Border measures The perspective from the TRIPS Agreement

AIPPI Forum & EXCOBuenos Aires, Argentina – 11-14 October 2009

Wolf MEIER-EWERTWorld Trade Organization

Wolf.Meier-Ewert@wto.org

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Location: Geneva, SwitzerlandEstablished: 1 January 1995Created by: Uruguay Round negotiations

(1986-94)Membership: 153 countriesBudget: ca. 180m Swiss francs, 2008-9Secretariat staff: ~650Head: Pascal Lamy (director-general)

Functions:

• Administering WTO trade agreements• Forum for trade negotiations• Handling trade disputes• Monitoring national trade policies• Technical assistance and training for developing

countries• Cooperation with other international organizations

FACT FILE - WTO

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Structure

BackgroundTRIPS provisions on border measures

Objective of the Enforcement PartSpecial Requirements Related to Border Measures

Enforcement-related work in the WTOReview of legislationDispute Settlement CasesRecent Discussions in the TRIPS Council

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I.Background

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MINISTERIAL DECISION Geneva 1982

The CONTRACTING PARTIES instruct the Council to examine the question of counterfeit goods with a view to determining the appropriateness of joint action in the GATT framework on the trade aspects of commercial counterfeitingand, if such joint action is found to be appropriate, the modalities for such action, having full regard to the competence of other international organizations. For the purposes of such examination, the CONTRACTING PARTIES request the Director-General to hold consultations with the Director-General of WIPO in order to clarify the legal and institutional aspects involved.

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Ministerial Declaration onthe Uruguay Round 1986

Trade-related aspects of intellectual property rights, including trade in counterfeit goods

In order to reduce the distortions and impediments to international trade, and taking into account the need to promote effective and adequate protection of intellectual property rights, and to ensure that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade, the negotiations shall aim to clarify GATT provisions and elaborate as appropriate new rules and disciplines.

Negotiations shall aim to develop a multilateral framework of principles, rules and disciplines dealing with international trade in counterfeit goods, taking into account work already undertaken in the GATT.

These negotiations shall be without prejudice to other complementary initiatives that may be taken in the World Intellectual Property Organization and elsewhere to deal with these matters.

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Extract From TRIPS Decision in the Uruguay Round mid-term Review,

April 19883. Ministers agree that the outcome of the negotiations is not prejudged and that these negotiations are

without prejudice to the views of participants concerning the institutional aspects of the international implementation of the results of the negotiations in this area, which is to be decided pursuant to the final paragraph of the Punta del Este Declaration.

4. Ministers agree that negotiations on this subject shall continue in the Uruguay Round and shall encompass the following issues:(a) the applicability of the basic principles of the GATT and of relevant international intellectual

property agreements or conventions;(b) the provision of adequate standards and principles concerning the availability, scope and use of

trade-related intellectual property rights;(c) the provision of effective and appropriate means for the enforcement of trade-related

intellectual property rights, taking into account differences in national legal systems;(d) the provision of effective and expeditious procedures for the multilateral prevention and

settlement of disputes between governments, including the applicability of GATT procedures;(e) transitional arrangements aiming at the fullest participation in the results of the negotiations.

5. Ministers agree that in the negotiations consideration will be given to concerns raised by participants related to the underlying public policy objectives of their national systems for the protection of intellectual property, including developmental and technological objectives.

6. In respect of 4(d) above, Ministers emphasise the importance of reducing tensions in this area by reaching strengthened commitments to resolve disputes on trade-related intellectual property issues through multilateral procedures.

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Issue of trade in counterfeiting and piracy goods was key for inclusion of IPR-related mandate in Punta del Este Ministerial Declaration in 1986 and the subsequent Uruguay Round negotiationsTRIPS = first international treaty with detailed section on enforcementWork in other fora:

International / regional organizations:WIPO Treaties / Advisory CommitteeWCO Model Law on border measuresWHO Rome Declaration & Impact TaskforceOECD (Measurement Study)InterpolG8ARIPO / OAPI

Bilateral / regional free trade agreements

Background

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II.TRIPS Provisions

on Border Measures

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Make available effective and appropriate tools to guarantee application of substantive rules,⇒ IP rights are private rights; obligation to

enforce lies - in principle - with the right holder

without creating barriers to legitimate trade,and providing safeguards against abuse⇒ preserve balance between different interests

Objectives of TRIPS Enforcement Section, (Preamble, Art. 41.1)

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Minimum level of protection, but not harmonisation at multilateral level→ Higher levels of protection possible as long as

TRIPS obligations are respectedApplication of national / MFN treatmentApplication of WTO dispute settlement rulesLeast-developed country transition periods:

until 1 July 2013 for all TRIPS provisions, except non-discriminatory treatmentuntil 1 January 2016 in relation to protection and enforcement of patents/undisclosed information with respect to pharmaceutical products

Basic Principles

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Border Measures (Art. 51 - 60) (1)

Make available procedures by which right holders can apply for suspension of release by customs authoritiesMandatory, to make available for:

import of counterfeit trademark and pirated copyright goods⇒ See definition in footnote 14 to Article 51

Optional for:Infringement of other IPRs (Art. 51)exports and goods in transit (Art. 51)parallel imports (Art. 51, fn.13)ex officio action (Art. 58)de minimis imports (Art. 60)

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Border Measures (Art. 51 - 60) (2)

Conditions / safeguardsadequate evidence of prima facie infringement required detailed description of the goods requiredauthority to require security or equivalent assuranceauthority to order indemnification

Proceduresnotice of suspension10 (+ 10) working days to initiate proceedings leading to decision on meritsright of inspection and information

Remedies authority to order destruction or disposal of infringing goods in accordance with the principles of Art. 46

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International Cooperation (Art.69)

Objective: eliminate international trade in goods infringing IPRsMeasures to be taken by Members:

establishment and notification of contact pointsexchange of information on trade in infringing goodspromotion of exchange of information and cooperation between customs authorities

Updated list of contact points in IP/N/3/Rev.9 plus addenda

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III.Enforcement-Related

Work in the WTO

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Dispute Settlement Cases (1)

Few cases of relevance for IPR enforcement in the pastCases subject to amicable settlement:

US vs. Denmark (WT/DS 83)US vs. Sweden (WT/DS 86) US vs. Greece/EC (WT/DS 124 and 125)US vs. Argentina (WT/DS 196)

Panel reports in which enforcement played a marginal role:

EC vs. US (WT/DS 176)US/Australia vs. EC (WT/DS174 & 290)

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Dispute Settlement Cases (2)China - Measures affecting the Protection and Enforcement of Intellectual Property Rights (WT/DS362):Claims by the United States regarding:

Thresholds for criminal procedures and sanctions

Disposal of IPR-infringing goods confiscated by Customs authorities

Denial of copyright and related rights protection and enforcement to works that have not been authorized for publication / distribution within China

Panel Report adopted on 20 March 2009

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"Without prejudice to other rights of action open to the right holder and subject to the right of the defendant to seek review by a judicial authority, competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46. . . ."

— TRIPS Article 59

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"Without prejudice to other rights of action open to the right holder and subject to the right of the defendant to seek review by a judicial authority, competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46. . . ."

— TRIPS Article 59

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"Without prejudice to other rights of action open to the right holder and subject to the right of the defendant to seek review by a judicial authority, competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46. . . ."

— TRIPS Article 59

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"In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or, unless this would be contrary to existing constitutional requirements, destroyed. . . ."

— TRIPS Article 46

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"In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or, unless this would be contrary to existing constitutional requirements, destroyed. . . ."

— TRIPS Article 46

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"In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or, unless this would be contrary to existing constitutional requirements, destroyed. . . ."

— TRIPS Article 46

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"In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or, unless this would be contrary to existing constitutional requirements, destroyed. . . ."

— TRIPS Article 46

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"In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or, unless this would be contrary to existing constitutional requirements, destroyed. . . ."

— TRIPS Article 46

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". . . In considering such requests, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account. In regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce."

— TRIPS Article 46

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". . . In considering such requests, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account. In regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce."

— TRIPS Article 46

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DS362: Customs Measures –US claims

Measures at issue:Regulations on Customs Protection of IPRsMeasures for the Implementation of the Customs IPR RegulationsPublic Notice No. 16/2007 notified by the General Administration of Customs

Disposal options under the Customs Measures areDonationSale to the right holderAuctioning off according to law, after eradicating the infringing featuresDestruction (if infringing features cannot be eradicated)

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Claims:None of the disposal options (other than destruction) provided for by the Customs Measures complies with the principles of Art. 46 Measures create a mandatory sequence regarding customs disposal options for infringing goods, so that Chinese customs authorities cannot exercise their discretion to order destruction of the goods as required by Art. 59, but must give priority to other disposal options Measures are inconsistent with Art. 46(4) as auctioning after removal of the trademark is permitted in more than just “exceptional cases”

DS362: Customs Measures –US claims

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DS362: Customs Measures –China’s argumentsNo violation of Art. 59/46

Customs authorities have the authority to order both disposal and destruction, as required by Art. 59. To illustrate this, China showed it destroyed 58% by value of all goods seized in the years 2005-2007.Granting authority to order destruction does not mean that Members must make a grant of unfettered and unguided discretion to their authorities.Donation to social welfare bodies and sale to the right holder constitute disposal outside the channels of commerce in such a way as to avoid harm to the right holderArt. 46(4) does not constitute an independent obligation, and even if it did China would comply with it because it removes “all” infringing features before auctioning goods

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DS362: Customs Measures –Panel findings

Acknowledges that China applies TRIPS plus, as border measures are applied

not only to counterfeiting and piracy, but also in respect of patent violations etc.not only to imports (0.15% of seized goods), but also to exports(99.85% of seized goods)

Interpreting Art. 51, the panel finds that Art. 59 does not apply to goods suspended on exportInterpreting Art. 59, the panel finds that

“shall have the authority” is not exclusive or exhaustive;requires the possibility to order destruction or disposal at anygiven moment, until the goods are finally dealt with;no obligation to take action in the absence of an application orrequest.

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DS362: Customs Measures –Panel findings

Disposal options under the Customs Measures have not been shown to be inconsistent with the principles in Art. 46, sentence 1 and 3.

Issue of interplay between the Law on Donations and the Contracts Law were outside the Panel’s terms of reference

Disposal options are inconsistent with the principle in sentence 4 of Art. 46, as auction permits the release into the channels of commerce after the simple removal of the trademark in more than just exceptional cases.

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Work in the TRIPS Council (1)

Review of TRIPS implementing legislationquestions and answers (IP/Q/country code)

Checklist of Issues on Enforcementquestionnaire relating to enforcement of IPRs (IP/C/5)responses by Members (IP/N/6/country code)

Use of Article 63.3 to gather informationrecent example of questions submitted by CH, Japan and US (IP/C/W/461,462,463 and Add.1) and responses by China (IP/C/W/465,466,467)

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Work in the TRIPS Council (2)

Discussions on EnforcementEC Initiatives: June 2005 (IP/C/W/448); March 2006 (IP/C/W/468); June 2006 (IP/C/W/471)

Joint Communication from EC/Japan/ Switzerland/US in October 2006 (IP/C/W/485)

US Communication in Feb.2007 (IP/C/W/488)

Swiss Communication in June 2007 (IP/C/W/492)

Transitional Review under Section 18 of China’s Accession Protocol (WT/L/432)

Annex 1A requires China to provide information in advance of enhanced IPR enforcement efforts through the application of more effective administrative sanctions

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Work in the TRIPS Council (3)

Discussions on Goods in Transit India and Brazil raised EC practice of stopping pharmaceutical products in transit in TRIPS Council Meetings in 2009

Compatibility with the spirit of the Doha Declaration on TRIPS and Public Health

Compatibility with TRIPS obligationsApplicability of conditions / safeguards in the provisions on border measures ?

Barrier to legitimate trade ?

Compatibility with GATT obligationsArticle V - freedom of transit ?

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www.wto.orgFor more information:

wolf.meier-ewert@wto.orgTel.: +41 22 739 63 44