuing
litigation would produce a critical case relating to intellectual property and
commercialisation. Aronson negotiated a manufacturing license with Quick Point
while her patent application was pending. Under the terms of this license, Quick
Point would produce the key chains and distribute them in exchange for a payment
of royalties from its sales. The royalties were subject to an escalator clause which
set a specific rate if the patent were issued and a lower rate if the patent was denied.
The United States Patent and Trademark Office rejected Aronsons application, but
Quick Point manufactured and sold the key chains for several years. After about
fourteen years, at the point when the patent would have expired if it had been
granted, Quick Point questioned whether it should have to pay under the license.
The license was of unspecified duration, and Quick Point was finding that there
were numerous competitors who simply copied Aronsons unprotected design. In
refusing to pay any more royalties, Quick Point relied on Brulotte v. Thys,
379 U.S. 29 (1964), a Supreme Court precedent which ruled that an obligation to
pay royalties post-patent expiration was invalid because of conflict with the limited
patent term. The Supreme Court distinguished Brulotte to rule against Quick Point,
holding that contractual obligations can complement patent law without conflict.
Both the Eldred and Aronson decisions centre on the temporal limitations on
intellectual property rights. In Eldred, the question is when Congress has the power
to extend the term. In Aronson (and its predecessor Brulotte), at issue is the ability
of private parties to extend the effective term through contract. When the Court
created a per se rule against post-expiration royalty payments in Brulotte, the
concern was over the patent owner leveraging its exclusive rights to expand the
scope of the patent beyond the statutory grant. The extreme scenario is of a patent
owner entering into a license with all potential licensees without placing any
temporal limitations on the license obligations. The rule in Brulotte prevents this
extreme scenario by ending the license when the patent terminates absent some
shorter term specified in the agreement.
Quick Point extended the reasoning of Brulotte to the scenario when a patent was
not granted. If a patent on an invention was denied, and the invention is not
otherwise protected, there is no consideration for the royalty payments. Aronson
was effectively leveraging the promise of a patent to obtain exclusive rights she did
not have. Furthermore, if any inventor was allowed to do what Aronson had done,
namely obtain protection for an un-patentable invention through contract, then
Quick Point questioned what incentive would exist to enter the patent system at
all. Enforcing contracts like the one between Aronson and Quick Point conflicts
with the incentives of the patent system to obtain exclusive rights for inventions that
meet the requirement for patentability.
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The Court rejected the conflict argument, concluding that contract incentives
complemented those provided by patent law. In broad terms, contract facilitates the
commercialisation of patented invention by allowing patentees to monetise rewards
that flow from exclusivity. Even in the case of non-patentable inventions, contract
can create incentives for an inventor to pursue a patent grant through escalating
licensing terms. Although parties may not always be able to predict whether a
patent will be granted, the possibility of obtaining a higher royalty rate or other
contractual payment does create incentives for an inventor to file an application.
Furthermore, even if an invention is non-patentable, contracting for the use of the
invention can help defray any expenses associated with producing the work. Since
an inventor may invest in a range of inventions, some patentable, some not, contract
allows the recoupment of fixed costs associated with research and development.
Since the exclusivity established by contract is much narrower than that created by
property, which creates rights against the world, contract provides benefits without
attendant costs from exclusivity. If there is a concern with abusive leveraging, the
licensee can always propose terms for time limiting the contract or lessening its
burden through other means. In short, contract creates its own set of incentives that
work in tandem with patent incentives for the creation and dissemination of new
works.
Post-expiration royalties may serve many valid purposes that reinforce the goals
of patent law. By potentially lowering payments over time, licensees may be more
willing to enter into agreements with patentees for use of a technology. Royalty
payments, although enforceable by patent law remedies, arise from contracting
terms that bind only the parties and not the rest of the world. Should post-expiration
payments be burdensome or the product of abusive leveraging, contract law doctrines can serve to limit their enforcement and anti-trust law can sanction the
patentee. For these reasons, the Brulotte decision is the object of criticism, but in
2015, the Supreme Court affirmed precedent in Kimble v. Marvel Enterprises,
135 U.S. 2501 (2015).
Although as of this writing, we do not know whether and how the Court will
overrule Brulotte, the Aronson decision is the applicable guide for how we should
understand intellectual property incentives. The Courts opinion in Aronson emphasises the importance of contract law in providing incentives for inventors and patent
owners. As pointed out above, these incentives complement the exclusivity of
patents. But these incentives also exist absent the grant of a patent. Even for
un-patentable inventions, contract law provides incentives for undertaking the
quest for a novel and nonobvious invention. Should that quest succeed, then
contract law offers tools for commercialising patent rights. But even if the quest
fails, contracts can provide alternatives that aid in obtaining a return on the research
and development investment. For Eldred, returns through contract may have
spurred his decision to pursue a business model based on public domain works.
More generally, contract is available for all unprotected creations, both those that
have fallen out of protection and those not eligible for protection because of failure
to meet legal standards.
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S. Ghosh
One may wonder whether contracts provide as much incentive as exclusive

intellectual property rights. But this query raises the problem, discussed above, of
how to gauge the magnitude and effectiveness of incentives. Exclusive intellectual
property rights may create incentives for creation and invention. But they may also
serve as disincentives for those who are seeking new business models or forms of
creativity and invention. In the case of Eldred, a digital publisher was willing to
undertake a venture absent any ostensible intellectual property protection. Instead,
working with contract and other business tools, Eldred was drawing on public
domain works to collect and distribute them. Similarly, Quick Point was making
and marketing an unpatented invention for the effective life of the ungranted patent.
It was only the expiration of the shadow patent term that spurred Quick Point to
rely on the highly criticised precedent in Brulotte to escape from its contractual
obligations. While Quick Point argued that Aronsons contract undermined incentives for patenting the keychain, it could equally be argued that non-enforcement of
the contract undermined incentives for Aronson to seek commercialisation of her
creation.
A sceptical reader may cast this argument as suggesting that contract law is a
substitute for patent law. No such argument is here being made. Justice Kagan
characterised the exhaustion argument in Bowman as promoting substitution of
contract protection for patent protection. But that is a mischaracterisation of how
contract and patent work together, whether in the context of pre-emption as in
Aronson or in the context of exhaustion (as will be explained in more detail in the
third section of this chapter). As the Court in Aronson emphasised, contract law
does not displace patent law. Instead, the two are complements, even in cases where
no patent is granted.
To understand that point more fully, note that the process of invention and
product development is a risky one. The question is who should bear the risk. If a
patent is granted, the patentee can, in theory and often in practice, recoup the costs
of development. The risk undertaken by the inventor is effectively spread through
monopoly commercialisation of a patent to the rest of society. Rights against the
world can be characterised as a form of risk spreading. Users of the patented
product bear the risk through higher priced products. But they gain through
presumably useful, novel, and nonobvious products (if these gains are not present,
the patent is invalid). Contract allows risk sharing for specific ventures within the
commercialisation process between the inventor and manufacturers and distributors. What Aronson allows is for the inventor to share the risk of the failure of patent
issuance with a licensee. An inventor, like Aronson, bears the risk of non-issuance
in the form of lower royalties. A licensee bears the risk of paying for an invention
that others may be able to copy for free. But one advantage the licensee might gain
is that of being first to market and being able to claim authorisation from the
inventor. Contract and patent work in tandem to allocate these and other identifiable
risks in the development and commercialisation process.
69
To summarise, contract and patent are complements. This conclusion should not
be surprising. The counterintuitive point is that contract law can complement patent
law even if a patent is not granted. Contra Justice Kagans doubt about contract in
the Bowman oral argument, the complementary role of contract as incentive exists
even when patent rights are exhausted. This last point is critical to the argument in
Sect. 3 of this chapter. But before transitioning to the exhaustion doctrine, a few
words about the relationship between license and contract will be useful.
5 Licensing and Contracts

To this point, this chapter has not carefully distinguished between a contract and a
license, but there is an important difference between the two. If a breach of an
agreement constitutes a breach of contract, then contract remedies are available. If,
however, the breach is a violation of a license, then intellectual property remedies
are available. This difference is a matter of both practical and theoretical consequence. Different quantitative remedies, as well as whether or not an injunction is
available, have different implications for the size and target of incentives. For the
purposes of this chapter, the conceptual difference is treated as providing
contrasting implications for remedies. But the underlying question of how to
characterise a breach of an agreement is one of ascertaining what incentives are
desirable and for what purposes. The labelling as contract or license, although
having substantive implications for remedies, is code for what are deemed appropriate incentives.
As illustration of this point, consider the characterisation of a breach as a
violation of a license. Such a characterisation assumes that exclusionary rights
are the proper form of incentives necessary to stimulate creation and dissemination.
Whether this assumption is valid rests in part on empirical findings and in part on
normative contentions. As an empirical question, if it can be shown that more
creativity is not forthcoming because of the characterisation as a license, then one
may wonder whether the license characterisation is desirable. On the other hand, if
there is an observable connection between license remedies and creativity, the
question still remains about whether additional creativity is itself desirable. A
similar point can be made for characterisation as a contract breach. Since contract
remedies are only against parties in privity with the intellectual property owner,
then one may argue that the incentives are less powerful than those provided by
exclusive rights. But the credibility of this argument has rests on empirical and
normative inquiries.
The debate over exhaustion in part rests on contract versus exclusionary remedies. What this section demonstrates, through its consideration of Supreme Court
precedents, is that incentives are complex and apply to many actors within the
system of intellectual property. Rights that provide incentives for original authors
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S. Ghosh
and inventors may create disincentives for consumers and subsequent creators. The
sum total of these incentives and disincentives has implications for the effectiveness of intellectual property in promoting its goals of invention and creativity.
Although all the incentives and disincentives cannot be measured and assessed,
they do come into consideration in terms of how intellectual property law and
policy are made within various institutional domains, whether courts, legislatures,
or private associations. The danger is that decision makers may emphasise some
incentives while ignoring others.
Code, Autonomous Concepts and Procedure:

Stepping Stones for European Law?
Alison Firth
Abstract Two propositions are advanced in this paper as important to development of intellectual property in the European Union:
1. Judicial development of law is often seen as a feature of the common law
(as opposed to civil law) world; but is at work in the European Union on
intellectual property issues.
2. In intellectual property and related rights, procedure and remedies govern what
issues come into prominence.
Examples of these in European Union law-making on intellectual property will
be identified. Code or procedure have already driven developments in trade mark
and design law through interpretation of European Union legislation, and in trade
secrets where a proposed directive was arguably driven by the exclusion of trade
secrets from Directive 2004/48/4EC on enforcement of intellectual property rights.
When in operation, the Unitary Patent Regulations and the rules of the Unified
Patents Court may become stepping-stones for future development.
1 Introduction
This paper makes two propositions and considers their effect on current and future
development of intellectual property (IP) law in the European Union (EU). The
first proposition is that, although judicial development of law is often seen as a
feature of the common law world (as opposed to the civil law world); it is hard at
work on intellectual property (IP) law in the EU. In the Court of Justice of the EU, it
A. Firth (*)
University of Surrey, Guildford, UK
Newcastle University, Newcastle upon Tyne, UK
Queen Mary University of London, London, UK
e-mail: alison.firth@newcastle.ac.uk
DOI 10.1007/978-3-319-31177-7_5
71
72
A. Firth
is achieved through interpretation, of treaty provisions, directives and regulations,

to identify and craft autonomous concepts. These in turn may inform revision of
the EU legislative texts.1
The use of autonomous concepts could be seen at work in the European
Commission and Court of Human Rights (see Letsas 2004).2 In the Court of Justice
of the EU (CJEU) the doctrine of autonomous concepts may have spread from
interpretation of free-standing customs and tax provisions3 into other areas, including IP, where partially developed EU law lies alongside the laws of Member States.
As Margoni points out elsewhere in this volume,4 express powers relating to
intellectual property appeared only in the Lisbon Treaty on the Functioning of the
EU, but nearly all the accumulated body or acquis of legislation in the area IP
predates those powers. Harmonisation is incomplete, but the CJEU in its interpretation of existing provisions is developing autonomous concepts of wider potential
application. In some cases these may operate to mitigate the ratcheting up of IP
rights identified by other contributors.5
The second proposition is that, for IP and related rights, procedural and remedial
laws are of especial importance and often govern what substantive issues come into
prominence.6 Suzors paper in this volume7 demonstrates how general procedural
and substantive laws on contributory liability and the joinder of defendants have
come into focus in the online enforcement of IP. Other possible propositions, that
technology and social change drive developments in IP law, are the subject of other
papers in this collection.
Based on examples of the two propositions in action, one may predict that the
forthcoming Unitary Patent and cases of the Unified Patent Court will provide
further opportunities for development of patent law, despite attempts to keep key
concepts out of the reach of the CJEU.
1
It may possibly exert influence in other areas of the world, especially where WTO TRIPs
language derives from EU legislative text (see Firth 2015).
2
Note that the European Convention and Court on Human Rights are distinct from the EU treaty
and its institutions, see next section.
3
Vousden charts and criticises this leap in the application of the doctrine of autonomous concepts
(Vousden 2010, citing C-61/94 Commission of the European Communities v. Germany [1996]
E.C.R. I-3989, [52]); Autonomous concepts are still alive and well in taxation (C-464/12 ATP
Pensions v. Skatteministeriat [2014] Pens. L.R. 223, [40]).
4
See Thomas Margoni, The Harmonisation of EU Copyright Law: The Originality Standard, this
volume (sixth chapter).
5
Ibid.
6
I am grateful to Prof Mario Franzosi for introducing me to this proposition, many years ago.
7
See Nicolas Suzor et al., Moments of Flux in Intermediary Liability for Copyright Infringement
in Australia, this volume (eighth chapter).
Code, Autonomous Concepts and Procedure: Stepping Stones for European Law?
73
2 Quick Background on EU and Its Court of Justice

Before exploring the propositions further, it may be helpful to outline some
background. The current international basis of the EU, that governs relations
between its member states and contains legal principles and powers on which EU
law is based, is the Treaty on the Functioning of the European Union (2012) O.J. C
326 (TFEU). In the days of the original Treaty of Rome, early decisions of the Court
of Justice established the autonomy of EU law and the possibility of its direct effect
against the state (C 26/62 NV Algemene Transporten Expeditie Onderneming van
Gend en Loos v. Nederlandse Administratis der Belastingen [1963] E.C.R. 1).
There are other, distinct, European treaties and institutions. One is the European
Patent Convention (2013), administered by the European Patent Office. Certain
aspects of EU law, such as Directive 98/44/EC on the legal protection of biotechnological inventions and its interpretation, have influenced the application of the
European Patent Convention through the administrative regulations and guidelines
of the European Patent Office (as noted by A-G Jacobs in Netherlands v. European
Parliament and Council of the European Union [2001] E.C.R. I-7079, [51]).
Another is the European Convention on Human Rights (2010) (ECHR), to
which EU Member States must adhere. Its guarantees of rights to possessions/
property,8 fair trial, privacy, freedom of expression, and so forth, and these are
mirrored in EU Charter of Fundamental Rights (2000). This has become binding
upon Member States when applying EU law, since the Lisbon Treaty came into
force in 2009 (see European Commission 2015).9
Along with its individual Member States, and as of 1 January 1995, the EU is a
member World Trade Organisation as an Inter-Governmental Organisation (see
WTO 2015). The EU is therefore signatory to the WTO TRIPS agreement. This is
reflected, for example, in Recital 4 of Directive 2004/48/EC on the enforcement of
intellectual property rights. The Infosoc directive (Directive 2001/29/EC on the
harmonisation of certain aspects of copyright and related rights in the information
society) was promulgated partly to ensure compliance with the WIPO treaties of
1996 (see Recitals 15 and 61).
EU Institutions include the European Commission, which exercises all the three
administrative powers of state identified by Montesquieu as requiring separation
(Charles-Louis de Secondat 1748):
legislativeby proposing legislation and promulgating legislation under delegated powers
An autonomous concept, confirmed to apply to intellectual property in Anheuser-Busch

v. Portugal (2007) A.N. 73049/01 ECtHR Grand Chamber, [63].
9
The Charter also contains rights not embodied in the ECHR, such as data protection. Plans and
mechanisms for the EU to accede to the ECHR have proved controversial (see C-2/13 Opinion of
the Court (Full Court) of 18 December 2014, ECLI:EU:C:2014:2454 and, for example, de Werd
2015).
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A. Firth
executiveas guardian of treaties, administration of laws, e.g. providing administration for Community Designs trade markets
judiciale.g. ruling on competition law infringements
The European Parliament shares the legislative process, with debates and committee proceedings, while sign-off of legislation by relevant ministers of Member
occurs in the Council of Ministers. EU law, where it exists, enjoys supremacy over
the national laws of EU Member States.
The Court of Justice hears references on interpretation of EU law from Member
states; appeals and staff cases from the Commission and other EU institutions via
the General Court or the Civil Service Tribunal. Features of the Court of Justices
procedure include Advocate-Generals opinions; and these often contain more
detailed reasoning than the courts rulings of the court, and may introduce matter
additional to that raised by the parties advocates. The Court issues reasoned
judgments and its rulings are unanimous (Beck 2013).10 The pool of judges for
the Bench is drawn from EU Member States (see generally European Union
Committee 2011, Chapter 2; European Union 2015).
EU law includes the concept of acte clair, whereby Member States courts
follow EU law where it is clear11 but make preliminary references12 to the Court of
Justice under TFEU article 267 where it is not.13 This is not quite a doctrine of
precedent but brings the need for transparency and detail in judgments.14 Nowadays
the judgments cite previous case-law and there are signs of the Court of Justice
distinguishing (see e.g. C-100/01 Ministre de lInterieur v. Aitor Oteiza Olazabal
[2002] E.C.R. I-10981, [36]) as well as applying previous rulings.15 Occasionally,
one sees explicit over-ruling of earlier judgments (but see C-267/91 and C-268/91
Keck and Mithouard [1993] E.C.R. I-6097, [15][16]).
10
Teleological or purposive interpretation and an integrationist stance are said to be characteristic

features of the CJEUs reasoning, although Beck has argued that differences from the reasoning of
national higher courts are less than often supposed. He analyses its approachesliteral, systemic
and purposive (see Beck 2013).
11
Clear meaning being the correct application of Community law may be so obvious as to leave
no scope for any reasonable doubt as to the manner in which the question raised is to be resolved
(C-283/81 Srl CILFIT and Lanificio di Gavardo SpA v. Ministry of Health [1982]
E.C.R. 3415, [16]).
12
For procedure, see the Court of Justices Recommendations to national courts in relation to the
initiation of preliminary ruling proceedings [2012] O.J. C 338/1.
13
Martin-Prat notes that referring issues that should already be sufficiently clear can be a problem
(Martin-Prat 2014, 32, citing communication to the public).
14
The Court of Justice refers to ratiodecidendi [sic] in C-310/97 Commission v. AssiDoman
Kraft Products [1999] E.C.R. I-5363, [54].
15
The phrase settled case-law is often used (see e.g. C-128/11 UsedSoft GmbH v. Oracle
International Corp [2012] 3 C.M.L.R. 44, [39]).
75
3 IP Laws in the EU
EU intellectual property law comprises, firstly, harmonising directives in all areas
of IP except plant varieties and (presently) trade secrets. Directives must be
implemented into the domestic laws of Member states, though they may be relied
upon directly in certain circumstances once the implementation date has passed.
Copyright has the most extensive list of harmonising measures, with a long list of
directives in force (see generally European Commission 2014).16 However, some
aspects remained un-harmonised, especially the concept of a protected work (van
Eechoud 2012).
Directive 2004/48/EC on the enforcement of intellectual property rights cuts
across the rights,17 providing for interim, evidential and final measures.18 In its
approach to financial remedies, it cuts across the traditional divide between compensatory damages and accounts of profits to divest an infringer of wrongful gains. I
have argued elsewhere that courts should use a cascade approach in deciding the
basis of a financial award (Fitzgerald and Firth 2014); Chinas Patent Law already
requires such an approach (Patent Law of the Peoples Republic of China (1984)
article 65).
As well as directives to harmonise the laws of Member States, there are
regulations creating unitary, EU-wide rights for trademarks, designs and plant
varieties and EU private international law regulations
Brussels Regulation (jurisdiction and enforcement)
Rome I (applicable law, contract)
Rome II (applicable law, non-contractual obligations)
The specifics of these legislative codes require interpretation from time to time;
though this process, they provide the raw material with which the Court of Justice
has fashioned a number of binding autonomous concepts, sometimes using purposive/teleological interpretation to stray in surprising ways from the text.
16
Discussed by Thomas Margoni, The Harmonisation of EU Copyright Law: The Originality

Standard, this volume (sixth chapter).
17
Trade secrets are not considered intellectual property for the purpose of the enforcement
directive (Bronckers and McNelis 2012).
18
Effectively in accordance with WTO TRIPs, preserving Member States obligations thereunder
(see Directive 2004/48/EC on the enforcement of intellectual property rights cuts across the rights,
Recitals 4,5,7 and article 3(b)).
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A. Firth
4 Proposition 1: Judicial Development of IP Law at Work

in the EU
Judicial development of IP law occurs when EU code in the form of legislation
(directives, regulations) is referred to the Court of Justice for interpretation, for
preliminary rulings under article 267 TFEU, as outlined above. As Stamatoudi
and Torremans (2014, 416) point out, this may result in the clarifying of a
harmonised provision but also extension of harmonisation where the court rules
that a term should be construed in an autonomous and uniform manner throughout
the EU. The framing of autonomous concepts is said to arise where
. . . the need for a uniform application of EU law and the principle of equality require that
the terms of a provision of EU law which makes no express reference to the law of the
Member States for the purpose of determining its meaning and scope must normally be
given an independent and uniform interpretation throughout the European Union; that
interpretation must take into account the context of the provision and the objective of the
relevant legislation (C-467/08 Padavan v. SGAE [2010] E.C.R. I-10055, emphasis
added).19
Some instances of the autonomous concept do stem from explicitly harmonising

text. For example the code defining originality for the purpose of copyright in
software, in photographs and in databases was expanded into a more general
autonomous concept through Infopaq, BSA and Painer. However, as the quote
from Padavan demonstrates, the absence of reference to laws of Member States
is sufficient.
Some other examples of autonomous concepts, arranged by area of IP, are set out
in the Table 1. (The table is intended to be illustrative, rather than exhaustive.)
In framing autonomous concepts, CJEU may refer to other Treaty and Charter
principles, e.g. non-discrimination, as in Deckmyn (Rosati 2014), or perhaps the
maintenance of cultural, religious and linguistic diversity as required by the Charter
of Fundamental Rights article 22.
The Court of Justices rulings have led to some surprising results. For example,
the concept of double identity trade mark infringement (identical marks used in
relation to identical goods or services to the registration) was said to be absolute in
Directive 2008/95. However, the CJEU has conceived it as importing a requirement
of adverse effect on the trade marks functions (see C-323/09 Interflora Inc
v. Marks & Spencer Plc [2011] E.C.R I-08625, a case on a Google Adword
paid for by a company unrelated to the trade mark proprietor).
19
Identical judicial text can be traced back to non-IP cases, notably C-357/98 R v. Secretary of
State for the Home Department, Ex parte Yiadom [2000] E.C.R. I-9265, [26]. Many IP cases
contain an identical or similar form of words, including C-245/00Stichting ter Exploitatie van
Naburige Rechten (SENA) v. Nederlandse Omroep Stichting (NOS) [2003] E.C.R. I-1251, [23];
C-40/01 Ansul BV v. Ajax Brandbeveiliging BV [2003] E.C.R. I-2439, [26]; C-306/05 SGAE
v. Rafael Hoteles SL [2006] E.C.R. I-11519; C-510/10 DR and TV2 Danmark v. Nordisk Copyright
Bureau [2012] ECLI:EU:C:2012:244.
77
Table 1 Autonomous concepts

Patent
Human embryo in Directive 98/44/EC article 6(2)(c)
C-34/10 Br
ustle v. Greenpeace [2011]
E.C.R. I-9821
C-364/13 International Stem Cell
v. Comptroller of Patents [2014] ECLI:EU:
C:2014:2451
Trade mark (see generally Maniatis and

Botis 2009)
Bad faith, in the context of Directive 2008/
95 article 4(4)(g)
C-320/12 Malaysia Dairy v. Ankenaevent for
Patenter og Vatemaerker [2013] ECLI:EU:
C:2013:435
Genuine use
C-40/01 Ansul BV v. Ajax Brandbeveiliging
BV [2003] E.C.R. I-2439
C-149/11 Leno Marken v. Hagelkruis Beheer
BV [2012] ECLI:EU:C:2012:816
Acquiescence
C-482/09 Budejovicky Budvar Narodni
Podnik v. Anheuser [2012] E.T.M.R. 2
Copyright/authors right
Parody in Directive 2001/29 article 5(3)(k)
C-201/13 Deckmyn v. Vandersteen [2014]
ECLI:EU:C:2014:2132
Equitable remuneration
C-245/00 Stichting ter Exploitatie van
Naburige Rechten (SENA) v. Nederlandse
Omroep Stichting (NOS) [2003] E.C.R I-01251
C-572/13 Hewlett-Packard Belgium SPRL
v. Reprobel SCRL [2015] ECLI:EU:C:2015:750
Fair compensation
C-521/11 Amazon.com v. Austro-Mechana
[2013] ECLI:EU:C:2013:515
By means of its own facilities C-510/10 DR
&TV2 v. Nordisk [2012] ECLI:EU:C:2012:244
Communication to the public by satellite
C-431 and 432/09 Airfield v. SABAM [2011]
E.C.R. I-09363
Sale
C-128/11 UsedSoft v. Oracle [2012] ECLI:EU:
C:2012:407
Private international law of IP
Jurisdiction to be assessed using autonomous
concepts of infringing acts from Directive
2001/29
C-170/12 Pinckney v. KDG Mediatech [2013]
ECLI:EU:C:2013:635
Civil and commercial matters C-406/09
Realchemie NL v. Bayer Cropscience
[2012] I.L.P.R. 1
EU laws, as many others, adopt a practice of granting exclusive property rights

to the author, inventor, innovator, etc. The rights are framed to benefit the holder
and arguably the public at large, such as by stimulating creation, innovation, and the
development of a financially viable independent press. Questions of benefit and
harm are usually postponed, howeverto private ordering in licence negotiations,
to exceptions and limitations and ultimately to the courts assessment of quantum.
By importing the issue of harm into the exclusive rights themselves, the Court of
Justice has shown that it can rein in the expansion of rights, albeit at the expense of
legal certainty.
78
4.1
A. Firth
Criticism of Autonomous Concepts
A number of criticisms may be levied at the process of crafting autonomous

concepts. The most general is directed against the process itself, as being judicial
activism and lacking democratic integrity (see generally Bengoetxea 2015), especially when taken in combination with the Courts practice of rewriting questions
set by the referring courts. Faeh marshals a number of reasons why the Court of
Justice should have refrained from defining human embryo in the Brustle and
International Stem Cell cases (Faeh 2015, 622625). An important argument is that
article 6 of the biotech directive leaves a margin of appreciation to Member States.
The general criticism could be countered in a number of ways. The composition
of the Court of Justice is drawn from all EU member states. Pro-active tendencies of
the Court of Justice might be seen as corrective of a democratic deficit in EU law
making (see Lenaerts 2013). Further, the courts decisions sometimes limit as well
as clarify the scope of IP rights, in a way that the legislature has found difficult to
achieve.20 In this regard, the CJEU may be compared with the US Supreme Court,
whose recent case law might also be seen as reining in IP (see e.g. Alice Corp v. CLS
Bank International (2014) 134 S. Ct. 2347).
Lastly, the framing of autonomous concepts is a common and legitimate activity
of international decision-making generally, as tribunals seek to make a system
workable. As well as the CJEU and European Court of Human Rights, international
arbitration is a scene for the creation of autonomous concepts, for example due
process (Mistelis 2009).
The second class of criticism is the way in which the autonomous concepts are
arrived at. As well as the particular code under interpretation, the decision-maker
usually refers to outside benchmarks. Letsas refers to the laws of Member states as
only a starting point for the European Court of Human Rights. Ideally an autonomous EU legal concept should blend as harmoniously as possible with national
laws of EU Member States. However, the Court of Justice has been criticised, by
Vousden, for (rather surreptitiously) lifting its so-called autonomous concepts
from the doctrine of Member States, particularly France (Vousden 2011) and
Germany (Vousden 2010). Rahmatian, discussing Infopaq and related cases, doubts
that the autonomous concept of originality is the authors right standard (Rahmatian
2013).
Another source of inspiration or autonomous concepts is international law
(Wessel and Blockmans 2013). Not surprisingly, since the EU is party to IP treaties
such as WTO TRIPs, the Court takes pains to ensure that autonomous concepts are
consistent with the EUs and Member States obligations under those treaties. In
SGAE, the international treaties (TRIPS, Berne Convention, WIPO Copyright
Treaty, WIPO Performances and Phonograms Treaty) get pole position in the
judgmentthey are cited in the first ten paragraphs, before the court even gets to
20
This is partly due to TFEU article 345, which states The Treaties shall in no way prejudice the
rules in Member States governing the system of property ownership.
79
the EU provisions (C-306/05 SGAE v. Rafael Hoteles [2006] E.C.R. I-11519).

However, Vousden has sounded a note of caution, and applauds the decision in
Airfield for breaking free from citation of international law (Vousden 2012; see also
C-431/09 Airfield NV v. Belgische Vereniging van Auteurs, Componisten en
Uitgevers CVBA [2012] E.C.D.R. 3). A further drawback of international law as
the basis for autonomous concepts in the EU is that, Marrakesh Treaty apart,
following international law will tend to enhance the ratchet effect.
The final source of inspiration is other aspects of EU law, either the area in
question or related areas. Thus, IP laws may be interpreted by reference to related
Treaty goals such as market integrationthe completion of a single internal market
for goods and services. As the number of autonomous concepts in a given area of IP
increases, they will tend to merge or collide to create a pointilliste landscape. At this
point, earlier autonomous concepts will become a reference point for subsequent
concepts, so as to achieve coherence in completing the picture. This approach may
be observed in Airfield v. Belgische Vereniging van Auteurs, Componisten en
Uitgevers CVBA [2012].
4.2
Private Code as Raw Material for the Generation

of Autonomous Concepts?
As well as harmonising measures and EU-wide rights, intellectual property in the

EU has also been the subject of private initiatives to identify common ground, in
particular the Wittem European Copyright Code (see European Copyright Code
2012). The website states:
The aim of the Wittem Project and this Code is to promote transparency and consistency in
European copyright law. The members of the Wittem Group share a concern that the
process of copyright law making at the European level lacks transparency and that the
voice of academia all too often remains unheard. The Group believes that a European
Copyright Code drafted by legal scholars might serve as a model or reference tool for future
harmonization or unification of copyright at the European level. Nevertheless, the Group
does not take a position on the desirability as such of introducing a unified European legal
framework.
Writing of contract law in 2001, Berger (2001) explores a process of creeping

codification, assisted by soft law initiatives such as the Lando-Beale Principles of
European Contract Law. He detects a gradual convergence of civil and common
law mechanisms in Europe.21 As a process of bottom-up harmonisation, Berger
regards creeping codification as greatly assisted by specific, written, instances,
which can be the subject of recognition and acceptance, in teaching and scholarship
as well as in the courts. He argues that creeping codification is to be preferred over
21
For a map showing the civil law/common law balance of Member States within the EU, see
(Wikipedia 2015).
80
A. Firth
big-bang codification. It is submitted that the Wittem copyright code can contribute in a similar manner to the development of copyright law in Europe.
Would such a process of creeping codification of copyright lack accountability? Pauwelyn et al. (2014) have studied informal processes in international
law-making and consider this problem. For law making, as for technical standardsetting, they argue that procedural integrity and stakeholder consensus provide
adequate meta-norms or benchmarks.
In conclusion, interpretation or adoption of these codes by the Court of Justice
is likely to generate an autonomous landscape. This landscape is likely to be
extended into patent law by the Unified Patent and Unified Patent Court, discussed
below. Given the explicit powers of the EU regarding intellectual property and its
membership of the WTO, patent law concepts may also be developed to a greater
extent by the CJEU via interpretation of TRIPs (C-414/11 Daiichi Sankyo Co Ltd
v. DEMO Anonimos Viomikhaniki kai Emporiki Etairia Farmakon [2014] Bus.
L.R. 1; Dimopoulos and Vantsiouri 2014).
5 Proposition 2: Procedure Drives Substantive Legal

Development
The interest of the rights-holder in maintaining exclusivity means that non-money
remedies and fast provisional measures are especially important in IP. This can
been seen from
inclusion of procedural and remedial rules in WTO TRIPs
importance of IP cases in developing remedies and procedures, such as search
and seize orders, border measures
development of EU rules on jurisdiction and applicable law that cater especially
for IP cases
the promulgation of EU enforcement directive 2004/48/EC
This last instrument was later accompanied by Statement by the Commission
concerning article 2 of Directive 2004/48/EC of the European Parliament and of the
Council on the enforcement of intellectual property rights (2005/295/EC) listing
the varieties of IP to which the directive applied. Trade secrets are not mentioned,
despite TRIPs article 39.
In 2013, the European Commission issued a proposed directive on protection of
trade secrets (European Commission 2013). An inter-institutional agreed text was
issued in December 2015 (Council of the European Union 2015) and on 14 April
2016, the European Parliament agreed the text without further amendment
(European Parliament 2016). It is likely to pass into law in summer 2016, with
two years for member states to implement its provisions. Trade secret protection
was not previously harmonised in the EU; in some member states unfair competition rules are used (as envisaged by TRIPs reference to article 10bis Paris).
81
In others, such as the UK the action for breach of confidence is used, and the
provisions of the enforcement directive are considered to apply, as permitted by EU
law. This situation is seen by the Commission as detrimental to cross-border
innovation and business competitiveness.
The proposal defines trade secret as meaning
. . ..information which meets all of the following requirements:
(a) is secret in the sense that it is not, as a body or in the precise configuration and
assembly of its components, generally known among or readily accessible to persons within
the circles that normally deal with the kind of information in question;
(b) has commercial value because it is secret;
(c) has been subject to reasonable steps under the circumstances, by the person lawfully
in control of the information, to keep it secret.
The proposal has been criticised and, if adopted, may raise as many problems as
it solves. Aplin (2014) outlines some of the definitional problems and uncertainties,
including
unclear status of commercially valuable private information (think celebrities)
whether the steps under (c) will be assessed on a subjective or objective basis
whether Member states that apply the enforcement directive to trade secrets
under their national rules will be obliged to do so here.
It is submitted that many of the problems identified by the Commission could
have been solved by extending the enforcement directive. The trade secrets proposal may be seen as a response to a procedural problem, the non-application of the
enforcement directive.
5.1
Patents Predictions
The EU is in the process of developing a system of unitary patent rights, whereby a

successful application to the (non-EU) European Patent Office (EPO) may result in
a single patent covering most EU Member States, as well as patents for other
designated states of the European Patent Convention (Lovells 2015). The proposals
also provide for a Unified Patent Court, in which patents may be litigated with
EU-wide effect (Unified Patent Court 2015).
Spain and Italy have been dissatisfied with the proposed language regime, which
does not include Spanish and Italian among the official languages (English, French,
German, as in the EPO).
Spain challenged Regulation (EU) No 1257/2012, which provided for enhanced
cooperation to bring these developments into being. The first main basis was that
there would be inadequate judicial review of the decisions of the EPO, contrary to
rule of law. On 5 May 2015, the CJEU rejected this challenge (C-146/13 Spain
v. European Parliament & Council of the EU [2015] ECLI:EU:C:2015:298). It also
dismissed Spains challenge to the language regime, in parallel decision of 5 May
2015 (Spain v. European Parliament & Council of the EU [2015]).
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A. Firth
Now that these obstacles to the proposals have been rejected by the Court of
Justice, they will go ahead. This will generate new EU legal code and procedural
rules on patent law. This is likely to provide fertile ground for development of
further autonomous concepts under the code and it is predicted that the procedures
developed for the Unified Patent Court will trigger new developments in IP law
generally, as well as in the area of patents.
One issue that has already come under discussion is whether the UPC should
have discretion to refuse a permanent injunction if infringement has been
established (Marfe et al. 2015). This issue has been especially topical in Europe
after the US Supreme Court in eBay Inc. v. MercExchange (2006) 547 U.S. 388.
6 Conclusion
In the EU, harmonisation of IP law is likely to develop significantly through the
jurisprudence of the Court of Justice, whose crafting of autonomous concepts goes
beyond the mere interpretation of unclear terms in harmonising legislation. Further
legislation is likely to be driven by procedural pressures. The creation of a Unitary
Patent and Unified Patents Court will extend this process further into the field of
patents.
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The Harmonisation of EU Copyright Law:

The Originality Standard
Thomas Margoni
Abstract The first European Union Directive in the field of copyright was enacted
nearly 25 years ago. Similarly to many other directives that followed, that Directive
was vertical in scope, meaning that its harmonising effects were limited to the
specific subject matter therein regulated (in this case, software). Other examples of
vertical harmonisation are found in the field of photographs and databases as well
as in many other European Union directives in the field of copyright, making this
fragmented approach a typical trait of European Union Copyright law
harmonisation. The reason for what could be labelled piecemeal legislation can
be linked to the limited power that the European Union had, until recently, in
regulating copyright. As it can be easily verified from their preambles, all European
Union Copyright Directives are mainly grounded in the smooth functioning of the
internal market. It is the internal marketrather than copyrightthat has driven
the harmonisation of European Union copyright law to date. Nevertheless, if we
look at the entire body of European Union copyright law today (the so called acquis
communautaire) it certainly appears much more harmonised than what may be
suggested by the above. The reason for this unexpected situation can most likely
be found in the fundamental role that the Court of Justice of the European Union has
played in interpreting andsome would arguein creating European Union copyright law. Using the example of the originality standard, this paper offers an
overview of the past and current state of European Union copyright, of the case
law that has allowed the Court of Justice of the European Union to develop and
affirm its own concepts and indicates what could and should be expected for the
future of European Union copyright law.
T. Margoni (*)
School of Law, University of Stirling, Stirling, Scotland
e-mail: thomas.margoni@stir.ac.uk
DOI 10.1007/978-3-319-31177-7_6
85
86
T. Margoni
1 Introduction
Almost 25 years have gone by since the first EU Directive in the field of copyright was
enacted (Directive 91/250/EEC of 14 May 1991 on the legal protection of computer
programs now consolidated in Directive 2009/24/EC of 23 April 2009). As with many
other directives that followed, that Directive was vertical in scope, meaning that its
harmonising effects were limited to the specific subject matter therein regulated
(in this case, software). Similar examples of vertical harmonisation are found in the
field of photographs and databases as well as in almost any other European Union
directives in the field of copyright, making this fragmented approach a typical trait of
EU Copyright law harmonisation. The reason for what could be labelled piecemeal
legislation can be linked to the limited power that the EU had, until recently, in
regulating copyright. As it can be easily verified from their preambles, all EU
copyright directives are mainly grounded in the smooth functioning of the internal
market. It is the internal marketrather than copyrightthat has driven the
harmonisation of EU copyright law to date.
Nevertheless, if we look at the entire body of EU copyright law today (acquis
communautaire) it certainly appears much more harmonised than what may be
suggested by the above. The reason for this unexpected situation can most likely
be found in the fundamental role that the Court of Justice of the European Union
(ECJ) has played in interpreting andsome would arguein creating EU copyright law. Using the example of the originality standard, this paper offers an
overview of the past and current state of EU copyright, of the case law that has
allowed the ECJ to develop and affirm its own concepts and indicates what could
and should be expected for the future of EU copyright law. The paper suggests that
a common set of rules and standards such as those governing originality in copyright are an essential element of any economic and political union, such as the
EU. How to reach these shared standards, that is to say, whether full harmonisation
or unification of EU copyright law should be achieved through judicial interpretation or through legislative intervention (as a form of expression of the political and
democratic process) exceeds the purpose of this article, but clearly represents a
fundamental issue for the future of the EU (copyright) legal framework.
In the first part of this chapter, the international copyright landscape is sketched
out, showing that the standard of originality has ultimately always been a matter of
national law. The second part deals with EU copyright law and identifies two key
moments in the harmonisation of originality: a first phase where the EU legislature
harmonised only specific subject matter and consequently the originality standard
in relation only to that subject matter (so called vertical harmonisation); a second
phase where the ECJ interpreted the international and EU legislative framework in
a way that expands horizontally (i.e. to all subject matter covered by EU copyright
law) the originality standard therein contained. Then there is provocatively
presented the argument that a third phase could be identified in the ECJ decision
C-168/09 Flos SpA v. Semeraro Casa e Famiglia SpA [2011] E.C.R. I-00181, a case
on EU design rights, that nonetheless has a direct impact on the harmonisation of
copyright protection and in particular on originality. Finally, this part looks at how
The Harmonisation of EU Copyright Law: The Originality Standard
87
national courts in EU Member States have reacted to the judicial activity

(or activism) of the ECJ in the field of originality: this represents a fundamental
passage in determining the effectiveness of ECJs originality standard at the
Member States level. The third part of the chapter presents some conclusions on
what could and should be expected for the future of EU copyright law.
1.1
The International Landscape
Originality is an essential requirement of copyright law: only works that show some
minimum amount of this attribute attract protection. However, generally speaking,
originality lacks a precise statutory definition (see Ricketson and Ginsburg 2005, esp.
8.05; Bently and Sherman 2014, 93; Cornish et al. 2013, 11-04; Gervais and Judge
2005, 16; Goldstein and Hugenholtz 2013, 192; Ginsburg 1992; Gervais 2002;
Gravells 2007; Judge and Gervais 2010; Schricker 1995). None of the major international copyright treaties explicitly define what it is and which level it has to reach in
order to enable copyright to arise, bringing a leading scholar in the field to state:
So far as a particular threshold standard for protection is concerned, the requirements
[of the Berne Convention] arise chiefly as a matter of inference, requiring the reader to
work through a number of different provisions (Ricketson 2009, 59).
Indeed, the Berne Convention for the Protection of Artistic and Literary Works
828 U.N.T.S. 221 (1886), the oldest and most relevant convention in the field,
postulates a general requirement of originality only indirectly and implicitly.
Article 2(1) of the Convention, dedicated to Protected Works, establishes that:
[T]he expression literary and artistic works shall include every production in the literary,
scientific and artistic domain, whatever may be the mode or form of its expression . . .
The same article then provides an illustrative list of works included in such a
broad definition. Books and other writings, lectures, choreographic works, musical
compositions with or without words, cinematographic works, works of drawing,
painting, architecture, sculpture, engraving, photographic works, works of applied
art, illustrations, maps and plans are all examples of protected works. Similar lists
are found in most national Copyright Acts.
As it can be seen, originality is not explicitly mentioned as a requirement in
the general clause or in the list present in article 2(1) (Ricketson and Ginsburg 2005,
8.87). All the same, the word original is not completely absent from the Convention. It can be found in article 2(3) dealing with translations, adaptations, arrangements . . . and other alterations, which are protected as original works (see
Ricketson and Ginsburg 2005, 8.87).1 A similar provision is present in article
The word original is used twice in article 2(3) with two different meanings. The article states:
Translations, adaptations, arrangements of music and other alterations of a literary or artistic
work shall be protected as original works without prejudice to the copyright in the original work.
88
T. Margoni
14-bis dealing with cinematographic works (see Berne Convention for the Protection of Artistic and Literary Works article 14-bis(1) BC; Ricketson 2009, 55).
Another useful element related to the presence of originality in the Convention
can be found in article 2, section 5:
Collections of literary or artistic works such as encyclopedias and anthologies which, by
reason of the selection and arrangement of their contents, constitute intellectual creations
shall be protected as such, without prejudice to the copyright in each of the works forming
part of such collections.
Similar to the above mentioned case of translations, collections of literary or

artistic works can be protected as autonomousyet derivativeforms of expression. Not every collection is eligible, though: only those which by reason of the
selection or arrangement of their contents constitute intellectual creations (see
Ricketson and Ginsburg 2005, 8.87).2 This last expression does not only state that a
form of originality is necessary in order to trigger protection, but it also gives some
more information regarding the type of originality required: intellectual creations.
The requisite of intellectual creations is noteworthy as it does not only apply to
article 2(5), i.e. to collections of literary and artistic works, but it extends to all the
subject matter covered by article 2 (see Ricketson 2009, 57).3 It has been said that
an explicit definition of intellectual creations was indispensable only for the case
of article 2(5), because the originality inherent in collections, as opposed to that in
the works collected, may not be as readily discernible (Ricketson 2009; Gervais
2002). Accordingly, not only collections but also any other scientific or literary
works such as books, lectures, musical compositions, songs, works of photography,
and sketches, in order to comply with Berne standards have to possess the required
type of originality, i.e. they have to be intellectual creations. Nevertheless, what this
exactly entails, how highor lowthe level of originality is, and what are the tests,
standards, and elements that can fill-up with content the concept of intellectual
creation remains a matter for national legislatures and courts (see Gervais 2002;
Ginsburg 1992).
At the national level, traditionally common law countries have phrased the
requirement of originality in the sense that the work must originate with the author,
i.e. must not be copied, and it must be the result of skill, judgement and/or labour
As it is well known, the English version of the Berne Convention confusingly reports selection
AND arrangement. However, the original official French text speaks of selection OU arrangement, and this is the version that in case of interpretative contrast prevails. Therefore, even if the
English translations still nowadays reports AND, the real requirement isand has always
beenOR. See Ricketson and Ginsburg 2005, 8.87.
3
A line therefore seems to run from article 2(5) through article 2(3) to article 2(1) as follows:
original translations, adaptations, etc. under article 2(5) and collections of works that are
intellectual creations under article 2(3) are to be protected as literary and artistic works
under article 2(1), suggesting that both originality and intellectual creation are correlative and
implicit requirements for literary and artistic productions that otherwise fall under article 2(1).
89
(see Bently and Sherman 2014, 96; Cornish et al. 2013, 11-04).4 The United States
and Canada developed their own standards (see Judge and Gervais 2010, 378). The
United States requires a modicum of creativity (see Feist Publications v. Rural
Telephone Service 499 U.S. 340 (1991), 346). This implies a higher degree of
originality than the traditional skill, judgement and labour (Feist Publications
v. Rural Telephone Service (1991), 346). In Canada, the Supreme Court, in CCH
Canadian v. Law Society of Upper Canada [2004] 1 S.C.R. 339, created a new
standard that, in the same words of the Court, is higher than the one historically
applied in the United Kingdom but does not require creativity as in the United
States (see CCH Canadian v. Law Society of Upper Canada [2004]). Other countries of this family, for example Australia and the United Kingdom, are likewise
adjusting their own standards (see Newspaper Licensing Agency v. Meltwater
Holding [2011] E.W.C.A. Civ. 890; Fitzgerald and Atkinson 2011).
Countries belonging to civil law traditions, instead, have shown the tendency to
stress the personal relationship or personal input that the author puts into the work
(Goldstein and Hugenholtz 2013, 192193).5 This difference, however, should not be
misinterpreted and is often more declamatory than material. Historically, a rather low
level of originality can be seen also in civil law countries, especially in relation to
certain subject matter such as catalogues or technical manuals (e.g. kleine M
unze or
petite monnaie) (Goldstein and Hugenholtz 2013, 192193; Lucas et al. 2012, 121).
These variegated conceptualisations of originality are all compatible with the
Berne mandated requisite of intellectual creations since, as it has been noted, the
determination of the precise meaning is left to national laws and tribunals. While it
is arguable that the product of the sweat of the brow may be less creative than
that of an oeuvres de lesprit or of a minimum of creativity, it is fundamental to
consider the extremely high variance not only across different legal traditions but
even within the same legal system of what has been held protectable in different
historical periods (see generally Gordon 1993; Merges 2007).
2 The European Acquis Communautaire

Until relatively recently, EU law did not regulate the standard of originality, nor
copyright more generally. The reason can be found in the absence of a clear and
direct attribution of powers to the EU to regulate copyright (principle of conferral)
(see generally Benabou 1997).6 Since its creationand until recentlythe main
4
This is the classical formula historically employed by courts in common law countries and especially
in the UK, although the precise wording varied over time adding or substituting elements.
5
France requires oeuvre de lesprit, Germany personal intellectual creations, Italy works of
ingenuity of creative character.
6
Consolidated Version of the Treaty on European Union (Maastricht Treaty) [2008] OJ C115/13
enshrines the principle of conferral on the basis of which the Union shall act only within the
limits of the competences conferred upon it by the Member States in the Treaties.
90
T. Margoni
basis for EU intervention in the field of copyright were articles 26 and 114 of the
Treaty on the Functioning of the European Union (TFEU) [2008] OJ C115/47 (see
van Eechoud et al. 2009, 1.2.2),7 which have given the EU the competence to
respectively adopt measures with the aim of establishing or ensuring the functioning of the internal market and the approximation of the laws of Member States
(European Commission 1988).8 Eventually, this lack of direct attribution of powers
to regulate copyright in a systematic way led to the fragmentary and subject-matter
specific approach taken by EU copyright directives, especially during 1990s.9
The same decade, though, also witnessed growing divergences in national
originality standards of specific subject matter such as software, a trend that became
of major concern for the European Commission due to the possible obstacles to
intra-Community trade and the consequent negative impact on the smooth functioning of the internal market (see generally Ramalho 2014). The situation caused
the EC to intervene in the field; nevertheless, besides a handful of legislatively
harmonised subject matterwhich as it will be seen infra included software,
photographs and databasesthe EU legislature did not reach the conclusion that
a general and horizontal harmonisation of the concept of originality was necessary (see European Commission 2004). A conclusion, the latter, eventually reached
by the ECJ a few decades later.
There are other provisions of the Treaty that the EU legislature identified as a legal basis to
regulate copyright such as article 53 (freedom of establishment), article 167 (common cultural
heritage), and article 169 (consumer protection). Nonetheless, article 114 remains the single
principal source of powers used to regulate copyright.
8
Other interventions in the field of intellectual property can be seen in Directive 89/104/EEC on
the approximation of trade mark laws (now replaced by Directive 2008/95/EC), and Directive
87/54/EEC on the legal protection of topographies. Recently, article 118 was introduced by the
Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the
European Community [2007] OJ C306/1 empowering the EU to create European intellectual
property rights. It must be noted, however, that article 118 has enabled the creation of uniform
intellectual property rights as opposed to harmonising the laws of Member States. Accordingly,
article 118 constitutes the legal basis for the creation of a unitary title, indicatively through a EU
Regulation, which is directly applicable in all Member States.
9
This can be observed in different documents of the EC. In the Green paper on copyright and the
challenge of technology: copyright issues requiring immediate action, for example, it can be read
that the Commission concluded that a directive on the legal protection of computer programs is a
necessary step for the completion of the internal market and that the creation of a European
information services market, currently divided by juridical and linguistic barriers, is of prime
importance (European Commission 1988, 5.4.1, 6.2.1).
2.1
91
The Vertically Harmonised Standard of Originality

in EU Copyright Law
The result of the reported lack of direct attribution of powers in regulating copyright,
combined with the internal market relevance of diverging originality standards, led to
a vertical harmonisation (i.e. through legislative interventions regulating only
specifically identified subject matter) of software (Directive 91/250/EEC of 14 May
1991 on the legal protection of computer programs now consolidated in Directive
2009/24/EC of 23 April 2009, article 1(3)), databases (Directive 96/9 of 11 March
1996 on the legal protection of databases, article 3(1)), and photographs (Council
Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of
copyright and certain related rights, now codified in Directive 2006/116/EC of
12 December 2006 on the term of protection of copyright and certain related rights
article 6). In recent years, however, that standard has been extended horizontally to
all kinds of works covered by EU copyright law. This horizontal expansion has been
operated by way of interpretationand not without criticismsby the European
Court of Justice, which established that any work covered by EU copyright law is
original if it is the authors own intellectual creation; industrial design and applied
art will receive an ad hoc analysis (see van Eechoud 2012; Bently 2012; Infopaq
International v. Danske Dagblades Forening [2009]; C-393/09 Bezpecnostn
softwarov
a asociace v. Ministerstvo kultury [2010] E.C.R. I-13971; C-403/08 and
C-429/08 Football Association Premier League and Others v. QC Leisure and Others
and Karen Murphy v. Media Protection Services [2011] E.C.R. I-09083; C-145/10
Eva-Maria Painer v. Standard VerlagsGmbH and Others [2011] E.C.R I-12533;
C-604/10 Football Dataco v. Yahoo! UK and Others [2012] EU:C:2012:115). This
section deals with vertical legislative harmonisation, while the horizontal judiciary
one is analysed in the next Section.
2.1.1
Software
The concept of authors own intellectual creation appeared for the first time in EU
copyright law in the Directive 91/250/EEC of 14 May 1991 on the legal protection
of computer programs. The reasons that brought the EC to require such a
standardised level of originality across the EU are explained in the Green paper
on copyright and the challenge of technology (European Commission 1988) and
relate to the emergence of different standards of protection for software in various
EU countries. As the 1988 Green Paper reports (European Commission 1988), in
Member States such as France and Germany courts offered protection to software
only under specific conditions that differed from the originality standard usually
required in those countries for other subject matter. This course of action was a
source of concern to the European Commission, which interpreted it as a potential
threat capable of jeopardising the internal market in a field, software, witnessing an
exponential growth in technological and economic terms (European Commission
1988, 5.6.3).
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T. Margoni
Nevertheless, the 1988 Green Paper did not provide the final formulation of the
authors own intellectual creation standard which will eventually be found in the
Software Directive. Yet, the Green Paper showed the direction, by pointing to a
definition present in the Topography Directive enacted only one year before the
publication of the Green Paper (Directive 87/54/EEC of 16 December 1986 on the
legal protection of topographies of semiconductor products). According to that
Directive, topographies are protected if they are the result of the creators own
intellectual effort and are not commonplace in the field (see European Commission 1988, 5.6.7). This concept of originality, it has been argued, is closer to the
English and Irish common law originality standards than to those of continental
Member States (Walter and von Lewinski 2010, 5.1.8; see also European Commission 1985, Chapter 2; Turner 1986).
As pointed out by Walter and Von Lewinski, the notion of originality underwent
different drafting phases and the expression authors own intellectual creation
appeared for the first time in the Initial Proposals Explanatory Memorandum and
was carried over into the EC Amended Proposal (Walter and von Lewinski 2010,
5.1.9). The Amended Proposal definition of originality was included into the final
text of the 1991 Software Directive, in accordance to which a computer program is
original if it is the authors own intellectual creation and no other criteria such as
qualitative or aesthetic merits should be considered (see Directive 91/250/EEC of
14 May 1991 on the legal protection of computer programs, Recital 8; van Gompel
and Lavik 2013).
The formula adopted in the 1991 Software Directive possesses an undeniable
nature of compromise intended to reconcile the British and Irish understanding of
originality with that of continental EU countries (Walter and von Lewinski 2010,
5.1.105.1.16). This aspectit has been pointed outcan be seen for instance in
the choice of words which combines expressions typical of continental European
countries (intellectual creations) with those typical of countries such as the UK and
Ireland (authors own, in the sense that the work must originate with its author,
i.e. not being copied) (Walter and von Lewinski 2010, 5.1.105.1.16).
In the 2000 EC Report on the Implementation of the Computer Program Directive (European Commission 2000), the EC recognised that the level of originality
for software had been harmonised for the first time all over the EU, noting that 12
Member States lower[ed] the threshold for granting protection and the remaining
three lift[ed] the bar (European Commission 2000, III). In particular, the EC noted
on the one hand that countries such as Germany had abandoned their previous
(higher) requirement of protection for computer programs (Sch
opfungsh
ohe), while
on the other hand, the United Kingdom had not yet implemented the new EU
standard. This lack of compliance with EU law could prove, the EC pointed out,
particularly problematic as the United Kingdom traditionally offered a lower
standard of protection, i.e. skill and labour (European Commission 2000, V.1(e)).
2.1.2
93
Photographs
The second directive proceeding to a vertical harmonisation of the originality

standard is the Term Directive, which mandates that photographs which are original
in the sense that they are the authors own intellectual creation shall be protected by
copyright and that no other criteria should be applied to determine their eligibility
for protection (Directive 2006/116/EC of 12 December 2006 on the term of
protection of copyright and certain related rights (consolidated version), article
6). The strong similarity to the definition found in the Software Directive is
apparent, as it is the character of compromise of the Directive. Not surprisingly,
the Software Directive has been used as a reference model for the determination of
the standard of originality for photographs (Walter and von Lewinski 2010, 8.6.10).
Recital 17 of the original directive of 1993 (Directive 93/98/EEC of 29 October
1993 harmonizing the term of protection of copyright and certain related rights)
stated that in order to achieve a sufficient harmonisation of the term of protection
the main goal of that legislative actphotographic works, which due to their
artistic or professional character are of importance within the internal market,
have to be governed by a harmonised level of originality. In 2006, the 1993
Directive was codified by Directive 2006/116/EC of 12 December 2006 on the
term of protection of copyright and certain related rights. In the 2006 codification,
the reference to artistic or professional character disappeared, but it has been
submitted that the change has not modified the standard laid out in Directive
93/98/EEC, Recital 17.
An important aspect in the protection of photographs under EU law is to be
found in the last sentence of article 6 of the 2006 Directive: Member States may
provide for the protection of other photographs. Differently from other special
forms of protection, the regulation of non-original photographs is completely left to
Member States (Directive 2006/116/EC; see also Perry and Margoni 2011). While
this approach can be explained by the observation that the protection afforded to
photographs at the Member State level was particularly inhomogeneous and complicated by the fact that some Member States offered a double-tier system of
protection, the harmonising effects of this type of provision are dubious
(European Commission 2006, Part 1, n. 9). Allegedly, the explanation for what
could be defined as an unsatisfactory approach to harmonisation (since Le crite`re
doriginalite . . . risque de perdre de son importance pratique) is probably to be
found once again in the character of compromise of the legislative instrument rather
than in a clear policy view (Benabou 1997, 385). Indeed, it has been pointed out that
the inclusion of the authors own intellectual creation harmonised standard for
photography was accidental (see van Eechoud 2012, 62).
2.1.3
Databases
The 1996 Database Directive affords copyright protection to databases which, by

reason of the selection or arrangement of their contents, constitute the authors own
94
T. Margoni
intellectual creation and no other criteria shall be applied to determine their

eligibility (see Directive 96/9 of 11 March 1996 on the legal protection of databases, article 3). Once again, a strong similarity of the requirements for protection
can be traced to the 1991 Software Directive. This intention was confirmed by the
EC which underlined the similar creative processes at the basis of databases and
computer programs. Moreover, the European Commission stressed that computer
programs are an essential component in database management (see Walter and von
Lewinski 2010, 9.3.7).
Furthermore, an important aspect of the Database Directive is the double-tier
protection system that it creates. In addition to copyright, the directive creates a sui
generis form of protection for substantial investments in the obtaining, verification
and presentation of a database. This form of protection is different and autonomous
from the one based on copyright and does not require any originality.
It is noteworthy that the two forms of protection operate independently from
each other and can be both present in the same database if the respective requirements are met. The crucial aspect is that they protect two totally different goods:
originality in the selection or arrangement of the database in the case of copyright
(see Football Dataco v. Yahoo! [2012]; Bently and Sherman 2014, 93); the substantial investment in the obtaining, verification and presentation (but not creation!)
of the data in the case of the sui generis right (see C-46/02 Fixtures Marketing v. Oy
Veikkaus Ab [2004] E.C.R. I-10365; C-203/02 British Horseracing Board
v. William Hill Organization [2004] E.C.R. I-10415; C-338/02 Fixtures Marketing
v. Svenska AB [2004] E.C.R. I-10497; C-444/02 Fixtures Marketing v. OPAP
[2004] E.C.R. I-10549; Davison and Hugenholtz 2005; Dietrich et al. 2013).
3 The ECJ and the Horizontal Expansion

of the Originality Standard
Between 2009 and 2012, in five landmark decisions (Infopaq International
v. Danske Dagblades Forening [2009]; Bezpecnostn softwarov
a asociace
v. Ministerstvo kultury [2010]; Football Association Premier League v. QC Leisure
and Karen Murphy v. Media Protection Services [2011]; Eva-Maria Painer
v. Standard VerlagsGmbH [2011]; Football Dataco v. Yahoo! [2012]) the ECJ
took the opportunity to elaborate on the precise contours of the EU originality
standard, which can be summarised as follows:
1. Under EU copyright law the required originality standard is the authors own
intellectual creation. This standard applies horizontally to all subject matter
covered by EU copyright directives (Infopaq International v. Danske Dagblades
Forening [2009], 36).
2. The authors own intellectual creation is present when authors can exercise free
and creative choices and put their personal stamp on the work (Football Dataco
v. Yahoo! [2012], 38; Infopaq International v. Danske Dagblades Forening
95
[2009], 45; Bezpecnostn softwarov

a asociace v. Ministerstvo kultury [2010], 50;
Eva-Maria Painer v. Standard VerlagsGmbH [2011], 89, 92).
3. When an expression is determined by technical or functional rules, such as when
there is only one way to express an idea, or the expression is predetermined by a
specific goal or constrained by narrow rules that leave no space for free and
creative choices no originality can be present (Football Association Premier
League v. QC Leisure and Karen Murphy v. Media Protection Services,
98 [2011]; Bezpecnostn softwarov
a asociace v. Ministerstvo kultury [2010],
49; Football Dataco v. Yahoo! [2012], 39).
Additionally, a fourth point can be inferred from these cases. Whereas the
evocative wording employed by the Court could suggest that the authors own
intellectual creation requirement is particularly high, a closer look at the facts
decided probably indicates a different outcome. The ECJ recognised protectionor
at least held that it could not be excludedto an 11 word extract (see Infopaq
International v. Danske Dagblades Forening [2009]), to a portrait photograph (see
Eva-Maria Painer v. Standard VerlagsGmbH [2011]), to a graphical user interface
(see Bezpecnostn softwarov
a asociace v. Ministerstvo kultury [2010]) and to a
programming language (C 406/10 SAS Institute v World Programming [2012] E.C.
J.), provided that they constitute the authors own intellectual creationsomething
for national courts to be determined. Match fixtures (see Football Dataco v. Yahoo!
[2012]) and sports games (see Football Association Premier League v. QC Leisure
and Karen Murphy v. Media Protection Services [2011]) were nonetheless excluded
from protection due to the lack of free and creative choices.
Consequently, it may be argued that the new standard created by the Court gives
much more emphasis to the qualitative rather than the quantitative type of authorial
contributions (see Bently and Sherman 2014, 102). Accordingly, a fourth principle
may be formulated:
4. In order to reach the required level of originality it suffices that authors make
some free and creative choices and therewith put their personal stamp onto the
work. However, skill and labour, even in significant amounts, are not conducive
to these free and creative choices and therefore do not lead to the creation of a
work possessing the required originality (see Football Dataco v. Yahoo! [2012],
53).10
In Infopaq International v. Danske Dagblades Forening [2009], the first groundbreaking decision of the ECJ in the originality saga, the Court underlined that it is
apparent from the general scheme of the Berne Convention, in particular articles 2
(5) and 2(8), that the protection of such certain subject matter as artistic or literary
works presupposes that they are intellectual creations (Infopaq International
10
Football Dataco v Yahoo [2012], 53 (1): the significant labour and skill required for setting up
that database cannot as such justify such a protection if they do not express any originality in the
selection or arrangement of the data which that database contains.
96
T. Margoni
v. Danske Dagblades Forening [2009], 34).11 Similarly, other works (i.e. computer
programs, databases and photographs) are protected by (EU) copyright only if they
are original in the sense that they are their authors own intellectual creation
(Infopaq International v. Danske Dagblades Forenin [2009], 35). In establishing
a harmonised legal framework for copyrightthe ECJ continuedDirective 2001/
29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and
related rights in the information society (Infosoc Directive) is based on the same
principles, as evidenced by Recitals 4, 911 and 20 in the preamble thereof (Infopaq
International v. Danske Dagblades Forening [2009], 36). Accordingly, copyright
within the meaning of article 2(a) of the Infosoc Directive is liable to apply only in
relation to a subject matter which is original in the sense that it is its authors own
intellectual creation (Infopaq International v. Danske Dagblades Forening [2009],
37). These words, successively confirmed in the other decisions under analysis,
represent the crucial transition from a partially harmonised to a fully harmonised
standard of originality through a process of judicial interpretation and regardless of
any internal market relevance (Cornish et al. 2013, 11.10).
A subject matter possibly excluded from the full harmonisation of originality is
perhaps found in the field of industrial design and applied art, although the situation
is not completely clear. In Flos v. Semeraro [2011], the ECJ was asked to determine
whether a moratorium in respect of copyright protection for industrial design was
compatible with articles 17 and 19 of Directive 98/71/EC of 13 October 1998 on the
legal protection of designs. While the Courts ruled against such compatibility,
another aspect plays a relevant role for the case of originality, one that attracted less
attention than what might have deserved (but see Bently 2012; see also Griffiths
2013; Derclaye 2014; Koenraad 2013).
At paragraph 34, the Court states:
However, it is conceivable that copyright protection for works which may be unregistered
designs could arise under other directives concerning copyright, in particular Directive
2001/29, if the conditions for that directives application are met, a matter which falls to be
determined by the national court (Flos v. Semeraro [2011], 34).
The reasons why the European Court of Justice chose to take explicit position on
this matter, which goes beyond what the referring court asked, are not entirely clear.
A possible explanation is that in paragraph 34 the Court operated an additional
extension of the concept of the authors own intellectual creation doctrine and
covered the field of industrial design. This view seems supported by the Opinion of
Advocate General Jaaskinen in case C-5/11, even though the relevant passages
were not carried over into the Courts judgement (see case C-5/11 Criminal proceedings against Titus Alexander Jochen Donner [2012] EU:C:2012:370, 27-31;
see generally Bently 2012).
11
Articles 2(5) and 2(8) of the Berne Convention respectively deal with collections of literary or
artistic works which constitutes intellectual creations and with news of the day having the
character or mere items of press information.
3.1
97
Flos v. Semeraro [2011]: Towards a Judicially Mandated

(Perfect) Cumulation of Protection?
The EU legal framework in the field of design rights protection (i.e. the protection
afforded to the outer appearance of a product; see Regulation No. 6/2002 of
12 December 2001 on community designs article 3) is particularly relevant for
present purposes because it establishes the principle of cumulation with copyright,
but leaves the determination of the extent and conditions of such cumulation
especially the level of originality requiredto be determined by each Member
State. This is the legal framework resulting from two pieces of EU secondary
legislation: the Directive 98/71/EC of 13 October 1998 on the legal protection of
designsin particular article 17and the Regulation (EC) No. 6/2002 of
12 December 2001 on community designsin particular article 96.
The provisions contained in article 17 of the 1998 Design Directive and article
96 of the 2002 Community Design Regulation, which represent the attempt to
reconcile the variety of traditional national approaches in the field while
maintaining a level of flexibility thanks to which Member States are able to choose
between perfect and partial cumulation, have attracted criticisms as they allow the
coexistence of different levels of originality in a market that aims to be, or become,
common. The two provisions have nonetheless been successful in eliminating the
solution whereby a product of applied art could be either protected by copyright or
by industrial design (so called non cumulability or separability). It must be
noted, however, that in the case of partial cumulation (allowed by the Design
Directive and Community Design Regulation) if the level of originality chosen
by the Member States is particularly high (say artistic value as required in Italy)
the resulting situation is much closer to a system where cumulation of protections is
in fact forbidden, rather than one where it is allowed. Accordingly, it can be said
that the harmonising effects of the Design Directive and Community Design
Regulation in terms of cumulability and originality standards are modest, only
formally excluding the principle of separability from the possible choices available to Member States.
As it will be shown, it would have probably been preferable that the EU
legislature had either allowed Member States to maintain their traditional categories (including separability), thereby granting a higher degree of discretion to
Member States, or alternatively required perfect cumulation between designs and
copyright, scarifying Member States discretion for the sake of greater
harmonisation. Instead, the chosen middle-way solution possesses the disadvantages of both alternatives, without really achieving the goals of either.
Accordingly, the rules that apply in different EU jurisdictions may be fairly
heterogeneous. For instance, a product of industrial design protected by a Community Registered Design is likely protected also by copyright, unless the applicable
law has provisions similar to e.g. the Italian one, in which case it should be
ascertained whether the product is not only original but possesses an artistic value
(and the debate on the meaning of such standard is far from being settled, see
98
T. Margoni
Montanari 2010; Franzosi 2009). As a matter of fact, the same product can be
protected by copyright in country A (say Germany) and not in country B (say Italy)
causing clear frictions in trans-border trade, as some case law has demonstrated
(see, e.g., the facts of Criminal proceedings against Titus Alexander Jochen Donner
[2012]).
Indeed, in countries implementing a partial cumulation rule, especially where
the work of applied art needs to meet particularly high levels of originality such as
that of the artistic value, many works belonging to industrial design and applied
art will hardly benefit from copyright protectionat least in cases of registered
designs.
The latter qualification is necessary because of the unclear effects of the Flos
v. Semeraro [2011] decision, in particular by paragraphs 34 and following (cited
above). To the extent that it is reasonable to assume that the cited paragraphs have
the effect of harmonising the originality standard in non-registered designs, it must
be accepted that in countries performing a partial cumulation between design rights
and copyright (i.e. requiring a different, usually higher, level of originality for
works of applied art and industrial design), this is now allowed only for registered
designs (national and community based).
In the different case of unregistered designs, Flos v. Semeraro [2011] mandates a
regime of perfect cumulation because if works which may be unregistered design
are protected under the Infosoc Directive (Directive 2001/29/EC of 22 May 2001 on
the harmonisation of certain aspects of copyright and related rights in the information society) and, after Infopaq International v. Danske Dagblades Forening
[2009], the latter requires the now fully harmonised standard of the authors own
intellectual creation, it follows that there is no space for a different originality
threshold for unregistered designs.
This conclusion, however, seems to contrast with the plain meaning of the
Design Directive and the Community Design Regulation (see Bently 2012;
Griffiths 2013; Koenraad 2013; Derclaye 2014). The main problem is the identification of which works that may be unregistered designs are protectable under the
Infosoc. In Flos v. Semeraro [2011], the ECJ only refers to the Design Directive,
therefore it should be excluded that unregistered designs based on the Community
Design Regulation (i.e. Unregistered Community Designs) are affected by the
decision. This seems the only reading of Flos v. Semeraro [2011] that is consistent
with a literal interpretation of the Community Design Regulation. In fact, the plain
meaning of articles 1 and 96(2) and Recital 32 Community Design Regulation point
in the direction that Flos v. Semeraro [2011] cannot apply to Unregistered Community Designs. Article 1 Community Design Regulation establishes that the
expression community design refers to both registered and unregistered community designs. Article 96(2) and Recital 32, even though not explicitly referring to
Unregistered Designs, reserve to Member States the power to establish the level
of originality for community designs an expression that, as provided by article
1, embraces both Registered and Unregistered Community Designs.
Consequently, there are two possible interpretations of paragraph 34 of Flos
v. Semeraro [2011]: either it applies to unregistered designs other than Community
99
Unregistered Designs (and it will be explained below how conceptually difficult

this is), or it overwritesor forces an unlikely reading ofthe explicit allocation of
powers to Member States operated by the EU legislator in article 96(2) Community
Design Regulation.
The first of the two proposed interpretations brings to a paradoxical situation, since
both the Directive and the Regulation have been drafted on the basis of very similar
considerations and definitions (see Margoni 2013). In particular, it will not be easy to
establish which works that may be unregistered designs can exist that are not
simultaneously Unregistered Community Designs. It could be opined that there are
forms of national unregistered design protection which do not correspond entirely to
Unregistered Community Designs. However, on the one side Flos v. Semeraro [2011]
does not refer to national unregistered designs, but to unregistered designs in
general, and on the other side such a form of protection seems to be currently available
only in one country (see Bently 2012; Bently and Sherman 2014; Margoni 2013).
Accordingly, the Court in Flos v. Semeraro [2011] almost certainly intended to harmonise originality for any form of unregistered designs (works which may be unregistered
designs) including works that can be protected as Community Unregistered Designs, a
conclusion that corresponds to the second of the suggested interpretations.
Nonetheless, this second interpretation of Flos v. Semeraro [2011] is troublesome.
Given that a Flos unregistered design is virtually always also an Unregistered Community Design, it should be concluded that Floss harmonising effects of the originality
standard apply to the Design Regulation even though the latter is not mentioned
anywhere in the Flos v. Semeraro [2011] decision, nor in the nationally referred
questions. More importantly, it should be concluded that the ECJ in Flos
v. Semeraro [2011] proposed an interpretation that disregards what seems to be the
plain meaning of an act of EU secondary legislation reserving specific powers to
Member States.
While it could be argued that the latter interpretation should nonetheless be
accepted in order to avoid the absurdity of the requirement of different originality
standards for almost perfectly overlapping legal categories, there is yet another
aspect that may cause institutional discomfort.12 The expansion of Flos v. Semeraro
[2011] harmonising effects of the originality standard can only apply to
non-registered designs, as explicitly indicated by the Court at paragraph 34 (and
in article 17 Design Directive and article 96(2) Community Design Regulation).
This provision is clear and explicit and there seems to be no space for ambiguity or
creative interpretation.
It follows that in countries implementing partial cumulation, a non-registered
design can be protected by copyright if it reaches the (usually lower) level of the
12
However this interpretation would contrast with the plain meaning of the Design Regulation,
especially article 96(2). The latter seems to apply to both Community Registered and Unregistered
Designs and therefore Member States should be free to determine the level of originality for
Community Unregistered Designs. Since the protection of UCD is automatic upon creation this
situation appears in logical contradiction with the statement of the ECJ at paragraph 34 of Flos
v. Semeraro [2011].
100
T. Margoni
authors own intellectual creation. However, if the same design is successively

registeredduring the 1 year grace period for exampleit will most likely not
qualify for copyright protection any longer, since the new (usually higher) standard,
for instance artistic value, needs to be met and only very few works of applied art
will be able to reach it.
Whereas the latter aspect could be seen favourably by critics of the possibility to
protect industrial design cumulatively by design rights and copyright, the general
legal uncertainty introduced by the ECJ decision cannot be easily accepted. In
particular, it seems hard to imagine that the Court did not anticipate the above
described situation and the consequent legal effects. Unless, of course, one sees in
the ECJ pronouncement a message to those Member States that are still taking
advantage of the possibility offered by article 17 Design Directive and article
96 Community Design Regulation (the questions referred by the national court in
Flos v. Semeraro [2011] did not ask the standard of originality in design rights to be
addressed, but related to a moratorium in the protection of industrial design that the
Italian government insistently tried to maintain). The message that the ECJ may
hypothetically have tried to convey is to abandon the possibility of different levels
of originality for applied art (sic, registered designs)something that the same ECJ
knows cannot be obtained by interpretative harmonisation given the plain meaning
of article 17 Design Directive and article 96 Community Design Regulationand
to adjust to the now pervasive standard of the authors own intellectual creation.
In this way, not only the originality standard for copyright would achieve absolute
harmonisation at the EU level (i.e. including registered designs), but also the aspect
of partial/perfect cumulation of protection will be solved by implementing the same
standard across the common market.
It is interesting to note that this seems the direction spontaneously taken by
e.g. the German Supreme Court, which has recently abandoned its previous doctrine on the basis of which products of industrial design required a higher threshold
of originality (see Geburtstagszug [2013] I ZR 143/12). It will be interesting to see
the reactions of other Supreme Courts and national legislatures in the future.
In conclusion of this section, it must be observed that if the proposed hypothetical reading of Flos will be confirmed, it shall be acknowledged that the ECJ has
taken yet another approach in the harmonisation of EU copyright law. In the past,
ECJ decisions formed the legal basis for subsequent legislative interventions by the
EU legislature, in what could be figuratively seen as institutional collaboration in
the legislative process.13 More recently, the ECJ directly intervened (by stealth and
substituting itself to the legislature as it has been sharply pointed out, see Bently
2012) in the harmonisation of EU copyright law by interpretatively expanding a
13
As it is known: C-158/86 (Warner) led to Directive 92/100/EEC of 19 November 1992 on rental
right and lending right and on certain rights related to copyright in the field of intellectual property;
C-341/87 (EMI Electorla) led to Directive 93/98/EEC of 29 October 1993 harmonising the term of
protection of copyright and certain related rights; C-62/79 (Coditel) led to Directive 93/83/EEC of
27 September 1993 on the coordination of certain rules concerning copyright and rights related to
copyright applicable to satellite broadcasting and cable retransmission.
101
number of EU copyright concepts (see generally Bently and Sherman 2014). With
this last intervention, the ECJ might have gone a step further and openly indicated
to Member States how to implement secondary legislation which explicitly allowed
Member States to choose among different possibilities, thereby intervening on a
power that the EU legislature had explicitly reserved to Member States.
4 The Effects of Authors Own Intellectual Creation

on Member State Domestic Laws
The effects of the ECJ authors own intellectual creation doctrine on national courts
have only recently started to unfold. Certainly, the new EU standard is unique and
pervasive in the sense that no other tests are allowed under domestic laws. However, it will be a matter for national courts to establish whether a specific work
meets the authors own intellectual creation definition. In so doing it is safe to
assume that courts will be guidedconsciously or unconsciouslyby their own
traditional legal constructions. Legal-cultural concepts are usually deeply rooted in
the minds of law practitioners and interpreters and tend to survive, at least initially,
legal or judicial reforms (see generally Rouland 1994).
That being said, one aspect can certainly be considered settled: the extent to
which national legal systems recognised a different level of originality other than
that attributed to software, databases and photographs, this is not compliant with
Union law any longer. Currently, only one standard of originality applies to all
subject matter covered by EU copyright law. There may be an exception connected
to registered designs on the basis of articles 17 and 96 of, respectively, the Design
Directive and the Design Regulation, but, as seen above, the relationship of these
provisions and Flos v. Semeraro [2011] is not yet completely clear (see Criminal
proceedings against Titus Alexander Jochen Donner [2012]; Bently 2012).
Regarding the implementation of the authors own intellectual creation standard
by national courts, it is plausible that these will recognise the new ECJ test and
interpret it in a way that reflects their own traditional standards. In some countries this
is made particularly easy by an undeniable similarity in the definitions of originality.
This is for example the case in Germany, where works are protected as long as they
are the personal intellectual creation of an author (EU: authors own intellectual
creations). Other cases of similarity, even if not so straightforward, can be seen for
instance in France and Italy where works are protected if they are oeuvres de
lespritunderscoring therefore the personal elementsor if they are opere
dellingegno di carattere creativo, underlying the presence of an intellectual creation.
Yet, it is not at the terminological level that the issue will be solved, but at the
interpretative one. Under this perspective, UK courts have already had occasion to
state that the new ECJ standard restates, but does not substantially change the legal
situation (see NLA v Meltwater [2010] E.W.H.C. 3099, 81, affirmed in [2011]
E.W.C.A. Civ 890). Likewise, the Dutch Supreme Court held that the new EU standard
102
T. Margoni
is in line with the one commonly employed by courts in the Netherlands (Stokke v. H3
Products [2013] S.C. [4.2]) and the Dutch government repealed the part of the Dutch
Copyright Act that granted protection to non-original writings, precisely as a consequence of the Football Dataco v. Yahoo [2012] decision (see Beunen 2012). In a
similar fashion, the Supreme Court of Belgium in 2013 confirmed that in light of the
ECJ case law and in particular Eva-Maria Painer v. Standard VerlagsGmbH [2011], a
workspecifically a fireplace designis original if it is the intellectual creation of the
author bearing his personal stamp (see M-Design Benelux SPRL v. Geoffrey Bontemps
SPRL [2013] S.C. C.12.0263.N/1). This ruling reversed a previous decision of the
same Court holding that the personal stamp element was not required under Belgian
law (see Artessuto v. B&T Textilia [2012] S.C. C.11.0108.N).
In conclusion, it is likely that when courts start consistently implementing the new
authors own intellectual creation standard they will still argue that a given work
was the result of free and creative choices on the basis of their traditional categories to
the extent that this is still possible. Beyond this limit courts (or legislatures) will need
to abandon the old standard. Nevertheless, where to draw the line will likely be the
object of a fair amount of national court decisions in the years to come.
5 Final Observations and Future Perspectives

In conclusion, and putting the issue of industrial design aside, the newly defined
level of originalitythe judicially defined authors own intellectual creationcan
be said to be placed in between the high standard expressed in the past by some
national courts (e.g. Germany), at least in relation to certain subject matter such as
software, and the low standard sometimes provided by UK courts (sweat of the
brow). This reading seems in line with the legislative history of the Directives that
harmonised the requirement of originality (European Commission 1988, 5.6.4).
An aspect worth noting, however, is the view expressed by Advocate General
Mengozzi in its opinion in Football Dataco v. Yahoo [2012], in which he pointed
out that the expression authors own intellectual creation echoes a formula which
is typical of the continental copyright tradition (Football Dataco v. Yahoo [2012]
37). This seems to contrast with the legislative history exposed above, which
documented that the authors own intellectual creation expressionat least in
the original formulation drafted for computer programswas a compromise standard which if closer to any tradition it would be to that of common law rather than
civil law countries. If the statement of the Advocate General is correct, it should be
logically inferred that the ECJ did not only expand the concept of authors own
intellectual creation beyond the three vertically harmonised subject matter.14 The
ECJ also modified the ambit of application of authors own intellectual creation,
14
Although the element of a personal stamp of the author was originally introduced by the EU
legislature.
103
bringing it closer to the continental formula, in spite of its original construction (see
generally Derclaye 2014, 718; Griffiths 2013). So far, the Advocate Generals view
has not been confirmed in other pronouncements.
Perhaps even more important than where to draw the line is the principle that a
lineand only onehas to be drawn. As shown in the preceding sections a shared
standard of originality is a necessary element for a copyright framework that aims to
operate in a common market and society. Different levels of originality can only
operate within different jurisdictions. However, if the European Union is to finally
become said common market and society then standards such as that of originality in
copyright law need to be fully harmonised in order to offer a level playing field to all
EU citizens. How to reach these shared standards, that is to say, whether full
harmonisation or unification of EU copyright law should be achieved through judicial
interpretation or through legislative intervention (as a form of expression of the
political and democratic process) exceeds the purpose of this article, but clearly
represents a fundamental issue for the future of the EU (copyright) legal framework.
Recently, in a number of policy documents and initiatives, the European Commission seems to have finally reclaimed the leading role in the harmonisation of EU
copyright law, beyond the simple issue of originality. In the Public Consultation on
the Review of the EU Copyright Rules of 2013 (European Commission 2013), the
Commission formulated a number of questions that revealed the fact that, at least in
interlocutory terms, the European legislature is considering additional forms of
intervention in the field of copyright law, including by way of a Regulation that
would render uniform (i.e. not subject to national implementing legislation) the
copyright framework (European Commission 2013, 36). Taking inspiration from
this renewed institutional interest, different commentators showed their support in
favour of a uniform copyright framework in the EU (see, e.g. European Copyright
Society 2014). This solution, today (rectius since 2009) is made possible thanks to
the new article 118 TFEU introduced by the Lisbon Treaty which gives the EU the
power to create unitary titles (i.e. Regulations) in the field of intellectual property.
Realistically, since a unitary title will likely need some time to be implemented,
and in consideration of the fact that some outstanding issues need immediate
reform, it is advisable that the EU legislature operate on two separate but parallel
ways (European Copyright Society 2014). On the one hand, a short term intervention, in the form of (amending) Directive(s), to correct the most outstanding issues
connected with EU copyright law (for examples in the field of exceptions and
limitations). On the other hand, a long term intervention by way of a Regulation
intended to make EU copyright law uniform in all aspects, not only originality (see
European Copyright Society 2014, 78).
The EU institutional framework has already shown its capacity to harmonise
(copyright) concepts by way of interpretation in ways that were certainly not
foreseen during the drafting phase of the Directives containing the harmonised
concepts. This form of harmonisation is probably unavoidable when a properly
formulated question reaches the ECJ. As evidenced in this article, these judicially
driven forms of harmonisation, while certainly filling out outstanding gaps in the
EU legal framework, are not exempt from criticism. Nevertheless, they are
104
T. Margoni
certainly avoidable, or at least their impact can be greatly minimised, by an EU

legislature that intervenes with a clear and ambitious agenda in the indicated fields.
The recently published Digital Single Market Strategy seems to represent a first step
in this direction, although perhaps one that is still too modest (see European
Commission 2015).
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International Copyright: Marrakesh

and the Future of Users Rights Exceptions
Margaret Ann Wilkinson
The author would like to thank Western law student Tierney

GB Deluzio for research assistance, and the reviewers of this
chapter for thoughtful comments.
Abstract The 2013 adoption by the World Intellectual Property Organisation

(WIPO) of the Marrakesh Treaty to Facilitate Access to Published Works
for Persons who are Blind, Visually Impaired or Otherwise Print Disabled
(Marrakesh) represents a transformational moment in international copyright
law. Marrakesh, a treaty devoted entirely to ensuring uniform rights for a set of
users of copyrighted materials, challenges previously held notions that international
copyright treaties must deal exclusively with rights holders rights. But does
Marrakesh mark a historic shift for international copyright? This chapter demonstrates that copyright has always been linked to technological change and the real
challenge since the inception of the Berne Convention has not been technological
change but changes to the underlying legal structures of business. The rise of
corporate business globally precipitated the inclusion of moral rights in copyright
and in Berne but this has not heretofore been recognised. The current pressure on
business to innovate has created further global pressures on information flow and
hence on copyright. What is historic about Marrakesh is its shift to a user perspective. From this perspective, extending international copyright protection to users
beyond those to whom Marrakesh applies (for instance, to libraries and archives) is
demonstrated to provide benefits in the public interest to all copyright stakeholders:
economic rights holders, authors, and users of information.
M.A. Wilkinson (*)

Faculty of Law, Western University, London, ON, Canada, N6A 3K7
e-mail: mawilk@uwo.ca
DOI 10.1007/978-3-319-31177-7_7
107
108
M.A. Wilkinson
1 Introduction
The Berne Convention for the Protection of Literary and Artistic Works (1886)
828 U.N.T.S. 221 (Berne Convention) on copyright was one of four epoch-making
multilateral treaties heralding the achievements of information innovation at the
end of the nineteenth century: the slightly earlier other three were the International
Telegraph Convention (1865) (now the International Telecommunications Convention (1947)), Treaty concerning the formation of the General Postal Union (1874),
and Paris Convention for the Protection of Industrial Property (1883)
828 U.N.T.S. 305 (Paris Convention). All four came into being and became
instantly effective because they were amongst the crowning achievements of the
European colonial age (Rickertson 1987)1 and each of the four has remained
notable into the present day (see for instance Convention of the International Postal
Union (1966) 611 U.N.T.S. 7), not least, in each case, because of its global reach
and therefore global impact.
Despite the independent historic development of the continental droit dauteur
and the British copyright (see generally Wilkinson 2006; Wilkinson and
Gerolami 2009),2 Berne brought countries together around standardising rights
(and enforcement of those rights) for creators of works (and their heirs and
assigns), rights creators and their successors in title could expect to receive for
the treatment of works within member states. The Berne Convention article
1 provided:
[t]he Contracting States are constituted into a Union for the protection of the rights of
authors over their literary and artistic works.
Article 3 provided:
[t]he stipulations of the present Convention shall apply equally to the publishers of literary
and artistic works published in one of the countries of the Union, but of which the authors
belong to a country which is not a party to the Union.
Over 120 years later, the Berne Union3 reached agreement on a treaty focused on
the rights of certain users of works: Marrakesh. This chapter focuses on whether
Rickertson notes: [d]espite relatively limited membership, the geographical sweep of the new
[Berne] Union was considerable when account is taken of the colonial possessions of France,
Germany, Italy, Belgium, Spain and the U.K. (Rickertson 1987, pp. 7980). The other four signatories were Haiti, Liberia, Switzerland and Tunisia. Of Rickertsons big six, all but Germany signed
the Paris Convention (Germany joined only in 1903) but the US had also signed by 1887. The earlier
International Telegraph Convention, with more signed members (20) than either the Berne Convention or Paris Convention had, drew only from continental Europe (physical barriers to connecting
telegraph wires further). The postal treaty garnered 21 members, including the big six and US.
2
It is interesting to note that the Canadian statute is, in English, the Copyright Act of Canada RSC
1985 c C42 and, in French, Loi sur le Droit dAuteur (both authoritative).
3
Integrated into the World Intellectual Property Organisation through the Agreement between the
United Nations and the World Intellectual Property Organisation (1974) (Agreement between UN
and WIPO).
International Copyright: Marrakesh and the Future of Users Rights Exceptions
109
Marrakesh is a historic shift in international copyright law: a shift from generating

treaties focused on creators to admitting the need for at least some user-centric
international copyright standardisation? This question, in turn, raises two further
enquiries: first, if Marrakesh signals such a shift, would it be the first or has there
already been a historic shift? Second, will Marrakesh actually make the shift?
Evidence pointing to the shift includes the fact that 51 nations signed Marrakesh
(Marrakesh article 18).4 However, as of July 2015, only eight nations had ratified or
acceded to it (of the 20 needed to bring it into force (Marrakesh article 18), by April
2016, sixteen. This creeping and uncertain commitment may demonstrate there is
actually no shift in the copyright focus of nations, despite introduction of a new
rhetoric.
The example of Canada, which has neither signed nor acceded to Marrakesh,
will be noted: its recent Bill C-65 to amend the Copyright Act (Access to
copyrighted works or other subject-matter for persons with perceptual disabilities,
first reading 8 June 2015) died on the order paper when the House rose on 19 June
2015 before a mandatory federal election (Canadian Government 2015).5 If there is
actually no shift in states attitudes toward copyright, how can Marrakesh be
positioned in the history of international copyright?
This chapter will examine the questions: (1) what, if anything, has, in the past,
characterised a historic shift in international copyright?; (2) can Marrakesh
represent (an)other historic shift?; and, (3) is Marrakesh signaling international
focus on users rights in copyright? The chapter will conclude with an examination
of WIPOs current ongoing consideration of a possible treaty for libraries and
archives (TLIB) (see IFLA 2013a).
2 What, If Anything, Has, in the Past, Characterised

a Historic Shift in International Copyright?
2.1
Changes in the Locus for International Copyright

Activity
Though international copyright law was conceived at a moment in time placing it as

one of the quartet of important and continuing international information-centered
multilateral commercial agreements, the Berne Convention continued for over three
quarters of a century independently administered through its own Union (see
Convention Establishing the World Intellectual Property Organisation (1967)
4
Which Shae Fitzpatrick, for instance, repeatedly terms a landmark (Fitzpatrick 2014).
General elections must be held on the third Monday of October in the fourth calendar year
following polling day for the last general election, in this case 19 October 2015. Although when it
rose, the House was scheduled to return 21 September 2015, the House did not sit in September
because the writ of election cannot be issued later than 36 days before polling day (Canada
Elections Act 2000 sections 56.1(2), 57(1.2)(c)).
5
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M.A. Wilkinson
828 U.N.T.S. 3).6 Nonetheless, between 1886 and 2013 (when Marrakesh was
signed), not only was the development of international copyright agreement not
stagnant but it also did not all occur within the confines of the Berne Union.
The Berne Union itself experienced a continual growth in membership between
1886 and 1970, with 58 members by 1970. The text of the Berne Convention was
revised repeatedly (see e.g. Additional Act and Declaration of Paris (1896) (Additional Act), Act of Berlin Revision (1908) (Berlin Revision); Additional Protocol
of Berne (1914) (Additional Protocol); Rome Revision (1928); Brussels Revision
(1948); Stockholm Revision (1967), mostly replaced by the Paris Revision (1971)).
Quite apart from Berne, by mid-twentieth century, key public international
agreements instantiated copyright interests as part of public international law.
The Universal Declaration of Human Rights (UDHR) (1948) article 27(2) stated:
Everyone has the right to the protection of the moral and material interests resulting from
any scientific, literary or artistic production of which he is the author.
The International Convention on Economic, Social and Cultural Rights (1966)

993 U.N.T.S. 3 article 15 provided that every individual has the right to benefit
from the protection of the moral and material interests resulting from any scientific,
literary or artistic production of which he is the author.
Indeed, it might be argued that the third quarter of the twentieth century heralded
a historic shift when the formerly independent institutions of international intellectual property governance, the Paris Union (for industrial property) and copyrights Berne Union, became part of the United Nations (Agreement between UN
and WIPO (1974)).7 This appeared to finally and firmly fix copyright law within the
framework of public international law: explicitly included within an international
human rights framework, with its historic international governing structures located
in the primary international public law institution (the United Nations).
However, the relocation of copyright exclusively into the realm of the United
Nations was short-lived and therefore perhaps not appropriately characterised as a
historic shift. Almost as soon as it occurred, a concerted effort emerged amongst
key stakeholders to transfer intellectual property international standard formation
away from public international law and into the realm of international trade law.8
This initiative bore fruit in less than two decades (see North American Free Trade
Agreement (1992) 32 I.L.M 289 (NAFTA)). When the new World Trade Organisation (see Agreement Establishing the World Trade Organisation (1944)
33 I.L.M. 1144 (WTO)) emerged from the post-WWII General Agreement on
Trade and Tariffs (General Agreement on Tariffs and Trade (1947)
55 U.N.T.S. 194 (GATT)), it included a fulsome agreement governing intellectual
6
The Berne Union continues but is administered in the broader context of WIPO.
A Protocol incorporating the Agreement was signed by Kurt Waldheim, Secretary-General of the
United Nations, and Arpad Bogsch, Director General of the World Intellectual Property Organisation, on 21 January 1975.
8
Pat Choate specifically identifies two US corporate CEOs, John R. Opel of IBM and Edmund
T. Pratt Jr. of Pfizer pharmaceuticals as the progenitors of TRIPS (Choate 2005, 16).
7
111
property law, including copyright (Agreement on Trade Related Aspects of Intellectual Property Rights (1994) 1869 U.N.T.S. 299 (Annex 1C) (TRIPS), matters
with which the earlier GATT had not dealt. The global span of the new WTO was
larger than the span of membership in the Berne Convention at the time.
J. H. Reichman writes that, under the Berne Convention and Paris Convention,
state practice treated the adoption into domestic law of a statute that more or less embodied
an international minimum standard as sufficient to discharge a given states international
responsibility, even if the domestic law in question were laxly or loosely enforced. What
mattered was the member states strictly observed national treatment in the application of
such laws, and not that the laws themselves, as implemented, fulfilled the spirit of the
Convention (Reichman 1997, 338, citations omitted).
On the other hand, as Reichman observes:

Under the TRIPS Agreement . . . adopting legislation that complies with the international
minimum standards becomes the starting point. States must further apply these laws in
ways that will stand up to external scrutiny . . . . [Those who do not] may eventually trigger
the WTOs dispute-settlement machinery (Reichman 1997, 339, citations omitted).
Nonetheless, despite this change to enforcement under the modern international

trade agreements involving copyright, just as the move of copyright exclusively
into the realm of the United Nations cannot be characterised as representing a
historic shift, it is also the case that the new international trade environment for
copyright cannot be described as marking a historic shift from the immediately
preceding public international law of copyright.
Although inclusion of copyright into the modern international trade environment
has been historic, there hasnt been a shift because the newly created global
international trade environment for intellectual property did not replace the older
public international legal environment for intellectual property. Firstly, the international trade agreements incorporated by reference the language of the public
international intellectual property agreements (NAFTA article 1701; TRIPS article
1). Secondly, the instantiation of intellectual property in modern international trade
has created an unusual international legal situation in which copyright (and other
intellectual property) is expressed both in international trade agreements and in
public international law. The key institutions of both international public law
(United Nations) and international trade (World Trade Organisation) are engaged.
Therefore, although there have been dramatic changes in the locus of international copyright law making, there has not been what could be termed a historic
shift, rather a series of changes culminating in a unique international environment
for copyright policy-makingspread across both public international and international trade environments.
112
2.2
2.2.1
M.A. Wilkinson
Changes in the Content of International Copyright

Agreements
Reflecting Technological Developments-
Changes to the content of multilateral agreements about copyright have been made
periodically since 1886and have been much described and commented upon in
the literature over the years (see e.g. Burger 1988). But which, if any, of these, prior
to the content of 2013s Marrakesh, can be characterised as constituting a historic
shift?
Copyright itself has been said to have arisen as a direct result of technological
innovation: the printing press (Eisenstein 1979). One constant theme of substantive
amendment to the Berne Convention has been revision to accommodate new
technologies. The first revision of 1896, for example, added protection of photographic works, the 1908 revision added an exclusive right for the recording of
music, the 1928 revision added a broadcasting right, the 1948 revision extended the
broadcasting right to cover television, and the most recent revision added a new
presumption of ownership for cinematographic works (Additional Act Interpretative Declaration [1]; Berlin Revision article 13; Rome Revision article 11bis;
Brussels Revision article 11bis; Paris Revision article 15).
While there have been major technological developments and changes to international copyright norms since 1886, the fact that the two sets of developments may
be correlated does not demonstrate that technology has caused historic shifts in
international copyright law norms (correlation is not causation). Important as it is
to study intellectual property issues raised in the face of technological developmentsand to focus scholarship on the intersections between copyright and technology, it does not appear possible to identify historic shifts in copyright because
of technological developments (Wilkinson forthcoming).
3 The Unique Introduction of a New System of Rights Into

Berne: The Moral Rights
Copyright has become firmly recognised as a legal device giving rise to private
rights (specified market monopolies) for public purposes. It is frequently
overlooked that when copyright first arose (in the eighteenth century), those
private rights were only the rights of individualsbecause all business was
conducted on an individual basis through sole proprietorships or individuals acting
together in partnerships. The early eighteenth century Statute of Anne legislating
copyright monopolies was speaking to business opportunities for individual
authors. In its first section it distinguishes authors from those to whom authors
may have transferred copies, including booksellers, printers, or those who have
113
purchased or acquired copies (Statute of Anne (1709); see Patterson 1968, chapter
7). The important statement about copyright in the late eighteenth century American Constitution similarly contemplates only individual authors, in a business
environment that then comprised only individuals acting as sole proprietorships
or in partnerships of individuals:
The Congress shall have the power. . . To promote the Progress of Science and useful Arts,
by securing for limited Times to Authors . . . the exclusive Right to their respective Writings
(United States Constitution article 1, section 8, clause 8).
As the American Constitution eloquently articulates, copyright was designed by

governments as a mechanism to provide incentives to individuals to spur them to
creativity . . . in turn producing public benefits through dissemination of information by individuals acting in sole proprietorships or partnerships of individuals,
thereby promoting progress. In the economic and political life of the times, the
public interest was politically synonymous with the national interest of the nation
promoting protection of copyrights.9
Probably in no small measure due to the internationalisation of copyright law
through adoption of the Berne Convention in the nineteenth century (at a time when
the vast majority of consumers and businesses were still all acting as individuals), a
certain understanding of copyright continues as doctrine in the twenty-first century10 and much modern intellectual property theorising and rhetoric continues to
consider consumers and businesses as one single interest.11
Nonetheless, although the stated focus of the Berne Union has remained on
authors throughout and beyond its first century, as will be described further
below, there is evidence that its primary focus shifted dramatically during its first
quarter century. As background to that discussion, it is important to recognise that,
in the second half of the nineteenth century, independent of intellectual property,
two important legal changes took place that eventually transformed the global
business environment (and challenge the original historic assumptions underlying
copyright): first, legal separation of companies from their individual owners, and,
second, legal recognition of corporations as legal persons in their own right. The
first development occurred through such legal landmarks as the United Kingdoms
Joint Stock Companies Act (1844) and Canadas pre-Confederation 1850 enactment
by the United Provinces of Canada: An Act to Provide for the Formation of
Incorporated Joint Stock Companies for Manufacturing, Mining, Mechanical or
In CCH Canadian v Law Society of Upper Canada [2004] 1 S.C.R. 339, [23] (CCH v LSUC),
Canadas Supreme Court unanimously defines the public interest in copyright: promoting the
encouragement and dissemination of works of the arts and intellect and obtaining a just reward for
the creator (see further background on this concept in Wilkinson 2004; Owen 2012).
10
Doctrine in the sense connoted by the Oxford English Dictionary definition 2(b) of doctrine
as: That which is taught or laid down as true concerning a particular subject or department of
knowledge. . .; a belief, theoretical opinion; a dogma, tenet.
11
Drassinower, for example, conceives of all members of society as either current or future
creators (Drassinower 2003).
114
M.A. Wilkinson
Chemical Purposes (1850). The second development, recognition of corporations

as legal persons, occurred at the end of the nineteenth century, through vehicles
such as the American decision in Santa Clara City v. Southern Pacific (1886)
118 U.S. 394 and the British decision in Salomon v. A Salomon [1897] AC 22.
Once individual and corporate interests separated during the nineteenth century,
and diverged even more during the twentieth, the emerging dominance of the
corporate business structure over the older sole proprietorships and partnerships
led to ownership of the original (economic) rights in copyright lying overwhelmingly with corporate interests.
Evidence of this shift is apparent in Englands copyright history. Prior to 1911,
there were various judicial approaches taken to the question of the copyright
relationship between an employer and an employee. One commentator wrote in
1895 that what amounts to employment to write . . . must depend upon the
circumstances (Charnier 1895, 101). Qualifying this conclusion about employment to write, he noted where persons were employed to obtain and compile
information regarding registered bills of sale, no express arrangement regarding the
copyright having been made, [copyright was not found to lie with the employer]
(Charnier 1895, 102, citing Trade Association v. Jackson (1887) 4 T.L.R. 130).
However, in the Copyright Act (1911)12 (which was seminal for modern copyright
in the common law world apart from the United States),13 section 5(1)(b) appears:
. . .where the author was in the employment of some other person under a contract of service
or apprenticeship and the work was made in the course of his employment by that person,
the person by whom the author was employed shall, in the absence of any agreement to the
contrary, be the first owner of the copyright.
With benefit of hindsight, it is evident that by the twentieth century, to maintain

the Berne Conventions original focus on authors, the concept of balance in
copyright (on the one hand to promote the Progress of . . . useful Arts [in the
public interest] by, on the other hand, securing for limited Times to Authors . . . the
exclusive Right to their respective Writings) would have needed to be
re-conceptualised to balance three sets of interests: (1) individuals (as it is
undeniably their cognitive activity which produces creativity and innovation),
12
In his 1912 commentary on the new comprehensive Copyright Act (1911), E.J. MacGillivray
does not seem to contemplate employers not focused on information industries becoming owners
of copyrights in their employees works: he focuses on an overall author and principal designer
of a work who employed others to accomplished parts of the work and would, under the new s
5, remain the author of the work (MacGillivray 1912, pp. 1011). At 57, footnote (g), he cites to
earlier decisions about employment, including Hildesheimer v. Dunn (1891) 64 L.T. 452, Walter
v. Lane [1900] A.C. 539, Sweet v. Benning (1855) 16 C.B. 459 and James Nisbet v. The Golf
Agency (1907) 23 T.L.R. 370.
13
This enactment was explicitly intended to align the British approach to copyright with the Berne
Convention as it stood after the Berlin Revision of 1908 (see MacGillivray 1912, p. 4). By then the
US had included copyright in its Constitution but was an information-importing nation and did not
join the Berne Convention. Indeed, works by foreigners manufactured in the US were not protected
in copyright there until 1891 and the US did not extend protection to foreign works until 1954.
115
(2) corporations (which had come to dominate in terms of both ownership, including ownership of new technologies, and influence upon economies), and (3) the
public interest in the progress. . . of the useful arts (United States Constitution).
Although there is no evidence of revolutionary contemporary nineteenth or early
twentieth century changes in thinking in copyright circles (nothing reflecting notions of
a triumvirate of interests in copyright: individuals, corporations and the public),14 it
would appear that consequences of the changes wrought by the legal separation of
individual and corporate business were sensed almost immediately in some quarters
and led to early attempts to address the fundamentally changed copyright environment.
Not long after the corporate form of business entity entered the European business
environment, there emerged in Europe a new form of rights in creativitythe moral
rights.15 These rights were conceived as rights that cannot be transferred away from
authors.16 It appears to be no coincidence that the conception of these moral rights
emerged just as corporate law evolved such that transfers of the older economic rights
in copyright (which were always conceived of as transferable) could occur not just
between individuals (as had been the case up until the corporate law changes beginning
in the mid-nineteenth century17) but also from individual authors to separate corporate
persons (and these latter would never, themselves, be original authors or creators).18
Rights of this new type proposed by European member states for inclusion in the
Berne Convention included the rights of paternity, integrity, divulgation, and
withdrawal (see further Wilkinson 2006; Wilkinson and Gerolami 2009). This, in
turn, led many nations to become aware of a need for new rights, related to, but
apart from, the economic rights in copyright.19 Two of these (paternity and
14
Wilkinson voices the suspicion that the rigidities of the industrial mechanisms for dissemination
of information (e.g. the need for presses) masked the entrance of the new corporate players (since
individuals had previously occupied similar roles) and blurred the increase in the number of types
of players. With the new technologies of the twenty-first century again enabling individuals, the
corporate interests are themselves bringing their dominance (and separation from individual
interests) into sharp relief (Wilkinson forthcoming).
15
Note that, in the original French, the term moral rights does not carry the connotation of
ethical that moral does in English: it simply connotes a relationship to an individual.
16
Attempts to theorise moral rights protection in ways consistent with the original conception of
the copyright monopolies have proven largely unsatisfactory (see Wilkinson 2006; Wilkinson and
Gerolami 2009).
17
Since, before then, all businesses had been comprised only of individuals.
18
Note also article 4[2] of the first twentieth century revision to the Berne Convention, the Berlin
Revision (1908), when the legal personality of the corporation was firmly entrenched in law,
abolished the requirement of formalities for copyright: The enjoyment and exercise of such rights
are not subject to any formalities. With this change, the net worth of copyright interests, if held by
corporations automatically for all works created by their employees, would automatically be
enhanced beyond what such interests could have been worth when registration of copyright was
required. The British 1911 enactment capitalised on this possibility.
19
As the US did not join the Berne Convention for over a century after its inception (joining in
1989), the addition of moral rights to the Berne Convention was irrelevant to American international obligations until then.
116
M.A. Wilkinson
integrity) were accepted into the Berne Convention in 192820 as article 6bis (Rome
Revision)21:
(1) Independently of the authors copyright, and even after transfer of the said copyright,
the author shall have the right to claim authorship of the work, as well as the right to object
to any distortion, mutilation or other modification of the said work which would be
prejudicial to his honour or reputation.
(2) The determination of the conditions under which these rights shall be exercised is
reserved for the national legislation of the countries of the Union. The means of redress for
safeguarding these rights shall be regulated by the legislation of the country where
protection is claimed.
Although moral rights have never been as fully embraced or expressed in the
legislation of as many states as the earlier economic copyright interests (and
modern extensions of them) have been, they spread throughout twentieth century
into national copyright laws (Wilkinson 2006; Wilkinson and Gerolami 2009) and
have remained in the Berne Convention, despite opposition to them such as that
mounted by the United States.22
Although, in retrospect, it is clear, with the emergence of the separation of legal
persons into corporate and individual, the nexus between copyright (as a private
interest) and the public interest needed re-examination, this has never been done
explicitly until now (Wilkinson 2006; Wilkinson and Gerolami 2009; Wilkinson
forthcoming). It was nevertheless inevitable that the emergence of the legally
independent corporation would compromise the continuing function of copyright
as originally conceived: a mechanism linking individuals in society in their dual
roles as producers (businesses) and consumers of information. Tacit international
acceptance of change in the firmament underpinning copyright is evidenced by the
continuing widespread acceptance and endurance of the late nineteenth concept of
moral rights.23 The introduction of moral rights re-established the fundamental link
between individuals and creativity and information dissemination that was part of
the original eighteenth century adoption of Berne but then lost through the
20
It is this revision of the Berne Convention that immediately followed upon the Berlin Revision
(which had precipitated the 1911 British omnibus copyright statute, discussed above) definitively
transferring most copyrights initially arising in an employment situation to the employer.
21
There were 33 signatories to the Rome Revision, including all but Haiti and Liberia, of the
original ten signatories to the Berne Convention.
22
When the text of the Berne Convention became a starting point for agreement about copyright in
the context of modern international trade, in the 1990s, the US omitted insistence upon deletion of
moral rights from NAFTA but did insist on the omission of article 6bis from TRIPS. Instantiation of
moral rights in American law is extremely limited, see, for example Visual Artists Rights Act
(1990) 17 U.S.C. section 106A.
23
One possible explanation for the American anti-moral rights attitude is that until very recently
the American trade-mark regime functioned such that the societal needs that led elsewhere to
moral rights protections within copyright have been met in the American content by trademark
(Wilkinson and Gerolami 2009, p. 9). This may change with the US decision disallowing
trademark infringement actions in what was determined essentially a copyright context (see
Dastar Corporation v. Twentieth Century Fox (2003) 539 U.S. 23).
117
nineteenth century legal developments in corporate law and the ensuing dominance
of corporate ownership of the economic rights in copyright.
By the twentieth century, though individual authors continued as the engines of
originality, information was packaged and disseminated almost entirely through
corporate persons. The moral rights created some balance between the rights of
individuals as authors and other rights inherent in copyright processes (the rights of
the new corporate information packagers and disseminators).
From the perspective of traditional economics, it is hard to argue that
non-transferable, individual rights (as moral rights are conceived to be)24 have a
place in trade and therefore in a trade regime.25 Therefore, perhaps it is not
surprising, given the unique function of moral rights and the continuing traditional
conception of the economics of copyright (see e.g. Watt (ed) 2014) that no moral
rights have been recognised in the global environment of TRIPS.26 However, the
public international law environment embraces values that are relevant to copyright
stakeholders other than the holders of the economic rights in copyright (the latter a
group in which some authors have membership) and the holders of moral rights: the
public international law environment declares rights for information users. The
Universal Declaration of Human Rights (UDHR) , in addition to including article
27(2), quoted above, also included article 19:
Everyone has the right to freedom of opinion and expression; this includes freedom . . . to
seek [and] receive . . . information and ideas through any media and regardless of frontiers.
and article 27(1):

Everyone has the right freely to participate in the cultural life of the community, to enjoy
the arts and to share in scientific advancement and its benefits.
While nearly a dozen international legal instruments have been adopted in

international public and trade law (including revisions and amendments to the
Berne Convention) protecting the rightsholders rights to material interests in
the 64 years since 1948 (Additional Act; Berlin Revision; Additional Protocol;
Rome Revision; Brussels Revision; Stockholm Revision; Paris Revision; WIPO
Copyright Treaty (1996); WIPO Performances and Phonograms Treaty (1996);
TRIPS; NAFTA), until Marrakesh in 2013, not one international intellectual property instrument focused on the users rights guaranteed by UDHR articles 19 and 27
(1). Because the rights guaranteed in articles 19 and 27(1) are not assignable and
therefore cannot be sold, it is unrealistic to expect them ever to be protected directly
24
In the Copyright Act of Canada, for example, while section 13(4) makes it very clear that
copyright right interests can be bought and sold, it is also clear that moral rights cannot be
bought and sold (section 14.1(2)).
25
This is not to say, however, that the moral rights cannot have an economic impact in the broader
context. Indeed, moral rights may have a place in international trade agreements, as may other
rights, to ensure that the rights of economic rightsholders in copyright are properly balanced
(creating a three-dimensional balance) by the rights of authors, and also by those of users.
26
On the other hand, they are recognised as part of NAFTA between the Government of Canada,
the Government of Mexico and the Government of the United States.
118
M.A. Wilkinson
through international trade agreements. In terms of the current dyad of global

international institutions focused on intellectual property (WIPO and the WTO),
it must then fall to WIPO, exclusively, to directly create the necessary protections,
through public international law, for the users rights in copyright that the UDHR
has declared.
After examining changes in the international administration of intellectual
property agreements and the history of technological advances and development
of international copyright response to them, it can then be seen that while changes
in international copyright to accommodate changing technologies have a long
history, none of this amounts to a shift in copyright law. On the other hand,
there was a profound change made to the Berne Convention in the early twentieth
century when an entirely new set of rights was introduced into it: the moral rights.
This change did mark a historic shiftalthough that shift has largely gone
completely unremarked.
4 Can Marrakesh Represent an(Other) Historic Shift?

In 2004 Chief Justice Beverley McLachlin, speaking for all nine judges of the
Supreme Court of Canada, declared that [t]he fair dealing exception, like other
exceptions in the Copyright Act, is a users right (CCH v LSUC [48]). While most
countries currently have far fewer exceptions made explicit in their copyright
legislation than does Canada.27
By 2011, an initiative to enshrine rights for the visually impaired was moving
forward in WIPOs Standing Committee on Copyright and Related Rights
(SCCR). Ultimately, at a 2013 Informal Session and Special Session of SCCR
(SCCR 2013a), a text was agreed upon. The text was proposed to WIPO at the
Diplomatic Conference to Consider a Treaty to Facilitate Access to Published
Works by Visually Impaired Persons and Persons with Print Disabilities held in
June 2013 in Marrakesh (WIPO 2013b). Adoption of Marrakesh by the General
Assembly of WIPO resulted on June 27, 2013.
There is no question that Marrakesh is historic, because it is the first international treaty focused on users rights in copyright. Its adoption certainly dispels any
argument that a treaty on exceptions and limitations to copyright holders economic
rights is not possible (Ginsburg 2012). Nonetheless, there are a number of reasons
to query whether it marks a historic shift in copyright.
One obvious problem with declaring Marrakesh as marking a shift is the fact that
it has not yet come into force (despite having been signed by 51 nations in
27
Kenneth Crews prepared a report on the state of copyright exceptions for libraries and archives
in the legislation of the countries of the world. His Study on Copyright Limitations and Exceptions
for Libraries and Archives was released by WIPO as part of SCCR 17 (2008) (See also Crews
update filed as part of SCCR 29 (2014); Crews 2008a; Crews 2008b, pp. 1719; Crews 2014).
119
Marrakesh and having 13 signatures added afterwards). The treaty needs 20 eligible
states to accede or ratify in order to come into force (article 18) and, to date, it has
16 (WIPO 2016). Unless it comes into force, Marrakesh cannot qualify as a historic
shift since it will have changed nothing.
Canada was the earliest common law country to adopt moral rights into its
copyright legislation (Act to Amend the Copyright Act (1931); see also Wilkinson
and Gerolami 2009), but did not sign Marrakesh.28 As noted above, whether it now
accedes will be determined by the new Liberal government recently elected.29
5 Is Marrakesh Signaling International Focus on Users

Rights in Copyright?
5.1
Effect of the Three Step Test
Even assuming Marrakesh does come into force, can it be considered to signal a
historic shift?
Trade agreements are focused on what is tradablethat is, in terms of
copyright, on the rights of copyright rightsholders. For example, under NAFTA,
while Canada, the US, or Mexico may implement in its domestic law more
extensive protection of intellectual property rights than is required (NAFTA article
1702), each country
shall confine limitations or exceptions to the rights provided for [in copyright] to certain
special cases that do not conflict with a normal exploitation of the work and do not
unreasonably prejudice the legitimate interests of the right holder (NAFTA article 1705
(5); see also TRIPS article 1, 13).
This approach allows countries to add to the rights of rights holders but requires
countries to satisfy a three step test30 in order to justify limitations or exceptions
(which create users rights).31 The respect for the three step test evidenced in
28
Under article 17, Marrakesh remained open for signature for 1 year after its adoption on
27 June 2013.
29
See above, n 5. Some commentators have opined that this failed result was expected by the very
government that introduced the legislation (see e.g. Macek 2015; CBC News 2015).
30
The three steps require a country defending a provision in its own copyright legislation to show
that the exception or limitation is (1) a special case, (2) a case which does not conflict with the
rightsholders normal exploitation of the work, and (3) a case which does not unreasonably
prejudice the legitimate interests of the rightsholders. If the country being challenged cannot
successfully defend its copyright provision in the relevant international trade tribunals, it will need
to remove the provision from its law or face trade sanctions (sanctions that may be taken with
respect to economic sectors other than copyright-related industries) from other states belonging to
the relevant trade agreement.
31
This interpretation of users rights as equating to limitations and exceptions stems from the
language of Canadas Chief Justice in CCH v LSUC [48].
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M.A. Wilkinson
Marrakesh demonstrates the ubiquity the test has achieved in both public international law and trade law:
Article 11 - General Obligations on Limitations and Exceptions
In adopting measures necessary to ensure the application of this Treaty, a Contracting
Party may exercise the rights and shall comply with the obligations that that Contracting
Party has under the Berne Convention, the Agreement on Trade-Related Aspects of
Intellectual Property Rights and the WIPO Copyright Treaty, including their interpretative
agreements so that:
(a) in accordance with Article 9(2) of the Berne Convention, a Contracting Party may
permit the reproduction of works in certain special cases provided that such reproduction
does not conflict with a normal exploitation of the work and does not unreasonably
prejudice the legitimate interests of the author;
(b) in accordance with Article 13 of the Agreement on Trade-Related Aspects of
Intellectual Property Rights, a Contracting Party shall confine limitations or exceptions to
exclusive rights to certain special cases which do not conflict with a normal exploitation of
the work and do not unreasonably prejudice the legitimate interests of the rightholder;
(c) in accordance with Article 10(1) of the WIPO Copyright Treaty, a Contracting Party
may provide for limitations of or exceptions to the rights granted to authors under the WCT
in certain special cases, that do not conflict with a normal exploitation of the work and do
not unreasonably prejudice the legitimate interests of the author;
(d) in accordance with Article 10(2) of the WIPO Copyright Treaty, a Contracting Party
shall confine, when applying the Berne Convention, any limitations of or exceptions to
rights to certain special cases that do not conflict with a normal exploitation of the work and
do not unreasonably prejudice the legitimate interests of the author.
Certainly Marrakesh is not the first public international law instrument to

include the three step test: in addition to WIPO Copyright Treaty article
1 (referenced in Marrakesh article 11), the WIPO Performances and Phonograms
Treaty also does so. Does subordination of the rights of any other stakeholders
to the rights of economic rightsholders, and the acknowledgement of this in
Marrakesh, mean that Marrakesh cannot mark a historic shift?
There is an extensive literature about the three step test (see e.g. Geiger
et al. 2014; Gendreau 2011). Suffice it here to point out the test has two elements
that require an evidentiary basis: (1) identification of the legitimate interests of the
rightsholders or authorsand evaluation of either unreasonable prejudice to, or
limits upon, those interests, and (2) identification of normal exploitation of the
work. Logically, then, if it can be demonstrated empirically that international
recognition of certain users rights (or recognition by individual states) is in the
legitimate economic interest of rightsholders, the three step test should prove no
barrier to national implementation of legislation implementing those users rights.
In this light, attention may be drawn to the increasing recognition that innovation is
now a key driver of national economies (see Crossan and Apaydin 2010, 1160).32
32
Crossan and Apaydin (2010), p. 1160: Since 1981, the number of publications in the fields of
Business, Finance Economics, and Management . . . grew at an average 14 per cent per year from
around 50 in 1981 to more than 1000 per year in 2008 (citations omitted). See also Government
(2015a) stating: The Governments support is making it easier for businesses to pursue the innovation that is so vital to Canadas economy. See also Department of Management Studies (2012).
121
In a comprehensive statistically-based review, Crossan and Apaydin (2010) have

noted that innovation is best conceived as both process and outcome (Crossan and
Apaydin 2010, 1156). It is becoming increasingly apparent that business innovation
is fostered where there is increased input to businesses from individuals beyond the
boundaries of the businesses themselves. The authors analysis of the literature
notes the advantage of a corporate learning environment to engendering the process
of innovation, including external linkages and formal information gathering
(Crossan and Apaydin 2010, 1172). The research identified [n]etwork, learning
and knowledge theories [as] used across all [the highly cited papers] (Crossan and
Apaydin 2010, 1164; 1177) and yet the authors concluded that the view of
innovation as a process is under developed in the literature (Crossan and Apaydin
2010, 1167) and poorly grounded theoretically (Crossan and Apaydin 2010,
1174). Nonetheless, the authors find the sources of innovation to be necessary
for a successful exploitation of an idea (Crossan and Apaydin 2010, 1169).33
The role of copyright in innovation falls into the category of contribution to
process and, therefore, must be recognised as necessary to innovation. Such
mechanisms as crowdsourcing serve the purpose of feeding back reaction from
members of the public to those seeking specific information and thus fuel the
Progress of . . . useful Arts. If innovation is necessary to the new economy and is
bolstered by an informed public that can, in turn, contribute to the process of
innovation (see Rocheska et al. 2014; Xu et al. 2015) then users rights in copyright
that enhance innovation must not be contrary to the three-step test because they
contribute to innovation and thus are in the economic rightsholders interest.
Canada is signatory to TRIPS and other agreements which include the three
step test and yet its Supreme Court has declared, in 2004, that [i]n order to
maintain the proper balance between the rights of a copyright owner and users
interests, [a users right, fair dealing in the case at bar] must not be interpreted
restrictively (CCH v LSUC [48]).
5.2
Fate of Other Users Seeking International Recognition

of Rights in Copyright
While Marrakesh represents a giant step forward in international copyright thinking, since it alters the rights of the visually impaired, by definition it cannot affect
most of the worlds populations. Therefore, the largest number of the worlds
citizens still have no international legal instantiation of their users rights as
guaranteed to them under the UDHR. To represent a historic shift, Marrakesh,
once it comes into force, must still become precedent to other treaties guaranteeing
users rights to more global populations.
33
The role of innovation as an outcome is identified as both necessary and sufficient.
122
M.A. Wilkinson
Although only nation-states have standing to participate in the deliberations of

WIPOs SCCR subcommittee, it is possible to be given status as a
non-governmental organisation (NGO) and be able to attend the meetings of the
SCCRand the International Federation of Library Associations and Institutions
(IFLA) has followed this process regularly throughout this century.34 By 2009,
IFLA, through its Committee on Copyright and other Legal Matters (CLM),35 was
presenting a Statement of Principles on Copyright Exceptions and Limitations for
Libraries and Archives to SCCR (see IFLA 2013b).36 Then CLM Chair Winston
Tabb emphasised four of its principles: preservation; general free use exceptions
applicable to libraries, including reproduction for research or private purposes;
copyright term; and barriers to lawful uses.37
SCCR 23 was unusually long (21 November to 2 December 2011)38 and proved
to be a watershed moment in the history of libraries and archives. For the first time,
unique consideration was given, by nation-states at the international level, to
possible treaty text for copyright limitations and exceptions for libraries and
archives.39 Members of the African Group of States presented possible language,
as did Brasil, Ecuador, and Uruguay.40
In 2012, the United Nations Educational, Scientific and Cultural Organisation
(UNESCO), a sister special agency of the UN to WIPO, held its first Canadian
34
The Canadian Library Association (CLA) has also frequently sought and received status as an
attending NGO.
35
In light of the rising involvement of international trade regimes in copyright, CLM itself
acknowledges it overlooked WIPO between 1996 and 2003 (IFLA 2003).
36
There has been another users rights- related item on SCCR agendas which is most recently
noted as Legal Instrument for Educational, Teaching and Research Institutions and Persons with
Other Disabilities [i.e. other than dealt with in Marrakesh]. This agenda item does not appear to
have attracted the energy of NGOs in close to the same numbers as the items on broadcasting
and libraries and archives have. Nor is there the same textual basis for discussion in the SCCR
record concerning the education item as for the other two (broadcasting and libraries and
archives). Finally, the reports from the sessions support the fact that the education item is much
less talked about.
37
In its full document, the IFLA also addressed legal deposit, interlibrary loan and document
supply, education and classroom teaching, provisions for persons with disabilities, orphan works,
contracts and statutory exceptions, and limitations on liability (see IFLA 2009).
38
Another initiative that was progressing at SCCR 23 was the possibility of a treaty for copyright
exceptions for the visually impairedeventually Marrakesh.
39
This author, together with Victoria Owen and Paul Whitney, represented CLA at this meeting,
acting in concert with the IFLA delegation. By 2011, IFLA, joined by other like-minded organisations, had developed a document that took the form of treaty-language that it hoped eventually
could form the basis for consideration by the nation-state members of SCCR for inclusion in a draft
treatywhich, in turn, SCCR would then recommend to its parent organisation, WIPO, for
international adoption. The other organisations joining were Electronic Information for Libraries,
International Council on Archives and Innovarte (see IFLA et al. 2012).
40
In many ways these proposals echoed principles and language also present in the TLIB
document. The US presented a set of Principles for discussionan approach more distant from
that advocated by IFLA and its NGO allies.
123
conference (see UNESCO 2012a). The resulting Declaration included the following
recommendation:
[to] urge the UNESCO Secretariat to:
...
b. support the work of the international archival, library and museum community to
secure an international legal framework of copyright exceptions and limitations to ensure
preservation of and access to cultural heritage in digital format, and acquisition of and
access to that heritage in a culturally appropriate manner (UNESCO 2012b).
This, in turn, led directly to an appearance and statement by UNESCO to SCCR

26 (held 1623 December 2013, immediately after Marrakesh was adopted in June)
in support of securing a legal framework for copyright exceptions and limitations
as the Vancouver Declaration set out.
One might have thought that the success of Marrakeshand the support of
UNESCOwould ease the progress of a treaty for libraries and archives. However,
with every swing of a pendulum there is some swing back, and progress has
appeared slow since Marrakesh toward an international treaty focused on libraries
and archives. The growing divisions amongst WIPO member states can be seen in
certain formal Conclusions to the SCCR 26 (SCCR 2013b), meeting which give a
flavour of recent debates between states:
14. The Committee was reminded that the terms of the work program adopted by the 2012
General Assembly recommended that the SCCR continue discussion to work towards an
appropriate international legal instrument or instruments (whether model law, joint recommendation, treaty and/or other forms), with the target to submit recommendations on
limitations and exceptions for libraries and archives to the General Assembly by the 28th
session of the SCCR.
15. Different points of view were expressed with regard to the nature of the appropriate
international legal instrument or instruments (whether model law, joint recommendation,
treaty and/or other forms) referred to in the 2012 General Assembly mandate to the SCCR
for text-based work. With regard to fulfilling that mandate, some Member States expressed
interest in discussing national laws, capacity building, technical assistance, the development of studies, and the exchange of national experiences, while other Member States did
not agree.
17. The Secretariat was requested to arrange for the update of the Study on Copyright
Limitations and Exceptions for Libraries and Archives (document SCCR/17/2) prepared by
Kenneth Crews. The Secretariat was also asked to arrange for a separate study on limitations and exceptions for museums. It is understood that the preparation of these studies
would not delay discussion on the limitations and exceptions agenda item on libraries and
archives. These studies will serve as information resources for the Committee.41
SCCR 27 was held in Geneva from 28 April to 2 May 2014.42 Unfortunately, for
what was apparently only the third time in SCCRs then 16 year history, at the end
of SCCR 27, member states failed to agree on the meetings Conclusionsand this
41
The Conclusions document is a formal element of the record of an SCCR meeting, and its
contents have to be agreed upon by all the state representatives (see SCCR 2013b).
42
The author was again privileged to attend (with the IFLA delegation) and presented the CLA
intervention.
124
M.A. Wilkinson
negated all the progress made on every agenda item. This failure occurred when the
European Union, which has declared it does not favour an international legally
binding instrument for libraries and archives, would not agree to continued use of
the term text-based in connection with ongoing work by the SCCR on the
libraries and archives agenda item. Brasil and Kenya, with the support of other
countries who have declared support for a treaty in this area, would not permit this
change in approach to the SCCR (SCCR 2014a) work on libraries and archives.
SCCR 28, which was held 30 June to 4 July 2014, began from the December
2013 conclusions of SCCR 26 (see again SCCR 2013b) (since there were no May
2014 conclusions (SCCR 2014b)). This 28th meeting also ended without a committee consensus about Conclusions, resulting in only a Summary by the Chair
being filed (SCCR 2014c).43 The Secretariat, officially reporting, noted
[t]he delegation of the United States of America stated that the inability to reach conclusions for the past two sessions threw a doubt on the usefulness of the committee. . .(SCCR
2014d, 416).
The trend of inability to reach consensus within meetings continued. SCCR

29 ended with a Chairs Summary of which, as the Summary itself notes, [t]he
Committee took note (see SCCR 2014e, [18]).44 In the Summary by the Chair
document that concluded SCCR 30, the following appears:
30. The Committee took note of the contents of this Summary by the Chair. The Chair
clarified that this summary reflects the Chairs views on the result of the 30th session of the
SCCR and that, in consequence, it was not subject to approval by the Committee (SCCR
2015a).
It is clear, after an unprecedented five consecutive meetings of the SCCR at

which even consensus in the Committee over how to report the Conclusions of the
sessions has not been achieved, that the process for moving forward on further
public international law agreement concerning either rights of economic rights
holders or users rights is currently at a standstill.45
6 Conclusion
As demonstrated by Marrakesh, it is possible to gain international agreement for
binding limitations and exceptions to copyright through the WIPO public international law process. However, that milestone can only represent a historic shift in
43
Even the Draft Report of SCCR 27 prepared by the Secretariat proved contentious at SCCR
28 and was not adopted until the end of that session (see SCCR 2014a, [294]).
44
That Draft Report (SCCR 2014d) itself is reported in the Summary of the Chair from the 30th
Session as having been approved by the Committee (see SCCR 2015a, item 5) SCCR 31 itself,
7-11 December 2015, showed no improved results over SCCR 30 (see SCCR 2015b).
45
Limitations and exceptions for libraries and archives remains an agenda item for SCCR
32, scheduled for 9-13 May 2013 (see SCCR 2016).
125
international copyright law if, in hindsight, we are able to see that those agreed
limitations and exceptions actually do set limits upon the scope of the economic
rightsholders rights such that a three-way balance between the economic
rightsholders, authors, and information users is achieved. This may require
re-interpreting the three-step test in order to place realistic limits on the current
dominance of the economic rightsholders rights (reinforced as they are in the
twenty-first century in international trade law where moral rights, like users rights,
cannot function directly). Additionally, in order to be considered to represent a
historic shift, Marrakesh will have to be shown to herald a trend of international
agreements instantiating users rights: at this point, not only is Marrakesh itself not
in force, but no other users rights treaty seems clearly poised to become
international law.
The current situation leaves a glaring imbalance between the three key sets of
stakeholders in modern copyright: economic rights holders are more than adequately represented in both public international law and international trade law,
authors are recognised explicitly through moral rights present in international
public law and some international trade agreements, but users, though acknowledged in the UDHR, continue without specific treaty rights, despite the promise of
Marrakesh. Moreover, libraries and archives, institutions that exist to serve the
public throughout all the nations of the world, globally recognised as trusted
information intermediaries,46 well positioned to exploit the advantages of the new
global telecommunications and digital technologies in order to serve all the
populations of the world, are struggling to help create a minimum international
legally protected environment for users rights.
Perhaps re-evaluating the key importance of the entrance of the moral rights into
the public international law of copyright, recognising it as reflecting the paradigm
shift in copyright law caused by recognition of the personhood of the corporation,
will re-invigorate debate about how to intentionally focus internationally on the
new three-way balance in the public interest that is required for copyright going
forward: a balance between (1) economic rights holders, (2) authors, and (3) users.
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Moments of Flux in Intermediary Liability

for Copyright Infringement in Australia
Nicolas Suzor, Rachel Choi, and Kylie Pappalardo
Abstract This chapter provides an overview of a recent shift in regulatory strategies to address copyright infringement toward enlisting the assistance of general
purpose Internet Service Providers. In Australia, the High Court held in 2012 that
iiNet, a general purpose Internet Service Provider, had no legal duty to police what
its subscribers did with their internet connections. We provide an overview of three
recent developments in Australian copyright law since that decision that demonstrate an emerging shift in the way that obligations are imposed on Internet Service
Providers to govern the actions of their users without relying on secondary liability.
The first is a new privately negotiated industry code that introduces a graduated
response system that requires Internet Service Providers to pass on warnings to
subscribers who receive allegations of infringement. The second involves a recent
series of Federal Court cases where rightsholders made a partially successful
application to require Internet Service Providers to hand over the identifying details
of subscribers whose households are alleged to have infringed copyright. The third
is a new legislative scheme that will require Internet Service Providers to block
access to foreign websites that facilitate infringement. We argue that these shifts
represent a greater sophistication in approaches to enrolling general purpose intermediaries in the regulatory project. We also suggest that these shifts represent a
potentially disturbing trend towards enforcement of copyright law in a way that
does not provide strong safeguards for the legitimate constitutional due process
interests of users. We conclude with a call for greater attention and research to
better understand how intermediaries make decisions when governing the conduct
of users, how those decisions may be influenced by both state and non-state actors,
and how the rights of individuals to due process can be adequately protected.
Nicolas Suzor and Kylie Pappalardo are academics and Rachel Choi is a Graduate
N. Suzor (*) K. Pappalardo
School of Law, Queensland University of Technology, Brisbane, QLD, Australia
e-mail: n.suzor@qut.edu.au; k.pappalardo@qut.edu.au
R. Choi
Paralegal, Brisbane, QLD, Australia
e-mail: contact@rachelchoi.com
DOI 10.1007/978-3-319-31177-7_8
129
130
N. Suzor et al.
1 Introduction
Technology creates new intermediaries, and changes what its possible to require of them
(Doctorow 2014, 70).
Regulating the internet is hard to do. The scale of the internet, its transnational
nature, and the anonymity of users make it extremely costly to target the individuals
who breach national civil or criminal laws. The only effective and scalable way to
regulate the actions of large numbers people on the internet is through online
intermediaries (Goldsmith and Wu 2006). These are the institutions that facilitate
communication: internet service providers (ISPs), search engines, content hosts,
and social networks. Governments, private firms, and civil society organisations are
increasingly seeking to compel these intermediaries to take more responsibility to
prevent or respond to infringements of intellectual property (IP) rights (particularly copyright and trademark). Around the world, intermediaries are increasingly
subject to a variety of obligations to help enforce IP rights, ranging from informal
social and governmental pressure, to industry codes and private negotiated agreements, to formal legislative schemes (see further Giblin 2014). This chapter provides an example of this emerging shift toward increased responsibilities for
intermediaries, through examination of a series of recent developments in
Australian copyright law. We review recent changes to the law that propose to
require general purpose ISPs to pass on warning notices and allegations of infringement to their subscribers, to hand details of subscribers who have received allegations of infringement over to rightsholders, and to attempt to block access to foreign
websites that facilitate infringement. These changes represent a stark policy move
away from the decision in Roadshow Films v. iiNet [2012] H.C.A. 16, where the
Australian High Court held that a general purpose ISP had no legal duty to concern
itself with what its subscribers did with their internet connections. The full impact
of these recent changes is not yet knowable. Taken together, however, they can be
seen as either providing more effective and efficient mechanisms for regulating user
behaviour or, less optimistically, as a worrying trend in unduly strengthening,
through public law, the influence of private actors.
2 An Emerging Shift in Governance: Enrolling Private

Intermediaries
As the internet continues to grow in importance for our everyday lives, the inability
of existing legal instruments to provide effective remedies for civil wrongs, and
constraints on illegal behaviour, is becoming a massive problem across the entire
breadth of national legal systems. There is a great deal of frustration, globally, that
the internet has proved so difficult to regulate, and that the intermediaries who are in
a position to act often have no formal responsibility to do so.
Moments of Flux in Intermediary Liability for Copyright Infringement in. . .
131
One of the most common obligations that private actors seek to have imposed
upon intermediaries is an obligation to respond to complaints and remove content
from their networks. Notice-and-takedown is the broad term given to this process.
Such obligations are currently most formalised and most used in copyright law:
Google alone receives over 32 million copyright takedown requests a month to
remove URLs from its search engine (Google 2014). The effectiveness of this type
of regimeat least in terms of the speed with which notices are processedmakes
it an attractive model to private actors.
The operation of notice-and-takedown in copyright is predicated upon the threat
of potential liability for non-compliance being placed upon intermediaries. The
prototype for this type of law, the United States Digital Millennium Copyright Act
(DMCA) was enacted in 1998 as a legislative bargain: it provides certainty for
telecommunications providers in the form of immunity from financial penalty for
copyright infringement, on the condition that they adopt efficient schemes for
removing apparently infringing content when notified (see Barker 2005, 4750).
The core problem with liability as a motivator is that there are few intermediaries
left to be sued. In copyright in particular, the rules for intermediary liability have
somewhat settledparticularly for US-based copyright industries suing under US
law. It is now generally clear that intermediaries whose role in infringement is
limited to providing a general purpose service or technology with substantial
non-infringing uses (Sony Corp of America v. Universal City Studios (1984)
464 U.S. 417), and who do not actively encourage infringement (MGM Studios
v. Grokster (2005) 545 U.S. 913), will not be liable for infringement. Rightsholders
are now, by and large, in a position where the major intermediaries who facilitate
infringement in a way that would attract liability are not often within jurisdictional
reach, and other intermediaries upon whom some duties might usefully be imposed
are largely immune from suit.
Take, for example, current debates about file sharing over BitTorrent. The
developers of the general purpose BitTorrent protocol and its software
implementations are often not liable for how it is used. The people who upload
infringing content are difficult to identify and many. The indexers and trackers of
any significant size that facilitate access to infringing content are dispersedThe
Pirate Bay, most notably, has proved extremely difficult to shut down on the basis
that its human and technical infrastructure is very often out of jurisdictional reach
(see Mantel 2012; Touloumis 2009). This leaves rightsholders with few avenues for
enforcement under existing law.
The current limits of intermediary liability have led copyright lobbyists to exert
massive pressure to change the rhetoric of enforcement. One of the key frontiers for
copyright enforcement over the last decade has been a struggle over whose responsibility it is to enforce copyright interests. Rightsholders, particularly the large
US-based entertainment and publishing industries, are currently seeking to require
various groups of intermediaries, who are not otherwise liable, to do something
about rampant infringement. In particular, the agenda of rightsholders for the
greater part of the last decade has been to seek new mechanisms to co-opt ISPs
into enforcing copyright. The key specific goals have been to get ISPs to block
132
N. Suzor et al.
access to infringing content hosted outside of the jurisdiction; to pass on notices of

infringement to their subscribers and impose sanctions upon allegedly repeat
infringers; and to hand over the personal details of subscribers who have received
multiple allegations of infringement.
This chapter illustrates one aspect of the on-going global efforts to seek to
impose new obligations on intermediaries through a discussion of three recent
developments in Australian copyright law. Australia is a particularly illuminating
jurisdiction in this regard as it has been one of the important targets for development of new copyright enforcement measures over the last decade. These efforts
have included high profile lawsuits, largely financed by the US copyright industries
(see McCallum 2008),1 one against the operators of the Kazaa file sharing network
(Universal Music Australia v. Sharman License Holdings (2005) 222 F.C.R. 465)
and the other against a large general purpose ISP (Roadshow Films v. iiNet [2012]
H.C.A. 16). Over the same period, intense political debates have erupted over, on
the one hand, the apparently high rates of copyright infringement amongst
Australian consumers and, on the other hand, the relatively high prices and low
levels of service to which Australian consumers are exposed in accessing copyright
goods when compared with the experiences of consumers in other Western countries (House Standing Committee on Infrastructure and Communications 2013).
Pressure on the Government to reform copyright law has been strong from all sides:
users of copyright are seeking a dramatic increase in exceptions to copyright
infringement (Australian Law Reform Commission 2014); the telecommunications
industry is seeking greater certainty through the expansion of safe harbours2 from
liability (Communications Alliance Ltd 2011); and rightsholder groups are heavily
engaged in lobbying for stronger copyright enforcement mechanisms. As part of
these latter two lobbying efforts, large media conglomerates have drastically
increased their political donations in recent years and represent some of the biggest
single donors to both major political parties (Coyne 2015).
These lobbying and litigation efforts have been effective in Australia in bringing
about three major legal changes in 2015. First, a government-sanctioned new
industry code implementing a graduated response scheme was developed and is
expected to be approved by late 2015 (Communications Alliance Ltd 2015).
Second, in an Australian court, in April 2015, rightsholders were partially
Referring to the iiNet case, the US Ambassador to Australia writes: Despite the lead role of
AFACT and the inclusion of Australian companies Village Roadshow and the Seven Network, this
is an MPAA/American studios production. . . . MPAA was the mover behind AFACTs case
(AFACT is essentially MPAAs Australian subcontractor; MPAA/MPA have no independent,
formal presence here), acting on behalf of the six American studios involved. MPAA prefers that
its leading role not be made public. AFACT and MPAA worked hard to get Village Roadshow and
the Seven Network to agree to be the public Australian faces on the case to make it clear there are
Australian equities at stake, and this isnt just Hollywood bullying some poor little Australian
ISP.
2
Safe harbour schemes limit relief against carriage service providers who fall within a safe
harbour specified in of the Copyright Act 1968 (Cth) Pt V Div 2AA from the risk of liability for
inadvertently hosting or communicating infringing material on behalf of their users.
1
133
successful in seeking preliminary discovery from ISPs of the identifying details of

account holders alleged to have infringed their rights (Dallas Buyers Club LLC
v. iiNet [2015] F.C.A. 317). Third, in June 2015, a new provision came into force in
Australian copyright law that enables rightsholders to apply for orders requiring
ISPs to block access to foreign websites that facilitate copyright infringement
(Copyright Act 1968 (Cth) section 115A). These developments have all proceeded
on the basis that ISPs are not generally legally liable for the infringing acts of their
subscribers: they follow a highly-publicised, unsuccessful attempt by rightsholders
to extend intermediary liability law to a general purpose ISP in Australia
(Roadshow Films v. iiNet [2012] H.C.A. 16). In this case against iiNet, the plaintiffs, led by the US Motion Picture Association of America (MPAA) and Recording
Industry Association of America (RIAA), sought a judgment which would have had
the result that ordinary consumer ISPs could be held liable when their subscribers
used their networks to infringe.
In the iiNet case, the Australian High Court found that Australian ISPs are under
no obligation to take measures against subscriberssuch as sending infringement
warning notices or terminating subscriber accountsbased only on the strength of
copyright infringement allegations made by rightsholders (Pappalardo 2014a;
Lindsay 2012). The primary infringements at issue in iiNet involved the communication of films and television programs using the BitTorrent protocol. The High
Court placed great emphasis on the fact that iiNet, as a mere ISP, had no control
over BitTorrent or how its subscribers were using file sharing technologies
(Roadshow Films v. iiNet [2012], [112], [137] (Gummow and Hayne JJ)). The
court stated:
[T]he extent of iiNets power was limited. It had no direct power to prevent the primary
infringements and could only ensure that result indirectly by terminating the contractual
relationship it had with its customers (Roadshow Films v. iiNet [2012], [69]-[70] (French
CJ, Crennan and Kiefel JJ); see also [139] (Gummow and Hayne JJ)).
This indirect contractual power was not sufficient to ground liability. There
were associated issues, including with the reliability of the rightsholders notices of
infringement, that led the court to conclude that iiNets inaction in the face of these
allegations had been reasonable (Roadshow Films v iiNet [2012], [78] (French CJ,
Crennan and Kiefel JJ)). Ultimately, the High Court held that iiNet was not liable
for its inaction in response to allegations of infringement against its users. Its
indifference was simply that of somebody who did not consider it his business
to interfere, who had no desire to see another persons copyright infringed, but
whose view was that copyright and infringement were matters in this case not for
him, but for the owners of the copyright (Roadshow Films v iiNet [2012], [144]
(Gummow and Hayne JJ); see also [7576] (French CJ, Crennan and Kiefel JJ)).
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N. Suzor et al.
3 After iiNet: Enlisting ISPs in the Fight Against Copyright

Infringement
Given the almost complete failure to extend liability to general purpose ISPs,
rightsholders have not resorted to further litigation in Australia but have instead
sought to enlist the aid of ISPs through other means. The primary focus across
several jurisdictions has been either to develop new statutory responsibilities for
ISPs, or to achieve the same ends through non-legislative means. In France, South
Korea, and New Zealand, rightsholders have been able to shepherd the introduction
of graduated response legislation designed to shift some of the burden for
enforcement of copyright claims to ISPs and administrative agencies (Boardman
2011; Yu 2010).3 A similar scheme in the UK is still under development.4
In a number of jurisdictions where it has not been possible to introduce legislative graduated response schemes, rightsholders have instead sought to achieve the
same practical regime (without, at least initially, any direct sanctions for users)
through private agreements and industry codes of conduct (see e.g. EMI Records
v. Eircom [2010] I.E.H.C. 108, [9]). This has been achieved largely through
coerced self-regulation (see Black 1996)with the state still very much involved
in ensuring that ISPs cooperate with rightsholders by issuing veiled and explicit
threats to directly intervene if an agreement is not reached (Bridy 2010). In Ireland,
rightsholders successfully sued Eircom, Irelands largest ISP, leading to a settlement through the development of a privately negotiated graduated response
scheme.5 In the United States, a comprehensive Copyright Alert System (colloquially called the six strikes system) was implemented after years of negotiations
between ISPs and the content industry (see Center for Copyright Information 2015;
Center for Copyright Information 2011; Giblin 2014; see also Bridy 2012). Both
schemes impose various obligations on ISPs to forward on allegations of infringement and, ultimately, implement some form of technical sanction against alleged
repeat infringers (see Center for Copyright Information 2015; Center for Copyright
Information 2011; Giblin 2014; see also Bridy 2012).
To date, there is no evidence that either the Irish scheme or the US system has
reduced instances of copyright infringement (Giblin 2014, 191192). Data is scant,
and the little evidence that has been collected is unreliable because it does not
account for the possibility that users have not ceased infringement but have merely
transitioned to other less detectable forms of infringement (Giblin 2014, 191192,
For an excellent overview and assessment of these schemes see Giblin (2014).
In July 2014, the UK government announced a new industry scheme, Creative Content UK,
comprising of two componentsa large-scale multi-media copyright education campaign, and a
notice-and-notice subscriber alert program that will be implemented following the education
campaign (see United Kingdom Government 2014; British Phonographic Industry 2015).
5
Since this scheme forms part of a settlement, the precise details are private. However, researchers
have pieced together what they can of the terms (see Giblin 2014, 172174).
4
135
198200).6 Additionally, graduated response schemes can adversely impact upon

internet users rights. The most concerning impact is that these schemes shift the
burden of proof from the copyright owner to the accused user (see Bridy 2012, 53).
In ordinary civil cases, the burden of proof falls upon the plaintiff to establish
copyright infringement. Yet under these schemes, an allegation of infringement
automatically triggers an action taken by the ISP against the accused user. If the
user wishes to dispute the allegation he or she must raise evidence that his or her use
was non-infringing or that the allegation is faulty in some way. This shifting of the
burden of proof raises significant concerns about the legitimacy of these schemes
from a due process point-of-view (see Suzor and Fitzgerald 2011; Bridy 2012, 53).
In the US scheme, for instance, users are limited to only six defences that they can
raise against allegations of infringement and the defences do not cover the full
spectrum of limitations and exceptions under US copyright law (Bridy 2012,
5758).7 Thus, users may have punitive action taken against them for uses that
are not, in fact, infringing, and there is very little that users can do about it. Privately
negotiated graduated response schemes also raise particular concerns related to
transparency. The private nature of these schemes tends to mean that they are
shrouded in secrecy, especially as to the specific processes used for the collection
and evaluation of data against users (Bridy 2012; see also Suzor and Fitzgerald
2011).
Even before the High Courts decision in the iiNet case, the Australian Government had been pushing for ISPs and the copyright industry in Australia to formulate
an industry code of practice for combatting online infringement. In 2010, then
Minister for Broadband, Communications and the Digital Economy, Stephen
Conroy, expressed a desire that the film and internet industries sit down and try
to come up with a code of conduct for dealing with online infringement (Grubb
2010). In September 2011, the Federal Attorney-Generals Department convened a
meeting with key stakeholders8 to discuss the state of the legislative landscape in
relation to online copyright infringement (Colley 2011; see further LeMay 2011).
6
The reaction of users in seeking ways of file sharing that are increasingly difficult to detect or
quash accords with regulatory theory that punitive enforcement of the law is often less effective
than persuasion, at least where punishment is used as an early choice: punitive enforcement
engenders a game of regulatory cat-and-mouse whereby [actors] defy the spirit of the law by
exploiting loopholes and the state writes more and more specific rules to cover the loopholes
(Ayres and Braithwaite 1992, 26).
7
Bridy argues that the scheme does not permit users to raise defences based on sections 107 to
122 of the US Copyright Act, other than fair use in section 109, and does not permit a user to argue
that the relevant content was in the public domain for any reason other than that it was published
before 1923 (see also Giblin 2014, 178180).
8
Including representatives from the Australian Content Industry Group (ACIG), Australian
Federation Against Copyright Theft (AFACT), Digital Entertainment Alliance Australia
(DEAA), Telstra, Optus, the Internet Industry Association (IIA) and the Communications Alliance. It is worth noting that key stakeholders did not include user rights groups.
136
N. Suzor et al.
Attorney-General Robert McClelland9 consistently stated that his preference

[was] for an industry-based solution rather than legislative reform (Colley 2011,
quoting Roger Wilkins, Attorney-Generals Department Secretary).
In late November 2011, a coalition of Australian ISPs presented a proposal to the
content industries for a voluntary notice and discovery scheme for dealing with
online copyright infringement (Communications Alliance Ltd n.d.). The coalition
of ISPs presenting this scheme proposed that costs for its operation be borne by
rightsholders (Communications Alliance Ltd n.d.). The various industry bodies
were never able to agree on costs; the content industries rejected this particular
proposal but expressed a willingness to work with ISPs to formulate an alternative
scheme (Taylor 2011; Adhikari 2011). Discussions ultimately stalled, however, in
the wake of the iiNet decision. General academic and industry consensus was that,
post-iiNet, ISPs were in such a strong legal position that they had no incentive to
agree to industry codes requiring them to pass on warning notices or implement any
other measures to prevent copyright infringement (see e.g. Lindsay 2012, 18).
This stalemate between ISPs and the content industries led to significant apparent
frustration on the part of the new Labor Government. In late 2013, the AttorneyGenerals Department sought to recommence discussions with Australian telecommunication providers and content creators about industry protocols for tackling
copyright infringement (Bingemann 2013; see also Simpson 2013), but again nothing
came out of these discussions. The Governments frustration came to a head in July
2014, when the Attorney-Generals Department released a discussion paper entitled,
Online Copyright Infringement (Australian Government 2014). The discussion
paper evidenced a vexation that ISPs were not doing more to combat online infringement. In it, the Government proposed sweeping amendments to Australias authorisation liability doctrine that would have overturned the iiNet decision by de-linking
the element of control from secondary liability (Pappalardo 2014b). The paper was
framed in the over-arching rhetoric that everybody has a role in reducing online
copyright infringement (Australian Government 2014). On this basis, the Government
essentially proposed to predicate liability primarily on an intermediarys failure to take
reasonable steps to prevent or avoid infringement even without a direct power to
prevent particular infringing acts (Pappalardo 2014b, 4).
After significant vocal opposition from user groups, copyright academics, and
other commentators, the Australian Government withdrew the proposal. Nevertheless, the paper served an important political function. It presented a harsh reality to
the bulk of ISPS who had so far refused to meet rightsholders demands that they
take more steps to actively police the actions of their users. When the Government
subsequently called on ISPs to reach agreement with copyright owners on an
industry code to tackle copyright infringement, the threat was explicit and clear:
if no code was agreed upon, the Government would either mandate its own code for
the industry or introduce legislation that would lead to significant risk of liability for
9
The Hon. Robert McClelland was the Attorney-General for Australia from December 2007 to
December 2011.
137
ISPs and other technological intermediaries. This threat, as it turned out, was a
sufficient incentive to convince ISPs to progress with a self-governing negotiated
graduated response code.
3.1
An Industry-Led Graduated Response Code
On 10 December 2014, the Federal Attorney-General and the Minister for Communications requested, in a joint letter to industry leaders, that a code be developed
through consultation with ISPs, consumer representatives and rightsholders from
the music, film, television and performing arts industries. In line with the Federal
Governments timeline, the final Code was submitted to the Australian Communications and Media Authority (ACMA) for registration as an industry code under the
Telecommunications Act 1997 (Cth) on 8 April 2015. The Code proposes a Copyright Notice Scheme that will apply only to residential fixed internet account
holders (Communications Alliance Ltd 2015). The Code has not yet been registered
by the ACMA because ISPs and rightsholders have not yet been able to reach
commercial agreement about who will bear the costs of the scheme. This continues
to be a major stumbling block in bringing the Code into effect.10 Once the Notice
Scheme is registered as an industry code under the Telecommunications Act,
approximately 70 of Australias largest ISPs will be required to comply with it.11
Failure to do so will make them liable to civil penalties. The effectiveness of the
Code will be independently evaluated 18 months after its commencement.
Under the Notice Scheme, rightsholders will be able to send infringement
reports to ISPs that identify internet protocol (IP) addresses alleged to have
been used to infringe copyright (Communications Alliance Ltd 2015, 3.4). ISPs
will then be obliged to take reasonable steps to match the IP addresses identified by
the rightsholders to account holders to which the IP addresses were assigned at the
time of the alleged infringement (Communications Alliance Ltd 2015, 3.6.2).
Where an IP address can be matched, the ISP will be required to send the account
holder an Education Notice which provides information on the alleged infringement, the identity of the rightsholder and a description of the content it is alleged
has been infringed (Communications Alliance Ltd 2015, 3.6.3, 3.7.1). The notice
would also contain, amongst other things, the assurance that personal information
has not been passed on to a third party, an acknowledgement that the detected
alleged infringement does not necessarily correlate to the account holders activity,
and general information about accessing lawful online content (Communications
Alliance Ltd 2015, 3.7.1). Upon receipt of further infringement notices with respect
10
The Code was initially scheduled to commence by 1 September 2015.

The Code will only apply to ISPs who have 1000 account holders individually or as part of a
corporate group, and an initial cap on volume will be limited to up to 200,000 notices to be
processed every 12 months.
11
138
N. Suzor et al.
to an account holder, the ISP will be required to issue a second Warning Notice
and a third Final Notice (Communications Alliance Ltd 2015, 3.6.3).
If a Final Notice is received within a 12 month period, the Code provides that the
account holder will have the option to challenge the validity of the allegations by
having them independently reviewed by a panel (Communications Alliance Ltd
2015, 3.10). The panel will comprise of six representative members: two appointed
by rightsholders, two by ISPs and two each from different consumer organisations.
Either after the allocated challenge period has expired or if a challenge is unsuccessful, the IP address related to the account will be listed on a Final Notice List.
Rightsholders will be able to write to an ISP requesting the Final Notice List, which
will detail the number of account holders issued with notices and any record of
acknowledgement from the account holders that they received a Final Notice. The
policy provides that rightsholders may then elect to file an application for preliminary discovery in court, seeking access to account holders details. ISPs will be
required to act reasonably to facilitate and assist rightsholders applications to
court. The Code leaves it to the courts discretion as to whether preliminary
discovery should be granted.
The proposed Code claims to be designed to deter copyright infringing behaviour and, at the same time, to educate consumers about available and lawful content
alternatives. In focusing on education, the Code appears to differ from graduated
response schemes implemented in overseas jurisdictions which include measures
requiring ISPs to take action against users suspected of infringing copyright by
suspending their accounts and eventually terminating service.12 Despite its emphasis on education, the proposed Code presents a number of key concerns for
consumers. Most importantly, there is potential for abuse of the system once
rightsholders obtain preliminary discovery of account holders personal details. In
other jurisdictions, some rightsholders have used discovery for so-called speculative invoicing, where rightsholders contact consumers with offers to settle potential infringement actions for grossly disproportionate amounts (see, e.g. Patrick
Collins v. John Doe [2012] E.D.N.Y., 5). Speculative invoicing is dangerous for
two reasons. First, the settlement figures claimed can have little relationship to the
harm suffered and, as such, become unfair extra-legal penalties that abuse preliminary discovery available through the legal system (Golden Eye v. Telefonica UK
[2010] E.W.H.C. 723, [137]). Second, consumers face a difficult choice between
paying up or incurring significant expense in contesting an action in court. Courts in
Australia and internationally have begun to exercise greater judicial oversight over
the ways that rightsholders communicate with users in order to limit these practices
(Golden Eye v. Telefonica UK [2010], [36]; Voltage Pictures v. John Doe (2014)
12
For example, the limited scheme in Ireland implemented in response to EMI Records v. Eircom
Ltd [2010] I.E.H.C. 108 seems to empower the ISP to terminate subscriber accounts upon
receiving three notices of infringement. Additionally, the Copyright Alert Scheme implemented
in the United States permits ISPs to impose mitigation measures upon receipt of the fifth and
sixth notice of infringementthese measures may include temporary restriction of the users
internet access (see Giblin 2014, 173, 177).
139
240 A.C.W.S 964, [133]). As one example, we consider the Australian Federal
Courts efforts to limit speculative invoicing in Dallas Buyers Club LLC v. iiNet
[2015] F.C.A. 317 below. This case suggests that Australian courts may be willing
and able to provide the supervision to avoid abuse of the Code.
3.2
Preliminary Discovery
The scheduled implementation of the graduated response code by September 2015

did not come soon enough for some rightsholders. Dallas Buyers Club LLC, the US
entity which owns the copyright in the film, and its parent company Voltage
Pictures LLC, were the applicants in the proceedings seeking preliminary discovery
from iiNet and five other Australian ISPs of the identities of the account holders
associated with ISP addresses which the applicants claimed had shared the film over
BitTorrent. The applicants believed that although the relevant account holders may
not necessarily be the same as the persons infringing their copyright, their information would help in leading to the identification of the actual infringers.
The ISPs resisted the application on many bases. The ISPs key argument was
that owing to the nature of peer-to-peer file sharing sites like BitTorrent, the
identified IP addresses only downloaded a very small sliver of the film, which
is insufficient to show substantial copying as required for a finding of copyright
infringement (Dallas Buyers Club LLC v. iiNet Ltd [2015], [28]). The ISPs put
forward a number of reasons to support the argument that the Courts discretion to
order preliminary discovery should not be exercised. These included that the
demonstrated infringements were trivial in nature and it made no commercial
sense for the applicants to commence the proceedings in seeking such small
sums, that there was evidence suggesting that the applicants would engage in the
practice of speculative invoicing if they were given the information of the account
holders they sought, and that the preliminary discovery process was being used as a
tool of investigation rather than identification (Dallas Buyers Club v. iiNet
[2015], [73]).
On 7 April 2015, Justice Perram of the Federal Court delivered judgment in
Dallas Buyers Club LLC v. iiNet Ltd [2015], ordering preliminary discovery from
six Australian ISPs of the information of 4726 account holders of IP addresses
believed to have infringed copyright in the 2012 Jean-Marc Vallee film Dallas
Buyers Club. While major rightsholders have indicated that they have no plans to
sue Australian subscribers whose information they obtain under the industry Code
described above, this decision illustrates how cases may proceed if the Code proves
to be unwieldy or ineffective for the purposes of deterring alleged copyright
infringement. Importantly, the decision imposes substantial protections for consumers through judicial oversight of the discovery process.
Justice Perram rejected the ISPs submissions and ordered the ISPs to provide
the applicants with the names and physical addresses of the account holders
associated with each of the 4726 IP addresses (Dallas Buyers Club LLC v. iiNet
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N. Suzor et al.
[2015], [5]). While it was accepted that the identified IP addresses only downloaded
a small sliver of the film, His Honour was satisfied that this provided strong
circumstantial evidence that the end-user was infringing the copyright in the film
overall and held that it was sufficient evidence for a preliminary discovery application (Dallas Buyers Club LLC v. iiNet [2015], [5]). At this stage of proceedings, it
was not necessary for the applicants to establish a prima facie case of infringement,
just that they had a real case which was not fanciful (Dallas Buyers Club LLC
v. iiNet [2015], [5]).
In making the order, Justice Perram imposed conditions on the applicants.
Firstly, the information of the account holders can only be used for the purposes
of recovering compensation for the infringements and is not otherwise to be
disclosed without the leave of the Federal Court. Secondly, a draft of any letter
the applicants intend to send to account holders associated with the identified IP
addresses must be submitted to his Honour (Dallas Buyers Club LLC v. iiNet
[2015], [5]). The second condition stems from the observation that any representations made to consumers about liabilities which they do not have or which are
drastically inflated may constitute misleading or deceptive conduct within the
meaning of section 18 of the Australian Consumer Law in the Competition and
Consumer Act 2010 (Cth) (Dallas Buyers Club LLC v. iiNet [2015], [82]).
In Justice Perrams final orders, ISPs were required to pay 75 % of the applicants
costs of the proceedings (Dallas Buyers Club LLC v. iiNet (No 3) [2015]
F.C.A. 422, [7]). His Honour had initially ordered the applicants to pay all of the
ISPs costs, but changed his order in response to the adversarial position adopted by
the ISPs which put nearly everything in issue and extended the length of the court
hearing (Dallas Buyers Club LLC v. iiNet (No 3) [2015], [6]). Justice Perrams
willingness to alter his costs order drastically reduces the incentive for future ISPs
to diligently challenge discovery orders (see further Suzor 2004).
Justice Perrams decision to require court oversight of the way in which subscriber details are used is an extremely important protection against abuse of the
legal process for preliminary discovery orders. Through this mechanism, the court
has effectively reduced, if not eliminated, the risk of account holders being subject
to speculative invoicing. Similar restrictions by courts have been important safeguards in both the UK (Golden Eye v. Telefonica UK [2010], [36]) and Canada
(Voltage Pictures v. John Doe (2014), [133]) to prevent extortionate demands that
rightsholders, including Voltage, have made in other jurisdictions (see e.g. Ernesto
2011). This has proved important in Australiain a subsequent hearing, Justice
Perram rejected Voltage Pictures draft demands as unreasonable and excessive
(Dallas Buyers Club LLC v. iiNet (No 4) [2015] F.C.A. 838). Voltage Pictures were
initially elusive as to the settlement figure it would include in letters sent to users
(Dallas Buyers Club v. iiNet (No 4) [2015], [912]), but they eventually informed
the Federal Court that it would include the purchase price of a single legitimate
copy of the film, another fee for sharing the film to other BitTorrent users, a
punishment for any other infringement of the copyright in other, unrelated, content
that subscribers admit to have illicitly downloaded and an amount that would cover
the cost of tracking down users associated with infringing downloads (Dallas
141
Buyers Club LLC v. iiNet (No 4) [2015], [15]. While Justice Perram found that
Voltage could ask for the costs of a single copy of the film and an appropriately
proportioned fee to recover its legal costs so far. However, his Honour rejected
attempts to multiply these fees, potentially thousands of times, for other BitTorrent
peers to whom the subscriber may have transmitted parts of the film. His Honour
also rejected the claim for monetary penalties based on infringements of other
copyright owners rights to which account holders may have admitted. His Honour
described Voltages proposition that BitTorrent users might have avoided infringement by approaching Voltage to negotiate a distribution arrangement in return for a
licence fee as so surreal as not to be taken seriously (Dallas Buyers Club LLC
v. iiNet (No 4) [2015], [23]).
Ultimately, Justice Perrams refusal to allow Voltage to send its letters as drafted
provides protection for consumers from speculative invoicing practices.13 This
level of judicial oversight, if it is repeated in future cases, provides some assurance
that the damages rightholders may seek from account holders must be far more
reasonable than might otherwise be claimed in such demand letters. While this
safeguard has not explicitly been introduced into the proposed Copyright Notice
Scheme, preliminary discovery in the judicial system is the only mechanism for
ISPs to disclose identifying details of subscribers. In this decision, the Australian
Federal Court here has clearly set out a series of protections for consumers that will
require rightsholders to make a binding commitment not to use discovery to seek
damages that they would not reasonably be able to recover in litigation.
3.3
Website Blocking
Given the two developments described above, it might appear that copyright
owners have largely succeeded in their strategic aim to compel ISPs to pass
infringement warnings on to ISP customers and to hand back to copyright owners
at least some ISP customer details,14 in an effort to convince users that the threat of
copyright enforcement is real. It is perhaps unlikely that the majority of large
rightsholders will pursue infringement actions against users, particularly given
the disastrous public-relations results of the RIAAs campaign to sue tens of
thousands of US consumers nearly 10 years ago. At least for the giant media
conglomerates, if not for the independent studios, Australias graduated response
scheme appears designed primarily as a means either to scare consumers or to
deliver targeted marketing messages aimed at encouraging consumers to gain
13
As of 4 September 2015, Dallas Buyers Club LLC decided not to appeal Justice Perrams ruling
against its methodology for calculating damages. Indications are that they are re-working how to
pursue additional damages beyond what the court has said it would allow (Reilly 2015).
14
Though ISPs are not compelled to hand over the identities of the customers; this is information
which remains within the purview of the courts on a case by case basis.
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N. Suzor et al.
access to copyright goods through legitimate channels. On the other hand, the
limitations imposed by the Federal Court on the way that preliminary discovery
can be used severely restricts the ability of the less scrupulous of the smaller
rightsholders from using these schemes as a revenue-raising strategy.
Rightsholders, as another alternative, have turned their attention to enlisting the
aid of ISPs in order to block subscribers access to foreign websites that facilitate
infringement. Frustrated with the continual arms race and jurisdictional challenges of locating and closing websites like The Pirate Bay, rightsholders have
sought to extend a website blocking scheme originally developed in the UK to other
jurisdictions, including Australia. In 2011, the England and Wales High Court
granted injunctive relief against an ISP, British Telecom (BT), requiring it to
block the Newzbin2 BitTorrent indexer (Twentieth Century Fox Film Corporation
v. British Telecommunications [2011] E.W.H.C. 2714) and ordering relief for the
first time under section 97A of the Copyright, Designs and Patents Act 1988 (UK),
which had been introduced in 2003 (Copyright and Related Rights Regulations
2003 (UK), regulation 27(1)). This followed an earlier successful action against
Newzbins first incarnation, where the UK company responsible for operating the
site was ordered to shut it down (Twentieth Century Fox Film Corporation
v. Newzbin Ltd [2010] E.W.H.C. 608). Shortly afterward, the site was reincarnated
as Newzbin2a direct copy of the original, hosted outside of jurisdictional reach in
the Seychelles. Rightsholders, faced with a valid successful judgment with a largely
ineffective remedy, sought to require one of the UKs ISPs to block access to the
new site.
The BT decision proved to be an attractive model for rightsholders. While on a
technical level the blocks are trivially easy to circumvent, many more orders for UK
ISPs to block websites have since been issued. The scheme has expanded as well. In
the UK, the Cartier decision extended the obligation to block to include sites that
were enabling the infringement of trade marks by others who traded in counterfeit
goods (Cartier, Montblanc and Richemont v. BSkyB, BT, TalkTalk, EE and Virgin
[2014] E.W.H.C. 3354). This decision, surprisingly, found that such an obligation
arose under article 11 of the Directive 2004/48/EC on the enforcement of intellectual property rights, despite the fact that section 97A, on which earlier orders were
based, applies only to copyright infringement (see Williams and Smith 2014).
Similar orders were also made in copyright law by other European Courts
although the European Court of Justice eventually found that Dutch orders to
block file sharing websites were ineffective and therefore imposed disproportionate
restrictions on freedom of communication (Rein v. Ziggo [2012] ECLI:NL:
GHDHA:2014:88, translated by Pirate Party 2012).
Rightsholders have sought to extend their victories in Europe to Australia and
other jurisdictions. On 26 June 2015, the Australian Federal Government amended
the Copyright Act 1968 (Cth) to allow rightsholders to apply to the Federal Court
for an injunction requiring ISPs to disable access to websites hosted in foreign
jurisdictions (Copyright Act 1968 (Cth) section 115A, introduced by Copyright
Amendment (Online Infringement) Act 2015 (Cth)). Rightsholders must show that
the online location either directly infringes copyright or facilitates infringement
143
(Copyright Act 1968 (Cth) section 115A(1)). Rightsholders bear the onus of showing that the online location has a primary purpose of infringing or facilitating the
copyright infringement (House of Representatives 2015, 38). The Court may take
into consideration a range of factors including whether disabling access to the
online location is a proportionate response in the circumstances, the impact on
any person likely to be affected by the grant of the injunction, and whether it is in
the public interest to disable access to the online location (Copyright Act 1968 (Cth)
section 115A(5); see also House of Representatives 2015, 5). The legislation provides that, if granted, the injunction must require the ISP to take reasonable steps to
disable access to the online location (Copyright Act 1968 (Cth) section 115A(2)).
The estimated cost to ISPs of complying with injunctions is expected to total
approximately $130,000 on an annual basis (House of Representatives 2015, 11).
According to the Explanatory Memorandum, the primary purpose test is an
intentionally high threshold for the rightsholder to meet, as a safeguard against
potential abuse (House of Representatives 2015, 38). In exercising its discretion,
the Court may take into account the flagrancy of the infringement or its facilitation
(House of Representatives 2015, 5). The legislation as enacted, however, raises
serious concerns about how it will be interpreted by the Court. In particular, it is
unclear when an online location will facilitate an infringement. The word facilitate has not been defined in the Copyright Act and is unfamiliar to Australian
copyright law (see e.g. Australian Digital Alliance 2015, 7; Weatherall 2015, 3). It
appears to be broader than the term authorise, which conditions liability for
secondary copyright infringement. Despite the Governments assurances, it appears
likely that the filtering scheme may be used to block foreign sites that would not
actually be liable for copyright infringement if they were hosted within Australia.
This Australian legislation passed both houses of Parliament with little debate or
opposition. One of the few voices of dissent was Greens Senator Scott Ludlam,
whose address to the Senate expressed concern about the dangerous potential for
expansion and scope creep (Commonwealth 2008, 4024). Senator Ludlam
pointed out that the Australian Governments record is not great when it comes to
carefully tailoring legislation designed to regulate the internet; Senator Ludlam
cited the secret blacklists compiled by ACMA in 2009, which notoriously listed
clearly innocuous sites that were erroneously proposed to be blocked alongside sites
that contained child abuse material. Several years later, the Australian Securities
and Investment Commission inadvertently blocked over 250,000 innocent sites in
addition to the one site it was targeting (Keane 2013), eventually leading to a
Parliamentary review into the administrative enforcement powers available under
the Telecommunications Act 1997 (Cth) to require ISPs to block websites (House of
Representatives Committee on Infrastructure and Communications 2015).
144
N. Suzor et al.
4 The Legitimacy of Decentralised Enforcement

The Australian changes explored here mark an important shift in the way that
obligations are imposed on online intermediaries. The dominant legal means of
enlisting the assistance of online intermediaries in copyright enforcement had, until
recently, taken the form of the threat of secondary liability. These new methods do
not depend on the threat of liability to make intermediaries compliantthey give
copyright owners more direct power to require intermediaries to aid them in their
enforcement pursuits. This reflects a more blunt approach to copyright enforcement: in some cases, ISPs are required to act without any effective judicial scrutiny
of the methods employed, which exposes ISPs to a great deal of uncertainty about,
and risk concerning, when the actions of their subscribers must trigger a response.
The law sets standards for compliance by the ISPs, and any failure in meeting those
standards leaves the ISP open to very expensive potential claims from copyright
owners. The predictable result is that the intermediary ISP will enforce the law in a
way that errs on the side of over-enforcement, impinging on the legitimate rights of
subscribers to free expression (Universal Declaration of Human Rights 1948 article
19; Internet Rights and Principles Coalition 2014) and due process (Suzor 2011,
1819; Suzor 2012; Suzor and Fitzgerald 2011).
Debates about the appropriate extent of ISP liability continue to fester in many
jurisdictions and in multilateral fora, without much hope of resolution. There are at
least four groups of serious competing tensions that are not easily reconcilable: the
importance of developing effective mechanisms to enforce the law, the liberty
interests of individuals, the liberty interests of intermediaries, and the substantive
intellectual property rights of rightsholders. Most of the recorded debate has been
rooted only in the conflict between the ISPs and rightsholders, and has not adequately considered the interests of internet users (see Cohen 2012, 129). A large
number of debates about intermediary liability continue to falter on the core
difficulty of developing governance procedures that are responsive to the needs of
stakeholders without sacrificing the generativity of the systemthe openness of
infrastructure that has made the internet such a powerful tool for innovation and
liberty (Zittrain 2008). In large part, this is an anxiety about the sophistication of
law and the ability of lawmakers to regulate technologya fear that bad law will
hinder innovation and liberty (Johnson and Post 1995).
Two of the three recent changes in Australian law described here show a
growing sophistication in the way that states regulate intermediaries through
discrete obligations, not by directly imposing liability on intermediaries based on
the conduct of their users. While these obligations are still generally resisted by
telecommunications industries, in the end we are seeing compromises reflected in
government sanctioned solutions between copyright holders and intermediary ISPs,
such as legislative bargains or essentially self-governing negotiated industry codes,
which are able to provide workable methods of enforcing law without introducing
risks or costs too high for intermediaries. In these compromises, however, it appears
to be the interests of end users that are largely left out. In the context of this shift,
145
there is, for instance, an important gap in knowledge about how intermediaries
make decisions to take down or refuse to take down content (Pasquale 2015), how
those decisions may be influenced by both state and non-state actors (Brown and
Marsden 2013), and how the rights of individuals to due process are actually
protected in these processes (Suzor 2011, 1819).
In the context of increasing pressures on intermediaries from rightsholders and,
in turn, governments, there is a growing global unease about how the rights of
individuals can be protected online (see e.g. Internet Rights and Principles Coalition 2014). The task of identifying and developing social, technical, and legal
approaches that can improve the legitimacy of online governance is an increasingly
pressing issue (Brown and Marsden 2013; de Nardis 2014: Mansell 2012). This is
also a recognised gap in the regulatory theory literature, where scholars have
identified a clear need to further explore how constitutional values and rights can
be protected when governance is decentralized (Black 2008; Grabosky 2013;
Morgan 2007, 1). There is an increasingly pressing need to interrogate what
good, legitimate governance should require of private online intermediaries. We
suggest that a key framework for analysis should be based on the constitutional
principles of the rule of lawparticularly certainty, due process, consent, and
respect for fundamental rights (Suzor 2011, 1819; Suzor 2012; Suzor and Fitzgerald
2011). This analysis foregrounds two main sets of questions:
How can intermediaries respond to the demands of disparate groups of public
authorities and non-state actors? This raises important questions about not only how
to deal with conflicting obligations (a classic jurisdictional problem), but whether
and how intermediaries should resist these demands and protect the freedom of their
users to communicate and seek information (Svantesson 2014).
How can different actors influence the way that intermediaries design and
govern their networks to improve legitimacy? Intermediaries are under mounting
pressures to increase the transparency of the decisions they make and the requests
they receive from states and private actors (Fung et al. 2007; Parsons 2015), but
how well increased transparency is working remains unclear. More work needs to
be done to closely examine the ways that intermediaries interact with, adopt, and
resist social, market, and legal pressures to develop more legitimate policies and
terms of service (De Zwart 2010).
The analysis that is needed now, in light of the recent Australian legal developments outlined above, must specifically examine the intersection between these
regulatory provisions and public constitutional values (Suzor 2011). The language
of constitutionalism and rights has been almost exclusively applied to the actions of
the state. It does not apply directly to the technical and policy decisions of private
online platforms (Lessig 2006). But this is precisely what is needed as both state
and non-state actors continue to place pressure on intermediaries to take more
responsibility for enforcing law and social norms.
The creator of the World Wide Web, Sir Tim Berners Lee, recently called for a
Magna Carta for the Web (Kiss 2014) to protect the rights of individuals. In
New Zealand, these principles have made it as far as a draft Bill of Internet Rights
and Freedoms (Hughes 2014). We suggest that a great deal more work is needed to
146
N. Suzor et al.
adapt the values of constitutionalism as a measure of the ability of decentralised

regulatory arrangements to protect the substantive and procedural rights of individuals. The measure of legitimacy that is needed here is both reflexive and
responsive (Black 1996), it requires a degree of autonomy to allow particular
groups to develop governance norms that are adapted to their needs (Johnson and
Post 1995; as Teubner 1983) as well as constraints on autonomy in response to
public values (Fitzgerald 2000; Parker 2008). This analysis, we believe, must
explore how private intermediaries might be influenced to make decisions in
ways that uphold the function of protecting rights and due process without the
expense or rigidity of formal legal processes (Morgan 2003; Parker 2007, 207).
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Press.
The Evolution of Domain Names and Their

Impacts on Trade Mark Rights
Heather Ann Forrest
Abstract In 2001, the World Intellectual Property Organisation identified various

points of tension arising from the use of trade marks in the Internet Domain Name
System. With the addition of more than 1000 alternatives to .com Top-Level
Domain to the global Internet, some of those tensions remain and new tensions
are created as trade marks function and value in the Domain Name System evolves.
This chapter considers the changing use of trade marks in the Domain Name
System, in particular from the introduction of new generic Top-Level Domains
and their impacts on trade mark rights.
1 Understanding the Name in Domain Name System

1.1
Names in the Early Internet
Names have been used to identify the computers that host information accessible
via the Internet for more than 40 years. While the computers that make up the
Internet rely on numerical addresses (see Mueller 2002, 3334), it was recognised
early in the Internets development that long strings of numbers are not easily
remembered by human users. As a result, computer-friendly numerical IP addresses
came to be paired with human-friendly alphanumeric names (Watson 1971). Yet at
this early point, names served a purely functional purpose for the relatively few
government and university computers that comprised the early Internet (see
Mueller 2002, 4041).
Names assumed a new significance with the introduction of the Domain Name
System, or DNS, in the early 1980s. The DNS provided a logical and efficient
means of allocating responsibility for keeping track of the increasing number of
host computers on the Internet (Clark 1982). Each zone, or so-called domain, in
the systems hierarchical structure would be named, with a master list of the names
H.A. Forrest (*)

University of Tasmania, Hobart, TAS, Australia
e-mail: Heather.Forrest@utas.edu.au
DOI 10.1007/978-3-319-31177-7_9
151
152
H.A. Forrest
at the top of the hierarchy (Top-Level Domains, or TLDs). At the DNSs

inception, there were eight TLDs: .arpa, .gov, .mil, .edu, .com, .org, .net and .int.
The list of TLDs grew with the addition of domains allocated to countries, called
country code TLDs or ccTLDs. The rate of creation of ccTLDs was and still is
limited by their association with the International Standardization Organizations
ISO 3166:1 standard of English country names and code elements. New ccTLDs
are issued only for those country codes included in the ISO 3166-1 standard
(Internet Assigned Numbers Authority, n.d.). To distinguish them from ccTLDs,
the eight initial TLDs were characterised generic or gTLDs, signalling their
general, categorical nature (Postel and Reynolds 1984).
Reflecting the hierarchical nature of the DNS, the TLD appears in a domain
name as its far right component. To the left of the TLD is the second-level, the next
level down in the hierarchical DNS. The operator of a TLD is responsible for
keeping track of all of the second-level domains within its TLD. In distinct contrast
to TLDs, many second-level domains identify sources of information. Where this is
the case, the second-level namespace is the level at which users register domain
names. The hierarchical design of the DNS also enables domain name registration
to occur further down the hierarchy and some ccTLDs have, for example, structured
the second-level into categories and pushed registration of names into the thirdlevel. Australias .au and the United Kingdoms .uk are examples of this, with
domain names appearing as, for example, brandname.co.uk. Names at the various
levels are separated by a full-stop, or dot. This is illustrated in Fig. 1. While the
term domain name encompasses all of these names as a composite, it is frequently
used to refer only to the publicly registered name (below, brandname).
The result of this structural design is that the functionality of the system for its
human users has come to depend upon names. At the top-level of the DNS, names
were predetermined for gTLDs through the choices of its architects, while for
ccTLDs by the adoption of the ISO 3166-1 standard. Yet at the level of public
registration (the brandname in Fig. 1), name choice was not restricted. Far more
than just easy-to-remember identifiers of a host computer, registered domain names
were used as identifiers of the source of information in the sense of attribution or
control. From DNSs early days arose the practice of selecting domain names for
their representativeness (Smith 1997, 1175); as businesses in particular discovered
semantic value in domain names, a conceptual link between domain names and
trade marks emerged.
1.2
More Names in the DNS: 19982011
Originally a US Department of Defense research project, the Internet fully

transitioned to commercial use in 1997 when responsibility for its oversight was
transferred to the National Telecommunications and Information Administration
(NTIA) of the Department of Commerce (see Computer Science and Telecommunications Board 2005, 7677). As interest in this new communications medium
The Evolution of Domain Names and Their Impacts on Trade Mark Rights
brandname
Third-Level Domain
brandname
com
co
uk
Second-Level Domain
153
Top-Level Domain
Fig. 1 Components of a domain name
grew beyond US borders, the US government faced increasing pressure to not only
commercialise the Internet but to divest its interest in the project. As the twentieth
century drew to a close, the Internet Corporation for Assigned Names and Numbers
(or ICANN, as it is now most commonly known) was established as a California
public benefit non-profit corporation with accountability to the NTIA through a
Memorandum of Understanding (ICANN 1999a).
At the point of ICANNs formation, a key concern was the anti-competitive
effects of the overwhelming popularity of one gTLD, .com, over all other TLDs.
ICANNs Articles of Incorporation reflect this concern by giving the non-profit
corporation the mandate to perform [. . .] and oversee [. . .] functions related to the
coordination of the Internet domain name system (DNS), including the development of policies for determining the circumstances under which new top-level
domains are added to the DNS root system (ICANN 1998). This work commenced
almost immediately and on 16 July 2000, the nascent ICANNs Board of Directors
resolved to support policy development to facilitate the addition of new gTLDs to
the DNS (ICANN 2000a). An initial, proof of concept (ICANN 2004) expansion
round commenced soon thereafter, generating 47 applications proposing more than
200 new domains including .books, .church, .xxx, .biz and .kids (ICANN 2000b).
From these ICANNs Board of Directors selected only seven.biz, .info, .name, .
pro, .museum, .aero and .coopapplying selection criteria that prioritised stability
and functionality of the DNS and contribution to diversity and competition (ICANN
2000c). A second experimental attempt at expansion was approved by ICANNs
Board on 31 October 2003 (ICANN 2003) generating ten applications proposing
nine additional new gTLDs: .asia, .cat, .jobs, .mail, .mobi, .post, .tel (two applications), .travel and .xxx (see ICANN 2004). All but .mail were ultimately added to
the DNS in the period 20042011 (ICANN n.d.(a)).
Names played a vital role in these experimental expansion processes, but that
role differed according to level of the DNS. Semantic value of second-level names
hinged upon the ease by which users could remember them and associate them with
the source of information sought (see Sterling 1997, 735); hence the apparently
increasing scarcity of semantically valuable (including trade mark-corresponding)
names in the .com TLD played a significant role in driving expansion at the
top-level (ICANN 2000d). The semantic value of the newly added top-level
names differed, however, from second-level domain names because they remained
largely categorical, in line with the initially created eight gTLDs. Thus in the first
decade of ICANNs control over the DNS, TLDs preserved and even reinforced
their established role as location identifiers, identifying zones in which certain
154
H.A. Forrest
general categories of information sources could be found. Up to this point,

trade marks entered the DNS at the second-level and below only.
1.3
ICANNs New gTLD Program: 2012 Onwards
Satisfied with the results of the two proof of concept expansion attempts (ICANN
2007), ICANNs Board of Directors voted in June 2008 in favour of commencing
another, significantly more impactful expansion round in which ICANN would not
hand-select successful applications, but rather all applications satisfying a set of
financial, technical and policy-based criteria would be successful (see ICANN
2008). A total of 1930 applications were lodged (ICANN 2012a, 2015a), many
continuing the status quo of generic, categorical-type names (such as .book, .film, .
lawyer and .home), while many others injecting a new semantic value into the
Top-Level of the DNS. Sixty-six applications, including .paris, .nyc and .quebec,
were characterised as geographic (ICANN 2015b). Six hundred and sixty four
applications, a significant one-third of the total lodged, were for trade markequivalent names, known in the ICANN environment as .brands (Cooper 2012).
One hundred and sixteen applications, comprising generics, geographics and
brands, request names in non-Latin scripts (ICANN 2015b).
Factoring in competing applications for the same name (ICANN 2015b),1 nearly
1300 new gTLDs are expected to be added to the DNS (ICANN 2015c). At 1 July
2015, more than 650 new gTLDs had already been added (ICANN 2015c), and
attention began to turn to Internet users reactions to these new online spaces.
Statistics reveal a gradual uptake, with more than 50 % of the mid-2015 total of
nearly 6.8 million domain name registrations in new gTLDs in a single domain, .
xyz (nTLDStats 2015). The vast majority of registrationsnearly 80 %are
reportedly parked, meaning they are not actively used by their registrant to display
information (nTLDStats 2015). It is difficult to make reliable predictions so soon
into the entry of new gTLDs into the DNS, but it is worth noting that applicants
predictions in ICANNs two earlier experimental expansion rounds were grossly
overestimated (Forrest 2013, 55). Even at this early stage, however, changes are
appearing in the way that namesparticularly trade marksare being used in the
expanded DNS. The significance of these changes should be analysed against the
backdrop of existing (and, in some cases, inherent) tensions between domain names
and trade marks.
Reporting a total of 233 contention sets of competing applications.
155
2 Existing Tensions Between Domain Names and Trade

Marks
The reliance on names in the DNS gives rise to particular challenges when the use
of those names is subject to jurisdiction-specific legal requirements, because the
DNSs architects intentionally prioritised innovation and avoided geographical,
topological, or technological constraints (see Postel and Reynolds 1984). Clearly,
names were integrated into the DNS to ensure human user workability, not to
establish a new corporate asset or form of private property (see Postel and Reynolds
1984).2 Recognition of legal rights in domain names was simply not the technical
communitys intention or concern.
The differences between domain names and trade marks are now well-known
and analysed in detail (see e.g. Falco 2014; Kim 2014; Phillips and Simon 2005,
264265). These gave rise early in the commercialised DNS to two issues in
particular: first, the registrability of trade marks as domain names; and second,
the registrability of domain names as trade marks. The historical approach to these
fundamental issues is highlighted here to highlight tensions that still remain more
than 30 years on from the implementation of the DNS and new issues arising from
the addition of more than 1000 new gTLDs to the DNS.
2.1
2.1.1
Trade Marks as Domain Names

Domain Name Registration by Trade Mark Owner
The fundamental differences between trade marks and domain names immediately
spawned a question as to whether trade mark rights confer a right to register a mark
as a domain name. As a starting point, the principal international treaties on
trademark protection, the Paris Convention on the Protection of Industrial Property
(1984) 828 U.N.T.S. 305 (Paris Convention) and Agreement on Trade-Related
Aspects of Intellectual Property Rights (1994) 1869 U.N.T.S. 299 (Annex 1C))
(TRIPS), do not mention domain names, nor do treaties dealing with mainly
procedural trade mark matters (Nice Agreement Concerning the International
Classification of Goods and Services for the Purposes of the Registration of
Marks (1967) 828 U.N.T.S. 191; Madrid Agreement Concerning the International
Registration of Marks (1979) 828 U.N.T.S. 389; Protocol Relating to the Madrid
Agreement Concerning the International Registration of Marks (1989); Trademark
Law Treaty (1994) 2037 U.N.T.S. 35. Domain name ownership is not expressly
encompassed within the exclusive rights of the trade mark owner under TRIPS
Article 16 or any other international treaty of global effect.
The motivation is to provide an organization name that is free of undesirable semantics.
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The absence of such a mandate in international law does not prevent States from
expanding trade mark owners rights to encompass domain name registration, but
the nature of domain names as global identifiers unconstrained by territorial borders
makes this a very difficult exercise. Domestic law could provide a right to register
local trade marks in local TLDsmost logically the trade mark owners local
ccTLD. This is not so impractical in light of findings that companies with headquarters outside of the United States tend to register domain names in their home
countrys ccTLD (Katz et al. 2010, 65).
The normative value of ICANN policy is particularly relevant where there are
gaps in international and domestic law. Contractually, ICANN could require (just
as it requires all domain name registrants to submit to the Uniform Domain Name
Dispute Resolution Policy (or UDRP, as it is most commonly known), that TLD
operators reserve domain names comprising trade marks for registration by trade
mark owners. Notably, the ICANN community considered and rejected this
approach in the new gTLD policy development process in the context of a proposed
globally protected marks list, or GPML (see Implementation Recommendation
Team 2009). The proposed GPML was intended to limit the creation of top- and
second-level domain names identical or confusingly similar to marks on the list
(Implementation Recommendation Team 2009, 17). It was not intended to be a
reserved list by which trademark owners will be able to simply block pending
domain applications or reserve domain names in advance (Implementation Recommendation Team 2009, 16) but would have required registrants of second-level
domains and applicants for top-level domains to demonstrate rights or legitimate
interests in an applied-for name (Implementation Recommendation Team 2009,
1921). Although not mandated by ICANN, many new gTLDs have voluntarily
adopted a mechanism to limit second-level domain name registrations of trade
marks (Donuts n.d.).
Importantly, the GPML and related mechanisms do not per se confer a right
upon trade mark holders to register corresponding domain names. The territoriality
of trade marks and the coexistence of marks registered in respect of different goods
and services render such a rule unworkable. Accordingly, the International Trade
Marks Association advises in response to the question, If I have a trademark, do I
have a domain name? as follows:
No, a trademark is not the same thing as a domain name. A trademark identifies goods or
services from a particular source, or of a defined quality. If a trademark owner would like to
use its trademark as its domain name, the owner must apply for a domain name registration
with an ICANN-accredited registrar (International Trademark Association 2015).
Thus the current position is that neither international law nor ICANN policy
recognises domain name ownership as a right of the trade mark owner.
2.1.2
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Domain Name Registration by Third Parties
From the absence of such a right (whether conferred by legislation or contract)

arises the potential for a trade mark-comprising domain name to be acquired by
someone other than the trade mark owner. At the top-level of the DNS, this was not
problematic prior to 2012, as ICANNs Board of Directors closely controlled the
experimental expansion rounds by deliberately selecting unproblematic new
gTLDs. At the second-level, however, cybersquatting (Avery Dennison Corporation v Sumpton, [1999] 999 F Supp 1337, 1338 (CD Cal, 1999) reversed [1999]
189 F3d 8683 appeared early in the commercialised DNS. The earliest attempt to
tackle this problem was an ineffective dispute resolution policy available only to
holders of United States trade marks challenging domain names identical to their
marks (Haas 2009). Consequently, in proposing the non-profit corporation that
would become ICANN, the NTIA recommended the adoption of a dispute resolution policy by which all domain name registrants would be bound (National
Telecommunications and Information Administration 1998). The matter was
referred by the newly formed ICANN to the World Intellectual Property Organization, which embarked upon a study of the use of trade marks and related terms as
second-level domains (see WIPO 1999a). The outcome of this study was the
adoption by the Board of Directors of the newly formed ICANN at its first public
meeting in August 1999 (see ICANN 1999b, c; DNSO Working Group-A 1999) of
the now well-known UDRP, which provides for the cancellation or transfer of
domain names deemed abusively registered in violation of a third partys trade
mark rights. All gTLDs other than .edu, .gov, .mil, .arpa, and .int have since
implemented the UDRP by force of their Registry Agreement with ICANN
(ICANN 1999d). Although they are not contractually required to do so, a number
of ccTLDs have also adopted the UDRP or modelled dispute resolution policies on
it (see e.g. ASNIC n.d.; CY Registry n.d.).
While the UDRP has proven an effective tool for combating unauthorised
registrations, increasingly high case volumes (see WIPO 2011, 18) even after the
introduction of sunrise priority registration periods for trade mark holders suggest
that the UDRP is not a completely effective deterrent.
2.1.3
Domain Names as Trade Marks
The second fundamental issue arising from the differences between domain names
and trade marks is the extent to which a domain name is registrable as a trade mark.
3
The court defined cybersquatting as where defendants merely squat on their registered
domain names until someone else comes along who wishes to use them . . . usurp[ing] all of the
accepted meanings of their domain names, so as to prevent others from using the same domain
names in any of their accepted meanings . . . [a]nd . . . seek[ing] to make a financial return by
exacting a price before consenting to allow others to use the domain names on which they have
chosen to squat.
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Again the starting point is international law, which makes no mention of domain
names. No international treaty requires that States protect domain names as trade
marks. Key observations from the language used in TRIPS article 15(1) are first,
that domain names are not expressly identified as signs, but various things
comprising signs (personal names, letters and numerals) are represented in domain
names, thus bringing them within the scope of eligibility for registration as
trade marks. Second, while article 15(1) lays out the minimum requirements of
registrability, it does not inherently recognise any particular sign or signs as
inherently registrable. Domain names are thus not expressly excluded from eligibility and, to be registrable, must along with all signs be distinctive and be used on
or in connection with commercial goods or services.
The distinctiveness requirement probes the role of a mark as an identifier.
Domain names unquestionably identify something, but the distinctiveness requirement demands more than that. More is required than identifying in the minds of
consumers the address of a host computer on the Internet, the domain names
originally intended function. More too is required than merely identifying a domain
names registrant as a business card does, and which trade mark experts assert
domain names unquestionably do:
For most of us, it is a reasonable assumption that the owner of a trademark in the real world
that you rely on to provide authentic goods or services is also the owner of a website that
you find under the corresponding domain name (Implementation Recommendation Team
2009, 1).
Rather, distinctiveness of a trade mark domain name demands that same recognition by consumers as exists in the bricks-and-mortar trade mark: a triangular
relationship between the domain name, its registrant/trader and that registrant/
traders particular goods or services. This has long been the justification for
affording marks legal protection (see Martin 1951).
One effect of the overwhelming popularity of .com is a perception of gTLDs as
being incapable of source identification due to their inherently generic nature. The
United States Patent and Trademark Office (USPTO) previously acknowledged this
perception in instructing trade mark examiners to ignore TLDs when evaluating
distinctiveness (USPTO 2013, s 1215.02), with the result that second-level domain
names comprising generic terms have come to relatively consistently be deemed to
lack trade mark significance (Falco 2014, 194). Naturally, such a view also limits
the registrability as a trade mark of gTLDs themselves.
The requirement that signs be used on or in connection with particular goods or
services is a logical extension of the requirement of distinctiveness. The relevant
question here is whether a domain name functions as a trade mark: the domain name
cannot simply be used as a contact detail like a phone number. It is easy in applying this
requirement, therefore, to draw a distinction between traditional bricks-and-mortar
businesses that register domain names to advertise their business (USPTO 2015, s
1215.02(b))4 and domain names directly linked to the sale of goods or services.
4
Advertising ones own products or services is not a service under the Trademark Act.
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Domain names registrability as a trade mark clearly depends upon the way in
which trade marks and domain names are used and Internet users perceptions of
those uses; fundamentally, domain names are not inherently trade marks and trade
marks are not inherently domain names. From the changing use in the DNS of
names generally and trade marks specifically come changes in Internet users
understanding of the DNS. The introduction of semantically valuable new gTLDs
in the DNS forces reconsideration of trade marks use as domain names as well as
the registrability of domain names as trade marks.
3 New gTLDs, New Opportunities, New Tensions

New gTLDs will unquestionably fundamentally change the DNS, but the existing
tensions between trade marks and domain names noted in the previous section
suggest that the impacts of expansion will encompass much more than simply a
greater number of TLDs in the system. Many have predicted that more gTLDs will
generate a higher volume of the conflicts already present at the second-level,
perhaps to unmanageable levels (Spencer 2014, 872; Arnot 2014; Fisher 2014)
yet this is not the only, or perhaps even the most significant tension arising from
new gTLDs. This analysis reveals significant potential opportunities but also
significant potential risks for trade mark holders.
3.1
3.1.1
Trade Marks as Domain Names: Exercising Rights

in an Expanded DNS
More Cybersquatting
Noting the continuously increasing UDRP case loads cited above, it is easy to
understand the trade mark communitys reticence to create more top-level domains
in which unauthorised third parties can register trade mark comprising domain
names (see Implementation Recommendation Team 2009, 15; see also WIPO
2009). Trade mark owners worry that the importance of domain names to contemporary communications and business and the concomitant dependence of all Internet users upon the integrity of registry operators who control TLDs and the
registrars who sell domain names are ignored until something goes wrong (Implementation Recommendation Team 2009, 2). Simply put, they see in new gTLDs
more opportunities for things to go wrong, when that was already occurring in a
DNS comprised of only 22 gTLDs: specifically, the five brand owner members of a
A sizeable number of our team would have preferred status quo with no new gTLDs until better
Rights Protection Mechanisms are in place for the existing gTLDs.
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team of trade mark experts assembled by ICANNs Board of Directors in 2009

expressed expectations of having to deal with at least one new domain name
infringement somewhere in the world every day of the year (Implementation
Recommendation Team 2009, 2).
That expert teams recommendations drove the development and inclusion in
ICANN new gTLD policy of a set of mandatory rights protection mechanisms
(RPMs) for all new gTLDs. These RPMs attempt to curb cybersquatting,
typosquatting and related activities at the second-level, but also address the new
threat of cybersquatting at the top-level. In line with other gTLDs created since
ICANNs formation, all were required to implement the UDRP (ICANN 2012b).
To bolster the UDRP, a new rapid relief mechanism was added to quickly resolve
those cases in which there is no genuine contestable issue as to the infringement
and abuse that is taking place (Implementation Recommendation Team 2009, 25).
Under the new gTLD RPMs, registry operators themselves assumed new liability: the Trademark Post-Delegation Dispute Resolution Procedure (Trademark
PDDRP) enlivens when a registrys affirmative conduct in its operation or use of
a gTLD or its affirmative bad faith conduct in relation to domain name registrants
within the registry impacts trade mark rights (ICANN 2012b, 9.2.1). As of
mid-2015, the Trademark PDDRP had not yet been actioned.
Some new gTLD RPMs, on the other hand, have taken immediate effect. With
each launch of a new gTLD, a mandatory 30-day sunrise takes place to provide
trade mark owners with an opportunity to register domain names prior to general
availability (ICANN 2012b, 6.2.1). Following that, for the first 60 days of a new
gTLDs availability to the public, a notification service must be employed to alert
domain name registrants of existing trade mark rights and rights holders of domain
name registrations matching their trade marks (ICANN 2012b, 6.1.1). Both the
sunrise and the notification service are supported by a newly developed global
repository for validated trade marks called the Trademark Clearinghouse (ICANN
2012b, 1.1).
ICANN will commence a review in late 2015 of these RPMs with a view to
future expansion round policy development. The start date of this review was
delayed to capture more data and give a fuller picture of the intellectual property
communitys experience in using these mechanisms and Internet users response to
them (ICANN 2015d).
Of more immediate concern to the trade mark community and not captured by
these RPMs is the impact of new gripe gTLDs such as .sucks. So-called sucks sites
have long been problematic for trade mark holders (Johnson 2001, 478), but unlike .
com, which neither actively invited nor repelled brand + sucks domain name
registrations, such registrations are the raison detre of new gTLD .sucks:
By building an easy-to-locate, central town square available 24 hours a day, 7 days a
week, 365 days a year, dotSucks is designed to help consumers find their voices and allow
companies to find the value in criticism. Each dotSucks domain has the potential to become
an essential part of every organizations customer relationship management program (.
sucks 2015a).
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While there are multiple ways to present gripe sites on the Internet, the use of a
domain name that evokes or connotes the subject of the griping is the most
common and effective in that it immediately labels the website as a gripesite by
communicating to the audience that the subject of the griping is the named brand
(Lipton and Wong 2013).
Trade mark owners faced a premium registration fee of up to USD 2499 to
register Trademark Clearinghouse entries during the .sucks sunrise period (Berkens
2015). After sunrise, when domain names became available to the general public,
marks registered or blocked in other new gTLDs sunrise periods became subject to
premium pricing (confusingly called Sunrise Premium names) (.sucks 2015b). A
year-long blocking service is available to prevent any registrations of the blocked
name, but Sunrise Premium names are not eligible for this service (.sucks 2015b).
In the view of ICANNs Intellectual Property Committee, this predatory, exploitative and coercive business model circumvents the ICANN-mandated new gTLD
RPMs by placing high cost barriers on participation in the sunrise priority registration period and financial penalties after the sunrise for having participated in other
new gTLDs sunrise periods (Shatan 2015, 4).
The protection of free speech conceptually stands in the way of preventing gripe
sites outright (see Fox 2009; Creasman 2005), but gripe sites have fallen afoul of
the UDRP (see, e.g. Red Bull GmbH v. Carl Gamel (2008) WIPO D2008-0253;
Wachovia Corporation v. Alton Flanders (2003) WIPO D2003-0596 (19 September
2003); Vivendi Universal v. Jay David Allen (2001) WIPO D2001-1121). Two
leading IP scholars have noted a tendency of courts and UDRP panels to distinguish
gripe domain names registered in .com from other pre-2012 TLDs, while noting a
more positive outcome overall for trade mark holders (Lipton and Wong 2013).
Although mindful of the free speech implications, they posit that the introduction
of .sucks could become the home of gripe sites on the Internet and influence
decision-makers to preserve .com domain names for trade mark holders (Lipton
and Wong 2013, 198). In response to the concerns raised by the Intellectual
Property Constituency and others, ICANN referred the matter to the United States
Federal Trade Commission (FTC) and Canadas Office of Consumer Affairs (Jeffrey 2015) as the FTC has recommended, upcoming reviews of new gTLD RPMs
will need to address these concerns (Ramirez 2015).
Increased cybersquatting arising from new gTLDs must also, given applicants
complete freedom in the new gTLD application process, take account of the risk of
trade mark capture at the top-level. This is ICANNs first real experience with rights
protection policy above the second-level, and comparatively speaking, this risk was
given less attention than the second-level harms addressed by the suite of RPMs just
noted. New policy gave registered and unregistered trade mark holders standing to
challenge new gTLD applications on the basis that use of the applied-for gTLD
would be likely to infringe the trade mark owners rights (ICANN 2012b, 3.2.2.2).
Sixty nine policy-compliant objections were raised and proceedings were administered by WIPO; nearly all were rejected, with only four objections being successful (WIPO 2013, 11). Factors influencing outcomes included the fact that only a
minority of applicants . . . asserted and evidenced registered rights in support of
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their application and response and in some cases in which rights were asserted,
they had been primarily obtained for the purpose of supporting an application for a
new gTLD application and/or legal rights objection, with little or no demonstrable
prior use (WIPO 2013, 12). Analysis of these decisions has revealed the lynchpin
factors to be consumer recognition of the mark and a bad faith intention to use the
gTLD to create customer confusion (Dolinska 2014, 983). The effectiveness of the
objection mechanism in combating this new version of cybersquatting is certain to
be evaluated by the ICANN community in policy development for future expansion
rounds.
3.1.2
Increased Cost
An obvious corollary to more things going wrong with the use of trade marks in
the expanded DNS is increased cost to trade mark owners. First, there is the cost of
accessing ICANNs newly mandated RPMs for new gTLDs. The Trademark
Clearinghouse supporting the RPMs was designed with the intention of lowering
costs by providing a single repository, and thus a single point of validation, the
most expensive part of registering Sunrise Domain names (Shatan 2015), of
trade mark rights as recorded in national registers worldwide. On this basis:
[I]t was believed by intellectual property owners that the costs of obtaining a Sunrise
Registration would be substantially reduced.
For some new gTLDs, this turned out to be the case. In .NYC for example, the cost of a
Sunrise Registration charged by the Registry to the Registrars was only an additional $15
above the cost of a normal registration. In most cases, however, new gTLD Registries
continued to charge a few hundred dollars despite the fact that this did not represent a cost
recovery pricing model. In essence, Registries were charging more simply because they
could and they knew that some trademark owners would be forced to pay those exorbitant
prices to protect their marks (Shatan 2015).
Even where a cost recovery pricing model is used, policing trade mark rights in
the expanded DNS unavoidably requires greater resources than in the pre-2012
DNS. Trade mark owners pay fees ranging between USD 95 and USD 150 for one
year of inclusion in the Trademark Clearinghouse, the amount dependent upon the
number of registrations deposited (Clearinghouse 2015). This is not an insignificant
added cost to any trade mark holders budget, but particularly so for large trade mark
portfolio holders such as Unilever, with a trade mark portfolio of nearly 160,000
registrations covering 400 brands in 14 categories of Food and Home and Personal
care products (Rorai 2010).
New gTLDs additionally demand greater resource allocation to defensive registrations. The threat of as much as billions of dollars in increased cost (Association
of National Advertisers 2011) in large part motivated the enhanced suite of RPMs
imposed in all new gTLDs. The volume of defensive registrations is another factor,
while premium pricing is another, as evidenced by the controversial new .sucks
gTLD with its sunrise fee of USD 2499 in comparison to the standard annual fee of
USD 9.95 per year (Shatan 2015). With the introduction of new gTLDs, this risk too
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has spread to the top-level; some of the more than 600 .brand applicants undoubtedly applied for a new gTLD motivated by concerns that their marks would become
the exclusive real estate (see generally Hunter 2003) of another party with rights in
the same mark. While ICANNs USD 185,000 application fee would not itself have
been cost prohibitive for large corporate trade mark portfolio holders, the true cost
of operating a new gTLD registry in satisfaction of ICANNs prescribed standards,
estimated by some to be as much as USD 800,000 to one million (Association of
National Advertisers 2011), has a considerable impact on corporate budgets.
Lastly, one can easily extrapolate the impact of new gTLDs on the already high
UDRP case volumes. Late 2014 data revealing 15 times more UDRP and URS
disputes being filed against new gTLD domain names than other TLDs (Berkens
2014) may if this trend continues beyond the launch of new gTLDs validate trade
mark owners fears that new gTLDs would create an overwhelming burden on their
enforcement budgets. Ultimately, new gTLDs unavoidably increase costs for trade
mark holders whether or not they chose to apply for a new gTLD. Some costs have
been felt immediately while others are longer term, and their impacts on trade mark
rights and their exercise in the DNS are yet to be revealed.
3.2
3.2.1
Domain Names as Trade Marks: Rights Acquisition

and Maintenance in an Expanded DNS
New Trade Marks Emerging
Less obvious but no less commercially and legally important than the impacts of
new gTLDs on the registration of trade marks as domain names are the impacts of
new gTLDs on the registration of domain names as trade marks. One potentially
significant outcome is the trade mark significance of new gTLDs and arising from
this registrability of names not previously deemed able to satisfy the standard
criteria of TRIPS article 15(1).
As noted above, the generic, categorical nature of pre-2012 gTLDs limits their
contribution to a trade marks distinctiveness. Many Internet users have simply
understood .com, .net, .org, .biz, and .info as mere organisational labels or
addresses, or at most a description of the business of the particular gTLD registry,
for example, the services of registering .com domain names (see Falco 2014,
194, citing USPTO 2013, s 1215.02(d)).
As new gTLDs enter the DNS, the question is now asked: will post-2012 new
gTLDs be understood the same way (Shimanoff 2014, 893)? Will, for example, the
new .bing TLD (ICANN n.d.(b)) be understood as merely a database of Bingrelated domain names? Will it be understood that .bing is a marketing device of
Yahoo? Will Internet users understand it as the address (as .com was and still is to
domain name registrations by commercial entities) to find the sort of information
previously accessible through the domain name bing.com? Or will it be understood as something more? These questions asked of existing companies with
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recognised brands will also be asked of new businesses formed to capitalise on the
opportunity of operating a TLD, with new brands and service offerings to the
Internet public. In both cases, trade mark significance will be borne out of changing
consumer perceptions of domain names, in particular the TLD name, as an identifier
linking the name with the particular services of a particular trader and thus creating
distinctiveness (see Falco 2014; Shimanoff 2014).
In anticipation of such questions, the USPTO has revised its examiners manual
to consider the gTLD in evaluating distinctiveness when the trade mark applicant
has contracted with ICANN to operate a gTLD and the identified services will be
primarily for the benefit of others (USPTO 2015, s 1215.02(d)). The latter is not
satisfied by operating a gTLD registry for [the trademark applicants] employees or
its own marketing activities . . . but registration for use by the applicants affiliated
distributors would typically qualify (Falco 2014, 197, citing USPTO 2013, s 1715).
In essence, when the gTLD shifts in the publics mind from identifying a
location on the Internet or the activity of maintaining a database of domain
names to a specialised service provided by a recognised service provider, new
trade marks are born (see Shimanoff 2014, 915925; Falco 2014, 23, citing Barrett
2013).
As with non-inherently distinctive names in the bricks-and-mortar world, the
path to consumer recognition may be long and require substantial investment
without guaranteed success, but there are countless examples of registrations
globally to illustrate that this is not an impossible task. Examples of failure of
offline and online names must also not be ignored. Notably, in 2011, prior to the
application period or launch of any new gTLD created in ICANNs current expansion round, the USPTO likened the name .music to .com and .net, finding that
consumers would understand it to be a TLD in the field of music based on the
current marketing environment which included evidence of a concerted effort to
obtain TLD status for .music (In re Dot Communications Network [2011]
101 U.S.P.Q. 2d 1062, 1067). Relying on pre-2012 consumer perceptions of
TLDs, in other words, .music would be understood by Internet users only as a
TLD, and therefore not as an identifier of source.
To overcome this and similar rejections new gTLD operators must through their
own use practices and Internet user education inject what has previously been
missing from TLDs, that source-identifying significance in connection with [the
trademark] applicants services (In re CyberFinancial.Net [2002] 65 U.S.P.Q. 2d
1789, 1792). To this point, all Internet user attention is on the TLD, without a clear
identification of the entity responsible for it. Although everyone recognises the
name .com, few know the name VeriSign, the Virginia, USA-based company
that operates .com (ICAAN 2012c). VeriSign, Inc has never offered .com to the
world as the particular services of VeriSign, Inc in the way that major soft drink
companies offer their products to the world under a brand that consumers connect
with that particular company. It is tempting to attribute this atypical marketing
approach to VeriSigns control over .com originating from its connection to Network Solutions, the original operator of .com, .net and .org under US government
contract before ICANNs formation (see Network Solutions n.d.). This is countered
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by the fact that gTLDs added to the DNS following ICANNs formation, long after
the commercialisation of the Internet, have been promoted just as .com, without
clear identification of their operators; likely only those actively involved in ICANN
policy-making would be able to identify the operators of any pre-2012 new gTLDs
such as .info, .biz or .name (Shimanoff 2014, 921).
Only this clear connection in the Internet users mind between the TLD, its
operator, and the particular services offered will complete the triangular relationship required in trade mark distinctiveness enabling .lawyers, for example, to be
treated differently from lawyers.com, which was deemed generic for providing an
online interactive database featuring information exchange in the fields of law,
legal news and legal services and therefore not registrable as a trade mark (In re
Reed Elsevier Properties [2007] 482 F3d 1376). This is unquestionably not an easy
task, particularly where the TLD is a generic term and that term is used elsewhere
generically by the trade mark applicant and others.
Semantically valuable TLDs will also potentially contribute to the evaluation of
distinctiveness of second-level domain names within those TLDs. Here, too, the
outcome turns on how gTLDs come to be used and how consumers perceive that
use (In re DNI Holdings [2005] 77 U.S.P.Q. 2d 1435). One impact of new gTLDs
on trade mark rights seems inevitable, however: given even the potential semantic
value of new gTLDs, trade mark examiners can no longer justify ignoring the TLD
when evaluating distinctiveness. Indeed this is reflected in recent revisions to the
USPTOs examiners manual, with the following caution: there is no bright-line,
per se rule that the addition of a gTLD to an otherwise descriptive mark will never,
under any circumstances, operate to create a registrable mark but such an occurrence is likely to be rare (USPTO 2015), s 1209.03(m)). Rare, perhaps, but no
longer impossible.
3.2.2
Stronger Existing Trade Marks
Shifting the focus to existing trade marks, another potential impact of new gTLDs
on the registration of domain names as trade marks is that certain marks may be
strengthened by the increased global exposure offered by inclusion in the DNS. In
addition to the other benefits anticipated by brands that applied for new gTLDs in
2012, including full control over the registry and the online consumer experience
(Smith 2014, 2426; Breyer et al. 2014, 2) and defensive blocking to prevent
capture of the domain by others, a .brand TLD rationalises and consolidates the
brand companys online presence in a way that .com domain names simply cannot.
Many of the companies that applied for a .brand were large global corporations
readily able to bear the costs as well as the risks of operating a new gTLD. For these
companies, the .brand TLD presents an opportunity to consolidate the online
interface with consumers and further strengthen their position as market leaders.
Yet a significant proportion of .brand applications were filed by companies with
brands having local, national or regional recognition but not the global familiarity
of the worlds most identifiable brands. The global reach of the Internet enhanced
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H.A. Forrest
by the clarity and directness of the .brand message may facilitate some of these
brands transition to global recognition, widening their footprint well beyond its
current reach to the point of achieving well-known trade mark status.
While ordinary marks receive protection under the international legal framework
against infringing use on or in connection with identical or similar goods and
services under TRIPS article 16(1), well-known marks receive a significantly
higher level of protection under TRIPS articles 16(2) and (3), which reinforce
Paris Convention article 6bis (1). International law does not as yet provide a
harmonised definition of well-known, so the determination can only definitively
be made on a jurisdiction-by-jurisdiction basis. Guidelines produced by WIPO
include such non-exclusive factors as the:
degree of knowledge or recognition of the mark in the relevant sector of the
public;
duration, extent and geographical area of any use of the mark;
duration, extent and geographical area of any promotion of the mark, including
advertising or publicity and the presentation, at fairs or exhibitions, of the goods
and/or services to which the mark applies;
duration and geographical area of any registrations, and/or any applications for
registration, of the mark, to the extent that they reflect use or recognition of the
mark; and
value associated with the mark (WIPO 1999b).
The use of local, regional and national brands as top-level domains unquestionably offers opportunities to expand the brand companys global footprint, targeting
new consumers in new markets and thus expanding the duration, extent and
geographical area of the use of the mark. Such expanded global use could, in
turn, support trade mark registrations in new markets and generate increased
recognition of the mark in those new markets, driving up the value of the mark.
Such an outcome is by no means guaranteed, however; as with the potential for new
trade marks arising from a new capacity for distinctiveness of gTLDs, achieving
well-known trade mark status depends upon the registry operators use of the new
gTLD and the publics perception of that use. Notably, use must be as a trade mark,
in other words, to identify the particular goods and services of one trader from those
of another. Cautionary statements made above in relation to the challenges of facing
new gTLD operators in acquiring distinctiveness in light of Internet users existing
perceptions of TLDs apply with equal force here.
3.2.3
Weaker Existing Trademarks
Lastly, while some marks may grow stronger due to their use in the expanding
DNS, there is the potential for other marks to lose distinctiveness and even trade
mark status. In this argument, ironically the DNSs requirement of absolute name
uniqueness, which was the chief motivator for many companies in deciding whether
to apply for a .brand (both from the offensive perspective, in terms of a company
167
consolidating its brand message online and seizing the prospect of being known and
recognised by global Internet users and the defensive perspective, in terms of
preventing another identical or similarly-named partys control over the TLD)
and perhaps the greatest near-future opportunity for the brand is at the same time
its greatest threat. How real this threat is depends on ones optimism as to the
success of new gTLDs and Internet users understanding of them.
Relying on the persistence of existing user perceptions of TLDs as address or
information category locators despite the proliferation of proprietary and other
semantically valuable names in at the top-level of the DNS, new gTLDs have
been characterised as the death knell for trade marks: ICANNs new program is
disastrous. When trademarks and brands appear in the top-level domain, they lose
their information conveying ability. The consumer has no context to differentiate
between identical marks, so confusion will inevitably arise (Boroughf 2014, 86).
This argument exposes the extreme opposite of the potential that use of a trade mark
as a gTLD is an opportunity to strengthen a marks recognition and distinctiveness.
It posits that the exclusivity offered by the DNS (and, conversely, the systems
inability to deal with trade mark coexistence) removes the context which consumers
need to link a mark with the goods and services in connection with which it is used
and the trader responsible for those goods and services (Boroughf 2014, 100103).
The other side of this coin is more optimistic but no less disastrous for trade mark
owners: that gTLDs are so widely accepted by Internet users that the brands
underpinning .brand gTLDs simply become synonymous with the services they
offer to Internet users. This loss of source-identifying function is known as
genericide (Goldstein 2007, 112114). The threat of genericide from use of a
trade mark as a gTLD, with all the benefits of the global reach of the DNS and its
ubiquity in modern life and business, illustrates how this can be cast as the problem
of becoming too well-known. It could even be argued that both the underlying
brand and the .brand TLD if it achieves trade mark registrability are highly
susceptible to genericide, which commonly arises when consumers find it linguistically and technically awkward to describe a product or service by terms that state
the product or services key characteristics (Goldstein 2007, 112114). Rather than
say, go look for that information using a web browser, many Internet users simply
say google it, using the trade mark as a verb rather than recognising it as a
particular service offered by a particular service provider.
As of mid-2015 hundreds of new gTLDs have entered the DNS and are accessible by Internet users, but it will take time for Internet users to recognise these new
spaces (see Allemann 2014). As new gTLDs began to enter the DNS, many Internet
users were unaware even of ICANN or its recent expansion initiative (Berkens
2013). One possibility is that as awareness grows, new gTLDs may simply become
synonymous with information provision on a particular topic or field of interest.
This is not genericide, as it does not involve existing marks losing distinctiveness,
but it may contribute to a perpetuation of the more general consumer perception that
TLDs are not source-identifying.
For .brand new gTLDs, the concern is that such a general perception of TLDs as
generic could, coupled with a high degree of success in achieving recognition and
168
H.A. Forrest
use of the .brand gTLD, confuse consumers and damage their perception of the
brand. Familiarity with the .brand and accepting it as a place to find particular
information on the Internet could result in consumers losing their earlier understanding of the brand as linking particular goods and services to a particular trader.
Indeed, this could come about even without a general perception of Internet users of
TLDs as generic.
4 Conclusion
It is clear that in the evolution of the use of trade marks in the DNS, some tensions
arising from the differences between the two identifiers have been managed relatively effectively, for example, through the UDRP, which eliminated the need for a
strained argument that the act of registering a domain name was the use of a trade
mark required to prove trade mark infringement. Other longstanding, fundamental
tensions, such as the requirement for absolute name uniqueness in the DNS and
trade mark laws necessary recognition of coexistence, persist and cannot be
adequately resolved by policy-based rights protection mechanisms. Indeed, these
tensions are exacerbated by the addition of hundreds, and perhaps in the future
thousands, of new gTLDs in the DNS.
The outcome of the use of trade marks in connection with new gTLDs depends
on a variety of factors that cannot yet be adequately measured in these early days
following the launch of new gTLDs. It remains to be seen how new gTLDs will be
used by their operators and whether any consistencies or trends will emerge, for
example across types of gTLDs (geographic, generic, brand). Many but not all .
brand TLDs have secured ICANNs approval to operate internal-only TLDs; this is
a new development in the DNS, raising questions both as to what such TLDs will
look like and how Internet users will respond. It also remains to be seen how trade
mark owners will respond to new gTLDs, although early data showing high UDRP
filing volumes and relatively restrained registration volumes suggests at least some
are employing a reactive rather than proactive strategy. Trade mark owners efforts
to educate Internet users may influence Internet users understanding of the use of
trade marks in the expanded DNS. Certainly, new gTLD registry operators efforts
to educate Internet users about new gTLDs specifically and generally will influence
any changes in user perception, which in turn may influence trade mark examiners
findings as to the distinctiveness of domain names. The obvious impacts of an
expanded DNS are already manifesting themselves: increased cybersquatting and
increased cost for trade mark owners. In time, the less obvious but no less commercially and legally important impacts of an expanded DNS on the acquisition and
maintenance of trade mark rights in the DNS will be exposed.
169
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Non-conventional Trademarks Under United

States Law: An Unbounded New Frontier
of Branding
Llewellyn Joseph Gibbons
Abstract This chapter explores the legal principles underlying trademark law and
theorises the functions of a trademark in post industrial information society or in a
sharing economy. At one time in the U.S. the legal boundaries of a mark were
readily limited to visual words or symbols, and the scope of trademark protection
was narrowly circumscribed to the specific of goods or services for which the mark
served as an identifier in commerce. Later, trademark protection extended to
complementary goods based on a judicial understanding of consumer perception
in an evolving marketplace. Overtime, as mark holders found new ways to use
designations in the marketplaces, courts (and the legislature) have extended trademark protection to protect what in at least some circumstances are in reality new
business models. Consequently, trademarks are no longer just words and symbols
or even (as we learned in the 1990s) a single colour(s) and trade dress. Today,
trademark law also protects attributes such as motion, shape, sound scent, taste, and
touch. The logical limit of modern trademark theory is the limit of the human
organisms sensory perception; and in time, as technology improves human perception, this frontier of trademark law too will continue to expand. Whether this
unlimited expansion of the subject matter of trademark is good public policy is an
open question.
1 Introduction
Whats in a name? That which we call a rose,
By any other name would smell as sweet (Romeo and Juliet, II, ii, 12).
William Shakespeare is wronga rose by any other name would not smell as
sweetbut Shakespeare knew not branding! The correct answer is that a consumer
may not perceive rose by any other (brand) name as smelling as sweet. However, he
Note that the term trademark rather than the more usual trade mark is used in this chapter,
reflecting the United States legislation.
L.J. Gibbons (*)
College of Law, University of Toledo, 2801 W Bancroft St, Toledo, OH 43606, USA
e-mail: lgibbon@Utnet.utoledo.edu
DOI 10.1007/978-3-319-31177-7_10
173
174
L.J. Gibbons
is right that whats past is prologue, and the past may better inform any understanding of the future role of marks and trademark law (The Tempest, II, I,
253254). This chapter explores what is a mark and what function will it serve in
postindustrial information society or in a sharing economy.1 At one time the
U.S. legal boundaries of a mark were readily visual words or symbols, and the scope
of trademark protection was narrowly circumscribed to the specific of goods or
services for which the mark served as an identifier in commerce.2 Overtime, these
protections extended to complementary goods based on a consumer perception in
an evolving marketplace. Ever since then, as mark holders found new ways to use
designations in the marketplaces, courts (and the legislature) have as quickly found
reasons to extend trademark protection to protect what in at least some circumstances are in reality new business models. Trademarks are no longer just words and
symbols or even (as we learned in the 1990s) a single colour(s) and trade dress.
Today, trademark law also protects attributes such as motion, shape, sound scent,
taste, and touch.3 The logical limit of modern trademark theory is the limit of the
human organisms sensory perception; and in time, as technology improves human
perception, this frontier of trademark law too will continue to expand.
Arguably, this evolution is at worse a de facto rejection of normative principles of trademark law; while at best; an example of policy makers sliding down a
slippery slope into an unprincipled real property law understanding of a trademark. The original justification for protection of trademarks was to protect the
integrity of the marketplace and to forestall uses that created a likelihood of
consumer confusion. Trademark law protected the association between the mark
and the associated goods or services. A trademark was understood as protecting the
commercial magnetism or good will of the mark owner (United Drug v. Theodore
Rectanus (1918) 248 U.S. 90). As the U.S. Supreme Court correctly held:
There is no such thing as property in a trade-mark except as a right appurtenant to an
established business or trade in connection with which the mark is employed. The law of
trade-marks is but a part of the broader law of unfair competition; the right to a particular
mark grows out of its use, not its mere adoption; its function is simply to designate the
goods as the product of a particular trader and to protect his good will against the sale of
Throughout this chapter, the author will use the term mark to refer to any designation that
functions like a trademark (using the US trademark rather than trade mark or trade-mark in
other jurisdictions) in order for consumers to distinguish the source, origin, and sponsorship in
commerce (see Commerce and Trade Act, U.S. Code 15, section 1127 that defines mark as any
trademark, service mark, collective mark, or certification mark).
2
Trademark law is of course territorial. Accordingly, this chapter limits is analysis to the evolution
of non-conventional or traditional marks under U.S. law. Although, it may in places extend its
parochial analysis to look at larger global trends. As will be discussed later in this chapter, the
U.S. has one of the broadest definitions of what sorts of designations that will be protected as
trademarks as well as a globally mature and diverse marketplace for consumer-mark interactions.
So, the U.S. experience may foreshadow what other countries may experience.
3
These new mark forms may also be referred to as non-traditional marks, non-conventional
marks, etc.
Non-conventional Trademarks Under United States Law: An Unbounded New. . .
175
anothers product as his; and it is not the subject of property except in connection with an
existing business (United Drug v. Theodore Rectanus (1918), 51).
In essence, a mark served as a signal to a consumer as to source, origin,

sponsorship, or affiliation. Writ large, a trademark is a persistent reminder or
artifact of the consumers past positive or negative interactions with the product
and producer.
However, over the latter part of the twentieth century and continuing until today,
trademark law has evolved as has commerce and the consumer experience and
expectations in the marketplace. Today, trademarks serve another purpose. Trademarks are a signal to the consumer and other consumers. A consumer not only
considers how they interact with the brand and their past experiences, but also how
others will interact with them as they consume the brand. A consumers consumption of brand X may to others also convey political or social support as to policy
Y. A consumer may avoid or support a brand not because of the quality of the
product but for the quality of the brands publicised social agenda. To the degree that
trademark law develops parallel to or in harmony with consumer expectations and
market needs, trademark continues to serve its historical legitimate purpose. But, to
the degree that trademark is trail-blazing where brand consultants and business
would like to take consumers or to the degree that trademark law is unmoored from
its original purposes and instead it is used as a barrier to commerce or to reduce
overall market integrity then it is no longer serving a legitimate trademark function.
The protection of trademarks today is increasingly akin that extended to real
propertynot the real property protections consistent with the modern administrative state; but those supposed real property protections that existed in the halcyon
days of yore when a person owned his property fee simple absolute and as the Latin
maxim says Cuius est solum, eius est usque ad coelum et ad inferos (see
Wikipedia 2015a). A new purpose of trademark law is to protect the mark qua
mark rather than the reputation-signalling function of the mark. In sum, a marks
value is no longer primarily as the physical representation of a companys goodwill.
Rather, a mark may become instrumental in satisfying higher order social needs
(see Maslow 1943). Branding can satisfy higher order needs such as love and
belonging, esteem, self-actualisationor if not the reality at least serve as an ersatz
substitute. These new non-trademark functions may be legitimate, moral, or even
noble and even in keeping with trademarks historic ties to unfair competition law;
but they are not legitimate uses of trademark law, as it is currently known in modem
society. This chapter will start by discussing the historical origins of trademark law
and then explore trademark law evolution to protecting designations and things that
were historically seen as outside the realm of trademark protection. One result of
the continuous expansion of trademark law is that it is slowly attempting to drift
into areas that in the past were clearly the domain of patent or copyright law.
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L.J. Gibbons
2 A Brief History of Marks and Their Evolution

Under U.S. law:
The term trademark includes any word, name, symbol, or device, or any combination
thereof . . . used by a person . . .to identify and distinguish his or her goods, including a
unique product, from those manufactured or sold by others and to indicate the source of the
goods, even if that source is unknown (Commerce and Trade Act, U.S. Code 15,
section 1127).
A related concept that is similarly analysed under U.S. trademark is trade dress.
Trade dress consists of the following:
Design of elements that constitute the appearance or image of goods or services as
presented to prospective purchasers, including the design of packaging, labels, containers,
displays, decor, or the design of a product, a product feature, or a combination of product
features, must also be:(a) distinctive; and (b) not functional . . . (Restatement of the Law
(3d) of Unfair Competition, section 16).
For the purpose, of this chapter, conventional trademarks are words, logos, or a
combination of these elements. Non-conventional trademarks are everything else
that can conceptually serve as a mark including: appearance, motion, shape, sound
and scent marks.4
2.1
Origin/Early Trademark Law
The slope of the development and expansion of trademark rights is important

because it demonstrates a slow but quickening goal of ever increasing trademark
rights under initially theories of preventing fraud (consumer protection) or
preventing unfair competition. Trademarks (along with trade secrets) are among
of the earliest forms of intellectual property. One can safely say that as long as
humans have been producing goods they have endeavoured to identify the source of
the goods. These original symbols may originally have been simple symbols of
ownership. However over time, some crafts people are more highly skilled than
others so that the symbol that originally meant I made it, I own it also was
associated with a higher quality product. Under principles of English common law,
the senior user of a mark had the right to prevent a junior user of the mark on the
4
Actually, both brand and trademark are defined similarly. For the purposes of this chapter, the
concept of brand captures the larger aura of consumer perception, for example consumption of the
brand conveys a social status while the term trademark is largely restricted to the function of the
claimed designation as an indication source, origin, sponsorship, or affiliation to the consumer.
Trademark law focuses on consumer development while brands may increase in value by brand
awareness by non-consumers. For example, a well-known brand may also be a Veblen good, and it
may be desirable because it signals wealth or prestige to lower socio-economic individuals (who
are not potential consumers of the brad) rather than solely for functional utilitarian reasons
attributable to the product thus serving a function similar to sumptuary laws.
177
same type of goods. Today, this is called trademark counterfeiting. This was true
throughout most of early U.S. history. Trademarks were protected by common law
rather than statutory principles. Beginning, in the 1840s, states began to statutorily
protect trademarks. Federal protection began in the 1870s. During this period, there
is a slow movement from viewing trademark counterfeiting or infringement as
solely a tort and to slowly ascribing a property right in the mark to the mark holder.
Initially, one could view the tort of unfair competition as providing an economic
incentive to the mark holder to engage in potentially expensive litigation in order to
protect the consumer from deceptive trade practices. Under the consumerbeneficiary justification of trademark infringement, one can extend the scope of
protection from the early requirement of identical marks on identical goods, to
identical marks on complementary goods, to similar marks on identical goods, and
similar marks on complementary goods. Today, this slope of protection has reached
the point of similar marks on any goods with an ever-increasing quantum of proof
on the trademark holder to demonstrate likelihood of consumer confusion. For
example, identical marks on identical goods have a presumption of infringement;
however, as the marks become more dissimilar the marks and goods less complementary, the quantum of proof grows. Ultimately, in the case of famous trademarks,
any use the tarnishes the famous mark or blurs the mark as to weaken its ability to
serve as a single source identifier, is prohibited even if there is demonstrably no
likelihood of consumer confusion (Commerce and Trade Act, U.S. Code 15, section
1125). In sum, trademark dilution is a broad right that prevents against any
commercial use that would lessen the marks uniqueness.5
2.2
Trade Dress to Terrium Quid
In the good old days, marks were words, designs/logos, and combinations of
colours. Over about a 15-year period, the U.S. Supreme Court opened up the
possibilities of what could be claimed as a trademark. The first in this line of
cases is Two Pesos v. Taco Cabana (1992) 505 U.S. 763. In this case, the
U.S. Supreme Court wrestled with the protection of trade dress and whether trade
dress could be inherently distinctive. The specific definition of the trade dress is
interesting but not important here.6 However what is significant, for this chapter is
There are some limits to trademark dilution such as fair use, comparative advertising, news
reporting, and non-commercial uses (see Commerce and Trade Act, U.S. Code 15, section 1125(c)
(3)).
6
Taco Cabana describes its common law (unregistered) trade dress for a Mexican restaurant as a
festive eating atmosphere having interior dining and patio areas decorated with artefacts, bright
colours, paintings and murals. The patio includes interior and exterior areas with the interior patio
capable of being sealed off from the outside patio by overhead garage doors. The stepped exterior
of the building is a festive and vivid colour scheme using top border paint and neon stripes. Bright
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L.J. Gibbons
the broad and expansive definition of trade dress that the U.S. Supreme Court
implicitly embraced:
Trade dress is the total image of the business. Taco Cabanas trade dress may include the
shape and general appearance of the exterior of the restaurant, the identifying sign, the
interior kitchen floor plan, the decor, the menu, the equipment used to serve food, the
servers uniforms and other features reflecting on the total image of the restaurant (Two
Pesos v. Taco Cabana (1992), 1).
The Supreme Court accepted this Court of Appeals definition and quoted: The
trade dress of a product is essentially its total image and overall appearance. It
involves the total image of a product and may include features such as size, shape,
colour or colour combinations, texture, graphics, or even particular sales techniques (Two Pesos v. Taco Cabana (1992), 1).
This definition of trade dress is breathtakingly broad as to encompass any aspect
of doing business as potentially being protected under trademark law so long as
other limiting principles of trademark law (for example functionality) do not
preclude trade dress from serving a protected trademark function.
In Qualitex v. Jacobson Products (1995) 514 U.S. 159, the U.S. Supreme Court
had to decide whether a single colour was functional or whether a single colour
could be protected as a trademark. Despite the fact that a good has to have at least
one colour, if it is to be perceived by humans, the U.S. Supreme Court remarkably
held that a single colour, standing along, could serve as a trademark. In fairness to
the Court, it was merely interpreting a rather broad definition of trademark.
Congress defined as a trademark in part as The term trademark includes any
word, name, symbol, or device, or any combination . . . (Commerce and Trade Act,
U.S. Code 15, section 1127). The Court then concluded on these facts (the colour of
gold-green for commercial dry cleaning ironing board pads) that sometimes a
colour alone could serve as a trademark.
The third and final case in this triumvirate of trademark cases is Wal-Mart Stores
v. Samara Brothers (2000) 529 U.S. 205, involving a product design. Samara
Brothers manufactured seasonal (spring/summer) one-piece seersucker childrens
outfits with appliques of flowers, hearts, and other designs dear to the heart of
parents and children alike. Wal-Mart Stores arranged to have copied the idea
(as well as the copyrighted designs-but thats another story). On appeal, the
U.S. Supreme Court had to consider whether this unregistered trade dress was
protectable under federal trademark law as inherently distinctive. The
U.S. Supreme Court held that it could be protected, but then distinguished between
product design and product packaging. If it was product packaging, for example the
container a product is sold in, then the trade dress could be inherently distinctive. A
mark that is inherently distinctive immediately serves as a mark as soon as it enters
commerce, and it does not require proof that it has acquired distinctiveness among
consumers. Developing secondary meaning can take years and a substantial
awnings and umbrellas continue the theme. This seems very close to a generic description of
many U.S. Mexican restaurant franchises.
179
investment in creating trademark awareness, and the designation is not protected as

a mark until it has acquired secondary meaning.7
Consumers understand product packaging as part of the mark or products trade
dress. With this understanding, theoretically courts can find without any actual
evidence of secondary meaning that the mark enjoys a legal presumption of
secondary meaning (inherently distinctive).8 However, if the claimed trade
dress is product-design that is it constitutes the product that the consumer desires
(rather than a container for the desired product) then it legally cannot be inherently
distinctive. A collector may want the container while the gourmet wants the
contents.9 This is clearly not a bright line distinction. One solution to a logical
dilemma is to use a Latin term and then define the problem away. This is an elegant
non-solution. The U.S. Supreme Court did sofor the vexatious mark or products
that are neither clearly product-packaging or product-designthey are assigned to
the new trademark category of tertium quid.10 The same goods may be attractive to
some consumers for the contents while to other consumers for the packaging. For
example, when the author was a child a brand chewing gum came in wrappers with
cartoons. Some of the authors childhood friends like the chewing gumwhile
others just wanted the cartoons. In the close cases, U.S. Supreme Court held that the
lower courts should require proof of secondary meaning. Samara Brothers continues the line of cases that potentially anything can serve as or be protected as a
mark as long as it is understood by consumers to serve a trademark function, and
there are no relevant limiting principles of trademark law that preclude protection
of the claimed mark.
7
During this period between use and secondary meaning, others could acquire interests in the mark
through registration or use. Even after secondary meaning is achieved, proving secondary meaning
can be an expensive process.
8
Word marks exist on a legal spectrum from fanciful (coined terms), arbitrary (no relationship to
the associated goods), and suggestive (describes the good with the help of the consumers
imagination) which are technical marks and enjoy a legal presumption of secondary meaning
(acquired distinctiveness) and descriptive marks (describe a characteristic of the product) and
require a showing of secondary meaning. This case created a not entirely analogous option for
trade dress.
9
PEZ candy is available in a mechanical dispenser. PEZ dispensers are collectibles, and one
Mickey-Mouse dispenser sold for US$7000. Other people just use the dispenser as candy
delivery device. Is the dispenser product packaging or product design or tertium quid? (see
Wikipedia 2015b).
10
Tertium quid refers to an unidentified third element that is in combination with two known ones
(see Online Etymology Dictionary 2015).
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L.J. Gibbons
3 Non-conventional Trademarks
A non-conventional mark is any designation that serves to indicate source, origin,
sponsorship or affiliation that is not a word mark, graphic symbol, or combination
of colours. Overall, non-conventional trademarks can be characterised as visible
such as colours, shapes, and moving (e.g. holograms, images, or positions) or
non-visible such as sounds, scents, tastes, and textures). Some non-conventional
marks may composes of multiple elements. Some elements of which may be
separately protected while others such as touch marks may often comprise two
elements the texture that creates the touch mark may also separately create an
appearance mark or design mark. However, the sin qua non of all conventional and
non-conventional is that they must be perceptible to the consumer. However,
depending on how the consumer interacts with the mark in the marketplace,
perceptibly can be made possible through the use or aid of a machine or device.
Appearance: For a mark to be characterised as a non-conventional mark based
on appearance it is often just another way of asserting that the mark is trade dress.
U.S. trademark law recognises that a single colour can serve as trademark as long as
the single colour has acquired secondary meaning. Examples of single colour
registration include gold-green for commercial ironing board pads or pink for a
brand of insulation.11 Product packaging or product containers may also serve as a
trademark. The visual appearance of a store can also serve as a trademark (trade
dress). For example, one wine store has trade dress, protection on its interior lay out
and distinctive internal design for displaying and advertising wine.
Motion: For a mark to be characterised as a non-conventional trademark based
on motion, it generally consists of moving images and may also include other
elements that are potentially protected as marks such as colour or sound. The best
known motion mark is the Lamborghini car door, which has a unique movement as
the door opens or closes (U.S. Regulation No. 2793439).12 Lamborghini doors
rotate vertically on a fixed hinge rather than outward which is the more conventional way for a car door to open or close. Interestingly, the Lamborghini scissor
doors appear to have many functional attributes: the automobile can be operated
with the door open; doors can open or close in narrow parking spaces; and less
danger of opening the door into traffic. Motion marks are not just physical movement. Microsoft has registered an animation of primary colours forming the
Microsoft Windows logo. Holograms as marks are also a type motion mark.
Other than the Lamborghini door, it is hard to imagine other motion marks that
11
A danger with colour marks or any mark is that they may become functional in the future. Green
is now a colour signifying an environmentally friendly or organic product. In theory, one day in the
future zoning or other regulations may require insulation manufactures to use certain coloursif
so then a colour for insulation would potentially become functional or changing in manufacturing
techniques may make a certain shape or colour or texture of a product cheaper to produce thereby
making the mark functional.
12
The mark consists of the unique motion in which the door of a vehicle is opened.
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are not composed of potentially independent elements that are separately capable as
serving as marks.
Shape: For a mark to be characterised as a non-conventional trademark based on
shape, it generally consists of a three-dimensional representation of the product, the
product container, or some three-dimensional symbol such as McDonalds famous
golden arches or the classic Coke-a-Cola bottle. Shape marks are often examples
of product packaging.
Sound: For a mark to be characterised as a non-conventional trademark based on
sound the sound cannot form a word or phrase. Rather, the mark consists of musical
notes constituting a jingle, an extract from a composition, a sound occurring in
nature, or even common human produced sounds, for example a race car revving
up. There are numerous examples of sound marks, and they have a relatively long
tradition (since 1978) of trademark protection in the United States. Sound marks
may have secondary meaning and yet be functional. The Harley Davidson motorcycle engine makes a distinct sound that has secondary meaning in the ears of
motorcycle enthusiasts. Yet, the mark is unprotected because this is also the sound
of a well-tuned type of V-twin engine. A sound mark on the sound produced by a
functioning engine may equate to a backdoor patent on a well-tuned type of engine.
Alternatively, copyright may provide stronger protection for an original sound
mark. However, copyright only prevents copying and does not preclude independent creation. Metro-Goldwyn-Mayer Studios Inc. (MGM) has a trademark on a
lions roar. Copyright law is also unlikely to stop another motion picture company
from tweaking the tail of their own lion, recording, and then using the roar.
Scent: For a mark to be characterised, as a non-conventional trademark based on
scent (olfactory mark), the odour cannot be naturally attributable to the product, for
example the odour of freshly cut wood for unprocessed lumber. One of the first
scent marks in the United States was for sewing thread and embroidery yarn (see In
re Celia, dba Clarkes Osewez (TTAB 1990) 17 U.S.P.Q. 2d 1238). The mark was
for a high impact, fresh, floral fragrance reminiscent of Plumeria blossoms
(U.S. Registration No. 1639, 128). Scents are potentially very powerful marks.
Many people have experiences with odours that will instantly transport them to
another point in their lives. Odours associated with good times, family, and loved
ones or odours associated with tragedy, loss, and painful memories. However while
a scent can serve as a mark, often in the context of the marketplace consumers do
not understand the scent as functioning as a mark rather it is merely an attribute of
the product. Therefore, it is difficult for a scent mark to become distinctive.
Taste: For a mark to be characterised as a non-conventional trademark based on
taste (gustatory mark), the mark must be capable serving the function of a trademark. Here one cannot resist a bad pun, de gustibus non est disputandum (In
matters of taste, there can be no disputes). The Benelux Trademark Office has
registered the taste of liquorish applied to paper goods. Other trademark offices
have rejected applications for the taste of artificial strawberry flavour for pharmaceutical products. One commentator found at least one arguable (or perhaps a
tongue in cheek) example of a U.S. taste mark
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L.J. Gibbons
THE MARK CONSISTS OF AN ARCUATE CONFIGURATION OF FIVE FLAVORS

OF ICE CREAM, NAMELY, CHOCOLATE, STRAWBERRY, PALMER HOUSE (NEW
YORK CHERRY WITH NUTS), PISTACHIO AND ORANGE SHERBET, ARRANGED
FROM BOTTOM TO TOP, AS IT IS SOLD ON A CONE (see (Baird 2014), citing
U.S. Registration No. 1623, 869).
Although, one can more persuasively contend that this is a description of colours
and not a combination of tastes.
Touch: For a mark to be characterised as a non-conventional trademark based on
touch, the product or the product packaging must signal a trademark function
through the consumers tactile sensory interaction with the mark. The changes in
the product design so as to create a touch mark may also potentially create a
separate mark based on appearance or another non-conventional trademark. Also,
different consumers may understand a touch mark differently. A blind consumer
may understand a raised series of dots as a word mark while a sighted person may
merely recognise the dots as indication a brand without separately understanding
their meaning as Braille characters.13 Well-known touch marks include the distinctive texture of some leather products sold under the LOUIS VUITTON brand
(U.S. Registration No. 2263, 903). Touchdown Marketing registered a spherical
personal fragrance dispenser that resembles a basketball with a pebble-grain
texture . . . and soft-touch feel (U.S. Registration No. 3348, 363).
3.1
Non-conventional Trademarks and Conventional

Principles
Non-conventional trademarks are disparate in nature and appeal to all of a consumers sense: sight, sound, touch, and taste. But, they share some commonalities
chief among them are that they all have attributes that may be functional in a
broader range of circumstances than do traditional marks; consumers frequently do
not as yet associate the attributes of the non-conventional designation as potentially
serving a trademark function; and that they are difficult to sufficiently describe in a
manner acceptable for trademark registration purposes or to delineate the scope of
the mark sufficiently to put others on notice as to what is actually claimed as a mark.
For example, while non-conventional scent marks have fared fairly well in the
United States, and within some European Union member states, the European Court
of Justice (ECJ), in C-273/00 Sieckmann v German Patent and Trademark Office
[2002] E.C.R. I-11737 rejected an application for a methyl cinnamate scent (as
balsamically fruity with a slight hint of cinnamon) under the EU Trademark
Directive (Directive 2008/95/EC of 22 October 2008 to harmonising the laws of
13
There is a registration for raised Braille characters, to be used on custom jewelry
(U.S. Regulation. No. 2058, 394). Also, Stevie Wonder (a blind entertainer) registered marks
with the Brail characters for a wonder summers night or Stevie Wonder for his apparel and
entertainment performances (U.S. Regulation Nos. 3512, 464; 3512, 465; 3495, 229; 3741, 784).
183
the Member States relating to trade marks). The ECJ held that a chemical formula
illustrating the scent was not equivalent to the odor of the designation-mark; that the
written description was unclear; and that a physical deposit of a sample of the scent
was not sufficiently stable or durable. In contrast, the U.S. Patent and Trademark
Office (USPTO) permitted the registration of a high impact, fresh floral fragrance reminiscent of plumeria blossom for sewing thread and embroidery yarn
(see U.S. Registration No. 1639,128).
Sounds marks are arguably easier to describe for the purpose of trademark
registration. Some such as those expressed in musical notation are easily described
while other such as the onomatopoeia of the rooster crow was sufficiently imprecise
for registration. Roosters in some countries crow cock-a-doodle-do while in others
KuKelekuuu. However, many of these difficulties could be overcome with a sonogram or digital sample of the clamed sound mark. Unlike scent samples, digital
sound samples do not deteriorate with age.
Touch marks can be described and perhaps supplemented with illustrations of
the texture being claimed as a trademark. Shape marks can be illustrated and
described. Colours can be both described such a gold-green, and there are scientific
ways to define a colour. As of yet, there does not appear to be an acceptable way to
describe a taste mark in a trademark application. Despite this current difficulty of a
taste rubric or descriptive scheme, the culinary arts will eventually overcome this
difficulty. Some possibilities include chemical representations of the claim mark,
assuming the chemistry is representative of the taste or equally likely, courts or
legislatures may be grant more latitude in the trademark application requirements
for a the representation of a taste mark.
Non-conventional trademarks also often run afoul of the requirement that a mark
not be functional. Scent is a key element of human taste. Scents can make unpalatable items palatable. Scents also hide offensive odours. Scents are also key social
messengers. In some cultures, the pine scent suggests clean, a menthol or mint scent
suggests a medical environment. Moreover, a trademark application in the U.S. was
rejected because scented face masks increased compliance with inhalational anaesthesia in children. Sounds potentially have a wide range of effects on the human
body many of which are not completely known (Associated Press 2003). A shape
mark may turn out to be in the end utilitarian as can touch marks. Any product for
human consumption is an unlikely product for a taste mark because of the functionality doctrine (also the difficulty of creating secondary meaning). Trademark
holders may speculate using taste marks on products not mean for human consumption that are also tasted, for example the postage stamps or pencils with an eraser.
Finally, many non-traditional trademarks are new to the consumer experience.
Consumers have been educated that a small graphic design on a shirt pocket is
probably a trademark, but absent other indictors a huge design on a shirt is probably
just a graphic design serving no trademark function. This is not intuitive rather this
exposure to the mark represents how consumers interact with the mark in the
marketplace. Today, if a consumer opens a can of cleaning fluid and smells a
fresh citrus fruit odour. The consumer is more likely to associate the pleasant
smell as an odour masking an offensive scent of a chemical cleaner rather than as
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L.J. Gibbons
the scent mark of a particular company. Consumers are exposed to sounds in

contexts where consumer attributes the non-conventional mark as an attribute of
the product rather than as a source identifier. The producer of a mobile telephone
may be very proud of their sound mark (ring tone). For most consumers, their sound
mark is just a ring tone. These few examples demonstrate that mark holders have a
heavy row to hoe before they can implant a non-traditional mark-source identifier
into the minds of most consumers.
3.2
Legal Protection for Non-conventional Trademarks
Brands are increasingly global. Investing in a non-conventional mark that will

receive limited if any protection in key international markets may not be a wise
choice as opposed the same investment in a conventional mark. The U.S. is on the
cutting edge of which designations may legally serve as a trademark. Some
non-conventional trademarks are well established in U.S. law, for example appearance (trade dress), motion, shape, sound, and scentwhile others taste and touch
are on the cutting edge of U.S. trademark law. However, many of these
non-conventional marks are not protectable in other countries (SMG Group
2014). The status of word marks or logos is relatively clear under many of the
important international treaties (see e.g., Paris Convention for the Protection of
Industrial Property (1883) 828 U.N.T.S. 305; Agreement on Trade Related Aspects
of Intellectual Property Rights (1994) 1869 U.N.T.S. 299 (Annex 1C) (TRIPS)).
For example, TRIPS article 15.1 defined a trademark as:
Any sign, or any combination of signs, capable of distinguishing the goods or services of
one undertaking from those of other undertakings, shall be capable of constituting a
trademark. Such signs, in particular words including personal names, letters, numerals,
figurative elements and combinations of colours as well as any combination of such signs,
shall be eligible for registration as trademarks (emphasis added).14
While other treaties may be agnostic on what constitutes a mark. For example,
the Paris Convention, with the exception of the protection well-known marks,
regards threshold eligibility of a mark for protection as a matter of national law
and focus of the Paris Convention is merely on national or uniform treatment for
foreign applicants or trademark holders.
Any oversight in extending trademark subject matter eligibility to
non-conventional marks in the existing trademark treaty regimes has been rectified
in more recent trademark treaties such as the Singapore Treaty on Trademarks or
trade treaties such as the Trans Pacific Partnership. In the controversial Trans
Pacific Partnership (TPP), article 18.18 states:
14
The Singapore Treaty on the Law of Trademarks (2006), rules 3(4)-3(9) provide for threedimensional mark, hologram mark, motion mark, colour mark, position mark sound mark as well
as non-visible signs other that a sound mark to be registered.
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No Party shall require, as a condition of registration, that a sign be visually perceptible, nor
shall a Party deny registration of a trademark only on the ground that the sign of which it is
composed is a sound. Additionally, each Party shall make best efforts to register scent
marks. A Party may require a concise and accurate description, or graphical representation,
or both, as applicable, of the trademark (Trans-Pacific Partnership Agreement, article
18.18, emphasis added).
TPP, if fully implemented, would be comprised of most of the economically

significant countries on the Pacific Rim with the exception of the Peoples Republic
of China. TPP signatories would represent roughly 40 % of the global GDP. The
shear economic force of the TPP member states suggests that TPP would represent a
new international commercial norm that would result in an expanded threshold
definition of trademark eligible subject matter. TPP also suggests the strong continuation of a U.S. global trade agenda that may also result in the increased
protection of non-Conventional marks as part of bilateral trade agreements.15 One
may assume that in time, trademark protection for non-conventional trademarks
will become the norm rather than a global anomaly. Assuming, that the designations
on their road to become marks can overcome other regulatory difficulties such as
description and functionality.
4 Future of Marks in a Post-Industrial Information

Economy
Trademarks are significant because in a modern economy they serve many different
purposes. For the trademark holder, the trademark may be the companys single
most valuable asset. A quick glimpse of the most valuable global brands demonstrates their value in a modern economy. Between 2006 and 2015, the value of the
top 100 global brands increased 126 % to US$3.3 trillion dollars (Millward Brown
2015a). This is in comparison to the gross domestic product of all of Africa in 2013
(US$2.39 trillion). Companies that developed strong brands significantly
outperformed the average on both the MSCI World Index and the S&P
500 (Millward Brown 2015b, 10). Having established that trademarks are among
an organisations most value assets, organisations now seek ways to leverage this
value into new frontiers thus extending trademarks. There are many motivations to
leverage a trademark. Perhaps the most prosaic and unremarkable is that the more
one uses a mark the stronger the mark becomes. Another significant reason may be
using trademark law as what may be in essence backdoor protection of a marketing
idea or business method. Finally, there is the actual or perceived the need for some
brands to constantly renew and to recreate themselves or risk consumer ennui and
obsolescence. These three perceptions of the role of marks in the marketplace
15
The United States has at least 13 free trade agreements that require the protection of a sound or
scent mark (see Halpern and Nard 2010, 195).
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L.J. Gibbons
require that marks and brands constantly enter new frontiers or risk becoming
irrelevant to consumers. Finally, a brand may be more that a trademark. For the
discerning consumer, the trademark may merely serve as a symbol of quality. But,
for many consumers, a trademark is a constituent building block of a constructed
social identity. Each of these concepts is important to understand the future of
trademarks.
4.1
Growth Equals Strength
Traditional principles of trademark law reward commercial use in the United

States. Use is the sine qua non of U.S. trademark law. The principle of rewarding
use and the commercial development of a mark permeates both U.S. statutory law
and case law. For example, one of the requirements for a valid U.S. trademark is
actual use in commerce. Trademark rights can be based either on the common law
based on actual use of a mark which protects the mark holder in the area where he or
she used the mark or through federal registration which creates a legal fiction of
constructive use throughout the U.S..16
A relate concept is acquired secondary meaning. Secondary meaning is the
capacity of the mark to serve as a mark. The test for secondary meaning is how
the consumer views the designation in the context of the marketplace. If a consumer
sees the designation and identifies it as denoting source origin, sponsorship, or
affiliation then the designation is serving as a mark. Some marks are born inherently
strong or with at least a legal presumption of secondary meaning. These marks are
often called technical (inherently distinctive) marks. For example, a coined term for
a product (fanciful mark); the use of a non-product descriptive term for a product
(arbitrary mark); of the use of a designation that suggests something about a product
without describing it (suggestive mark) are all legal conclusions that the mark has a
presumption that ab initio the designation can serve as a mark.
Other marks and perhaps, the favourite marks of the marketing department are
descriptive. This designation describes a usually desirable characteristic of the
product, for example SPEEDY DELIVERY for a commercial delivery service.
On the other hand, if the consumer understands the mark to indicate a characteristic
of the product then the designation lacks secondary meaning and is merely a
descriptor. For example, the fictitious designation ULTRA WHITE for bleach
could be either a trademark or a description of a characteristic of an effective
bleaching agent. The test would be how consumers understand the designation
when interacting with it. Clearly with time and repeated exposure, consumers can
be educated that ULTRA WHITE bleach signifies a product from the fictions
American Soap of Toledo, Ohio and no longer means an adjective describing any
16
Trademark registration may also be based on a foreign trademark registration (see Commerce
and Trade Act, U.S. Code 15, section 1126(e)).
187
beach as being of high quality. Consumer understanding can be measured directly

through consumer surveys or testimony or through judicially recognised proxies
such as the degree and manner of advertising, the length and manner of use, and
whether the use of the mark has been exclusive. Therefore, there is a strong
incentive to expand the mark and to deter other uses even if some uses of the mark
arguably would not create a likelihood of consumer confusion.
U.S. courts engage in a judicial assumption that the stronger the mark the more
likely consumers will be confused when they encounter unauthorised use of the
mark in the market place. However, in the multi-factor test for consumer confusion,
courts often separately consider bridging the gap as a factor or likelihood of
expansion.17 This may result in double counting the effect of the prior determination of the strength of the mark. Bridging the gap or likelihood of expansion
evaluates whether in the future is either the senior or junior user is likely to enter
into direct competition. So, the more the brand and product lines expand the more
likely the mark holder is to enter into new markets. This concept has a corollary
whether consumers are likely to assume that the gap has been bridged. The more
famous the brand, the more diverse the universe of services or goods associated
with the brand, the more likely consumers are to assume that the brand holder is just
adding another new product or entering into a new market. The trademark system
provides only one real disincentive to growing a brand, and that disincentive is
largely theoretical. The disincentive is the spectre that the brand or mark will
become so big that it is detached from serving a trademark function and becomes
in time the generic name for the thing itself.
4.2
Backdoor Quasi-Patent or Quasi-Copyright Uses

of Trademarks
The reality of trademark law is that it has the potential to create artificial and
arguable illegal barriers to entry by competitors that could be best described as
quasi-patent or quasi-copyright protection. U.S. trademark law protects both registered and common-law trademark laws. This also includes common law trade dress.
In the case of common law marks, a party may assert a trademark right and litigate a
trademark without ever having to submit the claimed designation to even very
cursory review by the USPTO. Courts have defined trade dress broadly its total
17
Each federal regional circuit court of appeals as well as the U.S. Court of Appeals for the Federal
Circuit has its own multi-factor test for the likelihood of consumer confusion. In AMF v. Sleekcraft
Boats (1979) 599 F.2d 341, the court considered the following factors: strength of the mark;
proximity of the goods; similarity of the marks; evidence of actual confusion; types of marketing
channels used; type of goods in questionand the degree of care expected of the purchaser; intent
of the defendant (alleged infringer) in using its mark (subject matter of the claim); and likelihood
of expansion of the mark product lines. The Sleekcraft Boats test in analogous to those used by
many other circuits.
188
L.J. Gibbons
image, overall appearance, and includes features such as size, shape, colour or
colour combinations, texture, graphics, or even particular sales techniques.
Many of the non-conventional marks also have at least in some situations
functional attributes. De facto functional marks are protectable while de jure
marks are not. The difference between de facto functional and de jure functional
is that bottles in finite shapes are de facto functional, they can all hold liquids;
however, a bottle can be moulded with a lip or rim so that a liquid being poured is
less likely to spill. This attribute (the potentially patentable attribute) of reducing
spills is de jure functional and cannot be protected under trademark law. Contrary to
popular understanding, the mere fact that individual elements of the claimed mark
are functional as long as the totally of the mark is non-functional, the mark is not de
jure functional for trademark purposes. This leads to the surprising result that some
number, five functional elements, each may not be individually protected under
trademark law, but all five collected in one mark is de jure non-functional and
protected as a mark.18 Consequently, the more sophisticated the non-conventional
mark, the less likely it is to be de jure functional.
A simple example may show the potential mischief of expanding trademark
rights. Child Catcher (a fictitious company) starts to sell a line of cologne for
children. The cologne comes in stuffed toy containers that make onomatopoeic
sounds of the animalthe stuffed cow says moo and the cat meow. Another
company, Bomburst (fictitious company) starts to sell stuffed animals with candy
treats inside, and Child Catcher sues it. This may sound silly protecting the idea of
using stuffed toys as containers for other desired objects as trade dress. But, at least
one company successfully asserted that birth certificates and adoptions for dolls as
trade dress (see Original Appalachian Artworks v. Toy Loft (1982) 684 F.2d 821).
Now, lets go down the slippery slope.
Alternatively, an aggressive publisher may be first to market smell-and-read
books. These are books that smell like the subject mattera rose scent for love
stories, a whiff of sulphur for war stories, or a smidgen rotting fish for the tax code.
In time, these associated scents become scent marks. The publisher may even assert
a broad trade dress over the concept of using scent to market bookswe are the
smelly books company. Such a broad assertion of pioneering trademark rights in a
new use of a mark may deter others from entering the marketplace with other
booksor even forms of literary propertya DVD producer might avoid using
odours to market DVDs. Trade dress in or a business model that largely replaces
waiters with tablet computers could be used to deter competitors. All of these
business models are potentially patentable subject matter. But, a patent takes
18
A feature is functional as a matter of law if it is essential to the use or purpose of the product or
if it affects the cost or quality of the product (TrafFix Devices v. Marketing Displays (2001)
532 U.S. 23). Court decisions distinguish de facto functional features, which may be entitled to
trademark protection, from de jure functional features, which are not. In essence, de facto
functional means that the design of a product has a function, i.e., a bottle of any design holds
fluid (In Re R.M. Smith (1984) 734 F.2d 1482).
189
years to obtain, must state its metes and bounds, and it will expire in 20 years
unlike potentially ambiguous and perpetual trademark protection.
Like all intellectual property rights, trademark rights are limited. The boundaries
of trademark law are at their strongest (and the scope of trademark protection the
weakest) when a trademark holder is endeavoring to use trademark law to obtain a
backdoor extension of a copyright or patent term. This has long been the rule in the
United States. In an early case, Kellogg v. National Biscuit (1938) 305 U.S. 111, the
U.S. Supreme Court refused to permit the owner of an expired patent to use the
trade dress of the product to prevent competition. More recently to avoid backdoor
extensions of a copyright, the U.S. Supreme Court, in Dastar v. Twentieth Century
Fox (2003) 539 U.S. 23, rejected the contention of the owner of an expired
copyright that origin in trademark prevented the unauthorised reformulation and
repackaging of an expired copyrighted work by a competitor.19 Therefore, it is
black letter (legal formalism) law that trademarks protect the reputation of the
manufacturer and not the innovation (product) or trademark protects the reputation
of the author but not the creative work-itself.
Legal realism or the Realpolitik of the marketplace suggests a different conclusion regarding the potential role of trademarks in a modern marketplace. The first
non-contentious assumption is that trademark litigation is expensive.20 In the
ordinary run of the mill trademark litigation, each party pays their own attorney
fees (see Commerce and Trade Act, U.S. Code 15, section 117(a); Octane Fitness
v. ICON Health & Fitness (2014) 134 S.Ct. 1749). Of courts, can and will allow
attorney fees in exceptional cases. However, the ad terrorem effect of a cease and
desist letter threatening expensive litigation is often sufficient to detour a new
entrant from using the claimed mark in any context. Also preventing the use of the
mark to compete in the market place not by free riding on the reputation of the
senior mark holder and creating a likelihood of consumer confusion but rather
honestly by using the mark because it is desirable as a product design even absent
the good will of the senior mark holder. Accordingly, there is the potential as
asserted marks increasingly move from the merely communicative to the functional
that they can be misused to protect business models or to unlawfully deter legitimate competition. As non-conventional marks become better known in the market
place, they may reach the threshold of fame necessary for protection against
trademark dilution, and at that point, the holder of a non-conventional trademark right may have achieved the dystopian goal of a trademark-patent.
19
For readers not familiar with U.S. copyright law, it is important to realise that the United States
takes the narrowest view of its obligation to protect moral rights under the Berne Convention so
moral rights were not at issue on appeal.
20
In the 2013 Report of the Economic Survey, the American Intellectual Property Law Association
found that a simple trademark infringement case involving less than US$1 million dollars in
controversy averages US$202 thousand dollars to the end of pre-trial discovery and US$375
thousand dollars through trial in legal costs, including attorney fees and experts (see IPISC 2013).
190
4.3
L.J. Gibbons
The Sisyphian Task of Evergreening Relevance
Somewhere on the way from the industrial revolution to an information economy,

organisations realised that their products were no longer either tangible or real, but
rather the intangiblethe brands. Brands are what compel consumers to purchase
tap water in bottles at over a 4000 % mark up over the tap price (Crowe 2015).
Developing countries can produce high quality commoditised goods that are identical in quality but lower in price to identical goods sold in the first world with a
brand label. Brands and trademarks give an identity to fungible commodity goods
and make possible the capture of consumer surplus. Production (in the US) was no
longer of things but rather of marketing campaigns, brands, and trademarks. As one
prominent commentator observed:
Since many of todays best-known manufacturers no longer produce products and advertise
them, but rather buy products and brand them, these companies are forever on the prowl
for creative new ways to build and strengthen their brand images. Manufacturing products
may require drills, furnaces, hammers and the like, but creating a brand calls for a
completely different set of tools and materials. It requires an endless parade of brand
extensions, continuously renewed imagery for marketing and, most of all, fresh new spaces
to disseminate the brands idea of itself (Klein 1999).
The two static two dimensional space that traditional word marks and design
marks exist in is no longer enough. Marks must continuously expand into new
media and new dimensions if they are to hold the consumers fickle interest. Many
years ago, there was a phrase to describe an aspirational goal, to shoot for the moon.
In marketing, been there, done that. The U.S. franchise Pizza Hut delivered
(or rather had delivered) pizza to the space station (BBC News 2001).21 The threats
of the intrusive outer space billboards are sufficiently serious to have the
U.S. Congress pass legislation to regulate it (Transportation Act, U.S. Code 49,
section 70102). And of course, magazine subscribers of the past decade (or so) have
been receiving their magazines in plastic wrappers to hide the odour of the many
perfume, cologne, or other advertisements that coupled the advertisement with the
impregnated scent of the advertised product. The goal of modern brand building is
the use the trademark to create an emotional visceral tie to the consumer rather than
to distinguish among fungible products. So, modern branding has been divorced
from indication of the source-quality of the goods, and it has become a building
block of a quality life.
21
The Pizza Hut chain said it paid the Russian space agency about $1m (700,000) for the
promotional stunt . . ..
191
5 Conclusion
Technology and trademark law has created a new frontier of new uses for new
forms of trademarks. As actual brands continually evolve to serve different purposes in the consumers life, the elements of constituting the brand too must evolve.
We are at the incipient edge of what the instantiation of marks may become in the
future.
These new frontiers of trademark law may convey significant economic advantages to first movers. Trademark is slowly moving away from its original purposes of
signalling quality to a function of conveying the quality or attributes of the consumers lifestyle. As western societies move from the production of goods to the
production of brands, economic value will increasingly be found in the brand rather
than in the underlying product. The brand value will not be in its ability to signal a
quality product, but rather in its ability to satisfy the consumers emotional needs.
Brands serve as building blocks of who we areI must be a good athlete, because I
wear branded athletic gear I am not alone because I have a brand connection to a
larger community. The brands of my youth seamlessly tie my parents generation, my
generation, and the next generation together with no understanding that the same
brand potentially have a different meaning to each generation. The modern brand no
longer has any meaning semiotically, it has become a free-floating signifier.
References
Associated Press. 2003. Infrasound linked to spooky effects. http://www.nbcnews.com/id/
3077192/. Accessed 22 Nov 2015.
Baird, Steven. 2014. When is a flavor/taste trademark possible? http://www.duetsblog.com/2014/
10/articles/trademarks/when-is-a-flavortaste-trademark-possible/. Accessed 22 Nov 2015.
BBC News. 2001. Pizza sets new delivery record. http://news.bbc.co.uk/2/hi/americas/1345139.
stm. Accessed 22 Nov 2015.
Crowe, Aaron. 2015. 10 items with ludicrous markups. http://www.nbcnews.com/id/39490829/ns/
business-personal_finance/t/items-ludicrous-markups/. Accessed 22 Nov 2015.
Halpern, Sheldon, and Craig Allen Nard. 2010. Fundamentals of U.S. Intellectual Property Law,
Copyright, Patent and Trademark. Netherlands: Wolters Kluwer.
IPISC. 2013. American Intellectual Property Law Association: Report of the economic survey.
http://www.patentinsurance.com/custdocs/2013aipla%20survey.pdf. Accessed 22 Nov 2015.
Klein, Naomi. 1999. No logo: Taking aim at the brand bullies. New York: Picador.
Maslow, A.H. 1943. A theory of human motivation. Psychological Review 50: 370396.
Millward Brown. 2015a. 2015 BrandZ top 100 global brands. http://www.millwardbrown.com/
brandz/top-global-brands/2015. Accessed 22 Nov 2015.
Millward Brown. 2015b. BrandZ top 100 most valuable global brands 2015. Sydney: Millward
Brown.
Online Etymology Dictionary. 2015. tertium quid. http://www.etymonline.com/index.php?
allowed_in_frame0&searchtertium+quid. Accessed 22 Nov 2015.
SMG Group. 2014. SMD Country Index. http://www.country-index.com. Accessed 22 Nov 2015.
Wikipedia. 2015a. Cuius est solum, eius est usque ad coelum et ad inferos. https://en.wikipedia.org/
wiki/Cuius_est_solum,_eius_est_usque_ad_coelum_et_ad_inferos. Accessed 22 Nov 2015.
Wikipedia. 2015b. PEZ. https://en.wikipedia.org/wiki/Pez. Accessed 22 Nov 2015.
The ASEAN Single Market: A Perspective

on Thailands Trade Mark Development
Kanya Hirunwattanapong
Abstract Thailand is facing an influx of Trade Mark legal issues in the wake of
coming into existence of the ASEAN Community Single Market where there is free
flow of goods, services and investment, among others. As for the ASEAN single
market and Trade Mark, the exhaustion of right of the Trade Mark rights owner
needs to be addressed both at the community and national levels. Although the
ASEAN Community fully realised the importance of intellectual property as one of
the key elements driving the ASEAN Community to become an innovation and
knowledge-based community, there is little concrete mechanism being made to
effectively support it. As for Thailand, one of the ten member states of the ASEAN
Community, the Trade Mark Act does not explicitly address the exhaustion doctrine, nor parallel imports. In 2000, however, the Supreme Court confirmed the
international exhaustion of exclusive Trade Mark rights, despite the fact that it was
not explicitly pronounced in the Trade Mark Act, and the case was decided in such a
way that could be counterproductive to legitimate international trade. Furthermore,
the Criminal Code, articles 273275, also gives protection to registered Trade Mark
regardless of the jurisdiction of registration. Parallel and differentiated treatment
given under different of laws clearly produces uncertaintya condition that is not
conducive to trade and the local entrepreneurs. In effect, Thailand has been
unitarily giving Trade Mark protection to foreign Trade Mark rights owners without
having the international treaty to guarantee reciprocity. If Thailand were a member
state of the Madrid System, this would be fairer to the local or national entrepreneurs. This can only make within Thailand an uneven playing field which conflicts
with the obligations Thailand has accepted under the ASEAN Chartera course
that Thailand must avoid.
The opinions and observations put forward in the paper is entirely the responsibility of the author.
K. Hirunwattanapong (*)
Faculty of Law, Chiang Mai University, Chiang Mai 50200, Thailand
e-mail: kanya.hi@cmu.ac.th
DOI 10.1007/978-3-319-31177-7_11
193
194
K. Hirunwattanapong
1 Introduction
Thailand is one of the ten member states of the Association of Southeast Asian
Nations (ASEAN).1 One of the aims of ASEAN, amongst others, is to create a
single market (Association of Southeast Asian Nations, Charter of the Association
of Southeast Asian Nations (2007) (ASEAN Charter), article 1(5)), which will
commence on 31 December 2015.2 The ten member states will form one market,
with a population over 600 million (ASEAN UP 2015), which is stable, prosperous, highly competitive and economically integrated with effective facilitation for
trade and investment in which there is free flow of goods and services and
investment. . . (ASEAN Charter, article 1(5)). As for the ASEAN single market
and Trade Mark, the exhaustion of right of the Trade Mark rights owner needs to be
addressed both at the community and national levels.3 The exercise of exclusive
right of Trade Mark, or specific subject matter alone, without making reference to
the exhaustion doctrine could have been used to divide the free movement of goods
in the market, as was decided in 1974 by the European Court of Justice in C-16/74
Centrafarm v. Winthrop BV [1974] E.C.R. 1183. Thailands Trade Mark Act (2000)
(TMA) article 44,4 read together with article 110,5 shows that the TMA plainly
put an emphasis on the the essential function of the Trade Mark, i.e., the importer
of the product bearing a genuine Trade Mark is not infringing the Trade Mark rights
of an owner in that country. The articles do not spell out the first sale doctrine
(exhaustion doctrine) either domestically or internationally, including the issue of
parallel imports.
The ASEAN Charter also requires the member states to adhere to multilateral
trade rules . . . for effective implementation of economic commitments and progressive reduction towards elimination of all barriers to regional economic integration, in a market-driven economy (ASEAN Charter, article 2(2)(n)). Thailand
has been a member state of the World Trade Organisation since 1995, and has
complied with the minimum standard of the protection of intellectual property
rights required by the Agreement on Trade-Related Aspects of Intellectual Property
The nine other members are Brunei, Cambodia, Indonesia, Lao Peoples Democratic Republic,
Malaysia, Myanmar, Philippines, Singapore and Vietnam.
2
During the 21st meeting of the member states in Phanom-phenh on 1820 November 2014, the
commencement of the ASEAN Community Single Market was postponed from 1 January 2015 to
31 December 2015 due to a number of differences of the member states rules and laws concerning
the single market.
3
Generally, the exhaustion doctrine applies to all intellectual property rights, namely that once a
product is sold with the blessing of the IP holder, then that IP holder cannot reach through to
further sales, rentals, or commercial use of that product.
4
TMA article 44: Subject to articles 27 and 68, the owner of the registered Trade Mark has an
exclusive right to use the registered Trade Mark with the products under which listed. (unofficial
translation).
5
TMA article 110: Anyone (1) import into the country, sell, having for sale the product bearing
copied or imitated Trade Mark of others . . . must be penalised . . . (unofficial translation).
The ASEAN Single Market: A Perspective on Thailands Trade Mark Development
195
Rights (1994) 1869 U.N.T.S. 299 (Annex 1C)) (TRIPS). However, with regard to
the international registration of Trade Marks, Thailand is not a member of the
Madrid Agreement Concerning the International Registration of Marks (1979)
828 U.N.T.S. 389 (Madrid Agreement) or the Protocol Relating to the Madrid
Agreement Concerning the International Registration of Marks (1989) (Madrid
Protocol). That Thailand is not a member of these international Trade Mark
registration treaties could jeopardise the ability of the Trade Mark right owner in
Thailand to engage in bilateral and global trade. Even though the Trade Mark is
jurisdiction limited, and Thailand is outside membership of both Madrid Agreement and Madrid Protocol, Trade Marks can be said to have some protection under
the Thai Criminal Code articles 273275 (Deka 1835/2545 (2002)), even though
this runs contrary to general legal principle as well as Trade Marks territorial
principle pronounced in the TMA. Furthermore, ASEAN Charter article 52(2) gives
articles of the Charter supremacy over domestic instruments of member states
where there is an inconsistency between them.
There are other international treaties on Trade Mark which are administered by
the World Trade Organisation (see WIPO n.d.). Although it is important for
fledgling regional integrated nations, such as those in the ASEAN Community, to
discuss the details of these treaties, it is also imperative to focus on the Paris
Convention on the Protection of Industrial Property (1984) 828 U.N.T.S. 305
(Paris Convention) and the Madrid Agreement, from the perspective of
Thailands development on Trade Mark. For Thailand, the Madrid Agreement is
the key international treaty on Trade Mark, in addition to the basic standards set by
the Paris Convention and TRIPS. This chapter explores how Thailand is facing an
influx of Trade Mark legal issues in the wake of coming into existence of the
ASEAN Community Single Market, and some suggestions to address these problems are given herein.
2 The ASEAN Single Market and Intellectual Property

Rights
The ASEAN Charter creates the ASEAN Community which comprises of three
main pillars, namely, the ASEAN Political and Social Community, the ASEAN
Economic Community, and the ASEAN Socio-Cultural Community (ASEAN
Charter, Preamble), and whereby a single market is created (ASEAN Charter,
article 1(5)). It will commence on 31 December 2015.
The ASEAN Community fully realised the importance of intellectual property as
one of the key elements driving the ASEAN Community to become an innovation
and knowledge-based community (ASEAN 2014). The ASEAN Working Group on
Intellectual Property Cooperation (AWGIPC) was formed in 1996 to pursue the
task given by the ASEAN Framework Agreement on Intellectual Property Cooperation 1995. The AWGIPC is administering the ASEAN Intellectual Property
196
K. Hirunwattanapong
Rights Action Plan 20112015 where its ultimate goal is to transform the ASEAN
Community into an innovative and competitive region and to be an active player
in the international intellectual property community (ASEAN 2011). However, the
AWGIPC is not trying to formulate a single set of laws or design a harmonised
regional system in IP, rather the AWGIPC is set to craft its own means of
integrating through a higher level of cooperation by undertaking programmes and
activities together, with AMSs [ASEAN Member States] strengthening linkages
with each other to improve their capacity, and participating in global IP structures,
subject to the capacity and readiness of each AMS (ASEAN 2011, 23).
The actions elucidated in the plan, however, appear to be a soft and friendly
pushing forward for the ASEAN Member States (AMS) to strengthening their IP
laws. It relies upon the AMS capacity and readiness so much so that there is a
foreseeable chance that the transformation of ASEAN Community into an innovative and competitive region may not be achieved in time by 2015, indeed such a
supposition may be seen to be far-fetched. The ASEAN Community needs what the
AWGIPC was against. As the ASEAN Community decided to establish, through
this Charter, the legal and institutional framework (ASEAN Charter, Preamble),
ASEAN should therefore take a pro-active approach by having a strong legal-based
commitment to pursue the task. At present, the problem is lessened because all
member states of the ASEAN are party to the World Trade Organisation and thus
also party to TRIPS (WTO 2015).6 At least, the AMS have the substantive IPR laws
that meet the minimum requirements of IPRs as set out in that agreement.
However, the ASEAN Single Market may not come into existence to benefit the
community and its people as intended if the free flow of goods is blocked by the
exercise of exclusive rights of the Trade Mark owners. The ASEAN must ensure
that its member states adhere to multilateral trade rule, notably, the agreement
establishing the World Trade Organisation (WTO Agreement) and TRIPS, with
the view to effectively eliminating of all trade barriers to the ASEAN Single Market
(ASEAN Charter, article 2(2)(n)). In order to achieve such goal, the issue such as
the exhaustion doctrine of the IPRs, including the parallel imports must be
discussed at the ASEAN level. Both of these are important to help the ASEAN
Single Market materialise and become economically healthy. The ASEAN must
also encourage its member states to become a party the international treaties that
facilitate the efficiency of international registration of Trade Marks, namely, the
Madrid Agreement and/or the Madrid Protocol. Then the ASEAN could hope to be
an active player in the international intellectual property community (ASEAN
2011, 1) by the end of 2015.
Lao PDR is the last AMS to become a member of the WTO.
2.1
197
The ASEAN Single Market & Free Movement of Goods
The ASEAN Charter requires its member states to adhere to the multinational trade
rules to ultimately and effectively eliminate all barriers to the formation of the
ASEAN Single Market (ASEAN Charter, article 2(2)(n)). The major international
trade rules are those under the WTO Agreement to which TRIPS is annexed. At
present, all of the ASEAN member states are party to the WTO. TRIPS provides the
minimum standard of intellectual property rights protection, and it is destined to
ensure that measures and procedures to enforce intellectual property rights do not
themselves become barriers to legitimate trade (TRIPS, Preamble). This Preamble
Statement recognises that the territorial and exclusive rights that are fundamental to
intellectual property rights are capable, if enforced, of providing a barrier to
legitimate trade. However, TRIPS does not avail itself of addressing the issue of
exhaustion of intellectual property rights (TRIPS, article 6). It follows that the
parties to TRIPS are free to address exhaustion within their own jurisdictions.
The TMA does not explicitly address the exhaustion doctrine, nor parallel
imports.7 Whether it welcomes the exhaustion doctrine in Trade Mark and parallel
imports remains to be settled. TMA article 44 says that subject to articles 27 and
68, the owner of the registered Trade Mark has exclusive right to use the mark with
the products listed. Under article 110(1), criminal penalties would be applied to a
person who imports into the country (Thailand) products bearing fake or imitated
Trade Marks. In effect, anyone who brings or imports the genuine goods bearing the
genuine Trade Mark is not held liable for Trade Mark infringement.8
In 2000, there was the first and only Supreme Court case to date on the
exhaustion of the Trade Mark exclusive rights and the parallel importation (Deka
2817/2543 (2000)).9 The Supreme Court confirmed the international exhaustion of
exclusive Trade Mark rights, despite the fact that it was not explicitly pronounced
in the TMA as it was in the Patent Act (1979) article 36(2) (as amended).10
However, it was tenable, the Supreme Court said, to hold that the patented product
7
In the context of the EU Single Market, the UK law, for example, addresses both the exhaustion
doctrine and parallel imports. The parallel import can, however, be stopped if the condition/quality
of the products bearing the mark was changed, and if the products were marketed outside the
European Economic Area (Torremans 2013, 510).
8
The repackaging of the product bearing the registered Trade Mark done under the licensing
agreement is not infringing the Trade Mark right owner (Deka 496/2556 (2013). However, in this
case, the defendant terminated the licensing agreement, but continued to use the Trade Mark in
question with the products that should have been returned back to the Trade Mark right owner.
Later, the product was a different product, i.e., having different ingredient/formula.
9
In this case, the Plaintiff registered the Trade Mark WAHL for the hair clipper. The defendant
bought the product in Singapore from the plaintiffs distributor, and imported into Thailand
for sale.
10
TMA article 36(2): The first paragraph shall not be applicable to the followings . . . (7) the
usage, sell, having for sale, or import into the country the patented products the patent right owner
has permitted to manufacture or sold. Note: article 36(1) addresses the territorial exclusive right
of the patent right owner.
198
K. Hirunwattanapong
that bears a registered Trade Mark should be treated under the same principle of
exhaustion of rights (Deka 2817/2543 (2000)). It has to be noted, however, that the
Supreme Court did not find the statement put on the package as to the services after
sale provided for by the defendant (the parallel importer), namely to fix the product
if it broke, an obstacle to the applicability of the exhaustion of right. It should be
noted that the services provided for by the defendant (the parallel importer), who
was neither the plaintiffs agent nor having the authorisation to carry out such
services, could have ruined the product, and thus affected the goodwill of the Trade
Mark owner. This could be counterproductive to legitimate international trade.
It is now left to the ASEAN Community to decide whether it adopts the
international or regional exhaustion of rights principles in order to efficiently
facilitate the single market as intended and also be a part of the world economy
when approaching this issue.
2.2
The ASEAN Single Market & International Registration

of Trade Marks
The Experts Group on Trade Mark had has made an ASEAN Filing Form for Trade
Mark. It was considered to be an important step towards the regional cooperation in
intellectual property (ASEAN 2014). The filing form alone, however, is not enough
to strengthen the ASEAN Single Market. It needs a well-thought out regional
system of Trade Mark to go with the filing form and to finally support the single
marketa market-driven economy. At present, there are only four member states
of the ASEAN Community that are a members of the Madrid Protocol, namely
Cambodia, the Philippines, Singapore and Vietnam (WIPO 2015a). In the meantime, before the ASEAN Community establishes its regional system, it should
encourage the six other member states, including Thailand, to become parties of
the Madrid Agreement or Madrid Protocol. This could help strengthen the capacity
of the people of the ASEAN Community in international commerce and trade
which will later benefit the whole ASEAN Community.
The Madrid Agreement and the Madrid Protocol, known as Madrid System,
facilitates international registration. This systems member states represent 80 % of
world trade (WIPO 2015b). It is a cost-effective application for international Trade
Mark protection, i.e., it requires one application with one language (English, French
or Spanish), and the applicant notes the designated countries where it wishes to
have the Trade Mark protected. The Trade Mark office of the designated member
countries will then make a final decision according to their own Trade Mark law.
199
3 Thailand and the International Registration

of Trade Mark
As noted above, Thailand is not a member of the Madrid Agreement nor the Madrid
Protocol (WIPO 2015b).11 It is however the member state of the Paris Convention,
Stockholm Act 1967, by accession on 2 May 2008, which came into force on
2 August 2008 (WIPO 2015d).12 Statistics concerning foreign applications for
Trade Mark protection in Thailand in 2014 show that the individual foreign country
applications, from those countries outside the ASEAN Community, out-numbers
the applications from the ASEAN Community.13 By country, Japan is the leading
country having applied for the Trade Mark protection in Thailand with 3553
applications in 2014, followed by the United States, 3265 applications, the EU,
2851 applications, and the ASEAN, 1080 applications.14 However, in total, there
are 9130 registered foreign Trade Marks compared to only 11,487 registered Thai
Trade Marks.15
There are some observations regarding the statistic above: first, the number of
Trade Mark applications from the ASEAN countries is much lower than those
coming from the United States or Japan.16 The much lower application numbers
could mean that there was not enough encouragement as to trade among the
member states of the ASEAN Community. In other words, the full effects of
being part of a production-based community is not really felt within the member
states of ASEAN. Also, this could be interpreted that applications have been
deterred by the fact that only four member states of the ASEAN Community are
party to the Madrid System. Also notable is that the total number of Thailands
Trade Mark registrations and of the foreign countries registration are close, notably,
11,487 and 9130 respectively. This could mean that Thai traders and entrepreneurs
are active at getting their Trade Marks registered. They should be supported by
Thailand becoming a member state of the Madrid System.
The Commerce Council of Thailand recently expressed its concern over
Thailand not being a member state of the international treaties of Trade Mark
11
Lao PDR was added to the Global Brand Database in March 2015 with its 33,000+ records,
making it the 22nd country whose data is available in the Global Brand Database (WIPO 2015c).
12
Thailand had thought of becoming the member state to the Paris Convention since 1942 when
the Thai authority at the time was amending the Criminal CodeCommerce Protection Section.
See also Orapan Panatpattana, below n 20.
13
See Appendix I Department of Intellectual Property Thailand http://www.ipthailand.go.th/index.php?
optioncom_docman&taskcat_view&gid195&limit20&limitstart0&ordername&dirDESC&
Itemid340.
14
ibid.
15
Ibid. Appendix II
16
On average, the number of applications from the European Union, the 28 Member States with
2851 applications, is close to the applications from the ASEAN, i.e. around 100 applications per
country.
200
K. Hirunwattanapong
registration.17 It addressed the slow-moving process of becoming the member state

to either of the two treaties is a detriment to the small and medium size enterprises
(SMEs) as the expenses of getting a Trade Mark registered in another country is
very expensive and that it may be that only large business entities can effort to
engage in multiple registrations.18 It also greatly reduced the competitive capacity
of Thai business entities in foreign countries: the products bearing only a Thai
registered Trade Mark may not be permitted into that foreign market as local
business entities already have that Trade Mark, or a similar one, registered.
At present, Thailand is still part way through the process of becoming a member
state of the Madrid Agreement and Madrid Protocol. One suggested option is for a
company to establish itself in countries that are member states to the Madrid
Agreement and Madrid Protocol, and apply for the international registration of
Trade Mark. However this is neither suitable nor viable for the SMEs, as it could be
extremely costly and time consuming procedure. Business entities, regardless of the
size, should be able to equally enjoy the support of doing cross border business from
Thailand.
4 International Trade Mark Protection Under Thai Law

Following the territorial nature of a Trade Mark (Paris Convention, article 6), the
Trade Mark is protected and enforced only in the country it is registered. The
Madrid System facilitates international registration of i.e. the Trade Mark can be
protected in the designated countries of members to the treaties, and it takes only
one application to do initiate this process (WIPO 2015e). The system is cost
effective suitable for all business in global market of whatever size. The fact that
Thailand is not yet a member state to the Madrid treaties could place Thai
entrepreneurs to a less competitive position. The TMA only protects the Trade
Mark that is registered in Thailand (TMA article 6). However, the TMA provides
some protection for unregistered Trade Marks, notably, well-known marks (TMA
article 8(10)), passing-off rights (TMA article 46(2)), and the right to have a
registered Trade Mark revoked on the ground of having a better claim over the
Trade Mark in question (TMA article 67). Furthermore, the Criminal Code also
gives protection to registered Trade Mark regardless of the jurisdiction of registration, i.e., an unregistered foreign Trade Mark can get protected in Thailand under
the Criminal Code articles 273275. Parallel and differentiated treatment given
under different of laws clearly produces uncertaintya condition that is not
conducive to trade and the local entrepreneurs.
17
Tarn-set-ta-kit Newspaper, 29 August 2556 (2013) (published in Thai)referenced in Department of Intellectual Property Thailand http://www.ipthailand.go.th/en/index.php?optioncom_
content&viewarticle&id451:8&catid8&Itemid332.
18
Ibid.
201
There are two dividing and contradictory opinions regarding the protection of
unregistered foreign Trade Mark in Thailand: first, the Criminal Code articles
273275 supersede the TMA, and this approach goes along with the nature of
Trade Mark, second, the Criminal Code articles 273275 are effective and not
trumped by the TMA.19
4.1
Criminal Code Articles 273275
In 2002, the Supreme Court, Intellectual Property and International Trade Branch,
otherwise known as the Deka Court, penalised the defendant who imitated an
unregistered foreign Trade Mark (Deka 1835/2545 (2002)). The Court referred to
the Criminal Code article 273, which is similar to TMA article 108.20 However, in
2005, the Intellectual Property and International Trade Court (IPITC), the first
court for IPR case, decided differently. The IPITC relied its decision entirely on the
TMA, and thus did not give protection to a foreign Trade Mark that was not
registered in Thailand (IPITC 2108/2548 (2005)).
However, there are law professors who still hold that the unregistered foreign
Trade Mark can be protected by the two lawsthe TMA and the Criminal Code.
Although the two laws address the same matter, the TMA promulgated much later
does not supplant the Criminal Code articles 273275 because the first is a specific
law while the latter is the general law. In other words, the legal status is different
and, therefore, the latter does not supplant the former.21 As a result, the interpretation must be that the Criminal Code articles 273275 are still effective, and that
unregistered foreign Trade Marks are able to get protection under the Thai Criminal
Code.22 The interpretation may be correct, but it could be to the detriment of the
Thai Trade Mark right owner in Thailand.
There are other reasons given to support the applicability of Criminal Code
articles 273275. First, the penalisations are different. The penalty (as a criminal
charge) provided for in the TMA is much higher than that of the Criminal Code. For
example, the TMA article 8, the violation of the registered Trade Mark can be
imprisoned for up to 4 years and a fine up to 400,000 Baht (approximately AU
$15,300) or both, whilst under Article 273 Criminal Code . . . shall be imprisoned
not exceeding 3 years, or fine not exceeding 6000 Baht, or both (approximately AU
$2230). The difference could be easily understood because the Criminal Code has
19
Orapan Panatpattana, Giving the Protection to the Foreign Trade Mark under the Thai Laws,
http://www.ipitc.coj.go.th/system/journal/trademark2006.pdf (in Thai, authors translation).
20
TMA article 108: Any one copies the Trade Mark . . . already registered in Thailand must be
imprisoned not exceeding four years or be fined not exceeding four hundred thousand Baht or
both.
21
For example, Orapan Panatpattana, above n 20, 65. The author refers to the opinion given by
Professor Pridi Kasemsap.
22
Orapan Panatpattana, above n 20, 68.
202
K. Hirunwattanapong
been in force since 1 January 1957 (Act Giving Effect to the Criminal Code (1956),
article 3), but the TMA (as amended) has been in force since 2000. The damages
nowadays caused by the Trade Mark infringement are usually high, and that the
monetary fine up to 6000 Baht could be disproportional to the actual damage done
to the Trade Mark right owner. The amount could hardly be sufficient to provide a
deterrent, which is also stipulated in the TRIPS Agreement (TRIPS, article 61).
Moreover, in practice, Trade Mark rights owners always take civil proceeding for
recovering damages.
In Thailand Nitting Industry v. Tanwal or Teetirat Sulsaksakul Thailand Nitting
Industry, Deka 12605/2555 (2012), the defendant possessed 71,200 faked T-Shirts
to be sold at 70 Baht each. If he had sold them all, he could have earned 1,484,000
Baht (approximately AU$57,000), and not to mention the damage that could have
been done to the reputation of the genuine Trade Mark. The Court finally ordered
the defendant to pay 3,100,000 Baht.23 Also, the Court in 2012 decided that the
60,000 Baht for each defendant was appropriate for the infringement of Trade Mark
of a cigarette brand where the defendants possessed 4000 infringing packages for
sale (Deka 10516/2551 (2008)).
Second, it is argued that the Criminal Code put an emphasis on consumer
protection while the TMA was focused on the rights of the Trade Mark owner.
The question arises at this point is how the lesser criminal penalty could help
protect the consumers. In Sect. 4.2, below, is demonstrated how consumers also
get protected by the TMA.
The recent Supreme Court cases, however, have shown inconsistent decisions
regarding the applicability of the Criminal Code articles 273275. In 2010, the
Supreme Court referred to TMA article 324 and decided that it gave effect to of
TMA article 109,25 not the Criminal Code article 274 (Q-Matic Sweden AB v. Q-Matic (Thailand) and others, Deka 5340/2553 (2010)). In 2011, the Supreme
Court decided that the defendant had breached Article 108 and 110(1)26 of the TMA
and thus there was no need to refer to Article 272(1) Criminal Code (Prosecutor
v. Prasit Kansila, Deka 8154/2554 (2011); Prosecutor v. Vichit Saejong, Deka
5124/2554 (2011); Prosecutor v. Photoco and others, Deka 9038/2553 (2010);
23
In this case, however, the plaintiff quoted an exaggerating amount of compensation,
i.e. 52,000,000 Baht (over AU$2 million). The Court had considered by all accounts, actual
damages, the reputation of the Trade Mark and other foreseeably estimated damages, but not too
overly calculated.
24
TMA article 3: The following are repealed (1) the Trade Mark Act 2474 BE; (2) the Trade
Mark Act (No. 3) 2504 BE. Laws, rules and orders that are contradicting the provisions set forth in
this Act, the Act prevails.
25
TMA article 109: Any one imitates the Trade Mark . . . already registered in Thailand with the
viewing to misleading the public into believing it was the Trade Mark of others, must be
imprisoned up to two years or be fined up to two hundred thousand Baht or both.
26
TMA article 110(1): Anyone (1) imports into the country . . . the product that bears the copied
Trade Mark set out in Article 108, or imitated Trade Mark according to article 109 or . . . must be
penalised according to that article.
203
Prosecutor v. New World Computer Supply and others, Deka 8151/2553 (2010)). In
the same year with the same court, Criminal Code article 275 was applied (Prosecutor v. Vichit Saejong, Deka 5124/2554 (2011)).
However, in 2012, the Supreme Court confirmed that the Criminal Code articles
273275 were effective and not replaced by the TMA (Prosecutor and Ko
Ko-chuan v. Sutin Sripoonpeng, Deka 9798/2555 (2012)). The Court explained
that the Criminal Code protected foreign Trade Mark owners who did not register
their mark in Thailand, so that it had an emphasis that was different, and thus was
not repealed by the TMA. In this case the plaintiff had only registered the Trade
Mark POSH abroad for the spare parts of a bicycle. The defendant fully realised
the registration. However, the defendant got the name POSH to be a significant
part of his Trade Mark, and there was no detail regarding the manufacturers. Thus,
the defendant in bad faith misled the consumers to believe that his products were
the real POSH.
There was also a case where the plaintiff had two Trade Marks one was
registered in Thailand and the other was not. The defendant violated both Trade
Marks and the Supreme Court applied Criminal Code article 275 to both Trade
Marks (Prosecutor v. Kittiya Khamnoi and others, Deka 8264/2555 (2012)).
It was revealed during the course of debate that the Commission for the Criminal
Code Amendment at the time in 1942 had considered that Thailand become a
member state of the Paris Convention for the Protection of Industrial Property,
and thus kept articles 273275 (protecting foreign Trade Mark right owner), which
were thought to be complimenting the Paris Convention.27 It was later rebutted by
those who oppose this view. They argue that keeping the Criminal Code articles
273275 in those days to protect a foreign Trade Mark was done with special
purpose, and this could have given a unitary protection to foreign Trade Mark
owner. Later when Thailand became a member of TRIPS in 1995, the treaty did not
require particular protection for a foreign Trade Mark.28
It has to be noted that the Supreme Court cases mentioned above over the last
10 years did not rule out the existence of the Criminal Code articles 273275. It has
to be noted also that the Supreme Court recognised the Trade Mark right owner
registered under the TMA, but applied the Criminal Code articles 273275 for
infringement. Moreover, the international treaties relating to Trade Mark protection
to which Thailand is a member state, namely, the Paris Convention and TRIPS, are
not targeting international Trade Mark protection. In effect, Thailand has been
unitarily giving Trade Mark protection to foreign Trade Mark rights owners without
having the international treaty to guarantee reciprocity. If Thailand were a member
state of the Madrid System, a foreign Trade Mark would be get the protection
according to the TMA. In other words, the foreign Trade Mark will not get
protected straight away under the Criminal Code. Clearly this would be fairer to
the local or national entrepreneurs.
27
28
Orapan Panatpattana, above n 20, 68.

Ibid.
204
4.2
K. Hirunwattanapong
The TMA: Well-Known Marks, Passing-Off

and Revocation on the Ground of Having a Better Claim
Over the Trade Mark
Trade Mark was also intended to give protection to consumers and the society at
large in addition to the Trade Mark rights owner: the Trade Mark is not registered if
it is misleading the consumers, and likewise, consumers are correctly informed the
origin of the product that bears such mark. For example, one of the requirements of
the mark being registered is that the mark will not be registered if it looks similar to
those that already registered (TMA, article 6(3)). Moreover, those who imitate the
registered Trade Mark with intention to mislead consumers to believe it was of the
Trade Mark right owner will be held liable by law (TMA, article 109). The
conditions for the Trade Marks being registered (see e.g. TMA, article 6),29
including the certain degree of protection giving to the unregistered (well-known)
Trade Marks, are meant to protect the consumers. They protect the consumers from
being misled by the likelihood of the registered Trade Marks or well-known marks.
The distinctive character of the Trade Mark, for example, may serve, in trade, to
designate the kind, quality, quantity, intended purpose, value, place of origin, of the
goods . . . (Paris Convention, article 6; TMA, article 6(1)), and this is to inform the
consumers the choices for which they chose to pay. The mark will not be registered
if it is identical or similar to the registered Trade Mark (TMA, article 6(3)). It is
intended not to confuse the consumers as to the place of origin and the owner of the
Trade Mark.
In Adidas, the Supreme Court (IP and IT Branch) concluded that the 4-stripe
mark with the term FOUR LINES put underneath the 4-stripe mark was not
similar to that of 3-stripe mark with the word Adidas underneath, as there was no
confusion among the consumers regarding the origin of the good (Adidas AG
v. Intellectual Property Department, Deka 22783/2555 (2012)). A product may
cause physical harm to consumers if the consumers understood or were led to
understand that the productsclosely relating to one anotherthat bear similar
or identical Trade Mark are from the same company. In DK Health Product Ltd the
plaintiffs Trade Mark was refused registration by the Intellectual Property Department because it was similar to the defendants registered Trade Mark for antiobesity medicine. The Supreme Court decided that the refusal was correct (DK
Health Product v. Intellectual Property Department and Hoffman La-Roche AG,
Deka 10360-61/2554 (2011)).
The similarity of the Trade Mark will also be considered by taking in to account
the professions relevant to the products bearing the similar Trade Mark. In other
words, users or consumers who are in profession that would not be mistaken by a
mere similarity and could distinguish the products, for example as in Sanofi Plaster
29
TMA article 6: Trade Marks capable of being registered must consist of the following
conditions: (1) being distinctive, (2) being not prohibited according to the law, and (3) not identical
or similar to those already registered.
205
and in Perusahaan Otomobil Nasional SDN BhD (Sanofi Plaster v. Intellectual

Property Department, Deka 8151-52/2554 (2011); Perusahaan Otomobil National
SDN BhD v. T Tiger, Deka 7202/2554).
As for the protection of a well-known mark, the TMA article 8(10) dictates that a
Trade Mark that is similar to the well-known mark, whether it registered or not, to
the point where consumers can get confused as to the origin of the product, shall not
get registered. So, a foreign Trade Mark that is well-known, according to the
Ministerial Rules, regardless of whether it is registered in Thailand, receives certain
level of protection. Article 8(10) puts an emphasis on the goodwill and the reputation it bears among the relevant consumers (Note by the Supreme Court, TGC Ink
v. Intellectual Property Department, Deka 4596/2552 (2009)). The Intellectual
Property Department has arranged for the well-known marks to be listed. However,
not being listed as a well-known mark at the IP Department does not deprive the
Trade Mark from being recognised as such, so that a Trade Mark is taken as being
well-known if it falls within the meaning of being a well-known mark (Watson
Enterprise v. Rely (Thailand), Deka 6113/2555 (2012)).
In Intel Corp. the plaintiff registered many Trade Marks in Thailand, and all of
them had INTEL as the first part of the registered mark. The Trade Mark INTEL
INTEGRATION CO., LTD might have misled the consumers that it was part of the
plaintiffs business. The fact that the word INTEL itself was declared no
protected, it did not make the presence of the term lawful. Moreover, the plaintiffs
Trade Mark was a well-known mark, therefore the Trade Mark INTEL INTEGRATION CO., LTD was prohibited from being entered as a registered mark
(INTEL v. Department of Intellectual Property, Deka 4492-93/2555 (2012)).
The TMA also protects the unregistered Trade Mark under the Passing-off
principle, a common law principle adopted into Thai, and written into the TMA
article 46: in short, stating that an unregistered Trade Mark shall not be enforced
against infringement, but the owner of the unregistered Trade Mark get protected
against those who pass their products off as that of the products of the Trade Mark
owner. The two types of protection given to unregistered Trade Marks, whether
local or foreign Trade Mark, do not provide protection against the infringing acts,
namely, making identical Trade Mark with special intention to misleading the
consumers to believe it genuine.30 In other words, the owner of the well-known
mark and the owners of unregistered Trade Mark who wishes to protect their marks
through passing-off principles needs to prove that their Trade Marks are wellknown among the relevant consumers or that they have goodwill and reputation.
However, in TGC Ink 2009, the Supreme Court said the evidence of product
advertisement gathered in 2002 was largely done on the Internet and cable television, so there was doubt that the public in general especially those who played golf
could access to the advertisement. The evidence put forward by the plaintiff was not
TMA article 108: Anyone fake the registered Trade Mark . . . shall be penalised; TMA article
109: Anyone imitates the registered Trade Mark with the view to misleading the consumers to
believe it was the Trade Mark of others, shall be penalised.
30
206
K. Hirunwattanapong
enough to conclude that the plaintiffs mark Golf Channel was a well-known
mark (TGC v. Intellectual Property Department, Deka 4596/2552 (2009)). One
needs to be aware, however, that those who play golf are mainly well-to-do, and
thus can effort to get access to the network system. The period 20022009 when the
Court decided the case was one when the Internet system was already well used
world-wide.
In Matsuda and Co the court considered the issue of similarity to the point of
causing confusion. The Supreme Court pronounced how to view similarity: consider the two marks in question as a whole, see the major and important features of
the mark, pronunciation of the mark, and the category under which the mark is used
(Matsuda v. Intellectual Property Department and Valentino SPA, Deka 7158/2555
(2012)).
The foreign Trade Mark right owner whose Trade Mark was not registered in
Thailand can ask the court to revoke the registered Trade Mark on the ground of
having a better claim over the Trade Mark in question. A person has to do so within
5 years of the registration (TMA, article 67). In Universal City Studio, Ink the
plaintiff uses the term Universal Pictures and has it registered abroad as a Trade
Mark. The plaintiff used the term before the defendant started his business. The
defendant used the name Universal Pictures (Thailand) Limited Company and
registered the term as Trade Mark UPT Universal Pictures (Thailand) Co., Ltd.
The Supreme Court said that the plaintiff had a right to prohibit the defendant to use
the term. The fact that the plaintiff did not have its business registered in Thailand
would not make the plaintiff devoid of the protection under the Trade Mark law
. . . (Universal City Studio v. Universal Pictures (Thailand) and others, Deka 7017/
2551 (2008)).
In TCL Corporation Ltd, the plaintiff registered the Trade Mark TCL in China
in 1986 for telephone and electrical devices. The plaintiff had sold his devices in
many countries. The defendant registered also in Thailand the name TCL in 2002.
The defendant had seen the plaintiffs devices before. Therefore, the plaintiff had a
better claim over the name TCL (TCL Corporation v. Montika Leelakulset). In
Sunkai Industry Company Limited the foreign Trade Mark right owner was not a
well-known mark in Thailand, but nonetheless was able to seek a revocation of the
registered Trade Mark in Thailand. The plaintiff (a foreign Trade Mark right owner)
proved before the court that it owned the Trade Mark with the words 555 THREE
FIVE and that it had sold products bearing this Trade Mark all over the world
(Sunkai Industry v. Intellectual Property Department, Deka 6985/2550 (2007)).
207
5 Influx of Considerations and Management of Trade

Mark Protection
The previous sections have seen the many important issues that need to be
addressed thoroughly both by the ASEAN Community and the member states
regarding the protection of Trade Marks. The ASEAN Single Market aims for an
even playing field in all ten member states to support and facilitate the free
movement of goods, amongst others ambitions. The issue of exhaustion of Trade
Mark rights of an owner, as well as the issue of parallel importation must be
answered. Moreover, the ASEAN Community must soon put in place a system
that supports the filing form for Trade Mark registration. Furthermore, the ASEAN
Community must encourage its member states to become a member to the Madrid
System to strengthen the ASEAN entrepreneurs capacity in the global market.
As for Thailand, to become a member of the Madrid System is advisable. To
give protection to unregistered foreign Trade Mark in Thailand via the Criminal
Code articles 273275 is potentially unfair to the Trade Mark owner registered in
Thailand. In other words, the foreign Trade Mark will get protected without having
to compare its similarity to those registered in Thailand. Indeed, the foreign Trade
Mark owner can challenge the validity of the registered Trade Mark that bears
similarity to his on the ground of having a better claim over the mark. The Trade
Mark owner has to do it within 5 years of the registration of the mark in Thailand
(TMA, article 67). There are provisions of the TMA that provide certain protection
to foreign Trade Mark, notably, the well-known mark and passing-off.
To maintain both laws for Trade Mark infringement when the course of having
protection is different can only cause uncertainty among the local traders and be
unfair to them. This can only make within Thailand an uneven playing field which
conflicts with the obligations Thailand has accepted under the ASEAN Chartera
course that Thailand must avoid.
References
ASEAN. 2011. ASEAN Intellectual Property Rights Action Plan 20112015. http://www.asean.
org/images/2012/Economic/sectoral_aem/service/agreement/ASEAN%20IPR%20Action%
20Plan%202011-2015.pdf. Accessed 22 Nov 2015.
ASEAN. 2014. Intellectual property. http://www.asean.org/communities/asean-economic-commu
nity/category/intellectual-property. Accessed 22 Nov 2015.
ASEAN UP. 2015. ASEAN Infographics: Population, market, economy. http://aseanup.com/
asean-infographics-population-market-economy/. Accessed 22 Nov 2015.
Torremans, Paul. 2013. Holyoak and Torremans Intellectual Property Law. Oxford: Oxford
University Press.
WIPO. 2015a. Status on 7 December 2015. http://www.wipo.int/export/sites/www/treaties/en/
documents/pdf/madrid_marks.pdf. Accessed 22 Nov 2015.
WIPO. 2015b. Benefits of the Madrid System. http://www.wipo.int/madrid/en/madrid_benefits.
html. Accessed 22 Nov 2015.
208
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WIPO. 2015c. Lao trademarks added to the Global Brand Database. http://www.wipo.int/refer
ence/en/branddb/news/2015/news_0003.html. Accessed 22 Nov 2015.
WIPO. 2015d. Members. www.wipo.org/members. Accessed 22 Nov 2015.
WIPO. 2015e. Madrid: The International Trademark System. http://www.wipo.int/madrid/en/.
WIPO. n.d. Trademarks. http://www.wipo.int/trademarks/en/. Accessed 22 Nov 2015.
WTO. 2015. Members and observers. https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_
e.htm. Accessed 22 Nov 2015.
Intellectual Property Rights and Foreign

Direct Investment Agreements
Ramesh Karky
Abstract This paper critically examines provisions of intellectual property on

multilateral and bilateral foreign investment treaties and the impact of intellectual
property rights on the determination of types of foreign direct investment in the
twenty-first century. It looks at China and India in particular, as countries that are
attracting foreign direct investment much more than any other developing countries. It further comparatively and critically analyses current trends in foreign
investment, current priority sectors of foreign investment and the effect and impact
of intellectual property right protection on the determination of types and sectors
for foreign investment.
1 Overview to Foreign Investment Provisions

in Multilateral Treaties
Foreign Direct Investment (FDI) is valuable and increasing in international economic transactions. In many situations, transfer of intellectual property or technology also has been considered as a part of foreign investment. So far there is no
single document or agreement that regulates FDI in the international arena. Historically, foreign investment law has emerged as a development of the public international law concept of protection of aliens and of state responsibility for injuries
inflicted on foreign citizens (Sornarajah 1994, 8). It is a well settled general
principle of international law states that when aliens establish themselves in a
foreign state, they have to accept the conditions and liabilities which nationals of
that state are under; and no state is expected to relinquish its jurisdiction over that
alien within its territory (Avramovich 1998, 1252). Therefore, a foreign investor
owes high level of compliance to the host state in exchange for protection of
The author would like to thank Professor Mark Perry for a Postdoctoral Fellowship, the Beijing
Foreign Studies University Law School and University of New England School of Law (Australia)
for inviting him at to an international intellectual property conference, and the Services Group/
AECOM International Development for providing him with an advisory position (20062008).
R. Karky (*)
Faculty of Law, Western University, London, ON, Canada
e-mail: rkarky@uwo.ca
DOI 10.1007/978-3-319-31177-7_12
209
210
R. Karky
property and for permission to act within the internal market of that country
(Avramovich 1998).
Prior to World War II, foreign investment was not afforded a sufficient degree of
legal protection at the international level (Sornarajah 1994, 29). Military force
remained the main means of protection of the property of nationals abroad. Shortly
after the World War II, an attempt to regulate FDI was made for the first time in the
Charter of the International Trade Organisation (1948). It provided that each state
had the sole right and jurisdiction to implement rules and impose restrictions
relating to the FDI regulation in its territory. The Charter of the International
Trade Organisation never came into force.
The General Agreement on Tariffs and Trade (1947) (GATT) did not have any
provision on foreign investment. Initially, the GATT did not address the issue of
trade-related measures, such as investment, services and intellectual property, as
they were not considered relevant to tariffs or custom duties (Burt 1997, 1033). The
lack of multilateral agreement regulating foreign direct investment considered as
inadequate in the light of success of the GATT. Practically, foreign investment is
also not effectively regulated by the agreement establishing the World Trade
Organisation (WTO) (Chow and Schoenbaum 2010, 417420; Chow 2015,
111). So far, the international trade community has not been able to reach a general
agreement as how to regulate foreign investment, and it also lacks political will to
conclude an effective multilateral world trade agreement (Chow and Schoenbaum
2010; Chow 2015). Currently, foreign investment is governed by the domestic laws
of the host country, unless they have signed regional or bilateral treaty (Chow and
Schoenbaum 2010; Chow 2015). Bilateral investment treaties were concluded
between major capital exporting and capital importing countries (Vandevelde
2000), with the main purpose of protection against expropriation and setting forth
standards for compensation to investors. Bilateral investment treaties provided for
national treatment and most favoured nation treatment to foreign investors, protection against expropriation, free repatriation of profits, dispute settlement, and so
forth (Shenkin 1994, 543). Bilateral investment treaties have still remained the
dominant vehicle through which foreign direct investment is governed in the
international arena (Guzman 1998, 640). Moreover, many countries have entered
into regional multilateral trade arrangement under which we find investment provisions (see e.g. North American Free Trade Agreement (1992) (NAFTA),
Chapter 11; Treaty of Amsterdam (Amending the Treaty on European Union)
(1997)).
In 1955, the GATT Conference adopted the Resolution on International Investment for Economic Development (1955) (see Resolution on International Investment for Economic Development, 4950). It recognised that increased investment
flows to developing countries help development efforts by injecting capital and
advanced technology, and it called on GATT Contracting Parties to create an FDI
friendly environment. In 1982, the first investment dispute arose under the GATT.
The United States brought the matter before GATT against Canada under article
XXIII(2) (see GATT Panel 1984). The Foreign Investment Review Act of Canada
(1973) had provisions, besides others, that foreign investors were requires to
Intellectual Property Rights and Foreign Direct Investment Agreements
211
purchase from Canadian sources. The United States challenged the Foreign Investment Review Act of Canada as a violation of article III:4 of the GATT and alleged
nullification and impairment of its benefits under articles III:4, III:5, XI and XVII
(1)(c). The GATT Panel found nullification and impairment of article III:4 (national
treatment obligation) by the imposition of the local content requirement, and that
Canada indirectly discriminated against those countries that would like to export
goods to the investor. Moreover, the panel agreed that the local content requirement
was a nullification or impairment of the expected benefits in the relations between
two developed countries. However, it would not necessarily have come to the same
result in a dispute involving developing countries. This decision was extremely
important for developing Trade-Related Investment Measures jurisprudence and it
was eventually embodied in the Agreement on Trade-Related Investment Measures
(1999) (TRIMs) (Edwards and Lester 1997, 186). TRIMs is one of the agreements
listed under Annex 1A of the agreement establishing the WTO. TRIMs is a product
of consensus between the two opposing viewpoints from the camps of developed
and developing countries, which sought to attain their own goals.
2 Provisions of the Agreement on Trade-Related

Investment Measures
TRIMs sets forth measures that are inconsistent with the national treatment principle of GATT article III:41 and the prohibition on quantitative restrictions of GATT
article XI:1.2 The scope of TRIMs is defined in article 1, which states that the
agreement applies to investment measures related to trade in goods only. In contrast
to this, in bilateral investment treaties, intellectual property has been considered as
a part of investment. TRIMs does not apply to services or intellectual property.
Article 2 provides that no Member may apply any part of TRIMs that is inconsistent
with the provisions of GATT 1994 article III (national treatment of imported
products) or GATT XI (prohibition of quantitative restrictions on imports or
exports). The term trade-related investment measures is not defined in the
agreement. However, the agreement contains in an Annex an Illustrative List of
measures that are inconsistent with GATT articles III:4 and XI:1. Paragraph 1 of the
Annex lists trade measures that are inconsistent with the national treatment
1
GATT article III:4: The products of the territory of any contracting party imported into the
territory of any other contracting party shall be accorded treatment no less favorable than that
accorded to like products of national origin in respect of all laws, regulations and requirements
affecting their internal sale, offering for sale, purchase, transportation, distribution or use. . ..
2
GATT article XI:1: No prohibitions or restrictions other than duties, taxes or other charges,
whether made effective through quotas, import or export licenses or other measures, shall be
instituted or maintained by any contracting party on the importation of any product of the territory
of any other contracting party or on the exportation or sale for export of any product destined for
the territory of any other contracting party.
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R. Karky
obligation contained in GATT article III.4.3 Paragraph 2 lists those that are inconsistent with the obligation of general elimination of quantitative restrictions provided for in GATT article XI.1.4 The chapeau to paragraphs 1 and 2 of the TRIMs
Annex provides that inconsistent trade-related investment measures include those
which are mandatory or enforceable under domestic law or under administrative
rulings or compliance with which is necessary to obtain an advantage. . ...
All exceptions under GATT shall apply under TRIMs (TRIMs article 3).5 In
addition, developing countries are permitted to deviate from Article 2 obligations
for balance of payments reasons (TRIMs article 4). Members of the WTO are
required to notify the Council for Trade in Goods of any trade-related investment
measures that are not in conformity with TRIMs. Countries are given 2, 5 or 7 years
to eliminate all notified trade-related investment measures, the period depending on
whether they are a developed, developing, or least-developed country Member,
respectively (TRIMs article 5). Developing and least-developed country Members
may qualify for an extension (TRIMs article 5). Members are required to ensure
transparency with respect to the application of TRIMs. Members need to notify to
the WTO Secretariat of lists of publications in which trade-related investment
measures may be found (TRIMS article 6). The Committee on Trade-Related
Investment Measures is established as a forum to examine the implementation
operation of the agreement (TRIMS article 7).
TRIMs is but one of the international trade agreements. It does not contain
substantive rules for the protection of investment including related to intellectual
3
Trade-related investment measures includes those which require: (a) purchase or use by an
enterprise of products of domestic origin or from any domestic source. . .[i.e. domestic content
requirements]; or (b) that an enterprises purchase or use of imported products be limited to an
amount related to the volume or value of local products that it exports [i.e. trade balancing
requirements].
4
Trade-related investment measures includes those which restrict: (a) the importation by an
enterprise of products used in or related to its local production, generally or to an amount related to
the volume or value of local production that it exports; (b) the importation by an enterprise of
products used in or related to its local production by restricting its access to foreign exchange to an
amount related to the foreign exchange inflows attributable to the enterprise; or (c) the exportation
or sale for export by an enterprise of products. . ..
5
Regarding GATT exceptions, there is provision of waiver of obligations under GATT article
XXV, which authorises the Contracting Parties in exceptional circumstances to waive their
Agreement obligations. Likewise, balance-of-payments exception is available under GATT article
XII which allows the Member state to introduce quotas in order to safeguard its external financial
position and its balance of payments. GATT article XXIV of the provides that custom union and
free trade area can deviate from their most favoured nation obligations under GATT article 1. The
Escape Clause under GATT articles XIX (1)(a)-(b) of is a safeguard designed against imports. It
allows the Member to suspend its obligations under GATT if as a result of unforeseen development
and of the effect of a certain GATT obligation, any product is being imported in such quantities
and in such conditions that it causes or threatens serious injury to domestic producers or directly
competitive products. GATT article XX set forth a list of general exceptions, i.e. protection of
human health, animal or plant life, etc., compelling circumstances that are deemed to override the
interests and benefits of unrestrained international trade. GATT article XXI provides that GATT
shall not apply in case of compelling interests of national security.
213
property investment, except as derived from protection accorded to trade in goods.

TRIMs does not address the issue of the protection of foreign investors in the host
Member, and it fails to cover the following important areas:
Non trade-related investment measures;
other types of trade-related investment measures, except local content requirements and performance requirements (such as equity requirements)6 or other
remittance restrictions;
political risks, such as, expropriation, nationalisation, requisition;
repatriation of profits.
TRIMs does not include intellectual property within foreign investment and it
does not require Members to provide any other protection measures for foreign
direct investment. It only prescribes obligations to Members to protect from local
content requirement and quantitative restriction on goods to be used in investment.
3 Overview Relating to Intellectual Property Rights

Intellectual property rights have never been more economically and politically
important or controversial than they are today (Okediji 2006, vii). Intellectual
property rights are a relatively new kind of right that is directly related to international trade, foreign investment, technology transfer and economic development.
The term intellectual property refers broadly to the creations of the human mind.
Intellectual property rights protect the interest of creators by giving them property
rights particularly freedom to operation over their creations. Intellectual property
rights are generally protected by giving statutory expression to the moral and
economic rights of creators in their creations and to the rights of the public in
accessing those creations within a jurisdiction, and aim to promote creativity by
both reward and the dissemination and application of such creations.
Traditionally intellectual property rights were divided into two distinct groups,
namely copyright and industrial property. Industrial property covered patents, trade
marks and industrial designs. The Paris Convention for the Protection of Industrial
Property (1883) prescribed the minimum standards for the protection of patents,
trade marks and industrial designs. The Berne Convention for the Protection of
Literary and Artistic Works (1886) prescribed to its members the minimum standards for copyright protection. In the due courses of the progress of intellectual
property rights, the Convention Establishing the World Intellectual Property Organisation (1967) came into existence which included the rights relating to: literary,
6
Covered in part by GATTS article XVI, unless otherwise specified in the schedule of Commitments. GATTS article XVI, Market Access: 2. [. . .] the measures which a Member shall not
maintain or adopt, [. . .] are defined as . . .limitations on the participation of foreign capital in terms
of maximum percentage limit on foreign shareholding or the total value of individual or aggregate
foreign investment.
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artistic and scientific works; performances of performing artists, sound recordings,

and broadcasts; inventions in all fields of human endeavour; scientific inventions;
industrial designs; trademarks, service marks, and commercial names and designations; protection against unfair competition; and all other rights resulting from
intellectual activity in the industrial, scientific, literary or artistic fields.
As the World Intellectual Property Organisation (WIPO) had no provisions of
enforcement and proper dispute settlement body, (apart from ultimately referring
matters to the security council of the United Nations, which has never occurred), a
new international agreement with effective dispute settlement and enforcement
mechanism was realised. Accordingly the Agreement on Trade-Related Aspects
of Intellectual Property Rights (1994) (TRIPS) was brought into existence. It
covers copyright and related rights; trade marks; geographical indications; industrial designs; patents, layout-designs (topographies) of integrated circuits; protection of undisclosed information; and control of anti-competitive practices in
contractual licenses.
4 Intellectual Property Rights as Investment in Bilateral

Investment Treaties
Provisions relating to intellectual property rights are also often found in bilateral
investment treaties (BITs) and preferential trade and investment agreements
(PTIAs). As discussed above, intellectual property rights are not to be found as
considerations in multilateral investment treaties, for example, TRIMs. GATT did
not have any provision on intellectual property and foreign investment. Indeed,
initially GATT did not address the issue of trade-related measure, such as investment, services and intellectual property, as they were not considered tariffs or
custom duties (Burt 1997). However, tremendous bilateral investment treaties
were concluded between capital exporting and capital importing countries
(Vandevelde 2000). BITs have provided for national treatment and most favoured
nation treatment to foreign investors, protection against expropriation, free repatriation of profits, dispute settlement (Shenkin 1994), and the inclusion of intellectual
property related provisions in BITs and PTIAs reflects the importance of patents,
trade secrets, trademarks, copyrights and the like in commercial relations between
countries (UNCTD 2007, 2). Intellectual property rights are specifically mentioned
in many BITs, and come under the definition of investment. For example the US
Uruguay agreement:
Investment means every asset that an investor owns or controls, directly or indirectly, that
has the characteristics of an investment, including such characteristics as the commitment
of capital or other resources, the expectation of gain or profit, or the assumption of risk.
Forms that an investment may take include: [. . .] (f) intellectual property rights . . .
(Bilateral Investment Treaty between United States and Uruguay (2004)).
215
On 11 July 1988, Australia and China signed a bilateral investment treaty

(Agreement between Australia and China on the Reciprocal Encouragement and
Protection of Investments (1988)). In this treaty, the definition of foreign investment includes intellectual and industrial property rights, including rights with
respect to copyright, patents, trade marks, trade names, industrial designs, trade
secrets, know-how and goodwill (Agreement between Australia and China on the
Reciprocal Encouragement and Protection of Investments, article 1(b)(iv)). On
26 February 1999, Australia and India signed a bilateral investment treaty (Agreement between Australia and China on the Reciprocal Encouragement and Protection of Investments, article 1(b)(iv)). This treaty states:
[I]nvestment means every kind of asset, including intellectual property rights, invested
by an investor of one Contracting Party in the territory of the other Contracting Party in
accordance with the laws and investment policies of that Contracting Party . . . (Agreement
between Australia and China on the Reciprocal Encouragement and Protection of Investments, article 1(c)).
Since 1989, China has signed BITs with 33 African countries, 16 BITs of which
have entered into force (Jin and Ke 2015). In these treaties, the definition of
investment includes intellectual property among others, and accordingly such
investment must be based on the laws and regulation of the host country (South
Africa-China BIT article 1.1; see Jin and Ke 2015).
Many countries are in process of negotiating a BIT. The United States and China
are in the early stages of negotiating the bilateral investment treaty. In some sectors
in China, the foreign investor must still partner with Chinese firms and that
provision compels the foreign investor to share their intellectual property with the
Chinese partner. Intellectual Property has been a major impediment to the completion of the US-China BIT, although it is probably the they resolve their differences
and come to a successful (US-China Business Council 2014). Mergers and acquisitions is one of the most common methods of foreign direct investment, and
following a successful BIT agreement it is likely that China will adopt this method
and acquire existing United States companies that have substantial intellectual
property portfolios (Chow 2015, 108). In a recent flurry of purchasing, Huawei
Technologies tried to acquire certain intellectual property assets of 3 Leaf Systems,
a technology firm in the United States. Leading U.S. officials [. . .] argued that
Huaweis acquisition of U.S. technology would pose a threat to U.S. national
security interests (Chow 2015 #5). Later this issue was resolved: Huawei withdrew
its application to acquire the intellectual property (Chow 2015).
In January 2015, the President of the United States, Barack Obama, and Indian
Prime Minister, Narendra Modi, issued a joint statement, Shared Effort; Progress
for All (White House 2015), and affirmed their shared commitment to facilitating
increased bilateral investment flows and fostering an open and predictable climate
for investment (Singh 2015). For these two parties, the chances of signing a
bilateral investment treaty appear bleak. There are many differences of opinion
between the United States and India on the shape of any such investment treaty.
One of them is the approach from the United States to the definition of foreign
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investment, which includes intellectual property rights amongst others, and Indias
approach that excludes intellectual property as foreign investment (Singh 2015).
The United States and European Union are currently negotiating a proposed
comprehensive and ambitious trade and investment deal: the EU-US Transatlantic
Trade and Investment Partnership (TTIP). There is speculation that there will not be
a comprehensive intellectual property chapter in TTIP as both sides have a high
level, i.e. at the strong end of the global spectrum, of intellectual property protection. Most probably negotiation will address a limited number of intellectual
property issues (Cirlig 2014, 27).
Many bilateral investment treaties aim to protect intellectual property, but they
are not always defined solely by reference to domestic intellectual property. The
scope of intellectual property in a bilateral investment treaty may be subjugated to
notions of symmetry and international harmonisation (Voon et al. 2014; Okediji
2014, 1133). In Saipem S.p.A. v. Bangladesh (2007) I.C.S.I.D. ARB/05/07,
Bangladesh argued that certain intellectual property did not exist under domestic
law and thus it could not fall within the definition of investment in its bilateral
investment treaty with Italy. The tribunal rejected that argument of Bangladesh and
stated that the scope of protection of a bilateral investment treaty must be symmetrical for parties to the treaty and an investor may be able to claim intellectual
property Saipem S.p.A. v. Bangladesh (2007), 124. In Philip Morris v. Uruguay
(2015) I.C.S.I.D. ARB/10/7 intellectual property is again under consideration
before international investment arbitration (see Sahin 2014). Here, the complainant
argued that the Uruguayan ordinance on cigarette packaging impinged on Philip
Morriss and Abals intellectual property rights and a caused substantial reduction
in the value of Abal as a company. On July 2, 2013, the Tribunal has decided that it
has jurisdiction over the case (Philip Morris v. Uruguay (2013), Decision on
Jurisdiction, 236). This case is fundamentally a conflict between health and intellectual property rights. This case is still under consideration before the Tribunal.
There are strong arguments that bilateral investment treaties extend the intellectual property protection above the standard embodied in TRIPS (see Liberti 2010).
The inclusion of intellectual property rights in the definition of investment in
bilateral investment treaties reflects the importance of protecting such intangible
assets in many investment operations. Intellectual property may be a significant
strategic asset, and is all the more important in the light of the rapid development of
advanced industries, such as biotechnology and pharmaceuticals, which rely on
patent and know-how protection. Generally, preferential trade and investment
agreements (PTIAs) include a full chapter on intellectual property containing
substantive obligations to be borne by the contracting parties.
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5 Impact of Intellectual Property Rights Protection

on the Determination of Types of Foreign Investment
Intellectual property is one of the essential determinants of inward foreign direct
investment. The existence of a sound intellectual property right framework and its
effective enforcement attracts foreign direct investment and encourages of technology transfer, and it is an important consideration of foreign investors. TRIPS article
7 sets out:
The protection and enforcement of intellectual property rights should contribute to the
promotion of technological innovation and to the transfer and dissemination of technology,
to the mutual advantage of producers and users of technological knowledge and in a manner
conducive to social and economic welfare, and to a balance of rights and obligations.
Intellectual property rights are promoted as incentives for the growth in innovation and technology transfer. They have traditionally played an important role in
knowledge-based economies and now play a crucial role in international trade. If
we examine the role of intellectual property rights in the context of domestic or
international trade, we can say that it protects key features of goods; it protects
goods from copying/imitation; it gives market access and market protection; it
attracts foreign investors; it may be converted into a great asset/property; it can be
licensed and receive royalty and it can be sold.
Different kinds of intellectual property rights play different role. Brands can be
protected by trademark. Designs can be protected by industrial designs. Innovative
products and processes can be protected by patent and utility models. Microchips
can be protected by layout-designs of integrated circuits. Quality or reputation
attributable to the geographical origin can be protected by geographical origin/
indication. Data compilation (list of customers, etc.); manufacturing processes,
techniques and know-how; formulas for producing products; business strategies
business plans, export plans, and marketing plans; research result, any other
confidential business information, by trade secret, or in Europe under the sui
generis Database Right. Culture, artistic and literary works, computer software,
compilation of data by copyright and related rights. One product may be related to
and protected by many intellectual property rights. It is obvious that the protection
of intellectual property rights is pre-requisite for a successful manufacturing to
innovation to literary and artistic works, and hence, it is a very effective tool to
market access and market protection. Any foreign investor primarily wants effective protection of its intellectual property rights in that country and also wants
environment of benefiting by its intellectual property.
The effective protection of intellectual property rights is one of the many
elements of business climate. In general, the points or conditions of attraction for
investment are market size (population size, income per capita) and growth; labour
costs, environmental standards, natural resources; proximity to other markets;
human capital base and skills; domestic research and development capacity; good
governance and transparency; trade costs and investment costs; effective
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infrastructure; protection of intellectual property rights and property rights as such;

taxation; over-all situation of corruption and others.
The importance of the protection of intellectual property rights depends on the
nature of the investment project. Protection of intellectual property primarily
matters for foreign investors in certain sectors. These sectors include drugs, cosmetics, healthcare products, chemicals, machinery and equipment, electrical equipment. Unauthorised used of technology is less likely in sectors requiring high
amount of investment like automobiles. In a survey it is found that, in respect of
sales and distribution related investment, 20 % of investors consider that intellectual property rights to be important. With respect to rudimentary production and
assembly, 30 % investors consider that intellectual property rights to be important.
With respect to manufacturing, 5060 % investors and with respect to research and
development, 80 % investors consider that intellectual property rights to be important (Javorcik 2007).
Foreign investment may take place in different ways, e.g. by licensing, foreign
direct investment (establishment), investing on equities and others. The higher level
of intellectual property rights protection shifts foreign investment preference away
from projects focusing solely on distribution and towards setting up manufacturing
activities. The situation of stronger protection of intellectual property rights provides higher likelihood of licensing rather than FDI. Investors with sophisticated
technologies and valuable brand names are more likely to set up wholly-owned
subsidiaries than joint ventures (Smarzynska and Wei 2000, 5). Technologies
introduced into joint ventures in developing countries are 3 and 4 years older
than those introduced into wholly-owned subsidiaries. Transfer of technologies to
wholly-owned subsidiaries involves more movement of technicians than to joint
ventures.
Corruption may have implication for the entry mode and thus technological
content of investment projects. Studies suggest that the level of corruption in a
country is an indicator of business condition and has an effect on foreign direct
investment (Udenze 2014). Corruption increases the cost of doing business, alter
the resources allocation and results in higher prices of goods or services (Udenze
2014). Corruption acts as a tax on foreign investors and it gives deterring effects on
FDI inflows (Udenze 2014, 88). Corruption shifts investors preference away from
wholly-owned subsidies and towards joint ventures (Udenze 2014, 88).
Patent protection attracts transfer of technology. A well informed and educated
citizenry are must in the development process in any country. Hence, copyright
plays vital role in building capacity for economic growth (Udenze 2014, 88).
Copyright protection attracts technology based industry like software, television,
internet related, and others as well as entertainment industries including movies,
music, and others. Trademark provides distinctiveness and promotion of the products, and its access and protection of the market. Hence, trademark protection
attracts all kind of industries or sectors. Furthermore, intellectual property rights
encourage licensing and technology transfer as well.
There is a close relation between economic growth and the protection of
intellectual property. The World Economic Forum reported in 2004 that the
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20 countries that provide the strongest protection of intellectual property were

among the top 27 countries in terms of economic growth. The World Economic
Forum further reported that the 20 countries that provide the weakest protection of
intellectual property were among the bottom 36 countries in terms of economic
growth (Owen 2007).
5.1
A Comparison Between India and China
It is predicted that China and India will once again be the largest economies and
their per capita incomes will rise dramatically within a few decades. A thousand
years ago, India and China were the richest areas of the world. Now both India and
China have undergone a process of economic reform. This reform process is more
advance in China than India. In fact, in 1980, China had a lower per capita than
India, but by 1990, Chinese per capita grew much faster and overtook India. Now
Chinese per capita income is more than double that of India (Rowthorn 2006).
However, Indian growth path is different than Chinese one. India plays smaller
role for manufacturing sectors whereas it plays significant role for modern services.
India has larger exports in Information Technology (IT) areas whereas Chinese
exports in IT areas (software) are not significant (Rowthorn 2006, 3). Manufacturing sectors play a larger role in China. Indias position in IT has a number of
advantages. Now it is estimated that India accounts for 65 % of the global market in
offshore IT and 46 % of the global business process offshoring segment (BPO).
Furthermore, IT can also be very useful in manufacturing and other industries, and
it helps industries to raise productivity and develop new, high-value added products
(Rowthorn 2006, 4).
Investment in China is highly profitable because of lower wages rate and lower
cost of living, among others. There is enormous potential for investment in China.
But the question is how long it will continue? (Rowthorn 2006, 4).
5.2
FDI in China and India: Popular Target Country
In 2014, China became the largest foreign direct investment (DFI) recipient in the
world (United Nations 2015, 4). Recently FDI has changed its past trend. For the
first time in 2014, overall FDI inflows declined by 16 % to $1.23 trillion (United
Nations 2015, ix). In 2014, FDI flows to developed countries declined by 28 % to
$499 billion (United Nations 2015, 2). The United States experienced FDI inflows
decreased to $92 billion that is 40 % of their 2013 level (United Nations 2015, 2).
The United States could not maintained its number one position as a top country to
attract FDI (United Nations 2015, 2). In 2014, Europe also experienced FDI inflows
decreased by 11 % to $289 billion (United Nations 2015, 2). However, FDI in the
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R. Karky
sector of service has been constantly growing over the past 10 years. In 2012,
services accounted for 63 % of global FDI stock (United Nations 2015, ix).
In 2014, developing countries received increased FDI flows by 2 % reaching
$689 billion (United Nations 2015, 3). FDI inflows increased in China by 4 % from
2013 to $129 billion and it is mainly increased in the service sector (United Nations
2015). Whereas FDI inflow fell in manufacturing sectors in China (United Nations
2015, 14). In 2014, Hong Kong and Singapore also experienced FDI inflows
increase (United Nations 2015, 3). FDI inflows to Hong Kong rose by 39 % to
$103 billion (United Nations 2015, 41). FDI inflows to Singapore rose by 4 % to
$68 billion (United Nations 2015, 41). FDI inflows to Viet Nam increased by 3 %
(United Nations 2015, 41). In 2014, FDI inflows to India increased by 22 % to $34
billion and the sector of manufacturing is gaining upward trend.
5.3
Outward FDI
Outward FDI can strengthen the competitiveness of their domestic firms and also
can bring other benefits to the domestic economy. Both China and India have
adopted a policy of going global to boost investment overseas (Investment Issues
Analysis Branch 2006). Nine out of the twenty countries who made largest foreign
direct investment in 2014 were developing countries particularly from Asia (United
Nations 2015, ix). In 2014, outward investment by multinational enterprises
(MNEs) based in developing countries increased by 29 % to $432 billion (United
Nations 2015, 5). Hong Kongs outward investment increased to $143 billion and
has become the second largest investor after the United States (United Nations
2015, 5). Outflows investment by Chinese MNEs continue to grow faster than
inflows in China and it reached $116 billion (United Nations 2015, 41). Similarly
Singapore experienced outflows to $41 billion (United Nations 2015, 5). In 2014,
Indian FDI outflows as well increased fivefold to $10 billion comparing the
performance of the year 2013 (United Nations 2015, 48). Whereas FDI outflows
from Japan and the United States decreased by 39 and 21 %, respectively (United
Nations 2015, 41).
Besides the improved competitiveness and performance of the firms and industries involved, such outward FDI contributes to industrial transformation and
upgrading of value-added activities, improved export performance, higher national
income and better employment opportunities:
While outward FDI entails the transfer of capital from home to host country, it can also
generate inflows in the form of repatriated profits, royalties and licensing fees, and
payments by the host country for increased imports from the home country (often in the
form of intra-firm trade). In general, in the immediate aftermath of the outward investment,
net financial flows tend to be negative but then gradually become positive. Outward FDI
also seems to have a delayed but positive effect on domestic investment (United Nations
2006, xix).
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6 Conclusion
Perhaps it is the right time to give a new look on FDI. The trend of FDI is not
constant. During the last one decade and more overall FDI was increasing globally,
but since 2014 the trend of FDI has been changed and overall FDI has declined. For
the first time in 2014, FDI in developed countries has decreased. Still FDI in some
developing countries including China and India has been increasing. China has
become number one FDI recipient country. FDI has decreased in the sector of
manufacturing including in China. The trade in goods has also declined in China,
and it is expected that it will be global trend in the near future. However, over the
past one decade, FDI in the sector of service has been constantly increasing
globally. The question arises whether FDI is increasing in the sector of intellectual
property. Authentic data is not available in respect of FDI in the sector of intellectual property. Perhaps advancement of science and technology has been playing a
vital role to bring such an important trend in the field of FDI. There is no doubt that
there is a close inter relationship between intellectual property and FDI.
The FDI is considered as one of the important parts of economic development of
a country. Today, FDI is widely recognised as a major potential contributor to
growth and development. It can bring not only capital to the host country, but also
technology, management know-how and access to new markets (Akyuz 2015, 26).
In comparison with other forms of capital flows it is also more stable, with a longerterm commitment to the host economy (Weber 2001, 13). Lack of strong intellectual property protection brings uncertainty to investors. Capital has a lot of choices
as to where it flows and it is less likely to go where uncertainty and risk exist.
Intellectual property fuels economic development and drives growth. Increased
intellectual property protection boost multilateral/bilateral trade and investment.
Access to mature and stable technologies is important for the economic and other
development of China and India, and it is not possible without strong protection of
intellectual property rights. Intellectual property rights protection is required to
secure market and to promote goods. Protection of intellectual property rights is one
of the many major elements of business climate affecting foreign direct investment
inflows. Protection of intellectual property rights affects particularly investors in
high tech sectors that rely heavily on patent protection; and manufacturing and
research and development projects. However, intellectual property rights protection
will have little impact on assembly or distribution sectors. There are certain areas
where foreign investors are not much serious to the situation of intellectual property, for example: textile, tourism, fishing, real state, manufacturing industry,
construction, and others. Whereas foreign investors who want to invest in the fields
of technology particularly chemical industry, pharmaceuticals, or information
technology (IT) and others are always serious to the situation of intellectual
property. In general, MNCs spend money on research and development and holds
technologies. MNCs are not willing to invest in such a country which does not
protect intellectual property.
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Certain types of FDIs are more beneficial to host country and certain are less.
The situation of stronger protection of intellectual property rights provides higher
likelihood of licensing rather than FDI. Investors with sophisticated technologies
and valuable brand names are more likely to set up wholly-owned subsidiaries than
joint ventures. Domestic investment also plays a key role on the development of a
country. For example, local money holders are less interested in investing in their
country in Africa. It has created a big problem in African countries. Generally they
have been investing in Europe or other countries. It is important to attract domestic
investors inside the country for economic activities. Intellectual property is one of
the areas that attracts domestic investors too.
There is also a growing trend of outflows of FDI from many developing
countries and it is successful. Such FDI outflows helps to bring technology,
knowledge and ability back at home. For the successful FDI outflows, companies
need to build competitive position. Protection of intellectual property rights in
home country as well as in host country is vital for a successful FDI, both inwards
and outwards. Without the protection of intellectual property rights, no companies
can run their business properly, can achieve profit, and build their strength.
Acknowledgement The author would like to thank Professor Mark Perry for a Postdoctoral
Fellowship, the Beijing Foreign Studies University Law School and University of New England
School of Law (Australia) for inviting him at to an international intellectual property conference,
and the Services Group/AECOM International Development for providing him with an advisory
position (20062008).
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Innovation Cartography and Patentomics:

Past, Present and Future
Kylie Lingard and Mark Perry
Abstract One method for determining investment targets in any business sector is
to determine where entities are focusing their development strategies to enhance
innovation. One signal that can be used to judge where companies are innovating is
publically available patent information. Using patent data is a complex process, but
one that has become more viable over the last decade due to the open availability of
patents online, and importantly the enhancement in software and hardware tools.
This paper looks at the evolution of such tools, using research and development in
crops as an example.
Crop development is one element of global food security. It may require access
to plant genes data, plant patents and related information. When access to such data
is restricted, innovation may stall. There are many hindrances to access, such as
economic power, but they also include the legal rights created by patents, copyright
and contracts. The mapping of legal rights in the innovation landscape, one that is
dominated by patents, is one tool to help understand the scientific directions and
investment in the field.
This paper reviews the legal rights mapping in the crop innovation landscape as
an example of how patent cartography can aid knowledge of sector directions.
Following an introduction, some of the literature on mapping patent data is surveyed. This is followed by a review of the research on mapping legal rights in
materials from databases. The fourth part explores the potential of a cartography
tool we have developed to enhance our understanding of innovation landscapes.
The chapter concludes by drawing together the current state of knowledge on
mapping legal rights in the crop innovation landscape.
K. Lingard (*)
Australian Centre for Agriculture and Law, University of New England, Armidale, NSW,
Australia
e-mail: klingar2@une.edu.au
M. Perry
School of Law, The University of New England, Armidale, NSW 2350, Australia
e-mail: mark.perry@une.edu.au
DOI 10.1007/978-3-319-31177-7_13
225
226
K. Lingard and M. Perry
1 Introduction
Crop researchers, including gene explorers, breeders or growers, may experience
the tension between private property rights and access to knowledge in their pursuit
of innovation (Adi 2006; Dawyndt et al. 2006). Much innovation depends on
invention, which in the industrial setting is typically patented. A patent grants the
holder an exclusive, time-limited right to exploit an invention, including licensing
its commercial use to others (Agreement on Trade-Related Aspects of Intellectual
Property Rights (1994) 1869 U.N.T.S. 299 (Annex 1C) (TRIPS), articles 28, 33).
In exchange for these rights, the holder must publically disclose the invention at the
outset of protection and relinquish control at the end of protection (TRIPS article
29).
The dominant jurisprudential basis for the state granting patent rights is, in
western countries at least, the belief that the rights incentivise invention, research
and development and thus promote social utility (Moore 2003). Of course, these
same rights may impede the ability of other people to access the materials they need
to develop new crop varieties. For example:
Negotiations, paperwork and licensing fees make for high transaction costs in obtaining
R&D inputs. Because of strategic access considerations, IP right owners may refuse to
license enabling technology tools, even for developments outside their own product scope.
Any or all of these factors may hinder the efforts of any one IP owner to obtain the
permissions from all of the other owners necessary to fully enable the development of
their own technology or product (Aoki and Schiff 2008, 192194; see also Jefferson
et al. 2015; Graff et al. 2003, 989; Reichman and Uhlir 1999, 795).
The development of laws and policies that balance these competing interests
presents an ongoing challenge for all policy makers (OECD 2013; Smith 2010).
Policy makers and courts have applied a range of legal rights to tangible and
intangible genetic material, with diverse approaches being taken in different jurisdictions (see generally Blakeney 2009; Eisenberg 2002). Tangible patentable material includes DNA, other biological materials and organisms (Eisenberg 2002; Zika
et al. 2010). Intangible material includes research tools, gene sequence data,
compilations of data and the software used to organise, store and visualise data
(Chang and Zhu 2010; Brown et al. 1999; Zika et al. 2010). The same subject matter
may attract a variety of rights, including patent, copyright, database and contract
rights (Ravishankar and Archak 2000; see also Eisenberg 2002; Graff et al. 2003;
Rimmer 2003).
Today, the global standard for patents is to provide inventors (or more usually
their employers or assignees) with exclusive rights to exploit their creation for at
least 20 years (TRIPS, articles 2734). Patents have been a popular form of
protection for genes, gene sequences, research methods and database software for
decades (see generally Eisenberg 2002), although courts in some jurisdictions have
recently pulled back from endorsing gene patents.1 For example, in 2002, the
1
Follow the Myriad cases in the USA, Australia, and other countries.
Innovation Cartography and Patentomics: Past, Present and Future
227
Canadian Supreme Court rejected the ability to patent what was considered to be a
higher lifeform (Harvard College v. Canada (Commissioner of Patents) [2002]
4 S.C.R. 45; see generally (Perry 2008)). In 2014, the Australian High Court
curtailed gene patenting (Harvard DArcy v. Myriad Genetics [2014] F.C.A.F.C.
115).
Databases store gene sequences and associated data sourced from a wide variety
of routes including scientific literature, patent applications and sequences submitted
by researchers (Brown et al. 1999, 51). Even a single segment of data can attract a
wide range of rights (Smith 2010, 2). This complex web of total rights now
envelops the transfer and use of. . .agricultural biotechnologies in the crop innovation landscape (Nottenburg et al. 2002, 391392; see also Ravishankar and
Archak 2000).
The mapping of various legal rights in genetic material is an essential part of the
investigative process for laboratories, and even may help researchers and developers obtain access to necessary technologies. Herein is examined the current
approaches to the mapping of legal rights in the crop innovation landscape. The
review draws on articles and books, government policy papers, database access
policies and commercial publications. Part 1 examines the literature on mapping
patent data. Part 2 explores the literature on mapping legal rights in database
material. The review concludes by considering where to from here in an age
where masses of data is analysed, often engaging in high throughput technologies
and enabling the age of omics, as in genomics (see BioConcepts 2011),2
metabolomics and proteomics, and the coming of age of patentomics.3
2 Mapping Legal Rights in the Crop Innovation

Landscape: Patents
2.1
Evolution and Purposes
To facilitate the utility of incentivising invention, part of the bargain for the state to
give patent grantees the limited monopoly over their innovations is that they must
publically disclose how the patent is made and deployed.4 These disclosures
2
Genomics/Genomik (ger.): The scientific study of genomes, using gene mapping, nucleotide
sequencing, and other techniques; the branch of molecular biology concerned with the structure,
function, and evolution of genomes.
3
Following the thread of the omics age, patentomics can be considered to be the systematic
study of the structure, function and evolution of a select body of patents. The tools are developing
that will allow this to be done in a high throughput and readily accessible way.
4
For example, the Australian Patent Act 1990 (Cth) section 29(4) requires a patent request in
relation to a complete application [to] be in the approved form and accompanied by a complete
specification. Section 40(2) provides:
A complete specification must:
228
become part of the prior art base, a body of existing knowledge that people can
draw on to further innovate. By standing on the shoulders of giants5 we can
improve on what has come before. However, if we cannot see what has come
before, then the state grant of patents forms an impediment to future innovation.
Access to prior art in the patent databases is a vital part of stimulating progress, but
it is sometimes overlooked as a key asset of the intellectual property system.
Analysing patent data is not new. For example, in 1949, Seidel suggested
studying the information in patents to inform corporate management decisionmaking (Karki and Krishnan 1997). By the 1950s, patent citation indexes formed
the basis of analysis of over 4000 chemical patents (De Bellis 2009). Since 1999,
the Organisation for Economic Co-operation and Development (OECD) has used
patent maps to inform its global scoreboard of science, technology and industry
(OECD 2015c; see e.g. OECD 2015a, b):
The OECD Science, Technology and Industry Scoreboard. . .draws on the latest internationally comparable data to uncover the strengths of the OECD and other leading economies, and examine current challenges to overcoming the effects of recent financial and
economic crises and improving the well-being of societies. It features indicators traditionally used to monitor developments in science, technology, innovation and industry, and
complements them with new and experimental indicators that provide new insights into
areas of policy interest (OECD 2015a).
The World Intellectual Property Organisation (WIPO), the principal player in

patents and arguably the leader in progress towards global intellectual property
harmonisation, is mandated to produce patent landscape reports of particular
interest to developing and least developed countries, such as public health, food
security, climate change, and the environment (WIPO 2015c; see e.g. WIPO
2015a; WIPO 2011; see generally Kitsara 2010; Secretariat of the Committee on
Development and Intellectual Property 2009). WIPO undertakes the following
process in preparing a patent landscape report:
A PLR begins with a state-of-the-art search for the relevant technology in selected patent
databases. The search results are then analyzed to answer specific questions about, for
example, patterns of patenting activity or of innovation. The results are presented visually
(a) disclose the invention in a manner which is clear enough and complete enough for the
invention to be performed by a person skilled in the relevant art; and
(aa) disclose the best method known to the applicant of performing the invention; and
(b) where it relates to an application for a standard patentend with a claim or claims defining
the invention; and
(c) where it relates to an application for an innovation patentend with at least one and no
more than 5 claims defining the invention.
Patent legislation universally contains the requirement for disclosure of how the patent is to be
performed, i.e. that a person skilled in the art of this area of research would be able to reproduce
the patented product or process.
5
Sir Isaac Newton expressed this sentiment in a letter to Robert Hooke dated 5 February 1676: If I
have seen further it is by standing on the sholders [sic] of giants. However, the idea of relying on
earlier work to make advances had been expressed some centuries prior to Newton.
229
to assist understanding and conclusions or recommendations based on the empirical

evidence are provided (WIPO 2015c).
As the visual mapping of patent data has evolved, so too has the use of patent
maps to examine the scope of the crop innovation landscape. For example, international agencies and scholars have used patent maps to analyse geographical
trends, sector patterns and organisational behaviours in agricultural biotechnology
(see e.g. OECD 2008; Oldham and Cutter 2006; Michiels and Koo 2008; Wang
2011; Chan 2006). Others have mapped owners of key biotechnology patents to
study collaboration opportunities and the humanitarian impacts of intellectual
property rights (Boulakia 2001, 15). For example, Krattiger (1996, viii) mapped
patents in a pest-resistant crop to examine how technology was being diffused to
farmers most dependent on novel solutions for their very livelihood and survival.
Some independent bodies have been working specifically to provide open-access
to agricultural innovation landscapes (see WIPO 2015c). For example, Cambia is a
not-for-profit institution seeking to democratise innovation (Cambia n.d.). The
institution has spent nearly 25 years developing tools to help researchers and policy
makers navigate the intellectual property landscape influencing R&D in agricultural biotechnology (Delmer et al. 2003, 1667). Their work responds to the
challenge of negotiating fair deals to use inventions that are essential to further
innovation, when such inventions are concentrated in the hands of a few. For
example, as Krattiger (1996, vii) noted:
An analysis of commercialized Bt crops and of recent field trials demonstrates that a subset
of these eight corporations are the major players in transgenic Bt plant technology, viz.
Monsanto, Novartis, AgrEvo and Mycogen with their own technologies, and DeKalb
Genetics Corporation and Pioneer Hi-Bred International through strategic alliances.
Cambias patent landscape maps have helped researchers identify and invent
around patents that would have otherwise stopped people working within or
entering the field (Masum et al. 2011). In this way, they have helped minimise
the tragedy of the anticommons (see generally Heller 2013).6 Cambia makes their
substitute technology available to through a sliding-scale licensing scheme where
those with less pay less and those with more pay more (Masum et al. 2011).
The anticommons thesis is simple: when too many people own pieces of one thing, nobody can
use it. Usually, private ownership creates wealth. But too much ownership has the opposite effect
it leads to wasteful underuse. This is a free market paradox that shows up all across the global
economy. If too many owners control a single resource, cooperation breaks down, wealth
disappears, and everybody loses. Conceptually, underuse in an anticommons mirrors the familiar
problem of overuse in a tragedy of the commons. The field of anticommons studies is now well
established. Over a thousand scholars have detailed examples from across the innovation frontier,
including drug patenting, telecom licensing, climate change, compulsory land purchase, oil field
unitisation, music and art copyright, and postsocialist economic transition. Fixing anticommons
tragedy is a key challenge for any legal system committed to innovation and economic growth
(Heller 2013, 6).
230
Cambia also administers the The Lens, a free patent search engine with a wide range
of visualisation tools (Cambia 2015).
There are other groups working to give access to patent information in the crop
innovation landscape, such as the Public Intellectual Property Resource for Agriculture. This organisation is mapping agricultural biotechnology patents to inform
the development of strategies that improve access to intellectual property, particularly for humanitarian purposes (Delmer et al. 2003, 1670; see also Atkinson
et al. 2003; Winickoff et al. 2009). Proposed strategies include the pooling of public
sector technologies and development of substitute technology (Atkinson et al. 2003;
Winickoff et al. 2009). Another example is the work of the International Science
and Technology Practice and Policy group at University of Minnesota. This group
is providing maps of patent data to address a lacuna of evidence on the impact of
gene patents on crop innovation (Instepp 2012).
Overall, the graphical modelling of patent data has become a popular tool in
advancing access to innovation and informing policy, research and business decisions (see Boulakia 2001). Patent data analysis and patent maps also provide policy
makers with empirical data to complement anecdotal narrative. For example,
Australian governments have recently used OECD data and the Global Innovation
Index 2015 (Cornell University et al. 2015) to argue that the country lags in
innovation and thus requires an innovation boost. If not a (substitute) for innovation, patents form a clear metric in the innovation measurement discussion.
Visual maps also allow non-experts in the particular science of the patent to easily
understand and respond to business and research opportunities and threats
(Boulakia 2001; see also Lee et al. 2009; Zhitomirsky 2011; Kock 2013; Suzuki
2011).
The use of patent maps to advance global objectives and inform important
decisions underscores the significance of careful project planning as the use of
different data selection, retrieval, analysis and modelling methods will produce
different results. For example, Holmans manual analysis of patent claims
discredited the findings that Jenson and Murray arrived at using automated data
analysis on whole genome sequencing and patents (Holman 2012; Jensen and
Murray 2005). The following section explores the use of some popular methods
in the process of mapping innovation landscapes.
2.2
Data Selection, Retrieval and Analysis Methods
Patent mapping involves the selection, retrieval, analysis and modelling of patent
data (Choi et al. 2013; Trippe 2003). The model may then inform further analysis
and action. There are a range of modelling software programs available for people
to use once they have selected, retrieved and analysed the data they wish to model
(see e.g. Cambia 2015). Examples of these are explored later in this paper. The
purpose of this section is to draw attention to the relationships between the quality
of the visual model, the types of data selected for analysis and the methods used to
231
retrieve and analyse chosen data (Cobo et al. 2011; see e.g. Staresinic and Boh
2008; Moehrle and Gerken 2012). Influences on these decisions include the
research objectives, technology in issue and budget available for the mapping
project (see Parisi et al. 2013).
Regarding data selection, patent citations have been a popular choice (OECD
2009, 106; see e.g. Karki and Krishnan 1997; Small 1999; Wang et al. 2011).
Citations link patents in the same way that science citations link the references in
the scientific papers (Karki and Krishnan 1997, 269). Patent citation modelling can
help identify knowledge flows and the technological and commercial importance
of a patent (OECD 2009, 106). Citation modelling can also reveal patent families
and the interactions between patents in a similar industry (Boulakia 2001). This
positions individual patents as part of a patent society (see e.g. Liu 2013, 246).
Other types of patent data one may choose to analyse include keywords, subject
matter classifications, patent owners and countries of registration. Mappers may
combine this data with other types of data, such as patent citation indexes (Cornell
University et al. 2015). For example, Liu (2013) obtained data from patents and
scientific journals to highlight some major differences as well as similarities of
patenting and publishing activity (see also Michiels and Koo 2008; Parisi
et al. 2013).
Different data selections bring different issues. For example, a citation may be
included in a patent at the behest of a patent officer rather than because of its
relevance to the invention (Dolfsma and Leydesdorff 2011, 317). On the other hand,
citations may capture connections between patents that subject matter
classifications miss.
There are numerous manual and automated tools available to retrieve and
analyse patent data (see generally Trippe 2003). There will, of course, be differences in outputs depending on the techniques used. For example, Holman (2012)
found his manual analysis of patent claims proved most of the patents relied upon
by Jensen and Murray (2005) were inappropriate to count. Berthels et al. (2011)
found that the manual retrieval and analysis of patent data remains the most
optimal albeit time-consuming approach because different uses of keywords and
vocabulary necessitated manually checking. In contrast, Choi et al. (2011) and
Yoon et al. (2013) argue that automated software tools arose in response to a
proliferation of patent data that made reliance upon expert knowledge and manual
analysis almost impossible. Lee et al. (2009, 782) suggest that a partly automated
approach may reduce the time and cost of developing patent maps manually and
improve information retrieval, summarization [and] trend analysis. Reduced costs
may make patent mapping more accessible to poor entities and countries. On the
other hand, financial constraints may lead mappers to select the retrieval and
analysis tools they can afford rather than the best tools for the job.
232
2.3
Issues Impacting the Quality of the Data Model
One data has been selected, retrieved and analysed, it may then be modelled for
further analysis. There are various issues that may impact the quality of data model.
Issues raised in the literature include mapping costs, the absence of standardised
methods and incomplete pictures of innovation landscapes.
2.3.1
Mapping Costs
Most biotechnology researchers and developers use patent data at some stage in the
R&D process (see Suzuki 2011), with the need to monitor intellectual property
landscapes only likely to increase (Kock 2013). The free availability of patent maps
and software tools may help underfunded entities and countries access patent
information that previously only experts could afford to use (Suzuki 2011, 1; see
also Parisi et al. 2013). On the other hand, Burhan and Jain posit that satisfactory
results may be best achieved by paying commercial mappers to conduct comprehensive searches (Burhan and Jain 2012, 205). The problem with this idea is that
commercial mapping fees may be outside the scope of many R&D budgets. This
may result in the use of ill-suited software tools that compromise the accuracy and
meaningfulness of map results.
2.3.2
Absence of Standardised Methods
Bubela et al. (2013, 201) suggest that standardised methods in patent mapping
processes may enhance the reliability of the results:
Landscaping techniques are now sufficiently mature and used widely enough in support of
science and innovation policies that general methodologies, reporting criteria and consistent practices ought to be established. These will enhance the reliability of landscapes upon
which business, government and academic leaders can base science and technology
decisions.
Trippe (2003, 221) argues against a one-size-fits-all approach and suggests a

need to select the best data and tools for the job at hand. Parisi et al. (2013) also
supports a flexible, project-specific approach that tailors search strategies to
research objectives and technology. Flexible approaches may need to consider the
views of the Committee on Development and Intellectual Property, who argue that
selecting the best tools for each task may be difficult for developing countries who
have limited general knowledge and techniques in searching patent information
(Secretariat of the Committee on Development and Intellectual Property 2009,
34).
2.3.3
233
Incomplete Pictures
Patent maps provide an incomplete picture of the innovation landscape because

they ignore other legal rights that may impact access to genetic material, such as
patent licensee rights and rights in database information (Dolfsma and Leydesdorff
2011; Graff et al. 2003; Archibugi and Pianta 1996). For example, the legal
licensees of patent rights cannot be mapped because licensing transactions are
not typically recorded in patent office data and are often confidential (Graff
et al. 2003, 990). As Jefferson (2006, 23) argues:
[W]hile the ownership of the patent itself is usually a matter of public record, the ownership
of the rights the most important feature of a patent is completely obscured. Nowhere, in
most jurisdictions, is there recorded or available the patterns of power: who owns what
rights.
The following section considers the current state of knowledge on the mapping
legal rights in databases.
3 Mapping Legal Rights in the Crop Innovation

Landscape: Databases
Crop researchers and developers may need to access information from a public or
private database (Smith 2010). Genetic databases compile information from a
variety of sources, including scientific literature, patent applications and
researchers (Brown et al. 1999). Access to database material may require the
navigation of multiple legal rights. Rights may come with data upon its accession
into a collection; rights may arise in data compilations and software; and database
owners may assert rights in contracts with users (see Reichman and Uhlir 1999;
Smith 2010). These rights have the potential to limit access to information and
affect the progression of science (Smith 2010, 2). They are therefore crucial
considerations in the crop innovation landscape (Archibugi and Pianta 1996).
Common rights in database material include patent rights, copyrights, database
rights and contract rights (see Reichman and Uhlir 1999; Smith 2010). Patent rights
may follow data into a collection, and database owners may obtain patents in their
software and methods used to collect, sort and analyse information (Rimmer 2003).
Access to data may be meaningless without access to these research tools. Copyright may subsist in data upon its accession, and in database software and compilations of data (Rimmer 2003; TRIPS article 10). Copyright generally prevents
unauthorised uses of protected subject matter for no less than 50 years after the
authors death (TRIPS article 12). Compilations of data may alternatively be
protected by a sui generis right to prevent the unauthorised extraction and/or
re-utilization of the whole or of a substantial part. . .of the contents of that database
(Smith 2010, 7). Contractual rights may arise through access policies and user
agreements (Smith 2010).
234
Most of the research on legal rights in database material explores the impact of
compilation rights on access to data. For example, Smith (2010) suggests that the
European sui generis right may impede research that needs to use a substantial part
of database. On the other hand, Smith (2010) speculates whether the weak protections for compilations under the United States copyright regime will drive
database owners to implement restrictive access measures. Reichman and Uhlir
(1999) and Greenbaum (2003) express similar concerns:
The ambiguity of the present copyright laws governing the protection of databases creates a
situation where database owners, unsure of how IP laws safeguard their information,
overprotect their data with oppressive licenses and technological mechanisms (Greenbaum
2003, 1).
However, as Krattiger posits:

This large number of companies working on Bt (mainly under license) demonstrates that
the law suits will not prevent the technology from being deployed; they will merely
determine who receives which portion of royalties. And those with most enabling patents
(also called controlling patents) will receive most of the royalties (Krattiger 1996, 6).
Greenbaum and Gersteins comparative analysis of two compilation protection

regimes led them to call for the following:
[A] universal industry-wide standardized and compulsory license that would allow academic users the ability to access any data set at a reasonable price without having to
negotiate different complex and limiting agreements for each database (Greenbaum and
Gerstein 2003, 982).
Empirical data on legal claims to database material might complement existing

comparative reviews and assist in the development of best practice standards for
database owners and operators. Empirical data might be sourced from the access
polices of genetic databases (see Perry 2013).
Research conducted for this paper found four projects that surveyed the access
policies and procedures of genetic databases. In 1999, Brown et al. (1999) sought to
aid European Union policy making by mapping the technologies and access
policies of human genetic databases. Brown found a lack of interoperability
between databases due to their development by relatively isolated research groups
in response to local information handling problems (Brown et al. 1999, 53; see also
Zika et al. 2010; Chang and Zhu 2010). In 2005, the Commission of the European
Communities mapped the number of databases registered across Europe from 1996
to 2004, as part of a wider review of the effectiveness of the European Unions sui
generis database system (Commission of the European Communities 2005). In
2010, Zika et al. (2010) surveyed the ownership structures, data types, storage
systems and access policies of 126 human genetic collections in Europe to identify
options and challenges for networking and harmonisation. Zika et al. (2010,
143144) found that standardisation of access policies and procedures may facilitate the rapid progress of research and development, but that harmonisation may
be costly and impractical to implement considering the wide variation in access
rules and data management procedures (see also Dawyndt et al. 2006, 252). The
authors suggested that harmonisation might begin by networking the human genetic
235
databases in Europe (Zika et al. 2010, 150). This finding supports the value of
database surveys to the development of laws and policies that facilitate access. In
2013, Perry undertook a preliminary survey of the types of intellectual property and
access information provided on the websites of 31 collections dealing mostly with
non-human genetic material (Perry 2013). Perry concludes:
Perhaps before we suggest models of how to access biobanks and the material therein, it
would be advantageous to take a serious and comprehensive survey of the current systems
being used by biobanks worldwide, and identify the best practices, which vary depending
on the type of accessions that they provide (Perry 2013, 278).
4 Patentomics: A Prototype for Patent Landscaping

Patentomics can be described as a moniker for the high throughput analysis of
large amounts of patents data. As discussed above, analysing the vast amounts of
patent data now available online, largely in an open access environment, can help us
understand the relationships between research areas and research companies, predict research trends, identify the direction that various businesses are moving into
for securing a monopoly portfolio in a particular area, and find opportunities for
working around patented areas or working within areas where there is a lacunar of
patented research. Visual maps can make it a great deal easier to picture complex
data. They also provide visual insights for non-patent experts. Here we look at an
example of the construction of a cartographic system.
Although Boulakia (2001) only accepted it was possible to create a patent map
through relationship analysis, he argued as follows:
[W]ithout understanding the subject matter, such a map is often useless and needs to be
refined by someone who understands the intricacies of the particular scientific discipline
that is the basis of the invention . . ..
Given the advances in software tools, and the ability to embed more intelligent
interpretation of terms into search code, this is probably less true today. As
illustrated here, once some key terms are identified, and admittedly this will take
domain expertise, useful information can be gathered by deploying the Patentomics
processing environment.
Inspired by the Opte Project that created an image of the vast constellation of
networks representing the Internet,7 especially the Mapping the Internet colour
image,8 Mark Perry decided to embark on a research project to create a userfriendly tool that could visually describe the three-dimensional relationships in
the patent arena, particularly the business interests in a selected research space. The
idea to create an open access, user friendly tool to visually describe patent
Lyon (2014) provides information on the project and impressive images.

This image is now part of the Museum of Modern Art collection in New York (see MOMA
Learning 2015).
8
236
relationship did not make any great progress until 2010.9 At that time, there were a
number of relationship mapping software packages available under free and open
source licenses, for example, the Large Graph Layout used in the Opte Project.
Perry used Cytoscape, a software platform immensely popular with
bioinformaticians (Shannon et al. 2003). The program offered a sophisticated
collection of tools to create visualisations of complex networks.
The first step in the research project was to retrieve patent data from patent
databases. Affirming a point made earlier in this paper, this process was time
intensive. Using a small team of postdoctoral researchers and law students (many
with science degree backgrounds),10 the research team focused on retrieving
patents concerning plant tolerance to biotic stress, in particular genes that seem to
promote stress tolerance to pests. The team searched a range of databases,
including:
United States Patents and Trademark Office patent database (USPTO 2009)
Canadian Patents Database (Canadian Intellectual Property Office n.d.)
PatentLens, provided by Cambia (Cambia 2015)
Espacenet, the European Patent Office database (EPO 2015)
AusPat, the Australian patent database (IP Australia 2015)
Patentscope, the WIPO patent database (WIPO 2015b)
For each patent recovered, the team recorded the title of the invention, patent
number, patent owners (often assignees from the inventor), country of filing, patent
publication date and patent expiry date (where applicable). A total of 240 patents
were obtained at the time (2011). The data was used to create a visual landscape of
patents in that field. Building the Cytoscape maps was not that difficult, but it was
made much easier in 2014 with the creation of a web-based version of Cystoscope
by a new member of the research team.11 Figure 1 demonstrates the kind of visual
relationships that can be seen.
When a user first accesses the Patenomics website, the home screen displays a
default graph of patents, patents owners and referenced patents. The graph uses the
plant biotic stress patent information to demonstrate how the site can work. The
graph has three types of nodes; the patent, patent owner(s) and referenced patent(s).
Patent owner nodes are the largest and the referenced patent nodes the smallest,
with the patents linked between these two nodes. If the user rolls over any node with
the mouse pointer, then only the connected nodes to that particular node become
visible. This allows the user to get an idea about the patents owner(s) and the patent
9
At which time a grant was received from the Government of Canada via Genome Canada and the
Ontario Genomics Institute (OGI-046).
10
Particular thanks are given to Professor P Krishna for molecular science advice, Dr T Margoni, S
Serniwka, N Zeit, M Taylor, V Viswambharan, M Qu, M Frontini, I Iyoha and the other 40+
research assistants active during that period.
11
This due to funding from the University of New England and the programming skills of
Dr. Hawlader Al Mamun, University of New England, who wrote the Java to make the Cytoscape
relationships available online and set-up the encrypted MySQL database for the patent data.
237
Fig. 1 Visual relationships
(s) referenced by the respective patent. If one or more nodes are selected, then
information regarding the node(s) is displayed in the upper right panel. Similarly, if
any edge is selected, its information is displayed at the bottom-right corner of the
panel. The website also gives users the ability to use their own datasets to create
their own charts showing such relationships.12
The aim of this part of the research project was to prove that on a relatively small
budget, with limited scientific knowledge,13 it is possible to dig out and display
company, patent, and prior art relationships in an easy to view map. The ability to
interpret information that is freely available in patent databases gains additional
facility with such cartography. Future project work aims to make Patenomics a
resource that is easier-to-use and more widely available.
5 Concluding Remarks
Global food security relies upon improvements in crop quality and productivity
(OECD 2013; Ravishankar and Archak 2000). Developers of this technology may
require access to crop genes and information (Adi 2006). The complex web of legal
rights in this type of material may directly or indirectly impede access, for example
through prohibitive access costs, terms and conditions.
12
Interested readers should see Perry (2015) for information on how to login and contact the
authors.
13
It should be noted that consultation with a molecular biologist in this field was required to get the
appropriate search terms.
238
Patent cartography has value in helping to navigate these legal webs of relationships and mitigates some of the barriers to innovation. For instance, patent maps
have led to the development of substitute technologies that allow poor entities and
countries to participate in agricultural biotechnology. They may help inform the
development of medium-term alternatives to radical patent law reform (Bergman
and Graff 2007). Empirical data may also help inform the development of patent
laws and policies that support innovation and access.
The use of patent maps to help researchers navigate the web of legal rights is not
without its challenges and limitations. Particular issues include the impact of data
selection, retrieval and analysis methods on the quality of visual results, and the
inability of patent maps to reflect patent licensees and other legal rights in the
innovation landscape. Legal rights in data retrieval, analysis and modelling software may also restrict access to the tools needed to develop quality patent maps.
These challenges do not detract from the value of patent mapping; they instead
serve as an indication of where further research is needed. For example, although
Deibel (2013) recently noted the value in mapping various rightsholders along
entire research and development chains, there is a lack of empirical data on legal
claims to database material. This data may work with the theoretical discussions on
different types of database rights to inform the development of best practices access
policies. These policies may in turn facilitate access to the materials needed to
improve crops and ensure global food security (Ravishankar and Archak 2000), as
well as understanding of the patent system and intellectual property as a discipline.
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Global Governance of Intellectual Property

ThiS is a FM Blank Page

Library of Congress Control Number: 2016940952

ThiS is a FM Blank Page

interrelationships between national intellectual property developments. The threads

ThiS is a FM Blank Page

The Changing Face of Intellectual Property: Global Forces and

International Copyright: Marrakesh and the Future of Users

Non-conventional Trademarks Under United States Law:

Brief Information on Contributors

Brief Information on Contributors

Brief Information on Contributors

peoples in land-use decision-making and equitable management policies for plant

Brief Information on Contributors

Australian Communications and Media Authority

Medicines Patent Pools

The Changing Face of Intellectual Property:

2 Harmonisation and Differentiation

The Changing Face of Intellectual Property: Global Forces and Compliance

is questionable, in which case an infringement hearing needs to be suspended and

interested stakeholders, typically those involved in the intellectual property

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The Changing Face of Intellectual Property: Global Forces and Compliance

The Changing Face of Intellectual Property: Global Forces and Compliance

refinement as seen in Association for Molecular Pathology v. Myriad Genetics

In another dimension of the intellectual property spectrum there has been

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Prior Art Defence in the Chinese Patent

1 A Case and Disputes Related

Disputes on Prior Art Defence

Prior Art Defence in the Chinese Patent System

2 Introduction of China Prior Art Defence

According to article 62, if the defendant under a patent infringement challenge

Where the alleged infringing design is identical to or without material difference

Prior Art Defence in the Chinese Patent System

3 Prior Art Defence in Other Countries

Prior Art Defence in US

Tate addressed this point more logically:

They would be able to do this because:

Prior Art Defence in the Chinese Patent System

Prior Art Defence in Japan5

4 Complicated Situation in China

The Real Issues: Behind the Veneer

Prior Art Defence in the Chinese Patent System

The Supreme Peoples Courts Way to Apply Prior Art

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Which Opinion Is More Justified?

Transformation of the Beijing High Peoples Courts

What Prior Art Defence Is Like Currently in China

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5 The Future of the Prior Art Defence in China

Distrust of Judges in Local Courts

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Doubt About the Real Effect of The Defence

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