Private International Law: Intellectual Property
Intellectual Property
Conflict in Intellectual Property Rights
Conflict of law problems in intellectual property ("IP") abound for oftentimes, intellectual property rights are infringed beyond the territory of registration.
Laws protecting intellectual property rights vary from one country to another despite efforts at standardizing intellectual property laws through treaties and international conventions. Though it is stated in most intellectual property textbooks that intellectual property rights may be enforced across borders, the same is true only when both foreign law and domestic law are the same or similar to one another. The problem arises when foreign laws differ from domestic laws on intellectual property.
For example, registrability in patents law varies from one country to another. If a patent is obtained in one country and this patent is infringed in another country where such invention is non-patentable, a need arises to determine which law is applicable. Too often, there is an inclination to apply domestic law since this will be the basis or the source of right for one who claims that his rights were violated.
The Internet and the World Wide Web have made intellectual property protection a complicated process since violation can occur in cyberspace which can happen in different places at the same time. Since cyberspace transcends national boundaries, the laws of different states may find application to the problem. Thus, several approaches have been devised to solve and harmonize conflicting laws of different jurisdictions.
Conflicts also occur because states have different rules with respect to IP rights.
For example, in the area of patentable subject matter, computer programs may be patentable in the United States, But not in Europe or the Philippines.
In the United States, anything under the sun is patentable while only those programs with a technical character are patentable in Europe; otherwise, the program is only copyrightable.
This distinction is important since an infringement suit may only prosper in the country of registration.
Hence, when the creator of a computer program patents the same in the U.S., he cannot enforce the patent in Europe, unless he also registers in Europe, which is not possible since computer programs are not patentable there.
Most textbooks on intellectual property state that intellectual property rights may be enforced in other countries due to some membership in an IP treaty or convention, but the truth of the matter is that the IP owner's rights are only limited to what is provided under domestic law. Hence, if domestic law does not allow registration, it would be doubly difficult to apply for protection with the courts of these countries.
For example, Article 110 of Switzerland's Federal Code on Private International Law states that, "[i]ntellectual property rights are governed by the law of the state in respect of which intellectual property protection is sought."
Intellectual Property Code and International Conventions
A starting point for solving conflict of law problems in intellectual property law are the national treatment provisions of the:
Paris Convention,
Berne Convention,
Trade-Related Aspects of Intellectual Property Rights (TRIPS), and
the Intellectual Property Code.
National treatment is simply the grant of reciprocal rights to citizens of states who are signatories to international conventions.
It is a concept embodied under Section 3 of Republic Act No. 8293, or the Intellectual Property Code of the Philippines:
Any person who is a national or who is domiciled or has a real and effective industrial establishment in a country which is a party to any convention, treaty or agreement relating to intellectual property rights or the repression of unfair competition, to which the Philippines is also a party, or extends reciprocal rights to nationals of the Philippines by law, shall be entitled to benefits to the extent necessary to give effect to any provision of such convention, treaty or reciprocal law, in addition to the rights to which any owner of an intellectual property right is otherwise entitled by this Act.
The national treatment principle bars the extraterritorial application of foreign copyright laws for it mandates the application of local laws for the equal treatment of the rights of foreigners. Otherwise, there could be no national treatment if foreign law is applied.
This concept, however, does not resolve conflict of law issues in intellectual property. National treatment simply mandates that the same treatment be given to nationals of contracting parties to international conventions. It does not answer the question of what law to apply or what approach to utilize to harmonize conflicting laws.
Bridgeman Art Library, Ltd. v. Corel Corp. 36 F.Supp.2d 191 (1999)
Bridgeman Art Library sued Corel Corporation for copyright infringement, alleging Corel copied and distributed its photographic transparencies of well-known works of art on compact discs.
Bridgeman Art Library, Ltd. owned a large library of photographs of paintings by European masters, which were in the public domain. They claimed copyright on their photographs and sued Corel Corporation for using these images in a CD-ROM without permission.
U.S. District Court: Granted Corel's motion for summary judgment, dismissing Bridgeman’s complaint. The court determined that United Kingdom law governed the copyrightability of the transparencies.
Whether the source of Bridgeman’s claim to copyrightability is the U.S. Copyright Act or the Berne Convention.
Copyright Act as the Source
The court held that the U.S. Copyright Act, not the Berne Convention, is the source of Bridgeman’s claims.
Berne Convention and National Treatment
The Berne Convention ensures "national treatment," meaning foreign authors are afforded the same rights as domestic authors under the local laws of the country where protection is sought.
However, the Convention does not automatically determine the validity of a copyright under another nation's laws.
Non-Self-Executing Nature of the Berne Convention
The Berne Convention is not self-executing in U.S. law.
The Copyright Act, as amended by the Berne Convention Implementation Act (BCIA), governs copyright enforcement.
Section 3(a) of the BCIA clarifies that the Berne Convention provisions are not independently enforceable and must be applied through the Copyright Act.
Protection Limited to Domestic Law
The Copyright Act exclusively determines the existence, scope, and remedies for copyright protection in the U.S., even for works protected under the Berne Convention.
The court reaffirmed that copyright claims in the U.S. are governed solely by the Copyright Act, with the Berne Convention providing general principles of national treatment but no enforceable rights on its own.
Approaches to IP Conflicts of Law
1. Territorial Approach
The basic approach is the territorial rule.7
The territorial rule basically states that laws have no extraterritorial application.
Since numerous intellectual property conventions refer to national laws as their point of focus, it has become the better practice to apply intellectual property laws within the territorial boundaries of a state.
Subafilms, Ltd. v. MGM-Pathe Communications Co. 24 F.3d 1088 (1994)
Subafilms entered into a joint venture with Hearst Corporation to produce Yellow Submarine.
Hearst negotiated a distribution and financing agreement with United Artists Corporation (UA).
Years later, UA licensed several films for videocassette distribution but initially refrained from licensing Yellow Submarine due to uncertainty over its authority.
MGM/UA, which acquired UA, later authorized Warner Bros. to distribute the film on videocassette internationally.
Subafilms and Hearst sued MGM/UA and Warner for copyright infringement related to international distribution.
District Court: Awarded damages to the plaintiffs.
Whether the defendants are liable for copyright infringement for acts occurring outside the United State.
No, the defendants are not liable because the U.S. Copyright Act has no extraterritorial application.
Presumption Against Extraterritoriality
U.S. laws, including the Copyright Act, generally do not apply outside the territorial jurisdiction of the United States unless Congress explicitly states otherwise.
Courts should not extend the extraterritorial reach of the Copyright Act without clear Congressional intent.
Such judicial action could disrupt international intellectual property regimes and harm U.S. trade relations.
Territorial Nature of Copyright Law
The principle that U.S. copyright law does not cover extraterritorial infringement has been consistently upheld and predates the 1909 Act.
Neither the 1976 Copyright Act nor subsequent enactments altered this doctrine.
Limited Extraterritorial Provisions
Congress expanded the Copyright Act in 1976 to include unauthorized importation of copyrighted works but did not address acts of infringement occurring entirely abroad.
Impact of International Treaties
The United States adheres to treaties like the Universal Copyright Convention and the Berne Convention, which emphasize national treatment.
Extending U.S. copyright laws extraterritorially could conflict with these treaties, displace foreign laws, and undermine international intellectual property harmony.
Allarcom Pay Television v. General Instrument Corp. 69 F.3d 381 (1995
Allarcom Pay Television had the exclusive right from certain producers to exhibit their motion pictures in Canada.
Showtime and General Instrument, through the use of a decoder device, were able to transmit their signal to Canada that allowed some programs in the United States to be broadcasted in Canada, which was Allarcom's exclusive territory.
Allarcom sued in the district court for copyright infringement under the Federal Copyright Act ("FCA").
Whether the FCA has extraterritorial application. No.
In order for U.S. copyright law to apply, at least one alleged infringement must be completed entirely within the United States, and mere authorization of extraterritorial infringement was not a completed act of infringement in the United States.
In this case, defendants either initiated a potential infringement in the United States by broadcasting the Showtime signal, which contained copyrighted material, or defendants authorized people in Canada to engage in infringement.
In either case, the potential infringement was only completed in Canada once the signal was received and viewed.
Accordingly, U.S. copyright law did not apply, and therefore did not preempt Allarcom's state law claims.
2. Most significant relationship
This approach applies the law of the state that has the most significant relationship to the parties to the case.
The law of the state which has the most connection shall be applied in the resolution of the conflict.
The points of contact, as enumerated in the Restatement (Second) of Conflict of Laws, are:
the place where the injury occurred,
the place where the conduct causing the injury occurred,
the domicile, residence, nationality, place of incorporation and place of business of the parties, and
the place where the relationship, if any, between the parties is centered
The most significant relationship approach answers to the need of modern litigation where there is difficulty of locating the place of injury.
This approach is appropriate for those cases involving transnational acts or those cases where an act may be happening or being committed in several states at the same time.
This is especially true for internet or cyber offenses where an offense can be committed at the same time in several states.
Itar-Tass Russian News Agency v. Russian Kurier, Inc. 153 F.3d 82 (1998)
Kurier, a Russian-language weekly newspaper published in New York City, and its president/editor-in-chief Pogrebnoy, were sued by Itar-Tass Russian News Agency and the Union of Journalists of Russia, alleging unauthorized copying and reprinting of the plaintiffs' articles in New York City.
District Court: Upheld the plaintiffs’ right to sue, recognizing the “exclusive” rights of both the newspaper publishers and the reporters to the articles.
Whether Russian law or U.S. law govern the issues of ownership rights and copyright infringement.
Ownership issues are governed by Russian law, while infringement issues are governed by U.S. law.
Ownership (Russian Law):
Copyright is treated as property, and ownership is determined by the law of the state with the “most significant relationship” to the property and parties.
Since the works were created by Russian nationals and first published in Russia, Russian law applies to ownership determination.
Under U.S. law (17 U.S.C. § 501(b)), standing to sue requires being the legal or beneficial owner of an “exclusive right,” which the plaintiffs met under Russian law.
Infringement (U.S. Law):
The conflicts principle for infringement follows lex loci delicti (the law of the place of the tort).
As the alleged infringement occurred in the United States (reprinting and distribution in New York City), U.S. copyright law applies.
The defendant is also a U.S. corporation, reinforcing the application of U.S. law for infringement issues.
3. Lex loci delicti
This is the traditional rule that employs the law of the place of injury.
This is fairly straightforward since what only needs to be done is the application of the law of the place where the injury or damage was sustained.
This is based on the vested rights theory since the rights of the parties vested in the place of injury and nowhere else. When someone is wronged in a particular place, the rights of the parties arise from that jurisdiction whose law must then be applied to determine the parties' rights and liabilities.
Furthermore, the state where the damage or injury is sustained has as much interest in redressing the wrongs committed within its jurisdiction.
Lex loci delicti requires the application of the law of the state where the tort is committed.
If an infringing act is committed within the borders of State X, it is the law of State X that will govern the tort claim.
This approach offers simplicity, ease of application, and stability and predictability in judicial decisions.
In the Itar-Tass case, the court applied this approach in resolving the infringement issue.
The problem with the traditional approach of lex loci delicti is that it is harsh and inflexible. It does not answer the complexities of modern litigation.
Where infringement happens in cyberspace, or where the injury is felt in several jurisdictions, it will be extremely difficult to localize the place of commission of the tort.
The rule may have to be discarded in favor of a more inclusive approach like state of the most significant relationship.
4. Public Policy Exception
When the application of a foreign law conflicts with an established policy of the forum, the foreign law may not be applied as being anathema to public policy.
Sarl Louis Feraud Intern. v. Viewfinder, Inc. 489 F.3d 474 (2007)
A French court found Viewfinder liable for copyright infringement for publishing unauthorized photos of Feraud's and Balmain's fashion shows.
Feraud and Balmain are French corporations that design high-fashion clothing and other items for women.
Plaintiffs sought to enforce the judgment in New York.
District Court: Dismissed the case, arguing it conflicted with New York’s public policy.
Viewfinder, as a news publication, had a First Amendment right to publish the photographs.
Whether enforcing the French court’s judgment would violate New York’s public policy, particularly in relation to First Amendment rights.
Enforcement would violate New York public policy only if it conflicted with the First Amendment.
Public Policy Inquiry:
Generally, foreign judgments are enforceable unless they are immoral or shock public conscience.
Differences in procedure alone do not render a foreign judgment unenforceable.
First Amendment Protection:
Foreign judgments infringing on First Amendment rights are considered "repugnant" to U.S. public policy.
News Publication Defense:
The district court incorrectly assumed that Viewfinder had an absolute First Amendment defense due to its status as a news publication.
Intellectual property laws must be obeyed alongside the First Amendment.
Fair Use Doctrine:
The fair use doctrine balances copyright laws and First Amendment rights.
The court criticized the district court for not fully analyzing fair use before dismissing the case.
The court vacated the district court's judgment and remanded the case for further proceedings, emphasizing the need for fair use analysis.
Philips Export B.V. v. CA
Philips Export B.V. (PEBV), a foreign corporation from the Netherlands, is the registered owner of the trademark PHILIPS and PHILIPS SHIELD EMBLEM. Philips Electrical Lamps and Philips Industrial Development, Inc., authorized users of the trademark, incorporated and registered with the SEC.
Standard Philips Corporation was issued a Certificate of Registration by the SEC.
Philips Export B.V. filed with the SEC for the cancellation of the word “Philips” the corporate name of Standard Philips Corporation in view of its prior registration with the Bureau of Patents and the SEC.
However, Standard Philips refused to amend its Articles of Incorporation so PEBV filed with the SEC a petition for the issuance of a Writ of Preliminary Injunction.
SEC: Denied. The corporate names are not identical, having at least two words different.
Property Right.
The right to use a corporate and trade name is considered a property right, a right in rem, meaning the corporation can protect its name against others in the same field.
A corporation’s name is integral to its identity and existence, essential for its legal actions, and can be protected against unauthorized use by another entity.
The right to a corporate name is as significant as the right to any other property or privilege granted to a corporation.
For the prohibition to apply, two requisites must be present:
the complainant corporation must have acquired a prior right over the use of such corporate name and
the proposed name is either identical or deceptively or confusingly similar to that of any existing corporation or to any other name already protected by law or patently deceptive, confusing or contrary to existing law.
PEBV adopted the name “Philips” part of its name 26 years before Standard Philips.
The test for the existence of confusing similarity is whether the similarity is such as to mislead a person using ordinary care and discrimination.
Standard Philips only contains one word, “Standard”, different from that of PEBV.
The two companies’ products are also the same, or cover the same line of products.
Although PEBV primarily deals with electrical products, it has also shipped to its subsidiaries machines and parts which fall under the classification of “chains, rollers, belts, bearings and cutting saw”, the goods which Standard Philips also produce.
Also, among Standard Philips’ primary purposes are to buy, sell trade x x x electrical wiring devices, electrical component, electrical supplies. Given these, there is nothing to prevent Standard Philips from dealing in the same line of business of electrical devices.
The use of “Philips” by Standard Philips tends to show its intention to ride on the popularity and established goodwill of PEBV.
Emerald Garment Manufacturing v. CA
H.D. Lee Co., Inc., a Delaware corporation, filed a Petition for Cancellation with the Bureau of Patents, Trademarks & Technology Transfer (BPTTT) against Registration No. SR 5054 for the trademark "STYLISTIC MR. LEE."
The trademark was registered on 27 October 1980 under Emerald Garment Manufacturing Corporation, a Philippine company.
H.D. Lee Co., Inc., claimed "STYLISTIC MR. LEE" closely resembled H.D. Lee Co.’s trademark "LEE," causing likely confusion, mistake, or deception among consumers.
Director of Patents: Ruled in favor of H.D. Lee Co., granting the petition for cancellation and opposition to registration.
Found H.D. Lee Co. to be the prior registrant and user of the "LEE" trademark in the Philippines.
CA: Affirmed the Director of Patents' decision.
Issue on Prior Registration vs. Actual Use
The Court of Appeals erred in relying solely on H.D. Lee Co.'s prior registration of the "LEE" trademark.
Actual use in commerce in the Philippines, as required under Sec. 2 and Sec. 2-A of R.A. No. 166 (Philippine Trademark Law), was not proven by H.D. Lee Co. before its registration.
Trademark Distinction
Petitioner (Emerald Garment Manufacturing Corp.) argued that its trademark "STYLISTIC MR. LEE" should be considered as a whole, rather than focusing on the word "LEE."
Differences between "STYLISTIC MR. LEE" and "LEE" were substantial, reducing the likelihood of confusion.
Requirement of Actual Use
The law mandates at least two months of actual use in commerce in the Philippines before filing for trademark registration.
Evidence presented by H.D. Lee Co. (e.g., sales through U.S. military Post Exchanges in the 1960s) was deemed insufficient to prove local commercial use.
International Law Considerations
Although the Paris Convention allows foreign corporations to assert trademark rights, compliance with Philippine municipal law, specifically the actual use requirement, remains paramount.
Registration under the Paris Convention does not override the necessity for local use to establish exclusive ownership rights.
Petitioner’s Evidence
Emerald Garment sufficiently demonstrated use of "STYLISTIC MR. LEE" in commerce since 1975 through sales invoices and records of distribution in the Philippines.
This established prior use over H.D. Lee Co.'s "LEE" trademark.