Table of Contents
A. Introduction
In theory, one might characterize an international instrument by asking whether or not it is self-executing. The obligations a nation undertakes in a treaty are regarded as self-executing when they apply as of the treaty’s own force in that nation’s courts. In contrast, a non-self-executing treaty must be implemented by the state’s lawmakers before it has direct effect, that is, before litigants can rely on its provisions in judicial proceedings. However, unlike many of the dimensions of international agreements discussed in this volume, the characterization of an agreement as self-executing is not itself a matter of international law. Rather, each party to the agreement decides the question whether the treaty has direct effect under its own national laws and policy. Although some countries have a rather rigid view on this issue, others take a mixed approach and decide it on a case-by-case basis (or, often more accurately, a provision-by-provision basis). Because the language of the treaty (or provision) and the intentions of the negotiating parties are determinative factors for these countries, the question arises whether the intended members of new intellectual property agreements should take steps to promote a particular view on the matter. Would it, in short, be beneficial – to member states and their citizens, to right holders, to the creative community, or to the international order – to draft agreements in a manner that most countries would regard as self-executing, and in this way, better ensure that states fulfill their international commitments?
This Comment begins in Part A with an overview of national views on self-execution, culminating in a description of the framework that countries adopting a mixed approach use when determining whether a measure has direct effect. This part focuses on the law of the United States, both because it has recently given considerable attention to this issue and because the decisions of any one party – particularly a large, economically powerful party – may influence the others. Part B considers how that framework plays out with regard to the core multilateral intellectual property agreements and free trade agreements (FTAs) that include chapters on intellectual property protection. Part C asks the normative question: as a general matter, is intellectual property appropriate subject matter for self-executing agreements? Concluding that it is not, Part D suggests ways to ensure that the goals of international intellectual property instruments are nonetheless fulfilled.
B. Self-Execution
I. Overview
Because self-execution is a matter of national law and policy, to the extent that something can be characterized along the dimension of self-execution, it reflects the approach that each state takes to the role its international commitments play in domestic disputes. Some states consider international law to be part of the domestic regime. In these monist jurisdictions, treaties are generally considered to have direct effect. An example, cited by Martin Senftleben, is a 1999 decision of the German Federal Court of Justice.Footnote 1 The decision, which required the Technical Information Library Hanover to pay the plaintiff equitable remuneration for its copying of scientific articles, was based directly on the three-step exceptions test in the Berne Convention, which permits certain unauthorized reproductions of protected works.Footnote 2
In theory, a monist system has several advantages. It can save legislative resources because there is no need for implementing measures.Footnote 3 Moreover, for countries new to the relevant field, adopting a self-executing treaty essentially imports a ready-made legal regime – often one that was drafted and adopted by countries with substantial experience in the area. A monist policy can also act as a signal that the country is prepared to adhere to the obligations set by the international community. For countries that see their future as enhanced by international cooperation and transnational business dealings, it can be highly beneficial to adopt what is essentially a pre-commitment strategy.Footnote 4 In bypassing the need for implementing legislation, a monist jurisdiction ensures that its international obligations will not be derailed by corrupt officials, local lobbyists, or legislators who wish to pursue other objectives. In some monist states international law may even trump later-enacted legislation.Footnote 5 Accordingly, a monist approach assures treaty partners that subsequent legislatures cannot easily undermine the nation’s commitments.
There are, however, countries that regard international and domestic laws as belonging to separate spheres. In these dualist systems, an international agreement is not internally binding until the national legislature transposes its provisions into domestic law. For example, under the UK doctrine of parliamentary sovereignty, Parliament must enact legislation to make a treaty domestically effective.Footnote 6 Thus, a court in the United Kingdom could never require one party to compensate another based solely on a provision of the Berne Convention.
A dualist approach has much to recommend it. It provides the legislature with a chance to reconsider the outcome of negotiations conducted in locations remote to its capital. Thus, at least in theory, a dualist approach promotes local accountability.Footnote 7 Furthermore, a dualist approach allows lawmakers to tailor the law to the specific circumstances of the country, to clarify the obligations set out in the instrument, and to put them into terms that can be more easily applied by judges and understood by lawyers and the laws’ consumers. Transposition also offers the opportunity to ensure coherence with other domestic legal regimes that use similar terminology or address related issues. Furthermore, making the change alerts the legislature that new administrative resources may be needed. When international and national measures are on a different footing, subsequent governments may retain more freedom to alter local law as needs change.
As the discussion of the advantages of monist and dualist systems suggests, both approaches also have disadvantages. The monist approach can be rigid. Moreover, circumventing the legislature can undermine democratic values. Since groups that can afford to lobby at the international level are often better heeled and more effectively organized than those that operate domestically, public choice theory suggests that a monist state’s legal regime will be more inclined than other systems to favor the rich over the poor and to favor concentrated business interests over the interests of dispersed consumers.Footnote 8 Dualist systems do not have this problem, at least not to the same degree. However, they may have a harder time in negotiations because they cannot be fully trusted to implement the agreements they sign or ratify.Footnote 9 And to the extent that their legislatures do fail to follow through and implement, they can find themselves in violation of international law.
Because of these problems, most systems are not entirely monist or dualist. For example, and as discussed further below, even monist systems do not generally regard the TRIPS Agreements as self-executing.Footnote 10 By the same token, some dualist countries may give direct effect to human rights agreements.Footnote 11 Furthermore, many countries are neither monist nor dualist, but rather take a mixed approach to self-execution and examine a constellation of factors to determine whether a particular instrument (or provision) has a direct effect. The United States furnishes an example. Before relying on the Berne Convention to order a defendant to compensate a plaintiff, a US court would ask whether the Convention – or its three-step exceptions test – is self-executing.
Of course, the failure of a state to implement an agreement or regard it as self-executing will put that country in violation of international law. Nonetheless, even after a violation is found, local implementation will still be required. Experience suggests that this may not always be feasible. Consider, for example, the US-110(5) case in the World Trade Organization (WTO).Footnote 12 Although a WTO panel held that the United States had violated the three-step exceptions test of the TRIPS Agreement,Footnote 13 the challenged exception remains good law in the United States. One reason may be that the provision was part of a legislative package: in exchange for extending the term of copyright generally, Congress enacted the challenged provision, which benefits certain access interests. To adhere to the WTO decision, the United States would have to unravel the sort of legislative compromise that is typical of democratic governance.Footnote 14
II. The Mixed Approach
For countries that take a mixed approach, determining which international measures have direct effect is not an easy task. The experience of the United States is illustrative. The Supremacy Clause of the US Constitution specifies that “Treaties … shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby.”Footnote 15 While that language implies that the Founders adopted a monist approach, it was clear by the early nineteenth century that the clause would not be interpreted that way. In an 1829 decision, Foster v. Neilson, Chief Justice Marshall limited its monist effect, reasoning that “[a] treaty is in its nature a contract between two nations, not a legislative act. It does not generally effect of itself, the object to be accomplished, especially so far as its operation is infra-territorial; but is carried into execution by the sovereign power of the respective parties to the instrument.”Footnote 16
In that case, Chief Justice Marshall read the English language version of a land grant treaty between the United States and Spain as contractual and held that it was not self-executing. But as a subsequent case soon showed, Marshall’s analytic approach was unpredictable. The Supreme Court encountered the same treaty four years later, but this time it was presented with the equally authentic Spanish version. In that case, the Court found the agreement to be self-executing.Footnote 17
This indeterminacy went on for many years. Typically, the treaties that reached the Supreme Court were found to be self-executing.Footnote 18 For example, in a 1940 case, Bacardi v. Domenech,Footnote 19 Chief Justice Hughes held that a Puerto Rico statute prohibiting use of certain trademarks was preempted by the national treatment provision of the Inter-American Trademark Convention, which the Court considered self-executing. Following the Court’s lead, in its 1956 decision, Vanity Fair v. Eaton, the Second Circuit held that the provision of the Paris Convention on unfair competition was self-executing.Footnote 20 But even though early Supreme Courts tended to interpret international agreements as having direct effect, lower courts did not understand the Court to have created a presumption in favor of self-execution. For instance, in Robertson v. General Electric, a patent case, the Fourth Circuit considered a provision of the instrument ending World War I that extended the time for acquiring a priority date under the Paris Convention. It found the provision was not self-executing.Footnote 21
To a degree, matters changed with the Supreme Court’s 2008 decision in Medellín v. Texas,Footnote 22 where the Court established a framework that focused on the instrument’s language and the events surrounding its adoption.Footnote 23 The question in that case was whether Texas was required to reexamine the conviction of a Mexican gang member for rape and murder. The defendant contended the conviction was defective because Texas had failed to notify Mexico of the defendant’s detention, as required by the Vienna Convention on Consular Relations and by a decision of the International Court of Justice (ICJ) holding that the Convention was meant to preempt a Texas procedural rule that barred further review.Footnote 24
To decide if the Vienna Convention or the ICJ decision had direct effect, Chief Justice Roberts began with the text of the agreement and looked for a “clear and express statement” that it was binding on courts.Footnote 25 Because the agreement to submit to the jurisdiction of the United Nations system used the phrase “undertakes to comply,” he reasoned that the agreement did not function as a directive to the judicial branch.Footnote 26 Rather, it called upon other arms of government to take specific actions.Footnote 27 To shore up this view, Roberts considered the negotiation and drafting history as “aids to … interpretation”Footnote 28 and analyzed the structure of the agreement as a whole. Under the UN Charter, a state aggrieved by noncompliance with an ICJ decision has, as its sole remedy, referral to the UN Security Council. Since the United States has a right to veto Security Council resolutions, the Justice reasoned it must not be automatically bound by the ICJ decisions.Footnote 29 Furthermore, he considered that the principal purpose of the Charter was to resolve disputes between governments, not to provide remedies to individuals like Medellín.Footnote 30 He also noted that in contrast to many of the agreements that have been found to be self-executing, this treaty raised questions that were primarily political in nature.Footnote 31 Finally, he expressed willingness to give the government’s own interpretation of the non-binding nature of its obligations “great weight,”Footnote 32 suggested that the negotiators’ understanding of what the United States had agreed to was relevant,Footnote 33 and noted that the post-ratification behavior of other member states indicated that none of them considered decisions of the ICJ to be binding.Footnote 34
In the last decade, the American Law Institute (ALI) revised its Restatement of Foreign Relations Law in light of Medellín and its progeny.Footnote 35 Although Medellín took a skeptical view of self-execution, and in remarks made out of court, Justice Scalia voiced even more adverse views to what he termed allowing foreigners to govern,Footnote 36 the ALI does not regard the United States as having moved into the dualist camp. Rather, it recommends courts consider whether the “treaty provision is sufficiently precise or obligatory to be suitable for direct application by the judiciary” and whether it was “designed to have immediate effect, as opposed to contemplating additional measures by the political branches.”Footnote 37 Additionally, the ALI suggests that courts should defer to Senate resolutions at the time when advice and consent were given and that they should consider whether implementing legislation is constitutionally required. Thus, treaties requiring the appropriation of money – which can only be accomplished by Congress – would never be regarded as self-executing.Footnote 38 In Comments, the Restatement goes on to caution that self-execution is distinct from the question whether the provisions of the treaty create rights and remedies.Footnote 39 That is, once a provision is found to be self-executing, it remains necessary to decide whether a litigant can obtain remediation for a violation of a commitment.
While not every state will follow the US analysis, it is not unlikely that states that take a mixed (or even a largely monist) approach will consider a similar set of issues: (1) the text of the agreement, including what it directs the parties to do and how precisely it delineates the obligations imposed; (2) the structure of the agreement as a whole, including whether it appears designed to have immediate effect and whether it contemplates action by other entities; (3) the negotiation history, to the extent it reveals the intentions of the parties; (4) the subject matter of the agreement and the branch of government responsible for (or constitutionally charged with) its oversight; (5) statements by the executive and legislative branches at the time the agreement was considered; and (6) the subsequent behavior of the other parties regarding the effect of the agreement.
C. The Status of Intellectual Property Agreements
The framework discussed above will have little application to strictly dualist or monist countries. But other nations will analyze international intellectual property instruments and provisions within them to determine their applicability in individual cases. How that analysis plays out will depend on the agreement in question.
I. The TRIPS Agreement
Although there has been debate on the issue,Footnote 40 the WTO Agreements are not generally regarded as self-executing.Footnote 41 An examination of the TRIPS Agreement shows why. The Agreement starts with the admonition that “Members shall give effect to … this Agreement.”Footnote 42 Although this language could have been inserted to deal with dualist regimes,Footnote 43 the provision goes on to state that members may provide more extensive protection and can “determine the most appropriate method of implementing the provisions.”Footnote 44 None of that language suggests that the parties intended the provisions to have direct effect.
The structure of the Agreement is consistent with this conclusion. It includes transition provisions for less and least developed countries, which appear designed to give those countries space to enact legislation suitable to their needs.Footnote 45 It also requires developed countries to provide technical and financial cooperation, including “assistance in the preparation of laws and regulations on the protection and enforcement of intellectual property.”Footnote 46 Moreover, it instructs the Council for TRIPS to “review the implementation of this Agreement.”Footnote 47 There is also nothing in the negotiation history that suggests it is self-executing, and it is difficult to see how certain provisions – such as measures that envision examination of advances to determine their suitability for protectionFootnote 48 – could be effective without the legislature intervening to establish administrative agencies and procedures. Significantly, at the time TRIPS went into force, virtually all countries enacted implementing legislation. The United States even included in its implementation measure a statement that “[n]o provision of any of the Uruguay Round Agreements, nor the application of any such provision to any person or circumstance, that is inconsistent with any law of the United States shall have effect.”Footnote 49
II. The Paris Convention
The situation under the Paris Convention is not as clear as it is under TRIPS. In part, that is because the language of the Paris Convention has changed over the century and a half in which it has been in force, and in part, it is because each of the provisions of the Convention uses different language. Thus, each must be analyzed separately. For example, the provision on unfair competition reads: “The countries of the Union are bound to assure to nationals of [other Union] countries effective protection against unfair competition.”Footnote 50 The phrase “bound to assure” suggests a binding commitment. Moreover, “effective” is the type of standard with which courts are familiar. Furthermore, affording protection does not require the intervention of an administrative agency. Similarly, the telle quelle provision states that trademarks of one country “shall be accepted … as is in the other countries of the Union.”Footnote 51 “Shall” implies immediate action. In contrast, the section on registration provides that the conditions for filing and registering “shall be determined in each country of the Union by its domestic legislation” and the well-known marks provision states that “[t]he countries of the Union undertake” to provide that protection.Footnote 52 In both cases, it would appear up to the state to implement the provision.
As important, especially in countries that consider what the negotiators expected, GHC Bodenhausen, then Director-General of the World Intellectual Property Organization (WIPO), which administers the Paris Convention, produced a guide to the Stockholm Revision of 1967.Footnote 53 In it, he acknowledged that some provisions are addressed only to states and that others require national implementation.Footnote 54 But there is a long list of provisions that, he noted, “may directly govern the situation at issue,” depending on the position the relevant member state takes to self-execution.Footnote 55 Interestingly, the measures listed are not always the ones that recommend themselves as self-executing. To be sure, Bodenhausen included the telle quelle provision. However, he also included the provisions on well-known marks and the conditions of registration.Footnote 56
Courts in the United States have gone both ways on questions concerning the direct effect of the Paris Convention.Footnote 57 As noted earlier, in Vanity Fair, the Second Circuit held that the unfair competition provision was self-executing (but did not interpret the provision as providing the defendant with relief). Other courts disagree.Footnote 58 For example, in In re Rath, the Federal Circuit denied direct effect to the telle quelle provision, in a decision that suggested that it was the job of Congress to implement the Paris Convention – and not the court’s role to fix congressional failure to comply with international law.Footnote 59
The Supreme Court has yet to weigh in on the domestic effect of the Paris Convention, but a strong argument can be made that it is likely to agree with the Federal Circuit. As Justice Scalia’s comments about foreign rule suggest, views on self-execution have evolved and there is now considerably more skepticism about giving agreements direct effect than there was when the Paris Convention was promulgated and revised. Certainly, Medellín imposes a more stringent test than the one the Second Circuit applied in Vanity Fair. Moreover, experience under the Convention has demonstrated that the meaning of terms like “unfair competition” and “well known” vary quite significantly among jurisdictions.Footnote 60 Given these differences, the terms are not likely to be regarded as “sufficiently precise … to be suitable for direct application by the judiciary,” as required by the Restatement Foreign Relations Law.Footnote 61
III. The Berne Convention
In the United States, the analysis of the Berne Convention is very different. The United States did not join Berne when it was first promulgated in the nineteenth century. By 1986, when it acceded, doubts about self-execution had grown (perhaps especially for an instrument closely associated with the droit d’auteur approach to protection with which the United States disagreed). Accordingly, in its implementation Act, Congress provided that “[t]he Convention for the Protection of Literary and Artistic Works, signed at Berne, Switzerland, on September 9, 1886, and all acts, protocols, and revisions thereto … are not self-executing under the Constitution and laws of the United States.”Footnote 62 Thus, there are no US courts that have given direct effect to any provision of the Berne Convention.
For countries that do not have the clear guidance provided by the US Congress, the Berne Convention may be more easily considered self-executing than Paris. Because it eliminates formalities, there is no need for administrative support.Footnote 63 Moreover, the extension of protection to certain nationals of non-Berne Union countries suggests that at least some negotiators viewed authorial rights as natural, universal norms.Footnote 64 Nonetheless, like the Paris Convention, the Berne provisions read differently from one another and thus require a measure-by-measure analysis. For example, the provision on moral rights states that “[i]ndependently of the author’s economic rights, … the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation.”Footnote 65 (Again, a hint that human rights are at stake). But a provision on unauthorized uses provides that “[i]t shall be a matter for legislation in the countries of the Union to permit the reproduction … of articles … on current economic, political or religious topic ….”Footnote 66 Some provisions, such as the one on rebroadcast rights, are extremely specific and provide enough detail for judges to apply; others, such as the measure on adaptation, are fairly abstract.Footnote 67 As the German case about the Technical Information Library Hanover suggests, the three-step exceptions test is particularly difficult to parse. It leaves it to the legislation of each country to decide on exceptions, but specifies the limits of those exceptions in a way that lends itself to judicial action.Footnote 68
Additionally, the rapid changes in technologies relevant to the use of copyrighted works can make direct judicial implementation of much of the Berne Convention extremely difficult. For example, the Convention uses the term “communication to the public” multiple times.Footnote 69 Judges confronted with new technologies have had a hard a time parsing that phrase even when interpreting their own domestic law.Footnote 70 It is not insignificant that after the TRIPS Agreement essentially incorporated the Berne Convention with few updates, several new technology-related multinational agreements were adopted.Footnote 71
IV. Free Trade Agreements
Many recent trade agreements include chapters that impose so-called TRIPS-plus obligations. These instruments arguably stand on a different footing from the TRIPS Agreement itself. To a large extent, they are directly aimed at clarifying ambiguities and open issues in TRIPS. Therefore, they tend to be extremely precise. For example, the TRIPS Agreement requires countries to protect data that is submitted for the clearance of pharmaceutical products for marketing purposes. The measure uses the terms “new chemical entities,” “considerable effort,” and “unfair commercial use,” none of which are defined.Footnote 72 In addition, the provision fails to say how clearances based on approvals elsewhere should be treated. In contrast, many FTAs either omit these terms or define them. For example, the agreement between the United States and the Dominican Republic and Central America (CAFTA) eliminates the term “considerable effort,” and instead of “unfair commercial use” it imposes a requirement of five years of exclusivity. It deals with the issue of foreign approval by requiring each country to accord its own five years of protection, irrespective of its basis for allowing a pharmaceutical to be marketed.Footnote 73
Other examples abound. The TRIPS provision requiring patent protection for advances that involve an “inventive step” does not define that term, other than to say it is equivalent to “non-obvious.”Footnote 74 This has led to considerable controversy over whether new uses of old materials can be excluded from patentability. The agreement between the United States and Korea (KORUS) clears up that point by requiring “that patents shall be available for any new uses or methods of using a known product.”Footnote 75 As noted earlier, the Paris Convention and the TRIPS Agreement leave the meaning of a “well known” mark unclear; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) references WIPO’s Joint Recommendation on Well Known Marks, which provides a detailed definition and expands trademark rights to include dilution protection.Footnote 76 As a textual and structural matter, these measures are therefore capable of having direct effect in all but the most dualist jurisdictions.
Admittedly, FTAs also contain language that suggests that implementation is required. For example, the intellectual property chapter of CAFTA and KORUS both state that “[e]ach Party shall, at a minimum, give effect to this Chapter.”Footnote 77 Similarly, the CPTPP provides that “[e]ach Party shall give effect to the provisions of this Chapter.”Footnote 78 That language suggests that legislative action is contemplated. However, the United States has developed an alternative to self-execution that may be equally effective at ensuring that the measures in an agreed instrument will be binding in the parties’ courts. That is, the United States chooses partners that it believes will implement the agreement, monitors how they plan to implement the agreement, and takes unilateral action when implementation fails to meet its expectations.Footnote 79
More important, the United States sometimes conditions its own implementation on a trading partner’s demonstration that it has already implemented the agreement to its satisfaction. For example, the US Act implementing CAFTA provides that: “At such time as the President determines that countries listed … have taken measures necessary to comply with the provisions of the Agreement that are to take effect on the date on which the Agreement enters into force, the President is authorized to provide for the Agreement to enter into force with respect to those countries.”Footnote 80 As Carlos Correa notes, the “certification” process entailed in making this determination not only ensures that right holders can seek relief in national courts but often also requires the other country to enact legislation that goes beyond the requirements of the agreement. In some cases, certification has led countries to provide right holders with more protection than is available to them under US law.Footnote 81
D. Normative Assessment
As the previous part demonstrated, it is rare for states to consider the provisions of international intellectual property agreements to have direct effect. For the most part, they are minimum-standard regimes and afford member states leeway to implement the obligations in ways compatible with their own legal systems. But the international community is faced with many new challenges. Moreover, some sectors have expressed an appetite for further harmonization.Footnote 82 It is therefore worth asking whether the global regime would benefit if future instruments were more often regarded as self-executing. Presumably, that would entail drafting measures that meet the standards of precision, clarity, and ease of application that most countries appear to require and that balance relevant interests in ways that potential members are willing to accept.
A case can certainly be made for this approach. It would be especially helpful to developing countries. Rather than work through all the complexities entailed in crafting exclusive rights regimes, those countries could simply adopt the systems constructed by their more experienced treaty partners. Moreover, pre-commitment may be especially attractive for intellectual property. Because these rights purport to promise long-term benefits at the expense of short-term costs, it might be difficult for poor countries to implement laws that may, over time, encourage local innovation, improve productivity, increase income, and yield social welfare gains, but which require the voting public to endure immediate sacrifices in the form of higher prices and reduced access.Footnote 83 Indeed, these considerations may be among the reasons why the Bacardi Court was persuaded that the Inter-American Trademark Convention – which involved the United States, Peru, Paraguay, Panama, Honduras, Haiti, Guatemala, Cuba, and Colombia – was self-executing.
Self-execution can also be to the advantage of developed countries. It ensures that they receive the benefits they expect from the trade-offs made during the negotiation process. For example, in the Uruguay Round, developed countries understood that if they opened their markets to imports, the manufacture of knowledge-intensive products would move to countries with lower labor costs. In exchange, they sought to capture returns on the innovations embedded in these products with stronger intellectual property protection.Footnote 84 Self-execution is also a direct way to overcome the problems of territorially limited rights. Harmonizing the level of protection available worldwide facilitates cross-border research, value chain production, and international distribution of creative products.Footnote 85 Furthermore, it enhances the incentives available to creators and aggregates the demand for products that appeal to small segments of dispersed populations. As concerns about developing and delivering vaccines and treatments to deal with COVID-19 have shown, nations are deeply interconnected, which makes an international approach highly desirable.
To be sure, negotiators may find that they must use some indefinite terms or measures in order to leave room for future developments. But even here, there are advantages. The dialogue generated when multiple courts consider the same open question is what US proceduralists call “percolation.” They view this process as a useful way to arrive at the best approach.Footnote 86 An example is the way in which Australia learned from US decisions on patenting products and phenomena of nature: it considered US caselaw and improved on it.Footnote 87 Or, as Christine Farley noted in connection with the “unfair competition” provision of the Inter-American Trademark Convention, the competing views of a multiplicity of courts might have led to a more refined understanding of what that cause of action ought to protect.Footnote 88
Perhaps the best way to convince countries to regard intellectual property agreements as self-executing is to argue that creators enjoy a fundamental right to control their intellectual efforts; that because these individual rights should not be subject to majority rule, they must have direct effect.Footnote 89 The categorization of intellectual property as fundamental is supported by several human rights conventions. For example, the Universal Declaration of Human Rights provides that “[e]veryone 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.”Footnote 90 And as Laurence Helfer observed, the European Court of Human Rights characterizes exclusive rights as property and protects certain aspects under the European Convention on Human Rights.Footnote 91 Significantly, we saw a flavor of that approach in the Berne Convention’s extension of protection to certain authors in non-Berne countries and in its moral rights provision.
One problem is that there are other values – including free expression, health, and the “right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement” – that are also regarded as fundamental.Footnote 92 Since these values clash, they have been the subject of intense academic, legislative, and judicial debate. Plausibly, however, balancing them should also be handled at the international level. In fact, that may have been the thinking of the German court when it gave the Berne Convention’s three-step exceptions provision direct effect in the Hanover library case. And this may also be a reason why the United Nations appointed a Special Rapporteur in the field of cultural rights to submit a report on how fundamental values regarding intellectual property should be balanced.Footnote 93 Among other things, she noted that protection for authors does not necessarily require the recognition of exclusive rights.Footnote 94
That said, it would be difficult to persuade most countries that intellectual property agreements should have direct effect on the ground that they protect human rights. There is disagreement as to whether intellectual property rights are human rights.Footnote 95 Even if every country were to decide that some are, countries may not agree on which of those rights are fundamental or on how to strike the appropriate balance among them.Footnote 96 Thus, there are some countries in which free expression trumps moral rights, or patent protection gives way to health concerns, or privacy interests alter remedies for infringement.Footnote 97 Because countries see these values as situated at the core of their national identities, there is little likelihood that they would regard a regime that takes a different view as self-executing. To see the point, consider the evolution in the United States from the Supremacy Clause, to Foster, Medellín, and Scalia’s concern about rule by foreigners. According to Gráinne de Búrca, that development was repeated in the European Union as it matured. It began with monist impulses, but what emerged over time (in the same year as in Medellín) was KadiFootnote 98 and the rejection of Security Council resolutions on the ground that they violated EU norms.Footnote 99
To be sure, self-execution can also be justified on the ground that it promotes global innovation. Seen that way, deep harmonization, which for many of the reasons expressed above is unlikely to lead to self-execution, is not necessary. Rather, if direct effect is desired, negotiators could concentrate on measures crucial to coordinating the worldwide intellectual property system to facilitate collaborative research and worldwide transactions. Nations could then retain flexibility in other spheres to further their own interests and values.
But even in this rather limited domain, there are forceful arguments against self-execution. As the structure of existing instruments suggests, a careful weighing of values and accurate identification of measures crucial to integration are unlikely to occur during multilateral treaty negotiations. For the most part, these agreements recognize the interests of right holders and, as interpreted by the WTO, leave members with little room to protect other values.Footnote 100 Many of these agreements are negotiated in secret; that negotiators consistently ignore recommendations to add user rights to these instruments suggests that public choice theorists are correct.Footnote 101 Because right holders are better organized and funded, their demands overwhelm the dispersed interests of the public. Opportunity at the implementation stage for democratic engagement concerning the substantive level of protection accorded right holders is therefore critical. For intellectual property, accountability is particularly important, because infringement is largely self-policing – and as Jessica Litman succinctly stated, “[p]eople don’t obey laws that they don’t believe in.”Footnote 102
Self-execution is also problematic because countries are in very different positions economically, culturally, and technologically. TRIPS was sold on the claim that stronger protection would push developing countries to the creative frontier. However, over twenty-five years of experience has demonstrated that this was true only for some countries. For the rest, TRIPS – even as locally implemented – is proving to be an obstacle to development.Footnote 103 There are likewise differences among developed countries. Each nation’s legal regime reflects its own industrial needs and creative requirements. As Susy Frankel argued, the preferences of small economies can diverge from those of larger markets.Footnote 104 In addition, intellectual property laws are part of complex legal systems that differ greatly from one country to another. For example, some states use antitrust law to cabin overreaching by intellectual property owners.Footnote 105 Others may safeguard competition in their intellectual property laws. Similarly, the availability of discovery (i.e. legal procedures to obtain information from adversaries and other parties) can shape both patent and trade secrecy law. Tailoring may therefore be unavoidable.
Self-execution is also hazardous because needs change over time and international lawmaking is not as responsive as domestic courts and legislatures. Nor have international negotiators always demonstrated the foresight to deal with contingencies. The original version of the compulsory licensing provision in TRIPS is illustrative.Footnote 106 Despite the existence of countries that lag far behind others technologically, the Agreement initially failed to account for the possibility that particular nations may lack the capacity to manufacture pharmaceuticals and would therefore be unable to make use of the flexibility to award compulsory licenses to protect public health.Footnote 107 It took more than five years for the WTO to recognize the problem and another four years to solve it.Footnote 108 In order to reach agreement to allow one country to manufacture for another, some members opted out as potential importers – a decision that, in light of COVID-19, may prove to have tragic consequences.Footnote 109 Finally, changes in technologies can require adaptations in the law. Even when negotiators manage to react in a timely fashion, making new law at the international level may not be as successful as allowing states to experiment first. As Graeme Dinwoodie pointed out, WIPO’s solution to the digital distribution of copyrighted words was not a great success.Footnote 110
E. Alternative Approaches
Even if promoting self-execution is not normatively desirable (or practicable), there are ways to fulfill the goal of coordinating the international intellectual property system. One approach comes courtesy of Chief Justice Marshall, who, prior to Foster, had stressed the role of statutory interpretation. Thus, in Murray v. The Schooner Charming Betsy, he opined that “an act of Congress ought never to be construed to violate the law of nations if any other possible construction remains.”Footnote 111 Because intellectual property is largely statutory even in common law countries, every nation with a doctrine akin to Charming Betsy gives judges considerable scope to fulfil its commitments.Footnote 112
It is, however, questionable whether Charming Betsy remains good law, at least in the United States. While the doctrine allows judges to adhere to international law and yet tailor the domestic regime to local conditions, the outcome is much like self-execution in that it permits the legislature to avoid accountability. It is thus not surprising that when the Federal Circuit in Rath refused to give direct effect to the telle quelle provision of the Paris Convention, it also declined to rely on Charming Betsy.Footnote 113 Significantly, the Supreme Court has occasionally ignored the doctrine.Footnote 114 And then-Judge (now Supreme Court Justice) Kavanaugh has suggested that the doctrine did not survive Medellín.Footnote 115
Megaregional agreements offer a somewhat different path to coordination. One reason that many countries may have balked at according direct effect to the WTO Agreement is that the parties did not have an equal voice in the Uruguay Round. As Susan Sell tells the story of TRIPS, twelve US-based multinational corporations held enormous sway over the US delegation, which pursued a divide-and-conquer strategy to undermine the leverage developing countries were mustering to counterbalance US demands.Footnote 116 Free trade agreements can be equally problematic. Although there are often fewer parties, one party may have considerable control over the others.Footnote 117 But megaregionals can present a sweet spot. The CPTPP is an example. The negotiating parties included developing countries, emerging economies, and a few that were highly developed. Among the latter, some enjoyed large internal markets; others relied heavy on import and export. Because the group was relatively small, the negotiating dynamics allowed the parties to identify positions that were true compromises (as the leaked texts suggest, this was particularly true after the United States withdrew from what had been the TPP). The final agreement includes TRIPS-plus provisions. Nonetheless, it is better balanced than the demandeurs of strong protection wanted or that many observers expected.Footnote 118 Even though megaregionals still require implementation, it may be easier to convince parties to execute their obligations in an agreement produced though genuine give-and-take than one based on asymmetric bargaining power.Footnote 119 Certainly, negotiators who know one another well are more able to anticipate the domestic reception of their agreements and can avoid including provisions that will not be implemented by one or more of the other parties.
Another possibility is to adapt the certification procedure we saw in connection with the CAFTA Agreement. That process, too, was asymmetric in that, as Correa noted, the United States used its clout to require of its trading partners more than it required of itself. However, one can imagine a system of reciprocal certification, where each party proposes implementing measures it believes will be acceptable to its legislature and then submits them for the approval of the other parties, with final implementation conditioned on joint approval. Although such a procedure is cumbersome, it might force the parties to focus harder on provisions that are necessary for coordination, rather than on demands that serve only the interests of right holders. The process would also help negotiators appreciate the problems that other parties face, such as inadequate competition laws or public health concerns.
Although top-down mandates through international agreement are one way to integrate legal regimes, it is also possible to coordinate from the bottom up, through the efforts of regulatory authorities and adjudicators. As Anne-Marie Slaughter and others have noted, in many fields, transnational networks of government officials have cooperated to produce effective solutions to jointly held problems.Footnote 120 Examples include the Basel Committee on Banking Supervision, the International Organization of Securities Commissions, and the International Competition Network.Footnote 121 For patent law, efforts along these lines have been underway for some time.Footnote 122 In 1983, the United States Patent and Trademark Office, the European Patent Office, and the Japan Patent Office created the Trilateral “to contribute to an increasingly efficient worldwide patent system.”Footnote 123 Joined by the Korean Intellectual Property Office and the National Intellectual Property Administration in China, the system now operates as IP5.Footnote 124 Much of its work is directed at improving the quality and speed of examination. However, the group also maintains lists of differing practices, categorized by whether the difference is attributable to office traditions, judicial decisions, or legislation.Footnote 125 While rule by administrative agency carries its own democracy deficit,Footnote 126 IP5 has no authority to create law or international obligations. However, where coordination is hampered by the participants’ own examination practices rather than legal obligation, IP5 can effectuate immediate change. Moreover, because these offices cater to right holders but exist, at least in theory, to protect the public domain, the group should be in a position to provide impartial advice to governments on how to change domestic laws in ways that improve global integration.
Judicial participation in this effort is more recent. At one time, the territoriality of intellectual property rights led courts to entertain multinational cases on a jurisdiction-by-jurisdiction basis.Footnote 127 But as the costs of piecemeal adjudication increased, judges began to consider the full geographic scope of these disputes and to develop tools for coordinating differing domestic legal regimes. The main approach is through private international law: rules that identify which court is most appropriate to hear a particular case and that determine the applicable law.Footnote 128 If sufficiently predictable, these rules allow the participants in multinational transactions to conform their conduct to the relevant law; if sufficiently supple, they allow countries to further their national interests and values effectively. Of course, to avoid over- or under-regulation, the rules themselves must be coordinated.Footnote 129 The ALI, the Max Planck Institute, groups in Asia, and the International Law Association have encouraged that effort, with recommendations on how courts should handle jurisdiction, choice of law, and enforcement questions.Footnote 130
Somewhat ironically, now that courts have agreed to hear transnational cases, they have occasionally achieved what centuries of international negotiations failed to accomplish: substantive harmonization. For example, in a 2017 decision, Eli Lilly v. Actavis UK, Lord Neuberger developed a view of claim interpretation that he found common to the laws of the UK, France, Italy, and Spain.Footnote 131 In Unwired Planet Intl. Ltd. v. Huawei Techs. Co. Ltd., a UK appellate court imposed a worldwide royalty for the use of standard essential patents subject to a commitment to license under fair, reasonable, and nondiscriminatory (FRAND) terms.Footnote 132 Cases involving secondary liability for copyright and trademark infringements on the internet similarly provide courts with opportunities to develop law for disputes involving intermediaries operating in multiple jurisdictions.Footnote 133
It is, of course, debatable whether substantive lawmaking through dispute resolution is superior to negotiating treaties. As with international instruments that are self-executing, there can be a democratic deficit. Depending on the terms of judicial appointments there may well be less control over adjudicators than over negotiators. And depending on the quality of the litigators, judges may be less versed in the relevant technology, less knowledgeable about the impact of particular rules on the creative community or the public interest, and too focused on the concerns of the litigants to consider broader issues. At the same time, however, adjudication is more nimble than international lawmaking and more responsive to domestic agendas. Furthermore, judicial decisions can usually be overruled. Since multiple courts will often consider the same issues, solutions will percolate – and that may be better than negotiation for finding the best solution to universally vexing problems.
F. Conclusion
Self-execution is a matter of national rather than international law. While some countries regard international agreements as having direct effect, most do not consider international intellectual property agreements to be self-executing. This means that negotiators cannot assume that national law will be implemented in a manner that is entirely consistent with agreements as drafted. Furthermore, leaving matters to the legislature can delay and interfere with the coordination (or harmonization) that many international agreements seek to achieve. For intellectual property law, this is particularly problematic, because the globalization of information, production, and manufacturing suggests that a high degree of integration is desirable.
Nonetheless, there are many good reasons to preserve states’ sovereign authority to implement international law for themselves. Legislative intervention creates a degree of accountability that is largely missing in the international sphere. Intellectual property law involves balancing proprietary interests against public concerns. Because countries differ dramatically along the lines of culture, economics, technological capacity, and fundamental principles, it would be difficult to strike the same balance everywhere. Thus, consensus can often be achieved only through the use of “constructive ambiguities”– language that is unsuitable to direct application by judges but which allows for legislative tailoring to local needs, capabilities, and values. In addition, technologies and needs change over time. International lawmaking is too prone to capture, too shortsighted, and too cumbersome to deal effectively with such problems.
Table of Contents
A. Introduction
In the late nineteenth century, when intellectual property (IP) was first harmonized at the international level,Footnote 1 legal technical assistance was backstage. Through the agency of colonialism,Footnote 2 the contracting European countries to the Paris and the Berne ConventionsFootnote 3 decided to incorporate their colonies as “countries of the Union” without being regarded members thereof.Footnote 4 Specific provisions included in both treaties permitted the European powers to impose their IP rules on their colonies,Footnote 5 without any requirement for technical assistance.Footnote 6 All this changed during the decolonization period in the 1950s and 1960s, when many European colonies in Africa and Asia became independent.Footnote 7 All of a sudden, legal technical assistance gained currency. As newly independent states moved to carve their national IP laws, the engineers of the post-war world economic order were faced with the question of how to move on.Footnote 8 The decolonization process had exposed the numerous contracts between post-colonial states and private investors from European countries to the mercy of transnational law.Footnote 9 Technical assistance, therefore, became a managerial tool to socialize these newly independent states to the international IP system to protect European (or Western) assets and interests.
The World Intellectual Property Organization (WIPO) played a principal role in this development.Footnote 10 At the inception of the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement, technical assistance received a new boost with the inclusion of a provision in the agreement requiring developed countries to provide legal technical assistance in favor of the developing and Least Developed Countries (LDCs), based on mutually agreed terms and conditions.Footnote 11 The result is that today, technical assistance has become a powerful – albeit informal – tool for the implementation of the various IP regimes explored in the general introduction to this volume, mostly in the Global South.
Relying on Third World Approaches to International Law (TWAIL) scholarship and doctrine, this chapter looks critically at the role of technical assistance in the institution and implementation of international IP treaty obligations in Africa, using the protection of plant variety as an illustrative example. It focuses mainly on technical assistance from WIPO and the International Union for the Protection of New Varieties of Plants (UPOV).Footnote 12
My central claim is that technical assistance should be seen as a vector of ideas and practices that progressively led to the systemic integration of African countries into the international IP system, which I call “adherence overdrive,” and the curious case of countries inadvertently neglecting the flexibilities inherent in the international IP system when formulating their national IP laws and policy (“compliance overdrive”). The term “adherence overdrive” and its meaning is my creation. The term “compliance overdrive” is borrowed from Caroline B. Ncube (see footnote 118 in this chapter). However, how the term is used in this article and its usual meaning differ slightly.
Besides the introduction and conclusion, this chapter is divided into three parts. Part B explores the origins of IP technical assistance and the concept of TWAIL. Part C examines the role of WIPO in the development of IP laws in Africa through its technical assistance program from the post-war period to the present. WIPO’s enduring relationship with the two regional IP organizations is highlighted, that is, the Organization Africaine de la Propriété Intellectuelle (OAPI), comprised chiefly of francophone African countries, and the African Regional Intellectual Property Organization (ARIPO), comprised chiefly of anglophone African countries. That discussion further sheds light on how WIPO has influenced and conditioned the scope and content of African IP law both regionally and nationally. Part D focuses narrowly on plant variety protection (PVP) in Africa, reviewing the extent to which WIPO and UPOV assistance in the area has led to a regime of PVP that has been criticized as unfavorable to the continent’s social and economic development.
B. The Roots of IP Technical Assistance and Third-World Approaches to International Law
The origins of IP technical assistance lay within the broader international law framework within which technical assistance evolved and of which the international IP system is a part. Decolonization accelerated after World War II and this acceleration provided the setting for programs of international technical assistance on an unprecedented scale.Footnote 13 It is thus widely agreed that the post-war period marked the birth of the development paradigmFootnote 14 – although an alternative description points to the inter-war period.Footnote 15 Two contemporaneous development account for this trend. First, barely three years into its formation, the United Nations (UN) General Assembly passed two key resolutions that prepared the ground for a much-expanded approach to international technical assistance for economic development. The first resolution called upon the Economic and Social Council (ECOSOC) and the specialized agencies to “give further and urgent consideration to the whole problem of the economic development of under-developed countries in all its aspects,” and the second amassed funds to enable the Secretary General to provide technical assistance to governments in connection with their economic development programs.Footnote 16
In the years that followed, the UN General Assembly went on to establish an Expanded Programme of Technical Assistance (EPTA), comprising the United Nations and seven specialized agencies as well as a Technical Assistance Board to coordinate their work.Footnote 17 The EPTA extended to non-self-governing territories as well.Footnote 18 In addition, the development at the United Nations coincided with the election of Harry Truman as President of the United States, who, in his inauguration speech in January 1949, proposed the Point Four Program,Footnote 19 a worldwide program of development through technical assistance. He invited other countries to “pool their technological resources” in a cooperative enterprise in which all nations work together through the United Nations and its specialized agencies wherever practicable.Footnote 20 In parallel, both programs facilitated the spread of technical assistance schemes in diverse areas – including the field of IP and public administration – to countries of the Global South.
During the post-war period, the development of the Third World was seen as critical. Efficiency in public administration and technological transfers were seen as ways to promote economic and social development in these countries.Footnote 21 An explicit assumption was that the USA and Western European nations had achieved a high level of development because of their efficient public administration policies and IP systems that fostered innovation. Therefore, what worked for the West should work for “the rest.”Footnote 22 Technical assistance was packaged as a tool for development for the Global South. Yet, concerning the international IP system, and also the international investment regime,Footnote 23 good governance was embodied in the international minimum standards that IP- and capital-exporting countries had perpetuated as a benchmark for all other countries to adhere to.Footnote 24 Using narratives of “development” and “good governance” as a basis to deploy technical assistance thus amounted to framing political relations as apolitical.Footnote 25
The idea of providing technical assistance predates the formation of WIPO, which was established in 1970 and became a UN specialized agency in 1974. Its forerunner, the International Bureaux for the Protection of Intellectual Property (BIRPI), had actively provided technical assistance according to the ethos of the time.Footnote 26 For instance, in 1969, BIRPI organized two industrial property seminars, one for Arab countries and the other for South American countries.Footnote 27 The objective for the meetings was to exchange views on, first, questions concerning industrial property and its importance for developing countries, and second, the application of the Paris Convention.Footnote 28 BIRPI also drafted the Model Law for Developing Countries on Inventions in 1965Footnote 29 and subsequently the Model Law on Industrial Designs, together with a commentary, which was submitted to a Committee of Experts from Developing Countries that met in Geneva from October 27 to 29, 1969.Footnote 30
Consequently, technical assistance was one of the seven functions envisaged for WIPO in its convention.Footnote 31 Thus, while WIPO was to be a site for norm-making in IP, it was also to provide technical assistance for the modernization and development of the Global South. The construction of modern states on a broadly Western model in the decolonized states can be seen as an axis that links the concept of technical assistance to TWAIL.
Technical assistance has often been criticized for introducing levels of IP protection that are inappropriate for the social and economic development of developing countries.Footnote 32 In particular, it has been argued that the advice provided does not always fully take into account all the possible options and flexibilities to accommodate innovation, technological, and other development objectives.Footnote 33 These criticisms relate primarily to the fact that the providers of technical assistance focus mainly on the promotion of the interest of IP holders and do not integrate broader development concerns. This view of technical assistance has led to the criticism that it merely constitutes a reproduction of the dominant Western-constituted view of IP rights and is, therefore, a political project rather than a technical provision or neutral measure.Footnote 34
Looking at technical assistance this way resonates with the broader dialectic of TWAIL as a critical perspective to international law and policy. Historically, the Third World has viewed international law as a regime and discourse of domination and subordination, not resistance and liberation.Footnote 35 TWAIL problematizes and contests the dominant, historically Eurocentric accounts of the origin of international law and its claims of universality, justice, and equity.Footnote 36 In this regard, TWAIL doctrine and scholarship is a response to decolonization and the end of direct European colonial rule over non-Europeans. The distinguished TWAIL jurist Makau Mutua insightfully elaborates the basic objectives of TWAIL as comprising three interrelated and purposeful objectives:
The first is to understand, deconstruct, and unpack the uses of international law as a medium for the creation and perpetuation of a racialized hierarchy of international norms and institutions that subordinate non-Europeans to Europeans. Second, it seeks to construct and present an alternative normative legal edifice for international governance. Finally, TWAIL seeks through scholarship, policy, and politics to eradicate the conditions of underdevelopment in the Third World.Footnote 37
If indeed international law is the common denominator through which global protection of IP is secured, then international IP law is not immune from TWAIL inquiry – even if TWAIL scholarship in the area of IP is relatively nascent and inadequate.Footnote 38
C. WIPO’s Technical Assistance and the Complex and Fragmented Regime of IP Laws in Africa
The timing of WIPO’s technical assistance to countries in Africa immediately following their independence has particular salience. Many of the newly independent countries, burdened by the need for economic and social transformation, bought into the liberal-progressive thought about development and good governance at the time. Antony Anghie has argued that “development, just like good governance, has a very powerful and universal appeal: all peoples and societies would surely seek good governance – in much the same way that all peoples and societies were seen as desiring development.”Footnote 39
Nonetheless, the reception of many African countries to the above idea is rather puzzling for two reasons. First, many of the countries were only just emerging from an immediate past of colonial rule where IP laws were more of an imposition than borrowed.Footnote 40 Colonial IP laws were designed mainly to protect colonial investments and to extract raw industrial materials from the colonies for the colonizers as much as possible.Footnote 41 As such, these laws were not designed for the development of the local communities. A cursory look at the auxiliary development of international IP law suggests that it was birthed along similar lines. Accounts of the histories of the Paris and Berne Conventions undeniably reveal their Eurocentric characteristics and vision.Footnote 42 Considering that the international systems of patent and copyright instituted by the these two conventions were developed with minimal participation of developing countries, the rules formulated were a response to the needs of developed nations.Footnote 43 By the time the majority of the developing countries had attained independence, the principles inherent in these treaties had been firmly established for long time. The agitations from developing countries in the 1970s for reforms in international IP regulation attest to this point. One would therefore have expected some caution on the part of newly independent African states.
Secondly, the colonial administrations did not build local expertise and institutions for IP in Africa. Thus, most of the countries emerged with weak institutions, fragile governments, and little or no expertise on IP matters. Yet, these former colonies’ memberships of international organizations presented a growing need for national or regional IP laws. For many of these countries then, forging IP laws for national development post-independence was and has been an odyssey. As the then Secretary General of the United Nations, Dag Hammarskjöld, noted, the self-determination of peoples is closely linked to the process of economic development; to the extent that the United Nations could provide technical assistance to support the latter, it would also advance the former.Footnote 44 However, economic development was difficult in countries that lacked an “independent administrative tradition”Footnote 45 or local expertise in the Western construct of IP and its protection. Concerning IP, WIPO filled the gap by deploying technical assistance as an instrument to assist African countries in their economic, social, and technological development.
Today, it can be said that WIPO’s intervention on matters of IP governance has contributed to a fragmented IP architecture in Africa. The patchwork of IP regimes on the continent comprises the IP instruments of the African Union, formerly the Organization of African Unity (OAU)Footnote 46 – even though the OAU Charter and the Constitutive Act of the African Union do not mention IP;Footnote 47 the OAPI and ARIPO frameworks; the eight subregional economic communities (RECs) recognized by the African Union;Footnote 48 and of course, the national laws of ARIPO (and to an extent OAPI) Member StatesFootnote 49 as well as the laws of countries that are not members of either OAPI or ARIPO.Footnote 50 Overall, there is a sharp disconnect between regional aspirations and subregional realities, which are also shaped by external influences such as bilateral, regional, and multilateral trade agreements.Footnote 51 This combination of factors materially contributes to the policy incoherence and inconsistency of IP regimes on the continent.Footnote 52
A recent addition to the above mix is the ongoing negotiation of an IP Protocol as part of the continent-wide free trade zone created by the Agreement Establishing the African Continental Free Trade Area (AfCFTA). The first phase of the AfCFTA negotiations focused on the framework agreement establishing the AfCFTA and negotiations on protocols on trade in goods and services and dispute settlement. The second phase of negotiations, which was expected to end in June 2021 but was extended due to delays caused by Covid-19, is dedicated to investment, competition policy, and IP. While waiting for the final product of the negotiations, experts anticipate that the IP Protocol will not depart from the principles and objectives of the AfCFTA, which are, inter alia, related to sustainable and inclusive socioeconomic development, resolving the challenges posed by the crow’s nest of obligations arising from multiple and overlapping trade regimes – including IP regimes – that accompany the existing RECs and IP organizations such as OAPI and ARIPO and expedite regional and continental legal harmonization.Footnote 53
Commentators have expressed the prospect that the AfCFTA IP Protocol will fulfill the above principles and objectives by streamlining the IP regime in Africa, considering the protocol’s special and historic status.Footnote 54 However, questions remain as to how this new agreement will operate relative to the eight RECs, many of which have overlapping memberships and also approach economic integration differently.Footnote 55 Indeed, the AfCFTA text acknowledges this interplay and the potential for incoherence, stating that those countries involved in “other regional economic communities, regional trading arrangements and custom unions, which have attained among themselves higher levels of regional integration than under this agreement, shall maintain such higher levels among themselves.”Footnote 56 Otherwise, the AfCFTA text is meant to take precedence, unless otherwise specified.Footnote 57 Nearly all African countries are members of the World Trade Organization (WTO) (see Table 12.1). Because of the national treatment and Most Favored Nation principles under the WTO Agreement on TRIPS, this wording will necessarily lead to providing these extra protections also to all other right holders, at least as long as the type of protection is within the ambit of the TRIPS non-discrimination clauses.
More generally, one could say that such fragmented regimes can only really be “disentangled” by harmonizing upward (to the highest common denominator, or beyond). That in itself is a highly problematic feature of the international IP system.
Questions also remain about the influence of donor support and IP technical assistance, for instance, from WIPO and the European Union for the negotiation of the AfCFTA IP Protocol.Footnote 58 Such reservations come on the back of the long history of the relationship between WIPO, OAPI, and ARIPO and the role of WIPO in consolidating the institution of Western-style IP norms across Africa through its technical assistance program.
I. The Formation of OAPI
In 1962, the first regional IP organization in Africa, called Office Africa in et Malgache de la Propriété Industrielle (OAMPI) – the predecessor to OAPI – was formed, after twelve francophone African countries signed the Agreement Relating to the Creation of an African and Malagasy Office on Industrial Property (the Libreville Agreement).Footnote 59 The French National Industrial Property Institute (INPI) and WIPO assisted former French colonies to create OAMPI. The Libreville Agreement, which was a replica of the extant French laws, protected patents, trademarks, and industrial designs. The agreement introduced threefold criteria for cooperation, which are still in force in the OAPI region to date: (a) the adoption of a uniform system of industrial rights protection based on uniform legislation; (b) the creation of a common authority to serve as the office for the protection of industrial property for each of the Member States; and (c) the application of common and centralized procedures, such that a single title issued by OAPI would be valid in all Member States.Footnote 60
With this agreement, francophone African countries paved the way for delegating responsibility for IP administrative decisions to the regional level.Footnote 61 In 1977, OAMPI was renamed OAPI, after the adoption of the Bangui Agreement on the Creation of an African Intellectual Property Organization (Bangui Agreement) and withdrawal of the Malagasy Republic.Footnote 62 No domestic legal instrument is required to enact the Bangui Agreement as national legislation. What this means is that not only is there no need for national laws, but that national implementing laws are not conceivable, since only the regional rights may exist, which are based on regional legislation (at least for the types of IP rights covered). The only exception is in the area of copyright, where the regional agreement may coexist with national laws in each Member State.Footnote 63 As the discussion below shows, legal and technical assistance from WIPO for the Bangui Agreement and its subsequent revision in 1999 guaranteed that this agreement was – and remains – one of the most TRIPS-plus pieces of legislation among developing countries, even though thirteen of its seventeen members are LDCs.Footnote 64
The revised Bangui Agreement provides for the protection of ten categories of IP, as follows: Patents (Annex I), Utility Models (Annex II), Trademarks and Service Marks (Annex III), Industrial Designs (Annex IV), Trade Names (Annex V), Geographical Indications (Annex VI), Literary and Artistic Property (Annex VII), Protection Against Unfair Competition (Annex VIII), Layout-Designs (Topographies) of Integrated Circuits (Annex IX), and Plant Variety Protection (Annex X). The Annexes for PVP, which came into force in January 2006Footnote 65 (discussed in Part D), and the protection of layout designs (topographies) of integrated circuits (not yet in force) are new additions that were not protectable in the OAPI countries beforehand.Footnote 66
The agreement requires members to accede to twenty-three international conventions, including the WTO and allied TRIPS Agreement. Eleven of these treaties were added during the 1999 revision, whereas no such obligations exist in TRIPS.Footnote 67 In addition, the agreement includes special protection for geographical indications (GIs) related to wines and spirits and extends the term of protection for copyright and patents. For example, regarding patents, the agreement not only has a low threshold for noveltyFootnote 68 but also imposes more stringent conditions for the use of compulsory licenses by third parties or by governments than does the TRIPS Agreement, thus sacrificing the full use of flexibilities affirmed by the Doha Declaration.Footnote 69 It demands a judicial procedure in national civil courts before licenses to third parties can be granted.Footnote 70 Furthermore, the agreement expands the scope of patent protection, for instance, to pharmaceutical products – regardless of the decision of the TRIPS Council to extend the general transitional period for LDCs to implement the TRIPS Agreement until July 1, 2034Footnote 71 and for pharmaceutical products until January 1, 2033.Footnote 72 To be certain, the terms of the LDC extension by WTO prevent countries from reducing or withdrawing existing protections,Footnote 73 thus locking countries into the revised Bangui Agreement, which otherwise states that any country can exit from their obligations under the treaty.Footnote 74
The decision to extend protection to pharmaceutical products and to increase the term of patent protection rendered LDCs of OAPI vulnerable to higher prices and licensing costs for technologies some thirty-two years earlier than TRIPS required, and thirty-one years earlier in the case of pharmaceutical products.Footnote 75 The consequences of such choices are overt. To date, African countries are net importers of medicinal and pharmaceutical products. The United Nations Economic Commission for Africa (UNECA) estimates that the continent covers 94 per cent of its pharmaceutical needs through imports.Footnote 76 With the outbreak of COVID-19, many of the countries providing these pharmaceuticals were heavily disrupted, and in 2020, at least ninety-four countries in the world restricted their exports of medical supplies as part of their response to COVID-19.Footnote 77 This scenario placed Africa in a perilous position in accessing essential supplies.
The outcome of the revised Bangui Agreement should not be surprising. The text of the revised agreement was written by a Cameroonian national, Denis Ekani, who served for nineteen years as the first Director General of OAPI, from 1965 to 1984.Footnote 78 He worked closely with the OAPI Secretariat and the staff of WIPO, UPOV, and INPI, the latter of which also hired an external consultant to assist with legal drafting.Footnote 79 Based on their training and professional networks, elites like Ekani tend to identify more closely with a network of international IP policy experts and officials – and with the objectives of WIPO – than with national governments or regional development objectives.Footnote 80 Indeed, it should be remembered that OAPI Member States had (and still have) limited expertise on IP matters, and the few staff in their IP offices are usually the product of training by INPI, WIPO, and European or US universities – which transfer their own pro‐IP views regarding the importance of strengthened IP protection.Footnote 81 Hence, the perspective of staff on the technical aspects of TRIPS (and IP in general) tends to focus narrowly on compliance.Footnote 82
Besides, governments within the region regarded IP decision-making as a technical domain, the legal details of which could be left to experts from OAPI or donor agencies such as WIPO or INPI, rather than a policy issue worthy of explicit integration into a broader national development policy.Footnote 83 Thus, while accounts from the OAPI Secretariat stress that the Bangui revision went through several stages and formalities in the drafting and negotiation process,Footnote 84 Carolyn Deere contends that:
At no point in the Bangui revision process was there any formal interstate negotiation of the draft text. Within the OAPI countries, there was no substantive parliamentary discussion about the proposed revisions to the Bangui Agreement. Parliamentarians had little knowledge of IP issues or the revision process and thus limited capacity to monitor or participate in matters of IP policy and decision‐making.Footnote 85
This situation meant that any national participation in the Bangui revision process was left in the hands of a small group of staff at the OAPI Secretariat and national IP offices, who would bow to pressure from their financiers. The mainly agrarian-based and net technology importing OAPI countries mostly develop low-cost indigenous innovations and rely on traditional knowledge and practices for everyday activities.Footnote 86 Africa’s rich agricultural resources, traditional knowledge, and cultural repositories afford it comparative advantages with GIs, PVP, traditional knowledge, and traditional cultural expressions. However, except for GIs and PVP, the OAPI IP framework does not extend to the rest. The revised Bangui Agreement, therefore, ought to have maximized the flexibilities permitted in TRIPS, for instance, by introducing IP systems that protect and promote farmers’ rights, access to medicines, and access to knowledge.
II. The Formation of ARIPO and the Reception of International Norms
More than a decade after the formation of OAPI, anglophone African countries established the Industrial Property Association for English-speaking Africa (ESARIPO), with the assistance of WIPO and UNECA. WIPO laid the foundation in a regional seminar on patents and copyright for nine anglophone African countries in Nairobi in 1972, which recommended the establishment of a regional industrial property organization.Footnote 87 This agenda was moved forward when WIPO and UNECA responded to a formal request from anglophone African countries for assistance in establishing the regional organization in 1973. In line with this move, a series of meetings were held at the UNECA headquarters in Addis Ababa and WIPO in Geneva, which led to a draft Agreement on the Creation of the Industrial Property Organisation for English-speaking Africa.Footnote 88 This agreement was subsequently adopted in a diplomatic conference held in Lusaka, Zambia, in 1976, thus deriving the name “the Lusaka Agreement.”Footnote 89 UNECA and WIPO served jointly as the Secretariat of ESARIPO until 1981, when the organization established an independent Secretariat.Footnote 90
The Lusaka Agreement established a regional system for the protection of industrial property, which sought to harmonize the national laws of Member States and promote cooperation.Footnote 91 In 2004, almost three decades after the formation of ESARIPO, the organization was renamed ARIPO to expand its mandate from industrial property to other categories of IP.Footnote 92 Unlike OAPI, which has a uniform IP structure outlined in the ten annexes to the Bangui Agreement, ARIPO advances a flexible IP structure. Beyond the Lusaka Agreement, which confers ARIPO membership, Member States are not automatically bound to any of its protocols. ARIPO has four protocols and Member States can choose which protocols to sign. The four protocols are the Harare Protocol on Patents and Industrial Designs (Harare Protocol), the Banjul Protocol on Marks (Banjul Protocol), the Swakopmund Protocol on the Protection of Traditional Knowledge and Expressions of Folklore (Swakopmund Protocol), and the Arusha Protocol for the Protection of New Varieties of Plants (Arusha Protocol).Footnote 93 ARIPO also has a Draft Policy and Legal Framework for the Protection of Geographical Indications and a Model Law on Copyright and Related Rights.
Just like OAPI, the deference and reliance on WIPO, the European Patent Office (EPO), WTO, and UPOV, among others, for technical and financial support in developing its regional IP system and capacity-building has presented ARIPO with contradictory policy positions. For example, although ARIPO adopted the commendable Swakopmund Protocol, which recognizes the significant traditional practices of its Member States, it also adopted the UPOV 1991-styled Arusha Protocol, which undermines their traditional farming practices.Footnote 94 Interestingly, while the Swakopmund Protocol protects traditional knowledge and expressions of folklore, ARIPO does not register traditional knowledge and expressions of folklore because Section 5 of the Swakopmund Protocol excises any formality for traditional knowledge.Footnote 95
Concerning PVP, however, ARIPO is earmarked to conduct a formal and substantial examination of applications for plant breeders’ rights under the Arusha ProtocolFootnote 96 – just as it does for patents, utility models, industrial designs (conducts only a formal examination), and trademarks. Considering the importance of traditional knowledge and expressions of folklore for African innovation and development, in contrast to the implications of a UPOV-plus PVP regime for Africa (discussed in detail in the next section), it is alarming to see that ARIPO does not register traditional knowledge but is rather assigned to register PVP.
While the regional legal regimes and institutional frameworks for francophone and anglophone Africa differed in important respects, in both cases their members delegated significant responsibilities to their respective regional secretariats, and WIPO served as their core source of financial, human, legal, and organizational support.Footnote 97 The WIPO Secretariat, for instance, hosts the websites of both ARIPO and OAPI, and it provided staff training, drafted legal texts for their respective conventions, and was involved in shaping their strategic direction through regular “tripartite meetings” of the secretariats.Footnote 98 Moreover, to increase its usefulness to the technological development efforts of their Member States, WIPO assisted in establishing a quadripartite agreement to promote cooperation between WIPO, OAPI, ARIPO, and the African Regional Centre for Technology.Footnote 99 The center is overseen by a Consultative Committee, which exercises decisive leadership and influence on IP decision‐making and capacity in the region.Footnote 100 To further bring its assistance programs closer, WIPO in 2019 and 2020 opened two external offices in Algeria and Nigeria respectively.
At present, WIPO administers twenty-six treaties (including the WIPO Convention) and provides technical and legal assistance to developing countries on the ratification and implementation of these treaties. This has led to the criticism that WIPO uses its technical assistance function to help promote uncritical ratification of existing international agreements and to further the upward harmonization of IP standards in ways that work against the interest of developing countries – Africa being an example.Footnote 101 In doing so, the development implications of proposed treaties, treaty accessions, or implementation options and alternatives are not often explored.Footnote 102
As depicted in Table 12.1, OAPI is a member of UPOV, which it joined in July 2014 as its first intergovernmental member.Footnote 103 All OAPI Member States are members of the Patent Cooperatioon Treaty (PCT) and the Paris Convention. For each OAPI Member State also party to the PCT, Article 3(2) of the Bangui Agreement provides that OAPI shall serve as “national office, designated office, elected office or receiving office.” Except for Comoros and Equatorial Guinea, all OAPI members are also contracting parties to the WTO Agreements.
All ARIPO Member States are contracting parties to the PCT. In addition, ARIPO can be designated as an international search authority under the PCT.Footnote 104 Article 3bis (5) of the Harare Protocol states that the ARIPO Office shall act as elected Office under the Patent Cooperation Treaty concerning an international application where a Contracting State is elected for international preliminary examination under the Patent Cooperation Treaty. In addition, all ARIPO Member States are parties to the WIPO Convention, and all apart from Sao Tome and Principe, Somalia, and Sudan are parties to WTO TRIPS.
State or intergovernmental organization | Paris Convention | Berne Convention | Patent Cooperation Treaty | Patent Law Treaty | UPOV Convention | WTO |
---|---|---|---|---|---|---|
OAPI | X | |||||
ARIPO | ||||||
Algeria | X | X | X | |||
Angola | X | X | X | |||
Benin | X | X | X | X | ||
Botswana | X | X | X | X | ||
Burkina Faso | X | X | X | X | ||
Burundi | X | X | X | |||
Cabo Verde | X | X | ||||
Cameroon | X | X | X | X | ||
Central African Republic | X | X | X | X | ||
Chad | X | X | X | X | ||
Comoros | X | X | X | |||
Congo | X | X | X | X | ||
Côte d’Ivoire | X | X | X | X | ||
Democratic Republic of the Congo | X | X | X | |||
Djibouti | X | X | X | X | ||
Egypt | X | X | X | X | X | |
Equatorial Guinea | X | X | X | |||
Eritrea | ||||||
Eswatini | X | X | X | X | ||
Ethiopia | ||||||
Gabon | X | X | X | X | ||
Gambia | X | X | X | X | ||
Ghana | X | X | X | X | ||
Guinea | X | X | X | X | ||
Kenya | X | X | X | X | X | |
Lesotho | X | X | X | X | ||
Liberia | X | X | X | X | X | |
Libya | X | X | X | |||
Madagascar | X | X | X | X | ||
Malawi | X | X | X | X | ||
Mali | X | X | X | X | ||
Mauritania | X | X | X | X | ||
Mauritius | X | X | X | |||
Morocco | X | X | X | X | X | |
Mozambique | X | X | X | X | ||
Namibia | X | X | X | X | ||
Niger | X | X | X | X | ||
Nigeria | X | X | X | X | X | |
Rwanda | X | X | X | X | ||
Sao Tome and Principe | X | X | X | |||
Senegal | X | X | X | X | ||
Seychelles | X | X | X | |||
Sierra Leone | X | X | X | |||
Somalia | ||||||
South Africa | X | X | X | X | X | |
South Sudan | ||||||
Sudan | X | X | X | |||
Togo | X | X | X | X | ||
Tunisia | X | X | X | X | X | |
Uganda | X | X | X | |||
United Republic of Tanzania | X | X | X | X | X | |
Western Sahara (Disputed) | ||||||
Zambia | X | X | X | X | ||
Zimbabwe | X | X | X | X |
III. The Continental (African Union) Level
At the African Union level, policymakers appear eager to endorse “effective” IP systems for Africa, despite the organization churning out five instruments that set out Africa’s position in some areas of IP.Footnote 105 This posture makes it look as though policymakers on the continent have adopted a half-in, half-out approach to IP administration that simultaneously insists on stronger IP rights and at the same time advocates for a balance regarding access, local innovation, and creativity. Technical assistance and capacity-building measures may best explain this dilemma.
In 2015, for example, a High-Level African Ministerial Conference organized by WIPO in cooperation with othersFootnote 106 explored ways in which IP could promote creativity and spur growth by ensuring the development of sound innovation systems. The speakers and panelists, many of whom were chosen by the WIPO Secretariat, did not include the African Group in Geneva or pro-development civil society organizations.Footnote 107 Among the many sessions at the conference,Footnote 108 there was one on food and agriculture, under the theme “Promoting Research and Development in Food and Agriculture.”Footnote 109 Speaking at this session was Mr Peter Button, Vice Secretary General of UPOV, who spoke on the topic “Promoting New Plant Varieties for Enhanced Agricultural Productivity and Food Security.” The content of the presentation was such that one cannot deny its partial and political tone. No wonder among the recommendations from the conference, Member States were encouraged to use all forms of IP in meeting the needs of the agricultural sector, and PVP was said to be a particularly important mechanism to promote the research and transfer of technology to farmers, thereby increasing productivity and value addition in agriculture.Footnote 110 Furthermore, UPOV membership was recognized as a key factor in maximizing the impact of PVP.
A key outcome of the conference was the Dakar Declaration.Footnote 111 In the Declaration, the AU Ministers pledged to, among others, provide a conducive environment with dynamic IP systems that propel creativity, innovation, and inventiveness and effectively guide the promotion, acquisition, and commercialization of IP for sustainable growth and development and the well-being of African populations. They also pledged to take advantage of the opportunities available within WIPO technical assistance and capacity-building programs, and to consider joining relevant WIPO-administrated treaties to which they were not yet parties.Footnote 112 An account has it that this declaration was negotiated behind closed doors and that African ministers of trade were not present at the time of its adoption – which raises doubts.Footnote 113 Ultimately, the event served as a forum for knowledge circulation and capacity-building in Africa, albeit lopsided toward the Western-centric corpus of IP systems that the sponsors favor.
The Science, Technology and Innovation Strategy for Africa (STISA-2024)Footnote 114 acknowledges the lack of technology readiness of the continent, which stands in sharp contrast to what is happening at the level of policy and legislation. Policymakers of the continent may well learn from the advanced countries. The history of the development of the advanced industrialized countries shows that they did not all start with strong IP laws. Countries such as the USA, Germany, and Japan, in the early stages of their technological development and catching-up, used instruments such as imitation, reverse engineering, sheer copying, or technology transfer, among others, to develop their innovation ecosystems; only when they had achieved considerable success did they begin to regulate IP strictly.Footnote 115 It is only when countries have accumulated sufficient indigenous capability, with an extensive science and technology infrastructure sufficient to undertake creative imitation, that IP rights become an important element in technology transfer and industrial activities.Footnote 116 This point is not often stressed in technical assistance and capacity-building projects.
It may come as no surprise, then, that central initiatives – both the African Model Legislation for the Protection of the Rights of Local Communities, Farmers and Breeders, and for the Regulation of Access to Biological Resources 2000 (African Model Law)Footnote 117 of the AU and the Swakopmund Protocol of ARIPO– have had little influence on the continent. Despite some criticisms against both instruments, it was expected that they would have an impact on the continent, but that has not been the case.Footnote 118 In practice, the African Model Law rejects the unconditional adoption of the UPOV 1991 model and patents for plant varieties,Footnote 119 rather embracing the sui generis option under TRIPS. It is anchored on the principle of balanced regional, subregional and national laws in Africa that cater to stakeholders’ divergent needs.Footnote 120 It protects the innovations, technologies and practices of local communities, including farming communities and indigenous peoples who conserve and enhance biological diversity for the benefit of present and future generations, alongside commercial plant breeders who develop new plant varieties based on farmers’ varieties.Footnote 121 As the next section shows, instead of this model being applied, curiously, quite the opposite is happening in Africa.
D. The Plant Variety Regime in Africa
The WIPO and UPOV are the leading international organizations in providing technical assistance and legislative advice on PVP laws, management, and enforcement in Africa. This situation further highlights WIPO’s strong influence on national and regional implementation of international obligations in the area of IP. Before discussing the plant variety regime in Africa, a look at the relationship between WIPO and UPOV will shed some light and contribute to our understanding of the situation in Africa.
I. WIPO’s Agreement with UPOV: An Uptick in Plant Variety Protection
In 1982, WIPO and UPOV formalized an existing arrangement on administrative and technical cooperation between the two organizations,Footnote 122 whereby the Director General of WIPO is designated as the Secretary General of UPOV, with the power to approve the appointment of the UPOV Vice Secretary General.Footnote 123 Under this agreement, the UPOV Office was to be located in the WIPO building in Geneva, where UPOV meetings are also held. Hence, WIPO services the UPOV Office and manages the financial administration of UPOV, among other things.Footnote 124 The agreement affirms the complete independence of the WIPO International Bureau and the UPOV Office in respect of the exercise of their functions. However, while UPOV is legally separate from WIPO, and is not part of the UN, the relationship that has ensued between UPOV and WIPO has led to the criticism that WIPO’s technical assistance for developing countries and LDCs is biased toward the UPOV 1991 regime.Footnote 125 This criticism implicates the position of WIPO as a neutral voice in the area of IP.
For example, the WIPO Academy offers two advanced distance learning courses on PVP. One of them is on the “Examination of Applications for Plant Breeders’ Rights” (DL-305-UPOV).Footnote 126 Additionally, WIPO frequently provides opportunities to make UPOV known. The UPOV Office has given presentations about plant variety and UPOV during the WIPO Summer Schools on IP and at conferences organized by WIPO (such as the African Ministerial Conference discussed above). Likewise, WIPO technical assistance programs often include references to UPOV and advice to UPOV non-members as to how to introduce UPOV-consistent PVP legislation.Footnote 127 Rather than assessing each country’s specific needs and advising on how UPOV could best be applied to the applicant’s circumstances, the advice tends to consist of providing the applicant countries with the model UPOV legislation.Footnote 128 Graham Dutfield, for example, has argued that some draft PVP legislation proposed through WIPO technical assistance contained a chapter on implementation, including provisions on enforcement and supervision that went beyond what is required under the UPOV Convention itself.Footnote 129
The methodology of WIPO for the development of national IP strategies, which was approved by the WIPO Member States under the “Development Agenda Project,”Footnote 130 has also not been without criticism. The project aimed to provide a coherent and harmonized approach, including a set of tools and mechanisms to guide the Member States in the development of national IP strategies. The methodology has four parts: The Process,Footnote 131 Baseline Questionnaire,Footnote 132 Benchmarking Indicators,Footnote 133 and National IP Strategy Online Platform.Footnote 134 It also sets the benchmarking indicators relevant for promoting PVP to include: (a) Plant variety protection office: legal status, autonomy, key functions and staffing; (b) Importance of breeders’ rights; (c) National agricultural policy or strategy; and (d) Plant breeding and seed associations.Footnote 135 The South Center has criticized the benchmarking indicators for not stating the contributions that farmers have made – and continue to make – in the development of varieties adapted to local evolving conditions, and for failing to give any reference to sui generis systems (such as those adopted in India, Malaysia, and Thailand) that do not follow the UPOV model and which recognize rights over farmers’ varieties.Footnote 136 Also, the methodology has often included a recommendation to the country receiving assistance to accede to UPOV 1991 and establish a PVP office as part of legislative and institutional reform.Footnote 137
The UPOV Office has over the years been active in discouraging developing countries from adopting PVP systems that diverge from the UPOV norm, as has been documented concerning Asian countries,Footnote 138 and in the specific case of Africa, as seen in the PVP laws of OAPI and ARIPO. The African Model Law, in particular, received opposition and criticism from WIPO and UPOV, OAPI, and the African Seed Trade Association.Footnote 139 For example, WIPO rejected the principle of inalienability of community rights, which is one of the pillars of the Model Law,Footnote 140 and further argued that the Model Law’s prohibition of patent on life forms was a violation of TRIPS Article 27.3(b), which requires patents on at least micro-organisms.Footnote 141 For its part, UPOV submitted a ten-page document criticizing and reworking more than thirty articles of the Model Law, recommending, among others, that farmers’ rights should be subject to or subordinate to plant breeders’ rights.Footnote 142 In 2001, the African Union sought to reconcile its differences with WIPO and UPOV, but to no avail.Footnote 143 Importantly, however, the text of the current Model Law shows that the African Union did not implement those recommendations. Even so, the African Model Law was overlooked by regional IP organizations, RECs, and many African countries when they enacted plant variety laws.
II. The Protection of Plant Variety under OAPI
As noted earlier, the revised Bangui Agreement had as one of its outstanding features the inclusion of Annex X on PVP, which establishes a regional framework applicable to the members of OAPI. The WIPO, the UPOV Office, WTO, and INPI played key roles in this agreement. It started with a series of meetings and discussions between the UPOV Secretariat and WIPO about proposals for revising the Bangui Agreement and the need to include the creation of a PVP system in the OAPI region in 1996.Footnote 144 In 1997, the UPOV Office consulted the French Ministry of Agriculture as well as Francois Burgaud, who was in charge of international relations within the French National Interprofessional Seed and Seedlings Grouping (GNIS), about providing technical assistance on PVP to francophone African countries, including providing a financial contribution for the organization of a regional seminar in Burkina Faso.Footnote 145 There was also a meeting between the Director General of OAPI, Anthioumane N’Diaye, and UPOV officials to discuss the possible inclusion of PVP in the revised Bangui Agreement in September 1997.
With funding from the French government, UPOV organized the said regional seminar in Ouagadougou, Burkina Faso, on December 17–19, 1997, in cooperation with the Government of Burkina Faso and OAPI.Footnote 146 The seminar focused on the nature and rationale for the protection of plant varieties and was attended by participants from Benin, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Gabon, Guinea, Mali, Mauritania, Niger, Senegal, and Togo.Footnote 147 The UPOV also participated in a WIPO Academy session for French-speaking countries to lecture on UPOV and PVP.Footnote 148 The UPOV further engaged the Head of the Seed and Plant Breeding Office in the French Ministry of Agriculture and Fisheries regarding the organization and financing of “roving seminars” in OAPI Member States. Earlier, in April 1997, the Director General of WIPO had sent to OAPI draft texts for the revision of the Bangui Agreement, which included a draft Annex relating to PVP drawn up by the UPOV Secretariat.Footnote 149
According to the OAPI Secretariat, the draft text was submitted to governments for comments, suggestions, and further elaboration and also to other partners, such as WIPO, UPOV, the EPO, and INPI. This process was followed by meetings of experts from OAPI Member States and partners in Conakry (November 1997), Abidjan (February 1998), Ouagadougou (July 1998), and Nouakchott (November 1998).Footnote 150 The definitive text was adopted by national IP officials at a further meeting in Nouakchott (Mauritania) at the end of December 1998.Footnote 151 On February 15, 1999, ten days before the diplomatic conference where OAPI members were scheduled to sign the revised Bangui Agreement, a joint UPOV–WIPO–WTO workshop was held for developing country delegates in Geneva to convey the message that UPOV 1991 would be the best option for implementing the PVP system required by Article 27.3(b).Footnote 152
To be sure, a position paper by UPOV on the outstanding issue of the review of Article 27.3(b) before the WTO Council for TRIPS in 2002 affirmed this position when it stated that “the plant variety protection system established on the UPOV Convention meets the requirements of Article 27.3(b) of the TRIPS Agreement.”Footnote 153 The statement further noted that “the introduction of a system which differs significantly from the harmonized approach based on the UPOV Convention will raise questions with regard to the implementation of the TRIPS Agreement.” As Graham Dutfield notes, “this statement gives the impression that UPOV membership is essential for TRIPS compliance, which is false. But for countries unsure of where their interests lie concerning IP protection in the field of plant breeding and anxious to avoid being criticized for failing to meet their TRIPS commitments, this is a powerful statement.”Footnote 154 It appears that the TRIPS Agreement has been good for UPOV membership despite the flexibilities and special and preferential treatments for LDCs included in it. In the context of Africa, instead of advising the countries – especially the LDCs – on how to utilize the flexibilities and transitional arrangement inherent in the agreement for their economic and social development, the UPOV, WIPO, and developed nations like the European Union and the USA along with their seed industries, saw an opportunity to get these countries to join the UPOV Act 1991.
From February 22–25, 1999, the revised Bangui Agreement was opened for signature at a diplomatic conference in Bangui, with fifteen OAPI Member States signing. Before Annex X was adopted, the UPOV Council had to certify it in 2000 as complying with UPOV 1991, as required under Article 34(3) of the UPOV 1991 Convention. The UPOV Council has conducted this task over the years through a detailed examination of the legislation of would-be acceding countries, thereby strongly influencing the legal regime applicable to PVP. Countries that deviate from the rigid model established by the convention are not allowed to join.Footnote 155 The revised Bangui Agreement came into force in 2002 for all OAPI members. However, Annex X was delayed due to a lack of capacity to implement PVP.Footnote 156 Funding and technical support from the French government and the UPOV Office were directed toward capacity-building, especially regarding the establishment of the system for technical examination of plant varieties, identification of initial eligible genera and species for PVP, and the required personnel and institutional support.Footnote 157
In January 2006, Annex X of the Bagui Agreement became operational, paving the way for OAPI and its Member States to deposit instruments of accession to UPOV.Footnote 158 Key provisions of Annex X, modeled after the UPOV Act 1991, may be problematic for the region. For example, Annex X extends to “all botanical taxa” except wild species, that is, species that have been neither planted nor improved by man.Footnote 159 This means that any variety that fulfills the required criteria may be granted protection.Footnote 160 Critics contend that it is unnecessary to extend PVP to all genera and species in the OAPI region, not least because of the lack of experience and capacity concerning implementation; in addition, it may not be wise to develop procedures and extend protection to crops that offer no or limited commercial value to the country.Footnote 161 Furthermore, Annex X of the Bangui Agreement fails to include any flexibility for its members, not even the limited transitional arrangement contained in UPOV 1991 concerning scope and protection.Footnote 162 This goes beyond the UPOV Act 1991 and further ignores the TRIPS Agreement’s transitional arrangements – in essence, failing to consider the fact that OAPI member countries may need policy space in fulfilling their treaty obligations.
Concerning the duration of protection, Article 33(1) of Annex X states that a plant variety certificate shall expire twenty-five years after its date of issue. The duration of protection is more extensive than in both the UPOV 1978 and 1991 Conventions. In addition, the rights conferred by a plant variety certificate in Article 32 of Annex X are extensive as far as they cover harvested material obtained through the unauthorized use of the propagating material of the protected variety, unless the breeder has had a reasonable opportunity to exercise his right concerning the said propagating material.Footnote 163 Moreover, Article 32(4) of Annex X further applies breeders’ rights to (a) varieties that are essentially derived from the protected variety, where the protected variety is not itself an essentially derived variety; (b) varieties that are not clearly distinguishable from the protected variety as provided in Article 6; and (c) varieties whose production requires repeated use of the protected variety.
The provision on essentially derived varieties (EDVs) – a concept introduced by UPOV 1991 – has become one of the most problematic provisions for interpretation and application by administrative authorities and judges.Footnote 164 Further, of major concern is the extensive provisions dealing with infringement and other unlawful acts, which among others stipulate injunctions, civil damages, criminal sanctions, and seizures. According to Article 54 of Annex X, any person who knowingly commits an act of infringement under subparagraph (1) of Article 48 or an act of unfair competition within the meaning of Annex VIII commits an offense and is liable to a fine of between 5,000,000 and 15,000,000 CFA francs or imprisonment of one to six months or both of these penalties, without prejudice to civil damages. Considering that criminal sanctions are not required under TRIPS except in cases of willful trademark counterfeiting or copyright piracy on a commercial scale, it is excessive to include such provisions in an agreement allegedly concluded by some of the world’s most deprived countries.Footnote 165 In most countries, including the developed countries, no criminal sanctions are provided for in the area of PVP or other areas of IP, such as patents.Footnote 166
It is no wonder that, ten years after the entry into force of Annex X of the Bangui Agreement, a 2019 research paper by Coulibaly and colleagues revealed that only seven of OAPI’s seventeen members had used the PVP system – and “at great cost and the expense of public funds.” The authors added that the system has neither produced a substantial increase in plant breeding activities in the OAPI Member States nor resulted in the growth of the seed industry in the subregion. On the contrary, it has raised alarms about the misappropriation of farmers’ varieties.Footnote 167
III. Plant Variety Protection under ARIPO and Others
Amid the African Union’s effort to promote a non-UPOV 1991 plant variety regime in Africa and its consequential call on OAPI to reconsider the provisions of Annex X of the revised Bangui Agreement, ARIPO pre-emptively announced in 1998 that it would stand by the AU position and not endorse any specific IP regime for plants.Footnote 168 It may therefore come as a surprise that in 2015, ARIPO adopted a PVP regime along the lines of the UPOV Act 1991. It all started in 2009 when the ARIPO Council of Ministers requested the ARIPO Office to implement its decision to develop a regional legal framework for the protection of plant varieties.Footnote 169 Based on this mandate, ARIPO initiated the process of developing a legal framework for plant varieties in collaboration with UPOV and WIPO. After consultations with the latter organizations, a first draft was drawn up in 2011. Further revisions to the first draft led to the release of a second draft in 2013.Footnote 170 After further consultations and clarifications with UPOV on specific issues, the ARIPO agreed on a final text of the “Draft Legal Framework for Plant Variety Protection” in March 2014.
The last regional workshop on the Draft ARIPO Plant Variety Protocol was co-organized by ARIPO, UPOV, and the US Patent and Trademarks OfficeFootnote 171 – further showing the extent of the contribution and power of these international organizations in shaping the ARIPO development agenda through PVP. As the UPOV rules require, the draft instrument was sent to the UPOV Council for examination and approval. The UPOV Council replied, noting that:
The Draft [ARIPO] protocols incorporate the substantive provisions of the 1991 UPOV Act. Once the Draft Protocol is adopted with no changes and the Protocol is in force, the Contracting States of the Protocol and ARIPO itself, in relation to the territories of the Contracting States to the Protocol, would be in a position to “give effect” to the provisions of the 1991 Act, as required by Article 30(2).Footnote 172
Technically, this response qualified ARIPO to join UPOV. However, during the meeting of the Administrative Council to adopt the Arusha Protocol, ARIPO Member States opposed and rejected Article 4 of the Draft Plant Variety Protocol, which empowered ARIPO to grant PVP rights on behalf of its members without their consent.Footnote 173 The amendment of this article meant that ARIPO could not become a member of UPOV 1991.Footnote 174 However, according to the “Status in Relation to UPOV Report 2021,”Footnote 175 ARIPO is still in the process of becoming a party to UPOV 1991. Attending the meeting of the ARIPO Administrative Council that adopted the Arusha Protocol were intergovernmental organizations and cooperating partners, including WIPO and UPOV.Footnote 176 Similar to the case of OAPI, stakeholders – including representatives of farmer groups in Africa – were not invited to the processes and discussions leading to the draft legislation and the subsequent adoption of the Arusha Protocol.Footnote 177
As it turns out, most of the concerns expressed about the Bangui Agreement, Annex X, of the OAPI apply here too. Article 3 of the Arusha Protocol extend the scope of protection under PVP to all plant genera and species. While its preamble acknowledges the need to fulfill the TRIPS Agreement Article 27.3(b), the protocol falls short of including the flexibilities inherent in the TRIPS Agreement or its transitional arrangements. Concerning the duration of protection for PVP, the protocol follows the UPOV 1991 order of twenty years from the date of the grant of the breeder’s right, excluding trees and vines, for which a breeder’s right shall be granted for a period of twenty-five years from the said date.Footnote 178 The following Article 26(2) of the protocol, however, states that “[n]otwithstanding sub-paragraph (1), the term of protection may be extended for an additional five years by a notice in writing to the ARIPO Office in respect of specific genera and species.” The conditions for such an extension are not spelled out, thus making it possible to go beyond the UPOV standard.
Furthermore, Article 21.3(a) of the protocol, on the scope of a breeder’s right, extends to harvested material obtained through unauthorized use of the propagating material of the protected variety, unless the breeder has had a reasonable opportunity to exercise his right concerning the said propagating material. And just as in the case of OAPI, Article 21.4(a) of the Arusha Protocol stipulates that the breeder’s right extends to varieties that are essentially derived from the protected variety, where the protected variety is not itself an essentially derived variety. Finally, Article 22.1(a) of the protocol – on “Exception to Breeder’s rights” – allows farmers to use protected material only for “private and non-commercial use.” As there is no further definition, it is unclear which acts are covered by this exception. Disturbingly, a similar exception has been defined by UPOV as prohibiting the regular exchange and sale of seeds or propagating material of protected varieties, even in small amounts, among farmers. Article 22(2) of the protocol allows, in certain circumstances, for farmers to save protected seed for propagating purposes on their holdings, but this appears to be subject to payment of royalties, which many smallholder farmers will not be able to afford.
It is such concerns about the Arusha Protocol and the non-transparent and non-inclusive process by which the protocol was adopted that led the UN Special Rapporteur on the right to food, Hilal Elver, to write a special “Open Letter”Footnote 179 to the Member States of ARIPO, expressing her concerns about the adoption of the Arusha Protocol in November 2016. The Arusha Protocol has not yet entered into force. It will do so once four states have ratified or acceded to it. It is said that because the ARIPO IP framework serves a harmonizing function, its protocols have a potentially less devastating effect as they might not be domesticated by the Member States.Footnote 180
Similar to OAPI, thirteen of ARIPO’s twenty Member States are LDCs. With the benefit of hindsight, one would have thought that ARIPO would stick to the AU Model Law when developing its PVP regime. However, ARIPO did not, and that should not come as a surprise. Throughout Africa, to borrow from Hong Xue’s words, the West Wind has been blowing.Footnote 181 Xue, referring to poet Shelley’s masterpiece “Ode to the West Wind,”Footnote 182 argues that “in international political circles, anyone with basic knowledge of IP law knows that the West Wind is sweeping through the world. Namely, the developed countries are leading the trend toward greater IP protections and are aggressively pushing the developing countries to follow.” She worries that the developing countries are internally surrendering to the West Wind. Under the power of the West Wind, the developing countries are educated to believe that the West leads the way, by default, and that they should not only proceed along its prescribed path but should even go further than the West. As a result, the developing countries are losing, step by step, their internal capacity for normative innovation.
As demonstrated throughout the chapter, this seems to be the case in Africa. Besides OAPI and its Member States – who are all members of UPOV, currently Egypt, Ethiopia, Kenya, Morocco, Rwanda, South Africa, Tanzania, Tunisia, Zambia, and Zimbabwe all have national plant variety laws and offices.Footnote 183 Moreover, Ghana recently adopted a PVP law after its parliament approved the Plant Variety Protection Bill 2020.Footnote 184 The bill has, since December 29, 2020, received presidential assent. As of February 22, 2021, Ghana, Nigeria, Mauritius, and Zimbabwe are among the list of countries that have initiated procedures for acceding to the UPOV Convention.Footnote 185
Finally, it bears mentioning that in May 2014, the Southern African Development Community (SADC)Footnote 186 adopted a Protocol for the Protection of New Varieties of Plants, based primarily on the UPOV 1991.Footnote 187 According to Article 44 of the protocol, it will come into force thirty days after signature by two-thirds (ten) of the SADC Member States. On June 29, 2020, Botswana became the ninth Member State to sign the SADC Protocol. Once it comes into force, the protocol will provide a regional system for PVP rights in the signatory states. Each Member State will need to have a national PVP for the protection to be effective. South Africa, arguably one of the most developed economies in Africa, is not a member of either ARIPO or OAPI but is a member of SADC. It is also a party to the 1978 UPOV Convention. If the SADC Protocol comes into force, it will effectively upgrade South Africa to UPOV 1991.Footnote 188
E. Conclusion
By relying on TWAIL scholarship and doctrine, this chapter has looked critically at the role of technical assistance in the institution and implementation of international IP treaty obligations in Africa, using the protection of plant variety as an illustrative example. I first examined the contribution of WIPO to the development of IP laws in Africa through the technical assistance program of that organization from the post-war period to the present, elaborating on the relationship that has evolved between WIPO and the two regional IP organizations – OAPI and ARIPO – in a way that sheds light on WIPO’s influence on IP law and administration in Africa (both regionally and nationally). Not only were the IP laws instituted post-independence unbefitting to the development needs, priorities, and situations of African countries, but the wave of economic liberalization processes that swept across the globe in the 1980s and 1990s – and the related mushrooming of the various IP and investment regimes addressed in this volume – have often forced African countries to agree to adopt UPOV 1991 compatible legislation, as well as occasional “UPOV-plus” protections, regardless of the implications.
In this regard, the TRIPS Agreement has been good for UPOV membership despite the flexibilities and the special and preferential treatments for LDCs included in it. Instead of advising countries – especially the LDCs – on how to utilize the flexibilities and transitional arrangement integral to the TRIPS Agreement for their economic and social development, the UPOV, WIPO, and developed nations (such as the European Union and the USA along with their seed industries saw an opportunity to get African countries to join the UPOV Act 1991. The WIPO and UPOV cooperated and spearheaded that move. Today, we have a system of PVP laws in Africa that can be described as TRIPS-plus or even UPOV-plus. As seen in the analysis of a few of the provisions of Annex X of the Bangui Agreement and the Arusha Protocol, these agreements have been criticized as unfavorable for the continent’s social and economic development because they are based on the 1991 Act of the UPOV Convention. The UPOV Convention is deemed inappropriate for Africa because it potentially facilitates biopiracy, does not support farmer’s rights, and includes PVP eligibility criteria that are ill-suited to the continent.
Despite opposition and criticism from WIPO and UPOV, the African Union adopted an African Model Law designed specifically to fit the African context by protecting the innovations, technologies, and practices of local communities, including farming communities and indigenous peoples who conserve and enhance biological diversity for the benefit of present and future generations –alongside commercial plant breeders who develop new plant varieties based on farmers’ varieties. Curiously, the African Model Law was overlooked by OAPI, ARIPO, and even SADC when designing their PVP laws. And while it may be difficult to rationalize the adoption by OAPI, ARIPO, and SADC of the UPOV Act 1991 when there is an alternative home-grown model, in a way this point substantiates the argument that in areas where the African countries might be poised to derive some benefits from improved and properly tailored IP protections, there are shortcomings in the drafting of the rules, or their implementation efforts have been least effective. It also validates the notion that technical assistance can (and should) be seen as a vector of ideas and practices that have progressively led to the systemic integration of African countries into the global protection of IP beyond borders, as designed, nurtured, and developed by the Global North. This scenario has led to the curious case of African countries inadvertently neglecting the flexibilities inherent in the international IP system when formulating their national IP laws and policies.
Table of Contents
A. Introduction
Significant changes have taken place in intellectual property (IP) rights – known as IPRs – in the last decades. These changes have notably been the result of the implementation of the Agreement on Trade-Related Aspects of Intellectual Property RightsFootnote 1 (hereinafter “the TRIPS Agreement”) and more recently of free trade agreements (FTAs) entered into by a number of Latin American countries that provide for TRIPS-plus standards.Footnote 2 Such changes have also been induced in some cases by other international instruments with IP-related provisionsFootnote 3 and the threat of unilateral trade sanctions, such as those that may be imposed under the Special Section 301 of the US Trade Act.Footnote 4 Thus, the IP landscape in Latin America became far more reflective of the interests of right holders as the legislation expanded the scope of protection and the set of conferred exclusive rights. In many cases the beneficiaries of this protection are foreign right holders who seek registration of their titles but do not invest or otherwise contribute to the socio-economic development of the Latin American countries where the protection is conferred.
Although a number of flexibilities are allowed by the TRIPS Agreement that may potentially mitigate certain unbalances between right holders’ and public interests,Footnote 5 such flexibilities are potentially subject to interpretation by WTO panels and the Appellate Body (AB). In addition, as new multilateral, regional or bilateral agreements are signed up and domestically implemented by Latin American countries, new layers of normative requirements are added to the already existing and complex grid of IPRs. In particular, FTAs have narrowed down the room for the domestic implementation of the TRIPS Agreement through the inclusion of IP chapters that contain TRIPS-plus provisions.Footnote 6 The ensuing strengthening and expansion of IPRs has come into tension with other international and domestic legal regimes, such as in the field of human rights.Footnote 7 As IPRs are constitutionally protected in Latin America,Footnote 8 their compatibility with other constitutional principles and goals – such as those that mandate the respect of the human right to health, education or culture – has also become problematic.Footnote 9
The FTAs have been one of the main channels for erosion of the TRIPS flexibilities. They had distinctive effects on the national landscape. While TRIPS sought to set out minimum standards in most areas of IP regulations, FTAs sought to implement TRIPS-plus provisions that reduced countries’ room for maneuver in national implementation otherwise guaranteed under Articles 1, 7Footnote 10 and 8Footnote 11 of the Agreement.Footnote 12
Latin American countries usually are driven toward the inclusion of IP chapters by developed countries as condition sine qua non for negotiations.Footnote 13 There are few instances of prior studies on the potential impact of the obligations contained in the FTAs and entered into in negotiations, with no clear assessment of the possible implications of the new IPFootnote 14 commitments. Hence, these agreements usually lead to international IP rules that do not adequately address the interests of both parties. Until now, the Latin American countries that have subscribed to FTAs have experienced difficulties in reconciling the more stringent and wide-ranging obligationsFootnote 15 included in these agreements with the need to build up balanced IP protection and enforcement regimes that respond to the overall fundamentals of the system and their national interests.
Several FTAs signed up by Latin American countries include detailed IP chapters,Footnote 16 which are regularly requested as part of the negotiated agreements by the United States and the European Union (EU) – but not exclusively by themFootnote 17 – while other FTAs include general provisions regarding IP.Footnote 18 More recently two FTAs were concluded: the USMCAFootnote 19 and the EU–MERCOSUR Agreement (concluded but not ratified yet). Although both agreements contain TRIPS-plus provisions, they focus on different aspects of IPRs. The MERCOSUR Agreement reflects the EU’s strong interest in geographical indications (GIs), while the USMCA reflects the US interests in patent law and test data protection.
The purpose of this paper is to analyze how external factors affected the design and implementation of IP legislation in Latin America. To this end, it first refers to the process of adoption of TRIPS-consistent legislation in the region during the transition period granted to developing countries. Second, it examines the possible influence of the interpretation of domestic IP legislation under the WTO Dispute Settlement Understanding (DSU) and provides an overview of TRIPS-plus provisions included in some of the FTAs signed in the region. Third, it analyzes other external factors, such as the reports produced under the Special Section 301 of the US Trade Acts and pursuant to the similar mechanism put in place by the EU. Fourth, it analyzes situations in which IP rules are deemed to be directly applicable by national courts – in accordance with the constitutional provisions and practices – thereby reducing the room for maneuver to shape national legislation. Finally, some case law by domestic courts relating to IP standards induced by the TRIPS Agreement or FTAs is summarily mentioned.
B. Adoption of National Legislation for TRIPS Agreement Implementation
The adoption of the TRIPS AgreementFootnote 20 marked a paradigm shift in IP law at the global scale. It required the Members of the World Trade Organization (currently numbering 164) to establish minimum standards on patent law as well as on other areas of IP, thereby significantly limiting the flexibilities available to design national policies on the matter and to determine how to balance right holders’ and public interests.Footnote 21 While it has been argued that changes to patent laws aiming at strengthening and expanding the scope of IPRs would have taken place anyway – because both the United States and the EU could have used bilateral and regional agreements to increase the levels of protection to the benefit of their industriesFootnote 22 – the TRIPS Agreement enormously simplified that process. It does so by addressing most areas of IP and because it is associated with a mechanism of enforcement that may lead to trade retaliations in case of non-compliance with the minimum standards set forth in the Agreement.Footnote 23 The TRIPS Agreement has had a decisive influence in shaping the IP regimes in Latin American countries.Footnote 24
The developing countries considered that the concessions granted in the TRIPS Agreement would be sufficient to satisfy the demands of developed countries regarding the expansion of IPRs.Footnote 25 However, immediately after the entry into force of the Agreement, such countries – in particular the United States and the EU – undertook bilateral or regional negotiations aimed at strengthening IPRs with higher standards than those in the TRIPS Agreement.Footnote 26 Therefore, while developing countries were struggling to internalize the Agreement’s standards, developed countries started to deploy a bilateral or regional strategy that would allow them to increase the protection standards. In particular, they were successful in incorporating new disciplines and in weakening the “flexibilities” allowed by the Agreement, particularly in relation to patents and undisclosed information.Footnote 27
The expansion of IPRs generated concern among developing countries’ governments, civil society and academics, particularly in relation to the impact on access to medicines – and more broadly, access to knowledge.Footnote 28 Thus, it was noted that the “[c]ontinuous extension of IP protection and enforcement increases the potential for law and policy conflicts with other rules of international law that aim to protect public health, the environment, biological diversity, food security, access to knowledge and human rights.”Footnote 29
Given the “developing country” status of Latin American countries, they were allowed, under the transition periods provided for in Article 65 of the TRIPS Agreement, to comply with their obligations as of January 1, 2000, and many developing countries passed TRIPS related legislation only weeks before their January 2000 deadline for its implementation. They were also allowed to delay the granting of product patent protection to areas of technology that were not protectable in their territory until that date, for an additional period of five years. However, no Latin American country made full use of this possibility.Footnote 30 A number of laws were, in fact, enacted between 1995 and 2000 in some Latin American countries to comply with the TRIPS Agreement.Footnote 31
Despite the rush to introduce domestic standards consistent with WTO obligations, a few countries in the region were the subject of disputes before the WTO’s Dispute Settlement Body (DSB). Both Argentina and Brazil were the subject of actions by the United States. Specifically, the United States attempted to promote a broad interpretation of some provisions in the Agreement, notably in relation to test data and some aspects of patent law.Footnote 32
For instance, in the case of Argentina, in 2000 the United States questioned the consistency of the country’s Patent Law with Article 31 of the TRIPS Agreement, in particular, the provisions of the Argentine Patent Law No. 24,481 on the availability and grant of compulsory licenses to remedy anti-competitive practices. The objection of the United States concerned the process of granting such licenses, as it wanted to make it clear that there should be an intervention and decision by the competition authority. The United States and Argentina reached an agreement that confirmed that “to justify the granting of a compulsory license the National Commission for the Defense of Competition (or the body that could replace it in the future) must have analyzed the practice in question and issued a decision, based on Law No. 25,156 (Competition Law).”Footnote 33
The United States requested consultations with Brazil regarding the provisions of Brazil’s 1996 industrial property law and other related measures that established a “local working” requirement for the enjoyability of exclusive patent rights. The United States asserted that the “local working” requirement could only be satisfied by the local production – and not the importation – of the patented subject-matter.Footnote 34 More specifically, the United States noted that Brazil’s “local working” requirement stipulated that a patent shall be subject to compulsory licensing if the subject-matter of the patent was not “worked” in the territory of Brazil.Footnote 35 The United States further noted that Brazil explicitly defined “failure to be worked” as “failure to manufacture or incomplete manufacture of the product” or “failure to make full use of the patented process”; the United States considered that such a requirement was inconsistent with Brazil’s obligations under Articles 27 and 28 of the TRIPS Agreement as well as Article III of the GATT 1994.Footnote 36 As in the Argentinian process, the United States and Brazil reached a compromise before the establishment of a panel, as the Brazilian Government agreed that, in the event it was deemed necessary to apply Article 68 to grant compulsory license on patents held by the US companies, prior talks on the matter would be held with the US Government.Footnote 37
While both disputes were settled between the parties, they demonstrate the intention of the United States to use the DSU as a mechanism to restrict countries’ space in the interpretation of the TRIPS Agreement’s provisions, while ensuring consistency of national provisions with the Agreement, which had already resulted in considerable reduction of the room for maneuver in the implementation of IP in the light of other public policies.
The rush to implement the obligations under the Agreement may be one of the reasons why some countries did not develop a balanced IP policy, as shown years later – for instance, in relation to patentability of pharmaceutical products or patentable subject-matterFootnote 38 or the extension of the term of copyright protection.Footnote 39 The effects of stronger IP rights in developing countries had a direct effect on the procurement of HIV drugs.Footnote 40 For example, in Brazil, by the late 1990s, the annual per-patient cost of HIV treatment was nearly US$5,000 – at a time when treatment featured almost exclusively unpatented drugs. As more people began treatment and as patients migrated to expensive second-line regimens based on drugs that were patented under Brazil’s new IP law, the program would become unsustainable. Hence, Brazil undertook several modifications of its patent policy in order to improve local capacity and to acquire less expensive generic versions of newer drugs from both foreign and local suppliers, including (for instance) the reform of the compulsory licenses regime.Footnote 41
Not only was the implementation of the TRIPS Agreement by many Latin American countries premature. In addition, despite knowing the implications of such implementation, as noted above, several countries in the region entered into negotiations of a number of trade agreements that would end up reducing the margin provided for in TRIPS Agreement even further. Another important aspect to analyze in the implementation of national regulations is the threat of potential claims under the DSU, as discussed below.
C. Multilateral and Bilateral Factors in Domestic Implementation
I. Analysis of Domestic Legislation under WTO Rules
Another factor that can influence the design and implementation of domestic IP regulations is the way in which panels and the AB of the WTO interpret the TRIPS provisions. Narrow interpretations, in particular, may expose WTO Members to complaints and eventually trade retaliations by other Members. Although no direct evidence exists how this might have influenced the implementation of the TRIPS Agreement in Latin America, it can be presumed that it is a factor that regulators have considered in adopting the implementing regulations. One possible example is the fact that, except Brazil and Argentina, other Latin American countries have not maintained or introduced compulsory licenses on the grounds of lack of working of a patent, which may be attributed to the ambiguity of the TRIPS Agreement in this regardFootnote 42 and the risk of complaints under the DSU. As pointed out by Gazzini, the obligations deriving from Membership in the WTO
are never inherently indivisible or erga omnes in the sense elaborated by the International Court of Justice in the field of human rights. As a rule, remedies for violations of WTO obligations remain available only to the Member(s) whose international trade interests have been affected, in actual or potential terms. Nonetheless, contracting parties have decided to extend to a limited number of WTO obligations the legal regime of indivisible obligation and to consider immaterial for the purpose of resorting to the dispute settlement system the effects of their violations. WTO obligations, therefore, are not a monolithic bloc.Footnote 43
Hence, the violation of a WTO rule may affect or threaten to affect the legally protected interests of one or more – but not necessarily all – Members. As a rule, resort to the WTO dispute settlement system is open to Members whose trade has suffered, in actual or potential terms, from the violation of WTO obligations.Footnote 44 However, Article 3(8) of the DSU introduces the presumption that violations of WTO obligations cause nullification or impairment of the benefits of the Members. The respondent can challenge such a presumption, and if the challenge is successful then adjudication is precluded.Footnote 45
The possibility, and admissibility, of differences in the implementation of the provisions of the TRIPS Agreement are expressly recognized in Article 1.1 of the Agreement: “Members shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice.” But such possible differences are subject to limits, as this provision only allows for choices regarding the “method of implementation” but not the substantive or enforcement standard as such.
In many cases, the space for different interpretations derives from general expressions or ambiguities in the text resulting from compromises reached in the negotiation of the Agreement. The room for different interpretations may also result from the absence of definitions. An example is the lack of one definition of the concept of “invention,”Footnote 46 which differs among countries and allows WTO Members not to grant patents, for instance, on developments without a technical effect (such as under European law), or to grant or not grant patents on genetic materials as found in nature.Footnote 47 Thus, the Brazilian patent law expressly excludes from the concept of invention the area of isolated genes,Footnote 48 a provision that is absent from other laws in the region.
WTO jurisprudence has already established, through several decisions, the degree of scrutiny available to the DSB over a Member country’s domestic legislation. In particular, it has established that in order to determine whether the implementation of legislation is contrary to TRIPS Agreement, the DSB must analyze such provisions to determine the extent of a country’s violation.
A first significant distinction is whether the legislation that is the object of a complaint is mandatory or discretionary – meaning the law as such or the application of that law. Only legislation that mandates a violation of WTO obligations can be found as such to be inconsistent with those obligations. By contrast, legislation that merely gives discretion to the executive authority of a Member to act inconsistently with the WTO Agreement cannot be challenged as such. Thus, where discretionary authority is vested in the executive branch of a WTO Member, it cannot be assumed that the Member will fail to implement its obligations under the WTO Agreement in good faith. According to this approach, the test is whether or not the legislation in question allows the administrative authorities to abide by that Member’s WTO obligations.Footnote 49
Another important issue, which may influence domestic implementation, is the extent to which WTO panels or the AB may interpret domestic law in order to establish a violation of the TRIPS Agreement (and other WTO agreements). In the India – Patents (US) case, the AB stated that “[i]t is clear that an examination of the relevant aspects of Indian municipal law … is essential to determining whether India has complied with its obligations under Article 70.8(a) [of the TRIPS Agreement]. There was simply no way for the Panel to make this determination without engaging in an examination of Indian law.”Footnote 50 This was further developed in the US Section 301 case, where the AB indicated that:
Our mandate is to examine Sections 301–310 solely for the purpose of determining whether the US meets its WTO obligations. In doing so, we do not, as noted by the Appellate Body in India – Patents (US)634, interpret US law “as such”, the way we would, say, interpret provisions of the covered agreements. We are, instead, called upon to establish the meaning of Sections 301–310 as factual elements and to check whether these factual elements constitute conduct by the US contrary to its WTO obligations.Footnote 51
It may be noted that in the US case against India on TRIPS, the United States had complained that the Indian law did not provide specifically the so-called “mailbox” provisions for the patent authority to receive applications for process or product patents in the pharmaceutical and chemical sector. The panel and the AB found that India had not complied with its obligations under Article 70.8 and 70.9, thus India was in violation of its WTO obligations over its failure to enact a specific law in terms of its WTO obligations.
In the case of the US Section 301 laws, the EC indicated that “Section 301 provides uncertainty about the possible use by the United States of unilateral measures ‘inconsistent with the Uruguay Round dispute settlement rules’.” This defeats the purpose pursued by the Uruguay Round participants when they agreed to adopt the DSU, namely, to provide security and predictability to the multilateral trading system (Article 3.2 of the DSU)Footnote 52 and Article 23 of the DSU, which prohibits unilateralism in the framework of the WTO dispute settlement procedures. Members must await the adoption of a panel or AB report by the DSB or the rendering of an arbitration decision under Article 22.
At issue in the case were the interpretation of these provisions of US law, how far they comply with the requirements of the WTO and its dispute settlement understandings, and whether the US law was discretionary or mandatory on the administration. Contrary to the Indian case, the panel found that the challenged sections of the US Trade Act of 1974 were not inconsistent with Article 23.2(a) or (c) of the DSU or with any of the GATT 1994 provisions cited. In particular, the panel noted that the language provided in the US Statement of Administrative Action approved by the US Congress at the time it implemented the Uruguay Round agreements and confirmed in the statements by the United States to the panel was enough to comply with US obligations under the WTO.Footnote 53
This jurisprudence limits the degree of interference that WTO panels and the AB may have in influencing national or regional IP regulations, but does not prevent them from providing “clarifications” of the TRIPS Agreement that may narrow down the flexibilities available to WTO Members. It is worth recalling that Latin American countries were bound to implement the TRIPS Agreement’s obligations by January 1, 2000, before any significant case law on the interpretation of some of its key provisionsFootnote 54 and, importantly, before the adoption of the Doha Declaration on the TRIPS Agreement and Public Health – which confirmed some of the flexibilities allowed under the Agreement and the interpretive value of its Articles 7 and 8.Footnote 55 As shown by the limited recognition of such flexibilities in most Latin American IP laws.Footnote 56 governments in the region in general adopted a cautious approach in the interpretation of the Agreement’s provisions.
II. IP Provisions in FTAs
Since the 1990s, more than seventy FTAs have been signed by Latin American countries, with other developing or developed countries. In particular, FTAs signed between Latin American and developed countries have introduced TRIPS-plus standards on patents, test data, copyright, trademarks, plant varieties protection and other IP categories.
Interestingly, the EU did not pursue agreements with ambitious IP provisions until 2006. Prior to that, IP clauses were general and had a greater focus on GIs. Since 2006, the level of protection asked for by the EU has increased considerably. The EU’s new external IP policy seems to follow, in many respects, the aggressive stance taken by the United States on IP in its own FTAs.Footnote 57 The following subsections present an overview of such TRIPS-plus provisions in both FTAs signed by the United States and the EU.
In the area of patents, the FTAs negotiated by the United States with Chile,Footnote 58 ColombiaFootnote 59 and Peru,Footnote 60 as well as the DR–CAFTAFootnote 61 regarding the Andean Community with the EU,Footnote 62 state that the contracting parties shall extend the term of protection a patent “to compensate the patent owner for unreasonable curtailment of the effective patent term resulting from the first marketing approval of that product in that party.”
For instance, the FTAs with the United States require each party, at the request of the patent owner, to adjust the duration of a patent “to compensate for unreasonable delays in the granting of the patent” (Chile–US Article 17.9.6; DR–CAFTA, Article 15.9 0.5). The FTAs with the United States – namely Chile (Article 17.10.2 (a)) and DR–CAFTA (Article 15.9.6 (b)) – also contain a provision requiring an extension of the patent term to compensate the patent holder for an “unreasonable” delay in approving the marketing of pharmaceutical or agricultural chemical products. In the EU–Colombia/Perú/Ecuador FTA, Article 231 includes a “best efforts” obligation to process the corresponding application expeditiously with a view to avoiding unreasonable delays.Footnote 63
Regarding copyright, several FTAs extended the duration of protection to the life of the author plus seventy years from his or her death for most works (including photographic works). The term of protection of sound recordings and audiovisual works was also extended to seventy years from their publication.Footnote 64 Other rules introduced by FTAs include the reproduction rights of transitory copies; the right to control any technological form of transmission of works, including interactive transmissions over electronic networks such as the Internet, with minor exceptions for analog reproductions and transmissions of sound recordings and performances; technological protection measures (TPMs), with limited exceptions;Footnote 65 and the prohibition of the removal or alteration of electronic rights management information.Footnote 66
Concerning plant varieties protection, the FTAs signed by the United States and the EU forced some Latin American countries to join UPOV 1991,Footnote 67 a less flexible regime compared to UPOV 1978, particularly in relation to the “farmer’s privilege.” As a result, Costa Rica, Chile, Dominican Republic, Panama and Peru are now parties to UPOV 1991.Footnote 68
Regarding trademarks, several FTAs in Latin America integrate sound marks as a mandatory subject-matter, and scent as an optional one.Footnote 69 Many US FTAs prohibit the denial of trademark registration solely on the grounds that the sign of which it is composed is a sound or a scent. An enhanced protection of well-known marks is also provided for in all US and EU FTAs. Internet-related IP referred to in the US FTAs includes domain names. In order to address the problems of trademark cyberpiracy, the US FTAs require that a party’s country-code top level domain (ccTLD) provides a dispute procedure based on the uniform domain-name policy (UDP) as well as online public access to a database of contact information.Footnote 70
Finally, regarding GIs, the FTA signed between the EU and Colombia and Peru shows the profound asymmetry in the economic interests of the parties with respect to the protection of these indications. While the EU obtained the recognition of a list of several pages of GIs, only two Colombian and four Peruvian indications are recognized.Footnote 71 While the European approach in the FTA has been the sui generis form of protection for GIs as applied in European countries, the FTAs signed with the United States provide for the protection of GIs through trademarks or a sui generis system or other legal means.Footnote 72 The GI protection has been significantly enhanced in FTAs with the EU but not in FTAs with other countries. For instance, in the FTA between South Korea and Chile, while the protection of GIs is included, the list consists of only three GIs from Chile (other than for wines, for which the number is larger), and the same number from South Korea,Footnote 73 while the FTA between Korea and the EU includes a greater number of South Korean GIs.Footnote 74
The bilateral and regional approaches used by the United States and the EU in Latin America – as well as in other regionsFootnote 75 – increased the tension between IPRs and constitutionally guaranteed human rights. In effect, by using regional or bilateral processes, in which developing countries have limited negotiating capacity, the FTAs introduced obligations that may undermine the realization of human rights.Footnote 76 As noted in a set of principles issued by the Max Planck Institute for Intellectual Property and Competition Law,
[c]ontinuous extension of IP protection and enforcement increases the potential for law and policy conflicts with other rules of international law that aim to protect public health, the environment, biological diversity, food security, access to knowledge and human rights. At the same time, such extension often counters, rather than facilitates, the core IP goal of promoting innovation and creativity.Footnote 77
The above-mentioned TRIPS-plus provisions in accordance with the European and US standards on IPRs, as transplanted through FTAs, are not generally adapted to the situation and needs of the receiving jurisdictions. As the prescriptive language used does not leave much policy space for adaptations during the implementation phase,Footnote 78 the effect is that the provisions may stay extraneous to the system. Also, it is important to note that the exceptions, limitations and other checks and balances present in the EU domestic system are mostly not transcribed into the FTAs. The effect is that the partner country is left with a higher level of IP protection and enforcement than the EU in its domestic law.Footnote 79
The most recent FTAs signed by Latin American countries present specific features that are briefly described below. It is, in particular, interesting to note what may be seen as a change in EU policy regarding TRIPS-plus provisions on patents and data protection, which is somehow reminiscent of the EU position in the CARIFORUM Agreement.Footnote 80
III. Trends in the Most Recent FTAs Involving Latin American Countries
1. The USMCA Free Trade Agreement
In late 2018, the United States, Canada and Mexico signed a new trade agreement, known as the United States–Mexico–Canada Agreement or USMCA. It updates and replaces the old North American Free Trade Agreement (NAFTA) and introduces new provisions regarding IPRs. In particular, the United States was able to introduce IP provisions included in the draft Trans–Pacific Partnership (TPP), from which the United States withdrew in January 2017,Footnote 81 and which were subsequently suspended in the Comprehensive and Progressive Agreement for Trans–Pacific Partnership (CPTPP).Footnote 82
It is interesting to note that the NAFTA largely reflects the TRIPS Agreement, as several of its provisions were taken by the United States from the text under negotiation in GATT. In this respect, NAFTA represents the first major agreement, modeled on the TRIPS Agreement but going beyond it in a number of areas, such as regulated products and enforcement issues.Footnote 83
In the field of patent law, the USMCA goes beyond the level of protection seen in previous FTAs, as it introduces most of the provisions negotiated in the failed TPP Agreement. This is particularly the case in the area of “secondary” patents. The USMCA text indicates that patents have to be available for “new uses of a known product, new methods of using a known product, or new processes of using a known product.”Footnote 84 This provision requires the patentability of second indication patents, which facilitates “evergreening” of pharmaceutical patents.Footnote 85 Under Mexican law, before the USMCA, patents cannot be granted for new uses, which was fully consistent with TRIPS, hence in order to implement the new provision the industrial property law was amended.Footnote 86
Another TRIPS-plus commitment relates to the patent term adjustment (i.e. extension) for “unreasonable” delays by a granting authority, which sets out a period of five years from the date of filing of an application, or three years from the request of examination, as the periods “reasonable” for the granting of a patent.Footnote 87 The text also includes a patent term extension for “unreasonable or unnecessary” delays in the marketing approval of pharmaceutical patents.Footnote 88 This provision evokes the patent term extension available under the 1984 Drug Price Competition and Patent Restoration Act, also known as the Hatch–Waxman Act in the United States and the Supplementary Protection Certificates established in the EU.Footnote 89 This provision – also included in several FTAs as seen in the previous section – may bring about major difficulties to the health sector and economies of the partner countries.Footnote 90 However, contrary to the United States and EU regulations, the FTA does not provide for a limit to the length of the patent term extension.Footnote 91
The USMCA also provides TRIPS-plus commitments regarding the protection of undisclosed test or other data submitted to regulatory authorities, which prevent regulators from using the clinical trial data submitted by the originator company to assess an application from a generic company for a period of time (at least five years for new pharmaceutical products, and either an additional three years for test data submitted to support a new use or formulation, or five years for combination products including a drug that has not previously been approved).Footnote 92 It further provides a ten-year period of “effective market protection” for biologicals (medicines produced from living cells and other biological materials via biotechnology processes),Footnote 93 the longest period of market protection for such drugs negotiated in a trade agreement to date.Footnote 94
The USMCA also includes the “patent linkage”Footnote 95 obligation found in other FTAs, which establishes a linkage between the patent status of medicines and the marketing approval process, potentially delaying the market entry of generics while disputes over possible patent infringement are resolved.Footnote 96
Regarding trademarks, the USMCA established that a sign does not need to be visually perceptible as a condition of registration. This indicates that parties cannot deny a registration of a trademark solely on the ground that the proposed mark is a sound. Hence, it limits the grounds for denying registration.Footnote 97 That is not all: the USMCA also broadened the scope of protection on the use of identical or similar signs. In both agreements, it is prohibited to use similar or identical trademarks, including subsequent GIs, without consent from the owner for goods or services that are “related” to those goods and services in respect of which the owner’s trademark is registered. The TRIPS uses the wording “identical and similar,” which is a tighter definition than “related.” The USMCA also requires that Article 6bis of the Paris Convention apply mutatis mutandis, which means that countries may make necessary alterations to adapt their laws to the required protection.Footnote 98
In addition, the USMCA has included several grounds on which the parties cannot refuse to provide protection for well-known marks. These grounds include that the mark must be registered in the party providing the protection or in another jurisdiction; or that it is given recognition as a well-known trademark. Although “well-known” is not fully defined, the parties agree to “recognize the importance” of WIPO’s Joint Recommendations Concerning Provisions on the Protection of Well-Known Marks.Footnote 99 Well-known mark protection in a global setting is controversial because such protection tends to favor the multinational businesses of large and developed nations, whose cultures dominate much of the globe. This problem is not just a small market economy problem; it is even true for large economies whose global presence may be limited because of language barriers.Footnote 100
In the field of GIs, the Agreement establishes (Article 20(31)) that the protection of GIs may be denied, opposed or cancelled, namely on the ground that it is considered “a term customary in common language as the common name for the relevant good in the territory of the Party.” In addition, Article 20(32) establishes guidelines for determining whether a term is customary in the common language as the common name for the relevant good in a party’s territory.Footnote 101
Finally, one of the most controversial provisions in the Agreement has been Mexico’s obligation to accede to UPOV 91, which is opposed by farmers and farmers’ organizationsFootnote 102 as it tightens the protection of breeders’ rights, particularly in relation to what is known as the “farmers’ privilege.”Footnote 103
The USMCA establishes clear timelines for each party to introduce the required changes in its legislation in order to fully comply with the FTA for different categories of IP. The United States, however, does not have to introduce further modifications to its legislation.Footnote 104
Some of the obligations have already been implemented by the Mexican legislation. Thus, the Ley Federal de Protección a la Propiedad Industrial in 2020 introduced the patent term extensions through complementary patent certificates. Articles 126 through 136 of the law established that certificates can be granted in case of “unreasonable” delays in the granting of a patent. On the other hand, the Ley Federal de Derecho de Autor, enacted in 2020, introduced most of the required reforms regarding copyright and internet service providers. The amendments to these IP regimes show that Mexico has not fully used the transition periods available under the USMCA in respect of certain topics. But this does not apply to other topics, such as the accession to UPOV 1991, which confronts a lot of internal opposition.Footnote 105
2. The EU–MERCOSUR FTAFootnote 106
The negotiation of the FTA between the Member States of MERCOSUR and the EU has a long history. It began in 1999, when the First Summit of Presidents and Heads of State of MERCOSUR and the EU was held. Since then, the negotiations have been suspended and restarted several times.Footnote 107 The last round started in 2016.Footnote 108 Since the earliest biregional meetings of the MERCOSUR–EU Working Group on Intellectual Property, MERCOSUR had rejected the EU demand to incorporate a specific chapter on IP into the FTA, on the assumption that the EU would aim at imposing TRIPS-plus obligations as a trade-off for agricultural market access. Instead, MERCOSUR proposed a “biregional dialogue” on the subject. The rationale for MERCOSUR’s refusal was to avoid the standards set out in the IP chapters negotiated by EU with other developing countries, which had included many TRIPS-plus obligations.Footnote 109 Despite these concerns, the outcome of the negotiation is a text with balanced commitments, with the sole exception of the disciplines on GIs.
There are no significant commitments in the field of patent law. The patent section includes a “best efforts” provision regarding the Patent Cooperation Treaty (PCT); this is the only provision regarding patents. This is highly significant, as it is the first time that the EU has made such a concession in an FTA. By not establishing provisions regarding patents, the FTA preserves room for maneuver with respect to the domestic implementation of patent policies, for instance, in relation to access to medicines. It is important to point out that Argentina, Paraguay and Uruguay are not Members of the PCT, while Brazil has been a Member since 1978.Footnote 110 The available evidence on the impact of the PCT on the Latin American countries that – as a result of FTAs – were forced to join it shows that the main beneficiaries of the operation of the Treaty have been foreign applicants, particularly in intensive-patenting technology fields such as pharmaceuticals.Footnote 111
Unlike other FTAs signed by the EU, the plant varieties section allows the parties to comply with UPOV 78 or 91 indistinctly,Footnote 112 thereby preserving the choice of most of MERCOSUR countries that adopted UPOV 78 (only Brazil has ratified the UPOV 1991 Act).Footnote 113
It is possible to identify several TRIPS-plus provisions in the field of copyright. They incorporate legal remedies against the circumvention of technological measures.Footnote 114 Civil liability is established when an act is done deliberately and for commercial purposes. Regarding the terms of protection, the FTA allows MERCOSUR Members to maintain the terms provided for literary and artistic works, anonymous works, performers’ rights and broadcasting organizationsFootnote 115 by the Berne Convention and, if higher, by their domestic laws. It also introduces the resale right or droit de suite,Footnote 116 although the provision is not mandatory for the parties. All MERCOSUR countries except Argentina have introduced this right in their domestic legislation.Footnote 117
In the field of trademarks, like in the USMCA, the text indicates that parties cannot refuse to provide protection for well-known marks. The grounds for such a protection include that the mark must be registered in the party providing the protection or registered in another jurisdiction. Differently to the USMCA, the parties “shall take into due consideration the principles established” by WIPO’s Joint Recommendations Concerning Provisions on the Protection of Well-Known Marks.Footnote 118 The trademark section of the IP chapter also includes the “coexistence” between trademarks and GIs.Footnote 119
Finally, the general rules concerning the protection afforded to GIs are found in Articles 33 to 39. MERCOSUR agreed to extend the higher protection for wines and spirits provided for in TRIPS Article 23 to all agricultural products. Hence, it enhanced the TRIPS protection standards by incorporating evocation as an infringement of the holder’s rights and the renouncement of invoking exceptions allowed under the TRIPS Agreement’s Article 24. A crucial component of the FTA is Annex II, which contains the list of the mutually accepted GIs. Those in the list have the level of protection given by the FTA, which substitutes that accorded by national laws – which means that the rules governing in the field of (mutually) recognized GIs are the rules of the FTA.Footnote 120
A distinctive feature of the GI section is Article 35.9, which lists the “particular cases” where a specific level of protection is defined for MERCOSUR countries that does not amount to full protection of the respective GIs. This provision allows for what are known as “grandfather” clauses. The continued use of terms by prior users is guaranteed but is “subject to certain conditions.” The conditions are specified for each GI, but basically they require the term having been used in good faith and in a continuous manner without using references to the actual origin of the GI in the label. It is also remarkable that the continued use is only to the benefit of those prior users that are included in a list for each MERCOSUR country.Footnote 121
If approved, the implementation of the GI section could be cumbersome as it will require addressing conflicts of interests between prior users in MERCOSUR countries and European GI rightsholders. The prior user’s right is weaker than that of the GI holder as is it is subject to proof that the prescribed conditions are met. Therefore, concerns may arise regarding whether prior users may be subject to litigation with the aim of excluding them from the market.
The FTA also has rules on generic terms. Article 35.10 states that protected GIs shall not become generic in the territories of the parties. This is the main rule. However, it is also foreseen that a GI protected in a contracting party may not be protected in another contracting party if the term (identical to the GI) is considered a common name of the goods concerned in the territory of the latter party (Article 35.6). Nevertheless, the FTA does not establish the criteria to consider a GI as “generic” in another contracting party: the national rules will determine whether the term is generic or not.Footnote 122
In a recent decision, an Argentinian court rejected the registration of a trademark based on the preeminence of a GI in Europe. In this case, the court rejected the application for the registry of “Gorgonzola” as a trademark by the Italian consortium Gorgonzola (manager of the Gorgonzola GI), based on the reasoning that “Gorgonzola” is not sufficiently distinctive vis-à-vis the generic term that identifies this particular type of cheese. The court also held that under Argentine trademark law, national or foreign GIs cannot be registered.Footnote 123
In conclusion, the IP chapters of USMCA and the EU–MERCOSUR FTAs show a significant difference with respect to parties’ concessions related to IP provisions. While there is some commonality with respect to trademarks and copyrights, in the field of patents, test data and plant variety rights, considerable room for maneuver is found in the EU–MERCOSUR FTA, while the USMCA goes even further with TRIPS-plus provisions.
D. Strengthening and Expansion of IP Protection beyond FTAs
I. Domestic Implementation Process
As discussed, the inclusion of comprehensive chapters on IPR protection in FTAs has become an important feature of the international trade policy of the EU and the United States. Not surprisingly, developing countries – and in particular Latin American ones – generally have a defensive position regarding the introduction of IP provisions in bilateral and regional FTAs that may further limit their policy space to address current systemic problems, such as access to health, food and knowledge.Footnote 124 The introduction of TRIPS-plus provisions entails adopting IP standards from developed countries,Footnote 125 thus shaping a complex network of provisions, which may not be harmoniously designed or aligned with the domestic needs and conditions. As pointed out by Seuba,
the exportation of IP standards concerns the postimplementation of the IP system of countries that have negotiated with the United States, the EU and EFTA. The resulting legal framework resembles a patchwork, since it is the outcome of a mix of obligations that collect some of the strongest though not necessarily harmonious provisions originating from OECD partners, which moreover are added to an already existing national and regional legal acquis.Footnote 126
Once an FTA is finalized and signed, the domestic procedures for its implementation need to be initiated. There is a significant difference in the EU and US requirements for an agreement to enter into force domestically. On the EU side, the agreement enters into force once it is internalized and approved by the European Parliament, known as a “saisine.” For “EU-only” agreements, the EU can notify its consent to the depository, and the agreement will apply in full (“enter into force”) once the other party notifies its ratification. For “mixed” agreements, the EU now requires the ratification of all EU Member States.Footnote 127 In the meantime, the EU can only apply the agreement provisionally in full or otherwise in part.Footnote 128
In the case of the United States, on the other hand, once an agreement is concluded, it must go through a “certification” process under the US law. This process is explained by the US International Trade Administration as follows:
Before an FTA enters into force, US legislation approving the Agreement requires that the President determine that the FTA partner has taken measures to bring it into compliance with its FTA obligations as of day one of the agreement. The Office of the US Trade Representative (USTR) and other agencies … review the relevant laws, regulations, and administrative practices (measures) of the FTA partner. The FTA partner is advised of any shortcomings in its laws and other measures, and the Administration consults with the FTA partner on the issue. If requested, assistance is provided to help a trading partner implement its commitments.Footnote 129
This process, which is meant only to ensure the implementation of the agreed commitments by the US partner, has been used to further narrow down the partner’s flexibilities, as in some cases additional obligations are imposed on the FTA counterpart. For instance, in the case of the US–Peru FTA, it was noted that during the “certification” many of the amendments aiming to reduce the negative impact of IP rights were disregarded.Footnote 130 Significantly, there is no similar procedure applied to check the US implementation of its obligations under the FTA and, in fact, many of them are never implemented, such as in the case of the patent linkage provisions that go beyond the US legislation.Footnote 131
Once an FTA enters into force, then the United States also observes the enforcement of IP provisions and notes any alleged deviation through bilateral committees and the reports produced in accordance with the Special Section 301 of the US Trade Act.
II. Special Section 301
The United States interferes in the domestic design and implementation of IP rules through a unilateral mechanism that aims to “identify third countries in which the state of IPR protection and enforcement gives rise to the greatest level of concern.” The Special Section 301 was introduced in 1988 into the US Trade Act by the Omnibus Trade and Competitiveness Act, signed by President Ronald Reagan. This section was an elaboration – specifically for IP – upon Section 301, which was incorporated into the US Trade Act of 1974 granting the USTR a range of responsibilities and authorities “to investigate and take action to enforce US rights under trade agreements and respond to certain foreign trade practices.”
Under the Special Section 301, the USTR is authorized to adopt, at its discretion, various measures to remedy foreign trade practices that affect US exports. It authorizes the USTR to (1) impose duties or other import restrictions, (2) withdraw or suspend trade agreement concessions or (3) enter into a binding agreement with the foreign government to either eliminate the conduct in question (or the burden to US commerce) or compensate the United States with satisfactory trade benefits. The USTR must give preference to duties (i.e. tariffs) if action is taken in the form of import restrictions.
Several Latin American countries are under the “inspection of the USTR’s Special Section 301.” In particular, Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru and Venezuela were mentioned in the latest Special Section 301 Report.Footnote 132 In general, the United States complains regarding the following: the implementation of patent policies, such as limitations to the protection of patent subject-matter and delays in the examination process of patent applications;Footnote 133 copyright enforcement measures in relation to broadcasting and digital platforms for distribution of copyrighted contentFootnote 134 and test data protection.Footnote 135 Regarding GIs, the United States notes the negative effect of the expansion of GI protection through FTAs between the EU and third countries. Therefore, it includes, in the “watch list,” those countries that are negotiating with the EU bilateral or regional agreements that include commitments to expand GIs protection.Footnote 136
The main objective of Special Section 301 has been to allow the US Administration to exert pressure on other countries by threatening (and eventually implementing) trade retaliatory measures. As noted by one commentator, it “was shaped quite deliberately to give the Executive the tools to use diplomatic and economic pressure to achieve a more ‘equitable’ world trading system, to the benefit of US commerce.”Footnote 137
A clear example of the problems raised by the application of Special Section 301 is shown in the case of Chile, which entered into an FTA with the United States in 2004, but only in 2010 put in place a system for copyright content takedown. Under this system, unlike under the US Digital Millennium Copyright Act,Footnote 138 removal of content by intermediaries requires a court order to comply with Chile’s constitution and its obligations under the American Convention on Human Rights. The FTA permits this interpretation, but the USTR has strongly criticized it, urging Chile “to amend its Internet service provider liability regime to permit effective action against any act of infringement of copyright and related rights.” Chile remains on the Priority Watch List in the most recent Special 301 Report published by the USTR, for “the serious concerns regarding longstanding implementation issues with a number of intellectual property (IP) provisions of the United States–Chile Free Trade Agreement (Chile FTA).”Footnote 139
III. EU Report on the Protection and Enforcement of Intellectual Property Rights in Third Countries
A mechanism similar to the US Special Section 301 has been adopted in the EU. The report on the protection and enforcement of IPRs in third countries identifies third countries in which the state of IPR protection and enforcement (both online and offline) raises concerns for the EU.Footnote 140 Like in the case of the United States, the EU Commission unilaterally determines which countries do not, in its view, comply with the desirable IP standards. For this purpose, it determines three priority levels, in which several Latin American countries are included.
Argentina, Brazil and Ecuador are classified as “Priority 3 countries.” Priority 3, according to the EU, presents serious problems in the area of IP, causing considerable harm to EU businessesFootnote 141 In particular, the EU complains regarding the following: restrictive patentability criteria (Argentina); backlog for registration of patents and trademarks (Argentina, Brazil); copyright piracy (Brazil, Mexico); border measures for IP-protected goods (Argentina, Brazil, Mexico); test data to obtain marketing approval (Argentina, Brazil) and non-compliance with UPOV 1991 standards (Argentina, Brazil, Ecuador, Mexico).Footnote 142
Additionally, in contrast to the United States, the EU pressures for the enforcement and strengthening of GI protection in Latin America. In the 2021 report, for instance, it noted that:
The provisions on the protection of geographical indications contained in the EU–Colombia, Peru and Ecuador Trade Agreement and in the EU–Central America Association Agreement also need to be closely monitored with regard to issues related to the recognition of EU GIs as well as concerns regarding their effective protection, in order to make sure that any observed usurpation is addressed in an efficient manner. There are also concerns as regards proofs of prior users entitled to use protected terms and effective protection of individual terms of compound names.Footnote 143
In conclusion, both the United States and the EU pursue policies that seek to dissuade Latin American and other developing countries from strengthening their national IP regimes. A central difference between the two policies is the potential impact that Special Section 301 has on the trade in goods, since it allows the United States to impose trade sanctions on countries that it considers are not implementing an “effective IP policy.” The approach applied by the EU is different insofar as it does not involve the imposition of trade sanctions, but rather pushes for modifications through “cooperation” clauses included in the FTAs. However, this is not possible in those countries with which no FTAs have been concluded.
E. Direct Applicability of International IP Rules
Many Latin American countries have a long-settled tradition of enforcing international treaties, including trade agreements, in their domestic systems through the direct application of their provisions by courts.Footnote 144 Treaty provisions can be invoked before and applied by national judges where they are deemed self-executing.Footnote 145
There is substantial variation among monist statesFootnote 146 as to which treaties require (or do not) implementing legislation.Footnote 147 While most Latin American countries follow a monist approach, there are differences regarding how the international treaties are incorporated into their national legal systems.
In Argentina, a binding treaty becomes part of the state’s legal system.Footnote 148 This implies that it may be applied by judges and invoked by private parties once it is approved in accordance with the prescribed constitutional procedure.Footnote 149 In Brazil, international treaties, once incorporated, have the same validity and efficacy as federal law.Footnote 150 Paraguay has also established the direct applicability of international treatiesFootnote 151 In Mexico, once an international treaty is ratified by the Senate, it becomes domestic law with self-executing character.Footnote 152
The self-executing character of treaty provisions becomes an important element in the field of IP, because the parties loose the room they may have to define the way in which the treaty obligations will be applied at the national level and right holders can directly invoke them against third parties, even in the absence of domestic regulations incorporating the treaty provisions.Footnote 153 Interestingly, in order to avoid the self-executing character of the IP provisions in the EU–MERCOSUR FTA, a provision in the final negotiated text states that:
Nothing in this Chapter shall be construed as conferring rights or imposing obligations on persons other than those created between the Parties under public international law, nor as permitting this Chapter to be directly invoked in the domestic legal systems of the Parties. A Party shall not provide for a right of action under its domestic law against the other Party on the ground that a measure of the other Party is inconsistent with this Chapter.Footnote 154
This provision is of great interest for Argentina, since the issue of the direct application of the TRIPS Agreement was debated in the courts notably in relation to the grant of precautionary measures provided for by Article 50 of the TRIPS Agreement.Footnote 155 While this particular provision is highly relevant to preserve the margin of maneuver in Argentina and Paraguay, the situation in Brazil and UruguayFootnote 156 is different, since in any case in these countries parties cannot directly invoke international treaties in local courts.
In the Andean Community, the Cartagena AgreementFootnote 157 is self-executing and of immediate application. It does not require the Member States to adopt rules for its transposition to make effective its rules and those adopted pursuant to the Agreement; that is, the Community rules are directly integrated into the internal order of each country without the need of being approved by the legislative or executive bodies of any of the Member States.Footnote 158 Regarding international agreements, most Andean Members have recognized in their Constitutions the direct effect of international treaties including trade-related agreements, although they have no direct effect for the Community as a whole.Footnote 159
Paradoxically, neither the United States nor the EU grant direct effects to trade agreements. In the United States, this was made explicit in the case of CAFTA, where it is stated that nothing in the FTA shall be construed to amend or modify any law of the United States or to limit any authority conferred under any law of the United States (Section 102 of the US implementation Act).Footnote 160 Furthermore, in the Uruguay Round Agreements Act, the US clarifies that: “No provision of any of the Uruguay Round Agreements, nor the application of any such provision to any person or circumstance, that is inconsistent with any law of the United States shall have effect.”Footnote 161 The provision specifically indicates that in case of contradiction between a WTO rule and domestic law, the latter will prevail. Although it has been argued that US courts could nonetheless apply the WTO agreements, including their authoritative interpretations and the decisions taken by the dispute settlement bodies, to interpret statutes on the basis of the theory of consistent interpretation (Charming Betsy), nothing indicates that this has ever been the case in US courts’ decisions.Footnote 162
In the EU, the WTO agreements share the status of a “mixed agreement” because their subject-matter “falls in part within the competence of the Union and part with that of the Member States.” The European Court of Justice (ECJ) has held that the GATT, although being an integral part of the Community and legal order and having binding effect, did not generate subjective rights for individuals that they could invoke.Footnote 163 And although the WTO is rule-based and its dispute settlement mechanism is juridical, the ECJ has denied the direct invocation of WTO agreements at the EC level, in Portugal v. Council.Footnote 164 This leads to a certain imbalance in the implementation of bilateral or regional treaties, since the United States and the EU preserve some room for adapting the agreed-upon rules to their respective legal systems, an option that many Latin American countries cannot exercise due to their constitutional approaches toward international treaties.
F. Conclusion
Ideally, IP policy should be defined in accordance with the level of technological and economic development and the particular conditions and needs of the country where IP protection is conferred. However, WTO Members are subject to the rules of the TRIPS Agreement that set out minimum standards that are to be interpreted by external bodies. While the Agreement provides for certain flexibilities, WTO case law and the Doha Declaration on the TRIPS Agreement and Public Health only confirmed some of them after Latin American countries were bound to adapt their legislations to comply with the Agreement. This temporal factor and the threat of trade retaliations under the DSU rules may explain why Latin American countries did not make full use of the policy space they had to establish IP rules more suitable to their national contexts and levels of technological and economic development.
Such room for action was further eroded by the negotiation and adoption of FTAs containing TRIPS-plus provisions and by committees created to discuss IP issues bilaterally, which restrict even more the margin of maneuver in IP policy. In addition, the pressure exerted through instruments such as Special Section 301 and its EU equivalent are likely to have discouraged the implementation of policies better adapted to the context of Latin American countries. While the interests of the developed countries promoting TRIPS-plus provisions have been generally the same, some divergences – especially in relation to the protection of GI issues – have become apparent, as the EU and the United States have conflicting interests in this field. This has put Latin American countries in a complex position while negotiating and implementing FTAs.
The impact of external rules in shaping Latin American IP regimes has been amplified in some countries by the fact that, unlike in the United States and the EU, constitutional rules accord direct effect to international treaties, including the TRIPS Agreement. This removes even further the room for maneuver of such countries for the implementation of their treaty obligations. National courts have played a still limited but important role in the process of interpretation and enforcement of IP rules adopted pursuant to the countries’ international obligations and other external pressures.
In summary, the recent evolution of IP policy and legislation in Latin America can only be understood on the basis of the external factors that influenced or determined them, in the light of the particular features of the legal systems applied in the region.
Table of Contents
A. Introduction 410
B. Remuneration Rights Per Se 416
I. Remuneration Rights Created outside the Scope of Exclusive Rights Provided by the International Treaties 417
II. Remuneration Rights Coexisting and Overlapping with Exclusive Rights Provided by the International Treaties 430
C. Limitation-Based Remuneration Rights 439
D. Conclusions 459
A. Introduction
International treaty norms shape essential elements of national and regional copyright systems around the world. Modern policymakers interested in developing new legal tools for the benefit of creators while at the same time pursuing important public interest goals are thus confronted with copyright treaty norms that frame their action, without always knowing their room to manoeuvre. Indeed, international copyright norms often reflect difficult political compromises and therefore inevitably tend to use vague language and open concepts. Also, in contrast to national or regional norms, they often are less scrutinised by scholars and benefit from less exposure to judicial applications, as they are mainly addressed at legislators. Therefore, it is essential to determine with more precision the policy space available for the legislator in particular when it comes to imagining new or better copyright norms. As an illustration, this chapter looks at the international copyright framework for the creation of statutory remuneration as a tool for achieving a balance between the different interests involved in copyright law. It also proposes a taxonomy for remuneration rights and advocates using this legal construction more frequently in the future.
In recent times, legislators have shown an increasing interest in statutory remuneration rights as a policy solution to safeguard access to copyrighted works and secure fair remuneration for creators. Scholars have underlined the advantages of this legal construction to fulfil the rationales of copyright, thus helping to bridge the continental ‘author’s right’ with the Anglo-Saxon ‘copyright’ tradition and create a framework of universal acceptance to reach balanced solutions respectful of the many interests involved in copyright law.Footnote 1 To advance this option for legislators, several arguments are put forward, mainly based on the fact that the existing copyright system based on exclusive rights has not ‘done the job’ it has been assigned, namely securing protection over and access to copyrighted works, while at the same time remunerating creators in a satisfying manner.Footnote 2 In fact, the current legislative framework seems particularly creator-unfriendly: creators can even be considered the losers of the copyright system, as they are (most of the time) not remunerated well for their creations and often face hurdles in their creative process, in particular when they want to reuse creatively existing copyrighted material.Footnote 3 In short, this is a ‘lose-lose situation’ for creators, as the copyright system does not reward them appropriately for what they have done, and at the same time does not create the right framework for them to be creative and to enrich society through their cultural production.
On the remuneration side, several empirical studies have underlined that the current system of exclusive rights only rewards top-selling authors; other remuneration avenues have to be found for the rest of them. As demonstrated in a recent study about the earnings of writers, all surveys consistently revealed the presence of ‘winner takes all’ markets: ‘There is a large gap between the earnings of successful writers and the rest. … The top 10% of writers still earn about 70% of total earnings in the profession’.Footnote 4 Similar results have been found for music creators:
Composers and musicians in the top income brackets depend heavily on revenue that is directly related to copyright protection. But the vast majority of other musicians do not … . For most musicians, copyright does not provide much of a direct financial reward for what they are producing currently. The survey findings are instead consistent with a winner-takes-all or superstar model in which copyright motivates musicians through the promise of large rewards in the future in the rare event of wide popularity.Footnote 5
Based on these findings, several authors have emphasised the interesting potential for creators in terms of statutory remuneration rights vis-à-vis exclusive rights.Footnote 6 It was in particular underlined that the earnings resulting from these rights can in many cases be much more interesting for authors than the royalty payments they receive from contracting parties resulting from their exclusive entitlements.Footnote 7 This reasoning was explicitly endorsed by some courts in Europe in order to justify the extensions of certain statutory remunerations from the analogue to the digital world through an extensive reading of certain copyright limitations.Footnote 8 Furthermore, these remuneration rights are sometimes considered inalienable for creators,Footnote 9 in contrast to the exclusive right which is most of the time systematically transferred to exploiters. Finally, scholars have highlighted the interest for creators to set up statutory remuneration rights when the enforcement of exclusive rights is hardly achievable, in particular with regard to infringing mass uses in the digital environment, such as streaming or peer-to-peer file sharing. In these cases, the statutory model could mirror the model of the private copy exception in the analogue world, which secures considerable earnings for creators when their works are copied.Footnote 10
On the creativity side, it has further been underlined that the exclusive right is hardly compatible with the fact that copyright law was originally meant to be ‘the engine of free expression’,Footnote 11 aimed at protecting creators from the interference of others and from all risk of censorship.Footnote 12 In effect, the need to ask for a licence might not be compatible with freedom of expression and freedom of artistic creativity for a creator of derivative works, as asking for authorisation introduces the possibility to say ‘no’ and thus of private censorship; this option leaves private entities deciding on what can (or cannot) be created. In addition to this uncertain compatibility with fundamental rights,Footnote 13 submitting derivative creations to the exclusive right is also problematic for a number of practical and economic reasons (high transaction costs to get a licence and uncertainty with regard to who owns the right, etc.). Therefore, it is not surprising that derivative works have always been the subject of a lot of litigation on both sides of the Atlantic. To address this issue, proposals have increasingly been advanced to submit creative uses to a statutory remuneration right,Footnote 14 in particular in the context of user-generated content (UGC) online.Footnote 15 Furthermore, the potential of carving out certain uses from the veto power of rightholders has been analysed with regard to the incentive function of the copyright system, with interesting results. Recent empirical studies have established that these limitations to the exclusive right are incentivising follow-up creativity and that many very innovative industries are based on the free spaces left by copyright law.Footnote 16
For all these reasons, statutory remunerations can have beneficial consequences for innovation and creativity, while also readjusting the copyright balance in favour of creators. Thus, they constitute precious tools in the hands of policymakers to design effective and balanced copyright legislation. However, national and regional legislators are not entirely free to design their copyright system according to their wishes and needs, as their laws have to comply with the international treaties they have ratified. For this reason, this chapter aims to analyse possible ways of creating remuneration rights in the light of international treaty obligations and to map all options.Footnote 17 In order to do so, the relationship between ‘remuneration rights’ and ‘exclusive rights’ was chosen as the decisive criterion of classification because of the way in which the copyright system is conventionally understood.Footnote 18 It needs however to be stressed from the outset that different theoretical and legislative approaches can be taken to conceptualise the role of ‘remuneration rights’ and their place in the copyright system. There is, for example, no universally agreed upon legal definition of ‘remuneration rights’. Various other terms are used in scholarship to refer to mechanisms providing for remuneration to rightholders other than through ‘exclusive rights’, including terms such as ‘legal licence’, ‘compulsory licence’, ‘obligatory licence’, ‘non-voluntary licence’, ‘statutory licence’, ‘right for compensation of remuneration’, ‘liability rule’, and ‘limitation-based remuneration rights’.Footnote 19
Conceptually, as discussed elsewhere,Footnote 20 the terminology used of course matters and can potentially carry important nuances in the understanding of this legal technique to design non-exclusive uses. For the purpose of inclusiveness, this chapter employs the term ‘remuneration rights’ to refer to statutory entitlements providing holders of copyright or related rights with a claim of remuneration without the ability to authorise or prohibit the use of copyrighted works or subject-matter covered by related rights.Footnote 21 In short, the use is ‘permitted-but-paid’, as Jane Ginsburg has put it in a foundational article on the matter.Footnote 22 This definition covers two broad categories of rights: remuneration rights created as such (‘remuneration rights per se’), created either outside the scope of exclusive rights or coexisting and overlapping with them (section B); and remuneration rights created through exceptions and limitations to exclusive rights (‘limitation-based remuneration rights’, section C).Footnote 23
B. Remuneration Rights Per Se
For the purpose of this article, ‘remuneration rights per se’ are rights to remuneration provided as such by international treaties, regional norm or national legislation adopted outside the scope of those treaties. Enactment of such rights does not result in the creation of exceptions or limitations to exclusive rights provided by the international treaties, since the international copyright framework does not provide for an obligation to create corresponding exclusive rights, or, when it does, the exclusive rights coexist and overlap with the remuneration rights granted on the top of them.
I. Remuneration Rights Created outside the Scope of Exclusive Rights Provided by the International Treaties
1. Remuneration Rights Provided by the International Treaties outside the Scope of Exclusive Rights
This category of remuneration rights refers to the rights provided by the international treaties either without corresponding exclusive rights (the right to an equitable remuneration for broadcasting and communication to the public of commercial phonograms, and the resale right) or as an alternative to the provision of an exclusive right (the right to equitable remuneration for broadcasting and communication to the public of fixations of audio visual performances, and the right to an equitable remuneration for rental).
a. Rights to an Equitable Remuneration for Broadcasting and Communication to the Public
A right to a single equitable remuneration for the use of commercial phonograms for broadcasting or for any communication to the public is provided by Article 12 of the Rome ConventionFootnote 24 and Article 15(1) of the WIPO Performances and Phonograms Treaty (WPPT).Footnote 25 While this provision is often referred to as a ‘non-voluntary licence’Footnote 26 or ‘compulsory licence’Footnote 27 (connoting a limitation of an exclusive right), it is important to clarify that this right to remuneration is provided as such for the sake of balancing the interests of rightholders and users, and is not an exception or limitation to the corresponding exclusive right of communication to the public.Footnote 28 This remuneration right is generally considered to be one of the central norms of these treaties, although contracting parties may decide to limit their application.Footnote 29 Payment of remuneration by users is paramount in case of remuneration rights, and it is the main condition for respect of these rights,Footnote 30 which cannot be exercised before a commercial phonogram is used for broadcasting or communication to the public. According to the Rome Convention, contracting parties have a choice of whether to provide remuneration to performers, producers of phonograms or both,Footnote 31 while under the WPPT parties retain only the possibility to determine the share of remuneration between the performers and producers if they do not reach an agreement.Footnote 32 Another important difference between the two treaties is that the Rome Convention requires the use to be ‘direct’ in order to trigger the application of the provision, whereas the conditions of the WPPT are satisfied when the use is ‘direct or indirect’. The WPPT also defines and extends the notion of ‘phonograms published for commercial purposes’,Footnote 33 further encompassing phonograms made available to the public without production of copies.Footnote 34
Regional copyright norms provide for some statutory remuneration rights in addition to the international treaties. Contracting parties to the Rome Convention and the WPPT may not adopt the right of performers and phonogram producers to a single equitable remuneration for broadcasting or for any communication to the public of commercial phonograms if they wish so.Footnote 35 Nevertheless, the twenty-eight member states of the European Union (EU)Footnote 36 and seventeen member states of the African Intellectual Property Organisation (OAPI) have to provide for this remuneration right by virtue of Article 8(2) of the EU Rental and Lending DirectiveFootnote 37 and Article 51 of Annex VII to the Bangui Agreement,Footnote 38 respectively.
Provisions of regional EU instruments on remuneration rights were developed over time by the case-law of the Court of Justice of the European Union (CJEU), giving some ‘flesh’ to the at times generally worded legal texts that twenty-seven countries agreed to abide by.Footnote 39 The CJEU drew several critical distinctions between the nature of the authors’ exclusive right of communication to the public (provided by Article 3(1) of the Information Society DirectiveFootnote 40) and the right of performers and phonogram producers to a single equitable remuneration for communication to the public of commercial phonograms (provided by Article 8(2) of the Rental and Lending Directive). When comparing the exclusive right of authors and the remuneration right of performers and phonogram producers in the context of communication to the public, the CJEU concluded that the exclusive right is ‘preventive’, whereas the latter is ‘compensatory’Footnote 41 and ‘financial’Footnote 42 in nature. The finding is, consequentially, relevant in differentiating the scope of the two rights covering ‘communication to the public’. According to the established case-law of the EU, the notions of the act of ‘communication’ and the ‘public’ are constituent parts of the ‘communication to the public’. While the CJEU applied the same case-law for defining the notion of ‘public’ with regard to both of the rights above, it developed a slightly different approach for qualifying an act as a ‘communication’, relying on the different nature of the rights. The CJEU ruled that ‘if it is relevant that a “communication” within the meaning of Article 3(1) of [the Information Society Directive] is of profit-making nature, this must be all the more true in the case of the essentially economic right to equitable remuneration of the performers and phonogram producers under Article 8(2) of [the Rental and Lending Directive]’.Footnote 43 Hence, the CJEU considered the profit-making nature of communicating to the public to be of higher relevance in case of the right to remuneration than for exclusive right of authors.Footnote 44
The CJEU also defined the significance of the word ‘single’ in the phrase ‘a single equitable remuneration’. The Court interpreted it as meaning that, regardless of types and the numbers of rightholders, users are not obliged ‘to pay separate remuneration several times for the same act of communication to the public, as that single remuneration will … be shared amongst the different beneficiaries of the equitable remuneration’.Footnote 45 Hence, the users need to pay only once.Footnote 46 This feature greatly simplifies compliance with the conditions for respective uses of commercial phonograms.
The established case-law of the CJEU also offers EU member states some guidelines on the concept of ‘equitable remuneration’. National laws should ‘enable a proper balance to be achieved between the interests of performing artists and producers in obtaining remuneration for the broadcast of a particular phonogram, and the interests of third parties in being able to broadcast the phonogram on terms that are reasonable, and that it does not contravene any principle of [EU] law’.Footnote 47 Whether the payment is ‘equitable’ should be assessed, in particular, in light of the value of the use concerned in trade.Footnote 48 The Court provided for the following factors that could be taken into account for determining the equitable remuneration: ‘the actual audience, the potential audience [and] the language version of the broadcast’Footnote 49 as well as the
number of hours of phonograms broadcast, the viewing and listening densities achieved by the radio and television broadcasters represented by the broadcast organisation, the tariffs fixed by agreement in the field of performance rights and broadcast rights in respect of musical works protected by copyright, the tariffs set by the public broadcast organisations in the Member States bordering on the Member State concerned, and the amounts paid by commercial stations.Footnote 50
Furthermore, the CJEU, when dealing with the comparison between requirements of ‘remuneration’ and of ‘equitable remuneration’, concluded that ‘the amount of the remuneration will necessarily be less than that which corresponds to equitable remuneration or may even be fixed on a flat-rate basis’.Footnote 51
In adition, ‘[p]referential trade agreements [PTAs] have become a major source of international intellectual property regulation’,Footnote 52 and rights to remuneration did not escape from this trend. The right of performers and phonogram producers to a single equitable remuneration for broadcasting or for any communication to the public of commercial phonograms is provided by, for example, Article 237(3) of the EU – Central America PTA (2012);Footnote 53 Article 10.9(3) and (4) of the EU – Korea PTA (2010); Article 220(3), (5) and (6) of the EU – Andean Countries PTA (2012);Footnote 54 Article 285 of the EU – Moldova PTA (2014); Article 158 of the EU – Georgia PTA (2014); Article 20.8(2) of the EU – Canada (CETA) (2016); Article 170(3) of the EU – Ukraine PTA (2014); and Article 70 of the EU – Kazakhstan PTA (2015). Overall, this right to remuneration, formulated in terms similar to Article 15(1) of the WPPT, is the most frequently referred right to remuneration in the PTAs concluded between the EU and its member states with third countries.
The international treaties, regional instruments and PTAs do not specify whether this remuneration right could be waived or transferred, and countries are free to clarify this in their national legislation.Footnote 55 For example, the laws of France,Footnote 56 Germany,Footnote 57 and the UKFootnote 58 limit the transfer of this right from performers to producers.
Countries around the world provide for this right to remuneration.Footnote 59 However, the scope of this right can differ to a large extent from country to country, as the Rome Convention and the WPPT make it possible for contracting parties not to apply this right to remuneration or to apply it only partially by making a formal notification to this end.Footnote 60 For example, the USA, non-party to the Rome Convention but a party to the WPPT,Footnote 61 provides for this right only in respect of communication to the public by means of a digital audio transmission. In the majority of European countries, this right to remuneration is interpreted in such a way as to cover not only traditional analogue ‘broadcasting’ but also ‘simulcasting’ (i.e., non-interactive linear transmission of broadcast programming via the Internet simultaneously to the original broadcast) and ‘webcasting’ (i.e., non-interactive linear transmission of broadcast programming via the Internet only).Footnote 62 Some countries do not limit this right to the phonograms published for commercial purposes and extend it to any phonograms.Footnote 63 Overall, of all the remuneration rights, the right to an equitable remuneration for broadcasting and communication to the public of phonograms constitutes the most significant source of revenue for European performers.Footnote 64
The Rome Convention and the WPPT focused on the protection of audio performances. After many years of negotiations and a failed diplomatic conference,Footnote 65 24 June 2012 marked the conclusion of the Beijing Treaty on audiovisual performances.Footnote 66 Article 11(2) of the Beijing Treaty provides that ‘[c]ontracting Parties may … declare that, instead of the right of authorizationFootnote 67 … , they will establish a right to equitable remuneration for the direct or indirect use of performances fixed in audiovisual fixations for broadcasting or for communication to the public.’Footnote 68
In the case of Colombia, Ecuador, Peru, and the EU and its member states, Article 220(6) of the EU – Andean Countries PTA (2012) is also of relevance: ‘The Parties may recognise to performers of audiovisual works an unwaivable right to obtain an equitable remuneration for broadcasting or for any communication to the public of their performances fixed’. This agreement was signed on 26 June 2016, just two days after the signing of the Beijing Treaty reconfirmed the policy space enjoyed by the parties. Under the national legislation of a number of European countries, the right to an equitable remuneration for broadcasting and communication to the public also covers fixations of audiovisual performances.Footnote 69
b. Resale Right (Droit De Suite)
Article 14ter of the Berne ConventionFootnote 70 indicates a possibility to introduce, for the benefit of authors, an inalienable right to an interest in any sale subsequent to the first transfer by the authors of original works of art and writers and composers of original manuscripts.Footnote 71 The resale right is also widely known by the terms ‘droit de suite’’and ‘resale royalty right’.Footnote 72 Although the resale right is not mandatory for parties of the Berne Convention, the EU and OAPI member states have to grant this right by virtue of Article 1 of the EU Resale Right DirectiveFootnote 73 and Article 10 of Annex VII to the Bangui Agreement, respectively.
In the EU, the scope of the resale right encompasses, in addition to the original works of art,Footnote 74 original copies.Footnote 75 At the same time, EU legislation excludes the original manuscripts of writers and composers from the scope of the resale rightFootnote 76 and, uniquely, limits the maximum amount of royalty to be paid.Footnote 77 The EU law makes clear that it is for sellers to pay the remuneration.Footnote 78 Even if sellers or dealers in works of art responsible for payment of the resale royalty agree with ‘any other person, including the buyer, that that other person will definitely bear, in whole or in part, the cost of the royalty’, such a contractual arrangement does not affect their obligations towards the authors to pay the royalty.Footnote 79 The CJEU clarified the obligation of the member states to make this remuneration right ‘inalienable’.Footnote 80 This feature of the right does not prevent member states from making ‘their own legislative choice in determining the categories of persons capable of benefiting from the resale right after the death of the author of a work of art’ for the remaining term of protection.Footnote 81 Thanks to the common normative framework, a rather high level of harmonisation was achieved among the member states of the EU by virtue of the Resale Right Directive.Footnote 82
Some countries undertook the obligation to provide for the resale right under the terms of trade agreements. For example, Colombia, Ecuador, Georgia, Kazakhstan, Moldova, Peru, Ukraine, and the EU and its member states each have to provide for the resale right as a part of the implementation of the PTAs they concluded.Footnote 83 The inalienable and unwaivable character of the resale right is cemented in the international order by these PTAs referring to the right either as ‘an inalienable and unwaivable right’Footnote 84 or as ‘an inalienable right, which cannot be waived, even in advance’.Footnote 85 The position of the EU in the international trade negotiations involving copyright is informed by Recital 7 of the Resale Right Directive stating:
The process of internationalisation of the [EU] market in modern and contemporary art, which is now being speeded up by the effects of the new economy, in a regulatory context in which few States outside the EU recognise the resale right, makes it essential for the European [Union], in the external sphere, to open negotiations with a view to making Article 14b [14ter] of the Berne Convention compulsory.Footnote 86
The resale right was first introduced in the legislation of France (in 1920), Belgium (in 1921), Czechoslovakia (in 1926), Poland (in 1935), Uruguay (in 1937) and Italy (in 1941).Footnote 87 As of January 1986, national legislation of twenty-eight countries granted resale rights.Footnote 88 Although the resale right is not mandatory under the international treaties, multiple countries not bound by the EU, OAPI and PTAs norms introduced the resale right in their legislation. More than eighty countries around the world have introduced resale right.Footnote 89 The Tunis Model Law on Copyright for developing countries (Tunis Model Law) contains this remuneration right in its Article 4bis.Footnote 90 Currently, there are discussions about the development of an international treaty on the resale right.Footnote 91
c. Rights to an Equitable Remuneration for Rental
The TRIPS Agreement,Footnote 92 the WCTFootnote 93 and the WPPT, while conferring rightholders with the exclusive rental right,Footnote 94 enable contracting parties to continue providing for the right to an equitable remuneration for rental of phonograms instead.Footnote 95 Contracting parties that had and continue to have in place ‘a system of equitable remuneration’ to rightholders for the rental right on 15 April 1994 may maintain such a system provided that it does not lead to the material impairment of the exclusive right of reproduction.Footnote 96 Thus, once contracting parties bound by these provisions abandon the system of equitable remuneration for rental, they are not able to restore it in its former shape.Footnote 97
The Agreed Statements concerning Articles 6 and 7 of the WCT and concerning Articles 2(e), 8, 9, 12 and 13 of the WPPT clarify that the scope of the rental right under the treaties is limited ‘exclusively to fixed copies that can be put into circulation as tangible objects’. Due to this limitation of the medium, the remuneration right excluding digital uses, like other rights tied to a particular technology, might lose its economic significance for rightholders as a consequence of technological and consumption changes.Footnote 98
2. Remuneration Rights Created outside the Scope of the International Treaties
Other than creating remuneration rights under respective provisions of international treaties, countries may introduce in their national copyright legislation statutory remuneration rights outside the scope of the minimum exclusive and remuneration rights provided by these treaties.Footnote 99 Notable examples of such remuneration entitlements adopted in a number of countries are the paid public domain (‘domaine public payant’Footnote 100) and the remuneration for use of works of expressions of folklore.Footnote 101
a. Remuneration for Use of Works of Expressions of Folklore
The first provisions regulating use of folklore through copyright law were established in Tunisia (1967), Bolivia (1968, for musical folklore only), Chile (1970), Morocco (1970), Algeria (1973), Senegal (1973), Kenya (1975), Mali (1977), Burundi (1978), Côte d’Ivoire (1978) and Guinea (1980).Footnote 102 The most significant binding regional legal authority is Annex VII to the Bangui Agreement, relevant for seventeen OAPI member states. Article 59 of Annex VII makes use of works of expressions of folklore subject to an appropriate payment (‘une redevance y afférente’) and requires a part of the sums collected to be spent for social and cultural purposes.Footnote 103 Copyright-based protection of folklore is also provided by Articles 1(3) and (5bis), 2(1)(iii), 6, 16(2) and 17 of the Tunis Model Law. Some African countries outside the OAPI grant copyright-related protection to folklore.Footnote 104
b. Remuneration for Use of Public Domain Works (Domaine Public Payant)
Like in the case of folklore, the international treaties do not provide for remuneration for use of works where the term of protection has expired, as they only refer to the minimum term of protection. In the first half of the 20th century, only a few countries had in place legislation providing for the domaine public payant (Uruguay, Bulgaria, Italy, Romania and Yugoslavia).Footnote 105 By the second half of the 1980s, domaine public payant systems were already in place in Algeria, Argentina, Brazil, Bulgaria, Chile, Côte d’Ivoire, Cuba, Czechoslovakia, Guinea, Hungary, Italy, Mali, Mexico, Portugal, Senegal, Portugal, Tunisia, Uruguay, USSR and Zaire.Footnote 106 However, an international study on the subject concluded in 2010 for WIPO demonstrated the existence of domaine public payant systems in fewer countries than was previously the case, namely, Algeria, Republic of the Congo, Côte d’Ivoire, Kenya, Paraguay, Ruanda and Senegal.Footnote 107 Remuneration for use of works in the public domain remains a recurring idea in national policy debates.Footnote 108 Article 59(1) of Annex VII to the Bangui Agreement provides for the domaine public payant. The amount of payment for the use of public domain works should be determined as half of the usual amounts, according to contracts and practices, for the use of protected works (Article 59(2) of Annex VII). Creation of the domaine public payant is also referred to in Article 17 of the Tunis Model Law. Some European countries provide for some forms of the domaine public payant – such as Croatia (communication to the public of folk literary and artistic creations),Footnote 109 Hungary (for the resale of original works of art), Norway (for the broadcasting of phonograms)Footnote 110 and Slovakia.Footnote 111
II. Remuneration Rights Coexisting and Overlapping with Exclusive Rights Provided by the International Treaties
In addition to the possibility to grant remuneration rights provided by international treaties and remuneration rights outside the scope of exclusive rights, states may grant remuneration rights coexisting and overlapping with the scope of the exclusive rights provided by the international treaties or by national legislation. Such remuneration rights, granted in addition to the corresponding exclusive rights, cover the same types of usesFootnote 112 and can be exercised only once economic operators (e.g., audio and audiovisual producers), to whom the exclusive rights had been transferred, have authorised use of the respective works and/or protected subject-matter.Footnote 113
The main reason for granting such rights is the alteration of the distributive justice achieved by the copyright system with regard to creators (i.e., authors and performers).Footnote 114 Holders of exclusive rights (e.g., audio and audiovisual producers-owners or transferees by virtue of legal presumptions or contracts) in their negotiations with users always aim at charging profit-maximising fees for the use of protected works and subject-matter (i.e., the maximum fee that users are willing to pay). It is likely that the grant of remuneration rights to authors and performers covering the same uses does not lead to an increase of users’ willingness or resources available for payment. The probable consequence is the redistribution of revenues generated by pre-existing fees in favour of holders of the remuneration rights (in accordance with the so-called ‘pie theory’Footnote 115). The consequential factual decrease in revenues for the transferees of exclusive rights is overcome by reliance on a legal fiction commonly used when creating new copyright entitlements: additional rights do not prejudice pre-existing rights.Footnote 116 Granting coexisting remuneration rights cannot alter all the consequences of granting exclusive rights, but this mechanism could contribute to the increase of real income for creators.Footnote 117
Granting coexisting remuneration rights could be a useful policy option for countries that either replaced remuneration rights by exclusive rights (e.g., due to international commitmentsFootnote 118) or introduced into their national legislation exclusive rights beyond the requirements of international treaties (e.g., in order to favour some industry groupsFootnote 119 or due to foreign pressure) and would still like to have some of the benefits of non-exclusive remuneration entitlements. Even if new evidence favours a return to the pre-existing situation, it is usually a challenging task; for policy makers, it is easier to grant rights than to take them away.Footnote 120
Remuneration rights coexisting and overlapping with exclusive rights and dependent on their transfer are often described in legal scholarship as ‘residual’ rights to remuneration. They are called ‘residual’ because authors and performers enjoy the unwaivable right to remuneration only upon the transfer of exclusive rights to audio and/or audiovisual producers.Footnote 121
The Beijing Treaty is the only international multilateral treaty that explicitly mentions this option. Its Article 12(3) provides that ‘[i]ndependent of the transfer of exclusive rights … , national laws … may provide the performer with the right to receive royalties or equitable remuneration for any use of the performance, as provided for under this Treaty including as regards Articles 10 [right of making available] and 11 [right of broadcasting and communication to the public]’ (emphasis added). This article of the Beijing Treaty explicitly provides for the possibility of persistence of the rights to remuneration after the transfer of exclusive rights.Footnote 122
The provision of Article 12(3) of the Beijing Treaty was inspired by Article 5(1) of the EU Rental and Lending Directive,Footnote 123 which obliges member statesFootnote 124 to provide authors and performers with a ‘residual’ remuneration right for rental of phonograms and films:Footnote 125 ‘Where an author or performer has transferred or assigned his rental right concerning a phonogram or an original or copy of a film to a phonogram or film producer, that author or performer shall retain the right to obtain an equitable remuneration for the rental’.’Footnote 126 The notions of ‘rental’ and ‘copies’ in the Rental and Lending Directive refer only to physical objects.Footnote 127 The title of Article 5 of the Rental and Lending Directive refers to the right to an equitable remuneration as ‘unwaivable’, and Article 5(2) states that ‘[t]he right to obtain an equitable remuneration for rental cannot be waived by authors or performers.’ The provision does not say anything on whether the right is ‘inalienable’,Footnote 128 but the CJEU interpreted the ‘unwaivable’ character of the right to equitable remuneration for rental in a broad way, concluding that the right is not only ‘unwaivable’ but also ‘inalienable’. The remuneration right cannot be transferred by contracts between private parties as well as by a national legislative presumption of transfer of rightsFootnote 129 from performers and authors to film producers.Footnote 130
Since its integration in the EU acquis, the above-described formula of ‘residual’ remuneration rights was used in trade agreements. For instance, the text of Article 179, titled ‘Unwaivable right to equitable remuneration’, of the EU – Ukraine PTA (2014) is identical, mutatis mutandis, to the text of Article 5 (with the same title) of the EU Rental and Lending Directive. Article 220(5) of the EU – Andean Countries PTA (2012), although formulated as a ‘may’ provision and referring only to performers, refers to the act of making available in addition to the unwaivable remuneration for rental: ‘Where performers have transferred the right of making available or the right of rental, a Party may provide that performers retain the unwaivable right to obtain an equitable remuneration, which may be collected by a collecting society duly authorised by law, in accordance with its domestic law.’Footnote 131
Another example of the remuneration right coexisting and overlapping with the scope of exclusive rights could be found in the EU Term Directive,Footnote 132 which extended the term of protection of phonograms beyond fifty years after publication, or communication, whichever is earlier. This legislative instrument provides performers, whose contract with phonogram producers on transfer or assignment of their rights gives a right to claim a non-recurring remuneration (typically, session musicians), with the unwaivable right to an annual supplementary remuneration from phonogram producers.Footnote 133 The remuneration right is supplementary to the exclusive right and has no legal impact on the existenceFootnote 134 or exercise of the exclusive right; that is, recording companies to whom the rights were transferred continue to exercise them as they deem fit. This remuneration ‘shall correspond to 20% of the revenue which the phonogram producer has derived, during the year preceding that for which the said remuneration is paid, from the reproduction, distribution and making available of the phonogram in question’.Footnote 135
With regard to the definition of the ‘revenue’ from which the aforementioned percentage should be calculated, Recital 13 of the Term Directive clarifies that ‘no account should be taken of the revenue which the phonogram producer has derived from the rental of phonograms, of the single equitable remuneration received for broadcasting and communication to the public or of the fair compensation received for private copying’. The purpose of this statement is to ensure that the remuneration right is supplementary to and independent from other remuneration rights.Footnote 136 This distinction is essential because the term extension remuneration right could be presented as an entitlement to an annual lump sum payment covering all types of uses controlled by the publisher holding exclusive rights. Unlike the duration of other remuneration rights (closely tied to the usual terms of protection of respective exclusive rights of authors, performers and phonogram producers), the right of performers to annual supplementary remuneration limited by the term extension starts immediately following the fiftieth year after publication of the phonogram (or, failing that, lawful communication).
In a number of EU member states, ‘residual’ remuneration rights (i.e., coexisting with the corresponding exclusive rights and dependent on their transfer) were introduced beyond the obligations under the Rental and Lending Directive and the Term Extension Directive.Footnote 137 Some stakeholders and scholars proposed unwaivable (‘residual’) remuneration rights for making available of audiovisual authors,Footnote 138 and of audio and audiovisual performersFootnote 139 and of authors and performers.Footnote 140
Discussions on the creation of new remuneration rights coexisting with exclusive rights were entertained by EU policymakers. In its Green Paper of 2011, the European Commission considered as a policy option the introduction of unwaivable remuneration rights for authors and performers for making audiovisual works available and subject to mandatory collective management:
It could be argued that authors have no economic benefit from the online exploitation of their works if no proportional remuneration is being passed on a per use basis. To remedy this, one option would be the introduction of an unwaivable right to remuneration for their ‘making available’ right managed, compulsorily, on a collective basis.
…
It could be argued that performers should equally be entitled, on a harmonised basis, to an unwaivable right to remuneration from which they would benefit even after they have transferred their exclusive right of making available. This right could also be compulsorily collected by collective management societies.Footnote 141
In 2012, the European Parliament called ‘for the bargaining position of [audiovisual] authors and performers vis-à-vis producers to be rebalanced by providing authors and performers with an unwaivable right to remuneration for all forms of exploitation of their works, including ongoing remuneration where they have transferred their exclusive “making available” right to a producer’.Footnote 142 In September 2017, the Committee on Culture and Education (CULT) of the European Parliament proposed the Committee on Legal Affairs (JURI) to include the following Article 14a(1), ‘Unwaivable right to fair remuneration for authors and performers’, in the Draft Directive on copyright in the Digital Single Market (DSM) Directive: ‘Member States shall ensure that where authors and performers transfer or assign the right of making available to the public their works or other subject-matter for their use on information society services that make available works or other subject-matter through a licensed catalogue, those authors and performers retain the right to obtain fair remuneration from such use.’Footnote 143
The adopted text of the DSM Directive, however, deviated from the approach promoting the grant of substantive statutory rights to remuneration. DSM Directive’s Article 18(1), titled ‘Principle of appropriate and proportionate remuneration’, reads as follows: ‘Member States shall ensure that where authors and performers license or transfer their exclusive rights for the exploitation of their works or other subject-matter, they are entitled to receive appropriate and proportionate remuneration.’ (emphasis added). This provision does not require member states to establish a substantive statutory right to remuneration, as it aims primarily at regulating the conditions of exploitation contracts. Still, according to the European Copyright Society (ECS), ‘Member States are also free to use non-contractual mechanisms to implement the principle of a fair remuneration. One such mechanism that Member States are free to maintain or introduce in their law code consists of an unwaivable right to remuneration that authors or performers cannot transfer’.Footnote 144
Another relevant provision of the DSM Directive is Article 15(5), stating that ‘Member States shall provide that author of works incorporated in a press publication receive an appropriate share of the revenues that press publishers receive for the use of their press publications by information society service providers.’Footnote 145 Similarly to the cited Article 18(1), it also does not require member states to implement it by granting authors a right to remuneration. Yet, it is one of the ways in which this provision of the DSM Directive could be transposed into the national laws of member states.
As is demonstrated by the preceding paragraphs, the grant of remuneration rights coexisting with exclusive rights covering the same uses is a legislative tool of distributive justice, provided by a few international and regional instruments as well as by the national law of some countries. Those instruments are usually interpreted as permitting or requiring the provision of remuneration rights entering into play only upon the transfer of the exclusive rights to economic operators (e.g., producers). Those instruments, nevertheless, do not prohibit the introduction of unwaivable remuneration rights coexisting with corresponding exclusive rights, without requiring the transfer of exclusive rights.
Nowadays, thanks to technological and business developments, notably in the accessibility of recording technologies and online platforms enabling an easy reach to the public, many creators participate in the copyright-based economy without passing through traditional economic actors playing the role of intermediaries, publishers and producers. Granting of a right to an equitable remuneration only to creators who transferred their exclusive rights, but not to those who preferred to keep them (e.g., self-publishing and self-recordingFootnote 146), does not seem to have a solid legal or economic public policy rationale. In the case of remuneration rights existing independently from the transfer of exclusive rights, an equitable remuneration requirement could also be applicable to the transfer of exclusive rights. Further empirical and interdisciplinary research on the impact of the grant of remuneration rights coexisting with exclusive rights is necessary (e.g., on the welfare of creators, on the cost of production of investment-intensive works, and on the prices for consumers). It seems that, given the ultimate purpose of the mechanism is to ensure some minimum standard of revenue-sharing from the results of creators’ artistic input, some outcomes of policy discussions and their conclusion in the domain of minimum wage could be of high relevance. The link between the conclusions of the discussion on minimum wage and the proposals for the grant of coexisting remuneration rights is strong where the creative input of authors and performers is the primary outcome of their labour.
With regard to the situations of coexistence and overlapping of exclusive and remuneration rights independent from the transfer of the exclusive rights, it could be observed that they could occur not only when entitlements to remuneration are granted to creators in addition to the pre-existing exclusive rights. The same situations should, in principle, occur when countries required by the international treaties to provide for a remuneration right decide to grant an exclusive right in addition to the corresponding remuneration right.Footnote 147
The unwaivable nature of some remuneration rights permits ensuring a connection between the commercial success of the creations and their creators, unlike the one-time payments of the commonly practiced ‘buy-outs’ (i.e., ‘all-rights included’ contracts by which authors and performers transfer all their rights to publishers, phonogram and audiovisual publishers, and other economic operators for the full term of copyright and for all the territories).Footnote 148
If the natural-person creators are the intended beneficiaries of the grant of remuneration rights, in addition to merely declaring such rights ‘unwaivable’ (and non-transferable), it is important to consider situations where, by virtue of statutory provisions, original creators (often employee creators and contributors to collective works) are not considered to be ‘authors’ or ‘owners’, for the purpose of initial allocation of rights. This runs contrary to the ‘creator doctrine’Footnote 149 of copyright law but is in line with the labour law.Footnote 150
Of course, not all creators always create with commercial motives in mind, and some creators sometimes do not want to put a price tag on the use of their works. Today, many creators legally express their wish for free non-commercial uses through free public non-exclusive copyright licences, such as the popular Creative Commons non-commercial licences.Footnote 151 In this regard, it is important to provide for an exception to the unwaivable character of rights where creators grant such licences.Footnote 152
C. Limitation-Based Remuneration Rights
States not bound by international treaties establishing minimum obligations with regard to exclusive rights are free to introduce and design statutory remuneration rights instead of exclusive rights, as they see fit, in their national policies.Footnote 153 The vast majority of the international community signatory of the international conventions however can transform the exclusive rights provided by international norms into remuneration rights only under certain conditions and to the extent permitted by the treaties. Limitation-based remuneration rights, unlike remuneration rights per se,Footnote 154 are generally also called ‘non-voluntary licences’, ‘compulsory licences’ or ‘statutory licences’. As explained above, we prefer the use of a unified terminology referring to remuneration rights, be it per se or based on limitations, since the remuneration entitlement is in both cases not technically based on a ‘licence’ but on a right given to rightholders, by law, to be remunerated for a particular use.
Many exceptions and limitations are explicitly mentioned in the international treaties. Some provisions require payment of remuneration to rightholders, and others do not. Regardless of the requirement of payment, such provisions can be implemented in national or regional law as remunerated exceptions and limitations to exclusive rights (referred as ‘limitation-based remuneration rights’ in this chapter).Footnote 155 Many other exceptions and limitations to exclusive rights, not mentioned by the international treaties, were created through the legislative flexibility available under the three-step test.Footnote 156 This section analyses the categories of entitlement, in the presented order.Footnote 157 As was stressed at the beginning of this chapter, the lines between the different categories of remuneration rights are sometimes difficult to draw precisely in practice. Nevertheless, the proposed classification could still be helpful for understanding different ways and grounds for creating limitation-based remuneration rights.
I. Limitation-Based Remuneration Rights Created within the Scope of Exceptions and Limitations Provided by the International Treaties
All the exceptions and limitations to exclusive rights provided by the international treaties have to comply with certain conditions, incorporated from what is generally referred to as the ‘three-step test’.Footnote 158 However, as there are different views on the interpretation of the test, and as the test is inherently an imprecise tool, it could be challenging to define with precision the contours of each and every limitation-based right that could be created under this flexibility mechanism.
Some international norms which explicitly mention possible exceptions and limitations provide some level of confidence with regard to the permitted legislative action at the national or regional level. This part provides an overview of limitation-based remuneration rights created within the scope of such exceptions and limitations mentioned by the international treaties.
1. Limitation-Based Remuneration Rights Provided by the International Treaties
Some of the international treaties explicitly foresee a possibility of making exceptions and limitations to exclusive rights subject to remuneration (‘limitation-based remuneration rights’).
Article 11bis(2) of the Berne Convention provides contracting parties with the competency to determine the conditions under which authors may exercise their right prescribed by this article,Footnote 159 provided that it is not prejudicial to authors’ right to obtain ‘equitable remuneration’.Footnote 160 Similarly, Article 13(1) of the Berne Convention allows state parties to impose reservations and conditions, subject to ‘equitable remuneration’, on the exclusive right granted to the author of a musical work, the recording of which has already been authorised.Footnote 161 The Phonograms Convention foresees that if contracting states permit the duplication of phonograms for the purpose of teaching or scientific research, they ought to subject it to the payment of ‘an equitable remuneration’ to the producers of phonograms.Footnote 162 The Marrakesh Treaty provides that parties to the treaty may subject to remuneration certain exceptions and limitations regarding the making of accessible format copies that give persons with visual impairments or other print disabilities access to copyrighted works.Footnote 163 Contracting parties may also subject to remuneration the importation of accessible format copies.Footnote 164 Article 3(6) of the EU Directive implementing the Marrakesh TreatyFootnote 165 reconfirms the liberty of EU member states to provide that specified uses undertaken by authorised entities for the benefit of visually impaired persons could be subject to ‘compensation schemes’, but imposes some limitations on such schemes.Footnote 166
The Appendix to the Berne ConventionFootnote 167 and Articles Vter and Vquater of the Universal Copyright ConventionFootnote 168 accord developing countries a possibility to introduce remunerated exceptions and limitations to the rights to translation and reproduction of copyrighted works for the purposes of education and research, subject to a ‘just compensation’ (Article IV(6) of the Appendix). A number of developing countries availed themselves of the faculties provided by Articles II (right of translation), III (right of reproduction) or V (right of translation) of the Appendix.Footnote 169 It is important to note that countries that opted for a regime for translation under Article V cannot reverse to the regime of compulsory licences for translations under Article II of the Appendix, and vice versa.Footnote 170 As the overview of the Berne Notifications demonstrates, while many of the ‘developing countries’ made respective declarations to avail themselves of the faculties provided for in Articles II and III of the Appendix, they did not renew their declarations upon the expiration of the ten-year period (according to Article I(2) of the Appendix). Hence, their national legislation cannot provide for respective remuneration rights outside the prescribed renewable ten-year period for which declarations are made under the Appendix.
The lending right is not dealt with by the major international treaties.Footnote 171 However, in 2014, Ukraine and the EU and its member states bound themselves by an Association Agreement, Article 178(1) of the intellectual property chapter of which obliges the parties to provide for an exclusive right of lending.Footnote 172 At the same time, Article 178(3), (4) and (5) of the EU – Ukraine PTA (2014), reproducing mutatis mutandis Article 6 of the EU Rental and Lending Directive, makes it possible for the contracting parties’ legislators to replace the exclusive right by ‘a remuneration’ to ‘at least authors’.Footnote 173 Prior to the adoption of the original Rental and Lending Directive in 1992,Footnote 174 out of all the EU member statesFootnote 175 only Germany provided for a copyright-based system, while other members provided for remuneration for lending and based their systems outside the copyright framework.Footnote 176 By 2014, the following EU member states provided for the right to remuneration for public lending: Austria, Belgium, Czech Republic, Estonia, France, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, the Netherlands and Spain.Footnote 177
The CJEU interpreted the provision of Article 6 ‘Derogation from the exclusive public lending right’ of the Rental and Lending Directive requiring ‘remuneration’ (rather than ‘compensation’) for lending as providing for the ‘public lending exception’.Footnote 178 It further stated that the ‘concept of “remuneration” [in case of public lending] is also designed to establish recompense for authors, since it arises in order to compensate for harm to the latter’.Footnote 179 In the EU, the remuneration for public lending should be determined taking into account the number of works lent and the number of persons borrowing from lending establishments.Footnote 180 For example, a flat-rate remuneration mechanism taking into account only the number of borrowers registered with public lending establishments is not compatible with the EU law.Footnote 181
Although the notion of ‘remuneration’ for lending was interpreted narrowly, the judges reached the conclusion that the notion of ‘lending’ in Articles 1(1), 2(1)(b) and 6(1) of the Rental and Lending Directive encompasses so-called ‘e-lending.’Footnote 182 Member states of the EU may decide to make the public lending of digital copies of works available for lending conditional to a prior ‘first sale or other transfer of ownership of that copy’ in the EU by the holder of the right of distribution, or otherwise with his consent.Footnote 183
Article 178(5) of the EU – Ukraine PTA (2014) and Article 6(3) of the Rental and Lending Directive permit member states to ‘exempt certain categories of establishments from the payment of the remuneration’ for public lending. The CJEU established that since this derogation is quantitative in nature and must be strictly interpreted, exemption of almost all categories of establishments undertaking the public lending of works from the obligation to pay remuneration for the lending carried out is prohibited by the Rental and Lending Directive.Footnote 184 However, it seems that some qualitative restrictions to this limitation-based remuneration right are tolerated. Denmark, Norway and Sweden, historically the world’s first countries to have introduced public lending systems in 1946, 1947 and 1954 respectively, remunerate only authors of works written in their national languages.Footnote 185 In Lithuania and the UK, the remuneration is due only for the public lending of books and similar publications.Footnote 186
International instruments do not explicitly deal with the question of whether the right to remuneration for lending could be waived, and different approaches were taken in different states. For example, while the right to remuneration for lending could be waived in the Netherlands, it is unwaivable in Austria and Italy.Footnote 187
2. Limitation-Based Remuneration Rights Created within the Scope of Unremunerated Exceptions and Limitations Provided by the International Treaties
Provisions of the international treaties foreseeing the possibility of introducing unremunerated exceptions and limitations can also serve as a basis for the introduction of remunerated exceptions and limitations (‘limitation-based remuneration rights’).Footnote 188 If a treaty explicitly allows contracting parties to establish an exception or limitation for certain uses without any payment to rightholders, this does not necessarily preclude making the same use conditional to payment, provided of course that it is compliant with international copyright normsFootnote 189 – but also with human rights obligations at the international and national levels.Footnote 190
The Berne Convention refers to some specifically permitted exceptions and limitations to the exclusive authors’ rights. Examples are Article 2(4) (regarding official texts of legal nature and their official translations), Article 2bis (regarding political speeches and speeches delivered in the course of legal proceedings, as well as certain uses of lectures and addresses), Article 10 (use of works for teaching) and Article 10bis (certain uses of works related to reporting current events).Footnote 191 Article 11bis(3) also leaves it to the contracting parties to ‘determine the regulations for ephemeral recordings made by a broadcasting organisation by means of its own facilities and used for its own broadcast’. Under the ‘minor exceptions’ doctrine (also referred to as ‘implied exceptions’ or ‘minor reservations’Footnote 192), contracting parties to the Berne Convention and the TRIPS Agreement may provide minor exceptions to the rights provided, notably, by Articles 11 and 11bis of the Berne Convention.Footnote 193 In the EU, Article 5 of the Information Society DirectiveFootnote 194 and Article 6 of the Databases DirectiveFootnote 195 reproduce some of those unremunerated exceptions.
For example, instead of providing for an unremunerated exception or limitation for teaching purposes, as permitted by the international treaties, some countries provide for a limitation-based remuneration right for reproduction for the purpose of education (e.g., Croatia, France, Germany and the Netherlands).Footnote 196 Article 5(4) of the recently adopted DSM Directive, which is still being transposed into member states’ national laws, unambiguously states that ‘Member States may provide for fair compensation for rightholders for the use of their works or other subject matter [in digital and cross-border teaching activities]’.Footnote 197 This clearly indicates that unremunerated exceptions or limitations under international treaties may nevertheless be turned into a limitation-based right to remuneration and remain compliant with international treaty norms.
With regard to the related rights, Article 15(2) of the Rome Convention, Article 6 of the Phonograms Convention, Article 16(1) of the WPPTFootnote 198 and Article 13(1) of the Beijing Treaty contain general clauses declaring that the contracting parties may provide for the same type of exceptions or limitations with regard to the rights of performers, audio and audiovisual producers, and broadcasters as they provide for copyright. In the EU, Article 10(2) of the Rental and Lending Directive establishes the same general rule.
Article 15(1) of the Rome Convention specifically refers to the possibility to introduce limitations for the following uses: private useFootnote 199; use of short excerpts in connection with the reporting of current events; ephemeral fixation by broadcasters by means of their own facilities and for their own broadcasts; and use solely for the purposes of teaching or scientific research. This list is reproduced verbatim by Article 10(1) of the EU Rental and Lending Directive, leaving EU member states free to pick and choose from the list. A different approach was taken in the OAPI, where Article 58 ‘Remuneration for private copying’ (‘Rémunération pour copie privée’) of Annex VII to the Bangui Agreement prescribes the grant of a right to remuneration for private copying to performers and phonogram producers. Still, the limitation-based right of performers and producer to remuneration for private copying is provided by the majority of European countries. The remuneration for private copying provides European performers with the second most significant source of revenue among all the remuneration rights.Footnote 200
II. Limitation-Based Remuneration Rights Created Only under the Flexibility of the Three-Step Test
The creation of remuneration rights on the basis of exceptions and limitations has some consequences. Even if public policies, new technologies and business practices may seem to favour the transformation of some exclusive rights (or their parts) into limitation-based remuneration rights, the international legal framework imposes constraints on how governments can create exceptions or limitations to the rights. Countries acting within the limits imposed by the international legal framework may introduce remuneration rights not explicitly mentioned by copyright treaties through the margin of flexibility provided by the three-step test of Article 13 of the TRIPS Agreement,Footnote 201 Article 9(2) of the Berne Convention, Article 10(1) of the WCT, Article 16(2) of the WPPT and Article 13(2) of the Beijing Treaty.Footnote 202 The three-step test also constitutes an integral part of the EU copyright lawFootnote 203 and applies to exceptions and limitations to exclusive rights provided by the EU law.Footnote 204 Understanding the utility of the three-step test in the formation of limitation-based remuneration rights may shed some light on the ability of member states to adapt their domestic laws to accommodate new norms.
1. The Three-Step Test and Its Room to Manoeuvre to Create Remuneration Rights
Much has been written about understanding the exact scope of the so-called ‘three-step test’. The criteria enumerated for the test are rather vague, and no particularly clear guidelines for their application emerge from the legislative history of their adoption and their diverse applications over time by courts at the international, European and domestic levels.Footnote 205 In fact, it seems that it is generally their vagueness and their imprecise contours that guaranteed their successful subsequent introduction in copyright legislation. As has been underlined, the wording of the criteria – even if similar at first glance – diverges slightly from one instrument to another, and the context of the adoption of the particular treaties that codified the criteria are also diverse,Footnote 206 so that a unified reading is not possible.Footnote 207
The question of the scope of the three-step test is of course crucial to determine how much policy space is available to legislators for the implementation of limitation-based remuneration rights, and the stricter the interpretation, the fewer are the possibilities for other approaches than ‘exclusivity’. However, the interpretation of the test is controversially discussed among scholars: to simplify, the flexibility to introduce limitation-based remuneration rights will depend whether a sequential (‘step by step’) approach is followed, stopping the assessment of the legality of the use if one step is not fulfilled, or a holistic approach to the test is followed. It is not possible to discuss here the arguments advanced in this debate. As demonstrated elsewhereFootnote 208 and supported by a large group of academics,Footnote 209 there are strong reasons to consider the three-step test rather as a flexibility tool, allowing to adapt the copyright system to new circumstances, rather than as a mere restriction mechanism for legislators.Footnote 210 In any case, as convincingly shown by Geiger, Gervais and Senftleben, even if the steps are considered sequentially, there is hardly any doubt that the test in any case constitutes a single analytical whole and should serve the ultimate goal of striking an appropriate balance of the different interests involved.Footnote 211 Also, the provision of a remuneration to the benefit of creators or rightholders under exceptions and limitations makes it easier to comply with the third step of the test (precluding ‘unreasonable prejudice’ to rightholders or authors) than in case of unremunerated exceptions or limitations.Footnote 212 In short, limitation-based remunerations are likely to pass the test if the use is justified by important competing interests, as the remuneration aspect for the use is safeguarded,Footnote 213 which is one core mission of the copyright system – provided, however, that the exclusive right is not entirely replaced by a remuneration right, as this would contravene the provisions on exclusive rights established by the treaties.Footnote 214
In the EU, some of the exceptions and limitations provided by Article 5 of the Information Society Directive, Article 10 of the Rental and Lending Directive, Article 6 of the Databases Directive,Footnote 215 Articles 5 and 6 of the Computer Programs DirectiveFootnote 216 and Article 6 of the Orphan Works DirectiveFootnote 217 are not explicitly mentioned by the international treaties and were created under the flexibility of the three-step test of the international treaties. The same is true with regard to the exceptions and limitations newly introduced by the DSM Directive for text and data mining (Articles 3 and 4),Footnote 218 digital cross-border teaching activities (Article 5), preservation of cultural heritage (Article 6) and use of out-of-commerce works (Article 8(2)).Footnote 219
Introduction of three of those EU exceptions and limitations into national law is subject to the requirement of ‘fair compensation’ to authors in respect to the following: reprography (‘reproductions on paper or any similar medium, effected by the use of any kind of photographic technique’), private copying (‘reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial’), and reproductions of broadcasts made by social institutions pursuing non-commercial purposes (e.g., hospitals and prisons).Footnote 220 Recital 17 of the DSM Directive, to the contrary, explicitly prohibits making the text and data mining exception introduced by Article 3 subject to compensation.Footnote 221
2. Two Examples of Limitation-Based Remuneration Rights Created under the Flexibility of the Test: Private Copying and Reprography
a. Private Copying
While international treaties do not explicitly provide for the possibility to make copies of works for private use, the right to remuneration for private copying, replacing the respective exclusive right, is one of the most prominent examples of limitation-based remuneration rights created under the flexibility of the three-step test.Footnote 222 This statutory mechanism creates a revenue stream for rightholders (who would not otherwise receive remuneration for private copying of their works) by imposing the obligation to pay on manufacturers, importers and/or retailers of devices used for private copying as well as on economic operators who make devices available for private copying by individuals. Rightholders cannot control the marketing of devices capable of copying and are merely entitled to remuneration. Natural persons are free to either purchase copying devices or use services provided by third parties.Footnote 223
Article 58 ‘Remuneration for private copying’ (‘Rémunération pour copie privée’) of Annex VII to the Bangui Agreement provides authors with a right to remuneration for private copying,Footnote 224 and twenty-three African countries (Algeria, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Democratic Republic of Congo, Djibouti, Gabon, Ghana, Kenya, Madagascar, Mali, Mauritius, Morocco, Mozambique, Niger, Nigeria, Senegal and Tunisia) provide for remuneration for private copying exception.Footnote 225 Six countries in North and South America (Canada, Dominican Republic, Ecuador, Paraguay, Peru and USA)Footnote 226 and nine countries in Asia (Azerbaijan, Georgia, Israel, Japan, Kazakhstan, Kyrgyz Republic, Turkey, Turkmenistan and Uzbekistan)Footnote 227 introduced remuneration for private copying into their national legislation. In Europe, thirty-seven countries created a remunerated limitation for private copying.Footnote 228 In 2015, global collections of levies for private copying of copyrighted works represented almost €310 million.Footnote 229
The contours of the private copying systems are similar in different countries. Uses need, in general, to be undertaken by a natural personFootnote 230 in a manner that is considered private and for a non-commercial purpose.Footnote 231 The main aspects differentiating the scope of the right in different countries are the type of products on which the private copying levies are imposed and the setting of tariffs. For example, in France, Germany, Italy and the Netherlands, levies cover a wide range of devices, including set-top boxes, smartphones and tablets,Footnote 232 whereas only blank compact discs are levied in CanadaFootnote 233 and blank cassettes in Israel,Footnote 234 thus excluding devices corresponding to modern consumption habits.Footnote 235 In the EU, the CJEU interpreted the Information Society Directive (Article 5(2)(b) on private copying) as not covering provision by commercial undertakings of ‘a cloud service for the remote recording of private copies of works protected by copyright, by means of a computer system, by actively involving itself in the recording, without the rightholder’s consent’.Footnote 236 It is likely that similar cases will appear in the future, testing the compliance of different technologies and business models (e.g., provision to customers of Network Personal Video Recorders, NPVRs) with the condition of ‘active involvement’.
b. Reprography
Reprographic reproduction is another example of a limitation-based remuneration right created under the flexibility of the three-step test.Footnote 237 The remunerated reprography limitation is not tied to any particular users (e.g., natural persons) nor purposes (e.g., private use), but is restricted to ‘reproductions on paper or any similar medium, effected by the use of any kind of photographic technique or by some other process having similar effects’.Footnote 238 So the remuneration for reprography is required from various organisations in different spheres of activities, such as schools – in Austria, Belgium, Czech Republic, Germany, Hungary, Lithuania, Portugal (sold copies) and Slovakia; higher education institutions – in Austria, Belgium, Czech Republic, Germany, Hungary, Lithuania, Portugal (sold copies) and Slovakia; public administration – in Belgium and Czech Republic; and businesses – in Belgium, Czech Republic and Lithuania.Footnote 239 There could be some overlap between private copying and reprography exceptions. In the EU, however, the CJEU came to the conclusion that, with regard to the relationship between reprography and private copying,
it is necessary to draw a distinction according to whether the reproduction on paper or a similar medium effected by the use of any kind of photographic technique or by some other process having similar effects is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial.Footnote 240
Furthermore, the scope of both exceptions cannot cover uses undertaken from unlawful sources in the EU.Footnote 241
The notion of ‘fair compensation’, required for exceptions and limitations permitting reprography, private copying and reproductions of broadcasts made by social institutions pursuing non-commercial purposes, is an autonomous concept of EU law, and it must be interpreted uniformly in all the member states that have introduced those exceptions.Footnote 242 According to the CJEU, ‘fair compensation’ must be regarded as ‘recompense for the harm’ suffered by authors as a consequence of introduction of the exception(s),Footnote 243 and it must be calculated on the basis of the ‘criterion of the harm’ in order for a ‘fair balance’ between the persons concerned to be achieved.Footnote 244 Definition of the ‘harm’ as the core criterion for determining what amount is ‘fair’ is not without consequences. The fair compensation required by the Information Society Directive should not exceed the ‘actual harm suffered’,Footnote 245 and hence ‘“overcompensation” would not be compatible with the requirement, set out in recital 31 in the preamble to Directive 2001/29, that a fair balance be safeguarded between the rightholders and the users of protected subject-matter’.Footnote 246 A lump sum compensation system that does not provide for a reimbursementFootnote 247 mechanism limiting the amounts paid by users to the amount defined by the ‘criterion of the actual harm suffered’ is prohibited by the EU law.Footnote 248 It seems, however, that ‘overcompensation’ is practically inevitable, given the factual impossibility for distributors of devices to know in advance the purchasers and the subsequent indiscriminate application of the compensation. The integration of a remuneration rationale in the structure of limitation-based remuneration rights could enable remuneration to rightholders beyond the mere ‘harm’ suffered.
In a few countries, remuneration for private copying is paid to rightholders from the state budget. Under such systems, not only the consumers of copying devices but all taxpayers effectively contribute to private copying levies. Such remuneration schemes are in place in Finland,Footnote 249 IsraelFootnote 250 and Norway.Footnote 251 The CJEU interpreted Article 5(2)(b) of the Information Society Directive as precluding the establishment of a scheme where fair compensation would be paid from the general state budget and where it would be impossible to ensure that the cost of the compensation is borne by the natural persons benefitting from the exception.Footnote 252 For this reason, Spain, which had had a state budget-funded system in place, had to revert back to the levy-funded model.Footnote 253
The international treaties do not explicitly deal with the issue of whether remuneration due under exceptions and limitations can be waived or transferred. In the EU, prior to the adoption of the DSM Directive, the CJEU interpreted the fair compensation for private copying and reprography under the Information Society Directive as unwaivable entitlements of authors.Footnote 254 Yet, the adoption of Article 16Footnote 255 and Recital 60Footnote 256 of the DSM Directive has changed this presumption, leaving the question of publishers’ entitlement to a share of a fair compensation under exceptions and limitations to member states. National legislation of some member states stipulates that the remuneration for private copying is unwaivable (and non-transferable).Footnote 257 Such a national approach is preferred if the remuneration of creators is the core objective of the copyright system.
D. Conclusions
As this chapter has tried to demonstrate, international copyright law provides far more policy space than often assumed to create statutory remuneration rights. It offers a classification of remuneration rights based on their relationship with the exclusive rights provided by international treaties. The three broad categories encompass remuneration rights defined as such by international or national norms and usually created outside the scope of exclusive rights (‘remuneration rights per se’); remuneration rights coexisting and overlapping with exclusive rights (including the so-called ‘residual remuneration rights’); and remuneration rights created through exceptions and limitations to exclusive rights (‘limitation-based remuneration rights’). The proposed classification demonstrates the policy options available for opting for the ‘middle way’ in copyright – between exclusive rights and unremunerated free uses, where appropriate.
Review of the international normative framework confirms that there is a variety of options for remunerating creators, other than through the grant of exclusive rights. Statutory remuneration rights are one of such instruments suitable to achieve a reasonable balance of interests between authors and exploiters. They also secure broad access to copyrighted works as they remove the blocking effects of exclusivity: they guarantee access and thus enhance the acceptance of copyright norms amongst the general public. Although there is relatively limited mention of statutory remuneration rights in the international treaties (in comparison with exclusive rights), such rights could also be introduced either as remunerated exceptions or limitations under the flexibility provided by the three-step test or in addition to exclusive rights. However, this is where grey areas remain due to the unclear interpretation of this crucial hurdle for legislators, as all limitations and exceptions to exclusive rights have to comply with the three-step test.
Therefore, in order to fully profit from the potential of introducing remuneration rights as sound balancing mechanisms in copyright law, legislators at the international level need to clarify the scope of the test in the future. This can be done via the implementation of hard law (such as agreed statements or an appendix) or soft law (declarations, guidelines or codes of conduct), thus securing the needed room to manoeuvre for legislators.Footnote 258
As we have seen, in the cases when the international treaties explicitly permit the creation of unremunerated exceptions and limitations, there seems to be increased acceptance that limitation-based remuneration rights comply with the test. Another possibility, consisting of creating remuneration rights coexisting and overlapping with the scope of exclusive rights (i.e., granted in addition to the exclusive rights), could be of use in situations where – for example – the leeway or political opportunities for the creation of limitation-based remuneration rights are few and where it is desired to alter the distributive justice achieved through a system of exclusive rights.Footnote 259 As mentioned earlier, politically it is easier to grant rights than to take them away.
Provisions on remuneration rights in international treaties are so far less frequent than on exclusive rights. Those provisions are either formulated as ‘may’ norms, or it is possible to avoid their application by maintaining some reservations to international treaties. However, multiple preferential trade agreements concluded with the EU, and regional copyright rules in the EU and OAPI, make the grant of some remuneration rights mandatory. Furthermore, national legislation of many countries provides for remuneration rights beyond the minimum rights referred by the international treaties.
The language used to formulate legal provisions on remuneration rights is not without consequences for defining the extent of the remuneration. As demonstrated by the example of the case-law of the CJEU, there are real consequences on the calculations of the amounts to be paid resulting from the precise interpretation of the terms used for describing rightholders’ entitlements to payment: ‘equitable remuneration’, ‘remuneration’ and ‘fair compensation’. On a teleological level, if one of the purposes of a remuneration right – including a limitation-based remuneration right – is to remunerate creators, the determination of its amount does not have to be limited to the ‘harm’ or ‘market value’ dilemmaFootnote 260 but should further take into account the remuneration objective.
Within the copyright system, some remuneration rights are the only economic entitlements with regard to which the international, regional and national norms specify that they cannot be waived and/or transferred. This feature of the remuneration rights, differentiating them from the tradable exclusive rights, is often seen as one of their key elements ensuring a direct connection between generated revenues and remuneration to creators. To put it simply, the impossibility to waive and/or transfer remuneration rights ensures a revenue stream to authors and performers in spite of the common industry practice of buy-out contracts. EU copyright law seems to be developing in the direction of rendering the remuneration rights per se unwaivable and non-transferable. For remuneration rights to serve their purpose, it seems that the unwaivable and inalienable character should be their necessary characteristic.Footnote 261 Yet, the adoption of the DSM Directive reversed past decisions of the CJEU and again left the question of sharing of compensation under exceptions and limitations between authors and publishers to the discretion of member states.
In many instances, if properly implemented, remuneration rights provide a very interesting option. They secure ‘a middle way’ in copyright law (a way between exclusivity and free use),Footnote 262 making sure cultural goods are accessible while at the same time helping to reduce the difference between revenues of creators (i.e., authors and performers) on the one side, and of economic operators (e.g., publishers, audio and audiovisual producers), on the other side.Footnote 263 Without any doubt, the creation of remuneration rights is a feasible option under the existing international treaty framework, and it deserves more research and policy attention as one of the components of the up-to-date and balanced copyright system.