The International Legal Framework

1. The International Legal Framework Injunctions and Flexibility in Patent Law – Civil Law and Common Law Perspectives, LMU 4-5 April 2019 Dr Henning Grosse Ruse - Khan Faculty of Law

2. Outline • The WTO/TRIPS Agreement • Part III, Enforcement • Injunctions • General IP Enforcement Rules • Part II, Section 5: Patents • Free Trade Agreements (FTAs)

3. TRIPS IP Enforcement Rules – an Overview IP Enforcement Provisions in TRIPS 1. General Obligations: Art.41 2. Civil and Administrative Procedures and Remedies: Art.42, 44 3. Provisional Measures: Art.50 4. Special Requirements Related to Border Measures 5. Criminal Procedures

4. Specific Rules on Injunctions

5. Art.44 TRIPS on Injunctions 1.  The judicial authorities shall have the authority to order a party to desist from an infringement, inter alia to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an intellectual property right, immediately after customs clearance of such goods. Members are not obliged to accord such authority in respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right. 2.  Notwithstanding the other provisions of this Part and provided that the provisions of Part II specifically addressing use by governments, or by third parties authorized by a government, without the authorization of the right holder are complied with, Members may limit the remedies available against such use to payment of remuneration in accordance with subparagraph (h) of Article 31. In other cases, the remedies under this Part shall apply or, where these remedies are inconsistent with a Member’s law, declaratory judgments and adequate compensation shall be available.

6. Art.44: ‘shall have authority’  What does an obligation that a body ‘shall have authority’ entail? In China – IPRs, the US complained about China’s border enforcement rules which allowed Customs to (1) offer infringing goods to charities, (2) auction them (after removing infringing features), (3) sell them to the right holder, or (4) destroy them– thereby breaching Art 59 TRIPS, requiring that customs ‘shall have authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46’ (setting out further details, incl. a proportionality test)

7. ‘Shall have authority’ in TRIPS “The Panel notes that the word "authority" can be defined as "power or right to enforce obedience; moral or legal supremacy; right to command or give a final decision." The obligation is to "have" authority not an obligation to "exercise" authority. The phrase "shall have the authority” is used throughout the enforcement obligations in Sections 2, 3 and 4 of Part III of the TRIPS Agreement, specifically, in Articles 43.1, 44.1, 45.1, 45.2, 46, 48.1, 50.1, 50.2, 50.3, 50.7, 53.1, 56 and 57. It can be contrasted with terminology used in the minimum standards of protection in Part II of the TRIPS Agreement, such as "Members shall provide" protection, or that certain material "shall be" protected. The obligation in Article 46 that certain authorities "shall have the authority" to make certain orders reflects inter alia that orders with respect to specific infringements are left to enforcement authorities' discretion.” (China – IPRs, Panel Report, 7.236)

8. ‘Shall have authority’ in TRIPS • Used throughout TRIPS enforcement rules, the term ‘shall have authority’ does not require that an office / court must exercise their authority in a particular way • Members may also provide further options, as long as the office / court can exercise its authority in the required way • In general, ‘shall have authority’ does not require action by authorities without a request of a right holder Also FTAsgenerally use the terms: ‘shall have authority’…

9. Art.44: ‘Judicial Compulsory Licenses’ • Based on US practice (see 28 U.S. Code §1498) which limits the patent owners remedies for government use to an ‘action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture’ • Art.44:2 TRIPS allows to limit remedies to payment of adequate remuneration as required under Art.31 h) TRIPS  Effectively, Art.44:2 TRIPS allows the grant of ‘judicial compulsory licenses’ in government use cases!

10. General TRIPS Provisions on Enforcement

11. General Enforcement Provisions: Art.41:1 Members shall ensure that enforcement procedures as specified in this Part are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be appliedin such a manner as to avoid the creation of barriers to legitimate tradeand to provide for safeguards against their abuse. (Art.41:1 TRIPS)  See also TRIPS Preambleand theGATT Ministerial Declaration on the Uruguay Round, Punta Del Este (Uruguay), 20 September 1986

12. General Enforcement Provisions: Art.41:1 Historical Context: In the 1980ies, countries importing goods into the US viewed Sec.337 (allowing to block infringing imports)as disguised barrier to international trade. In response, the EC (US – Sec.337) successfully challenged the consistency of Sec.337 under Art.III:4 GATT (national treatment) ‘Chairman's Draft’ of July 23, 1990, PART IX: TRADE IN COUNTERFEIT AND PIRATED GOODS, lists as objectives for a future IP agreement in the GATT context ‘[t]o ensure that such procedures and remedies do not themselves become barriers to legitimate trade and are not applied in a discriminatory manner to imported goods.’  ‘Barriers to legitimate trade’ originates from concerns about over-enforcement of IP rights, in particular in international trade context!

13. EU – Seizures of Generic Drugs in Transit A Are seizures and temporary detentions of transiting goods as barriers to legitimate trade?  How to interpret the term ‘legitimate trade’? Who decides? 13

14. General Enforcement Provisions: Art.41:2-4 2.  Procedures concerning the enforcement of intellectual property rights shall be fair and equitable. They shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. 3.  Decisions on the merits of a case shall preferably be in writing and reasoned. They shall be made available at least to the parties to the proceeding without undue delay. Decisions on the merits of a case shall be based only on evidence in respect of which parties were offered the opportunity to be heard. 4.  Parties to a proceeding shall have an opportunity for review by a judicial authority of final administrative decisions and, subject to jurisdictional provisions in a Member’s law concerning the importance of a case, of at least the legal aspects of initial judicial decisions on the merits of a case.

15. Civil Remedies – General: Art.42 Section 2: civil and administrative procedures and remedies Article 42 - Fair and Equitable Procedures Members shall make available to right holders (11) civil judicial procedures concerning the enforcement of any intellectual property right covered by this Agreement. Defendants shall have the right to written notice which is timely and contains sufficient detail, including the basis of the claims. Parties shall be allowed to be represented by independent legal counsel, and procedures shall not impose overly burdensome requirements concerning mandatory personal appearances. All parties to such procedures shall be duly entitled to substantiate their claims and to present all relevant evidence. The procedure shall provide a means to identify and protect confidential information, unless this would be contrary to existing constitutional requirements.

16. Substantive Patent Provisions of TRIPS

17. TRIPS Patent Provisions: Art.27:1 A horizontal non-discrimination rule for Patent protection: ‘Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyablewithout discriminationas to the place of invention, the field of technology and whether products are imported or locally produced.’  Does Art.27:1 apply to IP enforcement remedies? • ‘Enjoyment’ of patent rights could be argued to include enforcement, and was interpreted widely in Canada –Patents; see also fn.3 to Art.3…  If Art.27:1 applies, industry-specific differences in granting injunctions could be attacked, as well as making injunctive relief subject to local working…

18. Relevant Enforcement Provisions in FTAs

19. Injunctive Relief in FTA Enforcement Rules CETA (Art 20.39) and EU-Japan (Art 14.46): • Extend injunctive orders to third parties in certain cases (which include intermediaries), along Art.11 of EU IP Enforcement Directive KORUS (Art 18.10(14)): • Does not extend injunctive orders to third parties • No express reference to flexibility in TRIPS to allow damages in lieu of injunctions CPTPP (Art 18.74(1)) and USMCA (Art 20.J.4(2)): • Do not extend injunctive orders to third parties • Preserve flexibility of TRIPS to allow damages in lieu of injunctions

20. Injunctions: Art.20:39 CETA, Art.242 P/Col 1. Each Party shall provide that, in civil judicial proceedings concerning the enforcement of intellectual property rights, its judicial authorities have the authority to issue an order against a party to desist from an infringement, and among other things, an order to that party, or, where appropriate, to a third party over whom the relevant judicial authority exercises jurisdiction, to prevent infringing goods from entering into the channels of commerce. (Art.20:39 CETA) Without prejudice to the provisions of Article 44.2 of the TRIPS Agreement, each Party shall provide that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue an injunction against the infringer aimed at prohibiting the continuation of the infringement. Where provided for in the domestic law of a Party, non-compliance with an injunction shall, where appropriate, be subject to a recurring penalty payment, with a view to ensuring compliance78 (Art.242 EU – Peru / Colombia FTA) Fn.78: The Parties shall ensure that the measures referred in this paragraph may also apply against those whose services have been used to infringe intellectual property rights to the extent they have been involved in the process. (see Art.11 EU Enf Dir)

21. Conclusions • TRIPS generally affords significant flexibility for WTO Members to afford discretion to their domestic courts in decisions about granting injunctive relief • For government use, WTO Members can generally opt for a system of judicial compulsory licensing • TRIPS ceilings against over-enforcement remain ambiguous:  when are injunctions applied in a way that creates barriers to legitimate trade? • FTAs don’t change much – but some EU FTAs require possibility to act against third parties, incl. intermediaries