Intellectual Property and Private International Law: Comparative Perspectives 9781472566102, 9781849462310

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SERIES EDITORS’ PREFACE The relationship between intellectual property and private international law has attracted attention amongst academics, legislators and practitioners around the world in recent years. The problems which can arise in this field can be very challenging, given the complex interaction between principles of property law, contract and tort law and the traditionally territorial nature of disputes relating to intellectual property rights. They can be especially acute where it is necessary to reconcile national traditions and the approaches to be taken in interpreting and applying international conventions and regulations; and, of course, the advent of new forms of technology tends to de-localise the focus on the location of property rights and the occurrence of events. Against this background, this book offers a valuable and timely resource. It contains the General and National Reports arising from the 18th International Congress of Comparative Law. As such, rather than focusing on one, or a small number of legal systems, it offers a comparative law perspective on a range of core issues spanning more than 20 countries across North America, Europe (include both EU and non-EU states) and Asia. These states have divergent legal traditions and, often, widely divergent legal rules for regulating the private international law aspects of intellectual property. The reports, authored by experts in the various legal systems, explain the legal regimes in force in those jurisdictions and relevant case law based on a questionnaire which sought information on the national legal rules and international instruments to which the State in question was party. Respondents were also asked to consider a number of hypothetical case studies. The authors were asked to explain the position in respect of copyrights, patents, trademarks and other intellectual property rights. In this way, and under the skilled editorship of Professor Toshiyuki Kono, a renowned expert in this field, the reader is able to see clearly the differences between the various regimes, both in theory and in practice. The topics covered in this book range from issues of personal and subject-matter jurisdiction to provisional and protective measures; from contractual rights (including those created in the course of employment) to the law applicable to the creation and transfer of intellectual property rights and their infringement; and from the problems raised by parallel and concurrent proceedings to the recognition and enforcement of foreign judgments. Along the way, provisions considered include the CLIP proposals, the ALI Principles, the reform of the Brussels I Regulation and the potential impact of the Hague Choice of Court Convention, as well as recent national reforms in various jurisdictions, including Japan. The book begins with a fascinating, detailed and rigorous general report which skilfully reviews the law in these various jurisdictions, analyses the results of the questionnaires and provides an invaluable resource for understanding the application of the law in this field at both national and international levels and for reflecting upon its possible reform. We believe that Intellectual Property and Private International Law makes a very important contribution to comparative law learning in the field and are delighted to welcome it to the Studies in Private International Law series. Paul Beaumont (University of Aberdeen) Jonathan Harris (King’s College, London)

General Report TOSHIYUKI KONO* and PAULIUS JURCˇ YS**

Contents Introduction............................................................................................................................................... 6 Part I  General Overview..........................................................................................................................8 1

Intellectual Property and Private International Law: Legal and Institutional Background........... 8 1.1 IP and Private International Law: Legal Framework in Different States............................... 8 1.2 The Hague Judgments Convention and Legislative Proposals............................................. 11 1.2.1 The ALI Principles.................................................................................................... 11 1.2.2 The CLIP Principles................................................................................................. 12 1.2.3 The Transparency Principles and Joint Japanese–Korean Proposal (Waseda Principles)................................................................................................................. 12 1.3 Institutional Framework of Cross-Border Enforcement of IP Rights................................. 13 1.3.1 Canada and the United States.................................................................................. 13 1.3.2 European States........................................................................................................ 13 1.3.3 Asian States............................................................................................................... 14

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The Principle of Territoriality of IP Rights and the Lex Protectionis............................................. 15 2.1 Main Principles of the Paris Convention.............................................................................. 15 2.2 The Principle of the Protecting Country in the Berne Convention.................................... 16 2.3 Current Discussion concerning the Appropriateness of the Territoriality Principle.......... 18

Part II  Jurisdiction over Disputes Concerning Intellectual Property Rights 3

Personal Jurisdiction in IP Cases..................................................................................................... 19 3.1 Personal Jurisdiction in the Hague Judgments Convention................................................ 19 3.2 Personal Jurisdiction in North America................................................................................ 20 3.2.1 Canadian and US Law.............................................................................................. 20 3.2.2 Personal Jurisdiction in the ALI Principles............................................................. 22 3.3 Personal Jurisdiction in European Countries....................................................................... 23 3.3.1 Defendant’s Domicile as the General Ground of Jurisdiction according to the Brussels/Lugano Regime.......................................................................................... 24 3.3.2 Jurisdiction based upon the Defendant’s Domicile in IP-Related Disputes.......... 24 3.3.3 Third-Country Situations........................................................................................ 26 3.3.4 Brussels I Reform Proposals..................................................................................... 27

*  Professor of Law at Kyushu University. **  Lecturer at Kyushu University.

2  Toshiyuki Kono and Paulius Jurcˇys 3.4

3.5

Asian Countries...................................................................................................................... 27 3.4.1 General Grounds of Jurisdiction in India and Taiwan........................................... 27 3.4.2 The Main Principles of the Exercise of International Jurisdiction in Japan.......... 28 3.4.3 Personal Jurisdiction in Korea................................................................................. 32 Comparative Observations.................................................................................................... 33

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Exclusive/Subject-Matter Jurisdiction............................................................................................. 33 4.1 Exclusive Jurisdiction Rules in the 2001 Draft of the Hague Judgments Convention........ 33 4.2 North American States........................................................................................................... 35 4.2.1 Subject-Matter Jurisdiction of Canadian and US Courts...................................... 35 4.2.2 Subject-Matter Jurisdiction in the ALI Principles.................................................. 36 4.3 European States...................................................................................................................... 37 4.3.1 Brussels/Lugano Regime: General Considerations................................................. 37 4.3.2 The ECJ Decision in the Case of GAT v LuK........................................................... 39 4.3.3 Third-Country Situations........................................................................................ 42 4.3.4 Exclusive Jurisdiction Rules in Commission Proposal (2010) and the CLIP Principles.................................................................................................................. 43 4.4 Exclusive Jurisdiction in IP Disputes in Asian States............................................................ 43 4.4.1 Exclusive Jurisdiction Rules in India and Taiwan................................................... 43 4.4.2 Exclusive Jurisdiction over IP Disputes in Japan.................................................... 44 4.4.3 Exclusive Jurisdiction in IP Disputes according to Korean Law............................ 47 4.5 Comparative Observations.................................................................................................... 48

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Jurisdiction in IP Infringement Disputes........................................................................................ 48 5.1 Infringement Jurisdiction in the 2001 Draft of the Hague Judgments Convention........... 49 5.2 Jurisdiction over IP Infringements in North American Countries...................................... 50 5.2.1 Jurisdiction over IP Infringement Disputes of Canadian Courts.......................... 50 5.2.2 Jurisdiction of US Courts over Claims concerning IP Infringements................... 51 5.2.3 Jurisdiction over IP Infringements according to the ALI Principles..................... 52 5.3 Jurisdiction over IP Infringement Disputes in Europe......................................................... 53 5.3.1 Brussels/Lugano Regime: Infringement Jurisdiction.............................................. 53 5.3.2 Application of Article 5(3) to Infringements of IP Rights..................................... 55 5.3.3 Jurisdiction over Internet-Related Infringements.................................................. 56 5.3.4 Third-Country Situations........................................................................................ 57 5.3.5 Infringement Jurisdiction in the CLIP Principles................................................... 58 5.4 Asian Countries...................................................................................................................... 59 5.4.1 India and Taiwan...................................................................................................... 59 5.4.2 Jurisdiction over IP Infringements according to Japanese Law and Latest Legislative Proposals................................................................................................. 59 5.4.3 Infringement Jurisdiction in Korea......................................................................... 61 5.5 Comparative Observations.................................................................................................... 62

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Jurisdiction in Contract-Related Disputes...................................................................................... 62 6.1 The 2001 Draft of Hague Judgments Convention................................................................ 62 6.2 Jurisdiction in Contract Disputes in the ALI Principles...................................................... 63 6.3 European Countries............................................................................................................... 63 6.3.1 The Brussels/Lugano Regime................................................................................... 63 6.3.2 The CLIP Principles................................................................................................. 68 6.4 Asian Countries...................................................................................................................... 68 6.4.1 Jurisdiction over Contractual Disputes according to Japanese Law...................... 68 6.4.2 Legislative Proposals................................................................................................. 69 6.5 Comparative Observations.................................................................................................... 70

General Report  3 7

Consolidation of Proceedings.......................................................................................................... 71 7.1 Consolidation of Claims in the 1999 Draft of the Hague Convention................................ 71 7.2 North American Countries.................................................................................................... 72 7.2.1 Canadian Approach to the Consolidation of Claims............................................. 72 7.2.2 Consolidation of Claims in the United States......................................................... 73 7.2.3 Claims against Multiple Parties and Other Possibilities of Consolidation in the ALI Principles........................................................................................................... 74 7.3 Consolidation of Claims in European States........................................................................ 74 7.3.1 Brussels/Lugano Regime: General Considerations................................................. 74 7.3.2 The Early Practice of Domestic Courts in IP Infringement Cases......................... 76 7.3.3 ‘Roche Nederland’ and its Aftermath...................................................................... 78 7.3.4 Third-Country Situations........................................................................................ 81 7.3.5 Consolidation Possibilities according to the CLIP Principles................................ 83 7.3.6 European Patent Litigation Scheme........................................................................ 83 7.4 Asian Countries...................................................................................................................... 85 7.4.1 Consolidation of Claims in India and Taiwan........................................................ 85 7.4.2 Consolidation of Claims according to Japanese Law.............................................. 85 7.4.3 Consolidation of Proceedings in Korea................................................................... 90 7.5 Comparative Observations.................................................................................................... 91

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Parallel Proceedings in IP Disputes................................................................................................. 92 8.1 Parallel Proceedings in the 2001 Draft of the Hague Judgments Convention.................... 93 8.2 North American Countries.................................................................................................... 95 8.2.1 Parallel Proceedings According to Canadian Law................................................... 95 8.2.2 Parallel Proceedings in US law and the ALI Principles........................................... 96 8.3 European Countries............................................................................................................... 98 8.3.1 Parallel and Related Proceedings............................................................................. 98 8.3.2 IP Litigation Strategies........................................................................................... 100 8.3.3 Third-Country Situations...................................................................................... 103 8.3.4 Review of the Brussels I Regulation: Parallel Proceedings in the Commission Proposal and the CLIP Principles.......................................................................... 106 8.4 Asian Countries.................................................................................................................... 108 8.4.1 Parallel Proceedings according to the Laws of India and Taiwan........................ 108 8.4.2 Parallel Proceedings according to Japanese Law and Recent Asian Legislative Proposals................................................................................................................. 108 8.5 Comparative Observations.................................................................................................. 111

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Jurisdiction to Order Provisional or Protective Measures in IP Disputes................................... 112 9.1 Provisional and Protective Measures in the 2001 Draft of the Hague Judgments Convention................................................................................................................................. 112 9.2 Jurisdiction to Grant Provisional Measures and Interim Injunctions under the Laws of North American Countries.................................................................................................. 113 9.2.1 Legal Situation in Canada...................................................................................... 113 9.2.2 Provisional and Protective Measures in the ALI Principles.................................. 114 9.3 Provisional and Protective Measures in the European Countries...................................... 114 9.3.1 Brussels/Lugano Regime........................................................................................ 114 9.3.2 Provisional Measures and IP-Related Issues......................................................... 116 9.3.3 Third State Situations............................................................................................. 119 9.3.4 Provisional and Protective Measures in European Reform Proposals................. 119 9.4 Jurisdiction to Order Provisional and Protective Measures in Asian States...................... 120 9.4.1 India and Taiwan.................................................................................................... 120 9.4.2 Japan........................................................................................................................ 121 9.4.3 Korea....................................................................................................................... 122 9.5 Comparative Observations.................................................................................................. 123

4  Toshiyuki Kono and Paulius Jurcˇys 10 Choice of Court Agreements in Cross-Border IP Disputes.......................................................... 123 10.1 The 2005 Hague Choice of Court Convention................................................................... 124 10.1.1 General Principles of the Hague Convention....................................................... 124 10.1.2 Choice of Court Agreements in IP Disputes......................................................... 125 10.2 Choice of Court Agreements in North American Countries............................................. 126 10.2.1 Canada.................................................................................................................... 126 10.2.2 Choice of Court Agreements according to the ALI Principles............................. 127 10.3 European Countries............................................................................................................. 128 10.3.1 Choice of Court Agreements according to the Brussels/Lugano Regime............ 128 10.3.2 Choice of Court Agreements in IP Disputes......................................................... 129 10.3.3 Choice of Court Agreements according to the CLIP Principles.......................... 131 10.4 Choice of Court Agreements in Asian Countries............................................................... 132 10.4.1 Choice of Court Agreements in India and Taiwan............................................... 132 10.4.2 Choice of Court Agreements in IP Disputes according to Japanese Law and other Asian Legislative Proposals........................................................................................ 132 10.5 Comparative Observations.................................................................................................. 135 Part III  Choice-of-Law Issues in Intellectual Property Disputes......................................................135 11 Applicable Law to Proprietary Matters of IP Rights..................................................................... 135 11.1 Applicable Law to Proprietary Aspects of IP Rights in North American Countries......... 136 11.1.1 The United States.................................................................................................... 136 11.1.2 The ALI Principles.................................................................................................. 136 11.2 European Countries............................................................................................................. 137 11.2.1 Early European Proposals...................................................................................... 137 11.2.2 European States...................................................................................................... 138 11.2.3 The CLIP Principles............................................................................................... 141 11.3 Applicable Law to Proprietary Aspects of IP Rights in Asian Countries........................... 142 11.3.1 India and Taiwan.................................................................................................... 142 11.3.2 Japan........................................................................................................................ 142 11.3.3 Korea....................................................................................................................... 143 11.4 Comparative Observations.................................................................................................. 144 12 Applicable Law to Infringement of IP rights................................................................................ 145 12.1 North American Countries.................................................................................................. 145 12.1.1 Applicable Law to Infringements of IP Rights in Canada.................................... 145 12.1.2 Applicable Law to Infringements of IP Rights in the United States.................... 146 12.1.3 Applicable Law to Infringements of IP Rights in the ALI Principles................... 148 12.2 European Countries............................................................................................................. 149 12.2.1 Rome II Regulation on the Law Applicable to Non-Contractual Obligations: General Rules.......................................................................................................... 149 12.2.2 Special Choice-of-law Rules for Infringements of IP Rights (Art 8)................... 150 12.2.3 Prohibition of the Choice of Law.......................................................................... 152 12.2.4 Ubiquitous Infringements...................................................................................... 153 12.2.5 Law Governing the Liability of ISP........................................................................ 154 12.2.6 Infringements of IP Rights according to Swiss and Croatian Laws..................... 155 12.2.7 The CLIP Principles............................................................................................... 156 12.3 Asian Countries.................................................................................................................... 157 12.3.1 India and Taiwan.................................................................................................... 157 12.3.2 Japan........................................................................................................................ 158 12.3.3 Korea....................................................................................................................... 162 12.4 Comparative Observations.................................................................................................. 163

General Report  5 13 Applicable Law to the Contracts for the Transfer of IP Rights.................................................... 164 13.1 North American Countries.................................................................................................. 164 13.1.1 Canadian Law......................................................................................................... 164 13.1.2 The United States.................................................................................................... 165 13.1.3 Law Governing Transfers of Title and Grants of Licenses under the ALI Principles................................................................................................................ 167 13.2 European Countries............................................................................................................. 168 13.2.1 Rome I Regulation: General Principles................................................................. 168 13.2.2 Problems Related to IP-Contracts......................................................................... 170 13.2.3 Law Governing Contractual Obligations according to Swiss and Croatian Law.......................................................................................................................... 174 13.2.4 Applicable Law to Contracts according to the CLIP Principles........................... 175 13.3 Asian Countries.................................................................................................................... 177 13.3.1 Applicable Law to IP Transfer Agreements in India and Taiwan......................... 177 13.3.2 Japan........................................................................................................................ 177 13.3.3 Korea....................................................................................................................... 179 13.4 Comparative Observations.................................................................................................. 179 14 Applicable Law to IP Rights Created in the Course of Employment Relationship..................... 180 14.1 North American Countries.................................................................................................. 180 14.1.1 Canada.................................................................................................................... 180 14.1.2 The ALI Principles.................................................................................................. 181 14.2 European Countries............................................................................................................. 182 14.2.1 Overview of the Law in Different Countries......................................................... 182 14.2.2 The CLIP Principles............................................................................................... 183 14.3 Asian Countries.................................................................................................................... 184 14.3.1 Japan........................................................................................................................ 184 14.3.2 Korea....................................................................................................................... 185 14.4 Comparative Observations.................................................................................................. 186 15 Applicable law to Securities in IP.................................................................................................. 186 16 Recognition and Enforcement of Foreign Judgments.................................................................. 188 16.1 Recognition and Enforcement in the 2001 Draft of the Hague Judgments Convention........................................................................................................................... 189 16.2 North American Countries.................................................................................................. 191 16.2.1 Recognition and Enforcement of Foreign Judgments in IP Disputes according to Canadian and US Law........................................................................................ 191 16.2.2 Recognition and Enforcement of Foreign Judgments in the ALI Principles....... 194 16.3 European Countries............................................................................................................. 196 16.3.1 Recognition and Enforcement of Foreign Judgments according to the Brussels/ Lugano Regime....................................................................................................... 196 16.3.2 The Recognition and Enforcement of Third-country Judgments....................... 199 16.3.3 Brussels I Reform Proposals................................................................................... 201 16.4 Asian Countries.................................................................................................................... 203 16.4.1 Recognition and Enforcement of Foreign Judgments in Taiwan......................... 203 16.4.2 Recognition and Enforcement of Foreign Judgments in Japan........................... 204 16.4.3 Recognition and Enforcement of Foreign Judgments in Korea........................... 210 16.5 Comparative Observations.................................................................................................. 210 CONCLUDING OBSERVATIONS....................................................................................................... 211

6  Toshiyuki Kono and Paulius Jurcˇys

Introduction The emergence and development of global business activities, and the inception of the Internet have resulted in the creation of a new field of legal studies concerning cross-border enforcement of intellectual property (IP) rights. This novel area of law is known as private international law and intellectual property. It has attracted much attention from lawyers within the fields of both private international law and intellectual property law. Several landmark decisions have caught the interest of legal practitioners as well as scholars engaged in deeper research activities. So far, several edited books1 have been published, and a greater amount of legal articles have been written on the subject. The object of private international law and intellectual property is mainly related to the private enforcement of intellectual property rights. In this context, ‘private’ enforcement is understood to mean legal measures taken by private parties (eg, proprietors of IP rights, persons exploiting IP rights with or without authorisation). Such legal measures taken by private parties would usually be determined by the law of the country where the protection is sought. In this report the private enforcement of IP rights refers to legal actions brought before national judicial or administrative authorities. Hence, public administrative acts upon which certain preventive acts are taken (eg, customs control, seizure of counterfeited goods etc) are not analysed here. Private international law and intellectual property could also be considered a special area of private international law dealing particularly with the enforcement of IP rights. Accordingly, legal problems which arise in the course of the enforcement of IP rights are mainly related to the exercise of international jurisdiction of the court seised, the applicable laws, and the recognition and enforcement of foreign court judgments rendered in disputes over IP rights. This General Report draws upon 21 national reports received from countries with very divergent legal traditions. National reports were collated from three continents: North America (Canada and the United States), Europe (14 EU Member States, Switzerland and Croatia) and Asia (India, Taiwan, Korea and Japan). The national reports were drafted on the basis of a questionnaire2 containing two main sections. The first section required national reporters to provide a general legal and institutional framework concerning the enforcement of IP rights in their respective countries. National reporters were then asked to indicate: a) international and regional legal instruments which have been ratified or are applicable in their countries, and b) national statutory instruments pertaining to the enforcement of IP rights. The second section of the questionnaire was based on hypothetical cases. Instead of providing a list of questions asking for a description of certain legal matters, it was decided to incorporate those questions into hypothetical cases in order to provide a better illustration of their legal situation. Such methodology, whereby the questionnaire is partly based on 1   JJ Fawcett and P Torremans, Intellectual Property and Private International Law, 2nd edn (Oxford, Oxford University Press, 2011); J Drexl and A Kur (eds), Intellectual Property and Private International Law: Heading for Future (Oxford, Hart Publishing, 2005); J Basedow, J Drexl, A Kur, and A Metzger (eds), Intellectual Property in the Conflict of Laws (Tübingen, Mohr Siebeck, 2005); A Nuyts (ed), International Intellectual Property and Information Technology (Alphen aan den Rijn, Kluwer Law International, 2008); S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, Mohr Siebeck, 2009); J Basedow, T Kono, and A Metzger (eds), Intellectual Property in the Global Arena: Jurisdiction, Applicable Law, and the Recognition of Judgments in Europe, Japan and the US (Tübingen, Mohr Siebeck, 2010). 2   See Appendix I.

General Report  7 hypothetical cases, was inspired by the recent initiatives to draft the European Civil Code (eg security rights in immovable property or condominiums in European private law). However, given that the scope of the project is related to international aspects of IP, national reporters were asked to consider these hypothetical cases as mere examples, so as to not restrict possible answers to questions posed. Hence, reporters were encouraged to provide further analysis of any issues not covered in the hypothetical case. In the same vein, national reporters were also asked to provide analysis of IP rights other than those addressed in a particular hypothetical case (eg, if the hypothetical case concerned copyright, the national reporters were asked to indicate whether, and if so, how the answers would differ in disputes related to other IP rights such as patents, trade marks, etc). Furthermore, national reporters were asked to structure their answers into two sections: operative rules and descriptive formants. In October 2009, due to certain logistic considerations and with the objective to receive national reports from as many legal jurisdictions as possible, a shorter version of the questionnaire3 was created (national reports of Switzerland and the United States were prepared on the basis of the shorter version of the questionnaire). Therefore, although the form of the national reports might differ, from a substantive point of view they cover identical legal issues as they were in the summer of 2010. The General Report consists of four main parts. Parts I and II provide a brief overview of private enforcement of IP rights as well as the related institutional framework. Part III deals with various jurisdictional issues which arise in cross-border IP litigation and provides an analysis of the jurisdictional approaches which exist in the countries covered. More specifically, Part II deals with jurisdiction over parties, jurisdiction in contractual and noncontractual disputes, subject-matter (exclusive) jurisdiction, available possibilities for consolidating multiple claims/proceedings, treatment of international parallel proceedings, and choice of court agreements in IP disputes. Part IV is mainly devoted to analysing various choice-of-law problems that arise in cross-border IP disputes. Namely, it provides an overview and analysis of the approaches concerning the applicable law to the proprietary aspects of IP rights, choice-of-law problems arising in IP infringement cases and contracts for the transfer of IP rights. A further aim of Part III is to depict choice-of-law problems which arise in the context of IP finance. Lastly, Part V focuses on the recognition and enforcement of foreign judgments rendered in IP-related disputes. An Epilogue concludes. Parts III, IV and V were drafted on the basis of the national reports and are structured geographically: each chapter begins with an introduction outlining the main problems subject to discussion. The analysis commences with an overview of the law in two North American countries – Canada and the United States – and deals with the approach established in the ALI Principles on Intellectual Property. Then the current legal situation in the European Union and several other countries (namely, Switzerland and Croatia) is introduced in conjunction with an analysis of the legislative proposals made by the CLIP working group and other legislative initiatives concerning the modification of the Brussels I Regulation. Finally, an overview of the law in four Asian countries (India, Taiwan, Korea and Japan) is provided. Further attention is given to recent legislation in Asian countries (for example, Japan’s Act amending its Code of Civil Procedure (2011), as well as several legislative proposals such as Transparency and Waseda Principles. In addition, the Korean proposal which was drafted together with the Waseda working group is briefly introduced.   See Appendix II.

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8  Toshiyuki Kono and Paulius Jurcˇys The authors would like to express their gratitude to a number of persons without whose assistance the preparation of this report would not have been possible: especially Ruben Pauwels, Steven Van Uytsel, Stefan Wrbka and Claire Wan-Chiung Cheng. The authors of the General Report are also grateful to the national reporters for their close collaboration and devotedness in drafting and updating their reports: Howard Abrams, Marie-Elodie Ancel, Joost Blom, Nerina Boschiero, Amelie Charbon, Dick van Engelen, Anastasia Grammaticaki, Marie-Christine Janssens, Ivana Kunda, Gyooho Lee, Tattay Levente, Ulf Maunsbach, Axel Metzger, Pedro de Miguel Asensio, Damjan Možina, Alexis Pereira, Thomas Petz, Ming-Yan Shieh, Iris Sidler, Vandana Singh, Tatiana Synodinou, Benedetta Ubertazzi, Dai Yokomizo and Christopher Wadlow.

Part I  General Overview 1.  Intellectual Property and Private International Law: Legal and Institutional Background 1.1  IP and Private International Law: Legal Framework in Different States All 21 states from which the national reports were assembled belong to the World Trade Organization. This means that these countries are bound by the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement4 which entered into force in 1995. The states had ratified many international conventions concerning the protection of IP rights before the establishment of the WTO (namely, Paris Convention for the Protection of Industrial Property (1883)5 and Berne Convention for the Protection of Literary and Artistic Works (1886)6). All represented states are also members of the World Intellectual Property Organization and are bound by the WIPO Performances and Phonograms Treaty (WPPT)7 and WIPO Copyright Treaty (WCT).8 Most of the states participate in international IP protection systems: the Patent Cooperation Treaty,9 the Madrid system concerning international trade mark registration, the Hague system concerning international industrial design registration and the Lisbon system concerning international registration of the appellations of origin.10 These international conventions have significantly influenced the development of national legal regimes for the protection of IP rights.11 Regional economic integration has also facilitated the harmonisation of different aspects of IP rights. This is particularly noticeable in the EU, where the domestic legislation of 4   Agreement on Trade-Related Aspects of Intellectual Property Rights, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C (1994) 33 International Law Materials 1197. 5  Paris Convention for the Protection of Industrial Property, as last revised at the Stockholm Revision Conference, 14 July 1967, 828 UNTS 303. 6   Berne Convention for the Protection of Literary and Artistic Works, 9 September 1886, as last revised at Paris on 24 July 1971, 1161 UNTS 30. 7   (1997) 36 International Law Materials 76. 8   (1997) 36 International Law Materials 65. 9   (1970) 9 International Law Materials 978. 10  www.wipo.int/services/en/. 11   For a more detailed overview, the reader is recommended to refer to the national reports of particular countries.

General Report  9 Member States has been to a large extent affected by harmonisation activities at the EU level. Numerous regulations and directives were adopted with the objective of aligning domestic statutes and ascertaining that minimum standards of protection are established. In the area of copyright, these include directives related to the legal protection of computer programs,12 rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission,13 legal protection of databases,14 harmonisation of certain aspects of copyright and related rights in the information society,15 resale rights16 as well as the term of protection of copyrights and related rights.17 Further, many legislative instruments were adopted with regard to industrial property rights in the EU: for example, directives to approximate the laws of the Member States relating to trade marks;18 legal protection of designs;19 or the protection of biotechnological inventions.20 On the basis of two legal instruments, Community trade marks21 and Community design rights became available.22 As regards patents, the European Patent Convention which entered into force in 1977 laid a solid foundation for the regional protection of patent rights.23 It is worth noting that negotiations concerning the creation of an ‘EU Patent litigation system’ are taking place.24 In addition, the following instruments regarding patents have to be mentioned: the Regulation concerning the creation of a supplementary protection certificate for medicinal products,25 and the Regulation concerning the creation of a supplementary protection certificate for plant protection products.26 In 2004 an additional directive was adopted requiring Member States to establish procedures concerning the protection of IP rights.27 Further regional cooperation occurs among a specific number of European states. For instance, the Swedish Report notes that major legislative developments in the area of IP in 12   Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, replaced by Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (Codified version) [2009] OJ L111/16. 13   Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission [1993] OJ L248/15. 14   Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases [1996] OJ L77/20. 15   Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society [2001] OJ L167/10. 16   Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art [2001] OJ L 272/32. 17   Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version) [2006] OJ L 372/12. 18   Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks [1989] OJ L40/1. 19   Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs [1998] OJ L289/28. 20   Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions [1998] OJ L213/13. 21   Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark [1994] OJ L11/1. 22   Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs [2002] OJ L3/1. 23   Convention on the Grant of European Patents (European Patent Convention) of 5 October 1973 as revised by the Act revising Article 63 EPC of 17 December 1991 and the Act revising the EPC of 29 November 2000. 24   Belgian Report, nn 62 and 63. 25   Council Regulation (EEC) No 1768/92 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products [1992] OJ L182/1. 26   Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products [1996] OJ L198/30. 27   Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights [2004] OJ 195/16.

10  Toshiyuki Kono and Paulius Jurcˇys the Nordic states (Denmark, Sweden, Norway, Finland and Iceland) have been coordinated within the framework of the Nordic Cooperation. As a result, the legislative basis concerning the protection of IP rights rest on common principles. The Belgian Report refers to another regional mechanism – the Benelux Convention on Intellectual Property (BCIP) – which not only establishes substantive rules for the protection of trade marks and designs in Benelux counties (Belgium, Netherlands and Luxemburg) but also establishes rules for the jurisdiction as well as the recognition and enforcement of judgments.28 In the EU, one of the cornerstone legislative instruments concerning the international jurisdiction and the recognition and enforcement of judgments is the so-called Brussels I Regulation. The Regulation was adopted in 2001 and entered into force from 1 March 2001; it replaced its predecessor, the Brussels Convention. The Brussels I Regulation establishes common rules of jurisdiction which are to be applied by the courts of EU Member States. In addition, the Regulation sets up a framework whose purpose is to facilitate the recognition and enforcement of judgments, court settlements and authentic instruments within the EU. A parallel convention, the ‘Lugano Convention’,29 was adopted in 1988 and applies in circumstances between the EC/EU Member States and EFTA states (Switzerland, Norway and Iceland). The Lugano Convention of 1988 was replaced by the Lugano Convention of 2007.30 The Lugano Convention basically contains the same rules as the Brussels I Regulation and thus contributes to legal certainty and foreseeability in the European region. It should be also noted that the Brussels I Regulation is in the process of revision.31 Two important Regulations concerning the applicable law to contractual and noncontractual obligations were adopted in 2007 and 2008. The so-called Rome I Regulation32 established choice-of-law rules for contractual obligations and replaced its predecessor the Rome Convention (1980)33. The rules provided in the Rome I Regulation apply to contracts concluded after 17 December 2009 (Art 28) which means that, in practice, the Rome Convention will remain an important legal source in coming years. The Rome II Regulation establishes choice-of-law rules for non-contractual obligations.34 These provisions apply with regard to events, which give rise to damage, occurring after its entry into force on 22 January 2009 (Art 31). In countries that are not members of the EU, private international law questions are also often governed by special statutes. In the United States, some of the relevant provisions concerning the federal organisation of court structure as well as the distribution of compe  Belgian Report, section 2.2.2.2.   Convention on jurisdiction and the enforcement of judgments in civil and commercial matters [1988] OJ L319/9. 30   Council Decision of 15 October 2007 on the signing, on behalf of the Community, of the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2007] OJ L339/1. 31   Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (21 April 2009), COM(2009) 174; Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (21 April 2009), COM(2009) 175; Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) (14 December 2010), COM(2010) 748; B Hess, T Pfeiffer and P Schlosser, The Brussels I-Regulation (EC) no 44/2001, the Heidelberg report on the application of regulation Brussels I in 25 member states (Munich, Beck, 2008). 32   Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) [2008] OJ L177/6. 33   Convention 80/934/EEC on the law applicable to contractual obligations [1980] OJ L266/1. 34   Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) [2007] OJ L199/40. 28 29

General Report  11 tence between the federal government and the states are addressed in the United States Constitution. Several special rules concerning the adjudication of IP-related disputes can be found in the Copyright Act, the Patent Act and other special legislation. In addition, a number of important sources of law in deciding multi-state IP disputes are established in the Restatements of Law (Restatement (First) and Restatement (Second) of Conflicts which have been adopted in US states). Similarly in Canada, provisions relevant to the adjudication of IP disputes can be found in the Constitution, special IP statutes as well as provincial legislation. Some Canadian provinces have enacted the uniform Court Jurisdiction and Proceedings Transfer Act (CJPTA).35 In other countries, jurisdiction and choice-of-law matters concerning multi-state IP disputes are generally decided according to special private international law statutes.36 These statutes have been subject to modifications or substantial revisions during the previous decades.37

1.2  The Hague Judgments Convention and Legislative Proposals One of the main events that accelerated the development of this new field of law was the Hague Judgments project initiated in early 1990 by the United States at the Hague Conference on Private International Law. The purpose of this initiative was to prepare an International Convention establishing harmonised rules on international jurisdiction and the recognition of foreign judgments. Following more than a decade of intense negotiations, the project basically failed, because major negotiating parties – principally the United States and the EU – were unable to agree on underlying concepts. One of the main reasons for such disagreements was also related to the problems concerning international jurisdiction in IP disputes. 1.2.1  The ALI Principles In an attempt to save the negotiations, three legal scholars (Rochelle C Dreyfuss, Jane Ginsburg and François Dessemontet) created a working group to draft more specific provisions regarding court jurisdiction in intellectual property matters. At the outset, such a draft proposal was intended to be put forward to the Hague Conference. However, as it became obvious that the project to conclude the Hague Judgments Convention would fail, the Dreyfuss-Ginsburg initiative was successfully transformed into another, more sophisticated initiative under the auspices of the American Law Institute. Subsequently, the ALI Principles on Intellectual Property38 were adopted in 2007 at the meeting of the ALI General Assembly. The ALI Principles provide for a comprehensive set of rules concerning various issues on international jurisdiction, applicable law and the recognition of judgments in IP disputes. One of the focal objectives of the ALI Principles was to restrict possible jurisdictional grounds in cross-border IP disputes and to facilitate coordination and consolidation of the proceedings.39   Canadian Report, section 1.1.2.2.   eg, Switzerland, Croatia, Korea, Japan.   Korean Report, section 1.3.1; Japanese Report, section 1.1.3. 38  The American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law and Judgments in Transnational Disputes (Chestnut, ALI Publishers, 2008). 39   R Dreyfuss, ‘The American Law Institute Project on Intellectual Property: Principles Governing Jurisdiction, Choice of Law and Judgments in Transnational Disputes’, in Leible and Ohly (eds), above n 1, 15–30. 35 36 37

12  Toshiyuki Kono and Paulius Jurcˇys 1.2.2  The CLIP Principles Parallel to the ALI initiative, the Max Planck Institute in Munich initiated a project which published draft principles on jurisdiction in intellectual property in 2004.40 This academic initiative further developed into a follow-up project, the so-called ‘CLIP’ (European Max Planck Group for Conflict of Laws in Intellectual Property). The CLIP working group was founded by the Max Planck Institute for Competition, Intellectual Property and Tax Law (Munich) and the Max Planck Institute for International and Foreign Law (Hamburg). Members of the CLIP working group consisted of six different countries on both sides of the Atlantic. Within five years the CLIP working group had drafted the so-called ‘CLIP Principles’ which, similarly to ALI, deal with international jurisdiction, applicable law as well as the recognition and enforcement of foreign judgments in IP matters. The CLIP Principles were finalised in 2011.41 1.2.3  The Transparency Principles and Joint Japanese-Korean Proposal (Waseda Principles) Two more specialised working groups to tackle private international law problems relating to the cross-border aspects of IP rights were formed by legal academics. Their creation was inspired by legal developments across the Pacific and in Europe. The first group was initiated under the auspices of the ‘Transparency of Japanese Law Project’, with the intention of drafting a proposal of special rules dealing with private international law aspects of IP.42 Similarly to the ALI and CLIP Principles, the Transparency Proposal deals, inter alia, with grounds for general, special and exclusive jurisdiction in IP disputes, consolidation of claims and coordination of parallel proceedings; applicable law to IP infringement, licensing and other related issues as well as recognition and enforcement; and recognition of foreign judgments rendered in IP disputes. The second so-called ‘Waseda group’ was established by scholars in Waseda University with the objective of drafting a proposal on the jurisdiction and applicable law for the whole East Asian region. The Waseda working group closely cooperated with another group of scholars in South Korea.43 It should be noted that in Korea, legal scholars have prepared a separate proposal for the revision of domestic private international law in order to make the cross-border adjudication of IP disputes more effective.44 The Principles prepared by the Waseda working groups were intended to be unified with the simultaneously drafted Korean Principles.

  See J Drexl and A Kur (eds), above n 1, 309–34.   Available at www.cl-ip.eu.  www.tomeika.jur.kyushu-u.ac.jp. 43   A new private international law statute was adopted in South Korea in 2001. For a German translation see ‘Gesetz über das internationale Privatrecht der Republik Korea Vollständige Revision am 7. April 2001 durch Gesetz Nr.6465’ (2006) 70 Rabels Zeitschrift für ausländisches und internationales Privatrecht 342–57, and KB Pissler, ‘Einführung in das neue Internationale Privatrecht der Republik Korea’ (2006) 70 Rabels Zeitschrift für ausländisches und internationales Privatrecht 306. Art 24 of the Act contained a special provision relating to infringements of IP rights, which mandated the application of the law of the place where those IP rights are infringed. 44   Korean Report, section 2.4. 40 41 42

General Report  13

1.3  Institutional Framework of Cross-Border Enforcement of IP Rights 1.3.1  Canada and the United States The institutional framework to adjudicate IP disputes in Canada and the United States is largely affected by the federal organisation of the courts. In Canada, the jurisdiction is divided between state courts and federal courts. The Federal Court of Canada would be competent to hear actions related to acts of registration which had to be undertaken by state officials.45 Patent infringement claims which are not brought in the Federal Court can be brought in a court of a state in which the infringement is deemed to have occurred (s 54(1) of the Canadian Patent Act). More generally, in IP infringement cases, a court seised must have jurisdiction in personam as well as subject-matter jurisdiction.46 In the United States, a case which can be adjudicated by state courts can also be brought before a federal court if there is diversity of citizenship or if one of the parties to the proceedings is a foreign citizen. As for IP disputes, federal courts have exclusive jurisdiction over matters which arise under the Patent Act or Copyright Act. Federal and state courts have concurrent jurisdiction in disputes which arise under the Trademark Act. State courts are competent to hear cases concerning trade secrets and rights of publicity. Matters concerning the qualification and registrability of patents and trade marks fall under the competence of the Patent and Trademark Office, whose decisions can be appealed to the federal courts.47 1.3.2  European States In Europe, the granting of IP rights is subject to different regimes. Depending on the nature of IP rights, the granting of IP rights may be national, regional or international. For instance, the protection of trade marks could be sought by registering the mark (a) in one particular state according to the law of that particular state; (b) according to the Community Trade Mark Regulation;48 or (c) by filing an application for international protection according to the Madrid Agreement. Similarly, patent protection could be sought pursuant to the Patent Cooperation Treaty (PCT), European Patent Convention (EPC) or national patent laws. Accordingly, different administrative authorities (specialised patent or trade mark offices) are involved in the examination of the applications for the protection of industrial property rights. The institutional structure of the adjudication of IP disputes has been to a large extent affected by European legislative instruments. An important document in this regard is the Enforcement Directive,49 which mandated Member States to facilitate the specialisation of their national courts and reduce the number of courts competent to hear IP cases. As a result, Member States undertook certain legislative measures which changed the organisation of their national courts, as well as their competence to hear IP cases. On the basis of the national reports, three groups of court systems could be generally distinguished. First,

  Canadian Report, section 1.1.2.1.  ibid. 47   US Report, answers to question III.1. 48   Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark [1994] OJ L11/1. 49   Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights [2004] OJ L195/16. 45 46

14  Toshiyuki Kono and Paulius Jurcˇys in some EU states, special courts are established to hear IP disputes (eg, Italy,50 Spain51 as well Switzerland, which is a member of EFTA52). Second, in other EU Member States, special court chambers have been established in order to specialise in the adjudication of IP disputes.53 In Portugal, specialised sections to hear IP disputes were established in courts of first instance and district courts of appeal. In addition, the Lisbon Court of First Instance had been conferred jurisdiction to hear appeals concerning certain decisions of the Industrial Property Office.54 Similarly, in Croatia, IP disputes fall under the competence of specialised Commercial Courts or courts of general competence, depending on the nature of the matter.55 Third, in several states, IP disputes are adjudicated by specially designated courts of general competence.56 It should be also mentioned that the distribution of functional competences varies from state to state. For instance, all the national reporters noted that different aspects related to IP rights are adjudicated by either civil or criminal courts. Further, a disparity exists over the possibility of challenging the decisions of institutions charged with examining applications for the granting of industrial property rights. In some states, appeals may be brought to the courts of general competence, while in other states – such as Switzerland – decisions by the Swiss Federal Institute of Intellectual Property shall be brought to the Federal Administrative Court. 1.3.3  Asian States In Japan, three special institutions share the competence to adjudicate IP disputes. First, the Tokyo District Court and Osaka District Court are competent to hear cases concerning IP disputes in general (Art 6(1) CCP). Second, the Japanese Patent Office (JPO) is in charge of the issuance of patents and other registered IP rights. The examination results of applications for patent and other registered IP rights could be appealed to the Appeals Department of the JPO. Third, appeals concerning decisions of the JPO are subject to the exclusive jurisdiction of the IP High Court which was established in 2005 and operates as a special division of the Tokyo High Court. The IP High Court also hears appeals concerning decisions of the Tokyo and Osaka District Courts that are rendered in cases concerning patents, utility models, layout designs, integrated circuits as well as copyrights (Art 6(3) CCP). Meanwhile, in Taiwan, jurisdiction over IP disputes is vested within the Intellectual Property Office (TIPO), courts of general competence as well as the special Intellectual Property Court (IPC). In India, a three-tier court system was inherited from the British legal system. According to their national report, IP disputes are generally adjudicated pursuant to the rules of the Code of Civil Procedure as well as any relevant rules for the specialised IP legislation.57

  Italian Report, section 1.1.4.   Spanish Report, para 19. 52   Where a specialised Federal Patent Court commenced its work at the beginning of 2011; Swiss Report, section III. 53   Portuguese Report, section 1.2; Greek Report, section 1. 54   Portuguese Report, section 1.1.3. 55   Croatian Report, section 1.3. 56   Slovenian Report, section 1.2.3. 57   Indian Report, section 1.2. 50 51

General Report  15

2  The Principle of Territoriality of IP Rights and the Lex Protectionis The roots of the territoriality principle, as it is known in IP law, can be found in the medieval printing and manufacturing privileges. Such privileges were granted on a case-by-case basis by sovereign seigneurs, princes and kings who thereby expected to increase their own wealth.58 The nineteenth and twentieth centuries were marked by the adoption of national IP statutes across the European continent. However, the adoption of IP statutes posed further complications. Namely, national statutes in different countries provided for different scopes of protection. More importantly, the protection of IP rights in foreign countries was often not available on the same terms as protection afforded to nationals of those countries where the protection was sought. In order to overcome these differences, governments of different countries started to conclude bilateral treaties, some of which are still currently valid.59 Nonetheless, the protection of IP rights based on bilateral agreements proved to be insufficient and therefore two landmark international treaties for the protection of IP rights were concluded (1883 Paris Convention for the protection of industrial property and 1886 Berne Convention for the protection of literary and artistic works). Bilateral and international treaties concluded at the end of the nineteenth century generally aimed, first, to establish minimum standards of protection and, secondly, to assure that foreign proprietors of intellectual property rights were treated in the same manner as domestic right-holders (so-called ‘national treatment’ principle). Besides that, both the Paris and Berne Conventions established Unions and administrative mechanisms responsible for the maintenance and development of these international instruments.

2.1  Main Principles of the Paris Convention The Paris Convention entrenched several significant principles relating to the enforcement of industrial property rights. Article 2 of the Paris Convention established the principle of national treatment, according to which nationals of any country of the Union shall enjoy in all the other countries of the Union the advantages that their respective laws now grant, or may hereafter grant, to nationals; they shall have the same protection as the latter, and the same legal remedy against any infringement of their rights, provided that the conditions and formalities imposed upon nationals are complied with. In addition, the Paris Convention abandoned the requirement of domicile or establishment in the country where protection is claimed for the enjoyment of any of the industrial property rights (Art 2(1)). Further, the Paris Convention established a principle known as the independence of national IP rights. This principle dictates that patents granted in one country of the Union are considered to be independent of patents obtained for the same invention in other countries, regardless of whether those other countries are members of the Union or 58   J Basedow, ‘Foundations of Private International Law in Intellectual Property’, in J Basedow, T Kono and A Metzger (eds), above n 1, 3–29. 59   F Dessemontet, ‘The ALI Principles: Intellectual Property in Transborder Litigation’, in J Basedow, T Kono and A Metzger (eds), above n 1, 31–48.

16  Toshiyuki Kono and Paulius Jurcˇys not (Art 4bis).60 The principle of independency of patent rights can be traced back to the idea of sovereignty and exclusive competence of states to regulate internal matters independently. It also reflects a general understanding that the requirements for the creation of industrial property rights are to be interpreted in the light of national industrial policy objectives. The Paris Convention also established a number of minimum requirements for the protection of industrial property rights. These are to be considered the minimum standards which must be implemented in all Member States of the Paris Union. The aim is to harmonise national IP systems and thereby afford equal minimum protection in any Member State of the Union. Countries remain free to establish higher levels of protection of industrial property rights. However, such broader protection enacted by a legislator of a particular state cannot extend beyond the territorial borders of the granting state. This means that the right-holder can enforce his/her intellectual property rights only in the granting state. These principles, ie national treatment, independence of patent rights granted by different countries to the same invention and minimum standards can be considered as reflections of territoriality of domestic industrial property rights. Hence, subject to the provisions of the Paris Convention, Member States are free to determine the scope of enforcement of industrial property rights. However, the legal effects of these statutes are limited to the territorial borders of the legislating state.

2.2  The Principle of the Protecting Country in the Berne Convention The principle of territoriality of intellectual property rights has been also associated with another specific rule known as the lex loci protectionis61, which literally means ‘the law of the protecting country’. This principle aims to solve the dilemma of applicable law in cases where the right-holder has intellectual property rights in several countries. Historically, the principle of the protecting country was first established in the Berne Convention for the Protection of Literary and Artistic Works. Among several provisions which the Berne Convention contains and which have relevance to the determination of applicable law in cross-border IP disputes, one of the most important is Article 5(2), which provides that: The enjoyment and exercise of these rights shall not be subject to any formality; such enjoyment and such exercise shall be independent of the existence of protection in the country of origin of the work. Consequently, apart from the provisions of this Convention, the extent of protection as well as the means of redress afforded to the author to protect his rights shall be governed exclusively by the laws of the country where protection is claimed.

For decades, the interpretation of this provision was a source of contention. First, insofar as ‘means of redress’ referred to in Article 5(2) is concerned, a court of a given country can grant only such remedies as are available according to the procedural rules of the forum law.62 In Europe, the application of Article 5(2) before EU Member States’ courts is subject to the relevant jurisprudence of the ECJ. Secondly, the phrase ‘where protection is claimed’ has been often referred to as the entrenching country of protection (lex loci protectionis). Notably, the law of the protecting country does not necessarily need to coincide with the lex 60   GHC Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial Property (Geneva, United International Bureau for the Protection of Intellectual Property, 2007), 61–63. 61   See R Fentiman, ‘Choice of Law and Intellectual Property’, in J Drexl and A Kur (eds), above n 1, 129–50. 62   See Belgian Report, para 15.

General Report  17 fori, especially in cases where the court exercises its international jurisdiction over foreign IP rights’ infringement.63 Consequently, in some recently adopted legal instruments, the principle of the protecting country is referred to as ‘the law of the country for which protection is sought’ (Art 8(1) of the Rome II Regulation, Art 3:601(1) of the CLIP Principles and Art 301(1)(b) of the ALI Principles). Thirdly, one of the most debated issues was related to the scope of the wording that ‘the extent of protection’ shall be governed by the law of the protecting country. Some national reporters indicated that the prevailing approach, both in theory as well as in court practice, is that Article 5(2) shall be applied to all matters related to copyright.64 Such broad interpretation of the scope of Article 5(2) of the Berne Convention was also adopted in recent domestic private international law codifications (eg, Art 93-94 of the Belgian CPIL). Alternatively, some legal opinions support a more moderate approach arguing for the application of the lex originis to such issues as validity of copyright or initial ownership and other related issues.65 Besides Article 5(2), the Berne Convention contains several additional provisions relevant to the cross-border enforcement of IP rights. Namely, Article 6bis(3) of the Convention provides that the means of redress for safeguarding moral rights shall be governed by the legislation of the country where protection is claimed. Moreover, Article 7(8) states that the term of protection shall be governed by the legislation of the country where protection is claimed. However, the Convention also allows Member States to provide for a different term, which shall not exceed the term fixed in the country of origin of the work. The need for the lex protectionis rule could be best explained by the fact that national IP laws differ, which also means that the protection afforded to the right-holder and the procedural mechanisms are country-specific. The traditional understanding of the lex protectionis principle is closely intertwined with the territorial nature of intellectual property rights.66 Namely, the territoriality principle in its strictest sense has been interpreted as meaning that the infringing acts can occur only within the borders of the country where the right-holder has his/her rights. Hence, patent-infringing acts could occur only within the borders of the protecting country (country of registration); and the law of this country would be applicable to the infringement. This notion, however, does not adhere well with distant intellectual property infringements when the infringing acts committed in one country cause damage in a third country (especially in the case of infringement of IP rights in the digital environment). Albeit lex protectionis seems to render quite straightforward results (ie the application of the law for which the plaintiff seeks protection), cross-border enforcement of IP rights have unravelled numerous practicalities pertaining to the application of this rule, as illustrated in the following examples. The content of the lex protectionis is deemed unclear and there has been much contention as to whether lex protectionis should be applicable to any aspects related to IP rights (initial title, conditions of existence, effects, infringement, consequences of the infringement etc).

63   See Decision of the Commercial Court in Zagreb, where the provision ‘in which protection is sought’ was interpreted as meaning lex fori. For a more detailed analysis of the judgment, see Croatian Report, part 1.3. 64   See Belgian Report, para 16. 65   See Chs 11 and 14 below. 66   Sometimes ‘territoriality principle’ is also used to refer to the choice-of-law rule determining the applicable law for in an intellectual property infringement case.

18  Toshiyuki Kono and Paulius Jurcˇys

2.3  Current Discussion concerning the Appropriateness of the Territoriality Principle In an age where IP products are objects of international trade, it is argued that the territoriality principle is no longer feasible.67 This is so because the exploitation of IP rights has become more globalised. The overarching idea which underlies all those criticisms of the territoriality principle is that it hinders efficient adjudication of multi-state disputes.68 Such inefficiency is closely related with the sovereignty argument which puts forwards the interests of sovereign states but does not take into account the interests of private actors. Besides supreme legislative competence to regulate IP matters at the domestic level, sovereignty concerns are apparent in the existence of registration requirements and rules positing exclusive jurisdiction for issues related with certain aspects of IP rights (existence, registration, validity69). Another subset of arguments against territoriality are related to the uncertainty of what legal issues should be governed by the law of the country which grants IP rights. By and large, it seems there is consensus that the law of the protecting country should be applied to issues of validity, registration and infringement of IP rights. However, opinions differ as to whether the law of the protecting country should also apply to such issues of initial ownership (especially with regard to copyright works and employee inventions), remedies of the infringement and transferability of IP rights. Several legislative initiatives in the United States70, Europe71 and Japan72 have been conducted in order to clarify those issues; although a closer glimpse into those legislative proposals elicits divergent academic opinions. The inability to cover cross-border exploitation of IP rights facilitated the development of an argument that territoriality should be replaced by extraterritoriality. In particular, proponents of this approach argue that we should not be so opposed to extraterritoriality, for it is part of the everyday practice of the courts.73 To be more precise, legal scholars have questioned whether there are any possible routes of departure from the territoriality principle.74 Other academics ponder the possibility of creating an IP regime which is not based on the territorial notion of IP rights, if one could design it from scratch.75 Such considera67  See eg GB Dinwoodie, ‘Developing a Private International Intellectual Property Law: The Demise of Territoriality?’ (2009) 51 William and Mary Law Review 713–800; RC Dreyfuss, ‘Resolving Patent Disputes in a Global Economy’ in R Moufang and T Takenaka (eds), Patent Law: A Handbook of Contemporary Research (Cheltenham, Edward Elgar Publishing, 2009) 610; A Kur, ‘Are there any Common European Principles of Private International Law with regard to Intellectual Property?’ in S Leible and A Ohly (eds), above n 1, 1–14. 68   A Kur, ‘Are there any Common European Principles of Private International Law with regard to Intellectual Property?’ in S Leible and A Ohly (eds), above n 1, 1–14; PA de Miguel Asensio, ‘Recognition and Enforcement of Judgments in Intellectual Property Litigation: The CLIP Principles’, in J Basedow, T Kono and A Metzger (eds), above n 1, 243–44. 69   Art 22(4) of the Brussels I Regulation. 70   American Law Institute, Intellectual Property, above n 38; F Dessemontet, ‘A European Point of View on the ALI Principles-Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes’ (2005) 30 Brooklyn Journal of International Law 850. 71   The second draft of the CLIP Principles is available at www.cl-ip.eu. 72  ‘Transparency Proposal’ is available at www.tomeika.jur.kyushu-u.ac.jp/ip/proposal.htm and J Basedow, T Kono and A Metzger (eds), above n 1, 394–402. 73   GB Dinwoodie, ‘Extra-Territorial Application of IP Law: A View from America’, in S Leible and A Ohly, above n 1, 123–37. 74   GB Dinwoodie, ‘Developing a Private International Intellectual Property Law: The Demise of Territoriality?’ (2009) 51 William and Mary Law Review, 732. 75   J Basedow, T Kono and A Metzger (eds), above n 1, 49.

General Report  19 tions were raised by academics and practitioners involved in the adoption of recent proposals dealing with cross-border aspects of IP rights (ALI Principles, CLIP Principles and Japanese Transparency Proposal).

Part II  Jurisdiction over Disputes Concerning Intellectual Property Rights 3  Personal Jurisdiction in IP Cases Before hearing the merits of a case with a foreign element, a court must verify whether it has international jurisdiction. Yet, as will be shown throughout this report, due to different economic and cultural traditions, private international law rules vary from state to state. As a result, different principles concerning the exercise of international jurisdiction have developed over time. Differences in the national laws and practices of domestic courts have fostered discussion for the need to prepare an international treaty which would harmonise rules on international jurisdiction. In the early 1990s the proposal to adopt such an international treaty was launched under the auspices of the Hague Conference on Private International Law.76 Although the goal to adopt a comprehensive instrument to harmonise the grounds of international jurisdiction as well as the recognition of foreign judgments failed, the early drafts of the Convention presented in 1999 and 2001 epitomise the possible avenues for harmonisation which were agreed upon at an international level.

3.1  Personal Jurisdiction in the Hague Judgments Convention Article 3(1) of the 2001 Draft of the Hague Judgments Convention established a general ground of jurisdiction according to which a defendant may be sued in the courts of a state where that defendant is habitually resident. The notion of ‘residence’ was further clarified in paragraphs 2 and 3. The drafters of the Hague Judgments Convention had considered other possible grounds of general jurisdiction (eg, domicile and nationality). However, the preference was given to habitual residence because, first, it was considered to be ‘more reliable in a factual sense’ and, secondly, habitual residence was also used in previous Hague Conventions.77 The residence of the defendant is understood as one of the alternative grounds of jurisdiction.78 Article 9 established a special ground of jurisdiction over actions brought against branches of the defendant. Namely, this provision provided that a plaintiff may bring an action in the courts of the state in which a branch, agency or any other establishment of the 76   Permanent Bureau of the Hague Conference on private international law, Annotated List of Issues to be Discussed at the Meeting of the Special Commission on Jurisdiction and Enforcement of Judgments, www.hcch. net/upload/wop/jdgm_pd01(1994).pdf. 77   P Nygh and F Pocar, Report on the preliminary draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, available at www.hcch.net/upload/wop/jdgmpd11.pdf (hereinafter referred to as ‘Nygh-Pocar Report’) 40–42. 78   ibid 39–40.

20  Toshiyuki Kono and Paulius Jurcˇys defendant is situated, or where the defendant carried on his regular commercial activity. However, actions against branches could be brought only if the dispute directly relates to the activity of that branch, agency or other establishment. Such actions could be based on contract, tort as well as any other legal basis regardless of whether the particular activity occurred in the forum state.79 The Draft Convention did not provide for a definition of a ‘branch, agency or other establishment’; hence these concepts would have had to be interpreted according to the law of the forum. The explanatory report noted that such branch, agency or other establishment should be ‘an integral part of the parent organisation’.80 In addition, Article 17 introduces the possibility for a court of a Contracting State to assert jurisdiction on the basis of their national laws. Nonetheless, this would be possible only if there is a close connection between the dispute and the forum state. In order to prevent the adjudication of disputes by courts of states that obviously lack jurisdiction, the 2001 Draft of the Hague Convention established a list of connecting factors which would be considered as insufficient for the exercise of general jurisdiction (Art 18(1)). Namely, general jurisdiction should not be exercised by the courts of a Contracting State solely on the following: the ground that the presence of the property to be seised is located in the forum state; the domicile, habitual or temporary residence, or the nationality of the plaintiff or the defendant; the carrying on of commercial activities of the defendant in the forum state; the service of a writ upon the defendant in the forum state; unilateral designation of the forum by the plaintiff; opening of the proceedings for a declaration of enforceability, registration or enforcement of a judgment; or the signing of the contract or the existence of a related criminal action in the forum state. If one of the abovementioned criteria is satisfied, the court should find that it lacks jurisdiction.81 As regards the applicability of the 2001 Draft of the Hague Judgments Convention to IP-related disputes, several remarks should be stated. First, during the drafting process, consideration was given to whether IP disputes should fall within the purview of the Hague Judgments Convention at all. If IP cases are included within the material scope of the Convention, it was argued that a distinction must be made between registered and nonregistered IP rights. More particularly, as regards cases over non-registered IP rights (such as copyrights), general jurisdiction provisions established in the Hague Judgments Convention should be applied. The second issue was related to the treatment of registered IP rights and exclusive jurisdiction rules. Besides, different opinions were expressed with regard to infringement of registered IP rights: some submitted that disputes over infringement of registered IP rights should not be subject to exclusive jurisdiction provisions.82

3.2  Personal Jurisdiction in North America 3.2.1  Canadian and US Law In Canada, international disputes concerning IP rights are usually adjudicated either by the Federal Court of Canada or the courts of Canadian provinces. According to the Canadian Report, the jurisdiction of the Federal Court is rather limited and the majority of international disputes are adjudicated by provincial courts. In order to determine whether a   ibid 56.  ibid. 81   ibid at 78–79. 82   For further analysis see Ch 4 below. 79 80

General Report  21 Canadian court has international jurisdiction, two sets of factors are taken into consideration: (a) rules which determine a court’s jurisdiction (so-called ‘jurisdiction simpliciter’) and (b) matters of discretion (forum non conveniens). Legal sources governing jurisdiction simpliciter differ according to the province; however, the laws of all provinces require the existence of in personam jurisdiction. This requirement is largely satisfied if the party resides in one of the Canadian provinces.83 In addition, the laws of Canadian provinces also establish that Canadian courts have in personam jurisdiction if a party submits itself to the jurisdiction of a court. The forum non conveniens doctrine was established following the jurisprudence of English courts, and allowed the courts to stay the proceedings if the defendant could prove that the plaintiff ’s choice of forum was oppressive or otherwise amounted to an abuse of rights. In some Canadian provinces the court practices established specific criteria to be taken into consideration when deciding whether proceedings should be stayed.84 Hence this doctrine plays an important role in Canadian private international law because of the broadly framed rules on jurisdiction simpliciter. The principles of asserting international jurisdiction in the United States were developed by the courts. In one of the landmark judgments, International Shoe Co v Washington, the United States Supreme Court decided that in personam jurisdiction may be asserted if the defendant had sufficient minimum contacts with the forum and such exercise of jurisdiction did not offend traditional notions of fair play and substantial justice.85 The ‘minimum contacts’ requirement is met if the defendant purposefully availed himself of the privilege of conducting activities within the forum state thus invoking the benefits of protection of its laws. Accordingly, a US court can assert personal jurisdiction over a corporation that delivers its products into a stream of commerce with the expectation that they will be purchased by consumers in the forum state.86 As in Canada, the forum non conveniens doctrine has been often invoked before US courts. In US law this theory requires the court to consider two elements: first, the existence of an alternative forum that has jurisdiction to hear the case; and, second, which forum would be most convenient and where the adjudication of the dispute would best serve the ends of justice.87 In deciding whether it is convenient to decide the case, the court must weigh public and private interests, which include access to proof, availability of witness, and all other practical problems which would make the trial of the case easy, expeditious and inexpensive.88 Yet, the fact that foreign law would have to be applied is not sufficient to dismiss a case.89 In the context of copyright infringement, the United States courts tend to hold that if allegedly an infringing act occurred abroad and the dispute arose between foreign nationals, there are strong policy concerns to allow dismissal of an action on the grounds of the forum non conveniens doctrine.90 83   For a more comprehensive analysis of the law of each Canadian province see Canadian Report, section 1.1.2.2. 84  ibid. 85   International Shoe Co v Washington 326 US 310 (1945) 316. 86   World-Wide Volkswagen Corp v Woodson 444 US 286 (1980) 297–98. 87   Gulf Oil Corp v Gilbert 330 US 501 (1947) 508–9. 88  ibid. 89   Piper Aircraft Co v Reyno 454 US 235 (1968) 260. 90   See eg Dominic Murray v BBC 81 F3d 287 (2d Cir 1996) 290; Skelton Fibres Limited et al v Antonio Linares Canas et al 1997 US Dist LEXIS 2365; Boosey & Hawkes Music Publishers Ltd v The Walt Disney Company and Buena Vista Home Video 145 F3d 481 (1998) 491.

22  Toshiyuki Kono and Paulius Jurcˇys In order to hear a dispute pertaining to foreign IP rights, Canadian and US courts could exercise their adjudicative authority if they have both in personam and subject-matter jurisdiction. In personam jurisdiction requires the court to determine whether a particular defendant has sufficient contacts with the forum state to justify the court’s exercise of its authority over that defendant. Subject-matter jurisdiction means that a court has to determine whether an actionable claim has been stated.91 As a matter of procedural law, in the United States the plaintiff bears the burden of proving the existence of both personal and subject-matter jurisdiction.92 The subject-matter jurisdiction requirement would usually mean that Canadian and US courts are not competent to hear disputes concerning the validity and infringement of foreign IP rights. 3.2.2  Personal Jurisdiction in the ALI Principles Chapter I of Part II of the ALI Principles deals with the jurisdiction over litigants. According to the ALI Principles, in order to be competent to hear an IP-related case, the court must have jurisdiction over the parties as well as subject-matter jurisdiction.93 Section 201 of the ALI Principles establishes a general jurisdiction rule based on the defendant’s residence. Pursuant to section 201(1), a natural person may be sued in any state in which he is resident, regardless of whether or not the claims arise in that state. The residence of a natural person is considered to be in the state in which he is habitually found or maintains significant professional or personal connections. Further, the residence of a legal person is in any state in which (a) it has a statutory seat; (b) it is incorporated or formed; (c) its central administration is located; or (d) it maintains its principal place of business (section 201(3)). It is worth noting that although the ALI Principles aim to propose jurisdiction rules that could be applied in common law countries as well as civil law countries, the competence of the court in the state where the defendant is resident is presumptive but not preferred. This approach was taken in order to take into consideration the specificities of the IP litigation which are related to the territorial nature of IP rights and to reflect the virtual omnipresence of the corporations which are engaged in activities over the Internet.94 In addition, section 207 establishes prohibited bases of jurisdiction in order to assure that courts fairly exercise their jurisdiction over multi-territorial disputes. Pursuant to section 207, a court cannot exercise jurisdiction solely on the ground that the tangible or intellectual property belonging to the defendant is present in the forum state, unless the dispute is directly related to that property. Further, the court cannot assert jurisdiction solely on the basis of the nationality of the parties or the presence of the plaintiff in the forum state; the conduct of the commercial activities of the defendant in the forum state (except where the dispute arises out of these activities); service of a writ upon the defendant in that state; or of completion of the formalities necessary to execute an agreement to which that dispute relates.

91   Ralphe A Armstrong and Anna Music v Virgin Records Ltd 91 F Sup 2d 628 (2000) 636. For the application of these jurisdiction requirements in patent infringement disputes see eg Viam Corp v Iowa Export-import Trading Co 84 F3d 424 (Fed Cir 1996) 427. 92   Sram Corporation v Sunrace Roots Enterprise Co Ltd 390 F Sup 2d 781 (2005). 93   American Law Institute, Intellectual Property, above n 38, 28. 94   ibid 36 (Reporters’ notes).

General Report  23

3.3  Personal Jurisdiction in European Countries 3.3.1  Defendant’s Domicile as the General Ground of Jurisdiction according to the Brussels/ Lugano Regime Article 2 of the Brussels I Regulation95 provides for a general jurisdiction rule according to which persons domiciled in a Member State shall be sued in the courts of that Member State (the so-called actor sequitur forum rei principle). The rationale behind this general ground of jurisdiction based on the defendant’s domicile is to make it easier for a defendant to defend himself.96 The general rule conferring jurisdiction on the Member State court of the defendant’s domicile would be applicable even if the plaintiff does not have his residence in the EU.97 The Brussels I Regulation contains no autonomous rules for the determination of the place of domicile of natural persons. Instead, Article 59 stipulates that the domicile of a natural person has to be determined according to the internal law of the forum. If a party is domiciled in another Member State, the court shall apply the law of that state in order to determine whether a party is domiciled there.98 It should be also noted that the court’s jurisdiction, based on defendant’s domicile, is applied regardless of the nationality of the defendant, and even if the plaintiff is domiciled outside of the EU or EFTA. As far as legal entities are concerned, Article 60(1) of the Brussels I Regulation and the revised Lugano Convention establish an autonomous notion of domicile. In particular, they stipulate that a company or other legal person or association of natural persons is domiciled at the place where it has its (a) statutory seat; (b) central administration; or (c) principal place of business.99 In addition, Article 5(5) of the Brussels I Regulation100 establishes a special ground of jurisdiction and provides that in disputes arising out of the operations of a branch, agency or other establishment, a person domiciled in a Member State may be sued in another Member State in which the branch, agency or other establishment is situated. In one of its early judgments, the ECJ decided that efficacy of the administration of justice requires that Article 5(5) be interpreted in an autonomous and restrictive manner.101 The ECJ further decided that for the purposes of establishing international jurisdiction over the parent body at the place of its branch, agency or establishment, such branch, agency or establishment should be subject to the direction and control of the parent body.102 In other words, the branch, agency or other establishment must appear to third parties as an easily discernible extension of the parent body.103 In its early practice the ECJ also provided for a clarification of the notion of ‘operations’ of the branch, agency or other establishment which   Art 2 of the Lugano Convention and the revised Lugano Convention (2007).   Case C-26/91 Handte v Traitements Mécano-chimiques des Surfaces [1992] ECR I-3967, para 14. 97   Case C-412/98 Group Josi Reinsurance Comp v UGIC [2000] ECR I-5925, para 61. 98   For a more detailed discussion as to the application of Arts 2 and 59 of the Brussels I Regulation by domestic courts see Austrian Report, section 4.1.1; French Report, answers to HC 1; Italian Report, section 1.2.2. 99   It should be noted that the Lugano Convention of 1988 in its Art 53 only refers to the ‘seat of a company or association of natural or legal persons’ which are to be considered as domicile and mandated by the court to apply its own rules of private international law to determine that seat. 100   Art 5(5) of the Lugano Convention and the revised Lugano Convention (2007). 101   Case 33/78 Somafer SA v Saar-Ferngas AG [1978] ECR 2183, paras 7 and 8. 102   Case 14/76 A De Bloos SPRL v Société en commandite par actions Bouyer [1976] ECR 1497, paras 20–21; Case 139/80 Blanckaert & Willems PVBA v Luise Trost [1981] ECR 819, para 9. 103   Case 139/80 Blanckaert & Willems PVBA v Luise Trost [1981] ECR 819, paras 12–13. 95 96

24  Toshiyuki Kono and Paulius Jurcˇys should, inter alia, mean (1) actions relating to undertakings which have been entered into at the place of business of the branch in the name of the parent body and which are be performed in the Member State where the place of business is established, and (2) actions concerning non-contractual obligations arising from the activities in which the branch has entered at the place in which it is established on behalf of the parent body.104 The rule conferring jurisdiction upon the courts of the state of the defendant’s domicile can be derogated from only in situations prescribed in the Brussels I Regulation itself (Art 3). Accordingly, a court of a Member State may exercise its jurisdiction over a foreign defendant, if there is one of the special or exclusive grounds of jurisdiction or if the jurisdiction is based on parties’ choice of court agreement (Arts 5–31 of the Brussels I Regulation). Such ‘cardinal’105 importance of a defendant’s domicile as a general ground of jurisdiction was confirmed by the ECJ which decided that other jurisdiction rules (Arts 5–31) are merely exceptions to Article 2 and thus have to be interpreted restrictively.106 In addition, the general jurisdiction rule of the domicile of the defendant in a Member State cannot be overcome on the basis of national law.107 The purpose of such a framework of international jurisdiction is based on legal certainty and predictability considerations. Foreseeability of the results also explains why such doctrines as forum non conveniens were not endorsed by the European legislator.108 3.3.2  Jurisdiction based upon the Defendant’s Domicile in IP-Related Disputes In cross-border IP litigation, the question then arises with regard to the relationship of different grounds of jurisdiction. In particular, it might be questioned whether the territorial nature of IP rights would not prevent the courts from hearing disputes involving foreign IP rights. According to most national reports from European countries, the principle of a defendant’s domicile (actor sequitur forum rei) applies equally with regard to actions concerning IP rights.109 Therefore, the court of the country where the defendant is domiciled can assert jurisdiction over actions involving claims related not only to infringements of domestic IP rights, but also claims concerning foreign IP rights (eg, when IP infringing acts have occurred in another Member State or in a non-EU state). This approach appears to be a well-established practice by domestic courts of many EU Member States and is supported among the majority of academics.110 Hence, in cases where foreign IP rights are infringed by acts committed abroad, the Brussels/Lugano regime allows the suing of the defendant (alleged infringer of IP rights) before the courts of an EU Member State if the defendant has his domicile there. This is also the prevailing approach in cases involving Internetrelated infringements of IP rights.111 104   Case 33/78 Somafer SA v Saar-Ferngas AG [1978] ECR 2183, para 13. The same practice is established by courts of some Member States. For a discussion see eg Austrian Report, section 4.1; German Report, answers to HC 1; Greek Report, answers to HC 1; Slovenian Report, answers to HC 1; UK Report, answers to HC 1. 105   See Belgian Report, para 41. 106   See inter alia Case C-412/98 Group Josi Reinsurance Comp v UGIC [2000] ECR I-5925, paras 35–37; Case C-51/97 Réunion européenne SA and Others v Spliethoff ’s Bevrachtingskantoor BV [1998] ECR I-6511, para 16. 107   Case C-281/02 Owusu v Jackson [2005] ECR I-1383, para 37. 108   ibid para 41. 109   Greek Report, answers to HC 1. 110   Austrian Report, section 3.2.3; Belgian Report, para 41; Dutch Report, section 3.2 and nn 18–19; German Report, section 2.2.1.2; Italian Report, answers to HC 1; Spanish Report, answers to HC 1. 111   Austrian Report, section 3.2.3; German Report, section 2.2.1.2; Spanish Report, answers to HC 1 where it is also noted that the issue of applicability of Art 2 of the Brussels I Regulation to IP infringements which occur on the Internet, is still controversial.

General Report  25 The same principle where a court of a Member State has jurisdiction pursuant to Article 2 of the Brussels I Regulation is also applicable with regard to actions concerning unitary Community IP rights. For instance, Article 97 of the Community Trade Mark Regulation provides that all infringement actions and actions for declaration of non-infringement (if such actions are permitted under national law) shall be brought in the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any of the Member States, in which he has an establishment.112 Only if the defendant is neither domiciled nor has an establishment in any of the Member States, shall such proceedings be brought in the courts of the Member State in which the plaintiff is domiciled or has an establishment. In addition, Article 98(1) stipulates that such a competent court shall have jurisdiction in respect of acts of infringement committed or threatened within the territory of any of the Member States. The same principle also applies with regard to Community design rights113 and Community plant variety rights.114 The jurisdiction of the court in IP-related cases based upon Article 2 of the Brussels I Regulation covers all manner of IP disputes, except those related to the registration or validity of foreign IP rights. Under the existing interpretation of the Brussels I Regulation, such issues as registration or validity fall under the exclusive jurisdiction of courts of the granting state and have to be adjudicated even if issues relating to the registration or validity of IP rights arise as a preliminary question.115 Some national reporters noted that the prevailing approach is that courts of the defendant’s domicile can also order cross-border injunctions in IP infringement cases.116 One other related question concerns the scope of jurisdiction of the court on the basis of the defendant’s domicile. The landmark judgment that sheds some light to this issue is the Shevill case of the ECJ.117 In Shevill the dispute related to the protection of personality rights which were allegedly infringed by the distribution of a journal in several Member States. Some national reports mentioned that the prevailing approach is to apply the Shevill jurisprudence also to multi-state IP infringements.118 Accordingly, the court which asserts jurisdiction on the ground that the defendant is resident in the forum country (Art 2 of the Regulation) is competent to decide upon the entire damage that arose from an infringement of parallel IP rights in the forum state and other states, given that the harmful event causing damage occurred in the forum country. However, it should be noted that in such a case, the court would have to apply the laws of different foreign countries for which the protection is sought. If the jurisdiction of the court is based upon the operations of the branch (Art 5(5) of the Regulation) and the damage or the harmful event occurred in another country, the court would have jurisdiction only with regard to the damage sustained in the forum country.119 112   Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (codified version) [2009] OJ L78/1. 113   Arts 82 and 83(1) Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs [2002] OJ L3/1. 114   Art 101 of the Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights [1994] OJ L 227/1. 115   The matters related to the exclusive jurisdiction are further discussed in Ch 4 below. 116   Belgian Report, para 159 and also nn 155 and 156. 117   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415. 118   Dutch Report, section 3.2; German Report, answers to HC 1; Italian Report, answers to HC 1; Spanish Report, answers to HC 1. 119   UK Report, answers to HC 1.

26  Toshiyuki Kono and Paulius Jurcˇys On the other hand, some national reports drew attention to the fact that the domestic case law on this issue is scarce or does not exist at all; and that the territorial nature of IP rights might probably be interpreted as limiting the court’s jurisdiction to decide only claims related to the damage sustained in the forum country.120 However, the Swedish Report noted that as a matter of practice, Swedish courts would determine the overall damage if the infringing acts were committed in Sweden.121 The same principles are also established with regard to Community IP rights: namely, the court which has jurisdiction based upon the defendant’s domicile is competent to hear claims related to acts of infringement committed or threatened within the territory of any of the Member States (Art 98 of the Community Trade Mark Regulation, Art 83 of the Community Designs Regulation, and Art 101(2) of the Community Plant Variety Rights Regulation). 3.3.3  Third-Country Situations The Brussels/Lugano regime does not extend to situations where neither of the litigants is resident in any EU Member State. In such cases, the domestic courts of the EU and the EEA states would assert international jurisdiction following the rules of the forum state (Art 4(1) of the Regulation). The domicile of the defendant is acknowledged as the general ground of international jurisdiction in domestic statutes of many EU Member States.122 Some EU Member States (the Netherlands123 and Spain) have aligned their domestic jurisdiction provisions to the Brussels/Lugano regime. For instance, in Spain, Organic Law 6/1985 was adopted on the basis of the Brussels Convention of 1968; hence, Spanish courts would assert jurisdiction over parties who are domiciled in third states, following the same principles applied in internal EU situations.124 It should be also noted that some national reports of EU Member States highlighted the fact that although national courts would apply the provisions of their domestic statutes in order to assert international jurisdiction, the application of domestic law has been largely influenced by EU law and the jurisprudence of the ECJ.125 Yet, not all EU countries follow principles similar to those laid down in the Brussels/ Lugano instruments. The courts of the United Kingdom would assert jurisdiction if the claim could be validly served to the defendant. Insofar as jurisdiction over the ‘overseas companies’ with a branch in the UK is concerned, UK courts would have to follow specific provisions of the Companies Act of 2006 and the Overseas Companies Regulations of 2009.126 In France, Articles 14 and 15 of the Civil Code establish nationality of the plaintiff or defendant as a ground for asserting international jurisdiction. These grounds could be invoked only if, firstly, there are no alternative grounds of international jurisdiction and, secondly, upon the request of the plaintiff.127

  For a discussion, see French Report, answers to HC 1; Slovenian Report, answers to HC 1, question 4.   Swedish Report, answers to HC 1.   Eg Arts 42 and 43 of the French Code of Civil Procedure; Art 3 of the Italian PIL Statute; Art 48(1) [personal jurisdiction] and Art 59 [operation of a branch or agency] of the Slovenian PILP Act; Art 112 of the Swiss Federal Private International Law Act. 123   Dutch Report, section 3.2. 124   Spanish Report, answers to HC 1. 125   French Report, sections 1.2.1 and 1.2.3 for further analysis of the French system of international jurisdiction. 126   UK Report, answers to HC 1. 127   French Report, section 1.2.3.6. 120 121 122

General Report  27 Insofar as a court’s competence to decide over damage claims arising from multi-state IP infringement is concerned, the legal situation would be less clear in cases involving defendants domiciled in third countries. The UK Report, for instance, draws attention to the fact that, subject to the forum non conveniens doctrine, and given that the defendant can be served without leave, UK courts would have unlimited jurisdiction to determine the damage sustained in foreign countries.128 3.3.4  Brussels I Reform Proposals One of the main features of the Commission’s Proposal to reform the Brussels I Regulation is the extension of the scope of application to cases where the defendant is not domiciled in a Member State (so-called ‘subsidiary jurisdiction’). The Commission requested the preparation of a study concerning the possibility of applying special jurisdiction rules of the Regulation in cases involving defendants who are domiciled outside of the EU129 based on the consideration of further legislative options. If the proposal to extend the personal scope of the application of the Brussels I Regulation with regard to defendants resident in non-EU states was adopted, this would mean that the same principles which had been developed for intra-Community situations would be applicable also in cases brought against defendants domiciled in third states. This would harmonise matters which had so far been left to Member States’ domestic legislation, and thus would contribute to more legal certainty. Contrary to the Brussels I Regulation, the CLIP Principles confer general jurisdiction over the courts of the defendant’s habitual residence (Art 2:201(1)). The CLIP Principles also provide for an explanation of the notion of ‘habitual residence’, which in the case of a natural person acting in the course of a business activity implies also the principal place of business (Art 2:601(1)). Article 2:601(2) of the CLIP Principles stipulates that the habitual residence of a company or other legal person shall be in any state in which it has its statutory seat or registered office; or central administration or principal place of business. If a legal entity lacks a statutory seat or registered office, it may also be sued in the state where it was incorporated or, if no such place exists, under whose law it was formed. Finally, similarly to the Brussels I Regulation, the CLIP Principles provide that, in disputes arising out of operations of a branch, agency or other establishment, a person may be sued in the courts of the place in which the branch, agency or establishment is situated (Art 2:207).

3.4  Asian Countries 3.4.1  General Grounds of Jurisdiction in India and Taiwan The Indian Code of Civil Procedure of 1908 contains no specific rules establishing when Indian courts have jurisdiction in cases with a foreign element. Nevertheless, according to their National Report, Indian courts would assume international jurisdiction if the defendant resides in India or is engaged in commercial activities there. ‘Residence’ in India means that the defendant has to dwell permanently or for a considerable time, or have his home in   UK Report, answers to HC 1.  See ec.europa.eu/justice_home/doc_centre/civil/studies/doc_civil_studies_en/htm, Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (21 April 2009), COM(2009) 175, 3–4. 128 129

28  Toshiyuki Kono and Paulius Jurcˇys India; a person may have several dwellings concurrently. The nationality of the defendant is not relevant to establishing jurisdiction of the Indian courts. As regards legal entities, Indian courts have international jurisdiction over the defendant’s legal entities that are incorporated in India under the Companies Act and have their principal or subordinate office in India. An action may be filed against a foreigner who is engaged in commercial activities and has an agent in India.130 Indian courts may also assert international jurisdiction over actions against foreigners if there is a cause of action determined in accordance with Indian laws. Taiwanese courts also have international jurisdiction over actions brought against corporate defendants who have their branch in Taiwan (Art 2 of the Civil Procedure Law).131 3.4.2  The Main Principles of the Exercise of International Jurisdiction in Japan The Japanese Code of Civil Procedure, adopted in 1890, did not provide for any specific provisions determining international jurisdiction of Japanese courts. Hence, the main principles concerning the exercise of international jurisdiction were developed gradually by the Japanese courts. It was not until May 2011 that Japan’s Parliament amended the CCP and introduced specific rules on international jurisdiction. This newly adopted legislation can be better explained in light of several landmark decisions by the Japanese courts. One of the trailblazing judgments of the Supreme Court was handed down in 1981, in the so-called Malaysia Airlines case.132 This case established the main principles of determining whether and under what circumstances Japanese courts can exercise international jurisdiction in disputes with a foreign element. In this case an action was brought by the relatives of Japanese passengers killed in a plane crash on a Malaysian domestic flight between Penang and Kuala Lumpur; there were no survivors. The plaintiffs’ action for compensation of damages, brought before a Japanese court, was challenged mainly on jurisdictional grounds. The plaintiffs argued that Japanese courts have international jurisdiction based on the place of the occurrence of contractual obligations. In addition, it was submitted that the defendant had his place of business in Tokyo. The defendant challenged the international jurisdiction of Japanese courts. The Supreme Court found that Japanese courts should have international jurisdiction over an action. Namely, the Supreme Court noted that in the absence of clear provisions on international jurisdiction that would assist in rendering the decision, rules on domestic jurisdiction envisaged in the Code of Civil Procedure should be interpreted in light of the principle of j¯ori (reasonableness, justice) and applied appropriately to determine international jurisdiction in cross-border disputes. The Court remarked that the defendant was engaged in economic activities in Japan, had appointed a representative in Tokyo and had a place of business there. Since the 1981 decision of the Supreme Court in the Malaysia Airlines case, lower courts in Japan have made minor modifications to the doctrine. The so-called ‘special circumstances test’ was developed to allow Japanese courts some discretion in applying general rules in the event that certain specific facts would justify deviation. In their decisions, the lower courts followed the concept that in cases where it is possible to establish the existence of one of the grounds of the venue, according to the provisions of the CCP, the principle of   Indian Report, section 1.3.   Taiwanese Report, answers to HC 1.   Supreme Court of Japan, Judgment of 16 October 1981, 35 Minsh¯u 1224.

130 131 132

General Report  29 j¯ori also mandated acknowledgement of the court seised having international jurisdiction. However, such a general principle was subject to certain limitations: the exercise of international jurisdiction would not be possible if it were to conflict with the principle of fairness between the parties or prevent prompt and speedy adjudication of the dispute. The special circumstances test meant that the court should consider various issues related to the conduct of the proceedings before asserting international jurisdiction. Such issues may be related to the collection of evidence, the hearing of witnesses, issuance of interim orders and so on. The change of approach was welcomed by the bar and legal academics, who applauded the fact that the determination of the existence of international jurisdiction would mean a more case-specific investigation of matters pertaining to the assertion of international jurisdiction. The special circumstances test was later approved by the Supreme Court in the so-called Family case.133 In this case the plaintiff was a Japanese legal entity engaged in the business of importing cars and car parts into Japan. The plaintiff concluded a contract with the defendant (a Japanese national domiciled in Germany), according to which the defendant was entrusted to purchase cars from various European countries, ship them to Japan and undertake other market research activities. For this purpose, a special account was opened to which the plaintiff transferred more than 90 million yen. Over time, the plaintiff became concerned that the entrusted money was not being managed properly. Hence, the defendant was requested to continue the payments for cars purchased by means of letters of credits. In addition, the defendant was requested to return the money from the fund. Later, the plaintiff filed a suit before the Chiba District Court for the repayment of money, arguing that this court was competent to hear the dispute because the place of performance of obligation was the plaintiff ’s headquarters. The defendant challenged the existence of international jurisdiction of the Japanese courts by claiming that the requested amount had been transferred. In its decision on the existence of international jurisdiction, the Supreme Court proceeded from the statement that even in cases where the defendant is not resident in Japan, Japanese courts may nonetheless have international jurisdiction over disputes if there is a connection between the dispute and Japan. After reiterating the view that Japanese courts have jurisdiction over the dispute if one of the conditions of venue set out in the CCP is satisfied, the Supreme Court added that ‘international jurisdiction may be denied if there are some special circumstances where the conduct of court proceedings in Japan is against the idea of fairness between the parties, [or prevents] prompt and speedy adjudication of the dispute’. In the case at hand, the Supreme Court found that the contract was concluded in Germany and the defendant was entrusted to engage in various commercial activities in Germany; there was no explicit agreement between the parties regarding neither the place of performance of obligation nor the governing law. The Court decided that the place of performance of the contract was in Japan, and the governing law of the contract should be Japanese law; therefore international jurisdiction of the Japanese courts could be asserted. However, the Supreme Court took into account that the defendant could not be aware that the claim for the performance of contractual obligations could be brought before Japanese courts. Moreover, the court referred to the fact that the defendant had been living in Germany for the last 20 years prior to the dispute; and since the plaintiff was a legal corporation, the filing of an action should not be an excessively burdensome task. Based on these   Supreme Court, Judgment of 11 November 1997, 51 Minsh¯u 4055.

133

30  Toshiyuki Kono and Paulius Jurcˇys considerations, the Supreme Court came to the conclusion that a decision to exercise international jurisdiction over the dispute would be against the principle of fairness, and would prevent prompt and speedy adjudication of the dispute; therefore they decided to decline international jurisdiction over the dispute. 3.4.2.1  The New Rules on International Jurisdiction The new Japanese rules on international jurisdiction are to a large extent built upon the domestic jurisdiction rules established in the CCP and the practice of Japanese courts. The members of the working group in charge of the preparation of international jurisdiction rules agreed that the principle according to which the action shall in principle be brought before the courts of the defendant’s domicile (actor sequitur forum rei) properly balances the interests of the parties, and therefore should be followed. Accordingly, with regard to actions against natural persons, Article 3-2 of the CCP (2011) establishes that Japanese courts have international jurisdiction if the person against whom the action is brought has his/her domicile in Japan. In a case when the defendant has no domicile or his/her domicile is unknown, Japanese courts have international jurisdiction if the person against whom the action is brought has his/her residence in Japan. The notion of ‘domicile’ should be interpreted in light of Article 22 of the Japanese Civil Code as meaning long-standing contacts with Japan, whereas ‘residence’ implies temporary relationships with Japan.134 Article 4(4) of the CCP provides for domestic grounds of territorial jurisdiction for actions against legal persons. More precisely, Article 4(4) establishes that actions against legal entities shall be brought before courts where the legal entity has its principal office or principal place of business. Further, Article 4(4) establishes that in the case where the place of the office or business is not known, the action can be also brought before a court of the place where the representative or person in charge of the business has his/her domicile. Accordingly, Article 3-2(iii) of CCP (2011) establishes that Japanese courts shall have jurisdiction with regard to actions against a legal entity or any other association or foundation when the legal entity or any other association or foundation has its principal office or place of business in Japan; or, if the place of business is not known or does not exist, the representative or other persons in charge of the business have their domicile in Japan. Further, Article 3-3 provides, inter alia, that actions against persons who have their office or place of business can be brought before Japanese courts but only with regard to commercial activities in Japan. In addition, Article 3-9 of the CCP (2011) codified the special circumstances test developed by the Japanese courts. Hence, according to this provision Japanese courts would have the discretion to decline international jurisdiction over either part of or the whole action, if it appears that there are some special circumstances affecting the fairness between the parties or prompt and speedy adjudication of the dispute. These general jurisdiction rules apply also with regard to cross-border IP disputes. 3.4.2.2  The Transparency Principles The general grounds of international jurisdiction established in the Transparency Principles by and large follow the established practice of Japanese courts and the Proposal for the 134   Kokusai saiban kankatsu kenky¯u-kai [International Jurisdiction Study Group], ‘Kokusai saiban kankatsu kenky¯u-kai h¯okoku (1) [Report of the International Jurisdiction Study Group (1)]’ 883 New Business Law (2008.6.15) 6. Art 22 of the Japanese Civil Code provides: ‘The principal place wherein a person lives shall be his/ her domicile’.

General Report  31 Amendment of the CCP.135 Hence, Japanese courts are conferred international jurisdiction over actions concerning IP rights if the defendant is domiciled or has its principal office or establishment in Japan (Arts 101(1) and 102(1)). It should also be noted that according to the Transparency Principles the court of the state where the defendant is domiciled can also hear claims concerning multi-territorial infringements of IP rights, and decide over claims concerning the damage sustained in foreign states.136 Article 109 of the Transparency Principles establishes a general exception allowing Japanese courts to dismiss a claim, if the claim is so closely related to other countries’ public-interest policies and the proceedings in those countries would be more appropriate than in Japan. This provision to some extent resembles the special circumstances test developed in the Japanese court practice. Yet, at the same time it should be noted that even though Article 109 is intended to provide some flexibility to Japanese courts in determining which court is in the most advantageous position to adjudicate the dispute, the intention of the drafters of the Transparency Principles was to interpret the notion of the ‘public-interest policy’ narrowly.137 3.4.2.3  Joint Japanese-Korean Proposal (Waseda Principles) The defendant’s habitual residence is also established as a general jurisdiction ground in the Waseda Principles (Art 201). ‘Habitual residence’ means the place where the party concerned habitually resides, including his or her principal office or place of business. In the event that the defendant is a corporation, habitual residence means the place where the head office of the corporation or any other legal person is located, and the place under the law of which that corporation or legal person is established. This general ground of jurisdiction is subject to limitations posed by exclusive jurisdiction rules (Art 209), choice-ofcourt agreements (Art 205) or jurisdiction by appearance of the defendant (Art 206). It should be also noted that the Waseda Principles also provide for a special jurisdiction rule determining international jurisdiction based on the place of business. The provision is drafted in light of the existing Japanese domestic jurisdiction regime and stipulates that a person may be sued in a state in which it has a business office, but only with regard to the business conducted at such business office or other office. In addition, Article 212 of the Waseda Principles establishes four grounds which are considered insufficient for a court to base its international jurisdiction: (i) nationality or habitual residence of the plaintiff in the forum state; (ii) nationality of the defendant; (iii) the temporary presence of the defendant or service of writ upon the defendant; (iv) the performance of the formalities necessary to enter into a contract. These prohibited grounds of jurisdiction were drafted with respect to Article 18 of the 1999 Draft Hague Judgments Convention.138 The Waseda Principles, prepared by scholars from Korea and Japan, establish the special circumstances test in Article 211. The special circumstances test would have only ‘negative’ effects in establishing international jurisdiction: a court which has jurisdiction pursuant to Articles 201–8 is entitled to dismiss a part of the whole action if there are 135  The Transparency Principles were drafted with an intention to facilitate the development of Japanese domestic legal framework. 136   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 99. 137   Ibid, 108–9. 138   Comments to Art 212 of the Waseda Principles.

32  Toshiyuki Kono and Paulius Jurcˇys special factors that would undermine the fairness between the parties, due process or a prompt trial. 3.4.3  Personal Jurisdiction in Korea The general system concerning the exercise of international jurisdiction in Korea is quite similar to the principles established in Japanese law. Article 2 of the Korean Private International Act was drafted on the basis of previously developed court practice and provides that Korean courts shall have international jurisdiction if a party or a case is substantially connected to the Republic of Korea. In its practice, the Supreme Court of Korea emphasised that in asserting international jurisdiction, Korean courts should take into consideration the international nature of the dispute and consider whether the exercise of jurisdiction would not undermine such underlying principles as fairness between the parties, appropriateness and expediency of adjudication, as well as judicial economy.139 According to their national report, Korean courts would most probably exercise international jurisdiction over a dispute if the defendant is resident in Korea.140 Article 5 of the Private International Act prescribes that where the defendant is a legal entity, Korean courts would assert jurisdiction if the defendant has its principal office or business establishment in Korea. If the place of the principal office or business establishment is not known, jurisdiction should be asserted according to the domicile of the person who is principally in charge of its activities. In addition, Article 12 of the Korean Private International Act posits a special jurisdiction rule according to which an action concerning the affairs of an office or business place can be brought to the court located in the place of such office or business.141 Insofar as multi-state IP disputes are concerned, the Korean court would exercise jurisdiction regardless of whether the plaintiff seeks the protection of Korean IP rights or foreign IP rights. For instance, in the Sonata of Temptation case,142 the Seoul Central District Court found that it had international jurisdiction because both defendants were resident in the Republic of Korea, the copyright infringement had taken place in Korea and there were no special grounds why Korean courts should dismiss the action. Similarly, the close connection and thus international jurisdiction of Korean courts was asserted in the 49 Things to Do in Your Life case, where the court found that the headquarters of the defendants were located in Korea and that the copyright-infringing activities also occurred in Korea.143 The Korean Principles follow the established court practices and entrench the substantial connection between the parties or the dispute and the forum state requirement as the basis for the exercise of international jurisdiction. Article 9 of the Korean Principles establishes a general principle rule that the court of the state where the defendant is habitually resident shall have jurisdiction. Similarly to section 207 of the ALI Principles, the Korean Principles also aim to limit the possibility of an exorbitant exercise of jurisdiction and establish certain grounds where there is no substantial connection between the forum and the dispute.

  Korean Report, sections 1.2 and 2.1, answers to HC 1 and n 283 for further references.   Korean Report, answers to HC No 1. 141  ibid. 142   See Korean Report, sections 1.2 and 2.1; and answers to HC 1. 143   Korean Report, section 2.1. 139 140

General Report  33

3.5  Comparative Observations The national reports have highlighted disputes involving foreign elements that could be adjudicated by domestic courts if the domicile or residence of the defendant is a forum state and the dispute has certain connection with the forum state. However, the standards for determining whether the dispute bears sufficient connection with the forum state vary. In addition, as was illustrated by the national reports, domestic laws also have different methodologies that the courts could apply to determine whether jurisdiction over a dispute could be exercised (eg, forum non conveniens or special circumstances test). The close analysis of the represented legal systems shows that the adjudication of multi-state IP disputes is often constrained by a subject-matter jurisdiction requirement or a narrow interpretation of exclusive jurisdiction rules.

4  Exclusive/Subject-Matter Jurisdiction One of the key problems related to the cross-border enforcement of IPs is the limitations posed by exclusive jurisdiction (subject-matter jurisdiction) rules. Exclusive jurisdiction conventionally means the state of affairs where only courts of a particular country are competent to hear certain disputes. Traditional examples of matters which usually fall under exclusive jurisdiction are immovable property or matters related to the registration of registries. In the case of immovables, courts of the country where the immovable is situated may often have exclusive jurisdiction. Further, matters related to registries or registration may be subject to exclusive jurisdiction by the courts of the place of registration. Hypothetical case no 2 of the Questionnaire aims to enquire into the legal approaches to exclusive/subject-matter jurisdiction in IP disputes. The hypothetical case proposes a situation where a court of country X hears a dispute between two parties concerning the infringement of a patent granted by a foreign state. National reporters were asked whether the courts of their countries would have jurisdiction over foreign IP rights (infringement, validity etc) and if so, what would be the legal effects of such decisions (erga omnes, or between the parties only). Further, the questions of the hypothetical case study aimed to verify whether courts could decide upon the validity of a foreign IP right if this issue arose as a preliminary matter, and whether those decisions differ with regard to registered and non-registered IP rights.

4.1  Exclusive Jurisdiction Rules in the 2001 Draft of the Hague Judgments Convention The negotiations to adopt the Hague Judgments Convention failed in part due to disagreements on various aspects of jurisdiction in IP matters. Nevertheless, the outcome of the discussions during the negotiations had a threefold effect. First, the importance of matters related to jurisdiction in IP cases was acknowledged as playing an important role in the area of international commercial litigation. Secondly, the main problems related to IP

34  Toshiyuki Kono and Paulius Jurcˇys litigation by different legal systems were crystallised. Thirdly, the Hague Judgments project facilitated further research initiatives on the subject around the globe. One of the key provisions related to jurisdiction in IP disputes was entrenched in Article 12 of the 2001 Hague Draft Convention. Article 12 dealt with exclusive jurisdiction over actions concerning rights in rem in immovable property (Art 12(1)), validity, nullity or dissolution of a legal person or decisions of its organs (Art 12(2)), as well as the validity of entries in public registries (Art 12(3)). In so far as IP rights are concerned, it should be first noted that the drafters did not agree upon the question of whether international jurisdiction over IP rights should be addressed in the Convention at all.144 If IP rights were to fall within the scope of the Hague Convention, two alternative provisions were propounded. The difference between the two propositions was related to the issue of whether proceedings concerning the infringement of registered IP rights should fall under the scope of exclusive jurisdiction rules. Hence, according to Alternative A, in proceedings in which the relief sought is a judgment on the grant, registration, validity, abandonment, revocation or infringement of a patent or a mark, the courts of the Contracting State of grant or registration shall have exclusive jurisdiction. Moreover, in proceedings in which the relief sought is a judgment on the validity, abandonment, or infringement of an unregistered mark or design, the courts of the Contracting State in which the mark or design is registered shall have exclusive jurisdiction. Pursuant to Alternative B, courts which have jurisdiction pursuant to Articles 3–16 of the 2001 Draft Convention can also hear claims concerning infringements of registered IP rights. Both A and B Alternatives are subject to several qualifications. First, exclusive jurisdiction rules do not apply to claims concerning validity or infringement of copyrights and other IP rights, the existence of which does not depend on the registration.145 Secondly, the 2001 Draft of the Hague Convention solves the problem which may arise if the validity of IP rights at stake is challenged in infringement proceedings. Hence, regardless of whether IP infringement claims fall within the scope of the exclusive jurisdiction provision or not, such exclusive jurisdiction rules would not be applicable if one of the matters (mentioned in Alternatives A or B) arises as an incidental question in the proceedings of a court which does not have exclusive jurisdiction under Article 12 of the Draft Convention. In addition, proposed Article 12(6) stipulated that the ruling on that matter shall not have binding effect in subsequent proceedings, even if they are between the same parties. The aim of this provision was to limit the extent of exclusive jurisdiction rules only to the cases where the validity or registration issues arise as the main issue of the proceedings.146 It should be noted that Article 12(6) would only be necessary if the infringement and other IP matters (eg contractual disputes related to the exploitation of IP rights) do not fall under the rules of exclusive jurisdiction.147 The text of proposed Article 12 is an outcome of discussions among the representatives of different states with regard to the question whether validity and infringement issues 144   See Summary of the Outcome of the Discussion in Commission II of the First Part of the Diplomatic Conference (6–22 June 2001), available at www.hcch.net/upload/wop/jdgm2001draft_e.pdf, n 80. 145   Nygh-Pocar Report, above n 77, 69; Report of the experts meeting on the intellectual property aspects of the future Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters (Prel Doc No 13), www.hcch.net/upload/wop/jdgmpd13.pdfhttp://www.hcch.net/upload/wop/jdgmpd13.pdf, 7. 146   Nygh-Pocar Report, above n 77, 70. 147   Preliminary Document No 13, Report of the experts meeting on the intellectual property aspects of the future Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters, available at www.hcch.net/ upload/wop/jdgmpd13.pdf, 6.

General Report  35 could be separated or not. Some delegations (UK, Australia, China) argued that IP infringement and validity issues are closely intertwined and cannot be dealt with in separate proceedings. In practice, the validity defence is usually raised in infringement proceedings, especially in patent-related disputes. If infringement disputes could be heard by courts in countries other than the place of registration, differences in interpreting the scope of the patents might arise. Therefore, in many cases the proper forum could be that of the protecting country. The same rationale would apply also in cases of the enforcement of European ‘bundle patent’ rights.148 Other delegations (Switzerland, Scandinavian countries) were in favour of a ‘more flexible approach’ whereby the court of the place of registration has exclusive jurisdiction over matters related to validity, while courts hearing infringement claims would have to stay the proceedings until the validity issue is decided.149

4.2  North American States Common law jurisdictions usually establish that a court can exercise international juris­ diction if both territorial jurisdiction over the defendant and subject-matter jurisdiction grounds are present. The following sections deal with the approaches taken by Canadian and US courts with regard to the establishment of subject-matter jurisdiction in IP disputes.

4.2.1  Subject-Matter Jurisdiction of Canadian and US Courts In Canada, besides rules which allocate jurisdiction between the Federal Courts and courts of particular provinces, one of the main issues in cross-border IP litigation is the establishment of subject-matter jurisdiction. According to their national report, Canadian courts have not yet determined whether their courts would have jurisdiction over the validity and infringement of foreign IP rights.150 However, since Canadian private international law has to a large extent developed on the basis of English law, it is very likely that Canadian courts would take into consideration the jurisprudence of the jurisdictions of the British Commonwealth. In this regard, the Canadian Report referred to the 2009 decision of the English Court of Appeal in the case of Lucasfilm Ltd v Ainsworth,151 where the question of subject-matter jurisdiction was decided. In particular, the Court of Appeal found that English courts are barred from hearing claims for the infringement of foreign IP rights. In Lucasfilm Ltd v Ainsworth, the claims were related to the infringement of US copyright; and even though the alleged infringer was domiciled in England, the subject-matter jurisdiction rules rendered claims for the infringement of foreign IP rights non-justiciable. On the other hand, the Canadian Report referred to earlier Canadian case law and scholarly writings which take a rather different approach from the one established in the recent judgment of the English Court of Appeal. Namely, leading Canadian private international law scholarship and court jurisprudence shows some tendency to take a more functional approach aimed ‘to facilitate the flow of wealth’. Hence, it nevertheless remains possible that Canadian courts would assert international jurisdiction if it appeared that the action   ibid, 4–5.  ibid. 150   Canadian Report, answers to HC 1 and 2. 151   Lucasfilm Ltd v Ainsworth (2009) EWCA Civ 1328; (2010) FSR 10, but see the decision of the Supreme Court (2011) UKSC 39. 148 149

36  Toshiyuki Kono and Paulius Jurcˇys has a real and substantial connection with the province and would decide a case over the infringement or validity of foreign statutory IP rights. In the United States, subject-matter jurisdiction poses similar limitations concerning the exercise of jurisdiction over claims concerning foreign IP rights. In one of the leading patent infringement cases the court decided that a ‘statute purporting to confer subject matter jurisdiction should be narrowly constructed; and ambiguities must be resolved against the assumption of jurisdiction’.152 Generally, unlike personal jurisdiction, the parties cannot waive lack of subject-matter jurisdiction by consent, by conduct, or by estoppel.153 Hence, the United States courts would exercise jurisdiction over infringements of IP rights only if the infringing acts occurred in the United States; this stance has been followed by the United States courts. For instance, in the case of Subafilms Ltd v MGM-Pathe Communications Co it was decided that US courts could grant the plaintiff monetary relief only for infringements which occurred within the United States.154 It is possible that US courts would grant relief in multi-state copyright infringement cases when the infringement takes place in both the United States and other states. However, the plaintiff would not succeed unless he indicates exactly under which foreign laws he wishes to seek international protection.155

4.2.2  Subject-Matter Jurisdiction in the ALI Principles Rules on subject-matter jurisdiction represent one of the major developments proposed by the ALI Principles. Section 211 provides that a court is competent to adjudicate claims and defences arising under foreign laws pertaining to copyrights, neighbouring rights, patents, trade marks, trade secrets, related IP rights and contracts that are related to any of these rights. This legislative approach was to a large extent influenced by efficiency considerations. In particular, the drafters of the ALI Principles considered that speedy adjudication of cross-border IP disputes would hardly be possible if the courts of each country, whose IP rights are concerned, retained exclusive jurisdiction over matters pertaining to the validity and infringement of foreign IP rights. Accordingly, the ALI Principles establish that adjudicatory authority of a court should not be negatively influenced merely by the fact that the object of a dispute is a foreign IP right. In addition, the ALI Principles stipulate that a court may determine all claims and defences among the parties which arise out of the transaction or occurrence upon which the original claim is based, regardless of the territorial nature of the IP rights at stake (section 212(1)). Following a common law approach, the ALI Principles request a court to have subject-matter jurisdiction under its local law and personal jurisdiction (according to relevant provisions of the ALI Principles). Further, the ALI Principles provide that the adjudication of the validity of registered IP rights granted under the laws of another country has legal effects only among the parties to the action (section 211(2)). The ALI Principles acknowledge that states should retain their exclusive authority in deciding such questions as the cancellation of registrations. Nevertheless, courts should be allowed to decide upon such matters as the validity of foreign IP rights. Such decisions of a court concerning the (in)validity of foreign IP rights should not have effects against parties other than those involved in the proceedings. This   Mars Inc v Nippon Conlux Kabushiki-Kaisha 24 F 3d 1368 (Fed Cir 1994) 1373.   Update Art Inc v Modiin Publishing Ltd 843 F 2d 67 (2d Cir 1988) 72. 154   Subafilms Ltd v MGM-Pathe Communications Co 24 F 3d 1088 (9th Cir 1994) and the introductory part of the US Report. 155   Ralphe A Armstrong and Anna Music v Virgin Records Ltd 91 F Sup 2d 628 (2000) 638. 152 153

General Report  37 would have significant facilitating consequences in disputes over IP rights granted in several countries. Furthermore, by limiting the legal effects of decisions over the validity of foreign IP rights to only the parties of the proceedings, the ALI Principles aim to maintain a balance between the interests of various stakeholders (right-holders, other parties to the proceedings and states); and to ensure that the sovereign interests of the state where IP rights had been granted are not undermined. Efficiency considerations also lead to the adoption of another special rule in which a court may permit an intervention by a person who has an interest that is substantially connected to the subject matter of the proceedings. Such interventions could be allowed only if they do not cause undue confusion, delay or in any way obstruct the proceedings (section 211(3)). In the context of subject-matter jurisdiction it is important to note that the ALI Principles also provide for a set of special provisions dealing with international jurisdiction over actions for a declaratory judgment. From a purely policy perspective, actions for (negative) declaratory judgments play a significant role because they provide for a useful mechanism to clarify the legal relationship between the proprietors of IP rights and investors. Section 213(1) establishes a general rule that an action for a declaratory judgment can be brought on the same terms as an action seeking substantial relief. Nonetheless, the ALI Principles provide for a special rule regarding actions for the declaration of the invalidity of a registered right: such actions can be brought only in the state of registration (section 213(2)). By adopting this legal framework, the ALI Principles uphold the sovereignty considerations of the granting state and at the same time restrict the potential for abuse of actions in negative declaratory judgments. In a more complex litigation, an action seeking a declaration of the invalidity of IP rights arising in multiple states may be brought in the state or states in which the defendant is resident. However, the effects of such a judgment concerning rights registered in states other than the forum state is limited between the parties to the action (section 213(3)).

4.3  European States 4.3.1  Brussels/Lugano Regime: General Considerations Article 22 of the Brussels I Regulation (Art 16(4) of the Brussels Convention and the Lugano Convention) provides for exclusive grounds of jurisdiction. Pursuant to Article 22(4) of the Regulation, proceedings concerning registration or validity of registered IP rights can be brought only before the courts of the country where the right in question is registered. Notably, Article 22 confers exclusive jurisdiction on the basis of the substance of the dispute (ie the (in)validity of the patent right) and does not depend on other factors such as the particular characteristics of the parties.156 Article 22(4) does not require that the parties be resident in the forum country; instead it confers jurisdiction upon the courts of the registering country even if neither of the parties are resident in the forum country. Further, exclusive jurisdiction rules apply regardless of how IP rights were registered or deposited. However, Article 22(4) does not apply if the dispute is concerned with the registration or validity of an IP right which is registered in a third country. 156   P Jenard, ‘Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters signed at Brussels’ (27 September 1968) [1979] OJ C59/1 (hereinafter ‘Jenard Report’), 36.

38  Toshiyuki Kono and Paulius Jurcˇys Article 22(4) of the Regulation is of a mandatory nature. This can also be illustrated by Article 25, according to which any court of a Member State shall declare of its own motion that it has no jurisdiction if the claim is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22. Exclusive jurisdiction rules applicable in cases concerned with the registration or validity of registered IP rights were often considered a reflection of the sovereignty of states.157 The sovereignty argument is traditionally supported by the idea that patent examination and granting procedures involve highly specialised national administrative proceedings which have to prove whether patent applications fulfil general patentability requirements (novelty, inventive step and obviousness). Specially erected patent offices usually have to apply national patent laws and follow precise examination proceedings; besides, in many countries, special procedures for the filing of patent applications are supplementary modifications, and the annulment of patents are provided for in their laws. Hence, procedural and substantive rules are closely intertwined in patent examination proceedings. Therefore, the rationale for exclusive jurisdiction is the assumption that courts of the country of registration are best placed to decide the question of registration and validity of intellectual property rights.158 These considerations are taken into account in order to justify the aim of Article 22(4) to concentrate proceedings in the court which is most related with the validity of the patent right; therefore, parties’ choice of court agreements cannot override the exclusive jurisdiction of the courts as established in Article 22. Article 22(4) is an exception to Article 2 of the Regulation and therefore should be interpreted autonomously.159 Autonomous interpretation means that definitions used in European legislative acts should be interpreted in light of their textual context, genesis and objectives of the legal instrument where they are used.160 This is inevitable in order to assure that the practice of the domestic courts does not differ from country to country. Based on the interpretation of Article 22(4), it applies to national patents as well as patents granted under the European Patent Convention and other IP rights which are subject to registration (registered trade marks, design or plant variety rights).161 Conversely, the validity of IP rights which are not subject to registration (such as copyrights as well as moral rights of authors, neighbouring rights, non-registered trade marks) falls under the guise of exclusive jurisdiction because they are created not on the ground of registration but come into existence ipso iure.162 The material scope of exclusive jurisdiction rules was clarified in the ECJ jurisprudence. In the case of Goderbauer, a dispute arose between the employee and the bankruptcy administrator of the employer over the entitlement to patent rights of inventions created under the employment contract. The ECJ followed the narrow interpretation of exclusive jurisdiction provisions and indicated that disputes having as their object the validity, exist  ibid.   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, para 22; D Stauder, ‘Die ausschließliche internationale gerichtliche Zuständigkeit in Patentstreitsachen nach dem Brüsseler Übereinkommen – Art 16 Nr 4 EuGVÜ, Art 19 EuGVÜ’ (1985) Praxis des Internationalen Privat- und Verfahrensrechts 78. 159   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, para 19; P Torremans, ‘The way forward for cross-border intellectual property litigation: why GAT cannot be the answer’ in S Leible and A Ohly (eds), above n 1, 194. 160   C Heinze and E Roffael, ‘Internationale Zuständigkeit für Entscheidungen über die Gültigkeit ausländischer Immaterialgüterrechte’ (2006) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 789. 161   ibid. For an overview of the Italian case law in the application of Art 16(4) of the Brussels Convention see Italian Report, section 1.2.2.6 and further references. 162   Although the Italian Report indicated that in one case Art 22(4) of the Brussels I Regulation was applied in a copyright infringement case; see Italian Report, nn 67 and 68. 157 158

General Report  39 ence or revocation of patents as well as enforcement of priority rights should be decided exclusively by the courts of the country of registration.163 Yet, the definition of ‘proceedings concerned with the registration and validity’ of patents and other registered IP rights does not cover claims related with initial ownership in general, or attribution of ownership in case of employee inventions.164 The question of the validity of IP rights arises in almost all cases: the alleged infringer or a party to an IP-related contract may always challenge the validity of IP rights which lie at the heart of a particular dispute. The significance of the validity of IP rights is most obvious in the cases where it is found that the IP rights in question are not valid and which consequently leads to the impossibility of the right-holder to enforce substantive claims. For a long time there was no consent on whether courts dealing with cross-border IP disputes should dismiss the case if one of the parties challenges the validity of foreign IP rights. For instance, the Dutch Report referred to the judgment of the Hague Court of Appeal of 1998 where it was decided that it is not possible to separate validity and infringement issues. Therefore, according to the Hague Court of Appeal the court hearing a case concerning infringement of foreign patents will have to stay the proceedings until the decision on the validity of patents is decided by a foreign court. The Court noted that despite its shortcomings, this was the only possible outcome according to the Brussels Convention. Nevertheless, the Hague Court of Appeal decided that the invalidity defence should not obstruct a court’s powers to grant provisional measures.165 In another case, Roche v Primus, the Dutch Supreme Court ruled that it can decide upon the infringement of foreign patents even if there are serious doubts as to the validity of those patent rights involved.166 Exclusive jurisdiction rules together with rules of parallel proceedings became important in the last decade of the twentieth century, where certain EU-specific litigation strategies were developed. Alleged infringers of registered IP rights often launched proceedings seeking a negative declaration of non-infringement, or that certain IP rights are not valid. Such claims for negative declaratory judgments were often brought to courts which were known for lengthy procedures (eg, Italian courts) or to courts of countries which were open to the enforcement of foreign IP rights (eg, Belgian courts). The advantage of plaintiffs seeking negative declarations was that the lis pendens rule established in Article 27 would require the courts later seised to stay the proceedings if the same case between the same parties is pending before courts of another country, and would eventually decline jurisdiction if the court first seised should assert jurisdiction over the dispute.167 In practice this would prevent the right-holder (‘actual plaintiff ’) from enforcing his rights until the proceedings before the court first seised finished.

4.3.2  The ECJ Decision in the Case of GAT v LuK Many of the controversies related to the legal effects of the invalidity defence and the relationship between exclusive jurisdiction rules with other jurisdictional provisions were 163   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, para 24. Some domestic courts have applied Art 22(4) in cases where the revocation of registered rights was at stake, see eg OLG Stuttgart, Decision of 26 May 2000 – 2 U 256/99 Recht der Internationalen Wirtschaft 141–43. 164   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, paras 26–28; D Stauder, above n 158 at 79. 165   Dutch Report, section 3.6. 166  ibid. 167   Case C-116/03 Erich Gasser GmbH v MISAT Srl [2003] ECR I-14, paras 71–73.

40  Toshiyuki Kono and Paulius Jurcˇys clarified by the ECJ. In the case of GAT v LuK168 a dispute arose between two German companies, ‘GAT’ and ‘LuK’, which were competitors in the car manufacturing industry. GAT was supplying certain vehicle parts to another car manufacturer (Ford) which allegedly infringed two patents owned by LuK in France. The alleged infringer (GAT) brought a suit for the declaration of non-infringement to the District Court of Düsseldorf and argued that the patents which LuK held in France were either void or invalid. The District Court of Düsseldorf found that it had jurisdiction with regard to the infringement issue, since both of the parties were resident in Germany (Art 2). Moreover, the Court held that it also had jurisdiction with regard to the validity of a disputed patent. In later proceedings, the District Court of Düsseldorf dismissed the claim brought by GAT, on the ground that the manufacturing process actually fell within the scope of the French patents.169 GAT brought an appeal. On its behalf, the Düsseldorf Court of Appeals (Oberlandes­ gericht) referred to the ECJ for a preliminary ruling under Article 234 EC. The primary question was whether Article 16(4) of the Brussels Convention confers exclusive jurisdiction only upon the courts in the proceedings where the main issue is the (in)validity of the patent or whether it also applies to those cases where the issue of (in)validity is raised as a counter-defence by the defendant in the course of the proceedings. One of the actual problems of interpreting the given provision was that the text reads differently in the other languages of the Convention. The English text referred to the proceedings ‘concerned with’, while in other translations of the Convention reference was made to the proceedings ‘that have as their object’ validity matters. In his opinion, Advocate General Geelhoed noted that the more restrictive version of the language used in the English text should not be followed. On the other hand, AG Geelhoed argued that Article 16(4) should not be construed as being limited to only cases where the principal claim in the proceedings targets the issue of validity of a patent. In the view of AG Geelhoed, Article 16(4) would also be undermined if foreign infringement courts were to decide the issue of validity as an incidental matter. In his opinion, AG Geelhoed did not place much emphasis on the different wording of Article 16(4) of the Convention; instead, he reviewed the objectives of the Brussels Convention and made a common argument that conferral of exclusive jurisdiction is based on the assumption that courts of a country of registration are ‘best suited to adjudicate upon the validity of a patent’. Furthermore, he indicated that exclusive jurisdiction is also justified by the fact that different national authorities are involved in the process of granting patent rights. The Advocate General indicated that the need to interpret Article 16(4) is also supported by the more general objective of avoiding inconsistent judgments. The ECJ followed the reasoning presented by the Advocate General and adopted a wider interpretation of Article 16(4). In particular, the ECJ noted that exclusive jurisdiction rules should be interpreted in consonance with other jurisdictional provisions of the Brussels Convention. The Court noted that the rationale behind exclusive jurisdiction rules is that questions of registration and validity have to be decided by the court that is best placed to rule upon these issues, ie courts of the country of registration. Moreover, the ECJ reiterated that patent disputes usually are related to highly technical questions that are consequently 168   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 169   See the decision of the Düsseldorf District Court (Landgericht Düsseldorf) of 31 May 2001 in case 4 O 128/00, Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 31.5.2003; 2001 Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 983–86 (‘Schwungrad’).

General Report  41 decided by specially designated institutions and courts.170 The ECJ decided that exclusive jurisdiction rules shall come into play in any situation where the issue of validity is at stake. Thus, according to the ECJ, it does not matter whether the validity question is part of the main claim or is raised as a plea in objection.171 Consequently, exclusive jurisdiction rules would be undermined if questions of (in)validity of a patent was decided by any other court than the court of the granting country.172 In addition, the ECJ clearly stated that such interpretation of the rules on exclusive jurisdiction would contribute to legal certainty, foreseeability of the parties as to which courts are competent to adjudicate the dispute and the avoidance of inconsistent judgments.173 The UK national report indicated that such interpretation of exclusive jurisdiction rules affirmed the established practice of English courts. Yet, the judgment of the ECJ in the case of GAT v LuK was met with fierce criticism by continental scholars.174 Three main arguments were put forward against the reasoning of the ECJ. First, it was indicated that the ECJ judgment in GAT v LuK not only contradicted domestic procedural statutes of certain Member States, but arguably was also contrary to the jurisprudence of the ECJ itself.175 This is because according to the GAT judgment, jurisdiction of the case depends on whether the question of validity of a particular IP right is raised or not.176 This would often be the issue in cases involving disputes over infringements of foreign IP rights: namely, actions concerning the infringement of foreign IP rights may be brought before courts of a defendant’s domicile. According to the reasoning of the ECJ in the GAT v LuK case, the court seised will have to decline jurisdiction if the question of validity of foreign IP rights is raised at later stages of the proceedings. Secondly, the practical outcome of the ECJ ruling in GAT v LuK is that disputes over registered IP rights will in most cases have to be resolved before the courts of the granting country. This would bar the possibility of bringing actions over parallel IP rights (eg, infringement of European bundle patents) before the court of a single country. Such a legal regime would create undue burden upon the holders of parallel IP rights which would have to resort to a country-by-country litigation despite the fact that rights infringed are substantially the same. Therefore, the ECJ was criticised for its unwillingness to take into consideration procedural costs associated with country-specific litigation.177 Further, it was argued that the GAT v LuK decision opened the gates for the alleged infringer to delay proceedings by raising an invalidity defence.178 Some national reporters indicated that the ECJ could have arrived at a different solution by allowing infringement courts to decide on the validity of foreign registered IP rights, and such decisions should have only inter partes effects.179

  Case C-4/03 GAT v LuK [2006] ECR I-6509, paras 22–23.   ibid, para 25. 172   ibid, para 26. 173   ibid, paras 28–29. 174   Italian Report, answers to HC 3; French Report, section 2 and n 74 for further references. 175   Case C-111/01 Gantner Electronic [2003] ECR I-4207, para 26; Case C-39/02, Maersk Olie & Gas A/S v Firma M de Haan en W de Boer [2004] ECR I-9657, para 36 176   C Heinze, ‘A framework for international enforcement of territorial rights: the CLIP principles on jurisdiction’ in J Basedow, T Kono and A Metzger (eds), above n 1, 60. 177   P Torremans, ‘The way forward for cross-border intellectual property litigation: why GAT cannot be the answer’, in S Leible and A Ohly (eds), above n 1, 194. 178   Swedish Report, section 1.2.3. 179  ibid. 170 171

42  Toshiyuki Kono and Paulius Jurcˇys Thirdly, academics did not support the ECJ’s attempt to justify exclusive jurisdiction rules by arguing that numerous administrative agencies are involved in patent granting proceedings.180 This argument is only partially true because in many cases international organisations such the European Patent Office are involved in patent-granting proceedings. Besides, patent applications filed according to the Patent Cooperation Treaty might be processed by patent offices of foreign countries. Hence, it is argued that exclusive jurisdiction rules matter only in cases which are concerned with the revocation of patent validity, but not where the question of patent validity arises as a preliminary matter.

4.3.3  Third-Country Situations The answers provided in the European national reports highlighted the fact that domestic statutory rules or case practice are not uniform in cases where the defendant is not resident in any of the EU Member States. For instance, the French Report notes that it is possible that French courts might nevertheless make an inter partes decision upon the validity of foreign patent rights.181 This would not be possible however in the UK, where courts can hear a case that has both in personam and subject-matter jurisdiction (the latter is sometimes also referred to as ‘justiciability’). The requirement of justiciability was established in the Moçambique case182 concerning actions of ownership over foreign land. According to the Croatian Report, Croatian law does not follow strict territoriality principles which would prevent Croatian courts from adjudicating disputes concerning infringement of foreign IP rights. Hence, Croatian courts would have jurisdiction if any one of the jurisdictional grounds existed (eg, if the defendant’s domicile or residence was in Croatia, the parties to the dispute were Croatian nationals and the defendant had residence in Croatia, if damage occurred in Croatia, or the defendant did not challenge the jurisdiction of the court).183 As regards the jurisdiction of Croatian courts to decide matters concerning the registration or validity of foreign IP rights, the situation is rather unclear. This is because there are neither statutory provisions dealing with the issue nor any court judgments on this question. However, the absence of any clear rule on whether Croatian courts have international jurisdiction over the matter does not mean that the jurisdiction would be declined. Instead, Article 187, when applied in conjunction with Article 27 of the Civil Procedure Act, may lead to the conclusion that Croatian courts will assert international jurisdiction over the dispute regardless of whether the foreign-registered IP right is valid or not. Insofar as nonregistered IP rights are concerned, the national report states that Croatian courts would also assert jurisdiction regardless of whether the validity of a foreign non-registered IP right is challenged or not.184 If the validity defence in IP infringement proceedings arises in the claim or counterclaim, the legal effects of the court’s decision over the validity would have erga omnes effects. Yet, if the validity issue arises merely as an objection in the proceedings, legal effects would be limited to the effects between the parties themselves.185

180   A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decisions GAT v LuK and Roche Nederland v Primus Goldenberg’ (2006) 7 International Review of Intellectual Property and Competition Law 850 et seq. 181   French Report, answers to HC 3. 182   British South Africa Co v Compania de Moçambique [1893] AC 602. 183   For a more elaborate presentation see Croatian Report, answers to HC 2. 184   Croatian Report, answers to HC 2. 185  ibid.

General Report  43

4.3.4  Exclusive Jurisdiction Rules in Commission Proposal (2010) and the CLIP Principles In the Commission Proposal for a Regulation (2010), the rules on exclusive jurisdiction in IP matters (Art 22(4)) remain identical but the rules concerning the coordination of parallel proceedings have changed. In particular, one of the first concerns was the operation of the lis pendens rule and the policy objective to restrict the possibility of filing torpedo claims.186 The CLIP Principles to a large extent reflect the criticism raised with regard to the ECJ judgment in the GAT v LuK case. The CLIP Principles maintain the widely acknowledged principle of territoriality of IP rights. Article 2:401(1) states that in disputes having as their object a judgment on the grant, registration, validity, abandonment or revocation of a patent, a mark, an industrial design or any other IP right protected on the basis of registration, the courts in the state where the right has been registered or is deemed to have been registered under the terms of an international convention shall have exclusive jurisdiction. Nevertheless, this rule shall not apply where the validity or registration arises in a context other than by principal claim or counterclaim. In such cases the decisions do not affect the validity or registration of those rights as against third parties (Art 2:401(2)). In establishing such a legal regime, Article 2:401 aims to reconcile the principle of territoriality of IP rights with the need to facilitate efficient cross-border litigation. The CLIP Principles provide two modifications to the exclusive jurisdiction rules that exist under the Brussels/Lugano framework. First, the CLIP Principles aim to clarify that exclusive jurisdiction rules apply only if the validity or registration matters are part of the claim or counterclaim and do not extend to situations where these matters have to be decided as a preliminary question.187 It follows that according to the CLIP Principles the questions of validity or registration could also be decided in infringement or any other proceedings which take place before courts other than those in the protecting country. Secondly, it is established that a court’s jurisdiction to adjudicate incidental questions of validity and registration does not have effects vis-à-vis third parties. This means that a decision upon the validity of registrations of foreign IP rights does not interfere with the functions or functioning of the administrative agencies of the protecting country. The CLIP Principles also stipulate that if a court is seised of an action which is subject to the exclusive jurisdiction of other courts by virtue of Article 2:401, it shall declare sua sponte that it has no jurisdiction (Art 2:402).

4.4  Exclusive Jurisdiction in IP Disputes in Asian States 4.4.1  Exclusive Jurisdiction Rules in India and Taiwan The Indian national report noted that Indian courts would have jurisdiction only with regard to actions concerning infringements of Indian IP rights.188 The Taiwanese national report indicated that Taiwanese courts would have jurisdiction in infringement disputes   For further discussion see sections 7.3.5 and 8.3.4 of this Report.   A Kur and B Ubertazzi, ‘The ALI Principles and the CLIP Project: A Comparison’ in S Bariati (ed), Litigating Intellectual Property Rights Disputes Cross-border: EU Regulations, ALI Principles, CLIP Project (Milan, CEDAM, 2010) 108–9. 188   Indian Report, answers to HC 2. 186 187

44  Toshiyuki Kono and Paulius Jurcˇys concerning foreign IP rights. However, the law in Taiwan does not provide for a clear-cut answer as to whether a Taiwanese court would be competent to decide over issues of validity of foreign-registered IP rights. However, Article 24 of the proposed Draft Amendment to Applicable Law for International Civil Disputes of Taiwan provides that the court can decide over the validity of foreign IP rights, notwithstanding whether they are registered or not. Such decisions would have legal effects only between the parties.189

4.4.2  Exclusive Jurisdiction over IP Disputes in Japan The Japanese Code of Civil Procedure did not provide for any specific rules concerning the jurisdiction of Japanese courts over foreign IP rights. The prevailing opinion is that Japanese courts could assert international jurisdiction in cases over infringement of foreign registered IP rights. However, in cases where the validity of a registered IP right, e.g. patent, is raised in the main claim or counterclaim, Japanese courts would not have jurisdiction over the dispute.190 Nevertheless, in cases where the validity issue is brought as a defence, such as a contest of validity of a patent or other registered IP right concerned, it would not affect international jurisdiction of a Japanese court. In this context, a path-breaking Japanese judgment was handed down by the Tokyo District Court in 2003 (the ‘Coral Sand’ case).191 The factual circumstances in this case were as follows: the plaintiff was a Japanese corporation which produced fine powder from fossil coral and sold it as an ingredient in health food. This fine powder was sold and distributed in Japan and the United States. The defendant, another Japanese corporation, was the owner of a patent in the United States for compounds which include coral sand that promoted health benefits. Having found that a similar material was being sold in the United States, the patent-holder issued warning letters to the Japanese manufacturer and the American distributor, urging them to halt manufacturing and sales activities. The Japanese producer of fossil coral filed a suit requesting the court to issue a negative declaratory judgment that the defendant had no right to seek an injunction in Japan on the basis of an alleged infringement of the American patent and thus stop the manufacturing and distribution of the products in the United States. The plaintiff also argued that sending letters making false allegations of infringement of a patent constitute false allegations under the Japanese Unfair Competition Prevention Act (Fusei ky¯os¯o b¯oshi h¯o, as further amended) and entitled the plaintiff to seek damages for injury to the plaintiff ’s reputation. In response, the defendant argued that the principle of territoriality of IP rights prevents the Japanese courts from exercising international jurisdiction to claims for negative declaratory judgments related with injunctions based on an American patent. Moreover, the defendant stated that the claims raised by the plaintiff had no legal basis and therefore should be dismissed. The Tokyo District Court found that where jurisdiction is based on the domicile of the defendant in Japan (Japanese corporation with a registered office in Japan), the jurisdiction of Japanese courts should be asserted (Art 4(4) of the CCP). Further, the Court did not find any special circumstances which would require denial of international jurisdiction. Having   Taiwanese Report, answers to HC 2.   Japanese Report, answers to HC 2. 191   Tokyo District Court, Judgment of 16 October 2003, 1847 Hanrei Jih¯o 23 (‘Coral Sand’ case), abbreviated English translation available at www.tomeika.jur.kyushu-u.ac.jp/result.php?s=49ad07dddf8070213df126c2e9c17 296&c=95bda1d6770bf04bb3028edb28cf5585. 189 190

General Report  45 established that it had general jurisdiction, the Tokyo District Court addressed the principle of the territoriality of IP rights. It stated that ‘the principle of territoriality of patents means that the grant, transfer, validity etc of patent rights of each country is governed by the laws of that particular country. The validity and effects of a patent are to be recognized only within the territory of that country.’ The Court also noted that the territoriality of patent rights is to be understood as a principle of substantive law, and does not affect the question of international jurisdiction of courts which are seised with a claim related to patent rights. In addition, the Tokyo District Court decided that the creation of patent rights should be considered with regard to the national economic policies of the granting country. Thus, if the court seised has to order an injunction on the basis of an infringement of a foreign patent, it might be necessary to decide the question of validity of such a patent right. However, in the opinion of the Court, the question of validity of a patent right should be seen as a matter of substantive law, and therefore should not affect the decision of whether the court seised has international jurisdiction over the dispute. With regard to the invalidity defence, the Court emphasised that at the time when the decision was made, there was no positive law governing such situations. However, if the counterparty is challenging the validity of the patent and thus the legitimacy of the patent-holder’s claims, or if in a case related to ordering an injunction finds that the patent right, which would have been the basis for an injunction, is not valid, such decision of invalidity has limited effects: affecting only the parties to the proceedings and not third parties. It follows then that there is no ground to decline jurisdiction if the court seised is not the court of the registering state. Further, the claim that the patent right at stake is invalid should not interrupt the continuation of the proceedings of the court seised if that court is not a court of the registering country. The prevailing opinion is that the Japanese can also exercise their international jurisdiction in cases concerning infringement of foreign non-registered IP rights. The fact that the validity of non-registered IP rights is challenged does not negatively affect the assertion of jurisdiction. However, no particular judgments of Japanese courts have been reported so far which illustrate the actual practice.192 4.4.2.1  Exclusive Jurisdiction in the CCP (2011) Article 3-5 of the CCP (2011) establishes exclusive jurisdiction rules. Article 3-5(ii) confers exclusive jurisdiction to Japanese courts over actions related to registration and entries in public registries. The rationale behind this provision is that all public registries require the involvement of public agencies whose acts can be reviewed only by judicial authorities of the same country. Therefore, Japanese courts shall have jurisdiction only with regard to registration and entries in Japanese public registries. Further, during the drafting process it was generally agreed that even if Japanese courts were allowed to invalidate entries in public registries of foreign countries, such Japanese court judgments are very likely to remain unrecognised by third countries concerned. Further, Article 3-5(iii) of Section III should be considered as lex specialis to the abovementioned rule. Article 3-5(iii) posits that actions related to the existence and effects of IP rights (as they are defined in Article 2(2) of the Intellectual Property Basic Act), which are subject to registration, shall be subject to the exclusive jurisdiction of Japanese courts if such IP rights are to be registered in Japan. The material scope of application of this   Japanese Report, answers to HC 2.

192

46  Toshiyuki Kono and Paulius Jurcˇys provision appears to be narrow and covers only matters related to the existence and effects of registered IP rights.193 Some earlier reports of the International Jurisdiction Working Group suggest that its members were aware of the possibility that Japanese courts may be issued with a claim for a negative declaratory judgment whereby the plaintiff seeks declaration of non-liability and invalidity of foreign registered IP rights. It was considered that in cases where the question of validity arises as the main issue, courts of the country of registration should be the best places to decide or hear the claim. Consequently, the decision was to adopt the rule that even if Japanese courts had jurisdiction based on the defendant’s domicile, they should decline jurisdiction over the case if the main object of the proceedings is related to the validity of foreign registered IP rights. On the other hand, the drafters of the CCP (2011) considered that there may be situations where the validity of a foreign registered IP right may be challenged by the defendant. In such cases, the determination of international jurisdiction should not be precluded by the invalidity defence, which is considered a matter of substance, but instead must be decided according to the applicable law. 4.4.2.2  Exclusive Jurisdiction Rules in the Transparency Principles The Transparency Principles follow the prevailing approach and provide that the jurisdiction over actions concerning validity and existence be vested only to courts of the registering country. However, this exclusive jurisdiction should exist only in cases where the registration or validity issues arise as the main issue of the dispute. Thus, in cases related to infringement of IP rights, questions concerning the registration and validity of foreign IP rights could be decided also by a court having international jurisdiction over the infringement case. The decision of a preliminary question does not have effects against third parties. According to the drafters of the Transparency Proposal, such limited approach to exclusive jurisdiction should facilitate prompt and efficient resolution of disputes regardless of whether the rights involved are granted by a foreign country or the forum country.194 Moreover, inter partes effects of decisions concerning the validity of foreign IP rights do not impose upon the sovereignty considerations of the granting country.195 The Transparency Proposal does not endorse the possibility of declaring foreign IP rights invalid for one practical reason, namely, the fear that foreign courts might err in applying foreign IP statutes according to which the registered IP right was granted and the validity of which is challenged. To put it differently, the drafters of the Transparency Proposal were of the opinion that courts of the country of registration are nevertheless best placed to render judgments on the validity of IP rights with erga omnes effects.196 So-called ‘torpedo’ claims, whereby the alleged infringer aims to bring proceedings for a negative declaratory judgment before a court of a country which is known for its slow proceedings, are not known in Japan. This is mainly because so far there is no strict lis pendens rule which would require Japanese courts to stay the proceedings if the action involving the same substance and the same parties has been brought before courts of another country. Nonetheless, the Transparency Principles take a future-oriented approach and provide that 193   According to Art 2(2) of the Intellectual Property Basic Act, ‘IP right shall mean a patent right, a utility model right, a plant breeder’s right, a design right, a copyright, a trade mark right, a right that is stipulated by laws and regulations on other intellectual property or right pertaining to an interest that is protected by acts’. 194   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 78. 195  ibid. 196  ibid.

General Report  47 in cases where an action is brought before a Japanese court seeking a declaration of noninfringement and also challenges the validity of a foreign IP right, a Japanese court shall dismiss the action if other proceedings based on the same or a related cause of action have been instituted before a foreign court; the Japanese court shall dismiss the claim if the primary obligation or primary facts (e.g. patent infringing acts) occurred or should have occurred in that foreign country (Art 201). According to the rules on recognition of foreign judgments, court decisions rendering foreign IP rights invalid may be considered contrary to public policy and be refused recognition (Art 402(3)). In other words, if a court of Taiwan were to decide that a certain patent granted by the Japanese Patent Office is declared invalid, such a decision of the Taiwanese court will likely be refused recognition in Japan on the ground that it is contrary to the public policy of Japan. 4.4.4.3  The Joint Japanese-Korean Proposal (Waseda Principles) The Waseda Principles do not follow the strict territoriality approach which allows a court to exercise international jurisdiction if one of the prescribed grounds of jurisdiction is satisfied. However, as regards registered IP rights, Article 209(1) provides that disputes concerning acquisition, registration, validity or revocation of IP rights have to be resolved exclusively by the courts of the state of registration. Such an exclusive jurisdiction rule would not be applicable if the issues pertaining to the acquisition, registration, validity or revocation of registered IP rights arose as a preliminary or incidental question (Art 209(2)). In such situations, the decision would have legal effects in subsequent proceedings.

4.4.3  Exclusive Jurisdiction in IP Disputes according to Korean Law In Korea, there are no statutory jurisdiction rules dealing with international IP litigations. Yet, according to established case law, actions concerning the existence, grant, registration, validity and revocation of patent rights fall within the exclusive international jurisdiction of the registering state.197 Such an exclusive jurisdiction rule is mandatory and cannot be modified by the parties’ choice of court agreement. It should be also noted that in one case, the Seoul High Court decided that exclusive jurisdiction rules do not apply for claims where the plaintiff seeks a transfer of the registration of foreign patents for the invention created on the basis of employment or other contractual relations.198 In the case at hand the court found that Korean courts had international jurisdiction on the ground that both parties were resident in the Republic of Korea and the employment duties resulting in the creation of the invention were performed in Korea. By and large, the exclusive jurisdiction rules concerning registration and validity of registered IP rights look identical in the Waseda and Korean Proposals. In both of these legislative proposals exclusive jurisdiction is conferred upon the courts of the country where those registered IP rights are granted (registered). Besides, in cases where the question of validity or registration arises before a court dealing with foreign-registered IP rights, both proposals follow the approach adopted in the ALI Principles that such decisions over registration and validity shall have effect only between the parties concerned and cannot have legal effects in other court proceedings. Article 10 of the Korean Principles follows the   See the Korean Report, section 2.1 para [2]; nn 183, 184 and 296 for further references.   Korean Report, section 2.1 para [3] and n 185.

197 198

48  Toshiyuki Kono and Paulius Jurcˇys rationale of the 1999 Hague Draft, in that an exclusive jurisdiction rule would be applicable only in cases where disputes over the creation and validity arise as the main issue. This exclusive jurisdiction rule would not apply to disputes where the question concerning the creation or validity of registered IP rights arises as a preliminary matter. Further, it should be noted that Article 10 of the Korean Principles deals only with exclusive jurisdiction over the validity and registration of foreign registered IP rights.199 Accordingly, the Korean Principles do not prevent the courts from deciding questions related to the validity of foreign non-registered IP rights.

4.5  Comparative Observations Close analysis of the represented legal systems shows that the adjudication of multi-state IP disputes is often constrained by a subject-matter jurisdiction requirement or a narrow interpretation of exclusive jurisdiction rules. One notable difference between the common law jurisdictions and continental European countries deserves attention. According to the Canadian and American reports, a subject-matter jurisdiction requirement would practically pre-empt the courts from hearing any claims concerning infringement or validity of foreign IP rights. Jurisdiction could be asserted only with regard to some incidental issues such as ownership of foreign IP rights. Under the European Brussels/Lugano regime, disputes concerning non-registered IP rights (such as copyrights or neighbouring rights) do not fall under exclusive jurisdiction rules and thus could be adjudicated by any court which has jurisdiction pursuant to one of the provisions of the Brussels/Lugano instruments. Exclusive jurisdiction rules as they were interpreted by the ECJ in the GAT case, would apply only with regard to registered IP rights. In the midst of such a legal environment, a number of legislative proposals put forward various possibilities of how to facilitate a resolution of multi-state IP disputes and to overcome limitations related to subject-matter/ exclusive jurisdiction requirements.200 One possible solution to the problem was first established in the 2001 Proposal for the Hague Judgments Convention. Namely, it was proposed in Article 12 that decisions over such issues as grant, registration, validity, abandonment or revocation of patent or mark should have inter partes effects.201 If any initiatives concerning adjudication of multi-state IP disputes is to be pursued in the future, the starting point should be the 2001 Draft of the Hague Judgments Convention.

5  Jurisdiction in IP Infringement Disputes Although the defendant’s domicile or habitual residence is a widely acknowledged principle of international jurisdiction, it is not the only ground upon which actions can be brought. IP cases have for a long time been subject to the jurisdiction of courts of those states which grant IP rights. This basis of jurisdiction was sometimes explained as a reflection of proprietary rights (land, immovable property) over which only courts of the situs   Korean Report, n 233 and answers to HC 2.   ss 211–14 of the ALI Principles; Art 2:401 and 2:402 of the CLIP Principles; Art 103 of the Transparency Principles; Art 10 of the Korean Principles. 201   Available at www.hcch.net/index_en.php?act=publications.details&pid=3499&dtid=35. 199 200

General Report  49 rei are competent, or linked to the protection of sovereign interests of the countries which grant IP rights. However, the expansion of international commercial activities and development of new digital technologies facilitated the creation of innovative business models which also brought about global strategies for the exploitation of IP rights. Jurisdiction in IP infringement disputes is without any doubt one of the cornerstones in the system of international adjudication of IP disputes. The importance of infringement jurisdiction in IP matters is also associated with a number of controversial questions. It is the territorial nature of IP rights that makes IP infringements substantially different from other kinds of torts. This section of the General Report is based on the answers provided in the national reports to hypothetical cases no 1 and 2. Hypothetical case no 1 sketched the following situation: A, who was an international pop-music idol, released a new single. After a short while B (a publisher of a monthly music journal) inserts a headline pronouncing that A’s new single is a mere adaptation of another song released in the 1950s. Questions 2 and 3 of the hypothetical case enquired whether and under what circumstances a court of a particular country would exercise its jurisdiction in tort disputes, and whether the court would be competent to decide on the damage suffered by A in the forum country as well as in other foreign countries where the journal was distributed. Since the case was obviously concerning libel/defamation disputes, the national reporters were also asked to indicate whether the decision of the court would differ in IP infringement cases.

5.1  Infringement Jurisdiction in the 2001 Draft of the Hague Judgments Convention Article 10 of the 2001 Hague Draft established a special jurisdiction rule for torts or delicts. Pursuant to Article 10(1), an action in tort or delict can be brought in the courts of the state in which (a) the act or omission that caused injury occurred; or (b) the state in which the injury arose. The latter would not apply if the defendant proves that the person claimed to be responsible for the tort could not reasonably foresee that the act or omission could have resulted in that particular state. In addition, Article 10 contains several provisions which are relevant for Internet-related activities. Namely, actions in tort could also be brought before the courts of the state in which the defendant has engaged in frequent or significant activity, or has directed such activity into that state (Art 10(2)). However, in order to protect the business operators, the 2001 Draft of the Hague Convention also established that courts shall not have jurisdiction if the defendant has taken reasonable steps to avoid acting or directing activities to the forum state (Art 10(3)). According to the Explanatory Report, the plaintiff in distant tort cases could have had the option to file a suit either before the courts of the country where the act or omission occurred, or before the courts of the country of injury.202 The same also applies in cases when the act or omission, or the injury, may occur in the future (Art 10(4)). The 2001 Hague Draft did not provide for a definition of the place of act or omission, nor did it offer a criterion to identify such place. Instead, it was generally understood that the court seised had to decide on this issue according to its own national law. As regards the place of injury, priority was given to the place where direct effects of the act occurred (the indirect harm   Nygh-Pocar Report, above n 77, 59.

202

50  Toshiyuki Kono and Paulius Jurcˇys was considered to be an insufficient connecting factor).203 The courts having jurisdiction, according to the rules of Article 10, would have had competence to decide only with respect to injury that occurred or may occur in the forum state, unless the domicile of the defendant is in the country where the injury was sustained (Art 10(5)). As a general rule, courts of the place where the act or omission that caused injury occurred should have jurisdiction to decide over injury which occurred in other states. It is noteworthy that Article 10 of the 2001 Draft of the Hague Convention could be used as an alternative to other general and special grounds of jurisdiction such as the place of a defendant’s habitual residence, in which case the forum would be competent to decide with regard to overall damage sustained by the plaintiff (Art 3), to choice of court (Art 4), or to the forum of the branch or any other establishment of the defendant given that the action is related to the activities of that branch (Art 9). In addition, the 2001 Hague Draft left open the possibility for Contracting States to provide for any additional grounds of jurisdiction (Art 17). The 2001 Draft did not contain any special provisions related to infringements of IP rights which meant that jurisdiction in cross-border IP infringement cases were to be assessed according to the general rules referred to above. However, from the preliminary documents it could be concluded that if it had been decided to include IP rights under the material scope of the Convention, jurisdiction over disputes related to copyrights and other non-registered IP rights would have to be decided according to general jurisdiction rules; whereas the adjudication of disputes related to registered IP rights would depend on the approach adopted with regard to the reach of exclusive jurisdiction rules (Art 12).

5.2  Jurisdiction over IP Infringements in North American Countries 5.2.1  Jurisdiction over IP Infringement Disputes of Canadian Courts The jurisdiction of Canadian courts over IP infringement disputes could be exercised if two requirements are satisfied: 1) the existence of jurisdiction simpliciter and 2) the existence of subject-matter jurisdiction. Jurisdiction simpliciter would exist if the defendant was resident in a Canadian province or if the defendant submitted himself to the jurisdiction of a Canadian court. Jurisdiction simpliciter would also exist if the claim is based on a tort which was committed in the province. In the case of Quebec, Quebec courts have jurisdiction if a fault was committed, damage was suffered or an injurious act occurred in Quebec. Hence, in the case of defamation by means of distribution of materials via the Internet, Canadian courts would have jurisdiction simpliciter over an action brought against a foreign defendant if the publication was distributed ‘in a language that could be read by more than a minimal number of people’. The defendant might be able to challenge the jurisdiction of the court seised by claiming that a court of a foreign country is forum conveniens. If the defendant’s pleas are successful, the Canadian court could stay the proceedings.204 The court’s jurisdiction to award damages based on tort would depend on whether the defendant’s residence is in a Canadian province or not. If the defendant has his residence in Canada, the Canadian court could decide on worldwide damages. If, however, the jurisdiction of a Canadian court was based on the situs of the tort (ie tort in Canada), the court   ibid, 60–61.   Canadian Report, answers to HC 1.

203 204

General Report  51 could decide only on damages based on the tort in that particular jurisdiction. In addition, the plaintiff could argue that the court should decide over damage sustained in foreign jurisdictions, but in order to succeed, the plaintiff will have to convince the court that there is a real and substantial connection between the local forum and those claims. On the other hand, the defendant could well bring counter-defence related to the difficulties associated with the application of foreign laws.205 The legal landscape would change considerably in the case of infringement of IP rights. As in the case of other kinds of torts, Canadian courts have jurisdiction over claims concerning infringements of IP rights, but this would only be true with regard to infringements of Canadian IP rights. Subject-matter jurisdiction requirements would bar Canadian courts from hearing disputes over the validity as well as infringement claims of foreign IP rights.206 Hence, Canadian courts would have jurisdiction only with regard to damages arising from an infringement of Canadian IP rights.

5.2.2  Jurisdiction of US Courts over Claims concerning IP Infringements The requirement to establish both jurisdiction in personam and subject-matter jurisdiction means that claims concerning infringements of foreign IP rights are usually dismissed by US courts. In cases concerning copyright infringements, US courts would usually grant monetary and injunctive relief for the infringements of US copyrights.207 However, in cases over multi-state IP infringements, the infringements of foreign copyrights may be taken into account for the purposes of calculating damages.208 A more stringent approach is followed in adjudicating disputes involving foreign registered IP rights. US courts usually do not assert jurisdiction over claims concerning infringements of foreign patents.209 In Ortman v Stanray Corp,210 the plaintiff filed a suit alleging the infringement of the United States as well as Canadian, Brazilian and Mexican patents granted for the same invention. Since both parties were US citizens, the jurisdiction of the court with regard to the infringement of the United States patent was affirmed. Nonetheless, the plaintiff ’s move to enjoin the defendant from infringing his foreign patents was dismissed by the court. In the same vein, the plaintiff ’s recourse to Congress having ratified the International Convention for the Protection of Industrial Property was considered to be insufficient for conferring jurisdiction over foreign patent infringement claims. In Packard Instrument Company Inc v Beckman Instruments Inc 211 the plaintiff alleged an infringement of a patent in the United States and nine other countries. The defendant brought a counterclaim and sought a declaration that patents in all countries were invalid. In addition, the defendant argued that the court should decline jurisdiction over foreign patent claims. Hence, the question was whether a US district court has jurisdiction over claims for infringement of foreign patents when the issue of the validity of these patents is raised. The defendant in particular argued that the United States courts should not exercise  ibid.   ibid, answers to HC 1 and HC 6. 207   Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994). See also Boosey & Hawkes Music Publishers Ltd v Walt Disney Co 934 F Supp 119 (SDNY 1996), 124–25, where the court relied on the forum non conveniens doctrine and dismissed the plaintiff ’s claim for damages for copyright infringement, inter alia on the ground that foreign law had to be applied. 208   Sheldon v Metro-Goldwyn Pictures Corp 106 F2d 45 (2d Cir 1939). 209   Voda v Cordis Corp 476 F 3d 887 (Fed Cir 2007). 210   Ortman v Stanray Corp 371 F 2d 154 (7th Cir 1967). 211   Packard Instrument Company Inc v Beckman Instruments Inc 346 F Supp 408 (1978). 205 206

52  Toshiyuki Kono and Paulius Jurcˇys jurisdiction because, first, the determination of the validity of foreign patents ‘would involve a form of foreign governmental interest’; and, secondly, a US forum ‘would not be suitable to enforce [a] foreign based claim’. The court decided that the decision over the validity of a foreign patent would raise serious comity concerns. Besides, the court noted that national patent laws are closely related to economic and social policy concerns. Some guiding principles of how American courts exercise jurisdiction over claims concerning infringements of IP rights in the digital environment can be found in Penguin Group (USA) v American Buddha.212 Penguin, a publisher with its principal place of business in New York City, filed a copyright infringement action against the defendant making four of its recently published books available online. The defendant, American Buddha, an Oregon non-profit organisation, argued that the New York court should dismiss the complaint for the lack of personal jurisdiction, since the ties between the defendant and the forum state were too insubstantial and the plaintiff did not suffer any in-state injury. The court found that in a copyright infringement case against out-of-state defendants and involving the uploading of a work on the Internet, the situs of injury is the location of the copyright-holder. In addition, in order to establish personal jurisdiction over a non-­ resident defendant under New York’s long arm statute, five requirements must be proven: (1) the defendant committed a tortious act outside New York; (2) the cause of action arose from that act; (3) the tortious act caused an injury to a person or property in New York; (4) the defendant expected or should reasonably have expected the act to have consequences in New York; and (5) the defendant derived substantial revenue from interstate or international commerce. In the case at hand, the court in particular addressed the issue of injury. Besides, if the above-mentioned five requirements for conferring personal jurisdiction over a non-resident defendant are satisfied, a court must then assess whether a federal due process clause is also met. It was held that the location of the infringing conduct is of little relevance in jurisdictional analysis concerning online copyright infringements. Accordingly, the court affirmed that the injury occurred in New York.

5.2.3  Jurisdiction over IP Infringements according to the ALI Principles International jurisdiction over IP infringement disputes and the extent of the competence of the courts in infringement matters is governed by section 204 of the ALI Principles. At the outset, it is noteworthy to emphasise that the ALI Principles take a rather innovative approach213 with the objective to adapt traditional jurisdictional criteria to the infringements of IP rights which occur in the digital environment. The distinctiveness of the ALI Principles could be best understood from the rule which stipulates that courts of the country where allegedly infringed IP rights do not exist may nevertheless also have jurisdiction over the case. Namely, pursuant to section 204(1), a person may be sued in any state in which that person has substantially acted or taken substantial preparatory acts to initiate or further an alleged infringement. The courts of the country where such substantial activities took place shall have jurisdiction concerning all injuries arising out of the infringing conduct, regardless of the place where the injuries occur. Further, as regards Internet-related acts, the plaintiff may also bring an action to the courts of the state to which those infringing activities were directed (section 204(2)).   Penguin Group (USA) v American Buddha 2011 WL 1044581 (NY)   American Law Institute, Intellectual Property, above n 38, Comments to s 204.

212 213

General Report  53 In order to prevent potential forum shopping practices, the ALI Principles establish another rule in which a person who cannot be sued in a WTO Member State, with respect to full territorial scope as outlined in sections 201–204(1), may nevertheless be sued in any state in which that person’s activities give rise to an infringement claim if the following two conditions are satisfied. Firstly, that person should direct those activities to that state, and, secondly, that person should solicit and maintain contacts, business, or an audience in that state on a regular basis, whether or not such activity initiates or furthers the infringing activity. The jurisdiction of the court of that state extends to claims concerning injuries arising out of conduct in any state. This provision was drafted in technology-neutral language and is based on established practices of courts in different jurisdictions.214

5.3  Jurisdiction over IP Infringement Disputes in Europe 5.3.1  Brussels/Lugano Regime: Infringement Jurisdiction The primary legal sources determining international jurisdiction of EU Member State courts in cross-border IP infringement cases are the Brussels I Regulation and Lugano Convention. According to Article 5(3) of the Brussels I Regulation,215 a defendant who is resident in a Member State may also be sued before the courts of the place where the harmful event occurred or may occur. The European Court of Justice had many opportunities to clarify the meaning of Article 5(3) and has interpreted the notion of the place of harmful event in an autonomous manner.216 Thus, the ECJ aims to assure that jurisdiction rules are interpreted uniformly and that private parties have the same rights and duties before courts of different Member States.217 From the beginning, Article 5(3) of the Brussels Convention was given a broader interpretation by the European Court of Justice. In an early case, Bier, which was related to cross-border environmental damage, the ECJ indicated that the expression ‘place where the harmful event occurred’ should be understood as covering both the place where the damage occurred, and the place of the event giving rise to it. Consequently, the defendant may be sued, at the option of the plaintiff, before either the courts of the country where the damage occurred, or the courts of the country where the harmful event occurred.218 The Court noted that rules of special jurisdiction are based on the existence of a particularly close connecting factor between the dispute and the courts other than those of the state of the defendant’s domicile which is inevitable to the sound administration of justice and efficacious conduct of proceedings.219 The scope of decision in the case of Bier was further limited by the ECJ in its subsequent case law. In the case of Marinari, the ECJ stated that the term ‘place where the harmful event occurred’ within the meaning of Article 5(3) cannot be construed so extensively as to  ibid 54–59.   Art 5(3) of the Lugano Convention and the Revised Lugano Convention (2007).   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, paras 15–16. 217  ibid. 218   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735, paras 24–25; such position was subsequently followed by the courts of EU Member States, see eg, Belgian Report, n 160 with further references to Belgian case law. 219   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735, para 11; Case C-220/88 Dumez France and Tracoba [1990] ECR I-49, para 17; Case C-68/93 Shevill and Others v Presse Alliance [1995] ECR I-415, para 19; Case C-364/93 Marinari v Lloyds Bank and Another [1995] ECR I-2719, para 10; Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535, para 27. 214 215 216

54  Toshiyuki Kono and Paulius Jurcˇys encompass any place where the adverse consequences can be felt if an event has already caused damage elsewhere. In other words, Article 5(3) cannot be interpreted as covering damage that results after the initial damage occurred and suffered by the victim in another Contracting State.220 Similarly, in the case of Dumez the ECJ held that Article 5(3) of the Brussels Convention cannot be interpreted as permitting a plaintiff, pleading damage, which he claims to be the consequence of harm sustained by direct victims of the harmful act, to bring proceedings against the perpetrator of that act in the courts of the place in which he himself suffered damage to his assets.221 In the case of Kalfelis, the ECJ was asked to clarify the meaning of the notion of ‘matters related to tort, delict or quasi-delict’ as it is employed in Article 5(3). In this case the plaintiff sued several banks with whom a number of spot and futures stock-exchange transactions were concluded. The plaintiff sought the establishment of the banks’ liability for failure to fulfil their contractual obligations to provide information as well as liability in tort and unjust enrichment. The ECJ noted that Article 5(3) should be interpreted autonomously and cover all actions which seek to establish the liability of the defendant except for actions related to ‘contract’ within the meaning of Article 5(1) of the Brussels Convention/Regulation.222 Another important decision concerning infringement jurisdiction was handed down in the Shevill case. A UK national, Fiona Shevill, brought an action in the UK against the French publisher of a newspaper which published an article stating that Fiona Shevill and other plaintiffs were part of a money laundering network. In answer to which courts have jurisdiction to hear an action for damages for harm caused by distribution of a defamatory newspaper article in several Contracting States, the ECJ ruled that courts of the country where the publisher is established shall have jurisdiction to award damages for all harm caused by the defamation.223 While the courts of the country where the publisher is established would have jurisdiction pursuant to Article 2 (defendant’s domicile), the victim of the defamatory publication would also have the option to file a suit in the place where damage occurred. Here, the ECJ stated that the place of damage should be understood as the place where the publication was distributed; however, the jurisdiction of the courts of the place of publication should be limited solely to the harm caused within the state whose courts are seised.224 Thus, in the case of Shevill the ECJ took a restrictive approach with regard to the amount of damages which may be awarded pursuant to Article 5(3). As in the case of other special grounds of jurisdiction in the Brussels/Lugano regime, it is generally understood that special jurisdiction provisions, such as those provided in Article 5 of the Regulation, form an exception to the general rule of forum domicilii, and have to be interpreted narrowly. The ECJ judgment in the Shevill case illustrates the European Court of Justice’s commitment to assure sound administration of justice and avoid multiplication of proceedings and forum shopping.225 The Shevill decision was not always supported by legal practitioners and academics, who criticised this judgment as being not always applicable due to the factual characteristics of defamatory infringements.226 220   Case C-364/93 Antonio Marinari v Lloyds Bank plc and Zubaidi Trading Company [1995] ECR I-2709, paras 14–15. 221   Case C-220/88 Dumez France SA and Traboca SARL v Hessische Landesbank and others [1990] ECR I-49, para 22. 222   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, paras 17 and 19. 223   Case C-68/93 Shevill [1995] ECR I-415, para 24. 224   ibid, paras 29–30. 225   For comments, see Belgian Report, answers to HC 1. 226   Italian Report, answers to HC 1 with a more detailed analysis.

General Report  55

5.3.2  Application of Article 5(3) to Infringements of IP Rights As of October 2010 there were no cases decided by the ECJ regarding the applicability of Article 5(3) of the Brussels I Regulation to IP infringement disputes. However, it is generally accepted that Article 5(3) also applies to IP infringement actions227 even if claims are related to the infringement of foreign IP rights.228 Yet, there are two main areas of controversy: it has to be clarified, first, what is the scope of the jurisdiction of the court which exercises its authority on the basis of Article 5(3), and secondly, how Article 5(3) should be applied to Internet-related infringements. As previously mentioned, the ECJ judgment in the case of Shevill dealt with an infringement of intangible property (person’s honour or reputation). National reports singlehandedly confirmed that this approach to the application of Article 5(3), as established in Shevill, would be followed by domestic courts in multi-state defamation cases.229 Besides, if the same approach is adopted with regard to IP infringements, it would generally mean that the plaintiff could bring claims for the infringement of IP rights either before the courts of the country where the defendant is established (pursuant to Art 2), or before the courts of the country where the infringing act/omission was committed or the damage occurred. Most of the European national reports mentioned that this interpretation of Article 5(3) is or would be followed by domestic courts as well in IP cases.230 For example, the Swedish Report referred to the judgment of the Supreme Court of Sweden concerning a multi-state trade mark infringement. In this case a Swedish company filed a suit against a German defendant before the courts of Sweden arguing that the defendant had infringed the plaintiff ’s ‘FireDos’ trade mark which was registered in Sweden, Benelux, France, the UK and Spain. The plaintiff sought an injunction as well as compensation of damage sustained in all countries where the trade mark was registered. The appeal court and the Supreme Court found that claims brought pursuant to Article 5(3) do not confer jurisdiction upon Swedish courts to decide over damages for the infringement of foreign trade marks.231 The Belgian Report provided for a number of examples illustrating how Article 5(3) of the Brussels Convention was applied to patent, copyright and trade mark infringement cases by Belgian courts.232 However, it remains controversial whether the Shevill jurisprudence could be applied to IP infringement cases.233 Some national reports indicated that according to the principle of territoriality of IP rights, the place where the event giving rise to the damage cannot be distinguished from the place where the damage occurred. Accordingly, IP rights cannot be infringed in the country where they do not exist.234 Therefore, it is sometimes argued that 227   See eg Belgian Report, para 44; French Report, answers to HC 1; Greek Report, answers to HC 1; Portuguese Report, answers to HC 1; Spanish Report, answers to HC 1; Swedish Report, answers to HC 1. 228   Italian Report, section 1.2.2.6 and n 65. 229   See eg, Greek Report, answers to HC 1; Dutch Report, section 3.2 with further references to domestic case law; Italian Report, Answers to HC 1 with further references to domestic case law (nn 111 and 112); Slovenian Report, answers to HC 1; UK Report, answers to HC 1. 230  See Austrian Report, section 3.2.3 and n 142 as well as section 4.1 with further explanation of the Austrian jurisdiction regime; Belgian Report, para 44 with further references; Dutch Report, section 3.2; German Report, answers to HC 1; Greek Report, answers to HC 1; Italian Report, section 1.2.2.3 and answers to HC 1; Portuguese Report, answers to HC 1; Spanish Report, answers to HC 1 and n 52 for further references; Swedish Report, answers to HC 1; UK Report, answers to HC 1. 231   Swedish Report, answers to HC 1. 232   Belgian Report, para 44 with further references, esp nn 167–74. 233   Italian Report, section 1.2.2.3 and answers to HC 1; Spanish Report, answers to HC 1. 234   Italian Report, section 1.2.2.6 with further references to Italian domestic case law and also answers to HC 1.

56  Toshiyuki Kono and Paulius Jurcˇys according to the Brussels/Lugano regime, pure IP infringement cases can only be brought either before the country of the defendant’s domicile (pursuant to Art 2) or before the country where the harmful event occurred or is likely to occur (pursuant to Art 5(3)). In the latter case, the place where the harmful event occurred or is likely to occur is the country where the IP rights are protected. In addition, the Slovenian Report also emphasised that such an approach is taken with regard not only to Article 5(3) of the Brussels I Regulation, but also to Article 55(1) of the Slovenian Private International Law and Procedure Act (PILP).235 Further, opinions differ regarding whether Article 5(3) of the Regulation also allows the possibility to bring actions for negative declaratory judgments seeking the ascertainment that a particular IP right of another country is not infringed. In the absence of any guidance from the European Court of Justice, some national courts have relied on Article 5(3) as a jurisdictional ground to hear such actions.236 However, there are few cases where a court would issue negative declaratory judgment with regard to the infringement of foreign IP rights. Conversely, the prevailing opinion seems to be that claims for negative declaratory judgments cannot be brought on the basis of Article 5(3).237 For example, the Swedish Supreme Court rendered a judgment in the so-called Flootek case where the plaintiff filed an action for a negative declaratory judgment seeking confirmation that its product did not infringe a Swedish patent held by a Norwegian company. Although the defendant (patent owner) argued that Swedish courts do not have international jurisdiction pursuant to Article 5(3) of the Lugano Convention, the Swedish courts in all three instances interpreted Article 5(3) narrowly and refused to exercise jurisdiction to hear an action for negative declaratory judgment.

5.3.3  Jurisdiction over Internet-Related Infringements One of the main sources of uncertainty concerning the application of Article 5(3) of the Brussels I Regulation is related to IP infringements on the Internet. In these situations the damage is ubiquitous and allegedly occurs in a number of states. Hence, for the purposes of asserting international jurisdiction the court must face the difficult task of determining the degree of connection between the infringement and the forum country.238 Opinions differ with regard to the language of the website where the alleged infringement of IP rights occurs. For instance, the Spanish Report noted that Article 5(3) was interpreted by Spanish courts in such a way so they could assert international jurisdiction over the infringement action even if the infringing material is distributed in a foreign language or is available on the Internet.239 The Austrian Report referred to the judgment of the Supreme Court in a case concerning trade mark infringement via the Internet. The Austrian Supreme Court decided that the harmful event occurred in the forum state because the website was directed to Austria. In such a case, Austrian courts would assert international jurisdiction to hear IP infringement claims if infringing acts were directed to Austria where IP rights are protected.240 As   Slovenian Report, general part, section 1.4.1.   Belgian Report, para 44 as well as nn 169–70; Decision of the Hague Court of 21 January 1998, Evans Medical v Chiron Corporation, reported by van den Broek in (1998) 20 European Intellectual Property Review 61. 237   See Belgian Report, para 44. 238   Spanish Report, answers to HC 1. 239   ibid and further references in n 52. 240   Austrian Supreme Court, OGH 4 Ob 110/01g, BOSS-Zigaretten (2001) Medien und Recht 320. 235 236

General Report  57 long as the jurisdiction of a court to decide over the entire damage sustained in different countries is on the basis of ubiquitous infringement, courts would have jurisdiction to decide only on the damage sustained in the forum country (unless the defendant is resident in the forum country).241 The French Report discussed one of the benchmark decisions of the Court of Cassation concerning international jurisdiction over an action for infringement of Internet trade marks.242 In this case a French court followed the reasoning of the Shevill case and decided it had international jurisdiction over damages sustained in France on the ground that, first, the plaintiff was a holder of a French trade mark and, second, the website was accessible (albeit passively) in France. In addition, the French Report noted that in the case of multistate infringements of IP rights, the assertion of international jurisdiction depends on whether there is a ‘close, substantial and significant link’ between the allegedly infringing act, the place where the damage was sustained and the forum state; albeit some scholars argue that the mere accessibility of a website is sufficient to exercise jurisdiction.243 It is expected that some clarity will be given by the ECJ in Case C-509/09244 where the German Federal Supreme Court referred to the ECJ asking for a preliminary ruling on the application of Article 5(3) to infringements of personal rights in the digital environment. In particular, the German Court asked whether the phrase ‘place where the harmful event may occur’, entrenched in Article 5(3), should be interpreted as meaning that in the event of possible infringements of personality rights on an Internet website, the person concerned may also bring an action against the operator of the website in any Member State in which the website may be accessed and irrespective of the Member State in which the operator is established. The German Supreme Court also enquired whether, alternatively, additional requirements related to the contents of the website should be established, and if so, what those requirements should be.

5.3.4  Third-Country Situations The Brussels I Regulation does not apply in situations where the defendant is not resident in any EU or EFTA Member State. In such circumstances, domestic jurisdiction provisions of the forum state will have to be applied. The answers provided by national reporters highlighted the differences in practice among various states. In some countries the grounds of exercise of international jurisdiction in tort cases are similar to that of the Brussels/Lugano regime. For instance, in Slovenia the court would have jurisdiction if the wrongful act (the event causing damage) was committed in the territory of the forum state or if the damage occurred in Slovenia (Art 55(1) of the Slovenian PILP). Similarly, in France, a plaintiff may bring an action before the courts of the place where the event causing damage occurred or in the courts of the place where the damage was sustained (Art 46 of the French CCP). The French national reporter noted that the practice of the Court of Cassation was largely influenced by the ECJ judgment in the Shevill case. With regard to the competence to award damages in multi-state IP infringement cases, French courts’ jurisdiction would be limited to damages sustained in France in cases where

  Austrian Report, section 3.2.3.   Cass 1re civ., 9 December 2003 as cited in the French Report, nn 67, 75 and 76 for further references. 243   French Report, section 2.2. 244   Case C-509/09, eDate Advertising GmbH v X. 241 242

58  Toshiyuki Kono and Paulius Jurcˇys the event causing damage was committed abroad.245 As for jurisdiction over disputes concerning infringements committed on the Internet, French courts will also consider whether there is ‘a sufficient, substantial and significant link’ between the alleged infringement and the forum.246 In Austria, international jurisdiction over infringement claims can be exercised if the court has personal jurisdiction or if the harmful event occurred in Austria (section 83(c) (1) of the Austrian Civil Jurisdiction Act). Yet, the Austrian Report indicated that section 83(c)(1) has been interpreted differently from Article 5(3) of the Brussels I Regulation so as to allow Austrian courts to decide on the overall damage resulting from infringing activities undertaken in Austria, even if the defendant is not resident in Austria.247 In the UK, the reach of jurisdiction of the English courts would depend on whether a non-European defendant could be served with or without leave. If the defendant could be served within the jurisdiction without requiring leave, the territorial jurisdiction of English courts would be unlimited.248 In Sweden, Chapter 10 of the Swedish Code of Judicial Procedure confers jurisdiction to Swedish courts on the ground that the property of a foreign defendant is located in Sweden. This provision has been interpreted as protecting Swedish plaintiffs especially in light of the fact that foreign judgments from states other than EU Member States are unlikely to be declared in Sweden. A jurisdiction based on the location of property is also significant in cross-border IP litigation scenarios, because the Supreme Court decided that patents registered in Sweden constitute an asset insofar as the exercise of international jurisdiction is concerned.

5.3.5  Infringement Jurisdiction in the CLIP Principles In the CLIP Principles, jurisdiction rules over actions concerning infringements of IP rights are drafted with regard to the principle of territoriality of IP rights. Article 2:201 stipulates that in disputes concerned with the infringement of an IP right, a person may be sued in the courts of the state where the alleged infringement occurs or may occur. However, this rule does not apply if an alleged infringer did not act in that state to initiate or further the infringement and this activity cannot reasonably be seen as having been directed to that state. As regards the extent of jurisdiction of the court seised, the CLIP Principles introduce slight modifications to the previous practice shaped by the ECJ in the Shevill judgment. As a general rule, Article 2:203 follows the territoriality principle and stipulates that a court hearing an infringement dispute shall have jurisdiction over infringements that occur or may occur within the territory of the state in which that court is situated. Nevertheless, in light of difficulties related to the recovery of damages which arise from infringements of IP rights performed through ubiquitous media, the court whose jurisdiction is based on Article 2:202 shall also have jurisdiction over infringements that occur or may occur within the territory of any other state, provided that the infringement has no substantial effect in the state or any of the states where the infringer is habitually resident. Additionally, one of the two following alternative requirements must be fulfilled: first, substantial activities in furtherance of the infringement in its entirety had been carried out within the territory of   French Report, section 2 and nn 75–76 for further references.   French Report, section 1.2.4 and n 13 for further references to the French jurisprudence. 247   Austrian Report, sections 3.2.3 and 4.1.5 providing for a detailed account. 248   UK Report, answers to HC 1. 245 246

General Report  59 the country in which the court is situated, or, secondly, the harm caused by the infringement in the state where the court is situated is substantial in relation to the infringement in its entirety. The solution adopted in the CLIP Principles is based on the prevailing approach in Europe, that IP rights can be infringed only in the country of protection. More generally, the CLIP Principles aim to concentrate jurisdiction in the courts of a state which has the closest nexus with the dispute, especially as the taking of evidence is concerned.249 Moreover, such legislative framework mirrors the intention to implement the targeting test as well as accommodate jurisdiction rules to effects-based considerations.250

5.4  Asian Countries 5.4.1  India and Taiwan Claims for damages sustained in India or Taiwan may be brought to the respective courts of these countries. However, the Indian Report indicated that Indian courts would not have international jurisdiction to decide upon claims for damages suffered in foreign countries. This means that a plaintiff will face certain difficulties if the action concerns foreign IP rights.251 However, according to the Taiwanese Report, such problems would not necessarily arise in Taiwan because Taiwanese courts would in principle assert jurisdiction over actions concerning infringements of foreign IP rights.252

5.4.2  Jurisdiction over IP Infringements according to Japanese Law, and Latest Legislative Proposals Article 5(9) of the Code of Civil Procedure of Japan provides that courts of the place where a tort was committed shall have jurisdiction. However, this provision applies only with regard to domestic torts (ie torts which occur in Japan), and allocates territorial jurisdiction among Japanese courts. Nevertheless, the majority opinion is that Japanese courts can exercise international jurisdiction with regard to torts which occur in Japan. The same provision has also been applied to IP infringement actions. More particularly, Japanese courts would assert international jurisdiction in cases where the damage occurs in Japan, unless there are special circumstances which would require the courts to decline international jurisdiction.253 Article 3-3(viii) of the CCP (2011) provides for broader jurisdiction rules regarding tort-related actions. It stipulates that Japanese courts shall have jurisdiction over actions concerning unlawful acts if such acts occurred in Japan. However, this rule shall not apply with regard to infringing acts undertaken abroad, the effects of which occurred in Japan, if it could not have been generally foreseen that the effects of such acts will occur in Japan. It should be noted that the CCP (2011) does not contain any special rules for particular kinds of torts. Thus disputes related to IP rights will fall under the general jurisdiction rule for 249  C Heinze, ‘A Framework for International Enforcement of Territorial Rights: the CLIP Principles on Jurisdiction’ in J Basedow, T Kono and A Metzger (eds), above n 1, 65 et seq. 250  ibid. 251   Indian Report, answers to HC 1. 252   Taiwanese Report, answers to HC 6. 253   Japanese Report answers to HC 1 with further references.

60  Toshiyuki Kono and Paulius Jurcˇys torts. The decision not to have any special jurisdiction provisions for IP infringements was based on the agreement that exclusive jurisdiction of the courts of the granting / registering country should not cover IP infringement actions.254 Article 105 of the Transparency Principles contains a special provision establishing rules of international jurisdiction over claims related to IP infringements. It provides that ‘Japanese courts shall have jurisdiction over claims of IP, when the results of an IP infringement occurred or are to occur in Japan, or when [the] infringing act took place or is to take place in Japan’. The proposed Article 105 aims to broaden the scope of infringement jurisdiction rules by making it clear that the right-holder can bring actions with regard to certain activities which might lead to the infringement of certain IP rights.255 In so far as the question of localisation of a multi-state (ubiquitous) infringement is concerned, the commentary notes that the Transparency Principles focus on the results of an infringement or infringing acts.256 The notion of ‘results’ is understood as being apart from the market effects test, established in Article 301, which deals with the applicable law to the infringement of IP rights. Further, the Transparency Principles provides that Japanese courts can exercise international jurisdiction if the results of such ubiquitous infringement are maximised in Japan (second part of Art 105). The maximisation of results of the infringement requirement was incorporated in order to assure more legal certainty and foreseeability.257 Article 203 of the Joint Japanese-Korean Proposal (Waseda Proposal) contains a special jurisdiction rule for IP infringement cases. The general rule is that a person may be sued in the courts of any state where the alleged infringement occurs (Art 203(1) first sentence). The Waseda Principles seem to follow the conventional understanding of an infringement of IP rights whereby infringing activities can only occur in the state where the IP rights are protected. The Waseda Principles posit a special jurisdiction rule for multi-state IP infringements and the so-called ‘ubiquitous infringements’ of IP rights. The second sentence of Article 203(1) stipulates that if injuries occur in several states, a person may be sued in the courts of the state in which the majority of the activities that initiate the alleged infringement occur. This provision has to be considered in conjunction with Article 211, which establishes a special circumstances test allowing the court to decline jurisdiction if such principles as fairness between the parties, due process or promptness of the proceedings are undermined.258 Notably, Article 203(1) to some extent resembles the Shevill doctrine by establishing that a court of the state where the activities initiating the alleged infringement were undertaken has international jurisdiction with regard to all injuries even if they occur in foreign states. Where an alleged infringement of an IP right is directed against a particular state, the court of that state may have jurisdiction only over those claims which are concerned with infringements occurring in its state (Art 203(2)). The drafters of the Waseda Principles also took into account the peculiarities of litigation concerning regis254   Kokusai saiban kankatsu kenky¯u-kai [International Jurisdiction Study Group], ‘Kokusai saiban kankatsu kenky¯u-kai h¯okoku (4) [Report of the International Jurisdiction Study Group (4)]’ 886 New Business Law No (2008.8.1) 88. 255   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 98. 256   ibid, 98–99. 257   ibid, 99. 258  ‘Commentary on Principles of Private International Law on Intellectual Property Rights (Joint Proposal Drafted by Members of the Private International Law Association of Korea and Japan)’ (2011) 2(6) Kigy¯o to H¯os¯oz¯o, available at www.globalcoe-waseda-law-commerce.org/activity/pdf/28/08.pdf, Commentary to Arts 203 and 211.

General Report  61 tered and non-registered IP rights. Article 209(2) provides that exclusive jurisdiction rules do not apply and courts could decide over such issues as acquisition, registration, validity or revocation of IP rights if they arise as a preliminary or incidental question. However, decisions upon such issues would not affect later proceedings.

5.4.3  Infringement Jurisdiction in Korea In asserting international jurisdiction over actions concerning IP infringements, Korean courts would first seek to determine whether the parties or the dispute are substantially connected to the forum (Art 2 of the Korean Private International Act). In light of the fact that there are no statutory provisions determining international jurisdiction in IP infringement cases, the Korean courts would defer to general jurisdiction rules. Further, exclusive jurisdiction provisions do not apply to actions concerning infringements of foreign IP rights. Besides, according to the Korean Report, it is likely that Korean courts would assert international jurisdiction if the infringing acts were committed in Korea.259 In the Sonata of Temptation case, the Seoul Central District Court decided that a Korean court had international jurisdiction, because the defendant was domiciled in Korea, the infringement of copyrights occurred in Korea and there were no special grounds which would undermine procedural principles such as fairness between the parties, appropriateness and expediency of adjudication.260 In cases where the plaintiff seeks compensation for damage suffered in numerous states, the question of whether Korean courts have international jurisdiction to decide the overall damage sustained in several countries would not depend on the defendant’s domicile in Korea.261 In other words, Korean courts could decide over the damage sustained in the forum as well as other countries even if the defendant is not resident in the forum country and the international jurisdiction of the court is based upon the place of the infringement of IP rights. Article 11 of the Korean Principles deals with jurisdiction over IP infringement actions and provides that courts of a country where the defendant undertook the main infringing activities shall have jurisdiction over actions related to that IP right. In such a case, court jurisdiction shall cover actions for damage arising from the defendant’s infringing activities regardless in which country such damage occurred. However, in cases where the acts of the defendant were directed to one specific country in which the damage occurred, the court shall have jurisdiction over claims related to the damage which was sustained in that particular country (Art 11(2)).262 Article 11 states that the Korean Principles make no distinction between registered and non-registered IP rights. It should also be noted that the Korean Principles do not contain any specific jurisdiction rules concerning ubiquitous IP infringement cases. Instead, Article 11 refers to the place of ‘main infringing activities’ and accordingly confers jurisdiction to the courts of the state where such main infringing activities occurred. This absence of special jurisdiction rules for ubiquitous infringements could be explained by the general understanding of the drafters that ubiquitous infringement cases should fall under the jurisdiction rules which determine objective joinder of actions (Art 15).   Korean Report, answers to HC 1 and HC 2.   Seoul Central District Court, Judgment of 13 March 2008, Case No 2007 Gahap53681 as referred to in the Korean Report, section 2.1 and answers to HC 1 and 2. 261   Korean Report, answers to HC 1. 262   Korean Report, n 234 and answers to HC 2. 259 260

62  Toshiyuki Kono and Paulius Jurcˇys

5.5  Comparative Observations The comparative analysis of the laws of different jurisdictions highlighted rather different approaches of adjudication of IP infringement actions. The territorially limited approach of the American and Canadian courts stands in contrast to the more flexible Brussels/ Lugano regime and the laws of represented Asian countries. Yet, a number of issues remain controversial and are subject to different jurisdiction rules. For instance, the answers submitted in national reports highlighted the need for a more comprehensive discussion concerning the relationship between a jurisdiction based on the defendant’s domicile/habitual residence and a jurisdiction based on the place of infringement. In this regard, significant differences exist among national laws regarding the scope of a court’s authority to decide over claims concerning the infringement of IP rights protected in the forum state, as well as the ability of submitting claims concerning infringements of foreign IP rights. In the area of IP, it appears that national legal systems generally have no established principles of adjudicating disputes which involve ubiquitous IP infringements. This area is pretty nebulous. Yet, some practical proposals have been laid down in some of the legislative proposals.263 Besides these legislative proposals, the results achieved at the negotiations to draft the Hague Judgments Convention could be a solid starting point if further harmonisation initiatives on a multilateral level are pursued.

6  Jurisdiction in Contract-Related Disputes One of the ways to exploit IP rights is to grant licences to third parties. Such contracts concerning the exploitation of IP rights venture into international waters whenever the contracting parties are from different states or when the exploitation of IP rights occurs in several states. In the case of a breach of such a contract, a number of intricate questions arise: which court should hear the case and what issues is the court competent to decide upon? A number of jurisdiction-related issues could be solved by contractual choice of forum clauses. However, if the parties did not include any agreement on jurisdiction, the national law of the court seised comes into play. As in other areas, jurisdiction to adjudicate contractual disputes is based on divergent methodologies and approaches employed by national courts. This section aims to briefly discuss general principles of international jurisdiction over contractual disputes and what specificities arise in the context of contracts for the exploitation of IP rights.

6.1  The 2001 Draft of Hague Judgments Convention Article 6 of the 2001 Hague Draft Convention entrenched two alternative sets of jurisdiction rules for actions brought on the basis of contractual obligations. Alternative A provides for a general ‘activity-based jurisdiction’ rule which should encompass various kinds 263   See s 204 of the ALI Principles; Art 2:202 of the CLIP Principles; Art 11 of the Korean Principles and Art 105 of the Transparency Principles.

General Report  63 of contracts.264 More precisely, it stipulates that a plaintiff may bring an action in contracts in the courts of the state in which the defendant has conducted or directed frequent or significant activity. This rule would be applicable only if the claim is based on a contract directly related to that activity. In addition, the proposed Alternative A also established several possible definitions of ‘activity’. Alternative B of Article 6 was identical to the provisions of the 1999 draft text of the Convention. In particular, Alternative B stipulated that a plaintiff may bring an action in contracts in the courts of a state in which: (a) in matters related to the supply of goods, goods were supplied; (b) in matters related to the provision of services, services were provided; or (c) in matters related both to the supply of goods and the provision of services, performance of the principal obligation took place in whole or in part. The characterisation of which of these rules to follow should be made under the national law.265 The provision applies also if only part of the goods or services were supplied in the forum state, which means that a plaintiff may have several available forums to file a suit. The Hague Draft Convention does not provide for any definition of goods, services or place of performance of an obligation. Hence, the court will also have to apply forum law if it is necessary to determine the place of the supply of goods or the provision of services. Yet, the Explanatory Report notes that the jurisdiction rule concerning contracts for the supply of goods also includes subcontracting, letting, leases and other contracts concerning the supply of goods. Notably, this provision however, does not cover contracts concerning sale of company shares of IP rights.266

6.2  Jurisdiction in Contract Disputes in the ALI Principles The ALI Principles provide for a special rule concerning international jurisdiction over claims alleging the breach of a contract for transferring or licensing IP rights. Section 205 states that courts of the state for which the exploitation of IP rights were transferred or licensed shall have jurisdiction. The underlying rationale behind such ground of jurisdiction is that the courts of the state where IP rights are exploited are best situated to access the evidence relevant to the dispute. In addition, the ALI Principles stipulate that if the jurisdiction of a court can be asserted on the sole ground of the transfer of IP rights exploited in the forum state, the scope of jurisdiction shall be limited only to those IP rights which are provided in the forum state (second sentence of section 205). Nevertheless, in multi-state disputes the plaintiff still has the possibility to bring an action before the courts of the defendant’s residence or to seek the consolidation of the proceedings pursuant to sections 221–23.

6.3  European Countries 6.3.1  The Brussels/Lugano Regime Special jurisdiction rules concerning actions related to the performance of contractual obligations are established in Article 5(1)(a) of the Regulation.267 According to this provision, a   Nygh-Pocar Report, above n 77, 50.   ibid, 49. 266   ibid, 50–51. 267   Also Art 5(1) of the Lugano Convention (1988) and the revised Lugano Convention (2007). 264 265

64  Toshiyuki Kono and Paulius Jurcˇys person who is domiciled in a Member State can be sued in matters related to contract in the courts of the state where the obligation in question has to be performed. The same rule was also posited in the Brussels Convention of 1968. However, in practice, national courts have faced considerable difficulties in determining the place of performance of contractual obligations and in deciding upon the scope of the application of Article 5(1). In order to at least partially remedy the existing ambiguities of interpretation, two additional alternative rules had been introduced in Article 5(1)(b) of the Brussels I Regulation. The first rule stipulates that in the case of the sale of goods, the place of performance is the Member State where, under the contract, the goods were delivered or should have been delivered. The second rule deals with service contracts and states that the place of the provision of services is in the Member State where the services were provided or have been provided. Yet, if the contract at hand is neither a sales contract nor a contract for the provision of services, the Brussels I Regulation again indicates that the general rule – according to which the jurisdiction should be asserted according to the performance of the characteristic obligation – shall be applied (Art 5(1)(c)). Jurisdiction of the courts of the place where the obligation in question has to be performed is based upon the assumption that such a place is most closely connected to the forum.268 Besides, the place of performance of obligation was intended to provide for a clear and precise connecting factor.269 However, in cases where complex contracts are involved the clarifications introduced in the Brussels I Regulation provided little for the determination of the characteristic obligation as well as the place of performance of obligation. The ECJ was requested to render preliminary rulings concerning the interpretation of Article 5(1). The material scope of the application of Article 5(1) was elucidated in the Tacconi case. In Tacconi, the question was whether an action, whereby the plaintiff seeks to establish a pre-contractual liability of the defendant, falls within the ambit of Article 5(1) or Article 5(3) of the Convention. In this case, the plaintiff sought compensation of damages allegedly caused by the defendant in breach of the duty to act honestly and in good faith during the contractual negotiations. The ECJ decided that for Article 5(1) to apply, it is essential to identify the obligation and the place where such obligation had to be performed. Further, the ECJ noted that Article 5(1) does not cover situations where there is a lack of obligation freely assumed by one party to another.270 As a result, an action concerning the pre-contractual liability of the defendant was considered to fall under the ambit of Article 5(3) which applies to matters relating to tort, delict or quasi-delict, and not Article 5(1), which establishes jurisdiction based on the place of performance.271 6.3.1.1  Determining the Place of Performance of Obligation For the purposes of international jurisdiction, the ECJ refused to interpret Article 5(1) of the regulation as referring to a particular obligation of a contract.272 Instead, the Court noted that the term ‘obligation’, as used in Article 5(1), implies only the obligation which 268   Case 266/85 Hassan Shenavai v Klaus Kreischer [1987] ECR 239, para 20; Case C-288/92 Custom Made Commercial Ltd v Stawa Metallbau GmbH [1994] ECR I-2913, para 13. 269   Case C-288/92 Custom Made Commercial Ltd v Stawa Metallbau GmbH [1994] ECR I-2913, para 15. 270   Case C-334/00 Fonderie Officine Meccaniche Tacconi v HWS [2002] ECR I-7357, paras 22–23. 271  Case C-26/91 Handte v Traitements Mécanochimiques des Surfaces [1992] ECR I-3967, para 18; Case C-334/00 Tacconi [2002] ECR I-7357, para 27. 272   Case 14/76 A De Bloos, SPRL v Société en commandite par actions Bouyer [1976] ECR 1497, para 10.

General Report  65 forms the basis of court proceedings and which corresponds to the contractual right upon which the plaintiff ’s action is grounded.273 It follows that in cases where the plaintiff seeks dissolution of a contract and compensation for damages, Article 5(1) would only be applicable if the court could identify the obligation which the plaintiff is reliant upon.274 By adopting a narrow approach to determining the obligation which forms the basis for a claim, the ECJ intended to limit situations where courts of several states have jurisdiction over the same action.275 Furthermore, it means that a court does not have international jurisdiction to hear the whole action founded on the ground of several obligations of equal rank and arising from the same contract if, according to the choice-of-law rules of the forum state, one of those obligations is to be performed in the forum state and the others in additional Member States.276 In the case of Tessili, the ECJ decided that the place of performance of the obligation in question shall be determined by the court seised according to the law which governs the obligation in question. In particular, the governing law should be determined by the choiceof-law rules of the forum state.277 The reference to the governing law also encompasses situations where according to the law of the forum the governing law has to be determined according to ‘uniform laws’ applicable in the forum state.278 The ECJ had also decided that for the purposes of Article 5(1), the contracting parties are allowed to specify the place of performance of an obligation.279 Nevertheless, such place of performance must have a real connection with the substance of the contract.280 The ECJ has placed much emphasis on the principle of legal certainty and predictability, so that a normally well-informed defendant should be able to reasonably foresee where he may be sued.281 Hence, the place of performance of obligations in the case of contracts which are neither sales nor services contracts shall be determined according to the law governing the obligation which is consistent with the conflicts provisions of the court seised.282 If a contractual obligation has been, or is to be performed in a number of places, for the purposes of Article 5(1), a single place of performance for the obligation in question must be identified. The ECJ held that in such a case the place where the obligation giving rise to the action is to be performed will normally be the most appropriate for deciding the case.283 In practice there may be cases where it is not possible to determine which court has the closest connection to the place of performance of certain contractual obligations. It may be questioned, for example, where the place of performance is in the case of sales contracts   ibid paras 11 and 13; Case 266/85 Hassan Shenavai v Klaus Kreischer [1987] ECR 239, para 20.   Case 14/76 A De Bloos, SPRL v Société en commandite par actions Bouyer [1976] ECR 1497, para 14. 275   ibid, paras 8–10; Case C-420/97 Leathertex Divisione Sintetici SpA v Bodetex BVBA [1999] ECR I-6747, para 31. 276   Case C-420/97 Leathertex Divisione Sintetici SpA v Bodetex BVBA [1999] ECR I-6747, para 40. 277   Case 12/76 Industrie Tessili Italiana Como v Dunlop AG [1976] ECR 1473, para 13. 278   Case C-288/92 Custom Made Commercial Ltd v Stawa Metallbau GmbH [1994] ECR I-2913, paras 27–29. 279   Case 56/79 Siegfried Zelger v Sebastiano Salitrini [1980] ECR I-89, para 5. 280   Case C-106/95 MSG v Gravières Rhénanes [1997] ECR I-911, paras 30–31. 281  Case C-26/91 Handte v Traitements Mécanochimiques des Surfaces [1992] ECR I-3967, para 18; Case C-440/97 GIE Groupe Concorde and Others v The Master of the vessel ‘Suhadiwarno Pankan’ and Others [1999] ECR I-6307, para 24; Case 256/00 Besix SA v Wasserreiningungsbau Alfred Kretzschmar GmbH & Co KG and others [2002] ECR I-1699, para 26; Case C-368/05 Color Drack GmbH v Lexx International Vertriebs GmbH [2007] ECR I-3699, para 19. 282   Case C-440/97 GIE Groupe Concorde and Others v The Master of the vessel ‘Suhadiwarno Pankan’ and Others [1999] ECR I-6307, para 32. 283   Case 256/00 Besix SA v Wasserreiningungsbau Alfred Kretzschmar GmbH & Co KG and others [2002] ECR I-1699, para 31. 273 274

66  Toshiyuki Kono and Paulius Jurcˇys involving a carriage of goods clause. The ECJ had previously decided that the national court should initially consider the provisions of a contract and, if the place of performance is not evident, the place where the goods are physically transferred or should have been transferred must be considered as the place of performance in terms of Article 5(1)(b).284 Furthermore, as for a non-competition clause without any geographical limit, the ECJ found that in cases where it not possible to identify a link to one particular forum, the general rule of a defendant’s domicile should be applied.285 In the case of Color Drack there were several places of delivery of goods within one Member State. The question which arose in that case was whether a plaintiff can bring an action against a defendant in the courts of the place of delivery of its choice with regard to all deliveries in that state. The ECJ found that the place of performance in that case had to be the place ‘with the closest linking factor between the contract and the court having jurisdiction’; the closest linking factor being determined on the basis of economic criteria.286 Notably, this approach applies with regard to both kinds of contracts: namely, contracts for the sale of goods and contracts for the provision of services.287 However if such a close link cannot be identified, the plaintiff can choose which court to bring an action before. In the opinion of the ECJ, allowing the plaintiff to decide the court would not undermine the interests of the defendant, who would in any case be sued in one of the courts of the state where goods were delivered.288 Besides, there may be disputes which concern several obligations of equal rank and each of those obligations shall have to be performed in different Member States. The ECJ ruled that in such circumstances the court of every state, where a particular obligation has to be performed, will have jurisdiction to hear actions which are based on that particular obligation. Therefore, the court of one state does not have jurisdiction to hear claims concerning obligations which were performed in another state, even if such obligation arises from the same contract.289 The ECJ was aware of the inefficiencies related to such a restrictive interpretation of Article 5(1); however, it noted that the plaintiff always has the right to bring an action before the courts of a defendant’s domicile pursuant to Article 2 of the Regulation.290 National courts were given some discretion to determine the place of performance and the existence of their jurisdiction in complex contracts. In particular, there may often be cases where the contract indicates that obligations are to be provided in several Member States. It may even be that the contract does not expressly provide for any definite place where the obligation has to be performed. In such circumstances the ECJ indicated that national courts shall take factual aspects and evidence of the dispute into consideration to determine the place of performance of the obligation.291 In the case of contracts for the provision of services in several states, a national court would have to identify (i) the place where the main provision of services is to be carried out, and (ii) the place with the closest   Case C-381/08 Car Trim GmbH v KeySafety Systems Srl [2010] ECR I-1255, para 58.   Case 256/00 Besix SA v Wasserreiningungsbau Alfred Kretzschmar GmbH & Co KG and others [2002] ECR I-1699, paras 49–50. 286   Case C-368/05 Color Drack GmbH v Lexx International Vertriebs GmbH [2007] ECR I-3699, para 40. 287   Case C-19/09 Wood Floor Andreas Domberger GmbH v Silva Trade SA [2010] ECR I-2121, para 31; Case C-204/08 Peter Rehder v Air Baltic Corporation [2009] ECR I-6073, para 36. 288   Case C-368/05 Color Drack GmbH v Lexx International Vertriebs GmbH [2007] ECR I-3699, paras 43–44. 289   Case C-420/97 Leathertex Divisione Sintetici SpA v Bodetex BVBA [1999] ECR I-6747, paras 38–39. 290   ibid, para 41. 291   Case C-368/05 Color Drack GmbH v Lexx International Vertriebs GmbH [2007] ECR I-3699, para 41; Case C-19/09 Wood Floor Andreas Domberger GmbH v Silva Trade SA [2010] ECR I-2121, para 40. 284 285

General Report  67 linking factor between the contract in question and the court having jurisdiction.292 The ECJ has provided an illustration of how these principles should be applied in the two following kinds of service contract. First, if the place of the provision of services is not clearly stipulated in a commercial agency contract, the place of performance should be the state where the agent is domiciled.293 Second, as regards contracts for the transportation of passengers, the place of performance of services is at the place of either departure or arrival of the aircraft.294 6.3.1.2  The Structure of Article 5(1) of the Regulation A number of issues arose with regard to the relationship between different sub-paragraphs of Article 5(1). According to lit (c), Article 5(1)(a) applies when contractual action does not fall under lit (b). In order to apply the special rule established in lit (b), the court would have to classify the contract as either a contract for the sale of goods or a contract for the provision of services. If the contract cannot be classified as either of these two types, the general rule established in lit (a) must be applied.295 In other words, sub-paragraph (a) is applicable with regard to all other contracts which cannot be classified as contracts for the sale of goods or provision of services. Further, a systematic interpretation of Article 5(1) implies that for sub-paragraph (b) to apply, two requirements must be fulfilled: first, the place of delivery of goods or provision of services must be in a Member State; and, second, the place of delivery of goods or provision of services must be established in the contract. If a court finds that a contract is a sales or services contract, lit. (b) shall be applied even if the place of performance of obligation is in several Member States. In some preliminary reference cases the ECJ was requested to clarify the notion of a contract for the sale of goods. In the case of Car Trim, the ECJ noted that Article 5(1)(b) does not provide for any definition of sales of contract services. Therefore, it is necessary to identify the obligation which characterises the contract in question. In the case at hand, it was decided that contracts for the sale of goods are also contracts where the purchaser specifies special requirements concerning the provision, fabrication and delivery of goods, and the seller is responsible for the quality of the goods and their compliance with the contract.296 The ECJ also handed down several judgments concerning the jurisdiction over actions related to the provision of services. Since the Regulation does not establish any definition of the ‘provision of services’, the ECJ provided some guidance by deciding that the concept of the provision of services implies that the party who is providing services should at least fulfil a particular activity in return for remuneration.297 In the case of Wood Floor, the ECJ confirmed that for the purposes of Article 5(1) of the Regulation, commercial agency contracts should be considered as contracts for the provision of services.298 However, in its 292   Case C-19/09 Wood Floor Andreas Domberger GmbH v Silva Trade SA [2010] ECR I-2121, para 42; Case C-204/08, Peter Rehder v Air Baltic Corporation [2009] ECR I-6073, para 38. 293   Case C-19/09 Wood Floor Andreas Domberger GmbH v Silva Trade SA [2010] ECR I-2121, para 43. 294   Case C-204/08 Peter Rehder v Air Baltic Corporation [2009] ECR I-6073, paras 40–44. 295   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327, para 40. 296   Case C-381/08 Car Trim GmbH v KeySafety Systems Srl para 38. 297   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327, para 29. 298   Case C-19/09 Wood Floor Andreas Domberger GmbH v Silva Trade SA [2010] ECR I-2121, para 34.

68  Toshiyuki Kono and Paulius Jurcˇys landmark judgment in Falco, the ECJ decided that in the case of a contract for the exploitation of IP rights, the owner of an IP right does not perform any services.299 As a result, the contract was not considered a contract for the provision of services within the context of Article 5(1).300 6.3.2  The CLIP Principles Some modifications to the existing Brussels/Lugano regime with regard to jurisdiction over IP contract disputes were proposed in the CLIP Principles. According to Article 2:201(1), in disputes concerned with contractual obligations a person may be sued in the state where the obligation in question is to be performed. In order to establish a more coherent regime than the one previously established under the Brussels I Regulation, the CLIP Principles provide for an autonomous definition covering all contractual obligations which arise from contracts having as their main object the transfer or licensing of an IP right. Namely, Article 2:201(2) stipulates that the state where the obligation is to be performed must be the state for which the IP licence is granted or the IP right is transferred. Therefore, unless otherwise agreed by the parties, the courts of the state for which the licence is granted or the right is transferred shall have jurisdiction. Further, the CLIP Principles contain two additional rules concerning the extent of the court’s jurisdiction. First, the CLIP Principles specify that if the place of performance of obligation is the sole ground of jurisdiction, the court’s jurisdiction will only cover activities relating to the licence or transfer of the IP right for the forum state (Art 2:201(2) second sentence). Second, in contrast to the previously established ECJ practice,301 the CLIP Principles allow the bringing of infringement claims, arising out of a contractual relationship between parties, before the court which would have jurisdiction to hear claims regarding the performance of contractual obligations (Art 2:201(3)).

6.4  Asian Countries 6.4.1  Jurisdiction over Contractual Disputes according to Japanese Law If an action concerns the performance of contractual obligations, Japanese law provides that the courts of the place where the obligation has to be performed shall have jurisdiction. This is entrenched in Article 5(1) of the Japanese CCP. Similar to other jurisdiction rules, Article 5(1) was originally perceived to allocate the domestic jurisdiction of Japanese courts. Yet actual court practice extended the scope of this provision as equally applicable to cases with a foreign element.302 Jurisdiction based on the place of performance of contractual obligations had been initially established in the practice of the lower courts in cases concerning the recognition and enforcement of foreign judgments.303 Gradually the place

299   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327, paras 31 and 36. 300  The Falco jurisprudence was adopted in the practice of several domestic courts; See Portuguese Report, answers to HC 3 and n 103 in particular. 301   See Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, para 19. 302   See eg Nagoya District Court, Judgment of 12 November 1979, 35 Minsh¯u 1241. 303   Tokyo District Court, Judgment of 31 January 1994, 837 Hanrei Taimuzu 300.

General Report  69 of performance became generally acknowledged as a ground for international jurisdiction and was applied together with the so-called special circumstances test.304 The rationale of conferring jurisdiction to the courts of the place where the obligation has to be performed is that these are the proper courts, not only to decide issues of performance of the obligation, but also to gather evidence or interrogate witnesses. In addition, it is said that a jurisdiction based on the place of performance also serves the interests of the defendant, increases the foreseeability in commercial transactions and is in line with the principles of fair trial.305 As in other states, a number of controversial issues exist with regard to the performance of the obligation as a ground for international jurisdiction. First, the prevailing opinion is that the place of performance of the obligation should be determined by the law of the state which governs the contract.306 In many cases Japanese courts would refer to Article 484 of the Japanese Civil Code that applies the law of the creditor’s/plaintiff ’s domicile and accordingly confers jurisdiction upon the courts of the state where the creditor is domiciled.307 Secondly, there is no prevailing opinion concerning the scope of the court’s jurisdiction. Some have argued that Article 5(1) applies only to actions concerning the performance of contractual obligations and does not cover tortious and other kinds of claims. Hence, claims concerning tortious acts have been brought according to infringement jurisdiction rules.308 The other argument is that a court of the place of performance is competent to hear contractual and other kinds of claims which may arise from unjust enrichment, torts etc.309 The CCP (2011) is based on the existing practice of Japanese courts. It provides that Japanese courts shall have international jurisdiction over actions concerning contractual obligations, unjust enrichment or negotiorum gestio if the place of performance of the contractual obligation is in Japan or, if according to the law, it is designated in a contract that the place of performance of the obligation is in Japan (Art 3-3(i)). 6.4.2  Legislative Proposals According to the Transparency Principles, Japanese courts have international jurisdiction over claims brought on the basis of contracts for the transfer of IP rights (Art 104). In order to provide for more legal certainty and foreseeability, the Transparency Principles provide that the place of the performance of obligation is the country of registration or the country which grants IP rights. The drafters also supported this approach because the jurisdiction is vested to the courts of the country where the IP rights are in fact exploited.310 The jurisdiction of Japanese courts would however be limited only to claims concerning the exploitation of IP rights in Japan. Nonetheless, the Transparency Principles also provide for a

304   Tokyo District Court, Judgment of 25 April 1995, 898 Hanrei Taimuzu 245; Tokyo High Court, Judgment of 24 March 1999, 1700 Hanrei Jih¯o 41; Tokyo District Court, Judgment of 19 March 1998, 997 Hanrei Taimuzu 286. 305   Osaka District Court, Judgment of 25 March 1991, 783 Hanrei Taimuzu 252. 306   Kobe DC 1993 September 22, 1515 Hanrei Jih¯o 139; Tokyo District Court, Judgment of 1962 October 17, 18 Kaminsh¯u 1002. 307   Tokyo District Court, Judgment of 1962 October 17, 18 Kaminsh¯u 1002; Shizuoka District Court, Judgment of 30 April 1993, 824 Hanrei Times 241. 308   Tokyo District Court, Judgment of 25 April 1995, 898 Hanrei Taimuzu 245. 309   Shizuoka District Court, Judgment of 30 April 1993, 824 Hanrei Taimuzu 241. 310   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 92–93.

70  Toshiyuki Kono and Paulius Jurcˇys possibility to consolidate actions which are objectively related (Art 110(1)) or to bring an action before the courts of a defendant’s domicile (Art 101). Article 204 of the Waseda Principles establishes a set of special jurisdiction rules concerning disputes over contracts for the transfer of IP rights. The general rule is that in disputes arising out of a contract concerning transfer or enforcement of IP rights, a person may be sued in the court of a state where that IP right is to be enforced under the contract (Art 204). In disputes over contracts for the exploitation of IP rights in multiple states, the Waseda Principles take a restrictive approach and establish that the courts of each of those states have jurisdiction to hear disputes concerning the exploitation of IP rights in the forum state (Art 205).311

6.5  Comparative Observations The fact that parties have limited capacities has direct implications to the negotiation and performance of the contract: contracts are often incomplete, the rights and duties of the parties are not clearly defined and the potential for renegotiation of contractual terms increased, especially in long term contractual relations. Contracts for the exploitation of IP rights are usually complex. Even though there were no controversial judgments rendered by the national courts, this does not mean that problematic issues may not potentially arise in the area of international jurisdiction over IP-related contracts. Conversely, as seen from the negotiations to adopt the Hague Judgments Convention as well as the ECJ judgment in the Falco case, contracts for the exploitation of IP rights hardly fit within the traditional criteria for the exercise of international jurisdiction over contractual disputes. The recent legislative proposals concerning adjudication of multi-state IP disputes aim to clarify the situation and establish more specific jurisdiction rules for disputes which arise out of IP-related contracts. These legislative proposals share two common features. First, all legislative proposals try to reconcile judicial competence with the principle of territoriality of IP rights and establish that courts shall have jurisdiction over actions concerning the exploitation of IP rights that are protected in the forum state. Secondly, legislative proposals clarify the situation concerning the scope of a court’s jurisdiction. In particular, it is provided that the court shall have jurisdiction to hear only those claims which are related to the exploitation of IP rights within the forum state. However, if the defendant is resident in the forum state, or if it possible to consolidate the claims, courts could hear claims concerning foreign IP rights only if there are also other grounds of jurisdiction. Nevertheless, further discussion may still be necessary with regard to such issues as whether legislative proposals will manage to assure proximity between the dispute and the forum, and how to approximate the rules on international jurisdiction with choice-oflaw provisions.

311   Art 12 of the Korean Principles stipulates that the court of the state where IP rights are exploited shall have jurisdiction over contractual disputes concerning the assignment, usage as collateral, licensing or other exploitation of IP rights.

General Report  71

7  Consolidation of Proceedings Consolidation of cross-border IP disputes became one of the most debated topics in recent years. High costs of country-by-country adjudication of multi-state IP infringement disputes have often been described as an Achilles heel. In order to overcome limitations posed by the principle of territoriality of IP rights, the consolidation of proceedings has been viewed as one of the most needed measures in creating an efficient cross-border IP litigation system.312 Several notorious court decisions were handed down in different jurisdictions which thus fuelled the debate on the desirability of possible venues of consolidation. The Supreme Court of the United States,313 as well as the European Court of Justice,314 had in principle dismissed the possibility of consolidation of multi-territorial patent claims; such a strict approach could also be interpreted as a sign that a legal change must take place at the legislative level. Indeed, some proposals to amend the present IP litigation system have already been suggested by academics on both sides of the Atlantic. The present chapter is formulated from answers provided in the national reports to hypothetical case no 3, which raised a number of questions with regard to the possibilities of consolidating claims brought against multiple defendants. The first scenario of the hypothetical case concerned a situation where a proprietor of parallel patent rights in several different states initiates proceedings and seeks to enjoin a number of foreign defendants who allegedly infringe the plaintiff ’s foreign patents. The national reporters were asked whether the law of their respective countries would allow the consolidation of claims in the courts of the plaintiff ’s domicile if neither of the defendants have any establishments in the forum state. In addition, national reporters were asked to explain whether such consolidation of claims against foreign defendants would be possible if the parties were bound by pre-existing contractual relations. In addition, the second alternative of the hypothetical case provided for a so-called ‘spider-in-the-web’ situation. The national reporters were asked whether the law of their state would allow the courts to assert international jurisdiction of multiple defendants given that (a) all the defendants belong to the same corporate group; (b) they infringe the claimant’s parallel IP rights based on a common policy; and (c) the coordinator of the infringing activities is domiciled in the forum state.

7.1  Consolidation of Claims in the 1999 Draft of the Hague Convention Article 14 of the 1999 Hague Draft of Judgments Convention contained a special jurisdiction rule concerning actions against multiple defendants. Despite the fact this rule was later removed from the 2001 Draft of the Hague Judgments Convention, it is still noteworthy to briefly address because Article 14 has been taken into consideration by drafters of subsequent legislative proposals on cross-border enforcements of IP rights. Article 14 of the 1999 312   P Torremans, ‘The Way Forward for Cross-Border Intellectual Property Litigation: Why GAT Cannot be the Answer’, in S Leible and A Ohly (eds), above n 1, 207; A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decisions GAT v LuK and Roche Nederland v Primus Goldenberg’ (2006) 7 International Review of Intellectual Property and Competition Law 854–55. 313   Voda v Cordis Corp 476 F 3d 887 (Fed Cir 2007). 314   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535.

72  Toshiyuki Kono and Paulius Jurcˇys Draft of the Hague Convention established that a plaintiff, bringing action against a defendant in a court of the state in which that defendant is habitually resident, may also proceed in that court against other defendants who are not habitually resident in that state if two conditions are fulfilled: first, the claims against the defendant habitually resident in that state and the other defendants are so closely connected that they must be adjudicated together to avoid a serious risk of inconsistent judgments; and, secondly, as regards each defendant who is not habitually resident in that state, there must be a substantial connection between that state and the dispute involving that defendant. By and large, Article 14 was drafted in light of Article 6(1) of the Brussels Convention. However, the provisions of the Hague Draft Convention are more restrictive. Namely, at the time when the text of the Hague Draft Convention was prepared, the Brussels Convention was interpreted as requiring proof of the existence of a close connection between the claims brought against different defendants.315 In the Hague Draft, two additional conditions of close relationship between the claims and the connection between the forum and the dispute which involves a non-resident defendant, were imposed to limit possible procedural advantages that a plaintiff might obtain by instituting proceedings against multiple defendants before courts of a single country.316 This requirement of a close relationship between the claims against different defendants aims to limit the multiplication of proceedings before courts of different countries which might conclude in inconsistent judgments. Further, in order to avoid situations where a non-resident defendant is sued before a clearly inappropriate forum, the Draft Convention required a substantial connection between the dispute concerning that particular defendant and the state of the forum seised.317 Lastly, rules provided in Article 14 of the 1999 Hague Draft Convention would not be applicable with regard to a co-defendant invoking an exclusive choice of court clause agreed with the plaintiff (Art 14(2)).

7.2  North American Countries 7.2.1  Canadian Approach to the Consolidation of Claims Subject-matter jurisdiction rules have significant implications in other matters related to the adjudication of cross-border IP disputes. In cases where the right-holder seeks consolidation of actions before the court of his own domicile against foreign defendants for the alleged infringements of IP rights, Canadian courts would follow a strict territoriality approach and not allow the consolidation of claims concerning foreign IP rights. The consolidation would be pre-empted also in the case where the alleged infringement was coordinated by a parent company even if it had its place of business in Canada. The mere fact that there is a close connection between the defendants would not overcome limitations imposed according to subject-matter jurisdiction rules. However, it is nevertheless possible that Canadian courts would assert jurisdiction if the jurisdiction simpliciter existed and it was clear that the Canadian court was the most appropriate forum.318 The possibility of a joinder of claims would be greater if the claims brought by the rightholder were for a breach of contract. Except for those situations where the defendants   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, para 13.   Nygh-Pocar Report, above n 77, 75. 317   ibid, 75–76. 318   Canadian Report, answers to HC 3. 315 316

General Report  73 (alleged infringers of the contract) did business in one of the Canadian provinces, the claims could be brought against the defendants if one of the categories of the service ex juris were satisfied. Such categories in matters concerned with contractual obligations could include, for example, where the contractual obligation was to be largely performed in the Canadian province or the contract is governed by the law of the Canadian province. In addition, the plaintiff will have to prove that the Canadian court is the forum conveniens despite the fact that the rights involved are foreign IP rights.319

7.2.2  Consolidation of Claims in the United States With regard to US law, parties have tried to enjoin claims related to foreign IP rights on the basis of supplemental jurisdiction. In particular, 28 USC section 1367 confers district courts with a ‘supplemental jurisdiction’ to entertain certain non-federal claims brought in the same action that are not otherwise supported by the original jurisdiction. Courts can enjoin claims that are related so that they form part of the same controversy under Article III of the United States Constitution (section 1367(a)). However, the Federal Circuit has consistently denied the possibility to entertain foreign IP claims. In Mars Inc v Nippon Conlux Kabushiki-Kaisha320 an action was brought against Nippon Conlux, a Japanese corporation, and its subsidiary in the United States. The plaintiff argued that an alleged direct infringement of the United States and respective Japanese patent constituted an act of unfair competition pursuant to 28 USC section 1338(b) (1988). The defendant argued that the claim concerning the alleged infringement of the Japanese patent should be dismissed on the ground that the court did not have subject-matter jurisdiction. The Federal Circuit first interpreted section 1338(b) and held that Congress did not intend to establish a notion of ‘unfair competition’ which would cover infringements of foreign patents. The court also found that the foreign patent infringement was not related to the United States patent since the underlying patents, devices, alleged acts and governing laws were different. In addition, the Federal Circuit noted that ‘public interest’ implies that localised controversies had to be decided at home, and that the hearing of claims related to matters involving a Japanese patent would undermine international comity. Another landmark judgment was handed down in the Voda v Cordis case321 where the Federal Circuit reversed the decision of the district court which found subject-matter jurisdiction over foreign patent infringement claims pursuant to the rules of supplemental jurisdiction (section 1367). Voda was a proprietor of patents issued under the Patent Cooperation Treaty in the United States, Canada and a number of European Patents in the UK, Germany and France. The defendant, Cordis, was a US-based corporation established in Florida with foreign affiliates in France, Germany, Italy, and the Netherlands. Voda filed a suit against Cordis US alleging infringements of US patents. Later, Voda amended his complaint and added claims of alleged infringements of European, British, French, German and Canadian patents. The district court decided it had supplemental jurisdiction over foreign patent claims. Yet, despite Voda’s arguments that a consolidated multinational patent adjudication would be more efficient, the Federal Circuit decided that the district court erred in asserting supplemental jurisdiction over foreign patent infringement claims. In particular, the Federal Circuit decided that the district court abused its discretion by   For a more detailed account see Canadian Report, answers to HC 3.   Mars Inc v Nippon Conlux Kabushiki-Kaisha 24 F 3d 1368 (Fed Cir 1994).   Jan K Voda v Cordis Corp 476 F 3d 887 (Fed Cir 2007).

319 320 321

74  Toshiyuki Kono and Paulius Jurcˇys asserting jurisdiction and held that considerations of comity, judicial economy, convenience, fairness and other exceptional circumstances constituted compelling reasons to decline supplemental jurisdiction. In coming to this conclusion, the Federal Circuit relied on such notions as independence of national patents (stating that ‘only a British court, applying British law, can determine the validity and infringement of British patents’). In discussing an issue of comity, the court noted inter alia that the plaintiff had not succeeded in identifying an international duty for American courts to adjudicate foreign patent infringement claims.

7.2.3  Claims against Multiple Parties and Other Possibilities of Consolidation in the ALI Principles The ALI Principles provide for a set of specific rules dealing with situations where the plaintiff seeks to sue multiple defendants. Section 206(1) of the ALI Principles establishes that the plaintiff bringing an action against a person in a state in which that person is resident may also proceed in that state against one or more non-resident defendants if the claims against the resident defendant and other defendants are so closely connected so as to be adjudicated together in order to avoid risk of inconsistent judgments. Such joint action against multiple defendants is possible if one of the two additional requirements is fulfilled: (1) there is a substantial, direct, and foreseeable connection between the forum’s IP rights at stake and each non-resident defendant; or (2) as between the forum and the states in which the additional defendants are resident, there is no forum that is more closely related to the entire dispute. This rule does not apply with regard to a co-defendant who invokes an exclusive choice-of-court agreement. The court which has jurisdiction according to section 206(1) is competent to decide injuries that arise out of activities that allegedly create the risk of inconsistent judgments; notwithstanding the place where such injury occurs. Section 206(2) further lists three instances when there is a risk of inconsistent judgments. Namely, inconsistency may arise if the ensuing judgments: (a) impose redundant liability; (b) conflict so that the judgment in one case would undermine the judgment in another case; or (c) conflict so that a party is unable to conform its behaviour to both judgments. Besides jurisdiction rules for claims against multiple defendants, the ALI Principles propose a legal framework for coordination of multi-territorial actions. In order to simplify and reduce the costs of the adjudication of multi-territorial IP disputes, the ALI Principles allow the court seised with related actions to choose one of the following mechanisms of adjudication: cooperation, consolidation or the combination of the two (sections 221–23). These innovative proposals are further discussed in section 8.2.2 of this report.

7.3  Consolidation of Claims in European States 7.3.1  Brussels/Lugano Regime: General Considerations The Brussels Regulation does not contain any specific rules for the consolidation of actions. However, there are some specific provisions which allow the plaintiff to consolidate proceedings. One such possibility is established in Article 6(1) of the Brussels I Regulation,322 which states that a person domiciled in a Member State may also be sued, where he is one   Art 6(1) of the revised Lugano Convention.

322

General Report  75 of a number of defendants, in the courts of the place where any of them is domiciled. The text of Article 6(1) was considered to be quite lenient as it enables the plaintiff to choose one of several states where actions against multiple defendants could be brought. Nevertheless, the Explanatory Report of the Brussels Convention indicated that for Article 6(1) to be applicable, a connection between the actions against multiple defendants has to be established (eg joint liability of defendants for the performance of contractual obligations).323 It was argued that such a narrow interpretation of Article 6 would help maintain the general jurisdictional ground of a defendant’s domicile and prevent national courts from exercising exorbitant jurisdictions.324 Such a restrictive interpretation of Article 6(1) of the Brussels Convention was established also in the jurisprudence of the European Court of Justice. In one of its early judgments the ECJ decided that Article 6(1) is an exception to the principle that jurisdiction is vested in the courts of the state where the defendant is domiciled (actor sequitur forum rei) and the existence of such a principle should not be challenged by an extensive application of exceptions to the general jurisdiction rule established in Article 2.325 Therefore, Article 6(1) could be applied where there is a connection between actions against different defendants that makes it expedient to determine those actions together to avoid the risk of irreconcilable judgments resulting from separate proceedings.326 However, the ECJ allows the national courts to decide on a case-by-case basis whether such a connection between the actions exists or not.327 In subsequent cases, the ECJ provided some additional guidance concerning the existence of a close connection between claims. For example, in the Réunion européenne case, it was decided that two claims in an action, one regarding compensation directed against different defendants and based in one instance on contractual liability and the other on the liability in tort or delict, cannot be regarded as connected.328 It should however be noted that the ECJ borrowed the notion of ‘irreconcilable judgments’ from Article 22 of the Brussels Convention (Art 28 of the Brussels I Regulation), which deals with the coordination of related proceedings. Although not mentioned in Article 6(1) of the Brussels Convention, the requirement of close connection between claims against multiple defendants was later included in the text of Article 6(1) of the Brussels I Regulation which provides that ‘a person domiciled in a Member State may be also sued where he is one of a number of defendants, in the courts for the place where any of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings’. Within the framework of the Brussels Convention, Article 6 of the Brussels I Regulation is an exception from the general rule that actions should be brought before a court of the defendant’s domicile (Art 2). Therefore, in 323   P Jenard, ‘Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters signed at Brussels’ (27 September 1968) [1979] OJ C59/1 (hereinafter ‘Jenard Report’), 49. 324  ibid. 325   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, para 8; Case C-51/97 Réunion européenne SA and Others v Spliethoff ’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002 [1998] ECR I-6511, paras 46–47; Case C-462/06 Glaxosmithkline v Jean-Pierre Rouard [2008] ECR I-3965, where the ECJ decided that Art 6(1) of the Regulation should be interpreted strictly, and refused to apply Art 6(1) to unilateral rules of jurisdiction provided for individual employment contracts (paras 28 and 32). 326   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, para 8. 327  ibid, paras 12–13. For the practice of Italian courts, see Italian Report, answers to HC 3 and n 134. 328   Case C-51/97 Réunion européenne SA and Others v Spliethoff ’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002 [1998] ECR I-6511, para 50.

76  Toshiyuki Kono and Paulius Jurcˇys order to assure legal certainty as to the place of litigation, the Regulation allows proceedings against several defendants only in exceptional cases.

7.3.2  The Early Practice of Domestic Courts in IP Infringement Cases The application of Article 6(1) to IP matters raised many controversial questions. For instance, national reporters were asked whether a proprietor of parallel patent rights in three different countries would be able to bring an action against three persons who independently infringed the patent rights in those three foreign countries respectively. In other words, the question raised in hypothetical case no 3 was whether a patent-holder could institute proceedings before a court of his own place of domicile merely on the basis that the claims against those parties concern infringements of parallel IP rights. Most national reporters from the EU Member States responded that the right-holder would not be able to institute such proceedings because (a) neither of the defendants had their domicile in the forum country, (b) the place of damage would be in every state where the infringement occurred (ie where the patents were granted); and (c) that there is no connection between the claims.329 It should be also noted that the consolidation of claims would be only possible if the court to which an application for the consolidation had been seised first (otherwise, ie if the proceedings had been first instituted before courts of other states, the court second seised may have to stay the proceedings according to Arts 27–31 of the Brussels I Regulation).330 The practice of the national courts varied significantly. For instance, English courts have usually adhered to the territorial nature of IP rights and refused to exercise jurisdiction over foreign IP rights. In Coin Controls v Suzo International,331 the plaintiff, who was an owner of three European patents in the UK, Germany and Spain for the coin-dispensing device used in gaming machines, sought interlocutory relief before the English courts against four defendants: a Dutch company and its three subsidiaries established in the UK, Germany and the Netherlands (Suzo UK, Suzo Germany and Suzo Holland, respectively). The plaintiff argued that the Dutch and German subsidiaries were responsible for the development and manufacturing of the coin-dispensing device, while the Dutch parent company provided financial assistance. The defendant requested the court remove all of the defendants except Suzo UK. Justice Laddie decided that the court had jurisdiction only with regard to claims against Suzo UK and Suzo Holland concerning the infringement of the UK patent. All other claims were dismissed on the basis that there was not enough evidence that the defendants had taken part in infringing different national patents. Such a decision was largely based on two main legal arguments. First, as regards claims related to the infringement of foreign patent rights, Justice Laddie decided that English public policy considerations prevented UK courts from adjudicating foreign IP rights.332 Secondly, joinder of actions against multiple defendants according to Article 6(1) of the Brussels Convention was not possible because the validity of each of the patents was challenged and such matters related to validity of registered foreign IP rights are subject to exclusive jurisdiction of the courts of granting states.333 329   Austrian Report, section 4.3.1; Belgian Report, answers to HC 3; French Report, answers to HC 3; Greek Report, answers to HC 3; Italian Report, answers to HC 3; Portuguese Report, answers to HC 3; Slovenian Report, answers to HC 3; Swedish Report, answers to HC 3; UK Report, answers to HC 3. 330   For a more detailed analysis, see Ch 8. 331   Coin Controls Ltd v Suzo International Ltd et al [1997] Ch 33. 332   ibid, 40–44. 333   ibid, 48 et seq.

General Report  77 In the Fort Dodge case the first plaintiff, Akzo, was a Dutch company and a proprietor of corresponding English and Dutch patents. The second plaintiff, Intervet International, was a fully owned subsidiary who also had exclusive licence under the patent. The patents concerned were granted by the European Patent Office. Akzo and Intervet instituted proceedings before Dutch courts seeking preliminary and final injunctions against a group of companies for alleged acts of infringements of both the Dutch and the UK patent. The action brought before Dutch courts was against various companies who either produced, imported or distributed allegedly infringing products in the Netherlands and the UK. The representative of Akzo and Intervet argued before the English Court of Appeal that the decision reached in the previous Pearce v Ove Arup case should be reversed so as to enable the proceedings related to infringement of the UK patent at stake to be brought against the defendants before Dutch courts. The Court was not persuaded by the arguments and stated that strict interpretation of Articles 2, 5(3) and 6(1) as established in the jurisprudence of the ECJ should be followed, which in this case meant that Akzo and Intervet had to initiate separate proceedings before the English courts if they wished to enforce their rights stemming from the UK patent. The reasoning behind such a decision was based on the territorial nature of patent rights which meant that there could be no irreconcilable judgments relating to the infringement of two national patent rights.334 The courts of continental European countries took a more liberal approach and allowed the consolidation of actions related to infringements of national bundle patents granted in accordance with the European Patent Convention. A number of remarkable decisions were made by Dutch courts. In one of its landmark judgments, Expandable Grafts v Boston Scientific,335 the Hague Court of Appeal had to decide (a) whether it had jurisdiction over an action for an injunction brought by a proprietor of a European patent who sought to prohibit the defendant domiciled in the Netherlands from infringing the Dutch Patent of the European bundle of patents, and (b) whether its jurisdiction could also be extended with regard to an action for an injunction against a French defendant, seeking the prevention of an infringement of the French patent. The plaintiff ’s argument was based on the fact that the same infringing products were put into different domestic markets by corporations belonging to the same corporate group. The Hague Court was of the opinion that the general rule allowing the suing of the defendant before courts of the country where it is domiciled should be maintained. However, the Court also noted that the need for a proper administration of justice requires simultaneous hearing of actions brought against several companies belonging to the same corporate group if such companies are selling identical products in different national markets based on a joint business plan. Nevertheless, such joinder of actions should not result in a situation where the plaintiff is given the possibility of suing all the parties in the courts, of his own choosing, of the domicile of any one of the companies belonging to the group. The Hague Court of Appeal held that the best way to strike a balance between Article 2 and Article 6(1) is to allow the bringing of actions in their entirety only before courts of the domicile of the head office which is in charge of the business operations in question or from which the business plan originated. The decision in the Expandable Graft case restricted the possibility of bringing actions only before the courts of the domicile of the main infringer, and thus limited forum   Fort Dodge Animal Health Limited et al v Akzo Nobel NV [1998] ILPr 732, paras 21–22 (Lord Woolf).   IEPT19980423, Hof Den Haag, EPG v Boston Scientific; as referred in n 19 of the Dutch Report.

334 335

78  Toshiyuki Kono and Paulius Jurcˇys shopping possibilities. Hence, a great number of previous cases where Dutch courts assumed jurisdiction over actions for the infringement of bundle patents brought against multiple alleged infringers were reversed.336 The approach taken by the Hague Court of Appeal, whereby the plaintiff was allowed to sue alleged infringers belonging to the same group of companies before the courts of the main infringer, was labelled the ‘spider-in-theweb’ doctrine and was subsequently applied by courts of other European countries.337

7.3.3  ‘Roche Nederland’ and its Aftermath To a large extent, the decision of the ECJ in Roche Nederland put an end to divergent interpretations of the applicability of Article 6(1) of the Brussels Convention to IP disputes. In this case, two American companies, Primus and Goldenberg, which were proprietors of the European patent in 10 EU states, brought an action in the Hague, where the main infringer (Roche Nederland) was established. The plaintiffs also sought to enjoin eight other companies belonging to the Roche group. Primus and Goldenberg argued that those companies had all infringed the patents by committing infringing acts in accordance to the common policy elaborated by Roche Nederland. Both the trial court and the court of second instance approved the existence of jurisdiction; the Dutch Supreme Court (Hoge Raad), however, was not so convinced and referred the case to the ECJ for a preliminary ruling. The ECJ was asked to clarify whether it is possible to bring a lawsuit for an infringement of a bundle of European patents against a defendant whose registered office is in the forum state and also sue other defendants having their registered offices in Contracting States other than that of the forum. The judgment in the Roche case was rendered the same day as another milestone judgment in GAT v LuK. The ECJ decided that Article 6(1) of the Brussels Convention does not apply in European patent infringement proceedings involving a number of companies established in various Contracting States which concern acts committed in one or more of those states even where those companies, belonging to the same group, may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them.338 In coming to such a conclusion, the ECJ followed the same line of reasoning as was established in its previous case law. The court again emphasised that for Article 6(1) of the Convention to be applicable, actions against multiple defendants must have a connection of such a kind that it is expedient to determine the actions together in order to avoid the risk of irreconcilable judgments which might result from separate proceedings. The parties in the Roche Nederland case suggested different interpretations as to the meaning of ‘irreconcilable judgments’. The plaintiffs argued that the Court should follow a broader notion of irreconcilable judgments, as established in the interpretation of Article 22 of the Brussels Convention which dealt with the coordination of related proceedings. If this interpretation was adopted, ‘irreconcilable judgments’ would have meant that the risk of conflicting judgments would not necessarily cause the risk of giving rise to mutually

336   For example, in the case of Organon the Hague Court of Appeal enjoined defendants from infringing a European Patent in the Netherlands, Germany, France, Lichtenstein, Luxembourg, Austria, the UK, Switzerland and Sweden (Court of Appeal of the Hague, decision of 3 February 1994, Applied Research Systems BV v Organon et al (1995) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 253 – Follikelstimulationshormon). 337   Dutch Report, section 3.4. 338   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535, para 41.

General Report  79 exclusive legal consequences.339 On the other hand, the defendants and the Advocate General supported a narrower understanding of the notion of ‘irreconcilable judgments’. In their view, the Court should have followed its established jurisprudence when applying rules related to the recognition of judgments where irreconcilable judgments were interpreted as entailing legal consequences which are mutually exclusive.340 The ECJ did not find it necessary to decide on this issue. Instead, it merely stated that even if broader interpretation of the notion of ‘irreconcilable judgments’ is accepted, there is no risk of such decisions being given in European patent infringement proceedings.341 The Court followed the proposal of AG Léger in deciding that decisions rendered in separate domestic proceedings could be contradictory if they are related to the same factual and legal situation. The ECJ stated that in the case of infringements of parallel patent rights, factual situations are not the same, because different persons are sued in different Member States for varied infringing acts.342 Furthermore, the principle of the independence of national patent rights, even though the patents at stake were granted under the European Patent Convention, led the Court to the conclusion that the legal situation is also different.343 Similarly, as regards ‘spider-in-the-web’ situations where individual companies pursue a common business policy that leads to infringements of patents held in different countries, the ECJ acknowledged that although factual circumstances are similar, from a legal perspective, infringements were not identical because of the independence of national patent rights.344 The ECJ explored further the policy objectives of the Brussels Convention, namely, the predictability of the rules of jurisdiction, the prevention of forum shopping and the need to assure speedy litigation.345 Finally, even if an action against multiple infringers was possible, it is very likely that the defendants will raise invalidity defences which, according to the previous judgment in GAT v LuK, would again lead to territorial litigation according to exclusive jurisdiction rules.346 The practical outcome of the ECJ decisions in the cases of Roche and GAT is that crossborder IP litigation, at least insofar as it is related to the registered IP rights, should be conducted on a country-by-country basis before the courts of each protecting state. 347 Even though it is possible to sue the main infringer in a court of his domicile and try to bring actions concerning infringements in other countries, such actions would fail if the plaintiff does not succeed to prove the causal link between the infringements of sister IP rights protected abroad. The national reporters indicated that as a result of the ECJ decision in the Roche case, a proprietor of parallel patent rights would be able to sue the coordinator of the infringement and in the same court seek a consolidation of claims against a number of defendants who belong to a group of corporations that jointly infringe parallel patent rights. Some national reports referred to the domestic case law where the ECJ reasoning in the Roche case was adopted348 or where it is expected that the domestic international   ibid, paras 22 and 24; Case C-406/92 The Tatry v Maciej Rataj [1994] ECR I-5439, para 58.   Case C-539/03 Roche Nederland [2006] ECR I-6535, paras 23–24; Case 145/85 Hoffman [1986] ECR 645, para 22. 341   Case C-539/03 Roche Nederland [2006] ECR I-6535, para 25. 342   ibid, paras 27–28. 343   ibid, para 31. 344   ibid, paras 34–35. 345   ibid, paras 37–39. 346   ibid, para 40. 347   Belgian Report, answers to HC 3. 348   As for the court practice of Belgian courts, see Belgian Report, answers to HC 3 and n 336. 339 340

80  Toshiyuki Kono and Paulius Jurcˇys jurisdiction rules might be adjusted to reflect the recent ECJ decision on the Roche case.349 The decision of the ECJ in the Roche Nederland case ignited many discussions within the patent community. On one hand, the UK report noted that such a decision of the ECJ affirmed the earlier practice of English courts.350 On the other hand, national reporters – mainly from the continental countries – were quite sceptical of the approach adopted by the ECJ.351 Taken together, the criticism of the ECJ judgment in Roche rests upon three main arguments. First, the conclusion that there can be no inconsistent judgments in socalled ‘spider-in-the-web’ situations was considered unconvincing. By stating that the infringements and defendants are different and that infringing acts would usually occur in different states, the ECJ decided that there can be no contradictory decisions even if patents were granted according to the EPC. However, it has been argued that the ECJ could have come to a different conclusion if it took into account what constitutes an object of infringement in such disputes as the Roche case. In particular, it has been argued that in European patent infringement proceedings the object of an infringement is the same; therefore there actually is a likelihood of contradictory judgments.352 Even though national law plays a certain role in European patent infringement proceedings, to the extent provided in Article 64 of the EPC, usually the allegedly infringed invention would be the same and the court dealing with the infringement case would have to determine the scope of the allegedly infringed patent according to the patent claims which would be identical to all patents in the bundle (Art 69(1) EPC).353 The second criticism is related to the need to protect the interests of the non-resident defendants. It stands to reason that the general principle of a defendant’s domicile should be maintained, and only limited exceptions to this rule are desirable. Although predictability of jurisdiction rules is one of the underlying policy objectives of the Brussels regime, it does not pre-empt jurisdiction rules from a dynamic interpretation. Insofar as crossborder IP litigation is concerned, it is argued that the ECJ should have adopted the interpretation of Article 6(1) as it was established in the Expandable Grafts decision of the Hague Court of Appeal because it ‘has laid a solid foundation for a balanced and pragmatic solution’.354 Further, commentators submit that the ‘spider-in-the-web’ doctrine does not threaten the objectives of predictability or legal certainty; instead, it balances the interests of both parties and facilitates efficient dispute resolution.355 Thirdly, the Roche judgment is criticised on the basis that it failed to take into account the interest of the business community for an efficient patent litigation structure. By referring to its previous decision in GAT, the ECJ reiterated the existence of exclusive jurisdiction rules which would come into application whenever the invalidity defence is raised. Taking into account relatively high litigation costs, the combined effects of the ECJ rulings   French Report, answers to HC 3.   UK Report, answers to HC 3. 351   Italian Report, answers to HC 3; Spanish Report, answers to HC 3. Also RC Dreyfuss, ‘Resolving Patent Disputes in a Global Economy’, in R Moufang and T Takenaka (eds), Patent Law: A Handbook of Contemporary Research (Cheltenham, Edward Elgar Publishing, 2009) 627–29. 352   A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decisions in GAT v LuK and Roche Nederland v Primus and Goldenberg’ (2006) International Review of Intellectual Property and Competition Law 850. 353   See eg German Report, answers to HC 3; Spanish Report, answers to HC 3; A Kur, ibid 850; G Beilfuss, ‘Is there Any Web for the Spider? Jurisdiction over Co-defendants after Roche Nederland’ in A Nuyts (ed), above n 1, 84–86. 354   A Kur, ibid 850. 355   A Kur, ibid 580–51; CG Beilfuss, above n 353 at 85–86. 349 350

General Report  81 in the GAT v LuK and Roche cases will cause litigation costs to be even higher, because of the segmentation of state-to-state patent litigation. This might have dramatic effects on small and medium undertakings that might no longer be able to enforce their IP rights. Therefore, it might be questioned whether another fundamental right to access of justice is not undermined. On a more general scale, territorially based litigation might have further systemic effects, namely, because of high costs associated with the enforcement of patent rights, companies might be discouraged from applying for the legal protection of their creative products. Nonetheless, some national reporters argued that the ECJ judgment in Roche did not completely eliminate the possibility of a joinder in multi-state IP infringement proceedings.356 The post-Roche jurisprudence of some national courts illustrates that, notwithstanding the strict approach taken by the ECJ, there might be further possibilities for the application of the ‘spider-in-the-web’ doctrine. In this regard there is one noteworthy decision, handed down by the Hague Court of Appeal in 2007,357 where the Court applied the Roche test requiring an investigation into the likeliness of inconsistent judgments in actions brought before courts of the country where each defendant is domiciled. As regards factual sameness, the Court decided that they may be the same where the defendant companies, belonging to the same corporate group, act in an identical or similar manner in accordance with the common policy prepared by one of them. Since the case at hand involved infringement of a Community trade mark, the Court had the opportunity to test whether this infringement would lead to the same factual situation even if the actions were litigated before the courts of each protecting country. Different from proceedings concerning the infringement of European bundle patents, the Hague Court of Appeal found that in the case of Community IP rights, the danger of irreconcilable judgments actually does exist because Community IP rights regulations create truly uniform supranational IP rights which are effective within the entire European Union.358 It follows that the ‘spider-in-theweb’ doctrine was not completely eliminated by the ECJ and could still be applied in cases of multi-state infringements of Community IP rights by companies who belong to the same group and who act in an identical or similar manner. Similarly, the Italian Report referred to one judgment of an Italian court in a trade mark dispute, where the court interpreted Article 6(1) broadly and joined claims related to the ownership of Italian and US trade marks.359 More generally, the answers provided in the national reports highlighted differing opinions as to whether the implications of the Roche case should affect consolidation of claims in cross-border cases concerning other kinds of IP rights (especially non-registered IP rights such as copyrights).360

7.3.4  Third-Country Situations The possibility of consolidating claims against defendants domiciled in third states should be decided according to domestic jurisdiction provisions. At the outset, it should be noted that there are very few (or no) domestic court decisions with regard to this matter. Therefore, the answers given in the national reports were based primarily on existing   French Report, answers to HC 5.  Decision of the Hague Court of Appeal of 23 August 2007, available at www.iept.nl/files/2007/ IEPT20070823_Hof_Den_Haag_Bacardi_v_Mad_Bat.pdf (in Dutch). 358   Dutch report, section 3.7. 359   Italian Report, answers to HC 3 and n 135. 360   Spanish Report, answers to HC 3. Similar doubts are expressed in the Swedish Report, answers to HC 3. 356 357

82  Toshiyuki Kono and Paulius Jurcˇys domestic statutory provisions361 or prevailing academic opinions. Due to the lack of domestic court decisions, some national reporters merely noted that it was unclear whether consolidation of the proceedings, where the defendant is not resident in any EU or EFTA Member State, would be possible.362 Three alternative regimes for the coordination of claims exist in Austrian domestic law. First, claims against multiple defendants could be consolidated in the Commercial Court of Vienna (section 162 of the Patent Act). However, in this case the consolidation of claims is limited only to claims concerning infringements of Austrian (and not foreign) patents.363 Second, an additional possibility of consolidation of claims is entrenched in Article 83c(2) of the Civil Jurisdiction Act. In this case a proprietor of IP rights could seek consolidation of claims against defendants who are domiciled in a third country but have their business establishments in Austria and undertake IP infringement activities in Austria. In order to consolidate the claims, an Austrian court must have international jurisdiction vis-à-vis every defendant in the proceedings.364 Hence the possibility of consolidating multi-state infringement proceedings against several defendants will depend upon the factual circumstances of each particular case. More precisely, if an action is brought against a number of foreign defendants who belong to the same corporate group and engage in infringing activities of several foreign IP rights, Austrian courts would not be able to consolidate proceedings against those foreign defendants merely on the ground that the defendant who coordinated those infringing activities is domiciled in Austria.365 Third, consolidation of claims could be possible pursuant to Article 93(1) of the Civil Jurisdiction Act. A consolidation based on this provision is possible if the following three requirements are met. First, the Austrian court should have general international jurisdiction over all defendants. The scope of this requirement is further defined by the Austrian Supreme Court which determined that it is sufficient if an Austrian court has international jurisdiction over at least one of the defendants.366 Second, the proceedings must concern the same situation of law or fact. Third, Article 93(1) of the Civil Jurisdiction Act requires that jurisdiction be conferred upon the court where the proceedings are to be consolidated. According to the Austrian Report, consolidated adjudication of ‘spider-in-the-web’ disputes are possible before Austrian courts because the second requirement of the sameness of fact or law has not been interpreted strictly by Austrian courts, thus allowing consolidated adjudication of coordinated infringements of parallel IP rights.367 The possibility of bringing an action against several co-defendants theoretically exists under French law, provided that there is a close connection between the claims.368 However, in cases where claims are brought against several co-defendants, French courts would be able to decline international jurisdiction if there is an insufficient link between the defendant’s domicile and the forum state. In practice, although the doctrine of forum non conveniens is unknown in France, courts nevertheless have certain discretion to evaluate whether

361   Art 5 §1 of the Belgian CPIL; Art 37 § 1 of the Greek Code of Civil Procedure; see Greek Report, answers to HC 1. 362   UK Report, answers to HC 3. 363   Austrian Report, section 4.3.3. 364   Austrian Report, section 4.3.3. 365  ibid. 366   Austrian Report, section 4.3.3. 367   Austrian Report, section 4.3.3 for further references to Austrian court practice. 368   French Report, section 1.2.3.

General Report  83 the exercise of international jurisdiction would not be exorbitant.369 On the other hand, some national reporters noted that the consolidation of actions against defendants, some of whom are not resident in a forum state, is not possible.370

7.3.5  Consolidation Possibilities according to the CLIP Principles Keeping in mind the criticism of the ECJ decision in the Roche judgment, the CLIP Principles put forward a proposal for a modified regime concerning actions against multiple defendants. The drafters of the CLIP Principles aimed to determine international jurisdiction of the court of the state where the main infringing activities occurred. Accordingly, Article 2:206(1) of the CLIP Principles establishes that a person who is one of a number of defendants may also be sued in the courts of the country where any of the defendants is habitually resident, given that the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. According to this rule, jurisdiction is only conferred upon the courts in the country of the habitual residence of the defendant who coordinated the activities leading to the infringement or is otherwise most closely connected with the dispute in its entirety (Art 2:206(2)). Hence, the CLIP Principles recall the ‘spider-in-the-web’ doctrine. The CLIP Principles also stipulate that the risk of irreconcilable judgments, so far as they concern the application of the rules on actions against multiple defendants, exists in disputes involving essentially the same legal and factual situation. The notion of ‘essentially the same factual and legal situation’ is also clarified in Article 2:206(1). The same infringement disputes involve essentially the same factual situation if the defendants have acted in an identical manner or in accordance with a common policy. The same legal situation exists in disputes even if different national laws have to be applied to claims against different defendants, given that the relevant national laws are harmonised to a significant degree by rules of regional organisations or by international treaties. The latter approach demonstrates the critical view of the recent ECJ practice in applying the Brussels I Regulation. Namely, the drafters of the CLIP Principles were of the opinion that at least within the EU, partial harmonisation of IP rights should not be disregarded. As for European patents, not only their issuance, but also sanctions and certain other aspects of enforcement of patent rights have been harmonised by the adoption of the Enforcement Directive371 and implementation of certain provisions of the TRIPS Agreement.372 In adopting such an interpretation, the CLIP Principles should open the possibility of bringing actions for infringement of regionally harmonised IP rights such as European bundle patents or European trade marks.373

7.3.6  European Patent Litigation Scheme In order to overcome the existing limitations concerning the adjudication of multi-state patent disputes, two possible legal instruments have been proposed: (a) a Community  ibid.   Slovenian Report, answers to HC 3.   Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights [2004] OJ 195/16. 372  C Heinze, ‘A Framework for International Enforcement of Territorial Rights: The CLIP Principles on Jurisdiction’ in J Basedow, T Kono and A Metzger (eds), above n 1, 76. 373  ibid. 369 370 371

84  Toshiyuki Kono and Paulius Jurcˇys patent, and (b) a European and Community Patents Court. One of the objectives of creating a system of Community Patent is to create additional incentives for small and medium enterprises and to make the access to the patent system less costly. A unitary Community title would provide for equal protection within the EU and thus help fight against counterfeiting and patent infringements. The Community patent can be granted only in respect of the whole Community (Art 2(2)). The examination of patent applications, the grant of Community patents as well as other administrative functions are to be carried out by the EPO. In particular, applications for Community patents should be filed through the national patent authorities or directly to the EPO. The EPO shall be also in charge of the administration of the Registry of Community Patent. As for substantive law provisions, the European Patent Convention should be applied together with national law, insofar as it complies with the Community law. The European and Community Patents Court would be for disputes concerning the infringement and validity of European and Community patents. The main objective of establishing a special patents court is to provide for a legal mechanism which would ensure expeditious and high-quality decisions, and would strike a balance between the interests of various stakeholders. The Court would have exclusive jurisdiction concerning: (a) actions for actual or alleged infringements of patents, supplementary protection certificates and related defences as well as declarations of non-infringement; (b) actions for provisional and protective measures and injunctions; (c) counterclaims for revocations of patents; (d) actions for damages and compensation derived from the provisional protection conferred by a published patent application; (e) actions relating to the use of the invention prior to the granting of the patent or the right based prior to use of the patent; and (f) actions for the grant and revocation of compulsory licences concerning Community patents (Art 15(1)). The national courts of Contracting States shall have jurisdiction in actions related to Community and European Patents unless they fall under the exclusive jurisdiction of the Patent Court. In particular, actions referred to in (a), (b) and (d) of Article 15(1) shall be brought to either (a) the court of the Contracting State where the infringement occurred or may occur, or (b) the local court of the Contracting State where the defendant is domiciled. If the defendant is domiciled outside the territory of Contracting States, the action shall be brought before the courts of the state where the infringement occurred or threatened to occur. Other kinds of actions referred to in Article 15(1) shall be brought before the central division. Such actions may only be initiated if the infringement proceedings have not been initiated before the local or regional division. An action for a declaration of non-infringement that is pending before the central division shall be stayed if an infringement action concerning the same patent between the same parties, or between the holder of the exclusive licence and the person requesting a declaration, is initiated within three months of a local action. The Patent Court may impose measures which are described in the Statute of the Court and Rules of Procedure. In particular, the Court can issue orders to produce or preserve evidence, orders to inspect property, freezing orders, provisional and protective measures, permanent injunctions as well as corrective measures in infringement proceedings (Arts 34–38). The Patent Court may also render a decision upon the validity of a patent and award damages. In the case of Community patents, the decisions of the Patent Court shall have effect within the whole territory of the EU. If the dispute concerns European patents, the effects of the decision shall be limited to the territory in which the European patent has effect (Art 16).

General Report  85

7.4  Asian Countries 7.4.1  Consolidation of Claims in India and Taiwan International jurisdiction of Indian courts in IP infringement disputes can be asserted if the court has jurisdiction over the defendant, and only with regard to claims which are related to infringement of Indian IP rights. Accordingly, as regards consolidation of claims against multiple defendants resident in different countries, who independently infringe parallel patent rights in those countries, Indian courts would not have jurisdiction over such claims concerning foreign IP rights. Similarly, the ‘spider-in-the-web’ doctrine is unknown to Indian courts; hence Indian courts would not join actions concerning the infringements of parallel patent rights even if the alleged infringers belong to the same group of companies. However, the Indian Report notes that Indian courts would nevertheless be competent to adjudicate disputes concerning the infringement of IP rights which were transferred by a contractual agreement between the right-holder (plaintiff) and alleged infringers of the contract.374 Taiwanese courts would also refuse to assert international jurisdiction over defendants who do not have their domicile in Taiwan. The ‘spider-in-the-web’ doctrine is not known in Taiwan; hence, Taiwanese courts would not have in personam jurisdiction over foreign defendants who infringe parallel IP rights even if such alleged infringers belong to the same corporate group.375

7.4.2  Consolidation of Claims according to Japanese Law Japanese law embeds a rather peculiar system concerning the consolidation of claims. There are two main areas of consolidation: (1) ‘objective joinder’, which means joinder of related claims and (2) ‘subjective joinder’, which means joinder of claims brought against different defendants. The legal basis for the joinder of claims is posited in Article 7 of the Japanese CCP which states that joinder of claims is possible if a (Japanese) court has jurisdiction over one of the claims pursuant to jurisdiction rules of the CCP. Similarly to Article 6(1) of the Brussels I Regulation, objective joinder in Japanese law is considered to be one of the special grounds of jurisdiction; therefore, Article 7 of the Japanese CCP should be interpreted and applied restrictively. Article 7 of the CCP does not directly require that there is any connection between the claims brought before a court; however, the prevailing opinion is that Japanese courts can assert jurisdiction only if there is a close connection between the claims.376 One of the benchmark decisions in the area of objective joinder is the Supreme Court decision in the so-called Ultraman case.377 In this case a dispute arose between a Japanese corporation, Tsuburaya Production, and a Thai national. The defendant’s corporation did not have its registered office in Japan, but its president was resident there. According to the licence contract concluded between Tsuburaya and the Thai counterparty in 1976, the object of the contract was a transfer of rights to use copyright products in a number of countries, including Thailand. In 1996 Tsuburaya allegedly sent a letter confirming the   Indian Report, answers to HC 3.   Taiwanese Report, answers to HC 3. 376   Japanese Report, answers to HC 3. 377   Supreme Court, Judgment of 8 June 2001, 55 Minsh¯u 727. 374 375

86  Toshiyuki Kono and Paulius Jurcˇys transfer of exclusive rights to the Thai counterparty. Later, Tsuburaya licensed the use of the copyright works to another party, a Japanese corporation, Bandai; according to this agreement, the territorial scope of use covered Japan and South East Asian countries. In April 1997 the corporation whose president was the Thai defendant, sent warning letters to Bandai and its subsidiaries as well as Sega Entertainment, arguing that he had obtained exclusive licence from Tsuburaya Corporation, and requesting the stopping of infringements. Subsequently, Tsuburaya Corporation brought a suit in Japan against the defendant, making a number of claims for compensation and requiring the court to issue declarations regarding a number of facts. Having decided that Japanese courts rightly asserted international jurisdiction, the Supreme Court briefly addressed the question of joinder of claims. It confirmed that joinder of claims is possible only if the close relationship between the claims exists. In the case at hand, the plaintiff made a number of claims, including: (1) a claim for compensation of damages for the disturbance of business by the defendant via warning letters; (2) a claim for a declaration that the defendant did not have a copyright over the copyrighted works concerned; (3) a claim for recognition of the fact that the contract of 1976 was not authentic (and indeed, the plaintiff argued that the defendant had forged the contract); and (4) a claim for the recognition that the plaintiff had the copyrights to use the works in Thailand etc. The Supreme Court found that the first and the second claims were closely related to the third and fourth claims. The Court emphasised that the joinder of claims would facilitate international adjudication of disputes and therefore was justifiable, considering the international allocation of judicial functions among the courts of different countries. Another form of joinder of claims is known as subjective joinder, ie joinder of claims raised by multiple plaintiffs or multiple defendants. According to Article 38 CCP, ‘if rights or obligations that are the subject matter of the suits are common to two or more persons or are based on the same factual or statutory cause, these persons may sue or be sued as coparties’. This provision is to be read in conjunction with Article 7 CCP which also requires that such joint claim is brought to a court which has a general venue pursuant to Article 4. In other words, courts which have jurisdiction on the basis of Article 4 (defendant’s domicile, place of establishment or place of business is in Japan) may assert jurisdiction over claims between joint parties, given that such claims are based on the same factual or statutory cause. In theory, Article 38 aims to allow the consolidation of closely related claims between the same parties thus facilitating dispute resolution, potentially reducing procedural costs and preventing inconsistent judgments. Besides, it is generally acknowledged that there should be a close connection between the claims and also between joint parties.378 In court practice, this provision has been interpreted in a restrictive fashion.379 Courts have often refused to exercise their international jurisdiction over multiple defendants who do not have residence in Japan. This was generally based on the argument that suing multiple foreign defendants may undermine their right to fair trial and procedural defence rights.380 Accordingly, although Japanese courts would not in principle have international jurisdiction over infringements of IP rights in foreign countries, they might nevertheless assert international jurisdiction over several closely related claims, provided that jurisdiction   Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853.   Tokyo District Court, Judgment of 25 April 1995, 898 Hanrei Taimuzu 245.   Tokyo District Court, Judgment of 5 February 1997, 936 Hanrei Taimuzu 242.

378

379 380

General Report  87 could be asserted over one of these claims.381 However, according to the Japanese Report, such close connection would not be affirmed in cases where parallel IP rights are infringed by persons who act independently in different foreign countries.382 In addition, it is hardly likely that Japanese courts would assert international jurisdiction in so-called ‘spider-inthe-web’ cases where infringement of parallel IP rights was committed by corporations belonging to the same corporate group. Hence, the question of whether the invalidity defence is raised or not is not relevant.383 Consolidation of claims brought for the breach of contract might be possible if contractual obligations were to be performed in Japan. However, for claims related to the performance of contractual obligations by different parties to be joined, Japanese courts would apply a special circumstances test. According to the special circumstances test, Japanese courts would consider whether joinder of claims against different parties does not undermine the principle of fairness between the parties, proper and speedy adjudication and the burden of defendants against whom the action is brought before Japanese courts. Hence, the Japanese Report notes that a joinder of the foreign parties for the performance of contractual obligations before a foreign court might also be problematic.384 7.4.2.1  Joinder of Claims in the CCP (2011) The drafters of the CCP (2011) were aware of the efficiency gains if several related claims are heard together in the same proceedings. Article 3-6 follows the established court practice and stipulates that Japanese courts can exercise international jurisdiction whenever they are competent to hear at least one claim of the action, provided that there is a close connection between the claims of the action. According to the Explanatory Report to the Interim Proposal, the exercise of international jurisdiction over claims which are not related might be considered an exorbitant exercise of jurisdiction. In addition, the question of whether there is a close connection between the claims should be interpreted in the light of territorial jurisdiction rules and, moreover, the discretion of the court should be restricted. Such an approach is said to be in line with the protection of the interests of the defendant, who should be given a fair opportunity to defend the case.385 The special rule concerning the joinder of claims would not apply if the claims are related to matters which fall under exclusive jurisdiction. In cross-border IP litigation this exception will be especially important, because most patent disputes involve issues which are related to registration, and fall under exclusive jurisdiction rules. 7.4.2.2  The Transparency Principles One of the most notable proposals to modify existing Japanese law, put forward in the Transparency Principles, is related to the treatment of joinder of claims. According to the comments to the Proposal, the members of the Transparency group were very much concerned about the need to provide litigating parties with a forum which could singlehandedly decide cases related to patent infringements occurring in multiple countries. Courts   Japanese Report, answers to HC 3.  ibid. 383  ibid. 384  ibid. 385   Kokusai saiban kankatsu kenky¯u-kai [International Jurisdiction Study Group], ‘Kokusai saiban kankatsu kenky¯u-kai h¯okoku (6) [Report of the International Jurisdiction Study Group (6)]’ NBL No 886 (2008.8.1), 72. 381 382

88  Toshiyuki Kono and Paulius Jurcˇys having jurisdiction over joint multiple claims would also be in a position to issue preliminary protective measures with extraterritorial effects and thus concentrate proceedings before a court of a single country. These efficiency considerations prevailed over the problems that might arise if courts of Japan had to apply foreign patent statutes which might often raise an issue of the differing scope of patent protection as well as the danger that judgments might not be easily recognised and enforced in other countries.386 Practical efficiency concerns justify the need of a legislative framework favouring joinder of claims; yet, conferral of authority to hear cases concerning joint claims in multi-territorial disputes requires the additional awareness of judges dealing with the dispute. As regards objective joinder of claims, the Transparency Principles provide that Japanese courts shall have international jurisdiction over joint claims or counterclaims between the same parties if, first, Japanese courts have jurisdiction over one of the claims and, secondly, the claims or counterclaims are closely connected to each other (Art 110(1)). Thus, according to Article 110(1), a Japanese court would be competent to join claims which are related to infringement of IP rights held in different countries, even if such infringing acts are not identical. The underlying requirement for such a joinder would be the close connection between the claims.387 Therefore, it seems that a Japanese court could join claims seeking legal redress on the basis of infringement of IP rights and claims of the counter-party, based on unfair competition statutes.388 Besides the requirement of close connection between the claims, Article 110(1) sentence 2 adds an additional condition that objective joinder of claims is possible if Japan is the country where primary contractual obligations were performed or primary infringing acts occurred. This approach reflects previous Japanese court practice.389 As for subjective joinder of claims, Article 101 provides for two special provisions. Article 101(2) entrenches a ‘general’ rule according to which claims raised by several plaintiffs or claims against several defendants may be joined if Japanese courts have jurisdiction over one of these claims and there is a close relationship between the claims. In addition, Article 101(2) stipulates that claims against several defendants may be joined if defendants could ordinarily foresee that Japanese courts would have international jurisdiction over them. By and large, the Transparency Principles follow the previous Japanese court practice whereby joinder of claims against multiple defendants was possible only in very limited cases. However, in order to balance the interests of various stakeholders, the Transparency Principles introduced a distinctive requirement of foreseeability which, together with the requirement of close connection between the claims, should strike a balance between legal certainty and flexibility.390 The second provision on subjective joinder of claims is entrenched in Article 110(3) of the Transparency Principles. It provides for a more specific situation of cooperative infringement of parallel IP rights in different countries. In particular, Article 110(3) deals with situations where parallel IP rights are infringed by legal entities belonging to the same corporate group (so-called ‘spider-in-the-web’ situations). According to this provision, Japanese courts could assert international jurisdiction against multiple defendants if 386   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 144. 387  ibid. 388  ibid. 389   Supreme Court, Judgment of 8 June 2001, 55 Minsh¯u 727. 390   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 142.

General Report  89 Japanese courts have jurisdiction over one of the claims and the following four requirements are fulfilled: (1) IP rights at stake should exist in different countries; (2) those IP rights should be substantively related; (3) in cases where Japanese courts are competent to hear the dispute according to special jurisdiction rules, the ‘primary’ contractual obligations have to be performed in Japan, or, in case of infringement, ‘primary’ facts should occur or should have occurred in Japan; and (4) the jurisdiction of Japanese courts is limited only with regard to those potential defendants who could have ‘ordinarily foreseen’ that they might be brought in court proceedings in Japan. The source of inspiration in drafting this provision was a set of legal developments in Europe. Since the landmark judgment was handed down in Roche,391 a number of preceding legislative proposals (ALI and CLIP Principles) have put forward possible jurisdiction rules enforcing the possibility of bringing suits against co-defendants belonging to the same corporate group. In the same vein, Japanese Transparency Principles follow this legislative trend and propose an alternative improvement of Japanese positive law. Article 110(3) should be read as a lex specialis of Article 110(2). While Article 110(2) deals with the rather traditional problem of multiple parties, Article 110(3) aims to solve the problem of consolidation of claims against defendants belonging to the same corporate group and who undertake, jointly or under the coordination of another member of the corporate group, certain acts which infringe parallel IP rights granted in different countries (‘spider-in-the-web’). Having regard to the fact that Japanese courts had not dealt with such infringements, and seeking to duly protect the interests of the defendants, the drafters of Article 110(3) entrenched a number of conditions which significantly restrict the material scope of this provision. Such additional requirements illustrate the spirit of Article 110(3) and help drive a wedge between the scope of paragraphs 2 and 3. Furthermore, Article 110(3) should be read in conjunction with Article 110(1) which deals with objective joinder of claims because ‘spider-in-the-web’ situations would usually be related to infringements of identical patents granted in different countries and such infringing acts would be committed jointly. Notably, Article 110(3) of the Transparency Proposal provides for a more stringent requirement regarding the objective connection between claims; namely, paragraph 3 posits that IP rights should be ‘substantively’ connected (whereas paragraph 1 requires ‘close’ connection between the claims). In addition, Japanese courts could have jurisdiction against multiple defendants only if the primary obligations (in case of contractual disputes) or primary facts (in case of infringement of parallel patent rights) occur in Japan. Therefore, it appears that Article 110(3) would be applicable only if the dispute has a close objective connection to Japan. In practical terms, this would mean, for example, that essential coordination activities should have taken place in Japan. 7.4.2.3  The Joint Japanese-Korean Proposal (Waseda Principles) The Waseda proposal contains provisions dealing with objective and subjective consolidation of claims. The earlier drafts of the Waseda Principles were based on the assumption that objective joinder of claims would be possible only in ubiquitous infringement cases.392 Nonetheless, having regard to the established case law of Japanese and Korean courts, the 391   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. 392   S Watanabe, ‘Chiteki zaisanken funs¯o no kokusai saiban kankatsu r¯uru ni tsuite no Nihon an [International jurisdiction rules for intellectual property disputes: The Japanese proposal]’ (2009) 6(2) Kigy¯o to h¯os¯oz¯o 149–50.

90  Toshiyuki Kono and Paulius Jurcˇys final draft of the Waseda Principles extended the material scope of the rules dealing with the objective consolidation of claims. Article 207(1) established that in the case where the plaintiff has more than one claim against the same defendant, the court that has international jurisdiction over one of those claims may also exercise jurisdiction over any other claim that is closely connected to the former. It should be also noted that the Waseda Principles adopt a narrow approach towards objective consolidation of claims because courts are not allowed to hear any claims arising out of a transaction of an infringement occurring in any state other than the forum state. The only exception is provided for claims concerning ubiquitous IP infringement activities that are directed to a particular state (second sentence of Art 207(1)). With regard to subjective joinder, Article 208 of the Waseda Principles establishes that a person who is one of a number of defendants may be sued in the state in which any of those defendants has a habitual residence. However, the possibility of suing several defendants before a single forum under the Waseda Principles exists only if those claims against the person and any other defendant are so closely connected that they should be adjudicated together to avoid risk of inconsistent judgments resulting from separate proceedings (Art 208(1)). In addition, paragraph 2 of Article 208 provides that in cases where there is an exclusive choice of court agreement between the plaintiff and the defendant, subjective consolidation is not possible if the defendant invokes the choice-of-court clause. According to the commentary, Article 208 is based on the assumption that it is necessary to provide for an efficient protection of IP rights by establishing a special provision which would allow the consolidation of claims and should be generally applied in cases where several parties infringe the same IP right.393

7.4.3  Consolidation of Proceedings in Korea According to Korean law, consolidation of actions falls under the notion of ‘joinder of claims’. Although statutory law does not provide for a clear-cut answer as to the joinder of claims, Korean court practice generally favours the need to protect the interests of the defendant. Hence, international jurisdiction over multiple claims could be asserted if the defendant (or multiple defendants) is not unreasonably forced to appear before a court seised and procedural defence rights are not undermined.394 Moreover, there should be a close connection between the claims. Hence, in order to determine whether joinder of claims is possible, the courts of Korea would take into consideration all relevant facts of the case. The court practice with regard to joinder of claims in multi-state IP disputes is scarce, and from a purely theoretical point of view, it is likely that Korean courts would assert jurisdiction over claims if the court has jurisdiction over one these claims. Nevertheless, it remains rather unlikely that such close connection could be affirmed in cases where parallel IP rights are infringed by persons acting independently in different foreign countries.395 Only where disputes arise over contracts for the transfer of IP rights and the obligations have to be performed in Korea, Korean courts might find that the joinder of claims against   Comments to Art 208 of the Waseda Principles.   Supreme Court of the Republic of Korea, Judgment of 26 September 2003, Case No 2003 Da29555; Tokyo District Court, Judgment of 5 February 1997, 936 Hanrei Taimuzu 242; Supreme Court of Japan, Judgment of 28 April 1998, 52 Minsh¯u 853; Supreme Court of Japan, Judgment of 8 June 2001, 55 Minsh¯u 727 (‘Ultraman’ case). 395   Korean Report, answers to HC 3. 393 394

General Report  91 several defendants (who are also parties to the same contract) is possible.396 As regards the subjective joinder of claims against multiple defendants domiciled in different states, the Korean Supreme Court had once indicated that the joinder should not unreasonably force them to appear before the court. Further, the Supreme Court noted that it is necessary to take into consideration all relevant factors, including the relation between the claims, the possibility of a resolution of a dispute in one proceeding and the possibility of defendants appearing in the proceedings.397 In the light of these considerations, the Korean Report indicated that in a case where alleged infringers belonged to the same corporate group and the habitual residence of the main infringer was in Korea, Korean courts may consolidate claims against such infringers. Therefore, consolidation would be possible only if it did not impose too great a burden upon the defendants to appear in the court proceedings.398 The decision concerning the consolidation would not alter if the defendants raised counterclaims arguing that foreign patents are invalid. This is so because Korean courts would find that the validity of patents should be decided as a preliminary matter. Special rules for joinder of claims are entrenched in the Korean Principles. Article 15399 deals with an objective joinder and provides that a court can join claims between the same parties if they are based on the same chain of contracts or infringing acts, given that a court has jurisdiction over one of the claims. However, such authority of the court to join the claims does not extend to claims concerning the existence and validity of registered IP rights (Art 15(2)). It should be noted that the requirements for a joinder according to the Korean Principles are more flexible than those established in the practice of Korean courts.400 Further, Article 16 of the Korean Principles provides that a claim against multiple defendants can be brought before a single court of a country where one of multiple defendants is habitually resident and (1) there is a close connection between the claims; (2) there is a need to prevent inconsistent judgments; and (3) there is substantial, direct, and predictable connection between the forum’s IP rights and other defendants.401 The provisions of the Korean Principles, especially concerning the subjective joinder of claims, were drafted on the basis of the Brussels Regime.402

7.5  Comparative Observations As in other matters related to the adjudication of multi-state IP disputes, consolidation of claims is often affected by the need to balance the interests of the litigants. At the same time, the territorial nature of IP rights must be taken into consideration. As a result, courts are rather reluctant to enjoin actions with multiple claims, even more so if such claims are raised against foreign defendants or if IP rights at stake were granted in foreign states. The answers received from various states illustrate that disputes concerning IP rights to a large extent still have to be adjudicated on a country-by-country basis. Yet, in order to improve the multi-state IP dispute settlement regime the first step should be the adoption of a more flexible and efficient approach to the joinder of claims. The second step should be the  ibid.   ibid and n 301.   Korean Report, answers to HC 3. 399   For the text of Art 15 see n 244 of the Korean Report. 400   Korean Report, section 2.4.2. 401   Art 16 of the Korean Principles as cited in Korean Report n 245 and answers to HC 1 part [3]. 402   S Watanabe, above n 392, 150. 396 397 398

92  Toshiyuki Kono and Paulius Jurcˇys introduction of an adjudication system which allows consolidation and coordination of proceedings: this would help reduce litigation costs. Besides, consolidation of claims would also be in the interest of the public because the aggregate amount of cases pending before courts of different states would diminish. Some academic proposals which have been made with regard to multi-state IP disputes403 and other matters (eg international insolvency disputes) could serve as a source of inspiration.

8  Parallel Proceedings in IP Disputes The existence of different grounds of jurisdiction in international IP cases means that the plaintiff may often have the possibility of choosing the forum for litigation. This may result not only in a situation where the defendant is sued before an improper forum, but also situations where the same or similar disputes are litigated before the courts of several different countries. For example, it may happen that before the plaintiff files an action for an infringement of IP rights, the defendant files a suit in a court of another country seeking to deny the existence of a contractual obligation or to deny liability for the alleged infringement. The laws of different states often contain specific legal mechanisms which are designed to control such multiplication of proceedings. Civil law countries in principle follow the lis alibi pendens doctrine according to which the court first seised should be given priority to conduct the proceedings. Common law countries adhere to the so-called forum non conveniens mechanism which aims to assure the court proceedings are conducted before a ‘natural’ or ‘more appropriate forum’. The issue of parallel proceedings is one of the difficulties arising in the cross-border adjudication of IP disputes. Some of the underlying problems might be related to the principle of territoriality of IP rights. In jurisdictions where a more flexible interpretation of the territoriality principle is adopted, the likelihood of parallel proceedings is relatively greater than in countries where the territorial nature of IP rights is interpreted strictly. In the latter countries, IP-related disputes can be adjudicated only before the courts of the country where IP rights were created, which also means that the likelihood of parallel proceedings is almost non-existent. In the context of cross-border IP disputes, several remarkable modes of IP litigation strategies had emerged. Namely, European Union courts had to solve a dilemma concerning actions for negative declaratory judgments, which were usually instituted by alleged infringers who intended to obstruct the actual plaintiff ’s possibilities of bringing a suit for IP infringement. EU domestic courts took different approaches, which caused some friction within the European jurisdictional regime. As a result, many attempts to establish a more uniform approach have been undertaken and will be discussed in this section. The proposed solutions are closely intertwined with the efficiency of adjudication of crossborder IP disputes. This section aims to identify and highlight the peculiarities of how parallel proceedings are controlled in different jurisdictions, and explore the possible avenues for further developments. Its findings are based mainly on the answers received from the national reports;  See chap III of the ALI Principles and Arts 2:701–2:206 of the CLIP Principles.

403

General Report  93 in particular those of hypothetical case no 5. The hypothetical case provided for a situation where patent rights in two countries X and Y are allegedly infringed. B, who is resident in a third country Z, manufactures infringing goods and imports them to countries X and Y. Having found out about B’s infringing acts, the right-holder A files an infringement action before a court of country Z where the alleged infringer is domiciled. However, before such infringement action is brought, the alleged infringer launches actions before courts of the countries X and Y where patents are granted seeking declarations that B’s acts do not constitute an infringement of the patents. Assuming that the country of the national reporters was country Z, they were asked how the courts of their country would decide with regard to pending parallel proceedings abroad and whether the decision would differ if IP rights involved were not patents, but other non-registered IP rights. In addition, national reporters were asked to indicate whether the decision of the court would be somehow affected if the validity of IP rights which are subject to the dispute was challenged by the alleged infringer.

8.1  Parallel Proceedings in the 2001 Draft of the Hague Judgments Convention The complexity of the problems related to international parallel proceedings was acknowledged during the preparation of the Hague Judgments Convention. The negotiations related to the most appropriate legal framework regarding parallel proceedings were very intense and protracted. The outcome of these deliberations resulted in a legal regime established in Article 21 of the 2001 Draft of Hague Judgments Convention. This provision remained almost identical in both drafts of 1999 and 2001. Article 21 aims to balance two competing approaches: the continental lis pendens doctrine and the forum non conveniens approach stemming from common law jurisdictions.404 In principle, Article 21 is an adapted version of the European lis pendens rule which would mean that priority should be given to the proceedings conducted by the court first seised. However, some exceptions, e.g. with regard to actions for negative declaratory judgments, are also established. Further, Article 22 is based on forum non conveniens considerations and provides for a set of ‘exceptional circumstances’ for declining jurisdiction. More particularly, Article 21(1) of the 2001 Hague Draft provides that when the same parties are engaged in proceedings in courts of different Contracting States and when such proceedings are based on the same causes of action, the court second seised shall suspend the proceedings if: (a) the court first seised has jurisdiction according to provisions of the Convention or domestic law and (b) is expected to render a judgment capable of being recognised under the Convention in the state of the court second seised. This rule would not apply only if the court second seised has exclusive jurisdiction pursuant to Article 4 (choice of court agreements), Article 11 (trusts) or Article 12 (exclusive jurisdiction) of the 2001 Draft. The notion of the ‘cause of action’ should be understood as referring to the subject matter of litigation and should not depend on the relief sought.405 The requirement that a judgment of the court first seised shall be capable of being recognised under the Convention means that the decision of the court first seised must fall within the notion of   Nygh-Pocar Report, above n 77, 89.  ibid.

404 405

94  Toshiyuki Kono and Paulius Jurcˇys ‘judgment’ (Art 23); hence Article 21 would not be applicable to court proceedings for provisional and protective measures pending before courts of different countries. As for IP matters, exclusive jurisdiction rules prevail over other grounds of jurisdiction. Hence, in cases where the court second seised has exclusive jurisdiction in the proceedings which have as their object registration, validity or nullity, or revocation of infringements of IP rights subject to registration (Art 12(4)), the court first seised will lack jurisdiction in the proceedings. Further, the 2001 Draft of the Convention clarifies when the court is deemed to be seised. Namely, Article 21(4) of the 2001 Draft establishes two possible instances: (a) when the document instituting the proceedings is lodged within the court; or (b) if such document has to be served before being lodged within the court, when it is received by the authority responsible for service or served on the defendant. Given that the conditions provided for in Article 21 are satisfied, the court second seised shall stay the proceedings on its own motion. In other words, the existence of conditions established in Article 21 creates an obligation for the court second seised; parties do not have to file any separate application for the proceedings to be stayed. The jurisdiction of the court second seised can be declined only when it is presented with a judgment rendered by the court first seised which should comply with the requirements for the recognition and enforcement in the country second seised (Art 21(2)). The judgment of the court first seised shall meet the requirements established in Article 25 of the 2001 Hague Draft and has to be based on the merits of the dispute between the same parties.406 The court second seised can however reopen the proceedings if, upon the request of a party, the plaintiff in the court first seised has failed to take necessary steps to bring the proceedings to a decision or if that court has not rendered such a decision within a reasonable period of time (Art 21(3)). The 2001 Hague Draft contains, inter alia, special provisions dealing with negative declaratory judgments. The members of the Special Commission who prepared the numerous drafts of the Convention were aware of the potential abuse of negative declaratory judgments, especially where the action for a negative declaration is brought with the intention of pre-empting the plaintiff ’s possibility of choosing the country of litigation. Therefore, Article 21(6) provides that if in an action before the court first seised the plaintiff seeks a declaration that it has no obligation to the defendant, and an action seeking substantial relief is brought before the court second seised, the court first seised shall suspend the proceedings at the request of a party if the court second seised is expected to hand down a decision which can be recognised according to the provisions of the Draft Convention in the country of the court first seised. The court first seised may, in exceptional circumstances, decline jurisdiction if upon application of a party it finds that the court second seised is clearly more appropriate to resolve the dispute. The conditions for when a court first seised should decline jurisdiction are specified in Article 22, which was drawn on the basis of the forum non conveniens doctrine. It should be noted that according to the Draft Convention, the court first seised can decline jurisdiction only in favour of the court second seised, which should be a court of another Contracting State;407 thus, rules of the Draft Convention would not be applicable if the court first seised finds that courts of a third country are more appropriate to resolve the dispute.   ibid, 90.   ibid, 92.

406 407

General Report  95 The jurisdiction can be declined only in exceptional cases. According to Article 22(1), the court first seised cannot decline jurisdiction if it is based on Articles 4 (choice of court agreements), Article 7 (consumer contracts), Article 8 (individual employment contracts) or Article 12 (exclusive jurisdiction). The court first seised cannot decline jurisdiction on its own motion, instead, the application to decline jurisdiction should be made by the defendant. In addition, Article 22(1) enumerates three circumstances which have to be satisfied; namely, (1) it is clearly inappropriate for the court first seised to exercise jurisdiction; (2) a court of another state should have jurisdiction over the dispute; and (3) the court of another Contracting State is clearly the more appropriate forum to resolve the dispute. Even though it is not directly specified in the text of the 2001 Draft of the Convention, it follows logically that the defendant should present facts and arguments supporting the request to decline jurisdiction.408 Nonetheless, the court retains its discretion that it is not obliged to decline jurisdiction (Art 22(1) stipulates that ‘the court may’ decline jurisdiction). In order to decline jurisdiction, the court first seised should be satisfied that the court of another state has international jurisdiction over the parties as well as the subject matter of the dispute. Article 22(2) of the 2001 Draft Convention sets out a non-exhaustive list of factors which might be taken into account in deciding whether the court of another State is more appropriate to hear the dispute. These factors include (a) inconvenience to the parties in view of their habitual residence; (b) the nature and the location of evidence as well as procedures for obtaining such evidence; (c) applicable limitation or prescription periods; and (d) the possibility of obtaining recognition and enforcement of any decision on the merits. Paragraph 3 of Article 22 establishes another important condition, ie in deciding whether there is another more appropriate forum to resolve the dispute, the court first seised shall not discriminate on the basis of nationality or habitual residence of the parties. Hence, it should not make any difference whether the plaintiff is habitually resident in another state. Article 22 of the 2001 Draft Convention also provides for several procedural steps which should be taken by the court first seised if it decides to decline jurisdiction. First, the court first seised should suspend the proceedings if it finds that a court of another country is more appropriate to hear the dispute. Second, the court first seised shall decline jurisdiction if the court of another State asserts jurisdiction over the dispute. The jurisdiction should be also declined if the plaintiff does not bring the proceedings in that state within the period specified by the court. However, if the court of another country decided not exercise jurisdiction, the court of the country first seised shall resume the proceedings and resolve the dispute.

8.2  North American Countries 8.2.1  Parallel Proceedings According to Canadian Law The question of international parallel proceedings under Canadian law is subject to several considerations. First, the situation of international parallel proceedings would occur if the dispute is pending before Canadian courts and courts of another country. As it was demonstrated in previous chapters, Canadian courts would generally hear the case if there are grounds for both territorial and subject-matter jurisdiction. Second, having established   ibid, 94.

408

96  Toshiyuki Kono and Paulius Jurcˇys that there are general grounds of international jurisdiction, Canadian courts would analyse how to deal with the issue of parallel proceedings. The Canadian Report noted the fact that parallel proceedings which are pending before courts of foreign countries is an important element of the forum non conveniens doctrine.409 Accordingly, Canadian courts would try to undertake a general evaluation whether Canadian courts or the court of a country seised is a more appropriate forum to hear the dispute. In cases where it appears that both Canadian and foreign courts are more or less equal to adjudicate the dispute, Canadian courts may decline jurisdiction if the foreign court was the court first seised or if the foreign court was first to assert its international jurisdiction.410 Nevertheless, the problem of parallel proceedings according to Canadian law is to a large extent affected by the limitations posed by the subject-matter jurisdiction requirement. Namely, Canadian courts would not in principle assert jurisdiction over actions concerning infringements of foreign IP rights which would mean that the situation of parallel proceedings does not arise. In addition, a subject-matter jurisdiction bar would also affect the issuance of anti-suit injunctions. In the case where the proprietor of foreign IP rights seeks to sue an alleged infringer who is located in Canada, Canadian courts would not issue antisuit injunctions to prevent the alleged infringer from seeking declaration of no liability (especially where the defendant seeks the issuance of negative declaratory judgment before courts of the country in which the IP rights exist).411

8.2.2  Parallel Proceedings in US Law and the ALI Principles Chapter 3 of the Second Part of the ALI Principles deals with the so-called ‘jurisdiction over simplification’. Jurisdiction over simplification is one of the cornerstone proposals of the ALI Principles which is designed to minimise litigation costs and simplify procedures for the adjudication of cross-border IP disputes.412 More particularly, sections 221–23 establish quite detailed rules concerning the coordination authority of the court first seised and possible ways of coordinating related actions pending before courts of different states. Coordination of multi-territorial actions according to the ALI Principles involves several stages. The first issue to be determined is the identification of the court first seised. This is important because a motion for the coordination of actions involving the same or series of transactions or occurrences should be submitted to the court first seised (section 221(1)). If the parties in all actions are not the same, the motion should be made in the court first seised with an action involving the moving party (section 221(1)(b)). The ALI Principles specify inter alia that a court which is seised with a coercive action is considered to be ‘first seised’ when three conditions are fulfilled: (a) the subject matter of the action is not within another tribunal’s exclusive jurisdiction (including cases where parties had made a choice of court agreement); (b) no other court has been previously seised with an action seeking substantive relief; and (c) in the case of actions between different parties, no other court has a pending motion to coordinate actions (section 221(5)). The second step in the coordination of multi-territorial actions is the need to establish that actions are sufficiently connected (‘arising out of the same transaction, occurrence, or   Canadian Report, answers to HC 5.   ibid and nn 206–7 for further references. 411   Canadian Report, answers to HC 5. 412   American Law Institute, Intellectual Property, above n 38, 92. 409 410

General Report  97 series of transactions or occurrences’, section 221(1)). Thirdly, having decided that related actions will be coordinated, the court should choose one of three possible forms of coordination: (i) cooperation, (ii) consolidation or (iii) a combination of cooperation and consolidation. It should be emphasised that the ALI Principles aim to preserve the notion of party autonomy and require that all related parties must agree to coordinated adjudication.413 Further, section 222(1) also establishes an exemplary list of factors to be taken into account by a court in determining which form of coordination should be chosen. These factors include the determination of whether centralised adjudication or cooperation would be more convenient and efficient; the cost of pursuing related actions in multiple courts; the need for specific expertise; the time required to resolve all claims; the relative resources of the parties; whether adjudication by multiple courts could result in inconsistent judgements and the possibilities for enforcement of a judgment resulting from consolidated proceedings. The form of coordination chosen may often depend on whether or not the parties in parallel actions are the same.414 However, the court does not need to have personal jurisdiction over all of the parties involved in the proceedings.415

COORDINATION OF MULTITERRITORIAL ACTIONS

COOPERATION

CONSOLIDATION

COOPERATION & CONSOLIDATION

Figure 1  Possible ways of coordinating multi-territorial actions according to the ALI Principles If it determines that cooperative resolution of all or part of the dispute is appropriate, the court shall inform all courts involved in the coordination and order the parties to formulate a plan for resolving the dispute in a just and expeditious manner (section 222(3)). In this case, the court has a duty to help the parties create a plan for the resolution of a dispute in a just and timely manner.416 But if the court determines that consolidation of all or part of the dispute is appropriate, the court shall next decide, in a timely manner, whether to retain jurisdiction over the consolidated action or instead suspend the proceedings in favour of another court. In deciding whether consolidation should be the form with which to handle multi-territorial dispute, the court again must take into consideration which state has the closest connection to the dispute; which court has authority to adjudicate the fullest scope of the consolidated action; the difficulties of managing the litigation;   ibid, 94–95.   ibid, 92–93. 415   ibid, 95. 416   ibid, 100. 413 414

98  Toshiyuki Kono and Paulius Jurcˇys the availability of process to summon and examine witnesses and obtain evidence; as well as the scope of a court to award an adequate remedy (section 222(4)). As was mentioned above, the court first seised may also decide that the adjudication of a dispute should continue in a combined form of cooperation and consolidation. In cases where the court decides that a dispute should be adjudicated in the form of coordination pursuant to section 221, other courts in which related actions are pending shall suspend the proceedings to await a determination by the designated court that the suit falls within the scope of the ALI Principles; and awaiting also the court’s decision in which way – cooperation or consolidation – the dispute shall be resolved (section 223(1)). Cooperative resolution of a dispute means that courts in which related actions are pending shall consult with the parties, the court first seised and other courts in which related actions are pending. During these consultations, the authority and timeline of adjudication before each of these courts shall be established (section 223(2)). In the case of consolidated adjudication of multi-territorial actions, courts other than the consolidation court shall suspend proceedings with regard to actions which fall within the scope of consolidation (section 223(3)).

8.3  European Countries Brussels I Regulation establishes two cornerstone provisions related to the coordination of parallel proceedings. Article 27 of the Regulation provides for a rule which deals with parallel proceedings that arise between the same parties and are based upon the same cause of action. Article 28 applies to situations where related actions are pending before courts of several Member States. The following sections deal with those two rules more specifically as well as focus on the problems which have emerged in the context of cross-border enforcements of IP rights.

8.3.1  Parallel and Related Proceedings Article 27 of the Brussels I Regulation417 deals with lis pendens situations and entrenches the first-in-time principle. In particular, Article 27 applies to proceedings which fulfil two conditions: first, parallel proceedings must have the same cause of action, and, second, proceedings must be between the same parties. If both requirements are fulfilled, any court other than the court first seised shall of its own motion stay the proceedings until the jurisdiction of the court first seised is established. The court second seised has no discretion and must stay the proceedings. Further, if the court first seised decides to hear the case, any other court later seised shall decline jurisdiction in favour of the court first seised (Art 27(2)). Such lis pendens framework as entrenched in the Brussels I Regulation is justified on several grounds. First, the lis pendens rule is designed to preclude, as far as possible from the outset, the possibility of a situation where judgment given in a particular case is not recognised on the basis of its irreconcilability with a judgment given in proceedings between the same parties in the state in which recognition is sought.418 Second, the lis pendens rule contributes to the protection of the right to access courts, which means that parties can submit   Also Art 27 of the Lugano Convention and the Revised Lugano Convention (2007).   Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861, para 8.

417 418

General Report  99 their dispute only to one court.419 Thus, the underlying objective of the prior temporis rule is to eliminate judicial inefficiency and retain mutual trust between the Member States. In its previous case law, the ECJ made it clear that the requirements for the application of the lis pendens rule should be interpreted autonomously from those laid down in the national procedural statutes.420 Such autonomous interpretation should contribute to the proper administration of justice within the EU and prevent parallel proceedings before national courts of different Member States. Hence, according to the ECJ, the application of the lis pendens rule does not depend on any other conditions besides: (1) that the action should be between the same parties; (2) those involving the same cause of action; and (3) the same subject matter.421 Therefore, the determination of the content of these requirements is crucial for the application of Article 27 of the Brussels I Regulation. One of the most controversial issues which the courts of EU Member States had to face was the determination of whether parallel proceedings had the same cause of action and the same object. In its early case law, the ECJ ruled that the notion of the same ‘cause of action’ comprises the facts and the rule of law which form the basis of the action, whereas the ‘object of the action’ for the purposes of Article 21 of the Brussels Convention (Art 27 of the Regulation) means the ultimate goal of the action.422 According to the ECJ, Article 21 of the Convention should be interpreted broadly so as to cover various situations where cases having the same cause of action are pending before courts of different courts and might end in conflicting decisions.423 Based on these considerations the ECJ found, for example, that a situation of lis pendens arises where one party brings an action for the rescission or discharge of an international sales contract whilst another party institutes proceedings before a court of another Member State seeking to enforce the same contract.424 For example, in the Tatry case, the ECJ decided an action for a declaration where the plaintiff is not liable and subsequently, an action commenced whereby the plaintiff in the first action is sued for compensation of damages having the same object.425 In this case the shipowners brought an action in the Netherlands seeking a declaration that they are not liable for damage to the cargo; subsequently, the cargo owners brought actions before English courts seeking damages for their alleged loss. The second condition of the application of Article 27(1) of the Regulation is the sameness of the parties. According to the ECJ ruling in the Gubisch case,426 the ‘sameness of the parties’ is established regardless of the procedural position of each of the parties in parallel proceedings. Therefore, the parties are considered the same even if one party who is a plaintiff in one proceeding is the defendant in a proceeding before another court. Hence, it is only important that the basic legal relationship from which the dispute arises involves the

419   See eg T Schilling, ‘Internationale Rechtshängigkeit vs Entscheidung binnen angemessener Frist’ (2004) Praxis des Internationalen Privat- und Verfahrensrecht 296. 420   Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861, para 11. For instance, the ECJ held in the Tatry case that the distinction which is made between actions in personam and actions in rem according to English law is not relevant to the interpretation of Art 21 of the Brussels Convention (Case C-406/92 The Tatry v Maciej Rataj [1994] ECR I-5439, para 46). 421   Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861, para 14. 422   Case C-406/92 The Tatry v Maciej Rataj [1994] ECR I-5439, paras 38 and 40. 423   Case C-351/89 Overseas Union Insurance Ltd et al v New Hampshire Insurance Company Co [1991] ECR I-3317, paras 12–17. 424   Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861, paras 17–19. 425   Case C-406/92 The Tatry v Maciej Rataj [1994] ECR I-5439, para 44. 426   Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861.

100  Toshiyuki Kono and Paulius Jurcˇys same parties regardless of their procedural status. The same interpretation of the Brussels I Regulation is also followed by the domestic courts of the EU Member States.427 In practice, there may also be situations where more than two parties are involved in parallel proceedings before courts of different countries but not all of the parties are identical. According to the ECJ ruling in the Tatry case, where two actions involved the same cause of action but only some of the parties to the second action were the same as those in proceedings instituted earlier before courts of other countries, it would be necessary for the court second seised to stay and eventually decline jurisdiction only on the basis that the parties are also involved in proceedings before a court of another Member State. Hence, the court second seised could (a) continue the proceedings with regard to the parties that are not involved in the proceedings before a court first seised; or (b) stay the proceedings; or (c) decline jurisdiction according to the rules provided in Article 27 of the Regulation.428 According to Article 28 of Brussels I Regulation, a court may stay the proceedings or decline jurisdiction if a related action is pending in another Member State. Notably divergent from Article 27, Article 28 does not require absolute sameness of cause of actions which are pending before courts of different Member States. More particularly, Article 27 is designed to solve the problem where two legally conflicting judgments may be rendered in courts of different Member States. The sister rule in Article 28 deals with a broader scope of the matter – inconsistent judgments that may legally be compatible but provide for different legal outcomes. In other words, Article 27 deals with conflicting judgments that are legally congruent: those in which parties dispute over the same legal object and may result in competing awards.429 Whereas Article 28 applies to parallel proceedings that are related without necessarily having the same legal object.

8.3.2  IP Litigation Strategies Strict interpretation of Article 21 of the Brussels Convention (Art 27 of the Regulation) facilitated the development of unseen litigation techniques whereby an alleged infringer of IP rights in one Member State launches action for a negative declaration seeking the establishment that certain acts do not constitute IP infringement, or that certain IP rights are not valid. Such actions are often obviously abusive: they are launched before a court that hardly bears any relationship with the dispute or is known for lengthy adjudication of disputes. In this regard, Italian and Belgian courts became (in)famous as places where such abusive actions are filed. In particular, alleged infringers of IP rights often filed an action for a negative declaratory judgment before Italian courts, where litigation usually takes more time than in other EU Member States. Such abusive actions became ironically known as ‘torpedoes’430 because of the procedural advantages resulting from the mandatory stay of proceedings by the court second seised. Hence, the plaintiff of a torpedo action could win time even in the situation where the court first seised declined jurisdiction. National courts of EU Member States have several times referred to the ECJ to seek clarification concerning the compatibility of such abusive actions with the European jurisdiction framework. In Turner v Grovit the UK courts heard a dispute where an English national,   Austrian Report, section 4.5.   Case C-406/92 The Tatry v Maciej Rataj [1994] ECR I-5439, paras 33–35. 429   U Magnus and P Mankowski (eds), Rome I Regulation (Munich, Sellier, 2009) 477 para 3. 430   M Franzosi, ‘World-wide Patent Litigation and the Italian Torpedo’ (1997) 19 European Intellectual Property Review 382; M Franzosi, ‘Torpedoes are here to stay’ (2002) 3(2) International Review of Intellectual Property and Competition Law 154–63. 427 428

General Report  101 Mr Turner, brought an action against his former Spanish employer. The employer contested the jurisdiction of the English courts and brought another action in Spain. The question in this dispute was whether the English courts could grant restraining orders against defendants who are threatening to commence or continue legal proceedings before courts in other countries, when those defendants were acting in bad faith and with the intention to frustrate or obstruct proceedings pending before the English courts. The ECJ decided that injunctions, whereby courts of one Member State prohibit a party from continuing the proceedings pending before a court of another Member State, cannot be granted under the Brussels Convention even if that party is acting in bad faith with the purpose of frustrating the existing proceedings.431 The reasoning of the ECJ was based on the principle of mutual trust, which allows a compulsory system of jurisdiction that does not permit the jurisdiction of a court to be reviewed by a court of another Member State. This principle also extends to situations where the defendant threatens to commence or continue legal proceedings before a court of another state. In the view of the ECJ, a court decision that questions whether such a party is acting in bad faith by having recourse to the jurisdiction of courts of another state amounts to inferring with the jurisdiction of the foreign court and therefore undermines the principle of mutual trust.432 In another case Gasser, the ECJ again had an opportunity to clarify whether lis pendens rules requiring the court second seised to decline jurisdiction should be followed in situations where the proceedings before a court first seised takes an excessively long time. The ECJ did not endorse any possible deviations to the strict interpretation of the lis pendens rule. It was decided that the possibility to disregard a duty to stay the proceedings, if the proceedings before the court first seised is excessively long or if it obvious that the court seised has no jurisdiction over the merits, would run counter to the letter and spirit of the Brussels Convention.433 The court reiterated that the Brussels jurisdiction regime is based on the principle of mutual trust which all courts of Member States have to follow.434 In this decision the ECJ gave unconditional preference to legal certainty and closed the doors to the introduction of any exceptions which might have allowed some flexibility in the application of Article 27. As a result, the court second seised may only stay the proceedings and cannot sua sponte examine the jurisdiction of the court first seised. The practical implications of the territoriality principle should be carefully taken into consideration when dealing with parallel IP proceedings. Namely, torpedo actions had been possible because the ECJ considered infringement actions and actions for negative declaratory judgments as based on the same cause of action. However, in the area of IP rights, the same cause of action exists only when both actions instituted before courts of different states are related to the same IP right.435 In other words, both actions should concern an IP right protected in the same country. Yet, in situations where parallel proceedings concern the protection of different national IP rights, it is obvious that these proceedings do not have the same cause of action.436 This also follows from the ECJ Roche decision   Case C-159/02 Gregory Paul Turner v Felix Fareed Ismail Grovit and Others [2004] ECR I-3565, para 31.   ibid, para 28. 433   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735; Case C-116/03 Erich Gasser GmbH v MISAT Srl [2003] ECR I-14693, paras 71–73. 434   Case C-116/03 Erich Gasser GmbH v MISAT Srl [2003] ECR I-14693, paras 70–72. 435   Austrian Report, section 4.5; French Report, answers to HC 5; Swedish Report, answers to HC 5. 436   Spanish Report, answers to HC 5. The French Report referred to one judgment concerning European patents. In that case the First Instance Court of Paris refused to acknowledge the sameness of the object where French patent infringement proceedings had been instituted in France and an action for a declaration of non-infringement of 431 432

102  Toshiyuki Kono and Paulius Jurcˇys where it was held that parallel proceedings concerning patents granted in different countries have different cause of action.437 In such situations, it is not relevant whether the objective of parallel proceedings is the infringement of IP rights, declaration of noninfringement or validity. It follows that Article 27 of the Regulation would not be applied. Theoretically, a court could exercise its discretion and stay the proceedings pursuant to Article 28 of the Brussels I Regulation; however, it is very unlikely that the court second seised would stay the proceedings especially if a court of another state was previously seised with a torpedo claim.438 Next it has to be clarified whether the same cause of action exists between the proceedings for the validity of IP rights and IP infringement proceedings.439 Based on hypothetical case no 5, two possible situations should be distinguished. First, the alleged infringer may file a suit challenging the validity of IP rights before a court of a third state which is not the protecting state and the right-holder subsequently brings an infringement action before a court of a state where the alleged infringer is domiciled. Second, the alleged infringer may file a suit challenging the validity of IP rights before a court of the protecting country (in the case of patents – the granting country) and the right-holder brings an infringement action before courts where the alleged infringer is domiciled. Both cases are identical in that (a) the right-holder seeks legal redress before courts of the defendant’s domicile pursuant to Article 2 of the Brussels I Regulation; and (b) the IP rights at stake are the same in all proceedings. Generally, the national reporters were not unanimous as to whether the invalidity action and the infringement action have the same cause of action and what procedural steps should be taken by the court second seised.440 In the first scenario where an action for invalidity is brought before a court of a third country which bears no connection to the dispute, if the proceedings are considered to have the same cause of action, the court second seised would be obliged to stay the proceedings (regardless of the fact that the action to the court first seised was a clear abuse of rights) pursuant to Article 27 of the Brussels I Regulation. However, it may be argued that invalidity proceedings and infringement proceedings do not have the same cause of action and therefore the court second seised could continue the proceedings.441 Following this approach, such invalidity proceedings would not even be considered as related proceedings in terms of Article 28 and the court second seised would not be obliged to stay its proceedings. The situation would be rather different in the second constellation where an invalidity action is brought before a court of a protecting state. The question which has to be answered is how to control parallel proceedings involving the same IP rights. In this case, the ECJ ruling in GAT v LuK would imply that the two actions are based on the same cause and that the proceedings before the court second seised have to be stayed and jurisdiction declined as soon as the court first seised asserts jurisdiction.

parallel Italian patent. See TGI Paris, decision of 9 March 2001 (2005) 33 International Review of Intellectual Property and Competition Law 225; French Report, answers to HC 5. 437   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. 438   Spanish Report, answers to HC 5; Swedish Report, answers to HC 5. 439   French Report, answers to HC 5; Swedish Report, answers to HC 5; UK Report, answers to HC 5. 440   See Belgian Report, answers to HC 5; Slovenian Report, answers to HC 5; where it was argued that invalidity action and infringement action are not based on the same cause of action. 441   Belgian Report, answers to HC 5; Slovenian Report, answers to HC 5; UK Report, answers to HC 5.

General Report  103 According to most European national reports such territoriality considerations would be equally applicable with regard to unregistered IP rights.442 Hence proceedings involving different IP rights, whether registered or not, will not be considered as having the same cause of action, and the lis pendens rule requiring the court second seised would not be applicable. The UK Report referred to several court decisions where English courts refused to defer to foreign parallel proceedings involving parallel IP rights.443 It should be also noted that the only situation where the requirement to stay the proceedings pursuant to Article 27 is if the court second seised has exclusive jurisdiction over the claim which had been previously brought before a court of another state.444 In order to tackle the torpedo problem, a number of solutions have been proposed. In order to avoid abusive torpedo actions, it has been argued that courts second seised should not defer to foreign proceedings where it is obvious that a judgment of a court first seised cannot be recognised in the forum country. However, as it was stated above, such an approach is incompatible with the Brussels I regime.445 Further, it has been proposed that in cross-border IP litigation, actions for a declaration of non-infringement should be allowed only before courts of the state where the proprietor of IP rights has his domicile.446 Since the possibility of bringing an action before a court of a foreign protecting state where the proprietor of allegedly infringed IP rights is not domiciled would still keep the gates open for potential abuse of procedural rights. It was argued that this approach should be adopted also with regard to alleged infringements of European bundle patents. In addition, the CLIP Principles also contain a modified regime to control parallel proceedings which will be addressed below.

8.3.3  Third-Country Situations The provisions of the Brussels I Regulation are applicable only to parallel proceedings pending before the courts of EU Member States. Therefore, Articles 27 and 28 are not applicable when the parallel proceedings occur before courts of a third state. In such situations, national jurisdiction rules of the forum would determine the manner of coordination of parallel proceedings. The answers submitted by the national reporters highlighted differences among the national regulation of parallel proceedings. In general, two different approaches could be distinguished: first, countries where the control of parallel proceedings depends, inter alia, on the condition of whether a foreign judgment rendered in the parallel proceedings could be recognised in the forum state; and second, countries, where the courts would not take into consideration the fact that there are pending parallel proceedings in a third state. A number of continental European countries belong to the first group of states where the control of foreign parallel proceedings depends on whether a foreign judgment could be recognised in a forum state. In Germany, for an action brought before a court of a third 442   See, in particular, Austrian Report, section 4.5; Belgian Report, answers to HC 5; Greek Report, answers to HC 5; UK Report, answers to HC 5. 443   Abkco Music & Records v Jodorowski [2003] ECDR 3; Prudential Assurance Co Ltd v Prudential Insurance Co of America (No 1) [2003] EWCA Civ 327, [2004] FSR 25; see also UK Report, answers to HC 5. 444   Case C-351/89 Overseas Union Insurance td et al v New Hampshire Insurance Company Co [1991] ECR I-3317; Case C-116/03 Erich Gasser GmbH v MISAT Srl [2003] ECR I-14693. The same approach was adopted by the Hague District Court, Rb Den Haag, IEPT20070926 Nooteboom v Faymonville. 445   Austrian Report, section 4.5; Greek Report, answers to HS 5. 446   Spanish Report, answers to HC 5.

104  Toshiyuki Kono and Paulius Jurcˇys country, the Code of Civil Procedure would be applied and the rules entrenched in section 261 paragraph 3 would be applied, mutatis mutandis. A German court would decline jurisdiction if there were a likelihood of the judgment being enforced in Germany.447 If an action for a negative declaratory judgment is raised before a court of a third country challenging the validity of foreign patents, German courts would assert jurisdiction on the basis that a judgment rendered by a court of the third country would not be recognised in Germany on the ground that the court would not have jurisdiction over the dispute related to the validity of foreign patent rights (section 328 para 1 no 1 of the German Code of Civil Procedure). In Austria, parallel litigation issues related with claims raised before courts of third countries would be decided pursuant to section 233(1) of the Civil Procedure Act which provides that the court second seised has to dismiss the claim of its own motion if the same claim is already pending before a court of another state. This rule was originally applied for domestic lis pendens situations, but later its application was extended to include foreign parallel proceedings.448 The notion of the ‘same claim’ is interpreted differently from the notion of ‘the same cause of action’ of the Brussels I Regulation. However, the most remarkable feature of the Austrian domestic regime is that the control of parallel proceedings is possible only if there is a risk of irreconcilable judgments. Such irreconcilability may arise when a foreign court judgment is rendered and the recognition is sought in Austria (section 233(1) of the Civil Procedure Act). Hence, the Austrian court would have to ascertain whether the disputes are based on the same cause of action and whether a foreign judgment can be recognised in Austria.449 As regards foreign parallel proceedings, the Austrian Supreme Court had previously decided that IP rights are territorial in nature; therefore, the cause of action is different where foreign proceedings are related to the protection of unregistered IP rights in that foreign country and Austrian proceedings are about the protection of Austrian IP rights.450 According to the Austrian Report, such findings of the Supreme Court are in line with the ECJ practice established in the Roche judgment.451 Italian domestic jurisdiction provisions dealing with foreign parallel proceedings are somewhat similar to the Austrian regime. Pursuant to Article 7(1) of the Italian PIL Statute, a judge shall stay the proceedings in situations where a dispute between the same parties, having the same object and being based on the same grounds is pending before a foreign court and a judgment rendered in such foreign proceedings, can be recognised in Italy.452 In Switzerland, the issue of parallel proceedings is governed by Article 9 of the Federal Private International Act according to which the proceedings have to be stayed if an action having the same subject matter and between the same parties are pending before a court of a foreign country and it is expected that the foreign court will, within reasonable time, render a decision which can be recognised in Switzerland. In Belgium, Article 14 of the CPIL allows the court to stay the proceedings where, firstly, the parallel disputes have the same cause of action and, secondly, will be likely recognised and enforced in Belgium. Similarly, Dutch courts do not seem to be bound by such strict jurisdiction rules as those entrenched in the   German Report, HC 5.   Austrian Report, section 4.5.   Austrian Report, section 4.5 for a more elaborate presentation. 450   Austrian Supreme Court, Decision OGH 4 Ob 91/90 (1991) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 384 and Austrian Report, section 4.5 with further references. 451   Austrian Report, section 4.5. 452   Italian Report, answers to HC 5. 447 448 449

General Report  105 Brussels I Regulation. Article 12 Rv leaves more discretion to the courts, which are allowed to stay the proceedings, but are not obliged to do so.453 In Spain there are no procedural rules that would deal with the control of international parallel proceedings. In practice, Spanish courts have been reluctant to take into consideration foreign parallel proceedings. Hence, according to the national report, it is very unlikely that Spanish courts will defer to foreign parallel proceedings in IP disputes.454 According to the French report, French courts usually decline international jurisdiction or stay the proceedings if they are courts second seised.455 In cases where the Brussels I regime does not apply, the jurisdiction of UK courts would be determined according to the common law. International jurisdiction of UK courts in IP-related cases would be to a large extent affected by the strict territoriality principle and the forum non conveniens doctrine. Namely, English courts may decline jurisdiction over disputes involving infringements or validity of foreign IP rights even if in personam jurisdiction over the defendant was established. Accordingly, UK courts would not take into consideration proceedings which are brought before a foreign court challenging the validity of UK IP rights.456 The question of how to control parallel proceedings pending before Croatian and foreign courts are determined by the provisions of Article 80 of the Croatian PIL. According to this provision, Croatian courts would take into consideration pending proceedings in a foreign country only upon the request of one of the parties. If such a request is made, the Croatian court may stay the proceedings if the following four requirements are satisfied: 1) both disputes must be between the same parties and concern the same legal matter; 2) the Croatian court is the court second seised, i.e. proceedings must firstly have been instituted before a foreign court; 3) Croatian courts do not have exclusive jurisdiction over the subject matter; and 4) reciprocity exists.457As regards the sameness of the parties, Croatian law establishes that the parties are considered to be the same even if their procedural status is different. The disputes are considered as being the same if the decision in one proceeding has res iudicata effects in other parallel proceedings. In this regard it should be noted that Croatian law does not provide for exclusive jurisdiction rules over cases related to infringements of IP rights. Further, the requirement of reciprocity is satisfied if there is factual reciprocity, notwithstanding the existence of any international agreement between Croatia and the country where parallel proceedings are pending. According to the national report, the relevant factor concerning the existence of reciprocity is that a foreign court where the parallel proceedings are pending should also recognise the priority of Croatian courts to hear disputes if the proceedings are first instituted in Croatia. In cases of parallel proceedings involving IP rights, the application of the abovementioned requirements would result in the following situation. If the alleged infringer launches proceedings for a declaration of non-infringement before courts of countries where IP rights were granted and the right-holder later files an infringement suit before the court of the country where defendant is resident, the decision of the Croatian courts would largely depend on the qualification of whether the actions pending before different courts are objectively identical and could have res iudicata effects. In particular, the Croatian   Dutch Report, sections 3.4 and 3.6.   Spanish Report, answers to HC 5. 455   French Report, section 1.2.4. 456   UK Report, answers to HC 5. 457   Croatian Report, answers to HC 5. 453 454

106  Toshiyuki Kono and Paulius Jurcˇys report indicated that the prevailing approach considers actions for condemnation (eg infringement action whereby the right-holder seeks termination of an infringement) are not treated as identical to actions for a (negative) declaration. Accordingly, res iudicata effects of the decision in infringement proceedings would not extend to pending foreign parallel proceedings concerning the action for negative declaration. This would mean that Croatian courts would not stay the proceedings, despite the fact that infringing proceedings have been first instituted before courts of foreign countries.458 The decision would be the same regardless of whether IP rights at stake are subject to registration or not. 8.3.4  Review of the Brussels I Regulation: Parallel Proceedings in the Commission Proposal and the CLIP Principles Some of the issues concerning the modernisation of the Brussels I Regulation were also related to parallel proceedings. In particular, as regards parallel IP infringement proceedings, the EC Commission proposed to enhance the communication as well as interaction between the national courts of different Member States which deal with parallel proceedings.459 In addition, some further alternatives were discussed with regard to the coordination of IP infringement and validity proceedings,460 as well as the coordination of proceedings concerning the validity of the arbitration clause before a national court and an arbitral tribunal.461 Section 7 of the CLIP Principles entitled ‘congruent proceedings’ provides for a more comprehensive legal framework containing significant corrections and improvements to the established legal practice concerning the application of Articles 27–30 of the Brussels I Regulation. The principle that the court first seised has the priority to hear the case is maintained, but with certain qualifications. Namely, Article 2:701 provides that where proceedings involving the same cause of action and between the same parties are brought in the courts of different states, any court other than the court first seised shall stay its proceedings. This provision follows the wording of Article 27 of the Brussels I Regulation, which also means that the CLIP Principles should be viewed in the previously established practice of the ECJ. If this is indeed the case, disputes pending before courts of different Member States should arise between the same parties, have the same cause of action and the same object. In this regard it should be noted that the CLIP Principles also bring further clarity as regards the situation where a court of one state conducts the proceedings concerning issuance of provisional and protective measures whereas the main proceedings are conducted by a court of another state. In such situations the Clip Principles establish that proceedings for the issuance of provisional and protective measures do not involve the same cause of action as the main proceedings (Art 2:207(3)). The CLIP Principles do away with the strict interpretation of Article 27 of the Brussels I Regulation by entrenching a number of exceptions when the courts later seised are not obliged to stay the proceedings. First, the lis pendens rule does not apply if the court later seised has exclusive jurisdiction under the CLIP Principles, or, secondly, if it is manifest that  ibid.   Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (21 April 2009), COM(2009) 175, 7. 460   ibid, 6. 461   ibid, 9; Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (21 April 2009), COM(2009) 174, 9. 458 459

General Report  107 the judgment of the court first seised will not be recognised under these principles (Art 2:207(1) lit a and b). In addition, any court other than the court first seised may terminate the stay in proceedings and continue the litigation if (a) the court first seised does not proceed within the reasonable time or (b) the court first seised decides not to hear the case (Art 2:207(2)). These exceptions aim to suppress abusive ‘torpedo’ actions which were possible because of a rigid interpretation of the lis pendens rule established in Article 27 of the Brussels I Regulation. Similarly to Article 28 of the Brussels I Regulation, the CLIP Principles also contain a specific provision dealing with the coordination of related proceedings. The definition of related proceedings is similar to one known under the Brussels I/Lugano framework: proceedings are deemed to be related where they are so closely connected that it is expedient to hear and determine them together in order to avoid the risk of inconsistent holdings or judgments (Art 2:702(3)). If related proceedings are pending in the courts of different states, any court other than the court first seised may stay its proceedings (Art 2:702(1)). Further, the CLIP Principles establish a non-exhaustive list of factors which should be taken into consideration in deciding whether the proceedings should be stayed or not. Such factors to be taken into account by a court are: (a) a determination of which court seised is best placed to adjudicate the fullest scope of the related proceedings; (b) the assessment of which state has the closest connection to the dispute; (c) the consideration of the procedural efficiency of centralised adjudication compared with procedural efficiency in multistate proceedings. As mentioned in the overview of the application of the Brussels I Regulation to IP matters, there is no firm opinion when the infringement proceedings have the same cause of action and the same object as proceedings related to registration, validity or revocation (etc.) of registered IP rights. The CLIP Principles go a step further and establish a special rule that if proceedings, having as their object a judgment on the grant, registration, validity, abandonment or revocation of a registered IP right, are brought in the state of registration after related proceedings of those in a court of another state concerned with that IP right, the court first seised may stay its proceedings (Art 2:703(1)). In cases where the court first seised decides to stay the proceedings, it may order provisional and protective measures for the duration of the stay according to Article 2:501 of the CLIP Principles. Similarly, if proceedings, which have as their object provisional and protective measures according to Article 2:501 of the CLIP Principles and which involve the same cause of action and the same parties, are brought before the courts of different countries, then any court other than the court first seised may stay its proceedings (Art 2:705(1)). In cases where related proceedings are pending before the courts of different countries the CLIP Principles aim to facilitate, to the extent permitted under the applicable procedural rules, the use of evidence produced in the proceedings before another court as well as awareness of findings and decisions made by other courts where congruent or related proceedings are pending. For these purposes, the CLIP Principles provide that the courts where parallel disputes are pending should exchange relevant information such as the status of the proceedings and court findings (Art 2:704).

108  Toshiyuki Kono and Paulius Jurcˇys

8.4  Asian Countries 8.4.1  Parallel Proceedings according to the Laws of India and Taiwan The Indian Report provided for a specific answer concerning the situation where the patent-holder brings an infringement action before an Indian court against the alleged infringer, arguing that the defendant’s acts infringe the plaintiff ’s patents held in foreign countries. Indian courts would not take into consideration proceedings pending before courts of foreign countries, on the basis that Indian courts generally do not have jurisdiction to hear actions related to the infringements of foreign IP rights. Moreover, the alleged infringer may bring an action before Indian courts seeking an interim injunction which would prevent the right-holder from filing an infringement suit before Indian courts.462 According to the Civil Procedure Law of Taiwan, a Taiwanese court would stay the proceedings if the same dispute had been previously initiated before a court of another country and the following two requirements are satisfied: first, the possibility that the foreign judgment on the action can be recognised in the Republic of China; and second, it is not substantially inconvenient for the defendant to participate in the proceedings. However, in IP disputes the situation is rather less certain. The Taiwanese court would not stay the proceedings if the court discovered that the defendant filed an additional suit before another country’s court challenging the validity of IP rights which were not registered in that country.463

8.4.2  Parallel Proceedings according to Japanese Law and Recent Asian Legislative Proposals The Japanese legal framework concerning international parallel proceedings is also not explicitly addressed in the Code of Civil Procedure. The only pertinent statutory provision is entrenched in Article 142 of the CCP which states that ‘neither of the parties can bring another action regarding the case which is pending before the court’. However, Japanese courts have consistently refused to apply Article 142 to situations where a similar case is pending before a foreign court. Hence, it was questioned whether international parallel proceedings should be prohibited in principle and if so what jurisdictional rules would be most appropriate. The national report identifies three prevailing approaches: 1) so-called ‘anticipated recognition’ theory;464 2) theory according to which parallel proceedings should be treated as an issue of standing to sue; and 3) opinion that the decision concerning parallel proceedings is based on the ‘special circumstances’ test.465 In the early case law, Japanese courts tended to turn a blind eye to parallel proceedings pending before foreign courts. Recently, however, the prevailing approach among both legal scholars and Japanese courts supports the special circumstances theory. According to this theory, Japanese courts would take into consideration whether there are certain   Indian Report, answers to HC 5.   Taiwanese Report, answers to HC 5. 464   According to the advocates of this theory, Japanese courts should decline jurisdiction whenever the proceedings are pending before a foreign court and the decision of that court can be recognised and enforced in Japan. Such conditions of the recognition of foreign judgments established in Art 118 of the CCP are satisfied, it is assumed that foreign judgments have the same legal effects as judgments rendered by Japanese courts, and the jurisdiction of Japanese courts should be declined. 465   Japanese Report, answers to HC 5. 462 463

General Report  109 circumstances that would require Japanese courts to decline jurisdiction. Such circumstances affecting whether jurisdiction should be declined or not are those of the burden of the parties, location of evidence, time factors etc. There are no cases related to the handling of parallel proceedings simultaneously pending before Japanese and foreign courts. Nevertheless, existing case law sheds some light on possible parallel IP litigation situations. Hence in such situations where the alleged infringer brings an action before foreign courts where IP rights are granted, and asks the court to issue a declaration of non-infringement, Japanese courts seised by the right-holder with an infringement action of foreign IP rights would consider which court is better situated to adjudicate the dispute. If a Japanese court found that there are some special circumstances showing that a foreign court would be better located to hear the dispute, the Japanese court would decline the jurisdiction. The situation would be the same if the defendant in infringement proceedings challenged the validity of allegedly infringed foreign patents: Japanese courts again will take all relevant factors into consideration in order to determine in which country the dispute would be best adjudicated.466 8.4.2.1  New Rules on International Jurisdiction The question of international parallel proceedings was also vigorously deliberated among the members of the CCP reform group. At an early stage of drafting, the majority opinion was that in cases where parallel proceedings concerning the same action are pending before courts of different countries, Japanese courts should dismiss the action if Japanese courts were seised of the case later than the foreign court.467 The Interim Draft (2009) prepared by the Ministry of Justice working group contained several alternative rules for international parallel proceedings. The proposed rules stipulated that Japanese courts would have had the authority to stay the proceedings until the foreign court decides the case, given that such future decisions may be recognised in Japan. However, due to fierce criticism and opposition, the idea of establishing a special rule for parallel proceedings was abandoned during the drafting. Instead, it was decided that the handling of international parallel proceedings should fall under the rule establishing a court’s discretion to dismiss an action if there are special circumstances (Art 3-9468). 8.4.2.2  Parallel Proceedings in the Transparency Proposal Article 201 of the Transparency Proposal provides for a more comprehensive legal framework for the coordination of proceedings. During the drafting process of the Transparency Principles, it was recognised that the prior temporis rule might not always provide the best solution in cross-border IP litigations. Therefore, it was decided to assign more emphasis to the spatial considerations of a particular dispute. Therefore, the underlying premise of the Transparency Principles is to examine the substance of the dispute and try to identify the   Japanese Report, answers to HC 5.   Kokusai saiban kankatsu kenky¯u-kai [International Jurisdiction Study Group], ‘Kokusai saiban kankatsu kenky¯u-kai h¯okoku (6) [Report of the International Jurisdiction Study Group (6)]’ 886 New Business Law (2008.8.1) 78. 468   Art 3-9 of the Act Amending CCP (2011) provides: ‘Courts can reject all or some claims of the action which they are competent to hear (except when parties have made an agreement conferring exclusive jurisdiction on a Japanese court) if from the nature of the case or the extent of the burden of the defendant caused by his/her appearance, the location of evidence or by reason of other circumstances the exercise of jurisdiction would be inequitable to the parties or hinder the conduct of a proper and speedy trial.’ 466 467

110  Toshiyuki Kono and Paulius Jurcˇys country where the primary obligations or facts occurred. This approach is in accordance with another set of rules which aim to facilitate effective and timely resolution of crossborder IP disputes by joining related claims before one forum or disputes where parallel IP rights are involved.469 Accordingly, Article 201(1) of the Transparency Proposal provides that in cases where a suit is pending in a court in a foreign country and is based on the same or related cause of action, and when the primary obligation should be or should have been performed in that foreign country, or the primary facts occurred or should occur in that foreign country, in the absence of special circumstances, the claim brought to Japanese courts shall be dismissed. However, the court may stay the procedure for a reasonable period of time if the primary obligations should be or should have been performed in a foreign country other than the foreign country where the suit is pending, or the primary facts occurred or should occur in a foreign country other than that foreign country (Art 201(2)). The Transparency Proposal also contains a special rule for those situations where courts of one country deal with an IP infringement suit and courts of the other country have to decide on the validity of the same intellectual property right. In such circumstances, the infringement court is given the authority to stay the proceedings for a reasonable period of time until the foreign court has decided upon the validity issue. The Transparency Proposal also goes a step further regarding the communications between the courts of different countries which might be dealing with related disputes. Namely, Article 201(4) provides that courts may communicate directly or may request information directly from the court in the foreign country in order to make the decision to dismiss the claim, stay the procedure or conduct subsequent deliberations. This provision was established with the intention of facilitating effective dispute resolution and reducing litigation costs. This provision was inspired by the 1997 UNCITRAL Model Law on CrossBorder Insolvency470 and the 2001 American Law Institute’s ‘Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases’.471 8.4.2.3  Parallel Proceedings in the Joint Japanese-Korean Proposal (Waseda Principles) The Waseda Principles also follow the so-called prior temporis rule: where actions involving the same cause of action and between the same parties are brought in the courts of different states, the court later seised shall stay the proceedings if the judgment of the court first seised can be recognised under the Waseda Principles (Art 213(1)). If a judgment rendered by a court first seised can be recognised, the court later seised shall dismiss the action without any delay (Art 213(2)). Yet, the Waseda Principles envisage for two exceptions which should add flexibility when applying the prior temporis rule. First, a court second seised may terminate the stay of the proceedings if the plaintiff in the first suit fails to proceed or if the proceedings in the court first seised do not proceed within a reasonable period of time (Art 213(3)). Secondly, the proceedings of the court first seised with an action for a declaratory judgment seeking a declaration that no obligation exists, shall be stayed if an action for the performance of the obligation was brought before a court of another state. The court first seised can stay the proceedings before the defendant in the first-in-time 469   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 143. 470  www.uncitral.org/uncitral/en/uncitral_texts/insolvency/1997Model.html. 471  www.amercol.org/images/DOC005.pdf.

General Report  111 proceedings files his defence and if the judgment rendered by a court second seised can be recognised according to the Waseda Principles. 8.4.2.4  Parallel Proceedings according to the Korean Principles The Korean Principles contain a special provision dealing with international parallel proceedings which to a large extent resembles the 1999 Draft of the Hague Judgments Convention. Article 17 of the Korean Principles stipulates that in cases where actions concerning related claims between the same parties arise from the same series of transactions or infringing activities and those actions are pending before courts of different countries, the court first seised shall have priority to exercise jurisdiction. The court second seised shall stay the proceedings until the court first seised establishes jurisdiction. However, this prior temporis rule does not apply if the country of the court second seised has exclusive jurisdiction or jurisdiction is conferred by a choice of court agreement (Art 17(2)). If the court second seised finds that the court first seised will assert jurisdiction and its decision meets the conditions of recognition in the country of the court second seised, the action should be immediately dismissed. The court second seised may, at the request of a party, continue the proceedings if the other party does not take necessary procedural steps before the court first seised, or the court first seised does not render a decision over the main claim within a reasonable period of time (Art 17(5)). In addition, the Korean Principles aim to provide a solution for the so-called torpedo problem. If the court first seised hears an action for a negative declaratory judgment, and the defendant in these proceedings files an action before the court of another country for the performance of obligations, the court first seised shall lose its priority in exercising jurisdiction if the defendant in these proceedings makes no further statement or answer to the merits. In such a situation, the court second seised shall have jurisdiction if its decision can be recognised in the country of the court first seised and the court first seised shall stay the proceedings (Art 17(5)).472 Moreover, the Korean Principles also contain a special provision which helps to determine which court is seised first.473 It should be noted that the scope of Article 17 of the Korean Principles is wider than Article 21 of the 1999 Draft of the Hague Judgments Convention.474 Namely, Article 17 of the Korean Principles is not limited to only the duplication of identical proceedings, but also applies to related actions. Such an approach was taken mainly because the drafters of the Korean Principles considered the rules concerning international parallel proceedings as vital to the formation of a crossborder IP litigation framework.

8.5  Comparative Observations The analysis of the question whether courts of represented states deal with international parallel proceedings has highlighted different approaches. Courts of common law countries in most cases would not defer to foreign proceedings. In Europe, although the Brussels/ Lugano regime contains uniform rules to tackle parallel proceedings giving priority to the action at the court first seised, differences still exist with regard to proceedings pending 472   For a practical illustration concerning the application of these rules see Korean Report, section 2.4.2 and answers to HC 5. 473   Korean Report, section 2.4.2 and n 253. 474   Korean Report, section 2.4.2.

112  Toshiyuki Kono and Paulius Jurcˇys before courts of third states. Approaches also differ in the represented countries of Asia. In addition, answers provided by national reporters illustrated, on one hand, the absence of clear rules concerning international parallel proceedings as a source of uncertainty; while, on the other hand, the existence of clear-cut rules might lead to rigidity and possible avenues for abuse and forum shopping. In light of such considerations, the cross-border enforcement of IP rights could be fostered if a ‘middle approach’ could be established. Namely, the 2001 Draft of the Hague Convention could serve as the basis for further improvements, while IP related aspects of parallel proceedings could be elaborated according to academic proposals (eg ALI Principles etc).

9  Jurisdiction to Order Provisional or Protective Measures in IP Disputes Provisional measures play an important role in international IP litigation. Practitioners often note that IP rights holders are primarily interested in stopping the allegedly infringing activities and only then considering what other remedies should be sought. Yet, a number of problems concerning international jurisdiction to order provisional and protective measures exist in the area of IP. Although it appears to be a widely established principle that courts have jurisdiction to order provisional or protective measures in relation to property located in the forum state, it nevertheless remains controversial whether and if so under what circumstances courts can order measures which would have extraterritorial effects. Although certain efficiency-related considerations in favour of allowing cross-border provisional or protective measures in multi-state IP disputes could be raised, such possibilities of ordering provisional measures is triggered by the territorial nature of IP rights. This section of the General Report is based mainly on answers received to the questions posed in hypothetical case no 11, which involved sales of fake branded goods in an Internet auction. The national reporters were asked to explain whether and under what conditions courts of their countries would have international jurisdiction to order provisional measures; how does the territoriality of the IP rights principle affect international jurisdiction to order provisional or protective measures; and whether such measures could have extraterritorial effects. In addition, national reporters were also asked to explain whether the person who seeks issuance of provisional or protective measures is required to grant a security or guarantee.

9.1  Provisional and Protective Measures in the 2001 Draft of the Hague Judgments Convention Matters related to international jurisdiction to grant provisional or protective measures were addressed in Article 13 of the 2001 Draft of the Hague Judgments Convention. Article 13 of the 2001 Draft provided for two alternative provisions. Alternative B was rather concise and provided that a court which is seised with a claim and has jurisdiction over the merits pursuant to Articles 3–15 may order provisional and protective measures intended to preserve the subject matter of the case. A more comprehensive proposal was proposed in

General Report  113 Alternative A of Article 13. According to the first paragraph, a court which has jurisdiction over the merits of the case also has jurisdiction to order provisional and protective measures. The Draft Hague Judgments Convention did not prevent the possibility of seeking relief simultaneously before courts of different states. Thus, even if a court does not have jurisdiction over the merits of the claim, it can still order provisional and protective measures with regard to the property which is located in the forum state. In such circumstances, the legal effects of the measure would be limited to the territory of the forum (Art 13(2)). Besides, the jurisdiction of the court to order provisional or protective measures for protecting the interim basis of a claim is not triggered if substantive proceedings are pending before a court of another state (Art 13(3)). Alternative A was mainly based upon Article 13 of the 1999 Hague Proposal. The 2001 draft aimed to bring more clarity and establish a definition of provisional and protective measures. According to Article 13(4), provisional and protective measures meant: (a) a measure to maintain the status quo pending the determination of a trial; (b) a measure providing a preliminary means of securing assets out of which an ultimate judgment may be satisfied; or (c) a measure to restrain conduct by a defendant to prevent imminent or future harm. The common understanding was that a measure ordered by a court should be both provisional and protective.475 It was up to the law of the forum state to determine what measures are available, in what circumstances and under what conditions an order for such measures can be made.476 It was also agreed in the diplomatic conferences that jurisdiction rules of Article 13 would not apply to remedies in which the purpose is to obtain evidence and anti-suit injunctions.477

9.2  Jurisdiction to Grant Provisional Measures and Interim Injunctions under the Laws of North American Countries 9.2.1  Legal Situation in Canada The in personam nature of injunctive orders means that Canadian courts can issue injunctions if they have personal jurisdiction over the defendant. Therefore, Canadian courts would issue an injunction against defendants who are resident in a Canadian province. In addition, the claim for an injunction must be justiciable by a Canadian court which in principle requires that Canadian courts should have jurisdiction to decide upon the merits. Hence, Canadian courts would not have jurisdiction to issue injunctions against persons who are resident in a foreign country and who committed infringing activities outside Canada, unless that person submits to the jurisdiction of a Canadian court or it is proved that the dispute has a real and substantial connection with Canada.478 As regards injunctions in IP cases, the Canadian Report noted that Canadian courts would have jurisdiction to issue orders concerning activities of the alleged infringer who has his personal residence in a Canadian province. In such cases the order of a Canadian court could also extend to the defendant’s activities in foreign countries. However, insofar as actions for injunctions for the protection of foreign IP rights are concerned, the   n 92 of the 2001 Hague Draft.   Nygh-Pocar Report, above n 77, 70–72. 477   ibid, 72. Anti-suit injunctions were considered to be concerned with jurisdiction matters and therefore outside of the scope of Art 13 of the Draft Convention. 478   Canadian Report, answers to HC 11. 475 476

114  Toshiyuki Kono and Paulius Jurcˇys subject-matter jurisdiction criterion would bar Canadian courts from issuing such injunctions. On the other hand, a Canadian court could issue an injunction if it is related to the protection of Canadian IP rights. Canadian courts might request the party seeking an injunction to provide a security for the compensation to the defendant in case the claim for injunction appears to be invalid.479 Besides, the Canadian Report indicated that Canadian courts could also issue an injunction regardless of whether the dispute has been submitted to arbitration proceedings. The Canadian Report also drew attention to the fact that interim injunctions are characterised to be procedural measures and are granted in accordance with Canadian law. This means that the plaintiff cannot successfully claim an injunction on the basis that such relief is provided for in the foreign law governing the action. 480

9.2.2  Provisional and Protective Measures in the ALI Principles Jurisdiction rules concerning the granting of provisional and protective measures are provided in section 214 of the ALI Principles. The ALI Principles acknowledge inefficiencies arising from interim orders whose effects are limited to one particular state and aim to establish a more flexible legal regime allowing cross-border provisional and protective measures.481 Three different grounds of jurisdiction for the issuance of provisional and protective measures are established in the ALI Principles. First, provisional and protective measures can be ordered by a court which has jurisdiction over the substance of the dispute (section 214(1)). The court having jurisdiction over the merits can issue also ex parte relief measures as well as measures which have transborder effects.482 This provision aims to assure that the court which has authority over consolidated claims has also the necessary powers with regard to provisional relief measures. Secondly, provisional and protective measures can be ordered by a court of a state where IP rights are registered or where tangible property is located (section 214(2)). In such cases the effects of the measure are limited to the state of the registration or location of the property. Within the overall structure of the ALI Principles, such jurisdiction to grant local relief measures is necessary to facilitate cross-border adjudication of disputes. Thirdly, the ALI Principles establish that courts of a state where the person having custody or control over goods in transit is located, have jurisdiction over provisional and protective measures while the owner or owners of the goods are identified and joined to the proceedings.

9.3  Provisional and Protective Measures in the European Countries 9.3.1  Brussels/Lugano Regime In addition to general, special and exclusive grounds of jurisdiction, the Brussels I Regulation also deals with the allocation of jurisdiction in granting provisional, including protective, measures. The Brussels I Regulation creates a two-tier jurisdiction regime for provisional and protective measures. On one hand, provisional measures could be granted by the courts of the state which have international jurisdiction over the substance of the

 ibid.  ibid. 481   American Law Institute, Intellectual Property, above n 38, 89–90 (Reporter’s Notes). 482   ibid, 88 (Comments to section 214). 479 480

General Report  115 case. On the other hand, Article 31 of the Regulation483 stipulates that provisional measures may be ordered by any other domestic court even if courts of another Member State have jurisdiction over the merits of the case pursuant to Articles 2 and 5–24. It should be recalled that the Brussels I Regulation is not applicable in cases where the residence of the parties and infringing acts occur in the forum country; in such cases the jurisdiction of a court to grant provisional or protective measures will have to be assumed according to domestic jurisdiction provisions.484 Domestic law will also determine the availability of provisional and protective measures. Article 31 of the Brussels I Regulation has been sometimes described as an ‘opening clause’485 because it opens the gates for the application of domestic jurisdictional rules concerning provisional and protective measures. Such an additional layer of jurisdiction rules has been considered a tool which facilitates the effective protection of legal rights.486 Although in adopting the Brussels I regime the European legislator intended to create a ‘highly predictable’ set of rules ‘founded on the principle that jurisdiction is generally based on the defendant’s domicile’,487 it has been also argued that neither goal was achieved.488 Namely, the exercise of jurisdiction on the basis of Article 31 had threatened the uniformity of the European jurisdiction regime because of existing differences among domestic jurisdiction rules, especially if national procedural rules allow far-reaching provisional and protective measures. For instance, under Dutch law, courts may order so-called kort geding measures which do not impose any time limit to the initiation of the main proceedings, and such measures may eventually become definite if the main proceedings are never initiated.489 In order to curtail rather broad grounds of jurisdiction490 to grant provisional and protective measures as well as to alleviate differences among national legal systems, two additional requirements were introduced by the ECJ in its case law. First, the ECJ had previously decided that provisional measures granted pursuant to Article 31 of the Brussels I Regulation should not only fulfil the requirements provided in relevant domestic legal provisions, but there should also exist ‘a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought’.491 Secondly, the ECJ had provided for an autonomous definition of ‘provisional, including protective, measures’ which are to be understood as referring to measures which, in matters within the scope of the Brussels Convention, are intended to preserve the factual or legal situation so as to safeguard rights of which the recognition is otherwise sought from the court having jurisdiction over the merits of the   Art 24 of the Lugano Convention and Art 31 of the revised Lugano Convention.   See eg Belgian Report, answers to HC 11.  C Heinze, ‘A Framework for International Enforcement of Territorial Rights: The CLIP Principles on Jurisdiction’ in J Basedow, T Kono and A Metzger (eds), above n 1, 73. 486   Art 31 provides that: ‘Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State even if under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.’ 487   Recital 11 of the Regulation. 488   See eg A Dickinson, ‘Provisional Measures in the “Brussels I” Review – Disturbing the Status Quo?’ (2010) Praxis des Internationalen Privat- und Verfahrensrechts 203. 489   Dutch Report, sections 3.1 and 3.5. 490   Proposal for a Council Act establishing a Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(97) 607 final OJ [1997] C 33/20. 491   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091, para 40; Case C-99/96 Hans-Hermann Mietz v Intership Yachting Sneek BV [1999] ECR I-2277. 483 484 485

116  Toshiyuki Kono and Paulius Jurcˇys case.492 Thus, such measures as the order to hear the witness or those that aim at the acquisition of evidence to enable the applicant to decide whether to bring the case, or determine whether it would be well founded and assess the relevance of the evidence which might be adduced in that regard, are not considered to be provisional measures within the Brussels/ Lugano system.493 According to the ECJ, the main purpose of Article 31 of the Brussels I Regulation is to avoid losses to the parties as a result of the long delays inherent in any international proceedings. Such intentions for a speedy process do not cover proceedings with regard to measures related to the establishment of facts on which the resolution of future proceedings may depend.494 However, such a stance by the ECJ was not necessarily upheld by legal scholars. For instance, it was questioned whether such ECJ practice was restrictive enough, especially in such areas as cross-border IP litigation where the importance of provisional and protective measures is crucial.495

9.3.2  Provisional Measures and IP-Related Issues In order to assess the practical implications of Article 31 of the Brussels I Regulation to the functioning jurisdiction framework, a more careful analysis of the application of domestic jurisdiction rules in granting provisional and protective measures is necessary. In this regard, it is worth mentioning that most national reports indicated that their courts have jurisdiction to issue provisional and protective measures even in those cases where they do not have jurisdiction over the merits.496 However, private international law problems do not arise if parties are domiciled in the forum state, IP infringing acts take part in the forum state and the protection is sought only with regard to IP rights protected in the forum state. The application of domestic jurisdiction rules concerning the issuance of provisional and protective measures in cross-border IP disputes brings about questions related to the effects of the principle of territoriality of IP rights and national sovereignty of states. In particular, one of the main questions is whether a court can issue a provisional measure with extraterritorial effects in foreign countries. The hypothetical case proposed was concerned with a trade mark infringement on the Internet. Many national reporters stated that domestic courts may issue preliminary and protective measures with cross-border effects especially in cases where the defendant is domiciled in the forum state.497 Some reporters noted that national courts would take into consideration whether that particular provisional or protective measure could be enforceable in respective foreign states.498 Cross-border provisional and protective measures are also available in cases concerning infringements of Community IP rights499 or Benelux trade marks500 492   Case C-261/90 Mario Reichert, Hans-Heinz Reichert and Ingeborg Kockler v Dresdner Bank AG [1992] ECR I-2149, para 34; Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091, para 37; Case C-104/03 St Paul Diary Industries NV v Unibel Exser BVBA [2005] ECR I-3481, paras 12–13. 493   ibid 25. 494   Case C-104/03 St Paul Diary Industries NV v Unibel Exser BVBA [2005] ECR I-3481, paras 15–16. 495   Spanish Report, answers to HC 11. 496   See Belgian Report, Austrian Report, German Report, Dutch Report, Swiss Report (answers to HC 11). 497   Dutch Report, sections 3.1 and 3.5; Belgian Report, answers to HC 11. 498   Belgian Report, answers to HC 11; German Report, answers to HC 11; Greek Report, answers to HC 11; Italian Report, answers to HC 11. 499   Arts 94(2)(a) and 103 of the Community Trade Mark Regulation. 500   Belgian Report, answers to HC 11.

General Report  117 provided that the defendant is domiciled in the forum state. In the Netherlands, it is established practice that courts having jurisdiction pursuant to Article 2 of the Brussels I Regulation would also have cross-border jurisdiction to issue provisional and protective measures.501 In cases where the defendant is not resident in the forum state, the legal effects of such measures are limited within the territory of a granting state.502 The situation is not uniform in cases where courts grant provisional or protective measures according to their domestic jurisdiction rules (Art 31 of the Regulation). The answers provided in the national reports suggest that the question of the territorial reach of provisional and protective measures often depends on the particular circumstances of the case and domestic court practice. In some EU states, the ECJ practice had, to some extent, influenced the jurisprudence of national courts in interpreting domestic jurisdiction provisions. For instance, the Belgian and Swedish Reports noted that courts would refrain from issuing orders granting provisional or protective measures with extraterritorial effects if the requirement of the ‘real connecting link’ between the subject matter of the measure at stake and the territorial jurisdiction of the forum state is not met.503 It should be also noted that according to the established ECJ practice,504 Article 31 of the Brussels I Regulation cannot mandate the courts to order provisional measures which have effects only in foreign countries.505 National reporters were also asked whether the courts’ exercise of international jurisdiction would somehow be affected if the IP rights for which protection is sought were granted for another state. Some national reporters answered that the courts could order provisional or protective measures if they have jurisdiction over the substance of the case regardless of the fact that IP rights at stake are registered abroad.506 It is unclear whether a court of a Member State could order cross-border provisional or protective measures concerning foreign IP rights if it does not have jurisdiction over the merits.507 If courts asserted international jurisdiction on the ground that the defendant is domiciled in the forum state, courts would be able to issue provisional or protective measures with extraterritorial effects.508 Yet, some national reporters noted that in practice, it is rather unlikely that a court would issue a provisional or protective measure with regard to foreign IP rights, especially in cases where the defendant is not resident in a forum state.509 However in Sweden, their courts would not have international jurisdiction to order provisional or protective measures if a dispute involves foreign IP rights.510 It is unclear whether the jurisdiction of a court seised with an application for a provisional or protective measure could be affected by the invalidity defence in cases concerning foreign-registered IP rights.511   Dutch Report, section 3.2.   Italian Report, answers to HC 11; although the situation is again controversial, see Austrian Report, section 3.2.3. 503   Belgian Report, answers to HC 11; Swedish Report, answers to HC 11. 504   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091; Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553. 505   Belgian Report, answers to HC 11. 506   French Report, answers to HC 11; German Report, answers to HC 11. 507   French Report, answers to HC 11; Slovenian Report, answers to HC 11. 508   German Report, answers to HC 11. 509   The Italian reporter referred to a ruling where the Court of Rome decided that orders related to foreign IP rights cannot have extraterritorial effects; see Italian Report, answers to HC 11 and n 183; UK Report, answers to HC 11. 510   Swedish Report, answers to HC 11. 511   Italian Report, answers to HC 11. 501 502

118  Toshiyuki Kono and Paulius Jurcˇys Another source of controversy is the scope of a court’s jurisdiction to order provisional and protective measures in cases concerning alleged IP infringements occurring over the Internet. The practice of national courts in this area is scarce or non-existent. The Italian Report referred to one court decision where an Italian court applied the market impact rule to decide that the blocking of a US website displaying signs allegedly infringing an Italian trade mark could only be possible if the products are offered for sale in Italy. However, Italian courts would not feel bound by any territorial constraints in ordering provisional or protective measures if they have jurisdiction over the merits.512 The opinions of national reporters differed on this point: some argued that international jurisdiction over IP infringements on the Internet would be asserted following general rules on jurisdiction, whereas others noted that courts would be unable to order measures with cross-border effects.513 National reporters were also asked whether the court of their country would require the person who seeks a preliminary measure to provide a security or guarantee. A provision that a party requiring to issue an order for provisional or protective measure may be requested to provide a guarantee is also established in the TRIPS Agreement. Some national reports indicated that such provision of security is not necessarily required, but may be requested, depending on the circumstances of the case.514 Portugal’s courts may require an adequate guarantee, pursuant to national civil procedure law. This decision would be made according to the particular circumstances of the case. For instance, an adequate guarantee may be required in case a defendant suffers some damages because of the revocation of the preliminary or protective measure.515 Spanish law (Art 737 of LEC 2000) also provides that in some cases, courts may require that the person who seeks a preliminary measure grant a guarantee before the enforcement of the measures.516 In the case of German courts, they may require a guarantee for the issuance of preliminary measures (section 921 of the German CCP); the claimant for whose benefit the measure is granted may be held strictly liable for damages if the preliminary measure is later revoked (Art 945 of the German CCP).517 However, as regards issuance of provisional or protective measures in cases concerning registered IP rights, the UK Report pointed out that the combined effect of Articles 22(4) and 31 of the Brussels I Regulation is that courts have no jurisdiction to order measures with cross-border effects.518 In EU states, courts are competent to grant provisional measures in cases which are pending before an arbitral tribunal, given that the subject matter of the dispute falls within the material scope of the Brussels I Regulation. This follows from the ECJ judgment in the Van Uden case.519 European national reporters noted that the mere fact that proceedings have been instituted before an arbitration tribunal does not affect a court’s jurisdiction to order preliminary and protective measures unless the arbitration agreement provides oth512   Italian Report, answers to HC 11; similar approach would be taken by Slovenian courts, see Slovenian Report, answers to HC 11. 513   Slovenian Report, answers to HC 11. 514   French Report, answers to HC 11; Greek Report, answers to HC 11; Italian Report, answers to HC 11; Slovenian Report, answers to HC 11; Swedish Report, answers to HC 11. 515   Portuguese Report, answers to HC 11. 516   Spanish Report, answers to HC 11. 517   German Report, answers to HC11. 518   UK Report, answers to HC 11. 519   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091; UK Report, answers to HC 11.

General Report  119 erwise.520 Portuguese courts would also be internationally competent to order preliminary and protective measures in cases where the parties submit the dispute to arbitration proceedings; there is also a national case law supporting this stance.521

9.3.3  Third State Situations In cases where the defendant is not domiciled in any EU state, the situation concerning the jurisdiction to order provisional or protective measures is not uniform. There is no common approach among the legal systems and the court practice to make more general observations is scarce. According to Article 10 of the Italian PIL Statute, Italian courts could order provisional and protective measures if the defendant is resident in the forum state or if the measure is to be enforced in Italy.522 In the Netherlands, Article 13 of the Statute on Civil Procedure allows the issuance of cross border measures. In Croatia, where the Brussels/ Lugano regime does not apply, courts could also order provisional or protective measures with extraterritorial effects in cases where a Croatian court does not have jurisdiction over the merits. Yet, it is not clear whether the fact that those IP rights at stake are foreign would have an effect on the international jurisdiction of Croatian courts to order provisional or protective measures.523

9.3.4  Provisional and Protective Measures in European Reform Proposals In order to improve the coordination of proceedings before courts of different states, the Commission Proposal for a Regulation524 contains certain suggestions for the modification of the existing framework. Generally, measures granted by a court which has jurisdiction over the substance of a case are to be recognised and enforced in other states (proposed Art 35). Such an objective to accelerate free circulation of provisional and protective measures would be extended (subject to certain conditions) also to ex parte measures.525 Besides, due to the divergent practices of domestic courts in granting provisional and protective measures on the basis of domestic procedural rules, the Commission Proposal prevents the free circulation of measures granted by a court which does not have jurisdiction over the substance of the dispute (proposed Art 36).526 Namely, if a provisional or protective measure is granted on the basis of domestic jurisdiction rules, the legal effects of such a measure are limited to the forum state. This should prevent abusive forum-shopping actions. Finally, courts shall closely cooperate if provisional measures are requested before a court of another state other than the state where main proceedings are pending.527 520   German report (s 1033 of the German CCP), Swedish Report, Spanish report, Italian Report, answers to HC 11. 521   Portuguese Report, answers to HC 11. 522   Italian Report, answers to HC 11. 523   Croatian Report, answers to HC 11. 524   Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) (14 December 2010), COM(2010) 748. 525   Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (21 April 2009), COM(2009) 175, 8; Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) (14 December 2010), COM(2010) 748, 9–10. 526   Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast) (14 December 2010), COM(2010) 748, 9–10. 527  ibid.

120  Toshiyuki Kono and Paulius Jurcˇys The Third Draft of the CLIP Principles generally follows the system existing under the Brussels/Lugano regime; however, certain clarifications regarding provisional and protective measures were introduced. Namely, Article 2:501(1) provides that courts having jurisdiction over the substance of the case may also issue provisional and protective measures. In addition to that, courts of a country where the measure is to be enforced or the country for which protection is sought also have jurisdiction to issue provisional and protective measures (Art 2:501(2)). Such reference to the place of enforcement and place for which protection is sought clarifies the ambiguity which existed with regard to the interpretation of Article 31 of the Brussels I Regulation. As was observed from the national reports of EU Member States, courts of the place where the property is located would usually have jurisdiction under their domestic jurisdiction rules; jurisdiction of the courts of the state for which protection is sought may also exist under infringement and other jurisdiction rules.528 However, the territorial reach of measures granted by the courts which exercise their authority on the basis of the infringement jurisdiction are limited to the territory of the forum. This is further specified in Article 2:604 of the CLIP Principles, which states that an injunction issued shall concern only activities affecting IP rights protected under the national law of the forum or laws of different states applied by the court. Thus the CLIP Principles aim to avoid situations where the courts, hearing cases related to an infringement of a domestic IP right, issue a worldwide provisional measure restraining the activity of the defendant.529 Such limitations, however, would not be applicable where the infringement occurs through ubiquitous media. In this case, it shall be presumed that the injunction concerns IP rights protected in all states where the signals can be received (Art 2:604(2)). In addition, measures granted by a court which does not have jurisdiction to decide over the merits of the case are excluded from the recognition and enforcement regime (Art 4:301(1)). The CLIP Principles also aim to eliminate existing differences among the laws of different Member States by positing that preliminary or protective measures granted in ex parte proceedings are not covered by the rules of recognition and enforcement. Finally, it should be noted that the CLIP Principles provide for an IP-specific definition of provisional and protective measures (Art 2:501(3)).

9.4  Jurisdiction to Order Provisional and Protective Measures in Asian States 9.4.1  India and Taiwan The Indian Report noted that Indian courts could order provisional measures only with regard to infringements affecting India; hence, cross-border measures could not be ordered. If the procedural requirements are met, Indian courts may also order ex parte interim measures. In Caterpillar v Kailash Nichiani the Delhi High Court decided that in cases concerning injunctions to cease copyright infringements, it is sufficient if the plaintiff proves that the alleged infringer undertakes certain factual business activities and provides sufficient evidence proving copyright infringement.530 528  C Heinze, ‘A Framework for International Enforcement of Territorial Rights: The CLIP Principles on Jurisdiction’ in J Basedow, T Kono and A Metzger (eds), above n 1, 73. 529   A Kur and B Ubertazzi, ‘The ALI Principles and the CLIP Project: A Comparison’, in S Bariati (ed), Litigating Intellectual Property Rights Disputes Cross-border: EU Regulations, ALI Principles, CLIP Project (Milan, CEDAM, 2010) 112–13. 530   Indian Report, answers to HC 11.

General Report  121 Taiwanese courts would generally issue provisional measures with cross-border effects only if they have jurisdiction over the main dispute and it is clear that such interim measures will be recognised and enforced in the foreign country concerned. The requirement of likeliness of recognition was interpreted as meaning that there exists a mutual recognition of judgments between Taiwan and the foreign country concerned.531 Taiwanese courts might order provisional measures also with regard to foreign IP rights according to procedural requirements established in Taiwanese Civil Procedure Law. Taiwanese courts also have the discretion of requiring the party who seeks issuance of provisional measures to provide a guarantee. Provisional and protective measures could also be ordered if the main dispute is submitted to an arbitration tribunal.532

9.4.2 Japan Japanese legislation does not contain special international jurisdiction rules concerning orders for provisional measures. However, Article 12 of the Provisional Civil Remedies Act533 was applied ex analogia by Japanese courts in cases where one party was seeking provisional measures in cross-border disputes. The prevailing approach is that in cases where Japanese courts have jurisdiction over the merits of the dispute, or if IP rights that should be preserved or the subject of the dispute are located in Japan, Japanese courts will assert international jurisdiction. However, in deciding whether to order provisional or protective measures, Japanese courts will take into account whether there are special circumstances in which an exercise of international jurisdiction would not run counter with the impartiality between the parties, fairness or speedy trial which would prevent Japanese courts from issuing provisional or protective measures. The Japanese Report also noted that the possibility of provisional measures is a rather difficult issue in IP disputes, especially if foreign IP rights are involved. Namely, in the Card Reader case,534 which involved the application for provisional measures ordering the defendant to cease infringing activities, the Japanese Supreme Court refused to issue an injunction which would have prevented the defendant from producing and exporting the infringing materials from Japan to the United States. The Supreme Court carefully analysed the case and decided that the application for an injunction based on a foreign IP statute could not be granted mainly because it would run counter to the principle of territoriality. Nonetheless, the Japanese Report also noted that Japanese courts could issue provisional measures in cases concerning infringement of foreign IP rights given that the requirements of international jurisdiction are met.535 The mere fact that the rights for which protection is sought are foreign IP rights does not negatively affect the existence of international jurisdiction of Japanese courts. Further, Japanese courts would generally be able to issue provisional measures in cases where they do not have jurisdiction over the merits of the dispute or if the case was submitted by the parties to an arbitration tribunal. Finally, Japanese courts may order the party who is seeking the issuance of provisional measures to

  Taiwanese Report, answers to HC 11.  ibid.   Art 12 of the Provisional Civil Remedies Act provides that ‘A case of a temporary restraining order shall be under the jurisdiction of the court having jurisdiction over the case on the merits or the district court having jurisdiction based on the location of the property to be provisionally seised or the subject matter of the dispute.’ 534   Supreme Court of Japan, Judgment of 26 September 2002, 56 Minsh¯u 1551. 535   Japanese Report, answers to HC 11. 531 532 533

122  Toshiyuki Kono and Paulius Jurcˇys grant a guarantee or security in order to make sure that the interests of the defendant are safeguarded.536 The drafters of the Transparency Principles were considering possible alternatives of establishing various grounds of jurisdiction to grant provisional and protective measures and their implications to the principle of territoriality of IP rights, as well as the interests of the business community.537 Article 111(1) of the Transparency Proposal provides that Japanese courts should have jurisdiction to order provisional measures, when (a) Japanese courts have international jurisdiction over the case on the merits, or (b) the applications for provisional measures concern the protection of Japanese IP rights. In addition, when the object to be provisionally seised is located in Japan, Japanese courts shall have international jurisdiction to order a provisional seizure (Art 111(2)). In the latter case, court jurisdiction is limited to ordering provisional seizures.538 The general principle underlying the Transparency Principles is that the reach of provisional and protective measures will be dependent on the scope of the jurisdiction of a court hearing a case. Nonetheless, the explanatory report indicated that in certain exceptional cases, such as dealing with ubiquitous infringements, Japanese courts would have international jurisdiction to issue crossborder provisional and protective measures.539 International jurisdiction rules to grant provisional and protective measures in the Waseda Principles were drafted in light of Article 13 of the Draft Hague Judgments Convention.540 Article 209 of the Waseda Principles provides that a court which has jurisdiction pursuant to Articles 201–9 also has the jurisdiction to order any provisional or protective measure. Further, a court of any state where the property is to be seised or the dispute is located is also granted jurisdiction to order provisional and protective measures. In the latter case, the legal effects of such measures are limited to the territory of the state where the property is located.

9.4.3 Korea In Korea, provisional measures could be ordered if a Korean court has international jurisdiction over the dispute. In assessing the existence of international jurisdiction over the merits of the case, Korean courts would have to apply general international jurisdiction principles. According to the Korean Report, Korean courts which have jurisdiction over the main dispute could issue provisional measures having effects also in foreign countries. At the request of the defendant, a Korean court may ask a plaintiff who has no domicile, office or business place in Korea to provide a security. If the plaintiff fails to comply with the requirement, the defendant is entitled to refuse to respond to the lawsuit.541 Similar provisions are also established in the proposed Korean Principles. Namely, a court may order provisional and protective measures if it has jurisdiction over the merits of the case. In such circumstances, the court could order provisional measures which have also effect in other countries (Art 18(1)). Further, courts of the state where the assets are

 ibid.   S Chaen, T Kono and D Yokomizo, ‘Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in J Basedow, T Kono and A Metzger (eds), above n 1, 134. 538   ibid, 135. 539  ibid. 540   Comments to Art 210 of the Waseda Proposal. 541   Korean Report, answers to HC 11. 536 537

General Report  123 located are also entitled to exercise their jurisdiction and order provisional measures with regard to assets which are located in the territory of the forum state (Art 18(2)).542

9.5  Comparative Observations The answers received from the represented countries confirmed that much further dis­ cussion is necessary with regard to jurisdiction to grant injunctions and other provisional and protective measures. Generally, it seems to be widely accepted that courts which have jurisdiction over the substance of the case can order provisional and protective measures. Yet, some divergent solutions to cross-border effects of such provisional and protective measures follow from the subject-matter jurisdiction requirement which exists in common law jurisdictions. It remains necessary to investigate the implications of the principle of the territoriality of IP rights and the scope of courts’ jurisdiction to grant provisional measures in multi-state IP infringement cases. This is particularly significant concerning the jurisdiction to grant provisional and protective measures in cases over ubiquitous IP infringements. The solid basis for future work could be the 2001 Draft of the Hague Judgments Convention (Art 13) together with subsequent legislative proposals concerning crossborder enforcement of IP rights. The principles established in the 2001 Hague Draft have been to a large extent adopted in recent academic proposals: it has been suggested that courts which have jurisdiction on the ground of the defendant’s residence/domicile should be competent to order provisional or protective measures with cross-border effects. In other cases where the court does not have jurisdiction over the substance of the case, the effects of measures are supposed to be limited to the territory of the forum state.

10  Choice of Court Agreements in Cross-Border IP Disputes Choice of court agreements play an important role in international litigation. Prorogation or derogation clauses are often included in international commercial transactions and thus facilitate legal certainty and foreseeability of the parties. Nevertheless, such advantages of the choice of court agreements become meaningless if the designated court fails to give effect and enforce choice of forum clauses. Therefore, from a legal policy perspective it seems to be desirable to assure that the requirements for the validity of choice of court agreements are as much as possible harmonised in the domestic laws of different countries. Cross-border IP litigation brings about similar efficiency considerations. Although it is true that due to the differences of the interests of the parties the choice of courts can only play a limited role in IP infringement proceedings, the possibility of the parties to agree on international jurisdiction should not be underestimated. In particular, prorogation of jurisdiction in cross-border IP disputes might be an ‘elegant’543 way, and the most efficient way, to avoid the application of complex jurisdictional rules and the fragmentation of litigation.   Korean Report, section 2.4.2 and answers to HC 11.   A Metzger, ‘Jurisdiction in Cases Related to IP Infringements on the Internet. Brussels-I-Regulation, ALI Principles and Max Planck Proposals’ in S Leible and A Ohly (eds), above n 1, 266. 542 543

124  Toshiyuki Kono and Paulius Jurcˇys Hypothetical case no 4 of the Questionnaire aimed to identify the legal framework concerning the enforceability of choice of forum clauses and what role such agreements play in the system of jurisdiction rules of a particular country. The hypothetical case provides for the following situation: A, who is the holder of a bundle of patents in different countries concludes a licensing agreement with B. B received a licence to make, use or offer for sale and otherwise dispose of licensed products. Although B paid the initial licence fee, it later refused to pay subsequent instalments. A files a suit against B and seeks to recover damages for patent infringement. A refers to a prorogation clause in the licence agreement. For its part, B challenges the validity of the choice of forum clause and submits that the court shall not exercise jurisdiction because the dispute involves foreign patents. The questions put forward in the hypothetical case aim to discover whether: 1) such choice of court clauses are enforceable and whether parties are allowed to make a choice of court agreement after the dispute has arisen; 2) whether a choice of court clause would be valid if the defendant raised a counter-claim that (foreign) patents at stake are invalid; 3) whether choice of court agreements could be enforceable in IP infringement proceedings; and 4) whether parties could submit their IP-related disputes to arbitral tribunals.

10.1  The 2005 Hague Choice of Court Convention 10.1.1  General Principles of the Hague Convention After prolonged negotiations to adopt a global judgments convention, the Hague Choice of Court Convention was signed on 30 June 2005.544 Similar to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards, the 2005 Hague Convention was a great leap forward in creating a comprehensive legal framework that ensures the effectiveness of exclusive choice of court agreements. The future of the 2005 Hague Choice of Court Convention seems to have more potential since, as of the end of February 2010, the United States and European Union had signed it and Mexico had ratified it.545 IP matters have posed significant hurdles in drafting the Hague Judgments Convention and were partially resolved in the 2005 Hague Choice of Court Convention. In order to provide a more comprehensive picture of the role of choice of court agreements in IP disputes, it is necessary to first describe the general structure of the Convention. Pursuant to Article 3 of the Convention, ‘exclusive choice of court agreements’ are agreements concluded in writing or by any other alternative means designating one or more courts of a Contracting State to decide disputes which have arisen or may arise in connec544  Available at www.hcch.net/index_en.php?act=conventions.text&cid=98. Before that, two conventions on choice of court agreements, namely, the 1958 Convention on the Jurisdiction of the Selected Forum in the Case of International Sales of Goods and the 1965 Convention on the Choice of Court, had been adopted, but did not enter into force. The Hague Convention of 2005 was already widely discussed in academic literature. See eg MA Adler, ‘The Hague Convention on Choice of Court Agreements: The United States Joins the Judgment Enforcement Band’, 27 Northwestern Journal of International Law & Business 1–36; G Rühl, ‘Das Haager Übereinkommen über die Vereinbarung gerichtlicher Zuständigkeiten: Rückschritt oder Fortschritt?’ (2005) Praxis des Internationalen Privat- und Verfahrensrecht 410–15; C Thiele, ‘The Hague Convention on Choice-ofCourt Agreements: Was It Worth the Effort?’ in E Gottschalk, R Michaels, G Rühl and J von Hein (eds), Conflict of Laws in the Globalized World (Cambridge University Press, 2007) 63–88; P Beaumont, ‘Hague Choice of Court Agreements Convention 2005: Background, Negotiations, Analysis and Current Status’ (2009) 5 Journal of Private International Law 125–59. 545  Status of the 2005 Hague Choice of Court Convention is available at www.hcch.net/index_en. php?act=conventions.status&cid=98.

General Report  125 tion with a particular legal relationship. Choice of court agreements which designate courts of one or more Contracting States are deemed to be exclusive unless the parties have expressly agreed otherwise. While formal validity requirements are harmonised in the Convention itself, substantial validity of a choice of court agreement (eg fraud, mistake, misrepresentation, duress or lack of capacity) should be decided pursuant to the law of the forum.546 The Hague Convention also entrenches the so-called ‘separability’ principle which means that the validity of a choice of court agreement is independent from the validity of other terms of a contract. Hence, the validity of a choice of court clause cannot be challenged merely on the basis that the contract is invalid (Art 3(d) of the Convention). Article 5 of the 2005 Hague Convention entrenches another cornerstone rule that a court designated in a choice of court agreement shall have jurisdiction over the dispute and shall not decline jurisdiction on the sole ground that a court of another Contracting State is competent to decide the dispute. Any other court of another Contracting State is obliged to suspend or dismiss the proceedings to which an exclusive choice of court agreement applies except where the choice of court agreement is null and void, giving effect to a choice of court agreement would result in a manifest injustice; the court designated in the choice of court clause decides not to hear the case if there are other exceptional reasons beyond the control of the parties (Art 6). Recognition and enforcement issues are governed by Articles 8–15 of the Convention. The general underlying principle is that a judgment given by a court of a Contracting State designated in a choice of court agreement shall be recognised by courts of other Contracting States. A judgment can be recognised only if it is effective in the country of origin. Moreover, recognising courts cannot review the merits of judgments handed down by a court designated by the parties. In other words, révision au fond is not permitted under the Convention (Art 8). The recognition or enforcement may be refused only if there are certain legal grounds provided in Article 9 of the Convention: namely, if the agreement was null and void, a party lacked capacity to conclude the agreement, the judgment was obtained by fraud or if the recognition or enforcement would be against public policy of the requested state or inconsistent with another judgment.

10.1.2  Choice of Court Agreements in IP Disputes The agreement on the final text of the 2005 Hague Choice of Court Convention witnesses a significant step forward to legal certainty and foreseeability in the area of international commercial transactions. IP-related concerns which arose at an early stage of the drafting of the Hague Judgments Convention were to a large extent resolved in the final text of the Convention adopted in 2005. The approach towards IP matters can be best understood from the material scope (application ratione materiae) of the Convention. The final text of the Hague Choice of Court Convention excludes a number of matters from its scope.547 The Convention does not apply inter alia to choice of court agreements pertaining to the validity and infringement of IP rights other than copyrights and related rights (Art 2(2)(n)), except where infringement proceedings are brought for a breach of contract between the parties relating to such rights, or could have been brought for breach of the contract (Art 2(2)(o)). Hence, two issues should be clarified. First, the Convention makes a distinction between copyrights, related rights and other (registered) IP rights   T Hartley, M Dogauchi, Explanatory Report, available at www.hcch.net/upload/expl37e.pdf, paras 125–26.   IP matters were not excluded from the 1965 Choice of Court Convention (Art 2 of the Convention).

546 547

126  Toshiyuki Kono and Paulius Jurcˇys (eg patents, trade marks, designs). Such distinction is drawn mainly on the ground that the existence of copyrights and related rights does not depend on the registration. Conversely, such IP rights as patents, designs or trade marks are usually created by the act of registration at competent national authorities. Public acts of registration are usually considered as closely related with the sovereignty of a granting state and the granting of rights depends on the fulfilment of certain requirements posited in the national laws. Similarly to the granting of rights, the declaration of invalidity as well as corrections in the registries require the involvement of national authorities and are made according to local procedural rules. The Hague Choice of Courts Convention exempts choice of court agreements pertaining to registration and validity of (registered) IP rights mainly because in many national legal systems such disputes fall under exclusive jurisdiction of the granting country. Nevertheless, the Convention would still apply to choice of court agreements concerning disputes where validity of a registered IP right is challenged as a defence (eg, in disputes for payment of royalties where the licensee raises a claim that the licensed IP right is invalid548). In such cases the court can decide upon the validity of the IP right as a preliminary matter; but such decisions would not be subject to recognition under the Convention. Secondly, the Convention does not apply to choice of court agreements which designate a competent court to hear IP infringement disputes unless such a dispute arises from a preexisting relationship. An example of a pre-existing legal relationship could be a licensing contract and the infringement proceedings related to it. According to the Official Commentary, IP ‘infringement actions are covered, even if brought in tort, provided they could have been brought in contract’.549 It should be noted that copyright-related disputes are fully covered by the Convention (including infringement disputes and disputes where the court should decide upon the validity, Art 2(2)(o)).

10.2  Choice of Court Agreements in North American Countries 10.2.1 Canada Choice of court agreements are enforceable before Canadian courts, and non-residents may agree to submit disputes to Canadian courts. Canadian courts would usually exercise their jurisdiction unless it is obvious that the litigation is absolutely unconnected to the province or the litigation would be unjustified. In so far as foreign IP rights are concerned, parties may have to put forward convincing arguments why the designated Canadian court should exercise jurisdiction. However, since Canadian courts take a rather restrictive approach in cases pertaining to foreign IP rights, it appears to be unclear whether choice of court agreements designating Canadian courts will be enforced. The enforceability of choice of court clauses in IP infringement cases and cases where the registration or validity of the contested (registered) IP right is challenged appears to be even less likely due to the hostile attitude towards foreign IP rights under the guise of subject-matter juris­diction.550

  T Hartley, M Dogauchi, above n 546, para 37.   ibid, para 39.   Canadian Report, answers to HC 4.

548 549 550

General Report  127

10.2.2  Choice of Court Agreements according to the ALI Principles Section 202 of the ALI Principles provides for a detailed framework concerning choice of court agreements in IP disputes. Most of the provisions concerning choice of court agreements are drafted in light of the Hague Convention on Choice of Court Agreements.551 According to section 202, parties are allowed to make a choice of court agreement regarding existing and future disputes. Unless the parties agree otherwise, the designated court has exclusive jurisdiction over the dispute. Moreover, the ALI Principles stipulate that in the absence of the parties’ agreement to the contrary, it is deemed that the parties have waived objections regarding personal jurisdiction of the designated court (lit (a) and (b) of section 202(1)). The choice of court agreement is formally and substantially valid if it is valid under the law of the forum state (including conflict-of-laws rules of the forum). The ALI Principles aim is to give preference to the principle of party autonomy. Therefore, the ALI Principles do not adopt such limitations as those established in the Hague Convention whereby the designated court can refuse to enforce a choice of forum clause if it would lead to a manifest injustice or undermine public policy considerations of the forum state.552 The capacity of the parties is treated separately and is determined under the law of the state in which that party had its residence at the time when the agreement was concluded. If that party (in most cases a legal entity) had more than one residence, the capacity to enter into an agreement is recognised if it existed under the law of any of its residences. By establishing a special rule regarding the capacity of the parties, the ALI Principles goes a step further than the Hague Convention which remains silent on this issue. It should be emphasised that the chosen court can only hear the case if it has subjectmatter jurisdiction over the dispute. This requirement of subject-matter jurisdiction reflects the idea that the dispute and the chosen court should have certain proximity.553 Cases revolving around the declaration that certain registered IP rights are invalid shall be brought before a court of a registering country. However, if the validity of the registered right arises as a preliminary question, the court’s decision would have only inter partes effects (sections 211(2) and 212(4)). The ALI Principles also establish a special rule for those situations when a choice of court clause is included in a standard form agreement. In such cases, the validity of a choice of court clause should be decided with regard to the reasonableness criterion (section 202(4)). Reasonableness should be determined by taking into consideration such factors as: (a) the location and resources of the parties, especially resources and sophistication of the non-drafting party; (b) interests of any states; and (c) the availability of remote adjudication (eg online dispute resolution). In addition, the ALI Principles aim to protect the interests of the non-drafting parties by establishing that the choice of court clause should be readily accessible and available for subsequent reference by the court and the parties. These requirements are especially significant in the context of online contracting.

  American Law Institute, Intellectual Property, above n 38, 38–40.  ibid.  ibid.

551 552 553

128  Toshiyuki Kono and Paulius Jurcˇys

10.3  European Countries 10.3.1  Choice of Court Agreements according to the Brussels/Lugano Regime It is generally agreed that parties are free to make a choice of court agreement with regard to any legal relationship (Art 23 of the Brussels I Regulation/Revised Lugano Convention). Choice of court agreements are deemed to be exclusive unless the parties agree otherwise. The Brussels I Regulation does not require any specific connection between the dispute and the forum state. A choice of court agreement is enforceable if at least one of the parties is resident in a Member State. Besides, in cases where neither of the parties is resident in a Member State, courts of other Member States shall have no jurisdiction unless the court chosen has declined its jurisdiction (Art 23(3)). It should be also noted that in cases where none of the parties is resident in a Member State, the effectiveness of a choice of court clause is determined under the law of the court seised.554 The Brussels I Regulation also allows the parties to conclude a choice of court agreement before or after the dispute arose. However, in order to be enforceable, choice of forum clauses have to meet the written form requirement. Hence, choice of court agreements must be concluded in writing or evidenced in writing or be in a form which accords with practices which the parties have established between themselves. If a choice of court agreement is concluded by electronic means, it is considered equivalent to an agreement made in writing as long as there is a durable record of the agreement. Agreements conferring jurisdiction in international trade or commerce should be concluded in a form which accords with a usage of which the parties are or ought to have been aware and in which such trade commerce is widely known to and regularly observed. Besides that, no other formal requirements such as language etc can be established under the domestic laws of Member States.555 Parties’ freedom to enter into choice of court agreements is limited by the mandatory nature of exclusive jurisdiction rules from which the parties cannot escape. It follows that parties’ choice of court agreements concerning matters falling under exclusive jurisdiction provisions of Article 22 of the Brussels I Regulation (including proceedings dealing with the registration or validity of registered IP rights) would not be enforceable. Additional limitations are established with regard to jurisdiction over consumer contracts (Art 17) and individual employment contracts (Art 21). Namely, in cases related to consumer or individual employment contracts, prorogation of jurisdiction is possible only if the choice of court agreement was concluded after the dispute has arisen or if such choice of court agreement allows the consumer/employer to bring proceedings in courts other than those indicated in the respective sections of the Brussels I Regulation which deal with jurisdiction over these types of contracts. Similar limitations are also established with regard to insurance contracts (Art 13). Such limitations of party autonomy are imposed with the objective of assuring the protection of the weaker party (consumer or the employee).556

554   The requirements for the enforceability of choice of court agreements according to domestic jurisdiction rules might be somewhat different from those established in the Brussels I Regulation. For instance, Belgian courts might analyse whether the dispute has a significant connection with Belgium (Art 6 of Belgian CPIL), Austrian courts would inter alia consider the international jurisdiction of a court whose jurisdiction choice of court agreement purports to exclude (Austrian report, answer to HC 4). 555   Case C-150/80, Elefanten Schuh v Pierre Jaqmain [1981] ECR 1671, para 26. 556   Recitals 13 and 14 of the Preamble of the Brussels I Regulation.

General Report  129 According to the established practice of the ECJ, the Brussels I Regulation does not permit courts, other than those designated by the parties, to control the grounds of jurisdiction of a court chosen by the agreement.557 Such practice has also been followed by the domestic courts of Member States.558 Nevertheless, courts can declare null and void choice of court agreements which are considered unfair.559 Similarly, the court can also decline jurisdiction of its own motion if it becomes clear that a choice of court clause is an unfair standard term.

10.3.2  Choice of Court Agreements in IP Disputes Enforceability of choice of court agreements in IP disputes might be problematic sometimes because of the territorial nature of IP rights and the mandatory nature of exclusive jurisdiction rules from which the parties cannot escape by concluding a choice of court agreement. Overall, European national reports indicated that parties’ choice of court agreements are enforceable regardless of whether a particular dispute is related to domestic or foreign IP rights. In other words, the designated court of a Member State cannot decline jurisdiction merely on the basis that the dispute involves foreign IP rights. Some national reports pointed to ECJ jurisprudence560 where the Court held that no other issues than those established in Article 23 shall be taken into consideration when deciding whether the choice of court agreement is enforceable. In the case of IP disputes, this means that such considerations as the territorial nature of IP rights (namely, the fact that IP rights which are the object of the dispute are foreign IP rights, or the allegation that infringement activities occurred in another state) shall not be taken into consideration by the court in deciding whether it should accept jurisdiction or not.561 Similarly, there is no dispute that a designated court can decide upon the infringements of IP rights which occur in any country other than the forum country as long as the parties agree (explicitly or implicitly) on the unlimited territorial jurisdiction of the court chosen.562 Parties’ choice of court agreements have prevalence over general and special grounds of jurisdiction. Yet, parties cannot contract out from exclusive jurisdiction provisions (namely, Art 22(4) of the Regulation) or alter material and functional jurisdiction of national courts.563 However, as far as patents and other registered IP rights are concerned, such exclusive jurisdiction rules are applicable only with regard to registration and validity. Hence, parties’ choice of court agreement with regard to infringement claims will be enforceable as long as the defendant does not challenge the validity or registration of the patent.564 Once a registration/validity defence is raised, infringement proceedings turn into proceedings over registration/validity, which accordingly leads to the application of   Case C-281/02 Andrew Owusu v NB Jackson [2005] ECR I-1383, paras 37–40.   Judgment of the Lisbon Court of Appeal as referred to in the Portuguese Report, nn 44 and 116. 559   Case C-167/00 Verein fur Konsumenteninformation v Karl Heinz Kenkel [2002] ECR I-8111, para 50; Joined Cases C-240/98 to 244/98 Oceano Grupo Editorial v Roció Munciano Quintero [2000] ECR I-4941, paras 29 and 32. 560   Case C-159/97 Transporti Castelleti Spedizioni Internationali SpA v Hugo Trumpy SpA [1999] ECR I-1597, para 40. 561   Austrian Report, answers to HC 4, where it is also indicated that the same approach would be taken under the Austrian Civil Jurisdiction Act, which would be applicable if neither of the parties are resident in the EU. 562   German Report, reply to HC 4. 563   D Stauder, ‘Die Anwendung des EWG Gerichtsstands- und Vollstreckungsübereinkommens auf Klagen im gewerblichen Rechtsschutz und Urheberrecht’ (1976) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 465. 564   French Report, answers to HC 4 where it is also noted that if an invalidity defence is raised, a French court hearing an IP infringement dispute will stay the proceedings. 557 558

130  Toshiyuki Kono and Paulius Jurcˇys exclusive jurisdiction rules established in Article 22(4) of the Regulation. This follows from the recent ECJ judgment in the case of GAT v LuK.565 The Brussels I Regulation does not provide a clear-cut answer as to whether parties are allowed to conclude choice of court agreements in anything other than contractual disputes. Article 23(1) of the Brussels I Regulation only establishes that choice of court agreements can be made with regard to ‘any disputes which have arisen or may arise in connection with a particular legal relationship’. Hence, it is unclear whether parties can make a choice of court agreement in tort or unjust enrichment etc cases. This is also true in IP-related litigation (eg infringement of licensing contracts). The notion of a ‘particular legal relationship’ should be given an autonomous meaning. According to the jurisprudence of the ECJ, the question of what claims are covered by a choice of court agreement mainly depends on the intention of the parties. As the ECJ put it, choice of court agreements confer jurisdiction only with regard to obligations which are freely accepted by the parties.566 This approach is followed by some domestic courts of EU Member States.567 Yet, it is uncertain whether the parties’ choice of court agreement which is part of an IP licensing contract can also be adhered to by a party seeking legal redress for infringement of licensed IP rights. The controversy over the interpretation of Article 23 could be best observed by taking into account the jurisprudence of the domestic courts of the Member States and academic opinion. Some national reports indicate that domestic courts would refuse to give effect to choice of forum clauses with regard to claims related to the infringement of IP rights in cases where parties were not previously bound by a contractual relationship.568 Nonetheless, the courts of some Member States adopted a broader interpretation of Article 23 than the one established by the ECJ. For instance, Portuguese courts have recently handed down decisions which upheld that the jurisdiction of a designated court by the parties includes all issues, contractual or not, that arise out of the main contract.569 Academic opinions are also in favour of giving effect to contractual choice of court agreements also with regard to claims related to infringement of licensed IP rights.570 The Italian Report noted that the designated court would enforce the choice of court agreement in ‘pure’ infringement cases. This is so because the choice of court agreements can only be deprived of efficiency with regard to insurance, consumer and individual employment contracts or if they are contrary to exclusive jurisdiction rules of the Regulation (Arts 13, 17, 21 or 22). The French Report indicated that the question regarding the material scope of a choice of court agreement, which is part of a contract for the exploitation of copyrights, is usually interpreted in favour of the author.571 Yet, a closer look at the case law of French courts also illustrates the tendency to interpret choice of court clauses broadly and enforce them regardless of whether a dispute is of a contractual or tortious nature.572   Case C-4/03 GAT v LuK [2006] ECR I-6509, para 24.  Case C-26/91 Handte v Traitements Mécanochimiques des Surfaces [1992] ECR I-3967; Case C-334/00 Fonderie Officine Meccaniche Tacconi v HWS [2002] ECR I-7357. 567   Austrian Report, answers to HC 4. 568   Belgian Report, answers to HC 4; Greek Report, answers to HC 4; Hungarian Report, answers to HC 4. 569   Portuguese Report, n 127. Similarly, the Swiss Report also noted that parties’ choice of court agreements concerning disputes which arise out of contractual or tortious relationship or unjust enrichment (see Swiss Report, answers to Question 4 of Part II). 570   Italian Report, answers to HC 4. 571   French Report, section 1.2.5. 572   ibid and answers to HC 4. 565 566

General Report  131 In comparison to the Brussels I Regulation, the situation is somewhat different in Croatia, which is not a member of the EU. The Croatian PIL Act does not provide for any special rules concerning the requirements of enforceability of choice of court clauses before Croatian courts. Accordingly, parties may chose Croatian courts only if one of the parties has Croatian nationality or a registered seat in Croatia. In cases where parties would prefer to make a derogatory choice of court agreement and confer jurisdiction to a foreign court, such clauses would be upheld by Croatian courts if three of the following requirements are met: a) one of the parties is a foreign national or legal person with legal establishment in a foreign country; b) Croatian courts do not possess exclusive jurisdiction over the matter; and c) the dispute is not related to personal status or family relations.573 Parties can make a choice of court agreement after the dispute has arisen; however, prorogation and derogation clauses are not enforceable in tort disputes (Art 53(1) of the Croatian PIL Act). According to the Croatian Report, Croatian law does not establish any specific provisions with regard to the enforceability of choice of court clauses in IP disputes. Nevertheless, it is the prevailing academic opinion that such choice of court agreements in IP disputes would be enforceable, as long as the general enforceability requirements are met.574

10.3.3  Choice of Court Agreements according to the CLIP Principles The existing ambiguities of interpretation of the Brussels I Regulation would be resolved if the proposal made by the CLIP working group was adopted. Although the Max Planck draft principles of jurisdiction of 2004 did not contain any specific rules relating to choice of court agreements, a number of special provisions regarding prorogation of jurisdiction were included in the Second Draft of the CLIP Principles (2009). Article 2:301 of the CLIP Principles generally follows the practice established under the Brussels I Regulation and posits parties’ freedom to agree on jurisdiction in cross-border IP disputes. Choice of court agreements are deemed to be exclusive unless the parties have agreed to the contrary. The validity of a choice of court agreement shall be determined according to the national law of the state of the designated court. It should be also noted that Article 2:301(3) of the CLIP Principles adopts identical written form requirements to those established in the Hague Choice of Court Convention. The CLIP Principles follow a separability doctrine according to which the invalidity of the contract does not render a choice of court clause invalid (Art 2:301(5)). The court designated in a choice of court agreement shall have jurisdiction over contractual and non-contractual obligations as well as all other claims which arise from that legal relationship. Parties’ choice of court agreement cannot override exclusive jurisdiction rules established in the CLIP Principles (Art 2:301(4)). Therefore, according to the CLIP Principles, in cases where jurisdiction of a court is conferred by the parties’ choice of court agreement, such agreements on jurisdiction shall be enforceable as long as the registration or validity of the registered IP right is not challenged in the main claim or counterclaim (Art 2:401(2)).

  Croatian Report, section 1.2.3.   ibid and answers to HC 4.

573 574

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10.4  Choice of Court Agreements in Asian Countries 10.4.1  Choice of Court Agreements in India and Taiwan Although choice of court agreements would be enforceable in most represented countries, the situation is quite restrictive under Indian law. Indian courts do not give effect to choice of court agreements. The parties’ agreement to designate an Indian court to hear a case would not be enforceable if it was made after the dispute arises.575 The situation is more flexible in Taiwan, where the parties’ choice of court agreements will be enforceable in disputes related to contractual obligations assumed by the parties. Taiwanese courts may also assert their jurisdiction and enforce the parties’ agreement with regard to a non-contractual obligation of the parties, given that the dispute at hand is sufficiently related to the forum. Finally, the question of the relationship between the exclusive jurisdiction rules and choice of court agreements is not clearly delineated under Taiwanese law. Nonetheless, the Taiwanese Report notes that it is likely that a Taiwanese court will not refuse to give effect to the choice of court agreement even if the counterparty raises an invalidity defence that the patent is not valid.576

10.4.2  Choice of Court Agreements in IP Disputes according to Japanese Law and other Asian Legislative Proposals Article 11 of the Japanese CCP deals only with domestic choice of court agreements and stipulates inter alia that ‘choice of court agreements can be made in the proceedings at the court of first instance’. In practice, this means that Japanese courts would enforce choice of court agreements made before the date of the oral arguments. Choice of court agreements shall be made in writing (Art 11(2) CCP). The written form requirement is also satisfied if the choice of court agreement is concluded by electronic means (Art 11(3) CCP). The written form requirement has been interpreted as requiring the parties to specify clearly the substance of the disputes which should fall under the ambit of the choice of court agreement and indicate the court which should decide the dispute. If a choice of court clause is a part of a larger contract, the nullity of a contract does not render the choice of court clause invalid (‘separability doctrine’). Choice of court agreements do not necessarily have to be in one document (eg offer and acceptance). Choice of court agreements which are included into B2C contracts have to be interpreted to the benefit of a weaker party, who cannot be deprived of the home court advantage. Hence choice of court agreements which are obviously detrimental when considering the interests of the weaker party may be considered as not enforceable. Similarly, choice of court agreements preventing the parties to raise any claims with regard to particular issues also may not be enforceable. The prevailing opinion in Japan is that choice of court agreements are enforceable before Japanese courts.577 In 1975 the Japanese Supreme Court handed down the landmark   Indian Report, answers to HC 4.   Taiwanese Report, answers to HC 4. 577   Osaka District Court, Judgment of 23 March 1986, 1200 Hanrei Jih¯o 97, available at tomeika.jp/search/ content.php?did=1521; Tokyo District Court, Judgment of 28 February 1994, 876 Hanrei Taimuzu 268, available at tomeika.jp/search/content.php?did=1096 (declining jurisdiction on the grounds that parties have concluded choice of court agreement designating courts of California as exclusively competent); Kobe District Court, 575 576

General Report  133 judgment in the so-called Chisadane case and upheld the validity of an exclusive choice of court agreement.578 In this case the dispute arose with regard to the damage to crude sugar which occurred during transportation from Brazil to Osaka. The question was whether a choice of forum clause included in a bill of lading was enforceable. The Supreme Court followed the established practice under Article 11 of the CCP and held that it is sufficient if the parties specify a country where the dispute is to be resolved. The choice of court agreement shall be in writing, although the parties are not obliged to sign the agreement as long as its content is drafted sufficiently clearly. International choice of forum clauses are valid unless they are contrary to public policy, or fall under the exclusive jurisdiction of Japanese courts. In the case where parties refer to a particular court but do not specify whether the designated court has exclusive jurisdiction, such a choice of court clause is deemed to confer exclusive jurisdiction upon the chosen court. Besides, the court stated that the reciprocity requirement which is one of the conditions for recognising foreign judgments is not a necessary condition in determining the validity of a choice of court agreement. Japanese courts have not dealt with choice of court agreements pertaining to IP disputes. According to the Japanese Report, the majority opinion supports the idea that the parties’ agreements conferring jurisdiction upon Japanese courts would be enforceable even if no relationship between the dispute and the forum exists.579 The majority opinion seems to follow the approach that parties would be free to make a choice of court agreement also at the time when the dispute arose. However, it is not clear whether a Japanese court would assert jurisdiction in disputes related to foreign-registered IP rights where the validity defence is raised. 10.4.2.1  New Rules on International Jurisdiction The legislative proposals introduced significant improvements. Article 3-7, to be introduced into the CCP by the Act Amending CCP (2011), contains a set of special rules concerning parties’ agreements on jurisdiction. This provision allows the parties to conclude a choice of court agreement. In order to be valid, choice of court agreements must arise out of a specific legal relationship made in written form. However, the parties’ choice of court agreement is not effective if a chosen foreign court cannot assert jurisdiction according to the forum law (Art 3-7(iv)). Besides, according to the Explanatory Report of the Interim Proposal, agreements on jurisdiction would be null and void if they are obviously contrary to public policy. The Act contains additional provisions concerning choice of court agreements over disputes in consumer and individual employment contracts (Arts 3-7(v) and 3-7(vi)). Insofar as IP rights are concerned, these matters are open to interpretation.580 Generally, parties cannot make choice of court agreements concerning matters related to registration or entries in public registries which also cover matters related to the registration of IP rights. It should also be reiterated that claims related to the existence and validity of regisJudgment of 10 November 1997, 981 Hanrei Taimuzu 191, available at tomeika.jp/search/content.php?did=1537; Tokyo High Court, Judgment of 28 November 2000, 1743 Hanrei Jih¯o 137, available at www.tomeika.jur.kyushuu.ac.jp/procedure/E-label/LA1-H12.11.28.pdf (where the exclusive choice of court clause in employment contract was upheld); Tokyo District Court, Judgment of 26 September 2003, 1153 Hanrei Taimuzu 268, available at www. tomeika.jur.kyushu-u.ac.jp/procedure/E-label/LA1-H15.09.26HT.pdf (where the Tokyo district court enforced parties’ exclusive choice of Hawaiian court agreement). 578   Supreme Court, Judgment of 28 November 1975, 29 Minsh Jih¯u 1554. 579   Japanese Report, answers to HC 4. 580  ibid.

134  Toshiyuki Kono and Paulius Jurcˇys tered IP rights fall under the exclusive jurisdiction of Japanese courts when the IP rights concerned are registered in Japan (Art 3-5(iii)). In cases where the validity of registered IP rights arises as a preliminary question or is raised as a counter-claim by the defendant, the Explanatory Report indicates that the possibility of making an invalidity defence depends on the applicable law (eg the question of whether the invalidity of an American patent can be challenged in proceedings concerning the infringement of an American patent shall be decided pursuant to the applicable American patent law). According to the Explanatory Report, this issue of the invalidity defence is treated as a problem of parallel proceedings which has to be decided on the basis of the special circumstances test. Such a legislative approach again does not offer much legal certainty and is open to interpretation.581 10.4.2.2  Choice of Court Agreements in the Transparency Principles Article 107 of the Transparency Principles allows parties to make choice of court agreements with regard to contractual and non-contractual disputes concerning IP rights. At the same time, the drafters of the Transparency Principles acknowledged that choice of court agreements in IP infringement cases would be rare. Article 107 resembles the proposed rule on choice of court agreements in the Act Amending the CCP (2011). In particular, according to the Transparency Principles, a designated court can hear all disputes referred to by the parties in a choice of court agreement, unless the object of the dispute falls under the exclusive jurisdiction rules. In the case where a court designated in a choice of court agreement has to decide upon the existence, registration, validity or ownership of foreign IP rights as a preliminary matter, such a decision shall have only inter partes effects. The drafters of the Transparency Principles were also aware of possible situations where one of the parties to a choice of court agreements might institute proceedings (eg for a negative declaratory judgment) before a court other than the one designated in the choice of court agreement with the aim to hamper the bringing of the suit against it (‘torpedo’ claims). Pursuant to Article 201 of the Transparency Principles, the court second seised which is also the designated court can stay the proceedings until the court first seised decides on its jurisdiction. Yet, the court designated in the choice of court agreement may directly contact the court first seised in order to facilitate the proceedings. 10.4.2.3  The Korean Proposal Article 206 of the Korean Proposal establishes a special rule dealing with choice of court agreements. It provides that the court chosen by the parties shall have jurisdiction to hear the dispute. Choice of court agreements can be made either before the dispute (e.g. as a clause in a contract) or after the dispute has arisen. The court chosen shall have exclusive jurisdiction unless parties agree otherwise (Art 206(2)). However, parties may not conclude choice of court agreements if the main issue of the dispute is related to the registration or validity of IP rights. Nevertheless, in cases where the question of registration or validity arises as a preliminary matter, choice of court agreements are enforceable under the Korean proposal (Art 206(4)). By establishing such rules, the Korean proposal basically follows previous Korean doctrine and court practice.582  ibid.   H Lee, ‘Chiteki zaisanken jiken no kokusai saiban kankatsu – Ni-kan s¯oan no taihi kent¯o to t¯oron no kekka [International jurisdiction over intellectual property cases – comparative analysis and outcomes of the discussions of the Japanese and Korean proposals]’ (2009) 6(2) Kigy¯o to h¯os¯oz¯o 131. 581 582

General Report  135

10.5  Comparative Observations The information provided by national reporters indicates that many unresolved legal questions exist also in the area of international choice of court agreements. Generally, national laws and court practices still differ with regard to the requirements for the validity of choice of court agreements. Even if a choice of court agreement is given effect by a designated court, national laws also follow different approaches concerning the scope of party autonomy. Namely, the question whether parties’ choice of court agreement could be made only with regard to claims arising out of contract, or whether infringement claims could also be brought on the basis of the choice of court agreement. Insofar as IP-related disputes are concerned, the relationship between the choice of court agreements and various provisions concerning jurisdiction in IP disputes could be further clarified and eventually harmonised. The national reports indicated that their states follow different approaches and interpretations of jurisdiction rules, and vary in their application to IP disputes. In this regard, the relationship between the choice of court clauses and jurisdiction rules concerning IP infringements and validity/registration issues has to be clarified. If any further harmonisation initiatives in the area of cross-border enforcement of IP rights is pursued, the 2005 Hague Convention in conjunction with more recent legislative proposals provides a solid basis for further developments.

Part III Choice-of-Law Issues in Intellectual Property Disputes 11  Applicable Law to Proprietary Matters of IP Rights One of the primary questions which arise in multi-state disputes is related to the nature of the IP rights at stake. The court must first of all determine whether IP rights exist, who is the legitimate right-holder of the IP rights and what is their content and limitations. For instance, in contractual as well as non-contractual controversies the court must first determine whether the rights exist and whether a party who claims protection is actually entitled to such protection. These issues of initial title, creation, existence, contents, limitations and exceptions as well as transferability have been often described as ‘matters pertaining to the IP right itself ’ or ‘proprietary matters’ of IP rights. Although several issues such as the protected subject matter as well as the formalities of protection have, to a certain extent, been harmonised by the adoption of international treaties and conventions, a number of controversial problems concerning the interpretation of these international instruments still exist. For instance, as regards the initial title to unregistered IP rights such as copyrights, Article 5(2) of the Berne Convention was subject to different interpretations as to the meaning of ‘country of origin’. A reconsideration of these conventional notions appeared to be necessary in the advent of the development of the digital environment. This section is based on the answers submitted by the national reporters to hypothetical cases nos 8 and 9 where a number of questions relating to the applicable law to initial ownership and other proprietary aspects of IP rights were raised.

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11.1  Applicable Law to Proprietary Aspects of IP Rights in North American Countries 11.1.1  The United States The leading case concerning the initial title to copyrights in the United States is Itar-Tass Russian News Agency v Russian Kurier, Inc.583 In this case a dispute arose between a major publisher of Russian-language newspapers in Russia and Israel, and the defendant Kurier, a Russian-language weekly newspaper published in the New York area. An extensive number of articles, headlines, pictures and graphics were copied from the plaintiffs’ publications and appeared in Kurier without the permission of the plaintiffs. The district court granted a preliminary injunction and awarded damages. The United States Court of Appeals for the Second Circuit upheld the decision of the lower instance court and further elaborated on the choice-of-law issues pertaining to copyright ownership and infringement. The Court in particular noted that the Berne Convention itself does not establish any choice-of-law rule for initial ownership. The Court therefore held that initial ownership of a copyright should be determined according to ‘the law of the country with the closest relationship’. In the case at hand the Court found that the ownership of illegally copied works had to be determined according to the law of the country of first publication (lex originis).

11.1.2  The ALI Principles The general choice-of-law rule established in the ALI Principles is based on the territoriality of IP rights. Section 301 inter alia stipulates that the law applicable to determine the existence, validity, duration, attributes, and infringement of registered IP rights is the law of each state of registration; and for other IP rights the law of each state for which protection is sought. The drafters of the ALI Principles intended to create a set of choice-of-law rules which would maintain the principle of territoriality and incorporate only those modifications necessary to adapt the exploitation of IP rights to the demands of the global economy. As regards the law governing the determination of initial title, the ALI Principles distinguish choice-of-law rules for three different groups of IP rights: registered rights; unregistered trade marks and trade-dresses; and IP rights that do not arise out of registration. As for registered rights, the ALI Principles contain a two-pronged rule. On the one hand, the initial title to registered rights is still subject to the territoriality principle, which means that the initial title to the patent will be determined pursuant to the law of the country where the patent is registered. In the comments to the provision cited above, the commentary to the ALI rules indicates that it is important to follow conventional wisdom and apply the same law which determines the existence and scope of the registered right. On the other hand, the ALI principles introduce an important modification to the principle of territoriality for situations where the creation of a registered right is based on the pre-existing contractual relations between the parties. Section 311(2) of the ALI Principles entrenches the rule that the initial ownership shall be determined pursuant to the law which governs their contractual relationship.

  Itar-Tass Russian News Agency v Russian Kurier Inc 153 F 3d 82 (1998).

583

General Report  137 The initial title to unregistered trade mark or trade dress is governed by the law of each state in which the trade mark or trade dress identifies and distinguishes the source of goods or services (section 312(1)). One of the significant departures from the strict territoriality approach in the ALI Principles is related to the determination of the initial title to non-registered rights. The drafters of the ALI Principles were concerned that legal certainty may be jeopardised if the question of initial ownership to unregistered IP assets is determined on a country-bycountry basis.584 Therefore, the ALI Principles refer to the ‘creator’s residence’ as a connecting factor. In particular, section 313(1) provides that if there is one creator, the law of the state of the creator’s residence at the time when the subject matter was created should be applied. If there are several creators, the initial title to the subject matter is determined according to the law of the state designated in a contract between the creators. If no choice of law is indicated, then the law of the state in which the majority of creators are resident at the time of the creation of the subject matter shall be applied (section 313(1)(b)). However, if this is not possible, the ALI Principles indicate that the law of the state which has the closest connection to the first exploitation of the subject matter should be applied. Section 314 of the ALI Principles follows a strict notion of territoriality in positing that the transferability of IP rights is governed by the law of each state for which the rights are transferred. Further, the law of the state for which the right is transferred will also have to be applied with regard to any recordation rules related to the transfer as well as the consequences in case those rules are not complied with. Section 314 applies to all kinds of intellectual property rights and does not seek to override the rules of national laws imposing certain registration requirements. As is explained in the Reporters’ Notes,585 one of the practical considerations for maintaining the territoriality principle is that the question of transferability may be closely related with other limitations and conditions for the transfer of IP rights (eg, right to mandatory remuneration in cases of rental rights under the EC law586). However, under the ALI Principles, such transferability restrictions and recordation requirements would be effective only with regard to the particular country where these transferability restrictions are imposed.

11.2  European Countries 11.2.1  Early European Proposals One of the first proposals to adopt choice-of-law rules for IP matters was drafted by Professor Ulmer under the auspices of the European Commission (the so-called ‘Ulmer Proposal’). Article D of the Proposal stipulated that the creation, scope and termination of copyright shall be governed by the principle of the protecting country. Article E of the Ulmer Proposal deals with the question of initial ownership of copyright works. The general principle is that the law of the protecting country should be applied to determine the initial owner of the copyrights. Issues related to the determination of the author in cases where several persons collaborate (co-authorship) and to the term of protection should be also governed by the law of the country where the work is actually exploited (lex   American Law Institute, Intellectual Property, above n 38, comments to s 313.  ibid. 586   Art 5(2) of the Directive 2006/115/EC of the European Parliament and the Council of 12 December 2006 on rental rights, lending rights and on certain rights related to copyright in the field of intellectual property. 584 585

138  Toshiyuki Kono and Paulius Jurcˇys protectionis).587 The law of the protecting country should also determine such issues as the assignability and the granting of exclusive and non-exclusive rights to exploit the work (Art F(1)(a)).588 In addition, lex protectionis also governs the limitations concerning the grant of licenses to exploit the work as well as the available remedies for the infringement of copyright (Art F(1)(b)). The effects of the assignment or grant of licenses vis-à-vis third parties are also governed by the law of the protecting country (Art F(1)(c)). This same principle of the protecting country should also be applicable with regard to works created in the course of employment relations. However, the underlying idea is that the employer and employee are free to agree on the transfer of rights (Art E(2)). The Ulmer Proposal contained a special rule for the transfer of copyrights (Art F): Article F envisaged the parties’ freedom to choose the governing law of the contract. In the absence of choice, agreements on the transfer of rights were governed by the law specified in Article 5 of the proposed Convention on the Law Applicable to Contractual and Non-Contractual Obligations. Namely, Article 5 provided that in the absence of choice, the employment contract should be governed by the law of the country in which the employee habitually carries out his work in performance of the contract. If such place cannot be determined, the employment contract shall be governed by the law of the country where the business, through which the employee was engaged, is established. A more elaborate legal framework was instituted with regard to industrial property rights. Article G of the Ulmer Proposal contained a general rule providing for a definition of industrial property rights which would fall under the scope of the subsequent provisions. Industrial property rights are defined as patents for inventions, rights to industrial designs as well as rights to trade marks used in commercial activity. The aim of establishing such a general rule was to assure that industrial property rights which arise out of public registration are covered by the subsequent choice-of-law provisions.589 Further, Article G(2) provided that the law of the protecting country (lex protectionis) should be applied in cases where there are differences between national and international rules related to the registration of industrial property rights. Moreover, the Ulmer Proposal followed the principle of territoriality in such matters as existence, effects and revocation of industrial property rights which were accordingly governed by the law of the protecting country (Art H).

11.2.2  European States The transferability and proprietary aspects of the transfer of IP rights were not covered by the 1980 Rome Convention, nor are they governed by the Rome I or Rome II Regulations.590 It might be questioned whether transferability should be characterised as a contractual matter or as an issue pertaining to the right itself. If transferability was characterised as a contractual issue, then the law chosen (lex contractus) would determine also the question of the transfer of IP rights. In other words, characterising transferability as a contractual matter allows the parties to agree on the applicable law. However, according to most of the European national reporters, the law of the protecting country (lex protectionis) should be 587   E Ulmer, Die Immaterialgüterrechte im internationalen Privatrecht: Rechtsvergleichende Untersuchung mit Vorschlägen für die Vereinheitlichung in der Europäischen Wirtschaftsgemeinschaft (Cologne, Carl Heymanns, 1975) 40–41. 588   ibid, para 69. 589   ibid 72. 590   Austrian Report, section 2.4.

General Report  139 applied to the issues of transferability or waivability of rights.591 This approach is established either in the domestic private international statutes592 or developed in the court practice.593 The application of the lex protectionis principle to transferability matters means that contractual aspects of the transfer (validity of the contract or other conditions voluntarily agreed by the parties) are governed by the lex contractus. The prevailing approach is that such IP-related proprietary questions as initial ownership, registration, existence, validity, content, duration, transferability or effects against third parties are also not governed by any of the provisions of the Rome II Regulation.594 In particular, the scope of the applicable law pursuant to the Rome II Regulation is determined in Article 15. However, this provision is understood as not touching upon the proprietary issues of IP rights.595 Consequently, proprietary issues will have to be determined according to the choice-of-law provisions of the forum country. Therefore, the following paragraphs will focus on the analysis of the approaches adopted in the domestic private international law statutes of the European states. The majority of European national reports indicated that the question of initial ownership as well as other proprietary matters shall be decided according to the law of the country for which protection is sought.596 For instance, Article 54 of the Italian Private International Law Statute entrenches a special rule on rights related to intangible assets and provides that rights related to these assets shall be governed by the law of the state in which they are exploited. This rule has been interpreted as mandating the application of the law of the protecting country (lex protectionis). The lex protectionis principle determines the existence and creation of the right as well as the scope, validity, transferability, transfer, attributes, duration, infringement and remedies.597 Lex protectionis therefore is applied to determine the initial ownership to IP assets with the only exception being employee’s inventions which are determined under the law chosen by the parties (lex contractus).598 In Austria, section 34(1) of the PIL Act stipulates that the law of the country for which protection is claimed governs the existence, the contents and the termination of IP rights. This rule has been interpreted so as to cover also such proprietary issues as the initial ownership, transferability and infringement of IP rights. Further, the Austrian Report indicated that section 34(1) also applies to other proprietary elements of agreements for the transfer of IP rights (so-called agreement of a transfer as such, Verfügungsgeschäft).599 A choice-oflaw agreement between the parties, pursuant to the Austrian PIL Act, with regard to the proprietary aspects of IP rights is not possible. Article 93 paragraph 1 of the Belgian Code of Private International Law (CPIL) establishes a rule that all issues related to initial copyright ownership (validity, scope, initial ownership, transfer etc) should be governed by the law of the country for which protection is sought. With regard to copyright works created in the course of an employment relationship, the Belgian report draws attention to Article 21 of CPIL which allows the court to set   Belgian Report, para 68.   Art 54 of the Italian PIL Statute; Art 93 Belgian CPIL.   In Germany the lex protectionis principle to matters concerning transferability was established by the decision of the Federal Supreme Court (BGH), German Report n 128 for further references. 594   Austrian Report, section 2.4.2. 595  ibid. 596   Greek Report, answers to HC 8; Dutch Report, para 4.1, Swiss Report, answers to HC 8; German Report, answers to HC 8; Swedish Report, section 2.1.3. 597   Italian Report, section 1.2.3.1. 598   Italian Report, answers to HC 8. 599   Austrian Report, section 3.4.1. 591 592 593

140  Toshiyuki Kono and Paulius Jurcˇys aside the application of a foreign law where it is considered to be contrary to international public order. With regard to copyright works created in the United States, the work-for-hire doctrine might be regarded as contrary to Article 21, because according to Belgian law copyright may originate only from natural persons. Nevertheless, in accordance with the prevailing approach in Belgium, rules allocating initial copyright ownership are not considered an element of Belgian international public policy.600 Similarly, Article 10.4 of the Spanish Civil Code contains a choice-of-law provision mandating the application of the law of the protecting country (lex protectionis). This principle would be applied to all matters related to IP rights that are not governed by the Rome II Regulation.601 According to Spanish law, parties are not allowed to agree on the applicable law on these issues.602 The Croatian Report noted that the PIL Act of Croatia remains silent on the law applicable to the initial ownership and transferability of IP rights. Nevertheless, the prevailing academic opinion is that the law of the protecting country (lex protectionis) should be applied to such matters as the transferability of IP rights and the determination of the initial owner of IP assets.603 The majority opinion in Germany supports the application of the lex protectionis principle to determine the question of initial ownership. Lex protectionis in the case of registered rights would lead to the application of the law of the country of registration. In the case of non-registered IP rights, especially copyrights, the Federal Supreme Court (Bundes­ gerichtshof ) follows the majority approach that the law of the country for which protection is sought should be applied.604 In the case of copyrights, German authors sometimes also argue for the application of the lex originis principle. This principle would require the application of the law of the country where the work has been first published. The advantage of this choice-of-law rule is that it would result in the application of the law of a single country. Arguably, this principle better suits authors and entertainment industries. The lex originis principle is generally applied by the French courts, the most notorious judgment in this area being handed down in the French Cour de Cassation in the so-called le Chant du Monde (also known as ‘John Huston’) case.605 The same principle – lex originis – would also be applicable with regard to initial ownership to collective works.606 In addition, national reporters discussed further alternatives to the principle of lex protectionis. It was specifically argued that initial ownership of copyright works could be also determined by the law of the country of origin (lex originis). In this case the law of the place where the IP asset was created has to be applied. The advantage of this choice-of-law rule is that it leads to more predictability as to the initial owner of the work, especially with regard to cases related to the Internet.607 However, very few court decisions were reported on this rule. Besides, there might be some dilemmas regarding IP infringement cases because of potential conflicts between the lex protectionis governing the infringement and lex originis determining the applicable law to initial ownership. Further issues related to the application of the lex originis principle may develop in cases stemming from problems over the   Belgian Report, answers to HC 8.   Spanish Report, para 28. 602   ibid, para 37. 603   Croatian Report, answers to HC 8 and 9. 604   German Report, answers to HC 8. 605   French Supreme Court, Decision of 28 May 1991 as referred to in the French Report, answers to HC 8. 606   ibid and n 157. 607   Dutch Report, para 4.1. 600 601

General Report  141 initial titles of IP assets created in the course of an employment (‘works made for hire’). Moreover, questions were also raised regarding the appropriateness of the application of the law of the domicile of the proprietor. This approach has been criticised for its circular reasoning: in order to determine the domicile of the owner of IP rights it is first necessary to determine the owner.608 Insofar as Community IP rights are concerned, such issues as existence and validity are handled by the Community regulations themselves (Art 88 of Community designs regulation; Art 101 of the Community TM regulation; Art 97(1) Plant variety Regulation). These Community regulations eliminated most of the problems related to choice-of-law by establishing a uniform supranational regime.

11.2.3  The CLIP Principles One of the cornerstone provisions concerning the applicable law to IP matters is established in Article 3:102 of the CLIP Principles. It provides that the law of the state for which protection is sought governs such issues as existence, validity, scope, duration and all other matters concerning the IP right. The usage of the open term ‘all other matters’ leaves some room for a broader interpretation of the content of the lex protectionis principle and may cover such issues as the maintenance of registered IP rights.609 It follows that the parties cannot choose the applicable law for these matters unless otherwise provided in the CLIP Principles (Art 3:103). The CLIP Principles follow the so-called ‘path dependency’ approach610 and aim to compensate for any omissions in the European law. Accordingly, the lex protectionis rule was adopted with regard to the determination of the initial ownership of registered and nonregistered IP rights (Art 3:201(1)). The law of the state for which protection is sought shall be applied also to such issues as co-ownership and transferability of shares of each coowner (Art 3:401). However this rule, based on the principle of territoriality of IP rights, is contingent upon two further clarifications. First, if the situation has a close connection with another state that has a work made for hire provision or deems a transfer or exclusive licence of all economic rights in the work to have taken place by virtue of the parties’ contractual relationship, effect may be given to such rules by constructing the parties’ relationship under the law applicable to the transfer or exclusive licence of all economic rights in the work as set forth in Article 3:201(1). Secondly, the CLIP Principles set out special rules concerning the right to claim a registered IP right which was created in the framework of an employment or a research and development contract (Art 3:201(3) and 3:503). The law of the protecting country also determines such issues as the transferability of IP rights as well as the question whether the transfer or licence can be invoked against third parties (Art 3:301). In the same vein, limitations and exceptions as well as the waivability of limitations and exceptions to an IP right are governed by the lex protectionis (Art 3:701).

 ibid.   A Kur and B Ubertazzi, ‘The ALI Principles and the CLIP Project: A Comparison’ in S Bariati (ed), Litigating Intellectual Property Rights Disputes Cross-border: EU Regulations, ALI Principles, CLIP Project (Milan, CEDAM, 2010) 113. 610   Comments in J Basedow, T Kono and A Metzger (eds), above n 1, 49. 608 609

142  Toshiyuki Kono and Paulius Jurcˇys

11.3  Applicable Law to Proprietary Aspects of IP Rights in Asian Countries 11.3.1  India and Taiwan Indian law follows the principle of territoriality in determining the initial owner of an IP product. However, given that disputes concerning foreign IP rights cannot be adjudicated before Indian courts, applicable law issues concerning initial title to IP assets do not seem to arise before Indian courts. Hence, Indian IP statutes would determine whether and to what extent IP rights are transferable and can be waived.611 In Taiwan, the issues of transferability and waivability are determined by the law of the protecting country.612

11.3.2 Japan The new Japanese PIL Act does not contain any specific choice-of-law provisions concerning the law applicable to proprietary matters of IP rights. Yet in legal scholarship as well as in the practice of Japanese courts it is well established that such issues as the initial title, existence, scope, transferability as well as the effects of IP rights are governed by the law of the protecting country.613 The principle of lex protectionis was abided by in two leading judgments rendered by the Supreme Court. Hitachi is one of the landmark cases in the area of initial ownership of IP rights, with the Supreme Court in 2006 awarding remuneration for the employee’s efforts in the making of an invention. In this case the Supreme Court mentioned in obiter dicta that the question of initial ownership shall be determined by the law of the protecting country.614 The lex protectionis principle was also referenced by the Supreme Court in the Card Reader case, concerning the cross-border infringement of an American patent.615 11.3.2.1  The Transparency Proposal The decisions of the Supreme Court rendered in the Card Reader and Hitachi cases largely influenced the approach adopted in the Transparency Principles. Article 305 of the Transparency Principles provides the following: The existence, primary ownership and effect of an intellectual property right shall be governed by the law of the country that granted the intellectual property right. Any choice of law agreement by the parties concerning these matters shall be invalid.

Similarly to other questions regarding the applicable law to IP matters, the applicable law to proprietary matters was discussed by the Transparency working group. One of the main questions was whether the principle of territoriality should be maintained, or whether more flexible solutions should be introduced. Nevertheless, since the aim of the Transparency Principles was to propose a possible legal mechanism for the amendment of the Japanese law, a decision was made to follow the Supreme Court’s judgments in the Hitachi optical disc case and the Card Reader case. The lex protectionis rule in these judg  Indian Report, answers to HC 8 and 9.   Taiwanese Report, answers to HC 9. 613   Japanese Report, answers to HC 8 and 9. 614   Supreme Court of Japan, Judgment of 17 October 2006, 60 Minsh¯u 2853 et seq, and section 14.2.1 below. 615   Fujimoto v Neuron Corporation (‘Card Reader’), 56 Minsh¯u 1551, abbreviated English translation available at www.courts.go.jp/english/judgments/text/2002.9.26–2000.-Ju-.No..580.html, and section 12.3.2 below. 611 612

General Report  143 ments was considered a reflection of the economic policies of the protecting state; accordingly, based on these public policy grounds, the choice of law regarding initial ownership of the rights was not established. 11.3.2.2  The Joint Japanese-Korean Proposal (Waseda Principles) The general choice-of-law principle adopted in the Waseda proposal is that all matters concerning IP rights such as existence, validity, content, revocation etc shall be governed by the lex protectionis (Art 301(1)). The principle of lex protectionis is conventionally understood to mandate the application of the law of the state for which protection is sought; or, in the case of registered IP rights, the law of the state in which IP rights are registered or deemed to be registered (Art 302(2)). As for copyrights, the initial title to a copyrighted work is determined by the law of the state in which the work is created. If the law of this state is not clear, the law of the place of the creator’s habitual residence shall be applied. Nevertheless, the lex protectionis principle is subject to a number of limitations. One of the remarkable features of the Waseda Principles is that the principle of party autonomy is given a much broader scope than in other legislative initiatives. In particular, parties are allowed to agree on the applicable law to any issue concerning IP rights including those of existence, validity, revocation, or transferability. Such a choice-of-law agreement, however, cannot affect the rights of third parties (Art 302). In order to safeguard the position of weaker parties, Article 302(3) provides that a choice-of-law agreement is valid if it is effective under the chosen law and complies with the mandatory rules of the lex fori. Such a flexible regime was established based on the drafters’ assumption that no clear choice-oflaw rules have been established in other East Asian countries.616 The Waseda Principles provide for alternative choice-of-law rules governing proprietary aspects of IP rights in such cases where the parties did not agree on the applicable law or which should be applied in situations involving third parties. As regards the transferability issue, the law of each state for which protection is sought should be applied, unless the parties have agreed otherwise (Art 309(1)). Lex protectionis should also be applied to the initial ownership of IP rights (Art 308(1)). Initial ownership of a copyrighted work is governed by the law of the state in which the copyrighted work was initially created. However, if the law of that state is not clear, the Waseda Principles establish a presumption that the law of the state where the creator has his habitual residence at the time of creation of the work should be applied instead (Art 308(2)). Further, Article 308 of the Waseda Principles envisages that there may be situations where the applicable law indicated by the abovementioned choiceof-law rules refers to a country where IP rights are not protected, the matters pertaining to the initial title should then be governed by the law of the state in which the subject matter is first exploited (Art 308(3)).

11.3.3 Korea Article 24 of the Korean Private International Act deals with the applicable law to the infringement of IP rights and mandates the application of the lex protectionis. Although this provision refers only to the infringement of IP rights, the Korean Report noted that the 616  ‘Commentary on Principles of Private International Law on Intellectual Property Rights (Joint Proposal Drafted by Members of the Private International Law Association of Korea and Japan)’ (2011) 2 Kigy¯o to H¯os¯oz¯o, available at www.globalcoe-waseda-law-commerce.org/activity/pdf/28/08.pdf, Commentary to Art 302, p 136.

144  Toshiyuki Kono and Paulius Jurcˇys prevailing opinion in Korea is that the law of the protecting country should be applied also to such proprietary issues as the determination of the initial right-holder and the existence, transfer and extinction of IP rights.617 This principle is also established in the court practice.618 Insofar as registered IP rights are concerned, the courts interpreted the lex protectionis principle to mandate the application of the law of the registering state to such issues as the determination of the right-holder and other proprietary matters.619 The Korean Report also noted that according to the existing law, a parties’ agreement concerning the initial ownership as well as other proprietary matters of IP rights is not enforceable.620 The Korean Principles envisage more elaborate choice-of-law rules for the determination of the existence, validity, contents, extinguishment, infringement, assignability and the effects of the assignment of IP rights. According to Article 20, parties are allowed to agree upon the law governing proprietary matters of an IP right; however, such a choice-of-law agreement has legal effect only between the contracting parties, and cannot be enforced vis-à-vis third parties. The existence and validity of the choice-of-law agreement shall be subject to the lex contractus. In the absence of choice by the parties, proprietary issues are to be governed by the law of the protecting country (if IP rights are not registered) and the law of the registering state (if IP rights are subject to registration). As regards the initial ownership of IP rights, the Korean Principles again makes a distinction between registered and non-registered IP rights. The law of the registering country should be applied to determine the initial owner of registered IP rights. In the case of non-registered IP rights, the Korean Principles diverges slightly from the strict territoriality principle and stipulates that the law of the state in which the IP asset was first created should be applied (Art 24(2)). This in practice means that the place where the creator has his habitual residence might often coincide with the law of the place where the IP asset was first created.621 Further, in cases where IP assets are created by several persons, the initial ownership should be determined according to the law of the state which has the closest connection to the creation if the parties have not agreed otherwise (Art 24(3)).622

11.4  Comparative Observations The answers provided by the national reporters confirmed that the determination of the initial owner of IP objects in most countries is made according to the principle of lex protectionis. This is especially true in the case of registered IP rights whose owner is usually determined according to the law of the registering country. Opinions differ however with regard to the initial ownership of copyrights: in some countries the lex protectionis principle is applied, whereas the law in other countries support the application of the law of the country where the work was first published (lex originis). In light of these considerations, it   Korean Report, section 2.2 and answers to HC 8.   Seoul High Court, Judgment of 8 July 2008, Case No 2007Na80093 (Von Dutch case) and its critical analysis in the Korean Report, section 2.2. In the Sonata of Temptation case the court applied Korean law, which was the law of the forum and also the law of the state for which protection was sought; see section 2.2 of the Korean Report. 619   Myspace Domain Name case (‘the State which has the closest connection with the trademark is the State of registration’) and discussed in the Korean Report, section 2.2 and answers to HC 8 and n 324. 620   Korean Report, answers to HC 8 and HC 9. 621   Korean Report, section 2.4.3 and answers to HC 8. 622  ibid. 617 618

General Report  145 is apparent that initial ownership of works in the digital environment is one field not established by the laws of the various countries. The ALI Principles and other academic proposals have put forward choice-of-law rules which could bring more clarity in terms of the existing laws. Yet some differences among the proposals are evident. The ALI Principles establish that the initial title to non-registered IP rights should be the law of the creator’s residence. Similarly, the Joint Japanese-Korean Proposal refers to the law of the country where the work was created. Meanwhile strict territoriality and legal certainty considerations have been maintained in the CLIP and Transparency Principles which adopt the lex protectionis approach. As regards matters related to the transferability of IP rights, the prevailing approach seems to be that the transferability issue is to be decided according to the law of the protecting state. A main reason why transferability is considered a part of the proprietary elements of IP rights is related to the various limitations imposed on the transfer of certain IP rights (eg, moral rights or remuneration claims for rental rights cannot be transferred).

12  Applicable Law to Infringement of IP rights One of the most debated questions in the field of choice-of-law to IP matters is related to the applicable law to infringements of IP rights. Although the traditional approach was to consider IP rights as firmly based on the principle of territoriality, the emergence of the Internet and global business models provoked new debates as to whether the principle of territoriality is appropriate to multi-state infringements of IP rights. This section of the General Report aims to provide an overview of the national reports and the answers received with regard to two hypothetical cases related to the infringements of IP rights. Hypothetical case no 6 focused mainly on the different notions of territoriality. The national reporters were asked to explain whether the laws of their respective countries would have (extraterritorial) effects over acts of a defendant who produces separate parts of a patented invention in the forum country and then exports them to foreign countries where those parts are assembled and put into use. In addition, the national reporters were asked whether courts of their country would apply foreign IP laws to allegedly infringing acts occurring in the foreign state. Hypothetical case no 7 dealt with the law applicable to the liability of students who created an Internet website which facilitated the exchange of digital media products. The national reporters were asked to indicate what choice-of-law principles would be applied in the courts of their countries to determine the liability of the website operators; whether parties would be allowed to agree on the governing law; and whether there are any special conflict rules determining the applicable law to ubiquitous infringements as well as the liability of the Internet service providers (‘ISP’).

12.1  North American Countries 12.1.1  Applicable Law to Infringements of IP Rights in Canada According to Canadian law, obligations arising out of torts are governed by the law of the jurisdiction in which the tort occurred (lex loci delicti). In Quebec, non-contractual

146  Toshiyuki Kono and Paulius Jurcˇys obligations are governed by the law of the country where the act causing injury occurred, unless the wrongdoer could have foreseen that the injury would occur in another country. Insofar as adjudication of IP disputes before Canadian courts is concerned, it should be recalled that Canadian courts would not have subject-matter jurisdiction with regard to infringements of foreign IP rights.623 Therefore, Canadian courts would hear only those claims which are related to infringements of Canadian IP rights. To put it differently, Canadian courts would have jurisdiction only with regard to IP infringements which are committed in Canada. The principle of territoriality of IP rights was established by Canadian courts in Beloit Canada Ltd v Valmet-Dominion Inc.624 In this case the court had to decide whether a Canadian patent was infringed by the manufacturing of components of a patented press machine which were exported and assembled abroad. The Federal Court of Appeal found that selling components in a substantially unified and combined form for the purpose of later assembly constitutes ‘making’ of the invention and amounts to an infringement of the Canadian Patent Act. However, the mere selling of the components, even if the seller is aware that such later usage of components may constitute infringement of the Canadian patent, is not an infringement as such. Only those cases when components are sold ‘as a kit for assembly of the invention’ are tantamount to an infringement of a patent.625 The Canadian Report noted that it is nevertheless possible to argue that infringements of IP rights (especially non-registered IP rights such as copyrights) could also take place if certain kinds of infringement or certain acts constituting an infringement take place outside of Canada. This might be the case where the infringement has a real and substantive connection with Canada. Infringements of IP rights occurring in the digital environment are also governed by subject-matter jurisdiction limitations. Therefore, only the parts of IP infringements occurring on the Internet which are related to the infringement of Canadian IP rights would be adjudicated before Canadian courts. The parties’ agreement on the applicable law would be possible only if the parties agree on the application of Canadian law. Canadian IP statutes, namely the Copyright Act, would be applicable to the liability of the ISP and the parties would not be able to invoke the application of IP statutes of other countries. Accordingly, the Canadian national report notes that given the subject-matter jurisdiction limitations, ‘it is hard to see how a concept of ubiquitous infringement could develop as a matter of common law’.626

12.1.2  Applicable Law to Infringements of IP Rights in the United States In the United States a general lex loci delicti principle determines the applicable law to IP infringements. In Itar-Tass Russian News Agency v Russian Kurier Inc627 the court held that the place of an American copyright infringement is in the United States. It is established practice of the American courts that the national treatment principle implies a rule of territoriality628 which means that no matter where the suit is brought, an action for an infringe  See section 4.2.1 above.   Beloit Canada Ltd v Valmet-Dominion Inc [1997] 3 FC 497, CA. 625   Canadian Report, answers to HC 6. 626   Canadian Report, answers to HC 7. 627   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F 3d 82 (1998). 628   Subafilms Ltd v MGM-Pathe Communications Co 24 F 3d 1088 (9th Cir 1994), 1097. 623 624

General Report  147 ment of a US copyright will have to be decided according to US law.629 Besides, in the case of Creative Technology, the court found that Article 5(2) of the Berne Convention is a ‘choice-of-law rule mandating the applicable law to be the copyright law of the country in which the infringement occurred, not the law of the country in which the author is a citizen or in which the work was first published.’630 As illustrated in previous sections, US courts have consistently declined to assert jurisdiction over foreign patent infringement claims; therefore, the courts adjudicate only claims which arise under the United States Patent Act. It is established in the practice of the United States courts that ‘the legislation of the Congress, unless contrary intent appears, is meant to apply within the territorial jurisdiction of the United States’.631 Accordingly, it is generally accepted that US IP statutes cannot be applied to acts that occur abroad. This rule is known as a ‘presumption against extraterritoriality’, and was strictly interpreted and applied by the United States courts in a number of IP-related cases. For instance, much controversy arose with regard to the interpretation of section 271(f)(1) of the United States Patent Act,632 which inter alia provided that infringement does not occur when one supplies from the United States a patented invention’s components for assembly in combination abroad. The Supreme Court had to verify how this provision would apply to a case where computer software was first sent from the United States to a foreign manufacturer on a master disk or by electronic transmission, then copied by the foreign recipient for installation on computers made and sold abroad. For the purposes of section 271(f)(1), the Supreme Court held that ‘the copies of Windows software actually installed on the foreign computers were not themselves supplied from the US’. The Court refused to apply American law for foreign conduct because ‘foreign law may embody different policy judgments about the relative rights of inventors, competitors and the public’.633 As regards copyright, it is generally accepted that US copyright laws do not apply extraterritorially. This means that infringing acts that occur outside of the United States are not actionable under US copyright laws.634 In the case of Subafilms the court noted that an extraterritorial application of US Copyright laws ‘would be contrary to the spirit of the Berne Convention’ and would undermine Congress’s objective to attain an effective and harmonious system of copyright among all nations.635 Nonetheless, American law could be applied in exceptional cases, namely, when the type of infringement permits further reproduction abroad (eg unauthorised manufacturing of copyrighted material in the United States).636 For instance, a court held that ‘the unauthorized manufacture of infringing goods within the US for subsequent sale abroad may give rise to a cause of action under the United States Copyright Act, even where the actual sale and distribution of infringing goods occurs outside of the US’.637 In other words, the occurrence of predicate infringing   Dominic Murray v BBC 81 F 3d 287 (2d Cir 1996), 293.   Creative Technology Ltd v Aztech Sys PTE 61 F 3d 696 (9th Cir 1995), 700; also Subafilms Ltd v MGM-Pathe Communications Co 24 F 3d 1088 (9th Cir 1994), 1097. 631   EEOC v Arabian American Oil Co (Aramco) 499 US 244. 632   This provision was enacted after another Supreme Court decision in Deepsouth Packing Co v Laitram Corp 406 US 518 (1972), where it was decided that the shipment overseas of materials that, when assembled in combination, violated a US patent, did not result in liability for contributory infringement. 633   AT&T Corp v Microsoft Corp 414 F 3d 1366 (Fed Cir 2005); NTP Inc v Research in Motion Ltd 418 F 3d 1282 (Fed Cir 2005). 634   Ralphe A. Armstrong and Anna Music v Virgin Records, Ltd 91 F Supp 2d 628 (2000) 634. 635   Subafilms Ltd v MGM-Pathe Communications Co 24 F 3d 1088 (9th Cir 1994) 1097–98. 636   Update Art Inc v Modiin Pub Ltd 843 F 2d 67 (2d Cir 1988) 73. 637  ibid. 629 630

148  Toshiyuki Kono and Paulius Jurcˇys acts in the US could justify the application of US copyright laws to other infringements in foreign states.638 For instance, in NFL v PrimeTime 24, the court applied US law and found the defendant liable for unauthorised secondary transmissions of football broadcasts to its satellite subscribers in Canada, despite the fact that under Canadian law such acts were lawful.639 However, according to the existing law, there can be no liability under the United States Copyright Act for authorising an act that itself could not constitute infringement of IP rights secured by US law.640

12.1.3  Applicable Law to Infringements of IP Rights in the ALI Principles Section 301 of the ALI Principles stipulates that infringement of IP rights and the remedies for their infringement should be governed by lex protectionis. Accordingly, in the case of infringements of registered IP rights, the law of each state of registration should be applied; while in the case of infringements of other IP rights which are not subject to registration, the court should apply the law of the country for which protection is sought. In addition, the ALI Principles deal with the law applicable to a non-contractual obligation arising out of an act of unfair competition and establish that the law of each state in which direct and substantial damage results or is likely to result (irrespective of the state in which the act giving rise to the damage occurred) should be applied (section 301(2)). It is noteworthy that the ALI Principles require the court to apply those remedies which are available under the applicable law, even if such remedies are not available under the law of the forum.641 As regards applicable law to ubiquitous infringements of IP rights, the ALI Principles aim to put forward a set of special conflicts rules to simplify the process for determining the governing law. Hence, section 321 establishes that when the alleged infringing activity is ubiquitous and the laws of multiple states are pleaded, the court may choose to apply the law of one or several states that have close connection to the dispute to the issues of existence, validity, duration, attributes, and infringement of IP rights and remedies. Besides, the ALI Principles also provide for a list of factors which should facilitate the determination of the state that is closely connected to the dispute: (a) the place where the parties reside; (b) the place where the parties’ relationship is centred; (c) the extent of the activities and the investment of the parties; and (d) the principal markets toward which the parties directed their activities. Nevertheless, the ALI Principles take into account the sovereignty of states and the fact that the laws of the states might substantially differ.642 Accordingly, a party is entitled to prove that the solution provided by any of the laws of the states concerned differs from the law(s) chosen to apply to the case as a whole. Such differences shall be taken into consideration by the court in determining the scope of liability and remedies (section 321(2)). By establishing such a legal rule for ubiquitous infringements, the ALI Principles aim to reconcile the principle of territoriality of IP rights (which would require the application of the laws of each protecting state) with the ubiquity of digital networks. Besides, in order to assure that the sovereignty interests of states concerned are not undermined, section 321 also allows the parties to bring evidence concerning the differences resulting from the   Ralphe A Armstrong and Anna Music v Virgin Records Ltd 91 F Supp 2d 628 (2000) 635.   NFL v PrimeTime 24 211 F 3d 10 at 13 (2d Cir 2000). 640   Subafilms Ltd v MGM-Pathe Communications Co 24 F 3d 1088 (9th Cir 1994) 1093–94. 641   American Law Institute, Intellectual Property, above n 38, 125. 642   ibid, 155 (Reporters’ Notes). 638 639

General Report  149 application of different laws; such differences are to be considered by the court in deciding upon the governing law.643

12.2  European Countries 12.2.1  Rome II Regulation on the Law Applicable to Non-Contractual Obligations: General Rules The Rome II Regulation on the law applicable to non-contractual obligations644 was adopted on 11 July 2007 and came into force on 11 January 2009. The Rome II Regulation contains uniform choice-of-law rules which supersede domestic choice-of-law provisions of Member States. The Rome II Regulation would be applicable to non-contractual obligations by any court of an EU Member State which has jurisdiction over the dispute. Any law specified by the Rome II Regulation will apply whether or not it is the law of a Member State (Art 3, the so-called ‘universality principle’). There is no requirement that the dispute at hand should be connected to the EU, as long as a court of a Member State has international jurisdiction over the dispute. The material scope of application of the Rome II Regulation is limited, however. Hence, national choice-of-law provisions will continue to apply to those issues which are not governed by the Regulation. In particular, the national reports645 indicate that national choiceof-law rules will continue to be applied to initial ownership, registration, existence, validity, content/attributes, duration of protection, transferability, as well as effects of IP rights against third parties. The notion of ‘non-contractual obligation’ has to be understood in light of jurisdictional provisions established in the Brussels I Regulation. Therefore, according to previously established practices of the ECJ, the notion of ‘non-contractual obligation’ has to be interpreted autonomously.646 The general choice-of-law rule is that non-contractual obligations arising out of delict or tort should be governed by the law of the country where the damage occurs (lex loci damni, Art 4(1)). The place of damage is to be understood only as the place of direct damage. Hence, the locus damni rule points to the law of the place where the event giving rise to the damage occurred and does not comprise the place where indirect consequences of that event occurred. The Rome II Regulation establishes also an exception to the lex loci damni rule: the court may apply the law of the state if both the person claimed to be liable and the person sustaining damage have their habitual residence in that state at the time when damage occurs (Art 4(2)). In addition, these choice-of-law rules may be avoided if, from the circumstances of the case, it is clear that the tort/delict is manifestly more closely connected with another country. In this case, the law of that country which is manifestly more closely connected with the dispute shall be applied (Art 4(3)). Yet, in order to assure legal certainty and predictability courts should refer to such ‘escape clauses’ only in exceptional cases.647   ibid, 155–56.   Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) [2007] OJ L199/40. 645   Spanish Report, paras 26 and 36–37. 646   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, para 16; Case C-26/91 Handte v Traitements Mécanochimiques des Surfaces [1992] ECR I-3967, para 10; Case C-51/97 Réunion Européene SA and Others v Spliethoff ’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002 [1998] ECR I-6511, para 15. 647   Recital 14 of the Rome II Regulation; Belgian Report, para 73. 643 644

150  Toshiyuki Kono and Paulius Jurcˇys

12.2.2  Special Choice-of-Law Rules for Infringements of IP Rights (Art 8) Different levels of harmonisation of IP rights within the EU affected the overall structure of the choice-of-law framework related to the applicable law to infringements of IP rights. Namely, Article 8 of the Rome II Regulation establishes two special conflicts rules for noncontractual obligations arising from infringements of IP rights: paragraph (1) deals with infringements of national IP rights; while paragraph (2) addresses infringements of unitary Community IP rights. In addition, there is a special provision stipulating that parties cannot make choice-of-law agreements with regard to non-contractual obligations arising from infringements of IP rights (Art 8(3)). Before making a closer analysis of Article 8, it is necessary to clarify which IP rights fall under the material scope of conflicts rules of the Rome II Regulation. According to Recital 26 of the Regulation, IP rights should be interpreted as covering for instance, copyright, related rights, the sui generis right for the protection of databases as well as industrial property rights; these are part of a non-exhaustive list of IP rights. Accordingly, some national reporters argued that the notion of IP rights should be interpreted broadly so as to cover infringements of IP rights which fall under the material scope of international conventions signed by the European Community.648 Consequently, applicable law to infringements of IP rights which are subject to the rules of TRIPs, the Paris and Berne Conventions, as well as the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations and the Washington Treaty on Intellectual Property in Respect of Integrated Circuits should be determined under the Rome II Regulation. In addition, special choice-of-law provisions for infringements of unitary Community IP rights also fall under the scope of the Rome II Regulation, which contains a special conflicts rule in Article 8(2). Although there is some room for discussion, the prevailing opinion is that the Rome II Regulation should also be applied with regard to infringements of other rights that are protected under domestic laws of individual Member States. Hence, the right of publicity, non-original writings, slavish imitations and passing offs should fall under the material scope of the Rome II Regulation.649 The same is true for know-how and trade secrets; albeit it might nevertheless be questioned whether Article 6 is applicable to acts of unfair competition or if Article 8 should be applied. 12.2.2.1  Infringements of National IP Rights: Lex Protectionis Article 8(1) of the Rome II Regulation introduced a special regime for non-contractual obligations arising from an infringement of IP rights, ie the ‘universally acknowledged principle’650 of lex protectionis according to which ‘non-contractual obligations arising out of infringements of IP rights are governed by the law of the country for which protection is claimed’. As previously stated, choice-of-law rules in the Rome II Regulation have universal application. This means that national courts can apply not only IP statutes of other EU Member States, but also those of any given third state where the infringement occurred (Art 3 of the Regulation). In addition, the principle of protecting country is also in line with the jurisdictional provision established in the Brussels I Regulation: according to   Dutch Report, section 4.2.  ibid.   Recital 26 of the Rome II Regulation.

648 649 650

General Report  151 which courts of one Member State may apply the law of another state whenever they are competent to hear cases submitted to them. The Rome II Regulation is the first supranational European instrument which directly established lex protectionis as a choice-of-law rule for non-contractual obligations arising from IP infringements. It should be noted that the language used in Article 8 of the Rome II Regulation is slightly different from the wording adopted in Article 5(2) of the Berne Convention. According to Article 5(2), ‘the extent of protection as well as the means of redress afforded to the author to protect his rights shall be governed exclusively by the laws of the country where protection is claimed’ (emphasis added). In order to avoid possible interpretations of this provision, namely, that claims have to be brought only before the courts of the country where the IP rights exist, Article 8(1) of the Rome II Regulation refers to ‘the law of the country for which the protection is claimed’ (emphasis added). Hence, the wording of the Rome II Regulation is adjusted to the interpretation of Article 5(3) of the Brussels I Regulation which empowers the courts of the Member States to assert international jurisdiction over IP infringement claims even if the infringing acts affect foreign IP rights. The scope of the applicable law is determined in Article 15 of the Rome II Regulation. The law applicable to non-contractual obligations specifically governs: (a) the basis and extent of liability, including persons who may be held liable for acts performed by them; (b) the grounds for exemption from liability, any limitation of liability and any division of liability; (c) the existence, the nature and the assessment of damage or the remedy claimed; (d) subject to the law of lex fori, the measures which a court may take to prevent or terminate injury or damage, or to ensure the provision of compensation; (e) the question whether a right to claim damages or a remedy may be transferred; (f) persons entitled to compensation for damage sustained personally; (g) liability for the acts of another person; and (h) the manner in which an obligation may be extinguished and rules of prescription and limitation. The establishment of the principle of lex protectionis, which is based on the territoriality of IP rights, leads to the situation where the different laws of each country for which protection is sought have to be applied. Such a ‘mosaic’ application of the laws of a protecting country is an inherent result of the lex protectionis principle. The mosaic application of the law of each state for which protection is sought has been subject to severe criticism. However, the limited possibilities of consolidated adjudication of multi-state IP disputes – especially disputes over registered IP rights – is consonant with the ‘strict’ territorial approach established in Article 8.651 Some national reporters discussed the possibilities of interpreting the notion of ‘infringement’ entrenched in Article 8 of the Regulation as limited to direct infringements of IP rights.652 In other words it was questioned whether indirect infringements of IP rights are covered by the lex protectionis rule. If the narrow notion of infringement is adopted, the applicable law to liability for acts constituting indirect infringements of IP rights would be subject to general choice-of-law rules of the Regulation. Hence, a completely different choice-of-law regime would apply with regard to direct and indirect infringements of IP rights and the results concerning the applicable law may vary. Such interpretation was not upheld by any of the national reporters. Hence, in the absence of any particular indication   UK Report, answers to HC 7.   Austrian Report, answers to HC 7.

651 652

152  Toshiyuki Kono and Paulius Jurcˇys by the European legislator, the applicable law to direct and indirect infringements as well as remedies concerning such infringements are to be determined by means of applying the lex loci protectionis principle (Art 8).

12.2.3  Prohibition of the Choice of Law The Rome II Regulation does not allow parties to make a choice-of-law agreement with regard to infringements of national IP rights (Art 8(3)). Hence, the parties can neither agree on the applicable law that would govern the infringement of IP rights, nor on the remedies. One possible explanation why freedom of choice was excluded for non-contractual obligations, arising from an infringement of IP rights, may lie in the overall structure of the Rome II Regulation: namely, Article 8 is a lex specialis to general choice-of-law rules envisaged in Article 4. The special nature of Article 8 suggests the European legislator’s intention not to allow freedom of choice in cases related to acts of unfair competition and infringements of IP rights. In one of the travaux prépatoires, the European Commission indicated that the freedom of choice in cases related to infringements of IP rights ‘would not be appropriate’.653 Some argue that this approach of the Commission was influenced by the academic opinion expressed with regard to early proposals of the Rome II Regulation.654 More particularly, scholars argued that freedom of choice should not be allowed because IP infringement cases are closely related to public policy considerations.655 Further, it was pointed out that the absence of freedom of choice contributes to the protection of national trade policies (eg parties are not allowed to evade the application of certain rules determining the consequences of infringement, such as double damages).656 The exclusion of freedom of choice with regard to IP and competition matters has been subject to criticism.657 Some scholars have argued that the public interest reasoning is not a convincing justification of the established lex protectionis rule. Besides, insofar as multistate infringements are concerned, the lex protectionis rule may lead to the application of 27 different laws, and this is only with regard to infringements limited within the borders of the EU. Therefore, it has been submitted that the possibility of choice on the applicable law after the infringement occurs would open the doors for a more case-specific, efficient and flexible choice-of-law methodology.658 However, such opposition against the exclusion of freedom of choice possibility was not only confined to academic discussions. The Dutch Report provided an illustration from their court practice: one lower instance court in the Netherlands enforced a parties’ agreement on the applicable Dutch law in a case where allegedly infringing copyright products manufactured in China were sold in the Netherlands.659 In addition, it should be noted that in Switzerland, which is not a Member of the EU, parties are conferred a limited possibility of choice to claims arising out of the 653  Proposal for a Regulation of the European Parliament and the Council on the law applicable to noncontractual obligations (‘Rome II’) COM(2003) 427 final (22 July 2003) 22. 654   Hamburg Group for Private International Law, ‘Comments on the European Commission’s Draft Proposal for a Council Regulation on the Law Applicable to Non-Contractual Obligations’ (2003) 67 Rabels Zeitschrift für für ausländisches und internationales Privatrecht 1–56, also available at www.mpipriv.de/de/data/pdf/commentshamburggroup.pdf. 655   See discussion in the Dutch Report, section 4.3. 656   German Report, answers to HC 7. 657   Italian Report, section 1.2.3.1; Spanish Report, answers to HC 7. 658   See Dutch Report, section 4.3; Spanish Report, answers to HC 11 with further references. 659   Decision of the District Court at Zutphen of 3 March 2010, Fashion Box v Virgino, see the Dutch Report, section 4.3.

General Report  153 violation of IP rights. Namely, parties are allowed to choose the law of the forum only after the infringement occurred. The approach taken by the drafters of the Rome II Regulation with regard to IP rights has been criticised because it does not elaborate on any special rules for different kinds of IP infringements.660 Ubiquitous IP infringements occurring on the Internet are governed by lex protectionis but without freedom of choice, it would mean the application of the laws of 27 Member States. The Dutch national report described that it would be a nightmare for the parties as well as for a judge hearing the case.661

12.2.4  Ubiquitous Infringements The answers provided by the national reporters highlighted the fact that neither the Rome II Regulation nor the domestic statutes of EU Member States provide for a special choiceof-law rule on ubiquitous infringements of IP rights. Therefore, a common definition of a ubiquitous infringement of IP rights is also missing.662 Some national reporters indicated that the definition of a ubiquitous infringement as well as the applicability of Article 8 of the Rome II Regulation should be clarified by the ECJ.663 Generally, Article 8 of the Rome II Regulation should be applied also to ubiquitous infringements of IP rights.664 This means that courts would have to consider the infringement of IP rights in each state separately and apply the law of each state for which protection is sought.665 Such legal framework leading to a mosaic application of a multitude of laws has been subject to fierce criticism. It was argued that the mosaic application of many different laws increases procedural costs related with the proof of the foreign law.666 It was proposed that, at least from a conceptual point of view, courts might try to limit the number of affected countries by using the ‘targeting’ (provided that such targeted countries can be identified) or country of origin approach.667 As an alternative, it has been argued that ubiquitous infringements should be governed by the law of the country which is more closely connected to the dispute, or that parties should be allowed to make an agreement on the governing law. Yet, as in the case of infringements of IP rights in general, Article 8(3) of the Rome II Regulation prohibits choice of law for ubiquitous IP infringements.668 On the other hand, it could be submitted that the lex protectionis rule offers legal certainty as to the law or laws which would have to be applied. Further, the application of the different laws will indeed be burdensome, but the qualification of whether acts of uploading constitute infringements of IPRs will not be so difficult because of the minimum harmonisation achieved by the adoption of the so-called Information Society Directive.669 In the case of multi-state infringements, one of the crucial questions is the determination of the place where the alleged infringement occurred. The Spanish reporter argues that   See Dutch Report, section 4.3.  ibid. 662   Austrian Report, section 3.2.3 and answers to HC 2; Belgian Report, answers to HC 7; UK Report answers to HC 7; Swedish Report, answers to HC 7. 663   Swedish Report, answers to HC 7. 664  ibid. 665   Belgian Report, answers to HC 7. 666   See Belgian Report, para 74. 667   Slovenian Report, answers to HC 7. 668   Italian Report answers to HC 7; Swedish Report, answers to HC 7; UK Report, answers to HC 7. 669   Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, [2001] OJ L167/10. 660 661

154  Toshiyuki Kono and Paulius Jurcˇys in the case of ubiquitous infringements occurring via the Internet, Article 8 should be understood as meaning that the country of protection could be every country where the illegal files can be downloaded.670 Some national reporters indicated that for the purposes of the determination of applicable law, the location of the server is not significant.671 However, if the plaintiffs would like to seek an order related to the (closure of the) server where illegally uploaded data is stored, they would either have to institute proceedings before the courts of the state where the server is actually located or the courts of the state of defendant’s domicile. This is so because under the existing ECJ jurisprudence’s application of the Brussels I Regulation, only the courts of a defendant’s domicile might issue orders with cross-border effects.672

12.2.5  Law Governing the Liability of ISP As regards the liability of the intermediary, a number of legal instruments have been adopted at the EU level. For instance, the Information Society Directive673 aims to establish a harmonised legal framework, to increase the level of protection of IP rights, and to foster innovation and competitiveness. Besides substantive law rules which balance the rights and interests of different categories of right-holders, the Directive established an obligation of Member States to provide for effective sanctions and remedies for infringements. Such sanctions should be effective, proportionate and dissuasive. The Directive aims to assure that national laws provide for a broader protection against the acts of intermediaries and also include the possibility to seek injunctions against intermediaries (Art 8).674 Further, the right to seek provisional and precautionary measures is established in Article 9(1)(a) of the Enforcement Directive.675 Nonetheless, such choice-of-law issues pertaining to the liability of intermediaries are to a large extent controversial. Some national reporters indicated that the law of the country of origin could be applied to the liability of the ISP. This would be in line with the legal framework provided by the Satellite and Cable Directive676 even though it was not originally meant to apply to Internet-related matters.677 Similarly, the principle of origin is provided for in the Directive on Electronic Commerce678 pursuant to which EU Member States shall ensure that right-holders ‘are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’ (Art 18). Yet, the material scope of this Directive covers only electronic commerce but does not extend to IP matters. In this regard, it should be noted that the Rome II Regulation does not contain any specific choice-of-law rules dealing with claims concerning the liability of the ISP. As it was   Spanish Report, answers HC 7.   Belgian Report, answers to the HC 7 and 8. 672   Belgian Report, answer to the HC 8. 673   Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society [2001] OJ L167/10. 674   For a discussion, see Belgian Report, answers to HC 7. 675   Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights [2004] OJ L195/16. 676   Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission [1993] OJ L248/15. 677   Portuguese Report, n 138. 678   Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market [2000] OJ L178/1. 670 671

General Report  155 already noted above, the scope of the applicable law is determined by Article 15 of the Rome II Regulation which inter alia provides that the law applicable to non-contractual obligations governs also the basis and extent of liability, including the persons who may be held liable for acts performed by them (Art 15(a)). Accordingly, the liability of the ISP for the infringement of IP rights would be the law of the protecting country (Art 8). 679 Yet, parties are not allowed to make a choice-of-law agreement (Art 8(3)). Some national reports were critical of the existing legal situation concerning the liability of intermediaries. For instance, the UK Report indicated that the scope of Article 8(1) is too broad to cover different categories of secondary liability.680

12.2.6  Infringements of IP Rights according to Swiss and Croatian Laws The Swiss Private International Law Act of 1987 inter alia contains general choice-of-law rules for torts as well as a special conflicts provision for infringements of IP rights. As regards the applicable law to torts, Article 133 et seq establish a cascade of conflicts rules: (a) the law of the state of parties’ habitual residence; (b) the law of the state where the tort was committed; or (c) in the case where the results occur in a state other than the state where the infringing acts were committed, and the tortfeasor could foresee that the results would occur in another state, the law of the state in which the results occurred should be applied.681 As regards IP matters, the Swiss PIL Act established the principle of lex protectionis. Article 110(1) stipulates that ‘rights in intellectual property are governed by the law of the country for which protection is sought’. It is generally understood that this choiceof-law provision deals with the applicable law to the existence, creation, contents, limitations and exceptions as well as termination of IP rights. In addition, the law of the protecting country will also determine the legal consequences of the infringement as well as the available measures for the infringement of IP rights. The law governing ubiquitous infringements of IP rights should be the law of every state for which protection is sought. Swiss law also endorses the principle of party autonomy with regard to infringements of IP rights. However, such freedom to agree on the applicable law is subject to two further limitations. Firstly, choice of the applicable law is possible only after the infringement/damage has occurred; and, secondly, parties may agree only to apply the law of the forum.682 Besides, some other provisions might be relevant in litigations over IP rights. For instance, Article 128 of the Swiss PIL Act stipulates that claims for unjust enrichment are governed by the same law that governs the legal relationship on which the basis of enrichment occurred, unless the parties agree that such claims are to be governed by the law of the forum (Art 128). The Croatian PIL Act establishes several choice-of-law provisions dealing with the applicable law to cross-border torts. Article 28(1) provides that non-contractual obligations are governed by the law of place where the tort was committed (lex loci actus) or the law of the place where the damage occurred (lex loci damni). The choice between these two alternatives is made in light of the interests of the suffering party; namely, the law of the country which is more favourable to the victim has to be applied. As regards the law applicable to   Italian Report, answers to HC 7.   UK Report, answers to HC 7. For the analysis of national legislation concerning the ISP liability see eg Slovenian Report, answers to HC 7. 681   Swiss Report, answers to question 3 of Part I. 682  ibid. 679 680

156  Toshiyuki Kono and Paulius Jurcˇys infringements of IP rights, the situation is not clear. In the case of Sten Eric Odman v Adris Grupa dd the High Commercial Court applied Croatian law to an infringement of copyrights. The Court did not provide any reasoning for such a decision, however, in legal scholarship such a choice of applicable law was explained by the fact that the infringing acts were committed in Croatia.683 Generally, Croatian law does not allow the parties to agree on the applicable law to non-contractual obligations unless the dispute is brought to an arbitral tribunal. Similarly, in cases concerning the ISP liability for infringements of IP rights or ubiquitous infringements of IP rights, the governing law is determined according to the same principles mentioned above. However, it was noted in the national report that such questions had not been addressed by Croatian courts by the time the report was drafted.684

12.2.7  The CLIP Principles Section 6 of the CLIP Principles deals with the law applicable to the infringement of IP rights and remedies. The general rule established in Article 3:102 is that the law applicable to infringement is the law of each state for which protection is sought (lex protectionis). By establishing this rule, the CLIP Principles follow the established practice of the EU Member States and Article 8 of the Rome II Regulation.685 At the same time, the CLIP Principles also contain a number of exceptions and special rules which aim to particularly address special issues related to the law governing infringements of IP rights. The first deviation from the lex protectionis principle is related to multi-state infringements. Namely, in cases where the infringement occurs in a number of states, the CLIP Principles allow the court to focus only on those states where (a) the defendants have substantially acted or taken substantial preparatory actions to initiate or further the infringement; or (b) the activity has substantial effect within (Art 3:602(1)). This approach has been developed on the basis of WIPO’s ‘Joint Recommendation Concerning the Protection of Marks and Other Industrial Property Rights and Signs on the Internet’.686 Insofar as regarding ubiquitous infringement, the CLIP Principles aim to establish a choice-of-law rule which would minimise inefficiencies associated with the application of the lex protectionis principle. Namely, Article 3:603 stipulates that the court hearing a dispute should apply the law of the state which has the closest connection with the infringement. The law of that particular state should also be applied to the existence duration, limitations and the scope of the infringement, to the extent that these issues arise as incidental questions in the infringement proceedings (second sentence of Art 3:603(1)). Additionally, in determining the state which has the closest connection to the infringement, the CLIP Principles require the court to take into consideration all relevant circumstances. In particular, the court should reckon: (a) the infringer’s habitual residence or (b) principal place of business; (c) the place where substantial activities in furthering of the infringement have been carried out; or (d) of the place where the harm caused by the infringement is substantial. One of the parties may prove that the substantive laws of related states differ from the law applicable to the dispute. In such a case, the CLIP Principles mandate the   Croatian Report, answers to HC 7.  ibid. 685  A Metzger, ‘Applicable Law under the CLIP Principles: A Pragmatic Revaluation of Territoriality’ in J Basedow, T Kono and A Metzger (eds), above n 1, 171–72. 686  Adopted in October 2001; WIPO Publication No 845, available at wipo.int/about-ip/en/development_ iplaw/pub845.htm. 683 684

General Report  157 application of different national laws unless this leads to inconsistent results; then the court must take such differences in consideration when fashioning the remedy. As regards secondary liability, the CLIP Principles stipulate that the law applicable to liability based upon acts that induce, contribute or further an infringement is the same as the law applicable to that infringement (Art 3:604(1)). The law applicable to the liability of the intermediary is the law of the state where the core of the activities of the intermediary is located. However, that law shall only be applicable if it provides for the (a) liability for failure to react in case of a manifest infringement; and (b) liability for active inducement. The CLIP Principles also establish special choice-of-law provisions for remedies. Generally, parties are allowed to make a choice of law which would govern the issue of remedies. Such a choice-of-law agreement is enforceable if it is made before or after the infringement occurred (Art 3:606(1)). Nonetheless, if the infringement is closely connected with a pre-existing relationship between the parties (ex contract), the law governing that pre-existing relationship shall also govern the remedies for the infringement unless (a) the parties have expressly excluded the application of the law governing the pre-existing relationship to the remedies; or (b) it is clear from all the circumstances that the claim is more closely connected with another state (Art 3:606). In addition, the CLIP Principles outline an exemplary list of remedies. Hence, the notion of ‘remedies’ includes injunctions, damages and other means of redress; claims based on unjust enrichment and negotiorum gestio; the question whether a right to a claim may be transferred as well as various ways of extinguishing obligations; the prescription and limitation of actions.

12.3  Asian Countries 12.3.1  India and Taiwan Adjudication of multi-state IP infringements is barred by the subject-matter jurisdiction of Indian courts which would only hear disputes concerning infringements of Indian IP rights. Accordingly, Indian courts are competent to hear only actions related to infringements of Indian IP rights and would not be able to decide upon infringements of foreign IP rights.687 Indian IP statutes contain special provisions dealing with infringements of IP rights and the liability of Internet service providers.688 In Taiwan, the law applicable to torts is governed by several Articles of the Act on the Application of Laws (1953). Article 9 stipulates that the law of the place where the tortious act was committed shall be applied. However, this lex loci delicti is subject to the double actionability rule which means that the foreign law would not be applicable if the allegedly tortious act does not also constitute a tort according to the law of Taiwan (Art 9(1)). In addition, Article 9(2) provides that the court shall order remedies which are available under the law of Taiwan. The 2011 Act on Private International Law of Taiwan aims to adjust the old choice-of-law methodology to the demands of the twenty-first century. Article 25 of this new Act retains the general lex loci delicti rule, yet this rule does not apply if the tort is more closely connected to another state (Art 25, second sentence). As a to-be-mentioned special rule on international tort, Article 27 deals with the applicable law to obligations arising from an   Indian Report, answers to HC 6.   For a detailed account see Indian Report, answers to HC 7.

687 688

158  Toshiyuki Kono and Paulius Jurcˇys infringement or restriction of competition, and provides inter alia that the law of the marketplace shall be applied. Insofar as infringements committed through the press, radio, TV, Internet or other mediums of communication are concerned, Article 28 establishes that the court should choose the law which is most closely connected to the infringement among the following three alternatives: (a) lex loci delicti; (b) the domicile of the tortfeasor, or (c) the national law of the party whose personality was infringed. Further, the 2011 Act allows for party autonomy in IP infringement disputes only if the parties choose Taiwanese law. As for IP infringement, no special rule is provided for, but it is established practice that IP infringements are governed by the laws of the country for which protection is sought.689 In cases where the action is brought against the ISP, the governing law of non-contractual obligations arising out of infringement of IP rights would be the law of the domicile of the ISP and the parties’ choice on applicable law would not be enforceable. The law governing ubiquitous infringements of IP rights would be the law of the place that has the most significant relationship to the infringement (Art 25).690

12.3.2 Japan The new Japanese PIL Act which came into force on 1 January 2007 introduced certain significant modifications with regard to choice-of-law rules in torts.691 The drafting process was largely influenced by the parallel reform of private international law in the EU (Rome I and Rome II Regulations). As regards the law governing non-contractual obligations, the new PIL Act first of all provides for a general choice-of-law rule (Art 17) which is supplemented by two special provisions concerning product liability and defamation claims (Art 18 and 19). These choice-of-law provisions can be ‘replaced’ if the law of any another country appears to be more closely connected with the case at hand (Art 20). Additionally, the parties are allowed to make a choice-of-law agreement after the tort occurs (Art 21). The new PIL Act provides that multi-state torts are governed by the law of a country where the damage occurs (Art 17(1). Furthermore, Article 17(2) provides for an exception: if the place of damage could not have been foreseen, the law of a place where a tort was committed should be applied. The ‘place of damage’ should be understood as a place where the direct damage occurs (eg bodily injury, but not cover medical treatment which should be considered as indirect damage). Besides, Article 19 stipulates that the applicable law to claims concerning defamation and damage to reputation shall be the law of the place of the victim’s habitual residence (or if the victim is a corporation or a non-profit organisation, the law of the country where that legal entity has its main place of business). This provision was drafted with regard to Internet-oriented infringements of personality rights. The new PIL Act of Japan remains silent on the applicable law to infringements of IP rights. The reason for such an omission was the argument that private international law aspects of IP have not been sufficiently crystallised in Japanese and foreign legal scholarship. Besides, some Japanese government officials stated that there is not much in terms of domestic court practice which would serve as a ground for creating a specific choice-of-law rule for IP infringements. However, the majority opinion is that cross-border IP disputes   Taiwanese Report, answers to HC 6.   ibid, answers to HC 7. 691   For a general overview see K Takahashi, ‘A Major Reform of Japanese Private International Law’ (2006) Journal of Private International Law 311; Y Nishitani, ‘Die Reform des internationalen Privatrechts in Japan’ (2007) Praxis des Internationalen Privat- und Verfahrensrecht 552. 689 690

General Report  159 should be considered in light of the principle of territoriality and that multi-state infringements of IP rights should be governed by the law of the country for which protection is sought (lex loci protectionis). This approach could be better illustrated by the following two notable Supreme Court judgments. In 1997 the Supreme Court of Japan handed down one landmark judgment in the socalled BBS Wheels III case, which was related to the cross-border enforcement of patent rights. In this case the plaintiff was a German manufacturer of aluminium car wheels and held parallel patents in Germany and Japan. The defendant was a Japanese party which had purchased aluminium wheels in Germany and then imported them to Japan. The wheels purchased by the defendant did not carry any message informing that certain import restrictions might apply with regard to further resale of such wheels. The plaintiff sought an injunction preventing the defendant from importing the patented products and also sought compensation for damages. The Supreme Court found in its decision692 that the aluminium wheels sold by the defendant in Japan fell under the scope of the patents granted in Japan and Germany. The Supreme Court applied the doctrine of international exhaustion of patent rights and decided that since the wheels had been placed in the German market, the patent-holder could no longer prevent further resale of the patented goods. The Supreme Court concurred with the findings of the Tokyo High Court, namely, that the patent-holder had received sufficient reward from the marketing of its product; hence, any further control of the resale of the patented goods could not be justified from a public interest perspective. The Supreme Court reiterated that according to the Paris Convention, patent rights are regarded as territorially independent rights, according to which the creation and the effects of patents are to be viewed regardless of the corresponding patents granted in other countries. Further, the Court referred to the principle of territoriality of patent rights, which should mean that the creation, transfer and validity of patent rights are subject to domestic legal provisions of the country for which the patent is granted. It was emphasised that the exploitation of those patent rights are also limited territorially and that the patent holder cannot succeed in arguing that the principle of territoriality of patent rights was infringed. Another famous decision concerning cross-border infringement of intellectual property rights was handed down in the so-called Card Reader case.693 In this dispute, the plaintiff, Fujimoto, a Japanese national residing in Japan, owned a patent in the United States but not in Japan. Neuron, a Japanese company with its principal place of business in Japan, produced an infringing product in Japan and exported it to the US through its wholly owned subsidiary allegedly inducing the infringement of the US patent. Having found that the infringing product was sold in the United States, Mr Fujimoto filed a suit against Neuron, making three claims for: a) an injunction against production and export of the infringing products to the United States; b) destruction of the infringing products; c) compensatory damages for Neuron’s wrongful acts. The Supreme Court of Japan first of all addressed the question whether it had any authority to issue an injunction for the prevention of the production of the infringing products in Japan and their export to the United States The Court classified the injunction 692   Supreme Court, Judgment of 1 July 1997, 51 Minsh¯u 2299; also available at The International Review of Intellectual Property and Competition Law (1998) 331; abbreviated English translation available at www.courts. go.jp/english/judgments/text/1997.07.01–1995-O-No.1988.html. 693   Fujimoto v Neuron Corporation (‘Card Reader Case’), 56 Minsh¯u 1551, abbreviated English translation available at www.courts.go.jp/english/judgments/text/2002.9.26–2000.-Ju-.No..580.html.

160  Toshiyuki Kono and Paulius Jurcˇys as an effect of US patent law: in the absence of any special provisions for intellectual property matters in the H¯orei, the Court found it necessary to decide the issue according to the general principle of j¯ori (fairness, reasonableness). The Court ruled that the country where the patent is registered should be applied to the question of an injunction. It was decided that according to section 271 of the United States Patent Law, both the infringer and the person who induced the infringement overseas are liable. Nevertheless, the Japanese Supreme Court went on to state that the extraterritorial application of US patent law would undermine fundamental values of Japan. Based on these considerations, the Court referred to the public policy exception (Art 22 of H¯orei) and refused to apply US Patent Law. Unfortunately, the Court did not state the precise reasoning as to why the application of the United States Law would run counter to the public policy of Japan. The Supreme Court only argued that injunctions are considered as public law legal redress and can only be granted on the basis of the law in force in the forum country. Further, it might be possible to infer from this reasoning that in the opinion of the Court, giving effect to a foreign statute with regard to activities which are partly committed in Japan would mean widening the reach of the American statute beyond US borders – the consequences of which would run counter with the strict understanding of the principle of territoriality of intellectual property rights. In addition, the second part of the claim concerning damages was also denied. In particular, the Court referred to the double-actionability rule and decided that there was no tort under Article 11 of H¯orei. The Card Reader case ignited discussion among Japanese scholars about the crossborder enforcement of IP rights; however, there was no unanimity on whether or not the decision of the Supreme Court in the Card Reader case was correct. Many arrows of criticism were directed towards the Court’s refusal to enforce foreign patent rights and grant injunctions. Last but not the least, the Supreme Court in its judgment stated that the applicable law to patent infringements should be governed by the law of the protecting country (according to the principle of territoriality of intellectual property rights). Nonetheless, this principle of protecting country was not applied by the Court itself.694 12.3.2.1  Transparency Principles During the preparation of the choice-of-law rules concerning the infringement of IP rights, the drafters of the Transparency Principles considered four underlying problems: (a) whether a distinction should be made between registered and non-registered IPRs; (b) whether a single choice-of-law rule could be employed for the infringement of IP rights as well as competition; (c) the relationship between the notions of territoriality and country of protection; and (d) to what extent party autonomy should be allowed.695 The Transparency Principles adopt the so-called market effects test. This test mandates the application of the law of state where the results of IP infringement or unfair competition acts occur or are to occur (Art 301(1)). The market effects test is in consonance with the principle of independence of industrial property rights. Yet, the determination of the market where the results of the allegedly infringing activity occur implies the application of certain economic criteria, which in turn means that the principle of territoriality must be

694   R Kojima, R Shimanami and M Nagata, ‘Applicable Law to Exploitation of Intellectual Property Rights in the Transparency Proposal’ in J Basedow, T Kono, A Metzger (eds), above n 1, 183. 695   ibid, 181–87.

General Report  161 reconsidered.696 The notion of ‘results’ of infringement covers only direct damages and does not comprise indirect damages.697 The law of the state where the results occur should also determine what remedies are available.698 In addition, the Transparency Principles allow the parties to agree on the law governing the formation and effects of an infringement of IP rights, or the competition after such infringement occurs (Art 304). As for ubiquitous infringement, the drafters of the Transparency Principles considered whether a special rule is necessary at all; and, if so, what connecting criteria are to be established.699 Article 302 of the Transparency Principles establishes a double-pronged choiceof-law rule. The general principle is that ubiquitous IP infringements shall be governed by the law of the place where the results of the exploitation of IP are maximised (Art 302(1)). This choice-of-law rule was considered to be in line with the general effects test established in Article 301(1). Besides, the drafters considered that the application of the effectsoriented choice-of-law rule would rationally balance the interests of the parties without depriving either of them of the foreseeability as regards the governing law.700 If the result of the application of the law of the state, where the exploitation of IP rights are maximised, is extremely unreasonable in relation to a particular state, the law of the state of maximisation shall not be applied with regard to the liability and remedies to the infringement in that particular state (Art 302(2)). The Transparency Principles do not contain any special choice-of-law rule determining the law which governs the liability of intermediaries. Nonetheless, the drafters of the Principles were of the opinion that the intermediaries’ role in the dissemination of know­ ledge is crucial and that their interests must be protected. Therefore, the choice-of-law rule should be drafted in a way that the intermediaries could easily foresee which law would be applicable to their activities. Therefore one of the possible options is the application of the law of the habitual residence of the intermediaries.701 12.3.2.2  The Joint Japanese-Korean Proposal (Waseda Principles) One of the underlying choice-of-law rules in the Waseda Principles is party autonomy. Parties are allowed to make a choice of law with regard to any issue; however, the effects of choice of law would have legal effects only between the parties (Art 302). As in the case of proprietary aspects of IP rights, parties are allowed to choose the governing law to infringement and remedies. Nonetheless, since in tort cases choice-of-law clauses are rather unlikely, the Waseda Principles establish that in the absence of choice, the law of each state for which protection is sought shall be applied to infringement and remedies (Art 304(1)). The same choice-of-law rule could also be applied to claims arising out of unjust enrichment or negotiorum gestio (Art 304(2)). In addition, Article 304(3) specifies that the law applicable to non-contractual obligations arising out of an act or acts initiating unfair competition is the law of the state in which a direct and substantial damage occurs or is expected to occur. In order to tackle the problems which arise in the context of cross-border infringements of IP rights, the Waseda Principles contain two special rules which establish a more flexible   For several examples of the application of the market effects test see ibid, 188–95.   ibid, 186 and n 20. 698  ibid. 699   ibid, 187–88. 700   ibid, 199–200. 701   ibid, 198–99. 696 697

162  Toshiyuki Kono and Paulius Jurcˇys interpretation of the principle of territoriality of IP rights. The first aims to clarify the situation concerning the applicable law to extraterritorial activities such as in the previously discussed Card Reader case.702 Hence, the Waseda Principles stipulate that courts should apply lex protectionis to the infringement of IP rights if substantive preparatory acts or direct inducement is directed to the state of protection and part of the infringing activities were committed outside of the protecting country, given that there is a threat of direct and substantive injury in the territory of the protecting state (Art 305). The second provision deals with ubiquitous infringements of IP rights which occur in several states. Namely, it is established that in such cases the court shall apply the law of the state which has the closest connection with that IP infringement in its entirety. In determining which state has the closest connection, the court ought to take into consideration the habitual residence or place of business of the infringer; the state in which the infringement activity mainly occurs; the state to which the infringement is directed; the state in which a substantial injury occurs; and the state in which the owner of such a right has principal interests (Art 306 paras 1 and 2). Similarly to the ALI and CLIP Principles, Article 304(4) of the Waseda proposal establishes the possibility for a party to prove that the law of the state in which the alleged infringement occurs, leads to a different legal solution and the court is obliged to apply that other law.

12.3.3 Korea Article 24 of the Korean Private International Act entrenches the lex protectionis principle according to which the protection of IP rights shall be governed by the law of the place where such rights are violated. Korean courts have interpreted this provision as requiring the application of the law of the registering state in the case of infringements of registered IP rights. Further, as previously noted, Article 24 of the Private International Act resembles the principle of territoriality of IP rights. Accordingly, Korean courts found that the law of the registering state should be applied to such matters as the creation, transfer and effect of a trade mark right.703 A very similar decision to that of the Japanese Card Reader case was also rendered in Korea. In the Myspace domain name case, the Korean court refused to apply the United States Anticybersquatting Consumer Protection Act on the ground that it was contrary to the Korean social order (pursuant to Art 10 of the Korean Private International Act); instead, the Korean Unfair Competition Act was applied. As regards copyright infringement, the lex protectionis principle is understood to mean that the applicable law is the law of the state where the infringing acts or the injury occurred. It should be recalled that Article 24 of the Korean Private International Act is based upon Article 5(2) of the Berne Convention. The relationship between Article 5(2) of the Berne Convention and Article 24 of the Private International Act was clarified in the so-called 49 Things to Do in Your Life case.704 In this landmark case an action for damages to compensate for a copyright infringement was brought by Shenyang Yuanliu, the copyright-holder of a Chinese book called 99 Things to Do in Your Life. This compilation of anecdotes was published by Beijing Industrial University, which later concluded an agreement with a Korean 702  ‘Commentary on Principles of Private International Law on Intellectual Property Rights (Joint Proposal Drafted by Members of the Private International Law Association of Korea and Japan)’ (2011) 2 Kigy¯o to H¯os¯oz¯o, available at www.globalcoe-waseda-law-commerce.org/activity/pdf/28/08.pdf, p 139. 703   Korean Report, answers to HC 7. 704   Seoul Central District Court, Judgment of 20 June 2008, Case No 2007 Gahap 43936 (‘49 Things to Do in Your Life’ case).

General Report  163 office of the international publisher Wisdom House. Wisdom House chose 45 excerpts from the book, added four other excerpts and published a book for the Korean market which became a 2005 bestseller. Shenyang Yuanliu brought an action for compensation against Wisdom House and eight of the largest Korean bookstores. In its judgment, the court inter alia noted that Article 24 of the Private International Act is pre-empted by Article 5(2) of the Berne Convention. The court found that in the case at hand the law of the state for which protection is claimed should be applied, thus the court should apply Korean law, that being the place where the copyright infringement occurred. It was decided that the publisher of the Chinese version of the book (Beijing Industrial University) had licence to publish only within the territory of the People’s Republic of China, which therefore led the court to the conclusion that the publication in Korea infringed the plaintiff ’s copyright. Accordingly, the court ordered the defendant to destroy all copies and pay compensation of 300 million Korean Won to the plaintiff. As regards the law applicable to infringing acts committed by an Internet service provider, the same choice-of-law principles set out in Article 24 of the Private International Act would be applicable. The Korean Principles establish that the law governing the infringement of IP rights should be the law of the protecting or registering country (Art 19). It is noteworthy that the drafters of the Korean Principles were aware of the shortcomings related to the application of the lex protectionis principle to infringements of IP rights which might occur in the digital environment.705 Therefore, as regards ubiquitous infringements concerning the infringement of IP rights in multiple states, the Korean Principles provide that the law of the state which has the closest connection to an infringement shall be applied. Similar to the ALI Principles (section 321), Article 21 of the Korean Principles establishes a list of factors which should be taken into account by the court in determining which law is most closely connected. These factors are: (a) the habitual residence of the defendant; (b) the state where the infringing activities are primarily committed or the state which the infringing activities are directed; (c) the activities and investments of the right-holder. However, the Korean Principles also establish a supplementary clause for those cases where it is not possible to determine the state which has the closest connection to an infringement. In such circumstances, the law of the state where the defendant has his habitual residence is deemed to be the most closely connected (Art 21(3)).706 Article 20 of the Korean Principles allows the parties to agree on the applicable law regarding the infringement of IP rights. Such agreements on the applicable law could be made before or after the dispute arises. The Korean Principles do not contain any specific choice-of-law rules concerning claims brought against the ISP.

12.4  Comparative Observations From the answers provided in the national reports, several remarkable conclusions with regard to the law governing infringements of IP rights could be drawn. On one hand, as regards court practice, it should be noted that the strict territoriality principle appeared to be followed in most jurisdictions. In common law countries the questions of applicable law to infringements of IP rights do not even arise because of the limitations resulting from   Korean Report, answers to HC 7.   Korean Report, section 2.4.3 and answers to HC 7.

705 706

164  Toshiyuki Kono and Paulius Jurcˇys subject-matter jurisdiction. Hence, peculiarities related to the exercise of international jurisdiction over claims involving foreign IP rights could be seen as one likely explanation why neither Canadian nor US laws provide for any choice-of-law regime concerning the infringements of IP rights. In European countries, even though courts are able to hear actions concerning infringements of foreign IP rights, in reality the application of the foreign lex protectionis could be only possible in cases concerning non-registered IP rights. On the other hand, various legislative proposals contain more specific conflicts rules for multi-state infringements of IP rights. Albeit the principle of lex protectionis is maintained with regard to registered IP rights, the parties are allowed to agree on the law governing damages. In addition, legislative proposals establish specific provisions to solve the problem of applicable law to ubiquitous infringements. Yet it remains to be seen whether and to what extent legislative proposals could affect the established practice of domestic courts.

13  Applicable Law to the Contracts for the Transfer of IP Rights A number of applicable law questions arise in cases related to the transfer of IP rights. As previously mentioned, one of the peculiar features of contracts for the transfer of IP rights is that contractual obligations between the contracting parties should be distinguished from matters related to the IP right itself. Accordingly, such a distinction between contractual and proprietary matters is epitomised in the case of international transfers of IP rights. Potential problems related to different applicable laws increase, not only because of differences with regard to potentially applicable laws of various countries, but also since it is quite likely that proprietary and contractual aspects of IP-related contracts will be governed by these different laws. This chapter discusses the following matters: whether, and if so, to what extent the parties are allowed to choose the governing law to their contracts for the transfer of IP rights and what would be the applicable law in the absence of choice. The following sections were prepared on the basis of the answers submitted to hypothetical cases nos 8 and 9. Hypothetical case no 8 related to the initial title of IP rights created in the course of an employment relationship. In hypothetical case no 9 several authors conclude an agreement for the transfer of copyrights to future works. Subsequently, after the alleged infringement had occurred, the right-holders sue for compensatory damages. The questions posed in the hypothetical case concern the enforceability of the transfer of economic and moral rights, the law governing transferability and the applicable law in the absence of choice.

13.1  North American Countries 13.1.1  Canadian Law According to Canadian common law, parties are allowed to choose the proper governing law to their contractual obligations. The Civil Code of Quebec also allows party autonomy, subject to the mandatory rules of the country whose law would be applicable in the absence

General Report  165 of choice. The proper law governs most of the issues related to the validity and operation of the contract. In the absence of choice, Canadian common law conflicts rules provide that contractual obligations are governed by the law that has the closest and most real connection to the contract. The Civil Code of Quebec follows the so-called ‘closest connection’ doctrine, which dictates that in the absence of choice, the contract is governed by the law of the country in which the party performing the obligation characteristic of the act is resident or has its business establishment.707 In cases of IP-related contracts, Canadian courts would distinguish the law applicable to contractual obligations and the law which governs issues related to IP rights themselves. The law chosen by the parties would only determine whether the parties were bound by the agreement and how this agreement should be interpreted; but, it would not affect such issues as the transferability or waivability of IP rights.708 It should be noted however that the jurisdiction of Canadian courts would be limited only with regard to claims concerning Canadian IP rights. This is the effect of jurisdictional bars resulting from subject-matter jurisdictions of Canadian courts. Accordingly, parties to an IP-related contract would be able to enforce only those claims which are related to Canadian IP rights.709

13.1.2  The United States US law generally allows the parties to determine the law governing the contract (section 187 of the Restatement (Second) of Conflicts). However, the principles followed in order to determine the law governing contracts with no choice-of-law clauses differ from state to state. As such, 12 states follow the traditional approach requiring the application of the law of the place of contracting (lex loci contractus);710 this approach stems from the First Restatement (sections 325 and 326). The scope of the lex loci contractus was interpreted as encompassing such issues as the form of a contract, contractual capacity, mutual assent, consideration, fraud, illegality and other circumstances that make a contractual promise voidable (section 332). Meanwhile, 23 US states follow the rules established in the Second Restatement.711 Section 188 is a cornerstone provision of the Second Restatement in determining the law applicable to contracts where the parties did not make a choice of law. It provides that the rights and duties of the parties with regard to contractual issues shall be governed by the law of the state which has the most significant relationship with respect to that issue. Besides, in the absence of an effective choice of law by the parties, the determination of the applicable law must be made having regard to the following factors: (a) the place of contracting; (b) the place of negotiation of a contract; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicile, residence, nationality, place of incorporation, as well as place of business of the parties. The Restatement also provides that these factors are to be evaluated in light of their relative importance to the particular issue. Besides, section 188(1) requires that the choice-of-law analysis in a contract dispute be made with consideration to the factors of section 6(2): the needs of an   Canadian Report, answers to HC 9.  ibid. 709  ibid. 710   S Symeonides, American Private International Law (Alphen aan den Rijn, Kluwer Law International 2008) para 485. 711   ibid para 488. 707 708

166  Toshiyuki Kono and Paulius Jurcˇys interstate system; the relevant policies of the forum and other interested forums; the justified expectations of the parties; the basic foundational principles of the area of law at issue; the uniformity and predictability of the result; and the ease in determination and application. The Second Restatement sets out nine choice-of-law provisions for particular contracts such as interests in land, interests in chattel, various insurance contracts, suretyship, payments of money lent as well as contracts for transportation. The same choice-of-law principles are also applied in cross-border IP cases.712 For instance, in the case of Re Amica the claimant was a transferee of a debtor’s rights of ownership, usage, marketing, and copyrights in its computer software program. BB Asset Management Inc brought an action against a debtor seeking damages for alleged contract and copyright infringements. The court enforced the parties’ choice of Californian law as the law governing their rights and duties, noting that the chosen law determines also the validity of a contract. The court decided that the plaintiff ’s agent had fraudulently induced the debtor to enter into the copyright transfer agreement and that the debtor was entitled to rescind and cancel the contract because of the plaintiff ’s fraudulent misrepresentations.713 In Rano v Sipa Press the parties concluded a copyright transfer agreement whereby a professional photographer Kip Rano (a resident in the UK) granted the defendant Sipa Press (a French corporation with subsidiaries in several US states) a non-exclusive licence to reproduce, distribute, sell and authorise others to sell his photographs. During the first eight years of the contract Rano submitted several thousand pictures to Sipa, which paid royalties. Later, Rano decided to change agencies and informed Sipa that he would not authorise any further sales of his photographs. In particular, Rano reasoned that Sipa has failed to pay royalties in a timely manner, sales were low, and Sipa was unwilling to reimburse certain expenses. Subsequently Rano filed a copyright infringement suit citing numerous grounds; he sought an injunction preventing Sipa from further use of his photographs and asked the court to order compensatory and punitive damages. The copyright licence contract contained no provisions concerning choice of law, and since the parties had made no submissions, the court followed sections 188 and 206 of the Second Restatement in its decision to apply Californian law as the law of the place of the making and performance of the contract.714 In Houlihan v McCourt,715 a play producer brought a suit against the authors, claiming a percentage of the gross receipts from certain play performances as well as claiming interest in proceeds from the sale of the authors’ books and the movie based on subsidiary rights clause in the contract. The decision regarding the law governing the subsidiary rights clause of the contract was made on the basis of the Second Restatement of Conflicts. In particular, the court held that in this case all the parties were resident in New York at the time the initial contract was formed. New York was the place where the contract was negotiated and where initial performance of the contract took place. As a result, the law of New York, not Illinois, where producer currently resided, governed the breach of the contract claim. 712   See eg Great Clips Inc v Hair Cuttery of Greater Boston LLC and Great Cuts Inc 2009 WL 458554 (D Mass) (concerning the law governing to a settlement agreement which was prompted by a dispute over the trade mark registration); Getty Images (US) Inc v Advernet Inc f/k/a VR Marketing Inc 2011 WL 2732202 (noting that the law of the state with the most significant relationship to the agreement purporting to grant a copyright licence should be applied). 713   Re Amica Inc 136 BR 534 (1992), 545. 714   Rano v Sipa Press Inc 987 F2d 580, 585 (1993). 715   Mike Houlihan d/b/a Blaguards Productions v Malachy McCourt and Frank McCourt 2002 WL 1759822 (ND Ill, 2002).

General Report  167

13.1.3  Law Governing Transfers of Title and Grants of Licenses under the ALI Principles The ALI Principles establish that contractual obligations of the parties are governed by the law chosen by the parties. The parties are allowed to agree on the governing law at any time, even after the dispute arises (section 302). The ALI Principles aim to create a more flexible regime by allowing parties to choose the law of any third state. Besides, the state whose law was chosen by the parties does not necessarily have to be related to the parties or the dispute. In addition, the ALI Principles allow the choice of non-state body of laws such as the UNIDROIT Principles of International Commercial Contracts.716 Nonetheless, the principle of party autonomy is not absolute: section 302 of the ALI Principles establishes that parties may not choose the law that will govern the validity and maintenance of registered rights; the existence, attributes and duration of rights, notwithstanding whether they are registered or not; as well as the formal requirements for recording assignments and licenses. Choice-of-law agreements should not adversely affect the interests of third parties and are only legitimate if they satisfy the validity requirements under the law chosen. Besides, the ALI Principles stipulate that the capacity of the contracting parties is determined by the law of the state in which that party was resident at the time of the conclusion of the agreement. In the absence of choice or in cases where parties’ agreements on the governing law is invalid, the agreement pertaining to the transfer of title and grants of licence is governed by the law of the country of the state which has the closest connection to the contract. Section 315(2) of the ALI Principles further establishes that the contract is presumed to be most closely connected to the state in which the assignor or the licensor resided at the time of the execution of the contract. The Commentary to section 315 provides that such choice-oflaw methodology, which ultimately presumes that the contract is most closely connected to the law of the state where the transferor or assignor is resident, was selected taking into regard two factors. First, it was considered that in most cases the intangible subject matter of the transfer agreement had been developed by the transferor/assignor. Secondly, the ALI Principles appear to establish a characteristic performance doctrine which is often applied in European jurisdictions. According to the characteristic performance doctrine, the person who performs a characteristic obligation is considered to be the transferor or the licensor.717 Yet, the ALI Principles do not provide whether and in what circumstances the court is allowed to rebut the presumption and apply the law of another state. Some commentators have criticised this provision arguing that it actually does not leave any discretion to the court.718 In addition, the ALI Principles contain special rules concerning the law applicable to standard form agreements. Pursuant to section 302(5), choice-of-law clauses in such agreements are valid only if they meet the requirement of reasonableness and were reasonably accessible to the non-drafting party at the time when the agreement was concluded, and is available for subsequent reference by the court and the parties. The ‘reasonableness’ of the choice-of-law clause should be determined taking into account the two following sets of   American Law Institute, Intellectual Property, above n 38, 131.   ibid, 148–49. 718   A Kur and B Ubertazzi, ‘The ALI Principles and the CLIP Project: A Comparison’ in S Bariati (ed), Litigating Intellectual Property Rights Disputes Cross-border: EU Regulations, ALI Principles, CLIP Project (Milan, CEDAM, 2010) 135–36. 716 717

168  Toshiyuki Kono and Paulius Jurcˇys factors: (a) the closeness of the connection between the parties, the substance of the agreement and the state whose law is chosen; and (b) the parties’ residences, interests and resources, especially those of the non-drafting party (section 302(5) lit (b)). In the absence of choice, the law governing contractual obligations should be determined similarly to other kinds of IP-related contracts. According to the ALI Principles it is presumed that standard form agreements are most closely connected to the state in which the assignor or the licensor resided at the time of the execution of the contract (section 315(3)).

13.2  European Countries 13.2.1  Rome I Regulation: General Principles Article 3 of the Rome I Regulation entrenches a cornerstone principle of the freedom of choice. Accordingly, contracts shall be governed by the law chosen by the parties. The law chosen by the parties does not necessarily have to be connected to the contract or the domicile or nationality of the parties. Besides, the Rome I Regulation allows the parties to choose the applicable law to either the whole contract or a portion of it. An agreement on the applicable law can be also made or modified after the conclusion of the contract. Parties to a contract may also choose a non-state body of law or an international convention.719 This means that parties may incorporate into a contract a reference to instruments such as the Unidroit Principles of International Commercial Contracts or the ALI Principles on Intellectual Property. The choice of law by the parties shall be made expressly or be clearly demonstrated by the terms of the contract or the circumstances of the case. However, the Rome I Regulation does not require that the choice-of-law agreement be confirmed in writing. If there is a dispute concerning the validity of a choice-of-law clause the court will have to apply Articles 10 and 11 of the Rome I Regulation. The existence and validity of a contract should be determined by the law which would govern the contract under this Regulation, if the contract was indeed valid. Freedom of choice is limited with regard to consumer or individual employment contracts, which are subject to special provisions of the Regulation. Besides, in cases where all elements relevant to the case are located in one country, the law of that particular country shall be applied (Art 3(3) and 3(4)). The parties’ choice of law is also subject to the application of the public policy exception and the application of overriding mandatory rules (Art 9). In comparison to the Rome Convention, one of the most remarkable modifications introduced by the Rome I Regulation is related to the determination of the applicable law in the absence of choice. More precisely, Article 4 of the Regulation introduces a newly designed methodology for contracts containing no choice-of-law provisions. The main underlying objective of restructuring Article 4 was to increase the predictability of the outcomes of litigations and to assure legal certainty and foreseeability of the application of choice-of-law rules within the European judicial area.720 Such modifications reflect the European legislator’s response to the differences in application of the closest connection test and the relationship between presumptions stipulated in Article 4 of the Rome Convention by Member State courts.   Recital 13 of the Rome I Regulation.   Recitals 6 and 16 of the Rome I Regulation.

719 720

General Report  169 Article 4 of the Rome I Regulation establishes a four-step cascade system of conflict rules. First, Article 4(1) of the Regulation provides for clear-cut conflict rules for particular types of contracts (contracts of sale, provision of services, rights in rem in immovable property or tenancy, franchise and distribution contracts as well as sale of goods by auction or contracts concluded within a multilateral system). Secondly, where a contract is not covered by Article 4(1), or where the elements of a contract are covered by more than one conflict rule provided in Article 4(1), the applicable law should be determined according to the characteristic performance rule. Characteristic performance means that the contract shall be governed by the law of the place where the party required to effect the characteristic performance of the contract is domiciled (Art 4(2)). This provision was added at a very late stage of the drafting of the Regulation, and was based on the proposal made by the Legal Committee of the European Parliament.721 It should also be mentioned that in contrast to the Rome Convention, Article 4(2) is not framed as a rebuttable presumption. Thirdly, Article 4(3) of the Regulation provides that where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than those indicated in paragraphs 1 and 2, the law of that country shall apply. It is noteworthy that the 2005 Commission proposal for a Regulation did not provide for any exceptions to the closest connection principle.722 This was partly due to the Commission’s intention to reduce the extent of discretion of the courts in the hopes that a stricter regime will contribute to greater legal certainty. However, an exception mandating the application of the law of the country which is manifestly more closely connected to the contracts was inserted in a later stage of the drafting, and thus brought the choice-of-law mechanism closer to the framework which was established in the Rome Convention. It is also worth noting that the scope of the application of Article 4(3) is much narrower than the rule stipulated in the Rome Convention: Article 4(3) of the Regulation would apply only in exceptional cases. Fourthly, where the law applicable cannot be determined pursuant to paragraphs 1 or 2 of Article 4, the contract shall be governed by the law of the country with which it is most closely connected. The principle of freedom of choice is not absolute: international contracts are often subject to various limitations or restrictions imposed by laws of different countries (eg, import and trade restrictions, necessary authorisations related to quality or health requirements etc). Besides, national laws might provide additional restrictions of party autonomy, especially when it is necessary to protect the interests of the weaker party (employee or consumer). According to Article 9 of the Rome Convention, courts could have given effect to the mandatory rules of the law of another country, with which the situation has a close connection, if and in so far as, under the law of the latter country, those rules must be applied regardless of the law applicable to the contract. The Convention did not however restrict the application of the rules of the law of the forum. In practice, a number of problems arose with regard to the interpretation of Article 9 of the Convention. National courts of the Member States took different approaches regarding what provisions should be mandatory and whether the notion of mandatory rules encompasses also the mandatory rules of the lex causae. Further, conflicting views were raised with regard to the relationship of 721   See, eg, U Magnus, ‘Article 4 Rome I Regulation: The Applicable Law in the Absence of Choice’ in F Ferrari and S Leible (eds), Rome I Regulation: The Law Applicable to Contractual Obligations in Europe (Munich, Sellier, 2009) 46. 722   Art 4 of the 2005 Commission proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I), COM(2005) 650 final (15 December 2005).

170  Toshiyuki Kono and Paulius Jurcˇys mandatory rules established in the European Directives with those provided for in national statutes.723 The Rome I Regulation aims to clarify previous ambiguities and provide for a more reasonable approach regarding the application of mandatory rules. Article 9(1) introduces a legal definition of ‘overriding mandatory rules’, which are described as provisions that are regarded as crucial by a country for safeguarding its public interests, such as their political, social or economic organisations. Overriding mandatory rules should be applied irrespective of the law that would otherwise be applicable to the contract. This wording reflects the opinion taken by the ECJ in the Arblade case.724 Article 9(2) of the Regulation reiterates that the application of the overriding mandatory rules of the law of the forum are not preempted by other provisions of the Regulation. By establishing such a regulatory regime, the European legislator aims to balance the legal certainty and foreseeability of the applicable law with public interest considerations.725 Therefore, the notion of mandatory rules under the Rome I Regulation should be understood as being rules of the utmost importance to the safeguarding of public interests (‘overriding mandatory provisions’), the application of which should be limited to exceptional cases.726 In addition, Article 21 of the Rome I Regulation posits that the application of a provision of the foreign law may be refused in exceptional cases such as when the application of the foreign law is manifestly incompatible with the public policy of the forum (ordre public).

13.2.2  Problems Related to IP Contracts The principle of freedom of choice equally applies to parties’ contractual obligations arising from IP transfer agreements. Insofar as IP-related contracts are concerned, parties may choose the governing law to their contractual obligations of the contract as well as such issues regarding the scope of transferred rights and necessary formalities for the validity of a contractual transfer of IP rights. Such freedom of choice can be enjoyed as long as the contract contains certain international elements (eg parties are resident in different states; the transfer is related to the exploitation of an IP asset in a foreign state etc). Some national reporters indicated that many licence agreements related to the exploitation of IP rights contain choice-of-law clauses and that in practice almost no problems arise with regard to the expression of choice.727 The Rome I Regulation however does not apply to proprietary matters of the transfer of IP rights (in particular the transferability, attribution of rights etc). These proprietary matters are governed by the law of the protecting country (lex protectionis).728 Accordingly, the parties’ agreement with regard to those issues is not enforceable. Such an approach is followed in the domestic laws of the EU Member States.729 For instance, in one case a 723   See eg Max Planck Institute for Comparative and International Private Law, ‘Comments on the European Commission’s Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I)’ (2007) 71 Rabels Zeitschrift für ausländisches und internationales Privatrecht 315 et seq. For a more comprehensive analysis see A Dickinson, ‘Third Country Mandatory Rules in the Law Applicable to Contractual Obligations: So Long, Farewell, Auf Wiedersehen, Adieu?’ (2007) 3 Journal of Private International Law 53. 724   Joined Cases C-369/96 and C-376/96 Arblade [1999] ECR I-8453, para 30. 725   See Recitals 6, 16 and 37 of the Preamble of the Rome I Regulation. 726  ibid. 727   See Dutch Report, section 5.1. 728   See section 11.2 above. 729   Austrian Report, sections 3.4.1 and 3.4.2.

General Report  171 Belgian court applied the parties’ choice of law to the contractual obligations, but applied lex protectionis to the proprietary issues of the IP rights.730 The Rome I Regulation has often been criticised for leaving many ambiguities which may likely arise in disputes over contracts involving IP rights. In particular, the Regulation did not provide for any solution as to the law applicable to certain types of contracts such as agency, or contracts related to the transfer of IP rights.731 This means that the applicable law to IP contracts will have to be determined in accordance with the choice-of-law rules established in paragraphs 2, 3 and 4 of Article 4. Yet, insofar as IP-related contracts are concerned, most of the EU national reporters shared the concern that the existing conflicts methodology of the Rome I Regulation is problematic and does not provide for a clear-cut solution.732 It is noteworthy that the Commission Proposal of December 2005733 contained a special conflicts rule for IP contracts. Article 4(1)(f) stated that a contract relating to intellectual or industrial property rights shall be governed by the law of the country in which the person who transfers or assigns the rights has his habitual residence. The proposed rule was controversial on the following two grounds.734 First, it was not clear what contracts ‘relating to intellectual or industrial property rights’ would fall under the substantive scope of this provision. Namely, it was not apparent if it applied to contracts which are not directly related to the transfer or the assignment of IP rights (eg licence agreements, publication contract). Moreover, the relationship of Article 4(1)(f) with regard to other conflicts rules dealing with specific contracts such as franchise (Art 4(1)(g) of the Proposal) or distribution (Art 4(1)(h)) was also unclear. Secondly, from a more political stance it was not uniformly agreed upon that the application of the law of the place where the transferor or assignor is habitually resident leads to such desirable results.735 This rule was later dismissed on the ground that it would not suit many contracts which have as their object the transfer or license of IP rights.736 Alternatively, some legal scholars have tried to argue that at least for copyright matters, Article 5(2) of the Berne Convention on the protection of literary and artistic works should be applied as lex specialis.737 Such reference to the Berne Convention does not seem very persuasive, for it would obviously distort the overall choice-of-law system established by the Rome I Regulation. Instead, other relevant choice-of-law provisions envisaged in Article 4 of the Regulation should be applied. The criticisms of the Rome I Regulation could be best illustrated by a closer analysis of the determination of the applicable law to IP contracts. Hence, it is necessary to see whether choice-of-law provisions established in Article 4 could be applied to IP contracts and what might be the drawbacks of the legal framework established in the Rome I Regulation. It might be questioned whether Article 4(1)(c), which provides that a contract relating to a right in rem in immovable property or to a tenancy of immovable property shall be   Brussels Court of Appeal, 8 October 2001, as cited in the Belgian Report, n 386.   L Garcia Gutiérez, ‘Franchise Contracts and the Rome I Regulation on the Law Applicable to International Contracts’ (2008) 10 Yearbook of Private International Law 238. 732   See eg, Austrian Report, section 2.3.1; UK Report, answers to HC 9. 733   Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I), presented by the Commission on 15 December 2005, COM (2005) 650 final. 734  CLIP, ‘Comments on the European Commission’s Proposal for a Regulation on the Law Applicable to Contractual Obligations (“Rome I”) of December 15, 2005 and the European Parliament Committee on Legal Affairs’ Draft Report on the Proposal of August 22, 2006’ (2006) International Review of Intellectual Property and Competition Law 471, also available at www.ip.mpg.de/shared/data/pdf/clip-rome-i-comment-04–01–20062.pdf. 735   Austrian Report, section 2.3.1. 736   German Report, n 142. 737   See Belgian Report, para 17 and n 254 for further references. 730 731

172  Toshiyuki Kono and Paulius Jurcˇys governed by the law of the country where the property is situated, could be applied to IP contracts. Yet, the prevailing approach is that this choice-of-law rule is applicable only to land and other immovables, and does not extend to IP rights.738 This leads to another question, namely, whether IP contracts could fall under the scope of lit (a) or (b) of Article 4(1). Again, the majority opinion seems to be that IP contracts cannot be considered contracts for the sale of goods nor as service contracts.739 This could be partly explained by the fact that the 2005 Proposal of the Rome I Regulation contained a choice-of-law rule for contracts relating to IP rights. This also follows from the ECJ judgment in the Falco case.740 In particular, the ECJ had to decide whether a claim for royalties under a copyright licence falls under the notion of provision of services under Article 5(1) (b) of the Brussels I Regulation. In its decision, the ECJ refused to qualify such dispute as arising from a contract for the provision of services. Therefore, some national reports indicate that if the Rome I and II Regulations are to be treated in consonance with the application of the Brussels I Regulation, then IP contracts should not be considered as contracts for the provision of services.741 This implies that some additional thought must be given before applying the special choice-of-law provisions of the Rome I Regulation for franchise or distribution agreements. Two other choice-of-law rules concerning franchise and distribution contracts might be of a particular relevance to contracts for the transfer of IP rights. Article 4(1) provides that in the absence of choice, a franchise contract shall be governed by the law of the country where the franchisee has his habitual residence (Art 4(1)(e)). Similarly, in the case of a distribution contract, the law of the habitual residence of the distributor shall be applied (Art 4(1)(f)). Hence, both these conflict-of-law provisions highlight the approach taken by the European legislator that the franchisee or the distributor performs the characteristic obligations of the contract.742 According to the European Commission, the application of the law of the habitual residence of the franchisee or distributor reflects policy objectives to protect their interests because they are considered the weaker contracting parties.743 One of the criticisms with regard to choice-of-law provisions to franchise and distribution contracts is that the Rome I Regulation does not provide for any definitions of franchise or distribution contracts. In practice, franchise and distribution contracts usually contain numerous mutual obligations related to the marketing of goods and ancillary obligations (advertisement etc). Since the Regulation itself does not contain any definitions, it stands to reason that notions of franchise or distribution contracts will be subject to autonomous interpretation.744 Yet, according to Recital 17, franchise and distribution contracts are treated as contracts for services. The underlying rationale for such an approach was to align the choice-of-law rules with the rules on international jurisdiction entrenched in Article 5 of the Brussels I Regulation. The drafters considered the services, in the case of franchise contracts, to be rendered in the place where the franchisee has his habitual residence. However, as indicated in the Dutch report,745 in the case of master franchise agree  UK Report, answers to HC 9.   See eg, Austrian Report, section 2.3.1; UK Report, answers to HC 9. 740   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327. 741   Dutch Report, section 5.2. 742   See Recital 21 of the Rome I Regulation. 743  See Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Contractual Obligations, COM (2005) 650 final (15.12.2005) 6. 744   U Magnus, ‘Die Rom I-Verordnung’ (2010) Praxis des Internationalen Privat- und Verfahrensrecht 36. 745   Dutch Report, section 5.2. 738 739

General Report  173 ments the application of the law of the country of the franchisee’s habitual residence may prove to be problematic, because master franchise agreements can cover several jurisdictions. In such circumstances the rule stipulated in Article 4(3) might have to be applied. Albeit franchise or distribution contracts might also involve transfer of IP rights, such obligations related to IP rights will seldom account for the essential parts of the contract. Choice-of-law provisions established in Article 4(1) lit (e) and (f) shall be applied as long as a contract is characterised as a distribution or a franchise contract, and regardless of the allocation of contractual duties between the parties to the franchise or distribution contract. The fact that a contract contains an obligation to transfer IP rights does not affect the characterisation of the contract. Further, some national reporters noted that the elimination of the special choice-of-law rule for contracts relating to transfer of intellectual or industrial property rights might have resulted in the broadening of the scope of application of rules dealing with the applicable law to distribution and franchise contracts.746 Article 4(2) provides for a specific choice-of-law rule for contracts which are not covered by any of the default provisions for specific contracts or if the applicable law to a particular contract can be decided under several choice-of-law provisions of paragraph 1. In such cases, the contract shall be governed by the law of the country where the party, required to effect the characteristic performance of the contract, has his habitual residence. This provision will be of great relevance to the credit, rent or lease of movables, factoring as well as contracts related to IP rights.747 Already here there seems to be no general agreement as to which party performs the characteristic obligations to licence contracts. While the prevailing opinion seems to be that the transferor of rights (seller, lessor, transferor) effects the characteristic performance of the contract,748 some national reporters indicate that it is the licensee who undertakes the performance of characteristic obligations.749 Even more controversial is the question related to the application of Article 4(2) to complex contracts where both parties are required to undertake certain obligations. The Rome I Regulation itself does not provide much guidance as to the application of the characteristic performance rule with regard to complex contracts. Recital 19 only indicates that in the case of a contract consisting of a bundle of rights and obligations, the characteristic performance of the contract should be determined having regard to its centre of gravity. Yet the notion of the ‘centre of gravity’ remains unclear and has to be interpreted on a case-by-case basis. Potential difficulties concerning the application of this provision to IP contracts have been highlighted by a number of scholars.750 Clarification is still required as to what would be the applicable law to a licence agreement pertaining to the exploitation of IP rights. Some national reports indicate that, for example, according to Article 4(2) the applicable law to the publication contract should be the law of the publisher’s (ie transferee’s) habitual residence. However, if the publisher has no other duty than to pay a consideration, it might be that the characteristic performance is undertaken by the author who transfers the rights.751 It is argued that such cases resemble an outright sale of IP rights which justifies the application of the law of the place where the transferor has his habitual residence.752   Austrian Report, section 2.3.1.   U Magnus, ‘Article 4 Rome I Regulation: The Applicable Law in the Absence of Choice’ in F Ferrari and S Leible (eds), Rome I Regulation: The Law Applicable to Contractual Obligations in Europe (Munich, Sellier, 2009) 45. 748   See ibid. 749   See eg, Slovenian Report, answers to HC 9. 750   Belgian Report, para 70 and answers to HC 9. 751   German Report, answers to HC 9. 752  ibid. 746 747

174  Toshiyuki Kono and Paulius Jurcˇys Some national reports indicate that simple licence contracts where the parties are resident in different countries would have to be governed by the law of the licensee.753 But in such cases the methodology of determination of the applicable law may differ. According to the Dutch national report, the applicable law in such a case must be determined in light of Article 4(3) of the Rome I Regulation. Article 4(3) allows for an exception of the characteristic performance rule if it is clear from all the circumstances of the case that the contract is manifestly more closely connected with another country. On the other hand, several national reports support the position that the characteristic performance of complex IP licence contracts (where the licence is granted for several jurisdictions or in cases of exclusive licence agreements) should be considered as performed by the licensor. This approach is supported from the perspective of the management of IP rights: if the licence is granted for several jurisdictions, or is granted to several parties in different countries, the application of the same law of the licensor’s habitual residence would contribute to the effective management of IP rights.754 With regard to hypothetical case no 9, some national reporters indicated that such a contract, whereby one party (the musical band) agrees to transfer its rights to the recording company and the latter undertakes an obligation to publish the record and pay royalties, could be considered an outright sales contract. Following this interpretation, Article 4(2) of the Rome I Regulation should come into play and the law of the place where the band is habitually resident should govern the contract.755

13.2.3  Law Governing Contractual Obligations according to Swiss and Croatian Law In Switzerland, obligations between the parties to a contract for the transfer of IP rights are governed by the law designated by the parties. A choice-of-law clause may be included in the contract, or added after the contract is concluded. Matters which are related to the transferability of IP rights are governed by the law of the protecting country (lex protectionis, Art 110). The law of the protecting country would also determine what claims the licensee can exercise with regard to the exploitation of the transferred IP right. In the absence of choice, a contract related to the transfer or assignment of IP rights is governed by the law of country where the transferor or grantor of the IP right has his habitual residence (Art 122(1) of the Swiss PIL Act).756 The choice of the governing law should not be contrary to Swiss public policy and other mandatory rules (Art 17 and 18). The Croatian Report noted that contractual obligations between the parties would be subject to the parties’ choice-of-law agreement. In the absence of choice, Article 20(14) provides for a special choice-of-law rule for contracts concerning copyrights which establishes that the law of the author’s domicile or seat at the time of the receipt of the offer should be applied. Croatian law would then make a distinction between contractual obligations and matters which are not subject to a parties’ disposition. Namely, the question of whether moral rights can be transferred is a matter of public law which means that parties cannot override the application of mandatory rules by choosing another applicable law (Art 19 of the Croatian PIL Act). The Croatian Report notes that the question of transfer  Dutch Report, para 3.3.   See Dutch Report, section 5.3. 755   See Austrian Report, section 3.4.3. 756   Swiss Report, answer to question 3 (Part 1). 753 754

General Report  175 ability should be governed by the law of the protecting country (lex loci protectionis), although this view had not been confirmed in court practice.757

13.2.4  Applicable Law to Contracts according to the CLIP Principles The CLIP Principles follow the well-established approach regarding the applicable law to matters of IP-related contracts. As under the Rome I Regulation, a distinction is made between issues pertaining to the IP right itself and other contractual matters. Thus, the transferability question is characterised as a proprietary issue which accordingly is governed by the law of the protecting country (lex loci protectionis, Art 3:301). The same approach is also followed with regard to the transferability by operation of law and compulsory licenses (Art 3:507(2)). Transfer or licence agreements, as well as contracts which have as their main object the creation of IP rights and other agreements related to IP rights, are governed by the law chosen by the parties (Art 3:501(1)). In comparison to the Rome I Regulation, the CLIP Principles establish a slightly different language as to the requirements related to the expression of choice. The choice-of-law ‘must be expressed or demonstrated with reasonable certainty by the terms of the contract or the parties’ conduct’. Besides, under the Rome I Regulation, the agreement on the exclusive jurisdiction of a court of a Member State was considered one of the crucial factors in determining the applicable law.758 However, according to the CLIP Principles such agreements conferring exclusive jurisdiction on the court of a state with regard to disputes, which may arise out of contractual disputes, make presumptions that the law of the state is chosen as the governing law of the contract. By and large, the CLIP Principles follow legal rules entrenched in the Rome I Regulation with regard to formal and material validity of a contract as well as the scope of the applicable law to a contract (Arts 3:504–3:506).759 The CLIP Principles aim to create a legislative framework which would favour the formal validity of a contract (Art 3:504). The existence and substantial validity of a contract shall be determined by the law which governs the contract (lex contractus). The only exception is when a contracting party relies upon the law of the state of his habitual residence in order to establish that he did not consent to the contract (Art 3:505(2)). The law governing the contract regulates the: (a) interpretation; (b) performance; (c) consequences of the breach (including avoidance) as well as the assessment of damages; (d) extinguishing of obligations as well as prescription and limitation of actions; and (e) the consequences of nullity of the contract (Art 3:506(1)). In addition, as regards the performance of the contract, the CLIP Principles require the law of the state in which the performance takes place to be taken into consideration. Other remaining issues which are not covered by the CLIP Principles shall be governed by the law of the state which has to be applied by virtue of the choice-of-law rules of the forum. One of the major developments introduced by the CLIP Principles is related to the determination of the applicable law to a contract in cases where no choice-of-law was made by the parties. The Principles reflect the prevailing opinion760 at the time of the drafting and   Croatian Report, answers to HC 9.   Recital 12 of the Rome I Regulation.   A Metzger, ‘Applicable Law under the CLIP Principles’ in J Basedow, T Kono and A Metzger (eds), above n 1,

757 758 759

166. 760   A Kur and B Ubertazzi, ‘The ALI Principles and the CLIP Project: A Comparison’ in S Bariati (ed), Litigating Intellectual Property Rights Disputes Cross-border: EU Regulations, ALI Principles, CLIP Project (Milan, CEDAM, 2010) 130.

176  Toshiyuki Kono and Paulius Jurcˇys adopt the approach that in the absence of choice, the contract shall be governed by the law of the state with which the contract is most closely connected (Art 3:502(1)). However, differently from the Rome I Regulation, the CLIP Principles neither follow the characteristic performance doctrine, nor aim to identify one of the parties who is presumed to have performed characteristic obligations. Instead, the CLIP Principles provide for a list of certain criteria which should assist the judge in determining the law of the state with the closest connection to the contract. Two different sets of factors that might demonstrate the closest connection of the contract with the state where the (a) transferee/licensee or (b) transferor/ licensor has his habitual residence are specified in Article 3:502(2): Factors showing the closest connection with the State in which the transferee/licensee has his habitual residence:

Factors showing the closest connection with the State in which the creator/transferor/ licensor has his habitual residence:

• t ransferee/licensee has the explicit/implicit duty to exploit the right; • the rights are mainly exercised in the State of the transferee’s/licensee’s habitual residence/place of business; • royalties are expressed as a percentage of the sales price; • the licensee/transferee has a duty to report the exploitation of the rights.

• t ransferee/licensee has no other explicit/ implicit duty than to pay a flat sum as money consideration; • the rights are mainly exercised in the State of the transferor’s/licensor’s habitual residence/place of business; • the license is for a single use; • the creator of a protectable subject matter has the duty to create the matter.

If it is not possible to make a clear decision according to the factors indicated above and the transfer or licence concerns IP rights only for one state, it is presumed that the contract is most closely related with that state. However, if the transfer or licence concerns IP rights in multiple states, it is presumed that the state with which the contract is most closely connected is the state in which the creator, transferor or the licensor has his habitual residence at the time of the conclusion of the contract (Art 3:502(3)). It is worth noting that the proposed choice-of-law rules (Art 3:502) are designed to be applied only to contracts which have as their main objects the creation of protectable subject matter, or the transfer or the assignments of IP rights. Hence, this provision does not cover other kinds of contracts which may be related to the transfer of IP rights (especially franchising and distribution contracts).761 Such a legislative approach might be partly explained in that the CLIP Principles are founded upon the Rome I Regulation which already contains specific provisions with regard to the applicable law to franchise and distribution contracts together with additional alternative rules for other types of contracts (Art 4 of the Rome I Regulation).

  ibid 131.

761

General Report  177

13.3  Asian Countries 13.3.1  Applicable Law to IP Transfer Agreements in India and Taiwan The Indian Report noted that the parties to an IP-related contract are allowed to choose the law governing the contract. The governing law chosen by the parties cannot override Indian law determining transferability and initial ownership.762 In the absence of choice, Indian law does not provide for a clear-cut solution concerning the determination of the governing law. According to their national report, the law governing contractual obligations of the parties would be chosen by the court from the following alternatives: the law of the state for which protection is sought; the law of the place where obligations were performed; lex fori or another state’s laws.763 In Taiwan, pursuant to Article 6 of the 1953 Private International Law Act, the parties are allowed to determine the law applicable to their contractual obligations. In the absence of choice, a court must follow a cascade of connecting factors: nationality of the parties if they have the same nationality; the place of contracting; the place where the offer was issued; or the place of the offeror’s domicile. These connecting factors were considered extremely rigid and unsuitable for many types of contract. In order to remedy the existing situation, the principle of closest connection was introduced in the 2011 Private International Law Act. Article 20(1) of the 2011 Act provides for the principle of party autonomy; contracts which do not contain choice-of-law clauses shall be governed by the law of the state which is most closely connected (Art 20(2)). It is presumed that the law of the domicile of the defaulting party shall be the law which is most closely connected. According to Article 9, the application of foreign law shall be excluded if it is incompatible with the public policy or good morals of Taiwan. Moreover, the parties cannot evade the application of mandatory rules by making a choice-of-law agreement (Art 7 of the 2011 Act).

13.3.2 Japan Article 7 of the Japanese PIL Act of 2006 establishes the principle of freedom of choice, according to which the parties are allowed to choose the governing law. In the absence of choice, a contract shall be governed by the law of the country with which the contract has the closest connection (Art 8). The closest connection doctrine was borrowed from the European framework (1980 Rome Convention and Rome I Regulation). The closest connection doctrine was adopted in order to replace the previous choice-of-law rule established in Article 7(2) of the H¯orei, which required the application of the law of the state where the contract was concluded. Especially since the emergence of the Internet, Article 7(2) has received much criticism, mainly on the ground that it is either impossible to determine the place of contracting or that this choice-of-law rule would lead to the application of the law of the state which has no connection to a contract. As regards contracts for the transfer of IP rights, the Japanese courts would make a distinction between contractual obligations of the parties, which would be governed by the law designated by the parties, and matters pertaining to the IP right itself, which would be subject to the lex protectionis.764 This approach seems to be prevailing, although there are   Indian Report, answers to HC 8 and 9.   Indian Report, answers to HC 9.   Japanese Report, answers to HC 9.

762 763 764

178  Toshiyuki Kono and Paulius Jurcˇys very few court decisions where the law applicable to the contracts for the transfer of IP rights has had to be determined.765 Yet what law is to be applied to parties’ contractual obligations, in the absence of choice, remains controversial.766 13.3.2.1  Transparency Principles In the Transparency Principles two specific provisions deal with the choice-of-law issues concerning the transfer or licensing of IP rights. Since the Transparency Principles aim to propose possible improvements to the existing Japanese law, choice-of-law rules dealing with the contracts for the transfer of IP rights are built upon Article 7 of the new Japanese PIL Act. Accordingly, Article 306 of the Transparency Principles allows the parties to agree on the applicable law. In the absence of choice, the formation and effects of a contract are determined by the law of the country granting the IP right which is the object of a contract. Nevertheless, if a contract concerns the transfer of IP rights for multiple states, the law of the place where the right-holder has his habitual residence would have to be applied. The rationale of this residence-oriented approach is the difficulties associated with the widely accepted closest connection doctrine. Namely, the members of the Transparency working group were of the opinion that in practice it is almost impossible to determine the characteristic performance in contracts concerning the transfer of IP rights for multiple states. Instead, for the sake of legal certainty and foreseeability, another connecting factor should be established.767 In addition, the Transparency Principles establish an escape clause which accords that the law of another state that is more closely connected to the contract may be applied (Art 306(3)). 13.3.2.2  The Joint Japanese-Korean Proposal (Waseda Principles) Article 19 of the Waseda Principles provides for a set of general principles regarding the applicable law to contracts which have as their object the transfer or exploitation of IP rights. As in other legislative instruments, the Waseda Principles endorse the principle of party autonomy. Although a distinction is made between contractual and proprietary aspects of IP rights, parties are allowed to agree also on the law governing the proprietary aspects of IP rights. As mentioned already, such choice of law with regard to issues of transferability, existence, validity and revocation would have legal effects only between the parties (Art 302(2)). In cases where parties do not make any choice-of-law agreement or where the choice-oflaw agreement is not valid, the contract shall be governed by the law of the state most closely connected with the contract (Art 307(1)). In particular, the Waseda Principles stipulate that the court shall apply the law of the state in which the transferee or licensee is habitually resident. However, in determining the applicable law, the court is also required to take into account three considerations: the express or implied obligation to exploit the right; exclusiveness of the licensed right; and the connection between the place of substantial exploitation of IP and habitual residence of the parties (Art 307(2)). Notably, the Waseda Principles establish that the law applicable to the contract shall also govern any tortious activity committed by a contracting party (Art 307(2)).   Tokyo High Court, Judgment of 30 May 2001, 1797 Hanrei Jih¯o 111 (‘Kepwie’ case).   R Kojima, R Shimanami and M Nagata, above n 694, 218–21.   ibid, 224–25.

765 766 767

General Report  179 According to the Waseda Principles, the court is ordered to apply the mandatory rules of the forum state (Art 312(1)). The court is also allowed to apply the mandatory rules of a third state if it finds it necessary (Art 312(2)). This approach was largely influenced by the provisions of the ALI Principles (section 323) as well as the Rome I and Rome II Regulations.768 Yet, the application of foreign law may be excluded once the court finds that such an application would manifestly undermine the public policy of the forum state (Art 313).

13.3.3 Korea As regards contracts for the assignment, security or licence of IP rights, the parties are allowed to agree on the applicable law (Art 25 of the Private International Act). In the absence of choice, the contract shall be governed by the law of the state which has the closest connection to the contract. According to Article 26, the state where the defendant is resident is presumed to be the most closely connected to the contract. It should also be noted that matters related to the transferability and other proprietary matters of IP rights are to be governed by the lex protectionis (Art 24 of the Private International Act). The parties’ agreement concerning the law applicable to such proprietary matters as transferability will not be enforceable in Korea; instead, Korean IP statutes will have to be applied; this was confirmed in the lower court practice.769 The Korean Principles follow Article 24 of the Korean PIL Act (2001) and also establishes the principle of party autonomy in which the parties are allowed to make a choice-of-law agreement before or after the dispute arises (Art 20). Such an agreement may be also made to either the whole or a portion of the contract. Besides, the Korean Principles do not even posit a written form requirement for the choice-of-law agreement (Art 4(1)). It is noteworthy that the parties are also allowed to choose the applicable law to proprietary issues of the IP right itself (existence, validity, effects, extinction, transferability). However, such choice of law would be effective only between the contracting parties (Art 20(2)).770 The validity of the choice of law shall be determined under the law chosen by the parties. Further, the Korean proposal follows Article 26 of the Korean PIL Act and provides that where there is no choice of law, the law of the country which is most closely connected will be applicable to the contract. Article 23(1) of the Korean Principles establishes a presumption that the law of the state where the assignee, security holder or licensee is habitually resident is the most closely connected.771 However, the Korean Principles remains silent as to whether the presumption is irreversible, or what circumstances are to be taken into consideration in order to rebut the presumption.

13.4  Comparative Observations From the reports gathered, a few comparative remarks deserve attention. First, in most countries, there are no specific choice-of-law provisions dealing with contracts for the 768   S Kidana, ‘Chiteki zaisanken ni kan suru kokusai shih¯o gensoku-an – Nihon gur¯opu no junkyoh¯o ni kan suru bubun no teian [The proposal of private international law principles for intellectual property: Rules on the applicable law from the Japanese proposal]’ (2009) available at www.globalcoe-waseda-law-commerce.org/ activity/pdf/19/16.pdf, 171. 769   Seoul High Court, Judgment of 8 July 2008, Case No 2007Na80093 (Von Dutch case) and Korean Report, answers to HC 9. 770   Rules Pertaining to International Intellectual Property Litigation (11 December 2006, ‘Korean Proposal’), available at www.globalcoe-waseda-law-commerce.org/activity/pdf/19/22.pdf. 771   Korean Report, section 2.4.3 and answers to HC 8 and 9.

180  Toshiyuki Kono and Paulius Jurcˇys transfer of IP rights. The practical outcome is that general choice-of-law provisions are applied. Second, it is generally accepted that the parties can agree on the law governing their contractual obligations. The possibility of agreement on the law governing the contract is particularly relevant in practice, because an agreement between parties on the governing law may help avoid uncertainties related to the determination of the applicable law to contracts that do not contain choice-of-law clauses. Third, some differences seem to exist with regard to the extent of party autonomy. In other words, the existing laws of most countries would enforce the parties’ choice of law with regard to their contractual obligations, while proprietary matters would be governed by the lex protectionis. However, it seems that some further discussion about the relationship between the party autonomy and the lex protectionis is necessary. Particularly, it may be questioned whether it would not be more efficient to allow the parties to a contract for the exploitation of IP rights in multiple states to agree on the law governing both contractual and proprietary aspects of the transfer of IP rights. Fourth, the answers submitted by national reporters highlighted how divergent the approaches are towards the determination of the law governing the contract in the absence of choice. It is inevitable that further investigation is required to determine which of the possible choice-of-law methodologies (choice of a particular connecting factor or the establishment of an exemplary list of factors which would hint to the application of the law of a particular state) would best serve the interests of the stakeholders.

14  Applicable Law to IP Rights Created in the Course of Employment Relationship A significant amount of intellectual property assets are created in the course of an employment relationship, or on the basis of commission contracts. The allocation of rights and entitlements to IP assets affects the interests of many stakeholders: corporations, research institutes, universities and states. Two main questions have to be distinguished in cases regarding the exploitation of inventions created in the course of an employment contract and other forms of contractual arrangements. The first is related to the initial ownership of unprotected subject matter; the second is a question of who – employer or employee – has the right to file a patent application and obtain a patent to the invention. Hypothetical case no 8 was designed in light of these considerations. This case concerned an employee invention and the rights associated with its exploitation. The national reporters were asked to explain whether a parties’ choice of law with regard to the right to apply for a patent would be enforceable and how the problem of reasonable compensation for the exploitation of the subject matter in several states would be resolved.

14.1  North American Countries 14.1.1 Canada The Canadian Report provided an overview of possible resolutions to disputes related to the exploitation of inventions created on the basis of contractual agreements. The general principle is that an inventor is entitled to file a patent application. Yet, in situations where

General Report  181 the invention is created by an employee, the exploitation of the invention and the question of who – employer or employee – is entitled to apply for a patent can be agreed upon by the parties in their contract.772 Parties’ agreement on the applicable law may be implicit or explicit; the question of who will have the right to apply for a patent would be considered an issue of the contract. The Canadian courts would most likely consider agreements concerning the right to file for a patent application to be effective. In the absence of choice, the court would apply the law of the country with the closest and most real connection to the contract.773 The same rationale would be applied with regard to other IP rights (copyrights etc). Regarding the question of the remuneration for the employee’s efforts in creating an invention, the decision of a Canadian court would depend on how the claims are characterised. In particular, the court may look to the contractual agreement between the parties. If the claim for damages was made on the basis of an employer’s breach of obligation not to misuse the information, the claim would be determined by the law of the country which governs the obligation. On the other hand, if the claim for compensation was characterised as one of unjust enrichment, the employee’s claim would arise out of the breach of contractual obligation and the law governing the obligation would also apply to the claims for compensation.774

14.1.2  The ALI Principles The ALI Principles entrenches the principle of party autonomy. Accordingly, the initial ownership to registered IP rights, unregistered trade marks or trade dresses and IP rights that do not arise out of registration shall be determined pursuant to the law which governs their contractual relationship (section 311(2), section 312(2) and section 313(1)(c)). This rule applies to employment relationships as well as other kinds of pre-existing relationships, such as commission. If parties fail to designate the governing law, the ALI Principles requires the application of the law of the country with which the contractual relations are most closely related. In an argument in support of this legislative approach, the ALI principles indicate that the principle of party autonomy gives a ‘uniform answer throughout the world . . . facilitates marketability and enhances the value of the registered rights’.775 The drafters of the ALI principles were aware that the interests of employees might be undermined by referring to the law of the country which is less beneficial to the employees. Nevertheless, it is also assumed that most legal systems have some sort of employee-oriented legislation, so that they will not be at a disadvantage from the application of the principle of party autonomy in the context of initial ownership. In addition, the ALI Principles have second-tier protective rules such as the application of mandatory rules in case the agreement of the parties runs counter with the law of the forum of another country with which the contract is closely connected (section 323).776

772   The same approach is followed in the US: the parties of an employment contract can agree upon such questions as who is entitled to file a patent application and acquire patent rights to an invention created in the course of employment relationship. 773   For a more detailed analysis see Canadian Report, answers to HC 7. 774  ibid. 775   American Law Institute, Intellectual Property, above n 38, 135. 776  ibid.

182  Toshiyuki Kono and Paulius Jurcˇys

14.2  European Countries 14.2.1  Overview of the Laws in Different Countries One of the key rules concerning the initial title to the subject matter created in the course of an employment relationship is established in the European Patent Convention. Article 60 of the European Patent Convention provides that in the case where an inventor is an employee, the initial ownership question has to be decided under the law of the state where the employee is mainly employed. If this state cannot be determined, then the law of the state where the employer has his place of business shall apply. The approach adopted in the European Patent Convention excludes the lex protectionis approach. Under EU law, the principle of freedom of choice is also applicable in the case of individual employment contracts. Yet, in order to ensure that such a choice-of-law agreement does not deprive the employee of the protection afforded to him, Article 8(1) of the Rome I Regulation provides that parties cannot derogate from the mandatory provisions that would have been applicable in the absence of choice. In the absence of choice, a contract is governed by the law of the country where the employee habitually carries out his work, or, if such a place cannot be determined, by the law of the country where the place of business, through which the employee was engaged, is situated (Arts 8(2) and 8(3)). The choice-oflaw rules determining the governing law in the absence of choice are more restrictive than the conflicts rules established in Article 4. This is explained by the general intention of the European legislator to differentiate between service contracts and individual employment contracts. Strict choice-of-law rules established in Article 8 also reflect the practical characteristics of employment relations: close relations between the employer and the employee, as well as the employee’s integration into the employer’s business activities. The national laws of various countries provide for special rules concerning the allocation of ownership rights to the employee’s invention or works made for hire. The issue of ownership of IP products created on the basis of a pre-existing contractual relationship is usually considered an exception to the widely accepted principle that the law of the protecting country (lex protectionis) should be applicable. This means that parties to a contract are free to choose the governing law pursuant to Article 8 of the Rome I Regulation for such issues as obtaining a right to a patent or employees’ claims for reasonable compensation for inventions made in the course of their employment relationship.777 At the same time, parties’ agreements are subject to such general party autonomy limitations as public policy and domestic mandatory rules of the EU Member States (for instance, in Germany, the questions concerning the applicable law to contractual relationships between employers and employees are governed by a special statute (the Employees’ Inventions Act)). The Private International Law Statute of Belgium (2004) establishes that the parties’ agreement upon initial ownership refers to the law most closely connected, unless otherwise provided.778 Article 122(3) of the Swiss PIL Act contains a special choice-of-law rule for employment contracts on the basis of which IP assets are created. Swiss law provides 777   See eg Dutch Report, para 6.1; French Report, answers to HC 9; Italian Report, Swedish Report, answers to HC 9; UK Report, answers to HC 9. 778   Art 93(2) provides: ‘Nevertheless, the determination of the original owner of the industrial property right is governed by the law of the State with which the intellectual activity has the closest connections. If the activity takes place within a framework of contractual relations, that State is presumed to be the State of which the law applies to these contractual relations, until proof to the contrary is brought.’

General Report  183 that the rights to intellectual property are governed by the law which applies also to the employment contract. Under Spanish law, the principle of protecting country is also applied with regard to creations made in the course of employment relations. Article 10.4 of the Spanish Civil Code is mandatory, which also means that parties are not allowed to choose who will be the initial owner of the employee’s invention. However, parties are usually allowed to agree on the applicable law to other contractual obligations related to performance of employment duties. These mutual obligations are governed by the law chosen by the parties (Art 8 of the Rome I Regulation). Thus, parties may also choose the governing law to such issues as licence, waiver, consent and other matters related to the exploitation of the employee’s invention. According to Article 10.1 of the Spanish Patent Act, the inventor or any other successor in title shall have the right to patent the invention. Besides, the actual inventor may also transfer the right to obtain a patent to any other third party. Further, insofar as employee’s inventions are concerned, the Spanish Patent Act provides that the inventions shall belong to the employer (Art 15). However, there is much uncertainty related to the situation of foreign patent applications.779 According to Greek substantive law, three different types of inventions are distinguished: (1) free inventions, which belong to employees; (2) service inventions, which belong to the employer; (3) dependent inventions (when 40 per cent of the invention belongs to the employer and 60 per cent to the employee). In the case of dependent inventions, the employer is given priority rights in exploiting the invention, since a proportionate compensation is paid to the employee considering the economic value of the invention and the profits it brings. An employee who makes a dependent invention is obliged to inform the employer in writing, together with further data as dictated by the law. If the employer does not reply within four months, the employee obtains the right to file a patent application and exploit the invention himself.780 Such a regulatory regime is of a mandatory nature, which means that the parties are not allowed to agree on an applicable law which would lead to different results. The Greek reporters noted that the principle of territoriality should be followed and that Greek law governing initial ownership issues would have to be applied only with regard to patent applications made in Greece.781

14.2.2  The CLIP Principles The applicable law questions concerning IP assets created on the basis of employment relationships are specifically addressed in Article 3:503. The CLIP Principles set out that the mutual obligations between employer and employee in relation to the transfer or licence of an IP right arising from the employee’s efforts shall be governed by the law chosen by the parties. Namely, the parties are allowed to make a choice-of-law agreement with regard to the right of the employer to claim the IP right and the employee’s right to remuneration. In any event, the choice of law by the parties cannot deprive the employee of the protection afforded by the mandatory rules which would have to be applied in the absence of choice. If the parties have not exercised their right to choose the governing law, the law of the state in which (or, failing that, from which) the employee habitually carried out his work in performance of the contract shall be applied. Nevertheless, if from all the circumstances it   Spanish Report, answers to HC 8.   Greek Report, answers to HC 8.  ibid.

779 780 781

184  Toshiyuki Kono and Paulius Jurcˇys appears that the contract is more closely connected with another state, the law of that state shall be applied (Art 3:503(2) and 3:503(3)).

14.3  Asian Countries 14.3.1 Japan Many noteworthy cases concerning various legal aspects related to employees’ inventions exist in Japanese law. As regards the question of remuneration, one of the most notorious cases concerned a dispute between Hitachi Corporation and one of its employees, Yonezawa. After creating three inventions pertaining to the transfer of data to optical discs, Yonezawa and Hitachi signed an agreement for the transfer of rights to obtain patents. This contract did not explicitly deal with the territorial scope of the transferred rights. Later Hitachi made patent applications in Japan, the United States, the United Kingdom, France, Germany, the Netherlands, and various other countries. Yonezawa received about $20,000 as compensation for the invention, although it was apparent later that Hitachi made huge profits from the commercialisation of the patented inventions. After retirement, Yonezawa filed a lawsuit requesting the court to order the payment of reasonable compensation. In its judgment, the Supreme Court emphasised that a distinction should be made between the transfer of rights to patent an invention and the issuance of a patent per se. 782 In the case at hand, the object of the parties’ agreement was the transfer of rights to obtain patents in Japan and a number of foreign countries. From the Supreme Court’s perspective, the principle of territoriality is important to the extent that the question of patent issuance (ie fulfilment of patentability requirements) should be decided according to the law of each country where the patent application is made. It was decided the parties made an implied choice of law (Art 7(1) of the H¯orei). The Supreme Court also indicated that the Japanese Patent Act does not directly deal with such initial ownership issues regarding foreign patent applications. Instead, Articles 35(1) and 35(2) only deal with domestic situations, hence it would be difficult to conclude that the right to just compensation entrenched in Article 35(3) also covers patents granted in foreign countries. Nevertheless, the Court went on to argue that patents form an essential component of national industrial development. In order to make sure that national economic policy goals are achieved, the interests of the employees should be duly protected. Therefore, the Court asserted that it is not reasonable to make a distinction between situations where the transfer of rights to obtain patents covers only domestic cases versus those that comprise cross-border cases. Besides, from a practical point of view, it is not easy for the parties to anticipate ex ante under what kind of legal framework the invention will be protected (trade secrets or patents). Furthermore, if the patent protection is chosen, it is not clear in which state(s) the employee will seek such patent protection. Such contractual agreements often involve parties who are bound by long-term contractual obligations and the underlying invention will usually be the same. This led the Supreme Court to the conclusion that Articles 35(3) and 35(4) should also be applied by analogy to those cases where employee inventions become the subject of foreign patent applications. In other words, in ascertaining the amount of reasonable compensation, the profits for the exploitation of the invention should also include profits gained in foreign countries.   Supreme Court of Japan, Judgment of 17 October 2006, 69 Minsh¯u 2853 et seq.

782

General Report  185 Consequently, the Supreme Court issued an order to pay compensation of 34.89 million yen, the highest such compensation for an employee invention thus far. The Court found that Hitachi had actually made profits of around 1.18 billion yen, while the contribution to the invention made by Yonezawa was estimated to amount to some 14 per cent of the returns. The very next day judgment was rendered in another notorious case, Nakamura v Nichia.783 Similarly, this latter case involved the issue of compensation for an employee invention, this time the blue LED created by Shuji Nakamura, currently a professor at the University of California. Nakamura claimed compensation of around $190 million. After careful analysis of the facts of the case, the court of first instance was prepared to order triple the amount of compensation to that claimed by Nakamura himself. Such a skyrocketing amount was possible because the court took into account potential profits that the employee might have earned by exploiting the rights of the patented blue LED. However, due to procedural limitations, the court only ordered the initial compensation amount claimed by Nakamura. Even so, this remains the highest ever compensation ordered by a Japanese court for an employee invention. In the course of the appeal proceedings, however, Nakamura and Nichia concluded a settlement agreement according to which Nakamura received ‘only’ $2 million. The outcome of these cases is that Japanese law generally allows the parties to an employment contract for the creation of IP products to agree on who – employer or employee – would be entitled to file a patent application. However, the provisions of the Japanese Patent Act concerning the remuneration are considered to be of a mandatory nature. As a result, parties to a contract would not be allowed to agree on the application of the law of the state which would deprive the employee from the protection provided. Article 305 of the Transparency Principles provides that the existence, primary ownership and effect of an IP right is governed by the law of the state that granted the IP right. The same provision also clearly stipulates that the parties’ agreement with regard to these proprietary issues is not allowed. The Commentary of the Transparency Principles also lists a number of proprietary issues which should be governed by the lex protectionis. Among other matters, it is also indicated that insofar as employee inventions are concerned, the law of the protecting state determines the ownership and monetary compensation.784 A much more flexible approach is established in the Joint Japanese-Korean Proposal (Waseda Principles). Namely, if the IP was created on the basis of employment or any other pre-existent relationship, the initial title is governed by the law applicable to the contract (Art 308(4)). It should be recalled that the Waseda Principles allow the parties to agree on the law which would govern any issue concerning IP rights (the choice of law must not affect the rights and duties of third parties, Art 302).

14.3.2 Korea According to the Korean report, initial ownership issues are to be determined by the lex protectionis.785 However, the Korean Principles introduce a more flexible regime and allow the parties to make a choice-of-law agreement also with regard to proprietary issues. Such agreements shall have legal effects only between the parties, and cannot affect the rights and duties of third parties. As for IP assets which were created as an employee invention or on   Tokyo High Court, Decision No 13(wa) 17772 of 30 January 2006.   R Kojima, R Shimanami and M Nagata, above n 694, 213 and 215.   Korean Report, answers to HC 8.

783 784 785

186  Toshiyuki Kono and Paulius Jurcˇys the basis of the commission or other pre-existing contractual relationship, Article 25(2) of the Korean Principles establishes that the law of the place where the employer is habitually resident shall govern the relationship between the parties, unless it was agreed otherwise.

14.4  Comparative Observations From the answers submitted by the national reporters, it appears that the parties’ right to agree on their mutual obligations as well as entitlements to the subject matter created in the course of a contractual relationship is widely accepted. The same is also true as regards IP assets created in the course of an employment relationship. However, as the overview of the European and Japanese laws have demonstrated, such a choice-of-law agreement is also subject to limitations related to the protection of the interests of the employee. Insofar as an employee’s inventions are concerned, it also appears that such industrial/cultural policyoriented considerations, such as the need to promote the development of culture and science as well as the need to protect the interests of the employees, may have certain repercussions with regard to the application of the law of the forum and the choice of law (eg Hitachi case). It may be further argued that there is some room for discussion with regard to the determination of the governing law in cases where the parties did not make an explicit choice of the governing law. It would be desirable if the future instrument harmonising private international law aspects of IP could provide for a uniform solution.

15  Applicable Law to Securities in IP In the last few decades IP rights have become one of the most valuable assets of companies. One possible way to exploit IP rights is to use them as collateral in financial transactions. It is established business practice to bundle portfolios of IP rights together with other corporate assets as collateral. Such exploitation of IP rights generally falls under domestic regulations on secured transactions. International financial contracts are usually very complex and a number of particular problems related to creation, third-party effectiveness, registration, priority or insolvency may arise. For instance, the IP licensor (original payee) may securitise his rights of payment under an IP contract whereby a third party (eg, securitisation vehicle or a factor) obtains the right to be paid. A problem could arise if the original payee (IP licensor), who securitised his right to a third party, becomes bankrupt. The question then arises whether a third party is still entitled to payments from the payor (ie IP licensee), or whether the creditors of the original payee should be entitled to the payments. Issues related to the effectiveness against third parties and priority of rights become even more complicated in cross-border transactions. The national reporters were asked to explain whether and how the taking of security of IP rights is addressed within the choice-of-law framework of their countries. Most national reports indicated that in their country, IP rights can be used as collateral.786 This is usually established in statutes dealing with particular IP rights and sometimes is also provided in special acts dealing with security rights. Even if there are no special statutory provisions which   See Answers to HC 12.

786

General Report  187 would clearly stipulate that IP rights could be used as collateral, this would still be possible in actual business practice. Although initially only registered IP rights such as patents were used as collateral, eventually any kind of IP right became acceptable as an object of secured transactions. In practice, different due diligence procedures are undertaken with regard to registered and non-registered IP rights, principally because there is no public registry containing information about the status of non-registered IP rights. Further, as regards non-registered IP rights, securities could be created only with regard to economic rights. In common law jurisdictions of Canada, the validity, perfection, and the effects of perfection would typically be governed by the law, including the conflict of laws rules, of the jurisdiction in which the debtor is located at the time when the security interest attaches. Issues of priority would be governed by lex fori. In Quebec, which is a civil law jurisdiction, the law of the grantor of the security would govern the validity of the security as well as the publication and its effects (Art 3105 of the Civil Code of Quebec). In the United States, secured transactions are governed by the Uniform Commercial Code, with Article 9 providing for a comprehensive legal framework which likewise applies to securities of IP rights. According to Article 9-301(1) of the UCC, the perfection, the effects of perfection or imperfection, and the priority of a security interest in collateral are governed by the law of the place where the debtor (ie the person assigning the right to payment) is located. A similar approach was also followed in the 2001 UN Convention on Assignments of Receivables in International Trade787 which inter alia stipulates that the law of the state in which the assignor is located governs the priority of the right of an assignee in the assigned receivable over the right of a competing claimant (Art 22). In the EU, the Rome I Regulation deals with the applicable law to voluntary assignments. The concept of assignment includes outright transfers of claims, transfers of claims by way of security as well as pledges or other security rights over claims (Art 14(3)). According to Article 14(1), the relationship between assignor and the assignee shall be governed by the law that applies to the contract between the assignor and assignee under the Rome I Regulation; hence, the governing law can be chosen by the parties (Art 3). In the absence of choice, such contracts for the assignment of IP rights should be considered as a contract for the sale of goods,788 and therefore the law where the seller (assignor) has his habitual residence should be applied.789 A number of European national reports indicated that the principle of lex loci protectionis would be applied to the creation, effectiveness against third parties, priority and the enforcement of these security rights over IP.790 The law of the protecting state should be also applied according to the European Patent Convention (Art 74) as well as the ALI Principles (section 317) and the Transparency Principles (Art 308). The application of the lex protectionis principle to the creation of securities in IP rights has been subject to criticism because it would require compliance with the requirements of a valid creation of security interests in every state concerned. In particular, the application of the   Available at www.uncitral.org/pdf/english/texts/payments/receivables/ctc-assignment-convention-e.pdf.   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327. 789   See also S Bariatti, ‘The Law Applicable to Security Interests in Intellectual Property Rights’ (2010) 6 Journal of Private International Law 395; TC Hartley, ‘Choice of Law Regarding the Voluntary Assignment of Contractual Obligations under the Rome I Regulation’ (2011) 60 International and Comparative Law Quarterly 29; L Stephens, ‘The New Rule on the Assignment of Rights in Rome I – the Solution to all our Proprietary Problems? Determination of the conflict of laws rule in respect of the proprietary aspects of assignment’ (2006) 14 European Review of Private Law 543. 790   eg Croatia, Italy (Art 54 of the Italian PIL Act), Portugal, or Spain (Art 10.4 of the Civil Code). The same approach is also taken in Japan and Korea (Art 24 of the Private International Act). 787 788

188  Toshiyuki Kono and Paulius Jurcˇys law of the country of protection does not fit the needs of financial markets where bundles (portfolios) of IP rights are used as single collateral. A notable project concerning secured transactions was undertaken under the auspices of the United Nations Commission on International Trade Law (UNCITRAL). At UNCITRAL the work on secured credit law was initiated in 2000. In 2001 Working Group IV (Security Interests) was entrusted with the task of developing an efficient legal regime for security interests in goods involved in commercial activity. The studies conducted over 12 sessions were exemplified in the preparation of the Legislative Guide on Secured Transactions which was adopted on 14 December 2007.791 The Legislative Guide deals with a number of substantial law issues including the creation, effectiveness against third parties, registration, priority and enforcement of a security right. In order to deal particularly with IP problems regarding the creation and enforcement of security rights, UNCITRAL prepared a ‘Supplement on Security Rights in Intellectual Property’ which was adopted on 29 June 2010.792 According to Recommendation No 208 of the Legislative Guide (2007), the law applicable to the creation, effectiveness against third parties and priority of a security right in an intangible asset is the law of the state in which the grantor is located. In addition, Recommendation No 248 further stipulates in the Supplement on Security Rights in IP that the law applicable to the creation, effectiveness against third parties and priority of a security right in IP is the law of the state in which the IP is protected. Besides, according to lit (c) of the same recommendation, the law applicable to the enforcement of a security right in intellectual property is the law of the state in which the grantor of the security is located.793 In light of these proposals made by UNCITRAL, three alternative provisions were included in the Third Draft of the CLIP Principles (Art 3:508). Issues concerning the creation of securities over IP rights will continue to be intensively debated topics within this decade. Acknowledging the great advancements in the area of security rights in IP, proposals made by UNCITRAL concerning choice-of-law issues should be thoroughly reviewed jointly by lawyers from both fields of IP and private international law.

16  Recognition and Enforcement of Foreign Judgments One element of the national sovereignty of states is that the effects of court judgments are limited to the territory of the forum states. In order to have legal effects in a third country, a judgment has to be recognised and declared enforceable. Recognition and enforcement of foreign judgments play an important role in the adjudication of multi-state IP disputes. Namely, in situations where a court decided a case concerning the protection of IP rights existing in several states, the recognition of such foreign judgments would significantly   Available at www.uncitral.org/pdf/english/texts/security-lg/e/09-82670_Ebook-Guide_09-04-10English.pdf.   Available at www.uncitral.org/pdf/english/texts/security-lg/e/Final.Draft.15_July.2010.clean.pdf; see also SV Bazinas, ‘Intellectual Property Financing under the Supplement to the UNCITRAL Legislative Guide on Secured Transactions’ (2011) 43 UCC Law Journal 601; S Bazinas, ‘Multi-Jurisdictional Receivables Financing: UNCITRAL’s Impact on Securitization and Cross-Border Perfection’ (2002) 12 Duke Journal of Comparative and International Law 365. 793   See also L Brennan, ‘Intellectual Property Financing: An Overview’, paper presented at UNCITRAL Third International Colloquium on Secured Transactions (1–3 March 2010) available at www.uncitral.org/uncitral/en/ commission/colloquia/3rdint.html and O Akseli, International Secured Transactions Law: Facilitation of Credit and International Conventions and Instruments (Oxon, Routledge, 2011). 791 792

General Report  189 reduce the costs of the parties and of the courts because essentially the same dispute would not have to be re-litigated in every state for which protection is sought. Another important – and more controversial – segment of multi-state adjudication of IP disputes is the recognition and enforcement of provisional and protective measures which have cross-border effects. However, since the failure of the most recent major attempt to adopt an international judgments convention, most of the matters concerning the recognition and enforcement of foreign judgments remain regulated by domestic or regional legislative acts. The following sections build upon answers received from the national reports. In hypothetical case no 10, national reporters were asked whether a court of their country would recognise a judgment given by a foreign court in a dispute over the ownership of a patent granted in the state of a particular national reporter. In particular, national reporters were asked what legal requirements the courts would employ before recognising or enforcing a foreign judgment; if the dispute concerns the ownership of a registered IP right, whether parties would be required to re-litigate the issue; and what are the procedural steps of enforcement of a foreign judgment.

16.1  Recognition and Enforcement in the 2001 Draft of the Hague Judgments Convention The 2001 Draft of the Hague Judgments Convention established quite a detailed legal regime concerning the recognition and enforcement of foreign judgments. The Draft Convention allows the recognition and enforcement of any ‘judgment’ which is rendered by a court, regardless of how it is termed. ‘Judgment’ means any decision, decree or order, as well as the determination of costs and expenses by an officer of a court (Art 23). The notion of judgment is to be understood broadly, and encompasses monetary and nonmonetary orders, orders concerning property rights and ‘negative declarations’ or judgments rendered in default of an appearance of the defendant.794 During the negotiations, the drafters of the Convention came to no definite conclusion as to what language most suitably describes the legal effects of a judgment in the state of origin (whether the judgment should ‘the effect of res judicata’, produce ‘effects’ or be ‘enforceable’ in the state of origin).795 This was due to the existing differences among the national laws of different states. The recognition and enforcement proceedings may be stayed or refused if the judgment is subject to review. The 2001 Draft generally allows the recognition and enforcement of foreign decisions ordering provisional or protective measures. However, the draft was not unequivocal as to what provisional and protective measures should be subject to the rules on recognition and enforcement. Therefore, the 2001 Draft Convention contained two alternative provisions. Alternative A of Article 23A is more specific and provides that ‘A decision ordering a provisional and protective measure which has been taken by a court seised with the claim on the merits, shall be recognised and enforced . . .’. Alternative A outlines a list of provisional and protective measures referenced: (a) measures to main the status quo of the issues at trial; (b) measures providing preliminary means of securing assets out of which an ultimate judgment may be satisfied; or (c) measures to restrain the conduct of a defendant. Alternative B is drafted in more open terminology: ‘orders for provisional and protective   Nygh-Pocar Report, above n 77, 98.   See Art 25 of the 2001 Draft of the Convention.

794 795

190  Toshiyuki Kono and Paulius Jurcˇys measures issued in accordance with Article 13 shall be recognised and enforced pursuant to the provisions of the Draft Convention.’ The Draft Convention allows the recognition and enforcement of judgments rendered by a court which exercised its international jurisdiction on the basis of Articles 3–13 of the Convention. However, judgments which were rendered on the basis of national law pursuant to Article 17 are not subject to the rules of recognition and enforcement (Art 24). Further, the Convention does not allow recognition or enforcement of judgments rendered by a court which: (a) did not comply with the provisions concerning choice of court or (b) the protection of weaker parties; (c) breached exclusive jurisdiction rules; (d) exercised jurisdiction on a ground which is prohibited by the Convention (Art 26). Such prohibition of recognition or enforcement was necessary in order to assure that national courts follow the jurisdiction provisions established in the Draft Convention.796 Hence, the court seised with a petition for recognition or enforcement must verify whether the court of the state of origin had jurisdiction according to the rules of the Convention (Art 27(1)). The verifying court must be bound by the findings of fact on which the rendering court based its jurisdiction. Article 28 of the Draft Convention provides for a list of circumstances in which a court may refuse to recognise or enforce a foreign judgment: (a) if the case between the same parties and having the same subject matter are pending before another court of the state addressed, provided that it was the court first seised; (b) the judgment is inconsistent with a judgment rendered in the state of the court seised or any other state; (c) foreign judgment was rendered in proceedings which were incompatible with the fundamental principles of procedure of the state addressed; (d) the document instituting the proceedings or an equivalent document was not notified to the defendant without giving sufficient time and in such a way that does not enable him to prepare for the defence; (e) the judgment was obtained by fraud; and (f) the recognition or enforcement would be manifestly incompatible with the public policy of the state addressed. This list of circumstances is exhaustive.797 As a result, the recognising court would not have discretion to refuse to recognise or enforce judgments due to other circumstances which may be established in national laws. The party which opposes the recognition and enforcement is obliged to prove the existence of one of the circumstances established in Article 28. However, the recognising court is not allowed to review the merits of the judgment rendered by the court of origin (Art 28(2)). The 2001 Draft of the Convention is based on the approach that recognition and enforcement of a foreign judgment are separate notions. This means that some judgments (such as declaratory judgments) can be recognised but need not be enforced; and some judgments which are not entitled to recognition can be enforced.798 In the latter case, this would most often be the question of enforcement of provisional or protective measures or other forms of intermediate decisions. Article 29 provides for a list of documents that a party seeking for the recognition or enforcement must produce (Art 29). Yet, the procedures for the recognition or enforcement were not established in the Draft Convention and are left to the domestic laws of the recognising state (Art 30). The 2001 Draft of the Judgments Convention provided for a balanced solution with regard to the recognition and enforcement of judgments awarding damages. In particular, a judgment awarding non-compensatory damages (including exemplary or punitive damages) must be recognised and enforced to the extent that the recognising court could have   ibid, 105–6.   ibid, 108.   ibid, 102.

796 797 798

General Report  191 awarded similar or comparable damages. Besides, the courts are also allowed to recognise and enforce a judgment up to the full amount of the damages if it is possible under the domestic laws (Art 33(1)). In addition, the Draft Convention generally would allow partial recognition or enforcement of a foreign judgment if certain elements of a judgment are severable (Art 34).

16.2  North American Countries 16.2.1  Recognition and Enforcement of Foreign Judgments in IP Disputes according to Canadian and US Law Just as in the case of the exercise of international jurisdiction, questions related to the recognition and enforcement of foreign judgments in Canada depends on whether the Canadian province follows common law principles or is a civil law jurisdiction (Quebec). According to Canadian common law, foreign judgments can be recognised or enforced if the following three requirements are met. First, the judgment debtor must have residence in the country where the judgment was rendered. Secondly, there should be a submission of the judgment debtor to the courts of the originating country. Thirdly, there should be a real and substantive connection between the defendant or subject matter of the dispute and the state where the judgment has been made. The latter ground was established by the Canadian Supreme Court in the case of Morguard, decided in 1990. Canadian courts would usually recognise monetary judgments but other kinds of court orders were not being recognised. However, the adoption of the Enforcement of Canadian Judgments and Decrees Act, which is in force in six Canadian provinces, opened the gates to the recognition of ‘decrees’ other than orders for monetary payments. The Supreme Court previously held that non-monetary orders are also enforceable in Canada, although the conditions of recognition had not been finally crystallised until 2010.799 With regard to the enforcement of foreign judgments, Canadian law established various alternatives which could be chosen by the plaintiff according to the particular circumstances of the enforcement.800 Recognition of judgments in IP disputes rendered by foreign courts would be subject not only to general conditions for recognition established in Canadian law but also to subjectmatter jurisdiction considerations which play a significant role in Canadian conflict-of-laws. More precisely, in such situations as presented in the hypothetical case of the questionnaire, where a foreign court issues a judgment concerning the change of entry in a patent registry with regard to the owner of a Canadian patent, the Canadian court would take into account such questions as the existence of in personam and subject-matter jurisdiction of a foreign court. Although a personal jurisdiction requirement could be easily established, subject-matter jurisdictions of a foreign court would hardly be recognised if the subject-matter jurisdiction of Canadian courts would cover the case. Therefore, foreign judgments in IP disputes over which Canadian courts have subject-matter jurisdiction would not be recognised in Canada. This would be especially the case with regard to the infringement or validity of a Canadian patent. Nevertheless, Canadian courts might recognise foreign judgments concerning the ownership of a Canadian patent if the original judgment was rendered in a contractual dispute.801   See Canadian Report, Part IV and answers to HC 10.   For a more detailed presentation see Canadian Report, Part IV and answers to HC 10. 801   According to the Canadian Report, such court practice exists in Canada. See Canadian Report, answers to HC 10. 799 800

192  Toshiyuki Kono and Paulius Jurcˇys In the United States, the question of recognition and enforcement of foreign judgments is not governed in federal laws; instead it is a matter of state law.802 While the recognition and enforcement of sister state judgments are subject to the constitutional Full Faith and Credit Clause,803 foreign judgments must not be contrary to international comity of the United States. The fundamental requirements concerning the recognition and enforcement of foreign judgments in the United States were established in Hilton v Guyot: Where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, concluding trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect, the merits of the case should not, in an action brought in this country upon the judgment be tried afresh.804

The principles established in the Hilton v Guyot judgment were largely followed in most US states. Three legal instruments which guide the court’s practice in recognising and enforcing foreign judgments have been adopted: the 1962 Uniform Foreign MoneyJudgments Recognition Act (‘UFMJRA’), the ALI Restatement (Third) of Foreign Relations, and a draft statute known as the Foreign Judgments Recognition and Enforcement Act. In Hilton v Guyot, reciprocity was one of the requirements of the non-recognition of a foreign judgment. Yet in most US states,805 courts no longer take into consideration whether there is reciprocity between the state of origin and the United States.806 The requirement of reciprocity was also abandoned in the Uniform Foreign Money-Judgments Recognition Act, the Restatement (Second) of Conflict of Laws (section 98); and the Restatement (Third) of Foreign Relations Law (section 481). Nevertheless, the proposed statute on recognition and enforcement contains reciprocity as one of the mandatory grounds for nonrecognition. Section 7 of the statute further establishes certain presumptions of cases where reciprocity would be absent. In order to be recognised, a foreign judgment should also meet certain procedural and substantive law requirements. A foreign judgment must be rendered by a court which had international jurisdiction over the defendant (UFMJRA, section 4(a)). The jurisdiction of the rendering court must exist under both the law of the rendering state as well as section 421 of the Restatement (Third). Additionally, in proceedings in which the judgment was rendered, the defendant must have been properly served, or have appeared voluntarily before the court. Default judgments are generally recognised and enforced in the United States,807 although the defendant can always challenge the foreign judgment. Absence of fair trial,808 bribery or corruption of the judge,809 fraud810 or failure to comply with the notice   British Mainland Airways Ltd v Int’l Travel, Inc 497 F 2d 869 (9th Cir 1974).   Art 4 s 1 of the US Constitution and 28 USC § 1738 (1988).   Hilton v Guyot 159 US 113 (1895), 202–3. 805   Only seven states maintain the requirement of reciprocity: Florida, Georgia, Idaho, Massachusetts, North Carolina, Ohio and Texas. 806   Tonga Air Services, Ltd v Fowler 118 Wash 2d 718, 826 P 2d 204 (1992), 209; Nicol v Tanner 256 NW 2d 796, 800 (Minn 1976); The Toronto-Dominion Bank v John W Hall, 367 F Supp 1009, 1013–14. 807   Chabert v Bacquie 694 So 2d 805 (Fla Ct App 1997); s 481 of the Restatement (Third). 808   Hilton v Guyot 159 US 113 (1895), 202; Bank Melli Iran v Pahlavi, 58 F 3d 1406 (9th Cir 1995). 809   Bridgeway Corp v Citibank, 201 F 3d 134 (2nd Cir 2000); Films by Jove, Inc v Berov 250 F Supp 2d 156 (EDNY 2003). 810   Fairchild, Arabatzis & Smith, Inc v Prometco (Produce and Metals) Co 470 F Supp 610 (SDNY 1979), 615. 802 803 804

General Report  193 requirements may constitute a barrier for the recognition or enforcement of foreign judgments. However, only an outrageous departure from due process requirements could prevent recognition or enforcement.811 A foreign judgment can be recognised and enforced in the United States if is not against the public policy of the recognising state. However, the courts did not find any infringement of public policy of the recognising state in cases where foreign judgments had been enforced based on the law of other jurisdictions, even if that foreign law upon which the judgment was based was different from the forum’s law.812 International comity requires that ‘courts of a separate sovereign not interfere with concurrent proceedings based on the same transitory claim, at least until a judgment is reached in one action’ allowing res judicata to be pleaded in defence.813 One of the elements of international comity is the first-in-time principle concerning parallel proceedings before courts of different states. The first-in-time principle requires federal courts to decline jurisdiction over a particular property over which another court has already asserted jurisdiction.814 In particular, as regards actions in rem and quasi in rem, the court first seised may exercise jurisdiction in exclusion of any other court.815 This principle had been first developed in the context of US federalism; and has subsequently been applied to proceedings pending before courts of foreign states.816 In the case of GlobalSantaFe, the court refused to take into consideration the fact that a Korean court had rendered a judgment which blocked the transfer of a squatted domain name. The reason for refusing to defer to the Korean judgment was that the foreign proceedings had been instituted with the intent of blocking the proceedings before American courts which had in rem jurisdiction over the dispute.817 As regards the substantive law defences, the most often invoked ground for nonrecognition of a foreign judgment is its contrariety to US public policy. Although in the Hilton v Guyot case the court did not make a direct reference to public policy, it was generally considered that public policy is one of the elements of international comity. It should be also noted that in contrast with the proposed Foreign Judgments Recognition and Enforcement Act, both the Uniform Foreign Money-Judgments Recognition Act and the Restatement (Third) of Foreign Relations establish that public policy is one of the discretionary grounds for non-recognition. In practice, American courts have endorsed the recourse to public policy to only a limited extent. In fact, public policy as a ground for nonrecognition could be used ‘only in those unusual cases where the foreign judgment is repugnant to fundamental notions of what is decent and just in the state where the enforcement is sought’818 or if the judgment ‘“tends clearly” to undermine public interest, the public confidence in the administration of the law, or security for individual rights or personal liberty or private property’.819

  British Midland Airways Ltd v International Travel Inc 497 F 2d 869 (9th Cir 1974), 871.   Untersteiner v Untersteiner, 32 Wn App 859 (1982), 863; The Toronto-Dominion Bank v John W Hall, 367 F Supp 1009, 1014. 813   Laker Airways Ltd v Sabena, Belgian World Airlines 731 F2d 909 (DC Cir 1984), 937; SEC v Banner Fund Int, 211 F 3d 602 (DC Cir 2000), 612. 814   Princess Lida of Thurn & Taxis v Thompson 305 US (1939) 456, 465–66. 815   SEC v Banner Fund Int, 211 F3d 602 (DC Cir 2000), 611. 816   Chesley v Union Carbide Corp 927 F2d 60 (2nd Cir 1991), 66; Dailey v NHL 987 F2d 172 (3d Cir 1993), 175–78. 817   GlobalSantaFe Corp v Globalsantafe.com 250 F Supp 2d (E.D. Va. 2003) 610, 625. 818   McCord v Jet Spray Intern Corp 874 F Supp 436 (D Mass 1994). 819   Ackerman v Levine 788 F 2d 830 (2d Cir 1986), 841. 811 812

194  Toshiyuki Kono and Paulius Jurcˇys

16.2.2  Recognition and Enforcement of Foreign Judgments in the ALI Principles According to the ALI Principles, the first task for a court seised with a request to recognise and enforce foreign judgment is to ascertain whether the rendering court applied the ALI Principles. If the judgment was rendered on the basis of the ALI Principles, then these Principles shall also be applied for the recognition and enforcement of proceedings, otherwise the judgment should be recognised and enforced according to the domestic rules of the forum state (section 401 lit (a) and (b)). In cases where the judgment was rendered according to the ALI Principles, such judgment can be recognised and enforced in a foreign state if it is enforceable in the rendering state. According to the ALI Principles, only final judgments are entitled to recognition and enforcement (section 401(2)). A judgment is ‘final’ if it enforceable in the country where that particular judgment was rendered. Hence, in order to determine the finality and the scope for the judgment to be recognised and enforced, the ALI Principles mandate the court of a recognising state to refer to the law of the rendering state. In this regard it is noteworthy that the ALI Principles aim to provide for a more flexible solution to situations where a foreign judgment is subject to review in the rendering state or the time limit for the review has not expired. In such cases the proceedings for recognition and enforcement, which were initiated before the judgment became final, should be stayed until the judgment becomes final and enforceable in the rendering state (section 401(2)). This rule was influenced by the Brussels I Regulation and the Second Restatement.820 Furthermore, the ALI Principles establish a broader notion of foreign judgments which are subject to recognition and enforcement in a third state. The effect shall be given not only to foreign final judgments but also to provisional and protective orders (section 401(4)), injunctive relief (section 412) as well as decisions on validity or invalidity, and infringement as well as ownership of IP rights (section 413). Effect may be also given to default judgments provided that the personal jurisdiction of the rendering court was consistent with the law of the rendering state or the ALI Principles. In assessing the existence of personal jurisdiction of the rendering court, the court of the enforcing country shall rely on the facts found by the rendering court (section 402). The ALI Principles establish one important rule concerning the effects of a foreign judgment. According to section 401(3), the preclusive effect given a foreign judgment should be no greater than the preclusive effect of the judgment in the rendering state. This provision aims to balance the sovereignty considerations of different states. Further, such limitation also affords greater legal certainty to the litigating parties. The grounds of non-recognition were drafted in light of the ALI Foreign Judgments Project.821 Accordingly, sections 403(1) and 403(2) of the ALI Principles establish mandatory and discretionary grounds of non-recognition. Grounds of non-recognition established in paragraphs (1) and (2) of section 403 should be read together with paragraph (3), which requires the recognising court to defer to the facts found by the rendering court except in those cases where the defendant did not appear in the court proceedings. Among eight grounds of mandatory non-recognition, four are related to principles of fundamental procedural fairness: (a) impartiality of the tribunal or procedures; (b) the integrity of the rendering court; (c) proper and timely notice to the defendant about the pending proceed  American Law Institute, Intellectual Property, above n 38, Reporters’ Note to § 401, 171.   The American Law Institute, ‘Recognition and Enforcement of Foreign Judgments: Analysis and Proposed Federal Statute’ available at www.ali.org. 820 821

General Report  195 ings; (d) the requirement that the judgment must not be obtained by fraud. However, the absence of certain procedural institutions, which are known in certain jurisdictions (e.g. discovery or jury trials), is not considered an infringement of procedural fairness.822 In addition, a foreign judgment must not be recognised if it is contrary to the public policy in the state in which the enforcement is sought (section 403(1)(e)). In assessing the violation of public policy, the recognising court should only consider the outcome of the litigation (not the substance or procedure) and only investigate how the outcome of the case affects the interests of the state in which recognition is sought.823 Foreign judgment should not be recognised if the rendering court exercised jurisdiction on the basis of a standard-form choice-of-court agreement which deprives one of the parties of the procedural guarantees envisaged in section 202. Further, the ALI Principles establish that a judgment cannot be recognised if the rendering court exercised its jurisdiction in breach of section 207 (which provides for insufficient grounds of jurisdiction) or in breach of the forum’s own rules on judicial competence. Such rules on mandatory non-recognition should facilitate the parties to engage into legitimate litigation as well as discourage the courts from adjudicating cases over which they do not have international jurisdiction. Discretionary grounds of non-recognition are established in section 403(2). Subparagraph (a) provides that a foreign judgment may not be recognised if the rendering court exercised its jurisdiction in a manner which is inconsistent with sections 201–6 of the ALI Principles. In the case where the jurisdiction of the rendering court is founded on the basis of a negotiated choice-of-court agreement, the recognising court should take into consideration whether the choice-of-court clause was reasonable according to section 202, and whether the party resisting the enforcement had ample opportunity to present its objections in the proceedings.824 In addition, section 413(2) of the ALI Principles also establishes that the judgment of a foreign country may not be recognised if the rendering court’s choice of applicable law to the dispute was inconsistent to the choice-of-law rules established in the ALI Principles (sections 301 et seq), or the rendering court did not properly apply sections 221 and 222 which establish special rules on parallel proceedings and the coordination of claims. Although the ALI Principles are founded on the principle of territoriality of IP rights (section 301), the Principles also stipulate some exceptions to territoriality. The establishment of a complex system in the ALI Principles, coupled with differences of national laws, may result in a situation where enforcement is not always possible. In order to duly reflect differences of local circumstances, the ALI Principles contain special rules concerning the enforcement of three types of remedies: monetary relief, injunctions and declarations. First, section 411(1) stipulates that in the case of the recognition of a foreign judgment, the enforcement court shall also recognise the rendering court’s order awarding compensatory damages without requiring proof of actual damages. However, in order to reconcile the differences between legal systems concerning non-compensatory (ie exemplary or punitive) damages, the ALI Principles establish that orders awarding such damages should be recognised at least to the extent that similar damages could have been awarded in the state of the enforcement court (section 411(2)).   American Law Institute, Intellectual Property, above n 38, Comments to s 403, pp 173–74 and 180–81.   For an overview of particular examples of when a foreign judgment should not be recognised, see Reporters’ Note to s 403, pp 180–85. 824   American Law Institute, Intellectual Property, above n 38, Comments to s 403, p 177. 822 823

196  Toshiyuki Kono and Paulius Jurcˇys Secondly, as regards the recognition and enforcement of foreign injunctions, section 412(1)(a) of the ALI Principles establishes that if a foreign judgment is recognised by the enforcement court, the rendering court’s order to award an injunction as a remedy for IP infringement must be enforced according to procedures available to the enforcement court. However, if injunctive relief were not available for that enforcement court’s territory, in the case of the enforcement court also being the rendering court, the enforcement court may decline to enjoin or to order the commission of acts within the territory of the recognising court. In those cases where the scope of an injunction is limited, the enforcement court must award monetary relief instead of an injunction (section 412(1)(b)). By allowing such discretion of the enforcement court, the ALI Principles aim to give more weight to local industrial and cultural considerations of particular countries.825 Moreover, such flexibility should reduce the possibility of the enforcement court in making recourse to the public policy exception (section 403 of the Principles). Thirdly, the ALI Principles address the issue of the recognition and enforcement of declarations of validity, infringement and ownership of rights. In particular, section 413 stipulates that declarations of foreign courts concerning the validity, invalidity, infringement or ownership of IP rights must be recognised; such declarations registered in another state can be enforced only between the parties to the litigation.

16.3  European Countries As in other instances concerning international jurisdiction of the courts of EU Member States, the recognition and enforcement of foreign judgments are subject to a dual regime: judgments rendered by courts of other Member States are subject to rules established in the Brussels I Regulation/Lugano Convention; whereas judgments rendered by courts of third states are recognised according to domestic provisions.

16.3.1  Recognition and Enforcement of Foreign Judgments according to the Brussels/ Lugano Regime The Brussels I Regulation establishes special rules for the recognition and enforcement of judgments rendered by courts of other Member States. In order to facilitate efficient and rapid recognition of judgments, Article 33(1) of the Regulation provides that judgments rendered in an EU Member State are to be recognised in other Member States without any special proceedings being required. The aim of the European legislator was to ensure that the declaration of the enforceability of a judgment is issued after purely formal checks of the documents, thus leaving only the possibility to enforce the rights of the defence.826 Such legal framework was established with regard to the consideration of mutual trust in the administration of justice, a central part of the Brussels/Lugano system. The Brussels I Regulation establishes a broad definition of ‘judgment’ which encompasses ‘any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court’ (Art 32).827 In other words,   ibid, Comments to s 412.   See Recitals 17 and 18 of the Brussels I Regulation. 827   Case C-394/07 Marco Gambazzi v DaimlerChrysler Canada Inc and CIBC Mellon Trust Company [2009] ECR I-2563, para 22. 825 826

General Report  197 ‘judgment’ refers to only judicial decisions rendered by a court or a tribunal of a Member State.828 In order to fall within the scope of the Regulation, judicial decisions must have been rendered in adversarial proceedings.829 Hence, judgments by default also fall within the scope of the Regulation.830 Notably, settlements reached during court proceedings do not fall under the notion of a judgment because they are merely contractual agreements between the parties, and depend upon the intentions of these parties.831 Accordingly, court decisions rendered in IP disputes equally fall under the ambit of the notion of ‘judgment’ and are subject to the same jurisdiction and enforcement provisions. Article 34 of the Brussels I Regulation832 establishes four grounds when judgments granted in one EU Member State shall not be recognised: (1) manifest contrariety to the public policy of the state where the recognition is sought; (2) in cases where the judgment was rendered in default, the defendant was not served with the document which instituted the proceedings excepting if the defendant failed to commence proceedings to challenge the judgment when it was possible to do so; (3) a foreign judgment is irreconcilable with a judgment rendered in a dispute between the same parties by a court of a Member State where the recognition is sought; or (4) irreconcilability of a foreign judgment with a judgment given in another Member State. Besides, a judgment cannot be recognised if it was issued in breach of other jurisdiction rules of the Brussels I Regulation (Art 35). According to the ECJ, the list of grounds for non-recognition is exhaustive.833 The requirements for non-recognition shall be interpreted strictly. Recourse to public policy is to be made only in exceptional cases.834 In one of its landmark decisions in the case of Krombach, the ECJ decided that a court can refer to public policy only when the recognition or enforcement of a foreign judgment ‘would be at variance to an unacceptable degree with the legal order of the State in which the enforcement is sought inasmuch as it infringes a fundamental principle’.835 In order to promote legal certainty and uniformity of the application of the Regulation, the ECJ has the authority to review the limits within which national courts may have recourse to public policy.836 Article 35(3) of the Regulation stipulates that public policy cannot be applied to rules relating to jurisdiction. Hence the public policy exception cannot be raised to bar the recognition or enforcement of a judgment rendered in another Member State merely on the ground that the court of origin did not comply with the rules on jurisdiction.837 Brussels I Regulation strictly forbids the recognising court from reviewing the substance of the judgment of which recognition is sought (Art 36). According to the ECJ, the recognising court cannot review the accuracy of the findings of the law or fact made by the originating court.838 This means that a foreign

  Case C-414/92 Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237, para 17.   Case 125/79 Denilauer [1980] ECR 1553, para 13. 830   Case C-394/07 Marco Gambazzi v DaimlerChrysler Canada Inc, and CIBC Mellon Trust Company [2009] ECR I-2563, para 25. 831   Case C-414/92 Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237, paras 18 and 20. 832   Also Art 34 of the Revised Lugano Convention. 833   Case C-414/92 Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237, para 10 834   Case 145/86 Hoffman v Krieg [1988] ECR I-645, para 21; Case C-78/95, Hendrikman [1996] ECR I-4943, para 23. 835   Case C-7/89 Dieter Krombach v André Bamberski [2000] ECR I-1935, para 37. 836   ibid, paras 22–23. 837   ibid, paras 32–34 where the ECJ decided that the public policy clause cannot be referred to in cases where the court of origin based its jurisdiction on the nationality of the victim of the offence. 838   ibid, para 29. 828 829

198  Toshiyuki Kono and Paulius Jurcˇys judgment may be refused recognition or enforcement only if the court of origin made an infringement which constitutes a manifest breach of a rule of law of the recognising state.839 The procedural public policy should be ascertained in light of the European Convention for the Protection of Human Rights and Fundamental Freedoms as well as the jurisprudence of the European Court of Human Rights.840 Hence, even though the Regulation aims to establish a legal framework which would simplify the formalities governing recognition and enforcement, fundamental procedural rights, such as the right to a fair hearing, cannot be undermined.841 The assessment of the measure adopted by the court of the state of origin through the lens of the public policy of the state where the enforcement is sought must be made in the light of all the circumstances.842 According to established ECJ case law, the second requirement of non-recognition aims to ensure that the judgment is not recognised or enforced if the defendant had no opportunity to defend himself.843 Situations when the lawyer appears before the court first seised on the behalf of but without a defendant’s authorisation are considered a default of appearance.844 The temporal criterion to determine whether sufficient time was provided to defendant is the point of time when the court proceedings are instituted. It is not sufficient if the defendant has subsequent possibilities of taking certain legal remedies against a judgment in a default of appearance.845 It is for the recognising court to determine whether such circumstances exist where the defendant was not able to defend himself.846 The judgment shall be declared enforceable immediately on the completion of formalities provided in Article 53 of the Regulation. The judgment debtor is not allowed to make any submissions at this stage (Art 41). The Regulation further requires that the judgment debtor is notified of the decision of enforceability of the foreign judgment. However, the decision about the enforceability may be appealed by any of the parties to the competent court within one month of service thereof, or within two months if the judgment debtor is resident in a country other than the country where the recognition is sought. In practice, it is enough to present the recognising court the original judgment. With regard to IP matters, foreign judgments are not subject to recognition, if a court of a Member State decided the case is in breach of the exclusive jurisdiction rules of the Brussels I Regulation. The ECJ judgment in the Duijnstee case is worthy of further attention: in this case the ECJ decided that the exclusive jurisdiction rule should be applied to IP infringement and validity matters but does not cover disputes between the parties over the determination of entitlement to an existing IP right created on the basis of a previously existing contractual relationship.847 Hence, foreign judgments concerning ownership of IP rights should be recognised in other EU Member States. Other court judgments ordering

  ibid, para 37.  ibid, para 44; Case C-341/04, Eurofood IFSC Ltd [2006] ECR I-3813, para 65; Case C-394/07, Marco Gambazzi v DaimlerChrysler Canada Inc and CIBC Mellon Trust Company [2009] ECR I-2563, para 28. 841   Case C-7/89 Dieter Krombach v André Bamberski [2000] ECR I-1935, para 43. 842  Case C-341/04 Eurofood IFSC Ltd [2006] ECR I-3813, para 68; Case C-394/07 Marco Gambazzi v DaimlerChrysler Canada Inc and CIBC Mellon Trust Company [2009] ECR I-2563, paras 40–41. 843   Case C-166/80 Klomps v Michel [1981] ECR 1593, para 9; Case C-172/91, Sonntag v Waidmann [1993] I-1963, para 38. 844   Case C-78/95, Bernardus Hendrikman and Maria Feyn v Magenta Druck & Verlag GmbH [1996] ECR I-4943, para 18. 845   ibid, para 20. 846   ibid, para 18. 847   ECJ, Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663. 839 840

General Report  199 the revocation of IP rights registered in another Member State cannot be recognised because of the infringement of exclusive jurisdiction provisions.848 Refusing to recognise a foreign judgment on the ground of public policy does not seem possible even if the court mistakenly determines the applicable law. This could be also deduced from the ECJ judgments in the Renault 849 and Krombach case.850 However, the public policy exception could be also used as a ground in refusing to recognise decisions concerning moral rights or punitive damages.851 Further, national reporters did not share a common position with regard to a foreign court decision concerning the ownership of a patent of a third state. Some national reporters noted that a foreign court decision determining the owner of a foreign patent would have to recognised and enforced;852 while others were of the opinion that the dispute concerning the ownership of a patent would have to be re-litigated before the courts of the recognising state.853

16.3.2  The Recognition and Enforcement of Third-Country Judgments The Brussels I Regulation does not apply to the recognition and enforcement of judgments which were handed down by courts of third countries.854 Thus, in the absence of uniform rules established at the EU level, domestic rules are applicable. From the responses submitted by the national reporters it is evident that domestic rules concerning the recognition and enforcement of judgments rendered in third states vary greatly. Only in Belgium and Italy are domestic rules concerning the recognition and enforcement of foreign judgments very similar to those of the Brussels I Regulation. In Italy, however, unlike the Brussels I Regulation, their enforcement procedure requires the presence of both parties at the time when an enforcement order is issued.855 In Spain, the Civil Procedure Law of 2000 contains no special rules on recognition; therefore, the provisions of the old Civil Procedure Law of 1881 are still applicable.856 They are relevant in cases where the recognition and enforcement of foreign judgments are not governed by international convention or EU legislation. Although Spanish law contains a requirement of reciprocity, it is not actually employed in practice. General requirements that have to be met in order for a foreign judgment to be recognised are entrenched in Article 954 of the LEC 1881. Spanish courts would need to verify the jurisdiction of the rendering court, review the compatibility with substantial and procedural public policy, investigate whether the defaulting defendant was properly notified and consider whether the foreign judgment is not incompatible with a judgment given or recognised in Spain. Besides, in the case of parallel proceedings between the same parties having the same cause of action, the Spanish court would need to ascertain where the proceedings were first instituted. However, differently from Brussels I, Lugano and other bilateral and multilateral 848   See eg, Belgian Report, answers to HC 10; French Report, answers to HC 10, Italian Report, answers to HC 10; Spanish Report, answers to HC 10. 849   Case C-38/98 Renault [2000] ECR I-3009, para 30 850   Arts 36 and 45 of the Brussels I Regulation and Case C-7/89 Dieter Krombach v André Bamberski [2000] ECR I-1935. 851   See Italian Report, section 1.2.4.1. 852   See Belgian Report, answers to HC 10; French Report, answers to HC 10; Italian Report, answers to HC 10; Spanish Report, answers to HC 10 and nn 1–4. 853   Greek Report, answers to HC 10. 854   Case C-129/92, Owens Bank Ltd v Fulvio Bracco and Bracco Industria Chimica SpA [1994] ECR I-117. 855   Italian Report, answers to HC 10. 856   See Spanish Report, paras 32 and 39–40.

200  Toshiyuki Kono and Paulius Jurcˇys treaties, automatic recognition is not possible under Article 955. General rules on recognition and enforcement are also applicable to foreign judgments handed down in IP disputes. In Portugal the Code of Civil Procedure establishes general principles for the recognition of foreign judgments. As in other countries, foreign judgments are subject to judicial review and confirmation unless they are used as proof in proceedings before a Portuguese court (Art 1094 of the Portuguese CCP). The requirements for recognition are provided in Article 1096 and include fair trial, finality of judgment, and public policy requirements.857 In Greece, foreign judgments may be recognised and enforced if foreign judgments are enforceable in the country of origin; are not contrary to public policy; the losing party was not deprived of basic procedural defence rights; and are not contrary to existing judgments rendered by Greek courts (Arts 323 and 905 of the Greek CCP).858 Similarly in Germany, section 328 of the Code of Civil Procedure determines matters of recognition and enforcement. German courts would confirm several requirements of recognition, which include the jurisdiction of the rendering court and reciprocity.859 In France, a foreign judgment could be recognised if four requirements are satisfied: the rendering court must have international jurisdiction; there was no fraud; foreign judgment must not be contrary to the substantive and procedural public policy of France; and the foreign judgment must not be contrary to other French judgments.860 In French law the distinction is made between measures in personam and measures in rem. French courts have recognised measures in personam (eg, Mareva injunctions), and Dutch kort geding orders prohibiting the commercialisation of products which allegedly infringe the French portion of a European patent.861 In Switzerland, in the areas where there are no special agreements existing between the state of the recognising court and Switzerland, the Swiss Federal Private International Act governs questions concerning the recognition and enforcement of foreign judgments. Article 25 et seq of the Swiss PIL Act provides general requirements for the recognition and enforcement of foreign judgments. According to Article 111, a foreign judgment in an IP infringement case would be recognised if the rendering court was the court of the state (1) where the defendant was domiciled or (2) where the act or result of the infringement occurred. In addition, decisions concerning the existence, validity or registration of IP rights could be recognised if the rendering court was a court of the state where the protection was sought or if such a decision could be recognised there (Art 111(2) of the Swiss Federal Private International Act).862 Sweden has no bilateral treaties with foreign states. This raises some practical concerns about the recognition and enforceability of foreign judgments. In particular, foreign judgments are considered as evidence for proceedings in Swedish courts.863 However, the national report highlighted that in cases where Swedish courts do not possess international jurisdiction (eg cases concerning the validity of a foreign IP right), a foreign judgment may nonetheless be recognised.864 However, in the UK, the recognition of foreign judgments concerning ownership of IP rights would not be possible because of the limitations posed   See Portuguese Report, section 1.2.3.1.   Greek Report, answers to HC 10. 859   See German Report, answers to HC 10. 860   French Report, section 1.4.3 and 1.4.4 as well as answers to HC 10. 861   See French Report, section 1.4.3 and nn 45–46 for further references. 862   Swiss Report, Part 1 question 4. 863   Swedish Report, section 1.2.3. 864  ibid. 857 858

General Report  201 in the Moçambique case. However, purely contractual arrangements of foreign judgments between the parties would be recognised in the UK.

16.3.3  Brussels I Reform Proposals Given the existing differences among national rules for the recognition and enforcement of judgments from third countries, the European Commission proposed the possibility of extending the Brussels/Lugano regime with regard to judgments by third countries.865 One of the main objectives of the revision of the Brussels I Regulation was the abolition of the exequatur procedure. According to statistical data of the European Commission, more than 90 per cent of applications for the declaration of enforceability are successful.866 Such a high percentage of positive applications raised the question of whether exequatur proceedings are necessary, given the high cost to the parties and the burden of the courts; however, the Commission did not intend to eliminate exequatur proceedings completely. Among other issues, it was questioned whether and to what extent the free circulation of authentic instruments should be allowed, and how to solve the formalities concerning the standardised form to be used at the enforcement stage. The CLIP Principles establish a very broad notion of a foreign judgment. The notion of a judgment is based upon Article 32 of the Brussels I Regulation. A ‘judgment’ means monetary and non-monetary judgments such as writs of execution, decisions determining the costs of the court officers, orders for the payment of money, judgments rendered in default of appearance, declaratory judgments as well as court settlements (Art 4:801). The definition of a judgment depends neither on the characteristics of a court or tribunal, nor the form of the proceedings in which the judgment was adopted.867 In order to facilitate the efficient resolution of multi-state IP disputes868 the definition of a judgment in the CLIP Principles comprises both provisional and protective measures (Art 4:301). One of the main underlying rules in the CLIP Principles is favor recognitionis: a general concept aimed at making foreign judgments more easily recognised and enforceable (Art 4:103).869 Accordingly, the CLIP Principles do not require any special procedure (so-called ‘automatic recognition’ principle). A judgment must have in the state of origin the effect whose recognition is sought in the requested state (Art 4:102(2)). The effects of a judgment shall be determined according to the law of the state of origin (Art 4:102(3)). The recognising court should also take into consideration the subjective, territorial and substantial scope of the judgment and whether there has been any change of circumstances. According to the commentators, this means that in principle, the enforcement of a foreign judgment should not extend beyond the limits of res judicata.870 One of the requirements for the recognition is that such a judgment should be final and conclusive in the rendering state. However, the requirements of finality and conclusiveness are to be loosely interpreted according to the law of the rendering state. Such a relaxed 865   Report from the Commission on the application of Regulation (EC) No 44/2001, COM(2009) 174 final, 5; Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (21 April 2009), COM(2009) 175, 4. 866   Report from the Commission on the application of Regulation (EC) No 44/2001, COM(2009) 174 final, 4. 867   PA de Miguel Asensio, above n 68, 251. 868  ibid. 869   PA de Miguel Asensio, above n 68, 250. The favor recognitionis principle emanates from the 1959 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Art VII.1) and 2005 Hague Convention on Choice of Court Agreements (Art 26). 870   PA de Miguel Asensio, above n 68, 260 et seq; although this issue remains controversial.

202  Toshiyuki Kono and Paulius Jurcˇys approach had been taken with the consideration that the determination of the finality of a judgment varies from state to state.871 However, in order to balance the interests of the parties, the CLIP Principles also provide that the recognition and enforcement of a foreign judgment (including provisional, interim or interlocutory judgments) can be postponed or refused if an ordinary appeal against the judgment has been filed in the rendering state or if the time limit for ordinary review of a judgment has not expired (Art 4:102(5)). Article 4:201(1) entrenches the main principle that a judgment cannot be recognised or enforced if the rendering court did not have jurisdiction according to Part 2 of the CLIP Principles. It is presumed that a court has jurisdiction if it adjudicates the dispute according to the CLIP Principles.872 Yet again, the fact that the judgment was rendered by a court exercising its jurisdiction on a ground which is not provided for in the CLIP Principles does not necessarily mean that such a judgment cannot be recognised or enforced. Instead, the recognising court would have to assess whether the jurisdiction of the rendering court was sufficient.873 In any case, the CLIP Principles make it clear that recognition or enforcement would not be possible if the jurisdiction of the rendering court was exercised in a way that conflicts with the exclusive jurisdiction rules stipulated in the CLIP Principles (Arts 2:401, 4:201 and 4:202). One of the requirements for recognition, according to the CLIP Principles, is that a foreign judgment must not be contrary to the public policy of the recognising state. Article 4:401 of the CLIP Principles makes a distinction between substantive and procedural aspects of public policy. It provides that a judgment shall not be recognised or enforced if the recognition or enforcement of a foreign judgment would be manifestly incompatible with the public policy or fundamental principles of procedural fairness of the recognising state. The reference to ‘manifest’ incompatibility with the public policy suggests that according to the CLIP Principles, public policy could be used as a ground of non-recognition or nonenforcement only in exceptional cases; namely, when the recognition or enforcement of a foreign judgment would undermine fundamental legal or moral principles of the recognising state. However, due to the high degree of harmonisation of substantive IPs, only a few ‘manifest’ differences can be foreseen which could lead to non-recognition or nonenforceability (e.g. differences in patentability requirements). Insofar as substantive public policy is concerned, the CLIP Principles do not allow the recognising court to review the merits of the case nor refuse recognition of a foreign judgment on the basis that the substantive laws of the state of origin and the recognising state differ. As for private international law matters, the application of a different law than the one which should have been applied if the proceedings had been instituted before the state of the recognising court does not constitute grounds for non-recognition. This would be the case in the adjudication of disputes concerning ubiquitous infringements especially if the court decided to apply the law of one or several states instead of the laws of each state for which protection is sought. This is closely intertwined with the prohibition to review the substance of a foreign judgment (Art 4:601). Another issue related to substantive public policy is that in the case of the recognition of judgments awarding non-compensatory damages, a recognising court is given discretion not to award damages which exceed the actual loss or harm suffered if it is contrary to the law of the recognising state (Art 4:402(1)).   PA de Miguel Asensio, above n 68, 268.   ibid, 273; also Art 4:201(2) of the CLIP Principles.   PA de Miguel Asensio, above n 68, 273–75.

871 872 873

General Report  203 As regards the recognition of provisional and protective measures, the CLIP Principles establish two additional requirements. First, recognition and enforcement is possible only with regard to those provisional or protective measures which have been adopted by the court with jurisdiction over the merits of the case (Art 4:301(1)). Second, provisional or protective measures adopted without prior hearing of the adverse party and enforceable without prior service of process to that party shall neither be recognised nor enforced (Art 4:301(2)). This restrictive approach was adopted following the existing legal practice in IP law of the EU Member States.874 Nevertheless, the drafters of the CLIP Principles left room for the establishment of a more lenient regime regarding the enforcement of provisional or protective measures among the members of the regional economic integration organisations (Art 4:103).875 Generally, the same requirements applicable to the recognition of a foreign judgment must also followed in cases where a declaration of enforceability is sought. The CLIP Principles only stipulate one additional requirement; namely, that a judgment must be enforceable in the state of origin. Albeit no special procedure can be imposed for the recognition of a foreign judgment, states are nonetheless allowed to maintain special methods or procedures for enforcement (Art 4:703).

16.4  Asian Countries 16.4.1  Recognition and Enforcement of Foreign Judgments in Taiwan Article 402 of the Taiwanese Civil Procedure Law establishes the following grounds when foreign judgments or interim measures are not recognised in Taiwan: 1) if a foreign court does not have jurisdiction according to Taiwanese law; 2) the judgment was rendered in ex parte proceedings; 3) foreign proceedings were conducted in a manner which is contrary to Taiwanese public policy or moral principles; or 4) there is no mutual recognition between Taiwan and the country whose judgment is to be recognised. Moreover, Taiwan’s Compulsory Enforcement Law provides for further requirements related to the enforceability of a foreign judgment.876 According to the national report, a foreign decision concerning amendments to the registered owner of a Taiwanese patent would not be recognised; hence parties would have to re-litigate the matter in order to change the register entry concerning the owner of the patent.

16.4.2  Recognition and Enforcement of Foreign Judgments in Japan In Japan, foreign judgments can be recognised according to Article 118 of the Code of Civil Procedure. The enforcement of foreign judgments is governed inter alia by Article 24 of the Civil Execution Act (Minji shikk¯o h¯o). Japanese law is not clear on whether foreign judgments granted in ex parte proceedings as well as interim and provisional measures can be recognised and enforced in Japan, albeit scholars strongly support that general recognition requirements of Article 118 CCP should be applied. With regard to foreign judgments in IP 874   In particular, as regards the provisional and protective measures granted for the protection of unitary community IP rights: Art 90 of the Community Designs Regulation; Art 103(1) of the Community Trade Mark Regulation. Also EMI Records Ltd v Modern Music Karl-Ulrich Walterbach GmbH [1992] QB 115. 875   PA de Miguel Asensio, above n 68, 270. 876   Taiwanese Report, answers to HC 10.

204  Toshiyuki Kono and Paulius Jurcˇys cases, the Japanese Report noted that general requirements of recognition and enforcement would be applied; however, Japanese courts would be reluctant to recognise foreign judgments which had been rendered in breach of the exclusive jurisdiction rules of Japanese courts. One of the preconditions for the recognition and enforcement in Japan is that a judgment should be rendered by a ‘court’. A ‘court’ is defined as a state authority which is competent to exercise judicial functions and is authorised to render judgments in disputes arising under private law. The notion of a court includes courts of general competence as well as specialised courts of foreign states. In its 1998 decision, the Supreme Court provided that a ‘foreign judgment’ subject to recognition and enforcement in Japan can be any court decision regardless of the name, form or procedure. A judgment should be rendered by a foreign court in a dispute between two or more parties in accordance to the principles of due process.877 Japanese courts can also recognise court orders which are rendered after the contested proceedings or in the absence of an appearance of the defendant.878 Japanese courts would also recognise foreign court judgments which were granted in summary proceedings879 as well as judgments concerning the distribution of costs and expenses of litigation.880 As regards interest which has to be paid on the basis of a foreign judgment, the majority opinion is that such interest payments are enforceable pursuant to Article 24 of the Civil Enforcement Act.881 Nevertheless, authentic instruments issued by public notaries do not fall under the notion of a foreign judgment and thus are not subject to recognition and enforcement.882 Similarly, according to the existing law, provisional measures also will not be recognised and enforced in Japan.883 A foreign judgment can be recognised and enforced if it is final and binding (Art 118 of the CCP and Art 24(3) of the CEA). This requirement is interpreted to mean that a judgment must not be subject to any further forms of judicial review. In other words, a foreign judgment would not be recognised as long as the review proceedings are still pending before courts of the rendering state.884 Furthermore, a foreign judgment shall be valid in the state of origin; otherwise it would neither be recognised nor enforced.885 The requirements for the recognition of foreign judgments are established in Article 118 of the CCP. The first requirement for the recognition is the so-called ‘indirect jurisdiction’: the jurisdiction of the rendering court must be recognised under the laws or regulations of international treaties ratified by Japan (Art 118(i) CCP). The majority opinion is that the jurisdiction of the rendering foreign court must exist also from the perspective of Japanese

  Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853.   Tokyo District Court, Judgment of 14 January 1994, 1509 Hanrei Jih¯o 96; Nagoya District Court, Judgment of 6 February 1987, 1236 Hanrei Jih¯o 113; Tokyo District Court, Judgment of 31 January 1994, 1509 Hanrei Jihō 101, Mito District Court, Judgment of 29 October 1999, 1034 Hanrei Times 270. 879   Tokyo District Court, Judgment of 25 February 1998, 972 Hanrei Times 258. 880   Tokyo District Court, Judgment of 13 November 1967, 18 Kaminsh¯u 1093; Nagoya District Court, Judgment of 6 February 1987, 1236 Hanrei Jih¯o 113; Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853. 881   Supreme Court, Judgment of 11 July 1991, 51 Minsh¯u 2530 and (1998) 41 Japanese Annual of International Law 107; Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853. 882   T Kono, N Tada and M Shin, ‘Recognition and Enforcement of Foreign Judgments Relating to IP Rights and Unfair Competition’ in J Basedow, T Kono and A Metzger (eds), above n 1, 298. 883   ibid, 299. See also Supreme Court, Judgment of 26 February 1985, 37 Kagetsu 25. 884   See Tokyo High Court, Judgment of 28 May 2003 (‘Salvador Dalí’), 1831 Hanrei Jih¯o 135. 885   There is one quite old Japanese court judgment on this issue: Tokyo District Court, Judgment of 21 July 1960, 11 Kaminsh¯u 1535. 877

878

General Report  205 law (so-called ‘mirror theory’).886 In one of its landmark cases the Supreme Court decided that the requirements for determining indirect jurisdiction of the rendering court should be similar to the standards adhered to by Japanese courts when deciding whether they have international jurisdiction over a particular dispute. Hence, indirect jurisdiction shall be verified in light of reason and in accordance with the territorial jurisdiction provisions of the CCP, as well as take into account the existence of special circumstances.887 This requirement of the existence of jurisdiction is also justified by the policy goal to protect the rights of the defendant in foreign proceedings. The second requirement is the service of documents informing the defendant about the commencement of the proceedings. Japan is a party to two international conventions on service.888 Hence, the requirement of service pursuant to Article 118(ii) would be fulfilled in documents served according to the formalities prescribed in one of the conventions. Further guidance concerning the notion of ‘service’ was provided by the Supreme Court.889 In particular, the Supreme Court held that court documents do not have to be served on the basis of Japanese civil procedure law; however, the service must be sufficient for the defendant to become aware of the commencement of the court proceedings and to defend himself by providing facts and evidence in the case. In addition, the requirements of service within the context of Article 118(ii) CCP are fulfilled as long as documents are served according to the formalities prescribed in an international treaty recognised by both Japan and the state of the court seised. In practice, Japanese courts have refused to recognise foreign judgments in cases where the defendant was served according to the procedural rules of the foreign state but without any translation of the documents into the Japanese language. In one case a Japanese husband left his wife and child in Japan and flew to the United States. He obtained a judgment in a US court declaring the marriage dissolved. The Japanese wife brought an action for declaration that the foreign decision was not legally effective because the requirements of Article 200(2) were not fulfilled. The Japanese court found that the foreign decision was not effective in Japan; namely, the court noted that Article 200(2) of the CCP is intended to protect Japanese nationals who may not be able to defend themselves in foreign proceedings.890 In another case an American corporation filed a suit for the compensation of damages sustained from the breach of a contract. The action was brought against the Japanese corporation before the court of Hawaii. After the decision was rendered, the plaintiff sought its recognition and enforcement in Japan. The Tokyo District Court refused to satisfy the claims of the action on the following grounds: the served documents must enable a normally reasonable person to understand that these documents are an invitation to court 886   Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853; Tokyo District Court, Judgment of 30 November 1973, 26 Kasai Geppo 83; Osaka District Court, Judgment of 25 March 1991, 1408 Hanrei Jih¯o 100; Osaka District Court, Judgment of 25 February 1992, 45 Kominsh¯u 29. 887   Japanese courts affirmed indirect jurisdiction on the following grounds: defendant’s domicile (Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853; Osaka High Court, Judgment of 25 February 1992, 783 Hanrei Times 248); place of performance of obligation (Tokyo District Court, Judgment of 14 January 1994, 1509 Hanrei Jih¯o 96); the place of tort (Tokyo District Court, Judgment of 14 January 1994, 1509 Hanrei Jih¯o 96; Tokyo District Court, Judgment of 13 February 1998, 987 Hanrei Times 282); related actions (Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853; Tokyo District Court, Judgment of 14 January 1994, 1509 Hanrei Jih¯o 96); choice of court agreements (Nagoya District Court, Judgment of 6 February 1987, 1236 Hanrei Jih¯o 113; Tokyo District Court, Judgment of 31 January 1994, 1509 Hanrei Jih¯o 101). 888  1965 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters and the 1954 Hague Convention on Civil Procedure. 889   Supreme Court, Judgment of 28 April 1998, 53 Minsh¯u 853. 890   Tokyo District Court, Judgment of 11 November 1988, 1315 Hanrei Jih¯o 96.

206  Toshiyuki Kono and Paulius Jurcˇys proceedings and these documents must be submitted according to formal rules of service. This would be in line with the principle of non-discrimination and fair trial. However, in the case at hand the documents were served to the defendant according to the procedural rules of Hawaii: by post and without any translation into Japanese.891 According to the prevailing approach, parties may challenge the recognition of a foreign judgment arguing that its conclusion or the grounds of the foreign judgment are contrary to the substantive or procedural public policy of Japan. In one of the cases, the Tokyo District Court decided that the ‘public policy’ requirement should be understood as contrariety to Japan’s fundamental legal order, moral values or principles of international cooperation in international cases.892 In addition, the prohibition of the review of the merits (révision au fond) has been interpreted as not allowing any challenges to the recognition of the foreign judgment on such grounds as the determination of the applicable law (Art 24(2) of the CEA). As regards procedural public policy, such issues as the service of documents or minimum requirements of due process fall under separate conditions for the recognition and enforcement of foreign judgments (Art 118(1) and 118(3) of the CCP). Substantive public policy was successfully invoked to prevent the recognition and enforcement of judgments ordering punitive damages893 or foreign judgments which were incompatible with judgments rendered by Japanese courts.894 One further ground for non-recognition has been established in court practice. Namely, a foreign court judgment may not be recognised if it is incompatible with another judgment rendered by a Japanese court in the same dispute between the same parties.895 Reciprocity is the last necessary requirement for the recognition of foreign judgments in Japan (Art 118(4) CCP). According to the Supreme Court, reciprocity exists when the same kind of Japanese judgment can have legal effects in a foreign state according to conditions which are not substantially different from the requirements established in Article 118 of the CCP.896 In practice, Japanese courts have decided that reciprocity exists between Japan and various developed states (Germany,897 UK,898 Switzerland,899 Queensland (Australia),900 California,901 Washington DC,902 Singapore, Hong Kong903 etc). Yet, Japanese courts have refused to affirm the existence of reciprocity between Japan and Belgium904 and the People’s Republic of China.905   Tokyo District Court, Judgment of 26 March 1999, 857 Kin’y¯u Sh¯oji Hanrei 39.   Tokyo District Court, Judgment of 13 February 1998, 987 Hanrei Times 282. 893   Supreme Court, Judgment of 11 July 1997, 51 Minsh¯u 2573. 894   Osaka District Court, Judgment of 22 December 1977, 361 Hanrei Times 127. 895  ibid. 896   Supreme Court, Judgment of 7 June 1983, 37 Minsh¯u 611, also (1984) 27 Japanese Annual of International Law 119. 897   Nagoya District Court, Judgment of 6 February 1987, 1236 Hanrei Jih¯o 113. 898   Tokyo District Court, Judgment of 31 January 1994, 1509 Hanrei Jih¯o 101. 899   Tokyo District Court, Judgment of 13 November 1967, 18 Kaminsh¯u 1093. 900   Tokyo District Court, Judgment of 25 February 1998, 972 Hanrei Times 258. 901   Tokyo District Court, Judgment of 13 February 1998, 987 Hanrei Times 282. 902   Osaka District Court, Judgment of 22 December 1977, 361 Hanrei Times 127; Supreme Court, Judgment of 7 June 1983, 37 Minsh¯u 611, also (1984) 27 Japanese Annual of International Law 119. 903   Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853. 904   The relevant judgment of the Tokyo District Court dates back to 20 July 1960, 11 Kaminsh¯u 1522. Albeit the Tokyo District Court refused to recognise a Belgian judgment on the ground that there is no reciprocity; this may be no longer a problem because the Belgian law was amended according to the principles established in the Brussels I Regulation, see Belgian Report, Part I, para 84. 905   Osaka High Court Judgment of 9 April 2003, 1141 Hanrei Times 270. 891 892

General Report  207 16.4.2.1  The Transparency Principles Part IV of the Transparency Principles provides for a set of rules concerning recognition and enforcement of foreign judgments in IP matters. Since the Transparency Principles were prepared with a view to improving domestic Japanese law, many of the proposed provisions re-establish principles developed in the practice of Japanese courts. The promotion of the international movement of judgments had been one of the main objectives of the Transparency Principles. The recognition and enforcement regime is based on the following four considerations: (a) the convenience of the parties; (b) prevention of incompatible judgments; (c) judicial economy; and (d) the maintenance of the public policy.906 One of the main innovations proposed by the Transparency Principles is related to the range of court decisions which could be recognised. According to the established practice of the Japanese courts, only final and binding judgments can be recognised in Japan. Nonetheless, in order to increase the level of protection of IP rights, the Transparency Principles also allow for the recognition and enforcement of foreign court decisions which are not final and binding (Art 403). The latter proposal has been considered as an innovation of the Transparency Principles in the field of recognition and enforcement.907 The Transparency Principles adopt the same notion of a judgment of a foreign court as had been established in Japanese court practice.908 Accordingly, the Transparency Principles allow the recognition of monetary and non-monetary judgments (eg, injunctive orders); declaratory judgments and judgments ordering affirmative relief; judgments rendered in the default of appearance of the defendant; or judgments issued in summary proceedings. The notion of a foreign court whose judgment is to be recognised in Japan means any authority of a foreign state which is competent to settle disputes between private parties. This means that the Transparency Principles allow also the recognition and enforcement of judgments which were issued by administrative authorities such as patent offices. In addition, the Transparency Principles make a distinction between foreign judgments which are ‘final and binding’ and judgments which are not ‘final and binding’. As for final and binding judgments, general requirements of recognition and enforcement are applied. Yet, foreign judgments which are not final and binding can be recognised according to the rules for the enforcement of provisional measures (Art 403(4)). The Transparency Principles also allow the recognition and enforcement of provisional and protective measures (Art 401). This is one of the most innovative features of the Transparency Proposal because according to the existing Japanese law, recognition and enforcement were not possible. Hence, foreign court decisions ordering measures prohibiting the alleged infringer from infringing activities could be recognised and enforced if prescribed criteria are satisfied. Three types of provisional measures could be recognised and enforced in Japan pursuant to Article 401(2): (a) provisional seizure of property or provisional disposition of an object in dispute; (b) measures for securing the enforcement of the right on the merits in a civil action; and (c) provisional disposition to establish a provisional state on the merits in a civil action. The enforcement proceedings should take place according to the existing statutes (Civil Provisional Remedies Act). The requirements for the recognition and enforcement of final and binding foreign judgments are established in Article 402. The Transparency Principles generally follow   T Kono, N Tada and M Shin, above n 882, 311.   ibid, 296.   Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853.

906 907 908

208  Toshiyuki Kono and Paulius Jurcˇys existing Japanese law; however, for the sake of clarity, two additional requirements – concerning international parallel proceedings and incompatible judgments – had been introduced. The first requirement for recognition and enforcement is the verification of the indirect jurisdiction (Art 402(1)): a foreign judgment can be recognised in Japan if the rendering court had international jurisdiction according to the provisions of the Transparency Principles. In terms of the indirect jurisdiction, there could be controversy over issues related to the existence of exceptional circumstances pursuant to Article 109 of the Principles. Potentially, if certain special circumstances exist, the rendering court could be considered as lacking jurisdiction from the viewpoint of the Japanese courts. In this regard, it should be also noted that the drafters of the Principles aimed to make it clear that the standard of indirect jurisdiction is not tantamount to direct jurisdiction.909 Namely, the requirement of an indirect jurisdiction should be interpreted narrowly and in a flexible manner.910 The second requirement is service. The Transparency Principles again follow the existing positive law and provide that a final and binding foreign judgment can be recognised if the losing defendant has received a service, a summons or order necessary for the commencement of the suit (Art 402(ii)). The service requirement is also met if the defendant appeared before the foreign court without receiving such a service. Thirdly, a foreign judgment can be recognised and enforced if it is not contrary to public policy in Japan (Art 402(iii)). The question of whether a judgment is contrary to public policy in Japan should be decided on a case-by-case basis. The notion of public policy includes a number of matters pertaining to substantive and procedural issues. Notably, the drafters of the Transparency Principles were considering the option of providing an exhaustive list of questions which could be considered as falling under the public policy exception. However, such an idea was abandoned due to various policy considerations.911 According to the Commentary, the recognition and enforcement of a foreign judgment may be refused if, for instance, (a) the rendering court which decided a dispute over foreign IP rights did not apply the mandatory rules of the protecting country; (b) if the status of a foreign IP right upon which the judgment is based conflicts with that of the protecting country; (c) the parties were not provided opportunities to produce allegations concerning the validity and scope of an IP right. Fourth, regardless of the fact that both the ALI Principles and the CLIP Principles abandon the requirement of reciprocity, the Transparency Principles follow domestic Japanese practice and retain reciprocity as one of the conditions for recognition and enforcement (Art 402(vi)). The requirement of reciprocity was subject to many discussions, and eventually it was retained based first on the consideration that the Transparency Principles primarily aim to modernise Japanese law; and, secondly, that the laws of most of the developed countries still maintain this requirement.912 Lastly, the Transparency Principles introduce new requirements regarding recognition and enforcement. First, a foreign judgment can be recognised in Japan if parallel proceedings in Japan, based on the same or similar claim, have been suspended or the claim was dismissed (Art 402(iv)). Further, a foreign judgment can be recognised if it is not incompatible with another judgment rendered by a Japanese court (Art 402(v)).   T Kono, N Tada and M Shin, above n 882, 311.   ibid, 312. 911   ibid, 318–19. 912   ibid, 330. 909 910

General Report  209 As mentioned above, the Transparency Principles allow the enforcement of foreign provisional measures, but not final and binding judgments. In order to be enforced, a foreign measure must not only satisfy requirements for the recognition of foreign final and binding judgments as established in Article 402, but must also meet additional procedural conditions. These procedural requirements have been established in light of the fact that the actual effects of the enforcement of a provisional measure may be detrimental to the interests of the party against whom the measure is issued. Therefore, the Transparency Principles would allow the enforcement of a measure if the parties to the original proceedings were given opportunities to be heard and to state their opinions on the validity of the IP rights at stake (Art 403(1)). In addition, a court may request the provision of security or stay the proceedings for the enforcement (Arts 403(2) and 403(3)). Article 404 of the Transparency Principles also establishes several provisions dealing with the legal effects of foreign judgments in Japan. The general principle is that a foreign judgment shall not have greater effect than in the state of origin. If only a part of a foreign judgment meets the requirements of recognition and enforcement, a Japanese court may recognise and enforce only that portion of the judgment. If a foreign court declares the invalidity of a registered IP right protected in a third state, such a decision has only effects between the parties (Arts 404(2) and 103(3)). Lastly, in the case where a foreign judgment cannot be enforced in Japan in whole or in part because of the existence of a compulsory licence, the right-holder shall receive adequate compensation (Art 404(3)). 16.4.2.2  Joint Japanese-Korean Proposal (Waseda Principles) Issues pertaining to the recognition and enforcement of foreign judgments are dealt with in Part IV of the Waseda Principles. Similar to the Transparency Proposal, the Waseda Principles were drafted after a close analysis of other legislative proposals (ALI, CLIP etc). Hence, foreign judgments, injunctions as well as provisional and protective measures can be generally recognised and enforced (Art 401, 403 and 405). Although the Waseda Principles follow the general trend and aim to facilitate the resolution of multi-state IP disputes, some of the provisions are rather peculiar if compared with other legislative proposals. For instance, Article 401 establishes three conditions for recognition and enforcement: indirect jurisdiction, service and public policy. Hence, in contrast to the Transparency Principles, the Waseda Principles do not differentiate between the standards of direct and indirect jurisdiction. Secondly, the Waseda Principles do not require the existence of reciprocity between the rendering and recognising states. According to Article 402, it is possible that only part of a judgment is recognised and enforced. Notably, foreign judgments invalidating IP rights registered in a third state may be recognised and enforced only between the parties (Art 404, also Art 209). The recognition and enforcement of provisional and protective measures is possible under the condition that the adverse party had an opportunity participate in the court proceedings where such measure was adopted. The Waseda Principles also follow established Japanese law and other legislative proposals in stipulating that punitive damages and other orders of monetary relief shall not be recognised or enforced beyond the amount of compensatory damages. The court is able to refuse recognition and enforcement of a foreign judgment which is inconsistent with another judgment in a dispute between the same parties.

210  Toshiyuki Kono and Paulius Jurcˇys

16.4.3  Recognition and Enforcement of Foreign Judgments in Korea Korea has signed only the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1959 and two bilateral treaties with China and Australia. Hence, in most cases the recognition and enforcement of foreign judgments in Korea are governed by the Civil Procedure Act and the Civil Enforcement Act. General requirements for the recognition of a foreign judgment in Korea are provided in Article 217 of the Civil Procedure Act: (a) the rendering court shall have international jurisdiction according to the laws of Korea; (b) the defendant should be properly served; (c) foreign judgement should not be contrary to good morals and social order in Korea; and (d) a mutual guarantee requirement should be met.913 An enforcement judgment is necessary in order to enforce a foreign judgment in the Republic of Korea. The enforcement judgment is adopted without any substantial examination of the foreign judgment to be enforced (Arts 26 and 27 of the Civil Enforcement Act). However, a foreign judgment cannot be recognised nor enforced if it is not final and conclusive, and if the rendering court did not have international jurisdiction pursuant to Article 217 of the Civil Procedure Act.914 These general requirements established in those two statutes would be applied to the recognition and enforcement of foreign judgments rendered in IP-related disputes. The Korean Principles establish several particular provisions concerning the recognition and enforcement of foreign judgments in IP cases. In order to be recognised, the rendering court shall have international jurisdiction according to the Korean Principles. Nevertheless, the Korean Principles would allow the enforcement of a judgment if the jurisdiction of the rendering court was asserted on a ground which is not prescribed in the Korean Principles.915 Further, the Korean Principles do not require the existence of reciprocity between the rendering and enforcing States. The Korean Principles also broaden the notion of judgments which can be recognised and allow for the recognition and enforcement of provisional measures, interim judgments as well as other forms of judicial decisions (settlements, waivers of claims, etc).916 However, the Korean Proposal excludes from recognition and enforcement protective orders which were granted in ex parte proceedings. As regards decisions which are not final, the Korean Proposal allows the court of the recognising country to stay the proceedings for the recognition and enforcement of such judgments which are not final. Besides, some discretion is granted to the court in determining to what extent foreign judgments ordering damages and payment of other fees should be recognised (Art 28).917

16.5  Comparative Observations In light of answers provided in the national reports several important conclusions can be made. First, the law of every represented state contains established mechanisms for the recognition and enforcement of foreign judgments. Yet, recognition and enforcement is still to a large extent viewed from the perspective of the recognising country. This leads to the second consideration which is particularly relevant to IP matters, ie the influence of   See Korean Report, section 1.4.2 for a detailed overview of the Korean court practice.   See Korean Report, section 1.4.2 and answers to HC. 915   See Korean Report, section 2.4.2. 916   Arts 26 and 27 of the Korean Principles; see also Korean Report, section 2.4.4. 917   For further discussion see Korean Report, section 2.4.4. 913 914

General Report  211 exclusive (subject-matter) jurisdiction over particular IP issues affects the recognition of a foreign judgment: if the judgment was rendered in breach of exclusive jurisdiction rules of the state where the recognition is sought (even though the rendering court finds itself competent to decide the case), such judgment is not likely to be recognised. The Canadian Report referred to the ruling in the Pro Swing case918 dealing with the recognition of foreign judgments related to IP ownership. Nevertheless, the practical effects of this judgment in IP matters will be of rather limited importance. More generally, it can be concluded that in the area of private international law of IP, the recognition and enforcement of foreign judgments seems to be one of the least harmonised fields. A closer investigation of national reports showed that differences exist with regard to the notion of a foreign judgment as well as the possibility to recognise and enforce provisional and protective measures. Besides, national laws employ different doctrines on the finality of foreign judgments. Little uniformity exists also with regard to certain requirements for recognition such as indirect jurisdiction, public policy or the existence of reciprocity. In the area of IP, it remains questionable whether the public policy exception could not be applied in order to refuse recognition or enforcement of a foreign decision on the basis that the law of a different state has been applied. This is particularly relevant to judgments in multi-state IP disputes such as ubiquitous infringements or the determination of initial ownership. It stands to reason that further harmonisation in the area of the recognition and enforcement of foreign judgments is inevitable. Therefore, different regulatory approaches existing in national laws and legislative proposals will have to be reconsidered. A set of more detailed rules could be established once the underlying policy objectives have been identified.

Concluding Observations Codification, Specialisation and Approximation The last decade of the twentieth century and the beginning of the new millennium have been marked with the signpost of codification in the areas of conflict of law and IP. A number of states and regional economic organisations have adopted new private international law statutes in order to adjust national legal frameworks to rapid technological changes that have touched every country. New private international law statutes were adopted in the European Union (namely, the Rome I and Rome II Regulations), Turkey, Russia, Japan, Taiwan, Korea, and China. The improvement of the choice-of-law rules was also brought to the discussions in the United States, where scholars question the prospects of the adoption of the Third Restatement of the Conflict of Laws.919 The process of codification of private international law is related to another important change: the adoption of more specialised choice-of-law rules for particular cross-border controversies. For example, in the European continent, the harmonisation of the law 918   Pro Swing Inc v Elta Golf Inc [2006] 2 SCR 612; RF Oppong, ‘Canadian Courts Enforce Foreign Non-Money Judgments’ (2007) 70 Modern Law Review 654–79; SGA Pitel, ‘Enforcement of Foreign Non-Monetary Judgments in Canada (And Beyond)’ (2007) 3 Journal of Private International Law 241–60. 919   S Symeonides, ‘A New Conflicts Restatement: Why Not?’ (2009) 5 Journal of Private International Law 383.

212  Toshiyuki Kono and Paulius Jurcˇys applicable to contractual obligations that was inaugurated by the adoption of the 1980 Rome Convention was deepened by the Rome I Regulation in 2008. As regards international jurisdiction, the Brussels Convention of 1968 was considered to be one of the more successful documents in the area of private international law. The territorial scope of the jurisdiction provisions entrenched in the Brussels Convention was extended to EFTA states by the Lugano Convention. Similarly, despite the failure of the attempts to adopt an international convention harmonising issues of international jurisdiction, the 2001 Draft of the Hague Judgments Convention is a significant advance in the field. On the basis of the negotiations at The Hague, the Convention on the Choice of Court Agreements was prepared. The development of legislation in the area of private international law can be noted also in Asian countries. New international jurisdiction and choice-of-law rules were enacted in China, Korea and Japan. One of the areas which drifted into the trend of developing more specialised choice-oflaw provisions is intellectual property. Many of the private international statutes adopted during the last few decades in civil law states contain certain rules related to IP rights. It could be noted that these statutes often contain a general clause establishing the principle of lex protectionis. In some countries, more comprehensive choice-of-law provisions for IP matters were enacted. Nevertheless, it could be generally stated that many issues concerning the jurisdiction over multi-state IP cases as well as the applicable law to IP matters need to be further clarified. As shown throughout this report, strict territorial approach and lex protectionis principle have often been criticised for to their rigidity and inaptness in multistate IP cases. As a result of the failure to adopt an international convention on jurisdiction and recognition of foreign judgments, a number of non-statutory codifications which aim to overcome the problems related to cross-border enforcement of IP rights. Six legislative proposals were drafted by academics in cooperation with practitioners (ALI Principles, CLIP Principles, Transparency Principles, Waseda and Korean Proposals, as well as a Taiwanese Proposal which was not discussed here). Despite some slight differences, all these legislative proposals could be considered as an attempt to afford greater legal certainty to international business and thus foster innovation and the development of national economies. These recent academic proposals also mark another important change in international harmonisation of private law: bearing in mind increasing difficulties related to the adoption of an international convention harmonising certain matters pertaining to international jurisdiction, these legislative proposals aim to not only fill in the lacuna with regard to the legal framework of international jurisdiction and applicable law in IP matters, but also help to disseminate certain underlying principles which form the basis of the new legal framework for cross-border enforcement of intellectual property rights.

Requirements for the Exercise of International Jurisdiction In the context of international jurisdiction, several general features could be highlighted. First, according to the national laws, courts can generally assert international jurisdiction if there is a sufficient connection between the dispute and the forum. In countries which could be viewed as belonging to the civil law tradition, the domicile of the defendant in the forum state is generally considered to be a sufficient ground for the exercise of jurisdiction (Art 2 of Brussels I Regulation, Japan, Korea, Croatia, Switzerland, France). This means that

General Report  213 other grounds of jurisdiction (eg, place of tort, place of performance of the contract) are considered to be exceptional/alternative grounds of jurisdiction. In common law countries (United States, Canada, India) courts can hear a case with a foreign element if they have both in personam and subject-matter jurisdiction.920 In personam jurisdiction can be asserted if a court finds that the defendant has sufficient minimum contacts with the forum. In addition, a court of a common law country must also determine whether it has subject-matter jurisdiction over the merits of the case and whether there are any grounds to dismiss the case based on the forum non conveniens considerations. The additional subject-matter jurisdiction requirement is one of the main features which distinguishes between common law and civil law countries. The implications of the subject-matter jurisdiction requirement are particularly obvious in the area of cross-border IP disputes. Courts of common law countries have consistently refused to hear claims related to foreign IP rights, even if the defendant was resident in the forum state. In European countries, the Brussels/Lugano regime generally allows a court to hear a case, as long as one of the grounds of jurisdiction exists. Hence, if a defendant is resident in a forum state, a court could assert international jurisdiction regardless in a dispute concerning foreign IP rights. Further, a court could also hear claims concerning foreign IP rights if one of the alternative grounds of jurisdiction exists (eg, claims concerning the infringement of a foreign IP right could be brought before a court together with claims concerning the infringement of rights protected in the forum state). Similar principles are followed also in Asian countries (Japan, Korea). Another significant issue related to the exercise of international jurisdiction concerns the authority of courts’ powers. Since courts of common law countries usually hear claims related to IP rights protected in the forum state, judicial powers are in fact limited to circumstances occurring in the forum state. In civil law countries, additional set of issues related to the court powers regarding adjudication disputes over foreign IP rights emerged. First, it remains controversial whether ECJ jurisprudence established in the Shevill case should be followed in the context of IP. If so, then the court of the state in which the defendant is resident could have jurisdiction over disputes concerning IP rights protected in the forum state as well as in other states. However, if the defendant was not resident in the forum state, a court could hear claims (and order provisional and protective measures) only within the territorial limits of the forum state. Secondly, particular litigation techniques whereby one of the parties challenges the validity of IP rights developed. In the context of multi-state IP disputes, challenging the validity of foreign registered IP rights caused enormous problems because of the exclusive jurisdiction conferred upon the courts of the registering state (Art 22(4) of the Brussels I Regulation) and the strict approach adopted by the ECJ in GAT v LuK case.921 The adjudication of multi-state IP disputes both in common law as well as civil law countries has been very territorial, costly and inefficient. In order to facilitate the adjudication of multi-state IP disputes a number of legislative proposals have been put forward. By establishing clear rules concerning international jurisdiction, the ALI, CLIP, Transparency Principles and other proposals aim to increase legal certainty and provide for more predictability. The proposed rules concern not only general grounds of jurisdiction, but also deal 920   The situation in the UK has been heavily influenced by the Brussels I Regulation. Besides, one significant judgment was handed down by the Supreme Court in Lucasfilm Ltd v Ainsworth (2011) UKSC 39. 921   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509.

214  Toshiyuki Kono and Paulius Jurcˇys with specific issues (eg, adjudication of actions for negative declarations, provisional and protective orders etc). One of the common denominators among all the legislative proposals is that they allow the courts to decide upon the validity of foreign IP rights if such issue arises as a preliminary question. The proposed principles also establish that that such decision upon the validity can only have limited – inter partes – effects. It has been submitted that the interests between various stakeholders (mainly, sovereign states and business community) are properly balanced. Yet, the gap between the court practice and legislative proposals is still huge.922

Cooperation Mechanisms A strict territorial approach towards subject-matter/exclusive jurisdiction creates significant hurdles for the adjudication of multi-state IP disputes before a court of one country. The adoption of a more flexible interpretation of subject-matter/exclusive jurisdiction rules is one of the necessary preconditions for the creation of the legal framework for the adjudication of cross-border IP disputes. In fact, a number of proposals have been put forward in the ALI and CLIP Principles as well as other Principles drafted by academics in Japan and Korea. In particular, three complementary institutional settings could be distinguished. First, the adoption of a more flexible approach towards the subject-matter/exclusive jurisdiction rules could help to coordinate parallel proceedings pending before courts of different states and involving same IP rights. Such proceedings involving same parties and identical IP rights have been considered as non-justiciable923 or not identical;924 as a result, the claims for consolidation of such cases have not been upheld by the courts. In order to remedy this situation, academic proposals have been made laying down specific rules of when or how such disputes involving the same parties and same IP rights could be consolidated. Secondly, if the consolidation of claims is not possible, there should be at least uniform rules providing how to treat related proceedings which are pending before different courts. Thirdly, academic proposals lay down specific proposals concerning the direct cooperation between the courts – another method of how to streamline the adjudication of multi-state IP disputes.

Choice-of-Law Matters A number of controversies arise in the context of the applicable law matters. As it could be seen from the national reports, there is no uniform opinion whether Article 5(2) of the Berne Convention can be considered as a choice-of-law rule. Yet, the territorial nature of IP rights had also repercussions to the determination of the law governing initial title, transferability, infringement and other proprietary IP matters. In common law countries non-justiciability of claims concerning foreign IP rights or the absence of subject-matter over such claims have resulted in the situation where courts did not have to solve intricate questions related to the governing law. In the civil law countries it was generally considered that matters pertaining to IP rights should be governed by the law of the state where the protection is sought.   But see Lucasfilm v Ainsworth (2011) UKSC 39.   Jan K Voda v Cordis Corp 476 F 3d 887 (Fed Cir 2007). 924   See eg, Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. 922 923

General Report  215 The increasing number of international commercial transactions as well as the development of modern information technologies brought about novel cases related multi-state exploitation of IP rights. While territoriality of IP rights remained the general rule mandating the application of the law of the state for which protection is sought; the need for more particular choice-of-law rules became obvious. In this context, four main areas should be distinguished. First, as regards the initial ownership as well as other proprietary issues related to IP rights (eg, existence, scope of protection, transferability etc), different approaches have developed depending on the fact whether rights at stake are subject to registration or not. If rights at stake are subject to registration, the prevailing approach is that the law of the registering state should be applied. Yet, several possible choice-of-law rules have emerged with regard to proprietary aspects pertaining to non-registered IP rights (the law of the protecting country (lex protectionis) or the law of the country of origin (lex originis925)). Secondly, the law of the protecting country (lex protectionis) has been often referred to as a general principle determining the applicable law to infringements of IP rights. Since the adjudication of infringement claims related to foreign IP rights has been consistently preempted by the subject-matter/justiciability doctrines, the law governing infringements of IP rights usually the law of the forum (lex fori). The principle of lex protectionis was also entrenched in such recent codifications as the Rome II Regulation (Art 8) as well as domestic private international law statutes. However, rules providing for the principle of lex protectionis to IP infringement cases were not always considered as appropriate. Instead, the trend appears to be to provide for a more comprehensive set of choice-of-law provisions which would distinguish between various kinds of infringements IP rights (particularly, concerning ubiquitous infringements of IP rights occurring in the digital environment). Further, it was also often suggested that party autonomy be introduced with regard to available remedies in the case of infringement of IP rights as well as to crystallise the matters to which concrete choice-of-law rules are applicable. Thirdly, many intricate problems exist with regard to the determination of the applicable law to contracts concerning the transfer of IP rights. Albeit national reports showed that parties’ choice-of-law agreements are generally upheld, the complexity of contractual relationship in practice often leads to much uncertainty concerning the determination of the governing law. In particular, problems arise in those cases where contracting parties have failed to agree on the law governing their contractual obligations. Different choice-of-law methodologies exist in common law and civil law countries. In common law countries, the law of the state with the ‘closest and most significant relationship’ would have to be applied. In countries of the civil law tradition, contractual obligations of the parties should be determined by the law of the state in which the party who is to perform the characteristic obligation is resident. The newly adopted Rome I Regulation provides for a more comprehensive set of choice-of-law rules. Yet, it appears that many of the issues related to the determination of the applicable law to contracts involving the transfer of IP rights remained unresolved. Therefore, generally, it could be noted that the practice of national courts in this area is not uniform. Hence, the legislative proposals provide for various sets of rules which should, at least partially, fill in the gaps related to the determination of the governing law in the absence of parties’ choice.

  See French John Huston case and Itar-Tass Russian News Agency v Russian Kurier Inc 153 F 3d 82 (1998).

925

216  Toshiyuki Kono and Paulius Jurcˇys Fourthly, a number of other issues related to cross-border exploitation of IP rights emerged. Securities in IP is one of the areas which has become more and more important in practice. Several parallel projects concerning the securitisation of IP have been launched and are in progress under the auspices of UNCITRAL as well as academic institutions.

Looking to the Future The increasing number of cases concerning cross-border exercise of IP rights marks the confluence of two different areas of law – intellectual property and private international law. IP has become a valuable asset for individuals as well as corporations and is often an object of international transactions. However, the existing legal framework concerning the exploitation of IP rights does not always provide for optimum solutions. In order to promote creativity as well as the flow of the objects resulting from creative activities, it is necessary to reconsider the existing institutional settings and think of possible ways how they could be improved. Much of the work has been accomplished already and has taken the form of legislative proposals (ALI, CLIP, Transparency, Waseda and Korean Principles). Since these proposals lack binding force, it is also possible to think of an international instrument which would establish a set harmonised rules related to the cross-border exploitation of IP rights. This work has been started under the auspices of the International Law Association.926 The ILA working group aims to draft a legal instrument which would be based on the previous projects (Hague Judgments Project, academic proposals in the area of IP and private international law) and put forward a set of rules concerning international jurisdiction, choice of law as well as recognition and enforcement of foreign judgments in IP matters.

 www.ila-hq.org/en/committees/index.cfm/cid/1037.

926

Austria THOMAS PETZ*

Contents 1. Introduction................................................................................................................................... 218 2. The Law Applicable to Intellectual Property Rights: An Analysis................................................ 220 2.1. The Domestic and European Sources of Austrian Conflict of Laws.................................. 220 2.2. The Law Applicable to the Infringement of Intellectual Property Rights......................... 222 2.2.1. The General Rule of the Lex Loci Damni and the Special Rule of the Lex Loci Protectionis.............................................................................................................. 222 2.2.2. The Main Differences between the General Rule and the Special Rule............... 223 2.3. The Law Applicable to Contracts Relating to Intellectual Property Rights....................... 229 2.3.1 The Legislative History of Article 4 Rome I and Its Repercussions..................... 229 2.3.2 The Determination of the Characteristic Performance and Its Alternatives....... 230 2.4 The Law Applicable to the Property Aspects of Intellectual Property Rights................... 239 2.4.1 The Application of Rome I to the Property Aspects of Intellectual Property Rights...................................................................................................................... 239 2.4.2 The Application of Rome II to the Property Aspects of Intellectual Property Rights...................................................................................................................... 243 2.4.3 Property Aspects and Employment Relationships................................................ 246 2.5 Choice of Law....................................................................................................................... 246 2.5.1 Choice of Law and Contractual Obligations......................................................... 247 2.5.2 Choice of Law and Non-Contractual Obligations................................................ 247 2.5.3 Choice of Law and the Property Aspects of Intellectual Property Rights........... 248 2.6 Summary............................................................................................................................... 250 3

Revisiting the Applicable Law: Four Case Studies........................................................................ 251 3.1 The Principle of Territoriality.............................................................................................. 251 3.1.1 The Application of Austrian Law to Infringing Activities that Occur Abroad.... 251 3.1.2 The Application of Foreign Law to Infringing Activities in Austria.................... 258 3.2 The Law Applicable to the Infringement of Intellectual Property Rights......................... 258 3.2.1 Direct Infringement............................................................................................... 259 3.2.2 Contributory Infringement................................................................................... 260 3.2.3 Ubiquitous Infringement....................................................................................... 264

* Research Fellow, Max Planck Institute for Intellectual Property and Competition Law, Munich; LLM (Berkeley); Mag iur, Karl-Franzens-Universität Graz, Austria. An earlier version of this contribution limited to the conflict of laws issues has been published as T Petz, ‘Conflict of Laws in Intellectual Property: An Analysis of Rome I, Rome II and domestic Austrian conflict rules’, in B Verschraegen, Austrian Law – An International Perspective (Vienna, Jan Sramek, 2010).

218  Thomas Petz 3.3

3.4

The Law Applicable to Initial Ownership........................................................................... 270 3.3.1 Initial Ownership of a Patent................................................................................. 270 3.3.2 Initial Ownership in Case of a Joint Collaboration.............................................. 273 3.3.3 Initial Authorship and Initial Title to Trade Mark................................................ 275 3.3.4 Reasonable Compensation for Use in Several Countries..................................... 277 The Law Applicable to Transfer of Rights Agreements...................................................... 278 3.4.1 The Enforceability of a Choice of Law Agreement............................................... 278 3.4.2 Transferability......................................................................................................... 281 3.4.3 Absence of a Choice of Law Agreement................................................................ 282

4

Jurisdiction, Recognition and Enforcement in Intellectual Property Case by Case.................... 282 4.1 General and Special Grounds of International Jurisdiction.............................................. 283 4.1.1 Jurisdiction at the Domicile of a Natural Person.................................................. 284 4.1.2 Jurisdiction at the Main Place of Business of a Corporation............................... 285 4.1.3 Jurisdiction Based on Distribution in Austria...................................................... 287 4.1.4 Jurisdiction Based on Distribution Abroad.......................................................... 291 4.1.5 Jurisdiction and the Amount of Damages Awarded............................................. 294 4.2 Subject-Matter Jurisdiction................................................................................................. 297 4.2.1 Jurisdiction for Proceedings Concerning the Infringement of Foreign Rights... 298 4.2.2 Jurisdiction for Proceedings Concerning the Validity of Foreign Rights............ 300 4.2.3 The Validity of a Foreign Right as an Incidental Question.................................. 305 4.3 Consolidation of Proceedings.............................................................................................. 310 4.3.1 Consolidation in Cases of Multiple Infringements.............................................. 310 4.3.2 Consolidation in Case of a Breach of Licence Agreements.................................. 313 4.3.3 Consolidation in Case of a ‘Spider in the Web’..................................................... 317 4.4 Choice of Court Agreements............................................................................................... 322 4.4.1 Choice of Court in Proceedings Concerning Licence Agreements...................... 322 4.4.2 Choice of Court in Infringement Proceedings..................................................... 326 4.4.3 The Counterclaim of Invalidity in Infringement Proceedings............................. 328 4.4.4 Arbitration Agreements......................................................................................... 331 4.5 Parallel Proceedings.............................................................................................................. 333 4.5.1 Parallel Proceedings in the Country of Registration............................................ 333 4.5.2 Parallel Proceedings outside the Country of Registration................................... 337 4.6 Recognition and Enforcement of Foreign Judgments........................................................ 339 4.6.1 Recognition of a Foreign Judgment in Austria..................................................... 339 4.6.2 Enforcement of a Foreign Judgment in Austria.................................................... 342 4.6.3 Enforcement by Registration in the Austrian Patent Registry............................. 344

5

On the ECJ: A Brief Summary of the Rules on International Jurisdiction.................................. 345

1 Introduction The purpose of this chapter is to assess how policy considerations on which intellectual property law is based affect Austrian rules on international jurisdiction, conflict of laws, and the recognition and enforcement of foreign judgments.1 To this avail, we will 1   As used here, the notion of ‘conflict of laws’ refers to the rules that determine the applicable law. On the origin of this notion and its relation to the more general notion of ‘private international law’, see M Schwimann, Internationales Privatrecht, 3rd edn (Vienna, Manz, 2001) 7–8; W Posch, Bürgerliches Recht, vol 7, 5th edn (Vienna,

Austria  219 apply two different approaches which, by and large, echo the structure of the questionnaire on jurisdiction and the applicable law in matters of intellectual property for the 18th International Congress on Comparative Law which took place in Washington, DC, in July 2010. The first approach is of a more theoretical nature: taking the rules on the applicable law as an example, we will observe how policy considerations of intellectual property influence the application of general conflict rules, and under what circumstances they mandate the development of special conflict rules for intellectual property. The reason why we apply this approach only to the rules on the applicable law is that contrary to those on international jurisdiction and the recognition and enforcement of foreign judgments, this field of law has recently undergone considerable changes within the European Union, with the adoption of the Rome I and Rome II Regulations.2 As there is as yet little case law on either of the Regulations, answering the questionnaire’s conflict of laws questions properly thus requires starting from scratch.3 Consequently, in this regard, rather than being a report on the Austrian conflict rules for intellectual property rights, this chapter provides an analysis of both Regulations and their interaction with the respective domestic Austrian conflict rules. This will be done in Section 2. We will start with a brief introduction to the Austrian conflict rules and proceed by analysing the rules that apply to the infringement of intellectual property rights, to contracts relating to intellectual property rights and to the property aspects of these rights. Further, before we summarise the results of this part, we will illustrate, in a synopsis, to what extent these rules allow choice of law. By contrast, the second approach is a more practical one: we will discuss four case studies that reflect some of the classical challenges that intellectual property law poses to conflict of laws and the solutions provided for – or that could be provided for – by Austrian law. These cases concern the principle of territoriality, the infringement and the initial ownership of intellectual property rights and finally contracts relating to such rights. Section 3 of this chapter is devoted to these issues. In Section 4, we will extend this approach to the rules on international jurisdiction and the recognition and enforcement of foreign judgments. The latter fields of law will thus be presented only in a case-based fashion: in six case studies, we will deal with general and special grounds of international jurisdiction for proceedings concerning intellectual property rights, subject-matter jurisdiction for infringement proceedings and proceedings concerning the validity of intellectual property Springer, 2010) no 1/5. See also for a German perspective, J Kropholler, Internationales Privatrecht, 6th edn (Tübingen, Mohr Siebeck, 2006) 7–9. 2   Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), (2008) OJ L 177/6, and Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), (2007) OJ L 199/40. The competence of the European Union to adopt Regulations with regard to issues of conflict of laws follows now from Art 81(2)(c) of the Treaty on the Functioning of the European Union (TFEU), (2008) OJ C 115/78. 3   The following questions of the questionnaire relate to conflict of law issues and are thus dealt with, directly or indirectly, in this chapter: Section I no I 3 on international and domestic sources of conflict of laws provisions (see below 2.1) and general principles of choice of law in torts, contracts and transfers of rights (see below 2.5); Section I no II on special conflict rules (see below 2.2 for infringement and 2.3.2.4 for licence agreements), the application of more general conflict rules to intellectual property rights (see below 2.3 for contracts relating to intellectual property rights and 2.4 for the property aspects of intellectual property rights) and the relationship and differences between general choice of law rules and choice of law rules for intellectual property rights (see below 2.5); Section II case 5 on the principle of territoriality (see below 3.1), case 6 on the infringement of intellectual property rights (see below 3.2), case 7 on the law applicable to initial ownership (see below 3.3) and finally, case 8 on the law applicable to transfer of rights agreements (see below 3.4).

220  Thomas Petz rights, the consolidation of multiple proceedings, the enforceability of choice of court agreements, the procedural treatment of parallel proceedings, and the recognition and enforcement of foreign judgments concerning registered intellectual property rights. In order not to lose sight of the bigger picture, however, we will set out the general principles of these fields of law where appropriate. Finally, in Section 5 we will briefly summarise the main differences concerning international jurisdiction for proceedings relating to intellectual property rights between the European regime and its domestic Austrian counterpart.

2  The Law Applicable to Intellectual Property Rights: An Analysis 2.1  The Domestic and European Sources of Austrian Conflict of Laws In Austria, the main source of conflict of laws has long been the 1978 Private International Law Act (hereinafter, PIL Act).4 Due to recent activities of the European legislator, however, the importance of this Act has diminished considerably. As regards the rules determining the law applicable to intellectual property rights, the entering into force of the Rome I and the Rome II Regulation was of particular importance. The first Regulation applies to all contracts concluded after 17 December 20095, the latter Regulation to all events giving rise to damage that occurred after 11 January 2009.6 As these dates are very recent, case law is still lacking. For Rome I, however, recourse may be made to the case law on those provisions of its predecessor, the Rome Convention on the law applicable to contractual obligations (hereinafter, Rome Convention),7 that have remained unchanged.8 Further, a

4   BGBl 1978/304, most recently amended by BGBl I 2009/109. On this Act in particular and on Austrian conflict of laws in general see A Duchek and F Schwind, Internationales Privatrecht (Vienna, Manz, 1979); M Schwimann, Grundriss des Internationalen Privatrechts (Vienna, Manz, 1982); F Schwind, Internationales Privatrecht – Lehr- und Handbuch für Theorie und Praxis (Vienna, Manz, 1990); M Schwimann in P Rummel (ed), Kommentar zum Allgemeinen bürgerlichen Gesetzbuch, vol 2, 2nd edn (Vienna, Manz, 1992); Schwimann, above n 1; B Verschraegen in P Rummel (ed), Kommentar zum Allgemeinen bürgerlichen Gesetzbuch, vol 2, Part 6, 3rd edn (Vienna, Manz, 2004); M Neumayr in H Koziol, et al (eds), Kurzkommentar zum Allgemeinen bürgerlichen Gesetzbuch, 3rd edn (Vienna, Springer, 2010); Posch, above n 1. 5   Art 29 Rome I and Corrigendum to Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), (2009) OJ L 309/87. See also W Posch, ‘Strukturelle und semantische Unzulänglichkeiten im vergemeinschafteten Internationalen Schuldrecht’ (2008) Wirtschaftsrechtliche Blätter 571, 572. 6   Arts 31, 32 Rome II. On the relationship and interpretation of these two provisions from a German perspective see J Drexl, ‘Internationales Immaterialgüterrecht’ in HJ Sonnenberger (ed) Münchener Kommentar zum Bürgerlichen Gesetzbuch vol 11, 5th edn (Munich, Beck, 2010) no 149. 7   BGBl III 1998/166 as amended last by BGBl III 1998/208. For an Austrian perspective on the Rome Convention see D Czernich and H Heiss, Das Europäische Schuldvertragsübereinkommen: Übereinkommen über das auf vertragliche Schuldverhältnisse anzuwendende Recht (Vienna, Orac, 1999); Verschraegen, above n 4; G Musger in H Koziol, et al (eds), Kurzkommentar zum Allgemeinen bürgerlichen Gesetzbuch 2nd edn (Vienna, Springer, 2007). 8   On the relationship of Rome I to the Rome Convention see Art 24 Rome I. For the methodology developed by the ECJ for interpreting the Rome Convention, see Case C-133/08 Intercontainer Interfrigo (2010) Zeitschrift für Rechtsvergleichung, 4 with a case note by C Rudolf.

Austria  221 substantial amount of legal writings on both Regulations in general9 and their intellectual property aspects in particular has been published.10 At the outset, two important differences between the PIL Act and the Regulations have to be stressed; a more general one, and one that is particular to conflict of laws. The first concerns the interpretation of the respective provisions. The provisions of the domestic PIL Act are construed in the last instance by the Austrian Supreme Court (OGH) applying the traditional methods of interpretation of domestic Austrian law.11 In contrast to that, the Regulations are construed autonomously in preliminary rulings by the European Court of Justice (ECJ), that is, without recourse to any domestic law, and by using the methods of European Union law only.12 The second difference is that both Regulations refer to the substantive law rules of the applicable law.13 Consequently, the substantive law rules of the country to which the conflict rules of the Regulations refer apply regardless of that 9   A genuine Austrian perspective on these Regulations is offered by H Heiss, ‘Die Vergemeinschaftung des internationalen Vertragsrechts durch “Rom I” und ihre Auswirkungen auf das österreichische internationale Privatrecht’ (2006) Juristische Blätter 750; H Heiss and L Loacker, ‘Die Vergemeinschaftung des Kollisionsrechts der außervertraglichen Schuldverhältnisse durch Rom II’ (2007) Juristische Blätter 613; H Ofner, ‘Die Rom II-Verordnung – Neues Internationales Privatrecht für außervertragliche Schuldverhältnisse in der Europäischen Union’ (2008) Zeitschrift für Rechtsvergleichung 13; H Heiss, ‘Europäisches IPR der außervertraglichen Schuldverhältnisse (Rom II) – Bedeutung für das europäische Kollisionsrecht und Folgen für das österreichische IPRG’ in G Reichelt (ed), 30 Jahre österreichisches IPR-Gesetz – Europäische Perspektiven (Vienna, Manz, 2009) 1; G Musger in H Koziol, et al (eds), Kurzkommentar zum Allgemeinen bürgerlichen Gesetzbuch, 3rd edn (Vienna, Springer, 2010); Neumayr, above n 4; C Rudolf, ‘Europäisches Kollisionsrecht für außervertragliche Schuldverhältnisse – Rom II-VO’ (2010) Österreichische Juristenzeitung, no 36; and the contributions in D Beig, et al (eds), Rom II-VO – Neues Kollisionsrecht für außervertragliche Schuldverhältnisse (Vienna, Manz, 2008). 10   For an Austrian perspective on these aspects see A Grubinger, ‘Die Rom-II-VO und die Verletzung von freiem Wettbewerb sowie von Rechten des geistigen Eigentums’ in D Beig, et al (eds), Rom II-VO – Neues Kollisionsrecht für außervertragliche Schuldverhältnisse (Vienna, Manz, 2008) 55; C Handig, ‘Rom II-VO – Auswirkungen auf das Internationale Wettbewerbs- und Immaterialgüterrecht’ (2008) Wirtschaftsrechtliche Blätter 1; C Handig, ‘Das Leck im Schutzlandprinzip’ (2009) ecolex 775. Any comprehensive analysis of an act of European Union law, however, requires looking beyond domestic scholarship. Thus, for a non-Austrian perspective on the intellectual property aspects of the Regulations, see J Basedow and A Metzger, ‘lex loci protectionis europea – Anmerkungen zu Artikel 8 des Vorschlags der EG-Kommission für eine Verordnung über das auf außervertragliche Schuldverhältnisse anzuwendende Recht (“Rom II”)’ in A Trunk et al (eds), Russland im Kontext der internationalen Entwicklung: Internationales Privatrecht, Kulturgüterschutz, geistiges Eigentum, Rechtsvereinheitlichung. Festschrift Boguslawskij (Berlin, Berliner Wissenschafts-Verlag, 2004) 153; B Buchner, ‘Rom II und das Internationale Immaterialgüter- und Wettbewerbsrecht’ (2005) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 1004; EI Obergfell, ‘Das Schutzlandprinzip und Rom II’ (2005) Praxis des Internationalen Privat- und Verfahrensrechts 9; N Boschiero, ‘Infringement of Intellectual Property Rights – A Commentary on Article 8 of the Rome II Regulation’ (2007) Yearbook of Private International Law 87; P de Miguel Asensio, ‘Applicable law in the absence of choice to contracts relating to intellectual property or industrial property rights’ (2008) Yearbook of Private International Law 199; R Sack, ‘Das IPR des geistigen Eigentums nach der Rom II-VO’ (2008) Wettbewerb in Recht und Praxis 1405; P Torremans, ‘Licenses and assignments of intellectual property rights under the Rome I Regulation’ (2008) Journal of Private International Law 397; M Grünberger, ‘Das Urheberrechtsstatut nach der Rom II-VO’ (2009) 108 Zeitschrift für vergleichende Rechtswissenschaft 134; P Mankowski, ‘Contracts Relating to Intellectual Property and Industrial Property Rights under the Rome I Regulation’ in S Leible and A Ohly (eds), Intellectual Property and International Private Law (Tübingen, Mohr Siebeck, 2009) 31; Y Nishitani, ‘Contracts Concerning Intellectual Property Rights’ in F Ferrari and S Leible (eds), Rome I Regulation – The law applicable to Contractual Obligations in Europe (Munich, Sellier, 2009); Drexl, above n 6, no 140–69; EI Obergfell, ‘Verträge über Rechte am Geistigen Eigentum’ in C Reithmann and D Martiny (eds), Internationales Vertragsrecht, 7th edn (Cologne, Schmidt, 2010) 825; U Stimmel, ‘Lizenzverträge unter der Rom I Verordnung’ (2010) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 783. 11   This, of course, refers only to the methods. It does not mean, however, that a notion used in a domestic Austrian conflict rule has the same meaning as in substantive Austrian law. 12   For the ECJ to issue a preliminary ruling, a request of a court of a Member State of the European Union is required. In such a ruling the ECJ does not make a final determination of the matters in question, but only construes the act of European Union law in question. In detail, see Art 267 TFEU. 13   Art 20 Rome I, Art 24 Rome II.

222  Thomas Petz country’s conflict rules. By contrast, the rules of the PIL Act regularly refer to the conflict rules of the country whose law shall be applied.14 Thus, it depends on those foreign conflict rules whether the law that is deemed applicable by the domestic Austrian conflict rules actually applies. In conflict of laws terminology, the difference thus is that both Regulations exclude the renvoi, whereas regularly the PIL Act does not.

2.2  The Law Applicable to the Infringement of Intellectual Property Rights 2.2.1  The General Rule of the Lex Loci Damni and the Special Rule of the Lex Loci Protectionis Article 4(1) Rome II provides that the law of the country in which the damage occurs shall apply to all non-contractual obligations arising out of a tort.15 Further, it makes clear that neither the law of the country where the event occurs that gives rise to the damage, nor that of the country where indirect consequences of the event occur, is applicable. The general rule for torts thus provides for the application of the lex loci damni. A court may deviate from this rule under two circumstances: first, if the person claimed to be liable and the person sustaining the damage both have their habitual residence in the same country at the time when the damage occurs.16 The rationale of this exception is that there is a closer connection to that country. Second, if the tort is manifestly more closely connected with a country other than that where the damage occurs or that of the parties’ common residence, the law of that other country shall apply.17 This is a general opening clause. An example of such a closer connection would be a pre-existing relationship between the parties such as a licence agreement. In addition to this general rule, Rome II provides for two special provisions for intellectual property rights. The first provision is Article 8 Rome II. The first paragraph of this provision determines the law of the country for which protection is claimed – that is, the lex loci protectionis – as the law applicable to the infringement of intellectual property rights; the third paragraph declares any choice of law regarding the infringement of intellectual property rights as inadmissible. Which rights are considered to be intellectual property rights is indicated by the non-exclusive list of Recital 26. This list includes industrial property rights, copyright and related rights, and the sui generis right for the protection of databases.18 The second provision dealing exclusively with intellectual property rights is Article 13 Rome II. It states that Article 8 Rome II is also applicable to claims based on unjust enrichment, agency without authority and pre-contractual liability. Consequently, the lex loci protectionis applies to all claims arising from the infringement of an intellectual property right, regardless of the nature of the claim.

  s 5 PIL Act.   For a comparison with the domestic Austrian regime before Rome II entered into force, see J Schacherreiter, ‘Rom II im Überblick’ in D Beig, et al (eds), Rom II-VO – Neues Kollisionsrecht für außervertragliche Schuldverhältnisse (Vienna, Manz, 2008) 1, 2–4. For an assessment of this rule see W Posch, ‘Zur Bestimmung des Deliktsortes bei außervertraglichen Schuldverhältnissen mit Auslandsberührung’ in P Apathy, et al (eds), Festschrift für Helmut Koziol zum 70 Geburtstag (Vienna, Jan Sramek, 2010) 835. 16   Art 4(2) Rome II. 17   Art 4(3) Rome II. 18   See Grubinger, above n 10, 60. See also below 3.1.1. 14 15

Austria  223

2.2.2  The Main Differences between the General Rule and the Special Rule This juxtaposition already reveals two main differences between the general rule applicable to all torts, and the special rule applicable only to the infringement of intellectual property rights. The first difference is that in the absence of exceptions, escape clauses and the possibility of choosing the applicable law, the rule on the infringement of intellectual property rights is a strict one. This difference, however, is not unique to intellectual property rights: for both claims arising out of an act of unfair competition which does not exclusively affect the interests of a specific competitor, and claims arising out of a restriction of competition, there is also no escape clause and no choice of law.19 This indicates that for both fields of law, intellectual property and competition, the policy considerations mandate the adoption of a special rule.20 The second difference to the general rule is that in the event of an infringement of an intellectual property right, one and the same law applies to all claims arising from this infringement regardless of whether they are rooted in tort, unjust enrichment, agency without authority or pre-contractual liability. In addition, however, there is a third hidden difference, dogmatic by nature, which is of utmost importance.21 For the purposes of this chapter, the latter two differences deserve to be scrutinised, and we will start with the dogmatic one. 2.2.2.1  The Dogmatic Difference between the Lex Loci Damni and the Lex Loci Protectionis As set out above, tort claims are governed by the law of the country in which the damage occurs. This requires determining what constitutes the damage, and where it occurs. Both issues are a matter of interpretation of the conflict rules and thus, of the Rome II Regulation. If it results from this interpretation that in a particular country no damage has occurred, the law of that country is not applicable. As a result, the law of a different country – that where the damage has actually occurred – will be applied by the Austrian court seised.22 By contrast, with regard to the infringement of an intellectual property right, the plaintiff unilaterally determines the applicable law by indicating in his submissions to the court the country for which he claims protection. The law of this country, then, applies regardless of whether the damage has actually occurred there. The crucial issue is thus not one of the rules determining the applicable law, but of the applicable law itself. Whether the allegedly infringing activities are actually infringing depends on the concept of infringement 19   Art 6(1), (3)(a) and (4) Rome II. By contrast, if the act of unfair competition affects exclusively the interests of a specific competitor, the general regime of Art 4 Rome II applies. Whether this also allows choice of law for non-contractual obligations arising out of such an act, however, is controversial. See Neumayr, above n 4, at Artikel 6 Rom II no 2 with further references. The proper solution seems to be that no such choice is allowed as only construed that way, the reference of Art 6(2) Rome II to the general regime of Art 4 Rome II has a normative value. See J Drexl, ‘Internationales Recht gegen den unlauteren Wettbewerb’ in HJ Sonnenberger (ed), Münchener Kommentar zum BGB, vol 11, 5th edn (Munich, Beck, 2010) no 160. 20   For these policy considerations see below 2.5.2 and Heiss and Loacker, above n 9, 630; Grubinger, above n 10, 63–64. It has to be stressed, however, that the policy considerations of unfair competition law and intellectual property law are not necessarily the same. Nevertheless, in both fields of law, the interests of third parties are deemed to deserve more protection than in ordinary tort cases. 21  On this difference see in detail S Briem, Internationales und europäisches Wettbewerbsrecht und Kennzeichenrecht (Vienna, Orac, 1995) 112–14; Drexl, above n 6, no 12. 22   In this regard, it is important whether the court has to determine the applicable law on its own motion. The PIL Act s 2 imposes such a duty on Austrian courts. See OGH 4 Ob 398/85, Noverox/Ferrox (1986) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 92 (with case note by H Schmidt).

224  Thomas Petz endorsed by the substantive rules of the applicable law. It may well be that this concept is limited to activities occurring on the territory of the country for which protection is claimed.23 Indeed, such a limitation follows from public international law: international comity requires that the substantive law of a country covers only those activities that occur within the territorial boundaries of that country.24 To honour this principle, thus, the substantive law of the country for which protection is claimed may consider only those activities to be an infringement that occur on its territory.25 For activities that occur abroad but have economic effects on the territory of the country for which protection is claimed, this means that the effects themselves have to be considered infringing activities under the law of the country for which protection is claimed.26 In this context, the place where the allegedly infringing activities occur is important to the extent that it distinguishes territorial from extraterritorial activities. Thus, it is decisive only for the application of the applicable law, but not for the determination of the applicable law. In this regard, the rule on the law applicable to the infringement of intellectual property rights differs considerably from the general rule which requires determining the place where the damage has occurred.27 As a result of this difference, if a court finds that no infringement of an intellectual property right has occurred in the country for which protection is claimed, the plaintiff loses his case on the merits whereas under the general rule, if the court finds that arguably no damage has occurred in a particular country, it simply does not apply the law of this country, but the law of the country where the damage arguably occurred.28 Constructing the dogmatic difference between the lex loci damni and the lex loci protectionis this way, however, has provoked considerable criticism, in particular from copyright scholars.29 This criticism is based mainly on two arguments. The first is that by making the applicable law dependent on a unilateral determination by the plaintiff, the conflict of laws issue in effect disappears. Consequently, the law of any country may apply, should the plaintiff claim protection for that country. This is considered to make it unforeseeable to   See below 3.1.1.   Drexl, above n 6, no 261. See also R Dittrich, ‘Internet und On-Demand-Dienste im IPR’ (1997) ecolex 166 and H Schack, Urheber- und Urhebervertragsrecht, 5th edn (Tübingen, Mohr Siebeck, 2010), no 912 and 915 who consider this limitation to be immanent to the principle of territoriality. See also below n 199. 25   Schack, above n 24, no 915. 26   See for Austrian law before the entry into force of Rome II OGH 4 Ob 72/88, RTL Plus, (1989) Medien und Recht 19 (considering for the purpose of compulsory licences a broadcast from Luxemburg that can be received in Austria by cable to be an Austrian broadcast as it is also directed to Austria); OGH 4 Ob 19/91, Tele-Uno III, (1991) Medien und Recht 195 (applying Austrian copyright law to an Italian broadcast directed to Austria and finding for infringement of the authors’ Austrian copyrights); OGH 4 Ob 44/92, Schott II, (1992) Medien und Recht 194 (applying Austrian copyright law to a German broadcast and finding for no infringement as the exclusive licence on which the plaintiff based his claim did not confer on him the broadcasting right for Austria). By contrast, for tort claims, the effects of infringing activities that occurred abroad have been considered to be infringing activities in Austria at the level of conflict of laws. See OGH 4 Ob 89/92, Macht und Magie, (1995) Medien und Recht 55 (applying in a personality rights case Austrian law to a broadcast that originated from Germany because the broadcast could be received by cable in Austria). See in detail M Walter, ‘Anwendbares Recht’ in U Loewenheim (ed), Handbuch des Urheberrechts, 2nd edn (Munich, Beck, 2010) § 58, no 97–100. 27   Briem, above n 21, 113; C Handig, ‘Neues im Internationalen Wettbewerbsrecht – Auswirkungen der Rom II-Verordnung’ (2008) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 24, 28; Drexl, above n 6, no 12; Neumayr, above n 4, § 34 IPRG no 2. 28   As regards the general tort rule, it has to be stressed that at the level of conflict of laws the court may not finally determine whether the damage has actually occurred in the country where it is claimed to have occurred. Rather, this determination is left to the substantive rules of the applicable law. See B Lurger, ‘IZVR und IPR bei Internet Domain Namen’ in V Schönberger, et al (eds), Das Recht der Domain Namen (Vienna, Manz, 2001) 103, 112 and 127. 29   See Walter, above n 26, no 16 and 17. 23 24

Austria  225 the defendant, at the time he engages in his allegedly infringing activities, which law will apply to these activities.30 The second argument is that such a construction requires that the substantive law rules of the country for which protection is claimed determine whether an allegedly infringing activity that occurs outside the territory of the country for which protection is claimed amounts to an infringement. As regularly the substantive law rules on infringement are silent on the territorial aspects of the infringement, this construction is considered to be impractical.31 Based on these arguments, a different construction of the dogmatic difference between the lex loci damni and the lex loci protectionis has been advanced. Its starting point is the observation that the lex loci protectionis applies to both the infringement of intellectual property rights and their property aspects. As far as infringement is concerned, the lex loci protectionis is considered to be identical to the lex loci damni, but as the lex loci damni does not apply to the property aspects of intellectual property rights, this identity is limited to their infringement.32 Thus, under this construction also the lex loci protectionis is distinguished from the lex loci damni. For the infringement of intellectual property rights, however, it follows from the identity of the first with the latter that determining the applicable law requires determining the place where the damage arguably occurred.33 Before the entry into force of Rome II, this construction found some support in the wording of section 34(1) PIL Act. This provision provides that the existence, contents and termination of intellectual property rights are governed by the law of the country where the allegedly infringing activities occurred. Thus, on its face it applies only to the property aspects of intellectual property rights. As the claims arising from the infringement of an intellectual property right are closely related to these aspects, however, this provision ever since has been considered to apply also to infringement claims.34 Taken literally, the law applicable to these claims would then be the law of the country where the allegedly infringing activities occurred. Construed that way, thus, as far as infringement is concerned, section 34(1) PIL Act would be nothing but a modified expression of the general tort rule which before the entry into force of Rome II provided for the application of the lex loci

30   See Walter, above n 26, no 10 and in his case note to OGH 4 Ob 139/90, Gleichgewicht des Schreckens (1991) Medien und Recht 112; B Lurger, ‘Internationales Deliktsrecht und Internet – ein Ausgangspunkt für grundlegende Umwälzungen im Internationalen Privatrecht?’ in J Basedow, et al (eds), Aufbruch nach Europa. 75 Jahre MaxPlanck-Institut für Privatrecht (Tübingen, Mohr Siebeck, 2001) 495, n 69. 31   To both arguments there are valid counter-arguments: the applicable law is not unforeseeable to the defendant, as the plaintiff will regularly claim protection for the country where the defendant has engaged in his allegedly infringing activities. Thus, by deciding on where to engage in these activities, the defendant in effect determines the applicable law. See Schack, above n 24, no 1044. In addition, if the plaintiff claims protection for a country where no infringing activities occurred, he risks losing on the merits. Further, for determining the territorial scope of the concept of infringement in substantive law, one may make recourse to the methods that have been developed in conflict of laws for determining the place where the allegedly infringing activities occurred. See Drexl, above n 6, no 259–88; Walter, above n 26, no 18. 32   Walter, above n 26, no 12; Schack, above n 24, no 1051. 33   Walter, above n 26, no 10; Schack, above n 24, no 1051. 34   OGH 4 Ob 345/82, Attco/Atco, SZ 56/107; OGH 4 Ob 408/5, Hotel Sacher (1986) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 73; OGH 4 Ob 309/86, Hotel-Video-Systeme, SZ 59/100; OGH 4 Ob 81/01t, CICLON (2001) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 269; Schwimann 1992, above n 4, § 34 IPRG no 3; HG Koppensteiner, Österreichisches und europäisches Wettbewerbsrecht, 3rd edn (Vienna, Orac, 1997) § 37 no 4; Verschraegen, above n 4, § 34 IPRG no 4; Neumayr, above n 4, § 34 IPRG no 2. Contra Schwind, above n 4, 191 and Lurger, above n 28, 127 who argue for the application of the general tort rule of s 48(1) PIL Act. It has to be stressed, however, that both approaches have a common goal, that is, the application of one and the same law to both the contents of the allegedly infringed right and its infringement.

226  Thomas Petz delicti commissi.35 The Austrian Supreme Court has endorsed such a literal construction of section 34(1) PIL Act in a copyright case concerning the distribution of a book in Germany: it held that German law applies only if the plaintiff succeeds in establishing that the book was actually distributed in Germany.36 More recently, however, in a trade mark case, the court held that advancing infringement claims based on Austrian trade mark law is sufficient for Austrian law to apply.37 Contrary to the first decision, in this decision it thus did not matter for determining the applicable law where the allegedly infringing activities occurred. But the case law of the Austrian Supreme Court has remained ambiguous: in a case on neighbouring rights, the Court on the one hand made the application of Austrian law dependent on the fact that the allegedly infringing activities occurred in Austria, but on the other stressed that Austrian law applied because the plaintiff had based his claim on his Austrian neighbouring rights.38 This ambiguity was also reflected in scholarly writings: Whereas some found the wording of section 34(1) PIL Act to indicate that the occurrence of the allegedly infringing activities is the connecting factor,39 others stressed that rather it is the plaintiff ’s claim for protection in a certain country.40 The practical consequences of these different dogmatic approaches, however, have been considered to be only minimal.41 Be this as it may, for Article 8 Rome II the criticism of the dogmatic construction endorsed here has to fail anyway.42 It does so for two reasons: first, the wording of Article 8(1) Rome II clearly refers to the law of the country for which protection is claimed as the applicable law. Thus, the connecting factor is the plaintiff ’s claim for protection, not the place where the damage occurred. Second, whereas the European legislator expressly declared that the rules on the law applicable to acts of unfair competition laid down in Article 6 Rome II are merely clarifications of the general rule for torts, he did not do so with regard to Article 8(1) Rome II.43 This indicates that the latter rule is dogmatically different. For these reasons, at least under Rome II determining the lex loci damni is different from 35   See OGH 4 Ob 89/92, Macht und Magie (1995) Medien und Recht 55 (with case note by M Walter) (considering in a personality rights case the lex loci delicti commissi to be an expression of the same principle as the lex loci protectionis). The rule on the law applicable to the infringement of intellectual property rights would be ‘modified’ because contrary to the general rule on the law applicable to torts it would not allow for choice of law and for the application of the law of a country that is more closely connected with the infringement. 36   OGH 4 Ob 125/93, Adolf Loos II (1994) Medien und Recht 26 (with case note by M Walter). See also OGH 4 Ob 238/03h, Journalistenbüro (2004) Medien und Recht 123 (with case note by M Walter). 37   OGH 4 Ob 81/01t, CICLON (2001) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 269. See also OGH 4 Ob 398/85, Noverox/Ferrox (1986) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 92 (with case note by H Schmidt); OGH 4 Ob 19/91, Tele-Uno III (1991) Medien und Recht 195 (with case note by M Walter); OGH 4 Ob 44/92, Schott II (1992) Medien und Recht 194 (with case note by M Walter). On the latter two decisions, see above n 26. 38   OGH 4 Ob 135/06s, Fall Gruppe D (2006) Medien und Recht 387 (with case note by M Walter). For this ambiguity see also OGH 4 Ob 139/90, Gleichgewicht des Schreckens (1991) Medien und Recht 112 (with case note by M Walter). 39   F Schönherr, Gewerblicher Rechtsschutz und Urheberrecht. Grundriss – Allgemeiner Teil (Vienna, Manz, 1982) no 907.4; Dittrich, above n 24, 166; Koppensteiner, above n 34, § 37 no 3; Lurger, above n 28, 127 and above n 30, 495 n 69; M Fallenböck, ‘Internationales Urheberrecht und digitale Wirtschaft’ in M Fallenböck, et al (eds), Urheberrecht in der digitalen Wirtschaft (Vienna, Manz, 2005) 155, 165; Walter, above n 26, no 35. 40   Schwimann 1992, above n 4, § 34 IPRG no 3; Verschraegen, above n 4, § 34 IPRG no 11; Neumayr, above n 4, § 34 IPRG no 2. 41   cf W Dillenz and D Gutman, Praxiskommentar zum Urheberrecht, 2nd edn (Vienna, Springer, 2004), § 81 UrhG no 36. The main practical differences concern the admissibility of choice of law and the possibility to apply the law of a country that is more closely connected with the tort. 42   See also below 3.1.1. 43   Recital 21 to Rome II. See Schacherreiter, above n 15, 7. For a critical view on this, see Handig, above n 27, 27–28.

Austria  227 determining the lex loci protectionis.44 Under this approach, Article 8(1) Rome II gives the plaintiff the advantage of determining the applicable law unilaterally by claiming protection for a particular country, but this advantage is counterbalanced by the risk that he will lose on the merits if he claims protection for a country where the defendant has not engaged in any activities.45 2.2.2.2  The Relationship to Non-Contractual Obligations Other than Tort The second difference that deserves closer scrutiny is the fact that one and the same infringement may give rise to several distinct non-contractual obligations. Some of these obligations could arise out of a tort, some out of unjust enrichment, and some out of agency without authority.46 Rome II applies to all these non-contractual obligations, but provides different rules for them. This may lead to the application of different laws to one and the same dispute.47 For intellectual property rights, however, Article 13 Rome II ensures that the lex loci protectionis applies to all non-contractual obligations regardless of their character. Consequently, one and the same law governs all non-contractual obligations arising from the infringement of an intellectual property right. A closer look, however, reveals that this is not really different from the violation of rights other than intellectual property rights. The reason for this is that often such a violation gives rise not only to noncontractual obligations arising out of unjust enrichment or agency without authority, but also to non-contractual obligations arising out of a tort. In this case, however, Articles 10(1) and 11(1) Rome II provide that if the unjust enrichment or agency without authority is closely connected with a ‘relationship existing between the parties’, the law applicable to that relationship also applies to these obligations. Consequently, the crucial issue is whether a tort claim which arises out of the same violation as a claim based on unjust enrichment or agency without authority qualifies as such a ‘relationship’. In my view, it does. This follows on the one hand from the wording of the respective provisions which, contrary to Article 4(3) Rome II, does not require the relationship to ‘pre-exist’, but merely to ‘exist’, and on the other from their purpose to ensure that the entire legal situation is governed by the same law.48 Thus, the lex loci damni applies to these claims even though they are not tort 44   Like here Drexl, above n 6, no 13; Grünberger, above n 10, 152–53; more cautious Heiss and Loacker, above n 9, 636. See also Grubinger, above n 10, 65. Contra Walter, above n 26, no 36 and 54. 45   Drexl, above n 6, no 12. But see based on a different dogmatic approach Schack, above n 24, no 1044. 46   The terminology used here is derived from Rome II. Thus, even though domestic laws may consider noncontractual obligations arising out of unjust enrichment or agency without authority as torts, they are not necessarily torts for the purpose of Rome II. 47   This is particularly true for non-contractual obligations arising out of agency without authority. According to Art 11(3) Rome II, such obligations are governed by the law of the country where the unauthorised act was performed. This is considered to be a reference to the law of the country where the event giving rise to the damage occurred rather than to the law of the country where the damage occurred. See Heiss and Loacker, above n 9, 643. By contrast, for non-contractual obligations arising out of unjust enrichment, Art 10(3) Rome II provides for the application of the law of the country where the unjust enrichment took place. This will regularly be the law of the country where the damage occurred and thus the law that also applies to the tort claim. See G Wagner, ‘Die neue Rom II Verordnung’ (2008) Praxis des Internationalen Privat- und Verfahrensrechts 1, 11. 48   This difference in the wording is not particular to the English version of the Regulation, but can equally be found in the German and the French versions. In the initial proposal, however, there was no such distinction. As the European legislator has not explained this change in the wording, one could argue that no importance should be attributed to it, and that a non-contractual obligation arising out of a tort which arises out of the very same violation of a right as the other non-contractual obligations, does not constitute an ‘existing’ relationship. According to this view, the latter obligations are thus not necessarily governed by the same law. See with regard to the initial proposal P Huber and I Bach, ‘Die Rom II-VO’ (2005) Praxis des Internationalen Privat- und Verfahrensrechts 73, 81. As laid down above in n 47, however, at least for non-contractual obligations arising out of

228  Thomas Petz claims. Against this background, Article 13 Rome II cannot be understood as a special rule for intellectual property rights, but only as echoing the general rule of Articles 10(1) and 11(1) Rome II to apply a single law to all non-contractual obligations arising from the same violation.49 The ‘relationship’ existing between the parties, however, could arise not only out of a tort, but also out of a contract. Damaging a rented car may serve as an example. The general rule is that the law applicable to the contract also governs the claims based on tort, unjust enrichment and agency without authority.50 This ensures that a single law applies to all claims, regardless of their nature, while also leading to the application of the law governing the contract to non-contractual obligations. The latter is important in two regards: First, the law applicable to the contract, and thus to the non-contractual obligations, can be chosen by the parties regardless of the restrictions imposed by Article 14 Rome II. Second, absent a choice of law clause, the applicable law is regularly determined by the principle of characteristic performance which leads to the application of the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.51 This, however, is not necessarily the country where the damage has occurred. In our car rental case, for example, the law applicable to the rental agreement is the law of the country where the rental company has its habitual residence.52 This law also applies to the company’s tort claims advanced against us if we drive the car in breach of the rental agreement to a different country and have an accident there – even though the damage occurred in that country. With regard to intellectual property rights, the situation is different: The lex loci protectionis applies to all non-contractual obligations, regardless of their connection to a contractual relationship. Consequently, different laws may apply to claims arising out of contractual obligations and to claims arising out of non-contractual obligations. This means that in the standard case in which a licensee breaches the licence agreement and thus infringes the intellectual property right that has been licensed, two different laws may apply,

unjust enrichment, nevertheless the same law will regularly apply because the unjust enrichment takes place at the place where the damage occurs. 49   Even if the European legislator had not adopted Art 13 Rome II, the same law would still apply to all noncontractual obligations arising out of the infringement of an intellectual property right. For non-contractual obligations arising out of unjust enrichment, this follows from the fact that the place where the unjust enrichment occurs is the place where the damage occurs. In this regard, there is no practical difference between general tort claims and claims arising from the infringement of an intellectual property right. By contrast, for non-contractual obligations arising out of agency without authority a different law may apply as the place where the act is performed may be different from the place where the damage occurs. For intellectual property rights other than unitary Community rights, however, the damage always occurs only at the place where the act of infringement is committed. See C von Bar, Internationales Privatrecht, vol 2 (Munich, Beck, 1991) 662; R Sack, ‘Das internationale Wettbewerbs- und Immaterialgüterrecht nach der EGBGB-Novelle’ (2000) Wettbewerb in Recht und Praxis 269, 271; H Schack, ‘Internationale Urheber-, Marken- und Wettbewerbsrechtsverletzungen im Internet – Internationales Privatrecht’ (2000) Multimedia und Recht 59, 65; Lurger, above n 28, 111 n 28 (opposing the dogmatic approach of von Bar and Schack, but agreeing on their results); J Drexl, ‘Internationales Immaterialgüterrecht’ in HJ Sonnenberger (ed), Münchener Kommentar zum Bürgerlichen Gesetzbuch, vol 11, 4th edn (Munich, Beck, 2006) no 118; contra S Strömholm, ‘The immovable lex loci delicti in international copyright law – traditional or rational?’ in J Basedow, et al (eds), Aufbruch nach Europa. 75 Jahre Max-Planck-Institut für Privatrecht (Tübingen, Mohr Siebeck, 2001) 517, 522. See also below 4.2.1 with regard to international jurisdiction. Thus, were Art 11 (3) Rome II applied to intellectual property rights, the claim based on agency without authority would be governed by the same law as the infringement claim. 50   Arts 4 (3), 10 (1) and 11 (1) Rome II. See Neumayr, above n 4, Art 10 Rom II no 2. 51   Art 4 (2) Rome II. 52   See Musger, above n 9, Art 4 Rom I no 9.

Austria  229 the lex loci protectionis to the tort claim and the law of the country where the licensor53 habitually resides to the contractual claim. This deviates from the principle that one and the same law applies to all claims of a dispute but ensures that the law applicable to the infringement of intellectual property rights may not be chosen by the parties. In this regard, Article 13 Rome II provides a special rule mandated by the policy considerations of intellectual property.54

2.3  The Law Applicable to Contracts Relating to Intellectual Property Rights 2.3.1  The Legislative History of Article 4 Rome I and Its Repercussions Absent a choice of law by the parties, Article 4(1) Rome I provides special rules to determine the applicable law for certain types of contracts, in particular, contracts for the sale of goods, contracts for the provision of services, distribution contracts and franchise contracts. These rules have in common that they stipulate a specific connecting factor, contrary to the more flexible connecting factor of the characteristic performance endorsed by the general rule of Article 4(2) Rome I. In addition to the list of types of contracts finally adopted by the European legislator, the initial draft of Article 4(1) Rome I contained a special rule on the law applicable to contracts relating to intellectual property rights.55 The specific connecting factor for these contracts was the habitual residence of the transferor or assignor of the intellectual property right. This rule, however, faced substantial criticism for two reasons.56 The first was the ambiguity with regard to the types of contracts to which it applied. One aspect of this ambiguity was whether the rule applied to contracts relating to intellectual property rights other than those providing for a transfer or an assignment of the right. Prominent examples of such contracts are licence agreements and publishing contracts. Another aspect of this ambiguity was whether the rule also applied to contracts that deal only incidentally with intellectual property rights. As Article 4(1) Rome I listed special conflict rules for the most important examples of such contracts, distribution contracts and franchise contracts, the crucial question was how these rules related to the special rule for contracts relating to intellectual property rights. Both aspects of this ambiguity would regularly come up when qualifying an individual contract. The second reason causing severe criticism was the contents of the rule itself. A fixed connecting factor providing for the application of the law of the country where the transferor or assignor is habitually resident adversely affects the 53   The licensor effects the characteristic performance at least if the licence agreement does not impose a duty to exploit on the licensee. On the law applicable to licence agreements, see in detail below 2.3.2. 54   Against this background, Art 13 Rome II has three purposes: first and foremost, to ensure that the applicable law is determined for all non-contractual obligations arising from the infringement of an intellectual property right without determining the place where the infringement occurred. See above 2.2.2.1. Secondly, to prevent different laws from applying to different non-contractual obligations based on the escape clauses of Arts 10 and 11 Rome II. Thirdly, to bar choice of law also for claims based on unjust enrichment and agency without authority and thus, to extend the strict character of Art 8 Rome II to these claims. See above 2.2.2. 55   Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I), presented by the Commission on 15 December 2005, COM(2005) 650 final. 56   See European Max Planck Group for Conflict of Laws in Intellectual Property (CLIP), ‘Comments on the European Commission’s Proposal for a Regulation on the Law Applicable to Contractual Obligations (“Rome I”) of December 15, 2005 and the European Parliament Committee on Legal Affairs’ Draft Report on the Proposal of August 22, 2006’ (2006) International Review of Intellectual Property and Competition Law 471; Mankowski, above n 10, 32.

230  Thomas Petz transferee or assignee. This could lead to inappropriate results, in particular if the rule were also applied to licence agreements. Whether for these two reasons or for others, the proposal was finally dropped.57 The fact, however, that initially a special rule for contracts relating to intellectual property rights had been provided that was later dropped has two repercussions on Article 4 Rome I as it now stands. The first concerns the rules determining the law applicable to contracts for the sale of goods and contracts for the provision of services. The initial existence of a special rule on contracts relating to intellectual property rights indicates that these rules have not been designed to apply to contracts relating to intellectual property rights. Thus, intellectual property rights are neither ‘goods’ within the meaning of Article 4(1)(a) Rome I nor ‘services’ within that of Article 4(1)(b) Rome I.58 The second repercussion concerns the rules on distribution contracts and franchise contracts. In the absence of a special rule on contracts relating to intellectual property rights, there seems to be more room to apply these rules to both distribution and franchise contracts that incidentally deal with intellectual property rights. This follows from the fact that the general rule of Article 4(2) Rome I applies if the elements of the contract are covered by more than one rule of Article 4(1) Rome I. In the absence of a rule on contracts relating to intellectual property rights, the general rule applies only if the court finds that the contract may not be qualified as a distribution contract or a franchise contract.59 The fact that such a contract contains some intellectual property elements, however, does not seem to influence its qualification as a distribution or franchise contract.60

2.3.2  The Determination of the Characteristic Performance and Its Alternatives As a result of the legislative history, Article 4(1) Rome I is not applicable to contracts that relate primarily to intellectual property rights. The general rule of Article 4(2) Rome I provides for the application of the law of the country where the person effecting the characteristic performance is habitually resident. Thus, the crucial issue is which performance is the characteristic one. This is determined by analysing the mutual obligations of the parties in order to single out the centre of gravity of the contract. Regularly, this analysis proceeds in two steps. First, for each contracting party individually, the primary obligation to which all other obligations are only ancillary is singled out. Second, based on the primary obligations of both parties, it is determined which contractual obligation distinguishes the contract   Mankowski, above n 10, 56.   In this regard, the repercussions of the legislative history of Art 4 Rome I also extend to the Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) (2001) OJ L 12/1. Recital 17 to Rome I provides that the concept of ‘provision of services’ and ‘sale of goods’ should be interpreted in the same way as when applying Art 5 Brussels I. Brussels I, which predates Rome I, does not contain such an express requirement of a coherent interpretation, but one can make the systematic argument that as both Regulations endorse the same concepts of ‘provision of services’ and ‘sale of goods’, Art 5 Brussels I should also be interpreted in the same way as Art 4 Rome I. With regard to licence agreements, this would mean that from the legislative history of Rome I it follows for Art 5 Brussels I that licence agreements are no service contracts. Indeed, this was the result reached by the ECJ in Case C-533/07 Falco Privatstiftung [2009] ECR I-3327, but based on a different reasoning. Thus, in this regard, there is interpretative coherence even though the ECJ did not take the legislative history of Rome I into account when reaching its decision. Cf the case note by P Mankowski in (2009) Juristenzeitung 958, 959. 59   On the law applicable to franchise contracts before and after Rome I, see L García Gutiérerrez, ‘Franchise contracts and the Rome I Regulation on the law applicable to international contracts’ (2008) Yearbook of Private International Law 233. 60   cf Mankowski, above n 10, 35–38. 57 58

Austria  231 from other types of contracts. Thus, the relative weight of the mutual obligations and their distinctiveness in relation to other types of contracts is decisive. Under this test, regularly the performance for which payment is due is the characteristic one. For most contracts it is obvious which obligation of a party is the primary one, so the analysis is limited to the second step. For some contracts, however, in particular those that establish a long-lasting relationship between the parties, the first step is crucial as it is not always obvious which obligation is the primary one. Regularly, licence agreements are a typical example of such contracts. As this outline indicates, the applicable law depends on the mutual obligations of the parties to a contract. To get an impression which obligations may be imposed by contracts relating to intellectual property rights, a brief detour to substantive law may be helpful. 2.3.2.1  The Substantive Law Background: The Mutual Obligations in Contracts Relating to Intellectual Property Rights In substantive Austrian intellectual property law, two main types of contracts relating to intellectual property rights can be distinguished: transfers and licence agreements. For transfers of intellectual property rights, the mutual obligations of the parties seem to be rather straightforward: the transferor is required to transfer the right and the transferee is required to make a payment. Any transfer of a right, however, in order to be effective requires that the right that is transferred exists. Registered intellectual property rights regularly come into existence by registration, unregistered intellectual property rights by creation. Consequently, a transfer of an intellectual property right requires creating a piece of work, making and registering an invention or developing and registering a trade mark to be effective. These obligations may be agreed upon expressly, but regularly they follow implicitly from the agreement to transfer (Verpflichtungsgeschäft). But not only the obligations of the transferor, also the obligations of the transferee may be more complex than they appear at first sight. He may be required, for example, to effect payment not by a lump sum, but by royalties that depend on his exploitation of the intellectual property right. From this form of payment, it may be derived that the parties have implicitly agreed on a duty to exploit the intellectual property right. Nevertheless, the mutual obligations of the parties in the case of a transfer of an intellectual property right do not raise as many difficulties as those in the case of licence agreements. For the latter, the difficulty starts with the minimum obligation of the licensor. In legal writings, some consider the licensor to be obliged only to refrain from challenging the use of his intellectual property right by the licensee whereas others consider him to be obliged to grant the licensee a right to exploit the intellectual property right.61 The obligation not to challenge the use is only ancillary to this right. This controversy may be traced back to the more fundamental question of whether the legal order is an order of rights, in which case the obligations follow from the right, or an order of obligations in which case the right 61   cf L Friebel and O Pulitzer, Österreichisches Patentrecht. Das materielle Recht, 2nd edn (Cologne, Heymann, 1972) 304–5; Schönherr, above n 39, no 418 and 428.l; P Gräser, ‘Der “Gebrauchszwang” im Markenrecht’ (1982) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 109, 111; C Liebscher, Lizenzverträge. Rechtsgrundlagen und Muster für den Patentlizenzvertrag, Know-how-Lizenzvertrag, Markenlizenzvertrag in Deutsch und Englisch (Vienna, Orac, 2001) 19; G Kucsko, Geistiges Eigentum (Vienna, Manz, 2003) 929; K Hiti, ‘Zur Drittwirkung von Marken- und Patentlizenzen. Die Auswirkungen der BOSS-Brillen-E des OGH auf Aktivlegitimation und Sukzessionsschutz von Marken- und Patentlizenznehmern’ (2003) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht, 2; W Nauta, ‘Die Rechtsstellung des Lizenznehmers – Entscheidung des OGH 15.10.2002, 4 Ob 209/02t’ (2003) Österreichische Juristenzeitung, 22.

232  Thomas Petz follows from the obligation. Rather than this theoretical dispute, however, the reason for the rather diverse picture in legal writings may be that different intellectual property rights and different types of licences are considered. In this vein, the Austrian Supreme Court held that exclusive licences grant the licensee a right to exploit, regardless of the intellectual property right that had been licensed.62 By contrast, the Court long considered nonexclusive licences to impose on the licensor only a duty to refrain from challenging the use of the intellectual property right, at least in the case of trade marks.63 When trade marks, however, became recognised as property rights, it abandoned the latter view and concluded that non-exclusive trade mark licences also grant a right to exploit.64 The main practical consequence of this difference in the dogmatic construction of the licence agreement is whether a duty to maintain the intellectual property right is imposed on the licensor.65 This duty is of particular importance for registered rights. For those who consider the licensor only obliged not to challenge the use of the intellectual property right by the licensee, such a duty only follows from an express agreement between the parties whereas for those who consider the licensor obliged to grant a right to exploit the intellectual property right, it follows implicitly from the licence agreement. Thus, in the first case the licensor is only obliged to refrain from activities, whereas in the latter case he could be required to engage in some activities. Consequently, depending on which view one endorses, the minimum obligation of the licensor is either the obligation not to challenge the use of the intellectual property right by the licensee or the obligation to grant the licensee a right to exploit the intellectual property right and to maintain this right. In addition to his minimal obligation, the licensor may also be obliged to sue third parties who infringe the intellectual property right. This may be the case in particular if the licence agreement does not entitle the licensee himself to sue third parties. In substantive Austrian intellectual property law, this is the case if the licence is non-exclusive.66 Further, like in the case of a transfer, the licensor is regularly required to create a piece of work, to make and register an invention or to develop and register a trade mark. These obligations may be agreed on expressly, but regularly they follow implicitly from the licence agreement because intellectual property rights can only be effectively licensed if they exist. Thus, this type of obligation is part of all licence agreements, regardless of which intellectual property right is licensed. It has to be noted that it is distinct from the duty to maintain the intellectual property right, as only once a right exists does the need to maintain it arise. Similarly, it is different from the minimum obligation of the licensor, as the existence of the intellectual property right that is licensed is a precondition for any effective license agreement. Thus, it is of no relevance to the duty to create whether the minimum obligation of the licensor is the obligation not to challenge the use of the intellectual property right by the licensee or the obligation to grant the licensee a right to exploit. In the first case, the licensee 62   OGH 4 Ob 173/90, Trennwand (1991) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht, 153 (patents); OGH 4 Ob 178/00f, Boss-Brillen II (2001) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht, 89 (trade marks). On the latter, see also the case note by R Schanda, ‘Kritisches zur Aktivlegitimation des Markenlizenznehmers’ (2001) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 151. 63   OGH 4 Ob 7/92, Gullivers Reisen (1992) Wirtschaftsrechtliche Blätter 406; OGH 4 Ob 115/94, Slender you, Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 67/174; OGH 4 Ob 77/95, Plus (1996) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 143. 64   OGH 4 Ob 209/02t, Brühl (2003) Evidenzblatt no 26. 65   Liebscher, above n 61, 19. 66   According to the prevailing view, such a duty does not follow implicitly from the licence agreement, but has to be expressly agreed. Cf for German patent law, R Kraßer, Patentrecht – Ein Lehr- und Handbuch, 6th edn (Munich, Beck, 2009) 939–40.

Austria  233 exploits the intellectual property right because the licensor is barred from prohibiting this exploitation, in the latter because he has a right to exploit. In both cases, however, exploitation requires that there is an intellectual property right. Thus, the duty to create is not an aspect of the minimum obligation, but a different type of obligation. In sum, there are four distinct obligations which may be imposed on the licensor: the minimum obligation not to sue respectively to grant a right to exploit, the obligation to sue third parties, the obligation to create the intellectual property right, and – in the case of registered intellectual property rights – the obligation to maintain the right. On the part of the licensee, the minimum obligation is the payment of a lump sum or royalties. In addition, however, he may be required to exploit the intellectual property right. Such a duty to exploit may either be agreed upon expressly or derived implicitly from the purpose of the licence agreement. An implicit duty to exploit exists, for example, if a contract provides that payment is due once the copyrightable work is distributed67 or if it provides for royalties without fixing minimum payments.68 By contrast, the mere fact that an exclusive licence has been granted does not mandate the presumption of an implicit duty to exploit.69 The most prominent example of a contract containing a duty to exploit is a publishing contract, as in such a contract the publisher regularly agrees to produce and distribute copies of the work. This is recognised by Austrian substantive law: section 1172 of the Civil Code imposes on the publisher a duty to exploit.70 2.3.2.2  The ‘Easy’ Case of Transfers and the ‘Hard’ Case of Licence Agreements Having analysed briefly the mutual obligations of the parties to contracts relating to intellectual property rights in substantive law, we return to the conflict rules. Conflict law scholars commonly make a distinction between ‘easy’ cases and ‘hard’ cases of contracts relating to intellectual property rights.71 The ‘easy’ cases are the agreements to transfer or assign an intellectual property right. These agreements amount to an outright sale of the intellectual property right. In these cases, the transferor is obliged to transfer the right, whereas the transferee is regularly only obliged to pay a lump sum.72 Thus, as the transferor is obliged to effect the characteristic performance, the law of the country where he is habitually resident applies. The ‘hard’ cases are the licence agreements. For these types of contracts, a gliding scale of mutual obligations may be developed. This, however, gives rise to a methodological problem: if the parties have agreed expressly and in writing on a particular obligation, this obligation may easily be established. Implicit obligations, however, may only be derived by interpretation, and the rules of interpretation are those of the applicable law. The result could be a vicious circle: whether there is an implicit duty to create or an implicit duty to   cf OGH 4 Ob 62/99t, Guide40+ (1999) Medien und Recht, 339 (with case note by M Walter).   OGH 3 Ob 208/53 and 3 Ob 207/53, Blockfräse, Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 26/125. Cf for German patent law Kraßer, above n 66, 940–41. 69   OGH 3 Ob 208/53 and 3 Ob 207/53, Blockfräse, Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 26/125. For a different view, see L Munk, Die patentrechtliche Licenz (Berlin, Heymann, 1897) 126. 70   M Büchele in G Kucsko (ed), Urheberrecht. Systematischer Kommentar zum Urheberrechtsgesetz (Vienna, Manz, 2008) 380; M Walter, Österreichisches Urheberrecht. Handbuch, vol 1 (Vienna, Medien und Recht, 2008) no 1807. 71   Czernich, above n 7, Art 4 no 122; Verschraegen, above n 4, Art 4 EVÜ no 114. For the application of the law of the country for which protection is claimed, see D Martiny in HJ Sonnenberger (ed), Münchener Kommentar zum BGB, vol 10, 5th edn (Munich, Beck, 2009) Art 4 Rom I no 221. 72   Czernich, above n 7, Art 4 no 121; Verschraegen, above n 4, Art 4 EVÜ no 115. 67 68

234  Thomas Petz exploit is determined by the applicable law, but what law is applicable depends on the existence of such a duty.73 The solution can only be to keep the requirements for establishing such a duty rather low at the level of the conflict rules and take the risk that in rare cases a law applies based on the existence of a duty that eventually turns out to be non-existent. 2.3.2.3  Three Models of Licence Agreement: ‘Standard’, ‘Exploitation’ and ‘Creation’ The standard model of a licence agreement reflects the minimum obligations of both parties: the licensor is obliged not to challenge the use of the right by the licensee, and the licensee is obliged to pay for this use. In this case, the contract is characterised by the licensor’s obligation not to challenge. Consequently, the law of the country where the licensor is habitually resident applies.74 However, as soon as the mutual obligations differ from those of the standard model, the situation becomes less clear. In case a duty to exploit is imposed on the licensee, he is required to fulfil two different duties: the duty to pay the licence fee on the one hand and the duty to exploit the intellectual property right on the other. This model may be called the ‘exploitation model’. The latter duty could be considered to be only an ancillary one, and thus the law of the country where the licensor is habitually resident may apply. As a result, the transfer and the licence of an intellectual property right would be treated the same way. Contrary to that, the duty to exploit could be considered to be the primary duty and consequently, the law of the country where the licensee is habitually resident is applicable. The situation becomes even more difficult if the duty to create is regarded as the primary duty of the licensor. This model may be called the ‘creation model’. In this case, the licensor is not merely obliged not to challenge the use of the right, but also to engage in some activities. This duty could be considered to shift the contract’s centre of gravity to the licensor. As at least an implicit duty to create is imposed by any licence agreement, this would lead to the application of the law of the country where the licensor is habitually resident to all licence agreements. The result would thus be the same as if there was no duty to exploit. By contrast, one could argue that the duty to create does not shift the centre of gravity of the contract, but leads to the result that the contract imposes no characteristic performance at all. In this case, Article 4(4) Rome I provides for the application of the law of the country that is most closely connected to the contract. Such a connection may be established without further difficulties if the licence is granted for one country only. In this case, the law of that country, that is, the country of distribution, will apply. In effect, this amounts to the application of the law of the country for which protection is claimed.75 If, however, the licence has been granted for a multitude of countries, there is no single country of distribution to which a closest connection may be established. For this case, it has been argued that the closest connection of the contract leads to the law of the country where the licensee is habitually resident.76 These latter considerations reveal that the distinction of the three models of licence agreements relies on the assumption that the characteristic performance of these agreements can be singled out. The distinction fails, however, if there are duties of equal weight imposed on the licensor and the licensee. This is arguably the case, for example, if the licensor is obliged   On this problem see de Miguel Asensio, above n 10, 213; Mankowski, above n 10, 54.   Czernich, above n 7, Art 4 No 121; Verschraegen, above n 4, Art 4 EVÜ no 115 (but compare § 34 IPRG no 13); Musger, above n 9, Art 4 Rom I no 10; OGH 4 Ob 90/09b, Falco Privatstiftung (2010) Zeitschrift für Rechtsvergleichung 10 (with case note by H Ofner). 75   cf W Posch, Bürgerliches Recht, vol 7, 4th edn (Vienna, Springer, 2008) no 13/10. 76   Torremans, above n 10, 419. 73 74

Austria  235 to create a piece of copyrightable work and the licensee is obliged to exploit the copyright. Here, no performance may be considered to be the characteristic one. Thus, even though the three models of licence agreements may well illustrate the importance of the mutual duties of the parties on the level of conflict of laws, they are of little help in practice. 2.3.2.4  The Proper Solution for the Law Applicable to Licence Agreements If we turn to practice in Austria, the first observation is that the case law is sparse. So far, the Supreme Court has only held that absent a duty to exploit, the licensor effects the characteristic performance.77 When holding so, however, it also stressed that the licence agreement had been concluded for a multitude of countries, so there was no closer connection to a country other than that where the licensor was habitually resident. Austrian literature on the law applicable to licence agreements is split. According to the majority view, the law of the country where the licensor is habitually resident applies to all types of licence agreements78, whereas according to the minority view,79 the law of the country where the licensee is habitually resident should apply at least to licence agreements that impose a duty to exploit on the licensee. What is common to both the majority and the minority view is that they try to single out the characteristic performance.80 Contrary to the minority view, however, the majority view does not indicate which duty of the licensor is the one which performance is the characteristic one. As the licensor assumes a variety of duties, this could be any of them: His duty not to sue, his duty to grant a right to exploit, his duty to sue third parties, his duty to create the intellectual property right, or his duty to maintain that right.81 Apart from a different balancing of the interests of the licensor and the licensee, one reason for the split opinion could be the method employed for determining the characteristic performance. If one determines it indirectly, that is, by looking at which party to the licence agreement makes the payment, he will conclude that the other party effects the characteristic performance.82 As regularly the licensee makes the payment, this approach has the advantage that the duties of the licensor do not have to be determined in detail. Hence, it is only of minor importance whether the licensor is just obliged to refrain from challenging the use of the intellectual property right by the licensee, or whether he is also required to create a piece of work, to make and register an invention or to develop and register a trade mark. By contrast, the characteristic performance could also be determined directly, that is, by looking at the duties other than the duty to pay in the first place. Among these duties, the duty of the licensor to create a piece of work, to make and register an 77  OGH 4 Ob 90/09b, Falco Privatstiftung (2010) Zeitschrift für Rechtsvergleichung 10 (with case note by H Ofner). 78   Czernich, above n 7, Art 4 no 121; Verschraegen, above n 4, Art 4 EVÜ no 115 (but compare § 34 IPRG no 13). 79  M Fallenböck, ‘Zur kollisionsrechtlichen Anknüpfung von Immaterialgüterrechtsverträgen nach dem Europäischen Vertragsrechtsübereinkommen (EVÜ)’ (1999) Zeitschrift für Rechtsvergleichung 98, 102; Musger, above n 9, Art 4 Rom I no 10; Neumayr, above n 4, § 34 IPRG no 4. Cf with regard to German law Schack, above n 24, no 1287; Stimmel, above n 10, 787. 80   See Neumayr, above n 4, § 34 IPRG no 4. On the validity of this approach, see Posch, above n 1, no 13/11 n 36, who argues that the legislative history of Art 4 Rome I indicates that the applicable law has to be determined based on the principle of characteristic performance rather than by recourse to the law of the country for which protection is claimed as the one most closely connected to the licence agreement. 81   If rather than the performance of one of these duties, the performance of all of them is considered to be decisive, this is no longer an issue of the characteristic performance but of the closest connection and thus, of Art 4(4) Rome I. 82   On this rule of thumb, see above 2.3.2.

236  Thomas Petz invention or to develop and register a trade mark could be considered to be the primary one. Alternatively, if the licensee assumes a duty to exploit the intellectual property right, this duty may be considered to be the primary one. The two methodical approaches have in common that they are based on the assumption that one of the parties to the licence agreement effects the characteristic performance. Due to the method it employs for determining the characteristic performance, however, the indirect approach may fail to take into account the duties of the licensor. But if the licensor is obliged to create a piece of work, to make and register an invention or to develop and register a trade mark, he is required to engage in considerable activities. Similarly, if the licence agreement imposes on the licensee a duty to exploit, he is also required to engage in some activities. In Falco, a decision on Article 5(1) Brussels I, the ECJ endorsed a direct approach to determining the characteristic performance.83 In applying this approach it concluded that for the licence agreement in question, the licensor’s duty not to sue is the characteristic one.84 In addition, it held that it would be immaterial for this conclusion whether a duty to exploit was imposed on the licensee.85 By contrast, the possibility of a duty to create was not even considered. As a result, under a strict understanding of Falco, the characteristic performance for licence agreements would always be effected by the licensor, and only by the licensor. Such an understanding, however, is irreconcilable with Article 4 Rome I. As the legislative history of this provision indicates, the European legislator declined to provide for the application of the law of the country where the licensor is habitually resident to all licence agreements. Such a strict application of that law, however, would be the result of Falco if it was applied to Article 4 Rome I. Thus, to honour the legislative history of this provision, despite its broad wording the decision in Falco has to be limited to the facts of the case: It involved a licence agreement that was concluded after the copyrightable piece of work has been created86 and that did not impose a duty to exploit on the licensee.87 Consequently, as far as a licence agreement imposes neither a duty to create on the licensor nor a duty to exploit on the licensee, it follows from Falco that the licensor effects the characteristic performance as he is obliged not to sue the licensee.88 Once the contract imposes at least one of these duties, however, Falco does not apply.89 83   Case C-533/07 Falco Privatstiftung [2009] ECR I-3327. At first sight, this decision seems to deal only with the construction of the notion ‘provision of services’ in Art 5(1)(b) Brussels I and thus not with what constitutes a ‘characteristic performance’ for the purpose of Art 4(2) Rome I. In Car Trim, however, the ECJ held that the connecting factor in Art 5(1)(b) Brussels I is the obligation which characterises the contract. Case C-381/08 Car Trim GmbH v KeySafety Systems Srl (2010) Wirtschaftsrechtliche Blätter no 87. Thus, both Art 5(1)(b) Brussels I and Art 4(2) Rome I employ the same connecting factor: the characteristic performance of the contract. For this reason, the conclusions of the ECJ in Falco on who effects the characteristic performance are also decisive for Art 4(2) Rome I. As here Mankowski, above n 58, 959. 84   Again, at first sight the decision seems to deal only with whether there are any activities on part on the licensor. This, however, requires under the approach of the characteristic performance that his performance is the characteristic one. From this perspective, it is also logical to hold that the obligations of the licensee may not be taken into account: they are not the characteristic ones. 85   Case C-533/07 Falco Privatstiftung [2009] ECR I-3327 para 32. 86   This follows from the fact that the distributed sound recordings dated from 1993 whereas the licence agreement was concluded by the heirs of the performer after his death in 1998. 87   See OGH 4 Ob 90/09b, Falco Privatstiftung (2010) Zeitschrift für Rechtsvergleichung 10 (with case note by H Ofner). 88   This was endorsed by the Austrian Supreme Court which referred this case to the ECJ in its follow-up decision, see OGH 4 Ob 90/09b, Falco Privatstiftung (2010) Zeitschrift für Rechtsvergleichung 10 (with case note by H Ofner). 89   Regardless of these duties, Falco does not apply to cross-licences as in this case both parties are obliged to refrain from suing the other and thus both would effect the characteristic performance. Consequently, for such

Austria  237 This leaves us without precedent as to who effects the characteristic performance in a non-Falco situation. In this case, the applicable law depends on the duties imposed on the parties to the licence agreement. If that agreement imposes only a duty on one of the parties, the person who has to perform this duty effects the characteristic performance. Thus, if the licensor is obliged to create, the law of the country where he is habitually resident applies, whereas if the licensee is obliged to exploit the right, the law of the country where he is habitually resident applies. But what if a licence agreement imposes both a duty to create and a duty to exploit? In this case, the characteristic performance cannot be singled out. Consequently, the applicable law has to be determined by recourse to the principle of the closest connection, as laid down in Article 4(4) Rome I.90 In my view, this requires distinguishing between single-state licences and multi-state licences.91 For single-state licences this is regularly the law of the country of distribution. As section 34(1) PIL Act provides that the law of the country for which protection is claimed applies to the existence, contents and termination of an intellectual property right, under this approach one and the same law may apply to the property aspects and the contractual aspects of the licence agreement.92 A different law may apply, however, if both parties to the licence agreement are habitually resident in the same country.93 By contrast, for multi-state licences the law that is most closely connected to the contract is regularly that of the country where the licensee is habitually resident. The reason for this is that in the event of such licence agreements, the licensee is required to exploit the right in a multitude of countries and thus he assumes a higher risk compared to single-state licences.94 As for multi-state licences, the law where the licensee is habitually resident applies anyway; contrary to single-state licences, the closer connection of a common habitual residence would not lead to the application of a different law. In sum, recourse to the principle of the closest connection in a licence agreement that contains both a duty to create and a duty to exploit allows a very flexible approach for determining the applicable law.95

licence agreements the applicable law has to be determined by recourse to the principle of the closest connection as laid down by Art 4 (4) Rome I. Before the entry into force of Rome I, general recourse to this principle was rejected for methodological reasons, see Schwimann 1992, above n 4, § 43 IPRG no 2; Briem, above n 21, 116; Koppensteiner, above n 34, § 37 no 8. 90   As under the approach developed here Art 4(2) Rome I is considered to be inapplicable only in the case that the licence agreement imposes both a duty to create and a duty to exploit, this does not amount to making Art 4(4) Rome I the general conflict rule for licence agreement. Considering Art 4(4) Rome I to be a general rule for contracts relating to intellectual property rights may indeed be irreconcilable with the legislative history of Art 4 Rome I, as indicated by Posch, above n 1, no 13/11 n 36. 91   It seems that the Austrian Supreme Court also considers this approach to be viable as it takes into account whether a licence has been granted for a single country or for a multitude of countries, see OGH 4 Ob 90/09b, Falco Privatstiftung (2010) Zeitschrift für Rechtsvergleichung 10 (with case note by H Ofner). As here Stimmel, above n 10, 788. 92   Whether the same law actually applies depends on the renvoi. As stated above in 2.1, contrary to Rome I, the Austrian PIL Act regularly provides for a renvoi. Thus, in the event that the conflict rules of the country for which protection is claimed refer back to Austrian law, or to the law of another country, different laws may apply. With regard to registered intellectual property rights, this risk is minimal as the conflict rules of nearly all countries provide for the application of the law of the country for which protection is claimed. For copyright, however, the situation is different, because the conflict rules of some countries, such as Portugal and Greece, provide for the application of the law of the country where the work was created. Thus, different laws may apply to the licence agreement and to the existence, contents, and termination of the copyright. 93   See Walter in his case note to OGH 4 Ob 139/90, Gleichgewicht des Schreckens (1991) Medien und Recht 112 94   See ibid; Briem, above n 21, 115. Contra Koppensteiner, above n 34, § 37 no 8. 95   See also Stimmel, above n 10, 787–88.

238  Thomas Petz To some extent this solution echoes that of section 43 PIL Act as applied to licence agreements imposing a duty to exploit.96 This provision was abolished when the predecessor of the Rome I Regulation, the Rome Convention, entered into force in Austria on 1 December 1998.97 It focused on the particularities of intellectual property rights at the cost of being in line with the conflict rules on contracts. Thus, it was an example of a special conflict rule for intellectual property rights that deviated from the general conflict rules. The crucial difference to the construction of Article 4 Rome I proposed here is that it did not allow for the application of the law of the country of the common habitual residence as the one being most closely connected to the licence agreement. This reveals that contrary to section 43 PIL Act, Article 4 Rome I is a general conflict rule, rather than one tailored specifically to the particularities of intellectual property rights. One way to explain the results of the approach endorsed here is the attribution of the economic risk.98 This risk comes from the investments required for commercially exploiting an intellectual property right. The investment of a publisher in the production, distribution and marketing of a book may serve as an example. If there is no duty to exploit, it is up to the licensee to decide whether he makes this investment.99 Consequently, the attribution of the economic risk is neither subject to, nor part of the contract. It becomes part of the contract, however, once there is a duty to exploit. As the attribution of the economic risk changes, the characteristic performance may also change. Similarly, the duty to create would induce the licensor to undertake an economic risk by concluding the contract: He will engage in activities in which he would not have engaged otherwise. Thus, if the licensor assumes a duty to create and the licensee a duty to exploit, the economic risk of the licensee is balanced with the risk of the licensor. As a result, no characteristic performance may be singled out. At first sight, this seems to be similar to franchise and distribution contracts. Even though these contracts are regarded as service contracts, the general rule on service contracts providing for the application of the law where the service provider is habitually resident does not apply.100 Rather, the law of the country where the franchisee or distributor is habitually resident applies. This rule could be considered to be based on a shift of the centre of gravity of the contract to the franchisee or distributor due to the economic risk he assumes. There is, however, clear evidence that these special rules are mandated by the protection of the weaker party.101 Consequently, the rationale is different and the similarity of licence agreements to franchise and distribution contracts only one of first sight.

  On this rule and its shortcomings see Schwimann 1992, above n 4, § 43 IPRG no 2; Fallenböck, above n 79,

96

100. 97   For the importance of this provision in the negotiations on Rome I see R Wagner, ‘Der Grundsatz der Rechtswahl und das mangels Rechtswahl anwendbare Recht (Rom I-Verordnung) – Ein Bericht über die Entstehungsgeschichte und den Inhalt der Artikel 3 und 4 Rom I-Verordnung’ (2008) Praxis des Internationalen Privat- und Verfahrensrechts 378, 385. 98   cf Martiny, above n 71, Art 4 Rom I no 151. 99   For the situation in Austrian substantive law see above 2.3.2.1. 100   Art 4(1)(b) Rome I. 101   Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (Rome I), presented by the Commission on 15 December 2005, COM(2005) 650 final, 6. For a criticism of this approach, see Mankowski, above n 10, 35–36. Following Mankowski, there are indeed strong parallels between franchise contracts and distribution contracts on the one hand and licence agreements on the other.

Austria  239

2.4  The Law Applicable to the Property Aspects of Intellectual Property Rights Section 34(1) PIL Act provides that the law of the country for which protection is claimed is applicable to the existence, the contents and the termination of intellectual property rights. All these issues are expressions of the property aspects of intellectual property rights. As the list of issues is considered to be non-exclusive, the rule has been found applicable to other issues relating to the property aspects of intellectual property rights, in particular to initial ownership102 and transferability.103 Further, even though the wording of this provision is limited to the property aspects, it has been considered applicable also to the infringement of intellectual property rights.104 Thus, like Rome II, the domestic Austrian conflict rules did not apply the general tort law regime to the infringement of intellectual property rights. This aspect is of particular importance, as meanwhile Article 8 Rome II provides that the law of the country for which protection is claimed applies to the infringement of intellectual property rights. Thus, as far as infringement is concerned, section 34(1) PIL Act is not applicable to events giving rise to damage that occurred after 11 January 2009. Whether this provision still has a scope of application depends on whether the Rome Regulations apply to the property aspects of intellectual property rights. If they do, it does not have any such scope; if they do not, it has. It has been argued that this question has to be answered differently for both Regulations: Rome I applies to the property aspects, but Rome II does not.105 In my view, the Regulations do not mandate such a different treatment. Rather, neither Rome I nor Rome II apply to the property aspects of intellectual property rights.106 As this conclusion is of considerable importance, it deserves closer scrutiny. For this purpose, we will start with Rome I and then proceed to Rome II.

2.4.1  The Application of Rome I to the Property Aspects of Intellectual Property Rights As a general rule, the scope of application of Rome I is limited to ‘contractual obligations’.107 What qualifies as a ‘contractual obligation’ has to be determined by autonomous construction, that is, without recourse to the concepts of domestic law. In this regard, the interpretation of the notion ‘contract’ in Article 5(1) Brussels I may be instructive.108 The ECJ has considered a situation to be a contract if a person freely assumes an obligation against another.109 The concept of a contract is thus rather wide. But even under this wide concept, 102  OGH 4 Ob 309/86, Hotel-Video-Systeme, Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 59/100; Schwimann 1992, above n 4, § 34 IPRG no 3; Verschraegen, above n 4, § 34 IPRG no 4. 103   Schwimann 1992, above n 4, § 43 IPRG no 3; Verschraegen, above n 4, § 34 IPRG no 17. 104   See above n 34. 105   Handig 2009, above n 10, 776. 106   As here Stimmel, above n 10, 790. 107   Art 1(1) Rome I. 108   Recital 17 to Rome I expressly provides for a uniform interpretation only with regard to the notions of ‘provision of services’ and ‘sale of goods’. Nevertheless, recourse may also be made to the concept of ‘contract’, as for the qualification as a contract for the ‘provision of services’ and ‘the sale of goods’ it is required in the first place that the situation qualifies as a contract. For possible differences between the concept of contracts in Art 5(1) Brussels I and the concept of contractual obligations in Article 1(1) Rome I, see Martiny, above n 71, Art 1 Rom I no 7. 109   Case C-334/00 Fonderie Officine Meccaniche Tacconi [2002] ECR I-7357.

240  Thomas Petz most property aspects of intellectual property rights are not covered, as they concern the shape of the right rather than obligations. This is true in particular for the existence, contents, termination and the initial ownership of an intellectual property right. There are some property aspects, however, that may be considered to qualify as ‘contractual obligations’ as they are related to the transfer of the right.110 These aspects concern essentially the requirements for a valid transfer of the right from the patrimony of the transferor to that of the transferee and the priority of competing property interests in respect of the same right.111 And indeed, some of these aspects may be qualified as contractual issues. The most prominent examples are the issue of transferability and the transfer itself (Verfügungsgeschäft). To the extent that transferability is considered to be only a requirement for the performance of a contract providing for the transfer of a right, it qualifies as a contractual issue, but to the extent that it is a requirement for the transfer of the right from the patrimony of the transferor to the transferee, it qualifies as a property issue.112 Similarly, if we put the emphasis on the fact that it is an agreement between the transferor and the transferee, the transfer itself may qualify as a contract, but if we put it on the fact that it affects a right rather than imposes obligations on the parties, it qualifies as a property aspect. These ambiguous property aspects may be called ‘transfer-related property aspects’. The issue of transferability and the transfer itself are not unique to intellectual property rights, but come up also in the context of a transfer of real property and the assignment of claims. Neither for the transfer-related property aspects of intellectual property rights nor for those of real property does Rome I provide an express rule. One is thus inclined to conclude that these aspects are not considered to qualify as ‘contractual obligations’ so that no conflict rule is required as Rome I does not apply anyway. The situation is different, however, with regard to the assignment of claims. Article 14(2) Rome I provides an express rule on the ‘assignability’ of claims: The law governing the assigned claim also determines its assignability. Further, Article 14(1) Rome I provides that the ‘relationship’ between the assignor and the assignee is governed by the law that applies to the contract between them. Recital 38 to Rome I stresses that instead of the notion ‘obligations’, the notion ‘relationship’ has been employed deliberately to clarify that the rule applies not only to the contractual obligations between assignor and assignee, but also to its property aspects. Thus, Article 14 Rome I applies at least to some transfer-related property aspects of claims.113 Consequently, the question arises whether this provision could be applied by analogy to the transferability and the transfer itself of intellectual property rights. Methodically, such an application by analogy requires in the first place that there is a lacuna in Rome I with regard to these issues – that is, for systematic reasons these issues should be dealt with, but they are not. 110   The notion of ‘transfer’ is used in a broad sense here so that it also covers the property aspects of licence agreements. 111   cf with regard to the assignment of a claim H Verhagen and S Van Dongen, ‘Cross-border assignments under Rome I’ (2010) 6 Journal of Private International Law 1, 2. 112   cf F Alférez, ‘Assignment of claims in the Rome I Regulation: Article 14’ in F Ferrari and S Leible (eds), Rome I Regulation – The law applicable to Contractual Obligations in Europe (Munich, Sellier, 2009) 217, 229. 113   S Leible and M Lehmann, ‘Die Verordnung über das auf vertragliche Schuldverhältnisse anzuwendende Recht (“Rom I”)’ (2008) Recht der internationalen Wirtschaft 528, 539; P Mankowski, ‘Die Rom I-Verordnung – Änderungen im europäischen IPR für Schuldverträge’ (2008) Internationales Handelsrecht 133, 150; U Magnus, ‘Die Rom I-Verordnung’ (2010) Praxis des Internationalen Privat- und Verfahrensrechts 27, 42; B Verschraegen, ‘Kritische Bestandsaufnahme zur Rechtswahl’ in B Verschraegen (ed), Rechtswahl – Grenzen und Chancen (Vienna, Jan Sramek, 2010) 111, 112; Musger, above n 9, Art 14 Rom I no 2.

Austria  241 In this regard it has to be stressed that the wording and the structure of Article 14 Rome I is the very reason why this provision is considered applicable to the property aspects of an assignment of claims. By contrast, the general conflict rule of Article 4 Rome I determines only the law applicable to the ‘contract’. This is true in particular with regard to rights in rem in immovable property: If Rome I should also apply to the property aspects of the transfer of such a right from the transferor to the transferee, Article 4(1)(c) Rome I would have to refer to their ‘relationship’. Absent such a reference, the rule does not apply to these aspects. Consequently, to the extent that Article 14 Rome I applies to the property aspects of the assignment of a claim, it constitutes an exception rather than the general rule. Thus, the absence of any conflict rules on the property aspects of the transfer of intellectual property rights in Rome I does not amount to a lacuna. But even if one concludes that there is a lacuna as regards the transfer of intellectual property rights, applying Article 14 Rome I would not be a suitable solution. This is because the most important transfer-related property aspects with regard to intellectual property rights are the effects of the transfer on third parties. It is highly controversial, however, whether Article 14 Rome I covers these aspects.114 The reason for this controversy is that Recital 38 refers expressly to the property aspects between the assignor and the assignee only. This reference has been construed in three different ways.115 The first is that it mandates a split of the property aspects of the assignment into the effects on the relationship between assignor and assignee on the one hand, and the effects against the debtor and all other third parties on the other. To the first type of effects, the law governing the contract should apply; to the latter, the law governing the assigned claim.116 The intellectual property equivalent of the latter would be the law of the country for which protection is claimed. Construed thus, the third party effects are not covered by Rome I. The second solution that has been advanced is that the reference to the property aspects between the assignor and assignee indicates that Article 14 Rome I does not at all apply to the effects of the assignment on third parties. As a consequence, the law applicable to this issue is determined by the domestic conflict rules. The crucial question for the transfer of intellectual property rights thus is whether section 34 PIL Act applies117 – but Rome I does not. The third solution finally proposes to apply the law governing the contract between assignor and assignee also to the third party effects of the assignment.118 This solution has the advantage that one and the same law applies to all property aspects of the assignment so that they do not have to be split up in their effects on the assignor and assignee on the one hand and on the   See Musger, above n 9, Art 14 Rom I no 4.   In detail see T Petz, ‘Conflict of Laws in Intellectual Property: An Analysis of Rome I, Rome II and domestic Austrian conflict rules’, in B Verschraegen, Austrian Law – An International Perspective (Vienna, Jan Sramek, 2010) 211, 237–40. 116   On the feasibility of such a split against the background of French civil law, see Verhagen and van Dongen, above n 111, 6–9. 117   See below 2.4.2. 118  A Flessner, ‘Die internationale Forderungsabtretung nach der Rom I Verordnung’ (2009) Praxis des Internationalen Privat- und Verfahrensrechts 35, 39; D Einsele, ‘Die Forderungsabtretung nach der Rom I-Verordnung – Sind ergänzende Regelungen zur Drittwirksamkeit und Priorität zu empfehlen?’ (2010) Rabels Zeitschrift für ausländisches und internationales Privatrecht 91, 96 (arguing that all property aspects are covered by Art 14(1) Rome I save ‘absolute’ disclosure requirements which have to be qualified as overriding mandatory provisions according to Art 9 Rome I); Verhagen and van Dongen, above n 111, 5; Verschraegen, above n 113, 112. Cf also with regard to Art 12 Rome Convention the decision by the Dutch Hoge Raad, 15 May 1997, (1998) Nederlandse Jurisprudentie No 585 and the case note by C Joustra in (1999) Praxis des Internationalen Privat- und Verfahrensrechts 280; A Stadler, ‘Der Streit um das Zessionsstatut – eine endlose Geschichte?’ (2000) Praxis des Internationalen Privat- und Verfahrensrechts 104. 114 115

242  Thomas Petz debtor and other third parties on the other. Technically, that way the applicable law is determined only indirectly, that is, by reference to the law that applies to the contract.119 In effect, what happens is that the scope of the applicable law is extended beyond the contractual issues to all property issues. This technique ensures that once the parties have chosen the law applicable to the contract that law also applies to the relationships between them, and that the law applicable to the property aspects may not be chosen separately. Thus, only the third solution results in Rome I being applicable to all property aspects of the assignment – and only this solution would provide for the application of the lex contractus rather than the lex loci protectionis to the transfer-related property aspects of intellectual property rights. Consequently, the two arguments on which this solution is based must be scrutinised. The first argument aims at establishing that Article 14 Rome I is applicable to the third party effects of the assignment and thus to all property aspects. This argument is based on the wording of the special review clause on the effectiveness of the assignment against third parties in Article 27(2) Rome I.120 This clause provides that the European Commission has to produce a report on the question of the effectiveness of an assignment of a claim against third parties that may be supplemented by a ‘proposal to amend’. As any amendment requires that the issue is already dealt with, it is inferred from this wording that Article 14 Rome I applies to the third party effects of an assignment. The second argument aims at establishing that the first rather than the second paragraph of Article 14 Rome I applies to the third party effects of the assignment. This argument relies on the reference to the property aspects of the assignment in Recital 38 to Rome I, but considers its limitation to the relationship between assignor and assignee inapplicable because any relationship against third parties builds on the relationship between assignor and assignee so that the effects of the assignment against third parties are intrinsically intertwined with its effects on the relationship between assignor and assignee.121 Thus, this argument is based on substantive law.122 Whether it really mandates that the same conflict rule applies to the effects against third parties may be doubted123, but shall not be assessed here, as already the first argument seems incorrect. This conclusion already follows from the wording of Article 27 Rome I.124 The special review clause of this provision on the effectiveness of an assignment against third parties differs in two regards from its general review clause: First, the report which it requires to be 119   In German conflict of laws terminology, this may be called ‘akzessorische Anknüpfung’. Cf Flessner, above n 118, 37. 120   Flessner, above n 118, 38–39; Einsele, above n 118, 92; Verhagen and van Dongen, above n 111, 11–12. 121   Flessner, above n 118, 40; Verhagen and van Dongen, above 111, 5. With regard to Art 12 Rome Convention see EM Kieninger, ‘Das Statut der Forderungsabtretung im Verhältnis zu Dritten’ (1998) Rabels Zeitschrift für ausländisches und internationales Privatrecht 678, 709–10. 122   Thus, those who focus mainly on the conflict rules do not consider it valid. See Leible and Lehmann, above n 113, 541; T Pfeiffer, ‘Neues Internationales Vertragsrecht – Zur Rom I-Verordnung’ (2008) Europäische Zeitschrift für Wirtschaftsrecht 622, 629; Magnus, above n 113, 42. 123   cf Stadler, above n 118, 106–7; Alférez, above n 112, 226. In addition, the legislative history of Art 14 Rome I indicates that Recital 38 to Rome I was introduced to ensure that the law applicable to the contract between assignor and assignee also applied to the property aspects between them rather than the law of the habitual residence of the assignor which was proposed to apply to the third party effects of the assignment. When the latter proposal was dropped, the reverse effect of Recital 38 became important. See Alférez, above n 112, 226. Further, it has been argued that the issue of the effectiveness of the assignment against third parties was so controversial that it is unlikely that it would be dealt with only in a Recital. See R Plender and M Wilderspin, The European Private International Law of Obligations, 3rd edn (London, Sweet and Maxwell, 2009) no 13.040. 124   cf Alférez, above n 112, 226.

Austria  243 submitted has to deal with the ‘question’ of the effectiveness rather than with the ‘application’ of Rome I. Second, this report may be supplemented not only by a ‘proposal to amend’, but also by an ‘assessment of the impact of the provisions to be introduced’. Were the third party effects already covered by Article 14 Rome I, the report would rather be on its application to these effects and no provisions dealing with them would have to be introduced. Thus, no special review clause would be required at all.125 Further, whereas the general report is due by 17 June 2013, the special report was already due by 17 June 2010, only six months after Rome I had entered into force. Within such a short period of time, there will be almost certainly no case law on this issue, so the report has to deal with an issue different from the application of Article 14 Rome I.126 Thus, the wording of Article 27 Rome I and the purpose of the special review clause indicate that Article 14 Rome I does not apply to the third party effects of the assignment.127 This conclusion is crucial for the property aspects of intellectual property rights as the effects against third parties are the most important ones. Thus, even if we assume that Article 14 Rome I applies by analogy to the transfer of intellectual property rights, the provision does not provide for a solution with regard to the effects of the transfer on third parties, but leaves it to the conflict rules of domestic law. In sum, the absence of an express rule on the transfer-related property aspects of intellectual property rights in Rome I does not constitute a lacuna and thus Article 14 Rome I may not be applied by analogy. Consequently, it follows from an autonomous interpretation that the property aspects of intellectual property rights are not covered by Rome I.128 This applies in particular to transfer-related property aspects such as the transferability, the effectiveness of the transfer, the property aspects of a licence, and the transfer itself (Verfügungsgeschäft).129

2.4.2  The Application of Rome II to the Property Aspects of Intellectual Property Rights Article 8 Rome II sets up a conflict rule for the infringement of intellectual property rights. In infringement proceedings, however, the existence, contents, termination and initial ownership of the allegedly infringed right constitute incidental questions. Thus, the crucial issue is whether Rome II applies to incidental questions at all.130 This issue must be solved 125   This seems to be recognised by Verhagen and van Dongen who thus construe Art 27(2) Rome I narrowly so that it does not apply to the property aspects of the assignment, but only to the question whether certain creditors may ignore an intrinsically valid transfer; see Verhagen and van Dongen, above n 111, 12–13. 126   For a different conclusion, see Magnus, above n 113, 42; Verschraegen, above n 113, 112. 127   For a different conclusion, see Martiny, above n 11, Art 14 Rom I no 16. The solution proposed here does not necessarily mean that different laws apply to the effectiveness of the assignment between assignor and assignee and to the effectiveness against third parties. If the Austrian legislator wishes that the same law applies to all property aspects of the assignment, it may simply adopt either a conflict rule that provides for the same as Art 14(1) Rome I or refers to Art 14(1) Rome I. In both cases, however, it has to be ensured that the renvoi is excluded. 128   cf Schack, above n 24, no 1290. 129   Thus, the situation is identical to that before the entry into force of Rome I. Rather than applying the provision on contracts relating to intellectual property rights (s 43 PIL Act) to the property-related aspects of a licence agreement, the Austrian Supreme Court applied the provision on the existence, contents and termination of intellectual property rights (s 34 PIL Act). See OGH 4 Ob 44/92, Schott II, (1992) Medien und Recht 194. That way, it could apply the lex loci protectionis to those aspects even though the licence agreement was concluded for a multitude of countries and thus, under the contracts rule the law of the country where the licensee is habitually resident would have applied. Technically, this result was received by characterising the licence as an intellectual property right and consequently the question of the rights conferred on the licensee a question of the contents of the right. By contrast, in scholarly writings the application of the lex contractus at least to the transfer itself was preferred; see Schwimann 1992, above n 4, § 43 IPRG no 2. 130   On this issue in detail see Drexl, above n 6, no 155–64.

244  Thomas Petz by an autonomous interpretation of the Regulation. Arguments for applying Rome II to property aspects in general and those of intellectual property rights in particular may be based on Article 15 Rome II. This provision states in lit (a) that the applicable law governs the basis and extent of liability, and in lit (f) that it applies to determining the persons who are entitled to compensation for the damage sustained personally. Indeed, these two provisions have been considered to be only expressions of the more general principle that the applicable law applies to all the requirements for liability and thus, also to the existence, content, termination and initial ownership of the right that has allegedly been infringed.131 This approach, however, is correct only to the extent that it concerns the contents of the allegedly infringed intellectual property right. By the content of a right, we mean the rights conferred on the right-holder, such as the right to distribute, and the exceptions to these rights.132 As liability for the infringement of an intellectual property right requires that a right is infringed, the content of a right concerns the basis and extent of liability. Thus, at least this property aspect is covered by Rome II if it comes up in infringement proceedings.133 For all other property aspects and in all other procedural set-ups, however, it follows from an analysis of Article 15(a) and (f) Rome II that the contrary is true. As regards the basis and extent of liability, it should be recalled that Rome II not only applies to the infringement of intellectual property rights, but also to the damage to movable property.134 Thus, assuming that Rome II applied to the property aspects, in the case of a car crash, the law determining the ownership issue would be the law of the country where the accident occurred rather than the law of the country where the car was located at the time the owner bought it. Depending on the substantive rules of property law of the country where the accident occurred, a different person may be the owner. This not only seems to be an inappropriate result, but also deviates from the conflict rules of most European countries as they follow the lex rei sitae approach. Absent of any indication by the European legislator, such a considerable change of the conflict rules is not to be assumed. Thus, the reference to the basis and extent of liability in Article 15(a) Rome II does not include the property aspects of rights.135 As regards the determination of the persons who are entitled to compensation for the damage they sustained personally, neither the purpose nor the wording of Article 15(f) Rome II mandates a construction according to which the applicable law should apply to all requirements for liability. The provision refers to the entitlement to compensation rather than the existence of a right. A person may claim to be entitled to compensation, but this does not mean that a right exists on which such a claim could be based.136 In addition, the emphasis of this provision is on persons who suffer indirect harm, not on those who suffer direct harm.137 Consequently, neither Article 15(a) Rome II nor Article 15(f) Rome II mandates the application of Rome II to the property aspects of intellectual property rights. 131  Basedow and Metzger, above n 10, 162 (but see now A Metzger, ‘Perspektiven des internationalen Urheberrechts – Zwischen Territorialität und Ubiquität’ (2010) Juristenzeitung 929, 933); Sack, above n 10, 1409– 10; Walter, above n 26, 56 (with an exception for initial authorship). 132   Walter, above n 26, no 56. 133   Drexl, above n 6, 164; Walter, above n 26, no 56; Metzger, above n 131, 933. Contra Schack, above n 24, no 1011 and 1051. The reason for this seems to be that the infringement of a right is so closely connected to its contents that one and the same law has to apply. See with regard to Austrian law before the entry into force of Rome II above n 34. 134   Drexl, above n 6, no 158. 135   contra Walter, above n 26, no 56. 136   cf Drexl, above n 6, no 159. 137   ibid, no 161.

Austria  245 In addition, applying Rome II to the property aspects of intellectual property rights causes considerable practical problems. The first problem is that regularly, infringement claims are closely connected with claims arising out of the breach of a licence agreement.138 This follows from the fact that usually non-performance of a licence agreement amounts to an infringement of the intellectual property right that has been licensed. Consequently, proceedings concerning the infringement of an intellectual property right often also require construing the licence agreement and determining whether it has been breached. In this procedural set-up, the issue of the identity of the owner of the intellectual property right comes up as an incidental question to both claims, the claim arising out of the breach of the contract and the claim arising from the infringement of the intellectual property right. If Rome II were to be applied to the issue of ownership, the law applicable to this property aspect would be determined by Rome II in the context of the infringement, but by section 34(1) PIL Act in the context of the contractual claims. As the connecting factor of both rules – the lex loci protectionis – is the same, they will regularly lead to the application of the same law. Under certain circumstances, however, because of the fact that contrary to the PIL Act, Rome II does not accept a renvoi, different laws may apply to one and the same issue in one and the same dispute. This is particularly true with regard to initial authorship because for copyright the conflict rules of some countries do not determine the lex loci protectionis, but the lex originis as the applicable law.139 Thus, if section 34(1) PIL Act refers to the conflict rules of such a country, this reference is not accepted if the copyrightable work does not originate from there. The latter observation that at least with regard to copyright some domestic conflict rules do not consider the lex loci protectionis, but the lex originis as being the appropriate applicable law reveals another practical problem.140 For those Member States of the European Union, such as France, Greece and Portugal,141 which have adopted for copyright the lex originis approach, the entry into force of the lex loci protectionis regime of Rome II would amount to a sudden change in the applicable law (Statutenwechsel). Again, in the absence of any reference in this regard, it cannot be assumed that this was intended by the European legislator. This analysis demonstrates that the better arguments are those against the application of Rome II to the property aspects of intellectual property rights. This also seems to be the view of the Austrian legislator when it recently adapted the PIL Act to the Rome Regulations: Despite proposals to the opposite,142 it refrained from deleting section 34 PIL Act. Thus, the law applicable to the existence, termination and initial ownership of an intellectual property right as well as to its transferability and the transfer itself is determined by this provision, with the effect that the lex loci protectionis applies to all these issues.143 By contrast, if an issue concerning the contents of an allegedly infringed intellectual property right comes up in infringement proceedings, this issue is covered by Article 8 Rome II. In this case, this   See Walter in his case note to 4 OGH 139/90, Gleichgewicht des Schreckens (1991) Medien und Recht 112.   Drexl, above n 6, no 145; Walter, above n 26, no 6.   See Drexl, above n 6, no 161. 141   cf J Schacherreiter, ‘Die Anknüpfung der ersten Inhaberschaft bei Film- und Arbeitnehmerwerken’ (2006) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 252, 255; Schack, above n 24, no 1011. 142   Handig 2009, above n 10. 143   cf Heiss and Loacker, above n 9, 613; Ofner, above n 9, 19; Neumayr, above n 4, Art 8 Rom II no 1 and 6. Contra Walter, above n 26, no 56 (with the exception of initial authorship) and Schwimann 1992, § 43 IPRG no 2 (applying the lex contractus to the transfer itself at least before the entry into force of Rome I). See also M Walter, ‘Die Vertragsfreiheit im Urheberrecht aus der Sicht des Internationalen Privatrechts’ in E Reimer (ed), Beihefte zu der Zeitschrift Gewerblicher Rechtsschutz und Urheberrecht (Munich, Beck, 1977) 137, 147–52. 138 139 140

246  Thomas Petz property aspect is also governed by the lex loci protectionis, but with the difference that a renvoi is excluded.

2.4.3  Property Aspects and Employment Relationships For intellectual property rights relating to the activities of an employee, section 34(2) PIL Act provides that the law governing the employment relationship also applies to the intellectual property rights. Thus, this conflict rule merely refers to the conflict rules for employment contracts. For employment contracts concluded after 17 December 2009, the applicable law is determined by Article 8 Rome I.144 This provision allows the parties to choose the applicable law but does not consider this choice effective if, in result, it deprives the employee of the protection afforded him by the mandatory rules of the law that would have been applicable in the absence of such choice. As regards the determination of the latter law it regularly provides for the application of the law of the country where the work is habitually carried out in the performance of the employment contract. At first sight, section 34(2) PIL Act thus seems to determine the lex contractus rather than the lex loci protectionis as applicable to the property aspects of intellectual property rights relating to an employment relationship. This, however, is only true for particular property aspects. As the wording of this provision clearly indicates, it applies only to the relationship between the employee and the employer. This restriction is generally considered to introduce a distinction relating to the property aspects between the employee and the employer and those against third parties.145 Thus, for example, the assignment of initial authorship between the employee and the employer is governed by the law applicable to the employment contract, whereas its effects against third parties are governed by the law of the country for which protection is claimed. The purpose of this distinction, however, and its feasibility, have been subject to speculation ever since.146 In particular, the parallel application of the lex contractus to the property aspects inter partes and the lex loci protectionis to the property aspects erga omnes could impose on the court the difficult task of accommodating both laws.147

2.5  Choice of Law In practice, one and the same dispute concerning an intellectual property right may involve at the same time contractual issues, infringement issues and property issues. These three types of issue, however, differ considerably when it comes to the balance struck between party autonomy on the one hand and the policy considerations based on which a domestic legislator grants and shapes an intellectual property right on the other. For conflict of laws, this means that different rules on choice of law may apply, and these different rules have to be considered separately. To illustrate the gliding scale of restrictions on choice of law, the   For a hypothetical case concerning this provision see below 3.3.1.   Introductory Remarks to the 1978 Act on Private International Law, reprinted in R Dittrich, Österreichisches und Internationales Urheberrecht, 5th edn (Vienna, Manz, 2007) 556; Schönherr, above n 39, no 908.1; Neumayr, above n 4, § 34 IPRG no 5; Verschraegen, above n 4, § 34 IPRG no 31. See also Art 14 Rome I. 146   cf R Dittrich, ‘Ausgewählte Grundsatzfragen des Arbeitnehmerurheberrechts’ (2006) Zeitschrift für Arbeitsund Sozialrecht, 2; Schacherreiter, above n 141, 255. 147   Schwimann 1982, above n 4, 197. 144 145

Austria  247 rules on contractual issues will be considered first, those on non-contractual issues second, and those on property issues third.148

2.5.1  Choice of Law and Contractual Obligations For contractual obligations, Article 3 Rome I provides for free choice of law as the general rule. Thus, the parties are not only free as to the law of which country they choose, but also as to when they choose it – that is, before, at or after the conclusion of the contract. If, however, all elements relevant to the situation are located in a country other than that whose law has been chosen, notwithstanding the choice of law, the mandatory provisions of that country shall apply according to Article 3(3) Rome I. To give an example, if both the author of a work and the publisher are domiciled in Austria and the book will be published in Austria only, the parties may not derogate from section 23(3) of the Austrian Copyright Act149 – which provides that no transfer of the copyright is possible – by agreeing on the application of US copyright law. Free choice is also the general rule for individual employment contracts. Article 8 Rome I, however, ensures that this choice does not result in depriving the employee of the protection afforded to him by the mandatory provisions of the law that would have been applicable in the absence of a choice. Regularly, this is the law of the country in which the employee habitually carries out his work in performance of the contract.150 This approach is stricter than that of Article 3(3) Rome I in two regards. First, it is not required that all other elements relevant to the situation are located in a country other than the one whose law has been chosen. Second, the law that would be applicable in the absence of a choice applies only if it is more favourable to the employee than the law that has been chosen. The reason for this distinction is that employment contracts differ from other contracts, in particular, service contracts, in so far as they create a lasting bond which brings the employee to some extent within the organisational framework of the business of the employer.

2.5.2  Choice of Law and Non-Contractual Obligations For non-contractual obligations, Rome II limits the admissibility of choice of law, compared to Rome I. This does not come as a surprise, as party autonomy is the dominant principle for contractual obligations, but is of only minor importance for non-contractual obligations, compared to the place where the damage occurred. This is revealed by the restrictions on the point in time when the parties may agree on a choice of law. As a general rule, Article 14 Rome II provides that a choice of law agreement is valid only if it is made after the event giving rise to the damage has occurred. There is an exception, however, if both parties to the dispute pursue commercial activities. In such a case, they may choose the applicable law even before that event. With regard to the infringement of intellectual property rights, however, Article 8(3) Rome II provides that Article 14 Rome II does not apply. Thus, a choice of law is not admissible.151 The reason for this inadmissibility seems to 148   On choice of law under Rome I and Rome II, see in particular T Thiede, ‘Die Rechtswahl in den Römischen Verordnungen’ in B Verschraegen (ed), Rechtswahl – Grenzen und Chancen (Vienna, Jan Sramek, 2010) 51. 149   BGBl 1936/111 as last amended by BGBl I 2010/10. 150   Art 8(2) Rome I. 151   Schack, above n 24, no 1052 (but opposing this result de lege ferenda). By contrast, Walter argues that Art 8(3) Rome II applies only to the infringement of intellectual property rights, but not to the remedies. See Walter, above n 26, no 55. In my view, however, such a construction would run counter to Art 15(c) Rome II, which provides that the applicable law also applies to the remedies. See below 3.2.1.

248  Thomas Petz be that the policy considerations based on which a domestic legislator grants intellectual property rights are considered to be more important than the principle of party autonomy. Surprisingly, these policy considerations are regarded as less important when it comes to immovable property. Thus, in the event that such property is damaged, the parties may choose the applicable law. By contrast, no choice is allowed for acts of unfair competition and restrictions of competition. Thus, the reason seems to be the specific nature of the public policy considerations. For intellectual property rights and unfair competition, it is obviously assumed that the domestic policy considerations of each country differ considerably, whereas for property rights, this may not necessarily be the case. The inadmissibility of choice of law for claims arising from the infringement of an intellectual property right may prove problematic if the infringement claim is combined with a contractual claim based on a licence agreement. Whereas the lex loci protectionis applies to tort claims, the lex contractus applies to the contractual claim, and thus different laws may apply even though the issues are intertwined. In this regard, however, it has to be borne in mind that the parties are free to settle their respective claims, and the law applicable to this settlement can be chosen based on Article 3 Rome I. Consequently, at least for choice of law after the event giving rise to the damage had occurred, the importance of Article 8(3) Rome II is only reduced: it is limited to those cases where the parties do not reach a settlement. Further, as already indicated, the inadmissibility of a choice of law agreement is not unique to intellectual property rights: Article 6(4) Rome II provides the same for unfair competition and acts restricting free competition. There is, however, a slight difference to the inadmissibility of choice of law for intellectual property rights. The plaintiff in proceedings concerning the infringement of intellectual property rights determines the applicable law by claiming protection for a particular country.152 This amounts to a unilateral choice of law. Whether this choice was clever depends on whether there is infringement under the applicable law. By contrast, for unfair competition and acts restricting free competition, the applicable law is determined by localising the competitive relations or the collective interests of consumers that are, or are likely to be, affected. Thus, the plaintiff may not unilaterally determine the applicable law simply by claiming protection for a particular country.153

2.5.3  Choice of Law and the Property Aspects of Intellectual Property Rights Finally, as has been elaborated above, both Rome Regulations do not apply to the property aspects of intellectual property rights.154 These aspects comprise the existence, contents, termination and initial ownership of an intellectual property right as well as its transferability and the transfer itself. Consequently, the law applicable to these aspects is determined by the domestic Austrian conflict rules.155 Section 34(1) PIL Act provides for the application of the law of the country for which protection is claimed. As regards choice of law, it seems generally accepted that the law applicable to the property aspects of intellectual property rights cannot be chosen by the parties.156 Two arguments have been advanced in   See above 2.2.2.1.   For the dogmatic reason for this difference, see above 2.2.2.1. 154   See above 2.4.1 and 2.4.2. 155   This does not apply to the contents of an intellectual property right if it comes up as an issue in infringement proceedings. See above 2.4.2. 156   Schwimann 1982, above n 4, 194; Briem, above n 21, 114; Verschraegen, above n 4, § 34 IPRG no 8; Neumayr, above n 4, § 34 IPRG no 1; Posch, above n 1, no 13/10 n 28; OGH 4 Ob 408/85, Hotel Sacher (1986) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 73 (trade mark); OGH 4 Ob 252/04v, Tourismusinformations­ systeme (2005) Medien und Recht 183 (with case note by M Walter) (copyright). 152 153

Austria  249 favour of this view: a formal one and a substantial one. The first relates to the wording of the provision of the PIL Act on choice of law, section 11, which limits the provision’s scope of application expressly to claims arising out of contractual obligations and claims relating to marital property. As all property aspects of intellectual property rights save the transfer itself (Verfügungsgeschäft) do not arise out of a contractual obligation, section 11 PIL Act does not apply to them. The second argument points to the fact that the property aspects of an intellectual property right are so closely related to the shape of that right that no law other than that of the country which grants the right should be applied. As indicated, the odd man out is the transfer itself.157 On the one hand it is an agreement, because the transferor offers to transfer the right and the transferee accepts this offer. However, contrary to other agreements, the transfer itself does not impose on the transferor an obligation to transfer the right. This obligation already follows from the agreement to transfer. Rather, it affects the ownership of the right and thus, touches upon a property aspect. As the transfer itself imposes no obligations on the parties, Rome I does not apply.158 Therefore, recourse has to be made to the domestic conflict rules. On its face, section 34(1) PIL Act does not apply to the transfer itself as it concerns neither the existence nor the contents nor the termination of an intellectual property right. By contrast, the wording of section 31(1) PIL Act on the law applicable to real property is wider, as it refers also to the acquisition of the real property. Indeed, it has been argued that the law applicable to the transfer itself of real property may be chosen.159 If this is correct, such choice seems even more appropriate with regard to intellectual property.160 The substantive argument against choice of law advanced above does not apply to the transfer itself as the transfer does not affect the shape of the right. The formal argument, however, applies: the provision of the PIL Act on contractual obligations, section 35(1), endorses the same concept of contractual obligations as employed by Rome I. This follows from the legislative history of this provision: When adapting the PIL Act to Rome I, the Austrian legislator emphasised that section 35(1) PIL Act applies to those contractual obligations which Article 1(2) Rome I expressly excluded from the Regulation’s scope of application.161 These contractual obligations have in common that they are all contractual obligations within the meaning of Article 1(1) Rome I.162 As there is no indication that the Austrian legislator intended to extend the scope of application of section 35(1) PIL Act beyond that of Article 1(1) Rome I, the concept of contractual obligations in both provisions is the same. The purpose of section 35(1) PIL Act is thus to apply to those contractual obligations to which Rome I does not apply, but not to agreements that do not impose obligations. As it follows from the construction of Rome I elaborated above, the transfer itself is no contractual obligation within the meaning of Article 1(1) Rome I. Given that the concept of contractual obligations in Article 1(1) Rome I and section 35 PIL Act is the same, the transfer itself is also no contractual obligation under section 35(1) PIL Act. The provision of the PIL Act on choice of law, section 11, however, makes the admissibility of a   See above 2.4.1.   See above 2.4.1. 159   cf Schwimann 1982, above n 4, 180; A Flessner, ‘Rechtswahl im internationalen Sachenrecht – neue Anstöße aus Europa’ in P Apathy, et al (eds), Festschrift für Helmut Koziol zum 70. Geburtstag (Vienna, Jan Sramek, 2010) 125. 160   For a limited choice of law for the transfer itself in Austrian law before the entry into force of Rome I, see Schwimann 1992, above n 4, § 43 IPRG no 2. Against such a choice Koppensteiner, above n 34, § 37 no 6. 161   Explanatory Remarks to the Proposal of the Federal Government 332 BlgNR 24. GP, 3. See below 3.4.1. 162   See above 2.4.1. 157 158

250  Thomas Petz choice of law dependent on the scope of application of section 35(1) PIL Act. Consequently, as this scope does not cover the transfer itself, section 11 PIL Act is inapplicable. As a result, the law applicable to the transfer itself cannot be chosen. It has to be stressed, however, that there is one exception to the general rule that the law applicable to the property aspects of intellectual property rights may not be chosen. But this exception is limited to a particular type of property aspects, that is, the property aspects between employer and employee.163 For these aspects, the applicable law may be chosen by choosing the law applicable to the employment contract. As indicated above, however, there are considerable restrictions imposed on this choice.164

2.6 Summary Before we turn to the case studies, let us reconsider the results of this part. As far as the law applicable to contracts relating to intellectual property rights in the absence of a choice of law agreement is concerned, Rome I contains no special rule, and the prevailing view in Austrian literature does not apply the general rule of Article 4(2) Rome I differently to contracts relating to intellectual property rights. As a result, the law applicable to a transfer of an intellectual property right is the law of the country where the transferor is habitually resident, and the law applicable to a licence agreement is regularly the law of the country where the licensor is habitually resident. With regard to licence agreements, however, we have argued for an interpretation of Article 4 Rome I that takes into account the particularities of intellectual property rights. What is crucial for this approach is that in case a duty to create is imposed on the licensor and a duty to exploit is imposed on the licensee, the law of the country having the closest connection to the licence agreement should apply. In the case of single-state licences, this would regularly be the law of the country of distribution, in the case of multi-state licences the country where the licensee is habitually resident. As regards the infringement of intellectual property rights, Article 8 Rome II provides for a special conflict rule that differs considerably from the general conflict rule for torts in Article 4 Rome II. The main difference is of a dogmatic nature, and this difference does not only distinguish Article 8 Rome II from the general conflicts rule, but also from the special conflict rule for unfair competition in Article 6 Rome II with which Article 8 Rome II otherwise has some similarities. In addition to this dogmatic difference, contrary to the general rule Article 8 Rome II provides neither for a special rule in case of a common habitual residence of the parties, nor for a general escape clause, nor for choice of law, nor for the application of special conflict rules for claims based on non-contractual obligations other than tort. As a result, Article 8 Rome II is a clear-cut, but very strict rule. This specific nature is arguably mandated by the policy considerations of intellectual property. Concerning the property aspects of intellectual property rights it has been elaborated in some detail that rather than Rome I or Rome II, the domestic conflict rule of section 34 PIL Act applies. Consequently, these aspects are governed by the lex loci protectionis. The approach of Rome I and Rome II not to cover property aspects is not unique to intellectual property, but applies equally to real property. Only with regard to the assignment of claims, there are some property aspects that are covered by Article 14 Rome I. As we have argued, however, this provision does not apply to the most important property aspects with regard   See s 34(2) PIL Act; Posch, above n 1, no 13/12.   See above 2.5.1.

163 164

Austria  251 to intellectual property rights, that is, the effectiveness of the transfer against third parties. In sum, thus, there is a special conflict rule for the property aspects of intellectual property rights, but this rule is one of domestic law. Finally, as regards choice of law, there is no special rule for contracts relating to intellectual property rights and – with the exception of section 34(2) PIL Act which deals with the property aspects between employer and employee – for the property aspects of intellectual property rights. For contracts, the general rule of Article 3 Rome I and the special rule on employment contracts of Article 8 Rome I are applicable to contracts relating to intellectual property rights in the same way as they are to contracts relating to other rights. For the property aspects including the transfer itself, no choice of law is admissible – except a limited choice as far as property aspects between employer and employee in an employment relationship are concerned. Thus, neither for contracts nor for the property aspects do the policy considerations of intellectual property mandate a solution that is different from that of other rights. Only with regard to the infringement of intellectual property rights, there is a special rule: Article 8(3) Rome II provides that the general rule of Article 14 Rome II which allows for a limited choice of law does not apply. Consequently, the law applicable to the infringement of intellectual property rights may not be chosen by the parties. This is similar, but not identical to the situation concerning unfair competition and acts restricting free competition. Thus, in this regard, the policy considerations of intellectual property seem to mandate a different solution.

3  Revisiting the Applicable Law: Four Case Studies In this part of the chapter, some of the results that have been reached in the previous part will be put to the test. For this purpose, four case studies will be advanced, one on the principle of territoriality, one on the infringement of intellectual property rights, one on the law applicable to initial ownership, and one on the law applicable to transfer of rights agreements. All four case studies consist of several hypothetical cases.

3.1  The Principle of Territoriality A owns a patent over an engine in Austria. B produces separate parts of the patented engine in Austria and exports them separately to his customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in Austria requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement, and that the Austrian Patent Act does not extend to activities abroad.

3.1.1  The Application of Austrian Law to Infringing Activities that Occur Abroad Assuming that an Austrian court has jurisdiction, could it apply the Austrian Patent Act to allegedly infringing acts that occur in country Z?

The crucial issue in this hypothetical case is that the activities of the defendant occur in one country, but the patent is registered in another. Thus, the country of protection differs

252  Thomas Petz from the country of infringement. Whether this issue matters for the determination of the applicable law depends on the applicable conflict rule. As a general rule, if an Austrian court has international jurisdiction, it determines the applicable law based on the Austrian conflict rules.165 In this regard, two issues are important: First, which Austrian conflict rule does apply to a particular claim? Second, what issues raised by the claim are covered by the applicable law? As far as the first question is concerned, our hypothetical case involves a patent infringement claim. For non-contractual obligations arising from the infringement of an intellectual property right, the applicable law is determined by Article 8(1) Rome II. Recital 26 of Rome II provides a non-exclusive list of intellectual property rights which includes copyright, related rights, the sui generis right for the protection of databases and industrial property rights. The latter notion seems to refer to the definition of industrial property in Article 1(2) of the 1883 Paris Convention for the Protection of Industrial Property.166 This provision defines industrial property as patents, utility models, industrial designs, trade marks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition. To the extent that this concept of industrial property also applies to unfair competition, it is wider than that of Recital 26 of Rome II as Rome II provides in its Article 6 for a separate conflict rule for unfair competition.167 With regard to patents, however, Article 1(2) Paris Convention is instructive. But recourse to this provision does not seem necessary as it is considered to be self-evident that Article 8(1) Rome II applies to the infringement of patents.168 And indeed, to what intellectual property right would it apply if not to patents?169 As regards the second question, the scope of the applicable law is determined by Article 15 Rome II. In our hypothetical case, the plaintiff asked the court to issue an injunction and to award damages. Article 15(c) Rome II provides that the applicable law governs the existence, the nature and the assessment of damage or the remedy claimed, Article 15(d) Rome II adds that the applicable law also governs measures which a court may take to prevent or terminate injury or damage. As a result, the applicable law covers both remedies claimed by the plaintiff, the injunction as well as the award of damages.170 Having settled on the applicable conflict rule and the scope of application of the applicable law, we return to the issue that the country for which the patent has been granted is different from the country where the allegedly infringing activities occurred. In this context, it has to be noted that the determination of the applicable law by an Austrian court depends to a large extent on the submissions of the plaintiff. If in these submissions he claims protection for a foreign country, the law of that country will apply. By contrast, if he claims protection for Austria, Austrian law will apply. But claiming protection for a partic  See above 2.1.   Paris Convention for the Protection of Industrial Property of March 20, 1883 as revised at Stockholm on 14 July 1967, BGBl 1973/399 as last amended by BGBl 1984/384. 167   cf Grünberger, above n 10, 140–41. 168   K Kreuzer, ‘Die Vergemeinschaftung des Kollisionsrechts für außervertragliche Schuldverhältnisse (Rom II)’ in G Reichelt and W Rechberger (eds), Europäisches Kollisionsrecht (Vienna, Manz, 2004) 13, 41; Heiss and Loacker, above n 9, 613; Sack, above n 10, 1406; Wagner, above n 47, 9; Grubinger, above n 10, 60. 169   This is true not only for patents granted by the Austrian Patent Office based on the proceedings provided for by the Austrian Patent Act, but also for the Austrian part of a European patent granted by the European Patent Office. For the latter patents, this follows from Art 64(3) of the European Patent Convention (hereinafter, EPC), BGBl 1979/350 as last amended by BGBl I 2008/2, which provides that the national law applies to the infringement of a European patent. 170   cf Sack, above n 10, 1409. 165 166

Austria  253 ular country is no easy task for the plaintiff. The reason for this is that Austrian procedural law regularly requires the plaintiff to substantiate his claim also with regard to substantive law.171 Thus, the plaintiff has not only to indicate for which country he claims protection, but also to submit in what allegedly infringing activities the defendant has engaged and in which country these activities have occurred. This requires the plaintiff to argue on the application of both the conflict rules and the rules of substantive law.172 This double task could pose a considerable risk for the plaintiff: If he does not succeed in distinguishing between both layers of law properly, the court could be inclined to conclude that protection was actually claimed for the country where the allegedly infringing activities had occurred. In our hypothetical case, this would mean that based on his submission that the infringing activities occurred in country Z, the court would hold that the plaintiff claimed protection for that country rather than for Austria. At first sight, this problem seems to be one of practical importance only to the plaintiff. A closer look, however, reveals that it is linked to the core issue of this hypothetical case, that is, the question at which level the principle of territoriality is operative. This question is not only decisive with regard to the submissions of the plaintiff, but also with regard to the determination of the applicable law by Austrian courts. Three approaches to answer this question have been advanced, the first two considering the principle of territoriality operative already at the level of the conflict rules, the third only at the level of the rules of substantive law.173 As the solution of our hypothetical case depends on which approach we endorse, all three of them have to be scrutinised. Under the first approach, the principle of territoriality is considered to be a conflict rule.174 This rule provides for the application of the law of the country where the allegedly infringing activities occurred. Thus, determining the applicable law requires determining the place where these activities occurred. As protection may be claimed for no country other than the one where the allegedly infringing activities occurred, the practical problem of distinguishing between the submissions of the plaintiff as to the applicable law and the substantive law does not arise. Under this approach thus Austrian law would not be applicable because the allegedly infringing activities occurred in country Z. Consequently, the Austrian court would apply the law of that country. Technically, this approach requires construing the phrase ‘for which protection is claimed’ in Article 8(1) Rome II as ‘where the damage occurs’.175 Obviously, such a construction is not feasible.176 But if one nevertheless construes Article 8(1) Rome II that way, its normative value would be reduced to a mere derogation of the escape clauses in Article 4(2) and (3) Rome II. From Recital 21 to Rome II it follows that this was not how the European legislator conceived this provision.177

  s 226 Civil Procedure Act [Zivilprozeßordnung], RGBl 1895/113 as amended last by BGBl 1983/135.   cf N Klass, ‘Urheberkollisionsrecht der ersten Inhaberschaft – Plädoyer für einen universalen Ansatz’ (2007) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 373, 376–77. See also Lurger, above n 28, 109. 173   See above 2.2.2.1. 174   Koppensteiner, above n 34, § 37 no 1; Walter, above n 26, no 10. 175   For intellectual property rights other than unitary Community intellectual property rights the place where the allegedly infringing activities occur is also the place where the damage occurs, see above n 49. For Art 8(2) Rome II – which provides that the law of the country where the infringing act was committed governs certain non-contractual obligations arising out of the infringement of unitary Community rights – to make sense, however, Art 8(1) Rome II has to refer to the place where the damage occurred. 176   But see Walter, above n 26, no 54: Claiming protection for a particular country is only the consequence of the fact that the infringing activities occurred in that country. 177   In detail, see above 2.2.2.1. 171 172

254  Thomas Petz Under the second approach, the plaintiff submits for which country he claims protection, but the court applies the law of that country only if it concludes that the allegedly infringing activities also occurred there.178 Even though this does not require the court to determine whether the activities were actually infringing – a task that is still left to the applicable law – it is required to single out which particular activity of a series of activities is the one that allegedly infringed the intellectual property right, and in which country that activity occurred.179 Thus, rather than the plaintiff ’s claim for protection in a particular country, the place where the act of infringement was committed is decisive. This, in effect, amounts to a limitation on the locus protectionis imposed by the locus delicti commissi.180 As a result, if the allegedly infringing activities have occurred in a country other than the one for which the plaintiff claims protection, the law of the country for which he claims protection does not apply even though the plaintiff claimed so. Under this approach, the principle of territoriality is considered to require that the allegedly infringing activities occurred in the country for which protection is claimed.181 Technically, this could be achieved by construing the notion ‘infringement’ in Article 8(1) Rome II accordingly. As a result, it would impose a restriction on the plaintiff ’s claim for protection for a particular country. Among the proponents of this approach, however, the proper way of constructing the notion ‘infringement’ is controversial. One way is to construe it by recourse to the concept of infringement of the lex causae. As a result, the law of the country for which protection is claimed would also determine whether infringing activities arguably occurred in that country. Another way is to construe it based on the concept of infringement of the lex fori.182 Consequently, the law of the country where the court is seated would determine whether infringing activities arguably occurred in the country for which protection is claimed. Again another way is to consider the notion ‘infringement’ to be an autonomous concept of Rome II so that recourse neither to the lex causae nor to the lex fori may be made. Contrary to the first two solutions, the concept of ‘infringement’ would thus be one of conflict of laws, not of substantive law. Arguably, only the latter approach is reconcilable with the principle of autonomous interpretation of Rome II.183 Be it as it may, in our hypothetical case the only infringing activities arguably carried out by the defendant were those carried out in country Z. Thus, there is some reason to assume that under all three solutions, there would be an ‘infringement’ in that country.184 For our hypothetical case it follows from this approach that even if the plaintiff based his infringement claim on his Austrian patent, the court would apply the law of country Z as the infringing activities arguably occurred there. For three reasons, Article 8(1) Rome II is irreconcilable with this approach. First, were the limitations imposed by the principle of territoriality limitations imposed on the conflict rule itself, they would lead to the application of the law of the country where the 178  Buchner, above n 10, 1006; Handig 2008, above n 10, 10; KH Fezer and S Koos, ‘Internationales Immaterialgüterprivatrecht’ in U Magnus (ed), J von Staudingers Kommentar zum Bürgerlichen Gesetzbuch, vol 6 Pt 2, 13th edn (Munich and Berlin, Sellier-De Gruyter, 2010) no 915. 179   See on this problem in general P Mankowski, ‘Das Internet im Internationalen Vertrags- und Deliktsrecht’ (1999) Rabels Zeitschrift für ausländisches und internationales Privatrecht 203, 262–64; Heiss and Loacker, above n 9, 643; T Thiede, Internationale Persönlichkeitsrechtsverletzungen (Vienna, Jan Sramek, 2010) 350–81. 180   Walter, above n 26, no 19. 181   Buchner, above n 10, 1006. 182   See Walter, above n 26, no 19. 183   See in detail below 3.2.2, n 220. 184   For the proponents of this approach this would follow from the principle of territoriality. Cf in general Dittrich, above n 24; Schack, above n 24, no 915.

Austria  255 infringing activities were carried out. For intellectual property rights, this country is regularly at the same time the country where the damage occurs.185 Thus, the special rule for intellectual property rights in Article 8(1) Rome II would only restate what already follows from the general rule for torts in Article 4(1) Rome II.186 This neglects the fact that Article 8(1) Rome II was designed not as an expression of, but an exception to, Article 4(1) Rome II.187 Second, if the plaintiff claims protection for a particular country but the court concludes that the defendant has not engaged in any allegedly infringing activities there, the law of that country will not be applied. The question thus is how should the applicable law be determined in this case. Article 8(1) Rome II provides for no solution, because protection was claimed only for the country where no allegedly infringing activities were carried out, and so it bars the application of the law of any other country. The decision would thus stop short at the level of the conflict rules. Third, for unitary Community intellectual property rights, Article 8(2) Rome II provides for the application of the law of the country where the act of infringement was committed to certain non-contractual obligations arising from the infringement of such rights. Thus, this provision also employs the notion ‘infringement’. If this notion has a normative value – as the proponents of the second approach argue – it has to have the same meaning in both paragraphs of Article 8 Rome II. In this case, however, Article 8(2) Rome II would contain two connecting factors, one referring to the place where the act was committed, the other to the place where the damage occurred.188 This does not seem to be a feasible construction.189 Thus, what remains is the third approach. Under this, the principle of territoriality does not impose a limitation on the conflict rule, but on the activities of the defendant that could amount to an infringement under the substantive rules of the applicable law.190 In our hypothetical case, this approach would result in the application of Austrian patent law if the plaintiff claimed protection for Austria. When applying this law, however, the court would have to consider whether the allegedly infringing activities of the defendant that occurred abroad amount to an infringement. Contrary to the first two approaches, under this approach this is an issue of the applicable rules of substantive law. In my view, only the latter approach is reconcilable with the wording and the purpose of Article 8 Rome II.191 Further, with regard to the plaintiff ’s practical problem of how to claim protection for a particular country, it follows from this approach that for determining the applicable law the court may not take into account the plaintiff ’s submissions on infringing activities that occur in a country other than that for which protection is claimed.192 Like under the first approach, the practical problem lined out at the outset thus does not come up under this approach either. For our hypothetical case this means that if   See above n 49.   See above 2.2.2.1. 187   cf Recitals 21 and 26 to Rome II. 188   Contrary to domestic intellectual property rights, for unitary Community rights the place where the infringing activities occurred is not identical to the place where the damage occurred: Whereas the first is regularly located within one of the Member States, the latter is the entire Community. Thus, this difference matters. See above n 49. 189   In particular, applying the law of the country where the damage occurred as it would follow from attributing a normative value to the notion ‘infringement’ does not solve the issue with which Art 8(2) Rome II is concerned, that is, the fact that because of the Community-wide grant of the unitary Community right the damage occurs in all the Member States rather than in only one of them. 190   Briem, above n 21, 111; Drexl, above n 6, no 14; Heiss and Loacker, above n 9, 635. 191   cf also above 2.2.2.1. The same conclusion is reached by Heiss and Loacker, above n 9, 635. 192   cf Drexl, above n 6, no 12. 185 186

256  Thomas Petz the plaintiff claims protection for Austria – for instance by basing his infringement claims on the provisions of the Austrian Patent Act193 – Austrian law applies. This brings us to the level of substantive law. On this level, what is crucial is whether the infringing activities in which the defendant has engaged constitute an infringement under Austrian patent law. This requires, in the first place, considering which activities occurred in which country. In Austria, the defendant produced the parts of the patented invention and prepared them for export whereas in country Z he offered them for sale and delivered them to the customers. If the patent is already infringed by the defendant’s activities in Austria, there is no practical need for considering his activities in country Z. Thus, the question of whether Austrian patent law applies to activities abroad comes up only if there is no infringement in Austria. For this reason, we have to consider first whether the production and possession of the parts of the patented invention in Austria amount to an infringement. Section 22(1) Patent Act confers on the patent holder several exclusive rights, among them the right to put the patented invention into circulation.194 The Austrian Supreme Court has recently considered the possession of the patented product for the purpose of export to amount to an infringement of this right even though the invention was not patented in the importing country.195 Thus, already the activities of the defendant in Austria may amount to an infringement provided that the export of individual parts of a patented invention is infringing. In Austrian patent law, producing an individual part of a patented invention amounts to an infringement only if that part contains the essential elements of the invention.196 Whether the elements contained in such a part are essential depends on the patent claims and their construction.197 In our hypothetical case, the fact that the customers have to assemble the patented engine indicates that rather than an individual part, all the parts in their entirety contain the essential elements of the patented invention. Thus, we assume that the possession of the individual parts for the purpose of exporting them to country Z does not amount to a patent infringement. Having found no infringement in Austria, the activities of the defendant in country Z have to be considered in a second step. In addition to the right to put the patented invention into circulation, section 22(1) Patent Act also confers on the patent holder the exclusive right to offer it to his customers.198 Whether this right is infringed by offering and delivering parts that contain unessential elements of the patented invention has to be determined only if the patent-holder’s right to offer the patented invention covers activities that occur in country Z. Thus, the territorial scope of this right has to be considered first. On its face, this right is unlimited, but the principle of territoriality limits it to offering the patented invention to customers in Austria. This limitation is considered to be inherent to the Patent Act. It follows from the fact that the jurisdiction to prescribe of the Austrian legisla cf OGH 4 Ob 81/01t, CICLON (2001) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht

193

269.   This right was introduced to meet the requirements of Art 28(1) TRIPS.   OGH 17 Ob 24/09t, Nebivolol (2010) ecolex no 57 with a case note by G Schönherr and T Adocker who contrary to the court consider the list of rights conferred on the patent holder by s 22(1) Patent Act to be exclusive and the reference by the court to the parallel provision of the Trade Mark Protection Act which expressly refers to the export inappropriate. 196   OGH 4 Ob 319/86, Schlüssel-Schloßkombination (1986) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 147; Friebel and Pulitzer, above n 61, 207–8; A Weiser, Östereichisches Patentgesetz, 2nd edn (Vienna, Weiser, 2005) 163. 197   OGH 4 Ob 319/86, Schlüssel-Schloßkombination (1986) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 147; Friebel and Pulitzer, above n 61, 206; Weiser, above n 196, 158. 198   cf OGH 14.01.1997, 4 Ob 4/97k (unpublished). 194 195

Austria  257 tor is limited to those situations that take place in Austria.199 Thus, as the Patent Act does not confer on the patent-holder the exclusive right to offer the patented invention to customers in country Z, there is no right that could be infringed by the activities of the defendant in that country. The principle of territoriality thus limits the patent protection to situations that take place in Austria. Alternatively, depending on their design, the plaintiff may argue that the individual parts produced by the defendant are non-infringing devices that relate to an essential element of his invention and may be used for exploiting the patented invention.200 Section 22(3) Patent Act bars any person other than the patent-holder and his licensees from offering such devices if the person offering them knows or should know that they could be used to exploit the invention.201 It is important to note that this rule does not extend the patent-holder’s right to offer and deliver the patented invention because any third person can offer and deliver non-infringing devices, as long as she is not aware that they could be used to exploit the patented invention.202 Thus, the patent-holder does not have an exclusive right to offer and deliver these devices. What happens instead is that the concept of patent infringement is extended to activities that would otherwise be non-infringing. As a result, the provision does not confer a right on the patent-holder, but prohibits third persons from engaging in certain activities. With regard to the principle of territoriality, the crucial question thus is what activities are prohibited. On its face, section 22(3) Patent Act applies to the offering and the delivery of non-infringing devices regardless of the country where they take place. Again, however, the principle of territoriality limits it to offers and deliveries that take place in Austria.203 By contrast, in our hypothetical case, the offers were made to consumers in country Z.204 Thus, if protection is claimed for Austria, Austrian patent law will apply, but the court will find for no infringement. As a result, regardless of the theory of infringement on which the plaintiff advances his claim, he will lose on the merits. This is because on the one hand Article 8(1) Rome II provides that Austrian patent law applies to the patent infringement claims, but on the other the principle of territoriality narrows down the rights Austrian patent law confers on the patent holder and the obligations it imposes on third parties so that activities of the defendant in country Z neither infringe the plaintiff ’s Austrian patent nor violate any obligations 199   Schwimann, above n 1, 146; Buchner, above n 10, 1005; Posch, above n 1, no 13/9; Handig, above n 10, 10; Heiss and Loacker, above n 9, 633; Schacherreiter, above n 15, 9; Neumayr, above n 4, § 34 IPRG no 1. The principle of territoriality is thus not an equivalent to the lex loci protectionis, as suggested by Grubinger, above n 10, 62. See also above n 24. 200   cf OGH 4 Ob 42/93, Gebißmodell (1994) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 33. 201   This type of infringement, the so-called mittelbare Patentverletzung, has been introduced only recently to Austrian patent law, see BGBl I 2004/149. The concept is taken from s 10 of the German Patent Act, see Weiser, above n 196, 155. Before that, it has not been recognised in Austria, see OGH 4 Ob 42/93, Gebißmodell (1994) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 33. 202   This indicates that these activities do not infringe the patent, but rather affect adversely the proprietary interests of the patent-holder or the licensee. Thus, the ground of liability is not the act committed by the direct infringer – this act may even be non-infringing – but the contributory infringer’s awareness of the fact that the devices could be used by third parties to infringe the patent. Cf below 3.2.2. 203   R Heidinger, ‘Die mittelbare Patentverletzung’ (2006) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 156, 156–57. Cf with regard to s 10 of the German Patent Act Kraßer, above n 66, 810. 204   Even if we assume that the parts were offered to the customers in Austria and were only delivered to country Z, the result would not be different. This is because s 22(3) Patent Act requires that the devices could be used to exploit the invention. From the principle of territoriality it follows that also this use has to take place in Austria. As the customers have assembled the patented invention in country Z, this requirement is not met. Cf with regard to German law Kraßer, above n 66, 810.

258  Thomas Petz of third parties. This risk of losing on the merits, however, is counterbalanced the fact that the plaintiff can unilaterally determine the applicable law by claiming protection for a particular country.

3.1.2  The Application of Foreign Law to Infringing Activities in Austria Assuming that the Austrian court has jurisdiction for the infringement proceedings, could it apply the patent law of country X where the patent has been granted to allegedly infringing activities that occur in Austria?

Solving this hypothetical case requires us to recall our main conclusions in the previous hypothetical case. These conclusions were that Article 8(1) Rome II applies to patent infringement claims and that the remedies sought by the plaintiff are well within the scope of application of the applicable law. Further, we concluded that under Article 8(1) Rome II the applicable law is unilaterally determined by the plaintiff claiming protection for a particular country. Thus, as far as the level of conflict of laws is concerned, the place where the allegedly infringing activities occurred does not matter. Against this background, in the present hypothetical case the Austrian court would apply the law of country X if the plaintiff claimed protection for that country.205 Further, depending on whether infringement under the patent law of country X is limited to activities carried out within the territory of that country, the activities carried out in Austria could be considered to be infringing. This decision is a decision on the merits of the case. Thus, if the activities in which the defendant has engaged in Austria do not qualify as an infringement under the patent law of country X, the plaintiff will lose his case on the merits. As a result, the Austrian court will apply the patent law of country X to infringing activities carried out in Austria, but the plaintiff will succeed only if that law regards these extraterritorial activities as an infringement.206

3.2  The Law Applicable to the Infringement of Intellectual Property Rights Three IT students A, B and C created a website facilitating speedy exchange of digital files (music, videos, software etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C knew that some files that are stored in the server of their website are illegal, they did not take any actions to prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C requesting to close the website and pay damages. It is assumed that an Austrian court has international jurisdiction in this case. 205   In this context it should be noted that before the entry into force of Rome II, if the plaintiff in a multi-state case claimed protection not only for Austria, but also for another country, the latter claim for protection had to be indicated clearly in his submissions. Otherwise, the court would assume that protection was claimed only for Austria. See OGH 4 Ob 125/93, Adolf Loos II (1994) Medien und Recht 24 (with case note by M Walter). Such a scenario would come up in our hypothetical case if the plaintiff claimed protection for both Austria and country X. Arguably, the assumption that absent of a clear indication to the contrary protection is claimed only for the country whose courts are seised is still valid under Rome II. See Neumayr, above n 4, § 34 IPRG no 2. 206   If the patent law of country X indeed provides that infringing activities that occur in Austria amount to an infringement of A’s patent in X and thus it does not endorse the principle of territoriality, this runs counter the principle of international comity. Consequently, the Austrian court seised with the proceedings may be inclined to construe the law of country X in way that ensures that it conforms to this principle. This, in effect, could result in finding for no infringement. See above 2.2.2.1 and Drexl, above n 6, no 261.

Austria  259

3.2.1  Direct Infringement Which law would be applied to determine the liability of A, B and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)?

Article 8(1) Rome II provides that the law applicable to non-contractual obligations arising from the infringement of an intellectual property right is the law of the country for which protection is claimed. Thus, which law determines the liability of the defendants for their allegedly infringing activities depends on the country for which the plaintiffs claim protection. If they claim protection only for one country, the law of that country applies, if they claim protection for several countries, the laws of all these countries apply (‘mosaic approach’).207 The crucial question then is whether Article 8(1) Rome II determines the applicable law only for the infringement of the intellectual property right in question or also for the remedies resulting from this infringement.208 The starting point for answering this question is the wording of Article 8(1) Rome II. If it was considered to apply only to the infringement, the law applicable to the tort law remedies resulting from this infringement would have to be determined based on the general rule of Article 4 Rome II. This rule, however, has a different structure as it contains opening clauses and allows the parties to choose the applicable law within the limits of Article 14 Rome II. Thus, limiting Article 8(1) Rome II to infringement could lead to the application of different laws to such closely connected issues as the infringement of an intellectual property right and the remedies resulting thereof. This result seems rather impracticable. Further, as far as non-contractual obligations other than tort – such as unjust infringement and agency without authority – are concerned, the reference in Article 13 Rome II to Article 8 Rome II stops short at the level of the infringement. Thus, the remedies concerning such non-contractual obligations would be governed by Articles 10 and 11 Rome II. If this is the case, however, why does the wording of Article 13 Rome II contain no hint of this distinction? Finally, Article 15 Rome II on the scope of the applicable law determines which issues are governed by the law determined applicable by the conflict rules of Rome II. These issues include not only the basis and extent of liability (lit a), but also the existence, the nature and the assessment of the remedy claimed (lit c) and the measures which a court may take to prevent or terminate injury (lit d). This indicates that the law determined by a conflict rule of Rome II applies to both the infringement and the remedies. From this it follows for the construction of the conflict rules that they may not be limited to the infringement. For these reasons, Article 8(1) Rome II applies to both the infringement of an intellectual property right and the remedies resulting thereof. Consequently, not only the infringement, but also the remedies claimed by the plaintiffs, the request to close the website and the claim for damages are governed by the applicable law. As just indicated, depending on the plaintiff ’s submissions, this could be the law of one country or the laws of several countries. Finally, as regards choice of law, Article 8(3) Rome II provides that the law applicable based on Article 8(1) Rome II cannot be derogated from by virtue of a choice of law agreement. As the latter provision applies to both the infringement of an intellectual property right and the remedies resulting therefrom, the inadmissibility of choice of law also applies 207   Heiss and Loacker, above n 9, 635; Neumayr, above n 4, Art 8 Rom II no 4. On the assumption that in infringement proceedings before Austrian courts protection is claimed only for Austria unless clearly indicated otherwise by the plaintiff in his submissions and the validity of this assumption under Rome II see above n 205. For ubiquitous infringement see below 3.2.3. 208   See Walter, above n 26, no 55.

260  Thomas Petz to both issues. Thus, in this hypothetical case, the parties are neither allowed to choose the law applicable to the infringement, nor to choose the law applicable to the remedies.209

3.2.2  Contributory Infringement Would the applicable law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

The solution to this hypothetical case depends on the answer to two questions. The first question is whether Rome II applies to the issue of contributory infringement at all. The starting point for answering this question is Article 15 Rome II, as this provision lays down which issues are governed by the applicable law. If we infer from this provision that Rome II does not apply, the applicable law is determined by the domestic Austrian conflict rules. By contrast, if we infer that it does apply, the second question arises. This question is how to characterise the issue of contributory infringement. If it is characterised as an issue of the infringement of an intellectual property right, Article 8(1) Rome II provides for the application of the law of the country for which protection is claimed. In this case, one and the same law applies to the claims advanced against the contributory infringer and the direct infringer. By contrast, if it is characterised as a tort law issue, Article 4(1) Rome II provides for the application of the law of the country where the damage occurs. Even though the damage regularly occurs in the country where the intellectual property right is protected, this does not necessarily lead to the application of one and the same law to the claims advanced against the direct infringer and the contributory infringer, as Article 4(2) and (3) Rome II provide for escape clauses. Thus, similar to the first question, the second question does not only concern a theoretical problem, but also has practical implications. To answer the question of whether Rome II applies at all to the issue of contributory infringement, a brief detour to substantive law would seem to be helpful. Even though what is considered to be contributory infringement differs considerably from one country to the other, two basic concepts can be distinguished.210 The first concept focuses on the effects of the activities of the contributory infringer on the infringement in its entirety. Thus, it resembles the traditional tort law concept of aiding and abetting. What is crucial for the contributory infringer to be held liable is that he intended to materially contribute to the infringing activities of the direct infringer. Thus, a specific intent to enable or further a specific infringement of a right on the part of the contributory infringer is required.211 Only   Contra Walter, above n 26, no 55 (arguing for choice of law for the remedies).   cf with regard to Austrian law OGH 4 Ob 194/07v, Filesharing durch Minderjährige (2008) Medien und Recht 18; W Zankl, ‘Verantwortlichkeit für fremde Internetinhalte – Altes und Neues zur Gehilfenhaftung’ (2001) Juristische Blätter 409. For a comparison of the situation in different countries see G Spindler and M Leistner, ‘Die Verantwortlichkeit für Urheberrechtsverletzungen im Internet – Neue Entwicklungen in Deutschland und in den USA’ (2005) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 773; M Neubauer, ‘Zur Haftung und Auskunftsverpflichtung von Providern – Aktuelles zu Unterlassungs- und Auskunftspflichten in Österreich mit einem Vergleich zur aktuellen Rechtslage in Deutschland im Zivil- und Strafrecht’ (2008) Medien und Recht International 25. See also for a thorough analysis of this issue and an innovative proposal G Dinwoodie, R Dreyfuss and A Kur, ‘The Law Applicable to Secondary Liability in Intellectual Property Cases’ (2009) Journal of International Law and Politics 201. 211   OGH 4 Ob 19/91, Tele-Uno III (1991) Medien und Recht 195 (copyright); OGH 4 Ob 42/93, Gebißmodell (1994) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 33 (patents); OGH 4 Ob 81/01t, CICLON (2001) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 269 (trade marks); OGH 4 Ob 122/03z, Northland (2003) Medien und Recht 395 (trade marks); OGH 17 Ob 34/08m, Tonerkartuschen (2009) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht no 47 (trade marks); OGH 17 Ob 26/09m, 209 210

Austria  261 if such intent is present is he liable for the activities of the direct infringer. Construed that way as accessory to the direct infringement, contributory infringement thus appears to be primarily an issue of the relationship between the contributory infringer and the direct infringer. Consequently, those who focus on this concept of contributory infringement are inclined to consider it covered by Article 15(g) Rome II which provides that the applicable law governs the liability for acts of another person.212 By contrast, the second concept of contributory infringement focuses on the fact that through the (technical) services he provides, the contributory infringer enables the activities of the direct infringer. The crucial difference is that for this type of infringement, no intent to contribute to a specific infringement is required on the part of the contributory infringer. Instead, it suffices that he is generally aware of the fact that the direct infringer uses the service to engage in infringing activities. Consequently, this concept of contributory infringement focuses on the general awareness of the contributory infringer rather than on his specific intentions in relation to the activities of the direct infringer. Those who focus on this concept of contributory infringement are thus inclined to consider it covered by Article 15(a) Rome II, as this provision provides that the scope of the applicable law covers the question of whether persons may be held liable for the acts performed by them.213 Our detour to substantive law and back to Rome II has thus revealed that regardless of which of the two substantive law concepts of contributory infringement one focuses on, Article 15 Rome II provides that the law applicable based on the conflict rules of Rome II governs the situation. This saves us at least distinguishing for to the conflict rules between these two concepts. Further, and more importantly, this also indicates that the conflict rules of Rome II apply to contributory infringement. The reason for this is that Article 15 Rome II applies only if the applicable law is determined by the conflict rules of Rome II. Consequently, it has to be inferred from the fact that Article 15 Rome II deals with contributory infringement that the conflict rules of Rome II have to do the same. Having answered the first question in the affirmative, the second question is whether the general conflict rule on torts or the special conflict rule on the infringement of intellectual property rights applies to contributory infringement. In my view, the proper answer to this question depends on whether the notion of ‘infringement’ in Article 8(1) Rome II is considered to have a normative value.214 If it does so, one might be inclined to consider contributory infringement as not being covered by this notion. By contrast, if one does not attribute such a value to this notion, contributory infringement would be covered by Article 8(1) Rome II as far as it affects intellectual property rights. Thus, two issues have to be separated: the first is whether the notion of ‘infringement’ has a normative value, the second how it is construed. As outlined above with regard to the principle of territoriality, some argue that under Article 8(1) Rome II the law of the country for which the plaintiff claims protection applies only if the infringing activities also occurred in that country.215 This approach thus requires determining whether the defendant has engaged in infringing activities in the country for Oscar II (2010) Medien und Recht 99 (trade marks) (with case note by R Heidinger). See in general I Griss, ‘Haftung für Dritte im Wettbewerbsrecht und im allgemeinen Zivilrecht’ (2005) Juristische Blätter 69. 212   M Leistner, ‘The law applicable to non-contractual obligations arising from an infringement of national or Community intellectual property rights’ in S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, Mohr Siebeck, 2009) 97, 104. 213   Drexl, above n 6, no 205. 214   ibid, no 201. 215   See above 3.1.1, n 178.

262  Thomas Petz which protection is claimed. This does not require the court to decide whether the activities were actually infringing, but only that they occurred in the country for which protection is claimed. Such an approach is reconcilable with the wording of Article 8(1) Rome II only if one construes the notion of ‘infringement’ accordingly. This amounts to attributing a normative value to this notion. Once this has been acknowledged, one could argue that this normative value affects not only the place where the activities occur, but also what types of activity are covered. Thus, the notion of ‘infringement’ could be construed to refer not only to activities that directly infringe an intellectual property right, but also to activities that contribute to such a direct infringement. But again, as elaborated above, there are at least three arguments which may be advanced against assigning a normative value to the notion of ‘infringement’ in Article 8 Rome II.216 First, such an assignment would in effect turn this provision from an exception to the general conflict rule on torts to a modified expression of that rule. Second, Article 8(1) Rome II would fail to determine the applicable law in case that the allegedly infringing activities did not occur in the country for which protection is claimed. Third, for unitary Community intellectual property rights, assigning a normative value to the notion of ‘infringement’ in Article 8(2) Rome II would result in having two connecting factors, one pointing to the place where the damage occurred, the other to the place where the allegedly infringing activities occurred. Based on these arguments, we hold that no normative value may be assigned to the notion of ‘infringement’ in Article 8(1) Rome II. Thus, this provision also applies to contributory infringement. Consequently, whether damages arising from contributory infringement are awarded and an injunction to close the website is granted depends on the substantive rules of the law of the country for which protection is claimed. As a result, the applicable law does not differ if the claim is advanced against the contributory infringer rather than the direct infringer, and the parties would not be allowed to choose the applicable law. The shortcoming of this approach is that it bars the application of a single law in multi-state cases which could be helpful for both the contributory infringer and the right-holder – but this follows from the general approach of Article 8(1) Rome II.217 But let us assume, for the sake of the argument, that the notion has such a value. In this case, the question arises as to how to construe it. In this regard, three approaches can be distinguished.218 The first and the second approach have in common that they determine the applicable law by recourse to rules of substantive law, but differ with regard to the law to which they make recourse: under the first approach, recourse is made to the rules of substantive law of the country where the court is seated (lex fori), whereas under the second it is made to the law applicable to the dispute (lex causae), that is, in case of an infringement of an intellectual property right, the law of the country for which protection is claimed. In this regard, recourse to the rules of substantive law does not mean that the court has to conclude that the activities of the contributory infringer were actually infringing, but only that the concept of infringement of an intellectual property right not only covers direct infringement, but also contributory infringement.219 Three arguments can be advanced against both approaches: methodological, doctrinal and material. The methodological argument is the most obvious one: as Rome II is an instrument of Community law, it has to be construed autonomously. Thus, as both   See also above 2.2.2.1 and 3.1.1.   See above 3.2.1. 218   See above 3.1.1. 219   On this technique see below n 265. 216 217

Austria  263 approaches make recourse to rules of domestic law, they are not reconcilable with the principle of autonomous interpretation.220 The doctrinal argument is that making recourse to rules of domestic law blurs the dividing line between the conflict rules and the rules of substantive law. Finally, the material argument is that substantive law is often arbitrary in considering the activities of the contributory infringer to be a tort or rather an infringement of an intellectual property right. In Austrian patent law, for example, section 22(3) Patent Act prohibits a person other than the patent-holder or the licensee to offer or deliver non-infringing devices to a third party if that person knows or should know that the devices are used to exploit the patented invention. This provision can be construed either as treating these activities as a patent infringement or as a separate tort. In the first case, the activities would be considered to be an ‘infringement’, in the second they would not.221 Similarly, the activities of an intermediary who enables copyright infringement by offering his services without being aware of actually infringing activities are treated as copyright infringement. This applies, however, to injunctions only, whereas for claims for damages, arguably the general tort law rules apply (section 81(la) Copyright Act). Thus, as regards injunctions, the activities of the defendant would be considered to be an ‘infringement’ under Article 8(1) Rome II, whereas as regards claims for damages, Article 4(1) Rome II would apply. This indicates that at the level of the substantive law, it could be rather arbitrary whether contributory infringement is treated as a matter of intellectual property law or of tort law. Finally, with regard to the application of the lex causae, there is also a logical argument: which law constitutes the lex causae is the result of Article 8(1) Rome II and thus cannot at the same time be a prerequisite for applying this provision. From these arguments it follows that if we assume that the notion of ‘infringement’ in Article 8(1) Rome II has a normative value, it is not to be construed by recourse to the rules of substantive law. What remains is thus the third approach: An autonomous interpretation of the notion.222 If the result of that interpretation is that contributory infringement is not covered by Article 8(1) Rome II, the general rule of Article 4 Rome II would apply. The conflict regime would thus be different. As already indicated, these differences relate to the exception in the case of a common habitual residence of the parties, the escape clause in the case that the tort is manifestly more closely connected to another country, the admissibility of choice of law, and the determination of the law applicable to claims arising out of unjust enrichment, agency without authority and pre-contractual liability. In my view, if the European legislator intended such a different treatment of contributory infringers of intellectual property rights, it would have to indicate so. In the absence of any such indication, however, it seems that, construed autonomously, the notion of ‘infringement’ covers also contributory infringement. Thus, even if we assume that the notion of ‘infringement’ has a normative value, the applicable law is determined solely by the plaintiff claiming protection for a particular country. The result is thus the same as if we assume that it has no normative value.

220   cf Grünberger, above n 10, 151–52; Fezer and Koos, above n 178, no 914. But compare ECJ Case C-533/07 Falco Privatstiftung [2009] ECR I-3327 (holding that the notion ‘place of performance of the obligation in question’ in Art 5(1)(a) Brussels I is to be construed by recourse to the lex causae); followed by OGH 4 Ob 90/09b, Falco Privatstiftung (2010) Zeitschrift für Rechtsvergleichung 10 (with case note by H Ofner). 221   See above 3.1.1, n 200. 222   cf Walter, above n 26, no 55.

264  Thomas Petz

3.2.3  Ubiquitous Infringement Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would an Austrian court define ubiquitous infringement of intellectual property rights?

The international jurisdiction of Austrian courts to hear proceedings on ubiquitous infringement depends primarily on the defendant’s domicile.223 If his domicile is located in Austria, Austrian courts have general international jurisdiction.224 This jurisdiction is not limited to any extent.225 This is true of the determination of both the infringement and the remedies resulting thereof. Consequently, the court at the defendant’s Austrian domicile has international jurisdiction to award our plaintiffs damages for the entire harm they suffered from the ubiquitous infringement, even though parts or most of this harm occurred abroad. Further, this court may also issue injunctions for all the countries that are affected by the ubiquitous infringement. As a result, if the defendant is domiciled in Austria, the court at the place of his domicile could decide on the ubiquitous infringement. If, however, the defendant is not domiciled in Austria, the jurisdiction of the Austrian courts depends on the country where the defendant is domiciled. In this regard, two scenarios may be distinguished. In the first scenario, the defendant is domiciled in a Member State of the European Union other than Austria. In this case, Austrian courts may have special international jurisdiction in matters of tort if the harmful event occurred in Austria.226 For intellectual property rights, the equivalent to the harmful event is their infringement.227 Thus, for solving our hypothetical case we have to single out in which arguably infringing activities the defendant engaged.228 In this regard, two activities may be distinguished. The first is running the file sharing website. Technically, this is done by uploading its contents on a server. This activity could be considered to occur either at the place where the defendant is physically present when uploading the contents or at the place where the server is located. Whereas in the latter case the link to the forum is regularly rather arbitrary, it is substantial in the first.229 For this reason, special infringement jurisdiction is considered to be 223   For the purpose of this hypothetical case, we treat each defendant individually and thus use only the singular. For the possibility of consolidating the proceedings in case of multiple infringements see below 4.3.1. 224   Art 2(1) Brussels I. 225   DA Simotta in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 5, pt 1, 2nd edn (Vienna, Manz, 2008) Art 5 no 327. 226   Art 5(3) Brussels I. See OGH 4 Ob 110/01g, BOSS Zigaretten I (2001) Medien und Recht 320. 227   In this context it has to be stressed that in the case of ubiquitous infringement of intellectual property rights, the infringement in a country other than that where the uploading occurs is not an effect of that infringement, but rather an infringement on its own. The crucial question thus is whether the fact that a website is accessible to the users in a country where the uploading did not take place amounts to an infringement for the purpose of Art 5(3) Brussels I. This is a matter of the construction of this provision. See OGH 11 Os 184/09g, Internethandel mit Raubkopien (2010) Medien und Recht 266 (in criminal proceedings concerning copyright infringement directing the website to Austria amounts to infringing activities in Austria); OGH 4 Ob 122/03z, Northland (2003) Medien und Recht 395 (having knowledge of the import of counterfeit goods from Italy to Austria amounts to infringing activities in Austria). 228   See below 4.1.4. On the jurisdictional stage, an Austrian court may only assess based on the plaintiff ’s submissions whether the claim advanced by him is sufficiently substantiated. This limited assessment, however, requires determining whether the allegedly infringing activities of the defendant suffice for conferring infringement jurisdiction on the Austrian courts. See OGH 4 Ob 110/01g, BOSS Zigaretten I (2001) Medien und Recht 320; Court of Appeals Linz 2 R 237/09z (2010) Medien und Recht 146. 229   Lurger, above n 28, 110; Fallenböck, above n 39, 163; Simotta, above n 225, Art 5 no 309.

Austria  265 conferred on the courts of the country where the defendant was physically present when uploading the arguably infringing contents.230 It has to be noted, however, that this country will regularly be the country where the defendant is also domiciled.231 Consequently, as far as running the website is concerned, special jurisdiction at the place where the infringement occurred adds only little to general jurisdiction at the defendant’s domicile. In our hypothetical case, it would confer jurisdiction on the Austrian courts only if the defendant was present in Austrian when uploading the contents of the website, but did not have any intentions to stay there permanently.232 Thus, jurisdiction at the place where the website is run from is regularly of only little practical importance. This is different for the second arguably infringing activity, that is, the accessibility of the website to users. It is rather controversial, however, whether mere technical accessibility should already suffice for conferring special infringement jurisdiction.233 Until this point, the Austrian Supreme Court could avoid taking sides on this issue.234 Fundamentally, it is a matter of how to construe Article 5(3) Brussels I.235 Those who focus on the wording of this provision may be inclined to conclude that accessibility suffices for conferring jurisdiction.236 By contrast, those who focus on its position within the structure of Brussels I may conclude that it does not.237 The reason for this conclusion is that if accessibility alone already conferred infringement jurisdiction, Austrian courts would have jurisdiction for virtually any file-sharing website, as technically they are all accessible to users in Austria. Consequently, in addition to being sued at his domicile, the defendant always has to expect to be sued in Austria, too – and in any other country of the European Union. This would allow a plaintiff domiciled in Austria to drag any defendant before Austrian courts and thus reduce considerably the practical importance of the jurisdiction of the court of the defendant’s domicile. As a result, the relationship between general jurisdiction of the defendant’s domicile and special jurisdiction at the place where the infringement occurs would in effect be reversed. Against this background, it has repeatedly been stressed that as a general rule, conferring infringement jurisdiction requires a special link between the country whose courts are seised and the infringing activities. As far as accessibility is concerned, this link is considered to be the defendant’s objective intentions to target a particular country. Consequently, the proponents of this approach require that a website is directed to Austria to confer infringement jurisdiction on Austrian courts.238 Initially proposed mainly for disputes concerning acts of unfair competition, this unwritten requirement has become  ibid.   Lurger, above n 28, 111.   cf s 66 Civil Jurisdiction Act [Jurisdiktionsnorm] RGBl 1895/111 as last amended by BGBl I 2009/135; Walter, above n 26, no 142. See in detail below 4.1.1. 233   See Lurger, above n 28, 114–17 and Walter, above n 26, no 176 with further references. 234   See OGH 4 Ob 110/01g, BOSS Zigaretten I (2001) Medien und Recht 320 (holding that a website was not only accessible in Austria but also directed to consumers in those regions of Austria that border Slovenia and thus, Austrian courts have infringement jurisdiction); OGH 11 Os 184/09g, Internethandel mit Raubkopien (2010) Medien und Recht 266 (in criminal proceedings concerning copyright infringement, Austrian courts have jurisdiction based on both the fact that the website was directed to Austria and physical copies were delivered to Austria). 235   Three cases on this issue are currently pending before the ECJ: Case 509/09 eDate Advertising (referred by the German Bundesgerichtshof) and Case 161/10 Martinez and Martinez (referred by the Tribunal de Grande Instance de Paris) on personality rights and the Wintersteiger case referred by the Austrian Supreme Court on trade marks, see OGH 17 Ob 8/10s (2011) Medien und Recht 411. 236   cf Simotta, above n 225, Art 5 no 320; Walter, above n 26, no 176; Court of Appeals Innsbruck 2 R 261/04f (unpublished). 237   cf Fallenböck, above n 39, 165. 238   Lurger, above n 28, 115; Fallenböck, above n 39, 165. See also dicta in OGH 4 Ob 110/01g, BOSS Zigaretten I (2001) Medien und Recht 320; OGH 11 Os 184/09g, Internethandel mit Raubkopien (2010) Medien und Recht 266. 230 231 232

266  Thomas Petz generally accepted also for disputes concerning intellectual property rights.239 However, it has adverse effects if a website is not directed to any particular country. In this case, no court would assume infringement jurisdiction, because the activity is directed to none of them. Thus, in effect, infringement jurisdiction would be abolished for such infringements. This is crucial for our hypothetical case, because file-sharing websites are regularly directed at a worldwide audience. For this reason, we follow neither those who consider mere technical accessibility to confer infringement jurisdiction on Austrian courts, nor those who require as a general rule that in addition, the activity is directed at Austria. Rather, we propose a differentiated approach. Under this approach, the mere accessibility of a website confers infringement jurisdiction on Austrian courts as long as the website is not directed to a different country or different countries. Only this construction ensures that both general jurisdiction at the defendant’s domicile, and special jurisdiction at the place where the infringement occurred, have a practical importance in ubiquitous infringement proceedings.240 This, however, is not the end to the story. If the jurisdiction of the Austrian court is based on accessibility to users in Austria – not on the uploading a website’s – the extent of this jurisdiction is arguably limited. In Shevill, a defamation case, the ECJ held that the extent of jurisdiction of the courts in the country where the defamatory statement had only been distributed was limited to the damage that the plaintiff ’s reputation suffered in that country.241 As such a territorial limitation on the jurisdiction of a court echoes the territorial nature of intellectual property rights, it seems even more appropriate for those rights than for torts.242 For this reason, the prevailing view endorses the application of Shevill to claims arising from the infringement of intellectual property rights.243 Such an application, however, may pose practical problems when it comes to injunctive relief. In our hypothetical case, for example, if the defendant is ordered to make the website inaccessible to users in Austria, this will regularly require him to take down the website and thus in effect make it inaccessible worldwide. Consequently, even though the jurisdiction of the court is limited to the accessibility of the website in Austria, in practice the injunction it issues has worldwide effects.244 To solve this problem, three approaches have been advanced. The first is to limit the infringement jurisdiction of the court to remedies other than injunctions.245 As a result, injunctions may only be issued by the courts of the country in which the defendant is domiciled. This approach, however, seems irreconcilable with both the wording and the structure of Article 5(3) Brussels I. The second approach is to consider Shevill inapplicable to injunctions. Under this approach, the court has jurisdiction to issue a worldwide injunction and thus, its jurisdiction corresponds to the practical effects of the injunction. Recently, in a defamation case, this approach has been endorsed by the Austrian Supreme Court.246 It fails, however, to take into account that offline, at least, there are situations where complying with a territorially limited injunction is possible. Thus, the problem of injunctions with 239   Fallenböck, above n 39, 165; contra Walter, above n 26, no 176. Cf also OGH 17 Ob 8/10s, Wintersteiger (2011) Medien und Recht 411. 240   For a similar approach with regard to the place of uploading, see Lurger, above n 28, 111. 241   Case C-68/93 Shevill [1995] ECR I-415. 242   cf OGH 4 Ob 135/06s, Fall Gruppe D (2006) Medien und Recht 387. 243   Simotta, above n 225, Art 5 no 329; Fallenböck, above n 39, 160; Walter, above n 26, no 178. Leaving this issue undecided OGH 4 Ob 135/06s, Fall Gruppe D (2006) Medien und Recht 387. Contra Lurger, above n 28, 118. 244   cf OGH 17 Ob 8/10s, Wintersteiger (2011) Medien und Recht 411. 245   Lurger, above n 28, 119–20. 246   OGH 12 Os 135/07f, Eine Frau in Tränen (2010) Juristische Blätter 320 (with a case note by P Zöchbauer).

Austria  267 worldwide practical effects based on jurisdiction limited to the country where the infringement occurred in online situations is solved at the cost of putting no limitation on the extent of jurisdiction in offline situations. This seems to be no reasonable balance of the interests involved. Thus, the third approach is the preferable one. Under this approach, it is simply accepted as a consequence of conferring infringement jurisdiction on a court that in online situations the practical effects of an injunction may exceed the extent of jurisdiction of the court rendering it.247 Any court, however, should try its best to tailor its injunctions to the territory of the jurisdiction for which they are issued. Based on this approach we thus conclude that Shevill is not only applicable to intellectual property rights, but also to any remedy that results from the infringement of such a right, including injunctions. As a result, in a scenario where the defendant is domiciled in a Member State other than Austria, Austrian courts have international jurisdiction in two set-ups. If the defendant is physically present in Austria when putting the file-sharing website online, Austrian courts have infringement jurisdiction for the entire harm and all injunctions. Thus, the courts may decide on the ubiquitous infringement. By contrast, if the website is accessible to users in Austria and is not directed to a different country, Austrian court also have infringement jurisdiction, but this jurisdiction is limited to the remedies that concern the infringement that occurred in Austria. Thus, in this set-up the courts cannot decide on the ubiquitous infringement. The solution is different if the defendant is domiciled in a third country. In this scenario, the domestic Austrian rules on international jurisdiction apply. Under this regime, Austrian courts have general jurisdiction for proceedings on the infringement of intellectual property rights if the defendant has established a business in Austria.248 Absent such a business, they may also assume jurisdiction if the defendant is physically present in Austria at the time the infringement proceedings are initiated.249 As a result, rather than domicile, the establishment of a business or mere physical presence suffices for conferring general jurisdiction on Austrian courts. Thus, compared to the Brussels I regime, the concept of general jurisdiction in domestic Austrian law is broader. Further, if the defendant neither has established a business in Austria nor is physically present there, Austrian courts may still have jurisdiction based on the infringement itself.250 This jurisdiction, however, is conferred on Austrian courts only if the event giving rise to the damage occurred in Austria.251 Thus, contrary to the Brussels I regime, no jurisdiction is conferred on Austrian courts if only the damage occurred in Austria.252 For the infringement of intellectual property rights, however, both the damage and the event giving rise to it may only occur in the country where the right is granted.253 Consequently, for these rights, this distinction is not decisive. Rather,   P Schlosser, EU-Zivilprozessrecht, 3rd edn (Munich, Beck, 2009) Art 5 no 20.   s 83c(1) Civil Jurisdiction Act. If, however, the business is a legal person that has its statutory seat or its central administration or its principal place of business in Austria, it is considered to be domiciled in Austria based on Art 60(1) Brussels I. In this case, thus, the domestic Austrian regime does not apply. In terms of conferring jurisdiction on the courts, the practical importance of the place where the business is established is thus rather limited. 249   See DA Simotta in H Fasching (ed), Kommentar zu den Zivilprozeßgesetzen, vol 1, 2nd edn (Vienna, Manz, 2000), § 83c JN no 12. 250   cf OGH 4 Ob 59/04m, innoline.at (2004) Evidenzblatt no 167. 251   s 83c(1) Civil Jurisdiction Act. 252   cf OGH 7 Ob 541/92 (1992) Juristische Blätter 655; OGH 2 Ob 157/04h (2004) ecolex no 406 (with case note P Mayr); contra Simotta, above n 249, § 92a JN no 9; Lurger, above n 28, 121; P Mayr in W Rechberger (ed), Kommentar zur Zivilprozessordnung, 3rd edn (Vienna, Springer, 2006) § 83c JN no 2. 253   Simotta, above n 249, § 83c JN no 38 and 40; OGH 4 Ob 20/89, 30SS, Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 62/84; Lurger, above n 28, 112. See in detail below 4.2.1. For 247 248

268  Thomas Petz under the domestic regime, the crucial question is whether the two allegedly infringing activities of the defendant may be qualified as infringement for the purpose of conferring international jurisdiction. Apart from the fact that different methods of interpretation apply as far as the construction of a provision of domestic procedural law is concerned, the substantial arguments made as regards the Brussels I regime are equally valid for the domestic Austrian one. In effect, there is only one minor difference, and this difference follows directly from the broader concept of general jurisdiction under the domestic Austrian regime: Austrian courts have special infringement jurisdiction if the defendant has neither established a business in Austria nor is physically present there at the time the infringement proceedings are initiated, but was physically present in Austria when uploading the contents of the website. Further, as under the Brussels I regime, they also have special infringement jurisdiction if the website is accessible to users in Austria and not directed to a different country or different countries.254 As regards the extent of this jurisdiction, however, there is a considerable difference under the domestic Austrian regime: the jurisdiction of the Austrian court as the court of the place where the infringement occurred is not limited to the damage suffered from the infringement in Austria.255 This already follows from the fact that Austrian courts have jurisdiction only if the event giving rise to the damage occurred in Austria, whereas Shevill concerned jurisdiction of the place where the damage occurred. Consequently, the Austrian court as the court of the place of infringement could decide on the entire damage resulting from the ubiquitous infringement, regardless of whether its jurisdiction is based on putting the file-sharing website online or on making it accessible to users in Austria. Further, it also does not matter whether the jurisdiction of the Austrian court is general or special in its nature: in both cases the Austrian court seised with the infringement proceedings has jurisdiction to decide on the ubiquitous infringement. Compared to Brussels I, the domestic Austrian regime thus treats the out-of-state defendant more severely: for the latter to confer jurisdiction for ubiquitous infringement on a domestic court, it suffices that the infringement occurred in Austria, whereas for the former it follows from Shevill that the defendant has to be domiciled in Austria. This different treatment of the out-of-state defendant may be counterbalanced, however, by a narrower concept of what constitutes the infringement in domestic Austrian procedural law. As a result, in a scenario where the defendant is domiciled in a third country, Austrian courts have international jurisdiction in four set-ups: first, if the defendant has established a business in Austria; second, if he is physically present at the time the infringement proceedings are initiated; third, if the file-sharing website was put online by the defendant while he was physically present in Austria; and fourth, if the website is accessible to users in

this reason, the purpose of s 83c(3) Civil Jurisdiction Act, which provides that the distribution of publications and devices that are shipped to Austria from abroad confers infringement jurisdiction on Austrian courts, is to clarify that shipping to Austria suffices for conferring jurisdiction. 254   cf Simotta, above n 249, § 83c JN no 38; Fallenböck, above n 39, 165; contra Lurger, above n 28, 121; Walter, above n 26, no 143 (mere accessibility suffices for conferring infringement jurisdiction). In this context it has to be noted that s 83c(3) Civil Jurisdiction Act, which confers jurisdiction on Austrian courts if allegedly infringing devices are shipped to Austria, requires the presence of a tangible good. Thus, as regularly no such good is involved in cases concerning ubiquitous infringement on the Internet, it provides no basis of jurisdiction. See also above, n 253. The provision applies, however, if physical copies or counterfeit goods offered for sale online are shipped to Austria. 255   Lurger, above n 28, 121.

Austria  269 Austria and is not directed to another country. As in all four set-ups this jurisdiction is unlimited in its extent, the courts may decide on the ubiquitous infringement. Regarding the applicable law, a country-by-country approach is mandated by Article 8(1) Rome II. The Austrian court thus has to apply the law of each country for which protection is claimed. This leads to the application of a multitude of laws.256 Some consolidation could follow from a choice of law agreement, but as no such agreement is allowed with regard to the infringement of intellectual property rights, this possibility is excluded.257 The application of multiple laws, however, does not mean that the allegedly infringing activities actually amount to an infringement in any country for which protection is claimed. Rather, for each country the situation depends on its substantive rules on the infringement of an intellectual property right whether the ubiquitous infringement actually amounts to an infringement. These rules could provide, for example, that only activities that either take place in the country for which protection is claimed or are directed to that country do so. Thus, under the dogmatic approach endorsed here, the requirement of a special link in case of ubiquitous infringement is a matter of substantive law, not of conflict of laws.258 Consequently, as ubiquitous infringement is not treated differently on the level of conflict of laws, no definition of this type of infringement is required. Further, on the level of substantive law, the concept is different for each intellectual property right so no general definition has been developed. A different result may only be reached if one once again assigns a normative value to the notion of ‘infringement’ in Article 8(1) Rome II. Under this approach, the notion could be construed to require that the allegedly infringing activities have substantial effects in the country for which protection is claimed.259 Thus, this approach allows consolidation to the extent that if not a single law applies, at least only a limited number of laws apply to the infringement. For valid reasons, however, this approach has already been rejected above.260 In the context of ubiquitous infringement, another argument may be advanced against it: contrary to Article 6(3)(b) Rome II, Article 8 Rome II does not provide a qualitative limitation for determining the applicable law in multi-state cases. In my view, providing an express rule on this issue for acts of unfair competition indicates that for the infringement of intellectual property rights a similar result may not be achieved simply by construing the notion of ‘infringement’ in Article 8(1) Rome II accordingly.261   cf before the entry into force of Rome II OGH 4 Ob 238/03h, Journalistenbüro (2004) Medien und Recht 123.   See above 2.5.2. 258   See above 2.2.2.1. 259   One variant of this approach may be to emphasise that these effects occur in those countries to which the allegedly infringing activities are directed, another that they occur in the country of the habitual residence of the right-holder. Whereas the first approach seems particularly suited for trade marks, as it presupposes a market, the latter is proposed mainly for copyright based on the argument that contrary to other intellectual property rights, copyright is universal in its nature. Cf Lurger, above n 28, 128 and 134; Fallenböck, above n 39, 167–69. See for Austrian law before the entry into force of Rome II OGH 4 Ob 19/91, Tele-Uno III (1991) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 195 (applying Austrian copyright law to an Italian broadcast directed to Austria and finding for infringement of the authors’ Austrian copyrights). 260   See in detail above 3.1.1. 261   Before the entry into force of Rome II, the Austrian Supreme Court allowed some consolidation in proceedings concerning ubiquitous infringement. In the case of an infringement of the rights of performing artists, for example, the Court applied Austrian law based on the shipment of physical copies to Austria, even though they were manufactured in Germany and the website offering them for sale was run from Germany. See 4 Ob 135/06s, Fall Gruppe D (2006) Medien und Recht 387. In adopting this approach, the Court considered the latter infringing activities to be so closely connected to the distribution of the copies in Austria that the centre of gravity of the infringement was in Austria. Thus, it treated the infringement as a ubiquitous infringement rather than a multistate infringement. The Court, however, considered the territorial scope of its injunction to be limited to the 256 257

270  Thomas Petz

3.3  The Law Applicable to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment in B’s laboratory. B now makes huge profits by granting licences to a number of companies to use A’s inventions. A files a suit for compensation, arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. It is assumed that A files a claim before an Austrian court.

3.3.1  Initial Ownership of a Patent What law would the Austrian court apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning the right to obtain patents be enforceable in Austria?

At the outset it has to be stressed that for the purpose of this hypothetical case, we assume that the dispute concerns a national Austrian patent, rather than the Austrian part of a European patent.262 Disputes between employees and employers concerning the right to obtain a patent may come up in three scenarios, that differ with regard to the main object of the dispute. This requires us to consider these scenarios briefly before we single out the one our hypothetical case is concerned with. In the first scenario, the right to obtain the patent is assigned by law to the employee, but the employee agrees to transfer it to the employer. Proceedings that come up regularly in this scenario are the employee claiming that the compensation he received for transferring his right was not reasonable, or the employer claiming that the employee has not yet effected the transfer of the right. Both claims have in common that they concern the performance of the agreement to transfer the right to obtain the patent. Thus, they are claims arising out of contractual obligations. In such proceedings, the applicable law is determined by Rome I. For agreements to transfer that are part of an individual employment contract, Article 8(2) Rome I provides for the application of the law of the country in which the employee habitually carries out his work in performance of the contract. In the second scenario the employee claims damages in the amount of a reasonable compensation because the right to obtain the patent that was assigned to him by law was infringed by the employer. The claim thus arises out of a non-contractual obligation, therefore Rome II applies. As the right to obtain the patent is an intellectual property right within the meaning of Article 8(1) Rome II, the applicable law is the law of the country for distribution in Austria. Under Rome II, reaching the same result would require that protection is claimed for Austria, and Austrian substantive law on the rights of performing artists considers the activities in Germany to be parts of the infringement in Austria. In our hypothetical case, however, absent the distribution of physical copies in Austria, it may be hard to argue that the centre of gravity is located in Austria. 262   This assumption is necessary because Austria is a Member State of the European Patent Convention. If the dispute concerned a European patent rather than a national Austrian one, Art 60 EPC would apply. This provision not only assigns the right to a European patent to the inventor, but also provides for a conflict rule for this assignment: If the inventor is an employee, the right to a European patent is determined by the law of the country in which the employee is mainly employed. Contrary to the conflict rule for national Austrian patents – s 34(2) PIL Act which refers to Art 8 Rome I – Art 60 EPC does not honour a choice of law agreement between the employee and the employer. Thus, such an agreement would not be enforceable in Austria even if the law chosen by the parties were more favourable to the employee. cf Drexl, above n 6, no 186. Further, the conflict rule of Art 60 EPC is limited to the right to a European patent. As a consequence, it does not cover claims for compensation. Thus, even if we assume that the patent granted to B is a European patent, Art 60 EPC would be applicable in our hypothetical case only to the incidental question of the initial assignment. See Drexl, above n 6, no 185.

Austria  271 which protection is claimed.263 The third scenario, finally, concerns the property aspects of the right to obtain the patent. In this scenario, the employee argues that the right to obtain the patent has been assigned by law to him rather than to the employer. This issue could come up either as a claim in proceedings for declaratory relief or as an incidental question in infringement proceedings and proceedings concerning an agreement to transfer. If the right to obtain a patent comes up that way, neither Rome I nor Rome II apply as they do not cover the property aspects of intellectual property rights.264 Consequently, the applicable law has to be determined by recourse to the domestic conflict rules of the country where the court is seated. In our hypothetical case, the employee claims damages for the infringement of his right to obtain the patent. This means that the applicable law is determined by Article 8(1) Rome II. As a result, if protection is claimed for Austria, Austrian law applies. Claiming damages, however, also requires the employee to establish that the right to obtain the patent has been assigned to him as otherwise he is not the person entitled for compensation. As an incidental question, the dispute thus also concerns the property aspects of the right to obtain the patent. Hence, it falls under the third scenario. As the property aspects of intellectual property rights are not covered by Rome II, recourse to the domestic conflict rules has to be made.265 In our hypothetical case, the court is seated in Austria. Consequently, it will apply the domestic Austrian conflict rules to the question as to whether the right to obtain the patent has been assigned to the employee. In employment relationships, the law applicable to the property aspects is determined by section 34(2) PIL Act. This provision provides that the law governing the employment relationship also applies to the intellectual property rights which relate to the activities of an employee in the course of that relationship. The purpose of this provision is to ensure that one and the same law governs all aspects of an employment relationship. Its scope of application, however, is limited to the relationship between the employee and the employer.266 Therefore, with regard to third parties, instead of the law governing the employment relationship the law of the country for which protection is claimed applies according to section 34(1) PIL Act. As regards intellectual property rights relating to the activities of an employee, section 34 PIL Act thus draws a distinction between the effects between the parties to the employment relationship and the effects against third parties. In our hypothetical case the crucial issue is whether the right to obtain the patent is assigned by law to the employee or the employer. This issue – the issue of initial ownership – thus concerns the relationship between the employer and the employee. Consequently, it is governed by the law governing the employment relationship. The law applicable to individual employment contracts is determined by Article 8 Rome I. This provision provides that absent a choice of law agreement, the law of the country in which the employee habitually carries out his work in performance of the contract applies. As A made his inventions by using the equipment of   cf Drexl, above n 6, no 153.   For Rome I see above 2.4.1, for Rome II see above 2.4.2. 265   See above 2.4.2. This illustrates that the treatment of incidental questions is primarily a matter of the interpretation of the scope of the conflict rules. On this approach, see HJ Sonnenberger, ‘Introduction to Private International Law’ in HJ Sonnenberger (ed), Münchener Kommentar zum BGB, vol 10, 5th edn (Munich, Beck, 2009) no 533; Drexl, above n 6, no 156. The traditional approach would be to characterise the initial assignment of an intellectual property right as an incidental question and to decide then whether the conflict rules of the lex fori (selbständige Vorfrage) or those of the lex causae (unselbständige Vorfrage) apply. In our hypothetical case, the applicable law would be determined by the conflict rules of the lex fori. Cf Sonnenberger, no 538. 266   Schwimann 1992, above n 4, § 34 IPRG n 4; Verschraegen, above n 4, § 34 IPRG no 31; see also above 2.4.3. 263 264

272  Thomas Petz the laboratory of B, he obviously habitually carried out his work in the country where that laboratory is located. Thus, if B’s laboratory is located in Austria, Austrian law applies. In sum, absent of a choice of law, whether the right to obtain the patent is assigned to the employer is determined by Austrian law, as the law applicable to the employment relationship based on section 34(2) PIL Act and Article 8 Rome I, and whether the activities of the employer in exploiting the invention amount to an infringement of the employee’s right to obtain the patent is determined by Austrian law as the law of the country for which protection is claimed according to Article 8(1) Rome II.267 If the parties decide to choose the law that governs the right to obtain the patent, this choice is effective by virtue of Article 8(1) Rome I only to the extent that the employee is not deprived of the protection afforded to him by the mandatory provisions of the law that, in the absence of choice, would have been applicable. This rule thus requires the court to assess whether the result of the proceedings would be more favourable to the employee if, rather than the law chosen by the parties, it applied, where applicable, the mandatory rules of the law that would govern the employment contract in the absence of choice.268 In our hypothetical case, if the laboratory of B is located in Austria, the law applicable in the absence of a choice of law agreement would be Austrian law. In Austrian patent law, the right to obtain the patent is assigned to the inventor.269 The inventor, however, may assign this right to his employer if two requirements are met.270 First, the invention has to be made in the course of the employment relationship. Second, the agreement to transfer the right to obtain the patent has to be done in writing. Neither the rule on the initial assignment of the right to obtain the patent nor that on the transfer of this right can be derogated from by agreement: section 17 Patent Act declares both of them to be mandatory. Choice of law, however, offers two scenarios in which these rules could be derogated from. In the first scenario, the parties choose a foreign law that provides for solutions different to that of Austrian patent law with regard to the assignment of the right to obtain the patent or the requirements for a valid transfer of that right. Thus, simply by the parties choosing this law, the rules of Austrian patent law would be derogated from. In the second scenario, the parties choose a law that provides for the same solutions as Austrian law, but allows them to derogate from these solutions by agreement, and they decide to do so. In this scenario thus the fact that the equivalent rules of the law chosen are not mandatory allows the parties to contract for a solution different to that of Austrian patent law. This illustrates that whether a choice of law is effective depends on the rules of the law chosen by the parties for the assignment and the transfer of the right to obtain the patent including their mandatory character on the one hand, and the contractual clauses on these issues adopted by the parties on the other. Only if neither the first nor the latter deprives an employee who habitually carries out his work in the performance of his employment contract in Austria of the protection afforded to him by the Austrian rules on the initial assignment of the right to obtain the patent and the transfer of this right, does the choice of law clause take effect in Austria. In short, this requires that the solutions of the foreign law that the parties have chosen are at   See above 2.4.2 and 2.4.3.   cf with regard to Art 6 Rome Convention Schwimann, above n 1, 113; Verschraegen, above n 4, Art 6 EVÜ no 20. For the same view with regard to Art 8 Rome I see D Martiny in HJ Sonnenberger, Münchener Kommentar zum BGB, vol 10, 5th edn (Munich, Beck, 2009) Art 8 Rom I no 40. Whether the court has to make this assessment on its own motion or only if the parties make submissions to this avail is controversial. In this regard it has been argued that this issue is not covered by Rome I and is thus a matter of the lex fori. See Martiny, no 41. 269   s 6 Patent Act. 270   s 7(1) Patent Act. 267 268

Austria  273 least as favourable to the employee as the solutions of Austrian patent law, not only with regard to the initial assignment of the right to obtain the patent and the transfer of that right, but also with regard to the extent to which they honour party autonomy.

3.3.2  Initial Ownership in Case of a Joint Collaboration Would the decision differ if A made an invention in joint collaboration with other researchers?

The procedural set-up of this hypothetical case is that the employee claims damages for the infringement of his right to obtain the patent.271 The law applicable to these infringement proceedings thus depends on his claim for protection. If he claims protection for Austria, Austrian law applies. In these proceedings, the question of whether the employee is entitled to compensation depends on whether the right to obtain the patent has been assigned to him by law or by contract. As this question concerns a property aspect of the right to obtain the patent, Rome II does not apply.272 Consequently, the law applicable to this incidental question is determined by the domestic Austrian conflict rules, as these are the conflict rules of the country where the court is seated. The scenario is thus the same as in the first hypothetical case. For the property aspects of intellectual property rights relating to an employment relationship, section 34 PIL Act distinguishes between their effects between the parties to that relationship and the effects against third parties. The effects of the initial assignment of the right to obtain the patent between employee and employer are thus governed by the law applicable to the employment contract, whereas its effects against third parties are governed by the law of the country for which protection is claimed. In case of a joint invention, two types of effects of the initial assignment of the right to obtain the patent must be distinguished, its effects on the relationship between the individual inventor and his employer on the one hand and its effects on the relationship among the co-inventors on the other. Vis-à-vis the individual inventor, all his co-inventors are third parties regardless of whether or not they are employed by the same employer. This means that if, for example, the right to obtain the patent is assigned to the employer of one of the inventors, it can not be assigned at the same time to the other inventors. Thus, in case of a co-invention any assignment of the right to obtain the patent has effects on all co-inventors.273 Section 34 PIL Act, however, does not take this into account, but provides for the application of the lex contractus to the inter partes effects of the initial assignment, and the lex loci protectionis to all third party effects. This could lead to the application of different laws to the different, but intrinsically intertwined effects of the assignment. On the courts, this poses the difficult task of accommodating two divergent solutions. Alternatively, one could argue that the effects of the initial assignment of the right to obtain the patent on the co-inventors are covered by section 34(2) PIL Act. This argument thus relies on a distinction between different types of third party effects of the initial assignment, those on the co-inventors on the one hand and those on all other third parties – in particular, licensees and infringers274 – on the other. The legislative history does not   See above 3.3.1.   See above 2.4.2. 273   cf Drexl, above n 6, no 188. 274   cf Schacherreiter, above n 141, 252. By contrast, Dittrich only considers the effects resulting from granting compulsory licences and fair use exceptions to be third party effects covered by s 34(1) PIL Act. See Dittrich, above n 146, n 50. 271 272

274  Thomas Petz indicate, however, that the legislator intended to introduce such a distinction. Rather, it seemed to endorse a uniform approach to all third party effects and this is also echoed by the wording of section 34(2) PIL Act. Distinguishing between different types of third party effects is thus no viable solution for applying this provision to the effects of the assignment of the right to obtain the patent on the co-inventors. Consequently, either all third party effects are covered by section 34(2) PIL Act, leading to the application of the lex contractus, or all of them are covered by section 34 (1) PIL Act, leading to the application of the lex loci protectionis. In my view, the proper solution depends on the purpose of section 34(2) PIL Act. This provision provides for the application of the lex contractus to the assignment of the right to obtain the patent. The reason for this is that one and the same law would govern the different national rights to obtain the patent if the patent is registered in several countries. The focus of this approach is thus on a multi-state scenario and a single inventor. This focus is echoed by section 34(2) PIL Act, as it determines the applicable law only for an individual employment relationship. Thus, in the case of co-inventors, the law applicable to the right to obtain the patent is determined for each of the co-inventors individually. This is done by applying Article 8 Rome I. As a result, this approach does not always lead to the application of one and the same law to the right to obtain the patent. Rather, this is only the case if the same law applies to all individual employment contracts of the co-inventors. This happens if all employment contracts contain the same choice of law clause or if all employees habitually carry out their work in the same country or if all of them have been employed through places of business situated in the same country. Further, it also happens if for some coinventors the choice of law agreement provides for the application of the law of the country where the others habitually carry out their work. Nevertheless, this indicates that the application of the lex contractus does not necessarily lead to the application of one and the same law to the right to obtain the patent in case of a joint collaboration. This is particularly true if only one of the co-inventors is a freelancer as absent an employment relationship, his right to obtain the patent is governed by the lex loci protectionis. As a result, the rationale on which section 34(2) PIL Act is based is not valid in case of the assignment of the right to obtain the patent to co-inventors. This leaves us with section 34(1) PIL Act and the lex loci protectionis. This, however, would not only lead to the application of the law of the country for which protection is claimed to all property aspects – inter partes and erga omnes – of the right to obtain the patent in case of a joint invention, but also to the inadmissibility of any choice of law agreement. As far as the right to obtain the patent in Austria is concerned, one and the same law would apply to the assignment of the right to obtain the patent to all co-inventors. Both approaches have their strengths and their shortcomings: the lex contractus approach could lead to the application of a single law to the different national rights to obtain the patent if the patent is to be registered in several countries. Whether one and the same law applies, however, depends on a multitude of factors. This approach thus seems preferable if all co-inventors are employed by the same employer and the patent is to be registered in several countries. By contrast, the lex loci protectionis approach does not allow choice of law and, thus, it seems rather impractical. It works well, however, for patents registered in only one country so that the right to obtain the patent can only be assigned for that country. In this case, applying the lex loci protectionis results in one and the same law being applicable to the assignment of the right to obtain the patent so that it does not matter which coinventor advances the claim. In short, applying the lex contractus approach solves the multi-

Austria  275 state problem and applying the lex loci protectionis approach the multi-person problem. In practice, however, both problems are intertwined. Two arguments can be advanced in favour of the second approach. The first argument is a systematic one based on the structure of section 34 PIL Act. This structure indicates that the special rule on employment relationships in the second paragraph is only an exception to the general rule on the existence, contents and termination of intellectual property rights in the first paragraph. As an exception, section 34(2) PIL Act thus has to be construed narrowly. The second argument is that in case of a joint invention, applying section 34(2) PIL Act does not fulfil its purpose as it does not necessarily lead to the application of a single law. In my view, these two arguments mandate a construction of this provision that, contrary to its wording, it does not apply to the inter partes effects of the assignment of the right to obtain the patent in case of a joint invention. Consequently, in such a case the lex loci protectionis governs the initial ownership to a patent even if it comes up in proceedings between only one co-inventor and his employer, and no choice of law is allowed. This is different from the case of a single inventor where the lex contractus applies to these effects.

3.3.3  Initial Authorship and Initial Title to Trade Mark Would the applicable law differ in the case of initial authorship or initial title to trade mark?

On its face, the rule of section 34(2) PIL Act applies to all intellectual property rights. This implies that the rule governs copyright and trade mark as well as patents. Consequently, one could argue that the law governing the employment contract also governs the assignment of initial authorship in a copyrightable work created in the course of an employment relationship or the assignment of the initial title to a trade mark developed in such a relationship. With regard to initial title to trade mark, this may indeed be the case, but as a brief detour to substantive law will show, situations of initial title to trade mark are rare. In substantive trade mark law, initial title to trade mark describes the situation where a person first applies for the registration of the trade mark and then transfers this application to another person. The application thus confers on the applicant a ‘right to register’ that can be advanced against the registrar.275 From the right to obtain the patent, initial title to trade mark differs with regard to the formal requirements for coming into existence: whereas the right to obtain the patent comes into existence simply by virtue of the invention being made, initial title to trade mark requires an application to the registrar. In Austrian trade mark law, a trade mark comes into existence at the time it is registered and once it is registered, it can be transferred.276 Contrary to the transferability of registered trade marks, Austrian trade mark law is silent on the transferability of the application to register a trade mark. One may conclude from this silence either that such a transfer is invalid or that the general civil law rules on transferability apply. In this regard it may be instructive that German trade mark law expressly declares the application for a trade mark to be transferable.277 This is in line with the approach of Community trade mark law: Article 24 of the   cf KH Fezer in KH Fezer (ed), Markenrecht, 4th edn (Munich, Beck, 2009), § 31 no 1.   ss 11(1) and 19(1) Trade Mark Protection Act [Markenschutzgesetz], BGBl 1970/260 as last amended by BGBl I 2009/126. See E Engin-Deniz, Markenschutzgesetz und weitere kennzeichenrechtliche Bestimmungen (Vienna, Verlag Österreich, 2005) 194. 277   s 31 German Act on the Protection of Trade Marks and other Indications, German BGBl I 1994/3082. On this provision KH Fezer, above n 275, § 31 no 1–2. 275 276

276  Thomas Petz Community Trade Mark Regulation278 provides that applications for Community trade marks are treated as objects of property. It thus seems that applications for trade marks are not transferable unless it is expressly provided so. In any event, situations concerning initial title to trade mark are rare, as regularly the person who applies for the trade mark has also developed the trade mark. This is in particular true with regard to employment relationships, as it will regularly be the employer who applies for registration. This brings us back to our hypothetical case and the question of the applicable law. Section 34 PIL Act distinguishes between the assignment of an intellectual property right between employee and employer on the one hand, and the effects of the assignment against third parties, on the other. As there is no reason not to apply this approach to initial title to trade mark, its assignment is governed by the law that governs the employment contract based on section 34(2) PIL Act.279 Thus, the applicable law would not differ from that applicable to the right to obtain the patent: the lex contractus applies. The distinction of section 34 PIL Act also applies to the assignment of initial authorship. Thus, if such property aspects come up as an incidental question in copyright infringement proceedings between employee and employer, they are also governed by the law applicable to the employment contract. It has been argued, however, that section 34(2) PIL Act should be extended beyond its wording so that it provides for the application of the lex contractus also to the effects of the assignment of initial authorship on third parties.280 Under this approach the effects of the assignment on third parties in the case of initial authorship would be treated differently than in the case of the right to obtain the patent or of initial title to trade mark. Such a different treatment is only mandated if it follows from the nature of copyright. Indeed, contrary to registered intellectual property rights, copyright comes into existence without any registration. Thus, there is no such thing as a right of the inventor against the registrar to grant the patent once the requirements for registration are fulfilled. In the absence of such a right, when initial authorship is assigned, the copyright itself is assigned. The equivalent in patent law to the assignment of initial authorship would thus be the transfer of the patent, but a transfer that is effective against third parties without being registered. The nature of copyright as an unregistered right thus makes it seem less appropriate to distinguish between the effects of the assignment between employee and employer on the one hand, and the effects against third parties on the other. The wording of section 34(2) PIL Act, however, does not take this difference into account. Consequently, the advocates of the application of the lex contractus to the effects of the assignment of initial authorship on third parties do not rely on the wording of this provision, but rather on the objective underlying the application of the lex loci protectionis. They consider this objective to be legal certainty. Based on this objective, they introduce a distinction between third party effects that require the application of the lex loci protectionis and third party effects that do not. A licensee, for example, is interested for reasons of legal certainty that the shape of a copyright is governed by the lex loci protectionis, and so is any 278   Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark [1994] OJ L 11/1 as amended last by Council Regulation (EC) No 422/2004 of 19 February 2004 amending Regulation (EC) No 40/94 on the Community trade mark [2004] OJ L 70/1. 279   Apart from the property aspects, of course, the claim for damages advanced by A against his employer is governed by the lex loci protectionis based on Art 8(1) Rome II. Further, in case of a joint development of a trade mark, rather than the lex contractus, the lex loci protectionis would apply to the assignment of the initial title. See above 3.3.2. 280   Court of Appeals Vienna 4 R 6/99b, Microsoft (1999) Medien und Recht 167; Schacherreiter, above n 141, 255; Dittrich, above n 146, n 50.

Austria  277 infringer of that right. With regard to initial authorship, however, neither a licensee nor an infringer has a particular interest in the application of the lex loci protectionis. Thus, absent of such an interest, the lex contractus should apply. So far, this argument is correct. It fails, however, to take into account that in the case of co-authors, any co-author is a third party vis-à-vis the other co-authors.281 Thus, in such a case applying the lex contractus to the effects against third parties could mean that initial authorship for all co-authors is determined by the law governing the employment contract of one co-author. The approach thus does not sufficiently recognise the interests of coauthors, if at least one of them created the work in the course of his employment relationship. This leaves us with the wording of section 34(2) PIL Act which clearly indicates that it does not apply to the effects of the assignment of initial authorship on third parties.282 Thus, this issue is treated no differently from the right to obtain a patent or initial title to a trade mark. For the purpose of our hypothetical case, however, these considerations are not decisive anyway as it only concerns the relationship between the employee and the employer. As a result, the law governing the employment contract also governs the question as to whom the initial authorship is assigned. This follows from section 34(2) PIL Act. Absent a choice of law, the place where the employee habitually carries out his work in performance of the contract is decisive according to Article 8(2) Rome I. Under the assumption that the author in our hypothetical case carries out his work in Austria, Austrian copyright law applies. As regards the assignment of the copyright in a work, section 10 Copyright Act provides that it is assigned to the author. Thus, initial authorship is with the employee. The situation could be different, however, if the parties choose the law governing their employment contract. In this case, they could designate a law that assigns initial authorship to the employer. Whether such a choice of law is effective depends on Article 8(1) Rome I. According to this provision, a choice of law cannot deprive the employee of the protection afforded to him by those provisions of the law that would have been applicable in the absence of a choice that cannot be derogated from by agreement. Thus, under the assumption that the employee habitually carries out his work in Austria, the mandatory provisions of Austrian law apply. The reference to the mandatory provisions in Article 8(1) Rome I, however, is considered to be a reference only to those provisions that aim at protecting employees.283 The crucial question thus is whether section 10 Copyright Act qualifies as such a mandatory provision. As it aims at protecting the personal link between the author and his work, it applies to all authors regardless of whether they are employees or freelancers. Thus, since it at least partially aims at protecting employees, it qualifies as a mandatory provision for the purpose of Article 8(1) Rome I. As a result, in our hypothetical case, a choice of law agreement on initial authorship that leads to the application of a law that assigns the copyright to a person other than the author would not be effective in Austria.

3.3.4  Reasonable Compensation for Use in Several Countries What law would an Austrian court apply if A raised a claim arguing that B had not paid reasonable compensation for patents obtained by B in a number of foreign countries?   See above 3.3.2.   For the same result, see OGH 4 Ob 309/86, Hotel-Video-Systeme, Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 59/100; M Walter in his case note to Court of Appeals Vienna 4 R 6/99b (1999) Medien und Recht 169, 170; Verschraegen, above n 4, § 34 IPRG no 4. 283   cf Verschraegen, above n 4, Art 6 EVÜ no 19. 281 282

278  Thomas Petz This hypothetical case differs from the first only with regard to the number of countries in which the employer has obtained a patent.284 For the infringement claims, this means that the laws of the countries for which protection is claimed apply (‘mosaic approach’). For the property aspects, however, which may come up as an incidental question, as the connecting factor of section 34(2) PIL Act is the individual employment contract, it is neither relevant with regard to the applicable law in which countries, nor in how many countries, the employer has obtained a patent. Rather, the principle that one and the same law applies to all matters relating to an employment contract trumps the principle of territoriality. Thus, as outlined above, absent of a choice of law, Austrian law applies to the ownership issue if B’s laboratory is located in Austria. In this regard, the only differences that may occur are issues of procedural law and substantive law. As regards the first, if Austrian law governs the employment contract, the right to obtain the patent is assigned by section 6 Patent Act to the employee, but he may agree to transfer this right to the employer. If such a transfer has occurred and the employer files an application for the patent abroad, however, the foreign Patent Office may object to registering him as the holder of the patent because its domestic law only provides for the employee to be registered. In this case, the employee is required to file the application for the patent and once he is granted the patent he is required to transfer it to the employer.285 The transfer of the right to obtain a patent is thus construed as an obligation to apply for the patent and to transfer the patent. This construction is considered to be mandated by the principle of territoriality. With regard to the substantive law, section 9 Patent Act provides that if an invention that was made by an employee in the course of his employment relationship is also used abroad, the amount of reasonable compensation for an infringement of the right to obtain the patent by the employer may be greater.

3.4  The Law Applicable to Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in Austria, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before an Austrian court arguing that the moral right of integrity of a work has not been transferred and has thus been infringed. It is assumed that an Austrian court has international jurisdiction.

3.4.1  The Enforceability of a Choice of Law Agreement Would the Austrian court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors?

In Austrian civil law, the transfer of a right consists of two agreements. The first is the agreement to transfer the right.286 The main characteristic of this agreement is that it imposes on the transferor the obligation to transfer his right to the transferee. Regularly, the agreement to transfer is a sales contract. The second agreement is the transfer itself.287 The main characteristic of this agreement is that the transferor transfers his right to the   See above 3.3.1.   cf Drexl, above n 6, no 184. 286   In German: Verpflichtungsgeschäft. 287   In German: Verfügungsgeschäft. 284 285

Austria  279 transferee. Thus, this agreement affects the right as such. Despite this property aspect, the transfer itself is an agreement: the transferor offers to transfer the right and the transferee accepts this offer. As a result, only if the transferor has effected both the agreement to transfer and the transfer itself, is the right transferred. Thus, in our hypothetical case, the question of whether a choice of law clause regarding the ‘transfer’ of the economic and moral rights of the author is enforceable touches upon two questions: would the court enforce such a clause with regard to the agreement to transfer, and would it enforce the clause with regard to the transfer itself?288 Whether an Austrian court has to deal with both questions or only with one of them depends on the individual lawsuit. For the purpose of this hypothetical case, however, both questions shall be answered. For the agreement to transfer, the solution is quite simple. The agreement imposes on the transferor the contractual obligation to transfer his right to the transferee. Article 3 Rome I honours a choice of law agreement provided that at least one element relevant to the situation is located at the time of conclusion of the agreement in a country other than the one whose law would apply in the absence of a choice of law agreement. As this element could also be the choice of a foreign law, this requirement is regularly met.289 There is, however, one limitation: if all the elements are located in one and the same country, but the parties choose the law of a different country, this choice is enforceable only to the extent that it does not run counter to the mandatory rules of the country where all these elements are located.290 The purpose of this limitation is to guarantee that in a situation where the choice of a foreign law is the only element that is located in a different country, the parties cannot derogate from the mandatory rules of the country where all the other elements are located. In our hypothetical case, A arguably is a resident of Austria, whereas B is a nonresident. Further, the album is distributed in country Y. Thus, the elements relevant to the situation other than the choice of law are arguably neither located all in Austria nor all in one and the same other country. As a result, the limitation of the law chosen by the parties to its non-mandatory rules only does not apply. Another limitation, however, may follow from Article 9(2) Rome I. This provision provides that the overriding mandatory provisions of the lex fori apply even if the parties have chosen a different law. In our context, such a provision could be section 23(3) Copyright Act, which declares that copyright is not transferable.291 This provision applies to both the moral and the economic rights conferred on the author. One may argue, however, that this provision applies only to the issue of transferability, and thus does not affect the validity of the agreement to transfer. Be this as it may, in any event this provision does not amount to an overriding mandatory provision as such provisions have to aim at safeguarding the public interests of a country.292 By contrast, the purpose of section 23(3) Copyright Act is to balance private interests, that is, those of the author and those of the users. As a result, if the parties choose Austrian law for the agreement to transfer, that choice is enforceable to its fullest extent in Austria. The same applies if they choose the law of a different country.   cf Verschraegen, above n 4, § 34 IPRG no 15.   cf Musger, above n 9, Art 1 Rom I no 4. 290   Art 3(3) Rome I. 291   As a mandatory provision of Austrian copyright law, it cannot be derogated from in the case of employment contracts and contracts where all relevant elements are located in Austria, see Arts 3(3) and 8(1) Rome I. See above, 2.5.1. The mandatory character of this provision, however, does not automatically mean that it is also an overriding mandatory provision for the purpose of Art 9 Rome I. 292   cf Schack, above n 24, no 1291; Stimmel, above n 10, 791; but see Walter, above n 26, no 23. 288 289

280  Thomas Petz Compared to the agreement to transfer, the solution as regards the transfer itself is more complicated. The reason for this is the ambiguous nature of this agreement. On the one hand it is an agreement, as the transferor offers to transfer the right and the transferee accepts this offer. On the other hand it does not impose obligations on the parties, but affects the property aspects of the right. This ambiguity makes the characterisation of the transfer itself a difficult task. Those who emphasise the fact that it is an agreement are inclined to conclude that Rome I is applicable, whereas those who emphasise the fact that the agreement does not impose any obligations may come to the conclusion that Rome I is not applicable.293 Which way of characterising the transfer itself is the proper one has to be determined by an autonomous interpretation of Rome I. This means in particular that no recourse may be made to the law of the country where the court is seated (lex fori). For the purpose of this hypothetical case it suffices to recall that as elaborated above, Rome I does not apply to the transfer itself.294 This does not solve the problem of characterisation, though, but only shifts it to the domestic conflict rules. Here, the starting point is section 35(1) PIL Act. This provision provides that the law designated by the parties governs all contractual obligations to which Rome I is not applicable. The wording and the purpose of this provision, however, already indicate that it is not applicable to the transfer itself. Its wording employs the same notions as Rome I, in particular the notion of ‘contractual obligations’. Rome I, however, does not apply to the property aspects of intellectual property rights.295 From this it follows that the notion of ‘contractual obligations’ in Rome I does not cover the transfer itself. By referring to this language, section 35(1) PIL Act also picks up this construction. As a result, as Rome I does not consider the transfer itself to be a ‘contractual obligation’, it is also not a ‘contractual obligation’ for the purpose of section 35(1) PIL Act. This conclusion is also mandated by the purpose of section 35(1) PIL Act, which is that this provision should apply to situations to which Rome I does not apply in view of the exceptions of Article 1(2) Rome I.296 In addition to its wording and purpose, the contents of section 35(1) PIL Act also indicates that it does not apply to the transfer itself of an intellectual property right. In this context, it has to be recalled that the main argument for applying the lex contractus rather than the lex loci protectionis to the transfer itself is that it ensures that the same law applies to both the agreement to transfer and the transfer itself.297 This aim is only achieved, however, if the law applicable to the transfer itself cannot be chosen separately. As nothing in section 35(1) PIL Act bars such a separate choice of law, this argument fails. Rather than a single law, three laws could apply, the first governing the transferability of the intellectual property right,298 the second the agreement to transfer and the third the transfer itself. This seems inappropriate, and it is not surprising that until now this approach has not been endorsed. As a result, section 35(1) PIL Act is not applicable to the transfer itself. In this case, section 34(1) PIL Act has to be considered next. This provision provides that the existence, the contents and the termination of intellectual property rights shall be   See above, 2.4.1.  ibid. 295  ibid. 296   Explanatory Remarks to the Proposal of the Federal Government 322 BlgNR 24 GP, 3. Cf also H Heiss, ‘Rom I und II: Vorschlag für ein österreichisches Anpassungsgesetz unter Berücksichtigung der neuen Richtlinien 2008/48/EG und 2008/122/EG’ (2009) Zeitschrift für Rechtsvergleichung 18, 19–20. 297   cf for Austrian law before the entry into force of Rome I Schwimann 1992, above n 4, § 43 IPRG no 2. 298   See below 3.4.2. 293 294

Austria  281 governed by the law of the country for which protection is claimed.299 As demonstrated above, however, as a general rule, choice of law is not permitted if the applicable law is determined by section 34(1) PIL Act.300 Thus, the law governing the transfer itself cannot be chosen by the parties. This result is in line with the solution for real property.301

3.4.2 Transferability How will the Austrian court deal with the issue of transferability?

As demonstrated above, Rome I does not apply to the transferability of a right because transferability touches upon a property aspect of that right.302 Thus, recourse to the domestic conflict rules has to be made. Section 34(1) PIL Act provides that the law of the country for which protection is claimed applies to the existence, the contents and the termination of intellectual property rights. The transferability is considered to be an issue of the contents of an intellectual property right and thus covered by this provision.303 Choice of law regarding the contents of a right is not permitted. Thus, as in our hypothetical case protection is claimed for Austria, the transferability of the copyright is determined by Austrian law.304 Austrian copyright law prohibits the transfer of the economic and moral rights of the author. This follows from section 23(3) Copyright Act which declares copyright to be not transferable. This not only applies to copyright as such, but also to the individual economic and moral rights which, taken together, constitute the copyright. Thus, in our hypothetical case the transfer of these rights for Austria is invalid even if the court concludes that the agreement to transfer is valid.305 In this case, the question arises which effects such a valid agreement has. These effects have to be determined primarily by considering the mutual intentions of the parties at the time of the conclusion of the agreement. Obviously, both of them wanted to confer as many rights as possible on B, the recording company. In Austrian copyright law, this is achieved by granting an exclusive licence. Consequently, the intentions of both A and B are honoured best if the agreement is construed as such a licence agreement.306

299   For licences, this result is achieved by the Austrian Supreme Court without further discussion simply by characterising the licence for the purpose of § 34(1) PIL Act as an intellectual property right. See OGH 4 Ob 44/92, Schott II (1992) Medien und Recht 194. Contra Schwimann 1992, above n 4, § 43 IPRG no 2. 300   See above 2.5.3; but see n 155. 301   Verschraegen, above n 4, § 31 IPRG no 10; Schwimann 1992, above n 4, § 31 IPRG no 3. 302   See above 2.4.1. 303   cf Verschraegen, above n 4, § 34 IPRG no 17. 304   Whether the Austrian Copyright Act actually applies depends to some extent on the nationality of A. If A is an Austrian national or a national of a Member State of the European Union, the Act applies. For the latter, this follows from the rules of the Act on foreign authors on the one hand and from Art 18 TFEU on the other. Cf ss 94–100 Copyright Act; Cases C-92/92 and 326/92 Phil Collins [1993] ECR I-5145. For all other nationals, the Austrian Supreme Court assumes that the Berne Convention for the Protection of Literary and Artistic Works as revised, in Paris on 24 July 1971, BGBl 1982/319 (hereinafter, Berne Convention) applies. Consequently, unless the defendant argues successfully that the country whose national the plaintiff is is not a Member State of the Berne Convention, the Austrian Copyright Act applies. See OGH 4 Ob 47/06z, Werbefoto (2007) Medien und Recht 28 with case note by M Walter. 305   See above 3.4.1. 306   OGH 4 Ob 53/93, Salzburger Marionettentheater (1993) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 184.

282  Thomas Petz

3.4.3  Absence of a Choice of Law Agreement What would be the applicable law in a case where no choice of law is made by the parties?

The law governing contracts relating to intellectual property rights in the absence of a choice of law is determined by Article 4 Rome I. The structure of this provision is threefold: it contains a list of specific connecting factors for certain types of contracts, determines the characteristic performance as the connecting factor for all the contracts not included in that list respectively for all the contracts that contain elements of several contracts included in the list, and introduces an escape clause for contracts manifestly more closely connected with another country. As indicated above, in the absence of a choice of law agreement, the general rule of Article 4(2) Rome I applies.307 In our hypothetical case, the contract resembles an outright sales contract: A is obliged to transfer its economic and moral rights and B is obliged to pay a lump sum or royalties. What distinguishes this contract from other contracts is the transfer of rights, not the payment. Consequently, the law of the country where A is habitually resident governs the agreement to transfer. Assuming that A did not only play a concert in Austria, but is also habitually resident there, Austrian law would apply to that agreement. Further, as A claims protection for Austria, Austrian law also applies to the issue of transferability. As argued above, because of the untransferability of both the economic and moral rights of the author in Austrian copyright law this requires to construe the agreement to transfer as an exclusive licence agreement.308 A similar technique may be applied, by the way, if we assume that A is habitually resident in a country other than Austria and the copyright law of that country allows A to transfer its economic and moral rights. As the performance characteristic to the contract is effected by A, the law of that country would apply according to Article 4(2) Rome I. To the issue of transferability, however, Austrian law applies because A claims protection for Austria.309 Thus, due to the non-transferability of copyright in Austrian law, the transfer of the economic and the moral rights of A is invalid. In this case, the effects of this invalidity depend on the law applicable to the agreement to transfer.310 These could range from the nullity of the agreement to transfer, to having no effects at all.

4  Jurisdiction, Recognition and Enforcement in Intellectual Property Case by Case As illustrated in the previous parts, the domestic Austrian conflict rules apply only if Rome I and Rome II do not apply. This is also true as regards their counterpart for international   See above 2.3.2.2.   Regularly, however, exclusive licence agreements impose on the licensee a duty to exploit. This does not follow from the exclusivity of the agreement, but from the fact that if the licensee does not exploit, the licensor has no other possibility to exploit his intellectual property right. The duty to exploit, however, is crucial for determining the law applicable to licence agreements, see above 2.3.2.4. Yet, in our hypothetical case, the applicable law is determined based on a transfer of the author’s moral and economic rights. For transfers, the duty to exploit regularly does not matter. By contrast, had the agreement been treated as a licence agreement when determining the applicable law, the duty to exploit could have mandated the application of a different law. On this problem see de Miguel Asensio, above n 10, 213; Mankowski, above n 10, 54. 309   For this reason the question of whether s 23(3) Copyright Act constitutes an overriding mandatory provision is only of minor practical importance. Cf Walter, above n 26, no 23; Stimmel, above n 10, 791. 310   Art 12(1)(a) Rome I. 307 308

Austria  283 jurisdiction and the recognition and enforcement of foreign judgments, that is, Regulation Brussels I.311 As a general rule, however, Article 4(1) Brussels I limits the application of the rules on international jurisdiction laid down in Brussels I to situations where the defendant is domiciled in a Member State of the EU. For the recognition and enforcement of foreign judgments, this limitation is echoed by Article 32 Brussels I, which defines as judgments only those decisions that are rendered by a court of a Member State. These limitations make it necessary for most of our case studies to distinguish different scenarios. That way, potential differences between the regime of Brussels I and the domestic Austrian regime may become visible.312 It must be stressed, however, that the practical importance of the latter is quite minimal compared to that of the first, as most of the countries neighbouring Austria and most of its main trading partners are Member States of the EU.

4.1  General and Special Grounds of International Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single is a mere adaptation of a song released in the 1950s. A files a defamation suit.

At the outset, for a better understanding of the rules on international jurisdiction a brief detour to substantive Austrian law may be helpful. The publication of a defamatory statement does not only constitute a criminal offence, but also gives rise to civil law liability. In general, three different civil law claims may be distinguished: claims for injunctive relief, claims for damages for the monetary loss suffered, and claims for damages for pain and suffering.313 For the first two types of claims, jurisdiction is vested in the civil courts. By contrast, for historic reasons, jurisdiction over the last type of claims is conferred on criminal courts.314 These claims may be advanced in two procedural arrangements.315 The first is 311  For an Austrian perspective on Brussels I, see A Burgstaller and M Neumayr (eds), Internationales Zivilverfahrensrecht (Vienna, LexisNexis, looseleaf); C Brenn, Europäischer Zivilprozess – Leitfaden für das grenzüberschreitende Verfahren in Österreich (Vienna, Manz, 2005); D Czernich and P Mayr, Europäisches Zivilprozessrecht – Eine Einführung (Vienna, Facultas, 2006); Mayr, above n 252; B König and P Mayr (eds), Europäisches Zivilverfahrensrecht in Österreich – Bilanz nach 10 Jahren (Vienna, Manz, 2007); Simotta, above n 225; D Czernich, et al (eds), Kurzkommentar Europäisches Gerichtsstands- und Vollstreckungsrecht, 3rd edn (Vienna, LexisNexis, 2009); B König and P Mayr (eds), Europäisches Zivilverfahrensrecht in Österreich II – 10 Jahre nach dem Vertrag von Amsterdam (Vienna, Manz, 2009); W Rechberger and DA Simotta, Grundriss des österreichischen Zivilprozessrechts, 7th edn (Vienna, Manz, 2009). Further, the writings of German scholars on Brussels I have been rather influential on both Austrian scholarship and Austrian case law. This is particularly true for J Kropholler, Europäisches Zivilprozeßrecht, 8th edn (Frankfurt/Main, Verlag Recht und Wirtschaft, 2005); T Rauscher, Europäisches Zivilprozeßrecht – Kommentar, vol 1, 2nd edn (Munich, Sellier, 2006); Schlosser, above n 247; R Geimer and R Schütze, Europäisches Zivilverfahrensrecht, 3rd edn (Munich, Beck, 2010); B Hess, Europäisches Zivilprozessrecht (Heidelberg, CF Müller, 2010); H Schack, Internationales Zivilverfahrensrecht, 5th edn (Munich, Beck, 2010). For a discussion of Brussels I by scholars from different Member States see U Magnus and P Mankowski (eds), Brussels I Regulation (Munich, Sellier, 2007). 312   On the rules of domestic Austrian law on international jurisdiction see H Fasching, Lehrbuch des österreichischen Zivilprozeßrechts, 2nd edn (Vienna, Manz, 1990); Simotta, above n 249; Mayr, above n 252; Rechberger and Simotta, above n 311. For a special focus on international jurisdiction in the field of intellectual property law see Schönherr, above n 39, no 910–12; Briem, above n 21. 313   If the statement is arguably not only defamatory, but also false, there are two additional remedies available: The revocation of the statement and the publication of the judgment holding that the statement was false. Both claims are considered to be civil law claims. See KH Danzl in Koziol, above n 4, § 1330 ABGB no 5; OGH 6 Ob 312/01b (unpublished). 314   s 40(1) Media Act [Mediengesetz] BGBl 1981/314, amended most recently by BGBl I 2007/112. 315   cf G Zeiler, Persönlichkeitsschutz (Vienna, Manz, 1998) 66.

284  Thomas Petz that the injured person herself initiates proceedings on the liability for pain and suffering before the criminal court in which jurisdiction the publisher of the defamatory statement is domiciled.316 The second approach is that the public prosecutor of the district where the publisher is domiciled initiates criminal proceedings against the publisher.317 He may do so, however, only upon the request of the person whose reputation has been injured. In these proceedings, the injured person may advance her claims for damages for pain and suffering. That way, the court that decides on the publisher’s criminal liability also decides on liability for pain and suffering. The main difference between the two procedural approaches thus is that in the first, only the publisher’s liability for pain and suffering is determined, whereas in the second his criminal liability is also determined. From the perspective of Brussels I, the fact that the claim for pain and suffering has to be advanced before criminal courts does not matter: A claim qualifies as a civil law claim even if it is advanced before a criminal court unless the defendant is to be regarded as a public authority which acted in the exercise of its powers.318 Consequently, Brussels I applies to all three types of civil law claims that may be advanced by plaintiff A on the basis of substantive Austrian law. Thus, the solutions to the hypothetical cases developed below apply to all three types of claims unless indicated otherwise.319

4.1.1  Jurisdiction at the Domicile of a Natural Person Would an Austrian court have international jurisdiction if the defendant B had his domicile320 in Austria?

As regards general international jurisdiction, Brussels I considers the domicile of the defendant to be the connecting factor.321 For natural persons, domicile is determined by recourse to the domestic rules of the country of the court seised.322 If an Austrian court is seised, the respective rules of Austrian procedural law apply. These rules draw a distinction between a person’s domicile and her habitual residence.323 Whereas the latter only requires that the person is permanently present in Austria, the first requires that in addition, she voluntarily intends to stay in Austria. Thus, a person is domiciled in Austria if both an objective and a subjective requirement are met. As in our hypothetical case defendant B is domiciled in Austria, Austrian courts have international jurisdiction over the defamation proceedings initiated by A based on Article 2 (1) Brussels I.324 316   s 8a Media Act. For connecting factors other than domicile on which this jurisdiction may also be based see s 40(1) and (2) Media Act. 317   s 8(1) Media Act. 318   Case C-172/91 Sonntag [1993] ECR I-1963; Simotta, above n 225, Art 1 no 41. 319   cf below 4.1.3. 320   This hypothetical case originally referred to residence rather than domicile. This is in line with the current approach in the fields of international jurisdiction and conflict of laws to consider the habitual residence as the connecting factor. Brussels I, however, is outdated in this regard as it still considers domicile to be the connecting factor. For a criticism on this, see Schlosser, above n 247, Art 59 no 1. In the hypothetical case, if B was only resident but not domiciled in Austria, Austrian courts would not have general international jurisdiction because Art 2 Brussels I would be inapplicable. As a result, Austrian courts would have international jurisdiction only if the infringing activities occurred in Austria. Thus, there would be no difference to the hypothetical case below in 4.1.3. To avoid such a redundancy, this hypothetical case is thus modified so that if B is a natural person, he is not only resident, but also domiciled in Austria. 321   Art 2(1) Brussels I. 322   Art 59(1) Brussels I. 323   s 66 Civil Jurisdiction Act. 324   On whether the plaintiff is entitled to claim damages for pain and suffering, see below n 355.

Austria  285

4.1.2  Jurisdiction at the Main Place of Business of a Corporation Would the decision regarding international jurisdiction of the Austrian court differ if the defendant was a corporation having its main place of business in a third country X, but with a branch located in Austria?

Austrian courts have international jurisdiction for defamation proceedings advanced against a legal person, such as a corporation, if this person is domiciled in Austria.325 Contrary to natural persons, the domicile of a legal person is determined without recourse to the rules of domestic law. Article 60 Brussels I considers a legal person to be domiciled at its statutory seat, its central administration or its principal place of business. By recognising three different domiciles, this provision entitles the plaintiff to choose where to sue the legal person. In our hypothetical case, however, B has only a branch in Austria. Thus, absent of a domicile of the defendant in Austria, Austrian courts do not have general international jurisdiction. They may, however, have special international jurisdiction as B has established a branch in Austria. This requires us to distinguish two scenarios. In the first scenario, the defendant is domiciled in a Member State of the European Union other than Austria. In this case, Austrian courts may have jurisdiction based on Article 5(5) Brussels I. This provision confers special international jurisdiction for those disputes that arise out of the operations of a branch on the courts of the country in which the branch is established. Thus, two requirements have to be met to vest jurisdiction in Austrian courts. First, the defendant has to be domiciled in a Member State other than Austria. Whether this is the case is determined by Article 60 Brussels I. Consequently, the defendant has to have either his statutory seat, or his central administration, or his principal place of business in such a country. Second, the dispute has to arise out of the operations of the Austrian branch. The existence of such a link between the dispute and the operations of the branch has to be argued by the plaintiff at the jurisdictional stage.326 For tort claims, the dispute is considered to arise out of the operations of the branch if it results from the activities of the branch or its personnel.327 Thus, the mere fact that a branch has been established does not suffice to confer jurisdiction on the courts of the country where it is situated. In our hypothetical case, this means that the defamatory statement has to be published by the Austrian branch, rather than by its parent body domiciled abroad. Some argue that Article 5(5) Brussels I confers jurisdiction on the courts of the country where the branch is situated only if another requirement is met: the parties have to have entered into a business relationship prior to the dispute.328 In effect, this approach takes the factual set-up that is paradigmatic for disputes on contractual claims brought against the branch by its business partners and requires for all other types of claims that a comparable factual set-up is present. Such a requirement would narrow down this ground of jurisdiction considerably. In particular, for tort claims advanced against a branch, a business relationship between the injured person and the branch prior to the injury exists only rarely. In our hypothetical case, for example, no such prior relationship between A and B is present and consequently, Austrian courts will not have international jurisdiction. The ECJ has not yet ruled on this issue, but only held in rather general terms that tort claims advanced   Art 2(1) Brussels I.   Simotta, above n 225, Art 5 no 404. 327   P Mankowski in U Magnus and P Mankowski (eds), Brussels I Regulation (Munich, Sellier, 2007) Art 5 no 298. 328   Kropholler, above n 311, Art 5 no 111. 325 326

286  Thomas Petz against the branch are covered by Article 5(5) Brussels I.329 At the centre of this controversy seems to be the question of what constitutes the connecting factor in Article 5(5) Brussels I: the relationship of the plaintiff to the branch or the activity of the branch? Those who endorse a narrow construction of this provision stress that the relationship is the connecting factor because the activity already constitutes the connecting factor for matters relating to torts in Article 5(3) Brussels I.330 Contrary to that, those who oppose such a construction stress that it would unduly reduce the practical importance of the special ground of jurisdiction at the place where the branch is established for tort claims.331 As the latter view seems to be the prevailing one, the solution of this hypothetical case shall be based on it. Thus, the existence of a prior business relationship between the plaintiff and the defendant is no requirement. As a result, it suffices for Austrian courts to have special international jurisdiction for the defamation proceedings initiated by A that the defamatory statement is published by the Austrian branch of the defendant.332 In the second scenario, the defendant is domiciled in a third country. In this case, Article 4(1) Brussels I refers to the domestic rules on international jurisdiction of the country whose courts are seised. In our hypothetical case, plaintiff A initiates defamation proceedings in Austria. Consequently, the domestic Austrian rules on international jurisdiction apply. As a general principle, these rules link international jurisdiction to personal jurisdiction: if an Austrian court has personal jurisdiction for a particular dispute, it also has international jurisdiction.333 Thus, the starting point for any analysis of international jurisdiction is personal jurisdiction. For personal jurisdiction over the activities of a branch, the general rule is that the court at the place where the branch is established has such jurisdiction for all disputes which relate to the business activities of that branch.334 For the publication of defamatory statements in media, however, there is a special rule that confers personal jurisdiction for claims advanced against a business established in Austria or persons acting on behalf of such a business on the courts at the place where the business is established.335 This raises the question of to what extent a ‘business’ differs from a ‘branch’. For the purpose of determining international jurisdiction at least, these terms are considered to be synonyms. Consequently, the same definition applies to both: they are independent commercial enterprises that are established on a continuing basis.336 This indicates that the special rule on the publication of defamatory statements in media is only an expression of the general rule, not an exception to it. Thus, the requirements set up by the latter also apply to the first. This concerns in particular the requirement of a link between the dispute and the activities of the business. The existence of such a link has to be established by the plaintiff. Regularly, disputes concerning the conclusion and the performance of a contract by the business are considered to relate to its activities. The same applies to disputes concerning torts commit  Case C-33/78 Somafer [1978] ECR 2183.   Kropholler, above n 311, Art 5 no 111. 331   F Pulkowski, ‘Außervertragliche Forderungen “aus dem Betrieb einer Zweigniederlassung” im Sinne von Artikel 5 Nr 5 Luganer Übereinkommen’ (2004) Praxis des Internationalen Privat- und Verfahrensrechts 543, 545; Schlosser, above n 247, Art 5 no 24. See also Mankowski, above n 327, Art 5 no 298 (focusing on direct harm). 332   If one endorses the narrow construction of Art 5(5) Brussels I, the same result would be reached by applying Art 5(3) Brussels I. Thus, the controversy is primarily of academic importance. 333   s 27a Civil Jurisdiction Act. 334   s 87(2) Civil Jurisdiction Act. 335   s 83c(1) Civil Jurisdiction Act; Simotta, above n 249, § 83c JN no 3. This rule also applies to intellectual property rights and acts of unfair competition. 336   OGH, Okt 11/74, Tankstellenkauf (1974) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 69; Simotta, above n 249, § 83c JN no 4. 329 330

Austria  287 ted by the business or its personnel in the course of its activities. The crucial issue thus is whether the defamatory statement was published by the business established by B in Austria. If the plaintiff succeeds in establishing this, Austrian courts have personal jurisdiction and thus international jurisdiction. Thus, like under the Brussels I regime, the fact that the defendant has established a business in Austria does not suffice for conferring international jurisdiction on the Austrian courts. In sum, under both the Brussels I regime and the domestic Austrian regime, Austrian courts have international jurisdiction over the defamation proceedings advanced by plaintiff A if the Austrian branch of defendant B has published the defamatory statement.337 If this is the case, the solution to this hypothetical case does not differ from that of the first hypothetical case – with the exception that this jurisdiction is a special one, not a general one.338 Under Brussels I at least, this distinction may be decisive for the extent of jurisdiction.339

4.1.3  Jurisdiction Based on Distribution in Austria Would an Austrian court have international jurisdiction if the copies of the journal were distributed in Austria, in the language which is officially spoken?

This hypothetical case leads to results different from those of the first one only under the assumption that the defendant is not domiciled in Austria.340 Otherwise, Austrian courts would have general international jurisdiction based on Article 2 Brussels I and thus, there would be no need to consider whether the place of infringement confers special international jurisdiction on them. Further, again a distinction has to be made depending on the defendant’s domicile, as different rules apply to defendants domiciled in a Member State and defendants domiciled in a third country. If defendant B is domiciled in a Member State other than Austria, plaintiff A could sue him in that country based on Article 2 Brussels I. Alternatively, in matters relating to tort, A could also initiate proceedings in the country where the harmful event occurred or may occur based on Article 5(3) Brussels I.341 Consequently, Austrian courts have special international jurisdiction if distributing copies of the journal in Austria constitutes the harmful event. The ECJ held in Shevill 342 that the place where the harmful event occurred was either the place where the publisher was established or the place where the publication was distributed and where the victim claimed to have suffered injury to her reputation. This rule, however, proves problematic in the case that distribution in the country whose courts are seised based on that distribution is only minimal in relation to the distribution of the publication in its entirety. To solve such spill-over situations, three approaches have been advanced.343 The first endorses a strict application of Shevill, so that distributing a single copy of a publication in a country suffices for conferring infringement jurisdiction on its courts. This approach, however, neglects that the justification of infringement jurisdiction is the   On whether the plaintiff is entitled to claim damages for pain and suffering see below n 355.   See above 4.1.1. 339   See above 3.2.3 and below 4.1.5. 340   See above n 320. For such a situation concerning trade marks registered in Austria see OGH 4 Ob 327/00t, CYTA (2001) Medien und Recht 194 (with case note by M Pilz). 341   OGH 4 Ob 110/01g, BOSS-Zigaretten I (2001) Medien und Recht 320. 342   Case C-68/93 Shevill [1995] ECR I-415. 343   cf Case 509/09 eDate Advertising (referred by the German Bundesgerichtshof) (2010) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 425. 337 338

288  Thomas Petz presence of a substantial link between the allegedly infringing activities and the forum. The second approach focuses on the reputation of the injured person. As her reputation may only be harmed if the person is known in the country where the distribution took place, this approach regularly confers jurisdiction on the courts of the country where the plaintiff is domiciled or habitually resident. Against this approach may not only be advanced that it in effect creates a forum actoris, but also that it neglects the fact that a person could become known in the country of distribution by the distribution of the defamatory statement itself.344 This leaves us with the third approach. Under this approach, infringement jurisdiction is conferred only if it follows from the circumstances of the distribution that it was directed to a particular country. In this regard, the language of the defamatory statement may matter.345 As we have argued above, we endorse an approach which focuses on the objective intentions of the alleged infringer, but with a slight modification: it is the alleged infringer who has to argue that he did not direct the distribution of the publication to the country of the court seised.346 As a result, in our hypothetical case, Austrian courts have infringement jurisdiction based on the distribution of the defamatory statement in Austria, provided that its distribution was not directed to a different country.347 What has been said so far holds true for all types of claims except those for damages for pain and suffering. For these claims, a distinction has to be made according to the procedural approach by which they are advanced.348 In most cases, the person whose reputation is injured by the publication of the defamatory statement will advance her claims for damages for pain and suffering without requesting the public prosecutor to initiate criminal proceedings.349 The Austrian Supreme Court has considered these claims to be media law claims rather than civil claims.350 Thus, the question arises whether these claims concern ‘civil matters’ as required by Article 1 Brussels I. The principle of autonomous interpretation, however, requires disregarding the characterisation as media law claims in domestic Austrian law in the context of Brussels I.351 This is not only the prevailing view in legal writings352, but is also recognised by Austrian courts as they regularly apply Brussels I to this type of claims.353 Consequently, if the plaintiff opts for this procedure, the international jurisdiction of the Austrian courts is determined by Article 5(3) Brussels I even though the   M von Hinden, Persönlichkeitsverletzungen im Internet (Tübingen, Mohr Siebeck, 1999) 88–96.   As German is the language officially spoken in Austria, most of the spill-over situations concern the distribution of German or Swiss publications in Austria. In such situations, the language is only of little importance, as it cuts both ways. 346   See above 3.2.3. 347   See OGH 6 Nc 17/10t (unpublished). 348   See above 4.1. 349   See OGH 3 Ob 182/08y (unpublished). 350   OGH 14 Os 118, 119/02, Powerplay (2002) Medien und Recht 371. On this decision see M Rami, ‘OGH: Keine Entschädigungsansprüche gegen ausländische Medienunternehmen’ (2002) Medien und Recht 278. As this issue relates to the nature of the claim, it is similar to that of claims advanced before criminal courts. See above 4.1. 351   Simotta, above n 225, Art 5 no 355. 352   U Frauenberger-Pfeiler, ‘Transnationale Deliktsklagen’ (1997) ecolex 74, 76; P Zöchbauer, ‘Medieninhalts­ delikte im Internet – Ein Beitrag zum Anwendungsbereich des österreichischen Medien-(straf-)rechts’ (2002) Medien und Recht 363, 368. See also Introductory Remarks to the 2005 Amendment of the Media Act [Mediengesetznovelle 2005] 29. 353   Court of Appeals Vienna 18 Bs 287/06x, Kristall-Erbin (2007) Medien und Recht 15. See also with regard to the publication of the judgment resulting from such proceedings OGH 12 Os 135/07f, Eine Frau in Tränen (2010) Juristische Blätter 320 (with case note by P Zöchbauer). But compare OGH 14 Os 118, 119/02, Powerplay (2002) Medien und Recht 371. Applying Art 5 (4) Brussels I to these claims presupposes that the proceedings concern civil matters and regularly, the claims that arise from civil matters are civil claims. For this reason, it may be argued that the requirement of ‘civil claims’ in Art 5 (4) Brussels I does not add anything to the requirement that the proceedings relate to ‘civil matters’ in Art 1 Brussels I. 344 345

Austria  289 court that has subject-matter jurisdiction is a criminal court.354 Thus, in this procedural approach the solution for claims for damages for pain and suffering does not differ from the solution for all other types of claims.355 Alternatively, however, the person whose reputation has been injured by a defamatory statement published in media may request the public prosecutor to initiate criminal proceedings against the publisher. In these proceedings, she may advance her claim for damages for pain and suffering. For these claims, international jurisdiction may be based on a different ground: if civil claims for damages and restitution are based on an act that gives rise to criminal proceedings, Article 5(4) Brussels I confers special jurisdiction for these claims on the court entertaining the criminal proceedings. Thus, in this set-up Austrian courts have jurisdiction over the proceedings advanced by A if two requirements are met. The first requirement is that the claim at stake is a civil claim for damages and restitution. This requirement is of particular importance for our hypothetical case because as just mentioned, in domestic Austrian law, claims for damages for pain and suffering arising from the publication of a defamatory statement are characterised as media law claims rather than civil claims. However, as for ‘civil matters’ in Article 1 Brussels I, this characterisation in domestic Austrian law does not affect the application of Brussels I. The claims thus qualify as civil claims within the meaning of Article 5(4) Brussels I as the remedy at which they aim – the award of damages – is a remedy of civil law. Consequently, this special ground of jurisdiction applies to claims for damages for pain and suffering caused by the publication of a defamatory statement in media despite their characterisation as media law claims in domestic Austrian law. The second requirement is that the criminal court seised with the proceedings has jurisdiction to entertain the civil proceedings. Whether this is the case is not determined by an autonomous interpretation of the notion ‘civil proceedings’, but rather by the lex fori.356 Thus, if Austrian criminal courts are seised with the civil proceedings, the domestic Austrian rules on jurisdiction are decisive. There is, however, a split between the civil chambers and the criminal chambers of the Austrian Supreme Court on whether the proceedings concerning claims for damages for pain and suffering are civil proceedings. Whereas the first stress that they are, as they aim at an award of damages357, the latter stress that they aim at imposing a fine, and thus are criminal proceedings.358 Hence, under the approach of the civil chambers Article 5(4) Brussels I would apply whereas under the approach of the criminal chambers it would not. We cannot decide this issue here, but we are inclined to follow the approach of the civil chambers. In this case, we have to determine whether the Austrian criminal courts have international jurisdiction for   Case C-172/91 Sonntag [1993] ECR I-1963.   This is true as regards jurisdiction. There is, however, a considerable difference on the level of substantive law. In Austrian law, damages for pain and suffering may be claimed only if in addition to the distribution of the defamatory statement the plaintiff has certain personal ties to Austria. These ties could be Austrian citizenship, or the establishment of a domicile or habitual residence in Austria. By contrast, no such personal ties are required for the other remedies such as injunctive relief and claims for damages for the monetary loss suffered. This distinction is decisive in our hypothetical case as Austrian law will apply because the distribution in Austria is the event giving rise to the damage. Thus, A may claim damages for pain and suffering only if A is either an Austrian citizen or domiciled or habitually resident in Austria. See s 51 Media Act. See also Court of Appeals Vienna 24 Bs 100/99, Powerplay (1999) Medien und Recht 136. This, by the way, was the rule for all defamation claims before the PIL Act entered into force. See OGH 8 Ob 235/74 Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 48/28. 356   Simotta, above n 225, Art 5 no 353. 357   OGH 7 Ob 19/09h (2010) Recht der Wirtschaft 153; see also Court of Appeals Vienna 27 Bs 268/99, Radio Nuova Carinzia (1988) Medien und Recht 117. 358   OGH 14 Os 75/97 (unpublished); OGH 14 Os 118, 119/02, Powerplay (2002) Medien und Recht 371. 354 355

290  Thomas Petz criminal proceedings advanced against a foreign media company. Again, this depends on the domestic Austrian rules on jurisdiction. For the claims at hand, they have jurisdiction if the defamatory statement was distributed in Austria and the plaintiff has certain personal ties to Austria.359 These ties are Austrian citizenship or the establishment of a domicile or habitual residence in Austria.360 Under two assumptions, therefore, Austrian criminal courts have international jurisdiction based on the fact that the claims for damages are advanced in criminal proceedings concerning the same defamatory statement. The first assumption is that upon the request of plaintiff A the competent Austrian public prosecutor initiates criminal proceeding against B, the second is distribution in Austria and personal ties of the plaintiff to Austria.361 If the defendant is domiciled in a third country, Austrian courts have international jurisdiction based on Article 4(1) Brussels I if this follows from the domestic Austrian rules on international jurisdiction. These rules provide that, as a general principle, Austrian courts have international jurisdiction if they have personal jurisdiction. For defamatory statements published in media, personal jurisdiction is conferred on the courts of the place where the event giving rise to the damage occurred.362 In the case of a defamatory statement, that event is its publication. Thus, if in our hypothetical case the statement was published in Austria, Austrian courts would have international jurisdiction. Alternatively, if the publication takes place abroad, but the statement is also distributed in Austria, the distribution in Austria is considered to be the event giving rise to the damage.363 This, however, applies only if the distribution of the publication was directed to Austria – which is not the case if only a single copy is distributed there.364 Again, as the same arguments made as regards Brussels I apply, we consider the proper solution to the problem of spill-over situations under the domestic Austrian regime to be the same.365 For our hypothetical case this means that even if the defamatory statement was not published in Austria, Austrian courts would have international jurisdiction based on its distribution in Austria provided that the distribution of the publication was not directed to a country other than Austria. As under the Brussels I regime, different rules apply for claims for damages for pain and suffering arising from the publication of a defamatory statement also if the defendant is domiciled in a third country. However, there is an important difference: whereas Article 5(3) Brussels I prevails over the domestic rules providing for special jurisdiction for claims for damages for pain and suffering because of its Community law nature, the opposite is true under the domestic Austrian regime. Thus, these special jurisdictional rules prevail over those providing for infringement jurisdiction at the place where the harmful event occurred. As a result, they apply regardless of the procedural set-up in which the plaintiff advances these claims. Consequently, Austrian criminal courts have international jurisdiction if the journals were distributed in Austria and the plaintiff has certain personal ties – citizenship, domicile or habitual residence – to Austria. Thus, the mere fact that the defamatory statement has been distributed in Austria does not suffice for conferring juris  ss 40(2), 51 Media Act.   s 51 No 2 Media Act. 361   As regards the applicable law, see above, n 355. In short, as the same requirements apply on both the level of jurisdiction and the level of substantive law, if Austrian criminal courts have jurisdiction, the plaintiff may also claim damages for pain and suffering. See s 51 Media Act. 362   s 83c(1) Civil Jurisdiction Act. 363   s 83c(3) Civil Jurisdiction Act. 364   Simotta, above n 249, § 83c JN no 18. 365   See above 3.2.3. 359 360

Austria  291 diction on the Austrian courts. Only if we assume that the plaintiff also had personal ties to Austria would Austrian courts have international jurisdiction. To sum up, Austrian courts have special international jurisdiction for all claims arising out of the publication of the defamatory statement by B. Under both the Brussels I regime and the regime of domestic Austrian law, a distinction has to be drawn between claims for damages for pain and suffering arising from the publication of a defamatory statement in media on the one hand, and all other types of claims on the other. As regards the latter, Austrian courts have jurisdiction if the defamatory statement has been distributed in Austria and the distribution of the publication has not been directed to a country other than Austria. By contrast, as regards the first type of claims, no such intention-based distribution is required. Rather, it suffices that a single copy of the defamatory statement is distributed in Austria. In addition to this minimal distribution, however, it is required that the plaintiff has personal ties to Austria. These ties could be Austrian citizenship or the establishment of a domicile or habitual residence in Austria. The latter requirement, however, does not apply if the defendant is domiciled in a Member State other than Austria and the plaintiff chooses not to request the public prosecutor to initiate criminal proceedings. In this case, the same regime as for the other types of claims applies. Thus, instead of the plaintiff having personal ties to Austria, it is required that the distribution of the publication is not directed to a country other than Austria. Finally, the language of the defamatory statement may matter on two levels. On the level of international jurisdiction, it is one of the factors that the Austrian court may take into account when determining whether the distribution of a defamatory statement was directed to a country other than Austria. On the level of substantive law, it may matter when determining whether the defamation claim advanced before an Austrian court is conclusive. In my view, the mere fact that the language of the defamatory statement is not spoken in Austria does not make the claim inconclusive.

4.1.4  Jurisdiction Based on Distribution Abroad Would the decision differ if the journal was printed in Austria for distribution in neighbouring country X in a language which is not spoken in Austria?

Again, two scenarios have to be distinguished. In the first scenario, the defendant is domiciled in a Member State other than Austria. In this case, the solution depends on whether the mere act of printing a defamatory statement already amounts to a ‘harmful event’ as required by Article 5(3) Brussels I. This touches upon the more general question of how to determine which event in a chain of events constitutes the harmful one. In this respect, three approaches may be advanced.366 The first approach is to consider any event in such a chain to be the harmful one. This would give considerable leeway to the plaintiff to single out a particular event and sue at the place where that event occurred. Under this approach, in our hypothetical case an Austrian court would have international jurisdiction even though the defamatory statement has not been distributed in Austria. The second approach is to consider the last event in the chain of events to be the harmful one. This approach would on the one hand limit to some extent the discretion of the plaintiff, but could lead to jurisdiction at a place that is only remotely related to the damage on the other. In our hypothetical case, it would not confer international jurisdiction on Austrian courts as the last event, that is, the 366   See Mankowski, above n 327, Art 5 no 214–16; von Hinden, above n 344, 54–60; Schack, above n 311, no 334–43; Lurger, above n 28, 110; for intellectual property rights see above 3.2.3.

292  Thomas Petz publication of the defamatory statement, did not occur in Austria. Finally, the third approach is to make recourse to substantive law. The proponents of this approach, however, advance different views as regards the methodology. Some do not specify the applicable law, but simply refer to the object of legal protection, others propose to apply the law of the country of the court seised, that is, the lex fori, and others again suggest determining the applicable law according to the conflict rules of the country whose court is seised (lex causae). The latter approach seems to be the prevailing one and it is also the preferable one.367 Applied to our hypothetical case, under this approach the result depends on the substantive rules on defamation of the country to which the Austrian conflict rules refer. As the proceedings concern defamation claims, Rome II does not apply.368 Consequently, recourse to the domestic Austrian conflict rules has to be made. These rules provide for the application of the law of the country where the event allegedly giving rise to the damage occurred.369 In case of a publication of a defamatory statement, there are two such events. The first is the decision on the publication of the defamatory statement.370 Consequently, Austrian substantive law would apply if the statement was not only printed in Austria, but also the decision on its publication was taken there. As such decisions are regularly taken at the publisher’s principal place of business, Austrian law applies only if this place is located in Austria. In this case, however, Austrian courts will regularly assume jurisdiction based on the publisher’s domicile in Austria rather than on his allegedly infringing activities.371 Thus, for our hypothetical case to make sense, we have to assume that the publisher’s principal place of business is located in a Member State other than Austria. The second event giving rise to the damage is the publication of the defamatory statement.372 As the statement was only printed, but not published, in Austria, the law of the country of publication applies. In our hypothetical case, this is the law of country X. As a result, it thus depends on the substantive rules on defamation of either the country where the publisher has established his principal place of business or the country where the defamatory statement was published whether printing a defamatory statement already amounts to defamation.373 If it does, the Austrian court seised may assume jurisdiction based on the fact that the ‘harmful event’ arguably occurred in Austria; if it does not, the court has to decline its jurisdiction.374 367   Case C-68/93 Shevill [1995] ECR I-415, 41; OGH 4 Ob 110/01g, BOSS-Zigaretten I (2001) Medien und Recht 320 (determining the infringing activity based on the applicable law in trade mark infringement proceedings). Compare also with regard to Art 5(1) Brussels I Case C-12/76 Tessili [1976] ECR 1473 as recently restated by the ECJ in Case C-533/07 Falco Privatstiftung [2009] ECR I -3327, 47 and 55. Thus, such a solution does not run counter to the principle of autonomous interpretation of Brussels I. But see Case C-364/93 Marinari [1995] ECR I-2719, 18. 368   Art 1(2)(g) Rome II. See Neumayr, above n 4, Art 1 Rom II no 7. 369   It is controversial whether this follows from ss 13(2) or 48(1) PIL Act. See OGH 6 Ob 283/01p, M Omofuma (2002) Medien und Recht 288; OGH 6 Ob 321/04f, Holocaust am Teller (2006) Medien und Recht 366. The main difference between these two provisions is that the latter contains an escape clause which allows for the application of a law of a country that is more closely connected to the situation. In particular, this could lead to the application of the law of the country. Where the damage occurred. See Schwimann, above n 1, 77; Neumayr, above n 4, § 48 IPRG no 3. The Austrian Supreme Court, however, reduced this difference by construing the notion ‘event giving rise to the damage’ to cover also the distribution of a defamatory statement. See OGH 4 Ob 89/92, Macht und Magie (1995) Medien und Recht 55. 370   von Hinden, above n 344, 60; Thiede, above n 179, no 15/39. 371   See above 4.1.1 (natural persons) and 4.1.2 (corporations). 372   OGH 4 Ob 89/92, Macht und Magie (1995) Medien und Recht 55. 373   This applies, of course, only under the condition that the conflict rules of these countries accept the reference of the Austrian conflict rules. 374   In Austrian substantive law, the tort of defamation requires that the defamatory statement is communicated to, least one person other than the injured person herself. See OGH 6 Ob 37/95, Herr Holle I (1997) Medien und Recht 202; Danzl in Koziol, above n 4, § 1330 ABGB no 5. Contra R Reischauer in P Rummel (ed), Kommentar zum

Austria  293 This applies to all claims advanced based on Article 5(3) Brussels I including those for damages for pain and suffering based on the Media Act. Similarly, if the plaintiff requests the public prosecutor to initiate criminal proceedings against a foreign media company and advances the latter claims in these criminal proceedings as also in this procedural setup, Austrian courts have jurisdiction only if the publication has been distributed in Austria.375 As under the applicable Austrian rules on criminal jurisdiction printing is not distributing, Austrian courts do not have international jurisdiction for these claims based on Article 5(4) Brussels I. In the second scenario, the defendant is domiciled in a third country. In this case, Austrian courts have international jurisdiction based on two special grounds of jurisdiction, jurisdiction for defamation proceedings on the one hand and jurisdiction for tort proceedings on the other. As regards the first ground of special jurisdiction, Austrian courts have jurisdiction if the defendant has either established a business in Austria or has acted in the course of a business established there.376 The crucial question thus is whether the fact that the journals have been printed in Austria suffices for establishing a business in Austria. If B has his own printing facilities in Austria, it seems so. If, however, he has only arranged for the printing to be done in Austria, but a third person has actually printed the journals there, it does not. No further assumptions in this regard are required, however, because this ground of jurisdiction applies only to defamatory statements that have been published. The crucial issue thus is publication. Once such a statement has been published, even preparatory activities of a third party may be covered by this ground of jurisdiction.377 However, as printing is not publishing, this ground of jurisdiction does not apply.378 This leaves the plaintiff with the special ground of jurisdiction over tort proceedings. For such proceedings, international jurisdiction is conferred on the courts at the place where the event giving rise to the damage occurred.379 This ground of jurisdiction, however, is limited in two regards. First, it is limited to claims for damages. Consequently, claims for injunctive relief may not be based on this ground. Second, it is limited to certain causes of action, that is, loss of life, infliction of bodily harm, deprivation of personal freedom and damage to tangible goods. Thus, it does not apply to defamation suits. Consequently, international jurisdiction can neither be based on the special ground of jurisdiction for defamation claims nor on the special ground of jurisdiction for tort claims. As a result, Austrian courts do not have international jurisdiction to hear the defamation proceedings initiated against defendant B. For the reasons that have just been outlined with regard to Brussels I, this applies also to claims for damages for pain and suffering regardless of whether they are advanced in civil proceedings or criminal proceedings. To sum up, in this hypothetical case, Austrian courts do not have international jurisdiction. The argument is the same for Brussels I and the domestic Austrian rules on jurisdiction: the crucial event is the publication of the defamatory statement. In relation to this, Allgemeinen bürgerlichen Gesetzbuch, vol 2, Pt 1, 3rd edn (Vienna, Manz, 2002) § 1330 ABGB no 1. If the statement is only printed in Austria but not published there, this requirement is not met. Thus, printing a defamatory statement does not itself constitute the ‘harmful event’ for the purpose Art 5(3) Brussels I. See OGH 4 Ob 146/04f, Stahlreport (2004) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht no 72 (implying that sending a defamatory fax does not constitute the harmful event). 375   s 51 Media Act. See in detail above 4.1.3. 376   ss 27a, 83c(1) Civil Jurisdiction Act. 377   cf OGH 4 Ob 19/91, Tele-Uno III (1991) Medien und Recht 195. 378   s 51 Media Act. 379   ss 27a, 92a Civil Jurisdiction Act.

294  Thomas Petz printing is only a preparatory act. As such, it does not suffice to confer international jurisdiction. Further, absent of jurisdiction of the Austrian courts, the issue of the language in which the defamatory statement is published does not arise.

4.1.5  Jurisdiction and the Amount of Damages Awarded Under Austrian law, would domicile of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published?

Article 2 Brussels I confers on Austrian courts general international jurisdiction to award damages for all the harm caused by the publication of a defamatory statement if the defendant is domiciled in Austria. Consequently, the question of whether other grounds of international jurisdiction confer jurisdiction to a similarly far-reaching extent becomes only relevant if the defendant is not domiciled in Austria. In this case, again a distinction has to be made as regards the defendant’s domicile. If the defendant is domiciled in a Member State other than Austria, Article 5(3) Brussels I vests jurisdiction for claims for damages for the harm caused by the publication of a defamatory statement in the courts of the country where the event giving rise to the damage occurred. In Shevill, the ECJ held that this could be either the country where the publisher is established or the country in which the publication was distributed and where the victim has suffered injury to her reputation. Based on this distinction, the Court concluded that the courts of the country of establishment have international jurisdiction for all the harm caused by the publication of the defamatory statement, whereas the courts of the country of distribution only have jurisdiction in respect of the harm caused in that country. The reason for this is the assumption of a link between the infringing activities for which jurisdiction is granted and the extent of the jurisdiction conferred on the court. Thus, if the defamatory statement is only distributed in Austria, Austrian courts do not have jurisdiction in respect of the overall damage.380 This reveals that the crucial issue is whether jurisdiction in the country of establishment amounts to a ground of jurisdiction different from that at the defendant’s domicile. Only if this is the case can the plaintiff claim the overall damages in a country other than that where the defendant is domiciled. In Shevill, the ECJ stressed that even though both grounds of jurisdiction are different, they will regularly coincide.381 As regards the place where a publisher is established, the court focused on the activities of the defendant such as the place where the harmful event originated from, where the libel was issued from, and where it was put into circulation.382 Taken together, these factors indicate that a publisher is established where substantial activity in relation to the entire harm has occurred. The decisive criterion thus is a qualitative one which focuses on the activities of the defendant. As these factors may point to a country other than the one where the defendant is domiciled, domicile indeed is not required for the court to have international jurisdiction over claims for the overall damage sustained in all countries where the defamatory statement has been distributed. Rather, there is also international jurisdiction to this extent in the country where the defendant has substantially acted.   See above 3.2.3.   Case C-68/93 Shevill [1995] ECR I-415; Kropholler, above n 311, Art 5 no 84.   Case C-68/93 Shevill [1995] ECR I-415, 33.

380 381 382

Austria  295 For claims for pain and suffering, a different regime applies – but only if the plaintiff requests the public prosecutor to initiate criminal proceedings and advances her claims in these proceedings.383 In this case, Article 5(4) Brussels I confers international jurisdiction on Austrian criminal courts because the civil claim is arising out of the same act as the criminal proceedings. On its face, this jurisdiction seems to be unlimited. A limitation, however, follows from the domestic Austrian rules on jurisdiction for the criminal proceedings. These rules require not only that the defamatory statement was distributed in Austria, but also that the plaintiff has qualified personal ties to Austria. These ties are either Austrian citizenship or the establishment of a domicile or habitual residence in Austria. Thus, if in our hypothetical case A has such ties to Austria, the Austrian criminal courts have jurisdiction for the entire damages for pain and suffering even if the defendant is not domiciled in Austria. One could argue, however, that this jurisdiction is limited to the distribution of the defamatory statement in Austria and this limitation also applies to the claim for damages. As the necessity of a link between the acts for which jurisdiction is granted and the extent of the jurisdiction has been recognised in Shevill, this seems to be the preferable solution. Thus, the extent of international jurisdiction of the Austrian courts is limited to those damages which relate to pain and suffering in Austria only.384 If the defendant is domiciled in a third country, international jurisdiction is determined by recourse to the domestic Austrian rules.385 As a matter of principle, Austrian courts have international jurisdiction if they have personal jurisdiction.386 In proceedings concerning the publication of a defamatory statement, Austrian courts have personal jurisdiction if these claims are advanced against a business established in Austria or persons acting on behalf of such a business.387 A ‘business’ is any independent commercial enterprise that is established on a continuing basis.388 Similar to the ‘establishment’ under Article 5(3) Brussels I, the ‘business’ of a defendant will often coincide with his domicile. There are situations, however, where the defendant has established a business in Austria, but is domiciled in a third country. For a legal person, this is the case if it has both its statutory seat and its place of central administration in a third country, but produces and publishes its journals in Austria.389 For a natural person, this is the case if she is domiciled in a third country bordering Austria, such as Liechtenstein, and running her media business in Austria. In both cases, Austrian courts have international jurisdiction for the entire harm based on the facts that the defendant has established a business in Austria and that business has published the defamatory statement. Absent a media business established in Austria, Austrian courts have special international jurisdiction if the event giving rise to the damage occurred in Austria.390 The crucial issue thus is what constitutes the event giving rise to the damage in a chain of events. One event in this chain is the conception and production of the defamatory statement, another event its distribution, which may take place in Austria and elsewhere. Thus, the last event in   On this procedural approach see in detail above 4.1.3.   In practice, this restriction is only of minor importance because damages for pain and suffering may be claimed only up to a maximum amount fixed by law, and this amount is rather low. See s 6(1) Media Act. 385   Art 4(1) Brussels I. 386   s 27a Civil Jurisdiction Act. 387   s 83c(1) Civil Jurisdiction Act; Simotta, above n 249, § 83c JN no 3. 388  OGH Okt 11/74, Tankstellenkauf (1974) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 69; Simotta, above n 249, § 83c JN no 4. 389   For a comparable solution in a domestic case see OGH 4 Ob 2377/96d, News (1997) Medien und Recht 207 and OGH 4 Ob 2379/96y, Adoptivkinder (1998) Medien und Recht 15. 390   s 83c(1) Civil Jurisdiction Act. 383 384

296  Thomas Petz this chain, the distribution, may occur in different countries. Consequently, if distribution is considered to be the event giving rise to the damage, the question arises whether distribution in Austria confers jurisdiction for the entire harm on the Austrian courts, even though the defamatory statement has also been distributed abroad. Contrary to Brussels I, both issues, the determination of the event giving rise to the damage and possible limitations on jurisdiction under domestic Austrian law, have not yet been subject to much discussion. The starting point of our analysis thus is our conclusion reached above that Austrian courts have infringement jurisdiction for defamation proceedings if the defamatory statement is distributed in Austria and its distribution is not directed to a different country.391 In this hypothetical case, however, we are not concerned with the requirements for conferring infringement jurisdiction, but only with the extent of this jurisdiction. In this regard, three approaches may be advanced. The first is to consider the extent of jurisdiction not to be limited to the damage that occurred on the territory of the country whose courts are seised. Under this approach, Austrian courts would have international jurisdiction even if only a single copy of the defamatory statement was distributed in Austria, provided that the distribution was directed to no other country. By contrast, the second approach limits the international jurisdiction conferred on an Austrian court by applying a quantitative criterion, that is, the relation of the overall distribution to distribution in Austria. Thus, Austrian courts would have jurisdiction only if distribution in Austria was substantial in relation to the distribution in other countries. As a result, if only a few copies were spilt over to Austria, this would not qualify as the event giving rise to the damage.392 Contrary to that, the third approach relies on a qualitative criterion, that is, the importance of the event that occurred in Austria in relation to the other events that occurred. Under this approach, if the defamatory statement was distributed in Austria and abroad, but conceived and produced only in Austria, the crucial event would have occurred in Austria. This latter approach echoes that endorsed by the ECJ in Shevill. To evaluate these three approaches, it is crucial to consider that the Austrian legislator expressly provided that Austrian courts have international jurisdiction if a defamatory statement that originates from abroad is distributed in Austria.393 Thus, if the statement is distributed both in Austria and in the country where it originates, only the distribution in Austria is considered to be the event giving rise to the damage. In this case, the mere fact that the statement has been distributed in Austria suffices for conferring jurisdiction on the Austrian courts. This seems irreconcilable with a quantitative limitation that requires that distribution in Austria is substantial in relation to the distribution abroad. Further, if the statement is conceived and produced abroad, but distributed only in Austria, the Austrian courts have international jurisdiction. Thus, preparatory activities such as the conception and production of the defamatory statement are not considered to be the event giving rise to the damage. This seems irreconcilable with a qualitative limitation that focuses on the activities of the defendant in their entirety. As a result, only the first approach is reconcilable with the rule that Austrian courts have jurisdiction over defamatory statements originating from abroad. Consequently, Austrian courts have international jurisdiction for the overall harm if the defamatory statement was distributed in Austria, provided that the dis  See above 4.1.3.   R Herzig, ‘Nochmals: Inländische Gerichtsbarkeit für Wettbewerbsverstöße aus dem Ausland – Eine Replik zu RdW 1988, 285’ (1988) Recht der Wirtschaft 415; Simotta, above n 249, § 83c JN no 18. 393   s 83c(3) Civil Jurisdiction Act. 391 392

Austria  297 tribution of this statement was not directed to a country other than Austria.394 Thus, there is no difference between the conferral of international jurisdiction on a court and the extent of the jurisdiction conferred. Again, the situation is slightly different for claims for damages for pain and suffering. If those claims are advanced against a defendant domiciled in a third country, Austrian courts have international jurisdiction if the defamatory statement is distributed in Austria and the plaintiff has certain personal ties to Austria. As already mentioned, these ties are citizenship, domicile or habitual residence. Thus, for claims for damages for pain and suffering, domicile of the defendant is not required for the court to have international jurisdiction for the entire harm. Rather, it suffices that the defamatory statement is distributed in Austria, provided the plaintiff has certain personal ties to Austria. In this context, the issue of whether the extent of this jurisdiction is limited to the damage suffered in Austria has not yet been discussed. The reason for this may be a practical one: as the maximum amount of damages for pain and suffering is fixed by law at a rather low level, substantive law bars claiming the overall harm.395 Be this as it may, as there is no reason for treating these claims differently from other defamation claims, we hold that the same rule on the extent of jurisdiction applies. Thus, also for claims for damages for pain and suffering, the extent of jurisdiction is not limited to the damage suffered in Austria.396 This applies regardless of the procedural set-up in which these claims are raised. Consequently, it does not matter whether they are advanced in civil proceedings or in criminal proceedings arising from the same act. To sum up, under the Brussels I regime, jurisdiction for the entire harm is conferred not only on the courts of the country where the defendant is domiciled, but also on the courts where he is established. Even though the distinction between a person’s domicile and her establishment may seem artificial at first sight, there are factual situations in which it matters. Similarly, under the domestic Austrian regime Austrian courts have jurisdiction for the entire harm if the defendant is only established in Austria. In addition, however, they may also assume jurisdiction if the event giving rise to the damage occurs in Austria. Thus, distribution of the defamatory statement in Austria suffices for conferring jurisdiction for the entire harm on Austrian courts, provided that the distribution of that statement was not directed to a country other than Austria. Further, as far as the extent of jurisdiction is concerned, under both regimes claims for damages for pain and suffering are not treated differently from all other types of claims. Under Brussels I, they are thus limited to the damage that occurs in Austria, whereas under the domestic Austrian regime they extend at least as far as international jurisdiction is concerned to the entire harm suffered.

4.2  Subject-Matter Jurisdiction An Austrian court is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of the infringement proceedings, B makes a counterclaim that the patent is invalid.

  See above 3.2.3 and 4.1.3.   See above n 384.   See above 3.2.3.

394 395 396

298  Thomas Petz

4.2.1  Jurisdiction for Proceedings Concerning the Infringement of Foreign Rights Would the Austrian court have international jurisdiction, and would it decide the question of the infringement of foreign intellectual property rights?

Absent a choice of court agreement, solving this hypothetical case requires distinguishing three scenarios. In the first, defendant B is domiciled in Austria. Article 2 Brussels I confers general international jurisdiction on the courts of the country where the defendant is domiciled. As domicile is the connecting factor, it does not matter that the patent is registered in a country other than Austria.397 Consequently, based on defendant B’s domicile in Austria, Austrian courts have international jurisdiction, and they would decide on the infringement of the foreign right. In the second scenario, defendant B is not domiciled in Austria, but in another Member State. In this case, international jurisdiction is determined by Article 5(3) Brussels I. This provision confers special international jurisdiction on the courts of the country where the harmful event occurred. The connecting factor of the harmful event, however, is ambiguous. For torts in general, the majority view considers it to confer jurisdiction on the courts of the country where the event giving rise to the damage occurs on the one hand and on the courts of the country where the damage occurs on the other.398 For the infringement of intellectual property rights, however, no importance is attributed to this distinction.399 The reason for this is the assumption that any infringement of an intellectual property right logically requires that this right exists in the country where the infringing activities occur: Without an intellectual property right to be infringed, any activity of the defendant is noninfringing and thus unsuited for giving rise to damage. As a result, the courts of the country where the defendant engages in his activities have international jurisdiction only if the intellectual property right exists there, and thus his activities are arguably infringing.400 In effect, this renders the distinction between the event giving rise to the damage and the place where the damage occurs superfluous, because damage may only occur in the country where the intellectual property right exists.401 Some scholars, however, consider the distinction between the event giving rise to the damage and the occurrence of the damage to be valid also for intellectual property rights.402 Under this approach, the fact that the defendant has engaged in arguably infringing activities in a country is sufficient to confer international jurisdiction on the courts of that country. Thus, this approach allows the holder of an intellectual property right to initiate infringement proceedings in a country where a potential infringer engaged in his activities regardless of whether the intellectual property right exists in that country.403 Practically, the main difference between the approach of the   Schlosser, above n 247, Art 2 no 1.   Case C- 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735; OGH 4 Ob 110/01g, BOSS-Zigaretten I (2001) Medien und Recht 320. See also above 4.1.3. 399   Simotta, above n 225, Art 5 no 308; von Bar, above n 49, 662; Schlosser, above n 247, Art 5 no 18; Schack, above n 311, no 343. Cf Case C-539/03 Roche Nederland [2006] ECR I-6535 and OGH 4 Ob 347/98b, A Thousand Clowns (1999) Medien und Recht 342. Contra Lurger, above n 28, 111, n 28. See also above 3.2.3. 400   cf Lurger, above n 28, 112. 401   Schack, above n 311, no 347; H Schack, ‘Internationale Urheber-, Marken- und Wettbewerbsverletzungen im Internet – Internationales Zivilprozessrecht’ (2000) Multimedia und Recht 135, 137. 402   Mankowski, above n 327, Art 5 no 22. 403   This echoes the situation for product liability cases where the courts of the country where the product was manufactured have international jurisdiction, even though no bodily harm was inflicted on the injured person in that country. Contrary to intellectual property rights, however, the protection of a person’s physical integrity does not depend to such a large extent on the shape of the right. 397 398

Austria  299 majority view and that of the minority view is that the first does not confer international jurisdiction on Austrian courts if a foreign intellectual property right is infringed whereas the second does. The main advantage of the approach advanced by the minority view is that it confers international jurisdiction on the courts of the country where most of the evidence is located and where the judgment will most likely be enforced; its main disadvantage is that often the plaintiff will lose on the merits. The reason for this is that absent of an intellectual property right in the country of the court seised, he will claim protection for the country where such a right exists. Consequently, the law applicable to the infringement claim is the law of the latter country. In substantive intellectual property law, however, activities that occur outside the territory of the country where the right exists are regularly considered to be non-infringing.404 As a result, a plaintiff will be very reluctant to initiate infringement proceedings before the courts of a country where the intellectual property right does not exist. This deprives such special jurisdiction of its importance in practice. Thus, the approach advanced by the majority view is indeed the preferable one. For our hypothetical case this means that as plaintiff A has not registered his patent in Austria, there is no right that could be infringed there. Consequently, Article 5(3) Brussels I does not confer special international jurisdiction on Austrian courts.405 In the third scenario, finally, defendant B is domiciled in a third country. For such situations, international jurisdiction is determined by recourse to the domestic Austrian rules on international jurisdiction.406 As a general rule, an Austrian court has international jurisdiction if it has personal jurisdiction.407 For proceedings concerning the infringement of a patent, two grounds of personal jurisdiction may apply. The first confers exclusive international jurisdiction for patent infringement proceedings based on the Austrian Patent Act on the Commercial Court of Vienna.408 The availability of this ground thus depends on the application of the Patent Act. The latter, however, applies only to patents that have been granted according to the procedures which it provides, that is, patents registered with the Austrian Patent Office, and the Austrian parts of European patents granted by the European Patent Office.409 As foreign patents do not fulfil this requirement, this ground of jurisdiction is not available in our hypothetical case. Consequently, recourse to the second ground of personal jurisdiction may be made. Absent any other contact of the dispute with Austria, this ground confers international jurisdiction on Austrian courts if the event giving rise to the damage occurred in Austria.410 Thus, contrary to Article 5(3) Brussels I, this ground of jurisdiction does not confer jurisdiction on Austrian courts if, rather than the arguably infringing activities, only the damage occurred in Austria. This, however, again raises the question of whether jurisdiction may be based on an activity that does not infringe an 404   See above 3.1. This conclusion is based on the assumption that the defendant does not engage in any activities in the country for which protection is claimed, but only in the country where the court is seated. 405   Compare for ubiquitous copyright infringement above 3.2.3. 406   Art 4(1) Brussels I. 407   s 27a Civil Jurisdiction Act. 408   s 162 Patent Act. 409   s 7 Introductory Act to the Patent Treaties [Patentverträge-Einführungsgesetz] BGBl 52/1979. 410   s 83c(1) Civil Jurisdiction Act. This ground applies only if s 162 Patent Act does not apply. Further, it confers jurisdiction on Austrian courts if the defendant has established a business in Austria or is domiciled or present there. See above 4.1.2. Only if neither is the case does it confer jurisdiction based on the fact that the event giving rise to the damage occurred in Austria. In addition, s 21(5) Patent Act provides that for the purpose of s 83c Civil Jurisdiction Act, a defendant is considered to be domiciled in Austria if he has authorised an agent or a process agent or if his patent is registered in Austria. Thus, Austrian courts have international jurisdiction for proceedings advanced against the holder of an Austrian patent. As in our hypothetical case the plaintiff is the holder of a foreign patent, this ground of jurisdiction does not apply.

300  Thomas Petz intellectual property right in the country where it occurs. Case law on this issue is sparse and ambiguous: whereas the Vienna Court of Appeals411 assumed jurisdiction in proceedings concerning the infringement of a foreign patent, the Graz Court of Appeals412 declined jurisdiction in proceedings concerning the infringement of a foreign trade mark. One argument in favour of the latter approach follows from the legislative history: when the Austrian legislator introduced this ground, it took the ground of jurisdiction that already existed for trade marks as the model, and extended it to all intellectual property rights. The ground of jurisdiction for trade marks, however, was limited to trade marks registered in Austria.413 As the decision of the Vienna Court of Appeals pre-dates this legislation, it may no longer be used as an argument against limiting the international jurisdiction of Austrian courts to activities that infringe Austrian intellectual property rights. Further, the same argument that has been advanced as regards Article 5(3) Brussels I applies: as the risk of losing on the merits is rather high, plaintiffs are likely to be reluctant to sue before an Austrian court if the intellectual property right does not exist there. As it cannot be assumed that the Austrian legislator intended to introduce a special ground of jurisdiction for intellectual property rights that has almost no practical importance, this ground has to be construed to require that the intellectual property right that is allegedly infringed exists in Austria.414 Consequently, as a foreign patent cannot be infringed in Austria, in our hypothetical case the event giving rise to the damage did not occur in Austria.415 As a result, as in the second scenario, also in this scenario Austrian courts do not have international jurisdiction over the infringement proceedings. Thus, only if the defendant is domiciled in Austria do Austrian courts have international jurisdiction.

4.2.2  Jurisdiction for Proceedings Concerning the Validity of Foreign Rights Would an Austrian court have international jurisdiction to decide upon the issues of validity and registration of foreign intellectual property rights raised in the counterclaim? If so, what would be the legal effects inter partes or erga omnes of such a decision? Would the decision differ with regard to registered and unregistered intellectual property rights?

As elaborated in the previous hypothetical case, absent a choice of court agreement, Austrian courts have international jurisdiction for disputes on the infringement of a foreign patent only if defendant B is domiciled in Austria. This jurisdiction is conferred to Austrian courts by Article 2 Brussels I. In this case, these courts also have international jurisdiction for the counterclaim of invalidity advanced by B.416 As regards the registration and the validity of 411   Court of Appeals Vienna 1 R 52 (1960) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 64 (case note by F Schönherr). 412   See OGH 4 Ob 550/92 (1993) Zeitschrift für Rechtsvergleichung no 55, where a drink was produced in Austria and distributed in the former Yugoslavia. As the dispute concerned only that part of an international trade mark that was registered in the former Yugoslavia, the Austrian court did not have international jurisdiction. This issue has not been appealed, so the Supreme Court did not rule on it. 413  R Seber, ‘Der Umfang der österreichischen inländischen Gerichtsbarkeit für Klagen im gewerblichen Rechtsschutz und Urheberrecht’ (1983) Zeitschrift für Rechtsvergleichung 270, 280. 414   Seber, above n 413, 280. 415   Simotta, above n 249, 83c JN no 38 (referring to Austrian intellectual property rights). For the same conclusion with regard to the situation before s 83c(1) Civil Jurisdiction Act was introduced, see F Schönherr, ‘Zuständigkeit der Gerichte in Angelegenheiten des gewerblichen Rechtsschutzes; Vollstreckung von im Schutzland ergangenen Urteilen im Lande des Wohnsitzes des Beklagten’ (1958) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 5, 7 and, more leniently, above n 39, no 912.1. 416   Art 6(3) Brussels I. Cf Case C-341/93 Danvaern [1995] ECR I-2054. Alternatively, of course, B may advance his counterclaim before the courts of the country where A is domiciled. If A is domiciled in a Member State, this

Austria  301 registered intellectual property rights, however, Article 22(4) Brussels I confers exclusive international jurisdiction on the courts of the country where the right has been registered. The solution thus depends on how the relationship between general international jurisdiction based on Article 2 Brussels I and exclusive international jurisdiction based on Article 22(4) Brussels I is construed. Further, as the latter ground of jurisdiction is restricted to intellectual property rights registered in Member States, two scenarios have to be distinguished. In the first scenario, Y, the country where the patent is registered, is a Member State other than Austria. In this case, the relationship between general international jurisdiction at the defendant’s domicile and exclusive international jurisdiction in the country where the intellectual property right is registered has already been considered by the ECJ. In GAT, the Court held that if the issue of validity is raised in a claim, exclusive jurisdiction trumps general and special jurisdiction.417 As a result, the courts of the country of registration have exclusive jurisdiction over the counterclaim of invalidity. Consequently, if we assume that in our hypothetical case defendant B is domiciled in Austria, and thus Austrian courts have international jurisdiction for the infringement proceedings based on Article 2 Brussels I, the Austrian court seised with these proceedings must decline jurisdiction.418 It is controversial, however, whether it must do so only as regards the counterclaim or also as regards the infringement claim. In this regard, two approaches may be advanced. The first is that the court declines its jurisdiction not only for the counterclaim, but also for the infringement proceedings.419 This approach is based on reasons of efficiency and consistency: As the decision in the infringement proceedings depends on that of the validity proceedings, the authority ruling on the latter should also rule on the first. That way, parallel proceedings and irreconcilable judgments are avoided. The second approach is to stay the infringement proceedings and resume them once the foreign authority has issued its decision on the validity issue.420 That way, the jurisdiction of the court hearing the infringement proceedings is preserved. In legal writings, the prevailing view is that the second approach is the preferable one, but only the first is considered to be reconcilable with GAT.421 As a result, in our hypothetical case the Austrian court seised lacks international jurisdiction not only for the counterclaim of invalidity, but also for the infringement proceedings. In the second scenario, Y is a third country. In this case, Article 22(4) Brussels I does not apply, as the patent is not registered in a Member State. This, however, is just half the picture. The other half is the effects of this inapplicability on the general jurisdiction at the defendant’s domicile based on Article 2 Brussels I. In this regard, two approaches may be advanced. The first is that if an intellectual property right is registered only in a third country, but the defendant is domiciled in a Member State, Article 2 Brussels I applies also to the issues of validity and registration.422 Thus, if we assume that in our hypothetical case follows from Art 2(1) Brussels I, whereas if he is domiciled in a third country, this follows from ss 27a(1), 83c(1) Civil Jurisdiction Act. By contrast, if both A and B are domiciled in Austria, the issue of international jurisdiction does not arise. 417   Case C-4/03 GAT v LuK [2006] ECR I-6509. 418   Art 25 Brussels I. 419   C Heinze and E Roffael, ‘Internationale Zuständigkeit für Entscheidungen über die Gültigkeit ausländischer Immaterialgüterrechte’ (2006) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 787, 797. 420   Schack, above n 311, no 350. 421   Simotta, above n 225, Art 22 no 135 with further references. 422  D Czernich and S Tiefenthaler, ‘Artikel 16 EuGVÜ: Liegenschaftsstreitigkeiten mit Auslandsbezug’ (1999) Wohnrechtliche Blätter 255, 257–58; S Tiefenthaler in D Czernich, et al (eds), Kurzkommentar Europäisches Gerichtsstands- und Vollstreckungsrecht, 3rd edn (Vienna, LexisNexis, 2009) Art 22 no 7; see also M Schauwecker, ‘GAT/LuK und Drittstaatenpatente’ (2009) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 187, 190.

302  Thomas Petz defendant B is domiciled in Austria, Austrian courts would have international jurisdiction to hear these issues. The second approach is that if Article 22(4) Brussels I is inapplicable because the intellectual property right is registered only in a third country, Austrian courts do not have jurisdiction to hear these issues even if the defendant is domiciled in Austria.423 This approach attributes a reverse effect to Article 22(4) Brussels I: if the exclusive ground of jurisdiction does not apply, the general ground does not apply either. Methodically, the difference between the two approaches can be boiled down to whether Article 22(4) Brussels I constitutes an exception to Article 2 for rights registered in Member States, or a special rule which covers in a comprehensive way the issues of registration and validity. In the first case, recourse to Article 2 Brussels I may be made for the issues of the validity and registration of rights registered in a third country, in the latter, Brussels I does not provide a ground of jurisdiction for these issues. Solving our hypothetical case requires us to take sides for one of these two approaches. Thus, we have to scrutinise the arguments on which the theory of reverse effect is based. There are principally two. The first argument is that this effect is mandated by international comity: if the EU assumed exclusive jurisdiction on the validity and the registration of intellectual property rights registered in one of its Member States, a third country may do the same with regard to all intellectual property rights registered in that country. This reciprocity would be undercut if the courts in the Member States assume jurisdiction over these issues based on the defendant’s domicile.424 The second argument is that regularly, if the authorities of a third country assume exclusive international jurisdiction for certain proceedings, its provisions on the recognition and enforcement of foreign judgments bar the enforcement of a judgment rendered in such proceedings by a court of the country where the defendant is domiciled.425 In this case, the theory of reverse effect ensures that such potentially unenforceable judgments are not rendered in the first place by preventing that jurisdiction is conferred on the courts of the country where the defendant is domiciled. It has to be noted that there is a considerable difference between these two arguments: whereas the first considers the reverse effect to be a matter of principle that applies regardless of whether the courts of the third country actually assume exclusive jurisdiction, the latter considers it mandated only if the courts of the third country assume exclusive jurisdiction for the proceedings. At least for proceedings having as their object tenancies of immovable property, the Austrian Supreme Court has rejected the theory of reverse effect.426 It did so by reversing the argument of unenforceability: as the judgment rendered by the court of a third country where the property is located is unenforceable in Austria under the domestic Austrian rules on recognition and enforcement, the only possibility for the plaintiff to get a judgment that is enforceable is to go the courts of the country where the defendant is domiciled. In my view, this argument applies only to judgments which require the defendant to engage in 423   Lurger, above n 28, 107; W Rechberger and U Frauenberger-Pfeiler, ‘Der österreichische Oberste Gerichtshof und der räumlich-persönliche Anwendungsbereich des EuGVÜ/LGVÜ’ (2001) Zeitschrift für Zivilprozess International 3, 21; Simotta, above n 225, Art 22 no 15. See also Schack 2000, above n 401, 136; Kropholler, above n 311, Art 22 no 7. 424   Against comity with the argument that such an effect is only justified if the courts of all countries are equal in their quality which is currently not true on a global scale, Czernich and Tiefenthaler 1999, above n 422, 258. 425   Kropholler, above n 311, Art 22 no 7; Simotta, above n 225, Art 22 no 15. See also below 4.6.1. The authorities having exclusive international jurisdiction may not only be courts, but also administrative agencies such as the Patent Office. 426   OGH 3 Ob 267/00m Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 74/75.

Austria  303 some activity such as making a payment to the plaintiff – as this was the case in the dispute before the court – because these judgments are regularly enforced in the country where the defendant is domiciled. By contrast, if the judgment concerns the existence of a right, enforcement will take place in the country where the right exists. In the case of registered rights, this is the country of registration. Thus, in my view, the fact that the Austrian Supreme Court has granted Article 22 Brussels I no reverse effect in proceedings having as their main object tenancies of immovable property does not require it to deny this effect in proceedings having as their main object the validity of a registered intellectual property right. Consequently, at least with regard to the latter type of proceedings, we join the prevailing view that Article 22 Brussels I has reverse effect. Along the lines of the Austrian Supreme Court, however, we do not consider this a matter of principle, but mandated by preventing the rendering of unenforceable judgments. This reverse effect renders Article 2 Brussels I and arguably all other grounds of jurisdiction of the Brussels I regime inapplicable if the courts of the third country assume exclusive jurisdiction over the issues of validity and registration. What follows from this inapplicability, however, is controversial: Whereas some argue that the court seised based on the defendant’s domicile has to decline its jurisdiction of its own motion, others argue that it may assume international jurisdiction based on its domestic rules.427 Thus, the crucial issue is whether the reverse effect renders only the regime of Brussels I inapplicable, or also the domestic regime of the court seised. This brings us back to the difference between the two arguments advanced in favour of recognising this effect. If it is considered mandated by international comity, it is up to the Member States to decide to what extent they honour this principle with regard to their domestic regime. Thus, the considerations for the domestic regime may be different from those for Brussels I. As a result, the reverse effect of exclusive jurisdiction under the domestic regime has to be determined separately. Thus, the domestic regime is applicable. By contrast, if the reverse effect follows from the potential unenforceability of the judgment, the considerations under Brussels I and the domestic regime are arguably the same. As a result, if reverse effect is granted based on this argument as regards the first, it has to be granted also as regards the latter. In this case, not only Brussels I, but also the domestic regime is inapplicable. The argument of unenforceability seems to be the prevailing one, and we also endorse it. Thus, the domestic Austrian rules on international jurisdiction may not serve as a basis for conferring international jurisdiction. Consequently, the solution to our hypothetical case depends only on whether the authorities of country Y where the patent is registered assume exclusive jurisdiction for proceedings concerning its validity. As this will regularly be the case, we assume for the purpose of our hypothetical case that they indeed do. Thus, we conclude that even if defendant B is domiciled in Austria, Austrian courts do not have international jurisdiction to hear the counterclaim on validity and registration.428 As neither in the first nor in the second scenario do Austrian courts have international jurisdiction to decide upon the issues of the validity and registration of foreign registered intellectual property rights, the question of the legal effects of a judgment on these issues 427   See Simotta, above n 225, Art 22 no 15; A Burgstaller and M Neumayr in A Burgstaller and M Neumayr (eds), Internationales Zivilverfahrensrecht (Vienna, LexisNexis, 2002) Art 22 no 7. For a thorough analysis of this issue see Seber, above n 413, 286–88, who rejects the theory of reverse effect. 428   If one does not endorse the theory of reverse effect, the Austrian court, as the court at the defendant’s domicile has international jurisdiction. It may have to decline its jurisdiction, however, because of the counterclaim of invalidity. Cf below 4.2.3.

304  Thomas Petz does not arise. Thus, we proceed to the third question of this hypothetical case, that is, the differences between registered rights and unregistered rights. On its face, Article 22(4) Brussels I does not apply to unregistered rights, as it refers only to registered rights. This indicates a different treatment of both types of intellectual property rights. Further, in our hypothetical case, the dispute concerns the existence of a foreign unregistered right. This requires us again to distinguish between unregistered rights granted by a Member States other than Austria and unregistered rights granted by third countries. In the first case, the crucial issue is whether Article 22(4) Brussels I applies by analogy to the issue of the existence of unregistered rights. By contrast, in the latter case, the crucial issue is the reverse effect that such an application by analogy would have on Article 2 Brussels I. This indicates that both issues are intertwined: only if we conclude that an application by analogy to unregistered rights granted by a Member State is mandated will the problem of the reverse effect on unregistered rights granted by third countries come up. In the event of Y being a Member State other than Austria, the proper solution depends on what is considered to be the reason for conferring exclusive international jurisdiction on the courts of the country where the right is registered for disputes concerning the validity of the right. If this reason is the territorial nature of intellectual property rights, it could be argued that Article 22(4) Brussels I should be applied by analogy to unregistered rights as the latter are also territorial in their nature.429 Contrary to that, if the reason is the fact that the procedure resulting in the grant of a right is closely intertwined with the registration of the right, there is no room for such an analogy, as unregistered rights do not require registration for their existence.430 The latter approach of considering registration the rationale of conferring exclusive jurisdiction on the courts of the country of registration is the prevailing one in legal writings431 and has also been endorsed by the ECJ in Duijnstee.432 Thus, no application by analogy is mandated. Absent such an application, the issue of the reverse effect of this exclusive jurisdiction on general jurisdiction at defendant B’s domicile in Austria in case the unregistered right is granted by a third country does not arise.433 Hence, in both scenarios the situation is indeed different to that of registered rights: The court at the defendant’s domicile has international jurisdiction on the issue of the existence of the unregistered right. In our hypothetical case, thus, if defendant B is domiciled in Austria, Austrian courts have international jurisdiction over disputes on the existence of unregistered rights based on Article 2 Brussels I.434 This applies equally to unregistered rights granted by Member States and unregistered rights granted by third countries. This, however, entails the question of the legal effects of such a judgment. Under Brussels I, the binding effect of a judgment is determined by the law of the country of the court rendering the judgment, and extended to the country where the judgment is to be recog429   In effect, however, the proponents of a territorial approach reject unanimously an application of Art 22(4) Brussels I by analogy to unregistered rights. This is convincing only if unregistered rights are not considered to be territorial in their nature. Indeed, some of the proponents of this approach argue this, but only with regard to copyright. Cf Schack 2000, above n 401, 137 and Schack, above n 24, no 1030. 430   See also Schlosser, above n 247, Art 22 no 21. 431   Kropholler, above n 311, Art 22 no 43; LP Rocha de Lima Pinheiro in U Magnus and P Mankowski (eds), Brussels I Regulation (Munich, Sellier, 2007) Art 22 no 61. 432   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663. 433   One reason for a different treatment of unregistered rights under the theory of reverse effect could be that contrary to registered rights the courts of third countries may not have exclusive international jurisdiction. 434   But see Court of Appeal of England and Wales Case No 1328/2009, Lucasfilm v Ainsworth (2010) International Review of Intellectual Property and Competition Law 864 with case note by P Torremans.

Austria  305 nised.435 In Austrian procedural law, not all parts of a judgment have binding effect, but only the holding.436 In particular, as rulings on incidental questions are regularly part of the reasoning, they do not have binding effect.437 This, however, does not apply if the incidental question is raised by means of a counterclaim: as the counterclaim adds to the dispute a matter that is different from that of the original dispute, a holding on both matters is required. Thus, in the case of a counterclaim, the holding of the judgment will deal with the existence of the unregistered intellectual property right. Consequently, all Austrian courts and the courts of all other Member States where the judgment is to be recognised are bound by this holding.438 Further, the effects of this holding on the parties depend on the aim of the counterclaim.439 If its aim is only a declaration that the unregistered right does not exist, it has effect only inter partes. By contrast, if it aims at a change of the legal situation that goes beyond such a declaration, it may have effect erga omnes. Regularly, claims concerning the validity of unregistered rights do not aim beyond a declaration that the right does not exist. The binding effect of a holding on a counterclaim of invalidity is thus of an inter partes nature only.440 For our hypothetical case, this means that the Austrian court seised with the infringement proceedings will deal with the issue of the existence of the unregistered intellectual property right in the holding of its judgment. Further, the court where the subsequent proceedings take place is bound by it, provided that the parties to these proceedings are the same.

4.2.3  The Validity of a Foreign Right as an Incidental Question What would be the decision of an Austrian court if the question of the validity of a foreign intellectual property right arose as an incidental question and remained unchallenged by the parties?

The solution to this hypothetical case depends on whether the foreign country where the patent is registered is a Member State of the EU.441 If it is a Member State, the Brussels I regime applies. As a general rule, Article 24 Brussels I confers international jurisdiction on a court that has no jurisdiction if the defendant enters an appearance before that court.442 There are, however, two exceptions to this rule. The first is that the defendant enters his appearance only to contest the jurisdiction. In our hypothetical case, however, the court’s jurisdiction on the validity issue remained unchallenged. Thus, defendant B did not enter an appearance to contest the jurisdiction of the Austrian court. The second exception is 435   Kropholler, above n 311, Vor Art 33 no 9; J Rassi in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 5, pt 1, 2nd edn (Vienna, Manz, 2008) Art 33 no 5. 436  Rechberger and Simotta, above n 311, no 886; Nunner-Krautgasser, ‘Die Anerkennung ausländischer Entscheidungen – Dogmatische Grundfragen’ (2009) Österreichische Juristenzeitung 794, 795. 437   Seber, above n 413, 289; Rechberger and Simotta, above n 311, no 886. 438   W Schragel in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 2, pt 2, 2nd edn (Vienna, Manz, 2008) § 190 JN no 21. 439   H Fasching and T Klicka in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 3, 2nd edn (Vienna, Manz, 2004) § 411 JN no 102, 127 and 156. On the importance of the aim of a claim see also below 4.6.1. 440   Schönherr, above n 39, no 644; Seber, above n 413, 286; Rechberger and Simotta, above n 311, no 890. Like the binding effect of a judgment, the personal scope of its effects is a matter of procedural law. Thus, if Austrian courts have international jurisdiction, both issues are determined by domestic Austrian procedural law. See Fasching and Klicka, above n 439, § 411 JN no 18; Rassi, above n 435, Art 33 no 10. See also OGH 4 Ob 252/03t (2004) Recht der Wirtschaft no 494. 441   See N Schoibl in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 5, pt 1, 2nd edn (Vienna, Manz, 2008) Art 25 no 6. 442   Art 24 Brussels I.

306  Thomas Petz that the courts of a Member State have exclusive international jurisdiction based on Article 22 Brussels I. This jurisdiction cannot be derogated by the appearance of the defendant before a court seised in another Member State. In GAT, the ECJ held that the exclusive jurisdiction of the courts of the country of registration on the validity and the registration of intellectual property rights applies not only if these issues are the raised by way of an action, but also as a defence.443 Consequently, even if the invalidity of a registered intellectual property right is raised only as a defence in infringement proceedings and thus comes up as an incidental question, the court seised lacks jurisdiction as long as no right registered in the country where it is seated is concerned. This applies not only if the jurisdiction of the court seised with the infringement proceedings is based on domicile or infringement, but also if it is based on the appearance of the defendant.444 Hence, if we assume for the purpose of our hypothetical case that country Y where the patent is registered is a Member State, entering an appearance does not confer international jurisdiction for the issue of validity on the Austrian court seised with the infringement proceedings because for this issue, the courts of Y have exclusive jurisdiction. As a result, the appearance of defendant B before the Austrian court does not confer jurisdiction for the infringement proceedings.445 This entails the question of how the Austrian court before which B entered an appearance shall proceed. As a general rule, Article 25 Brussels I requires the court to decline its jurisdiction of its own motion. This provision, however, applies only to claims which are ‘principally concerned’ with a particular matter. This limitation is considered to render it inapplicable to incidental questions as they are not ‘principally concerned’ with a matter.446 In particular, the validity of a registered intellectual property right is not ‘principally concerned’ with the infringement of that right. As just indicated, however, the ECJ held in GAT that even if the issue of validity of a patent comes up as an incidental question in infringement proceedings, only the courts of the country of registration have international jurisdiction to hear the dispute.447 This broad interpretation of Article 22(4) Brussels I is considered to render the limitation of Article 25 Brussels I inapplicable to issues concerning the validity and registration of registered intellectual property rights.448 Consequently, the Austrian court before which the infringement proceedings are initiated is required to decline its jurisdiction on its own motion. It may do so at any time in proceedings.449 443   Case C-4/03 GAT v LuK [2006] ECR I-6509. This aspect of this decision has given rise to considerable criticism, see A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decisions GAT v Luk and Roche Nederland v Primus and Goldenberg’ (2006) International Review of Intellectual Property and Competition Law 844. In particular, it has been criticised that it enables the defendant to launch a ‘super-torpedo’. Unlike the normal torpedo – that is, the infringer initiates proceedings for a declaration of non-infringement before the right-holder initiates infringement proceedings – a super-torpedo can also be launched after the right-holder has already initiated infringement proceedings. Despite this criticism, however, the European legislator does not seem to be willing to change Art 22(4) Brussels I. This is indicated by Art 22(4) of the revised Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2009] OJ L 147/5, and by Art 22(4) of the Proposal for a Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(2010) 748 final, which both take up the wording in GAT. 444   See above, n 421. 445  A different solution applies to unregistered intellectual property rights such as copyright. As Art 22(4) Brussels I is limited to registered intellectual property rights, it does not bar the conferral of jurisdiction by the defendant’s appearance in infringement proceedings concerning unregistered intellectual property rights. 446   Kropholler, above n 311, Art 25 no 1; Schoibl, above n 441, Art 25 no 5. 447   Case C-4/03 GAT v LuK [2006] ECR I-6509. 448   Kropholler, above n 311, Art 25 no 1; Simotta, above n 225, Art 22 no 132. 449   Schoibl, above n 441, Art 25 no 8.

Austria  307 By contrast, if the patent is registered in a third country, the solution differs depending on the domicile of the parties. If at least one of the parties is domiciled in a Member State, the Brussels I regime applies.450 On its face, however, Article 22(4) Brussels I applies only to intellectual property rights registered in a Member State. As a consequence, if an intellectual property right is registered in a third country, entering an appearance by the defendant would confer jurisdiction on the Austrian court. The situation is thus similar to that of the court having jurisdiction based on the defendant’s domicile. For this situation, however, it has been argued that Article 22(4) Brussels I has reverse effect: from the conferral of exclusive jurisdiction on the courts of the country of registration it follows that if the country of registration is a third country, no court of a Member State may assume jurisdiction based on Brussels I.451 Consequently, if we accept the theory of reverse effect, an appearance by the defendant does not confer jurisdiction on the Austrian court seised.452 Further, as regards the procedural steps of the Austrian court, one may argue that if Article 22(4) Brussels I is considered to have reverse effect on Article 24 Brussels I, an application by analogy of Article 25 Brussels I is mandated. Consequently, the result for rights registered in a third country is the same as for rights registered in a Member State provided that at least one party is domiciled in a Member State.453 Thus, the Austrian court seised with the infringement proceedings may decline its jurisdiction of its own motion at any time. Only if the patent is registered in a third country and also both parties are domiciled in such countries do the domestic Austrian rules on international jurisdiction apply.454 These rules provide that a court which lacks international jurisdiction may nevertheless hear a case if the defendant makes an appearance before that court without contesting its jurisdiction.455 Such a conferral of jurisdiction by appearance, however, is barred for those types of proceedings that are expressly listed in section 104(4) Civil Jurisdiction Act. This list contains most of the types of proceedings that are listed also in Article 22 Brussels I. This need not come as a surprise, as when adopting section 104(4) Civil Jurisdiction Act, the Austrian legislator intended to adapt the domestic Austrian rules on international jurisdiction to echo those of the Lugano Convention.456 For proceedings concerning the validity and the registration of registered intellectual property rights, however, the Austrian legislator decided against including them in the list of section 104(4) Civil Jurisdiction Act. The reason for this was a pragmatic one: the chances that such proceedings would be advanced in Austria were considered to be only minimal. Thus, on its face, section 104(4) Civil Jurisdiction Act does not bar a conferral of jurisdiction by appearance for proceedings concerning the validity and the registration of intellectual property rights. However, it follows from the legislative history that the Austrian legislator did not intend to deviate from the rules of the Lugano Convention on exclusive jurisdiction concerning the registration and   Case C-412/98 Group Josi [2000] ECR I-5925; Simotta, above n 225, Art 24 no 5.   See above 4.2.2. 452   In contrast to Art 2 Brussels I, Arts 24 and 25 make express reference to Art 22 Brussels I. Thus, attributing reverse effect to this provision runs counter their wording, but it follows from the arguments on which the reverse effect of Art 22 is based. See above 4.2.2. Contra Schoibl, above n 441, Art 25 no 7. 453   The wording used by Simotta, above n 225, Art 22 no 15 seems to endorse this view. 454   Art 4(1) Brussels I; Simotta, above n 225, Art 24 no 8. 455   s 104(3) Civil Jurisdiction Act. 456   Introductory Remarks to the 1997 Amendment of the Civil Jurisdiction Act [Wertgrenzennovelle 1997] 38. The Lugano Convention was later replaced vis-à-vis the Member States of the European Union by the Brussels Convention and then Brussels I. The revised Lugano Convention entered into force between the EU and Norway on 1 January 2010. As regards Switzerland, the Convention entered into force on 1 January 2011; as regards Iceland, it entered into force on 1 May 2011. See also above n 443. 450 451

308  Thomas Petz the validity of registered intellectual property rights, but rather found it superfluous to adopt an express rule for these proceedings. This indicates that it acknowledged the existence of a lacuna and considered an application by analogy of section 104(4) Civil Jurisdiction Act to be mandated to reach the same results as under the Lugano regime. Consequently, international jurisdiction for proceedings concerning the validity and the registration of an intellectual property right registered in a third country may not be conferred by appearance on Austrian courts.457 Thus, as far as the conferral of jurisdiction by the defendant’s appearance in proceedings having as their main object the validity of a patent is concerned, the solution is the same regardless of the foreign country in which the patent is registered and where the defendants are domiciled: the appearance of the defendant does not confer international jurisdiction on the Austrian courts.458 What may be different, however, under the domestic Austrian regime is whether this applies also if – as in our hypothetical case – the issue of validity comes up only as a defence in the infringement proceedings, and thus amounts to an incidental question. In this regard, two approaches may be advanced. On the one hand one could argue that, as the Austrian legislator intended to streamline the domestic Austrian regime with Brussels I, it is mandated to apply the first in the same way as the latter. In this case, the solution derived from the GAT decision would have to be implemented. Thus, an appearance by the defendant would not confer jurisdiction for the infringement proceedings if the issue of validity comes up. Consequently, the Austrian court seised would have to decline its jurisdiction on its own motion.459 On the other hand, one could argue that as the Austrian regime does not deal expressly with exclusive jurisdiction for proceedings concerning the validity of a patent, there is some leeway for reaching different solutions if there are good reasons. As the discussion of the GAT decision illustrates, there are indeed good reasons for not adopting its approach in domestic Austrian law.460 Thus, we hold the view that in our hypothetical case the Austrian court has jurisdiction for the infringement proceedings even though the validity of the patent comes up as an incidental question. This leaves us with the question of how the Austrian court will deal with the incidental question of the validity of a foreign patent under the domestic Austrian regime. In this regard, two approaches may be distinguished. The first is to make recourse to the applicable law. This requires determining the applicable law in the first place. As the validity of a right concerns a property aspect, Article 8 Rome II does not apply. Thus, the applicable law is determined by section 34(1) PIL Act. This provision provides for the application of the lex loci protectionis. Thus, the law of the country where the patent is registered – the lex causae – would determine whether the Austrian court seised with the infringement proceedings could decide on the incidental question of the validity of the foreign patent.461 The second approach is to make recourse to Austrian procedural law, that is, the procedural lex fori. In our view, the procedural treatment of incidental questions is an issue of procedural law and   But see for a different conclusion Simotta, above n 249, § 83c JN no 41.   This conclusion is also mandated by the fact that for proceedings having as their main object the validity of a patent exclusive jurisdiction is conferred on the Austrian Patent Office and thus an administrative agency. See s 57(1) Patent Act. Thus, even if the Austrian court seised assumed international jurisdiction based on the defendant’s appearance, it would have to decline its jurisdiction for such proceedings anyway as the Austrian courts lack subject-matter jurisdiction. See Simotta, above n 249, § 104 JN no 128. By contrast, if the issue of validity comes up as an incidental question only, the Austrian courts have subject-matter jurisdiction. See s 156 Patent Act. 459   s 42(1) Civil Jurisdiction Act; Rechberger and Simotta, above n 311, no 110. 460   See Simotta, above n 225, Art 22 no 134. 461   Seber, above n 413, 289. 457 458

Austria  309 as a general rule, such questions are determined by the lex fori. Consequently, the Austrian court seised with the infringement proceedings will deal with the incidental question of the validity of the foreign patent based on domestic Austrian procedural law. As regards incidental questions, this law provides that a court may decide on such a question as long as there is no provision that provides to the contrary.462 For Austrian patents, section 156(3) Patent Act provides that the court seised with the infringement proceedings has to stay these proceedings if there is some evidence that the patent is likely to be invalid. In this case, the defendant has to initiate invalidity proceedings before the Austrian Patent Office within a month. Once the Patent Office has issued its decision on the validity of the patent, the court is bound by this decision once it resumes, upon request of one of the parties, its proceedings. Methodically, as section 156(3) Patent Act requires that the court seised with the infringement proceedings has already taken some evidence on the likelihood of the patent being invalid, it does not take away the jurisdiction of that court. Thus, in domestic Austrian patent law the court seised with the infringement proceedings has jurisdiction to hear the incidental question of the validity of the patent, but it has to stay its proceedings once there is evidence that renders it likely that the patent is invalid. As indicated, however, this regime applies only to Austrian patents, that is, patents registered with the Austrian Patent Office. But as the rationale of preventing a court from declining its jurisdiction if the issue of validity is not substantiated sufficiently is also valid for foreign patents, one could argue that section 156(3) Patent Act should apply by analogy to foreign patents. Thus, in our hypothetical case, the Austrian court seised with the infringement proceedings may decide on the validity of the foreign patent as long as there is no evidence that the patent is likely to be invalid. If it does so, however, it has to be noted that in domestic Austrian procedural law the decision on an incidental question regularly becomes only part of the reasoning of the judgment and thus it lacks binding effect.463 As a result, the issue may be re-litigated in the country where the patent is registered. By contrast, if evidence is advanced that the foreign patent is likely to be invalid, the Austrian court has to stay its proceedings. In this case, once the foreign authority has decided on the validity of the patent, the Austrian court has to resume its proceedings.464 In our view, such an application by analogy of section 156(3) Patent Act to foreign patents seems to be the preferable solution.465 To sum up, three scenarios have to be distinguished: as a general rule, if the issue of validity of a foreign patent arises as an incidental question in proceedings concerning the infringement of a registered intellectual property right, appearance by the defendant does not confer international jurisdiction on the Austrian courts, and any Austrian court seised has to decline its jurisdiction of its own motion at any time in the proceedings. This rule,   Schönherr, above n 39, no 644; Schragel, above n 438, § 190 JN no 24. For patents see s 156(1) Patent Act.  Seber, above n 413, 289; Rechberger and Simotta, above n 311, no 886; B Nunner-Krautgasser, ‘Die Anerkennung ausländischer Entscheidungen – Dogmatische Grundfragen’ (2009) Österreichische Juristenzeitung 794, 795. There is, however, an exception to this rule: if one of the parties moves in infringement proceedings for a separate declaratory judgment on the incidental question of the validity of the allegedly infringed right, this issue will be part of the holding of this judgment and thus have binding effect. In this case, however, this effect will be of an inter partes nature only. See Seber, above n 413, 288. 464   This, however, may be problematic from a constitutional point of view, because the Austrian court would be bound by the decision of a foreign authority. 465   By contrast, for trade marks there is no such duty to stay the infringement proceedings if in the course of taking evidence the court considers the trade mark likely to be invalid. Thus, the court has to decide on the incidental question itself. See OGH 4 Ob 21/02, Manpower III (2003) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 11. 462 463

310  Thomas Petz however, does not apply if the patent is registered in a third country and also both parties are domiciled in such a country. In this case, appearance by the defendant confers jurisdiction on the Austrian court seised with the infringement proceedings even though the issue of validity arises as an incidental question. In this set-up thus the Austrian court may not of its own motion decline jurisdiction. Further, the latter solution also applies if rather than the validity of registered rights, the existence of unregistered rights arises as an incidental question in infringement proceedings: as no court has exclusive international jurisdiction on the issue of their existence, the problem of the effects of this jurisdiction on other grounds of jurisdiction does not arise.

4.3  Consolidation of Proceedings A is a holder of identical patents in Austria and in countries X, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D have infringed his patents in countries X, Y and Z. A institutes patent infringement proceedings against the alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in Austria; due to high litigation costs, A seeks to consolidate the proceedings before an Austrian court.

4.3.1  Consolidation in Cases of Multiple Infringements Would the Austrian court have jurisdiction to join the claims against defendants B, C and D?

At the outset, two techniques of consolidating related proceedings have to be distinguished. The first is that, based on particular factual circumstances, one and the same court has jurisdiction for each of the related proceedings advanced before it and consequently, for all of them. Methodically, this way of consolidating thus does not rely on the conferral of special jurisdiction for the related proceedings on a particular court, but on the mere fact that based on general jurisdiction or other grounds of special jurisdiction, one and the same court has jurisdiction for each of the related proceedings. Put differently, it presupposes rather than confers jurisdiction. In this context, it has to be noted that one and the same court has jurisdiction for each of the related proceedings only if in addition to international jurisdiction, it also has personal jurisdiction and subject-matter jurisdiction for each of them. Thus, this way of consolidating related proceedings depends not only on the rules of international jurisdiction. Further, at least in domestic Austrian procedural law, such a consolidation requires that in the related proceedings essentially the same claims based on essentially the same situation of fact are advanced.466 By contrast, the second technique of consolidating proceedings does not require that one and the same court has jurisdiction to hear all the related proceedings. Rather, it suffices that it has jurisdiction to hear at least one of them. For all other proceedings for which this court does not have jurisdiction, jurisdiction is conferred on it by way of consolidation. That way, consolidation constitutes a special ground of jurisdiction. Regularly, this requires a certain connection between the claims advanced in the related proceedings. Article 6(1) Brussels I, for example, requires that these claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. In Roche Nederland, the ECJ held that such a risk   s 11(1) no 2 Civil Procedure Act.

466

Austria  311 arises if the claims concern essentially the same situation of law and the same situation of fact.467 By contrast, in domestic Austrian law, related proceedings may be consolidated if the claims arise either from the same situation of law or the same situation of fact.468 For proceedings concerning intellectual property rights, however, it suffices that the proceedings concern essentially the same claims, based on essentially the same situation of fact.469 Thus, the special regime of domestic Austrian law for intellectual property rights echoes the regime of Brussels I. Compared to the general regime of Austrian law, this regime is on the one hand stricter as it requires for consolidation that both the situation of law and the situation of fact in the related proceedings are essentially the same, and on the other more lenient as it suffices that both situations are only essentially the same. For our hypothetical case, Article 6(1) Brussels I shall serve as the starting-point. Under the condition that the claims are closely connected, this provision confers on the courts of the country where one of the co-defendants is domiciled the jurisdiction to hear all related proceedings. Consequently, Austrian courts may consolidate such proceedings only if at least one of the co-defendants is domiciled in Austria. However, as none of the three codefendants in our hypothetical case is domiciled in Austria, the Austrian court seised by plaintiff A does not have jurisdiction over the related proceedings advanced against codefendants B, C and D. This gives rise to the question of whether these proceedings may be consolidated based on the rules of domestic Austrian law. The answer to this question depends on the scope of application that is left by Article 6(1) Brussels I for these provisions. On its face, Article 6(1) Brussels I applies only to those related proceedings in which all the co-defendants are domiciled in a Member State. It has been argued, however, that the provision should also apply if one or more of the co-defendants are domiciled in a third country, as long as at least one co-defendant is domiciled in a Member State. Methodically, this argument has two prongs. The first prong is that when drafting Brussels I, the European legislator did not sufficiently consider the problem of third countries. As a result, for codefendants domiciled in such countries, there is a lacuna in Brussels I, and this lacuna should be closed by applying Article 6(1) Brussels I by analogy.470 The second prong is that even though applying this provision to defendants domiciled in third countries may treat them worse than defendants domiciled in Member States, this discrimination does not run counter to the principle of non-discrimination, as the latter applies only to defendants domiciled in Member States.471 Against this argument, however, the counter-argument may be advanced that applying Article 6(1) Brussels I to defendants domiciled in third countries creates a considerable risk of abuse: if the plaintiff succeeds in establishing a claim against only one co-defendant domiciled in a Member State, he can drag all other co-defendants before the courts of that Member State. Moreover, this also applies if the plaintiff himself is not domiciled in a Member State. Nevertheless, the prevailing view considers Article 6(1) Brussels I to be applicable to related proceedings as long as at least one co-defendant is domiciled in a Member State.472 For domestic Austrian law this means that its provisions on the consolidation of related proceedings apply only to situations where all the codefendants are domiciled in a third country.   Case C-539/03 Roche Nederland [2006] ECR I-6535; Case C-98/06 Freeport [2007] ECR I-8319.   s 93(1) Civil Jurisdiction Act. 469   s 83c(2) Civil Jurisdiction Act. 470   Kropholler, above n 311, Art 6 no 7. 471   See Art 4(2) Brussels I. 472   Simotta, above n 225, Art 6 no 14. 467 468

312  Thomas Petz In this case, the domestic Austrian rules on international jurisdiction set up three different regimes for consolidating related patent infringement proceedings.473 The first is the general one provided for by section 93(1) Civil Jurisdiction Act. This regime confers jurisdiction to hear related proceedings on Austrian courts if at least one of the co-defendants is domiciled in Austria. Its personal scope of application is thus identical to that of Article 6(1) Brussels I. As a result, section 93(1) Civil Jurisdiction Act applies only to those matters that are not covered by Brussels I.474 Moreover, as in our hypothetical case none of the co-­ defendants is domiciled in Austria, the Austrian court seised may not base its jurisdiction to hear the related proceedings on this provision. The second regime is the special regime for the consolidation of related proceedings concerning the infringement of intellectual property rights set up by section 83c(2) Civil Jurisdiction Act. This regime requires, among others, that all the co-defendants have either established their business in Austria or engaged in infringing activities in Austria. As elaborated above, the place where a business is established does not necessarily coincide with the place where the defendant is domiciled.475 Thus, both connecting factors on which this jurisdiction is based differ from the connecting factor of Article 6(1) Brussels I. However, as it presupposes rather than confers international jurisdiction, such jurisdiction may not be based on section 83c(2) Civil Jurisdiction Act if all of the co-defendants are domiciled in a third country. In our hypothetical case none of the co-defendants has established his business in Austria and none of them has engaged in infringing activities there. As a result, the Austrian court seised by plaintiff A does not have jurisdiction over the related proceedings. Third, for patent infringement proceedings, section 162 Patent Act confers jurisdiction on a specific Austrian court, that is, the Commercial Court of Vienna. This court has jurisdiction for all proceedings concerning the infringement of a patent registered in Austria including the Austrian parts of European patents. As outlined above, if one and the same court has jurisdiction over all the related proceedings, this court may consolidate the proceedings based on section 11(1) no 2 Civil Procedure Act, provided that they concern essentially the same claim arising from essentially the same situation of fact. Thus, like the second regime of domestic Austrian law, this regime does not confer international jurisdiction on a court, but allows a court that has jurisdiction over the related proceedings to consolidate them. The wording of section 162 Patent Act, however, clearly indicates that this applies only if Austrian patents are infringed.476 By contrast, in our hypothetical case, the infringement proceedings concern only the foreign patents of plaintiff A. Consequently, if A advances the related proceedings before the Commercial Court of Vienna, the court may not consolidate them.477 In sum, the Austrian court seised by plaintiff A does not have jurisdiction to consolidate the related patent infringement proceedings advanced against co-defendants B, C and D. Under the assumption that at least one of the co-defendants is domiciled in a Member State, this follows from the fact that none of the co-defendants is domiciled in Austria as required for conferring international jurisdiction by Article 6(1) Brussels I. By contrast, if we assume that none of the co-defendants is domiciled in a Member State, this follows from the fact that in our hypothetical case none of them has established his business in   Art 4(1) Brussels I.   See Art 1(2) Brussels I. 475   See above 4.1.5. 476   For the Austrian part of European patents, this follows from s 7 Introductory Act to the Patent Treaties. 477   This conclusion spares us considering the relationship between s 83c(2) Civil Jurisdiction Act and s 162 Patent Act. 473 474

Austria  313 Austria, none has engaged in activities infringing A’s foreign patents there, and none has engaged in activities infringing A’s Austrian patent.

4.3.2  Consolidation in Case of a Breach of Licence Agreements Would the decision of the Austrian court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of a breach of the licence agreements?

This hypothetical case shares with the previous one the fact that none of the codefendants is domiciled in Austria. Consequently, jurisdiction over the related proceedings advanced by A may not be based on Article 6(1) Brussels I, as this provision requires that at least one of the co-defendants is domiciled in Austria.478 This, however, is not the end of the story. If one and the same Austrian court has jurisdiction to hear the related proceedings, this court may consolidate them based on section 11(1) no 2 Civil Procedure Act.479 Thus, as a first step we have to consider whether in our hypothetical case jurisdiction is conferred on one and the same Austrian court. Most likely, such a conferral may be based on the place of performance of the licence agreement. This requires us again to distinguish between defendants domiciled in Member States and defendants domiciled in third countries. For the first, this jurisdiction follows from Article 5(1) Brussels I, for the latter from section 88(1) Civil Jurisdiction Act, its counterpart in domestic Austrian law. Only if we succeed in establishing that regardless of where the defendants are domiciled, one and the same Austrian court has jurisdiction may we determine in a second step whether the claims advanced in these proceedings concern essentially the same claims based on essentially the same situation of fact as required by section 11(1) no 2 Civil Procedure Act for consolidating related proceedings. To start with, if a defendant is domiciled in a Member State, Article 5(1)(a) Brussels I confers both international and personal jurisdiction on the courts at the place of performance of the obligation in question.480 From this it follows that only if all the defendants have to perform the obligation which they have not honoured within the jurisdiction of one and the same Austrian court, will this court have jurisdiction to hear all the related proceedings. This requires determining in the first place the obligation in question. In this context, it has to be recalled that if a licensee exploits the patent in a way that contravenes the licence agreement, this exploitation constitutes an infringement of the patent. Thus, depending on the plaintiff ’s claim, such proceedings may not concern the free assumption of an obligation by one party towards another as required for applying Article 5(1) Brussels I.481 Consequently, rather than on this ground, the proceedings may be based   cf Simotta, above n 225, Art 6 no 14.   See above 4.3.1. This court has to have international, personal and subject-matter jurisdiction for all the related proceedings. 480   Recently, the ECJ has rendered another scenario unfeasible. This scenario was to consider licence agreements to be contracts for the provision of services under Art 5(1)(b) Brussels I. In this case, a court of the place where the services were provided or should have been provided has jurisdiction. Arguably, this is the place where the licensor is habitually resident. The ECJ, however, rejected the proposition that licence agreements are contracts for the provision of services. See Case C-533/07 Falco Privatstiftung [2009] ECR I -3327. The Austrian Supreme Court which referred this case to the ECJ alternatively considered the service to be provided at the place where the use of the right is allowed under the licence agreement provided that the right was also actually exploited there. See Falco, 17. 481   Case C-334/00 Fonderie Officine Meccaniche Tacconi v HWS [2002] ECR I-7357; Case C-27/02 Engler [2005] ECR I-481; OGH 4 Ob 110/01g, BOSS-Zigaretten I (2001) Medien und Recht 320; OGH 4 Ob 174/06a, Leerkassettenvergütung IV (2007) Medien und Recht 35 (holding that compulsory licence fees prescribed by law are substitutes for contractual licence fees and thus do not concern matters of tort). 478 479

314  Thomas Petz on Article 5(3) Brussels I.482 By contrast, the licensor’s claim for payment of the licence fee is a contractual claim. In our hypothetical case, however, the plaintiff obviously does not claim payment. Thus, we assume that the breach of the licence agreement concerns supplemental contractual duties assumed by the defendant, such as the duty not to manu­ facture goods that may be used to substitute the patented ones, or the duty to buy the resources required for manufacturing the products from certain producers. Most of these supplemental duties have in common that they impose on the licensee a duty to refrain from something.483 Consequently, the obligation in question is regularly the undertaking not to do something. On its face, these undertakings are not limited to a particular country and thus, there are multiple places of performance. In Besix, the ECJ held that in case of an undertaking not to do something which is not subject to any geographical limit, Article 5(1) Brussels I is inapplicable, as there is a multiplicity of places of performance.484 As a result, in our hypothetical case, the jurisdiction of the Austrian court may not be based on the place of performance. It may be argued, however, that Besix does not apply to licence agreements, as these are regularly limited to a particular country. Under this approach, in our hypothetical case the place of performance could confer jurisdiction on an Austrian court. Further, if the place of performance of the obligation in question is the same for all licence agreements, the court at the place of performance may also consolidate the related proceedings. Most likely this will occur if all the licence agreements provide for performance at the licensor’s principal place of business. This could occur if all the licensees are parties to one and the same licence agreement providing so, or if one licence agreement is dependent on another providing so. In practice, however, this scenario does not seem to come up very often because parties who agree upfront on the place of performance are regularly inclined to make a choice of court agreement as well. This is particularly true if the licence agreement is based on their standard terms. In case of a choice of court agreement, one and the same Austrian court would indeed have jurisdiction – but based on the parties’ choice, rather than on the place of performance. Consequently, we have to consider other scenarios in which the obligation in question has to be performed by all licensees at one and the same place. In this regard, two scenarios may be distinguished. The first scenario is that one and the same law applies to all licence agreements, and this law provides for performance at the one and the same place, for example, at the place where the licensor is domiciled. The second scenario is that different laws apply to the licence agreements, but for all these laws, the rules on performance determine one and the same place as the place of performance. Thus, both scenarios concern two issues: the issue of the applicable law on the one hand, and the issue of the default rules on the place of performance on the other. As regards the applicable law, absent a choice of law, one and the same law applies to all licence agreements if the law of the country where the licensor is habitually resident applies. 482   On the discussion whether infringement claims that are closely connected with contractual claims may be advanced before the courts at the place of performance and thus decided by one and the same court see Simotta, above n 225, Art 5 no 84 and 292–94. The ECJ arguably opposes conferring jurisdiction on one and the same court in such a scenario, see Case C-51/97 Réunion européenne SA and Others v Spliethoff ’s Bevrachtingskantoor BV and the Master of the vessel Alblasgracht V002 [1998] ECR I-6511. In any event, however, the court at the place of infringement may decide on the incidental question of whether the allegedly infringing activities are noninfringing because they are justified by a licence agreement. See Simotta, above n 225, Art 5 no 296 with further references. 483   cf Case C-533/07 Falco Privatstiftung [2009] ECR I-3327. 484   Case C-256/00 Besix SA v Wasserreinigungsbau Alfred Kretzschmar GmbH & Co [2002] ECR I-1699.

Austria  315 As argued above, this is the case if the licence agreement imposes neither a duty to create on the licensor, nor a duty to exploit on the licensee, or if it imposes a duty to create on the licensor, but no duty to exploit on the licensee.485 In these situations, Austrian law would apply to our hypothetical case as the licensor has his principal place of business in Austria. As a general rule, however, Austrian law considers the place of performance of an obligation to be at the debtor’s domicile. In our hypothetical case, the debtors are the licensees. Thus, even though Austrian law would apply to all licence agreements, there would be no common place of performance in Austria. As a result, the requirement that one and the same court has jurisdiction for all the related proceedings is not met in the first scenario. For the second scenario, it has to be noted that different laws apply if the connecting factor is either the habitual residence of the licensees or the use of the patented invention. As argued above, regardless of the duties imposed on the licensor, this requires that at least a duty to exploit is imposed on the licensees.486 However, if different laws apply, it seems rather unlikely that all of them determine the place of performance in the same way.487 Further, there is some reason to assume that if they do, they consider the place of performance to be located at the habitual residence of the debtor. As in our hypothetical case the debtors are the licensees, this leads to multiple places of performance, all of which are located outside of Austria. Thus, in sum, absent a place of performance common to all licence agreements that is located in Austria, the Austrian court seised by A has no jurisdiction for all the related proceedings in the first place. Thus, it is barred from taking the second step of consolidating them. For a different reason, the same holds true for defendants domiciled in a third country. The provision of domestic Austrian law on jurisdiction at the place of performance requires that the place of performance of the contract is either laid down expressly in, or follows implicitly from, the contract.488 This, in effect, amounts to an indirect choice of court   See above 2.3.2.4.   In detail, see above 2.3.2.4. 487   In particular, the Payment Services Directive, Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/ EC, 2005/60/EC and 2006/48/EC and repealing Directive 97/5/EC, [2007] OJ L 319/1, does not harmonise the rules on the place of performance of payments. See OGH 4 Ob 90/09b, Falco Privatstiftung (2010) Zeitschrift für Rechtsvergleichung 10. In our hypothetical case, this does not matter anyway, as no claim for payment has been advanced. 488   s 88(1) Civil Jurisdiction Act. As in this hypothetical case the related proceedings do not concern the patent, but the licence agreement, neither s 162 Patent Act nor s 83c Civil Jurisdiction Act is applicable. For the first, this follows clearly from its wording which refers only to claims based on the Patent Act and the Patent Act does not deal with contracts relating to patents. See Seber, above n 413, 279. The situation is more difficult as regards s 83c Civil Jurisdiction Act as the latter applies not only to the protection, but also to the ‘use’ of patents. Indeed, it has been argued that this also covers the use by the licensee based on a licence agreement. See Seber, above n 413, 279. The Austrian Supreme Court has not yet considered the application of s 83c Civil Jurisdiction Act to licence agreements. For contracts relating to the transfer of the right to the patent, however, its case law is ambiguous: in an older decision it considered s 83c Civil Jurisdiction Act applicable, whereas in a younger one it did not. Compare OGH 4 Ob 344/75, Substrate (1976) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 63 to OGH 4 Ob 24/92, Abfallbeizen (1993) Medien und Recht 149. In my view, the decisive criterion is that applying s 83c Civil Jurisdiction Act to contracts relating to intellectual property rights would have the effect that jurisdiction could not be established at the place of performance of these contracts: on the one hand s 83c Civil Jurisdiction Act does not accept the place of performance as a connecting factor, on the other it is an exclusive ground of jurisdiction that bars recourse to the special jurisdiction at the place of performance based on s 88 Civil Jurisdiction Act. See Simotta, above n 249, § 83c JN no 2. Thus, contracts relating to intellectual property rights would be treated differently from any other contract without a proper reason for doing so. In particular, the legislative history does not indicate that the Austrian legislator intended to bar this jurisdiction for contracts relating to intellectual property rights. Consequently, in my view, s 83c Civil Jurisdiction Act is inapplicable to contracts relating to intellectual property rights. As here Walter, above n 26, no 140 with further references. 485 486

316  Thomas Petz agreement. As a result, unlike under Article 5(1)(a) Brussels I, it is not required that the place of performance of the obligation in question is determined. In case of multiple licence agreements thus only if all these agreements provide expressly or implicitly for the same place of performance could the related proceedings be consolidated at that place. As indicated above, however, such a scenario is rather unlikely because if the parties to a licence agreement have agreed in advance on the place of performance, it is likely that they will also have made a choice of court agreement. In rare cases that the parties agree only on the place of performance, however, Austrian courts have jurisdiction to hear the related proceedings under the domestic Austrian regime if the place of performance is located in Austria.489 This brings us to the second step of our analysis, that is, the requirements for consolidating related proceedings. Section 11(1) no 2 Civil Procedure Act allows consolidation only if essentially the same claims based on essentially the same situation of fact are advanced.490 A typical example of such a scenario is a landlord who rented out several apartments and now sues several of his tenants for payment of rent.491 For the breach of a licence agreement by a multitude of licensees, the requirement of essentially the same situation of fact is met if the breach is nothing but a collective failure to pay the licensee fees. In our hypothetical case, however, the breach of the licence agreement does not concern the duty to pay, but only supplemental duties assumed by the licensees. In this case, the particularities of intellectual property rights seem to bar consolidation. Three such particularities may be singled out. The first is that different laws may apply to the different licence agreements and thus, the claims are based on different legal situations. This is true at least if absent a choice of law agreement all the licensees assume a duty to exploit. By contrast, if a single law is chosen for all the licence agreements, or if absent a duty to exploit the licensor is considered to effect the characteristic performance, one and the same law applies, and thus the legal situation on which the claims are based is the same.492 Here, the second particularity of intellectual property rights becomes crucial: the shape of such rights is determined by the law of the country for which protection is claimed.493 In our hypothetical case, for all three co-defendants this is the law of the country where the patent is registered. Further, the ambit of a licence depends on the shape of the intellectual property right for which the licence is granted. Thus, even if one and the same law applies to the licence agreement, the legal situation is different as different rights are licensed. As a result, the claims arising from the breach of the licence agreement are not similar.494 Finally, the third particularity of intellectual property rights is that the nonperformance of a licence agreement by the licensees is likely to differ from one licensee to the other. Consequently, also the situation of fact is different. This is of particular importance for our hypothetical case as the claims advanced by A arguably concern only breaches of supplemental duties and these duties do not depend on the contents of the intellectual 489   As both Art 5(1) Brussels I and s 88 Civil Jurisdiction Act confer not only international, but also personal jurisdiction on the courts of the place of performance, personal jurisdiction does not have to be considered separately. In domestic Austrian law, subject-matter jurisdiction over contractual claims depends on the amount in question. For the purpose of this hypothetical case, it is assumed that one and the same court has subject-matter jurisdiction. If the amounts in question differ so considerably that different courts have subject-matter jurisdiction, the proceedings cannot be consolidated. 490   Rechberger and Simotta, above n 311, no 327. See also Simotta, above n 249, § 83c JN no 24. 491   Rechberger and Simotta, above n 311, no 327. 492   For reasons of clarity, the situation as regards the applicable law is simplified here. In detail, see above 2.3.2.4. 493   See above 2.4.1. 494   This is of particular importance if rather than the breach of supplemental duties, payment of the licence fees is claimed.

Austria  317 property right that has been licensed. As a result, in our hypothetical case at least the situation of fact is not essentially same. In addition, if at least one of the licensees assumes a duty to exploit in her licence agreement, also the situation of law is not essentially the same. Thus, the Austrian court seised with the related proceedings may not consolidate them based on section 11(1) no 2 Civil Procedure Act. In sum, neither under the Brussels I regime nor under the domestic Austrian regime does the Austrian court seised in this hypothetical case have international jurisdiction over the related proceedings. Under the first regime this follows from the fact that the applicable rules on the place of performance will regularly not provide for a place of performance that is common to all obligations in question in the related proceedings. By contrast, under the latter regime this follows from the lack of an explicit or implicit agreement on the one and the same place of performance in the licence agreements. But even if we assume that under both regimes an Austrian court has jurisdiction, it may not consolidate the related proceedings because they concern neither the same situation of law nor the same situation of fact.

4.3.3  Consolidation in Case of a ‘Spider in the Web’ Assuming that B, C and D are members of a group of a corporation and take identical steps in the infringement of A’s patents. A seeks to consolidate the proceedings before an Austrian court where the coordinator of the infringing activities has its main place of business. Would this court consolidate the proceedings if it was to decide upon the request of A, and if so, under what conditions? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

In this hypothetical case, one of the co-defendants – the coordinator of the infringing activities – has its principal place of business in Austria. Consequently, Austrian courts have international jurisdiction for the proceedings advanced against this co-defendant based on Article 2(1) Brussels I. Domicile of one of the co-defendants in the country where the related proceedings are to be consolidated is also one of the requirements of Article 6(1) Brussels I for conferring jurisdiction. It is controversial, however, whether this provision confers jurisdiction only for those proceedings that are advanced against co-defendants domiciled in a Member State.495 Those who argue in favour of such a requirement stress that this prevents rendering a judgment that will eventually be unenforceable in the third country where the co-defendant is domiciled, whereas those who argue against it stress that not allowing consolidation in the case that the co-defendant is domiciled in a third country would treat co-defendants domiciled in Member States less favourably. Even though the wording of Article 6(1) Brussels I indicates that domicile in a Member State indeed is a requirement for conferring jurisdiction, we will not solve this controversy but provide solutions under both approaches. Thus, based on the domicile of the co-defendants, two approaches have to be distinguished. Under the first approach it suffices for conferring jurisdiction on the Austrian court seised that one of the co-defendants is domiciled in a Member State.496 In our hypothetical case, this requirement is met as the coordinator of the allegedly infringing activities is domiciled in Austria. Consequently, it does not matter whether the other co-defendants are domiciled in Member States or third countries. By contrast, under the second approach, the jurisdiction of the Austrian court seised has to be   See Simotta, above n 225, Art 6 no 9 with further references.   A Burgstaller and M Neumayr, above n 427, Art 6 no 8; Simotta, above n 225, Art 6 no 9.

495 496

318  Thomas Petz determined for each co-defendant individually based on his domicile.497 Consequently, for those who are domiciled in a Member State, the jurisdiction of the Austrian court is determined by Article 6(1) Brussels I, whereas for those who are domiciled in third countries, it is determined by the domestic Austrian rules. Against this background, we do not distinguish two factual scenarios, but rather analyse both regimes. Under the Brussels I regime, jurisdiction for the related proceedings requires that the claims advanced against the co-defendants are sufficiently closely connected. The reason for requiring such a connection is to avoid the risk of irreconcilable judgments resulting from separate proceedings on closely connected claims. In Freeport, the ECJ held that the mere fact that related claims are advanced on different legal bases does not amount to a risk of irreconcilable judgment.498 Such a risk exists, however, if the claims are based on essentially the same factual and legal situation. As regards patent infringement by multiple defendants, in Roche Nederland the ECJ considered both to be different – the factual situation because the co-defendants engaged in different activities, the legal situation because the patents were considered to be similar, but not identical.499 The latter conclusion is based on the observation that even under the single application procedure of the European Patent Convention, the contents of the patents depends on the domestic law of the countries for which they are granted. As a result, even though parallel patents are infringed, the legal situation is not essentially the same. Thus, applied to our hypothetical case, the Austrian court does not have jurisdiction to hear the related proceedings under Roche Nederland: the patents that are infringed are granted for different countries and thus, the legal situation is different.500 Further, absent such jurisdiction, raising the counterclaim that the patents are invalid does not have any effect on the jurisdiction of the Austrian court. The reason for this is that the counterclaim may have a de-consolidating effect only if the related proceedings were consolidated in the first place.501 Under the domestic Austrian regime, the situation is more complex as there are three different regimes that could apply, a general one for all types of proceedings, a more special one for proceedings concerning intellectual property rights and one special to patent 497   Mayr, above n 252, § 93 JN no 6; D Czernich in D Czernich, et al (eds), Kurzkommentar Europäisches Gerichtsstands- und Vollstreckungsrecht, 3rd edn (Vienna, LexisNexis, 2009) Art 6 no 6. 498   Case C-98/06 Freeport [2007] ECR I-8319. Followed by OGH 4 Ob 173/09h (2010) ecolex no 279. 499   Case C-539/03 Roche Nederland [2006] ECR I-6535. 500   For the infringement of copyright, the situation may be different because copyright law has been harmonised to a large extent. The Commercial Court of Vienna has recently referred this issue to the ECJ, see Case C-145/10 Painer. 501   If we assume for the sake of the argument that the related proceedings could be consolidated before the Austrian court at the domicile of the coordinator of the infringing activities, this court also has jurisdiction for those counterclaims that arise from the same facts on which the original claim was based. See Art 6(3) Brussels I. This requires that both the claim and the counterclaim result from one and the same situation of fact. This requirement is met for the claim and the counterclaim advanced by the coordinator of the activities as they both arise from his allegedly infringing activities that occurred in Austria. For the counterclaims advanced by the other defendants, however, it proves problematic. Here, Roche Netherland is again decisive, as the ECJ indicated in this judgment that coordinated activities in different countries constitute different situations of fact. Under this approach, the Austrian court seised with the related proceedings does not have jurisdiction for the counterclaims advanced by the other defendants. But even if we leave Roche Netherland aside and assume that the coordinated infringing activities constitute one and the same situation of fact, would the Austrian court lack jurisdiction for the counterclaims in our hypothetical case. The reason for this is that if the validity of a registered intellectual property right is raised as a counterclaim, the courts of the country where the right is registered have exclusive international jurisdiction. Cf Art 22(4) Brussels I for patents registered in Member States; for its reverse effect on patents registered in third countries see above 4.2.2. As a result, even if we assume that the Austrian court seised has jurisdiction for the related proceedings, it has jurisdiction only for the counterclaim of invalidity advanced by the coordinator of the allegedly infringing activities.

Austria  319 infringement proceedings only.502 Thus, we have to determine in the first place which of these regimes apply to our hypothetical case. As the special regime regularly prevails over the more general one, we will start our analysis with the one unique to patents. Section 162 Patent Act confers jurisdiction to hear patent infringement proceedings on a particular court, the Commercial Court of Vienna. Thus, this court – and only this court – has jurisdiction for all patent infringement proceedings advanced in Austria. This ground of jurisdiction, however, is limited to claims that are based on the Austrian Patent Act.503 As this Act applies only to patents that have been granted by the Austrian Patent Office based on the procedures provided for by the Act and to the Austrian parts of European patents, this ground of jurisdiction does not apply to foreign patents. In our hypothetical case, only the infringement claims advanced against the coordinator of the activities concern an Austrian patent whereas the infringement claims advanced against the other co-defendants concern foreign patents. As a result, the Commercial Court of Vienna does not have jurisdiction for all the related proceedings. This, however, is a prerequisite for consolidating the proceedings based on section 11(1) no (2) Civil Procedure Act. Thus, the special regime for patents does not allow the Austrian court seised by plaintiff A to consolidate the proceedings. This brings us to the special regime for intellectual property rights set up by section 83c(2) Civil Jurisdiction Act. This regime requires for allowing the related proceedings to be consolidated that Austrian courts have international jurisdiction for all the proceedings. Thus, like section 162 Patent Act, it presupposes rather than confers international jurisdiction. The jurisdiction of an Austrian court may be based on a business established in Austria, on domicile, on presence, or on infringing activities that occurred in Austria.504 In our hypothetical case, however, Austrian courts have jurisdiction only over the coordinator based on the business he has established in Austria, but not over the other co-defendants. In particular, as they engage in infringing activities only abroad, these activities may not confer jurisdiction on Austrian courts.505 As a result, the Austrian court at the place where the coordinator has established his business may not consolidate the related proceedings. This leaves us with the general regime of section 93(1) Civil Jurisdiction Act. This provision makes the international jurisdiction of Austrian courts for related proceedings dependent on three requirements. The first requirement is that different courts have general jurisdiction over the defendants. For natural persons, this means that they have to be domiciled or habitually resident, for legal persons that they have to have established their central administration in different jurisdictions. In multi-state situations, this requirement this is construed rather widely: It shall suffice that Austrian courts have general international jurisdiction with regard to only one of the co-defendants.506 This requirement is met in our hypothetical case if we assume that the coordinator of the activities has not only his principal place of business, but also his central administration in Austria. Such a wide construction of section 93(1) Civil Jurisdiction Act is based on two arguments, a substantive   See above 4.3.1.   Court of Appeals Vienna 1 R 52 (1960) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 64 (case note by F Schönherr); Seber, above n 413, 278. 504   Contrary to s 11(1) no 2 Civil Procedure Act, s 83c(2) Civil Jurisdiction Act does not require that one and the same court has jurisdiction for all the related proceedings. It allows consolidation, however, only for those proceedings for which Austrian courts have international jurisdiction. Thus, it does not confer international jurisdiction on Austrian courts. See OGH 4 Ob 02z, Magnetfeldtherapiegeräte II (2002) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht-LS no 151. 505   cf Simotta, above n 249, § 83c JN no 38 (referring to Austrian intellectual property rights); Schönherr, above n 415, 7 and, more leniently, above n 39, no 912.1. 506   Simotta, above n 249, § 93 JN no 5; Mayr, above n 252, § 93 JN no 4. 502 503

320  Thomas Petz one and a more formal one. The substantive argument stresses that in purely domestic cases, a defendant domiciled in Austria may be sued before a court other than that having general jurisdiction simply because one of his co-defendants is domiciled there. If this is the case, even more may a foreign defendant in proceedings for which Austrian courts do not have general jurisdiction be sued before such a court. The more formal argument relies on the wording of section 93(1) Civil Jurisdiction Act: on the one hand it requires that different courts have jurisdiction without specifying whether these courts have to be Austrian ones, on the other it provides expressly for consolidation before an Austrian court. Based on this wording, the Austrian Supreme Court concluded that related proceedings may be consolidated before an Austrian court even if Austria has general jurisdiction only over the proceedings advanced against one of the co-defendants.507 The court supported this conclusion by referring to the purpose of section 93(1) Civil Jurisdiction Act which is to provide for international jurisdiction if Austrian domestic procedural law allows to consolidate related proceedings that concern either the same situation of law or the same situation of fact. Thus, for meeting the requirement of general international jurisdiction it suffices that one of the co-defendants is domiciled in Austria. In our hypothetical case, this requirement is fulfilled as the coordinator of the activities is domiciled there. This brings us to the second requirement: the related proceedings have to concern either the same situation of law or the same situation of fact. As regards parallel patents, the situation of law is different as the scope and the contents of the patents regularly differ from country to country. In our hypothetical case, the coordinator of the activities has engaged in infringing activities in Austria, so A’s Austrian patent is infringed. As the other codefendants, however, did not engage in such activities in Austria, they did not infringe A’s Austrian patent, and in the countries where they engaged in such activities, they infringed foreign patents rather than the Austrian one. Thus, as the co-defendants infringe parallel patents rather than one and the same patent, the proceedings advanced by A in Austria do not concern the same situation of law. However, the second requirement is also met if the proceedings concern the same situation of fact.508 In our hypothetical case, the infringing activities are coordinated activities, and they are identical. At least for torts and unfair competition, such activities have been considered to concern the same situation of fact.509 Further, in a case of an exclusive licence agreement, the Linz Court of Appeals considered the breach of this agreement by both the author and a foreign publisher to concern the same situation of fact.510 Thus, arguably the activities of the co-defendants in our hypothetical case concern the same situation of fact. As both the first and the second requirements are met, consolidation depends on the third one. This requirement is that jurisdiction for the related proceedings could be conferred by a choice of court agreement on the court where the proceedings are to be consolidated. That way, it is ensured that proceedings for which no choice is allowed may not be transferred to another court by virtue of consolidation and thus, the inadmissibility of such a choice is circumvented. Contrary to proceedings concerning the validity of 507   OGH 5 Ob 615/83 Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 56/162. 508   This is a considerable difference to Art 6(1) Brussels I as construed in Roche Nederland. 509   OGH 4 Ob 80/08f, Digitale Blutdruckmessgeräte (2009) ecolex 42; G Schubert in H Fasching (ed), Kommentar zu den Zivilprozeßgesetzen, vol 2, pt 1, 2nd edn (Vienna, Manz, 2003) § 11 JN no 11. See also OGH 4 Ob 02z, Magnetfeldtherapiegeräte II (2002) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht-LS no 151. 510   See OGH 4 Ob 328/87, Apotheke Gottes II (1988) Medien und Recht 93 (case note by M Walter).

Austria  321 patents, in patent infringement proceedings choice of court agreements are admissible.511 Thus, also the third requirement of section 93(1) Civil Jurisdiction Act is met: jurisdiction for the related proceedings may be conferred on the court where the coordinator is domiciled because for patent infringement proceedings concerning Austrian patents choice of court agreements are effective. As a result, the court at the coordinator’s domicile has jurisdiction to hear the related proceedings.512 Thus, the solution of the domestic Austrian regime is different from that of Brussels I. This difference is mainly due to the independent normative value of the concept of the same situation of fact. As the Austrian court seised has jurisdiction under the domestic Austrian regime, the effects of counterclaims have to be determined. In this regard, two scenarios have to be distinguished, depending on the country of registration of the patent. In the first scenario, at least one patent is registered in a Member State. In this case, the effect of the counterclaim on the consolidated proceedings is determined by Article 22(4) Brussels I. Thus, international jurisdiction for the counterclaim of invalidity is conferred exclusively on the courts of the country where the patent is registered. Hence, in this scenario the Austrian court at the place where the coordinator is domiciled has to decline its jurisdiction for the consolidated proceedings once the counterclaim is raised.513 In the second scenario, all the patents are registered in third countries. In this case, the solution depends on whether the conferral on Austrian courts of exclusive international jurisdiction for proceedings having as their main object the validity of patents registered in Austria has the reverse effect, that Austrian courts do not have international jurisdiction for such proceedings if they have as their main object the validity of foreign patents.514 As argued above, the main argument for such a reverse effect is that otherwise the Austrian courts would render a judgment that is not enforceable in the country of registration.515 Under this approach, however, the reverse effect is not a matter of principle. Rather, it depends on whether the authorities in the country of registration assume exclusive jurisdiction for proceedings having as their main object the validity of patents. This has to be determined for each country individually. For the purpose of our hypothetical case, we assume that the authorities in the countries of registration have exclusive international jurisdiction. Thus, except for the coordinator of the allegedly infringing activities, the Austrian court seised does not have jurisdiction to hear the counterclaim of invalidity. As far as the counterclaims are concerned, the solution under the domestic Austrian regime is thus the same as under Brussels I even though it is based on a different reasoning.   See below 4.4.2 and 4.4.3.   As this result is different to the one reached based on s 83c(2) Civil Jurisdiction Act, the relationship between both provisions has to be determined. With the introduction of s 83c, the Austrian legislator wanted to merge and unify the various provisions dealing with intellectual property rights so that all issues relating to these rights are dealt with in one provision. This suggests that s 83(2) is the lex specialis to s 93(1) for intellectual property rights and thus derogates the latter as far as these rights are concerned. Cf OGH 4 Ob 02z, Magnetfeldtherapiegeräte II (2002) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht-LS no 151. This is important in two regards. First, proceedings concerning intellectual property rights can already be consolidated if they concern essentially the same situation of law and fact whereas all other proceedings can only be consolidated if they concern the very same situation of law and fact. Second, the consolidation of proceedings concerning intellectual property rights does not require that, at least one of the co-defendants is domiciled in Austria. Rather, it suffices that all of them only engaged in allegedly infringing activities in Austria while being domiciled in third countries. 513   In detail, see above 4.2.2. 514   This reverse effect follows from s 104(4) Civil Procedure Act as in this scenario all the defendants other than the one coordinating the allegedly infringing activities are domiciled in third countries and the patents which are claimed to be invalid are also registered in third countries. 515   See above 4.2.2. 511 512

322  Thomas Petz

4.4  Choice of Court Agreements A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing inter alia that his products do not fall under the scope of the licensed patents. A filed a suit against B seeking payment of the licence fees516 and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted clause is not enforceable. It is assumed that A and B are neither Austrian nationals nor do they have their domicile517 in Austria.

4.4.1  Choice of Court in Proceedings Concerning Licence Agreements Would the choice of court clause of the licence agreement be enforceable in Austria? Would the decision differ if the parties made a new choice of court agreement at the time when the dispute arose?

In this hypothetical case, the international jurisdiction of the Austrian courts depends on the effectiveness of a choice of court clause which is part of a patent licence agreement concluded between the parties to the dispute. The proper starting point for determining whether such a clause is effective is Article 23 Brussels I. This provision sets up several requirements, the first being the one that determines its scope of application vis-à-vis its counterpart in domestic Austrian law, section 104 Civil Jurisdiction Act. This requirement provides that Article 23 Brussels I applies if at least one of the parties to the choice of court agreement is domiciled in a Member State. It thus has two aspects which deserve some consideration. The first aspect is that it is not necessarily required that the defendant has to be domiciled in a Member State. Rather, Article 23 Brussels I is also applicable if only the plaintiff is domiciled in such a country. This makes good sense, as at the time of the conclusion of the choice of court agreement, the parties usually do not know who will be the plaintiff and who the defendant. The second aspect of this requirement is that none of the parties has to be domiciled in Austria. Thus, it suffices that the only link to Austria is that the parties have designated the Austrian courts to hear their dispute. Even though the requirement that at least one of the parties is domiciled in a Member State seems quite straightforward, the scope of application of Article 23 Brussels I has proved rather controversial. This controversy concerns three scenarios, but only one of them is of importance for our hypothetical case.518 In this scenario, both parties are domiciled in the same Member State, but they designate the courts of a different Member State to hear their dispute. The Austrian Supreme Court considered Article 23 Brussels I to be 516   The facts of this case study originally referred to damages for patent infringement. To better illustrate how choice of court agreements operate in proceedings concerning the breach of a contract relating to an intellectual property right on the one hand and in patent infringement proceedings on the other, we have limited the first hypothetical case to the contractual claim. 517   Originally, the facts referred to the place of business. As indicated above, the place of business does not always coincide with a person’s domicile, in particular in case of natural persons, but it regularly does. See above 4.1.5. As domicile is the connecting factor for general jurisdiction under Brussels I, this difference matters in particular as regards the personal scope of application of Art 23 Brussels I. To simplify this case study, we thus change it slightly by assuming that neither party is domiciled in Austria. 518   See Simotta, above n 225, Art 23 no 27–34 with further references.

Austria  323 inapplicable to this scenario as it involved a purely domestic dispute.519 This decision, however, has given rise to considerable criticism.520 In particular, it was found irreconcilable with the decision of the ECJ in Trasporti Castelletti.521 Based on a strict interpretation of the wording of Article 23 Brussels I, the ECJ held that only those considerations that relate to the requirements set up expressly by this provision may be taken into account when determining whether a choice of court agreement is effective. As the absence of a domicile of the parties in the country whose courts have been designated to hear the dispute is no such requirement, it is argued in legal writings that Article 23 Brussels I should apply to such a scenario. The Austrian Supreme Court has endorsed this approach in a more recent decision.522 Consequently, it now seems generally accepted that Article 23 Brussels I applies to such a scenario. As a result, for the purpose of our hypothetical case it does not matter in which Member State the parties are domiciled as long as at least one of them is domiciled in a Member State. This means that Article 23 Brussels I applies if either A or B or both of them are domiciled in a Member State.523 If this is the case, the effectiveness of the choice of court agreement depends on the other requirements set up by Article 23 Brussels I. One of these requirements is the specificity of the agreement, that is, that it relates to a ‘particular legal relationship’. In our hypothetical case, this relationship is the licence agreement. Another requirement is that the agreement is effected in a certain form such as, for example, in writing. Arguably, the licence agreement in our hypothetical case was done in writing, so this requirement is also met. Thus, as far as Article 23 Brussels I is concerned, the choice of court clause of the licence agreement concluded between A and B is effective. This brings us to the objection advanced by B against the jurisdiction of the Austrian courts based on the argument that the proceedings concern foreign patents. This argument has two aspects. On the one hand it brings to the court’s attention the territorial nature of patents, on the other it stresses that no infringing activities occurred in Austria. Both aspects, however, the right-related one and the activity-related one, are aspects of substantive law rather than procedural law. Thus, systematically, they should not be considered when determining international jurisdiction. This approach has also been endorsed by the ECJ in Trasporti Castelletti.524 Under this approach, as none of the requirements of Article 23 Brussels I relates to substantive law, substantive law considerations do not matter for determining jurisdiction. Consequently, the objection to the court’s jurisdiction advanced by B fails. As a result, the Austrian courts seised have international jurisdiction based on the choice of law clause of the licence agreement. Absent a designation by the parties, which specific Austrian court has jurisdiction to hear the case is determined by the Austrian Supreme Court among those courts that have subject-matter jurisdiction.525   OGH 1 Ob 240/02d (2004) Juristische Blätter 187.   Simotta, above n 225, Art 23 no 37 with further references. 521   Case C-159/97 Trasporti Castelletti [1999] ECR I-1597, 52. 522   OGH 10 Ob 40/07s (2008) Juristische Blätter 389. 523   Recently, the EU has signed the Hague Convention on Choice of Court Agreements, but has not yet ratified it. See Council Decision 2009/397/EC of 26 February 2009 on the signing on behalf of the European Community of the Convention on Choice of Court Agreements [2009] OJ L 133/1. Once it has done so, the relationship between this Convention and Brussels I will be determined by Art 26 of the Convention. According to this provision, if one of the parties is domiciled in a country outside the EU that has ratified the Convention (eg Mexico) rather than Art 23 Brussels I, the Convention will apply. See Simotta, above n 225, Art 23 no 10. 524   Case C-159/97 Trasporti Castelletti [1999] ECR I-1597, 52. 525   s 28 Civil Jurisdiction Act. In this context it has to be noted that s 162 Patent Act, which confers jurisdiction on the Commercial Court of Vienna, applies only to patent infringement proceedings, not to proceedings concerning 519 520

324  Thomas Petz This solution does not differ if a new choice of court agreement is made at the time the dispute arises. Article 23(1) Brussels I requires that the dispute relates to a ‘particular legal relationship’, but it does not require that the choice of court agreement is concluded at the same time as that relationship arises. Consequently, the choice of court agreement could also pre-date or post-date the existence of the relationship. For agreements that are concluded at the time the dispute arises, however, one limitation follows from the fact that a court may base its jurisdiction on a choice of court agreement only if that agreement has been reached by the time it decides on its international jurisdiction.526 The court seised based on the choice of court agreement, however, may not assess this jurisdiction on its own motion. Rather, it may do so only at the request of the defendant.527 In practice, the defendant will challenge the jurisdiction of the court once the plaintiff has initiated the proceedings. Thus, regularly, the choice of court agreement has to be concluded at the time the plaintiff advances his complaint at the latest. As a result, the parties in our hypothetical case may make a new choice of court agreement at the time the dispute arises provided that they do so before the plaintiff advances his complaint. As regards the relationship between the original and the new choice of court agreement, the latter prevails over the first.528 Only in the event that none of the parties is domiciled in a Member State, the effectiveness of the choice of court agreement is determined by the domestic Austrian rules on international jurisdiction. The requirements which a choice of court agreement has to meet to confer international jurisdiction on Austrian courts are set up in section 104 Civil Jurisdiction Act. For the purpose of this hypothetical case, three of these requirements are of particular importance. The first requirement is a formal one: the choice of court agreement has to be done in writing.529 As in our hypothetical case the agreement is part of the licence agreement, and such agreements are regularly done in writing, this requirement seems to be met. The second requirement focuses on the specificity of the choice of court agreement: it requires that such an agreement relates to a ‘particular dispute’ or to a ‘particular legal relationship’. In our hypothetical case, as the choice of court agreement is part of the licence agreement, it obviously refers to this agreement. Thus, this requirement is also met. In this context, it has to be noted that specificity is the only relational requirement for a choice of court agreement to be effective under domestic Austrian law. Consequently, the dispute does not have to have any additional contacts to Austria.530 The flipside of the requirement of specificity thus is that the international jurisdiction of Austrian courts may not be contested on the basis that the patent that has been licensed is a foreign one. As a result, the objection to the court’s jurisdiction advanced by defendant B fails.

patent licences. Arguably, however, the Austrian Supreme Court will nevertheless designate that court because of its specific knowledge in matters of patent law. 526   OGH 7 Ob 338/98a Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 71/206; Simotta, above n 225, Art 23 no 55; Schoibl, above n 441, Art 26 no 38. 527   OGH 7 Ob 338/98a Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 71/206; Simotta, above n 225, Art 24 no 70. 528   Simotta, above n 225, Art 23 no 81. 529   In detail, see Simotta, above n 225, Art 23 no 312. 530   Introductory Remarks to the 1997 Amendment of the Civil Jurisdiction Act, 35 and 37–38; Rechberger and Simotta, above n 311, no 103.

Austria  325 Finally, the third requirement set up by section 104 Civil Jurisdiction Act requires considering the international jurisdiction of the Austrian court which the choice of court agreement purports to exclude. If that jurisdiction is based on particular grounds, the agreement lacks any effect. This requirement thus makes the effectiveness of a choice of court agreement dependent on the ground of jurisdiction which it purports to exclude. In this regard, two types of grounds of jurisdiction have to be distinguished. The first type is those grounds that confer international jurisdiction expressly on an Austrian court. Thus, contrary to the general approach, for these grounds international jurisdiction does not follow implicitly from personal jurisdiction. The second type is those grounds for which section 104(4) Civil Jurisdiction Act provides that the international jurisdiction of the Austrian court may not be derogated by a choice of court agreement.531 Against this background, the solution to our hypothetical case depends on the answers to two questions: first, do Austrian courts have international jurisdiction for disputes concerning a patent licence agreement absent of a choice of court agreement? Second, if they do, are the grounds on which this jurisdiction is based of such a nature that the choice of court agreement has no effect? Already the first question has to be answered in the negative in most cases.532 The only exception seems to be that the parties have chosen Austria expressly or implicitly as the place of performance of the licence agreement so that Austrian courts have international jurisdiction based on section 88(1) Civil Jurisdiction Act. And even if this is the case, this ground of jurisdiction would not render the choice of court agreement ineffective: section 88(1) Civil Jurisdiction Act neither confers expressly international jurisdiction on the court at the place of performance nor is it contained in the list of section 104(4) Civil Jurisdiction Act. Consequently, as the third requirement also is met, the choice of court agreement concluded by A and B is enforceable in Austria.533 The solution in domestic Austrian law is thus the same as under the Brussels I regime. This decision would not differ if the parties made the choice of court agreement at the time the dispute arises. Such a difference in the point in time would only matter if it was required for conferring international jurisdiction on a court that such an agreement had already been concluded before the dispute had arisen. Section 104 Civil Jurisdiction Act, however, does not contain such a requirement. According to its wording, the choice of court agreement has to relate to a ‘particular dispute’ or to a ‘particular legal relationship’. The reference to a ‘particular dispute’ clearly indicates that the dispute could already have arisen at the time the choice of court agreement is concluded. One limitation, however, follows from the assessment of its international jurisdiction by the Austrian court seised. As under the domestic Austrian regime this assessment is done in limine litis, the choice of court agreement has to be concluded at that time at the latest.534 In practice, as under Brussels I, this requires that it is made before the plaintiff advances his complaint.   See above 4.2.3.   See Seber, above n 413, 282. On the inapplicability of s 83c Civil Jurisdiction Act to licence agreements, see above n 488. For s 162 Patent Act, the same result follows from the fact that the Patent Act does not deal with licence agreements and thus the requirement that the claims are based on the Patent Act is not met. Cf s 35 Patent Act. Thus, both grounds of jurisdiction are limited to infringement proceedings. In such proceedings, however, international jurisdiction could be conferred on the courts of a different country by a choice of court agreement. See Koppensteiner, above n 34, § 35 no 7; Simotta, above n 249, § 83c JN Act no 2. 533   See Rechberger and Simotta, above n 311, no 101. 534   cf s 42(1) Civil Jurisdiction Act. See also Rechberger and Simotta, above n 311, no 110; O Ballon in H Fasching, Kommentar zu den Zivilprozeßgesetzen, vol 1, 2nd edn (Vienna, Manz, 2000), § 42 JN no 3; Schoibl, above n 441, Art 26 no 38. In detail, see below 4.4.3. 531 532

326  Thomas Petz

4.4.2  Choice of Court in Infringement Proceedings Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings?

In one aspect at least, the solution to this hypothetical case is similar to that of the first one. This aspect is the distinction of two scenarios based on the parties’ domiciles. Thus, if at least one of the parties to the choice of court agreement is domiciled in a Member State, the Brussels I regime applies. By contrast, if both parties are domiciled in a third country, the domestic Austrian regime on international jurisdiction is applied. There are, however, two aspects in which this hypothetical case differs from the first one. The first is that the proceedings are patent infringement proceedings rather than proceedings concerning the breach of a patent licence agreement. The second aspect is the point in time when the choice of court agreement is concluded. Rather than at the time the dispute arises, the choice of court agreement is made once the Austrian court has been seised with the patent infringement proceedings.535 These differences require us to analyse two issues. The first is whether the choice of court agreement of the licence agreement also governs the infringement proceedings. The second is whether the parties may reach a choice of court agreement after the court has already been seised with the infringement proceedings. We will start with the first issue and then move on to the second one. If at least one party is domiciled in a Member State, for a choice of court agreement to be effective, Article 23 Brussels I requires the dispute to have arisen in connection with a ‘particular legal relationship’. In our hypothetical case, this relationship is the licence agreement. In his suit, however, plaintiff A does not claim that this agreement has been breached, but rather that his patents have been infringed. Thus, the proceedings are tort law proceedings, not contract law proceedings. Consequently, only if the choice of court clause of the licence agreement also applies to patent infringement proceedings between the same parties may a court’s jurisdiction for the latter be based on that clause. In this regard, two approaches may be advanced. The first is to construe the notion of ‘a particular legal relationship’ extensively so that it covers not only the licence agreement, but also the patent that is licensed.536 This approach would thus honour the close relationship between the licence agreement and the intellectual property right to which that agreement relates. The second approach is to focus on the intentions of the parties. These intentions shall be determined based on the principles developed by the court seised. This determination is considered to be a matter of fact, not a matter of law.537 This approach thus honours party autonomy to a large extent. In Duffryn and Benincase, the ECJ endorsed the latter approach.538 An Austrian court would thus regularly hold that the choice of court agreement made with regard to the licence agreement also applies to related patent infringement claims, as holding otherwise would undermine contrary to the parties’ intentions the choice of court agreement.539 535   This difference is based on the assumption that as the choice of court agreement is concluded ‘in’ patent infringement proceedings, the court has already been seised with these proceedings. If one does not share this assumption, the solutions advanced as regards the relevant point in time for choice of court agreements in the previous hypothetical case apply to this one, too. See above 4.4.1. 536   See Kropholler, above n 311, Art 23 no 18 and 69. 537   Simotta, above n 225, Art 23 no 300. 538   Case C-214/89 Duffryn [1992] ECR I-1745; Case C-269/95 Benincase [1997] ECR I-3767. 539   Schlosser, above n 247, Art 23 no 38; Simotta, above n 225, Art 23 no 304.

Austria  327 By contrast, if none of the parties is domiciled in a Member State, the domestic Austrian rules on international jurisdiction apply. Section 104 Civil Jurisdiction Act requires for a choice of court agreement to be effective that it relates to a ‘particular dispute’ or to a ‘particular legal relationship’. Thus, specificity of the choice of court agreement is required. In our hypothetical case, the choice of court clause is part of the licence agreement and thus it obviously refers to that agreement, whereas the claims advanced by plaintiff A are claims arising out of the infringement of the patent that has been licensed. Consequently, as under Article 23 Brussels I, it has to be determined whether this dispute relates to the licence agreement as the ‘particular legal relationship’ for which the choice of court agreement was made. And again, as under Brussels I, so under the domestic Austrian regime such a relationship is recognised, and rightly so.540 Thus, this requirement is met. And, as indicated above, it also has a flipside that deserves some consideration: as specificity is the only relational requirement, no links between the dispute and Austria are required.541 Consequently, it does not matter that rather than an Austrian patent, foreign patents have been infringed. This brings us to the second issue, that is, the effectiveness of a choice of court agreement concluded after an Austrian court has already been seised with the infringement proceedings. If at least one party is domiciled in a Member State, Article 24 Brussels I provides that once the defendant enters an appearance before an Austrian court lacking international jurisdiction without contesting that court’s jurisdiction, jurisdiction is conferred on that court.542 The jurisdiction conferred by appearance has sometimes been described as an ‘implicit’ choice of court agreement as opposed to the ‘express’ choice of court agreements based on Article 23 Brussels I. An appearance is entered not only if the defendant argues on the merits of the case in the oral hearings, but also if he does so in his written answer to the complaint. In our hypothetical case, the only ground on which the Austrian court may base its jurisdiction is the choice of court agreement. As indicated above, in practice an ‘express’ choice of court agreement has to be made, at the latest, at the time the plaintiff brings his action.543 If no such agreement has been concluded at that time, however, the court may not decline its jurisdiction. This follows from the possibility that international jurisdiction may be conferred on the court by the appearance of the defendant.544 Consequently, if B enters an appearance before the Austrian court seised without contesting its jurisdiction, international jurisdiction is conferred on that court. By contrast, if both parties are domiciled in a third country, there are two main differences to the Brussels I regime. The first difference concerns the court’s assessment of its international jurisdiction. According to section 42 Civil Jurisdiction Act, once the court has received the complaint it has to decide on its own motion whether it has jurisdiction.545 This means that an ‘express’ choice of court agreement has to be concluded and brought to the court’s attention at the time when it decides in limine litis on its jurisdiction at the latest. As in our hypothetical case the jurisdiction of the Austrian court may only be based 540   See Simotta, above n 249, § 104 JN no 87 (arguing that such infringement claims still concern the performance of the contract). Note the different approach as regards Art 23 Brussels I: there, the prevailing view makes recourse to the parties’ intentions, whereas here, it construes the requirement of a ‘particular legal relationship’. 541   See above 4.4.1. Introductory Remarks to the 1997 Amendment of the Civil Jurisdiction Act, 35 and 37–38; Rechberger and Simotta, above n 311, no 103. 542   See Case C-412/98 Group Josi [2000] ECR I-5925; OGH 3 Ob 380/97 (1998) Juristische Blätter 726; Simotta, above n 225, Art 24 no 5 with further references. 543   See above 4.4.1. 544   Art 24 Brussels I. 545   See Ballon, above n 534, § 42 JN no 3.

328  Thomas Petz on the choice of court agreement, this agreement has to be concluded at the time when the plaintiff brings this complaint. Only if the court mistakenly does not decide on its international jurisdiction in limine litis and continues with the proceedings may an appearance by the defendant confer jurisdiction on it. In these rare cases, the second difference to the Brussels I regime becomes important. This difference aims at ensuring that the defendant makes a well-informed decision when appearing without contesting the court’s jurisdiction. To this avail, section 104(3) Civil Jurisdiction Act requires that the defendant is either represented by an attorney or a public notary or instructed by the judge on the possibility of contesting the court’s international jurisdiction and on the consequences of such a contest. Only if this requirement is met would the court assert jurisdiction based on the defendant’s appearance. In this regard, the Austrian regime is stricter than Brussels I. In sum, as far as applying the choice of court clause of the licence agreement to the infringement proceedings is concerned, under both Brussels I and the domestic Austrian rules on international jurisdiction the clause is considered applicable to the latter proceedings. As regards the conferral of jurisdiction by appearance, however, there is a remarkable difference. Under the regime of Brussels I, such an ‘implicit’ choice requires only that B enters an appearance without contesting the jurisdiction of the court. By contrast, under the domestic Austrian regime, an ‘implicit’ choice of court agreement during the proceedings by the defendant’s appearance may confer jurisdiction only if the Austrian court seised mistakenly did not decide on its international jurisdiction.

4.4.3  The Counterclaim of Invalidity in Infringement Proceedings Would the court enforce an exclusive choice of court clause in patent infringement proceedings if the defendant raised the counterclaim that the patents are invalid?

At the outset it has to be stressed that if a choice of court agreement is exclusive, counterclaims may be advanced only before the court designated by the parties.546 Whether a choice of court agreement is exclusive depends on its construction. As a general rule, under the Brussels I regime a choice of court agreement is exclusive unless the parties provide otherwise,547 whereas under the domestic Austrian regime the opposite is true.548 In our hypothetical case, however, the counterclaim is a special one as it concerns the validity of a foreign patent. Under both the Brussels I regime and the regime of domestic Austrian law, the effectiveness of a choice of court agreement may be affected adversely by the exclusive jurisdiction of the courts of the country of registration for proceedings concerning the validity of the patent. In detail, the solution to this hypothetical case depends not only on where the parties are domiciled, but also on where the patents that are allegedly infringed are registered: Domicile is decisive for determining whether Article 23 Brussels I or its counterpart in domestic Austrian law, section 104 Civil Jurisdiction Act, applies. Registration is decisive for determining whether jurisdiction for proceedings concerning the validity of the patent is based on Article 22(4) Brussels I or section 104 Civil Jurisdiction Act.   See OGH 2 Ob 74/00x (2000) Zeitschrift für Rechtsvergleichung no 76.   OGH 6 Ob 275/01m (2002) Recht der Wirtschaft 603. On this issue see P Oberhammer, ‘Internationale Gerichtsstandsvereinbarungen: Konkurrierende oder ausschließliche Zuständigkeit?’ (1997) Juristische Blätter 434. 548   OGH 2 Ob 180/07w (2008) Österreichische Juristenzeitung-LS no 11; OGH 4 Ob 21/02w, Manpower III (2003) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 11. 546 547

Austria  329 For those patents that are registered in a Member State, two scenarios have to be distinguished depending on the domicile of the parties. The first scenario is that at least one party is domiciled in a Member State. In this case, the effectiveness of the choice of court agreement is determined by Article 23 Brussels I.549 According to its paragraph 5, this provision bars the enforcement of choice of court agreements that confer international jurisdiction for proceedings concerning the validity of a patent on the courts of a country other than that where the patent is registered. The purpose of this provision is thus to preserve the exclusivity of the jurisdiction conferred on the courts of the country of registration by Article 22(4) Brussels I. Hence, the crucial question in our hypothetical case is whether once the counterclaim of invalidity is raised the court seised with the infringement proceedings based on the choice of court agreement has to decline its jurisdiction of its own motion. The answer to this question depends on the proper construction of Article 22(4) Brussels I. As elaborated above, the ECJ indicated in GAT that the counterclaim of invalidity has this effect.550 Thus, in our hypothetical case, once defendant B challenges before the Austrian court designated by the agreement as the forum for the patent infringement proceedings the validity of patents registered abroad, the court has to decline its jurisdiction of its own motion.551 For different reasons, this conclusion holds also true for the second scenario. In this scenario, the patent is registered in a Member State, but the parties are domiciled in third countries. In this case the effectiveness of the choice of court agreement is determined by recourse to domestic Austrian law in general, and to section 104 Civil Jurisdiction Act in particular. International jurisdiction for the counterclaim of invalidity, however, is conferred by Article 22(4) Brussels I exclusively on the courts of the Member State where the patent is registered. In case of such an exclusive conferral, the domestic regime does not apply.552 Consequently, also in this scenario the Austrian court seised based on the choice of court agreement has to decline its jurisdiction for the infringement proceedings of its own motion. This renders that agreement ineffective. For those patents that are registered in third countries, again two scenarios have to be distinguished, depending on where the parties are domiciled. In the first scenario, at least one of the parties is domiciled in a Member State. In this case, Article 23 Brussels I applies. The solution thus depends on whether one endorses the theory of reverse effect as regards Article 22 Brussels I.553 On its face, Article 22(4) Brussels I is inapplicable to proceedings concerning the validity of patents registered in a third country, and consequently, Article 23(5) Brussels I does not render ineffective a choice of court agreement that confers international jurisdiction for such proceedings on Austrian courts. Consequently, the Austrian   See above 4.4.1.   See above n 421. 551  Under GAT, this solution would be the same even if the validity of the patent was raised as a defence rather that by way of counterclaim. See in detail above 4.2.3. 552   Art 4(1) Brussels I. 553   See above 4.2.2. In our hypothetical case, the reverse effect does not affect international jurisdiction based on the defendant’s domicile in a Member State, but on a choice of court agreement. This, however, does not make any difference as the purpose of attributing a reverse effect is to preserve the (presumably) exclusive jurisdiction of the country where the right is registered and for this purpose, the nature of the ground of jurisdiction which it affects does not matter. What it decisive for the reverse effect thus is not the ground of jurisdiction on which the Austrian court would base its jurisdiction, but the exclusive conferral of jurisdiction for the proceedings concerning the validity of a patent under both Art 22(4) Brussels I and its counterpart in the domestic law of the country where the patent is registered. For attributing a reverse effect in case of a choice of court agreement see Kropholler, above n 311, Art 22 no 7; Tiefenthaler, above n 422, Art 22 no 7. 549 550

330  Thomas Petz court chosen by the parties would have international jurisdiction to decide on the validity of such patents. The prevailing view, however, considers Article 22(4) Brussels I to have reverse effect: if the patent is registered in a third country whose authorities assume exclusive jurisdiction for proceedings concerning its validity, no Austrian court may assume jurisdiction based on Article 23 Brussels I.554 Technically, this follows from an application by analogy of Article 23(5) Brussels I. Thus, under the assumption that the authorities of the country of registration indeed assume such exclusive international jurisdiction for proceedings concerning the validity of a patent, the Austrian court seised with the infringement proceedings based on the choice of court agreement is required to decline its jurisdiction on its own motion. The second scenario is the rather rare case that neither the parties are domiciled nor the patents are registered in a Member State, but a choice of court agreement conferring international jurisdiction on Austrian courts has been concluded. In this case, the effectiveness of the choice of court agreement is determined by section 104 Civil Jurisdiction Act. Thus, the question arises whether under its domestic regime Austria assumes exclusive jurisdiction for proceedings concerning the validity of an Austrian patent and, if so, whether this jurisdiction has a reverse effect if the validity of foreign patents comes up by way of counterclaim. As regards the first question, Austria indeed assumes exclusive international jurisdiction for proceedings concerning the validity and the registration of Austrian patents.555 This jurisdiction, however, does not seem to trump choice of court agreements. The reason for this is that this ground of jurisdiction is not mentioned in the exclusive list of grounds of jurisdiction which have such an effect in section 104(4) Civil Jurisdiction Act. As indicated above, however, when amending this provision, the Austrian legislator wanted to streamline it with its counterpart of the Lugano regime.556 Under the latter, exclusive jurisdiction for proceedings concerning the validity of a patent is conferred on the courts of the country of registration, and this conferral renders a choice of court agreement ineffective. Thus, as the first question has to be answered in the affirmative, we proceed to the second one on the reverse effect. The answer to this question is closely linked to the reverse effect of Article 22 Brussels I: if one endorses the theory of reverse effect based on the argument that otherwise the Austrian court would render a judgment that is unenforceable in the country of registration for Brussels I – as we do – no different conclusion may be reached as regards the domestic Austrian regime.557 Thus, also the exclusive conferral of jurisdiction for proceedings concerning the validity of a patent on the Austrian Patent Office has reverse effect. Consequently, again under the assumption that the courts of the third country where the patent is registered assume exclusive jurisdiction for the proceedings concerning the validity of the patent, the Austrian court seised based on the choice of court agreement has to decline its jurisdiction of its own motion. Thus, the choice of court agreement would not be enforceable in Austria.558 To sum up, in this hypothetical case, the choice of court agreement does not confer jurisdiction for the infringement proceedings on the Austrian court if the counterclaim of invalidity is raised. The reason for this is different for patents registered in a Member State and   In detail, see above 4.2.2.   s 57(1) Patent Act confers jurisdiction for these issues on the Austrian Patent Office and thus, an administrative agency. On the lack of subject-matter jurisdiction of Austrian courts for proceedings which – like counterclaims of invalidity – have as their main object the validity of a patent, see above n 458. 556   See above 4.2.3. 557   See above 4.2.2. 558   For a different conclusion with valid reasons, see Seber, above n 413, 286–88. 554 555

Austria  331 patents registered in third countries: whereas it follows for the first directly from the conferral of jurisdiction on the authorities of the Member State where the patent is registered by Article 22(4) Brussels I, it follows for the latter from the reverse effect of Austria assuming exclusive international jurisdiction for proceedings having as their main object the validity and registration of Austrian patents.

4.4.4  Arbitration Agreements Would the parties’ arbitration agreement be enforceable under Austrian law? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

As the Brussels I regime does not apply to arbitration in general and arbitration agreements in particular, the solution to this hypothetical case depends on the domestic Austrian rules on dispute resolution by arbitration.559 These rules, however, apply only if the arbitration tribunal is seated in Austria.560 Thus, we assume that it is. For subjecting a dispute to arbitration, section 582(1) Civil Procedure Act sets up two requirements. The first requirement is that the claim advanced in the Austrian proceedings is of a pecuniary nature. The emphasis of this requirement thus is on the claim rather than the right that is infringed. Claims arising from the infringement of an Austrian intellectual property right and claims based on a breach of contract relating to an Austrian intellectual property right regularly meet this requirement. In our hypothetical case, however, the claims concern foreign intellectual property rights. This raises the question of which law determines the pecuniary nature of these claims. With this question, we touch upon the more general issue of how to determine whether the requirements for subjecting a dispute to arbitration are met. In this regard, two approaches have been advanced. The first approach is to determine it based on the law applicable to the dispute (lex causae), the second to determine it based on Austrian law as the law of the arbitration tribunal seised (lex fori). In Austria, the prevailing view endorses the latter approach.561 Thus, whether the requirements for subjecting a dispute to arbitration are met is determined on the basis of Austrian law. For claims concerning foreign intellectual property rights, this requires them to be treated as if they were Austrian claims. Consequently, in our hypothetical case the infringement claims and the claims based on breach of contract are considered to be of a pecuniary nature. Thus, the first requirement is met. The second requirement for subjecting a dispute to arbitration is that rather than an administrative agency, civil courts have jurisdiction to hear the claims. Under the lex fori approach, it is not decisive for claims concerning foreign intellectual property rights that the civil courts of the country for which protection is claimed have jurisdiction, but that the Austrian civil courts would have jurisdiction if the claims concerned Austrian intellectual property rights. As both contractual claims as well as infringement claims relating to intellectual property rights concern civil matters, Austrian civil courts have jurisdiction. Thus, as both requirements are met in our hypothetical case, the dispute may be subjected to arbitration. As a result, the arbitration agreement is enforceable. What seems problematic, however, is the issue of the validity of an intellectual property   See Art 1(2)(d) Brussels I.   s 577(1) Civil Procedure Act. 561   OGH 7 Ob 502/96 (unpublished); C Hausmaninger in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 4, pt 2, 2nd edn (Vienna, Manz, 2007) § 582 JN no 62. 559 560

332  Thomas Petz right. This issue may come up in three different scenarios.562 In the first scenario, validity is raised by the defendant as a defence in infringement proceedings or in proceedings concerning the breach of a contract relating to an intellectual property right. In this case, the issue of validity does not constitute the claim, but only a defence. The wording of section 582(1) Civil Procedure Act indicates that only the claim has to be taken into account when determining whether a dispute could be subjected to arbitration. Thus, raising the defence of invalidity does not affect the jurisdiction of the tribunal. Consequently, in our hypothetical case the tribunal may decide on the validity of the patent.563 This decision, however, does not have any binding effect: As elaborated above with regard to judgments, only the holding of a judgment has binding effects.564 If the validity of an intellectual property right is raised as a defence, it will be treated procedurally as an incidental question. A decision on such a question, however, becomes only part of the reasoning, but not of the holding of the judgment. This rule applies equally to awards rendered by tribunals seated in Austria.565 Thus, in our hypothetical case the tribunal could decide on the issue of validity of the foreign patent, but this decision would not have binding effect.566 In the second scenario, the defendant in infringement proceedings advances a counterclaim of invalidity. In this case, the main object of the dispute is the invalidity of the respective intellectual property right. As elaborated above, in this case the Austrian civil courts have jurisdiction to hear the counterclaim if Austrian patents are concerned.567 Hence, arguably the claim that such a right does not exist may be subjected to arbitration. What is crucial in this case is the effect of the award. Contrary to the first scenario where the invalidity is raised as a defence and thus constitutes an incidental question only, in this scenario the invalidity constitutes the main object of the dispute. Consequently, it will be dealt with in the holding of the judgment rather than only in its reasoning. This means that the decision on this issue has binding effect. This binding effect, however, is limited to the parties to the dispute.568 As claims concerning foreign patents are to be treated in arbitration pro­ ceedings before a tribunal seated in Austria as if they were claims concerning an Austrian patent, the same is true also for foreign patents. Finally, in the third scenario, rather than the defendant, the plaintiff claims that an intellectual property right is invalid. For intellectual property rights registered in Austria, jurisdiction for such proceedings is regularly conferred on the Austrian Patent Office and thus on an administrative agency. This is particularly true for Austrian patents.569 Consequently, 562   These scenarios apply to all intellectual property rights with the exception of copyright. Claims concerning the existence of a copyright in a piece of work may not be subjected to arbitration before a tribunal seated in Austria. The reason for this is that under the dualistic approach of Austrian copyright law, the existence of copyright protection also means the existence of moral rights, and the claim that the latter do not exist is not a pecuniary one. Non-pecuniary claims may only be subjected to arbitration if the parties are allowed to settle the claims. As the existence of a copyright in a piece of work concerns the grant of that right by a legal order, however, the claim that this right does not exist may not be subject to a settlement. Thus, the claim that a piece of work is not protected by copyright may not be subjected to arbitration. See Hausmaninger, above n 561, § 582 JN no 31 and 48. As the pecuniary nature of the claim and the possibility of a settlement are determined by the lex fori, it does not matter whether under the applicable law copyright is only an economic right and thus the claim that a piece of work is not protected is of a pecuniary nature. 563   See G Kodek in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 5, pt 1, 2nd edn (Vienna, Manz, 2008) Art 1 no 166. 564   In detail, see above 4.2.2. 565   s 607 Civil Procedure Act; Hausmaninger, above n 562, § 607 JN no 35. 566   See Hausmaninger, above n 562, § 607 JN no 35. 567   See above 4.2.2. 568   Hausmaninger, above n 562, § 607 JN no 5 and 41. 569   s 57(1) Patent Act. The decision on this issue has effects erga omnes.

Austria  333 as the requirement that for those proceedings civil courts have jurisdiction is not met, arbitration agreements are not effective to the extent that the validity of such rights is concerned.570 This applies regardless of whether the intellectual property rights are registered in Austria or in another country.571 Thus, even if in our hypothetical case the civil courts of the country where the patent is registered had jurisdiction for proceedings concerning the validity of the patent, the arbitration agreement would not be effective. By contrast, the existence of unregistered rights is regularly determined in Austria by civil courts. Thus, one could argue that with regard to those rights, the arbitration agreement is effective. The tribunal could thus decide on the existence of these rights, but only with effects inter partes.572 As a result, under the assumption that the tribunal is seated in Austria, the arbitration agreement would be enforceable if the issue of validity is raised by a counterclaim or as a defence whereas it would be unenforceable if it is raised as the original claim.

4.5  Parallel Proceedings A owns a product patent in country X. B who is located in Austria produces a product identical to that for which A has the patent and exports that infringing product to X. Having found out about the infringing activities, A files an infringement suit before an Austrian court. However, before A brings this suit in Austria, B launches an action in X seeking a declaration that he is not liable for the infringement of the patent owned by A.573

4.5.1  Parallel Proceedings in the Country of Registration What procedural steps would an Austrian court take having regard to the proceedings pending in X? Would its decision be different if the dispute was related to intellectual property rights that are not subject to registration?

Article 27(1) Brussels I provides that where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than that first seised shall stay its proceedings of its own motion until such time as the jurisdiction of the court first seised is established. This provision thus applies only if the parallel proceedings are advanced before the courts of Member States.574 In our hypothetical case, the Austrian court which has been seised second has international jurisdiction based on the defendant’s domicile. Consequently, the procedural steps it has to take depend on whether country X where the courts have been seised first is also a Member State. If X is a Member State, the court second seised has to stay of its own motion its proceedings if two requirements are met.575 The first requirement is that the parallel proceedings concern the same parties. In our hypothetical case, the patent infringement proceedings are   s 582 Civil Procedure Act. Hausmaninger, above n 562, § 582 JN no 32.   See Hausmaninger, above n 562, § 582 JN no 33. 572   See above n 440. 573   This case study originally provided that A owned patents in two countries and sought for a declaration of non-infringement in both of them. In this case, it is crucial in which country the proceedings for such a declaration had been initiated first. As regards the jurisdiction of the Austrian court seised with the infringement proceedings, however, it does not make any difference in which country the proceedings for a declaration of non-infringement have been advanced first because the Austrian court is always the one seised second. For this reason, the hypothetical case has been simplified. 574   Kropholler, above n 311, Vor Art 27 no 2; OGH 8 Ob 18/98t (2009) Zeitschrift für Ehe- und Familienrecht 63. On this decision see also the case note by M Nadeleimsky in (2009) Zeitschrift für Ehe- und Familienrecht 74. 575   Art 27(1) Brussels I. 570 571

334  Thomas Petz brought by A against B and the proceedings for a declaration of non-infringement by B against A. Consequently, even though both parties act in different capacities in the parallel proceedings, the proceedings concern the same parties.576 The second requirement is that the proceedings involve the same cause of action. In Gubisch, the ECJ construed this requirement rather widely: if the ‘heart’ of the two actions is the same, they involve the same cause of action.577 In our hypothetical case, at least the ends that the actions have in view are different, as one aims at a declaration of non-infringement and the other on remedies for an infringement. In The Tatry, however, the ECJ held that an action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same ‘heart’ as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss.578 Against this background, the parallel proceedings in our hypothetical case do concern the same cause of action.579 As both requirements are thus met, the Austrian court seised by A has to stay its proceedings of its own motion.580 This stay will last until the court first seised has established its jurisdiction. In our hypothetical case, the court seised in country X may assume jurisdiction based on Article 5(3) Brussels I as due to the import and the distribution of the infringing products in that country, the harmful event occurred there. The further procedural steps of the Austrian court depend on the decision of the court in X: if it declines jurisdiction, the Austrian court will resume its proceedings; if it assumes jurisdiction, the Austrian court will decline jurisdiction. If the dispute is related to unregistered intellectual property rights, the main difference is that the right may exist not only in country X, but also in Austria. In this case, it becomes crucial for which country A claims protection in the infringement proceedings advanced before the Austrian court, and for which country B asks the court in X for a declaration of non-infringement.581 In this regard, two scenarios may be distinguished. In the first, A claims protection for a country and B asks for a declaration of non-infringement concerning his activities in the same country. In this case, the parallel proceedings concern the same unregistered intellectual property right and thus under The Tatry, they have the same cause of action.582 As a result, the Austrian court has to stay its proceedings, as it is the court second seised. By contrast, in the second scenario the solution is more controversial. In this scenario, A claims protection for one country whereas B asks for a declaration of noninfringement concerning his activities in the other. In this case, the solution depends on whether we consider the unregistered intellectual property right to be territorial or ubiquitous in its nature. Under a territorial approach, the parallel proceedings would concern different domestic unregistered rights. As the ECJ held in Roche Nederland that the infringement of such different rights did not concern the same legal situation, the cause of action 576   P Mayr in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, vol 5, pt 1, 2nd edn (Vienna, Manz, 2008) Art 27 no 20. 577   Case C-114/86 Gubisch Maschinenfabrik [1987] ECR 4861. 578   Case C-406/92 The Tatry [1994] ECR I-5439. 579   In this context, it has to be noted that in our hypothetical case obviously in both proceedings protection is claimed for country X and thus the law of that country applies. As a result, one and the same law applies to the infringement claim advanced by A in the proceedings before the Austrian court and the proceedings for a declaration of non-infringement advanced by B before the court of country X. Thus, the issue whether the same cause of action requires that the claims are based on one and the same domestic law does not arise. In Roche Nederland, the ECJ indicated that if different domestic laws apply, the legal situation is different and thus, also the cause of action is not the same. See Case C-539/03 Roche Nederland [2006] ECR I-6535, 31. 580   OGH 6 Ob 139/98d (1999) Zeitschrift für Rechtsvergleichung no 46. 581   OGH 4 Ob 110/01g, BOSS-Zigaretten I (2001) Medien und Recht 320. 582   Thus, it does not matter for this scenario whether unregistered intellectual property rights are territorial or ubiquitous in their nature. But see below n 584.

Austria  335 would thus not be the same in this scenario.583 By contrast, under the ubiquitous-right approach, the parallel proceedings would concern one and the same unregistered right, and thus the same legal situation. As a result, the parallel proceedings would have the same cause of action. Hence, in this scenario the crucial issue is whether unregistered intellectual property rights are ubiquitous in their nature and thus may be treated differently in case of parallel proceedings. In Austria, the prevailing view still endorses a territorial approach.584 Consequently, the solution developed by the ECJ in Roche Nederland applies to both registered and unregistered intellectual property rights.585 This means that in this scenario, the cause of action is different as different domestic laws apply. Consequently, the Austrian court may continue with its proceedings. In sum, as far as unregistered intellectual property rights are concerned, the solution thus depends on which country protection is claimed for by A in the infringement proceedings before the Austrian court, and which noninfringement is claimed for by B before the court in X.586 By contrast, if X is a third country, the effects of the proceedings for a declaration of non-infringement that have been initiated in that country before infringement proceedings are advanced in Austria have to be determined by domestic Austrian law. For parallel proceedings before domestic courts, section 233(1) Civil Procedure Act provides that the court second seised has to decline its jurisdiction of its own motion if the ‘same claim’ as before the court first seised is advanced.587 This rule is supplemented by similar rules for parallel proceedings before foreign courts in bilateral and multilateral treaties on the recognition and enforcement of foreign judgments.588 In this regard, the most important multilateral treaty is the Lugano Convention to which the EU, Switzerland, Iceland and Norway are parties.589 This Convention contains the same rule on parallel proceedings as Brussels I. Thus, proceedings are considered to be parallel if they involve the same cause of action and are brought between the same parties.590 Against this background, if X is a third country the solution to this hypothetical case depends on whether Austria and X are parties to a treaty on the recognition and enforcement of judgments. As the chances are low that they are, we will assume that they are not.   Case C-539/03 Roche Nederland [2006] ECR I-6535. On this decision see Kur, above n 443.  OGH 4 Ob 399/80, Bacher-Krippe (1981) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 138; OGH 4 Ob 125/93, Adolf Loos II (1994) Medien und Recht 26; OGH 4 Ob 135/06s, Fall Gruppe D (2006) Medien und Recht 387; Schönherr, above n 39, no 907 and 907.4; Walter, above n 26, no 6; Briem, above n 21, 110; Simotta, above n 249, § 83c JN no 38. But see Lurger, above n 22, 128 and 134. 585   Currently, a request for a preliminary ruling advanced by the Commercial Court of Vienna is pending before the ECJ in which the Court asked whether Roche Nederland also applies to copyright, as this field of law has been harmonised to a large extent by Directives. See Case C-145/10 Painer. This request, however, still relies on the territorial nature of copyright and considers a consolidation of the parallel proceedings only mandated because the contents of copyright is similar within the Member States. Thus, it does not construe copyright as a ubiquitous right. 586   See OGH 4 Ob 58/03p, BOSS-Zigaretten V (2004) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht no 49 (trade mark infringement proceedings concerning activities in Austria advanced first before a German and then before an Austrian court have the same cause of action); OGH 4 Ob 118/06s, Red Bull (2007) Evidenzblatt no 26 (proceedings concerning the infringement of a Community trade mark and proceedings concerning the infringement of a German trade mark concern a different cause of action). 587   The domestic Austrian concept of the ‘same claim’ is different from that of the ‘same cause of action’ in Brussels I as the latter focuses more on the ends of the claim. See OGH 4 Ob 58/03p, BOSS-Zigaretten V (2004) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht no 49. 588   In detail, see Mayr, above n 576, Anhang Art 27–30 no 3. Most of the bilateral treaties concluded by Austria became inapplicable when Austria became a party to the Lugano Convention. Thus, only the bilateral treaties with Israel, Liechtenstein, Tunisia and Turkey are still of practical importance. With the exception of the treaty with Turkey, all these treaties contain provisions on parallel proceedings. On these treaties see also below 4.6.1. 589   On this Convention, see above n 456. 590   Art 27(1) Lugano Convention. 583 584

336  Thomas Petz Absent a treaty provision on parallel proceedings, it is generally accepted that section 233(1) Civil Procedure Act applies by analogy to parallel proceedings before a foreign court.591 This analogy is based on the observation that the underlying principle of reducing the risk of irreconcilable judgments by avoiding parallel proceedings is valid equally for parallel proceedings before domestic courts and parallel proceedings before a domestic and a foreign court. In the latter scenario, however, the risk of irreconcilable judgment is reduced: Whereas the holding of a domestic judgment has binding effect once it is rendered, foreign judgments have such an effect only once they are recognised in Austria. Thus, contrary to parallel proceedings before domestic courts, a judgment resulting from parallel proceedings before a foreign court is irreconcilable with an Austrian judgment only after recognition. Most likely, the irreconcilability comes up if enforcement of the foreign judgment in Austria is sought. Hence, to prevent an Austrian court which is seised second from rendering a judgment that could turn out to be unenforceable because of being irreconcilable with the judgment rendered by the foreign court seised first and recognised and declared enforceable in Austria, the Austrian court has to assess whether a judgment issued by that foreign court should be recognised in Austria.592 Only after the court has made this assessment may it apply section 233(1) Civil Procedure Act by analogy to the parallel proceedings before the foreign court. This assessment, however, does not require establishing with certainty that the foreign judgment will be recognised in Austria. Rather, it suffices that its recognition is established with some probability.593 Nevertheless, this requires us to look at the rules on recognition in domestic Austrian law.594 Recognition in Austria requires in the first place that Austrian judgments are recognised in the country where the foreign judgment has been rendered.595 Thus, it is based on the principle of reciprocity. This principle, however, is considered to be honoured only if recognition of Austrian judgments in the country where the foreign judgment has been rendered is guaranteed by law. Thus, the reciprocity that is required is a formal one.596 Such a guarantee may follow from bilateral or multilateral treaties on the recognition and enforcement of judgments. Such treaties, however, regularly contain also a special provision on parallel proceedings. Thus, to this extent, their provisions on the recognition are of no importance. Alternatively, reciprocity could be guaranteed by an administrative order issued by the Austrian government.597 This technique, however, has been employed mainly 591   E Schumann, ‘Internationale Rechtsanhängigkeit (Streitanhängigkeit)’ in W Rechberger and R Welser (eds), Festschrift für Winfried Kralik zum 65 Geburtstag (Vienna, Manz, 1986) 301, 306; Mayr, above n 576, Anhang Art 27–30 no 9. The wording of s 233(1) Civil Procedure Act refers only to ‘courts’, without indicating whether they have to be domestic ones. Thus, taken literally, this provision applies not only to parallel proceedings before different Austrian courts, but also to parallel proceedings before an Austrian court and a foreign court. Nevertheless, the purpose of this provision is to apply only to domestic parallel proceedings. Thus, it may only be applied by analogy to parallel proceedings before a foreign court. 592   OGH 1 Ob 161/38 SZ 19/137; OGH 8 Ob 82/05z (2005) Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen no 127; W Rechberger and P Oberhammer, Exekutionsrecht, 5th edn (Vienna, Facultas WUV, 2009) no 121; P Mayr, above n 439, § 233 JN no 32. As recognition rather than enforceability is decisive, it does not matter that the judgment rendered in the proceedings for a declaration of non-infringement may not be enforceable in the country where it is rendered. For the unenforceability of such judgments in domestic Austrian law, see below 4.6.2. 593   Mayr, above n 439, § 233 JN no 32; Schumann, above n 591, 308. 594   As this scenario involves a third country, Brussels I does not apply to the recognition of foreign judgments. On the domestic Austrian regime on the recognition of foreign judgments see below 4.6.1. 595   s 79(2) Enforcement Act [Exekutionsordnung] RGBl 79/1896 as last amended by BGBl 519/1995. 596  OGH 3 Ob 229/06g (2006) Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen no 179. 597   See below 4.6.1.

Austria  337 in matters of family law so far. Thus, absent a treaty on the recognition and enforcement of judgments between country X and Austria, it is rather unlikely that judgments rendered by the courts of X are recognised in Austria. As a result, the Austrian court may proceed with its proceedings even though it has been seised second.598 This brings us back again to the question of whether the solution is different for disputes relating to unregistered intellectual property rights. In general, the regime of domestic Austrian law is the same for registered and unregistered intellectual property rights. In particular, there is no difference with regard to determining the probability that the judgment rendered by a court in X is recognised in Austria. Thus, in practice, contrary to the regime of Brussels I, the problem that the infringement proceedings in Austria may concern the Austrian unregistered right whereas the proceedings for a declaration of non-infringement in X concern the unregistered right in X does not come up. Nevertheless, it may be interesting to note that the Austrian Supreme Court has arrived at the same solution as the ECJ in Roche Nederland in the case of a bilateral treaty. It held that if in the proceedings advanced before the Austrian court protection is claimed for Austria only and in the proceedings before the foreign court for that country only, the cause of action is different.599 As a result, if recognition is based on a bilateral treaty, the result will regularly be the same as under the Brussels I regime.

4.5.2  Parallel Proceedings outside the Country of Registration What procedural steps would an Austrian court take if B brought his suit before a court of a third country W challenging the validity of the patent in country X?

Again, Article 27(1) Brussels I serves as the starting point of our analysis. This provision applies only to parallel proceedings before the courts of different Member States. As Austria, the country where the infringement proceedings are initiated, is a Member State, the application of this provision depends on whether W, the country where the proceedings on the validity of the patent are initiated, is also a Member State. Otherwise, the domestic Austrian rules on parallel proceedings apply. This requires us again to distinguish two scenarios. If W is a Member State, the Austrian court seised with the infringement proceedings has to stay its proceedings of its own motion because it has been seised only second. The court in W, however, has to decline of its own motion its jurisdiction once it assesses it.600 If X, the country where the patent is registered, is a Member State, this follows from the exclusive conferral of jurisdiction for proceedings concerning the validity of the patent on the court of the country of registration.601 If X is a third country, the same applies, but it follows from 598   In purely domestic cases, the ‘legitimate interest’ in the proceedings for a declaration of non-infringement may be lost if subsequent infringement proceedings are initiated: s 228 Civil Procedure Act requires that the plaintiff has such an interest, and the interest has to be present until the last hearing before the court of first instance. See OGH 3 Ob 925/23 Sammlung der Entscheidungen des österreichischen Obersten Gerichtshofs in Zivilsachen 5/328. For copyright, however, the Supreme Court held that subsequent infringement proceedings take away the legitimate interest in proceedings on a declaration of non-infringement only if all remedies available in copyright law are advanced in the infringement proceedings. OGH 4 Ob 307/63 (1964) Österreichische Blätter für gewerblichen Rechtsschutz und Urheberrecht 36. As regularly this is not the case, there is still a legitimate interest to proceed with the proceedings concerning the declaration of non-infringement. Arguably, this applies also if the proceedings for a declaration of non-infringement have been advanced before foreign courts. See OGH 4 Ob 91/90, Imitationsmöbel (1991) Juristische Blätter 800; Seber, above n 413, 289. 599  OGH 4 Ob 91/90, Imitationsmöbel (1991) Juristische Blätter 800 (construing the provision on parallel proceedings of the Austrian-Italian treaty on the enforcement of judgments in a competition law case). 600   Art 25 Brussels I. 601   Art 22(4) Brussels I.

338  Thomas Petz the reverse effect of the conferral of exclusive jurisdiction for such proceedings on the courts of the Member States for patents that are registered in Member States: as a decision on the validity by a foreign court is likely to be unenforceable in the country of registration because the authorities of that country will regularly assume exclusive jurisdiction for such proceedings, no foreign authority may assume jurisdiction for such proceedings in the first place.602 As a result, regardless of whether X is a Member State, the court in W seised by B has to decline its jurisdiction of its own motion.603 Only after the court in W has reached this decision may the Austrian court seised second resume its proceedings.604 In this case, however, regularly some time has passed and some expenses have occurred. For rights that are granted only for a limited period of time even such little delay is particularly annoying. Consequently, some argue that requiring the court second seised to stay its proceedings in any event may encourage bringing abusive suits before courts that obviously have no jurisdiction.605 For this reason, they propose that the court second seised should not defer to the jurisdiction of the court first seised if the judgment rendered by the latter is not enforceable based on Article 35(1) Brussels I. This provision bars the recognition of judgments that have been rendered by a court assuming international jurisdiction in a way that conflicts with the rules of jurisdiction of Brussels I. In our hypothetical case, the judgment in the proceedings concerning the validity of a patent rendered by the courts of country W will not be recognised in Austria because the patent is not registered in W. As just indicated, if the country of registration is a Member State, this follows directly from the exclusive conferral of international jurisdiction on the courts of the country of registration for proceedings concerning the validity of a patent whereas if it is a third country, it follows from its reverse effect.606 Based on this non-recognition in Austria, it could thus be argued that in the first place, no deferral should be made to the jurisdiction of a court that does not have jurisdiction. In effect, this would amount to making the assessment of a court concerning its jurisdiction dependent on the enforceability of the foreign judgment.607 This approach, however, is irreconcilable with both the wording of Article 27 Brussels I and the structure of Brussels I.608 Thus, the procedural step that the Austrian court has to take is staying its proceedings until the court in country W has declined its jurisdiction. By contrast, if W is not a Member State, the domestic Austrian rules on parallel proceedings apply. As indicated in the first hypothetical case, absent a treaty on the recognition and enforcement of foreign judgments to which both Austria and W are parties, or an administrative order issued by the Austrian government providing for recognition of judgments rendered in W, there is no risk of irreconcilable judgments, as the foreign judgment will not be recognised in Austria. As a result, the Austrian court seised with the infringement proceedings will proceed with its proceedings even though it has been seised only second. Thus, under domestic Austrian law, rather than the issue advanced before the court first   In detail, see above 4.2.3 (arguing for an application by analogy of Art 22(4) and Art 25 Brussels I).  Under GAT, this applies equally to proceedings having as their main object the validity of a patent and proceedings in which the validity comes up only as an incidental question. See above 4.2.2 and 4.2.3. In this hypothetical case, the validity of the patent is the main object of the proceedings. 604   Art 27(1) Brussels I. 605   R Fentiman in U Magnus and P Mankowski (eds), Brussels I Regulation (Munich, Sellier, 2007) Introduction to Art 27–30 no 55; Burgstaller and Neumayr, above n 427, Art 27 no 26. 606   See Art 22(4) Brussels I. 607  OGH 6 Ob 295/00a (2001) Zeitschrift für Rechtsvergleichung 192; Mayr, above n 576, Art 27 no 3; MR McGuire, Verfahrenskoordination und Verjährungsunterbrechung im Europäischen Prozessrecht (Tübingen, Mohr Siebeck, 2004) 114. See also Case C-159/02 Turner [2004] ECR I-3565. 608   Kropholler, above n 311, Art 27 no 19. 602 603

Austria  339 seised, the existence of a treaty or an administrative order is decisive for the procedural steps that the Austrian court seised second has to take.

4.6  Recognition and Enforcement of Foreign Judgments A court of foreign country X decides a case between the parties A and B ruling that A is the owner of a patent registered in Austria. A refers to an Austrian court asking to recognise and enforce the foreign judgment.

4.6.1  Recognition of a Foreign Judgment in Austria Could the foreign judgment concerning the ownership be recognised in Austria? How would the recognising court assess the international jurisdiction of the rendering court?

In our hypothetical case, the court in country X rules that one of the parties is the owner of a patent. This requires us to consider in which procedural set-ups it may issue such a ruling. Against the background of Austrian law, two such set-ups may be distinguished. In the first, the issue of ownership of a patent is the main object of the proceedings.609 The typical example is that of the inventor who was not the first to file a patent application, who claims that the person who was eventually granted the patent must transfer the patent to him.610 In such proceedings, the court will rule on who is the owner of the patent. In the second procedural set-up, the existence, construction and performance of an agreement to transfer is the main object of the proceedings.611 This agreement may concern a transfer of the right to the patent or a transfer of the patent itself. The typical example of such proceedings is that of the employer who sues the employee to effect the transfer of the right to a patent as agreed upon in the employment contract. In such proceedings, the court will rule on whether the transfer has to be effected. However, as the transfer of a right changes the ownership of the right, this decision also affects the ownership. The difference between the two procedural set-ups thus is that in the first, any change in the ownership of a patent follows directly from the judgment, whereas in the second, it follows only indirectly from the enforcement of a judgment on an agreement to transfer. Even though our hypothetical case seems to concern only the first procedural set-up, we will analyse both. We do so because under both the Brussels I regime and the domestic Austrian one, a different treatment of these two set-ups is mandated. This brings us to the scope of application of the two regimes in the first place. The Brussels I regime applies to the recognition of all judgments on civil and commercial matters rendered by the courts of another Member State.612 Depending on the country of origin of the judgment thus two scenarios concerning the recognition in Austria have to be distinguished. In the first scenario, country X is a Member State. Consequently, the recognition of the judgments rendered by its courts is governed by Brussels I. Under this regime, as a general rule, a judgment rendered in the country of origin is recognised automatically in the   See Friebel and Pulitzer, above n 61, 405.   See for Austrian patent law s 49(5) Patent Act. For these proceedings, jurisdiction is conferred on the Patent Office rather than on the civil courts, see s 57(1) Patent Act. 611   Patent Office AA A-1540–29/5, 6 (1930) Patentblatt 144; L Munk, Das österreichische Patentgesetz (Berlin, Heymann, 1901) 140. 612   Art 32 Brussels I. 609 610

340  Thomas Petz country of recognition, that is, without any special recognition procedure being required.613 This rule, however, does not apply if the court of origin assumes international jurisdiction in a way that conflicts with particular grounds of jurisdiction provided for by Brussels I. In this case, the recognition of the foreign judgment is barred.614 One of these grounds is the exclusive jurisdiction of the courts of the country of registration for proceedings having as their main object the validity or registration of a registered intellectual property right.615 In our hypothetical case, the patent is registered in Austria and thus, the Austrian courts have exclusive jurisdiction in case the proceedings before the courts of country X have as their main object the validity or registration of the patent registered in Austria. The crucial issue thus is whether proceedings which directly or indirectly concern the ownership of a patent have as their main object the validity or registration of the patent. At this point, we have to make recourse to the two procedural set-ups distinguished at the outset. For the second procedural set-up, the proceedings concerning the agreement to transfer, this issue has been considered by the ECJ in Duijnstee.616 Based on the argument that exclusive jurisdiction is an exception and thus such a ground of jurisdiction has to be construed narrowly, the Court held that proceedings concerning an employment contract transferring the right to a patent do not qualify as proceedings having as their main object the validity or registration of the patent. By contrast, for the first procedural set-up, the proceedings concerning the ownership of the patent, the situation is less clear. Here, the factual situation from which these proceedings arise may serve as a starting point. This situation is characterised by the fact that the person who should be the patent-holder because he is the inventor does not hold the patent. Thus, the registration in the patent registry does not echo the actual ownership situation properly. In Duijnstee, the ECJ indicated that proceedings concerning the legality of the registration are proceedings concerning the registration of the patent.617 In our view, granting the patent to a person other than the inventor concerns the legality of the registration. As a result, the courts of the country of registration have exclusive jurisdiction for the proceedings which arise from this situation. Under Brussels I, the solution to our hypothetical case is thus different for proceedings having as their main object the ownership of a patent on the one hand and proceedings having as their main object the agreement to transfer on the other. For the first, Austrian courts have exclusive international jurisdiction because the patent is registered in Austria. Consequently, if such proceedings are advanced before the courts of country X, the judgment rendered by these courts will not be recognised in Austria. In effect, the Austrian court will review the jurisdiction of the court of origin in this case. By contrast, for the second type of proceedings, Austrian courts do not have exclusive international jurisdiction, even though the patent is registered in Austria. Consequently, the judgment rendered by a court in country X in such proceedings is automatically recognised in Austria without reviewing the international jurisdiction of the court of origin.618 In the second scenario, country X is a third country. Thus, the recognition of a judgment rendered in that country is governed by the domestic Austrian rules on the recognition of foreign judgments. In line with the Brussels I regime, these rules do not set up a special   Art 33(1) Brussels I.   Art 35(1) Brussels I. 615   Art 22(4) Brussels I. 616   Case C-288/82 Duijnstee [1983] ECR 3663. 617   ibid, no 26. 618   Art 35(3) Brussels I. 613 614

Austria  341 recognition procedure. Rather, the foreign judgment is automatically recognised in Austria, provided that two requirements are met.619 The first is that Austrian judgments are recognised in the country of origin and this recognition is guaranteed by law.620 Thus, formal reciprocity is required.621 In terms of this reciprocity, it does not suffice that in practice Austrian judgments are recognised in the other country.622 To guarantee by law the recognition of Austrian judgments in the other country, two techniques have been employed. The first is to conclude a bilateral or multilateral treaty on the mutual recognition and enforcement of judgments. In civil and commercial matters, the most important multilateral treaty concluded by Austria is the Lugano Convention. This treaty guarantees recognition of Austrian judgments in Switzerland, Norway and Iceland.623 In addition, Austria has concluded a few bilateral treaties on the recognition and enforcement of judgments, for example, with Liechtenstein,624 Israel,625 Tunisia626 and Turkey.627 The second technique is that the Austrian government issues an administrative order on the recognition of judgments rendered in a particular country. Such an order will regularly be issued only if the government of the other country does the same. The latter technique is mainly issued in family law. Against this background, under domestic Austrian law the solution to this hypothetical case depends on the assumptions that we make. Under the assumption that Austria has neither concluded a treaty on the recognition and enforcement of judgments with country X, nor issued an administrative order to recognise the judgments rendered in that country, the requirement of formal reciprocity is not met. Consequently, a judgment rendered by the courts of country X will not be recognised in Austria. By contrast, if we assume that Austria has concluded a treaty on the recognition and enforcement with country X or issued an administrative order to recognise the judgments rendered by the courts of that country, the second requirement becomes important. This requirement is that the court of origin has international jurisdiction for the proceedings in which the judgment was rendered. Thus, the jurisdiction of that court is reviewed by the Austrian court of recognition. The rules of this review, however, depend on the technique employed for guaranteeing formal reciprocity. In the event that formal reciprocity follows from a treaty, the international jurisdiction of the court of origin is regularly assessed based on the rules on international jurisdiction laid down by the treaty itself.628 Recognition in Austria thus requires that the court in country X has international jurisdiction based on those rules of jurisdiction of country X that have become part of the treaty with Austria.629 Consequently, solving our hypothetical case requires that we know the provisions of the respective treaty. By contrast, in the event that   Rechberger and Oberhammer, above n 592, no 121.   Patent Office JAA 24.11.1933 (1934) Patentblatt 34.   Friebel and Pulitzer, above n 61, 354. 622   But see W Jakusch in P Angst (ed), Kommentar zur Exekutionsordnung, 2nd edn (Vienna, Manz, 2008) § 79 no 5. 623   BGBl 1996/448. 624   BGBl 1975/114. Similar bilateral treaties have also been concluded with countries that are now Member States of the EU or of the Lugano Convention. Both Brussels I and the Lugano Convention supersede these treaties, see Art 69 Brussels I and Art 55 Lugano Convention. 625   BGBl 1968/349. 626   BGBl 1980/305. 627   BGBl 1992/571. 628   This is not true with regard to the Lugano Convention: like Brussels I, the Lugano Convention does not allow a review of the jurisdiction of the court of origin, see Art 35(3). 629   s 57(1) Patent Act. 619 620 621

342  Thomas Petz formal reciprocity is guaranteed by administrative orders, the international jurisdiction of the court of origin is regularly assessed based on the Austrian rules on international jurisdiction. Technically, this is done by assuming that the court of origin is an Austrian court.630 This approach is called the ‘mirror-image rule of jurisdiction’.631 Under the assumption that an administrative order has been issued, the solution to this hypothetical case thus depends on whether the court of country X would have jurisdiction based on the domestic Austrian rules on international jurisdiction.632 This brings us back to the two procedural set-ups outlined at the outset. If the proceedings before the courts of country X have as their main object the ownership of the patent, they would have jurisdiction under the domestic Austrian rules on international jurisdiction only if the patent is registered in X.633 As in our hypothetical case the patent is registered in Austria, a judgment rendered by a court in country X in such proceedings will thus not be recognised in Austria. By contrast, if the proceedings have as their main object the agreement to transfer, the courts of country X would have international jurisdiction in three situations at least: first, if the defendant has either established his domicile, or his habitual residence is in X.634 Second, if the licence agreement provided for X as the place of performance.635 Third, if the parties designated the courts of country X to hear their dispute.636 Consequently, if one of these requirements is met, the judgment rendered by the courts of country X in such proceedings will be recognised in Austria. The crucial issue thus is whether the proceedings advanced before the courts of country X have as their main object the ownership of the patent or the licence agreement. This issue is determined by domestic Austrian procedural law. It has to be stressed, however, that treaties on the recognition and enforcement of foreign judgments and administrative orders on the recognition of foreign judgments are the exception rather than the rule. Thus, in the event that country X is a third country, the foreign judgment on the ownership of the patent will regularly not be recognised in Austria.

4.6.2  Enforcement of a Foreign Judgment in Austria Would the parties be required to re-litigate the dispute in order to have the ownership decision registered with the Austrian Patent Office?

Registering a change of ownership with the Austrian Patent Office no longer concerns the recognition of a foreign judgment, but its enforcement. For the enforcement of a foreign judgment, both the Brussels I regime and the regime of domestic Austrian law require that the judgment is enforceable in the country of origin.637 This enforceability is determined based solely on the rules of that country. Thus, in our hypothetical case, the judgment has to be enforceable in country X based on the rules on enforceability of country X. As these rules are unknown to us, we have to make an assumption as to their contents. In this regard, the Austrian rules on the enforceability of judgments may be instructive. They provide as a   s 80 No 1 Enforcement Act.   Lurger, above n 28, 124. 632   Friebel and Pulitzer, above n 61, 355. As in this scenario country X is a third country, Brussels I does not apply. Thus, under the mirror-image rule the jurisdiction of the Austrian court is regularly determined based on the domestic Austrian rules of international jurisdiction. 633   s 57(1) Patent Act. 634   s 66 Civil Jurisdiction Act. 635   s 88(1) Civil Jurisdiction Act. 636   s 104(1) Civil Jurisdiction Act. 637   Art 38(1) Brussels I; s 79(2) Enforcement Act. 630 631

Austria  343 general rule that all judgments except declaratory ones are enforceable. Consequently, we have to consider whether in the two procedural set-ups from which a judgment concerning the ownership of a patent may result, the judgment may be a declaratory one.638 In the first set-up, the proceedings having as their main object the ownership of a patent, the judgment not only deals with rules on the ownership issue, but also provides for a change of the registration in the patent registry. Thus, it is not a declaratory judgment. In the second setup, the proceedings having as their main object the agreement to transfer, the judgment does not touch upon the ownership issue, but it will rule on whether the transfer has to be effected. Thus, the judgment rendered by the court is also not a declaratory one. Based on this observation, we are inclined to assume that the judgment rendered by the court of country X is enforceable there. Under this assumption, the solution to our hypothetical case depends on whether the country of origin of the judgment in a Member State. If this is the case, the Brussels I regime on the enforcement of foreign judgments applies. This regime requires for a foreign judgment to be enforceable in Austria that it has been declared enforceable by an Austrian court.639 These proceedings, however, do not amount to a re-litigation of the dispute. Thus, the foreign judgment is enforced in Austria without being re-litigated there.640 By contrast, if the country of origin of the judgment is a third country, it is rather likely that the parties will have to re-litigate their dispute. The reason for this is that like recognition, the enforcement of a foreign judgment depends on formal reciprocity and a review of the international jurisdiction of the court of origin. Thus, what has been said above as regards recognition holds true also for enforcement.641 In most cases, the requirement of formal reciprocity will not be met because neither has a treaty on the mutual enforcement been concluded with the third country, nor has an administrative order providing for enforcement been issued by the Austrian government. As a result, the foreign judgment will not be enforceable and the parties will have to re-litigate their dispute in Austria. Such relitigation does not run counter to the principle of res iudicata, because res iudicata effects are granted only to foreign judgments that may be recognised in Austria.642 Consequently, the principle of formal reciprocity has both negative and positive aspects: the negative aspect bars recognition and enforcement of certain foreign judgments, the positive aspect allows re-litigation of the dispute in Austria.643 For proceedings having as their main object the ownership of a patent, re-litigation will take place before the Austrian Patent Office;644 for proceedings having as their main object the agreement to transfer, re-litigation will be heard by the civil courts.645 If, contrary to the standard situation, we assume that the requirement of formal reciprocity is met, the enforcement of a foreign judgment depends on whether the court of origin has jurisdiction to hear the case. This requires the Austrian court of enforcement to review the jurisdiction of the court of origin. As indicated above, the standard of review   See above 4.6.1.   Art 38(1) Brussels I.   In detail, see below 4.6.3. 641   See above 4.6.1. 642   Rechberger and Oberhammer, above n 592, no 121. 643  ibid. 644   s 57(1) Patent Act. On this provision see Munk, above n 611, 148; Friebel and Pulitzer, above n 61, 405 and 408. No re-litigation is required, however, if the legalised original judgment and a written approval of the current patent-holder to the change in ownership following from that judgment is presented to the Patent Office. On this way of enforcing a foreign judgment, see below 4.6.3. 645   OGH 4 Ob 24/92, Abfallbeizen (1999) Medien und Recht 149 (case note by M Walter). 638 639 640

344  Thomas Petz depends on the technique employed for guaranteeing formal reciprocity.646 If this reciprocity follows from a treaty, the standard of review is regularly the regime of international jurisdiction laid down by the treaty itself. By contrast, if it follows from an administrative order, the standard is the Austrian regime on international jurisdiction. As just outlined, the chances that a foreign judgment concerning the ownership of an Austrian patent is enforced in Austria differ for the two procedural set-ups from which such a judgment may result: the enforcement of a foreign judgment resulting from proceedings having as their main object the agreement to transfer is more likely than that of a judgment resulting from proceedings having as their main object the ownership of the patent, because for the latter, the Austrian Patent Office has exclusive international jurisdiction if the patent is registered in Austria.647 Finally, in both set-ups, the foreign judgment is enforceable in Austria only if it has been declared enforceable by an Austrian court.648 In this regard, the domestic Austrian regime thus echoes that of Brussels I.

4.6.3  Enforcement by Registration in the Austrian Patent Registry Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in Austria? Would an enforcement judgment be necessary, or would it suffice to present the original judgment to the enforcing authority?

In this hypothetical case, enforcement is sought in the Austrian Patent Registry. Section 43(5) Patent Act recognises two procedures for enforcing a foreign judgment concerning the ownership of a patent. The first procedure is that one of the parties to the lawsuit files an application with the Austrian Patent Office to change the registration. This application has to contain both the original judgment and a declaration of the current patent-holder indicating that he agrees on changing the registration as provided for by the judgment.649 If the original judgment is in a language other than German, normally a German translation has to be added.650 Further, two formal requirements have to be met. The first is that the original judgment has been legalised by an Austrian authority.651 This follows from the general rule that foreign public documents may serve as evidence before Austrian authorities only if they are legalised.652 As legalising a foreign judgment is different from declaring it enforceable, this procedure effectively allows enforcement of a foreign judgment yet without declaring it enforceable by an Austrian court. Thus, no declaration of enforceability is required. The second requirement is that Austrian judgments may be enforced the same way in the country of origin of the original judgment.653 Thus, the principle of reciprocity applies also to this enforcement procedure. This limits the application of this procedure considerably. But its main drawback is that it requires the cooperation of the party who has lost the lawsuit, as he has to issue a declaration that he agrees with the changes in the registration – and this cooperation will often be lacking.   See above 4.6.1.   cf Art 22(4) Brussels I; s 57(1) Patent Act.   s 79(1) Enforcement Act. 649   Friebel and Pulitzer, above n 61, 355 with further references to older decisions of the Patent Office. 650   ibid, 359. 651   ibid, 359; A Weiser, Österreichisches Patentgesetz, 2nd edn (Vienna, Weiser, 2005) 195. 652   For some countries, however, this requirement has been waived by a treaty, and for others it has been reduced to an attestation by the ratification of the Hague Convention of 5 October 1961 on Abolishing the Requirement of Legalisation for Foreign Public Documents (BGBl 1968/27). See Friebel and Pulitzer, above n 61, 359; Weiser, above n 651, 195. 653   Friebel and Pulitzer, above n 61, 358. 646 647 648

Austria  345 Consequently, the second procedure seems to be the standard one.654 This procedure consists of two steps which are regularly combined in a single proceeding.655 The first step is the issuance of a declaration of enforceability: upon application of an interested party, the original judgment has to be declared enforceable by an Austrian court.656 What is enforced in Austria thus is not the original judgment, but this domestic declaration.657 As regards the jurisdiction for issuing this declaration, it does not matter whether the judgment is enforced in Austria under the Brussels I regime or under the regime of domestic law, as the latter echoes the first.658 Thus, jurisdiction for issuing this declaration is conferred primarily on the Austrian District Court in whose jurisdiction the current patent holder is domiciled, and absent such a domicile in Austria, on the District Court in whose jurisdiction the patent registry is located, that is, the Viennese District Court, in whose jurisdiction the Patent Office is seated.659 The second step is the issuance of an authorisation of enforcement. In his application for such an authorisation, the applicant has to indicate that the declaration of enforcement shall be enforced by registering the changes with the Austrian Patent Office.660 Once the competent court has validly declared the original judgment enforceable and has authorised the enforcement, the applicant may present the decision to the Patent Office. Normally, if the original judgment is in a language other than German, a German translation has to be added.661 The Patent Office will then examine the judgment and change the registration accordingly.662 In sum, thus, if there is reciprocity of enforcement of judgments in the patent registry between Austria and the country of origin, the original judgment may be enforced in Austria provided that it is accompanied by a written approval of the current patent holder. As this will occur only rarely, regularly a declaration of enforceability and an authorisation to enforce are necessary for an enforcement of a foreign judgment before the Austrian Patent Office.

5  On the ECJ: A Brief Summary of the Rules on International Jurisdiction Our analysis of the case studies on international jurisdiction for proceedings relating to intellectual property rights in the previous part has shown that even though the provisions of the Brussels I regime and their Austrian counterparts differ on their face, they regularly   See Friebel and Pulitzer, above n 61, 354 with further references.   s 84a(1) Enforcement Act; Rechberger and Oberhammer, above n 592, no 139.   Art 38(1) Brussels I, s 79(1) Enforcement Act. 657   J Rassi in H Fasching and A Konecny (eds), Kommentar zu den Zivilprozeßgesetzen, 2nd edn (Vienna, Manz, 2008) Art 38 no 24; Kropholler, above n 311, Art 38 no 14. For a different view, see G Kodek in D Czernich, et al (eds), Kurzkommentar Europäisches Gerichtsstands- und Vollstreckungsrecht, 3rd edn (Vienna, LexisNexis, 2009) Art 38 no 15. 658   Indeed, it has been the aim of the Austrian legislator to streamline the domestic rules on the recognition and enforcement of foreign judgments with those of the Lugano Convention when it amended them in 1995. See Rechberger and Oberhammer, above n 592, no 119. 659   Art 39 Brussels I, s 82 Enforcement Act. As regards the latter, see Friebel and Pulitzer, above n 61, 355 with further references to older decisions of the Patent Office; Rassi, above n 657, Art 39 no 10. 660   s 54(1) no 3 Enforcement Act; See Jakusch, above n 622, § 54 EO no 26. 661   See F Schönherr and G Thaler, Entscheidungen zum Patentrecht (Vienna, Manz, 1980) 185. 662   ibid, 179 with further references to older decisions of the Patent Office. 654 655 656

346  Thomas Petz provide for the same solution. This, of course, does not come as a surprise: on the one hand Brussels I reflects to a large extent the domestic regimes of the Member States, on the other the Austrian legislator amended the domestic Austrian rules on international jurisdiction in order to streamline them with Brussels I. There are, however, a few differences, and these deserve closer scrutiny. For proceedings concerning intellectual property rights, one important difference is that under the domestic Austrian regime, raising the invalidity of a registered intellectual property right as a defence does not require an Austrian court having jurisdiction for the infringement proceedings to decline jurisdiction of its own motion.663 Another difference is that the extent of jurisdiction conferred on Austrian courts based on the infringement of an intellectual property right is not limited to the activities and the damage that occurred in Austria.664 Again another difference is that under the domestic Austrian regime, related proceedings may be consolidated even if the situation of law is different provided that the situation of fact is the same.665 Interestingly, however, these differences do not follow directly from the wording of Brussels I, but rather from three decisions of the ECJ: GAT, Shevill and Roche Nederland. These decisions have in common that the ECJ did not construe the relevant provisions in the light of the specific policy considerations of intellectual property but as a part of a general system of grounds of jurisdiction that applies to multiple fields of law. Thus, it is no surprise that the solutions of the ECJ have been criticised heavily by intellectual property scholars. By contrast, as argued here, under the domestic Austrian regime there is some leeway to adopt solutions that are more sensitive to the policy considerations of intellectual property. Vis-à-vis Brussels I, however, the practical importance of the domestic Austrian regime is only minimal.

  See above 4.2.3.   See above 3.2.3. and 4.1.5.   See above 4.3.3.

663 664 665

Belgium MARIE-CHRISTINE JANSSENS*

Contents1 Section I....................................................................................................................................................................... 348 1

Preliminary Note on Special Features of the Belgian Legal and Judicial System............................................ 348

2

Legal Sources....................................................................................................................................................... 348 2.1 Area of Intellectual Property Law........................................................................................................... 348 2.1.1 Scope of Intellectual Property Rights..................................................................................... 348 2.1.2 International Legal Framework.............................................................................................. 350 2.1.3 National Legal Framework Including EU Regulations which are Directly Applicable – and Constitute an International Legal Source – in Belgium........................................................ 351 2.1.4 Competence of National Courts............................................................................................. 352 2.2 Legal Sources Concerning PIL Issues (Jurisdiction, Choice of Law, Recognition and Enforcement)........................................................................................................................................... 356 2.2.1 Belgian Code on Private International Law (CPIL)............................................................... 356 2.2.2 Rules in Specific (International) Intellectual Property Laws applicable in Belgium........... 357 2.2.3 General Community Legislation............................................................................................ 363 2.3 Relationship between Intellectual Property and and Private International Law................................. 365 2.3.1 Preliminary Observation......................................................................................................... 365 2.3.2 International Jurisdiction in Intellectual Property Cases...................................................... 366 2.3.3 Applicable Law in Intellectual Property Cases....................................................................... 378 2.3.4 Recognition and Enforcement of Foreign IP-Related Decisions.......................................... 384

Section II..................................................................................................................................................................... 386 Case 1. General/Special Grounds of Jurisdiction........................................................................................ 386 Case 2. Subject-Matter Jurisdiction............................................................................................................. 390 Case 3. Consolidation of Proceedings......................................................................................................... 393 Case 4. Choice of Court............................................................................................................................... 397 Case 5. Parallel Proceedings......................................................................................................................... 400 Case 6. Principle of Territoriality................................................................................................................. 402 Case 7. Infringement of Intellectual Property Rights................................................................................. 404 Case 8. Applicable Law to Initial Ownership.............................................................................................. 407 Case 9. Applicable Law to the Transfer of Rights Agreements................................................................... 411 Case 10. Recognition and Enforcement of Foreign Judgments................................................................... 415 Case 11. Provisional Measures and Injunctions............................................................................................ 418  * Professor of Intellectual Property Law, Catholic University Leuven (KULeuven) and Catholic University Brussels (KUBrussel), Centre for Intellectual Property Rights Leuven. The author wishes to thank Kristof Roox, partner at Crowell Moring, and Carl De Meyer, partner at Howrey LLP, for their helpful guidance in solving the various cases forming Section II. 1   Throughout this chapter the following abbreviations are used: BCIP (Benelux Convention on Intellectual Property), CFI (court of first instance), CPIL (Belgium Code for Private International Law), CTR (2009 Community Trade Mark Regulation), ECJ (European Court of Justice), IP (Intellectual Property), PIL (Private International Law), SPC (Supplementary Protection Certificate). Often-quoted Belgian journals include IRDI (Intellectuele Rechten – Droits Intellectuels), Ing Cons (Ingénieur Conseil – Intellectual Property – ICIP), RDC (Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht) and RW (Rechtskundig Weekblad).

348  Marie-Christine Janssens

Section I 1  Preliminary Note on Special Features of the Belgian Legal and Judicial System 1. Belgium is a constitutional monarchy organised as a federal state with a civil law system. The organisation of the legislative and executive branches of the state has undergone significant changes during the several last decades. Competences to regulate have been divided up between the three language communities (Dutch, French and German) and three regions (Flemish, French and Brussels) that were established as a result of state reforms that occurred between 1970 and 1993. Regarding the issues that are at the centre of the present report – intellectual property law, private international law and judicial law – the federal government maintains exclusive authority. It is therefore not necessary to deal with the complicated Belgian state structure in more detail. Being one of the current 27 Member States (and founding fathers) of the European Union, Belgium has to observe European legislation, the importance of which is particularly significant in the area of both intellectual property law and private international law. Intellectual property disputes will normally be decided by civil or criminal courts.2 In Belgium, all courts are federal courts. They are, roughly speaking, organised according to a four-tier structure as follows, in ascending order: 1. The Justice of the Peace (civil)/Police Court (criminal). 2. The CFI or Tribunal of First Instance (civil)/Correctional Court (criminal)/Commercial Court/Labour Tribunal (social law). 3. The Court of Appeal (civil, commercial and criminal matters)/Labour Court of Appeal (social law)/Cour d’assises (jury trial for serious criminal offences). 4. The Cour de Cassation (Supreme Court) dealing only with points of law.

2  Legal Sources 2.1  Area of Intellectual Property Law 2.1.1  Scope of Intellectual Property Rights 2. As can be deduced from the various international and national legal texts mentioned hereafter, intellectual property rights in Belgium encompass protection for copyrights (including software and databases), the sui generis database right, trade marks, designs, patents (including SPC), plant variety rights, geographical denominations and topographies of semiconductors. The protection of each of these rights is covered by a special Belgian (or Benelux) Act. With regard to trade marks, designs and plant varieties, it is fur  This chapter will only address civil law issues.

2

Belgium  349 ther possible to add this national protection with a community right that is governed by EU regulations, ensuring protection for the marks, designs or plant varieties across the whole territory of the EU, including Belgium.3 3. Although trade secrets (know-how) and company names are often mentioned in international and European texts as being part of the IP system, it is difficult to form such a conclusion for Belgium. Unfortunately, the various national laws dealing with IP lack a precise definition of the concept of intellectual property law, and some additional specificity would certainly be useful. During the preparatory discussions leading to the Belgian Code of Private International Law (CPIL),4 it was submitted that this notion should be given a broad interpretation with reference to the international treaties.5 A reference was made in particular to Article 2, point viii of the Convention Establishing the World Intellectual Property Organisation, signed at Stockholm on 14 July 1967,6 which entails a very broad scope of application. It indeed describes the scope of ‘intellectual property’ with reference to rights relating to ‘literary, artistic and scientific works, performances of performing artists, phonograms, and broadcasts, inventions in all fields of human endeavour, scientific discoveries, industrial designs, trademarks, service marks and commercial names and designations, protection against unfair competition and all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields’. This reference is remarkable because, first, unfair competition matters are addressed in a specific article of the CPIL (Art 99 § 1, 2) and, secondly, the substance of these matters is dealt with in a specific Act regulating unfair competition, which is not considered to form part of the general IP legal framework7. In addition, it is worth noting that one of the procedures that has typically been conceived for the protection of intellectual property rights – the so-called descriptive seizure procedure8 – only mentions patents, SPCs, plant varieties, topographies of semiconductor products, drawings and designs, trade marks, geographical indications, denominations of origin, copyrights, neighbouring rights and sui generis database rights. Furthermore, the most relevant European regulation that deals with all IP rights, the 2004 Enforcement Directive9, also refrains from imposing upon the Member States a definition of the notion of intellectual property. Article 1 only states that ‘this Directive concerns the measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights [and that] for the purposes of this Directive the term “intellectual property rights” includes industrial property rights’.10 One year later the Commission published a declaratory statement explaining ‘that at least the following intellectual property rights are covered by the scope of the Directive: copyright, rights related to copyright, sui generis right of a database maker, rights of the creator of the topographies of a semiconductor product, trademark rights, design rights, patent rights, including rights derived from supplementary protection certificates, geographical indications, utility model rights,   See details of these instruments, below para 4.   See more below para 12.   Parl Documents Senate 2003-04, no 3-27/1, 119. 6   This Convention was adopted by the Belgian Law of 26 September 1974 (MB 29 January 1975). 7   Act of 6 April 2010 on market practices and consumer protection. A reservation should be made for the special provisions in Arts 119–22 of this Act that relate to the protection of geographical indications. 8   See more details about this procedure, below para 7. 9  Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights (hereinafter ‘Enforcement Directive’). 10   See also Art 2 defining the scope of application with reference to ‘any infringement of intellectual property rights as provided for by Community law and/or by the national law of the Member State concerned’. 3 4 5

350  Marie-Christine Janssens plant variety rights [and] trade names [but only] in so far as these are protected as exclusive property rights in the national law concerned’.11 Finally, even though the TRIPs agreement explicitly regulates trade secrets in the part dealing with substantive law of intellectual property rights,12 these provisions have, according to settled case law from the Belgian Cour de Cassation, no direct (‘self-executing’) effect in Belgium.13 2.1.2  International Legal Framework 4. Belgium is a signatory – and has ratified14 – the international conventions and treaties relating to the categories listed below. 2.1.2.1  General IP Paris Convention for the Protection of Industrial Property (1883, as amended on 14 July 1967).15 Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) (1994).16 2.1.2.2 Copyright Berne Convention for the Protection of Literary and Artistic Works (1886, amended on 28 September 1979).17 Universal Copyright Convention (as adopted in Geneva on 6 September 1952).18 International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (The Rome Convention) (1961).19 WIPO Copyright Treaty (WCT).20 WIPO Performances and Phonograms Treaty (WPPT) (1996).21 2.1.2.3  Trade Marks Madrid Agreement Concerning the International Registration of Marks (1891, as amended on 14 July 1967).22 Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989, as amended on 12 November 2007).23

11   [2005] OJ L94/37. It is interesting to point out that the Enforcement Directive (above n 9) explicitly refrains from regulating issues of private international law. See Recital (11): ‘This Directive does not aim to establish harmonised rules for judicial cooperation, jurisdiction, the recognition and enforcement of decisions in civil and commercial matters, or deal with applicable law. There are Community instruments which govern such matters in general terms and are, in principle, equally applicable to intellectual property.’ 12   See pt II, s 7 entitled ‘Protection of undisclosed Information’. 13   Cass 11 May 2001, (2001) Auteurs & Media 353. 14   Conventions which have been signed but are not in force in Belgium, will not be mentioned. 15   Adopted by Law of 26 September 1974, MB 29 January 1975. 16   MB 23 January 1997. 17   Adopted by Law of 25 March 1999, MB 10 November 1999. 18   MB 30 August 1960. 19   Adopted by Law of 25 March 1999, MB 10 November 1999. 20   Adopted by Law of 15 May 2006, MB 18 August 2006. 21   Adopted by Law of 15 May 2006, MB 18 August 2006. 22   Adopted by Law of 26 September 1974, MB 29 January 1975. 23   MB 28 July 1998.

Belgium  351 Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (1957, as amended on 28 September 1979).24 Trademark Law Treaty (1994).25 2.1.2.4 Patents European Patent Convention (EPC) (1973 as amended on 29 November 2000).26 Patent Cooperation Treaty (Treaty of Washington 1970, as amended on 3 October 2001).27 Strasbourg Agreement Concerning the International Patent Classification (1971–79). Strasbourg Convention on the Unification of Certain Points of Substantive Law on Patents (27 November 1963).28 Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977, as amended on 26 September 1980).29 2.1.2.5  Other IP rights Hague Agreement for the International Deposit of Industrial Designs (1925–60)30 and supplementary Agreement of Stockholm (14 July 1967).31 Locarno Agreement Establishing an International Classification for Industrial Designs (1968, as amended on 28 September 1979).32 International Convention for the Protection of New Varieties of Plants of 2 December 1961 (1991). 2.1.3  National Legal Framework Including EU Regulations which are Directly Applicable – and Constitute an International Legal Source – in Belgium 2.1.3.1 General Law of 15 May 2007 Concerning the Punishment of Counterfeiting and Piracy of Intellectual Property.33 Council Regulation (EC) No 1383/2003 of 22 July 2003 concerning Customs Action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights.34 2.1.3.2 Copyright Law on Copyright and Related Rights of 30 June 1994.35 Law of 31 August 1998 Transposing to Belgian Legislation the European Directive No 96/9/ EC of 11 March 1996 on the Legal Protection of Databases.36   Adopted by Law of 26 September 1974, MB 29 January 1975.   Belgium has ratified this Treaty but will only be bound by it three months after the deposit of the instrument of ratification by Luxembourg. 26   The latest amendments (EPC 2000) were adopted by Law of 21 April 2007, MB 4 September 2007. 27   Adopted by Law of 8 July 1977, MB 30 September 1977. 28   MB 7 October 1977. 29   MB 14 January 1984. 30   MB 13 January 1971. 31   MB 29 January 1975. 32   MB 3 June 2004. 33   MB 18 July 2007. 34   [2003] OJ L196/7. 35   MB 27 July 1994. 36   MB 14 November 1998. 24 25

352  Marie-Christine Janssens Law of 30 June 1994 Transposing to Belgian Law the European Directive of 14 May 1991 on the Legal Protection of Computer Programs.37 2.1.3.3  Trade Marks and Designs Benelux Convention on Intellectual Property (2007) (BCIP).38 Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community Trade Mark.39 Council Regulation (EC) No 6/2002 of 12 December 2001 on Community Designs.40 2.1.3.4 Patents Patent Law of 28 March 198441 (currently under revision). Regulation 469/2009 of 6 May 2009 Concerning the Creation of a Certificate of Complementary Protection for Medicaments (SPC).42 Regulation 816/2006 of 17 May 2006 on Compulsory Licensing of Patents Relating to the Manufacture of Pharmaceutical Products for Export to Countries with Public Health Problems.43 Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July 1996 Concerning the Creation of a Supplementary Protection Certificate for Plant Protection Products (SPC).44 2.1.3.5  Other IP rights Law of 20 May 1975 on the Protection of Plant Variety Rights.45 Law of 10 January 1990 on the Legal Protection of Topographies of Semiconductor Products.46 Council Regulation (EC) No 2100/94 of 27 July 1994 on Community Plant Variety Rights.47 Council Regulation (EC) No 510/2006 of 20 March 2006 on the Protection of Geographical Indications and Designations of Origin for Agricultural Products and Foodstuffs.48 Act of 6 April 2010 on Market Practices and Consumer Protection (in particular Arts 1119– 22 of this Act that deal with the protection of geographical indications).49 2.1.4  Competence of National Courts 2.1.4.1  National IP Rights 5.  In May 2007, two laws on civil and judicial matters were enacted that have quite significantly modified the competence of various courts to hear disputes relating to intellectual   MB 27 July 1994.   MB 26 April 2006. For the application of this Convention, the territories of Belgium, Luxembourg and the Netherlands are to be deemed a single country. 39   [2009] OJ L78/1. This Regulation replaces Regulation 40/91 of 20 December 1993. 40   [2002] OJ L3/1. 41   MB 9 March 1985. 42   [2009] OJ L152/1. This Regulation codifies former Regulation 1768/92 of 18 June 1992 ([1992] OJ L182/1). 43   [2006] OJ L157/1. 44   [1996] OJ L198/30. 45   MB 5 September 1975. 46   MB 26 January 1990. 47   [1994] OJ L227/1. 48   [2006] OJ L 93/12. 49   MB 12 April 2010. 37 38

Belgium  353 property rights in Belgium.50 Their principal goal was to transpose the 2004 Enforcement Directive and at the same time to bring about more specialisation by reducing the number of competent courts.51 While the law of 9 May 2007 mainly aims at reinforcing civil sanctions and better regulating civil procedures such as the ‘petition for descriptive seizure’, the law of 10 May has reorganised material and territorial competences of the courts. Since 1 November 2007, commercial courts – instead of the CFI/civil courts – have had exclusive competence to hear cases dealing with patents, SPCs, plant varieties and topographies of semiconductor products. These courts already had been held to possess jurisdiction in respect of trade marks and designs cases. Jurisdiction over disputes relating to copyright (including neighbouring rights and the sui generis database rights) has been attributed to the CFI (private parties), the Commercial Court (parties qualifying as ‘tradesman’) and the Justice of the Peace (where the value of the dispute is under 1860 euros) respectively. 6. Besides concentrating jurisdiction for IP matters in the commercial courts as much as possible, the 2007 Reform also aimed at centralising the competence of these courts on the territorial level. Only the commercial (and for some copyright issues, civil) courts sitting in the town where the five courts of appeal are located, can hear IP-related disputes. With regard to possible measures that can be sought against infringing acts, owners of intellectual property rights52 have the following civil actions at their disposal.53 (a)  The Descriptive Seizure Procedure (Art 1269bis/1 CCP) 7.  This procedure was introduced at the end of the nineteenth century and has proved very valuable and useful over the years since, as a means to preserve evidence of an infringement. Through the 2007 Reform, it has been improved54 and extended to all intellectual property rights. It concerns a unilateral procedure that is initiated by a petition lodged to the President of the commercial court seeking to appoint an expert to make a description of all items that may establish the infringing character of certain goods or acts (including their origin, destination or importance). The expert will be allowed to search the premises of the potential infringer without prior notice. The President’s order will define the mission 50   Law of 9 May 2007 ‘concerning the civil aspects of the protection of intellectual property rights’ (MB 10 May 2007, 25704; err MB 14 May 2007) and Law of 10 May ‘concerning aspects of judicial law relating to the protection of intellectual property rights’ (BS 10 May 2007, 25694; err BS 15 May 2007). Hereafter these laws will be referred to as ‘the 2007 Reform’. To be complete, mention should also be made of the law of 15 May 2007 ‘concerning the punishing of counterfeiting and piracy of intellectual property rights’ (MB 18 July 2007, 38734) that has completed this important reform with the harmonisation and improvement of criminal actions and sanctions that can be taken against acts of piracy and counterfeiting. 51   For more details about the 2007 Reform, see B Michaux and E De Gryse, ‘De handhaving van intellectuele rechten gereorganiseerd’ [The enforcement of intellectual property rights re-organised] (2007) Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 623; MC Janssens, ‘Drie wetten inzake handhaving van intellectuele rechten openen in 2007 nieuwe horizonten in de strijd tegen namaak en piraterij’ [Three laws regarding the enforcement of intellectual property rights open up a new horizon in the fight against counterfeiting and piracy in 2007] (2007–8) Rechtskundig Weekblad 930; F Hostler et al, ‘La répression de la contrefaçon et de la piraterie de droits de propriété intellectuelle. La loi du 15 mai 2007: instrument à la pointe ou texte épineux?’ (2008) Journal des Tribunaux 181. 52   Some IP laws also allow other interested parties to initiate such proceedings. For the sake of brevity, only ‘right owners’ will be mentioned hereafter. 53  For more details about these proceedings in Belgium, see the various contributions in F Brison (ed), Sanctions et procédures en droits intellectuels/Sancties en procedures in intellectuele rechten (Brussels, Larcier, 2008). 54   In particular, new rules aim for better protection of confidential information, the obligation to compensate the party subjected to measures when they are later found to be unfounded, and the possibility for the judge to hear the defendant if seizure is requested.

354  Marie-Christine Janssens of the expert and may, subject to a specific request from the claimant and the fulfilment of certain conditions, also allow for the provisional physical seizure of the suspected goods as well as, in appropriate cases, of the materials and implements used in the production and/ or distribution of these goods and the documents relating thereto. In compliance with Article 7.3 of the 2004 Enforcement Directive, Article 1369bis/9 of the Code of Civil Procedure states that the measures ordered by the President will cease to have effect either at the request of the party concerned (third-party proceeding) or, in any event, if the applicant does not institute, within a determined period, proceedings leading to a decision on the merits of the case before the competent judicial authority. If the plaintiff fails to do so, the report will lose its evidentiary value and can no longer be used for any purpose. (b)  Proceedings Seeking Provisional (Interim) Measures 8.  No major changes – apart from the changes regarding territorial and subject matter jurisdiction that were discussed above – have occurred in relation to this generally available type of procedure. The President of the commercial court has the power to issue against any alleged infringer an interlocutory injunction intended to prevent any imminent infringement of an intellectual property right, or to forbid, on a provisional basis, the continuation of the alleged infringements of that right. The 2007 Reform has made it clear that such injunctions may also be issued against an intermediary whose services are being used by a third party to infringe an intellectual property right.55 In order to succeed in an action for directly enforceable interim measures, the plaintiff must demonstrate that the decision is ‘urgent’. Moreover, interim proceedings must be followed by a procedure on the merits within the period determined by the President (Art 1369ter Code of Civil Procedure).56 For the sake of completeness, it should be noted that the Code of Civil Procedure provides for the possibility of obtaining interim orders on the basis of a unilateral petition in cases of ‘absolute necessity’.57 This general type of proceeding is also available for IP owners, but has become somewhat less customary as a result of the 2007 Reform which extended the scope for descriptive seizure proceedings.58 (c)  Proceedings on the Merits 9.  Since the 2007 Reform, two alternative proceedings are available to right owners to initiate proceedings on the merits that may lead to a final order, such as a cease and desist order, an order to remove the goods from the channel of commerce or have them destroyed and/ or an order to provide information from producers, manufacturers, distributors and suppliers regarding the origin of infringing goods.

55   In the field of copyright, this possibility was recognised earlier and has given rise to the much discussed SABAM v Scarlet case, where the court found the defendant – acting as an ISP in Belgium – liable for copyright infringement and ordered it to implement technical measures to prevent P2P infringements by its users (CFI Brussels 29 June 2007, (2007) Auteurs & Média 476; on 28 January 2010 the Court of Appeal of Brussels decided to refer questions to the ECJ). 56   In the absence of such determination, the provisional measures will cease to have effect within a period of 20 working days (or 31 calendar days) from the date of the serving of the order. This (new) rule was added to be in compliance with Art 9.5 of the 2004 Enforcement Directive. 57   See Art 584, s 3 of the Code of Civil Procedure. 58   Above, para 7.

Belgium  355 First, there is the normal procedure ‘on the merits’ to be conducted before the competent commercial court. Apart from issuing the measures enumerated in the preceding paragraph, the court can also order the infringer to pay the right-holder damages appropriate to the actual prejudice suffered by him/her as a result of the infringement. Secondly, the 2007 Reform has introduced for all IP infringements the possibility to obtain a final decision ‘on the merits’ through the mechanism of the interim procedure.59 This ‘accelerated’ injunction procedure, which is known as a procedure comme en référé (‘as an interim ruling’), leads to a final order to cease an infringement that will have the same effect as a decision in a regular proceeding on the merits. The case is to be initiated before the President of the competent court (instead of the court), with no need to demonstrate ‘urgency’. In the framework of this generally ‘shorter and faster’ procedure, the President is even allowed to decide counter-claims for nullity of the IP right invoked. The court cannot, however, award damages or corrective measures that aim at compensating the harm. Such measures can only be decided in an ordinary action on the merits. 2.1.4.2  Community IP Rights 10.  The rules on subject matter and territorial jurisdiction described above leave intact rules relating to the exclusive competence of certain courts in relation to disputes over community trade marks and community designs that are mandated by the relevant European regulations. Indeed, in furtherance of Article 95 of the Community Trade Mark Regulation, disputes relating to community trade marks can only be heard by specialised CTM courts. Belgium has designated the Commercial Court of Brussels and the Court of Appeal of Brussels as such ‘CTM courts’, of first and second instance respectively.60 The same competence rules apply in relation to community designs, as was mandated by Article 80 of the Community Design Regulation. The Regulation on community plant variety rights did not require the Member States to set up special courts.61 11. Finally, regarding European Patents, it is notable that negotiations are currently conducted at an advanced stage with the aim of establishing a pan-European patent court.62 This so-called EEUPC (EU Patents Court System) will include local and central divisions under a common appeal court. It will have jurisdiction both in relation to existing European patents and future EU patents. The system envisages a mixed agreement to be concluded between the Community, its Member States and other contracting parties to the European Patent Convention63. In particular, the European Court will have exclusive jurisdiction for 59   This type of procedure has long been in use (and popular) in unfair competition cases. Art 3 of the Act of 6 April 2010 on Certain Procedural Aspects of the Act of 6 April 2010 on Market Practices and Consumer Protection (former Art 96 of the Unfair Competition Act of 14 July 1991) was revised in 2007 so as to allow for its use in cases of infringement of industrial property rights. Infringements relating to copyright can be based on a similar provision contained in Art 87 of the Copyright Act. 60   For more details on the international (territorial) jurisdiction of these courts, see below para 24. 61   See below para 27. 62   This was agreed by the Council of Ministers on 4 December 2009 as part of a ‘package deal approach’ on an enhanced patent system for Europe, including also the creation of a single EU Patent (see www.epo.org/patents/ law/legislative-initiatives/community-patent.html). The goal to establish a unified patent court was announced in the Communication from the Commission to the European Parliament and the Council of 3 April 2007 (doc 8302/07). 63   See Working Document of the General Secretariat of the Council of the EU of 23 March 2009, no 7928/09, containing the text agreement Member States will be asked to sign (available at the EU website – register.consilium.europa.eu/pdf/en/09/st07/st07928.en09.pdf).

356  Marie-Christine Janssens infringement actions of patents and SPCs, actions or counter-claims for revocation, actions for declaration of non-infringement, actions for provisional and protective measures and injunctions, actions for compensation in respect of the protection conferred by a published patent application, actions relating to the use of the invention prior to the granting of the patent or to the right based on prior use of the patent and actions for the grant or revocation of compulsory licences in respect of Community patents. The national courts shall have jurisdiction in actions which do not come within the exclusive jurisdiction of the EEUPC (entitlement to the patent, assignment etc) and, of course, in relation to patents granted by national patent offices which remain entirely outside the scope of the future litigation system.

2.2  Legal Sources Concerning PIL Issues (Jurisdiction, Choice of Law, Recognition and Enforcement) 2.2.1  Belgian Code on Private International Law (CPIL) 64 12. On 16 July 2004 the Belgian legislature enacted the Belgian Code on Private International Law, which has substantially modified existing rules on jurisdiction and conflicts of laws.65 The scope of application of the CPIL is broad: it deals with every ‘civil or commercial matter’ that involves an ‘international’ situation.66 In a first general part, common principles and techniques are explained. This part is followed by 11 chapters, each of which relates to a specific legal matter (natural persons, marriage, succession and wills, property, obligations, legal persons, etc). In a similar manner, each chapter contains sections that successively deal with the three major topics of private international law: (1) the jurisdictional rules, (2) the relevant choice of law rules and, in some cases, (3) a special rule on the recognition of foreign judgments (exequatur). The advantage of having all these rules included in one Code is that consistent definitions, a consistent and clear language and suitable terminology are introduced.67 In general, the objective of the legislation was to elaborate a normative set of rules, yet exercise constraint to allow for flexibility in each individual case. Hence, judicial discretion is allowed or required in inter alia the following situations:68 judicial competence for the purpose of preventing denial of the plaintiff ’s rights; the application of the mandatory rules of a foreign state; cases pending abroad; deviation from the formal requirements for the recognition of foreign judgments. 64   For the sake of avoiding repetition, there will be a discussion the general grounds and principles that are applicable to intellectual property disputes, in Section II hereafter. 65   MB 27 July 2004; in force as from 1 October 2004. This Code is notable as it had never before been possible to agree on a complete set of rules in the field of private international law: J Erauw, ‘Brief description of the draft Belgian Code of Private International Law’ in P Šarˇcevic´ and P Volken (eds), Yearbook of Private International Law, vol 4 (The Hague, Kluwer Law International, 2002) 146. 66   This latter notion has to be given a broad interpretation; see T Krüger, ‘Wanneer is een zaak “internationaal” voor het Europees IPR?’ [‘When is a case “international” according to European IPL?’], (2006) Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 941; M Fallon, ‘Article 2’ in J Erauw et al, Le Code de Droit International Privé Commenté (Antwerp and Oxford, Intersentia and Bruylant, 2006) 8. 67   Erauw, above n 65, 146. 68   ibid, 148.

Belgium  357 Interestingly, the judge is also given the power to deviate from the conflicts rules when a more closely connected national law is apparent.69 13.  The importance of these rules in practice – and hence for solving the different cases in Section II hereafter –has to be put into perspective. Indeed, Article 2 starts to make a reservation for ‘the international treaties, for the law of the European Union and the provisions of specific laws’. As a matter of principle, the whole CPIL is subordinated to these supranational instruments and, in essence, only has a subsidiary character, which considerably reduces its practical importance and impact (especially regarding jurisdiction).70 On the other hand, it should be noted that the CPIL reiterates many criteria and solutions contained in the different community instruments, and sometimes even incorporates the interpretation given by the ECJ.71 Hence, the scope of the rules in the CPIL is to a large extent in conformity with these superior norms. In sum, Belgian courts must handle intellectual property law cases involving PIL issues according to the rules set forth in, first, the specific intellectual property laws and, secondly, where no solution is given in these specific laws, the relevant international and community instruments. Only when none of these instruments provides a solution, the provisions of the CPIL will find application. In practice, the provisions of the CPIL will essentially apply where the specific IP laws are not applicable and where the defendant has no domicile or residence in an EU Member State.72 2.2.2  Rules in Specific (International) Intellectual Property Laws applicable in

Belgium 14.  Hereafter the laws that include specific provisions on the allocation of international jurisdiction and, in some cases also, on choice of law and recognition of foreign judgments in relation to specific intellectual property rights will be described. In accordance with Articles 67 (community instruments) and 71 (other conventions) of the Brussels I Regulation, they have to be given priority over any other international or national regulations relating to the same matter. 2.2.2.1  The Berne Convention for the Protection of Literary and Artistic Works 15.  In disputes about copyright before Belgian courts, the parties can rely directly upon the provisions of the Berne Convention.73 This Convention comprises a few provisions in relation to the question of applicable law. Issues of jurisdiction and enforcement of foreign judgments are not dealt with in the Convention. One of the most prominent provisions is Article 5.2, which states that ‘the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed’.   See Art 11, discussed below at para 58.   See M Pertegás Sender, ‘Règles de conflit de lois et compétence internationale’ in D Kaesmacher (ed), Les droits intellectuels sous toutes leurs facettes (Brussels, Larcier, 2007) 139. 71   K Roox, ‘Intellectuele eigendom in het nieuwe wetboek IPR’ [‘Intellectual Property in the new IPL Code’] (2005) Intellectuele Rechten – Droits Intellectuels 150. 72   Indeed, whenever the defendant is domiciled or resides in a Member State, the Brussels I Regulation will find application (see Art 4 of the Brussels I Regulation). 73   This possibility is explicitly provided for in the Law of 25 March 1999 that adopted the Berne Convention (MB 10 November 1999). 69 70

358  Marie-Christine Janssens Regarding, firstly, the means of redress, this rule is obvious in view of the principles of international procedural law according to which the remedies granted by the courts in a given country can only be the remedies which the procedural law of this particular country provides for. Where the conflict of laws rules of the forum country may call for the substantive application of the substantive copyright law of another country, these remedies may well have a cross-border effect.74 In the latter case, Belgian courts are obviously bound by the case law of the ECJ, which states that, in cases of transnational copyright infringement, damages for other EU Member States in which the infringement had its effects can only be granted by the court of the place of domicile of the defendant.75 Much less evident is the interpretation of the words ‘where protection is claimed’, although a large majority accepts that this part of the phrase has to be read as ‘for which protection is claimed’.76 Hence, it is important to distinguish between the lex loci protectionis and the lex fori, which might in some cases, but not all, coincide.77 The same observation should be made in relation to the lex loci delicti.78 16.  Most problematic, however, is the scope of the wording ‘the extent of protection’ for which Article 5.2 imposes the application of the lex loci protectionis. For decades this issue has been the subject of much controversy. In fact, the mere question of whether this ‘law of the country where protection is sought’ is a choice of law rule is a contentious issue that has yet to be resolved.79 In short, it can be observed that on the international level the majority seems to be in favour of a general application of the lex loci protectionis rule to all copyright issues.80 This view is shared today by a majority of scholars in Belgium81 and is also adopted by recent case law.82 Its confirmation in Articles 93 and 94 of the CPIL83 has removed any uncer­ 74   T Dreier and B Hugenholz (eds), Concise Commentary of European Copyright Law (The Hague, Kluwer Law International, 2006) 29. 75   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415. See more details, below para 44 and Case Study 1. 76   In Belgium, see eg F De Visscher and B Michaux, Précis du droit d’auteur et des droits voisins (Bruylant, Brussels, 2000) 632; A Cruquenaire, ‘La loi applicable au droit d’auteur: état de la question et perspectives’ (2000) Auteurs & Média 212; H Haouideg, ‘Droit d’auteur et droit international prive en Belgique’ (2006) Revue Internationale de Droit d’Auteur 131. On the international level see, eg, A Lucas (ed), Aspects de droit international privé de la protection d’oeuvres et d’objets de droit connexes transmis par réseaux numérique mondiaux, WIPO Report no GCPIC/1 of 25 November 1998, nos 35 et seq (with ample references); Dreier and Hugenholz, above n 74, 29. See also most of the commentators mentioned in the following notes. 77   Cruquenaire, above n 76, 212. 78   B Van Asbroeck and M Cock, ‘La loi applicable, les aspects de droit international prive et la bande dessinée en Belgique’ in E Cornu (ed), Bande dessinée et droit d’auteur (Brussels, Larcier, 2009) 194. 79   M Van Eechoud, Choice of Law in Copyright and Related Rights (The Hague, Kluwer International Law, 2003) 125. See also SJ Schaafsma, Intellectuele eigendom in het conflictenrecht. De verborgen conflictregel in het beginsel van nationale behandeling [Intellectual Property in the Conflict of Laws. The hidden conflict-of-law rule in the principle of national treatment] (Deventer, Kluwer, 2009). In this doctoral thesis the author argues that the real conflict of law rule in the Berne Convention is, in fact, contained in the principle of national treatment. 80   International doctrine that advocates such general application includes, eg, E Ulmer, Intellectual Property Laws and the Conflict of Laws (Deventer, Kluwer, 1978) nos 15 and 51 et seq; A and HJ Lucas, Traité de la propriété littéraire et artistique (Paris, Litec, 1994) no 1068; JS Bergé, La protection internationale et communautaire du droit d’auteur (Paris, LGDJ, 1996) no 416; P Katzenberger, in G Schricker (ed), Urheberrecht Kommentar, 2nd edn (Munich, CH Beck, 1999) §§ 120 et seq, fn 129. 81   See, eg, De Visscher and Michaux, above n 76, 637–40; A Strowel and JP Triaille, Le droit d’auteur, Du logiciel au multimedia (Brussels, Bruylant, 1997) nos 510 et seq; Haouideg, above n 76, 133; Cruquenaire, above n 76, 224–25; F Rigaux and M Fallon, Droit International Privé, 3rd edn (Brussels, Larcier, 2005) 700. 82   See, eg Court of Appeal Brussels 8 October 2001, (2002–3) Rechtskundig Weekblad 1147. For more details on this case law, see answers to Case Studies 8 and 9. 83   See, below para 78.

Belgium  359 tainty.84 Hence, this interpretation will be adopted for the purposes of the present report. As a result, in cases where copyright infringement is claimed in different countries, which is often the case in an Internet context, Belgian courts (assuming they have jurisdiction) will have to make a distributive application of the various laws of the countries concerned.85 It should not be overlooked, however, that a substantial minority contests the viewpoint described above. These scholars submit that the lex loci protectionis rule described in Article 5.2 does not apply to all copyright issues but is mainly aimed at enforcement situations.86 It is then argued that fundamental issues, such as the existence/validity of copyright and/or initial ownership (authorship) 87 as well as related questions of transfer of the rights, should be resolved by applying the lex loci originis. 17.  For the sake of completeness, it is necessary to point to a few other provisions containing choice of law rules, such as Article 6bis(3) providing that ‘the means of redress for safeguarding the [moral] rights granted by this article shall be governed by the legislation of the country where protection is claimed’88 and Article 7(8) which allows for an application of the lex loci originis in relation to the term of protection of copyright.89 2.2.2.2  Benelux Convention on Intellectual Property (BCIP) 18.  The Benelux Convention coordinates a uniform system of Benelux trade mark, and the Benelux design law that has been in place since 1962. The system applies to all trade marks and designs registered with the Benelux Office for Intellectual Property at The Hague, irrespective of the nationality of the owner of the right. Today, there is a consensus that this Convention takes priority over the Brussels I Regulation,90 which provides that it shall not 84   For an overview of the different viewpoints that existed before, see Cruquenaire, above n 76, 210; B Docquir, ‘La titularité du droit d’auteur – Etude de conflits de loi’ (2003) Ingénieur Conseil – Intellectual Property 409; K Roox, ‘Overzicht van Rechtspraak. Internationaal privaatrecht. Intellectuele eigendomsrechten 1998–2006’ [‘Overview of case law. International Private Law. Intellectual Property Rights 1998-2006’] (2006) Tijdschrift voor Privaatrecht 1556. 85   Van Asbroeck and Cock, above n 78, 195. See also Case Study 7. 86   This view is supported by, eg, J Ginsburg, The Private International Law of Copyright in an Era of Technological Change (The Hague, Hague Academy of International Law, 1998) 99; Van Eechoud, above n 79, 109 et seq and s 4.5; Dreier and Hugenholz, above n 74, 29; A Kéréver, ‘Chronique jurisprudence’ (1998) Revue Internationale de Droit d’Auteur 197 fn 177; G Koumantos, ‘Le droit international prive et la Convention de Berne’ (1988) Le droit d’auteur 144. In a general report that the latter author prepared for an international conference of the ALAI, he admitted, however, that an overwhelming majority of national reporters took the (opposite) view in favour of the general application of the lex loci protectionis (Rapport général au Congrès de l’ALAI de 1996, Copyright in Cyberspace (Amsterdam, Otto Cramwinckel, 1997) 261). 87   In relation to authorship and, albeit in a more reserved way, first ownership, the application of the lex originis is defended by P Torremans, ‘Choice of law in EU copyright directives’ in E Derclaye (ed), The Future of Copyright Law, Series Research Handbooks in Intellectual Property (Cheltenham, Edward Elgar, 2009) 470. See also Van Asbroeck and Cock, above n 78, 201. Cf Docquir, above n 84, 409. 88   It is argued that the specific means of redress for each moral right are linked so strongly to the moral right concerned that it would make no sense to separate them in terms of the applicable law. This probably explains why this Berne provision is considered to be superfluous, also in view of the fact that remedies are always determined by the law of the country of protection. See Dreier and Hugenholz, above n 74, 34; Torremans, above n 87, 463. 89   See Art 7(8) of the BC: ‘In any case, the term shall be governed by the legislation of the country where protection is claimed; however, unless the legislation of that country otherwise provides, the term shall not exceed the term fixed in the country of origin of the work’. See also Art 14bis(2) including a choice of law rule on ownership in cinematographic works. 90   Originally this conclusion was the subject of much controversy; see M Gotzen, ‘La compétence judiciaire en droit européen et en droit Benelux des marques et modèles’ (1978) Ingénieur Conseil – Intellectual Property 173. The issue was settled by Benelux Court of Justice, 10 December 1990, Kortman v Remo (para 13). See also A Braun and E Cornu, Précis des marques. Les conventions internationales. La convention Benelux. Le droit communautaire, 5th edn (Brussels, Larcier, 2009) no 556; Pertegás Sender, above n 70, 137.

360  Marie-Christine Janssens affect any conventions in relation to particular matters to which the Member States are parties (Art 71). 19.  Article 4.6 of the BCIP deals with jurisdiction of the competent Benelux courts91 and defines the territorial jurisdiction of Belgian courts with regard to both validity92 and infringement issues that involve trade marks or designs registered in the Benelux93. Further details related to the grounds for jurisdiction and the territorial effects of a decision are provided in Case Study 11(1). Regarding connected cases, where a case is already pending before a court of another Benelux country, or when it is associated with another dispute placed before that court, the court in which the action was brought later shall, upon the request of one of the parties, refer the dispute to the first court that hears the initial action.94 20.  The Benelux system is a unique system of uniform rules of substantive law for trade marks and designs that does not co-exist with national systems (as is the case with community trade marks and designs). Hence, with respect to the substance of the law, no discussion as to the applicable law will arise because, simply spoken, no other laws exist.95 21.  Regarding recognition and enforcement of decisions rendered by another Benelux court, Article 1.14 of the BCIP imposes upon the three states the quasi-automatic recognition of decisions rendered in another state, subject only to the requirements that the decision is final and that an authenticated copy is produced. 2.2.2.3  Community Industrial Property Rights 22.  It should be noted at the outset that current European Union copyright rules have until now ignored the issues that arise in the context of private international law. There is only one exception, in relation to satellite broadcasting,96 but, apparently, it was not even supposed to be a private international law rule.97 23.  In disputes relating to community trade marks and community designs, the specific jurisdiction rules contained in the Trade Marks Regulation and Designs Regulation respectively will apply.98 The present report will be limited to a summary of the provisions of the Trade Mark Regulation (CTR)99. 91   Regarding the identification of the competent court, the Benelux countries must apply their national law. The rules applicable for Belgium have been described above (2.1.4). 92   It should be noted that the Benelux system does not include the possibility of revocation or invalidation claims to be filed with the office. On the administrative level, the system only provides for a pre-grant opposition procedure. 93   Contrary to the Brussels I Regulation (see, eg, Art 22.4), the Benelux system does not regulate jurisdictions with reference to the subject matter of the claim. 94   An exception applies in situations where the second court has already given a decision in the matter other than an internal provision, in which case referral shall be to this latter court. 95   Exceptions only exist with respect to criminal actions and procedural matters, which continue to be governed by the normal national rules. They will not be addressed in the present report. 96   See Art 1.2.d of Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, [1993] OJ L248/15. 97   Torremans, above n 87, 466–67. 98   See references to these Regulations, above para 4. In relation to matters not specified in these two Regulations, the provisions of the Brussels I Regulation remain applicable (see, eg, Art 94.1 of the CTR). 99   The Designs Regulation sets up a sui generis system of jurisdiction that takes into account the existence of the two types of community designs – registered and unregistered – that are recognised. Regarding registered designs, the main features of the jurisdictional system are comparable to the trade mark system. In relation to unregistered designs, the special national community courts will have to apply Art 82 to determine their territorial jurisdiction as well as, in certain cases specified in Art 79 of the Brussels I Regulation. These rules are applied in Case Study 2.

Belgium  361 24. In relation to the question of jurisdiction, this Regulation makes a distinction between (i) claims relating to the validity of the CTM, and (ii) claims dealing with infringement actions. Regarding validity, Articles 41–42 and 56–57 of the CTR vest the OHIM (EU Trade Mark Office) in Alicante with exclusive jurisdiction to decide this issue in the framework of opposition and cancellation cases. Additional jurisdiction is given to specific national courts (community courts) in relation to counter-claims seeking revocation or a declaration of invalidity of the community trade mark in an infringement action. In such cases, these courts will, however, have to observe the special rules set forth in Article 100 of the CTR. With regard to infringement, courts will seek in the first place recourse to Title X (Art 94 et seq). The answer to the question of which EU court has territorial jurisdiction to hear a matter where the infringement or breach of a community trade mark crosses national boundaries is laid down in Article 97 of the CTR. The lex contractus prevails (Art 97.4) and in this respect Article 23 as well as Article 24 of the Brussels I Regulation continue to apply. If no choice of forum was agreed by the parties, proceedings in respect of the actions and claims referred to in Article 96 (see details below) shall be brought in the courts of the Member State in which the defendant is domiciled. One could say that this rule incorporates the basic principle of the Brussels I Regulation, but in a modified form.100 This rule is indeed extended to defendants who are not domiciled in any of the Member States but have ‘an establishment’ there. If neither of these criteria apply, a court of a Member State will have jurisdiction if it is located in the place of the domicile or the establishment of the plaintiff or, and in this strict sequence, the Trade Mark Office in Alicante. Compared to the Brussels I Regulation, where Article 4 leaves room for the application of national rules, the possibilities for forum shopping are more limited,101 but they are not excluded.102 Jurisdiction is indeed also allocated to courts in the place where the infringement has been committed or threatened (Art 97.5 of the CTR).103 In such cases, however, and in contrast to the other jurisdiction connectors, the courts cannot render a cross-border decision, and the relief will be limited to the state where the court sits (Art 98). Furthermore, application of Articles 2, 4, 5 and 31104 of the Brussels I Regulation is excluded with regard to the subject matters listed in Article 96 for which the ‘community courts’, defined in Article 95, shall retain exclusive jurisdiction. These courts alone may try infringement proceedings, actions for a declaration of non-infringement and actions for compensation for acts done during the application period. Subject to the provisions of Article 100, these courts can also decide counter-claims for revocation of Community registrations or for declarations of their invalidity. 25.  While the question relating to the applicable law is normally answered with reference to the country where the tort occurred or where protection is sought, the Community Trade Mark Regulation has provided for its own rule: the Community trade mark courts   L Bently and B Sherman, Intellectual Property Law (Oxford, Oxford University Press, 2004) 1081.  ibid, 1081. 102   eg, Art 6 of the Brussels I Regulation that deals with situations where there are multiple defendants, continues to apply, meaning that an action can be brought against a co-defendant in another court than the court of the domicile (see below para 46). 103   Claims for a declaration of non-infringement are explicitly excluded from this possibility. 104   The CTR has its own rule on territorial jurisdiction for provisional and protective measures laid down in Art 103. Except for the courts that base their jurisdiction on the place of the infringement, any other competent community court can grant measures with a cross-border effect. 100 101

362  Marie-Christine Janssens shall only apply the provisions of the Regulation (Art 101.1)105 which have, moreover, to be interpreted in a ‘community’ context. Conversely, on all matters not covered in the CTR, a Community trade mark court can apply its national law,106 including its private international law (Art 101.2).107 26.  Finally, an important practical advantage of the CTR is the rule that a CTM court may make orders relating to activity within any Member State, which are enforceable there without further proceedings.108 27.  Articles 101 et seq of the Plant Variety Regulation describe which courts have jurisdiction to hear infringement claims relating to this community right.109 In contrast to the two other community rights (trade marks and designs), the Regulation does not oblige the Member States to designate special ‘community courts’. The ordinary courts having jurisdiction over an infringement case shall have to ‘treat the Community plant variety right as valid’ as a matter of principle (Art 105). However, regarding the nullity or cancellation of the right, only the Community Office in Angers (France) has exclusive competence to take decisions (Arts 20–21). It is generally assumed that possible gaps in the protection system may be filled in by the Brussels I Regulation, even though the Regulation itself only mentions the Lugano Convention110. 2.2.2.4  European Patent Rights 28.  Even though no unified EU Patent system exists (yet) (see above para 11), this report cannot overlook the importance of the European Patent Convention, in view of its impact on Belgian law.111 This instrument contains specific jurisdiction rules applicable to proceedings during the application process (eg, the attribution of exclusive jurisdiction to the EPO regarding claims for revocation of the patent during the opposition procedure). Other disputes that originate prior to the granting of the patent have to be litigated before the national courts designated in a special Protocol.112 Once delivered, the European patent is to have in the designated states the effects of a national patent.113 National law determines not only the conditions for liability, the kind of remedies available and the assessment of damages, but also the procedural rules that 105   See also Art 14 of the CTR: the effects of Community trade marks are determined solely by the CTM Regulation. These ‘effects’ essentially refer to Arts 9–13 that cover the rights conferred by a CTM. Other aspects of infringement are in the main governed by national trade mark law; W Cornish and D Llewelyn, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 6th edn (London, Thomson, 2007) 767. 106   This would, eg, be the case for the definition of acts constituting use of the mark and the limitations allowing honest use of name, address, descriptions and indications of intended purpose. Also very important is the application of national law as concerns the fourth type of infringement listed in Art 5.5 of the Trade Mark Directive dealing with ‘other uses’ of a trade mark and for which the CTR has no explicit provision. 107   cf Art 96 of the Design Community Regulation and its application in Case C-32/08 Fundación Española para la Innovación de la Artesanía (FEIA) v Cul de Sac Espacio Creativo SL, Acierta Product & Position SA (in relation to the right of ownership to a design that was made on commission). 108   Cornish and Llewelyn, above n 105, 770. 109   eg, according to indent 2 of Art 101, any breach of those rights are to be heard by the court of the Member State in whose territory the defendant has his domicile, his official address or, if there is a lack thereof, the address of his establishment; see its application in Ghent Court of Appeal, 13 October 2008, (2008) Ingénieur Conseil – Intellectual Property 837 (in this case, the validity of the right was not disputed). 110   Pertegás Sender, above n 70, 136. 111   Through a centralised application procedure, the European Patent Office today issues European patents which, once granted, split into a bundle of national patents covered by national legislation. 112   See Arts 1–8 of the Protocol on jurisdiction and the recognition of decisions in respect of the right to the grant of a European patent of 5 October 1973, MB 7 October 1977. 113   See Arts 2 and 64 EPC.

Belgium  363 govern enforcement.114 Hence, the Belgian segment of a European patent will follow the same PIL rules as are applicable to nationally granted Belgian patents. With regard to the question of jurisdiction over infringement as well as enforcement, the Brussels I Regulation remains applicable today.115 The specific PIL rules included in Article 64(3) of the EPC relate only to applicable law. Hence, and notwithstanding the territorial nature of patents, this article does not prevent courts from assuming jurisdiction in relation to disputes regarding foreign patents and from ordering decisions with a cross-border effect.116 With regard to applicable law, Article 64(3) of the EPC includes an explicit choice of law rule mandating that infringements to European patents be decided on the basis of the national law of the country for which the patent was granted.117, 118 As the most important issue in infringement actions tends to be the scope of the claims, Belgian patent law does not diverge significantly from the national laws in other Contracting States, because it must conform to the EPC (Art 69 and its Protocol). Indeed, besides setting up a unitary patent granting system, the EPC has also harmonised the core of post-grant patent law. In practice, there is widespread similarity amongst the Contracting States in the nature of the acts that constitute infringement (sale, importation, contributory infringement, etc).119 Yet, it remains true that, partly due to long-existing national traditions, the application of the various national laws may still give rise to divergent outcomes depending on the venue of the litigation.120 29.  Finally it is pointed out that Article 60 of the EPC sets out a special rule on the allocation of jurisdiction as well as applicable law, in relation to ownership of European patents in proceedings between an employee and an employer121. 2.2.3  General Community Legislation122 2.2.3.1 International Jurisdiction 30.  Concerning jurisdiction in civil and commercial matters, including intellectual property matters, the most important instrument to consider from a Belgian perspective is Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Regulation).123 This instrument not 114   M Pertegás Sender, Cross-border Enforcement of Patent Rights: An Analysis of the Interface between Intellectual Property and Private International Law (Oxford, Oxford University Press, 2002) 56. 115   For future initiatives which will fundamentally change rules relating to international jurisdiction, see above para 11. 116   Roox, above n 84, 1542. 117   The wording used in this provision (‘any infringement of a European patent shall be dealt with by national law’) is somehow misleading in this respect; R Hacon and J Pagenberg, Concise European Patent Law (Alphen aan den Rijn, Kluwer Law International, 2007) 68. 118   See, eg, application in CFI Antwerp, 29 February 2008, (2008) Intellectuele Rechten – Droits Intellectuels 184. 119   Hacon and Pagenberg, above n 117, 68. 120   Pertegás Sender, above n 114, 8–9 (with a summary of the much-discussed Epilady saga). 121   For further details, see Case Study 8. 122  In this section, I will merely cite the relevant legal sources. Their general principles and rules will be described in Section II, where they will be put in perspective with relevant case law and doctrine. 123   [2001] OJ L12/1. This Regulation replaces, as from 1 March 2002, the 1968 Brussels Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (last amended version [1998] OJ C27/1). It is, however, generally accepted that the case law developed by the ECJ as well as by the national judiciary on this former Convention has still to be taken into consideration. For the sake of convenience, hereinafter only references to the Regulation will be made, even in cases where an explicit reference is made to the Convention.

364  Marie-Christine Janssens only constitutes the main source and cornerstone of the European Civil Procedure Law, but has also become an essential pillar for cross-border enforcement of intellectual property rights. The Brussels I Regulation moreover lays down uniform rules to facilitate the free circulation of judgments, court settlements and authentic instruments in the EU,124 the essence of which will be described in section 2.3.4.1. 31.  The Lugano Convention of 1988 is often referred to in case law and governs the same subject as the 1968 Brussels Convention (now replaced by the Brussels I Regulation). This parallel Convention was applicable in the relationship between Member States and EFTA countries (Iceland, Norway and Switzerland)125 but has moved into the background since the Brussels I Regulation126 came into force. Recently, it has been replaced by the Lugano Convention of 30 October 2007127.128 In the present chapter, the latter Convention will not be dealt with further. 32.  It is finally observed that the EU has not yet ratified the Hague Convention on choice of court agreements. A proposal has been published129 but further studies to evaluate the impact of a possible ratification are still undertaken. 2.2.3.2 Applicable Law (Choice of Law) 33.  Once the court accepts it has jurisdiction, the next issue to determine is what law applies. The Community legislator has recently modernised the legal framework that was in existence for many decades by two regulations defining the law applicable to, on the one hand, contractual obligations and, on the other hand, non-contractual obligations: 1. Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 relates to the law applicable to contractual obligations.130 This instrument will hereinafter be referred to as the ‘Rome I Regulation’. According to Article 24, this Regulation replaces the Rome Convention;131 however, because it only applies to contracts concluded after 17 December 2009, the provisions of the earlier Rome Convention will continue to play an important role in the coming years. 2. Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 relates to the law applicable to non-contractual obligations.132 This instrument, which entered into force on 11 January 2009, will hereinafter be referred to as the ‘Rome 124   One of the main goals of the Regulation (and its predecessor, the Convention) was to provide for legal certainty; see Preamble, paras (11) and (15): ‘In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States . . . The rules of jurisdiction must be highly predictable.’ 125   [1988] OJ L319/9. This Convention will be replaced in the near future; see Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, Brussels 21 April 2009, COM(2009) 174 final, 2 (hereinafter referred to as ‘2009 Report on Regulation 44/2001’). 126   Pertegás Sender, above n 70, 138. 127   Text published in [2007] OJ L339/3. 128   It entered into force between the European Community and Norway on 1 January 2010. The ratifications of Denmark, Iceland and Switzerland are still outstanding. 129   COM(2008) 538 and SEC(2008) 2389 (5 September 2008); see also 2009 Report on Regulation 44/2001, above n 125, 2. 130   OJ L177/6 (4 July 2008). 131   Convention 80/934/ECC on the law applicable to contractual obligations (Rome Convention) of 19 June 1980, in force as from 1 April 1991; consolidated version published in OJ C334/1 (30 December 2005). 132  OJ L199/40 (31 July 2007).

Belgium  365 II Regulation’. This Regulation takes precedence over the Rome Convention (Art 28) and applies to events giving rise to damage which occur after its entry into force on 11 January 2009 (Art 31).133 2.2.3.3  Recognition and Enforcement of Foreign Judgments 34.  The Brussels I Regulation applies in relation to recognition and enforcement of foreign judgments. It was indeed the purpose of this Regulation to determine the international jurisdiction of courts in Community countries, so as to facilitate recognition of judgments and to introduce an expeditious procedure for securing their enforcement, and other instruments and court settlements.134

2.3  Relationship between Intellectual Property and and Private International Law 2.3.1  Preliminary Observation 35.  Intellectual property rights are territorial in nature. Where disputes over these rights arise involving more than one country, problems of international private law surface. Hereafter, the legal norms to which courts in Belgium can revert to decide whether they have jurisdiction to hear the case and, if so, to determine under which law the dispute has to be resolved will be described. 36.  Under Belgian law, the relationship between intellectual property issues and the three major questions of private international law (jurisdiction, applicable law and enforcement) is addressed in chapter VIII of the CPIL, entitled ‘Property’.135 Although not groundbreaking with regard to their content, intellectual property law specialists have welcomed the codification of these rules, including clarification of existing (and to some extent conflicting and ambivalent) case law. The core provisions relating to IP disputes are to be found in Article 86 (international jurisdiction), Articles 93–94 (applicable law) and Article 95 (recognition and enforcement of foreign decisions). However, as previously mentioned, the provisions of the CPIL have a subsidiary character. They will only apply in cases where neither the various specific community IP regulations (Benelux IP Convention and EU Regulations on the community trade mark, design and plant variety rights) nor the general community PIL instruments (Brussels I Regulation, Rome I Regulation and Rome II Regulation) provide the answer. In practice, this latter situation will be rather exceptional. Most of the published case law as well as the writings in legal literature therefore concern an application of these community instruments. As it is obvious that the same situation will be present in the other EU Member States,136 the

133   A Nuyts and H Boularbah, ‘Droit international privé européen (2006–2008)’ (2008) Journal Droit Européen 308. It is submitted by some authors that ‘entry into force’ would mean 19 August 2007 and, accordingly, that proceedings applying the Regulation could be brought after 11 January 2009 if the event giving rise to the damage occurred after 19 August 2007; see TC Hartley, ‘Choice of law for non-contractual liability: selected problems under the Rome II Regulation’ (2008) 57 International and Comparative Law Quarterly 899. 134   Cornish and Llewelyn, above n 105, 98. 135   c VIII further deals with immovable property, chattels, goods in transit, cultural property, stolen goods and transferable securities. 136   With the exception of Denmark, which has signed specific agreements with the Commission.

366  Marie-Christine Janssens community rules137 with a focus towards their application by Belgian courts will be discussed here. Case law is most prominently available in patent litigation cases, not only because of a certain notoriety of Belgium in relation to ‘torpedoes’138 but in particular because in this area, most decisions regarding cross-border declarations of non-infringement, crossborder injunctions and cross-border effects of a provisional seizure order have been handed down in the last decade.139 2.3.2  International Jurisdiction in Intellectual Property Cases 37.  International jurisdiction will depend on two preliminary questions relating to, first, the nature of the IP right and, secondly, the nature of the dispute.140 The relevance of the first question is explained by the fact that for certain IP rights – trade marks, designs and plant variety rights – specific conventions or regulations exist with special jurisdiction rules. Belgian courts will have to give priority to these exclusive rules over any other provision.141 The answer to the second question will identify the applicable rule(s) of international jurisdiction. Indeed, disputes relating to validity, infringement or licence contracts obey different jurisdiction grounds in the Brussels I Regulation as well as in the Belgian Code on Private International Law. These grounds are described hereafter. 2.3.2.1  Provisions in the Brussels I Regulation 38.  In the large majority of cases dealing with international IP disputes, Belgian courts have examined their jurisdiction on the basis of the provisions of the Brussels I Regulation (or its predecessor). This Regulation has proven to be ‘a highly successful instrument which has facilitated cross-border litigation’ and ‘is highly appreciated among practitioners’142 to such an extent that some have even lauded it as a masterpiece of community legislation.143 As was observed by the ECJ in the Duijnstee case, one of the aims of the Regulation (and preceding Conventions) was to reduce the scope for forum shopping.144 Experience with cross-territory patent actions has, however, prompted some scholars to state that the Regulation falls ‘demonstrably short’ of this aim.145 39.  An overview of recent Belgian case law confirms that Belgian courts have, in principle, had no problem in admitting their jurisdiction in relation to infringing acts that   Rules relating to the specific IP community rights have already been dealt with in Section I.   This notion typically refers to proceedings initiated before a court known for its backlog and seeking a cross-border declaration of non-infringement with a view to slow down – on the basis of the lis pendens rules – infringement proceedings that the patent owner will launch at a later date. For more details, see C De Meyer, ‘Bedenkingen bij het fenomeen van de Belgische Torpedo’ [‘Some considerations regarding the phenomenon of the Belgian Torpedo’] (1999) Intellectuele Rechten – Droits Intellectuels 76. The EU Commission has expressed concern about this phenomenon in its 2009 Report on Regulation 44/2001, above n 125, 6–7. 139   Roox, above n 71, 149 (with further references). 140   M Pertegás Sender, ‘Règles de conflit de lois et compétence internationale’ in D Kaesmacher (ed), Les droits intellectuels sous toutes leurs facettes (Brussels, Larcier, 2007) 134. 141   See Arts 67 and 71 of the Brussels I Regulation and Art 2 of the CPIL. These rules have been described above. 142   2009 Report on Regulation 44/2001, above n 125, 3. 143   B Hess, T Pfeiffer and P Schlosser, ‘Report on the Application of Regulation Brussels I in the Member States’, Study JLS/C4/2005/03, September 2007, Ruprecht-Karls-Universität Heidelberg, Institut Für Ausländisches Und Internationales Privat- Und Wirtschaftsrecht, ec.europa.eu/civiljustice/news/docs/study_application_brussels_1_ en.pdf, 1. 144   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663 (this case concerned an entitlement to patents). 145   Cornish and Llewelyn, above n 105, 98. 137 138

Belgium  367 occurred in other countries, even non-EU countries. It has been observed, nevertheless, that courts are generally reluctant to accept international jurisdiction in cases of crossborder infringement. In a significant number of cases, jurisdiction was declined, not because of objections of principle but simply because the prerequisites for the application of the Brussels I Regulation were not met.146 40.  The Regulation does not foresee specific rules for intellectual property infringement actions and in this respect the courts will have to apply the general and specific rules applicable to civil disputes. In summary, these rules include, first, the basic principle that a suit is to be brought in the EU (or EFTA) state of the defendant’s ‘domicile’ (Art 2). Alternative jurisdictions are available in the place of tortious harm (Art 5.3) or, in the case of a contractual dispute, in the place where the obligation has to be performed (Art 5.1). Further qualifying factors essentially include the rule concerning co-defendants (Art 6.1), the rules on priority of jurisdiction in cases of lis pendens and related actions (Arts 27–28) and the ability of other jurisdictions to take provisional measures (Art 31). As most of these jurisdictional grounds are of relevance in the various case studies that will be examined in Section II, details of each of them will be provided in relation to these cases. (a)  Application of General Jurisdiction Rule 41.  In line with its predecessor the Brussels Convention, the Brussels I Regulation takes the perspective that persons domiciled in a Member State shall be sued in the courts of that Member State (actor sequitur forum rei). Article 2 lays down this general principle according to which (most of) the rules of jurisdiction of the Regulation apply where a defendant has its domicile in a Member State.147 This rule is applicable ‘whatever the nationality’ of the defendant and even if the plaintiff is domiciled outside the EU/EFTA. Conversely, a defendant domiciled outside the Community is subject to all applicable national rules of jurisdiction (Art 4). The rule of the forum domicilii is ‘cardinal’148 and implies that all other rules in the Regulation that derogate from the general principle (such as the rules of special and exclusive jurisdiction) have to be given a restrictive interpretation.149 It has moreover been given a mandatory character that cannot be set aside on the basis of national law150 because ‘a court may not sidestep the Regulation’s paths in order to reach a fair solution in complex cases’.151 The latter observation explains why the application of the forum non conveniens rule152 is not allowed; its effect would be ‘to undermine the predictability of the rules of jurisdiction . . . and consequently to undermine the principle of legal certainty’.153 146   F De Visscher and M Bouche, ‘Jurisdiction et loi applicable en cas de contrefaçon transfrontalière (actes de contrefaçon) des droits de propriété intellectuelle’, Answer of the Belgian Group of AIPPI to Question Q174, www. aippi.org, 1–2. 147   Case C-412/98 Group Josi Reinsurance Comp v UGIC [1998] ECR I-7091. See also Case Study 1 for an application of this rule. 148   Pertegás Sender, above n 114, no 3.08. 149   Case C-51/97 Réunion européenne v Spliethoff [1998] ECR I-6511. 150   Case C-281/02 Owusu v Jackson [2005] ECR I-1383. 151   Cornish and Llewelyn, above n 105, 103, while at the same time deploring that the Regulation did not adopt any doctrine of forum non conveniens. This concern is shared by other scholars; see eg T Hartley, ‘The European Union and the Systematic Dismantling of Common Law of Conflict of Laws’ (2005) 54 International and Comparative Law Quarterly 813. 152   Many Member States, including Belgium (see, below para 56), do recognise such a rule in their national regulation. 153   Case C-281/02 Owusu v Jackson [2005] ECR I-1383, para 41.

368  Marie-Christine Janssens With regard to intellectual property disputes, Article 2 clearly includes the possibility of suing a defendant in his place of domicile even though the rights concerned were granted by a state outside the EU and even if the infringing acts took place in another Member State or outside of EU/EFTA territories.154 If, for example, the defendant is domiciled in Belgium and a claim relates to infringement of American copyright by acts done in the United States, the Brussels I Regulation will apply and the Belgian court must accept jurisdiction. When jurisdiction is based upon Article 2, the decision can even have crossborder effects.155 This would not be possible if the defendant had its domicile in another (Member) State.156 (b)  Application of Special Jurisdiction Rules 42. Alternative forum options are available to the plaintiff that allow suing the defendant in the court of another Member State where the defendant is not domiciled. These options will be summarised in the order of their appearance in the Brussels I Regulation. 43.  First, where the dispute relates to a contract, Article 5.1 states that in the absence of a specific provision to the contrary between the parties,157 the defendant may be sued in the courts of a Member State for the place of performance of the obligation at issue ( forum executionis). The ECJ has made it clear that the general rule of Article 5.1(a) also applies to licence contracts relating to an intellectual property right. The Court, however, clarified that such contracts are not contracts for the provision of services within the meaning of the second indent of Article 5.1(b) and, hence, do not follow the special jurisdiction rule laid down in that provision.158 In this respect, the so-called Tessili method will have to be applied, according to which the place of performance has to be determined with reference to the law that is applicable pursuant to the rules of conflict of laws.159 44.  Secondly, in matters relating to tort, delict or quasi-delict, Article 5.3 provides that the courts of the place where the harmful event occurred or may occur will have jurisdiction. It is settled case law that the place where the harmful event occurred includes not only the place where the acts giving rise to the harm originated, but also the place where the harm had effect.160 No discussion exists concerning the application of this provision to matters of infringement of intellectual property rights.161 This also follows from the case law of the ECJ, in   Bently and Sherman, above n 100, 1080.   See, eg cross-border injunction issued in a patent infringement case by CFI Brussels, 12 December 2003, Steps v Franzoni (2004) Intellectuele Rechten – Droits Intellectuels 284. 156   Because the defendant had its residence in the Netherlands, the Court of Antwerp declined jurisdiction to decide on the infringement of a patent owned by a Belgian company on the basis of Art 2; CFI Antwerp, 20 March 2008, reported in J Deene, ‘Kroniek intellectuele rechten’ [‘Overview of case law intellectual property rights’] (2009) Nieuw Juridisch Weekblad 542. 157   This freedom of choice regarding jurisdiction is regulated in Art 23 of the Regulation (below, para 51). 158  Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327; (2009-2010) Rechtskundig Weekblad 1727, commentary by P Brulez. 159   Nuyts and Boularbah, above n 133, 310. For more details on the Tessily decision and the determination of the locus executionis, see Case Study 3. 160   Case 21/76 Handelskwekerij GJ Bier BV v Mines de Potasse d’Alsace SA [1976] ECR I-1735. Numerous other decisions have afterwards confirmed this holding. In Belgium, the Cour de Cassation confirmed the ECJ’s case law in Cass 6 October 2006, (2008-2009) Rechtskundig Weekblad 1726 (general tort case). See more details in Case Studies 1(2) and 7(3). 161   Hence, the discussion in legal doctrine whether such infringements are to be characterised as tortious or quasi-delictual, is of no relevance here; see in this respect JJ Fawcett and P Torremans, Intellectual Property and Private International Law (Oxford, Clarendon Press, 1998) 150. 154 155

Belgium  369 particular in the Kalfelis162 and Shevill 163 rulings. Whereas in the first case, the Court decided that Article 5.3 had to be given an independent and broad interpretation covering ‘all actions which seek to establish the liability of a defendant and which are not related to “a contract” within the meaning of Article 5.1’, it applied this provision in the latter case to an infringement of an intangible property (a person’s reputation and honour). In line with this case law, it is generally accepted that, by analogy, intellectual property rights should fall under Article 5.3.164 According to the Shevill doctrine,165 the plaintiff can bring a claim either before the court where the defendant is established (ie general locus domicilii rule) which then has jurisdiction to award damages for all the harm caused by the infringement, or before the courts of each Member State in which the infringement occurs or where the plaintiff claims to have suffered harm. In the latter situations, which include two different connecting factors – locus acti and locus damni166 – courts, however, solely have jurisdiction in respect of the damage sustained in the forum state. In this hypothesis, an IP right owner will have the (burdensome) task of collecting the different parts of the damages in different courts. Belgian courts have regularly applied Article 5.3 with reference to the above-mentioned ruling of the ECJ. For example, in an international patent litigation, the Antwerp Court accepted jurisdiction in a case where a Dutch company had sued a Greek company alleging infringement of its European patent, which occurred in Antwerp.167 The Brussels Court assumed juris­ diction because the manufacture and the offering for sale of the patented product took place on Belgian territory. The argument of the defendant, that the final product, a medicament, was sold in the US, was considered irrelevant.168 As of today, Belgian courts have, however, been rather reluctant to apply this jurisdictional ground to declarations of non-­ infringement in particular when a cross-border declaration is sought.169 In some (rather specific) cases such relief was however granted.170 In the sector of copyright, the Antwerp Court accepted jurisdiction to order final injunctive relief sought by a Belgian producer of phonograms against a Dutch defendant for infringement of its neighbouring right by selling CDs in Antwerp.171 Likewise the Brussels Court accepted jurisdiction because the French film La veuve de Saint-Pierre was distributed in Belgium in violation of the claimant’s copyright.172 One may further refer to a copyright infringement case initiated by a Belgian company against a British company for   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565.   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415.   Pertegás Sender, above n 114, no 3.67. 165   Although this case was concerned with the infringement of personality rights (defamation), it is generally assumed that its holdings also apply to intellectual property rights’ infringements; see, eg, Dreier and Hugenholz, above n 74, 29. 166   Roox, above n 84, 1557. 167   Commercial Court Antwerp 11 September 2008, Philips v Ari Trans et al, reported in J Deene, ‘Kroniek intellectuele rechten’ [‘Overview of case law intellectual property rights’] (2009) Nieuw Juridisch Weekblad 542. Competence was also assumed on the basis of Art 6.1 (close connection between claims involving many defendants one of which had its residence in Belgium). 168   CFI Brussels, 20 November 2008, (2009) Ingénieur Conseil – Intellectual Property 33. See also CFI Liège, 6 December 2007, (2008) Intellectuele Rechten – Droits Intellectuels 162. 169   Jurisdiction was declined in CFI Brussels, 12 May 2000, Röhm v DSM, (2002) Intellectuele Rechten – Droits Intellectuels 321. See also CFI Brussels, 19 January 2001, Novo Nordisk v DSM, (2002) Intellectuele Rechten – Droits Intellectuels 304. Cf De Visscher and Bouche, above n 146, 4. 170   See cases discussed by Roox, above n 84, 1555–56. 171   Court of Appeal Antwerp, 12 September 2008, (2008) Intellectuele Rechten – Droits Intellectuels 415. 172   Court of Appeal Brussels, 4 May 2001, (2001) JLMB – Journal Liège Mons Bruxelles 1444. 162 163 164

370  Marie-Christine Janssens non-payment of statutory levies in relation to the sale of blank CDs in Belgium.173 In a comparable case involving the same claimant and another company established in Britain but conducting its business in Germany, the Court of Appeal based its competence on Article 86 of the CPIL. While the positive decision on the merits will probably not raise difficulties, ignoring the Brussels I Regulation in this case is rather questionable.174 Moreover, Article 5.3 regularly finds application in situations of infringements in Internet contexts.175 45.  In complex international litigation involving many parties, plaintiffs will look for the availability of concentration mechanisms that will enable them to bring the case before one forum that is able to decide the dispute as a whole. The Brussels I Regulation offers such mechanisms in the pre-litigation stage (para 46)176 as well as in the post-litigation stage when litigation is already pending (paras 47–48).177 46.  In cases of multiple defendants, the Brussels I Regulation provides for an alternative jurisdiction factor in Article 6.1.178 According to this rule each of the defendants if domiciled in a Member State may also be sued in the courts of the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Use has been made of this clause for some time by Belgian courts (although not so extensively as was the case in the Netherlands179), allowing consolidation of claims for infringement of national bundle patents deriving from a European patent application, whenever one of a number of defendants was domiciled in Belgium.180 Clearly, this ground for jurisdiction provides substantial scope for forum shopping.181 The latter conclusion may explain why, in its 2006 Roche ruling,182 the ECJ has taken a severe stand on the application of Article 6.1 (also in view of the fact that this article allows for a derogation of the general principle of the actor sequitur forum rei). In a nutshell, the ECJ held that because patent law is different in each country, there is no risk of conflicting   Court of Appeal Antwerp, 3 March 2008, Auvibel v Cd Republic (www.auvibel.be/files/RP03032008N.pdf).   President CFI Brussels, 24 May 2006, Auvibel v X, (2007) Intellectuele Rechten – Droits Intellectuels 180. Confirmed by the Court of Appeal on 20 May 2008. 175   eg in a trade mark case, jurisdiction was accepted where the holders of the domain name ‘Liberty tv.com’ and of various trade marks including the word ‘liberty’, active in the travel sector, brought an infringement claim against a Swiss company using the domain name ‘Liberty-Voyages.com’. The Brussels Court accepted jurisdiction on the basis of Art 5.3 of the Convention of Lugano on the basis that because Benelux consumers could access the disputed website, the harm occurred in the Benelux territory where the protection was claimed; Court of Appeal Brussels, 2 December 2004, (2004) Ingénieur Conseil – Intellectual Property 537 (the Court, however, dismissed the claim on the merits, deciding that no risk of confusion was demonstrated). In relation to copyright disputes, see Case Study 7. 176   It should be noted that also the general rule of the defendant’s domicile can be used as a concentration technique where the harmful event occurred for transnational torts. 177   Pertegás Sender, above n 114, 42. 178   It is currently not possible on the basis of the Brussels I Regulation to group actions of several plaintiffs against the same defendant, before the courts of one Member State. 179   See in this respect Pertegás Sender, above n 114, 56, referring to the Netherlands as ‘the epicentrum of crossborder patent litigation’, in the context of the application of Art 6.1. 180   See, eg, CFI Brussels 30 July 2001, Synthon v SKB (2002) Intellectuele Rechten – Droits Intellectuels 301; Commercial Court Brussels, 28 February 2002, Vittel v Keramag (2002) Ingénieur Conseil – Intellectual Property 237. Conversely, in CFI Liège, 6 December 2007, (2008) Intellectuele Rechten – Droits Intellectuels 162, where the jurisdiction regarding the first defendant was based upon Art 5.3, the court declined territorial jurisdiction over the other defendants because none of the defendants had their domicile in the district of Liège. 181  V Jandoli, ‘Cross-border Litigation Again? This Time the Legislator Intervenes’ (2009) 31 European Intellectual Property Review 236, 238. 182   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. For more details, see also Case Study 3 (3). 173 174

Belgium  371 decisions. In a more general way, the Roche ruling prompts us to conclude that it is currently impossible to bring consolidated proceedings against several infringers of a European bundle patent even where the infringers belong to a group of companies and act in accordance with a coordinated policy.183 Henceforth, the claimant will be obliged to bring proceedings in each of the jurisdictions concerned which, clearly, will entail high costs and hamper an efficient handling of the claims. 47.  Thirdly, mention should be made of the special rules that solve questions of lis pendens and related actions (see Arts 27 and 28 respectively). To resolve cases of litis pendentiae, Article 27 gives the first court to be seised strict primacy where more than one set of proceedings involving the same cause of action184 and between the same parties are brought. This is so even where a motivation for bringing proceedings in the first court is to take advantage of the slowness of its procedures and effectively ‘torpedoing’ the action’.185 If the requirements are satisfied, the court second seised must stay proceedings until the court first seised has established that it has jurisdiction. At this point the court second seised must decline jurisdiction. This strict application of Article 27 has also been upheld in a case where it was claimed that the court second seised had exclusive jurisdiction.186 Hence, it pays off for a party to be the first to bring its action to the court of his choice, in order to frustrate the application of another ground of jurisdiction (eg, choice of court clause). In relation to IP disputes, it is worth mentioning that the lis pendens rule will normally apply to the so-called ‘mirror-actions’ seeking on the one hand a declaration of noninfringement of an IP right and, on the other hand, an injunction on the basis of the infringement of the same right.187 However, actions to enforce patents for different Member States, even when they are granted for the same invention and in common form from the EPO and are asserted against equivalent acts, are not for the same cause.188 48.  The rule of Article 28 (‘related actions’) allows the court to stay the case or decline jurisdiction where the action is related to another action that is pending in another Member State.189 For the application of this article, it is required that both proceedings are concerned with the examination of the same legal issue, without necessarily having identical parties or an identical cause of action. Originally, legal scholars took the view that this article will apply where two infringement actions involve, eg, parallel patent rights (generally issued from a European patent grant), because there is a risk of irreconcilable judgments even if, strictly speaking, the actions do not concern the same rights.190 Reference was 183   Not surprisingly, the Roche ruling has attracted much criticism. See, eg, Nuyts and Boularbah, above n 133, 311–12; A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decision GAT v Luk and Roche Nederland v Primus and Goldenberg’ (2006) 37 International Review of Intellectual Property and Competition Law 844, 849; Jandoli, above n 181, 236. 184   For more details about this condition, see Case Study 5(1) with reference to the Tatry ruling. 185   See comments of P Véron, ‘ECJ Restores Torpedo Power’ (2004) 35 International Review of Intellectual Property and Competition Law 638, in relation to Case C-116/02 Erich Gasser GmbH v MISAT Srl [2003] ECR I-14693. 186  See Gasser decision above. 187   C De Meyer and E De Pauw, ‘Belgian Torpedoes: have they really missed their target?’ in Allied and in Friendship: For Teartse Schaper (Deventer, Kluwer, 2002) 146. See also Case Study 5 dealing with such an action. 188   Cornish and Llewelyn, above n 105, 101, with reference to the Tatry ruling. 189   To identify the time at which proceedings become pending, see Art 30 of the Brussels I Regulation. It can further be observed that, if the court would decline jurisdiction, which is an option offered by Art 28.2, this may lead to a (temporary) negative conflict of jurisdiction if the first court does not take jurisdiction with respect to the action concerned. 190   Pertegás Sender, above n 114, no 4.129; Fawcett and Torremans, above n 161, 183–84. Belgian case law, however, has not followed this view; see De Visscher and Bouche, above n 146, 16.

372  Marie-Christine Janssens made to the Tatry decision where the ECJ concluded that the concept of ‘related actions’ must be interpreted broadly and must cover all cases where there is a risk of conflicting decisions, even if the judgments can be separately enforced and their legal consequences are not mutually exclusive.191 In particular the Court interpreted Article 28 as granting discretion as soon as the proceedings create the ‘risk of conflicting decisions, without necessarily involving the risk of giving rise to mutually exclusive legal consequences’.192 However, in view of the subsequent Roche ruling193 it is questionable whether the original broad interpretation, with a possible application regarding patent infringement proceedings, can be maintained, notwithstanding the criticism that is currently voiced on the Roche ruling.194 49.  Finally, Article 31 includes special jurisdiction rules in relation to provisional and protective measures.195 Applications for such measures (as may be available under the law of that state196) may be made to the courts of a Member State, even if, under the Regulation, the courts of another Member State have jurisdiction as to the substance of the matter and even if the parties have submitted the dispute to arbitration.197 The expression ‘provisional, including protective, measures’ as used in Article 31 is to be understood as referring to measures which, in matters within the scope of the Regulation, are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case.198 With reference to the ECJ’s rulings in Denilauler and Van Uden,199 it has to be further observed that Article 31 of the Brussels I Regulation can only be applied if a real connecting link exists between the subject matter of the measures sought and the forum. Hence, this provision cannot justify measures that would have no effect in the forum and produce solely extra-territorial effects. By stating this condition, the ECJ seeks to avoid the so-called ‘forum shopping’ for provisional measures, as well as the risk of abuse of the rights deriving from the Brussels I Regulation. Overall, Belgian doctrine200 and case law201 seem to accept that the measures can –but need not necessarily – be restricted to the national territory and may have cross-border effects202 as long as such measures have also an effect in the forum. The majority of case law   Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439 (para 52).  ibid. 193   See above, para 46. See also more details in Case Study 3(2(b)). 194  Above n 188. For more details and references to Belgian case law pre-dating the Roche decision, see M Pertegás Sender, ‘Aanhangigheid, samenhang en voorlopige maatregelen’ [‘Lis pendens, related actions and provisional measures’] in H Van Houtte and M Pertegás Sender (eds), Europese IPR-Verdragen [European PIL Conventions] (Leuven, Acco, 1997) 125. 195   For an extensive analysis of this provision, see Pertegás Sender, above n 114, 127 et seq. 196   Regarding possible measures under Belgian law, see above para 8. 197   Regarding this latter situation, see Case Study 11. 198   Case C-261/90 Mario Reichert, Hans-Heinz Reichert and Ingeborg Kockler v Dresdner Bank AG [1992] ECR I-2149, para 34. See also Case C-104/03 St Paul Dairy Industries NV v Unibel Exser BVBA [2005] ECR I-3481. In this latter case the Court further clarified that the aim of Art 31 is to avoid causing loss to the parties as a result of the long delays inherent in any international proceedings (para 12). 199   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091; see also Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553 and Case C-99/96 Mietz v Intership Yachting [1999] ECR I-2277. For more details see Case Study 11. 200   Pertegás Sender, above n 114, no 3.156. 201   See decisions described hereafter. Older case law, tended to decline jurisdiction to order transnational provisional measures; see De Visscher and Bouche, above n 146, 7. 202   In an explicit way this was confirmed in the AG Léger’s opinion of 10 June 1997 in the Van Uden case (paras 112 and 120). See also Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553. 191 192

Belgium  373 that applied Article 31 (and its predecessor Art 24 of the Convention) concerned patent disputes.203 The decision in SKB v Chiron was one of the first cases in Belgium in which the Court applied Article 31 and assumed jurisdiction to take cross-border measures where the Belgian plaintiff essentially requested a declaration of non-infringement relating to a European patent owned by a US company (even though the claim was not phrased as such204). The President decided that Article 4 was not applicable in relation to proceedings based upon Article 31 because the latter constitutes an autonomous ground – and hence an alternative forum – for jurisdiction and granted the relief sought by the claimant.205 A similar claim and reasoning can be found in the case Medtronic v Theric. The Court, in the end, dismissed the claim for a cross-border declaration because of the lack of ‘a real connecting link’ with the Belgian territory, as required by the ECJ in the Van Uden decision.206 With reference to the same Van Uden decision, in 1999 Belgian’s highest court (Cour de Cassation) confirmed that Belgian courts can issue interim orders with a cross-border effect on the basis of Article 31 (24 Convention).207 Hence, it is no wonder that cross-border interim injunctions have been granted in several other cases. This occurred, eg, in the Colgate v Unilever patent infringement suit.208 Prior to ordering the injunction, the Court did confirm, first, that it could assume jurisdiction on the basis of Article 31 (24 Convention) and, secondly, that the necessary ‘real connecting link’ had been established in this case. A similar position was taken by the Court in Altana Pharma v Eurofarma granting a crossborder injunction for all the European countries where the patent was valid.209 These decisions confirm the broad interpretation that Belgian courts seem to accord Article 31 (as well as to the Van Uden decision), although the number of decisions remains modest.

203   For a more detailed discussion of the cases described hereafter, as well as references to other decisions, see Roox, above n 84, 1544 et seq. 204   The claimant requested permission to continue production and exploitation in all the European countries covered by the European patent. 205   President CFI Brussels 6 February 1997, (1997) Intellectuele Rechten – Droits Intellectuels 346. See, however, President of the Brussels Court 8 October 2003, Ratiopharm v Lundbeck (2003) Intellectuele Rechten – Droits Intellectuels 297, where the Court only accepted the rendering of a declaration permitting further commercialisation of an allegedly infringed patent with effect on the Belgian territory. 206   President CFI Brussels 23 June 2000, Medtronic v Therex (2002) Intellectuele Rechten – Droits Intellectuels 328. See also Court of Appeal Brussels 20 February 2001, Roche v Glaxo (2002) Intellectuele Rechten – Droits Intellectuels 284. 207   Cass 3 September 1999, (2000) Intellectuele Rechten – Droits Intellectuels 71 (in casu the Court had approved the use of the descriptive seizure procedure to collect evidence relating to an infringement of a foreign patent, even though no protection in Belgium existed). Whether this decision is compatible with the more recent holding of the ECJ in Case C-104/03 St Paul Dairy Industries NV v Unibel Exser BVBA [2005] ECR I-3481 has been questioned; see K Szychowska, ‘Taking evidence in intellectual property matters under Regulations 44/2001 and 1206/2001’ (2006) Intellectuele Rechten – Droits Intellectuels 111 et seq; Roox, above n 84, 1548. However, as the St Paul Dairy decision related to a measure ordering the hearing of a witness, it remains questionable whether its holding would also extend to a measure seeking an interim descriptive seizure order. 208   President CFI Brussels, 14 September 2001, (2002) Intellectuele Rechten – Droits Intellectuels 239. 209   President CFI Brussels, 25 March 2005, (2005) Intellectuele Rechten – Droits Intellectuels 302. See about this case, K Roox, ‘De Altana Pharma-beschikking: een nieuwe Belgische grensoverschrijdende beslissing in kort geding’ [‘The Altana Pharma order: a new Belgian cross-border decision in an interim proceedure’] (2005) Intellectuele Rechten – Droits Intellectuels 254. A similar decision can be found in Court of Appeal Antwerp, 25 April 2007, (2007) Intellectuele Rechten – Droits Intellectuels 248 (involving a US claimant against Belgian and US defendants); see comments by K Roox, ‘ATMI/Praxair: opnieuw een grensoverschrijdende beslissing in kort geding’ [‘ATMI v Praxair: another cross-border interim injunction’] (2007) Intellectuele Rechten – Droits Intellectuels 259.

374  Marie-Christine Janssens (c) Application of IP Related Exclusive Jurisdiction Rule 50.  Last but not least, exceptions to the general ‘defendant in court’ rule are applicable in cases of exclusive jurisdiction. The Brussels I Regulation includes a number of provisions in which courts will have jurisdiction regardless of the domicile of the defendant. With regard to intellectual property disputes, the following three situations are of major importance. (i)  Certain Types of Disputes Concerning Specific Subject Matters In the area of intellectual property law, this exception relates essentially to the specific Community IP rights regulated in EU Regulations, which have been described above.210 These regulations address in a consistent way issues of international jurisdiction which is, as a rule, reserved to the tribunals designated in the separate Regulations,211 even though some room is often left for the general community rules (Brussels I Regulation)212 and/or national PIL rules. The existence of specific community instruments regarding trade marks, designs and plant varieties, may provide an explanation for the relatively limited case law dealing with the international jurisdiction of the Belgian courts in these matters.213 Conversely, it is no wonder that most Belgian case law that involves PIL problems relates to copyright and, even more so, patent law where such uniform rules are still lacking.214 (ii)  Prorogation of Jurisdiction (Forum Clauses) 51.  The Brussels I Regulation confirms the principle of the autonomy of the parties which will prevail over all grounds of general or special jurisdiction.215 Where an agreement exists between the parties (one of which has to be domiciled in the Community) regarding a choice of jurisdiction clause, the agreed court will have exclusive jurisdiction and there is no question of alternative jurisdictions unless the parties have agreed that the forum clause would have a non-exclusive character (Art 23).216 An exception is, however, made with respect to matters for which an exclusive jurisdiction rule exists (eg, regarding the validity of a patent or trade mark registration). Courts can never enforce a forum clause which derogates from such rules. (iii)  Situation Listed in Article 22 52.  For the purpose of the present report, section 4 of Article 22 is of particular relevance. It imposes an exclusive jurisdiction rule where the action relates to ‘the registration or validity of patents, trademarks, designs or other similar rights’.217 This rule, which is applicable irrespective of the domicile of the defendant,218 is justified by the fact that the grant of   See above, 2.2.2. Exclusive jurisdiction results from Arts 67 and 71 of the Brussels I Regulation.   See, eg, Recital (30) of the Community Designs Regulation: ‘The litigation system should avoid as far as possible “forum shopping”. It is therefore necessary to establish clear rules of international jurisdiction.’ 212   As was recalled in the Tatry decision, the specialised conventions preclude the application of the provisions of the Brussels Regulation only in cases governed by the specialised convention and not in those to which it does not apply. Eg, where a specialised convention contains certain rules of jurisdiction but no provision as to lis pendens or related actions, Arts 27 and 28 of the Brussels I Regulation accordingly apply; Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439. 213   cf Roox, above n 84, 1560. 214   Roox, above n 71, 149. 215   See, eg, CFI Brussels 12 May 2000, Röhm Enzyme, (2000) Intellectuele Eigendom en Reclamerecht – NL 227. 216   See also more details in Case Study 4. 217   ‘Other similar rights’ refer to other registrable rights such as plant varieties, SPCs and utility models. 218   Art 22.4, opening sentence. See also Art 4.1 that includes a reservation regarding the Arts 22 and 23. The general jurisdiction rule of Art 2 remains applicable in cases where the connecting factors for exclusive jurisdiction under Arts 22 and 23 are situated in a third (non-EU) state; see 2009 Report on Regulation 44/2001, above n 125, 5 (with reference to Opinion 1/03 of the ECJ). 210 211

Belgium  375 such rights ‘is an exercise of national sovereignty’.219 Exclusive jurisdiction is conferred upon the courts of the Contracting State in which the deposit or registration has been applied for because ‘those courts are best placed to adjudicate upon cases in which the dispute itself concerns the validity of the patent or the existence of the deposit or registration’.220 Pursuant to Article 25, any other court will have to decline jurisdiction on its own motion. This rule essentially concerns disputes relating to revocation, invalidity, an amendment of the patent specification or a declaration of validity of an industrial property right (not covered by (i) above). There is no suggestion that this rule applies to copyright and related rights, the existence of which is not dependent upon a formal act of registration.221 The distinction made between, on the one hand, claims that relate to the validity of registered industrial property rights and, on the other hand, all other claims seems obvious in theory, but is much less evident in practice. In a considerable number of infringement cases – which are to be qualified as ‘other disputes’ – defendants will typically initiate a counterclaim seeking the invalidity of the IP right relied upon by the plaintiff. Or the defendant may merely defend himself by arguing that the registration is invalid. Hence, the question of whether Article 22.4 applies to this type of infringement cases is a crucial one, in particular, because it is sometimes difficult to predict whether validity is going to be a real issue and whether such claim will be raised bona fide. These issues have been the subject of heated debates amongst foreign scholars222 which, in turn, have been echoed in Belgian literature and case law.223 In 2006 the ECJ’s decision in the GAT v LuK case cast a new light on the discussion.224 The Court made it clear that Article 16.4 of the Convention (today replaced by Art 22.4) always applies to cases where a patent’s validity is at stake, including the situation where the claim was initiated through a counter-claim in an infringement action.225 As happened in many other countries,226 this decision has also in Belgium had the effect of nearly paralysing European cross-border litigations in infringement cases where the defendant files a counter-claim or raises a plea of nullity regarding a non-national 219   Report (Jenard) on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters signed at Brussels, 27 September 1968, OJ C59/1. 220   Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553, para 22. 221   See Art 5.2 of the Berne Convention: ‘The enjoyment and the exercise of these rights shall not be subject to any formality’. 222  See more details and references in C Wadlow, Enforcement of Intellectual Property in European and International Law (Sweet & Maxwell, London, 1998) 188. 223   See more details in Case Study 2. 224   Case C-4/03 GAT v LuK [2006] ECR I-6509: ‘[Article 22.4 applies] irrespective of whether the issue (of validity) is raised by way of an action or a plea in objection’. To allow otherwise ‘would multiply the risk of conflicting decisions which the (Regulation) seeks specifically to avoid’ (at para 29). This decision has triggered many critical reactions. See, eg, B Docquir, ‘Résumé de CJCE, 13 juillet 2006 (arrêts Roche et GAT/LuK)’ (2006) Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 190; K Szychowska, ‘Quelques observations sous les arrêts de la Cour de justice dans les affaires C-4/03 GAT et C-539/3 Roche’ (2007) Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 498; P Torremans, ‘The Widening Reach of Exclusive Jurisdiction: Where Can You Litigate IP Rights after GAT?’ in A Nuyts (ed), International Litigation in Intellectual Property and Information Technology (Austin, Kluwer Law International, 2008) 65; Nuyts and Boularbah, above n 133, 313–14; M Wilderspin, ‘La compétence juridictionnelle en matière de litiges concernant la violation des droits de propriété intellectuelle’ (2006) 95 Revue critique de droit international privé 777. 225   Whereas a few years ago a fall in torpedo actions was reported, it is feared that this GAT ruling of the ECJ will worsen the situation and might even create ‘super-torpedoes’; see Hess et al, above n 143, 334. 226   See Jandoli, above n 181, 236. At p 242, this author develops an interesting argument holding that, with the coming into effect of the Rome II Regulation, courts will have to hold that the ECJ’s decision in Roche will no longer apply to legal actions taken up pursuant to Art 6.1. See also Nuyts and Boularbah, above n 133, 312.

376  Marie-Christine Janssens industrial property right.227 Conversely, where the validity of the patent is not the subject of a (counter-)claim, Belgian courts continue to be willing to grant relief.228 It is still premature to assess the impact of the ECJ’s case law on Belgian jurisprudence. At least in doctrine, it is submitted that as of today the summa divisio between exclusive and non-exclusive jurisdiction remains unclear and controversial.229 2.3.2.2  Belgian Code on Private International Law (CPIL) 53.  Because most of the rules in the CPIL that are of interest for the present report mirror the provisions of the Brussels I Regulation, they will be described in a concise way only, pointing to possible areas of difference. In this context, it should be remembered that the Belgian rules will, in practice, essentially apply in the relationship between a Belgian company and a company located outside the EU/EFTA.230 (a) General and Special Jurisdiction Rules 54.  The basic principle for jurisdiction is the defendant’s domicile or place of residence (Art 5). In line with the Brussels I Regulation, nationality has lost ground as a connecting factor which is, partly, due to the increasing number of persons holding multiple citizenship.231 Unlike the Regulation, the CPIL provides for a definition of these two possible locations in a separate Article 4. Furthermore, Belgian courts have jurisdiction for international companies located abroad but having a local branch in Belgium (Art 5 para 1(3)). In the case of multiple defendants, Article 5 paragraph 1(2) allows the court to take jurisdiction if one of the defendants is domiciled or resides in Belgium. This provision pursues the same aim as Article 6.1 of the Brussels I Regulation, but is formulated in a different way. Where the latter sets out the requirement of a close connection between the actions, the Belgian provision is phrased in a more negative way, precluding its application in cases of improper use of the jurisdiction ground.232 The second part of this provision indeed allows the court to decline jurisdiction if it appears that the claim was initiated to ‘back out’ certain defendants of the jurisdiction of their court. This correction mechanism aimed at reducing the much-criticised practice of the ‘Belgian Torpedo’.233 As a further qualifying factor for jurisdictional purposes, the CPIL also includes a lis pendens rule (Art 14) which is comparable to Article 27 of the Brussels I Regulation. Unlike the latter, however, no special rule is provided concerning ‘related cases’. 55. The CPIL includes, in a comparable manner, the other alternative jurisdiction grounds that are laid down in the Brussels I Regulation in relation to contracts and torts (see Arts 96, 1° and 96, 2° respectively – compare with Arts 5.1 and 5.3 of the Regulation). 227   Court of Appeal Antwerp, 5 May 2008, Avery v 3M, (2008) Intellectuele Rechten – Droits Intellectuels 256. With reference to the GAT ruling, this Court declined jurisdiction to decide on a cross-border declaration of noninfringement relating to a European patent because the Belgian claimants also disputed, albeit in subsidiary order, the validity of the European patent owned by the US defendant. Regarding the Belgian part of the patent, the Court applied Art 22.4 to grant the requested relief (declaration of non-infringement) for the Belgian territory. 228   CFI Antwerp 29 February 2008, (2008) Intellectuele Rechten – Droits Intellectuels 184. In this case the issue of the validity of the patent was raised as a defence and not as a real claim. With reference to the conclusions of Advocate General Geelhoed in the GAT v LuK case, the Court considered that in such a case, it could either take or stay the case. 229   Pertegás Sender, above n 70, 139. 230   In all other cases the Brussels I Regulation or the Lugano Convention will apply, respectively. 231   Erauw, above n 65, 155. See also Roox, above n 71, 150. 232   B De Groote, ‘Article 5’ in Erauw et al, above n 66, 28–29. 233   Roox, above n 71, 150.

Belgium  377 56.  Further bases of jurisdiction include the existence of a forum clause by which parties make the Belgian courts or a particular Belgian court (Art 6) or the court of another country (Art 7) internationally competent.234 In a new provision (Art 6 para 2) the Belgian court has been given the possibility to decline jurisdiction if it considers that the case presents no significant connection with Belgium.235 57.  Article 10 allows Belgian courts to retain jurisdiction to order provisional or precautionary measures even in matters which are, according to the CPIL, outside the competence of the Belgian courts and for which the court seised could not grant final relief. In other words, and in a similar manner as applies to Article 31 of the Brussels I Regulation, forum shopping that may lead to cross-border measures is possible at the interim stage. Unlike the community provision, the CPIL has added the condition that the measures should pertain to persons or goods in Belgium.236 This requirement essentially follows from the ECJ’s case law regarding the community provision.237 The claimant must finally produce evidence that the case is ‘urgent’, which is an essential prerequisite for obtaining provisional relief. 58.  One may finally point to an innovative rule stating that Belgian courts have international jurisdiction in exceptional circumstances (Art 11). In particular, the Belgian forum is available in cases where a proceeding abroad would appear to be impossible or unreasonable, and provided that the case presents a close connection with Belgium. In such cases the Belgian court must accept jurisdiction.238 The aim of the legislator was to provide a safety net for situations of ‘denial of justice’ or where a reasonable proceeding cannot be guaranteed. The exact meaning or scope of the new provision in relation to IP matters in the absence of relevant case law is, however, not yet entirely clear.239 (b) Specific Jurisdiction Rules Related to Intellectual Property Disputes 59.  Article 86 of the CPIL sets up a dualist regime on the question of international jurisdiction depending on the subject matter of the dispute. While paragraph 2 of Article 86 deals with disputes over the validity of industrial property rights, paragraph 1 regulates all other IP disputes. (i)  Disputes Dealing with Validity Issues (Art 86 para 2) 60. Where the claim involves the registration or validity of intellectual property rights which are dependent on an application or registration and for which such application or registration was made in Belgium, paragraph 2 provides for the exclusive jurisdiction of the Belgian courts. This provision is clearly modelled after Article 22.4 of the Brussels I Regulation and, congruent with it, does not apply where the intellectual property right is 234   In the latter situation, an exception is provided for situations where the foreign decision would not be enforceable on the Belgian territory. 235   This rule is seen as a limited version of the forum non conveniens approach; Erauw, above n 65, 151. On the meaning of this concept in Belgium, see A Nuyts, L’exception de forum non conveniens (Brussels, Bruylant, 2003). 236   It suffices that this condition is satisfied at the moment of the introduction of the claim. Relocation of the goods or persons during the proceedings or at the moment of the decision, will not impact on the jurisdiction ground; see Roox, above n 71, 150. 237   See above para 49. It is argued that the ECJ’s interpretation (requiring an effect in the state and precluding orders with sole extraterritorial effects) should equally apply to the Belgian provision (Roox, above n 71, 151). 238   It is worth noting that the Code did not maintain the exceptional jurisdiction that was provided for in former Art 638 of the Code of Civil Procedure (jurisdiction of the court of the place where the claimant has its domicile or residence in cases where no other rule applied). 239   Roox, above n 71, 151. On the ECJ’s case law, see above para 52.

378  Marie-Christine Janssens unregistered, as with copyright and unregistered design rights. For its application, two distinct conditions apply in a cumulative manner: the dispute involves the registration or the validity of the intellectual property right and concerns a ‘Belgian’ right.240 Hence, in practice, this rule seems to be of only limited interest, as it will merely relate to claims for invalidity of Belgian (parts of) industrial property rights.241 It is submitted, nevertheless, that given the fact that the Belgian Article 86 paragraph 2 was drafted after the example of Article 22.4 of the Brussels I Regulation, it will have to be interpreted in conformity with the ECJ’s recent case law, even if this might imply a more extensive scope of application than was originally upheld.242 (ii)  Other Claims Relating to Intellectual Property Disputes (Art 86 para 1) 61.  On the strict condition that protection is claimed for the Belgian territory, Belgian courts have jurisdiction to hear all other IP-related claims (eg, injunctions, declarations of non-infringement). This provision which expresses the principle of territoriality that characterises the IP system,243 entails that no cross-border measures can be ordered. Hence, in principle, a Belgian court cannot accept jurisdiction in cases concerning infringements that occurred abroad. In the latter situation, the court will need to have recourse to the general rules set out in Articles 5 to11 of the CPIL, which are left intact by Article 86 and which are not restricted to a purely territorial protection.244 Article 86 paragraph 1, indeed, only provides an alternative jurisdictional ground which allows the claimants to choose the forum. However, as was pointed out in relation to Article 22.4 of the Brussels I Regulation,245 it will also in Belgium be difficult to distinguish between the exclusive and additional ground for jurisdiction.246

2.3.3  Applicable Law in Intellectual Property Cases 62.  In Belgium, courts will have to determine the applicable law according to the rules set forth in, firstly the specific intellectual property laws (Art 3.1) and, secondly, where no solution is given in these specific laws, the relevant community instruments (Art 3.2). Only when none of these instruments dictate a solution, the provisions of the CPIL will find application (Art 3.3). As our analysis of these applicable instruments will reveal, the prevailing view with regard to the governing law of intellectual property is the lex loci protectionis rule. 2.3.3.1  Specific IP Conventions and Regulations 63.  The specific international, community and Benelux regulations that exist in relation to certain IP rights have been described above.247 As noted, the availability of uniform rules regarding the substance of Benelux trade marks and designs as well as Community trade 240   This latter condition also includes rights which have been applied for using European or international registration facilities such as the EPC or the Madrid Protocol, but having effect (or having been applied for to have effect) on Belgian territory. 241   M Pertegás Sender, ‘Article 86’ in Erauw et al, above n 66, 445. 242   ibid, 447. Cf Roox, above n 71,153. 243   See also Roox, above n 71, 151. 244   Parl Documents Senate 2003-04, no 3-27/1, 80 and 113; Roox, above n 71, 151. 245   Above, para 52. 246   M Pertegás Sender, ‘Règles de conflit de lois et competence internationale’ in D Kaesmacher (ed), Les droits intellectuels sous toutes leurs facettes (Brussels, Larcier, 2007) 139–40. 247   See above, 2.2.

Belgium  379 marks, designs and plant variety rights removes many choice of law questions in crossborder litigations within Benelux or Member States. Indeed, the relevant regulations constitute ‘the applicable law’ for each of the rights they brought into existence. 64. It must be added, though, that not all these instruments regulate in an exhaustive manner the many questions of applicable law. Where no answer is provided, the situation is more complicated, and courts will have to turn to the individual texts. For example, in relation to trade marks (only!), Article 2.20 of the Benelux Convention states that the grounds of infringement apply ‘without prejudice to the possible application of ordinary national law in matters of civil liability’. The European community instruments all include a ‘renvoi’ to the national law, including the international private law, of the country of the court that holds jurisdiction ‘for all matters that are not covered by the Regulation’.248 The Rome II Regulation, for its part, provides that for any question that is not governed by the relevant Community instrument, courts dealing with an IP infringement case will have to apply the law of the country in which the act of infringement was committed (Art 8.2). 65.  Finally, with regard to ownership of a European Patent for an employee’s invention, a solution is dictated by Article 60 of the EPC referring to the law of the country where the employee is mainly employed.249 2.3.3.2  European Union Instruments 66.  The relevant instruments are the two Community Regulations that regulate choice of law issues in the situation of contractual obligations (Rome I Regulation) and non-­ contractual obligations (Rome II Regulation) (see above para 33). (a) Rome I Regulation (Contractual Obligations) 67.  In essence, the focus will be on the Rome I regulation, which entered into force on 17 December 2009, the provisions of which apply to contracts concluded after that date. However, its predecessor, the 1980 Rome Convention, will continue to constitute an important instrument to resolve questions concerning validity of a licence or assignment agreement as well as the interpretation and performance of the agreed terms for some time. 68.  Prior to deciding to apply the Regulation, courts will often have the difficult task to distinguish between the elements of the dispute that relate to the (scope of the) intellectual property right as such, on the one hand, and to the contractual arrangements relating to this right, on the other hand.250 In the first case (eg, the question whether certain rights are assignable), it is likely that the dispute will be resolved by reference to the lex loci protectionis rule.251 In the second case (eg, the question of the scope of the rights that were assigned or the formalities that have to be observed for the validity of a contractual transfer), the lex contractus and, hence, the Regulation will apply.252

248   Art 101 para 2 Trademark Regulation. Cf Art 88 para 2 of the Designs Regulation and Art 97 para 1 of the Plant Variety Regulation. 249   See above para 29. Further details are included in the answer to Case Study 8. 250   PLC Torremans, ‘Intellectuele eigendomsovereenkomsten en de Rome I-Verordening’ [‘Intellectual Property Rights Agreements and the Rome I Regulation’] (2009) 6 Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 538–39. 251   Fawcett and Torremans, above n 161, ch 10. 252   See more details in Case Study 9(2).

380  Marie-Christine Janssens 69.  Article 3 of the Rome I Regulation confirms as a cornerstone the freedom of the parties to contractually agree on the law applicable to their contract.253 Parties may incorporate by reference into the contract a non-state body of law or an international convention. 70.  In the absence of such a choice, and unlike the Rome II Regulation, the Rome I Regulation does not include a specific choice of law rule in relation to contractual disputes over intellectual property rights. Some commentators254 have therefore argued that in copyright matters, where an international convention exists that sets forth a choice of law rule (Art 5.2 of the Berne Convention), this rule should be given priority as lex specialis as well as in view of Article 25 of the Rome I Regulation.255 It remains, however, questionable whether the scope of this Berne provision would also include contractual obligations.256 71.  Where the contract is silent, the solution adopted in the Regulation takes a different approach from the earlier Convention257 following a three-step reasoning process. First, eight types of contracts are identified at Article 4.1 (a)–(h), including, for example, contracts for the sale of goods or services, consumer contracts, insurance contracts and employment contracts. For each type of contract, a test is specified to establish the applicable law. In relation to contracts that do not fit in the list of Article 4.1 – which will often be the case for intellectual property contracts258 – Article 4.2 provides for the application of ‘the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence’.259 Unlike the Convention, this presumption is not rebuttable. A court shall not, however, apply this ‘habitual residence’ test and shall apply the law of another country where it is clear from the circumstances that a contract is ‘manifestly more closely connected’ with that country (Art 4.3). Thirdly, if it is not possible to determine the applicable law using the preceding factors, Article 4.4 comes to the rescue with a final catch-all provision stating that the ‘contract shall be governed by the law of the country with which it is most closely connected’. 72.  The Regulation allows for exceptions to the application of the general choice of law rules where there are mandatory rules of the forum. For example, Article 9 maintains that provisions that are regarded as ‘crucial by a country for safeguarding its public interests, such as its political, social or economic organisation’ shall not be restricted by anything in the regulation. Effect may be given to such provisions where the ‘overriding mandatory provisions render the performance of the contract unlawful’ (Art 9.3). Similarly, Article 21 states that application of the law of a country specified by the rules in the Regulation may be refused where such application is ‘manifestly incompatible with the public policy of the forum’. 253   This freedom is limited in certain cases such as consumer and employment contracts (Art 5 – cf Arts 6 and 8 of the Rome I Regulation). Further limitations are included in Art 3.4, where all other elements relevant to the situation at the time of the choice are located in another country. In such a case the choice of the parties should respect provisions of the law of that country which cannot be derogated from by agreement. The same logic applies with respect to rules of Community IP rights. 254   Docquir, above n 84, 444. 255   This article provides that the Regulation shall not prejudice the application of international conventions which lay down conflict-of-law rules relating to contractual obligations. 256   Van Asbroeck and Cock, above n 78, 209. 257   In sum, the Convention provided for the law of the country with which the contract is most closely connected as the main determining factor. It further provides that the contract ‘is most closely connected with the country where the party who is to effect the performance’ lives (Art 4.2) but allows for an exception if it appears from the circumstances as a whole that the contract is more closely connected with another country (Art 4.5). 258   Torremans, above n 250, 542. See more details in Case Study 9(3). 259   Several scholars have already commented on the difficulty to apply this criterion of the most characteristic performance to IP contracts. See more details in Case Study 9(3).

Belgium  381 (b) Rome II Regulation (Non-contractual Obligations) 73.  Unless the parties agreed on a choice of law clause (see below), Article 4 sets the basic solution of the lex loci damni as governing law in relation to a non-contractual obligation260 in a civil or commercial matter. This rule refers to the law of the country in which the damage arises or is likely to arise, and applies irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country in which the indirect consequences of that event occur.261 Exceptions to this general rule are provided such as in the case where the tortfeasor and the victim both have their habitual residence in the same country at the time the damage occurs, in which case the law of that country will apply (Art 4.2). A so-called ‘escape clause’ is furthermore provided if the tort is manifestly more closely connected with another country in which case the law of that country will apply (Art 4.3). Such mechanisms making it possible to depart from the general rule are to be regarded upon as ‘exceptional’.262 74.  Article 8 specifically deals with infringements of intellectual property rights and prescribes that courts apply ‘the law of the country for which protection is sought’263 because – as Recital (26) explains – in relation to such matters, ‘the universally acknowledged principle of the lex loci protectionis should be preserved’. This principle ensures the application of a state IP law when the IP rights are exploited in the territory of that state and the relief sought will have its effects in that state. It is moreover in line with the approach adopted in the Brussels I Regulation: that the courts of a Member State should apply the law of another Member State where they are competent to decide on the cases submitted to them.264 The negative consequence – and practical difficulties – arising from this rule are that, in cases of a multi-state infringement, a court cannot opt for the law of only one country, and will have to apply each of the laws of the countries where the infringement was committed.265 Thus, the application of the lex loci protectionis rule will be particularly problematic in relation to (the growing number of) infringements that occur in the Internet context or, in general, where the infringement is ubiquitous.266 Hence, it is unsurprising that some commentators regret that a more flexible rule, such as the ‘manifestly closer connection’

260  The notion ‘non-contractual obligation’ has to be given an autonomous meaning in community law. Guidelines are provided in the ECJ’s decisions Kalfelis (C-189/87), Handte (C-26/91) and Réunion européenne (C-51/97). 261   The latter connecting factors are given relevance in relation to determining jurisdiction on the basis of Art 5.3 of the Brussels I Regulation. With regard to problems that can arise from this different approach, see TC Hartley, ‘Choice of Law for Non-contractual Liability: Selected Problems under the Rome II Regulation’ (2008) 57 International and Comparative Law Quarterly 899. 262   See Green Paper on converting the Convention of Rome of 1980 on the law applicable to contractual obligations into a Community Instrument and its modernisation, COM(2002) 654 final, point 3.2.5. See also Recital (14) of the Rome II Regulation. 263   Regarding unitary Community rights, Art 8.2 mandates the application of the law of the country in which the act of infringement was committed, unless otherwise provided by the relevant Community instrument (see above, para 64). 264   Jandoli, above n 181, 237. 265   An exception to this rule may apply where a different solution is provided in specific regulations. See, eg, the deviating rule applicable to satellite transmissions, above para 22. 266   See also J Drexl, ‘The Proposed Rome II Regulation: European Choice of Law in the Field of Intellectual Property’ in J Drexl and A Kur (eds), Intellectual Property and Private International Law: Heading for the Future, IIC Studies, vol 24 (Oxford, Hart Publishing, 2005) 168 et seq. See also the so-called ‘Kur Proposal’ strongly suggesting that in relation to trans-border conflicts, the lex loci protectionis rule be combined with a market impact rule; see A Kur, ‘Applicable Law: an Alternative Proposal for International Regulation: the Max-Planck Project of International Jurisdiction and Choice of Law’ (2005) 30 Brooklyn Journal of International Law 962 et seq.

382  Marie-Christine Janssens rule of Article 4.3, has not also been prescribed in connection with intellectual property infringements.267 Little case law is available in Belgium on the matter of the applicable law in relation to infringement cases.268 It can furthermore be observed that, prior to the coming into force of the Rome II Regulation as well as the Belgian CPIL, uncertainty reigned as a result of the different viewpoints supported by academic writers pointing either to the application of the lex loci delicti or the lex loci protectionis.269 Based upon an extensive analysis of existing case law, Pertegás Sender concludes that Belgian courts would rather look at (patent) infringement cases from a damage-to-property point of view, which leads them to the application of the lex loci protectionis.270 75.  In line with Rome I, the Rome II Regulation confirms the freedom of parties to agree contractually on the law that will govern their non-contractual obligations (Art 14). However, with regard to disputes over intellectual property rights, Article 8.3 prohibits parties to derogate from the lex loci protectionis mandated by Article 8. 2.3.3.3  Belgian Code of Private International Law (a)  General Rules 76.  The CPIL has followed the continental tradition whereby choice of law rules are formulated for specific situations, rather than prescribing a general approach.271 The introductory first chapter includes some general conflict-of-law principles in its Articles 15 to 21. These rules include the possibility for the Belgian courts to set aside the application of the law established by the rule of allocation where it is ‘obviously impossible to determine in time the content of the foreign law’272 (Art 15), where parties seek to evade the applicable law (fraude à la loi) (Art 18) or when the situation has only a minor connection to the established law and is closely connected with another country (Art 19). 273 Also a court could set aside the foreign law by raising the exception of international public order (Art 21 of the CPIL).274 (b)  Rules in Respect of Intellectual Property Disputes 77.  Where the dispute relates to intellectual property rights, courts must refer to Article 93, which distinguishes between two situations.275 Before describing these situations, it is 267  See Kyung-Han Sohn, ‘Rome II and Intellectual Property Infringement’ (2005) 1 Quarterly Review of Corporation Law and Society 370 (dspace.wul.waseda.ac.jp/dspace/bitstream/2065/12932/1/32.pdf). 268   Pertegás Sender, above n 114, no 5.148. 269   The majority sustained the latter approach; Van Asbroeck and Cock, above n 78, 207. 270   Pertegás Sender, above n 114, no 5.151. 271   Erauw, above n 65, 153. 272   Such a situation could occur, eg, in proceedings seeking an interim injunction in urgent cases; ibid. 273   See, eg, CFI Brussels, 24 May 2006, Auvibel v X (www.auvibel.be/nl/files/RP24052006E.pdf), confirmed by the Court of Appeal on 20 May 2008. In this case the Brussels court denied the request of a British company conducting its business mainly in Germany to apply German law pursuant to Art 19 para 1. The court reasoned that the defendant, through its German-based website, also targeted the Belgian public: ‘this is demonstrated, amongst others, by the possibility to pay on a Belgian bank account and the express mentioning of the costs of transportation to Belgium and the possibility to request, via e-mail, information in Dutch. Moreover, a large number of Belgian users appear to have already placed orders with the defendant. Thus the situation has multiple connections with Belgium.’ 274   See more details in Parl Documents Senate 2003–04, no 3-27/1, 114, as well as in Case Studies 8(3a) and 9(1). 275   Where the dispute relates to contracts, special choice of law rules are provided for in Art 98 of the CPIL. This article essentially refers to the 1980 Rome Convention, which has now been superseded by the Rome I Regulation. The Belgian legislator will need to bring Art 98 in line with this evolution.

Belgium  383 important to note Article 94, which states that the rules laid down in Article 93 apply in relation to ‘the existence, the nature and the content and scope of the rights’ (Art 94 para 2), as well as to issues of ownership (Art 94 para 3), modes of transfer, opposability and termination of the rights (Art 94 para 5). (c)  General Rule: Lex Loci Protectionis 78.  In line with Article 8 of the Rome II Regulation, Article 93 paragraph 1 of the CPIL sets out the general principle of the lex loci protectionis, ie, the application of the law of the country in respect of whose territory protection is sought. Considering the territorial nature of intellectual property rights, this corresponds to the traditional rule in the sector of intellectual property rights.276 This rule is also closely connected to the provisions in Article 86 with regard to jurisdiction:277 ‘if the Belgian Court has jurisdiction pursuant to Article 86, the former will also need to apply Belgian law’.278 In line with this reasoning, where the claimant seeks protection in different states, the court will have to apply the laws of the different states to find infringement in these different states (distributive application).279 With regard to copyright law, the CPIL also mandates the application of the lex loci protectionis rule to disputes relating to copyright ownership. In view of the positions previously taken in doctrine and case law, this solution is surprising.280 In prior case law, the question of applicable law relating to ownership issues had alternatively been solved with reference to either the law of origin (nationality of the author or place of first publication) or the lex loci protectionis. This discussion is obviously connected to the more general debate regarding the meaning of Article 5.2 in fine of the Berne Convention.281 By enacting Article 93, it seems that the Belgian legislature intended to put an end to the divergent opinions that existed in Belgium before 2006.282 For several years, Belgian courts have applied the Belgian Copyright Act when protection is sought within Belgian territory.283 (d)  Ownership Issues: ‘Closest Connection’ Rule 79.  The second paragraph of Article 93 makes an exception to the lex loci protectionis rule in relation to disputes regarding original ownership of an industrial property right. In such cases, the court has to apply the law of the state with which the intellectual activity presents the closest connection. In this respect, Article 93 includes a (rebuttable) presumption that, where the intellectual activity takes place within a contractual relationship, such intellectual activities are presumed to take place in the state that governs this relationship. If, for instance, the dispute relates to the ownership of a patented invention conceived by an

276   Brussels Court of Appeal, 8 October 2001, (2002–3) Rechtskundig Weekblad 1147. See also G Van Hecke and K Lenaerts, Internationaal Privaatrecht [International Private Law] (Brussels, Story-Scientia, 1989) 312; Pertegás Sender, above n 70, 142. 277   See above, para 61. 278   CFI Brussels, 24 May 2006, Auvibel v X (available at www.auvibel.be/files/RP24052006E.pdf). 279   Pertegás Sender, above n 242, 479; Roox, above n 71, 154. 280   Pertegás Sender, above n 242, 478. 281   See, above, para 16. 282   M Pertegás Sender, in H Boularbah et al, ‘Le nouveau droit international privé belge’ (2005) Journal des Tribunaux 202; Haouideg, above n 76, 133. 283   See, eg, Mons Court of Appeal, 6 December 2006, Acquaviva v Madonna (2007) Auteurs & Média 252. The Court ruled that Madonna’s hit Frozen was partly a copy of a song by Belgian artist Salvatore Acquaviva and could no longer be distributed in the country.

384  Marie-Christine Janssens employee, the law that regulates the employment relationship will be applicable.284 One can easily perceive the problems that will arise in situations where the invention is the result of a contract of collaboration involving companies from different states.285 Where reference is made to ‘industrial property rights’, this would in Belgium include patents, trade marks, designs and plant variety rights, although the concept is not defined in a closed manner.286 2.3.4  Recognition and Enforcement of Foreign IP-Related Decisions 2.3.4.1  Brussels I Regulation 80.  Questions about the recognition and enforcement of foreign judgments in Belgium are largely governed by the Brussels I Regulation.287 Its aim was to make the exequatur procedure ‘efficient and rapid’. To that end, Articles 32 et seq are set up in such a way that the declaration that a judgment given in one Member State is enforceable should be issued virtually automatically, and is subject to the rights of the defence.288 These rules can be summarised as follows: a judgment289 given in accordance with the Brussels I Regulation in one Member State is to be recognised in others without further proceedings (Art 33)290 and may not, under any circumstances, be reviewed as to its substance (Art 36) .291 As far as Belgium is concerned, the application for a declaration of enforceability (Arts 38–39) shall be submitted to the court of first instance. An appeal has to be lodged with either the court of first instance (regarding an appeal by the defendant) or the court of appeal (regarding an appeal by the applicant) (Art 43).292 81.  A judgment of another Member State will, however, not to be recognised if, inter alia, it is ‘manifestly’293 contrary to substantive public policy (Art 34.1),294 it is irreconcilable 284   This solution is consistent with the rule of Art 60 of the EPC which, at any rate, has to be given priority over the provisions of the CPIL (Art 2 of the CPIL). 285   See also A Puttemans, ‘Les droits intellectuels et la concurrence déloyale dans le Code de droit international privé’ (2005) Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 621. 286   M Pertegás Sender, ‘Article 93’ in Erauw et al, above n 66, 477. See also, above, paras 2-3. 287   A recent EC study has shown that, where the jurisdiction rules generally apply in a relatively small number of cases, the rules on recognition and enforcement are more frequently applied; see 2009 Report on Regulation 44/2001, above n 125, 3. 288   Recitals (17) and (18) of the Brussels I Regulation. Respect for the rights of the defence means that the defendant is given the possibility to appeal, in an adversarial procedure, against the declaration of enforceability if he considers one of the grounds for non-enforcement to be present (see Arts 43–46). 289   ‘Judgment’ means any judgment given by a court or tribunal, whatever it may be called, including a decree, order, decision or writ of execution (Art 32); see also Case C-414/92 Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237. Belgian courts have apparently not experienced much difficulties in applying this notion; see, eg, Court of Appeal Antwerp, 12 May 1997 (1998–99) Rechtskundig Weekblad 860, where the Court accepted that a ‘Vollstreckungsbescheid’ issued by a German foreign criminal court could be qualified as a judgment under Art 32. 290   Case C-145/86 Hoffman v Krieg [1988] ECR I-645. 291   It has been proposed that the main objective of a future revision of the Regulation should be the abolition of the exequatur procedure in all matters covered by the Regulation; 2009 Report on Regulation 44/2001, above n 125, 4. 292   See further details in Case Study 10. 293   See, in this respect, Case C-7/98 Dieter Krombach v André Bamberski [2000] ECR I-1956, mandating a restrictive application of this ground. 294   In Belgium, the Cour de Cassation has emphasised that this provision deals with the international public order which is to be distinguished from the internal public order: Cass 14 June 1985, Pas (1985) I, at 1323. According to the ECJ’s ruling in Krombach (above) it would, nevertheless, include the ‘procedural public order’ (eg, right to a fair process). An EC study shows that this ground is frequently invoked but rarely accepted: 2009 Report on Regulation 44/2001, above n 125, 4. This conclusion is confirmed in Hess et al, above n 143, 244 also in relation to Belgium. Some examples of Belgian decisions are given at ibid, 248.

Belgium  385 with a judgment given in Belgium between the same parties (Art 34.3)295 or with an earlier judgment given in another Member State or even a third state296 involving the same cause of action and between the same parties (Art 34.4). For the present report it is furthermore important to mention Article 35(1), which precludes the recognition of a judgment that conflicts with, inter alia, the rule of exclusive jurisdiction in relation to industrial property rights laid down in Article 22.4. For example, if a French court ordered the revocation of a Belgian patent, Belgian courts would not have to recognise the judgment. Yet another important ground of refusal can be found in Article 34.2 relating to judgments given in default of appearance of the defendant. In principle, the rules on recognition fully apply to provisionally enforceable judgments and provisional measures. However, in order to ensure the protection of the defendant, the ECJ in Denilauler has excluded the recognition of protective orders which have been obtained ex parte.297 Some scholars have raised questions as to the compatibility of this holding with Article 50 of the TRIPs as far as intellectual property matters are concerned.298 It will be interesting to see how courts will eventually adopt this proposition. 82.  In Belgium, the procedure for recognition is straightforward and does not seem to raise many problems in practice.299 In contrast to most Member States,300 Belgium has not adopted specific supplementary provisions regarding the procedure for making the application. The recognition is affected by the judges in first instance courts on the basis of an accelerated (written) procedure. As a rule, exequatur proceedings can be said to operate efficiently, and a decision can be obtained in a fairly short time period (one or two weeks). It is, however, not impossible that because of the backlog of some courts, decisions can take a month.301 Also, it appears that not all courts apply Article 55.2 correctly and still require a full translation of the judgment (instead of only the certificate mentioned in Art 53.2).302 2.3.4.2  Belgian Code of Private International Law 83.  If the judgment was not issued in a Member State or EFTA state, the Belgian court will apply Articles 22 et seq of the CPIL which have largely been drafted in line with the provisions of the Brussels I Regulation. Pursuant to Article 22, foreign legal decisions will be recognised automatically even in the absence of any international convention with the relevant state. The court is not permitted to review a decision as to its substance. Procedural rules regarding the competent court (court of first instance) can be found in Article 23, which includes a reference to the ordinary procedural rules of Articles 1024–34 of the Code of Civil Procedure. The application should contain the documents listed in Article 24. In this respect, it is important to   Case C-80/00 Italian Leather SpA v WECO Polstermöbel GmbH & Co [2000] ECR I-4995.   This assimilation between Member States and third countries is the subject of criticism. See, eg N Watté, A Nuyts and H Boularbah, ‘Le règlement “Bruxelles I” sur la compétence judiciaire, la reconnaissance et l’exécution des décisions en matière civile et commercial’ (2002) Journal des Tribunaux (Be) 161, 169. 297   Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553. This case specifically concerned a French order in a ‘provisional seizure’ proceeding, which is comparable to the Belgian proceeding described para 7 above. 298   Hess et al, above n 143, 341, with reference to C Kurtz, Grenzüberschreitender einstweiliger Rechtsschutz immaterialgüterrecht (Göttingen, V & R Unipress, 2004) 214. 299   De Visscher and Bouche, above n 146, 14. 300   For an overview, see Hess et al, above n 143, 221. 301   Hess et al, above n 143, 226, fn 685. 302   ibid 227, fn 688. In relation to translations, Belgian courts will also have regard to the specific law of 15 June 1935 on the use of languages in judicial proceedings. 295 296

386  Marie-Christine Janssens point to Article 30 which requires that the foreign authenticated document be notarised in the way indicated in paragraph 2 of this provision.303 Article 25 enumerates in an exhaustive manner304 nine grounds on the basis of which courts can refuse to recognise and enforce foreign judgments. These provisions in fact codify and complete (taking into account settled case law) the provisions that were previously contained in Article 570 of the Code of Civil Procedure. The refusal grounds include the incompatibility with public order (para 1), non-observance of the rights of defendants305 (para 2), the fact that the decision was obtained in a way to evade the application of the normally applicable choice of law rules (para 3), the possibility to appeal the decision (para 4), and non-observance of the articles on exclusive jurisdiction of the Belgian courts (para 7). Courts should ensure, however, that they do not refuse recognition on the basis of a general or abstract assessment. In line with case law from the Cour de Cassation, they should examine the concrete individual decision taking into consideration the factual context of each case.306 84. In relation to decisions dealing with industrial property rights (hence not copyright), an additional non-recognition ground is provided for in Article 95. ‘Foreign decisions concerning the registration or the validity of intellectual property rights which require an application or registration, shall not be recognised in Belgium if, pursuant to an international treaty, and besides the existence of a refusal ground mentioned in Article 25, the application or the registration had to be made in Belgium’. This provision clearly mirrors the wording of the exclusive jurisdiction ground set out in Article 86 paragraph 2, and is in accord with Article 35.1 of the Brussels I Regulation (above, para 81).

Section II Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that A’s new single is a mere adaptation of a song released in the 1950s. A files a defamation suit.

Case 1(1)  Would a court of your country have international jurisdiction if the defendant B had its residence in your country? This question can be answered in the affirmative. In tort (as well as in delictual) cases the plaintiff generally has the option of the forum in the defendant’s domicile pursuant to Article 2 of the Brussels I Regulation. This rule applies irrespective of the nationality of the defendant or the domicile of the plaintiff.307 303   See, in this respect, also the special Royal Decree of 12 July 2006 ‘relating to the legalisation of foreign court decisions and authentic acts’ (MB 11 January 2007). 304   H Boularbah, ‘Efficacité des jugements et actes authentiques’ in H Boularbah et al, ‘Le nouveau droit international privé belge’ (2005) Journal des Tribunaux 185. 305   See, eg, Cass 20 June 2008 (2008) Rechtspraak Antwerpen Brussel Gent 1122 (in this case, the plea for the non-recognition of a Congolese decision was not sustained). 306   Cass 29 April 2002, (2002–3) Rechtskundig Weekblad 862. See other references given in H Storme, ‘Article 25’ in Erauw et al, above n 66, 137. 307   See more details in para 41.

Belgium  387 Moreover, in view of alternative forum options that are available to the plaintiff (see, below, second part of the question), this general principle of the forum domicilii rule provides a useful forum shopping tool for a victim of libel facing multi-territory wrongful acts. It also provides the advantage of being able to sue the defendant in one forum, where such acts occur in different Member States. Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located in your country? At the outset, it can be observed that in relation to the application of the general jurisdiction ground of Article 2 of the Brussels I Regulation (domicile of the defendant), Article 60 prescribes strict criteria that courts have to use for the identification of the defendant’s domicile. In particular, regarding the domicile of ‘a company or other legal person or association of natural or legal persons’, this provision enumerates three alternative criteria to determine the domicile of the defendant including (a) the statutory seat, (b) a central administration or (c) the principal place of business. All of those grounds are alternatives, so that the claimant has several fora available for as long as any one of those grounds is present in Belgium. None of these grounds applies to the defendant in the present case. Because the community legislator aimed at laying down an autonomous definition of ‘seat’ for jurisdictional purposes in Article 60,308 there is no leeway for the Belgian court to apply other rules. However, in the current factual context, Article 5.5 of the Brussels I Regulation might provide for an alternative jurisdiction ground. The Belgian court can indeed accept jurisdiction on the (twofold) condition that the main place of business of the defendant’s corporation is located in an EU Member State, and that the dispute arises out of the operations of a branch that is situated in Belgium. The mere fact of having a branch in Belgium is not, in itself, a sufficient factor. A similar rule can be found in Article 5, paragraph 1(3) of the Belgian CPIL attributing jurisdiction to a Belgian court for international companies located abroad but having a local branch in Belgium. Case 1(2)  Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? In this situation, where copies are distributed in one of the three official languages recognised in Belgium (Dutch, French, German), and assuming that the publisher is not established in Belgium, the alternative ground for jurisdiction laid down in Article 5.3 of the Brussels I Regulation can be relied upon.309 While examining its jurisdiction, the Belgian court will, in particular, refer to the interpretation that the ECJ provided in the Shevill case310 in relation to Article 5.3 of the Brussels 308   Watté et al, above n 296, 163. It should be noted that different rules relating to locating the ‘seat’ applied under the regime of the earlier Brussels Convention as well as the Lugano Convention. For more details, see Pertegás Sender, above n 114, nos 3.10 et seq. 309   For more details, see above, para 44. When making a ruling as to its jurisdiction on the basis of one of the grounds provided for by Art 5, a court is required to take into account only the claims which the applicant has set out in the application, disregarding any allegation on the part of the defendant that the facts are not as claimed. 310   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415. In this case, Ms Shevill wished to repair the damage caused to her reputation and honour following the distribution of a defamatory newspaper article.

388  Marie-Christine Janssens I Regulation. This decision involved an international libel through press dispute which is very comparable to the case at hand. In Shevill, the ECJ decided that the expression ‘place where the harmful event occurred’ in Article 5.3311 has to be construed in such a way that the victim of a libel by a newspaper article distributed in several Contracting States may bring an action for damages against the publisher either: – before the courts of a Member State of the place where the publisher of the defamatory publication is established (not applicable in the present case); or – before the courts of each Contracting State in which the publication was distributed and where the victim claims to have suffered injury to his reputation.312 In the first hypothesis, courts will have jurisdiction to award damages for all the harm caused by the defamation whereas in the latter case, a court can only rule in respect of the harm caused in the state of the court seised. Hence, in the present case, the Belgian court will assume jurisdiction because the publication, which caused an injury to the honour, reputation and good name of the plaintiff, was distributed in Belgium, which is the place where the plaintiff claims to have suffered damage. This conclusion would not differ if the music journal had been distributed in Belgium in another language than an official language (eg, Japanese).313 Relief will, however, only be granted in respect of the harm suffered on Belgian territory. In circumstances where Article 5.3 of the Brussels I Regulation would not be applicable (eg, a US publisher residing in the United States), the internal private international law rules would lead to the same conclusion. In matters relating to tort, Article 96.2 of the CPIL provides that Belgian courts have jurisdiction when the claim concerns an obligation deriving from a harmful event, if and to the extent that the prejudice occurred or is about to occur in Belgium.314 It is generally accepted that this latter option reflects the case law of the ECJ in the Shevill case, and should be applied accordingly. Observation In contrast to the foregoing reasoning, language might be an issue in the case of an online distribution of the journal. Regarding the question of the location where the prejudice occurred, the CFI of Brussels accepted jurisdiction in a defamation case because the litigious remarks ‘where largely disseminated through the Internet’ and because defamatory and slanderous messages made through the Internet ‘must be considered as having being made wherever the dissemination of these remarks could be received or read’.315 Hence, in such a case, the actual understanding by the targeted public of the content of the publication would be a relevant factor.   The Court applied the identical provision of the former Brussels Convention of 27 September 1968.  In Marinari, the ECJ has, however, clarified that the expression ‘place where the damage occurred’ cannot be construed so extensively as to encompass any place where the adverse consequences can be felt of an event which has already caused damage actually arising and, eg, does not cover the place where the victim claims to have suffered financial damage following upon initial damage arising and suffered by him in another state (Case C-364/93 Marinari v Lloyds Bank and Another [1995] ECR I-2719). 313   It is, on the other hand, very likely that such a language issue will be relevant in relation to the determination of the amount of damages. 314   See T Krüger, ‘Article 96’ in Erauw et al, above n 66, 492. 315   CFI Brussels 19 February 2004, (2005) 21 RTDI 75. 311 312

Belgium  389 Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)? Assuming that the journal was printed in Belgium in the Spanish language for distribution in Spain, it is likely that the Belgian court would decline jurisdiction (unless the defendant has its domicile in Belgium, in which case Article 2 of the Brussels I Regulation would apply). The only possible ground for jurisdiction would again have to be found in Article 5.3 of the Brussels I Regulation, providing that in matters relating to tort, delict or quasi-delict, the courts of the place where the harmful event occurred or may occur will have jurisdiction. In the present case, however, the Shevill doctrine cannot be applied. The ECJ indeed held that the place of the event giving rise to the damage can only be the place where the publisher of the newspaper in question is established. Arguing per analogiam that the printer can be equated with the publisher seems too far-fetched. Alternatively, it would also be difficult to claim that harm occurs on Belgian territory. It is indeed questionable whether the act of printing, which constitutes the only connecting factor with Belgium, is concerned with ‘a matter of tort, delict or quasi-delict’. Although the ECJ has indicated in Kalfelis that Article 5.3 had to be given an independent and broad interpretation covering ‘all actions which seek to establish the liability of a defendant (above, para 44), the author is inclined to provide a negative answer. The court will probably not consider the act of printing to involve a tortious or delictual liability regarding the wrongful acts and the damage resulting there from suffered by the claimant A. Case 1(3)  Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? The author would answer this question in the affirmative. According to the Shevill doctrine, if the plaintiff brings a claim before the court where the defendant is established, this court will have then jurisdiction to award damages for all the harm caused by the infringement (see answer to the first part of the question and, para 44).

Case 1(4)  Please specify if answers to these questions were different in cases where intellectual property rights are at stake In essence, the answer would not differ. As was explained above, no discussion exists regarding the application of Article .3 of the Brussels I Regulation to matters of infringement of intellectual property rights (above, para 44). Hence, if the defendant has its residence in Belgium, the claim can be brought before a Belgian court which will have jurisdiction to award damages for all the harm, also in other countries, caused by the infringement of the IP right. Alternatively, if the defendant does not reside in Belgium, the court can assume jurisdiction on the condition that the infringement occurs on Belgian territory or that harm is suffered in Belgium. In the latter two situations the Belgian judge will solely have jurisdiction in respect of the damage sustained in the forum. An additional remark can be made in relation to the question regarding the printing in Belgium. Such an act might in itself be seen as an infringement (presumably of the plaintiff ’s copyright) and will then be actionable in Belgium.

390  Marie-Christine Janssens

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X:

Case 2(1)  Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? The following facts are taken into account: – no patent protection has been obtained in Belgium (‘foreign patent’) and, hence, there is no issue of an infringement that occurs in Belgium; – the countries where the patent is registered are not known (European or not); – the domicile of the parties is not identified. Answer to the question: (a) If neither the plaintiff nor the defendant has its domicile in Belgium, the Belgian court would decline jurisdiction. (b) If the defendant has its domicile in Belgium, the court will assume jurisdiction for the infringement claim on the basis of Article 2 of the Brussels I Regulation (above, para 41). Neither the nationality of the plaintiff (EU or elsewhere) nor that of the patent (eg, German or US) are relevant factors. The Belgian court has in such a case unrestricted jurisdiction over infringing acts (torts) which occur in another Member State and even in non-EU countries. The basis for alternative jurisdiction of Article 5.3 cannot be contemplated here because the infringement occurs abroad (above, para 44). Case 2(2)  Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? No. From the moment of the introduction of a counter-claim seeking the invalidity of the foreign patent, and assuming that the patent is registered in a Member State, it is very likely that the Belgian court will, on its own motion, decline jurisdiction on the basis of Article 22.4 of the Brussels I Regulation in favour of the court to which Article 22 attributes jurisdiction. This conclusion is not obvious in view of former case law in Belgium, but seems to be the result of the ECJ’s ruling in GAT v LuK (above, para 52). While Belgian courts originally adhered to an extensive interpretation of Article 22.4316, a change of approach has become visible as a result of critical remarks published by legal scholars and commentators317. It was argued that a distinction had to be made between, on 316   CFI Brussels 12 May 2000, Röhm v DSM, (2002) Intellectuele Rechten– Droits Intellectuels 321; CFI Brussels, 27 June 2002, Colgate v Unilever, (2002) Intellectuele Rechten Droits Intellectuels 295. 317   See eg Pertegás Sender, above n 114, 152; K Roox, ‘Grensoverschrijdende maatregelen in octrooizaken’ [Cross-border measures in patent litigation cases] (2002) Intellectuele Rechten – Droits Intellectuels 257; M Pertegás Sender and B Strowel, ‘Grensoverschrijdende octrooigeschillen: spannend afwachten op de arresten van het Europees Hof van Justitie’ [Cross-border patent disputes: eagerly awaiting the decisions of the Court of Justice] (2004) Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 755; A Puts, ‘L’intervention du

Belgium  391 the one hand, actions of infringement and, on the other hand, those concerning validity. This view was slowly followed by certain courts. It was held that the assessment of jurisdiction regarding infringement claims that might trigger the application of Article 22.4 differs from the one relating to declarations of non-infringement which does not necessitate an examination of the validity of the patent318. Where the claimant sued for infringement, a split was made and the court continued to handle the case as an ‘infringement case’ that would not be affected by the exclusive jurisdiction rule and would order a final crossborder injunction. If it appeared that the validity of the right was disputed in another forum, the court would stay the proceedings. As from the date the GAT ruling was handed down, however, Belgian courts started to exercise more caution (above, para 52). Where a counter-claim of invalidity is raised such as in the present case, it seems now almost certain that the court will reject jurisdiction. Assuming that the counter-claim relates to the validity of a US or Japanese patent, such a decision to decline jurisdiction will be based on Article 86 paragraph 2 of the CPIL (above, para 60). In line with the community provision applied above, this Belgian provision vests exclusive jurisdiction to decide on the validity of patents in the courts of the country where the patent is registered. Parties are not permitted to depart from exclusive jurisdiction! If so what would be the legal effects (inter partes or erga omnes) of such a decision? (Not applicable.) Would the decision differ with regard to registered and non-registered intellectual property rights? The decision would indeed differ because the exclusive jurisdiction rules of Article 22.4 of the Brussels I Regulation and Article 86 paragraph 2 of the CPIL only apply to intellectual property rights that are subject to registration. Hence, these rules will not apply in relation to a non-registered community design that automatically benefits from protection in Belgium during a period of three years without any requirement of registration. The court will examine its jurisdiction in relation to both the infringement and validity claims on the basis of Articles 79 et seq of the Community Designs Regulation. In application of Article 80, exclusive territorial jurisdiction is vested in the commercial courts (first instance court and appeal court) sitting in Brussels. These courts have international jurisdiction in cases where the defendant is domiciled or has an establishment in Belgium (Art 82).319 Article 79.3 explicitly excludes the application of the jurisdiction grounds laid down juge des référés par une interdiction “cross border” en matière de contrafaçon de brevets’ (1998) Ingénieur Conseil – Intellectual Property 137. 318   CFI Brussels 19 January 2001, Novo Nordisk v DSM (2002) Intellectuele Rechten – Droits Intellectuels 304; CFI Brussels 30 July 2001, Synthon v SKB (2002) Intellectuele Rechten – Droits Intellectuels 301; Brussels Court of Appeal, 20 February 2001, Roche v Glaxo, (2001) Intellectuele Rechten – Droits Intellectuels 168; Court of Appeal Brussels, 15 June 2004, (2005) Journal of Intellectual Property Law and Practice 1. 319   If the defendant is neither domiciled nor has an establishment in any of the Member States, such proceedings shall be brought in the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any of the Member States, in any Member State in which he has an establishment. If neither the defendant nor the plaintiff is so domiciled, or has such an establishment, such proceedings shall be brought in the courts of the Member State where the office has its seat (Art 82 points 2 and 3).

392  Marie-Christine Janssens in the Brussels I Regulation (eg, Arts 2, 5.1, 5.3, 22.4 and 31)320 in relation to both infringement and invalidity claims. Should the infringing acts occur on Belgian territory, the Belgian court can assume jurisdiction on the basis of Article 83 of the Community Designs Regulation. Regarding subject matter jurisdiction, Article 81 mandates that the Brussels court has exclusive jurisdiction: (a)  for infringement actions and actions in respect of threatened infringement of Community designs; (b) for actions for declaration of non-infringement of Community designs, if they are permitted under national law (which is the case in Belgium); (c) for actions for a declaration of invalidity of an unregistered Community design; (d) for counter-claims for a declaration of invalidity of a Community design raised in connection with actions under (a). Article 85.2 then provides that, with respect of an infringement action of an unregistered Community design, the Brussels court shall treat the Community design as valid if the right holder produces proof that the conditions laid down in Article 11 of the Community Designs Regulation have been met and indicates what constitutes the individual character of his Community design. However, the defendant may contest its validity by way of a plea or with a counter-claim for a declaration of invalidity. The exclusive jurisdiction rules of Article 22.4 of the Brussels I Regulation and Article 86 paragraph 2 of the CPIL will not apply either in relation to a copyright, the protection for which is not dependent on any formalities. The Belgian court will apply the general jurisdiction rules laid down in the Brussels I Regulation (Art 2 – place of domicile and/or Art 5.3 – place of harm), irrespective of the subject matter of the claim (infringement321 or validity). Because the question starts from the assumption that the infringing act does not take place on Belgian territory (eg, in France), a Belgian court will only accept jurisdiction if the claim is brought against a Belgian defendant. Concerning applicable law, it has already been observed that in such a case the court will apply French law (lex loci protections rule – above, para 74) to decide over the infringement claim as well as over the eventual defence seeking a decision that no copyright would exists (eg, for lack of originality). Case 2(3)  What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties? It is likely that the court accepts jurisdiction to hear the infringement case if the validity of the (patent) right was not formally disputed.322 Hence the answer will not differ from the answer given to the first part of the question.

320  The Community Designs Regulation still makes reference to Arts 2, 5.1, 5.3, 16.4 and 24 of the 1968 Convention. 321   See, eg, Brussels Court of Appeal 4 May 2001, discussed by Roox, above n 84, 1557. In this case the Court accepted jurisdiction on the basis of Art 5.3 with reference to the Shevill ruling (harm occurred on Belgian territory through Internet exploitation of a film). 322   See, eg, application in CFI Antwerp, 29 February 2008, (2008) Intellectuele Rechten – Droits Intellectuels 184. See also more details in para 52.

Belgium  393

Case 3: Consolidation of Proceeding A is a holder of identical patents in countries W, X, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W.

Case 3(1)  Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C and D? The following facts are taken into account: Claimant A’s main place of business is in Belgium. Claimant A is the owner of patent registrations: in Belgium (W) as well as in Germany (X – where it is infringed by a local defendant B), in France (Y – where it is infringed by a local defendant C) and in the United States (Z – where it is infringed by a local defendant D). Claimant A initiates infringement proceedings in these three latter countries. He then turns to the Belgian court to ask for consolidation of the cases. (i)  Assuming that the Belgian court was second seised In such a case the Belgian court will, prior to any other decision, determine whether it has to decline or stay the case on the basis of the provisions of Article 27 (lis pendens) or 28 (related cases) of the Brussels I Regulation. For further details in this respect, see further below (see also above, paras 47–48). The court has no possibility to consolidate the claims in the Belgian court because it was only second seised. (ii)  Assuming that the Belgian court is first seised The Belgian court will examine its jurisdiction on the basis of the Brussels I Regulation (against the German and French defendants) and the CPIL (against the US defendant). The general ground for jurisdiction in Article 2 of the Brussels I Regulation and Article 5 paragraph 1 of the CPIL is not applicable as none of the defendants is domiciled in Belgium. The Belgian location of the plaintiff ’s business is not relevant. Likewise, because none of the defendants have their domicile in Belgium, neither Article 6.1 of the Brussels I Regulation, which enables consolidation of jurisdiction by providing that in cases of multiple defendants the proceedings can be brought in one state, nor Art 5 para 1 of the CPIL, will find application. No patent infringement is alleged to occur in Belgium, hence Article 5.3 of the Brussels I Regulation (place of harmful event) will not provide for a jurisdiction ground either. In conclusion: the Belgian court would normally decline jurisdiction because neither the subjective (defendant) nor the objective (the infringement) connecting factor is located in the forum state. Consequently, the court will not accept to take the claim for consolidation into consideration.323   Regarding available consolidation mechanisms, see more details above in paras 45 et seq.

323

394  Marie-Christine Janssens Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract? (i)  Assuming that the licence contract contains a forum clause in favour of country W (Belgium) The Belgian court will likely assume jurisdiction on the basis of Article 23 of the Brussels I Regulation which mandates respect for a choice of jurisdiction clause as long as one of the parties is domiciled in the EU, and provided (i) the formal requirements are complied with, and (ii) the contract does not derogate from an exclusive jurisdiction rule (above, para 51). The Brussels I Regulation contains no forum non conveniens rule. Such a rule, which can be found in Article 6 paragraph 2 of the CPIL, enables the court to decline jurisdiction if it considers that the case presents no significant connection with Belgium (quod non in casu because of the domicile of the claimant). (ii)  Assuming that the licence contract does not contain a forum clause The decision would not differ from the answer to the principal question where the cases were first brought in other courts. In theory, the plaintiff would have had the possibility to first sue the defendants in a Belgian court on the basis of the alternative jurisdiction ground provided in Article 5.1 of the Brussels I Regulation which states that, where the dispute relates to a contract, the defendant may be sued in the courts of a Member State for the place of performance of the obligation at issue. However, the jurisdiction of the Belgian court would still not be obvious.324 Indeed, unless the parties have provided for a specific provision regarding the place of performance of their obligations in the licence contract, the court will have to determine the locus executionis, taking into consideration the nature of the disputed obligation (which is also for this court to identify). This court must, in particular, ‘determine in accordance with its own rules of conflict of laws what is the law applicable to the legal relationship in question and define in accordance with that law the place of performance of the contractual obligation in question’.325 In other words, first the lex contractus will have to be determined in order to locate jurisdiction. This law has to be determined applying the provisions of the Rome I Regulation. In this latter respect, it is argued that the criterion prescribed in Article 4.3 of the Rome I Regulation to determine the applicable law (the ‘habitual residence of the party that is required to effect the characteristic performance’) is difficult to apply in relation to patent licence agreements. In most cases, recourse shall be had to the ‘most closely connection’ rule of Article 4.4 (above, para 71). Even if this latter rule should point to Belgian law (which the author does not consider likely in this case), it remains uncertain whether its application to the decisive question – where to locate the place of the performance of the obligation? – would lead to Belgium as the forum for jurisdiction. Indeed, one should not forget that, because of its derogating character to the general jurisdiction rule, application of Article 5.1 should be regarded upon in a restrictive manner326 and should relate to a place where an ‘actual performance’327 324   In IP cases, it is generally admitted that it is often difficult to determine the place of performance of a disputed obligation; see Haouideg, above n 76, 113. 325   Case 12/76 Industrie Tessili Italiana Como v Dunlop AG [1976] ECR I-1473. 326   Case C-256/00 Besix SA v Wasserreinigungsbau Alfred Kretzschmar GmbH & Co [2002] ECR I-1699. 327   Case C-106/95 Mainschiffahrts-Genossenschaft eG v Les Gravières Rhénanes SARL [1997] ECR I-911.

Belgium  395 takes place. If the place of the performance of the principal obligation cannot be precisely determined, which is often the case in relation to IP licence contracts,328 Article 5.1 cannot even be applied. Case 3(2)  Assuming that B, C and D are members of a group of a corporation and take identical steps in infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. (i)  Assuming that the court of country X is a court of your country, would it consolidate the proceedings (and if so under what conditions) if it was to decide upon the request of A? It will be assumed that claimant A (first) sues all the defendants in a Belgian court. Unlike the situation in point 1, one of the defendants – the coordinator – has its main place of business in Belgium and Article 2 of the Brussels I Regulation will apply.329 As a result, the Belgian court shall have jurisdiction regarding the infringement claim that is brought against the coordinator (the claimant might even obtain a cross-border injunction against this defendant!). A general rule on consolidation as such is not available in the Brussels I Regulation. However, a plaintiff can make use of some alternative mechanisms having this effect (see above para 45). In the present case, claimant A seems to be in a position to rely on Article 6.1 of the Brussels I Regulation which allows different defendants (having their domicile in a Member State) to be sued in the courts for the place where any one of them is domiciled.330 This provision will even be applicable where the proposed action is regarded under a national provision as inadmissible from the time it is brought in relation to the first defendant. However, if it appears that the Belgian defendant has only been included in the case ‘in an artificial manner’ (eg, with the sole aim of invoking Art 6.1) a court may refuse to apply Article 6.1.331 Regarding the US defendant, the claimant will have to rely on Article 5 paragraph 1 of the CPIL, which is comparable to Article 6.1. Article 6.1 will, however, only apply if it is demonstrated that the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.332 In view of the ECJ’s Roche ruling,333 it is very likely that the Belgian court will conclude that the requirement of a close relationship is not complied with in this case and refuse to apply Article 6.1. In Roche, the ECJ in particular held that under the broadest conceivable interpretation of this provision,   Van Asbroeck and Cock, above n 78, 184.   See Art 60 of the Brussels I Regulation enumerating three alternative criteria to determine the domicile of companies and other legal persons including (a) the statutory seat, or (b) a central administration or (c) the principal place of business. 330   It should be emphasised that this rule is only applicable if the plaintiff sues all the defendants before a Belgian court, before any other litigation is pending elsewhere. 331   Case C-103/05 Reisch Montage AG v Kiesel Baumaschinen Handels GmbH [2006] ECR 6827. For an application in Belgium, see CFI Brussels, 8 June 2000, Roche v Glaxo (2002) Intellectuele Rechten – Droits Intellectuels 313, where the court held that the application of Art 6.1 may not lead to the undermining (erosion) of the general principle of the forum domicilii. 332   The condition of a ‘close connection between the actions’ stems from the ECJ’s decision in the Kalfelis case (Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565). Regarding the interpretation of this condition and its application by Belgian courts, much has been written by Belgian scholars. See, eg, Pertegás Sender, above n 114, no 3.28 et seq; Roox, above n 317, 257. 333   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. For further details, see above para 46. 328 329

396  Marie-Christine Janssens it does not apply, and the court of one Member State cannot assume jurisdiction in infringement cases relating to European bundle patents against multiple defendants.334 This is so even in cases ‘involving a number of companies established in various Contracting States in respect of acts committed in one or more of those States, even where those companies, which belong to the same group, may have acted in an identical or similar manner in accordance with a common policy’. With this wording, the ECJ in fact indicated that it did not endorse the ‘spider in the web theory’, which had already given rise to a more restricted case law since it was applied by a Dutch Court in 1998.335 The ECJ reasoned in the Roche ruling that since neither the patent infringements of which the various defendants are accused, nor the national law in relation to which those acts are assessed, are the same, there is no risk of irreconcilable decisions being given in European patent infringement proceedings brought in different Contracting States.336 Furthermore, the ECJ held that possible divergences between decisions given by the courts concerned would not arise in the context of the same factual and legal situation. To conclude, it is very likely that the Belgian court will decline jurisdiction regarding defendants B, C and D with reference to the Roche ruling, even if it is not disputed that these defendant companies belong to the same group and where it can be demonstrated that they have acted in an identical or similar manner in accordance with a common policy. (ii)  What would be the decision of a court, in a situation where a claimant A has first instituted separate infringement proceedings in the courts of the defendants’ domicile and afterwards asks for consolidation of these cases in the Belgian court where a later infringement action was directed against the coordinator? As discussed above, consolidation as such is not regulated in the Brussels I Regulation. The only possible remedy would have to be found in the provisions relating to lis pendens and related cases (Arts 27–28). Where the former will not apply because the various actions do not have the same cause of action (above, para 47), the application of Article 28 will equally be problematic for two reasons. First, this provision on related actions presupposes that the Belgian court would have been first seised, which is contradicted by the factual context at hand. Secondly, the request will fail because the court will have to conclude that the actions are not related in the sense of Article 28.3 of the Brussels I Regulation. Even though, in principle, this article also applies where the parties are not identical or where the cause of action is not identical, it is very likely that a Belgian court will apply the Roche doctrine also in relation to Article 28. In Roche, the ECJ explicitly held (in relation to Art 6.1) that where infringement proceedings are brought before a number of courts in different Contracting States in respect of a European patent granted in each of those states, against defendants 334   This case concerned a European patent owned by two American citizens and granted for 10 EPC Contracting States. The patent-holders claimed that the patent was infringed by Roche Nederland and members of the Roche Group having their seats in eight different countries. The infringement claim was brought against all defendants before the court in The Hague. 335   This theory was adopted by Belgian courts with reference to the ruling of the Court of Appeal of The Hague in the Boston Scientific case (23 April 1998, (1998) European Intellectual Property Review N-132). For an article discussing this theory and related cases, see P De Jong, ‘The Belgian Torpedo: From Self-propelled Armament to Jaded Sandwich’ (2005) 27 European Intellectual Property Review 75. 336   Similar views had already previously been adopted in Belgian case law. See, eg, CFI Brussels, 12 May 2000, Röhm v DSM (2002) Intellectuele Rechten – Droits Intellectuels 321; CFI Brussels, 19 January 2001, Novo Nordisk v DSM (2002) Intellectuele Rechten – Droits Intellectuels 304; CFI Brussels, 8 June 2000, Roche v Glaxo (2002) Intellectuele Rechten – Droits Intellectuels 313.

Belgium  397 domiciled in those states in respect of acts allegedly committed in their territory, any divergences between the decisions given by the courts concerned would not arise in the context of the same legal situation and, hence, such diverging decisions could not, therefore, be treated as contradictory.337 In view of the similar language that is used in Articles 28.3 and 6.1,338 it is very likely that Belgian courts will no longer conclude on the existence of ‘related actions’ where the proceedings involve an infringement of the various parts of European patents in separate Member States. Would the decision change if B, C and D raised counterclaims that A’s patents are invalid? Having concluded that the Belgian court will decline jurisdiction, the question is no longer relevant.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose licensed products. B paid the initial licence fee but later refused to pay other fees arguing inter alia that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and referring to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country:

Case 4(1)  Would such a choice of court clause of the licence agreement be enforceable? The following facts are taken into account: The licence contract is concluded between A (a German licensor) and B (a French licensee). The contract contains a prorogation clause in favour of the Belgian courts. The dispute concerns the scope of the patent rights that are subject of the licence contract. Licensor A has initiated an infringement suit against licensee B. The latter objects to the application of the choice of court clause but does not raise an issue regarding the validity of the various patents. None of these patents are valid in Belgium so there is no connection with the Belgian territory apart from the choice of jurisdiction clause. Where the contract is concluded between parties, at least one of which is domiciled in a EU Member State, the Belgian court will have to apply Article 23 of the Brussels I Regulation and respect the choice of the parties (above, para 51). The prorogation clause will be valid and effective provided that it is (a) in writing, or evidenced in writing, or (b) in a form which accords with practices which the parties have established between themselves; or 337   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535, paras 31–32. 338   Where actions ‘are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings’. This language is also used in Art 34.3 regarding recognition of foreign decisions and was interpreted in this context in Case C-145/86 Hoffman v Krieg [1988] ECR I-645, para 22 (in this case the concept of irreconcilability was interpreted in a more narrow manner since the ECJ also required that the decisions have ‘mutually exclusive legal consequences’ that are not a prerequisite for the application of Art 28 – see also Roche decision, para 23).

398  Marie-Christine Janssens (c) in international trade or commerce, in a form which accords with a trade or commercial usage.339 It is assumed that the choice of forum agreement complies with these conditions and that the forum agreement was made in favour of a court located in the EU, which is also required for the application of Article 23. Since the validity of the patents is not raised, the court cannot disregard this choice on the basis of Article 23.5 of the Brussels I Regulation which requires that contractual provisions that purport to exclude the exclusive jurisdiction rule of Article 22, shall have no legal force. Purely contractual and infringement disputes concerning intellectual property rights remain outside the scope of Article 22.4. The answer to the question is therefore affirmative. At the plaintiff ’s request the court could order a cross-border injunction having effect in all the countries where the licence operates. The answer might differ if the case concerned parties none of which was domiciled in an EU Member State (eg, a US licensor and a Japanese licensee). In such a case, the Belgian court will decide on the jurisdiction issue with reference to Article 6 of the CPIL the essence of which is comparable to Article 23 of the Brussels I Regulation. Article 6 paragraph 2 of the CPIL, however, also contains a forum non conveniens rule which enables the court to decline jurisdiction if it considers that the case presents no significant connection with Belgium (above, para 56). This rule is not mandatory, and the court can decide in its own discretion whether to apply it or not, taking into consideration the specific circumstances of the case. Assuming that the bundle of patents owned by the US licensor does not include a Belgian patent, there is a possibility that the court sets aside the choice of forum clause and declines jurisdiction on the basis of Article 6 paragraph 2 of the CPIL. On the other hand, where the parties have chosen the court of a neutral territory in the context of an agreement with worldwide application, arguments about forum non conveniens are generally given little weight. Would the decision differ if parties made (new) choice of court agreement at the time when the dispute arose? In principle, no. The Brussels I Regulation contains specific provisions that address the enforceability of new choice of forum clauses agreed to after the dispute has arisen, but these rules only relate to insurance contracts, consumer contracts and employment contracts (see Arts 13, 17 and 21 respectively). In our second hypothesis of a licence contract concluded between non-EU parties, the Belgian court would have to apply the provisions of the Brussels I Regulation (instead of the CPIL) in case one of the parties would have moved its residence to a EU Member State and a new choice of court agreement would have been concluded afterwards. Indeed, Article 23 of the Brussels I Regulation does not specify when – at the time of the conclusion of the contract or at the time the proceeding is initiated – one of the parties should have its residence in a Member State. Some Belgian scholars argue in favour of a liberal interpretation of Article 23 that leaves room for both possibilities.340 339   It should be noted that Art 23.2 explicitly confirms that contracts can be validly concluded by electronic means; for more details, see Watté et al, above n 296, 167. 340   H Van Houtte, ‘Uitsluitende bevoegdheidsgronden’ [‘Exclusive jurisdiction grounds’] in H Van Houtte and M Pertegás Sender (eds), Europese IPR-verdragen [European IPL Conventions] (Leuven, Acco, 1997) 51. Contra (in France): H Gaudemet-Tallon, Les Conventions de Bruxelles et de Lugano (Paris, LGDJ, 1996) no 115.

Belgium  399 Case 4(2)  Would the court enforce an exclusive choice of court clause if the defendant raised a counter-claim that patents are invalid? The mere fact of the initiation of such a counter-claim would not make the choice of court clause defective. According to Article 6.3 of the Brussels I Regulation, a court retains jurisdiction in relation to counter-claims arising from the same contract or facts on which the original claim was based. Hence, the court will apply the forum clause regarding the (contractual) claim for infringement in the way indicated in the first part of the question. After having assumed jurisdiction for the dispute on the basis of Article 23, the court will however have to set aside the application of the choice of forum clause regarding the counter-claim on the basis of Article 23.5 of the Brussels I Regulation. This latter provision states that contractual provisions that purport to exclude the exclusive jurisdiction rule of Article 22.4 in relation to the validity of a registered industrial property right shall have no legal force. It can finally be observed that choice of forum clauses do in principle not apply to disputes regarding validity because such claims are not related to the contract (no contractual dispute). Case 4(3)  Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings? Assuming that no licence agreement exists, the infringement proceeding will no longer be regarded upon as a dispute which arises within the framework of a contractual relationship between the parties and, hence, not Article 23 but the normal rules of jurisdiction will apply. This means that, in view of the fact that the defendant has its domicile abroad, the Belgian court will have to decline jurisdiction (unless the infringing acts occur in Belgium). Assuming that the concerned parties were previously bound by a contractual relationship with a forum clause, even then it is rather unlikely that the court acknowledges the validity of such clause in relation to an infringement dispute that has arisen after the termination of the contract.341 However, if the parties would agree to a choice of forum clause after the dispute has arisen, the Belgian court will honour this clause on the basis of Article 23 (see answer to first part of the question). This situation seems highly hypothetical as the interests of the parties may be too divergent to reach an agreement that confers exclusive jurisdiction to a particular court once the dispute on the alleged infringement has arisen.342 Case 4(4)  Would parties’ arbitration agreement be enforceable under the law of your country? Parties can voluntary enter into an agreement to submit their dispute over the scope of the licence and the question of infringement of A’s patent to arbitration.

341   See, eg, President CFI Brussels, 31 January 1997, Studio Peyo v Dureco/Dutchy (1997) Intellectuele Rechten – Droits Intellectuels 44, where the court refused to apply the forum clause to a dispute that had arisen after the termination of a licence agreement. 342   Pertegás Sender, above n 114, no 2.180.

400  Marie-Christine Janssens Could the arbitration tribunal decide upon the validity of intellectual property rights? As in many European countries the Belgian Patent Act gives exclusive jurisdiction over a range of patent law issues, including patent validity and infringements issues to particular courts. In particular Article 73, section 4 of the said Act attributes sole jurisdiction for such issues to ‘the court sitting at the headquarters of the Court of Appeal in whose jurisdiction the domicile or residence of the defendant or of one of the defendants is located.’ Section 6 of the said article, however, goes on to state the following: ‘Any agreement contrary to the provisions of the preceding paragraphs shall be null and void. This Article shall not, however, preclude that disputes in respect of the ownership of a patent application or of a patent, the validity or the infringement of a patent or . . . be submitted to arbitration tribunals.’ Hence, for Belgium it can be concluded that both the issues of validity and infringement of a Belgian patent or the Belgian part of a European patent are arbitrable in Belgium. For the sake of completeness, one may also refer to Article 1.2(d) of the Brussels I Regulation that explicitly states that the Regulation – and thus its exclusive jurisdiction rule of Article 22.4 – shall not apply to disputes that are submitted to arbitration. Regarding this provision, the ECJ has held in the Van Uden decision (above, para 49), that ‘where the parties have validly excluded the jurisdiction of the courts in a dispute arising under a contract and have referred that dispute to arbitration, there are no courts of any State that have jurisdiction as to the substance of the case’ (see also more details in Case Study 11, question 4). If so, what would be legal effects of such decision? According to Article 51 of the Belgian Patent Act: ‘If a patent is revoked, in whole or in part, by a judgment or a decision or by an arbitration award, the decision on revocation shall constitute a final decision in respect of all parties, subject to opposition by third parties. Final revocation decisions shall be entered in the Register.’

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A.

The following facts are taken into account: The defendant B is a company located in Belgium. Claimant A owns patents in the Netherlands (X) and Germany (Y) but not in Belgium. The disputed acts occur in Belgium (production) as well as in the Netherlands and Germany (importation). Prior to the filing of the infringement claim by A in Belgium, earlier proceedings had already been initiated by the Belgian defendant before the Dutch and German courts seeking a declaration of non-infringement. Case 5(1)  Assuming that the court of country Z is a court of your country, what procedural steps would a court of a country Z take, having regard to pending proceedings in countries X and Y? First, the court will assume jurisdiction regarding the infringement claim directed against defendant B on the basis of the general jurisdiction rule of Article 2 of the Brussels I

Belgium  401 Regulation (domicile of defendant). The fact that the case solely involves foreign patents will not present a hurdle. Patent enforcement outside the boundaries of the granting state is an exercise of the patent-owner’s ius prohibendi towards private parties. The subject matter of such a dispute is the enforcement of a private right which does not affect the sovereign granting act.343 Secondly, the court will examine whether Article 27 regarding lis pendens applies to the case (above, para 47). This provision requires that a Belgian court – on its own motion – stays the proceedings if a court of another Member State (in casu Germany and the Netherlands) was first seised until the time that these latter courts have established their jurisdiction. Such a decision is, however, dependent on two conditions: – the first action involves the same parties which is OK in this case;344 and – the first action involves the same cause of action. In the Tatry case, the ECJ ruled that ‘cause of action’ comprises the facts and the rule of law relied on as the basis of the action, and the ‘object of the action’ means the end the action has in view. An action seeking to hold the defendant liable for causing loss, and ordered to pay damages, has the same cause of action and the same object within the meaning of that article as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss.345 A declaration of non-infringement claim can be looked upon as the ‘mirror action’ of an infringement claim. Hence, according to the above-mentioned Tatry ruling, the actions in the Netherlands and Germany will be regarded upon as having the same cause of action for the purposes of Article 27 as the Belgian action. Hence, the Belgian court is bound to stay the proceedings until the two other courts have taken a decision about their jurisdiction. Observation The conclusion would not differ should the court have had to apply the provisions of the CPIL. Indeed Article 14 of the CPIL, relating to lis pendens, also mandates the court to stay the proceeding where they have the same cause of action, adding as an extra condition that the foreign decision will likely be recognised or enforced. This condition is satisfied in the case at hand. Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? This question must be answered in the negative.

343   Pertegás Sender, above n 114, no 2.13. This author refers to a very old Belgian decision that confirmed this view (Liège Court of Appeal, 30 January 1909, Wallot & Kruger v Georges & Fortunesco, Pasicrisie (1909) I, 175). 344   In the Tatry case the ECJ held that where Art 27 requires, as a condition of the obligation of the second court seised to decline jurisdiction, that the parties to the two actions be identical, that cannot depend on the procedural position of each of them in the two actions; Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439, para 30. 345   Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439, para 38 et seq.

402  Marie-Christine Janssens Case 5(2)  What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y? The Belgian court can assume jurisdiction for the infringement claim initiated by plaintiff A based on the defendant’s domicile which is located in Belgium (Art 2 of the Brussels I Regulation). However, because a suit for invalidity of a patent (assuming such a suit has been initiated) has not the same cause of action as an infringement suit, the lis pendens rule of Article 27 of the Brussels I Regulation will not apply here (above, para 47). The court will not even consider the cases as ‘related’ in the meaning of Article 28 of the Brussels I Regulation, because the proceedings are not concerned with the examination of the same legal issue (see above, para 48 and our answer in relation to Case Study 3). To conclude: as long as the issue of invalidity is not raised in the Belgian proceeding ‘by way of an action or a plea in objection’, it is to be expected that the Belgian court will decide that it has jurisdiction to hear the infringement matter. Should the defendant introduce such a counterclaim, the rule of Article 22.4 allocating exclusive jurisdiction to the court of the state where the registration was obtained, will find application and the Belgian court would normally have to decline jurisdiction. Yet it might be argued that the defendant B acted in bad faith, as it appears from the factual context that the (French) court first seised clearly lacks jurisdiction. In such circumstances, legal scholars have suggested that, where the defendant’s main motive would be to obstruct the infringement procedure, courts should be able to retain jurisdiction and decide the case.346

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.

Case 6(1)  Assuming that the court of country X is a court of your country, could it apply the (Belgian) patent statute for allegedly infringing acts occurring in country Z (eg Germany)? Probably not. Regarding questions of applicable law, the Belgian court will have to resort to the provisions of the Rome II Regulation in relation to infringing acts that take place after 1 January 2009 (or 19 August 2007).347 As was pointed out in Section I, the general rule of Article 4 of this Regulation refers to the law of the country in which the damage occurs348 (Germany), or to the law of the country where the two parties have their habitual residence (Belgium).

346   Nuyts and Boularbah, above n 133, 314; Wilderspin, above n 224, 788; Torremans, above n 224, 71. These scholars also refer to the opinion of the advocate-general in the case GAT v LuK (above, para 52). 347   See above n 133. 348   In Art 4, relevance is not attached to the place where the event giving rise to the damage occurs (in casu, the manufacturing of the separate parts in Belgium).

Belgium  403 However, in matters of an infringement of an intellectual property right, another connecting factor takes precedence over this general rule. In such a case Article 8 mandates the application of the law of the country for which protection is sought (lex loci protectionis), ie, the country where the rights are exploited (and infringed) and where the relief sought will have its effects (above, para 74). Its application is not even limited to the laws of Member States, but entails a universal application, hence including, eg, US patent law (Art 3). In the present case the plaintiff claims protection for allegedly infringing acts occurring in Germany. Hence, in compliance with the lex loci protectionis rule, the Belgian court cannot revert to the provisions of the Belgian Patent Act and will have to decide – on its own motion349 – to apply German patent law.350 This is not in itself problematic as, in principle, a domestic court can apply a foreign lex protectionis.351 Where the defendant is sued pursuant to Article 2 of the Brussels I Regulation (place of domicile), Article 8 implies, and even requires, that courts may render their decisions also on patent infringements occurring abroad. In such a case the court will have to decide on the infringement occurring in these foreign countries by applying the laws of those countries. Case 6(2)  Assuming, first, that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z? It is assumed here that the claimant brings a proceeding before the Belgian court claiming an infringement of a German patent in relation to allegedly infringing acts that take place in Belgium. It is not clear whether the claimant also owns a Belgian patent. The Belgian court probably cannot apply the German Patent Act. In compliance with Article 8 of the Rome II Regulation (see part (1) of the question), the Belgian court must apply Belgian patent law (lex loci protectionis) because protection is sought against acts that occur in Belgium. Assuming that no patent protection exists in Belgium, it is likely that the court will reject the claim for infringement. Belgian patent law indeed solely affords protection in relation to acts occurring in Belgium that infringe upon a patent that is validly registered in Belgium (using the national, the EPC or PCT route). Assuming that a patent has also been granted in Belgium, it is likely that the court will sustain the claim as it can be argued that the disputed acts (production of separate parts and export) constitute indirect infringement which is actionable under Article 27 paragraph 2 of the Belgian Patent Act: The patent shall also confer on its owner the right to prevent all third parties not having his consent from supplying or offering to supply on Belgian territory a person other than parties entitled to exploit the patented invention with means, relating to an essential element of that invention, for putting it into effect, when the third party knows, or it is obvious in the circumstances, that those means are suitable and intended for putting that invention into effect.

  Cass 9 October 1980, Arr Cass (1980–81) 142.   An application of the provisions of the Belgian CPIL would lead to the same conclusion, as Art 93 para 1 of the CPIL is entirely in line with Art 8 of the Rome II Regulation. 351   Pertegás Sender, above n 114, 39, criticising the opposite holding by a Dutch court (President District Court Rotterdam, 28 March 1996, Mölnlycke v Kimberley (1996) Intellectuele Eigendom en Reclamerecht – NL 30). 349 350

404  Marie-Christine Janssens

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any actions to prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C, requesting closure of the website and payment of damages. Assuming that the court of your country has international jurisdiction in such a case:

Case 7(1)  What law would be applied to determine the liability of A, B and C for direct infringement acts? This case bears some resemblance to the famous Napster case that was decided in the United States in 2001.352 The answer below relocates the dispute to Europe. Regarding the question of applicable law, Belgian courts will have to observe the provisions of the Rome II Regulation in relation to infringing acts that take place after 1 January 2009 (which is assumed here). Concerning the infringement of intellectual property rights – including copyright – Article 8 of the Rome II Regulation prescribes the application of the law of the country for which protection is sought (lex loci protectionis). Alternatively, Article 93.1 of the CPIL will lead to the same result.353 As both provisions correspond to the rule imposed in Article 5.2 of the Berne Convention354 and which takes priority over the EU regulations, there is no need to distinguish between the various systems. What matters is the subject matter of the claim: for which countries is the protection sought? Logically, this should be the countries where the claimant owns copyright protection and where the infringing acts take place. If the claimants merely seek to enforce their exclusive rights on the Belgian territory (eg, a request to close the website on Belgian territory and to receive damages355), Belgian copyright law will apply to determine whether the defendants are liable for copyright infringement that occurs on Belgian territory. In particular, the Belgian court will apply Article 1 of the Belgian Copyright Act defining the scope of the exclusive rights of reproduction and public communication in order to determine that (clearly) the acts committed by the defendants constitute an infringement. The application of the lex loci protectionis will coincide here with the lex fori. If relief is sought in multiple countries, the court will have to apply each of the laws of the various countries where protection is sought, which may prove a burdensome task (above, para 74). On the other hand, the Belgian court will probably not have much difficulty in concluding to direct infringement. The acts committed by the defendant, ie, storing illegal files on a server and communicating these files to the public, are – at least in the EU Member States – in a consistent way qualified as constituting infringing acts.356   A&M Records, Inc v Napster, Inc 239 F 3d 1004, 1020–22 (9th Cir 2001).   See above, paras 74 and 78, respectively.   See above, para 16. 355   Where jurisdiction can be based upon Art 2 (because the defendants have their domicile in Belgium) the plaintiff can, moreover, seek a cross-border decision to obtain damages for all the harm caused by the infringement. 356   See Arts 2 and 3 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ L167/10) that 352 353 354

Belgium  405 The location of the server in one particular country is irrelevant to determining applicable law relating to the infringing acts of communication in all other countries. If the claimants seek, eg, an order to ‘close down’ the server entirely, it will be necessary for the Belgian court to apply the copyright law of the country where the server is located. The Belgian court will, however, only have jurisdiction to issue an order with transborder effects if it sits in the place of domicile of the defendant. Would parties be allowed to agree on the applicable law (infringement and remedies)? No. Article 8.3 of the Rome II Regulation explicitly excludes the possibility of agreements that derogate from the rules laid down in Article 8.1 (lex loci protectionis) that were applied above. Case 7(2)  Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? No. Article 8.1 of the Rome II Regulation would equally apply. It is generally known that, because of logistical and other problems of identifying direct infringers, legal action against a particular indirect infringer, which plays a central role in facilitating the infringement, provides the only avenue for meaningful relief. The EU legislator has therefore mandated that actions relating to copyright infringement can also be directed against ‘intermediaries’. First, this rule was included in Article 8 of the Information Society Directive 2001/29/ EC357 providing that ‘Member States shall ensure that right-holders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’. Although this mandatory provision only refers to ‘an injunction’, it has been transposed into Belgian law in a broad manner also including claims for damages. Secondly, the possibility of injunctions is reiterated (in Art 11) and extended (in Art 9.1(a)) of the 2004 EU Enforcement Directive358 with regard to interlocutory injunctions.359 For the sake of completeness, one should also consider the Belgian Act of 11 March 2003 on certain legal aspects of information society matters.360 Article 6 of this Act excludes the application of the country of origin rule (lex loci originis) – which is the general rule in matters relating to the provision of information society services (Art 5) – with respect to matters of copyright, neighbouring rights and industrial property rights.361 To conclude: where the claim is directed against an ISP, the same choice of law rules apply as in cases of direct infringement (see answer to first part of the question). This harmonise the concepts of the rights of reproduction and public communication (including in Internet and ondemand situations). As a result of the 1996 WIPO treaties, the same conclusion can be made for many other countries. 357  ibid. 358   Above n 9. 359   For an application in Belgium, see case discussed above n 55. 360   This Act implements EU Directive 2000/31 on certain legal aspects of information society services, [2000] OJ L178/1 (also known as the ‘Electronic Commerce Directive’). See in particular Recital (23) of this Directive stating that ‘this Directive neither aims to establish additional rules on private international law relating to conflicts of law nor does it deal with the jurisdiction of Courts; provisions of the applicable law designated by rules of private international law must not restrict the freedom to provide information society services as established in this Directive’. The same is confirmed in Art 1.4. 361   Art 6 also confirms the freedom of the parties to contractually agree on the law applicable to their contract.

406  Marie-Christine Janssens answer would not differ depending upon the nature of the remedies sought (injunctive relief and/or damages). Would parties be allowed to agree on the applicable law (infringement and remedies)? No. Article 8.3 of the Rome II Regulation explicitly excludes the possibility of agreements that derogate from the rules laid down in Article 8.1 which relates to infringement claims in general. Case 7(3)  Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? The question will be answered assuming that it inquires about possible jurisdiction for the Belgian court to decide such infringements. The court will examine its jurisdiction on the basis of the general rules of the Brussels I Regulation. The most obvious connecting factors will include the domicile of the defendants (Art 2) and the fact that the harmful event occurs (also) in Belgium (Art 5.3). In the past, Belgian courts have not hesitated to apply Article 5.3 in IP infringement cases that occur in the Internet context. The place of the causal event is considered the place from where the site is managed or supplied with content.362 Concerning the connecting factor of the place where the harm occurs, courts appear to adhere to the so-called effects-based approach, which analyses whether acts committed online have consequences on the Belgian territory such as to justify their jurisdiction.363 The mere fact that a website is available on Belgian territory, however, was not considered to be sufficient a connecting factor for jurisdiction.364 Obviously, the injured rightholder will be advised to take action in the country of origin of the communication or the country of the defendant’s domicile in order to obtain a decision on his full injury rather than bringing multiple proceedings.365 If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights? The assumed case of ubiquitous infringement is that an act committed in one state has affected an infinite number of other states and therefore the range of the affected area cannot be specified. A typical situation is an intellectual property right infringement via the Internet. 362   Brussels Court of Appeal, 4 May 2001, (2001) JLMB-Journal Liège Mons Bruxelles 1444. De Visscher and Michaux, above n 76, 590; Haouideg, above n 76, 119. 363  Brussels Court of Appeal, 4 May 2001 (n 363); Pres Commercial Court Nivelles, 9 March 2005, Swift v Swiftpay, (2006) Ingénieur Conseil – Intellectual Property 386; Pres Commercial Court Hasselt, 15 April 2005, (2005) Ingénieur Conseil – Intellectual Property 167. By analogy, one can refer to the preparatory discussions in Parliament that related to Art 99 para 2 (applicable law in certain tort matters such as defamation). It was held that in cases of Internet communications, the targeted public should function as a determining factor (‘target-market’ theory). Accordingly, the court should take into consideration such factors as the language and the presentation of the website, its interactive character (eg payment system) as well as the follow-up that is given to the site; Parl Documents Senate 2003-04, no 3-27/7, 180. See also J Verlinden, ‘Article 99’ in Erauw et al, above n 66, 510–11; P Peters, ‘L’internet et la protection des consommateurs’ in H Bartholomeeusen et al (eds), Internet sous le regard du droit (Brussels, Editions du Jeune Barreau de Bruxelles, 1997) 138. 364   Court of Appeal Brussels, 2 December 2004, (2004) Ingénieur Conseil – Intellectual Property 537 (trade mark infringement dispute). For more details on the determination of the ‘locus’ of the harm in Internet-related cases, see Haouideg, above n 76, 119; Van Asbroeck and Cock, above n 78, 187 et seq. Both articles argue in favour of the country of destination. 365   Haouideg, above n 76, 119.

Belgium  407 The author has not found in the published Belgian case law definitions or a specific treatment regarding ubiquitous infringement. It is likely that, unless clear legal provisions are enacted to the contrary, Belgian courts will conceptualise ubiquitous infringement as an accumulation of infringements in multiple countries and seek recourse to a distributive application of the various laws (see answer to the first part of this Case Study).366 Regarding Belgium, the author is not aware of ongoing projects seeking to find a specific solution for this kind of infringement comparable to the MPI draft (Max Planck Institute),367 the ALI principles (American Law Institute)368 or the CLIP proposal (also funded by the Max Planck Society).369

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment in B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation, arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country.

It is assumed that claimant A is a German researcher who has made several inventions while being employed by a Belgian company. European patents have been obtained for these inventions, which are valid in several states. Although not specified (‘visiting researcher’?), it is also assumed that A has signed an employment contract with B. Case 8(1)  What law would the court of your country apply to determine who is the initial owner of the invention? At the outset, it must be observed that the question regarding the right to the entitlement to a patent – which is assumed to be the subject of this case study370 – should be distinguished from the question regarding initial ownership of an (unpatented) invention. Concerning this latter issue, the lex loci protectionis will find application (see answer to part (3)(a) of the question below). Regarding the right to the patent title, the legal starting point for answering this question is (at present371) to be found in the European Patent Convention. The EPC indeed includes special rules on the allocation of jurisdiction372 and applicable law in relation to ownership of European patents in proceedings between an employee and an employer. In particular, 366   From the understanding of the author, though, ubiquitous infringement is not merely diffusive infringement, but includes the situation where the infringement occurs in unspecifiable and multiple countries via computer networks. 367   A Kur, ‘Applicable Law: An Alternative Proposal for International Regulation – The Max-Planck Project on International Jurisdiction and Choice of Law’ (2005) 30 Brooklyn Journal of International Law 951. 368   Intellectual Property Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes, June 2008, www.ali.org. See in particular para 302: ‘The applicable law(s) of “ubiquitous infringement” shall be governed by the law of the place where the results of the exploitation of intellectual property are maximised’. 369   See www.cl-ip.de. 370   Indeed, a patent licence presupposes the prior grant of a patent, which in turn raises the question of who is entitled to apply for such patent. 371   It is not expected, though, that this rule will change if a ‘EU Patent system’ were to be established. 372   Art 4 of a special protocol (above n 112) allocates jurisdiction to the courts of the Contracting State whose law determines the right to the patent pursuant to Art 60 of the EPC.

408  Marie-Christine Janssens Article 60 stipulates that if the inventor is an employee and a dispute arises regarding the right to the patent, the relevant national law is that of the location where the employee is mainly employed. If this law cannot be determined, Article 60 refers to the national law of the place of business of the employer to which the employee is attached or, if this does not provide a clear answer, the place where the employee has the centre of his professional life, respectively.373 Whereas the central connecting factor is the state in which the employee is mainly employed, the factual context of the case at issue refers to Belgium. Hence, the court will apply Belgian law irrespective of the nationality of the claimant. Article 60 indeed applies in every situation where the right to entitlement to a European patent (EPC patent) is in dispute. For the sake of completeness it is noted that, in contrast to most other European countries, Belgian law lacks special provisions that regulate the matter of employee inventions. In the absence of an explicit transfer-of-rights provision in the contract, the claimant will have to argue his case on the basis of the limited case law that addresses the issue of employee inventions with little chance to obtain the ownership rights or even compensation (see also below). The same conclusion will be arrived at if the court had to apply the provisions of the Belgian CPIL (eg, in case the inventions are only protected by Belgian or other non-EPC patents). Indeed, Article 93 paragraph 2 provides for an exception to the application of the general rule of the lex loci protectionis in relation to disputes regarding original ownership of an industrial property right. In such cases, the court has to apply the law of the state with which the intellectual activity presents the closest connection. In this respect, Article 93 includes a (rebuttable) presumption that, where the intellectual activity takes place within a contractual relationship, such as in the case at issue, intellectual activities are presumed to take place in the state that governs this relationship. In the present case this rule would point to the law that regulates the employment relationship and, hence, to Belgian law. Would the parties’ choice of law clause concerning the right to obtain patents be enforceable in your country? Even though Article 3 of the Rome I Regulation – as well as Article 8 with respect to individual employment contracts – confirms the freedom of the parties to contractually agree on the law applicable to their contract, this choice may never prejudice the application of provisions of : the law of the chosen country which cannot be derogated from by agreement (Art 3.3); Community law, which cannot be derogated from by agreement (Art 3.4). Clearly the latter provision (Art 3.4) is not applicable to the present case lacking uniform provisions on patent law in the EU (the EPC is not a body of community law). Regarding the prohibition to deviate from ‘provisions which cannot be derogated from’,374 either pursuant to Articles 3.3 or 8.1, the question arises whether Article 60 of the EPC, the application of which would normally refer to Belgian law (see answer to part (1) of this Case Study), can be regarded upon as mandatory. The author does not consider this   See in this respect also Case C-383/95 Petrus Wilhelmus Rutten v Cross Medical Ltd [1997] ECR I-57.   This concept should be distinguished from the concept of ‘overriding mandatory provisions’ and should be construed less restrictively (Recital 37 of the Rome I Regulation). See more details in B Volders, ‘Nieuw verwijzingsrecht voor grensoverschrijdende overeenkomsten’ [New conflict of law rules for transnational contracts] (2009– 2010) Rechtskundig Weekblad 642, 663. 373 374

Belgium  409 to be the case. However, unfortunately, no case law or doctrine has yet addressed this question in Belgium. Assuming Article 60 of the EPC does not preclude the parties from freely agreeing upon the application of another law applicable to the entitlement to the patent right, the question remains whether Belgian law (which would normally have been applicable) contains other provisions from which no derogation is possible. As explained above, neither the Belgian Patent Act nor any other national act includes provisions in relation to the allocation of the right to the patent for inventions made by employees.375 The doctrine of freedom of contract prevails in principle and contractual arrangements regarding ownership deviating from settled principles are to a large extent permitted.376 Observation If the question related to the issue of initial ownership – ie, the so-called ‘inventorship right’ – the normally applicable law to determine in which person the rights to an invention vest would be the lex loci protectionis. A choice of law clause that deviates from this rule does not seem acceptable. Indeed, it can be argued that if it is not possible to derogate from the application of the lex loci protectionis rule in relation to infringement cases,377 a fortiori this should not be allowed in relation to disputes over original ownership. Case 8(2)  Would the decision differ if A made an invention in joint collaboration with other researchers? No. The answer would, however, differ if the invention is the result of a contract of collaboration involving companies from different states. In such a case the court will need to have recourse to a distributive application of the various laws that regulate the various employment relationships (see above, para 79). Case 8(3)(a) Would the applicable law differ in case of initial authorship? This situation would lead to the same outcome, albeit through different legal reasoning as compared to the first question. The relevant question would proceed as follows: what law would a Belgian court apply to determine who is the initial author of a copyrighted work where the work was created by a foreign author within the framework of an employment contract that is subject to Belgian law? The legal provisions that the court will have to apply to answer this question – Article 5.2 of the Berne Convention and Article 93 paragraph 1 of the CPIL – concur regarding the ultimate solution: the court is bound to apply the lex loci protectionis. As was explained in Section I, the majority view does not support an exception to this Berne rule in relation to the question of original ownership of copyright (above, para 16).378 In this respect, one   A fortiori, no mandatory compensation rules are prescribed under Belgian law.   MC Janssens, Uitvindingen van werknemers in dienstverband en aan universiteiten in de EU [Employee and University Inventions in the EU] (Brussels, Bruylant, 1996) 264 et seq. 377   See Art 8.3 of the Rome II Regulation (above, para 75). 378   However, as it appears very difficult to find a consensus on this issue internationally, it can never be excluded that a Belgian court would be tempted to follow foreign doctrine that advocates the application of the lex loci originis. For an example from older case law, see President CFI Ghent, 10 January 1996, (1997) Revue de Droit Commercial Belge – Tijdschrift voor Belgisch Handelsrecht 33, with observations by M Pertegás Sender. 375 376

410  Marie-Christine Janssens may, in particular, refer to a judgment of the Court of Appeal of Brussels in which it was decided that the lex loci protectionis should apply not only to the question whether the work was protected by copyright but also to issues regarding original ownership, scope of the exclusive rights and exploitation of the rights.379 This solution is confirmed in Article 93 paragraph 1 of the CPIL prescribing the application of the lex loci protectionis as a general choice of law rule for all copyright disputes. As is further clarified in Article 94 of the CPIL, this rule applies irrespective of the nature of the dispute (validity, scope, initial ownership, transfer, etc). In sum, the author considers that the lex loci protectionis will be applied to the present case where the dispute relates to initial copyright ownership to a work created in the course of employment.380 This rule will guide the court to the application of Belgian Copyright law. The question could arise as to whether, in the event that the choice of law rule pointed to a foreign law, a Belgian court can invoke the application of Article 21 of the CPIL. This provision allows the court to set aside the application of a foreign law where it is considered contrary to international public order. Regarding the latter issue, and by way of example, the parliamentary documents mentioned the basic principle that copyright can only originate in a physical person,381 which rule would indeed be set aside be applying, eg, US copyright law with its work-for-hire rule. Nevertheless, it must immediately be pointed out that a majority of scholars do not consider that rules relating to copyright ownership are part of the international public order and even submit that it is far from clear which provisions of Belgian IP laws would be considered mandatory and so fundamental as to form part of the Belgian international public order.382 The Court de Cassation has repeatedly held that ‘international public order’ only includes ‘principles that are essential to the moral, political and economic order of Belgium’.383 This norm is more stringent than what is to be understood by ‘internal public order’.384 Case 8(3)(b) Would the applicable law differ in case of initial title to a trade mark? The two major trade mark laws that are applicable in Belgium – the Benelux Convention and the Community Trade Mark Regulation – do not include special rules on initial ownership of trade marks, as this does not seem to constitute a real issue for trade mark law. Both systems instead adhere to the general principle that the exclusive right in a trade mark shall be acquired by (first) registration of the trade mark (see, eg, Art 2.2 of the Benelux Convention). This rule can in no way be set aside, and any agreement to the contrary would be null and void. 379   Court of Appeal Brussels 8 October 2001, (2002-2003) Rechtskundig Weekblad 1147. See also Court of Appeal Antwerp, 19 December 2005, discussed by Roox, above n 84, 1557 (application of the lex loci protectionis to a dispute regarding ownership). Cf Liège Court of Appeal 16 March 1999, (1999) Ingénieur Conseil – Intellectual Property 392 (dispute regarding initial ownership). 380   This is, eg, confirmed by Van Asbroeck and Cock, above n 78, 200. 381   Parl Documents Senate 2003-04, no 3-27/1, 114. 382   See M Pertegás Sender, ‘Article 93’ in Erauw, above n 66, 480; Puttemans, above n 285, 622; De Visscher and Bouche, above n 146, 13. However, other commentators do not exclude such a possibility; see Torremans, above n 87, 463. Unfortunately, this issue has not yet been litigated before a Belgian court. 383  Cass 18 June 2007, (2008) Rechtspraak Antwerpen Brussel Gent 1091; Cass 29 April 2002, (2002–3) Rechtskundig Weekblad 862; Cass 17 December 1990, Arr Cass (1990–91) 432. 384   Cass 2 April 1981, Arr Cass (1980–81) at 869. For other references, see H Storme, ‘Article 25’ in J Erauw, above n 66, 139.

Belgium  411 Without prejudice to this rule, the author considers that parties remain free to agree in a contract on the question of who (employer or employee) will have the right to file for trade mark protection. Failing such an agreement, one could argue in favour of the application of Article 93.2 of the CPIL that states that the right to the original ownership of an industrial property right has to be determined by the law of the state with which the intellectual activity presents the closest connection. Observation In trade mark law, no provisions exist that grant special rights to the ‘original inventor’ of the sign. This conclusion leaves, of course, intact provisions of other IP rights (eg, copyright law) that may afford protection to the sign. The same is true for the rules relating to particular situations, such as bad faith on behalf of the person who (first) registered the sign. Case 8(4)  What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries? Lacking a choice of law clause, the court would proceed as indicated in relation to question (1). With reference to Article 60 of the EPC, the court will apply Belgian law, which does not guarantee a right to remuneration in favour of employees. The situation in which the invention was conceived (eg service invention) will have no bearing on the decision.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X, arguing that the moral right of integrity of a work had not been transferred and thus had been infringed.

The following facts are assumed: Claimant A and defendant B, while they met in Belgium, have orally entered into an agreement pertaining to the future production/distribution of A’s music. No precise details are known as to the scope of the transfer of the rights (ie, licence or transfer, which exploitation rights, duration, exclusivity, geographical extent, etc). The dispute arises after defendant B distributes an arrangement of a song in the United Kingdom (country Y) through its branch office. The claimant initiates an infringement suit before the Belgian court claiming violation of its moral right. As moral rights can only exist in a physical person, it will be necessary for the individual members of the pop group to personally intervene in the proceedings. Case 9(1)  Assuming that a court of your country is a court of country X, would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? According to the author’s understanding, a dispute here arises as to the existence of a choice of law clause (an ‘oral’ contract) and, if so, as to its validity (oral form) and its content

412  Marie-Christine Janssens (which law was chosen?). These questions involve a contractual issue and, hence, the provisions of the Rome I Regulation will be applicable. If there is no dispute over the existence of a particular choice of law clause, the Belgian court will honour this choice and apply the nominated law to resolve the dispute. According to Article 3 of the Rome I Regulation, the choice does not have to be confirmed in writing. It suffices that it can clearly be demonstrated by the terms of the contract or the circumstances of the case that a certain choice of law clause was agreed upon by the parties. Assuming that it can be demonstrated, or that it is not disputed, that the parties agreed to a valid choice of law clause pointing to the application of, eg, UK law where defendant B has its branch, it is likely that the Belgian court will respect this choice.385 This conclusion is in accord with a judgment of the Court of Appeal of Brussels of 2001. After having decided that, as a rule, the lex loci protectionis applies to the question of, eg, original ownership, scope of the exclusive rights and exploitation of the rights (including transfer), the Court accepted that a contract clause deviating from this rule was acceptable under the provisions of the (predecessor of) the Rome I Regulation.386 An interesting question in this situation might arise regarding the ‘mandatory’ or ‘public policy’ character of Article 1 paragraph 2 of the Belgian Copyright Act precluding the assignment, in general, of moral rights. Article 21 of the CPIL indeed allows a Belgian court to set aside the application of a foreign law and adopt the lex fori where the former is considered contrary to international public order.387 The parliamentary documents leading to the CPIL cite, by way of example, the rule relating to the non-transferability of moral rights388 which rule would now be set aside be applying, eg, UK copyright law. However, as was noted in relation to Case Study 8, the majority view contests such a broad application of Article 21. Nevertheless, because this issue has not yet been litigated before a Belgian court, it can never be excluded that a court takes a different approach.389 If there is a dispute between the parties regarding the existence of a choice of law clause, the court shall have to assess this dispute applying the law referred to in Article 10 of the Rome I Regulation (ie, in principle, the law which would govern the contract if it were valid unless the particular circumstances described in Art 10.2 are present). Furthermore, Article 11 will have to be used to assess the formal validity of the choice of law clause. In particular, Article 11.1 prescribes that where a contract is concluded between persons who are in the same country at the time of its conclusion, the contract is formally valid if it satisfies the formal requirements of the law which governs it in substance or of the law of the country where it is concluded (ie, Belgian law).

385   It is settled case law that, in such a case, the Belgian court has an obligation to determine the content, meaning and scope of the foreign law after having obtained all necessary information and with due respect of the rights of the defence; Cass 3 December 1990, Pas (1991) I, 329; Cass 9 October 1980, Arr Cass (1980–81) no 90. 386   Court of Appeal Brussels 8 October 2001, (2002–3) Rechtskundig Weekblad 1147. 387   This possibility is also confirmed in Art 21 of the Rome I Regulation. 388   Parl Documents Senate 2003–04, no 3-27/1, 114. 389   Because Belgian and French copyright law share the same roots and basic principles, Belgian courts sometimes draw inspiration from French case law. In relation to the problem at issue, the decision of the French Supreme Court (Cour de Cassation) in the famous John Houston case, might tempt a court to conclude on the mandatory (ordre public) character of moral rights rules and to apply its domestic law (Cass Fr 28 May 1991). This decision has resulted in an abundant literature and will not be commented upon here (see, eg A Lucas and R Plaisant, ‘France’, § 7.4.a in MB Nimmer and PE Geller, International Copyright Law & Policy (New York, Mathew Bender, yearly update) § 7 [4][a][b]).

Belgium  413 A Belgian court would probably conclude on the validity of an oral agreement regarding applicable law. If such lex contractus referred to Belgian law it is, however, very unlikely that the court would enforce the contractual transfer of moral rights (see next question). Case 9(2)  How will the court deal with the issue of transferability? This issue will likely arise in the context of the dispute regarding the scope of the transfer of rights that the contract entails (moral rights included or not?). To decide this dispute, the court will have to determine whether the issue of transferability relates to the ‘law of the issue’ (la loi du droit) rather than to the ‘law of the contract’ (la loi du contrat). Lacking a clear distinction between these issues, this question raises a characterisation problem which is not easy to resolve, ‘as there exists a sort of tension between, on the one hand, copyright issues and, on the other hand, contractual issues’.390 If the issue of transferability is regarded as a copyright issue, all relevant legal provisions would mandate an application of the lex loci protectionis (Art 5.2 of the Berne Convention, Art 8.1 Rome of the II Regulation and Art 93 of the CPIL). Conversely, if this issue is considered to constitute a contractual issue, the lex contractus (in this case identified in the choice of law clause) would govern the dispute. There is little published case law in Belgium that could provide guidance. The majority of Belgian doctrine adheres to the view that ‘real questions of copyright’ such as original ownership, validity requirements, scope of the exclusive rights and the transferability of the rights (and possible waivers) should be governed by the ‘law of the issue’, and hence the lex loci protectionis.391 This is in line with Article 94 of the CPIL that provides that the law referred to in Article 93 (lex loci protectionis) governs issues such as ‘the existence, the nature, the content and the scope of these rights’ (Art 94 para 2), ‘the ownership of these rights’ (Art 94 para 3), ‘the availability of these rights’ (Art 94 para 4), ‘the modes of the coming into existence, transfer and loss of these rights’ (Art 94 para 5) and ‘the opposability of these rights’ (Art 94 para 6). The lex contractus should then be applied to formal requirements such as possible rules mandating a written form, explicit mandatory provisions relating to duration, remuneration and scope of the transfer of rights as well as specific mandatory requirements relating to publication contracts.392 It is further argued that the lex contractus would also govern the question of the validity of the transfer of the rights in relation to future creations, as this will be submitted by the defendant in the present case (eg, Belgian law imposes certain requirements that have to be observed for such transfers to be validly included in the transfer of rights). Finally, the law of the contract is also considered to govern issues relating to the formal requirements applicable in relation to a presumption of transfer (eg, in favour of employers) 393 or modes of remuneration. In respect of all these contractual issues, the Rome I Regulation will be applicable. Its Article 12 provides that the lex contractus governs in particular the interpretation, the performance, the consequences of a breach of an obligation, including the assessment of damages, the various ways of extinguishing obligations, prescription and the consequences 390   Van Asbroeck and Cock, above n 78, 202 et seq. See also De Visscher and Bouche, above n 146, 11; Haouideg, above n 76, 133 et seq. 391   Van Asbroeck and Cock, above n 78, 215; De Visscher and Bouche, above n 146, 11; Haouideg, above n 76, 135. See also Court of Appeal Liège, 16 March 1999, (1999) Ingénieur Conseil – Intellectual Property 392. 392   De Visscher and Michaux, above n 76, 649; Docquir, above n 84, 447. 393   Van Asbroeck and Cock, above n 78, 216.

414  Marie-Christine Janssens of nullity of the contract. Clearly, there is no reference to issues relating to the rights as such, most of which will normally arise prior to the contractual issues.394 Some uncertainty has arisen after the enactment in 2004 of Article 94 para 5 of the CPIL quoted above. This provision states that the lex loci protectionis governs issues regarding the ‘mode of transfer’ of the rights. The parliamentary documents have, however, clearly indicated that this provision does not include the contractual aspects relating to an agreed transfer of rights, such as the validity of the contract and the conditions of a voluntarily agreed transfer.395 Hence, it is assumed that the CPIL has not introduced a change to the prevailing view.396 To conclude, it is very likely that in the case at hand, a Belgian court will decide that the issue of the transferability of the (moral and economic) rights as such will be governed by the lex loci protectionis (and, hence, UK copyright law). For the sake of completeness, it can be observed that: (i) should the lex loci protectionis point to Belgian law, a court will have to apply Article 2 paragraph 2 of the Belgian Copyright Act, which states that moral rights are inalienable and that an overall renunciation of the future exercise thereof shall be null and void;397 (ii) should the lex contractus refer to Belgian law, this would obviously be beneficial to the claimant because the Belgian Copyright Act sets forth very strict rules regarding the validity of contracts concluded by the original author in relation to a transfer of his rights (see, in particular Art 3 of the Copyright Act, which requires that such contracts shall be in written form, shall be interpreted in a restrictive manner (in favour of the author) and shall set out, for each mode of exploitation, the author’s remuneration as well as the precise scope and the duration of the contract). Moreover, where the contract relates to future works, it shall only be valid for a limited period of time and for specified types of works. Case 9(3)  What would be the applicable law in a case where there is no choice of law made by the parties? It is assumed that the parties are bound by a valid licence agreement which, however, does not contain a choice of law clause. It will be presumed that the contract was concluded after 17 December 2009, which will allow us to apply the Rome I Regulation. Clearly, the licence (or assignment) agreement at issue does not fit in the list of the eight types of contracts that are identified in Article 4.1(a)–(h). Hence, Article 4.2 mandates to apply the (non-rebuttable) presumption that the contract will be governed ‘by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence’.398   ibid, 215.   V Sagaert, ‘Article 94’ in Erauw et al, above n 66, 484. 396   Van Asbroeck and Cock, above n 78, 205. 397   A large consensus, however, exists that limited waivers in relation to the exercise of certain attributes of moral rights in strictly defined situations are enforceable provided the waiver complies with the usual formal requirements. See, eg, MC Janssens, ‘Morele rechten: een algemeen overzicht’ [‘Moral Rights: A General Overview’] in E Cornu (ed), Bande dessinée et droit d’auteur (Brussels, Larcier, 2009) 19 (para 20); F Gotzen, ‘Le droit moral dans la nouvelle loi belge relative au droit d’auteur et aux droits voisins’ (1995) Ingénieur Conseil – Intellectual Property 140. 398   Art 19 defines habitual residence for companies and other bodies, incorporated or not, as ‘the place of central administration’, while the habitual residence of a natural person acting in the course of their business activity is defined as being their ‘principal point of business’. For contracts concluded in the course of operations of a 394 395

Belgium  415 In relation to copyright licence (or assignment) agreements, such as the one at hand, it has already been observed that, in many cases, it will in practice be difficult to identify one or ‘the’ most characteristic performance:399 would it be the granting of permission, or the act of transfer on behalf of the author or the obligation to exploit on behalf of the licensee?400 Even though Belgian doctrine is inclined towards the latter solution in cases where the licensee has an obligation to exploit the rights,401 it is not excluded that a Belgian court may decide that in this particular case, it is not possible to identify the most characteristic performance. The court may then have recourse to Article 4.4 and apply ‘the law of the country with which the contract is most closely connected’.402 Unfortunately, in this respect many connecting factors can be identified in relation to our contract (country of the authors, country of the distribution, country of the establishment of the music publisher, country for which protection is claimed, etc). The court will have to determine the closest of these connecting factors which will involve an ad hoc examination of the particular circumstances of the dispute.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking it to recognise and enforce the foreign judgment.

Case 10(1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (i)  Judgment given in another Member State: application of the provisions of the Brussels I Regulation The basic rule is that judgments given in a Member State shall automatically be recognised in any other Member State. According to Article 35.3 of the Brussels I Regulation, the court may not review the jurisdiction of the court of the Member State of origin.403 branch, agency or any other establishment, the habitual residence will be the place of the branch, agency or other establishment. In the case at issue, it is not known where the residence of the claimant or the plaintiff is situated. Emphasis added. 399   Torremans, above n 250, 550; Van Asbroeck and Cock, above n 78, 211 et seq. 400   Payment of royalties or any other form of financial compensation is a general characteristic of most contracts and will therefore not qualify as the most characteristic performance; Torremans, above n 250, 545 with reference to the standard work on the subject, E Ulmer, Intellectual Property Rights and the Conflict of Laws (Deventer, Kluwer, 1978). 401   This is in particular sustained in relation to copyright exploitation contracts in view of several articles in the Belgian Copyright Act that impose special obligations upon the assignee or publisher; Van Asbroeck and Cock, above n 78, 212. These latter authors, however, argue against the majority viewpoint and submit that the most characteristic performance takes place on the side of the licensor or assignor. 402   Torremans, above n 250, 542. In this interesting contribution, the author attempts to apply the aforementioned provisions to the different forms of contracts that are regularly used in relation to the licensing or transfer of patents, trade marks and copyright. His conclusion is that recourse will often have to be made to Arts 4.3 and 4.4 to define ‘the closest connection’ which, in practice, will most likely result in the application of the lex loci protectionis (ie, the same law as the one which is applicable to the non-contractual aspects). 403   See Case C-7/98 Dieter Krombach v André Bamberski [2000] ECR I-1956: the court of the state in which enforcement is sought cannot review the accuracy of the findings of law or fact made by the court of the state of origin (para 29).

416  Marie-Christine Janssens Some exceptions to this pivotal rule exist, including the situation whereby the judgment to be enforced would conflict with the rule of exclusive jurisdiction in relation to industrial property rights set forth in Article 22.4.404 This rule imposes an exclusive jurisdiction rule where the action relates to ‘the registration or validity of patents, trademarks, designs or other similar rights’.405 This provision, however, does not deal with the question of ‘original ownership’ as such, or with the related question of the entitlement to the patent.406 Regarding these issues the normal jurisdiction grounds remain applicable. Hence, where the foreign judgment refrains from deciding on the validity or the registration of the patent and merely relates to original ownership, the Belgian court will have to recognise it. The exception relating to public policy407 seems not applicable in this case, even if it would appear that the court erred in relation to the determination of the choice of law rule (lex loci protectionis). Support for this conclusion can be found in the holding of the ECJ in the Renault case that dealt with a design law dispute. The Court held that ‘recourse to the clause on public policy . . . can be envisaged only where recognition or enforcement of the judgment delivered in another Contracting State would be at variance to an unacceptable degree with the legal order of the State in which enforcement is sought inasmuch as it infringes a fundamental principle’. The Court went on to emphasise that ‘in order for the prohibition of any review of the foreign judgment as to its substance to be observed, the infringement would have to constitute a manifest breach of a rule of law regarded as essential in the legal order of the State in which enforcement is sought or of a right recognised as being fundamental within that legal order’.408 One should not forget that the rules in the Brussels I Regulation are founded on ‘the mutual trust in the administration of justice in the European Communities’,409 which will contribute to the principle of legal certainty that is pursued by the system. (ii)  Judgment given in a non-EU (EFTA) state: application of the provisions of the CPIL The answer would be the same as under (i). The non-recognition ground in relation to decisions over the validity and registration of an industrial property right provided in Article 95 of the CPIL does mention the issue of initial ownership.410

  See above, para 81.   See above, para 52. 406   See Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663. In this case concerning an entitlement to a patent, the Court pointed out that a very clear distinction exists ‘between jurisdiction in disputes concerning the right to the patent . . . and jurisdiction in disputes concerning the registration or validity of a patent’ (para 27). Where ‘the dispute does not itself concern the validity of the patent or the existence of the deposit or registration, there is no special reason to confer exclusive jurisdiction . . . and consequently such a dispute is not covered by Article 22.4’ (para 25). 407   See above, para 81. 408   Case C-38/98 Renault SA v Maxicar SpA and Orazio Formento [2000] ECR I-3009, para 30. In this case the Court decided that recognition of a decision emanating from a French court cannot be refused solely on the ground that national or Community law in relation to design law was misapplied in that decision. In the disputed decision, a French Court of Appeal had recognised the existence of an intellectual property right in body parts for cars and had conferred on the holder of that right protection by enabling him to prevent third parties trading in another Contracting State from manufacturing, selling, transporting, importing or exporting in that Contracting State such body parts. 409   Recital (16) Brussels I Regulation. 410   See above, para 84. 404 405

Belgium  417 Case 10(2)  Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in registry of a recognising country? If the decision is recognised, the court is not allowed to review the judgment as to its substance. Case 10(3)  Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority? (i)  Enforcement of a judgment given in another Member State411 While under the system of the Brussels I Regulation recognition of a decision is ‘automatic’, its enforcement through the issuance of a decision requires some procedural steps, albeit very minor and formal in nature.412 The unilateral exequatur procedure involves an application for a declaration of enforceability which has to be submitted to the court of first instance as is provided in Articles 38 and 39 of the Brussels I Regulation.413 The applicant must give an address for service of process within the area of jurisdiction of the court applied to. The application shall include a copy of the judgment in a form that satisfies the conditions necessary to establish its authenticity (Art 53) as well as the certificate prescribed in Article 54 – ie, using the standard form attached to the Regulation – that has to be produced by the court that gave the judgment. The Belgian court can, however, decide to dispense with the latter requirement. The court may – and this regularly occurs in Belgium – decide that a translation of the judgment or the certificate is produced. Belgium has not adopted specific supplementary provisions regarding the procedure for making the application. The recognition is affected by the judges in first instance courts on the basis of an accelerated (written) procedure. The court shall ‘immediately’414 render a decision declaring the foreign judgment enforceable on completion of the formalities described above. Hence, a decision is indeed required but its nature is ‘declarative’ rather than ‘substantial’.415 Against such a decision, an appeal can be lodged with either the court of first instance (regarding an appeal by the defendant) or the court of appeal (regarding an appeal by the applicant) (Art 43). (ii)  Enforcement of a judgment given in a foreign (non-EFTA) state The procedural formalities for the enforcement of foreign decisions laid down in the CPIL (Art 25 et seq) are very similar to the Brussels I Regulation. These rules have been described above, 2.3.4.2.

  See also above, paras 80 et seq.   Watté et al, above n 296, 170. 413   Jurisdiction is given to the court of the place of domicile of the party against whom enforcement is sought or of the place of enforcement (Art 39.2). 414   See Art 41 of the Brussels I Regulation. 415   Watté et al, above n 296, 170. 411 412

418  Marie-Christine Janssens

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seise infringing goods. Assume that both A and B are resident in your country and the main infringing activities take place there.

Case 11(1)  Would a court of your country have jurisdiction to issue provisional measures/ injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? At the outset, the author observes that, where both the plaintiff and the defendant have their residence in Belgium and where the main infringing activities take place in Belgium, the question in relation to jurisdiction (only) will not involve a private international law issue sensu stricto. Hence, the Belgian court will not need to turn to the provisions of the Brussels I Regulation and can apply the normal provisions of the Belgian Code of Civil Procedure which provides for the territorial jurisdiction of the court of the place of the defendant’s domicile. This court will, of course, be in a position to order provisional and protective measures under the rules of internal law. In principle, these orders can even have extraterritorial effects. (However, it would have to be seen whether they are enforceable in the relevant foreign countries.) It can further be observed that an application of the specific rules that govern Benelux trade marks, on the one hand, and Community trade marks, on the other hand, will also lead to the same conclusion, ie, allowing courts to assume jurisdiction to order provisional measures with a trans-border effect. (i) Assuming that claimant A is the proprietor of a Benelux trade mark In this case, the Belgian court will apply the rules on jurisdiction laid down in the Benelux Convention on Intellectual Property (BCIP) (see para 19). These rules, which can be found in Article 4.6 of the BCIP, are founded on the following principles: 1 the validity of choice of court agreements is confirmed; 2 territorial jurisdiction is determined by the address for service of the defendant or by the place where the obligation in dispute has arisen, or has been or should be enforced416; 3 where the criteria mentioned above are insufficient to determine territorial jurisdiction, the claimant may bring the case before the court of his address for service or residential address, or, if he has no address for service or residential address in Benelux territory, before the court of his choice, in either Brussels, the Hague or Luxembourg. Benelux courts have to apply these mandatory rules ex officio and are required to expressly confirm their jurisdiction in the decision.417 416   These grounds apply alternatively, at the choice of the claimant: F Gotzen and MC Janssens, Handboek Merkenrecht [Handbook of Trade Mark Law] (Brussels, Bruylant, 2008) 284. 417   The application of these rules in practice does not seem to raise problems except in relation to declarations of non-infringement. It is submitted that, regarding the latter claims, the criterion of ‘the place where the obligation in dispute has arisen, or has been or should be enforced’ cannot constitute a connecting factor for the purpose of jurisdiction; Roox, above n 84, 1560–61.

Belgium  419 Applying these rules to the present case, a Belgian court will assume jurisdiction for the allegedly infringing acts because the defendant has its residence in Belgium and, alternatively, because these acts take place in Belgium. This court can order an injunction – in a final as well as in a provisional manner – with respect to the infringing acts. Article 4.6 of the BCIP does indeed not distinguish between provisional and final measures, the particular nature and procedural rules of which are to be governed by the internal law of each of the three Benelux countries. According to settled case law by the Benelux Court of Justice, the decision rendered in one of the three states will automatically have a cross-border effect into the other two Benelux states, unless it contains an express stipulation to the contrary.418 Hence, should A only own trade mark rights in Benelux, the court will refuse to extend the effects of its decision to any country outside Benelux. (ii)  Assuming that claimant A is the proprietor of a Community trade mark In this case, the Belgian court will apply the rules on jurisdiction laid down in Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community Trade Mark (see paras 23 et seq). According to Article 96 of the CTR, only the Brussels Commercial Court can assume jurisdiction for the allegedly infringing acts where the defendant has its residence in Belgium. Regarding provisional measures, the application of Article 31 of the Brussels I Regulation has explicitly been set aside by Article 94.2(a) of the CTR. The CTR has its own rule in relation to provisional and protective measures which is laid down in Article 103 of the CTR. This rule includes a ‘renvoi’ to the Member States’ internal law regarding the nature of the measures (‘as may be available under the law of that State in respect of a national trade mark’). Where the defendant has its domicile in Belgium, the Belgian court can grant such measures with a cross-border effect into all other EU Member States pursuant to Article 103.2.419 Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)? (i)  Assuming that the defendant has its residence in Germany where the acts of infringement occur The Belgian court will examine its possible jurisdiction on the basis of the Brussels I Regulation. It will immediately be obvious that the court has no jurisdiction over the main dispute. However, the court could apply Article 31 of the Brussels I Regulation, which provides for a special jurisdiction rule in relation to provisional and protective measures (independent from Art 2 or other general jurisdiction rules). With reference to the ECJ’s decision in 418   Benelux Court of Justice, 13 June 1994, Renault v Reynolds, (1994–95) Rechtskundig Weekblad 323. See comments by L De Gryse, ‘De territoriale reikwijdte van vonnissen in merkenzaken’ [‘The territorial scope of decisions in trade mark cases’] (1994–95) Rechtskundig Weekblad 1184–89. This rule applies to validity claims, infringement matters, declarations of non-infringement and any other matter of substantial trade mark or design law. 419   The Belgian court would also have jurisdiction to render a final cross-border injunction with effect in all the Member States (Art 98.1 of the CTR). Only if jurisdiction is based upon the place of the infringement, shall such relief be limited to the state where the court sits (Art 98.2 of the CTR).

420  Marie-Christine Janssens Van Uden 420 Belgian courts would, in principle, agree to order measures that have a crossborder effect in other countries where the infringement occurs (above, para 49). In its Denilauler decision, the ECJ emphasised that the granting of this type of measure requires particular care on the part of the court in question and a detailed knowledge of the actual circumstances in which the measures sought are to take effect.421 In the Van Uden decision, the ECJ therefore concluded that the application of Article 31 is conditional on, inter alia, the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought.422 In the present case, assuming that trade mark protection does not extend to Belgian territory, the Belgian court will decline to grant an interim injunction. The ECJ has, indeed, made it clear that Article 31 of the Brussels I Regulation cannot justify measures that would produce solely extra-territorial effects.423 The decision might be different if the order would, albeit partly, produce an effect in the forum. The question might arise whether the court would accept jurisdiction if the claimant only seeks protective measures aimed at obtaining information and evidence (eg, by initiating the unilateral ‘provisional seizure’ procedures described above, para 7). With some caution, the author tends to answer this question in the negative in view of the ECJ’s ruling in St Paul Dairy.424 In this case, which only related to a measure ordering the hearing of a witness, the ECJ decided that such a measure is not covered by the notion of provisional measures used in Article 31. It is not entirely clear today 425 – and in view of the 2004 Enforcement Directive even questionable – whether this holding would also extend to the so-called ‘provisional seizure’ proceedings. On the other hand, it should be borne in mind that such protective measures, which are ordered without the defendant being summoned to appear, fall outside the scope of the recognition and enforcement system of the Brussels I Regulation.426 (ii)  Assuming that country Y is located outside the EU (eg, Belgian claimant owning a Japanese trade mark that is infringed upon in Japan) None of the rules mentioned above would be applicable and the Belgian court will have to seek recourse to the provisions of its own private international law (CPIL). In particular Article 10 of the CPIL could be relied upon which provides that Belgian courts have jurisdiction to order provisional or precautionary measures even to matters which are outside the competence of the Belgian courts and, hence to situations where these courts cannot grant final relief (see above, para 57). However, the text of Article 10 includes two essential conditions for its application. First, this provision only applies in

420   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091. 421   Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553, para 15. In the next paragraph, the Court held that the courts of the place where the assets subject to the measures sought are located are those best able to assess the circumstances which may lead to the grant or refusal of the measures sought. 422   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091 423  See Denilauler and Van Uden decisions mentioned in nn 421 and 422. 424   Case C-104/03 St Paul Dairy Industries NV v Unibel Exser BVBA [2005] ECR I-3481. 425   2009 Report on Regulation 44/2001, above n 125, 8. 426   Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553. See above, para 81.

Belgium  421 ‘urgent matters’ and, secondly, the measures asked for may only pertain to persons or goods situated in Belgium at the moment of the introduction of the claim.427 Case 11(2)  Could a court issue an injunction/protective measure if the trade mark for which the protection is sought was registered abroad? The answer to this question has been discussed above. Case 11(3)  Would a court in your country require the person seeking issuance of provisional measures to provide a guarantee? Article 851 of the Belgian Code of Civil Procedure regulates the issue of cautio judicatum solvi.428 It provides that, unless their relevant countries have agreed to the contrary in a (bilateral or other) Convention,429 all foreign claimants are obliged to provide a guarantee upon the request of the defendant in relation to possible damages or other costs that could result from the proceedings. This rule does not apply in relation to claimants from an EU (or EFTA) country, as it would be contrary to the basic principle of non-discrimination laid down in Article 18 of the EC Treaty.430 Reference should further be made to Article 1369bis/3 of the Code of Civil Procedure that regulates the descriptive seizure procedure (see above, para 7). Because of the ‘sensitive’ nature and possible misuse of this unilateral procedure, the court granting the order may impose upon the claimant the obligation to give a previously determined amount in consignation to ensure compensation for any prejudice suffered by the defendant. This rule applies irrespective of the nationality or residence of the claimant. It transposes the mandatory provision contained in Article 7 section 2 of the 2004 Enforcement Directive.431 Case 11(4)  Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? In the Tatry decision,432 the ECJ held that specialised conventions preclude the application of the provisions of the Brussels I Regulation only in cases governed by the specialised convention and not in those to which it does not apply. Hence, where both the Benelux Convention on Intellectual Property and the Community Trade Mark Regulation are silent concerning the hypothesis of arbitration, the provisions of the Brussels I Regulation accordingly apply. Article 1.2(d) of this latter Regulation starts to make an exception, concerning its application, for disputes that are submitted to arbitration.

427   This condition is satisfied at the moment of the introduction of the claim. Relocation of the goods or persons during the proceedings or at the moment of the decision, will not impact on the jurisdiction ground; see Roox, above n 71, 150. 428   Neither the Benelux Convention nor the Brussels I Regulation contains special rules in this respect. 429   Belgium is party to a significant number of such conventions, which will not be enumerated here. The defendant will also be exempted from this obligation if he/she owns (sufficient) property in Belgium; see CFI Brussels 5 June 2009, (2010) Journal des Tribunaux 113. 430   Case C-20/92 Anthony Hubbard v Peter Hamburger [1993] ECR I-3777 431   This provision prescribes ‘that Member States shall ensure that the measures to preserve evidence may be subject to the lodging by the applicant of adequate security or an equivalent assurance intended to ensure compensation for any prejudice suffered by the defendant as provided for in paragraph 4’. 432   Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439.

422  Marie-Christine Janssens Regarding this provision the ECJ, in the earlier quoted Van Uden decision, has held that ‘where the parties have validly excluded the jurisdiction of the courts in a dispute arising under a contract and have referred that dispute to arbitration, there are no courts of any State that have jurisdiction as to the substance of the case for the purposes of the Convention [and that] consequently, a party to such a contract is not in a position to make an application for provisional or protective measures to a court that would have jurisdiction under the Convention as to the substance of the case’. 433 However, the Court then went on to indicate that, nevertheless, a court may be empowered under Article 24 (now Art 31 of the Brussels I Regulation) to order provisional or protective measures because this article explicitly allows for its application even if a court of another Contracting State has jurisdiction as to the substance of the case and provided that the subject-matter of the dispute falls within the scope ratione materiae of the Convention. At first sight this latter condition is not complied with as, under Article 1.2.d of the Brussels I Regulation, arbitration is excluded from its scope.434 With reference to the Reichert case435 the ECJ, however, observed that provisional measures are not in principle ancillary to arbitration proceedings but are ordered in parallel to such proceedings and are intended as measures of support. They concern not arbitration as such but the protection of a wide variety of rights. Their place in the scope of the Regulation is thus determined not by their own nature but by the nature of the rights which they serve to protect.436 The Court therefore concluded that, where the subject-matter of an application for provisional measures relates to a question falling within the scope ratione materiae of the Regulation, Article 31 remains applicable and may confer jurisdiction on the court hearing that application (even where proceedings have already been, or may be, commenced on the substance of the case before arbitrators437). In conclusion: where it will not be possible for a Belgian court to issue a final injunction, provisional injunctive relief may be obtained on the basis of Article 31 of the Brussels I Regulation. Case 11(5)  If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure? The author would submit that the Belgian court would consider a temporary injunction to be a substantive measure. According to the ECJ, the expression ‘provisional, including protective, measures’ must be understood as referring to measures which, in matters within the scope of the Regulation, are intended to preserve a factual or legal situation, so as to safeguard rights the recognition of which is sought elsewhere from the court having jurisdiction as to the substance of the matter.438 Hence, where ‘interim relief ’ is intended to maintain the status quo or to safeguard certain rights, and where such relief will only be granted if the claimant has success433   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091; see in particular, para 24 et seq. 434  ibid. ‘By that provision, the Contracting Parties intended to exclude arbitration in its entirety, including proceedings brought before national courts’ (para 31). 435   Case C-261/90 Mario Reichert, Hans-Heinz Reichert and Ingeborg Kockler v Dresdner Bank AG [1992] ECR I-2149. 436   Van Uden decision, para 33. 437   Van Uden decision, para 34 and decision point 3. 438   ibid. Case C-261/90 Mario Reichert, Hans-Heinz Reichert and Ingeborg Kockler v Dresdner Bank AG [1992] ECR I-2149.

Belgium  423 fully sustained the burden of proving the prima facie validity of the IP rights relied upon, it would be difficult to characterise such measures as ‘procedural’ in nature. The author admits that this conclusion is, partly, inspired by the fear that by characterising an interim injunction as procedural rather than substantive, this would allow the court to use the lex fori. The author personally considers that this would make no sense in relation to a procedure that has increasingly become a ‘community’ matter.

Canada JOOST BLOM*

Contents 1. Overview of Canadian Law on Cross-border Enforcement of Intellectual Property Rights...... 426 1.1. Legal Sources and Institutional Competence...................................................................... 426 1.1.1 Intellectual Property............................................................................................... 426 1.1.2 International Jurisdiction....................................................................................... 429 1.1.3 Choice of Law......................................................................................................... 437 1.1.4 Recognition and Enforcement of Foreign Judgments and Interim Measures.... 438 1.2. Intellectual Property............................................................................................................. 441 1.2.1 Jurisdiction............................................................................................................. 441 1.2.2 Choice of Law......................................................................................................... 445 1.2.3 Enforcement of Judgments.................................................................................... 447 2. Case Studies.................................................................................................................................... 449 Case 1. General/special grounds of jurisdiction....................................................................... 449 Case 2. Subject-Matter Jurisdiction.......................................................................................... 453 Case 3. Consolidation of Proceedings....................................................................................... 455 Case 4. Choice of Court............................................................................................................. 457 Case 5. Parallel proceedings....................................................................................................... 459 Case 6. Principle of Territoriality (Choice of Law).................................................................. 460 Case 7. Infringement of Intellectual Property Rights............................................................... 463 Case 8. Applicable Law to Initial Ownership............................................................................ 464 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 467 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 469 Case 11. Provisional Measures and Injunctions......................................................................... 471 Case 12. Securities in Intellectual Property................................................................................ 473

*  Faculty of Law, University of British Columbia.

426  Joost Blom

1  Overview of Canadian Law on Cross-border Enforcement of Intellectual Property Rights 1.1  Legal Sources and Institutional Competence 1.1.1  Intellectual Property Although most matters of private law are within the legislative authority of the legislatures of the Canadian provinces, intellectual property – as far as its major branches are concerned – is federal law. In keeping with the general aim of the Constitution Act 1867 to create a single economic entity, the legislative powers most critical to a modern economy, as understood in the second half of the nineteenth century, were vested in the federal Parliament. These include the ‘regulation of trade and commerce’,1 ‘banking’,2 ‘bills of exchange and promissory notes’,3 ‘bankruptcy and insolvency’,4 ‘patents of invention and discovery’;5 and ‘copyrights’.6 Trade marks are not mentioned, but Canada’s trade mark legislation has always been federal, on the assumption that it falls under the trade and commerce power.7 Canada’s intellectual property law is therefore mostly embodied in three federal statutes: the Copyright Act,8 the Patent Act9 and the Trade-marks Act.10 Other federal statutes on more narrowly focused areas of intellectual property include the Industrial Design Act,11 the Integrated Circuit Topography Act12 and the Plant Breeders’ Rights Act.13 The law of trade secrets and the tort of passing-off 14 have not been the subjects of legislation,15 and so are still governed by the common law in each province.16   Constitution Act 1867, s 91(2).   ibid, s 91(15). 3   ibid, s 91(18). 4   ibid, s 91(21). 5   ibid, s 91(22). 6   ibid, s 91(23). 7   The federal power to regulate trade marks has never been directly contested. See Kirkbi AG v Ritvik Holdings Inc [2005] 3 SCR 302, 205 SCC 65, paras 15–19. That case specifically upheld the federal power to create a statutory civil remedy for passing-off in s 7(b) of the Trade-marks Act RSC 1985, c T-13, on the basis that it ‘rounded out’ the (otherwise unchallenged) federal scheme for regulating registered trade marks by providing a civil remedy for the wrongful use of another person’s unregistered trade mark. Passing-off is, for the rest, a tort under the common law of the provinces. It consists of using a name or other identifier for one’s own goods or services that misleads a significant portion of the public into thinking they are associated with another producer or supplier. In Quebec law, concurrence déloyale falls within the scope of the general principle of delictual civil responsibility in the Civil Code of Quebec, SQ 1991, c 64 (cited hereafter as CcQ), Art 1457, whilst its content has been largely derived from the common law of passing-off: Ciba-Geigy Canada Ltd v Apotex Inc [1992] 3 SCR 120, 133. 8   RSC 1985, c C-42. 9   RSC 1985, c P-4. 10   RSC 1985, c T-13. 11   RSC 1985, c I-9. 12   SC 1990, c 37. 13   SC 1990, c 20. 14   See above n 7. 15   Because these two areas are closer to the law of tort than they are to any national economic system, federal attempts to legislate on them would be open to challenge, on the basis that they properly belong under ‘property and civil rights within the province’ in the Constitution Act 1867 s 92(13), which is the main source of provincial authority over private law. 16   Because the Supreme Court of Canada is the court of final appeal in matters of provincial as well as federal law, the common law of the nine common law provinces and the three territories is uniform except where altered by provincial statute, or where divergent case law between provinces has not yet been considered by the Supreme 1 2

Canada  427 Canadian intellectual property law originally developed against the background of law inherited from the United Kingdom, but has not retained any close correspondence with the law there. It has also, of course, been shaped by the international treaties to which Canada is a party. Copyright legislation existed in the British North American colonies that became Canada.17 Shortly after Confederation, which vested responsibility for copyright in the federal Parliament, Canada passed the 1868 Copyright Act.18 This did not, however, supplant British copyright law, which continued to apply to Canada, concurrently with the Canadian statute, until both were replaced by the Copyright Act of 1921,19 which, heavily amended, continues as the current Act. The 1921 Act generally followed the British model, and the main features of the current Act still reflect its British origins.20 Canada has been a party to the Berne Convention in its own right since 1928 and, although Canada has participated in the revisions of the Berne Convention, Canadian law only recently moved beyond the Paris revision of 1934.21 Canada ratified and implemented the 1971 Paris revision in 1998, the same year that Canada became a party to the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (1961). Changes to Canadian law were also made as a result of Canada’s entry into the Free Trade Agreement with the United States (amended in 1989) and its successor, the North American Free Trade Agreement (amended in 1994), and as a consequence of the TRIPS Agreement,22 when Canada became a member of the World Trade Organization (amended in 1996). Canada has signed, but not ratified, the WIPO Copyright Treaty (WCT) (1996) and the WIPO Performances and Phonograms Treaty (WPPT) (1996), both of which entered into force among state parties in 2002. Federal legislation to amend the Copyright Act to bring it into conformity with the latter two treaties, in anticipation of Canada’s ratification of them, was introduced in 2004–0523 and again in 2007– 08,24 but both bills died at the end of their respective sessions of Parliament. Consultations were held in July–September 2009 in preparation for a fresh legislative initiative. Canadian trade mark legislation was enacted, in the pre-Confederation Province of Canada (now Ontario and Quebec), as early as 1860.25 Canadian federal legislation was first enacted in 1868. An attempt from 1932 to 1954 to regulate trade marks with a broader unfair competition statute26 was not a success, and the current Trade-marks Act27 returned Canadian law to traditional lines, influenced primarily by the concepts of British law. The

Court. The judge-made law of Quebec, however, is distinct from the common law elsewhere in Canada, and matters of private law are generally subject to the Civil Code of Quebec, SQ 1991, c 64. 17   The history of Canadian copyright legislation is set out in JS McKeown (ed), Fox on Canadian Law of Copyright and Industrial Designs, 4th edn (Toronto, Thomson Carswell, 2007) (looseleaf) c 3; S Handa, Copyright Law in Canada (Markham, Ont, Butterworths, 2002) 53–56. 18   31 Vic, c 54. 19   SC 1921, c 24. 20   S Handa, Copyright Law in Canada (Markham, Ont, Butterworths, 2002) 53. 21   D Vaver, Copyright Law (Toronto, Irwin Law, 2000) 4. 22  Agreement on Trade-Related Aspects of Intellectual Property Rights, appended to the World Trade Organization Agreement (1994). 23   Bill C-60 of 2004–05 (1st Sess, 38th Plmt). 24   Bill C-61 of 2007–08 (2nd Sess, 39th Plmt). 25   For the history of Canadian trade mark legislation, see RS Jolliffe and AK Gill, Fox on the Canadian Law of Trademarks and Unfair Competition, 4th edn (Toronto, Carswell, 2002) at 1-3 to 1-12. 26   The Unfair Competition Act of 1932, which was repealed and replaced with the current statute as of 1954. 27   RSC 1985, c T-13.

428  Joost Blom Act has been remarkably stable, not having been substantially amended since 1954.28 As far as international agreements are concerned, Canada has since 1951 been a member of the Union of Paris (1883)29 and the Act reflects this fact by, inter alia, the provisions relating to the rights of owners of trade marks that are used in another country of the Union30 so as to be made known in Canada.31 Unlike copyright and trade marks, the Canadian law of patents has borrowed extensively from the United States system as well as from the British. The first federal Patent Act of 1869 was modelled upon the existing United States patent legislation of 1836 and its drafting reflects the American premise that the grant of a patent is a matter of right, whereas under United Kingdom law it is in theory a matter of royal prerogative.32 However, owing to the fact that the American law is itself derived from British law, the influence of United Kingdom cases on the interpretation of the Canadian Act has been strong.33 The Patent Act34 has also been substantially shaped by international conventions.35 As already mentioned in connection with trade marks, Canada acceded to the Paris Convention for the Protection of Industrial Property (1883) in 1951. This introduced into the Patent Act the system for assuring patentees of priority based on the first foreign patent application made in another convention country, provided the Canadian application follows by no more than 12 months.36 In 1990 Canada became a party to the Patent Cooperation Treaty (PCT) (Washington 1970), which set up an international system with a uniform form of application and deemed simultaneous application in other countries as designated by the applicant at the time of filing. The Act was substantially amended in 1989 to implement the international standards in the PCT, notably the requirement for absolute novelty and a priority rule based on the ‘first to file’ principle.37 The intellectual property provisions of the North American Free Trade Agreement of 1992 were largely based on the provisions of the TRIPS Agreement, which was then in the final stages of negotiation. These provisions led to (among other changes) the substantial elimination of a system, long resented by brand-name drug manufacturers, by which patentees of products for use as medicine could be required to grant a compulsory licence at a fee fixed by a government agency.38 To round out the picture, the Industrial Design Act39 dates back, in its essentials, to the 1860s and is generally regarded as too narrow in its scope and inadequately integrated with the protection offered by copyright in designs.40 And the Integrated Circuit Topography 28   The only major change was the abolition of a system of registered users in favour of a general power of the trade mark owner to license others to use the mark without that use causing a loss of distinctiveness: SC 1993 c 15. 29   International Convention for the Protection of Industrial Property (Paris 1883). 30   Which now is deemed to include any WTO member: Trade-marks Act RSC 1985, c T-13, s 2 ‘country of the Union’. 31   ibid, s 5. 32   HG Fox, The Canadian Law and Practice Relating to Letters Patent for Inventions, 4th edn (Toronto, Carswell, 1969) 5. 33   Ibid, 6. 34   Now RSC 1985, c P-4. 35   See RT Hughes and DP Clarizio, Hughes & Woodley on Patents (Markham, Ont, LexisNexis, 2005) (looseleaf) § 3. 36   Patent Act RSC 1985, c P-4, s 28.1. The protection is not limited to Paris Union countries but extends to any country that by international agreement grants Canadian applicants similar protection. 37   See ibid ss 28.1–28.2; RT Hughes and DP Clarizio, Hughes & Woodley on Patents (Markham, Ont, LexisNexis, 2005) (looseleaf) § 1. 38   Patent Act RSC 1985, c P-4, s 39(4), was repealed by the Patent Act Amendment Act SC 1993, c 2, s 3. 39   Industrial Design Act RSC 1985, c I-9. 40   M Tawfik, ‘When Intellectual Property Rights Converge: Tracing the Contours and Mapping the Fault Lines “Case by Case” and “Law by Law” ’, in Y Gendreau (ed), An Emerging Intellectual Property Paradigm: Perspectives from Canada (Cheltenham, Edward Elgar Publishing, 2008) 267, 271–73.

Canada  429 Act41 and the Plant Breeders’ Rights Act42 were both enacted in 1990 as part of the adjustment of Canadian law to protect forms of intellectual property recognised elsewhere, a process of adjustment prompted by the 1987 Free Trade Agreement with the United States (later subsumed in the North American Free Trade Agreement) and, later, by the WTO and TRIPS Agreements. Administrative responsibility for the intellectual property statutes rests with the Canadian Intellectual Property Office.43 Within that office are the Commissioner of Patents and the Registrar of Trade-marks, the legally responsible officials under those two statutes. The Patent Appeal Board and the Trade-marks Opposition Board are administrative tribunals that review the decisions made by the Commissioner and Registrar, respectively. On the copyright side, the Copyright Board is not a quasi-judicial but an economic regulatory entity, which is responsible for, among other things, setting the royalty tariffs for public performances and telecommunication to the public of works, the copyright to which is administered by a collective society.

1.1.2  International Jurisdiction 1.1.2.1.  Allocation of Jurisdiction among Canadian Courts Judicial jurisdiction in matters of intellectual property is, for most things, concurrent between the Federal Court of Canada and the courts of the provinces. The Federal Court of Canada has a much narrower jurisdiction than its United States counterpart. There is no equivalent, for example, to ‘diversity’ jurisdiction based simply on the fact that the parties to litigation are domiciled in different states or are foreigners, under which the American federal courts can decide matters governed by state law. The Federal Court has no inherent jurisdiction, which means that its jurisdiction in a particular matter must be expressly granted by some provision of federal law and must be for the resolution of some matter that is governed by federal law. 44 The intellectual property statutes grant the Federal Court exclusive jurisdiction in various matters, mainly having to do with the actual administration of the Acts, such as applications to rectify a registry, appeals from decisions of officials in relation to applications,45 and import prohibitions.46 Aside from these specific grants of exclusive jurisdiction, the Court has concurrent jurisdiction with the courts of the provinces in any other case ‘in which a remedy is sought under the authority of an Act of Parliament or at law or in equity respecting any patent of invention, copyright, trade mark, industrial design or topography’.47 In practice, the courts of the provinces are usually the forum for litigation involving both intellectual property and non-intellectual property claims, such as contract or tort claims. This is because the Federal Court has no jurisdiction to deal with the contract or tort aspects of the case,48 whereas the court of the province can deal with the intellectual   Integrated Circuit Topography Act SC 1990, c 37.   Plant Breeders’ Rights Act SC 1990, c 20.   See online: Canada, Intellectual Property Office, www.cipo.ic.gc.ca. 44  See Peak Innovations Inc v Meadowland Flowers Ltd (2009) 75 CPR (4th) 359, 2009 FC 661 (no jurisdiction in action for declaration of non-infringement of Industrial Design Act because the statute did not provide for such a cause of action). 45   Federal Courts Act RSC 1985, c F-7, s 20(1); Patent Act RSC 1985, c P-4, ss 17, 19.2, 31(6), 41, 52, 60(1), 71. 46   Copyright Act RSC 1985, c C-42, s 44.1–44.2. See also Copyright Act RSC 1985, c C-42, s 57(4). 47   Federal Courts Act RC 1985, c F-7, s 20(2). See also Copyright Act RSC 1985, c C-42, s 37. 48   See, for example, Mobilevision Technology Inc v Rushing Water Products Ltd (1984) 1 CPR (3d) 385 (FCTD) (no jurisdiction because copyright licensee’s only claim was in breach of contract). 41 42 43

430  Joost Blom property rights along with the others.49 Where no such complication exists, which is the more common situation, litigants usually bring intellectual property actions in the Federal Court because its greater experience in such matters is regarded as giving it special expertise.50 1.1.2.2  International Jurisdiction The rules for the jurisdiction of Canadian courts51 must be divided between the rules defining the courts’ jurisdiction, which are matters of law, and the ability to decline to exercise jurisdiction that the court possesses, which is a matter of discretion. The first issue is often described as jurisdiction simpliciter. The second is usually labelled forum non conveniens, because that is the issue in the great majority of cases in which the court’s discretion to decline jurisdiction is invoked. (Forum non conveniens will be discussed further below.) (a)  Jurisdiction simpliciter The rules defining the court’s jurisdiction simpliciter are found in different sources, depending on the jurisdiction. 1. For the common law provinces and territories except British Columbia, Saskatchewan and Nova Scotia, jurisdiction is essentially defined by the ability of the plaintiff to serve the defendant with process in order to initiate the action. If the rules of court of the relevant province permit service, the action can be validly commenced and the court ipso facto has jurisdiction. This treatment of the procedural rules for service as impliedly embodying substantive rules of jurisdiction goes back to the approach historically followed in England. The same principle applies in the Federal Court. For these jurisdictions, there is no definition of jurisdiction other than the rules for service of process. (These jurisdictions collectively will be referred to as the ‘service rule jurisdictions’.) 2. British Columbia, Saskatchewan and Nova Scotia have enacted the uniform Court Jurisdiction and Proceedings Transfer Act (‘CJPTA’),52 a statute originally proposed by the Uniform Law Conference of Canada in 1994. Several more provinces are likely to adopt the CJPTA in the near future. The Act defines the court’s jurisdiction, which it labels ‘territorial competence’, in substantive rather than procedural terms. The purpose of the Act was to articulate the rules for jurisdiction in a more transparent and systematic way, not to alter the substance of them in any major respect. The actual jurisdictional practice in these provinces therefore parallels that in the other common law jurisdictions. (These three provinces will be referred to as the ‘CJPTA jurisdictions’.) 49  In Cheap Tickets and Travel (Canada) Inc v Emall.ca Inc 2005 BCSC 815, a trade mark dispute brought in the British Columbia Supreme Court was not stayed even though a concurrent claim was brought before the Federal Court for expungement of the registered trade mark in question. There was no reason why the British Columbia action, which was for passing-off as well as infringement of the trade mark, should wait on the expungement proceeding. 50   The Federal Court’s other main areas of jurisdiction are judicial review of federal administrative tribunals, claims against the federal Crown, maritime law, and federal tax law (with most of the first instance work being done by the Tax Court of Canada). The Federal Court of Appeal hears all appeals from the Federal Court and the Tax Court. 51   ‘Jurisdiction’, as used in this context, refers to international jurisdiction, not to subject-matter jurisdiction. 52   British Columbia (BC): SBC 2003, c 28; Saskatchewan (SK): SS 1997, c C-41.1; Nova Scotia (NS): SNS 2003 (2d Sess), c 2. The statutes are identical, except that BC’s does not include an initial section giving the short title of the Act, which means that the section numbers in the BC Act are one lower than those in the SK and NS Acts. Citations to the CJPTA in this paper will be to the BC Act indicated by CJPTA (BC).

Canada  431 3. Quebec has placed its rules for jurisdiction in Title Three of the Civil Code of Quebec, called ‘International Jurisdiction of Quebec Authorities’. 53 They resemble the rules in other provinces to some extent but differ from them in important respects. All the jurisdictions regard a party as subject to the court’s in personam jurisdiction54 if the party resides in the province. 55 The test for the nature of residence is stated somewhat differently for each group. For the service rule jurisdictions the test is whether the defendant can be served in the province, which means that even transitory presence is sufficient although unlikely to be exercised for reasons of forum non conveniens. For CJPTA jurisdictions the test is not mere presence but ordinary residence.56 For Quebec the test is domicile57 or residence.58 For corporations and other legal persons, the necessary connection – presence, ordinary residence, domicile or residence – is satisfied, for practical purposes, by having a place of business in the province.59 All the jurisdictions also agree in regarding a party as subject to the court’s jurisdiction if it submits (or, as the common law Canadian judges often call it, ‘attorns’) to the court’s jurisdiction.60 Submission includes defending a proceeding on the merits, commencing a proceeding in which a counterclaim is made, and agreeing to submit to the court’s jurisdiction.61 Where the different Canadian jurisdictions differ substantially is in the rules governing jurisdiction simpliciter in a proceeding against a defendant that is not in the province and has not submitted or agreed to submit to the court’s jurisdiction. The service rule jurisdictions define jurisdiction simpliciter in such cases through the rules for service ex juris. These differ somewhat among the provinces in this group. Most of them allow service ex juris without leave of the court for a claim that falls within a list of categories of claim that are connected with the province. Thus in each jurisdiction service 53   SQ 1991, c 64, Arts 3134–54. The Civil Code of Quebec, which came into force on 1 January 1994, replaced the Civil Code of Lower Canada, which dated from 1865. The earlier Civil Code did not contain equivalent jurisdictional rules because such express rules as existed (which in many respects were different from those in the CcQ) were found in the Code of Civil Procedure. 54  Jurisdiction in rem exists, in common law jurisdictions, only in admiralty matters. Jurisdiction in rem depends simply on the res, the vessel, being within the province or territory or, in the Federal Court, in Canada. Under Art 3152 CcQ, ‘A Québec authority has jurisdiction over a real action if the property in dispute is situated in Québec.’ 55   In this discussion ‘province’ is used for the sake of simplicity, but the term should be taken to include ‘territory’ and, in relation to the Federal Court’s jurisdiction, should be taken to mean ‘Canada’. 56  CJPTA (BC), s 3(a). 57   Domicile in the private international law of Quebec has a different meaning from the same term in the common law. The common law term includes a heavily weighted mental element relating to a person’s long-term intentions, whereas the Quebec term is based simply upon where the person has his or her principal establishment (Art 5 CcQ). Residence is defined in Art 77 CcQ as the place where a person ordinarily resides. 58   Art 3148(1) CcQ. 59   Service rule jurisdictions see J Walker, Castel & Walker Canadian Conflict of Laws, 6th edn (Markham, Ont, LexisNexis, 2005–) (looseleaf) § 11.3. R 135 of the Federal Court Rules, SOR98/106, simply authorises service on a defendant outside Canada by serving a person inside Canada whose services are used by the defendant to enter into contracts or business transactions in Canada. CJPTA jurisdictions: CJPTA (BC), s 6. Quebec: Art 307 CcQ (domicile of a legal person is at its head office) and Art 3148(2) CcQ (a legal person not domiciled in Quebec is subject to the Quebec authority’s jurisdiction if it has an establishment in Quebec and the dispute relates to its activities in Quebec). 60   In the service rule jurisdictions, a defendant who takes part in the proceeding (other than by objecting to jurisdiction) cannot thereafter raise objections to the court’s jurisdiction. In the CJPTA, submission to the court’s jurisdiction is expressly listed as one of the grounds for jurisdiction (CJPTA (BC), s 3(b)). 61   Service rule jurisdictions: see J Walker, Castel & Walker Canadian Conflict of Laws, 6th edn (Markham, Ont, LexisNexis, 2005–) (looseleaf) § 11.2. CJPTA jurisdictions: CJPTA (BC), s 3(b), (c) and (d). Quebec: CcQ Art 3148(4), (5).

432  Joost Blom ex juris is available if the claim is in respect of a tort committed in the province.62 Although they differ in detail, the rules in each province in this group generally permit service ex juris for claims for breach of contract if the breach or the making of the contract took place in the province or the contract was governed by the province’s law.63 Service ex juris is also typically authorised if the claim is against a person who is a ‘necessary or proper party’ to a proceeding properly brought against another person served in the province.64 A plaintiff whose claim does not fall within any of the categories in which service ex juris may be effected without leave, can apply to the court for leave to serve ex juris.65 The Federal Court Rules are the exception among service rule jurisdictions. There are no specific rules for when service ex juris is authorised. If a person resident outside Canada regularly enters into contracts or business transactions in Canada by using the services of a person resident in Canada, and a proceeding is brought in respect of such a contract or transaction, service on the Canadian resident is deemed to be service on the foreign resident.66 For the rest there is simply a rule that a document to be personally served outside Canada may be served in the same manner as a document to be served in Canada, or in the manner prescribed by the law of the jurisdiction in which service is to be effected.67 Leave to serve outside Canada is not required, but the defendant can seek to have service set aside on the ground that the claim is being proceeded with in another court or jurisdiction, or that for any other reason (such as forum non conveniens) it is in the interests of justice of justice that the proceedings be stayed.68 The CJPTA provides that a court has territorial competence in an action against a person that is not ordinarily resident in the province and has not submitted to the court’s jurisdiction, if ‘there is a real and substantial connection between British Columbia and the facts on which the proceeding against that person is based’.69 For the sake of giving some predictability the Act provides a list of categories of claim, derived from the service ex juris categories, in which the existence of a real and substantial connection with the jurisdiction is presumed. The presumption may be rebutted, but most of the categories are such that rebuttal is hard to imagine. The categories include a claim that ‘concerns a tort committed in’ the province,70 and a claim that ‘concerns contractual obligations, and (i) the contractual 62  See, for example, Ontario Civil Procedure R 17.02(g). The Rules of Civil Procedure are, in Ontario, regulations made under the Courts of Justice Act RSO 1990, c C.43; see RRO 1990, reg 194. 63   For example, Ontario Civil Procedure R 17.02(f) includes claims where ‘(i) the contract was made in Ontario, (ii) the contract provides that it is to be governed by or interpreted in accordance with the law of Ontario, (iii) the parties to the contract have agreed that the courts of Ontario are to have jurisdiction over legal proceedings in respect of the contract, or (iv) a breach of contract has been committed in Ontario, even though the breach was preceded or accompanied by a breach outside Ontario that rendered impossible the performance of the part of the contract that ought to have been performed in Ontario’. 64   For example, Ontario Civil Procedure R 17.02(o). 65   Alberta, still following the model of Order XI of the former English High Court Rules (as all the other service rule jurisdictions used to do), requires leave to serve ex juris in any of the listed cases and does not provide for service ex juris otherwise. The Alberta rules were under revision at the time of writing: see Rules of Court Statutes Amendment Act 2009, SA 2009, c 53, online: Legislative Assembly of Alberta, www.assembly.ab.ca/net/index. aspx?p=bills_status&selectbill=031; Alberta Law Reform Institute, Rules of Court Project: Final Report No 95 (Edmonton, Alberta Law Reform Institute, 2008), online: Alberta Law Reform Institute, www.law.ualberta.ca/alri/ docs/4.%20Final%20Report%2095.pdf. The proposed r 11.24 would make Alberta’s approach similar, but not identical, to that in the CJPTA jurisdictions (see ibid at 278–80). 66   Federal Court R 135. 67   Federal Court R 137(1). 68   Federal Courts Act RSC 1985, c F-7, s 50(1). 69   CJPTA (BC), s 3(e). 70   CJPTA (BC), s 10(g).

Canada  433 obligations, to a substantial extent, were to be performed in [the province], (ii) by its express terms, the contract is governed by the law of [the province], or (iii) the contract (A) is for the purchase of property, services or both, for use other than in the course of the purchaser’s trade or profession, and (B) resulted from a solicitation of business in British Columbia by or on behalf of the seller’.71 The rules of court of the CJPTA jurisdictions typically provide that service outside the province may be effected without leave if the claim falls into one of these categories in which a real and substantial connection is presumed, but only with leave in any other case.72 In Quebec, in actions of a patrimonial nature, a Quebec authority has jurisdiction where ‘a fault was committed in Quebec, damage was suffered in Quebec, an injurious act occurred in Quebec or one of the obligations arising from a contract was to be performed in Quebec’.73 The Supreme Court of Canada has interpreted ‘damage’ in Quebec fairly broadly by holding, in a case of delict, that it includes purely financial consequences and loss of commercial reputation felt by a business establishment in Quebec.74 There is no leave requirement for service on a person outside Quebec; there are only provisions on the mode of service.75 To summarise, the pattern in Canada is that jurisdiction simpliciter always exists as against a defendant that is resident (with some differences in borderline cases) in the province, or a defendant that agrees to submit to the jurisdiction or actually submits through participation in the proceeding. Jurisdiction simpliciter exists as against a defendant that is outside the province and does not submit, if the claim falls under one or more of the categories in which such jurisdiction does not require leave of the court,76 or if the court gives leave. (b)  Constitutional limits on jurisdiction simpliciter The rules described in the previous section operate within a constitutional framework that was only recently constructed by the Supreme Court of Canada. In 1990 the Court held for the first time that, as a matter of constitutional principle, the court of a province could not take jurisdiction over a non-resident defendant unless there was a ‘real and substantial connection’ between the defendant or the subject matter of the action and the province.77 This   ibid, s 10(e).   See, for instance, BC Rules of Court, BC Reg 221/90 as am, r 13(1), (3). 73   Art 3148(3) CcQ. 74   Spar Aerospace Ltd v American Mobile Satellite Corp [2002] 4 SCR 205, 2002 SCC 78. A factor in the case was that the physical harm, to the extent there was any, took place in outer space because the claim was for negligence leading to the malfunctioning of a satellite for which the Quebec business establishment had manufactured the communication payload. 75   Code of Civil Procedure (CCP), RSQ, c C-25, Art 123 (personal service or domiciliary service valid whether the person’s domicile or residence is in or outside Quebec; service by leaving at place of work valid for persons with no known domicile or ordinary residence in Quebec), Art 137 (special rule allowing any adult to effect service upon a person domiciled or resident elsewhere in Canada). 76   The exceptions being Alberta, which requires leave if the case is in one of the categories and does not permit service otherwise (see above n 65), and the Federal Court, whose rules permit service ex juris without leave in any type of case (see nn 66–67 above and accompanying text). 77   Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077, 76 DLR (4th) 256, as confirmed by Hunt v T & N Plc [1993] 4 SCR 289, 109 DLR (4th) 16. The only Supreme Court case applying this principle squarely to jurisdiction simpliciter is Spar Aerospace Ltd v American Mobile Satellite Corp [2002] 4 SCR 205, 2002 SCC 78. Although the point is largely academic, the Federal Court is not subject to the same constraint because its jurisdiction derives from federal legislative authority, which, unlike that of the provinces, extends to extraterritorial matters. It is not entirely clear whether traditional common law grounds for jurisdiction, such as presence within the jurisdiction, remain fully valid or whether they are now also subject to the ‘real and substantial connection’ 71 72

434  Joost Blom has given rise to a voluminous case law on whether, in the circumstances of a particular case, and irrespective of whether rules of court were satisfied, a real and substantial connection exists so as to support jurisdiction simpliciter. The flexible nature of this criterion, which has been said by the Supreme Court itself to be more a matter of ‘order and fairness’ than a ‘rigid test’,78 has imbued the jurisdiction simpliciter inquiry with many of the characteristics of the forum conveniens discretion, without actually displacing it.79 The CJPTA was developed by the Uniform Law Conference of Canada partly with the aim of mitigating the uncertainties produced by the addition of this constitutional overlay to the rules for jurisdiction simpliciter. The statute’s approach, as noted above, is to make the real and substantial criterion explicitly the sole basis for ‘territorial competence’ in a proceeding against a non-resident, non-submitting defendant, and fleshing out the criterion with a list of connections that are (rebuttably) presumed to meet the test. The statute does, however, include a ‘last resort’ provision that, even if a real and substantial connection with the province does not exist, a court may hear the proceeding if, essentially, there is no other forum in which the plaintiff can reasonably be required to bring the proceeding.80 It remains to be seen if the jurisdiction so conferred is constitutionally supportable.81 (c)  Forum non conveniens Given how wide the Canadian rules for jurisdiction simpliciter typically are, the concept of forum non conveniens assumes an important role. It mitigates a system that would otherwise grant litigants too ready access to Canadian courts and thereby over-foster a multiplicity of available forums. The forum non conveniens doctrine developed rapidly in the 1980s and 1990s, with the Canadian courts following the lead set by the English courts. Historically, the discretion to decline jurisdiction was exercised very sparingly where the defendant was served in the jurisdiction and the court therefore had jurisdiction ‘as of right’. The defendant could obtain a stay of the proceedings only by showing that the plaintiff ’s choice of forum was oppressive or vexatious, or otherwise an abuse of the court’s process. Even then, a plaintiff could avoid a stay by showing that depriving it of the right to sue in its chosen forum would cause an injustice to it.82 Forum conveniens played a role where the defendant was served ex juris because, to obtain leave to serve ex juris (as the English and Canadian rules formerly required), the plaintiff had to show that the case was a proper one to be heard in the forum. By 1986 these two quite disparate approaches, one for service in the jurisdiction and the other for service ex juris, were combined in England into an integrated doctrinal package.83 The discretion to stay an action against a defendant served in the jurisdiction was seen to perform the same function as the discretion to allow service ex juris, namely, to direct litigation into the forum ‘in which the case may be tried more suitably for the interests of all requirement. The Supreme Court made ambiguous remarks on the subject in Beals v Saldanha [2003] 3 SCR 416, 2003 SCC 72 para 37. Jurisdiction based on consent, at least, would seem to be sufficient per se: see Teja v Rai 2002 BCCA 16, 97 BCLR (3d) 44 para 21; Litecubes LLC v Northern Light Products Inc 2009 BCSC 181 paras 45–61. 78   Hunt v T & N Plc ibid, 325 SCR, 41–42 DLR. 79   See especially Muscutt v Courcelles (2002), 213 DLR (4th) 577 (Ont CA). 80   CJPTA (BC), s 6. The provision was borrowed from Art 3136 CcQ. 81   This would probably require ‘order and fairness’ to be regarded as an autonomous, constitutionally sufficient ground even in the absence of any ‘real and substantial connection’ – a debatable point. 82   St Pierre v South American Stores (Gath & Chaves) Ltd [1936] 1 KB 382, CA. 83   Spiliada Maritime Corp v Cansulex Ltd (1986), [1987] AC 460, HL. The stages in this evolution are well set out by Esson JA in 472900 BC Ltd v Thrifty Canada Ltd (1998) 168 DLR (4th) 602 (BCCA).

Canada  435 the parties and the ends of justice’.84 The difference between the two situations became merely one of onus. So, if a defendant was served in the jurisdiction, it was for the defendant to persuade the court to stay the action on the ground that another forum was clearly more appropriate. If the plaintiff wished to serve the defendant ex juris, it was for the plaintiff to persuade the court that the local forum was clearly more appropriate than any other. These developments were soon accepted by Canadian courts, although (as noted above) the procedural context in most provinces differed from the English model in that service ex juris in the listed categories of case did not require leave. This meant that the question of onus in cases of service ex juris was, and continues to be, less clear-cut. But the Canadian rule, as expressed by the Supreme Court of Canada, otherwise follows the English version closely: It seems to me that whether it is a case for service out of the jurisdiction or the defendant is served in the jurisdiction, the issue remains: is there a more appropriate jurisdiction based on the relevant factors . . . Whether the burden of proof should be on the plaintiff in ex juris cases will depend on the rule that permits service out of the jurisdiction. If it requires that service out of the jurisdiction be justified by the plaintiff, whether on an application for an order or in defending service ex juris where no order is required, then the rule must govern. The burden of proof should not play a significant role in these matters as it only applies in cases in which the judge cannot come to a determinate decision on the basis of the material presented by the parties. While the standard of proof remains that applicable in civil cases, I agree with the English authorities that the existence of a more appropriate forum must be clearly established to displace the forum selected by the plaintiff.85

In fact, despite occasional statements to the contrary, Canadian courts usually assume that the defendant must persuade the court to deny the plaintiff its chosen forum, irrespective of whether service was effected in the jurisdiction or ex juris without leave. The only forum conveniens situation in which the onus is unequivocally on the plaintiff is when the rules of court require the plaintiff to obtain leave to serve ex juris. In service rule jurisdictions, the courts look at a wide range of factors to decide whether to stay a proceeding on the ground of forum non conveniens. The following list is typical:86 the location of the majority of the parties the location of key witnesses and evidence contractual provisions that specify applicable law or accord jurisdiction the avoidance of a multiplicity of proceedings the applicable law and its weight in comparison to the factual questions to be decided geographical factors suggesting the natural forum whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court The CJPTA jurisdictions work with a codified list as follows: 11 (1)  After considering the interests of the parties to a proceeding and the ends of justice, a court may decline to exercise its territorial competence in the proceeding on the ground that a court of another state is a more appropriate forum in which to hear the proceeding. (2) A court, in deciding the question of whether it or a court outside British Columbia is the more appropriate forum in which to hear a proceeding, must consider the circumstances relevant to the proceeding, including   Spiliada, ibid 476 (Lord Goff).   Amchem Products Inc v British Columbia (Workers’ Compensation Board) [1993] 1 SCR 897, 920–21 (emphasis in the original). 86   Muscutt v Courcelles (2002), 213 DLR (4th) 577 (Ont CA) para 41. 84 85

436  Joost Blom (a) the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court or in any alternative forum, (b) the law to be applied to issues in the proceeding, (c) the desirability of avoiding multiplicity of legal proceedings, (d) the desirability of avoiding conflicting decisions in different courts, (e) the enforcement of an eventual judgment, and (f) the fair and efficient working of the Canadian legal system as a whole.87

Recently the Supreme Court of Canada, on its first occasion to consider the CJPTA, held that section 11 was a ‘complete codification of the common law test for forum non conveniens’ and was not intended to supplement or alter it.88 The Civil Code of Quebec includes a forum non conveniens discretion in its private international law provisions,89 although until the new Code was enacted in 1991, the status of the doctrine in Quebec law was uncertain. The doctrine is expressly to be exercised only ‘exceptionally’ and the Supreme Court of Canada has given some weight to that indication.90 Aside from that difference in emphasis,91 the discretion appears to have broadly similar contours in Quebec law as it does in the common law Canadian jurisdictions.92 (d)  Arbitration and forum selection clauses International commercial arbitration is governed, in each Canadian jurisdiction, by the UNCITRAL Model Law on International Commercial Arbitration, which each province has enacted as part of its own law,93 as has the federal jurisdiction.94 The Model Law has a stricter rule of judicial deference to an arbitration agreement than was typical in AngloCanadian (or, for that matter, Quebec) law previously. The court is obliged to refer the parties to arbitration unless it decides that the agreement is ‘null and void, inoperative or incapable of being performed’.95 Canadian courts have accepted the policy underlying the Model Law, that arbitration is to be encouraged and so courts should not construe the arbitration agreement too narrowly or search for reasons to find it invalid.96 Courts have also been conscious of the need to exercise sparingly their powers to review awards.97  CJPTA (BC), s 11.   Teck Cominco Metals Ltd v Lloyd’s Underwriters [2009] 1 SCR 321, 2009 SCC 11 para 22. 89   Art 3135 CcQ. 90   Spar Aerospace Ltd v American Mobile Satellite Corp [2002] 4 SCR 205, 2002 SCC 78. 91   There is also the difference that if Art 3135 is applied, the result is the dismissal, not just the stay, of the action: C Emanuelli, Droit international privé québécois, 2nd edn (Montréal, Wilson & Lafleur, 2006) para 165. 92   G Goldstein and E Groffier, Droit international privé (Montréal, Yvon Blais, 1998) vol 1 para 134. 93   See, for instance, International Commercial Arbitration Act RSBC 1996, c 233; International Commercial Arbitration Act RSO 1990, c I.9. Quebec has not enacted the Model Law as such but the provisions on arbitration in the Code of Civil Procedure, RSQ, c C-25, Book VII, Title I (Art 940 et seq), provide for a similar degree of deference to an arbitration agreement (Art 940.1). The Code also specifically provides, in Art 940.6, that where ‘matters of extraprovincial or international grade are at issue in an arbitration, the interpretation of this Title, where applicable, shall take into consideration’ the UNCITRAL Model Law and the related travaux préparatoires. See Dell Computer Corp v Union des consommateurs [2007] 2 SCR 801, 2007 SCC 34 paras 46–47. 94   Commercial Arbitration Act RSC 1985, c 17 (2nd Supp). 95   UNCITRAL Model Law on International Commercial Aribtration (1985) Art 8(1). 96   Dell Computer Corp v Union des consommateurs [2007] 2 SCR 801, 2007 SCC 34; Kaverit Steel & Crane Ltd v Kone Corp (1992), 87 DLR (4th) 129 (Alta CA), leave to appeal to SCC refused, 24 September 1992; Jean Estate v Wires Jolley LLP (2009) 68 CPC (6th) 1, 2009 ONCA 339; Dancap Productions Inc v Key Brand Entertainment Inc (2009) 68 CPC (6th) 34, 2009 ONCA 135; Automatic Systems Inc v Bracknell Corp (1994) 18 OR (3d) 257 (CA); BWV Investments Ltd v Saskferco Products Inc (1994) 119 DLR (4th) 577 (Sask CA). 97   Quintette Coal Ltd v Nippon Steel Corp [1991] 1 WWR 219 (BCCA), leave to appeal to SCC refused, 13 December 1990; Corporacion Transnacional de Inversiones SA de CV v STET International SpA (1999) 45 OR (3d) 183, affd (2000) 49 OR (3d) 414, leave to appeal to SCC refused, 3 May 2001; United Mexican States v Karpa (2005) 74 OR (3d) 180 (CA). 87 88

Canada  437 As for choice of judicial jurisdiction clauses, the Supreme Court of Canada has affirmed as a matter of common law that parties should be held to such agreements, and local proceedings stayed, unless there is ‘strong cause’ why a local proceeding is more appropriate than litigation in the chosen forum.98 Quebec law is in this respect even stricter. Article 3148, paragraph 2 of the Civil Code of Quebec stipulates that a court has ‘no jurisdiction’ where the parties have chosen to submit all existing or future disputes relating to a specified legal relationship to a foreign authority or to an arbitrator.99 To constitute grounds for a stay, a forum selection clause must be an exclusive choice of forum. An agreement that the court of a particular country will have jurisdiction is generally construed as not being exclusive, and so will not inhibit the bringing of a proceeding in another forum.100 This rule will change, and such clauses will be presumed to be exclusive in the absence of express indications to the contrary, if and when Canada becomes a party to the Hague Choice of Court Convention.101

1.1.3  Choice of Law The choice of law rules applied in the common law jurisdictions of Canada are almost all judge-made and almost all derive from principles in English private international law.102 Only in Quebec have the main choice of law principles been codified, and those principles are derived partly from French law and partly from other modern codifications of private international law, most notably that of Switzerland. From the point of view of civil liability the most important choice of law areas are those relating to contracts and torts. The common law rule in contracts is that the parties are free, subject to very few qualifications, to agree on the ‘proper law’ of their contract and if they have not agreed, the court will apply the law that has the closest and most real connection to the contract. The proper law governs almost all issues relating to the validity and operation of the contract. Other laws may be relevant to questions of formation (whether an agreement is reached at all), formalities, and the legality of performance.103 The tort choice of law rule, at least for easily localised torts, is that almost all issues, including limitation of actions, are governed by the lex loci delicti (the law of the jurisdiction in which the tort took place).104 This rule has no exception if the choice of law issue is between two Canadian jurisdictions, but may be subject to some exceptions in international cases.105 It is unclear whether the lex loci delicti principle is equally determinative 98   ZI Pompey Industrie v Ecu-Line NV [2003] 1 SCR 450, 2003 SCC 27. In Zhan v Pfizer Inc (2007), 37 BLR (4th) 132 (Ont SCJ), the court enforced a choice of judicial jurisdiction contained in a domain name registration agreement. 99   This provision, according to the Supreme Court of Canada, must be interpreted broadly, as reflecting the legislature’s adoption of the principle that the autonomy of the parties should be respected: GreCon Dimter Inc v JR Normand Inc [2005] 2 SCR 401, 2005 SCC 46. 100   Old North State Brewing Co v Newlands Services Inc [1999] 4 WWR 573 paras 35–36 (BCCA) (enforcement of foreign judgment); Schleith v Holoday (1997) 31 BCLR (3d) 81 (CA); Westcott v Alsco Products of Canada Ltd (1960) 26 DLR (2d) 281 (Nfld SC); Khalij Commercial Bank v Woods (1985) 17 DLR (4th) 358 (Ont HC). An intention that the choice be exclusive can be inferred from the context of the clause even ‘exclusive’ or similar wording is not used: BC Rail Partnership v Standard Car Truck Co (2003) 20 BCLR (4th) 1, 2003 BCCA 597. 101   Hague Convention on Choice of Court Agreements (2005), Art 3, para (b). 102   English private international law, that is, as it stood before the far-reaching changes introduced by European law with respect to the law governing contractual and non-contractual obligations. 103   J Walker, Castel & Walker Canadian Conflict of Laws, 6th edn (Markham, Ont, LexisNexis, 2005-) (looseleaf) § 31.4. 104   Tolofson v Jensen [1994] 3 SCR 1022 (motoring accident). 105   ibid 1055–63. Lower courts have seen few grounds on which to make such exceptions; see, for example, Somers v Fournier (2002) 60 OR (3d) 225 (CA).

438  Joost Blom with respect to torts in which the damage is separate in space from the defendant’s wrongful act or omission.106 The Quebec choice of law rules, which are contained in the Civil Code of Quebec,107 differ in important respects from these common law rules. Although the principle of the parties’ freedom to choose the law governing their contract is embodied in the Code,108 if there is no foreign element the parties’ agreement does not supersede the mandatory provisions of the law of the country that would apply if no law were designated.109 If the parties do not agree on which law will govern their contract (or other juridical act) the rule, like the common law one, is that the courts must apply the law of the country with which the act is ‘most closely connected, in view of its nature and the attendant circumstances’. Unlike the common law, however, the Code supplements this rule with a presumption that the act is most closely connected with the country in which the party ‘who is to perform the prestation which is characteristic of the act’ is resident or has its business establishment.110 The general choice of law rule in Quebec for non-contractual civil liability is the law of the country where the injurious act occurred, except that where the injury appeared in another country that was foreseeable to the wrongdoer, the law of the latter country applies.111 Unlike the common law rule, this quasi-lex loci delicti rule gives way to the law of another country if both the wrongdoer and the victim are domiciled or resident in that other country.112

1.1.4  Recognition and Enforcement of Foreign Judgments and Interim Measures Canadian common law regards essentially three things as grounds for recognising or enforcing a foreign judgment: first, the residence (or possibly even the temporary presence) of the judgment debtor in the originating jurisdiction; second, submission by the judgment debtor to the jurisdiction of the foreign court by commencing the proceedings as plaintiff, by participating in the proceeding as defendant, or by making a binding agreement to submit; and, third, the existence of a real and substantial connection between either the defendant or the subject matter of the action and the originating state. The third ground was introduced in 1990 in Morguard Investments Ltd v De Savoye,113 and resulted in a wide range of judgments in undefended proceedings against non-residents of the ori­ ginating state becoming enforceable (or recognisable as res judicata) in Canada. This ground extends to judgments from foreign nations as well as from other Canadian jurisdictions.114

106   British Columbia v Imperial Tobacco Ltd (2004) 239 DLR (4th) 412 para 170 (Rowles JA), affd, [2005] 2 SCR 473, 2005 SCC 49. 107   SQ 1991, c 64. 108   ibid Art 3111(1). 109   ibid Art 3111(2). 110   ibid Art 3113. The drafters drew this feature from European law. It was part of the Rome Convention on the Law Applicable to Contractual Obligations (1980), now European Community Regulation No 593/2008 (also referred to as Rome I). The general choice of law rules are modified for particular types of contract, notably contracts of sale (Art 3114), consumer contracts (Art 3117), and employment contracts (Art 3118). 111   ibid Art 3126(1). Art 3128 contains a special rule for products liability that gives the plaintiff the choice of (1) the law of the manufacturer’s establishment or residence, or (2) the law of the country where the product was acquired. 112   ibid Art 3126(2). 113   Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077, 76 DLR (4th) 256. 114   Beals v Saldanha [2003] 3 SCR 416, 2003 SCC 72.

Canada  439 Procedurally, in the common law jurisdictions, there are four routes to enforcing an extra-provincial money judgment. All of them produce a local judgment or a registry entry with equivalent legal force: (1) An action on the judgment at common law is available irrespective of the originating jurisdiction. Common law enforcement is based on the theory that the judgment of a foreign court of competent jurisdiction creates a debt in favour of the judgment creditor. (2) A more expeditious and economical procedure than bringing an action on the judgment is to register the judgment under one of three possible statutes. The first is the uniform Enforcement of Canadian Judgments and Decrees Act which six provinces have enacted.115 This procedure is available if the judgment (as defined in the Act) is from elsewhere in Canada. The range of judgments registrable under the Act is, if anything, wider than those enforceable at common law because there is no jurisdictional test the judgment must meet.116 In effect, the jurisdiction of courts in other Canadian provinces is conclusively presumed to be valid. (3) The second statute is the uniform Reciprocal Enforcement of Judgments Act which is law in every province except Quebec.117 This statute is older than the Enforcement of Canadian Judgments and Decrees Act and does contain jurisdictional tests drawn from, but not identical to, the common law tests based on presence in the original jurisdiction or submission to the original court’s jurisdiction. The ‘real and substantial connection’ ground is not included as a basis for jurisdiction because the Act pre-dates the Morguard case. In some provinces the ‘reciprocating states’, which must be designated by regulation, can only be other Canadian provinces,118 whereas in other provinces, foreign jurisdictions may also be designated as reciprocating states.119 (4) Judgments from the United Kingdom may be registered under the Canada-United Kingdom Convention for the Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters, implemented in all provinces except Quebec.120 The 115   Enforcement of Canadian Judgments and Non-monetary Orders Act SBC 2003, c 29 (in force 4 May 2006, includes non-monetary orders); Enforcement of Canadian Judgments Act CCSM, c E116 (enacted 2005, in force 22 March 2006, includes non-monetary orders); Enforcement of Canadian Judgments Act SNL 2000, c E-11.1 (in force 11 October 2007, does not include non-monetary orders); Enforcement of Canadian Judgments and Decrees Act SNS 2001, c 30 (in force, includes non-monetary orders); Canadian Judgments (Enforcement) Act RSPEI 1988, c C-1.1 (in force, does not include non-monetary orders); Enforcement of Canadian Judgments Act 2002, SS 2002, c E-9.1001 (in force 1 January 2003, includes non-monetary orders). Cf Canadian Judgments Act SNB 2000, c C-0.1, which is not the uniform Act and restricts the enforcement of default judgments to certain categories of case (see s 5). 116   Enforcement of Canadian Judgments and Non-monetary Orders Act SBC 2003, c 29, s 6(3)(a), and identical provisions in the other Acts. 117   Court Order Enforcement Act RSBC 1996, c 78, Part 2; Reciprocal Enforcement of Judgments Act RSA 2000, c R-6; Reciprocal Enforcement of Judgments Act CCSM, c J20; Reciprocal Enforcement of Judgments Act RSNB 1973, c R-3; Reciprocal Enforcement of Judgments Act RSNL 1990, c R-4; Reciprocal Enforcement of Judgments Act RSNWT 1988, c R-1 (also law in Nunavut); Reciprocal Enforcement of Judgments Act RSNS 1989, c 388; Reciprocal Enforcement of Judgments Act RSO 1990, c R5; Reciprocal Enforcement of Judgments Act RSPEI 1988, c R-6; Reciprocal Enforcement of Judgments Act SS 1996, c R-31; Reciprocal Enforcement of Judgments Act RSY 2002, c 189. 118   See, for example, s 7 of the Ontario statute. 119   For example, the reciprocating states under British Columbia’s statute include some US states, all Australian states, Germany and Austria. 120   Canada-United Kingdom Civil and Commercial Judgments Convention Act RSC 1985, c C-30; International Conventions Implementation Act RSA 2000, c I-6, Part 3; Court Order Enforcement Act RSBC 1996, c 78, Part 4; Canada-United Kingdom Judgments Enforcement Act CCSM, c J21; Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters Act SNB 1984, c R-4.1; Canada and the United Kingdom Reciprocal

440  Joost Blom jurisdictional grounds expressly listed in the Convention do not include the ‘real and substantial connection’ principle. However, United Kingdom judgments can be registered in Canada on that ground because the drafters included a provision that the other state’s court would have jurisdiction, even if none of the listed grounds is satisfied, if ‘the jurisdiction of the original court is otherwise recognised by the registering court’.121 The recognition and enforcement of foreign judgments is a matter of provincial law. The Canadian Constitution does not include any provision analogous to the ‘full faith and credit’ provision of the United States Constitution, requiring that effect be given to the judgments of sister states. However, Morguard Investments Ltd v De Savoye122 suggested, and the Supreme Court of Canada later said explicitly,123 that the courts of each province were constitutionally obliged to recognise each others’ judgments as long as the defendant or the subject matter of the action had a real and substantial connection with the originating province. As noted above, the same jurisdictional criterion applies to non-Canadian judgments,124 but as a matter of common law, not as a constitutional requirement. Traditionally, orders of foreign courts other than those for the payment of money have not been enforceable under the Anglo-Canadian system, because they do not constitute debts. This narrow definition of what constitutes a foreign judgment has come to seem outdated in light of the view running through the Morguard case, that the rules of private international law must be framed so as to facilitate cross-border transactions wherever to do so comports with the principles of order and fairness. As a result, both statutory and common law developments have opened up the possibility of enforcing non-monetary orders from courts of other jurisdictions. The uniform Enforcement of Canadian Judgments and Decrees Act, in the version adopted in some provinces, allows for the enforcement of ‘decrees’ other than orders for the payment of money.125 The codified Quebec law seems to offer some scope for enforcing non-monetary orders of authorities outside Quebec.126 And the Supreme Court of Canada has now held that non-monetary foreign judgments are enforceable at common law, albeit subject to fairly stringent (and to some extent still unclear) conditions.127 Recognition and Enforcement of Judgments Act RSNL 1990, c C-3; Canada and United Kingdom Reciprocal Recognition and Enforcement of Judgments Act RSNS 1989, c 52; Reciprocal Enforcement of Judgments (Canada-UK) Act RSNWT 1988, c R-2 (also law in Nunavut); Reciprocal Enforcement of Judgments (UK) Act RSO 1990, c R6; Canada-United Kingdom Judgments Recognition Act RSPEI 1988, c C-1; Canada-United Kingdom Judgments Enforcement Act SS 1988-89, c C-0.1; Reciprocal Enforcement of Judgments (UK) Act RSY 2002, c 190. 121   Art V(1)(f). See Dodd v Gambin Associates [1994] OJ No 1330 (QL), revng (1994) 17 OR (3d) 803 (Gen Div). 122   Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077, 76 DLR (4th) 256. 123   Hunt v T & N Plc [1993] 4 SCR 289, 109 DLR (4th) 16. 124   Above n 114 and accompanying text. 125   See n 115, indicating which provinces enacted this version of the model statute. Saskatchewan has also enacted the Uniform Law Conference of Canada’s model statute on the enforcement of non-Canadian judgments, which, like the model Act on the enforcement of Canadian judgments, includes non-monetary orders: Enforcement of Foreign Judgments Act SS 2005, c E-9.121, s 7. 126   Art3155 CcQ refers to the Quebec authority declaring enforceable ‘any decision’ rendered outside Quebec. The decision must, however, be one that is not subject to a regular appeal (recours ordinaire) and must be final (définitive) according to the law of the originating jurisdiction (Art 3155(2) CcQ). This has been seen as allowing for some enforcement of non-monetary judgments: Pro Swing Inc v Elta Golf Inc [2006] 2 SCR 612, 2006 SCC 52 paras 83, 86 (McLachlin CJC). However, the other provisions of the Civil Code do not contemplate a discretion to modify the foreign order; the concept is that the Quebec court orders an exequatur declaring the foreign order enforceable in Quebec: see C Emanuelli, Droit international privé québécois, 2nd edn (Montréal, Willson & Lafleur, 2006) paras 277, 294. 127   Pro Swing Inc v Elta Golf Inc [2006] 2 SCR 612, 2006 SCC 52, discussed in the next section as an intellectual property case.

Canada  441 The conditions under which foreign judgments are recognised and enforced in Quebec are set out in the Civil Code and are similar but not identical to those in the common law provinces. The common law rule that presence, or at least some kind of residence, in the original country gives its courts in personam jurisdiction, has its Quebec counterpart in the rule that a foreign authority has jurisdiction in a personal action of a patrimonial nature where the defendant was domiciled in the original country.128 The possession of an establishment, short of domicile, in the original country will also found jurisdiction, but only if the dispute relates to the defendant’s activities in that country.129 Jurisdiction based on the defendant’s submission to the foreign court’s jurisdiction is likewise recognised, 130 except that a consumer or worker who has agreed to renounce the jurisdiction of the authority of his or her place of domicile is not bound by that agreement.131 Jurisdiction on grounds other than domicile or submission is restricted to two situations: where a prejudice was suffered in the original country, resulting from a fault committed there or an injurious act that took place there;132 and where the obligations arising from a contract were to be performed in the original country.133

1.2  Intellectual Property 1.2.1 Jurisdiction Intellectual property claims relating to copyright, patents and trade marks involve questions both of territorial jurisdiction and subject-matter jurisdiction. 1.2.1.1  Territorial jurisdiction As already noted, claims to alter a register or otherwise require Canadian officials to do acts in relation to the claimant’s rights must, under each of the relevant statutes, be brought before the Federal Court of Canada, but otherwise the Federal Court’s jurisdiction is concurrent with that of the courts of the provinces.134 Therefore, if an action is brought for infringement of the plaintiff ’s rights, jurisdiction in personam over the defendant must exist according to the rules of court or statutory provisions in the relevant jurisdiction. None of these provides specifically for jurisdiction in intellectual property cases.135 Consequently, the defendant must be present or resident in the province (or, in the case of the Federal Court, in Canada), or must submit or have agreed to submit to the court’s jurisdiction, or be subject to the court’s jurisdiction by the claim’s having a real and substantial connection with the province coupled with the availability of ex juris service in respect of that claim. As noted above, under the Federal Court Rules, ex juris service, and so jurisdiction over a non-resident defendant, are available in any type of case, subject to the court’s discretion   Art 3168(1) CcQ.   Art 3168(2) CcQ. This rule applies to individuals as well as corporations. 130   Art 3168(5) and (6) CcQ. 131   Art 3168(5) CcQ. 132   Art 3168(3) CcQ. 133   Art 3168(4) CcQ. 134   Above, text accompanying n 47. 135   The Patent Act itself has a provision that requires an infringement action, if it is not brought in Federal Court, to be brought in a court of the province in which the infringement is said to have occurred: Patent Act RSC 1985, c P-4, s 54(1). 128 129

442  Joost Blom to decline jurisdiction on forum non conveniens grounds.136 In the courts of the provinces, for service ex juris to be available without leave, the intellectual property claim must fit under one or more of the categories of claim for which the rules of court or the CJPTA authorise such service. In Quebec, the claim must be one that satisfies the jurisdictional tests in the Civil Code. The typical provisions for tort and contract claims are described above.137 A claim for infringement of Canadian musical copyright by a television station broadcasting programmes from the United States into Canada, has been treated for this purpose as a claim founded on a tort committed in the jurisdiction.138 Other categories in the rules of court or the CJPTA may come into play as well. To take an example from a CJPTA jurisdiction, in one case the Canadian distributor of a line of disposable dinner plates, which had a licence to use the manufacturer’s trade mark in Canada, sought an injunction from a court in Nova Scotia against the American manufacturer entering the Canadian market on its own account by shipping products with the trade mark into Canada. The court held it had territorial competence under the Act because the claims fell under three categories of presumed real and substantial connections with the province. These were that the claim was brought to enforce, assert, declare or determine a proprietary or possessory right in the province, that it concerned a business carried on in the province, and that it was a claim for an injunction ordering a party to refrain from doing certain acts in the province.139 The court also held, on the issue of forum non conveniens, that no other forum was clearly more appropriate.140 If a civil action is directly concerned with the validity or infringement of a Canadian intellectual property right, it is very difficult to argue that the Canadian court is forum non conveniens compared with a foreign court.141 However, certain collateral claims may be more appropriately litigated elsewhere. For example, an Ontario court stayed a proceeding for infringement of Canadian copyright because the claimant’s rights depended on an assignment to the defendant being invalid; the contract of assignment, which covered various jurisdictions, was governed by English law; and an English judgment had treated the assignment as valid because the claimant had not, in that proceeding, contested its validity. 136   Above, nn 66–67 and accompanying text. Service ex juris formerly required leave. An example of a case where such leave was granted, in a claim against German defendants for infringement of a Canadian copyright by shipping infringing copies into Canada, is Iscar Ltd v Karl Hertel GmbH (1986) 10 CPR (3d) 523 (FCTD). 137   Above nn 62–75 and accompanying text. 138   Composers Authors and Publishers Association of Canada Ltd v KVOS Inc [1963] SCR 136, 37 DLR (2d) 1. See also Polaroid Corp v Eastman Kodak Co [1977] 2 FC 233 (TD) (patent infringement claim). 139   CKF Inc v Huhtamaki Americas Inc (2009) 71 CPR (4th) 449, 2009 NSSC 21. The three bases fall within the categories that appear in the CJPTA (BC) as s 10(a), (h) and (i), respectively. A Canadian patent application was held to be ‘personal property’ for the purpose of the service ex juris rule encompassing claims relating to a contract in respect of personal property in Ontario (Civil Procedure Rules (Ont), r 17.02(c)(i)): SRU Biosystems Inc v Hobbs [2006] OJ no 987 (SCJ) (QL). 140   After the plaintiff had begun its action in Nova Scotia the defendant had begun proceedings in Ontario and Maine relating to the same dispute. The Nova Scotia court held that it was the only court that would have jurisdiction over all the matters in dispute and so offered the best chance of avoiding conflicting decisions: ibid para 76. The plaintiff had also obtained a stay of the Ontario proceeding conditional on the Nova Scotia court assuming jurisdiction: Huhtamaki Company Manufacturing v CKF Inc [2008] OJ no 4383 (SCJ) (QL). 141   Preston v 20th Century Fox Canada Ltd (1990) 33 CPR (3d) 242 (FCTD), affd (1993) 53 CPR (3d) 407 (FCA) (action for infringement of Canadian copyright by American film allegedly based on plaintiff ’s screenplay, jurisdiction not contested); Matbro Ltd v Massey-Ferguson Industries Ltd (1979) 43 CPR (2d) 283 (FCTD) (patent infringement action against foreign company); GRI Simulations Inc v Oceaneering Int’l Inc (2005) 250 Nfld & PEI R 154, 2005 NLTD 157 (claims against foreign company for assisting breach of fiduciary duty by plaintiff ’s former employees and infringing plaintiff ’s Canadian copyright); Research in Motion Ltd v Atari Inc (2007) 61 CPR (4th) 193 (Ont SCJ) (action by Canadian company for declaration that it had not infringed foreign defendant’s Canadian copyright).

Canada  443 Inconsistent results were best avoided by forcing the claimant to challenge the assignment in the English courts.142 1.2.1.2  Subject matter jurisdiction Aside from the allocation of jurisdiction as between the Federal Court and the courts of the provinces, the main question of subject matter competence is whether a Canadian court has any jurisdiction to decide questions relating to the validity and infringement of foreign statutory intellectual property rights.143 The author has found no case in which a Canadian court has been asked to decide such issues. Canadian courts would look to the law of other jurisdictions, especially those of the British Commonwealth, for persuasive authority on the question whether subject-matter jurisdiction exists in relation to actions that involve deciding on the validity or infringement of foreign intellectual property rights. In December 2009 the English Court of Appeal, in Lucasfilm Ltd v Ainsworth,144 confirmed authoritatively for the first time that there is a rule of subject-matter jurisdiction that bars an English court from dealing with intellectual property rights created by foreign law. 145 Claims for the infringement of foreign intellectual property rights were therefore non-justiciable.146 The English court was held to lack jurisdiction in an action for infringement of United States copyright, although the infringer was domiciled in England and the infringing copies were made there to be sold to American 142   Folkes v Greensleeves Publishing Ltd (1997) 76 CPR (3d) 359 (Ont Gen Div), affd (1998) 85 CPR (3d) 144 (Ont CA), leave to appeal to SCC refused, 12 November 1998. See also Ingenium Technologies Corp v McGraw-Hill Companies Inc (2005) 255 DLR (4th) 499, 2005 BCCA 358 (litigation about contract granting rights with respect to computer software; action stayed in favour of parallel proceedings already under way in New York); Westec Aerospace Inc v Raytheon Aircraft Co (1999) 173 DLR (4th) 498, 1999 BCCA 243, appeal dismissed [2001] 1 SCR iv, 2001 SCC 26 (copyright licence litigation stayed in favour of parallel proceeding already under way in Kansas). For the converse to Folkes, a case in which a Canadian court took jurisdiction over dealings with foreign intellectual property rights, see Shaw v Shaw [2007] OJ no 2758 (SCJ) (QL), discussed below in the text accompanying n 155. 143   Common law wrongs, such as passing-off or breach of confidence, committed outside the province, would be within the jurisdiction of the courts of a province on the same basis as other actions based on foreign torts. Usually jurisdiction would require that the defendant be resident in the province or the action have some other real and substantial connection with the province. A breach of confidence committed by one British Columbia mining company against another in Argentina was the subject of Minera Aquiline Argentina SA v IMA Exploration Inc [2007] 10 WWR 648, 2007 BCCA 319, leave to appeal to SCC refused [2007] 3 SCR x. Neither party sought to rely on Argentine law, so British Columbia law was applied. See also John Walker & Sons Ltd v Henry Ost & Co [1970] 1 WLR 917 (Ch D) (passing-off in Ecuador actionable in England because defendant was in England and some of the defendant’s acts were committed there). 144   Lucasfilm Ltd v Ainsworth [2009] EWCA Civ 1328. [Editor’s note: the UK Supreme Court handed down a decision in 2011; see Lucasfilm v Ainsworth [2011] UKSC 39.] 145   The existence of the rule was already widely assumed; see JJ Fawcett and P Torremans, Intellectual Property and Private International Law (Oxford, Clarendon Press, 1998) 43–44; Tyburn Productions Ltd v Conan Doyle [1991] Ch 75, Ch D. The same Court (differently constituted) had earlier, in Pearce v Ove Arup Partnership Ltd [2000] Ch 403, CA, held that under the jurisdiction rules embodied in the Brussels Regulation (Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition of Judgments in Civil and Commercial Matters), an English court could not refuse to hear an action for infringement of the copyright law of another member state of the European Communities, although it was a foreign copyright law and the infringement took place in the foreign country. It was relevant that copyright does not depend upon entries in a public registry; disputes about the validity of intellectual property rights that do depend upon registration are subject to the exclusive jurisdiction of the state of registry under the Brussels Regulation, Art 22(4). Pearce v Ove Arup was distinguished in Lucasfilm, ibid, on the basis that it was a decision on European law, not on the general English principles of jurisdiction (paras 138, 151–56). 146   The court in Lucasfilm, ibid para 181, took pains to reject a distinction between a claim as to the subsistence of registration of a foreign intellectual property right and a claim as to its infringement.

444  Joost Blom purchasers.147 The rule applies only to proceedings founded directly on intellectual property rights. Proceedings on contracts, for example, that deal with such rights are not caught by the non-justiciability rule.148 The absolute rule barring a court from deciding issues relating to the validity of foreign intellectual property rights has been criticised as based on a false analogy with the ‘local action’ theory that applies to claims involving title to foreign immovables,149 but the Lucasfilm case treats the analogy as convincing. There is no Canadian jurisprudence on the question, although the leading Canadian conflicts text takes a stance opposite to that which now prevails in England, and says there is no reason why the holder of a foreign intellectual property right could not sue in Canada for its infringement in the foreign country.150 Over the last two decades, Canadian courts have tended to move away from conceptualist approaches to jurisdiction, and towards more functional approaches that are ‘grounded in the need in modern times to facilitate the flow of wealth, skills and people across state lines in a fair and orderly manner’.151 They may well be receptive today to an argument that if the defendant or the subject matter of the action has a real and substantial connection with the province – which is now the basic criterion for the existence of jurisdiction simpliciter152 – there should be no absolute bar to seeking a decision from a Canadian court on the infringement or the validity of a foreign intellectual property right.153 Even if that proposition were to be adopted, however, the action would still usually be stayed on forum non conveniens grounds because in most cases the jurisdiction whose intellectual property rights were at issue would be clearly the more appropriate forum for the resolution of the dispute.   There was no infringement of United Kingdom copyright on the facts: Lucasfilm, ibid paras 18–98, 209.   Litigation to enforce an agreement to assign a foreign copyright is within the court’s jurisdiction: R Griggs Group Ltd v Evans [2005] Ch 153, Ch D. The court in Lucasfilm, ibid paras 196–208, upheld the trial judge’s order that the defendant must assign his rights under foreign copyright laws to the plaintiff. 149   The English rule that actions concerning title to foreign immovables are local in nature stems from British South Africa Co v Companhia de Moçambique [1893] AC 602 (HL), followed in Hesperides Hotels Ltd v Muftizade [1979] AC 508, HL. Fawcett and Torremans, above n 145, 284–99, argue that the analogy lacks a solid foundation, that the issue of subject-matter jurisdiction should be treated as one of policy, and that, on balance, considerations of policy militate in favour, not of an absolute rule barring jurisdiction, but of a forum non conveniens approach. The Court of Appeal in Lucasfilm, ibid para 175, took the opposite view and explicitly applied the Moçambique rule to intellectual property claims. 150   J Walker, Castel & Walker Canadian Conflict of Laws, 6th edn (Markham, Ont, LexisNexis, 2005–) (looseleaf) § 35.9.f, citing RG Howell, ‘Intellectual Property, Private International Law, and Issues of Territoriality’ (1997) 13 Canadian Intellectual Property Review 209. Prof Howell at 212 cites Preston v 20th Century Fox Canada Ltd (1990) 33 CPR (3d) 242 (FCTD), affd (1994) 53 CPR (3d) 407 (FCA), as a case in which the court appears to have taken jurisdiction to decide on infringement that took place in the United States. The court may have taken the view, however, that the distribution of the film in Canada amounted to an infringement in Canada; the trial judge at 257 refers to infringement of two of the owner’s rights, the reproduction right (Copyright Act RSC 1985, c C-42, s 3(1) (d)) and the right to reproduce, adapt and publicly present a work as a cinematographic work (s 3(1)(e)). It is otherwise difficult to account, as Prof Howell points out, for the judge’s application of the Canadian statute. 151   Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077, 1096; 76 DLR (4th) 256, 269. 152   Above, text accompanying nn 77–79. 153   There are some signs, in the Canadian cases, of a loosening of the rule that the court has no jurisdiction to decide on rights that depend on title to a foreign immovable: Khan Resources Inc v WM Mining Co (2006) 79 OR (3d) 411 (CA) (treating rule apparently as one of declining jurisdiction rather than an absolute bar); Godley v Coles (1988), 39 CPC (2d) 162 (Ont Dist Ct) (court took jurisdiction in action for damage to condominium in Florida allegedly caused by Ontario-resident defendants). A move to relax the rule that foreign intellectual property rights are non-justiciable would also get some support from United States District Court decisions on copyright (Carell v The Shubert Organization Inc 104 F Supp 2d 236 (SDNY 2000); Armstrong v Virgin Records Ltd 91 F Supp 2d 628 (SDNY 2000)), but a more recent Circuit Court decision on patents went the other way (Voda v Cordis Corp 476 F3d 887 (Fed Cir 2007), cited in Lucasfilms [2009] EWCA Civ 1328 para 166–72). 147 148

Canada  445 Where the Canadian proceeding does not directly concern the validity or infringement of a foreign intellectual property right, but only concerns an issue as to the ownership of or right to exercise the foreign right, the Canadian court may have jurisdiction over that issue. This is analogous to the rule that the bar to dealing with title to foreign immovables does not extend to personal claims, in contract or otherwise, arising out of dealings with the immovable.154 Thus an Ontario court has issued an anti-suit injunction against a man’s conducting patent infringement litigation in the United States against, in effect, his former wife. The issue was the continuing validity of a licence of the patent rights he had granted to her company, and that question, the court held, was best decided in Ontario.155 An Alberta Court of Appeal decision, Aram Systems Ltd v NovAtel Inc,156 went even closer to the line between deciding on the validity of foreign patent rights, and deciding on claims arising out of dealings with respect to such rights. It upheld a trial decision dismissing the plaintiff ’s claim to be entitled to the defendant’s United States patent, on the basis that the plaintiff ’s employee was the inventor. By agreement, the Court applied United States law to the issue of inventorship.157 It also upheld the trial court’s decision on a counterclaim that the plaintiff ’s pending United States patent applications in respect of the same subjectmatter were based on a misuse by the plaintiff of confidential information given to it by the defendant.158 The trial judge’s order, that the plaintiff must withdraw those applications, therefore stood. The issue of subject-matter jurisdiction appears not to have been contested, apparently because both plaintiff and defendant were based in Alberta159 and wished to have the Alberta court decide the dispute. The inventorship issue, particularly, verges on being an issue as to validity, but is not quite. From the jurisdictional point of view a claim, ‘I am entitled to the patent because the patentee got the concept from me,’ does seem to be of the same order as a claim, ‘I am entitled to the patent because the patentee’s purchase of the concept from me was invalid.’ If this is right, a claim impeaching someone’s entitlement to a right can validly be distinguished from a claim impeaching the validity of the right, which would be on the other side of the line.

1.2.2  Choice of Law Since Canadian courts never deal – or at least apparently have never dealt – directly with a foreign statutory intellectual property right, the problem of applying foreign law to determine whether the right exists, or whether it was infringed, does not arise. The choice of law issue that does arise from time to time is the ‘unilateral’ one of whether Canadian law applies to a case with foreign elements.160 154   A Canadian example is Minera Aquiline Argentina SA v IMA Exploration Inc [2007] 1 WWR 43, 2006 BCSC 1102 para 183, affd [2007] 10 WWR 648, 2007 BCCA 319, leave to appeal to SCC refused [2007] 3 SCR x. The Canadian court, by means of imposing a constructive trust, required one Canadian company to transfer to another Canadian company the ownership of a mining property in Argentina, on the ground that the defendant had obtained the property by a misuse of confidential information originating with the plaintiff ’s predecessor. 155   Shaw v Shaw [2007] OJ No 2758 (SCJ) (QL). 156   Aram Systems Ltd v NovAtel Inc [2009] 10 WWR 262, 2009 ABCA 262, leave to appeal to SCC refused, 28 January 2010. 157   ibid para 18. 158   The law applied to the issue of breach of confidence seems to have been Canadian, which would be supported by the facts that the confidential information was Canadian in origin and was imparted to the recipient (the plaintiff) in Canada. 159   Their main places of business were actually in neighbouring premises: see the trial decision, [2009] 3 WWR 725, 2008 ABQB 441 para 16. 160   This choice of law is unilateral in the sense that it decides whether Canadian law applies, but not whether foreign law applies.

446  Joost Blom Generally the question is whether an act of infringement took place in Canada, since it is only to such infringements that Canadian law applies. Infringement of a Canadian patent means infringement of the exclusive right of ‘making, constructing and using the invention and selling it to others to be used’.161 Localising the making or construction of the invention is generally straightforward, and a sale takes place in the location where title to the invention is transferred.162 ‘Use’ of an invention has been held to include possession of it for the purposes of trade,163 and consequently possession of the relevant product in Canada constitutes infringement in Canada even if the possessor intends to sell the product only outside Canada.164 The most important decision on the territorial dimension of Canadian intellectual property law is the Supreme Court of Canada case of Society of Composers, Authors and Music Publishers of Canada v Canadian Association of Internet Providers.165 The question was under what circumstances the uploading or downloading of digitally recorded musical works via the Internet constituted infringement of the Canadian copyright-holder’s exclusive right to communicate the work to the public by telecommunication.166 The issue arose in the context of the Copyright Board’s drafting of a tariff that would impose royalties on such transactions. The Board had taken the view that only uploading to or downloading from a server located in Canada could constitute infringement of the Canadian right. The Supreme Court disagreed. The Copyright Act contained nothing to indicate which telecommunications, in geographic terms, were subject to the statute. The Act therefore had to be interpreted on the assumption that Parliament intended to legislate only intraterritorially. A survey of the law of the European Communities, United States, Australia and France167 persuaded the Court that ‘Canada could exercise copyright jurisdiction in respect both of transmissions originating here and transmissions originating abroad but received here’.168 The criterion the Court actually settled on was that the Internet transmission must have a real and substantial connection with Canada. ‘A real and substantial connection to Canada is sufficient to support the application of our Copyright Act to international Internet transmissions in a way that will accord with international comity and be consistent with the objectives of order and fairness’.169

  Patent Act RSC 1985, c P-4, s 42.   Thus sales of the invention outside Canada are not infringement of the Canadian patent, and even if the seller is Canadian it is not authorising infringement by making such sales: Laboratoires Servier v Apotex Inc (2008 67 CPR (4th) 241, 2008 FC 825 paras 143–60, affd without reference to this point (2009) 75 CPR (4th) 443, 2009 FCA 222. 163   Monsanto Canada Inc v Schmeiser [2004] 1 SCR 902, 2004 SCC 34 paras 55–58. 164   Wellcome Foundation Ltd v Interpharm Inc (1992) 41 CPR (3d) 215, 226–67 (FCTD), citing the English decision F. Hoffmann-la Roche & Co AG v Harris Pharmaceuticals Ltd [1977] FSR 200, 207 (Ch D). 165   Society of Composers, Authors and Music Publishers of Canada v Canadian Association of Internet Providers [2004] 2 SCR 427, 2004 SCC 45. 166   Copyright Act RSC 1985, c C-42, s 3(1)(f). 167   [2004] 2 SCR 427, 2004 SCC 45 paras 64–76 (hereinafter SOCAN). 168   ibid para 76 (emphasis in the original). 169   ibid para 60. The Supreme Court has made the ‘real and substantial connection’ almost an all-purpose private international law formula. The extent of its use has been the subject of some criticism; see J Blom and E Edinger, ‘The Chimera of the Real and Substantial Connection’ (2005) 38 University of British Columbia Law Review 373; JG Castel, ‘The Uncertainty Factor in Canadian Private International Law’ (2007) 52 McGill Law Journal 555. It made its first appearance in Morguard Investments Ltd v De Savoye [1990] 3 SCR 1077, 76 DLR (4th) 256. 161 162

Canada  447 The location of the host server is relevant to, but not decisive of, the question whether the real and substantial connection with Canada exists.170 The real and substantial connection test marks the limit of the Act’s potential applicability, but it is inapt to be a standalone definition for the scope of a royalty tariff. The tariff the Board subsequently approved, which applies only to commercial online music services, implicitly applies to their sales to customers in Canada.171 The real and substantial test would be directly applicable, however, if a Canadian copyright owner brought an infringement action in respect of one or more specific communications out of, into or via Canada.172

1.2.3  Enforcement of Judgments Money judgments in intellectual property cases are enforceable according to the usual principles discussed earlier. Often, however, a judgment in an intellectual property matter will include orders other than a final order for the payment of a sum certain of money, the only type of judgment the common law regarded as enforceable. Injunctions, either interlocutory (as a provisional measure) or permanent are frequently the remedy principally sought. An order for an accounting of profits, which requires an inquiry into what the profits were, is also a standard remedy in intellectual property cases. Until recently, orders of this kind made by foreign courts would simply have been of no effect in Canada. In order to obtain a similar Canadian order against a Canadian party, the claimant would have had to commence an action in Canada on the original cause of action, which, if the cause of action were a foreign statutory intellectual property right, would pose the jurisdictional problems noted above. This situation has potentially been transformed by the Supreme Court of Canada’s decision in Pro Swing Inc v Elta Golf Inc.173 A United States federal court in Ohio had given a consent decree in 1998 in a trade mark infringement action brought by an American supplier of golf clubs (Pro Swing) against, inter alia, an Ontario company (Elta) that sold golf clubs over the Internet, sometimes to customers in the United States. Under the terms of the decree, Elta undertook not to trade in golf equipment bearing the trade mark TRIDENT or a confusing mark, and would deliver to Pro Swing’s counsel any golf club heads and marketing material in its possession. Several years later Pro Swing went back to the court in Ohio, alleging that Elta had not complied with the consent decree and continued to sell infringing goods. In 2003 the United States court granted Pro Swing a contempt order against Elta. This order repeated the terms of the consent decree and added new orders, including that Elta account for all infringing clubs and other equipment sold since the consent decree, that Elta identify its suppliers and purchasers from it of infringing goods, and that Elta recall all infringing goods. A few months later Pro Swing filed a motion in the Ontario Superior Court of Justice for recognition and enforcement of the consent decree and the contempt order. The motions judge made an order enforcing parts of the decree 170   SOCAN, ibid paras 105–6. The location of the server may, however, be decisive in localising the infringement of the reproduction right, if it is on the server that the copy is made: Copyright Board (Canada), Re SOCAN Statement of Royalties, Satellite Radio Services Tariff (SOCAN: 2005–2009; NRCC: 2007–2010; CSI: 2006–2009) (2009), 74 CPR (4th) 399 paras 72–74. 171  Copyright Board (Canada), Statement of Proposed Royalties to be Collected by SOCAN for the Public Performance or the Communication to the Public by Telecommunication, in Canada, of Musical or DramaticoMusical Works in the Year 2010, Supplement to Canada Gazette, Part I, 4 July 2009, Tariff No 22. 172   See SHS Leong and CL Saw, ‘Copyright Infringement in a Borderless World – Does Territoriality Matter?’ (2007) 15 International Journal of Law and Information Technology 38. 173   Pro Swing Inc v Elta Golf Inc [2006] 2 SCR 612, 2006 SCC 52.

448  Joost Blom and contempt order, namely those relating to an accounting, identifying suppliers and purchasers, and the recall of infringing goods. This order was reversed on appeal, mainly on the ground that it was unclear whether the United States court intended its order to have extraterritorial effect. On further appeal, the Supreme Court held by a narrow majority that the American court orders should not be enforced, but affirmed unanimously that the way was now open to enforce foreign non-monetary orders, in appropriate circumstances and subject to appropriate conditions. Deschamps J said: The conditions for recognition and enforcement can be expressed generally as follows. The judgment must have been rendered by a court of competent jurisdiction and must be final, and it must be of a nature that the principle of comity requires the domestic court to enforce. Comity does not require receiving courts to extend greater judicial assistance to foreign litigants than it does [sic] to its own litigants, and the discretion that underlies equitable orders can be exercised by Canadian courts when deciding whether or not to enforce one.174

The objections to enforcement that the majority regarded as decisive in this case were that the contempt order was of a quasi-criminal nature, with the public law element dominant over the restitutionary component of the award; that evidence to finalise the damage award could have been obtained more simply by issuing letters rogatory to the Ontario court; that a Canadian court was unfamiliar with the technicalities of the American law relating to enforcement of contempt orders and so might give the order consequences that an American court would not; and that it was not clear whether the United States court, which was dealing solely with United States trade mark rights, intended its order to apply to Elta’s worldwide sales and, if it did, whether Elta had agreed to this as part of the settlement. In light of these factors a Canadian court should exercise its discretion against enforcement. The dissenting judges were not persuaded by these factors, and thought the motions judge had properly granted the order she did. Of particular interest in the present context is their handling of the question whether the United States judgment included orders that territorially went beyond the protection of United States trade mark rights. Instead of regarding this as arguably, at least, an excess of jurisdiction on the part of the American court, the dissenting judges thought it was merely a question intrinsic to the merits of the decision. They therefore applied the rule, well-established in relation to monetary judgments, that a Canadian court cannot review the merits of a foreign judgment that is otherwise entitled to recognition.175 Thus, although the actual order in Pro Swing was denied enforcement, the decision not to do so was an exercise in discretion that would not necessarily extend to orders granted in different circumstances. The result might well have been different if it had not been a contempt order but an original order that was sought to be enforced. Thus, in future, foreign orders such as an accounting of profits or an injunction against exporting infringing goods may well be enforced by orders of Canadian courts if the extraterritorial operation of the foreign order is clearly defined and is justified in terms of vindicating the foreign intellectual property rights at stake.

  ibid para 31.   ibid para 119.

174 175

Canada  449

2  Case Studies Please note that the author has not included metalegal formants with respect to any of the cases. The issues raised are ones of private international law, which aside from considerations of international comity are not the subject of changing social forces or theoretical legal perceptions. Such metalegal considerations as there may be, the author has considered as part of the descriptive formants.

Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit.

Case 1(1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (Please specify, for this and questions (2) and (3), if answers to these questions were different in cases where intellectual property rights are at stake.)

Operative Rules A Canadian court, which for a defamation action must be the court of a province (the Federal Court has no jurisdiction), would have jurisdiction simpliciter based on B’s residence in the province. Residence, or even mere presence, is sufficient to found jurisdiction in the service rule jurisdictions of Canada. 176 In the CJPTA jurisdictions, B would have to be ‘ordinarily resident’.177 In the case of Quebec, the test would be whether B had his or her domicile or residence in Quebec.178 Jurisdiction simpliciter would likewise exist as against a corporation under the circumstances stated. In the service rule jurisdictions, the question is whether the corporation is present in the province through carrying on business there. If so, service may be effected on any person that has authority to do business on the corporation’s behalf.179 In the CJPTA jurisdictions, a corporation is deemed to be ordinarily resident in the province if, inter alia, it has a place of business in the province.180 A possible exception is Quebec, because a legal person not domiciled in Quebec may be sued based on having a place of business in Quebec only if the dispute relates to that person’s activities in Quebec. The competence of the Quebec court would therefore depend on whether the publication of the allegedly defamatory material by corporation B was considered an activity by B in Quebec.181   See the text above accompanying nn 52–76 for the types of jurisdiction rules in Canada.   CJPTA (BC), s 3(d). 178   Art 3148(1) CcQ. 179   Eg Ontario Rules of Civil Procedure, RRO 1990, reg 194, r 16.02(1)(c). 180   CJPTA (BC), s 7(c). 181   Art 3148(2) CcQ. 176 177

450  Joost Blom In each type of jurisdiction, including Quebec, jurisdiction could be declined on grounds of forum non conveniens. For the purposes of these rules, it makes no difference whether the defamation concerns intellectual property rights or not. Descriptive Formants If the defendant is resident in the province but the defamation takes place largely or wholly outside the province, the defendant may have a strong argument that the local court is forum non conveniens. Canadian courts have emphasised that a major factor in deciding whether to take jurisdiction in a defamation action is whether the harm to reputation was principally suffered in the province or elsewhere. (See the descriptive formants relating to case 1(2).)182 Another important factor in the forum non conveniens analysis is whether the claim is governed by foreign law. As noted above, publication of defamatory material in a foreign country probably constitutes a tort committed in that country and therefore governed by the law of that country. If the foreign law of defamation differed substantially from the local law, it would provide a weighty argument for declining jurisdiction in favour of the relevant foreign jurisdiction.

Case 1(2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)?

Operative Rules If B was not resident in a Canadian province but copies of the publication were distributed there in a language that could be read by a more than minimal number of people,183 the court would again have jurisdiction simpliciter. Both the service rule jurisdictions and the CJPTA jurisdictions allow service ex juris without leave if the claim is for a tort committed in the jurisdiction.184 The common law regards the tort of defamation as committed in any place in which the defamatory statement is published, that is, communicated to people other than the plaintiff.185 This jurisdiction would be subject to the discretion to decline jurisdiction on forum non conveniens grounds. Even if the court lacked jurisdiction simpliciter, it would acquire it if the defendant chose to attorn (submit) to the jurisdiction.186 182   A case in which the defendant was resident in Canada but the defamation took place in Uganda was not stayed, because Ontario was also the plaintiff ’s residence and was the appropriate forum under the circumstances: Kitakufe v Oloya (1998) 67 OTC 315 (Gen Div). 183   In one recent case a court took jurisdiction in a libel action brought by a Canadian resident, who formerly lived in India, against a newspaper published in Punjabi in India and on a website: Bains v Sadhu Singh Hamdard Trust [2007] OJ No 1129 (SCJ) (QL). 184   Above, text accompanying nn 62 and 70. 185   Thus the alleged tort was not committed in British Columbia, and the court lacked jurisdiction simpliciter, where the defamatory material was posted on a password-protected site on the Internet but there was no evidence that anyone in British Columbia had downloaded or read the defamatory material: Crookes v Holloway (2007) 75 BCLR (4th) 316, 2007 BCSC 1325. See also Jenner v Sun Oil Co Ltd [1952] OR 240 (HCJ). 186   Imagis Technologies Inc v Red Herring Communications Inc 2003 BCSC 366; Shekhdar v K & M Engineering & Consulting Corp [2006] OJ No 2120 (CA) (QL).

Canada  451 For the purposes of these rules, it makes no difference whether the defamation concerns intellectual property rights or not. Descriptive Formants Since any publication in the province provides jurisdiction simpliciter, the critical issue would be whether a court would decline jurisdiction on forum non conveniens grounds. Much depends on how substantial a reputation A enjoys in the province, or at least in Canada. Canadian courts have refused to decline jurisdiction in defamation actions against non-resident defendants if the plaintiff is resident in, or at least has a substantial reputation in, the province where the action is brought. Thus an Ontario court took jurisdiction where a former Canadian resident, still well-known in Canada, was allegedly libelled by directors of an American company in corporate press releases originally published in the United States but republished in Canada.187 Likewise, a British Columbia court refused to decline jurisdiction in an action brought by a former general manager of the Vancouver Canucks (a National Ice Hockey League team) against a New York newspaper concerning the plaintiff ’s activities with the Canucks. No print copies of the newspaper circulated in the province, but the article in question was posted on the Internet and was noticed by a radio commentator in British Columbia, who interviewed the plaintiff about it on air. Part of the reason for not declining jurisdiction was that the plaintiff ’s claim, if made in New York, would probably be defeated by the American rule that a ‘public figure’ suing in defamation must prove malice, whereas British Columbia law has no such requirement.188 One case in which a court declined jurisdiction involved a former United Nations official, born and raised in Guinea but now living in Ontario, who sued an American newspaper and three of its reporters in Ontario for articles concerning the plaintiff ’s activities while he was posted in Kenya. The action had no real and substantial connection with Ontario, mainly because the plaintiff himself had no connection with Ontario until after the articles appeared.189 Therefore, if B could persuade the Canadian court that A’s reputation is centred elsewhere than in Canada, B might well be able to obtain a stay of A’s proceeding on the basis that the other forum would clearly be more appropriate for a trial of the action. However, if the other forum is in a jurisdiction, such as the United States, in which it is more difficult to succeed in a libel action than in Canada, the plaintiff ’s legitimate advantage in suing in Canada will be a factor, though not a decisive one, against staying the proceeding.190   Black v Breeden [2009] OJ No 1292 (SCJ) (QL). See also Jenner v Sun Oil Co Ltd [1952] OR 240 (HCJ).   Burke v NYP Holdings Inc (2005) 48 BCLR (4th) 363, 2005 BCSC 1287. See also Wiebe v Bouchard (2005) 46 BCLR (4th) 278, 2005 BCSC 47. The advantage of Canadian over United States libel law was also a factor in refusing to decline jurisdiction in Pindling v National Broadcasting Corp (1984) 14 DLR (4th) 391 (Ont HCJ), an action brought by the former prime minister of the Bahamas in relation to an allegedly defamatory broadcast over an American television network that was rebroadcast in Ontario. Since these cases were decided, Canadian law has become somewhat more tolerant of false statements in the media, in that it has recognised a defence of ‘responsible communication on matters of public interest’. This means that defamatory, false statements may not expose the maker or publisher to liability for libel if the maker or publisher can show that the statements were made on a matter of public interest and that it made sufficient efforts to verify them: Grant v Torstar Corp 2009 SCC 61; Quan v Cusson 2009 SCC 62. 189   Bangoura v Washington Post (2005) 258 DLR (4th) 341 (Ont CA), leave to appeal to SCC refused, 16 February 2006. Jurisdiction simpliciter existed, but jurisdiction was declined in Irving v Weiner [1992] BCJ No 397 (SC) (QL); Olde v Capital Publishing LP (1996) 5 CPC (4th) 95 (Ont Gen Div), affd (1998) 18 CPC (4th) 1 (Ont CA) (issue of jurisdiction simpliciter raised but not decided). 190   See n 188 above. 187 188

452  Joost Blom

Case 1(3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published?

Operative Rules If B were resident in the Canadian province, a defamation claim could include world-wide damages, because jurisdiction is based on B’s residence, not on the situs of the tort. However, if B is non-resident and jurisdiction is based on the claim being for a tort committed in the jurisdiction (see question (2)), claims for damage caused in other jurisdictions would, technically, be claims based on torts committed in those jurisdictions through the publication there. The latter claims would not be ones for which the plaintiff has a right to serve ex juris without leave in either the service rule jurisdictions191 or the CJPTA jurisdictions. However, the plaintiff could seek leave to validate service ex juris in relation to those claims by leave of the court (which is required if the claims fall outside the categories in which service without leave is authorised). In order to support the competence of the local forum a court would have to be persuaded that there is a real and substantial connection between the local forum and those claims as well as the claim related to local publication, and that the local forum is a forum conveniens for the action in respect of those other claims. Were a court to take jurisdiction in respect of the claims for damage suffered elsewhere, the defendant would probably be able to raise any defences that it might have under the relevant foreign laws. The choice of law rule for defamation is probably the law of the place in which the publication occurs as the lex loci delicti.192 According to this view, if publication takes place in multiple jurisdictions there are multiple torts each governed by the law of the jurisdiction in question. For the purposes of these rules, it makes no difference whether the defamation concerns intellectual property rights or not. Descriptive Formants In order to substantiate the real and substantial connection with the local forum, and to show that the local court is forum conveniens, the plaintiff would emphasise the efficiency to be gained by consolidating the claims relating to damage suffered in foreign jurisdictions with the claim for damage suffered in the jurisdiction. That gain in efficiency may offer the plaintiff a sufficiently compelling advantage that a court could be persuaded to take jurisdiction. However, since the defendant can probably raise any defences it has under the relevant foreign laws, the efficiency of consolidation may be undercut by the potential complexity of applying foreign law. No Canadian case has squarely decided a case based on harm caused by defamation outside the jurisdiction.193 191   Unless the foreign defendant is a necessary or proper party to a defamation claim against a local defendant (as was the case in Pindling v National Broadcasting Corp (1984) 14 DLR (4th) 391 (Ont HCJ)). The service rules typically include a rule authorising service ex juris without leave on someone who is a ‘necessary or proper party’ to a defendant who was served in the jurisdiction. See, for example, Ontario Rules of Civil Procedure, RRO 1990, reg 194, r 17.02(o). This ground does not appear in the CJPTA list of presumed real and substantial connections, which are the basis for service ex juris without leave in the CJPTA jurisdictions. 192   See text accompanying nn 104–6 above. 193   Some jurisdiction cases involved claims that appeared to encompass damage suffered elsewhere, such as Pindling v National Broadcasting Corp (1984) 14 DLR (4th) 391 (Ont HCJ), but the issue did not have to be addressed at that stage because jurisdiction did not depend on it.

Canada  453

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X:

Case 2(1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights?

Operative Rules International jurisdiction, in the sense of jurisdiction simpliciter, would exist if B was resident in the province (the Federal Court would not have jurisdiction over such a claim), or if B submitted or agreed to submit to the court’s jurisdiction. Infringement of a foreign patent must ex hypothesi take place in the jurisdiction in which the patent rights exist, and so would not qualify as a tort committed in the province or, probably, as any of the other categories of claim in which a Canadian court can take jurisdiction against a non-resident, non-submitting defendant. The difficulty would be subject-matter jurisdiction. As noted above, the traditional view is that a Canadian court has no subject matter jurisdiction if the issue is the validity of a foreign patent right (or any other intellectual property right).194 If this rule were followed, A would not be able to bring the infringement action in Canada in the first place. It is possible a Canadian court might reconsider this rule, which has not actually been the subject of a Canadian decision. However, even if the rule were abandoned, the plaintiff would still have to meet an argument of forum non conveniens. Descriptive Formants In this case, both the jurisdiction simpliciter and the forum non conveniens analyses would depend on how closely connected the infringement litigation was with Canada. If, say, both A and B were residents of the forum province, or at least B was, the action would have a real and substantial connection with the province. Jurisdiction simpliciter would exist. If the traditional subject matter jurisdictional bar could be overcome, there would at least be the potential for the court to take jurisdiction. Other circumstances would then have to be examined in order to decide whether the province was forum conveniens, in the sense that it was clearly a more appropriate forum for the action than the jurisdiction in which the intellectual property rights existed and were infringed. For instance, if B had no business presence in Y, and evidence concerning infringement and validity of the patent under Y law could reasonably easily be produced in the Canadian court, the issue of B’s infringement might be more appropriately decided in Canada than in Y. A could thus resist B’s application for a stay on the ground of forum non conveniens.

  Above, text accompanying nn 143–55.

194

454  Joost Blom

Case 2(2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and nonregistered intellectual property rights?

Operative Rules Essentially these are the same as for case 2(1). Unlike the European rules, the Canadian rules do not turn on the distinction between registered and non-registered rights. However, if the right in question was a registered one, it would provide additional reason to argue forum non conveniens on the basis that questions of the correctness of the register are most appropriately decided by the court of the jurisdiction whose register it is. Descriptive Formants They would be the same as those discussed for case 2(1).

Case 2(3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Operative Rules Procedurally, the question of the validity of a foreign intellectual property right could be put before a court only by proving the content of the foreign intellectual property law by means of expert evidence. Even if both parties were willing to have the court decide the issue of foreign law, a court would not be bound to do so and could raise the jurisdictional issue of its own motion if it thought, as it well might, that a fundamental limitation on its own jurisdiction needed to be considered. Descriptive Formants If the question was not strictly the validity of the right but, say, the plaintiff ’s entitlement to the right under an assignment or licence, the subject-matter jurisdiction issue would not present itself and a court could decide on the validity of the assignment or licence.195

Case 2(4) Would parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such decisions?

Operative Rules The arbitration legislation in Canada, which is provincial law, typically does not limit the arbitrability of particular disputes; that is a matter for the common law. And the common 195   As in Shaw v Shaw [2007] OJ No 2758 (SCJ) (QL), discussed above, text accompanying n 155. See also Aram Systems Ltd v NovAtel Inc [2009] 10 WWR 262, 2009 ABCA 262, leave to appeal to SCC refused, 28 January 2010, discussed above, text accompanying nn 156–59.

Canada  455 law regards any dispute as arbitrable unless legislation expressly or implicitly excludes arbitration of it. Arbitrators may make awards for the payment of money that function as a debt, but arbitrators may not make orders that only a court can make. Arbitration legislation usually provides an expeditious process for converting an arbitral award into a judgment of the court.196 A court can also order an injunction, for example, to implement an arbitral award.197 Courts have power to review an arbitral award for having exceeded the arbitrators’ jurisdiction (a test that is subject to a great deal of case law), but not for simply making a decision that the court regards as incorrect.198 There is no rule, statute or common law that prevents parties from submitting foreign intellectual property rights to arbitration. However, an arbitral award could have no greater effect that the parties’ own agreement could have. If a court were asked to convert the award into a court judgment, it would encounter the same subject matter jurisdictional issues that a court would do if the matter had been litigated. Descriptive Formants If the arbitrator were to decide on the invalidity of the Y patent, that would be binding as a matter of contract between the parties. However, it would probably not be convertible into a decision of the Canadian court, because of the subject matter jurisdictional question that would confront the court; it cannot give legal force to a decision that it itself would not have had jurisdiction to make. Even less would the award be regarded, presumably, as of any legal effect in Y.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y, and Z. B, C and D are competitors of A and are located in countries X, Y, and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W.

Case 3(1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C, and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C, and D on the ground of the infringement of a contract?

Operative Rules For the reasons discussed in case 2, the traditional rule would be that a Canadian court (W) would have no subject-matter jurisdiction in relation to A’s claims for infringement of the patent laws of X, Y and Z. 196  For example, Commercial Arbitration Act RSBC 1996, c 55, s 29 (a domestic statute); International Commercial Arbitration Act RSO 1990, c I.9, s 11(1). 197   This was done in Avalanche Effects Inc v Visual Frameworks Inc [2007] OJ No 76 (SCJ) (QL). 198  See Xerox Canada Ltd v MPI Technologies Inc [2006] OJ No 4895 (SCJ) (QL), refusing to interfere with an award of unpaid royalties and damages for infringement of copyright in software.

456  Joost Blom If the claims were for breach of contract, however, there would be no subject-matter jurisdiction issue but there could be an international jurisdiction (territorial competence) issue. Unless B, C and D did business in the Canadian province, A would have to serve B, C and D ex juris and, in order to do so, would have to fit the claim into one of the categories in which such service is authorised without leave of the court or would have to obtain leave of the court. Those categories vary among the provinces. In Ontario, for example, which is a service rule jurisdiction,199 service ex juris is permitted without leave if the claim is in respect of a contract made in Ontario, a contract expressly governed by Ontario law, or a breach of contract that was committed in Ontario.200 In the CJPTA jurisdictions the categories for claims in respect of contractual obligations are that the obligations, to a substantial extent, were to be performed in the province, or the contract by its express terms was governed by the law of the province.201 In Quebec the court has competence if one of the obligations of a contract was to be performed in Quebec, a fault was committed in Quebec, or damage was suffered in Quebec.202 If service ex juris was not possible without leave, A could seek leave, but would be unlikely to get it if none of B, C and D was connected with the province and the licence agreements concerned foreign patent rights. In such circumstances the subject-matter of the claim would probably be seen to lack a real and substantial connection with the province. And, even if a connection did exist, the plaintiff seeking leave would have to persuade the court that the action was more appropriately heard in Canada than in the jurisdictions whose patent rights were in issue. Descriptive Formants If leave was sought to serve ex juris, A’s ability to consolidate a number of claims in a Canadian proceeding would be a factor in favour of the court taking jurisdiction, but if that were the main reason for A’s wish to sue in Canada, it would probably not be enough to persuade a Canadian court that it was forum conveniens in the face of all the connections with the other countries. The law governing the contracts would, however, be an important factor. If A could convince the court that the three agreements were all impliedly governed203 by the law of the province, despite the fact that they dealt with foreign patent rights, A might have a good prospect of getting the case heard in Canada.204

Case 3(2) Assuming that B, C, and D are members of a group of a corporation and takes identical steps in infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the   For the types of Canadian jurisdiction regimes, see above, text accompanying nn 52–76.   Civil Procedure Rules, r 17.02(f)(i), (ii) and (iv), respectively. In addition, r 17.02(f)(iii) authorises such leave if the parties to the contract have agreed that the courts of Ontario are to have jurisdiction. 201   CJPTA (BC), s 10(e)(i) and (ii) (presumed real and substantial connections). 202   Art 3148(3). 203   If they were expressly governed by the law of the province, service ex juris would typically be possible without leave. 204   That the law of the province governed the contracts was the decisive factor in the decision not to defer to the foreign court’s jurisdiction in Teck Cominco Metals Ltd v Lloyd’s Underwriters [2009] 1 SCR 321, 2009 SCC 11. See also Folkes v Greensleeves Publishing Ltd (1998) 85 CPR (3d) 144 (Ont CA), in which England was held a more appropriate forum for litigation about an assignment of copyright that dealt with multiple jurisdictions, including Canada. 199 200

Canada  457 court of country of X is a court of your country would (and if so under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C, and D raised counterclaims that A’s patents are invalid?

Operative Rules If the proceeding was for B, C and D’s infringement of the foreign patent rights in X, Y and Z, but the infringement was coordinated by a parent company with its main place of business in Canada, the presence of the coordinating mind in Canada would not alter the subject-matter jurisdiction issue (see Case 3(1)). That jurisdictional bar would apply whether or not the validity of the foreign patents was challenged. As noted above,205 the jurisdictional bar has not been the subject of any Canadian decision and might be dispensed with if it were challenged, provided that jurisdiction simpliciter existed and the case was such that the Canadian court was clearly the most appropriate forum, notwithstanding that the action concerned foreign patent rights. The coordinating company’s presence in Canada would offer a real and substantial connection with the jurisdiction, thus establishing jurisdiction simpliciter 206 and also providing a factor in favour of the province being forum conveniens. Descriptive Formants None in addition to the operative rules.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose licensed products. B paid the initial license fee but later refused to pay other fees, arguing, inter alia, that its products did not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country:

Case 4(1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made (new) choice of court agreement at the time when the dispute arose?

Operative Rules If two non-resident parties agree to litigate disputes in a Canadian province, the court certainly has jurisdiction under normal circumstances. However, the court is not obliged to   Text accompanying nn 143–55.   In the service rule jurisdictions, service ex juris could be effected without leave under a rule, shared by all these jurisdictions (but not present in the CJPTA), covering claims against a person outside the province who is a necessary or proper party to a proceeding properly brought against a person who was served in the province: eg Ontario Civil Procedure Rules, r 17.02(o). 205 206

458  Joost Blom hear the case if it takes the view that the litigation is completely unconnected with the province and the use of its courts is unjustified. The only Canadian authority the author knows of is obiter dicta in a British Columbia case in which British Columbia residents had brought an action in the state of Washington, in the United States, for injuries suffered in a road accident there. At the time of the accident the defendant was also a resident of British Columbia. She admitted liability and persuaded the Washington court to decline jurisdiction in the action, which was now solely about the quantum of damages, if the British Columbia court would take jurisdiction. The British Columbia court therefore had to decide whether the defendant’s consent alone was sufficient to take jurisdiction, which the Court of Appeal held was the case. Huddart JA said: It may be that a plaintiff and defendant cannot agree to give a court jurisdiction and that a court will want to consider factors other than their agreement before accepting jurisdiction, to satisfy itself the dispute comes within s 9(1) of the Supreme Court Act[207] as one arising in the province, as the chambers judge’s reasons acknowledge. This is not that case. This case is one in which British Columbia has an interest, as the Chambers judge recognized.208

Following this dictum, if the litigation concerned the licensing of a bundle of patent rights, none of which were Canadian, the agreement to litigate in Canada might well be thought insufficient, by itself, to make the case a proper one for the court to hear. However, if the parties could put forward legitimate reasons for wanting it heard in Canada, the court might be persuaded that it should exercise jurisdiction. Aside from the territorial jurisdiction question, there is the subject-matter jurisdiction issue that has been discussed in the previous cases. If the issue is about the interpretation of the licence, the author thinks there is no reason why a Canadian court could not hear it.209 On the other hand, if the issue is about whether B’s products infringe the patent, the court might well take the view that it has no jurisdiction because the question involves foreign patent rights (see Case 4(3)). Descriptive Formants The choice of court clause, unlike an arbitration clause, is not regarded as an unrestricted means to select a neutral forum. There is no Canadian case that upholds the right of foreigners to avail themselves of the services of Canadian courts in disputes that otherwise have nothing to do with Canada.

Case 4(2) Would the court enforce an exclusive choice of court clause if the defendant raised a counter-claim that patents are invalid?

Operative Rules This would probably not alter the legal situation described in Case 4(1). Infringement issues and validity issues are both covered by the subject-matter jurisdiction principle.210 207   Supreme Court Act RSBC 1996, c 443, s 9(1): ‘The court continues to be a court of original jurisdiction and has jurisdiction in all cases, civil and criminal, arising in British Columbia.’ 208   Teja v Rai (2002) 209 DLR (4th) 148, 2002 BCCA 16 para 32. 209   There might be an argument of forum non conveniens, despite the choice of court agreement, but that is an argument the defendant must raise; the court cannot do so of its own motion. 210  The Lucasfilm decision is likely to be accepted on this point: see above, n 146.

Canada  459 Descriptive Formants None.

Case 4(3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings?

Operative Rules It seems unlikely that it would make a difference whether the choice of court agreement was part of the licence or whether it was made in the course of infringement proceedings. Descriptive Formants None.

Case 5: Parallel proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country:

Case 5(1) What procedural steps would a court of a country Z take having regard to pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration?

Operative Rules B’s residence in the Canadian jurisdiction would clearly give the court territorial jurisdiction in A’s claim against B. However, the question is whether the court would have subjectmatter jurisdiction in A’s action. If A was litigating in Canada a question of infringement of patent rights under the laws of X and Y, the Canadian court would have to consider the subject-matter jurisdiction bar against actions concerning the validity or infringement of foreign intellectual property rights. If the Canadian court held that it had jurisdiction, the next question is whether B could persuade it to decline jurisdiction on the basis that the actions already under way in X and Y deserved priority because X and Y were more appropriate forums to resolve the issues. Where the Canadian and the foreign court are about equally appropriate, there is precedent for the Canadian court’s deferring to the jurisdiction of the foreign court on the basis that the action was commenced there first211 or that the foreign court was the first positively to 211   Westec Aerospace Inc v Raytheon Aircraft Co (1999) 173 DLR (4th) 498, 1999 BCCA 243, appeal dismissed, [2001] 1 SCR iv, 2001 SCC 26.

460  Joost Blom assert jurisdiction.212 Such a decision is treated as an exercise of the forum non conveniens discretion, with the parallel proceeding being an important factor in the overall evaluation of whether the foreign court is clearly a more appropriate forum than the Canadian forum. If the court took the view that X and Y were less appropriate forums than Canada for A’s claim to be heard, it could reject the forum non conveniens argument and allow A’s action against B to continue even in the face of parallel proceedings by B against A in the foreign jurisdictions X and Y.213 A could also attempt to obtain from the Canadian court an anti-suit injunction against B’s continuing its actions against A in X and Y. The Canadian court would have personal jurisdiction over B to grant such an injunction. However, A would have to establish two things. First, A would have to show that the courts of X and Y were forum non conveniens for the litigation by Canadian standards, which means that Canada would have to be clearly a more appropriate forum than either X or Y. Second, A would have to satisfy the Canadian court that to let B’s action in X and Y proceed would amount to an injustice as against A.214 Descriptive Formants On the facts given it is highly unlikely that A could succeed. Very probably, the Canadian court would apply the subject-matter jurisdiction bar because A is attempting to get a Canadian court to decide issues of infringement of A’s patent rights in X and Y. Aside from the subject-matter jurisdiction problem, A would be hard pressed to make a case that the Canadian court should retain jurisdiction even in the face of parallel proceedings in X and Y. A would be even harder pressed to get a Canadian court to issue an anti-suit injunction against B’s pursuit of the X and Y proceedings.

Case 5(2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Operative Rules The applicable rules would be the same as in Case 5(1). Descriptive Formants If B were challenging A’s patent rights under X and Y law in a third country, W, A’s problems with the subject-matter jurisdiction issue would be the same as in Case 5(1), but A’s problems with territorial jurisdiction would be reduced, given that W is not demonstrably a more appropriate forum for the litigation than Canada.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble   Ingenium Technologies Corp v McGraw-Hill Companies Inc (2005) 255 DLR (4th) 499, 2005 BCCA 358.   Teck Cominco Metals Ltd v Lloyd’s Underwriters [2009] 1 SCR 321, 2009 SCC 11 para 22.   Amchem Products Inc v British Columbia (Workers’ Compensation Board) [1993] 1 SCR 89.

212 213 214

Canada  461 the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.

Case 6(1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z?

Operative Rules Canadian jurisdiction in respect of patent infringement is traditionally assumed to be limited to infringement that takes place in Canada.215 If that is so, the issue is whether it is an infringement in Canada to manufacture, not the invention, but the component parts of the invention so that they can be assembled outside Canada. This precise question arose in Beloit Canada Ltd v Valmet-Dominion Inc.216 The Canadian patent for the press section of a paper machine was said to have been infringed in Canada by the defendant’s manufacturing the component parts of the machine in Canada and exporting them to purchasers who assembled them abroad. The trial judge held there was no infringement in Canada because the components as such were not the subject-matter of the invention. The Federal Court of Appeal reversed the decision and found there was infringement in Canada. The Court started with the rule that a vendor of components does not infringe merely by knowing that purchasers buy the components for the purpose of using them in the infringement of the patent. But the vendor does infringe in either of two situations: (1) the vendor alone, or in association with another person, sells all the components of the invention to a purchaser in order that they may be assembled by the purchaser; (2) the vendor, knowingly and for its own ends and benefit, procures the purchaser to infringe the patent. The case was of the first type. The components in the case were ‘sold in a substantially unified and combined form for the purpose of later assembly’, in which case ‘infringement may not be avoided by a separation or division of parts which leaves to the purchaser a simple task of integration and assembly’.217 In the Beloit case the vendor had actually contracted to sell complete machines and simply delivered them in component form. This was ‘making’ the invention in Canada, and thus an infringement of the Patent Act. In an earlier case a Canadian patent, claiming as the invention a film to be used in making sheet moulding compound, was held infringed in Canada by making the film in Canada even if the film was exported to the United States and used only there to make the sheet moulding compound. The film was exported, to the defendant’s knowledge, to companies that would use it as specified in the patent. ‘It does not matter where the film is actually

215   This is also the implication of the provision in the Patent Act that requires an infringement action, if it is not brought in the Federal Court, to be brought in a court of the province in which the infringement is said to have occurred: Patent Act RSC 1985, c P-4, s 54(1). The Act apparently does not contemplate that an infringement may have taken place outside any province. See also Domco Industries Ltd v Mannington Mills Inc (1990) 29 CPR (3d) 481 (FCA), leave to appeal to SCC refused, 20 December 1990 (invention sold fob in United States to Canadian buyers; no infringement of Canadian patent). 216   Beloit Canada Ltd v Valmet-Dominion Inc [1997] 3 FC 497 (CA). 217   ibid para 41.

462  Joost Blom used, whether in Canada, the United States or elsewhere. The fact that it is manufactured and intended for use for that purpose is an infringement of claim 12.’218 Descriptive Formants The cases just mentioned show that the sale of components as such is not infringement, even if the seller knows the buyers will use the components to make the invention outside Canada. B’s shipment of components from Canada crosses the line into infringement in Canada only if the components are effectively sold as a kit for the assembly of the invention in Y and Z. There is some room to argue the law may not be so rigid and B’s exporting of the components to buyers in Y and Z may be caught even if this strict test is not met. Although it dealt with copyright, the SOCAN case 219 offers some scope for arguing that it is not strictly necessary for the infringement, or at least certain kinds of infringement, to take place wholly in Canada as long as the infringement has a ‘real and substantial connection’ with Canada. If this idea were extended to patent infringement, any making, using or vending of the invention that has a real and substantial connection with Canada is within the permissible scope of the Patent Act because, applying SOCAN, that would still be an intraterritorial application of the Act. However, the line drawn by the older cases, in defining the actual territorial scope of the Act is fairly clear. Any movement towards expanding the types of cross-border activity that would constitute patent infringement would probably lead to greater uncertainty. It will probably take more than the SOCAN case to move the line significantly.

Case 6(2) Assuming, firstly, that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Operative Rules If the invention were assembled in Canada from components imported from X, and A brought an action in Canada for infringement of its patent rights, not in Canada but in X, A would be met with the subject-matter jurisdiction bar discussed earlier. Descriptive Formants It is very unlikely that a Canadian court will overturn the subject-matter jurisdiction bar. In other words, it will probably refuse to hold that A’s foreign patent rights can be the subject of a Canadian infringement action merely because the components of an invention assembled in Canada originated in the country in which A holds its patent rights.

218   AlliedSignal Inc v Du Pont Canada Inc (1993) 50 CPR (3d) 1, 19 (FCTD), revd on other grounds but agreed with on this point (1995) 61 CPR (3d) 417, 444 (FCA), leave to appeal to SCC refused, 30 November 1995. 219   Society of Composers, Authors and Music Publishers of Canada v Canadian Association of Internet Providers [2004] 2 SCR 427, 2004 SCC 45, discussed above, text accompanying nn 165–72.

Canada  463

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C requesting to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case:

Case 7(1) What law would be applied to determine the liability of A, B and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Operative Rules As previously discussed, because of the subject-matter jurisdiction bar, a Canadian court would almost certainly not have jurisdiction to decide whether A, B or C had infringed the copyright laws of other nations. It would only have jurisdiction to decide if the activities of A, B or C infringed Canadian copyright. If the particular right being relied on is the sole right to communicate the work to the public by telecommunication,220 the SOCAN case221 stands for the proposition that the telecommunication right under the Canadian Copyright Act extends to any communication that has a real and substantial connection with Canada. The parties could agree that Canadian law applied (that is, that the communications had a real and substantial connection with Canada). They could not, however, agree to have the court apply a foreign copyright law to the allegedly infringing activities of the three students. Descriptive Formants The location of A, B and C, the location of the server they use to provide their file exchange services, and the location of their customers would all be relevant to determining whether, in the case of any communication, there was a real and substantial connection with Canada.

Case 7(2) Would the choice of law differ if the claim for damages was brought against the internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Operative Rules If the ISP was sued as an infringer, and the ISP provided service to customers in Canada, the communications by the ISP to the customers would clearly have a real and substantial   Copyright Act RSC 1985, c C-42, s 3(1)(f).   Society of Composers, Authors and Music Publishers of Canada v Canadian Association of Internet Providers [2004] 2 SCR 427, 2004 SCC 45, discussed above, text accompanying nn 165–72. 220 221

464  Joost Blom connection with Canada and so would be subject to the Canadian Copyright Act. Although it is not strictly relevant to the conflict of laws point, it is worth noting that, as the SOCAN case decided, the Canadian statute exempts ISPs from liability if their only act in respect of the communication is to provide the means of telecommunication necessary for another person (such as A, B and C) to communicate the work.222 It would not be open to the parties, by agreement, to ask a Canadian court to apply a foreign copyright régime to the ISP’s activities. Descriptive Formants None in addition to the rules just mentioned.

Case 7(3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Operative Rules Canadian intellectual property law has not developed a concept of ubiquitous infringement.223 Descriptive Formants Given the Canadian attachment to the view of intellectual property rights as defined by national law and limited in application to the relevant state, it is hard to see how a concept of ubiquitous infringement could develop as a matter of common law.

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licenses to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licenses without A’s consent. Assuming that A files a claim before a court of your country:

Case 8(1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country?   Copyright Act RSC 1985, c C-42, s 2.4(1)(b); SOCAN, ibid paras 79–103.   See also JJ Fawcett and P Torremans, Intellectual Property and Private International Law (Oxford, Clarendon Press, 1998) 611, suggesting that even where the intellectual property owner’s local and foreign rights are parallel, they will be viewed, for purposes of choice of law in infringement actions, as distinct rights, each subject to a different national law. The authors quote from a Scottish trade mark case (James Burroughs Distillers plc v Speymalt Whisky Distributors Ltd [1989] SLT 561, 566): ‘Each jus actionis is separately derived from a statutory privilege which the trade mark holder has in the territory in question and is strictly confined to that territory.’ 222 223

Canada  465 Operative Rules If B has not patented the invention, the first issue is to characterise the nature of A’s claim. Turning first to Canadian domestic law, aside from the law of patents there is no concept of ownership of an invention as such.224 What A can ‘own’ is the right to control the use of information that he or she developed and imparted to B in confidence, in the sense that B was to use the information only for a particular purpose. Thus, in Canadian law, A’s claim would be for breach of confidence in the form of B’s unauthorised use of the information B acquired about A’s invention. Breach of confidence is a hybrid wrong, in the sense that it combines elements of a common law tort, an equitable wrong, and property.225 For choice of law purposes the action for breach of confidence, or a similar claim in foreign law, is probably best characterised as one of tort, since a wrongful act, the unauthorised disclosure or use of information, is the gist of the wrong.226 The primary choice of law rule in tort, in the common law provinces, is in favour of the lex loci delicti.227 In Quebec the rule is in favour of the law of the country where the injurious act occurred, except where the person who committed the injurious act and the victim have their domiciles or residences in the same country, in which case the law of that country is applied.228 The characterisation as tort is not, however, the only possibility. In the only Canadian case that actually dealt with choice of law in relation to breach of confidence, the parties, focusing more on the remedy than the right, agreed that an action for breach of confidence was to be characterised as a restitutionary claim for unjust enrichment resulting from a breach of duty.229 The choice of law rule applied, again by agreement of the parties, was the ‘proper law of the obligation’.230 To the extent that A’s rights to exploit the invention depend on the terms of A’s contract of employment with B, a Canadian court, in interpreting and giving effect to the contract, will apply the law that the parties have agreed will govern their contract.231 The agreement may be explicit or implicit, in the sense that it is necessarily implied they intended a particular system of law to govern. Since these issues – including, for that matter, who will have the right to apply for a patent – are proper subjects for contractual agreement, it follows that an agreed choice of law would likewise be regarded as effective by a Canadian court. Failing an agreement by the parties, the court will apply the law most closely connected to the contract. If B has patented the invention under the law of B’s domicile, the issues are quite different. A’s claim would then be based on challenging B’s right to acquire the patent, which   This appears to be true of the law of Quebec as well as of the common law.   Cadbury Schweppes Inc v FBI Foods Ltd [1999] 1 SCR 142 paras 19–26. 226   JJ Fawcett and P Torremans, Intellectual Property and Private International Law (Oxford, Clarendon Press, 1998) 699–700 argue that non-contractual breach of confidence should be characterised for choice of law purposes as a tort, but acknowledge there is no English authority on the matter. 227   Above, text accompanying nn 104–6. 228   Art 3126 CcQ. 229   Minera Aquiline Argentina SA v IMA Exploration Inc (2006) [2007] 1 WWR 43, 2006 BCSC 1102 para 183, affd [2007] 10 WWR 648, 2007 BCCA 319, leave to appeal to SCC refused [2007] 3 SCR x. 230   ibid (BCSC), para 184 et seq. The parties agreed on this formulation but not on how it applied to the facts. The court applied British Columbia law, as the law under which the parties conducted their affairs in relation to each other, rather than the law of Argentina, which was where the defendant acquired immovable property through unauthorised use of the information. 231   In the case of a contract of employment, the law of Quebec provides that an agreed choice of law cannot deprive the worker of the protection to which he is entitled under the mandatory provisions of the law of the country where the worker habitually carries on his work or, if that is spread among several countries, the law of the employer’s domicile or establishment (Art 3118 CcQ). 224 225

466  Joost Blom would depend on the law of the country in which the patent was obtained. Although this gets close to deciding an issue relating to the existence of a foreign intellectual property right, one Canadian case did decide on the right to obtain a United States patent and in doing so applied the United States law on inventorship. The jurisdictional issue was apparently not raised by the parties and the choice of law was agreed.232 If B patented the invention under Canadian law, A would have to claim that A, as the inventor, was the person entitled to apply for the patent,233 that the patent was wrongly issued to B, and that B should therefore be ordered to assign the patent to A. A’s right as inventor would be subject to any contractual arrangements between A and B as to which of them would own the patent rights. A choice of law in the contract would be given effect in determining the parties’ respective contractual positions in respect of the right to apply for the patent. Descriptive Formants If the proper characterisation of A’s claim is one of tort, under either the common law or the Quebec choice of law rule, a Canadian court would probably determine A’s rights according to the law of B’s domicile, since it is there that B holds the information and wrongfully imparts it to others by granting licences. On the other hand, if it is one of unjust enrichment, the result is probably the same. The proper law of B’s enrichment is likewise probably a function of where B acquired the knowledge, where B misused it, and where B was enriched by that misuse, all of which point to the law of B’s domicile.

Case 8(2) Would the decision differ if A made an invention in joint collaboration with other researchers?

Operative Rules The only difference to a common law claim for breach of confidence would be that A would have to join the co-inventors as plaintiffs, since the claim would belong to the inventors jointly. The same would be true if the claim were contractual or if the claim were in relation to patent rights. Descriptive Formants None.

Case 8(3) Would the applicable law differ in case of initial authorship or initial title to trade mark?

Operative Rules The rules with respect to ownership of copyright and trade marks are essentially the same as those described above for patents. If A’s claim related to infringements by B of A’s rights as author or A’s rights as the owner of a trade mark, jurisdiction would depend on whether 232   Aram Systems Ltd v NovAtel Inc [2009] 10 WWR 262, 2009 ABCA 262, leave to appeal to SCC refused, 28 January 2010, discussed above, text accompanying nn 156–59. 233   Patent Act RSC 1985, c P-2, s 27(1).

Canada  467 the rights involved were those under Canadian law. If the question was whether B acted contrary to A’s right to the Canadian copyright or Canadian trade mark rights, the Canadian court would apply Canadian law to questions of initial ownership, just as to issues about the validity of such rights. If the question was whether B acted contrary to A’s rights under a foreign copyright or trade mark law, a Canadian court would, in all likelihood, decide it had no jurisdiction to adjudicate on A’s claim because it would involve determining the ownership of foreign intellectual property rights. Descriptive Formants None.

Case 8(4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Operative Rules The choice of law rule would depend on how A’s claim is characterised. If it is a claim for damages for breach of confidence, it probably depends on the law governing the obligation. By analogy with contract, it would probably be the law that has the closest and most real connection with B’s obligation to A not to misuse the information, such as by using it to obtain patents in B’s name. Since the obligation of confidence is closely associated with the contract between A and B, it is likely that the law that governs it is the same law that governs the contract. On the other hand, if the claim is characterised as one of the unjust enrichment of B through misusing the information, the proper law of the enrichment would be applied. Since the enrichment would arise out of the contractual relationship the same conclusion would apply, but an argument could be made that the applicable law is the law of the place where the enrichment occurred, which might be the country in which each patent was obtained.234 Descriptive Formants None.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of the concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus infringed. Assuming that a court of your country is a court of country X:

 Compare Christopher v Zimmerman (2000) 192 DLR (4th) 476, 2000 BCCA 532.

234

468  Joost Blom

Case 9(1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors?

Operative Rules If A brought an action in Canada alleging infringement of A’s moral rights in the album, a Canadian court would distinguish between the law governing the recording contract as such (which the parties could choose) and the law under which the moral rights were claimed. A Canadian court would have subject-matter jurisdiction, as explained in relation to other cases above, only in relation to moral rights enjoyed under Canadian law, because they are as much a creation of the Copyright Act as copyright itself.235 According to the Act ‘Moral rights may not be assigned but may be waived in whole or in part.’236 The validity and extent of the waiver would presumably depend on the law governing the transaction that was said to constitute the waiver. If that transaction was a contract, the proper law of the contract would be determined according to general conflicts principles, including the right of the parties to choose the governing law. That law would determine whether the agreement was binding and how it should be construed. It would not, however, determine whether moral rights were transferable or waivable, since that depends on the law governing the rights, not on the law governing the contract.237 Descriptive Formants The issue in Case 9(1) would therefore arise only if Canadian moral rights were at issue. If the band’s claim was based on its moral rights under the law of a foreign country, a Canadian court would probably not be regarded as having jurisdiction to decide whether those rights had been infringed. The court might take jurisdiction if the issue were limited to the validity and interpretation of the contract itself (for example, a declaration about the contract’s interpretation rather than a claim for infringement of the rights).238 Forum non conveniens might be an issue if the contract, as well as the moral rights affected, were foreign, but a Canadian court might regard itself as forum conveniens if the contract was governed by the law of a Canadian province.

Case 9(2) How will the court deal with the issue of transferability?

235   Copyright Act RSC 1985, c C-42, s 14.1–14.2. JJ Fawcett and P Torremans, Intellectual Property and Private International Law (Oxford, Clarendon Press, 1998) 502–4 likewise argue that moral rights must be governed by the same law that governs the copyright. 236   ibid, s 14.1(2). 237   The position is analogous to the assignment of contractual rights. The validity of the assignment depends on the proper law of the assignment, whereas the question, whether the rights are assignable in the first place, depends on the proper law of the contract under which the rights arose. See J Walker, Castel & Walker Canadian Conflict of Laws, 6th edn (Markham, Ont, LexisNexis, 2005-) (looseleaf), § 24.1.c. 238  Compare Shaw v Shaw [2007] OJ No 2758 (SCJ) (QL) (jurisdiction to determine validity of licence); R Griggs Group Ltd v Evans [2005] Ch 153 (Ch D) (jurisdiction to determine personal obligation to transfer ownership).

Canada  469 Operative Rules See Case 9(1). Descriptive Formants See Case 9(1).

Case 9(3) What would be the applicable law in a case where there is no choice of law made by the parties?

Operative Rules If the parties’ agreement did not include a choice of governing law, the Canadian court would apply the system of law that had the closest and most real connection to the contract.239 As noted under Case 9(1), this law would be applied to the contractual issues but not to the issues related to the moral rights themselves. Descriptive Formants None.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment.

Case 10(1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court?

Operative Rules The recent decision of the Supreme Court of Canada in Pro Swing Inc v Elta Golf Inc240 removes one barrier to the recognition of the X judgment as to ownership of the Canadian patent, namely, that it is not a money judgment. However, the majority in that case made it clear that whether a non-monetary judgment will be given effect in Canada is subject to the discretion of the enforcing court.241 The jurisdiction of the foreign court, as far as jurisdiction in personam against A is concerned, would depend on whether A was resident in X or submitted to the jurisdiction of the X court. Even if A was a non-resident and did not submit, jurisdiction as against A would be recognised if there was a real and substantial connection between A or the subject matter of the action and country X.242

  Above, text accompanying n 103.   Pro Swing Inc v Elta Golf Inc [2006] 2 SCR 612, 2006 SCC 52. 241   Above, text accompanying n 174. 242   Above, text accompanying nn 113–14. 239 240

470  Joost Blom However, there is also a subject-matter jurisdiction question. Just as a Canadian court would probably not regard itself as having jurisdiction to adjudicate on the validity or infringement of a foreign intellectual property right, a Canadian court would probably not regard a foreign court as having jurisdiction to adjudicate on the validity or infringement of a Canadian intellectual property right. An analogy would be the rule that foreign judgments determining title to immovable property in Canada will not be recognised, because such issues are exclusively subject to the jurisdiction of the Canadian court.243 Descriptive Formants The difficulty about subject-matter jurisdiction might be overcome if the ownership question before the foreign court turned on an issue of contract, or some other personal obligation between A and B. In such a case the foreign decision could be characterised simply as one relating to the contract, rather than to the patent rights as such. In that event a declaration as to the obligation might be recognised by a Canadian court. One Canadian case applied this logic to the question of who was the inventor in relation to a foreign patent, which it decided by applying law of the country in which the patent was obtained.244 Pursuing the analogy with subject-matter jurisdiction relating to immovables, a foreign judgment based on a personal obligation relating to ownership of an immovable in Canada will be recognised in Canada, even if a judgment directly affecting title to the immovable would not.245

Case 10(2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in registry of a recognising country?

Operative Rules An application to rectify the Canadian patent register must be made to the Federal Court of Canada.246 Descriptive Formants If the obstacles to recognition of the foreign judgment can be overcome (see Case 10(1)), A could apply to the Federal Court to be registered as the owner of the patent based on the recognition of the foreign judgment, rather than based on a relitigation of the merits of the dispute. However, the obstacles to recognition of the judgment are substantial and so A might well have to re-litigate the matter before the Federal Court.

  Duke v Andler [1932] SCR 734.   Aram Systems Ltd v NovAtel Inc [2009] 10 WWR 262, 2009 ABCA 262, leave to appeal to SCC refused, 28 January 2010, discussed above, text accompanying nn 156–59. 245   The author is not aware of direct authority, but O’Hara v Chapman Estate (1987) 46 DLR (4th) 504 (Sask CA) comes close. This is the converse of the principle that Canadian courts will take jurisdiction in personam in claims based on contract or some other personal obligation, notwithstanding that the subject-matter of the obligation is a foreign immovable; for a recent example, see Minera Aquiline Argentina SA v IMA Exploration Inc [2007] 1 WWR 43, 2006 BCSC 1102, affd [2007] 10 WWR 648, 2007 BCCA 319, leave to appeal to SCC refused [2007] 3 SCR x. 246   Patent Act RSC 1985, c P-4, s 52. 243 244

Canada  471

Case 10(3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Operative Rules If enforcement involved the registration of patent rights, the Federal Court would have to make an order to that effect (see Case 10(2)). The Commissioner of Patents would have no authority to recognise a foreign judgment without a court order. Descriptive Formants None.

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there:

Case 11(1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)?

Operative Rules Under Canadian law, injunctions are in personam orders, and jurisdiction to grant them therefore is based on personal jurisdiction over the defendant. If such jurisdiction exists based upon B’s residence in the Canadian province, the injunction itself may extend to B’s activities outside the province or outside Canada.247 However, the injunction must be relief in respect of a claim that is properly justiciable by the Canadian court, which usually means that the court must have jurisdiction to grant judgment on the merits of the dispute.248 Whether an injunction with extraterritorial effects will be granted, even in such a case, depends on the court’s discretion. That discretion will be exercised on the basis, in part, of the extent to which the injunction represents an intrusion into a foreign legal system. Another relevant factor is whether the injunction would require some kind of supervision to be exercised outside the jurisdiction. 247   Aetna Financial Services Ltd v Feigelman [1985] 1 SCR 2 (jurisdiction existed to grant injunction relating in part to acts taking place outside the province, but discretion should not be exercised to do so); Mooney v Orr [1995] 1 WWR 517 (BCSC) (injunction granted that covered assets outside the jurisdiction). 248   RJ Sharpe, Injunctions and Specific Performance, 3rd edn (Aurora, Ont, Canada Law Book, 2000) paras 1.1170–1.1250. In exceptional cases a court may grant an injunction to restrain conduct in the jurisdiction although the principal action is before another forum (ibid para 1.1170).

472  Joost Blom If B was resident in a country outside Canada and the infringing activities took place there, a Canadian court would not have jurisdiction in personam over B to grant an injunction of any kind, unless B submitted to the court’s jurisdiction or it could be shown that there was a real and substantial connection between the subject-matter of the claim and the Canadian jurisdiction. Acts of infringement and the marketing of counterfeit wares in foreign countries would not normally be the subject of a civil claim in Canada because the Canadian court would lack subject-matter jurisdiction over them. That being so, the Canadian court would not have jurisdiction to grant A an injunction to protect A’s interests in respect of such foreign claims. Descriptive Formants The only extraterritorial relief a Canadian court might be persuaded to grant would be relief in respect of trade mark infringement in Canada, such as preventing the importation of infringing wares into Canada.

Case 11(2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad?

Operative Rules See Case 11(1). The Canadian court could not issue such an injunction. Descriptive Formants None.

Case 11(3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee?

Operative Rules Rules of court of the provinces all permit the court to order that a non-resident plaintiff give sufficient security to cover an award of costs if the principal action fails. 249 They also typically provide that anyone seeking interlocutory (that is, provisional) relief may be required to give an undertaking to the court to compensate the defendant for its loss if the claim in respect of which the relief is given turns out to be invalid.250 Descriptive Formants None. 249   See, eg Ontario Civil Procedure R 56.01(1)(a). The obligation to provide security for costs is a procedural issue governed by the lex fori: J Walker, Castel & Walker Canadian Conflict of Laws, 6th edn (Markham, Ont, LexisNexis, 2005–) (looseleaf), § 6.3j. 250   See, eg Ontario Civil Procedure R 40.03.

Canada  473

Case 11(4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings?

Operative Rules The UNCITRAL Model Law on International Commercial Arbitration, which is law in each Canadian jurisdiction, provides, ‘It is not incompatible with an arbitration agreement for a party to request from a court, before or during arbitral proceedings, an interim measure of protection and for a court to grant that measure.’251 Descriptive Formants None.

Case 11(5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

Operative Rules If the question is whether the issuing of an injunction is governed by the rules of the lex fori or those of the lex causae, Canadian law regards it as a procedural matter, and so governed by the lex fori, because it concerns the granting of a remedy rather than the existence of a right. Descriptive Formants The result of the above characterisation is that a claimant could not claim an injunction in Canada on the ground that he or she would be entitled to one under the foreign law that governs the cause of action. Aside from the general rule that the availability of a type of remedy is viewed as a procedural matter, the discretionary nature of injunctions rules out any other characterisation.

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y:

Case 12(1) Could intellectual property rights be used as collateral pursuant to the law of your country?

251   International Commercial Arbitration Act RSBC 1996, c 233, s 9, and similar provisions in the other provinces’ Acts. It is Art 9 of the Model Law, which some provinces have enacted as a schedule to their statute, as in the International Commercial Arbitration Act RSO 1990, c I.9.

474  Joost Blom Operative Rules Intellectual property rights are certainly used as collateral in Canada. Since all intellectual property rights are assignable,252 it is taken for granted that security interests in them may be granted to creditors.253 The main uncertainty is whether the grant of a security interest in intellectual property must meet the requirements of assignment of the property in question, which are provided in the federal intellectual property statutes, or the requirements of grants of security in personal property, which are governed by provincial legislation.254 The best current practice appears to be to comply with the requirements of both. It is clear that failure to register a security interest in intellectual property under the provincial personal property security statute will mean that the security interest is not protected against a trustee in bankruptcy or judgment enforcement creditors.255 Descriptive Formants None.

Case 12(2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights?

Operative Rules The rules that a Canadian court would apply to the validity of a security interest in intellectual property would probably be those that apply to the creation of security interests in intangibles under the provincial personal property security statutes. Taking the British Columbia statute as typical,256 the validity, perfection, and effect of perfection or nonperfection of a security interest in an intangible are governed by the law, including the conflict of laws rules, of the jurisdiction in which the debtor is located when the security interest attaches.257 Questions of priority as between different security interests are regarded as matters for the lex fori to determine according to the rules in the personal property security legislation.258 A security interest in an intangible is declared to be subordinate to the 252   Copyright Act RSC 1985, c C-42, s 13(4); Patent Act RSC 1985, c P-4, s 50(1); Trade-marks Act RSC 1985, c T-12, s 48(1). 253   See, for instance, Melchior v Cable (Trustee of) (2007) 65 BCLR (4th) 165 (SC), 2007 BCSC 136, considering whether an alleged security interest in a patent took priority over the interest of a secured creditor of the patentholder. 254   See RC Cuming, C Walsh and RJ Wood, Personal Property Security law (Toronto, Irwin law, 2005) 604–7. See also D Vaver, Copyright Law (Toronto, Irwin Law, 2000) 248–49. 255   RC Cuming, C Walsh and RJ Wood, ibid 606–7. 256   Typical, that is, of the common law jurisdictions. In Quebec, Art 3105, para 1 CcQ makes the validity of a security charged on an incorporeal movable to be governed by the law of the country where the grantor is domiciled when the security is created. Publication and its effects are governed by the law of the country in which the grantor is currently domiciled (Art 3105, para 2). A security that has been published is deemed to have been published in Quebec from the first publication if the publication meets the timing requirements in Art 3106 CcQ. See C Emanuelli, Droit international privé québécois, 2nd edn (Montréal, Wilson & Lafleur, 2006) paras 525–26. 257   Personal Property Security Act RSBC 1996, c 359, s 7(2). ‘Intangible’ is defined in s 1(1) of the Act as meaning personal property other than goods, chattel paper, etc, and as meaning a licence, but the definition does not specifically include intellectual property interests. 258   In the British Columbia Act ibid, the priority rules for intangibles are in s 35.

Canada  475 interest of a transferee other than under a security agreement, if the transferee gave value and had no notice of the security interest.259 Descriptive Formants None.

Case 12(3) Would a court of your country apply the same law to registered and non-registered intellectual property rights?

Operative Rules As noted for Case 12(2), the law of the location of the debtor applies to securities interests whether they are perfected or not, as well as to the effect of perfection or non-perfection. Descriptive Formants None.

  ibid s 20(c).

259

Croatia IVANA KUNDA*

Contents Section I:  General Overview................................................................................................................. 478 1.1. Intellectual Property Law..................................................................................................... 479 1.1.1. International and Domestic Legal Sources........................................................... 479 1.1.2. Types of Intellectual Property Rights.................................................................... 482 1.1.3. Bodies Competent to Decide Intellectual Property Matters................................ 483 1.2. International Jurisdiction.................................................................................................... 485 1.2.1. International and Domestic Legal Sources........................................................... 486 1.2.2. Grounds for Exercising and Declining International Jurisdiction....................... 487 1.2.3. Choice-of-Court Agreements................................................................................ 492 1.3. Conflict of Laws.................................................................................................................... 493 1.3.1. International and Domestic Legal Sources........................................................... 493 1.3.2. General Principles of Conflict of Laws in Tort..................................................... 496 1.3.3. General Principles of Conflict of Laws in Contract.............................................. 498 1.3.4. General Principles of Conflict of Laws in Certain Other Matters....................... 502 1.4. Recognition and Enforcement............................................................................................. 504 Section II:  Hypothetical Case Studies.................................................................................................. 507 Case 1. General/Special Grounds of Jurisdiction..................................................................... 507 Case 2. Subject-Matter Jurisdiction.......................................................................................... 509 Case 3. Consolidation of Proceedings....................................................................................... 511 Case 4. Choice of Court............................................................................................................. 512 Case 5. Parallel Proceedings....................................................................................................... 513 Case 6. Principle of Territoriality (Choice of Law).................................................................. 515 Case 7. Infringement of Intellectual Property Rights............................................................... 516 Case 8. Applicable Law to Initial Ownership............................................................................ 518 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 519 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 520 Case 11. Provisional Measures and Injunctions......................................................................... 522 Case 12. Securities in Intellectual Property................................................................................ 524

*  Dr sc, Assistant Professor, Chair of Private International and European Private Law, University of Rijeka, Faculty of Law.

478  Ivana Kunda 1. This report discusses jurisdiction and applicable law in matters of intellectual property for the country of Croatia. The general topic was discussed at the 18th International Congress of the International Academy of Comparative Law held in July 2010 in Washington DC. In accordance with detailed instructions by the General Reporter on the topic, Professor Toshiyuki Kono, the report is divided into two sections. The first section providing a general overview of the legal system and its rules in the fields of intellectual property law and private international law, and the second section discussing the hypothetical cases as if they were to be resolved before the Croatian court or other competent body.

Section I:  General Overview 2.  This section contains a general overview of the basic features of Croatian law concerning the cross-border enforcement of intellectual property rights. The first subsection describes legal sources and institutional competences in the field of intellectual property law, the second subsection analyses the rules on international jurisdiction, the third is devoted to the rules determining the applicable law, and, finally, the fourth subsection deals with the recognition and enforcement of foreign judicial decisions and preliminary/interim measures. 3.  Prior to addressing each of these issues, it seems appropriate to provide relevant information on the Croatian legal system, in particular on the hierarchy of legal sources. Croatia is a civil law country in which the Constitution is the fundamental legal source.1 Article 5(1) of the Constitution lays down that Croatian statutes shall conform to the Constitution, and other rules and regulations shall conform to the Constitution and the statutes. This equally applies to the statutes and rules, which regulate the field of intellectual property law and private international law. 4.  International treaties constitute an important source of Croatian law. All international treaties in force in Croatia have priority over the national legal sources, such as statutes and by-laws.2 The international treaties signed by the Republic of Croatia subsequent to 8 October 1991, the date when Croatia declared its independence, if ratified and publicised according to the prescribed rules, make part of its internal legal order. Furthermore, the international treaties to which the former Yugoslavia was a party remained applicable in the Republic of Croatia on the condition that their provisions are not contrary to the Constitution and legal order of the Republic of Croatia.3 1   The Constitution of the Republic of Croatia, Official Gazette of the Republic of Croatia (hereinafter: OG RC) 41/2001 (consolidated version) and 55/2001 (corrections). This consolidated version of the Constitution of the Republic of Croatia is a compilation of texts including: the text of the Constitution of the Republic of Croatia, OG RC 56/1990; the text of the Constitutional Act on Revisions and Amendments to the Constitution of the Republic of Croatia, OG RC 135/1997 (consolidated version, OG RC 8/1998); the text of the Amendments to the Constitution of the Republic of Croatia, OG RC 113/2000 (consolidated version, OG RC 124/2000); and the text of the Amendments to the Constitution of the Republic of Croatia, OG RC 28/2001. 2   Art 140 of the Constitution states: ‘International agreements concluded and ratified in accordance with the Constitution and made public, and which are in force, shall be part of the internal legal order of the Republic of Croatia and shall be by its legal force above statutes. Their provisions may be changed or repealed only under conditions and in the way specified therein or in accordance with the general rules of international law.’ 3   Art 29 of the Conclusion and Implementation of International Treaties Act, OG RC 28/1996 expressly provides that succession with respect to the international treaties of the predecessor state of the Republic of Croatia is governed by the respective norms of international law unless these treaties are contrary to the Constitution of the

Croatia  479

1.1  Intellectual Property Law 5.  This subsection is intended to provide a brief presentation of the intellectual property law in the Republic of Croatia. At the outset, the international and domestic legal sources are listed and described, followed by the catalogue of the intellectual property rights that can be granted or are recognised ex lege. Finally, the system of specialised and general courts and other bodies competent to hear intellectual property matters is presented.

1.1.1.  International and Domestic Legal Sources 6.  The Croatian legal system recognises the foremost legal power to the Constitution, and the basic constitutional principles underlying intellectual property matters are defined in the relevant part of Article 68 of the Constitution: Freedom of scientific, cultural and artistic creativity shall be guaranteed. The State shall stimulate and assist the development of science, culture and the arts. The State shall protect scientific, cultural and artistic goods as national spiritual values. Protection of moral and material rights deriving from scientific, cultural, artistic, intellectual and other creative activities shall be guaranteed.

7.  Immediately below the Constitution, in the hierarchy of Croatian legal sources, are international treaties. The following multilateral treaties regulating the field of intellectual property are in force: Convention establishing the World Intellectual Property Organisation of 1967, supplemented in 19794 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)5 Paris Convention for the Protection of Industrial Property of 18836 Berne Convention for the Protection of Literary and Artistic Works of 1886 (Paris Act, 1971)7 Madrid Agreement Concerning the International Registration of Marks of 18918 Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks of 19899 Republic of Croatia and its legal order. (Prior to 1996, the Conclusion and Implementation of International Treaties Act of 1991, OG RC 53/1991, was in force. According to Art 33 of the former 1991 CIITA, the international treaties concluded by or accessed by the former SFRY apply in the Republic of Croatia on the basis of the international law on the succession of states, if not contrary to the Constitution and legal order of the Republic.), Along the same lines there is also the Constitutional Decision on Sovereignty and Independence of the Republic of Croatia of 1991, OG RC 31/1991. 4   Official Gazette of the Republic of Croatia, International Treaties (hereinafter: OG RC IT) 12/1993 i 3/1999. 5  The TRIPS Agreement forms Annex 1C of the Marrakesh Agreement Establishing the World Trade Organisation, signed in Marrakesh, Morocco on 15 April 1994. The text in the Croatian language is not published in the OG RC IT but is available in: ‘Sporazum o trgovinskim aspektima prava intelektualnog vlasništva (Sporazum TRIPS)’ [‘Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)’] in O Spevec, T Tomic´ and Z Horvatic´ (eds), Rezultati Urugvajske runde multilateralnih pregovora o trgovini [The Results of the Uruguay Round of the Multilateral Trade Negotiations] (Zagreb, Ministarstvo gospodarstva, Zakonski tekstovi, 2003). 6   The text published in OG RC IT 12/1993 and 3/1999. 7   The text published in OG RC IT 12/1993 and 3/1999. 8   OG RC IT 12/1993 and 3/1999. The text published in OG RC IT 12/2008. 9   Entered into force in Croatia on 23 January 2004, OG RC IT 13/2003, 18/2003 and 12/2008.

480  Ivana Kunda Amendment of the Common Regulations under the Madrid Agreement Concerning the International Registration of Marks and Protocol relating to that Agreement of 200810 Administrative Instructions for the Application of the Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating Thereto of 200811 Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks of 1973, amended in 198512 Trade mark Law Treaty of 199413 Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 195714 Nairobi Treaty on the Protection of the Olympic Symbol of 198115 Universal Copyright Convention of 1952, revised on Paris in 197116 Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations of 196117 Convention for the Protection of Producers of Phonograms Against Unauthorised Duplication of their Phonograms of 197118 Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite of 197419 WIPO Copyright Treaty of 199620 WIPO Performances and Phonograms Treaty of 199621 Hague Agreement Concerning the International Registration of Industrial Designs of 1925, revised in the Hague in 1960 and supplemented in Stockholm in 1967, with amendments of 1979, as well as the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs of 199922 Locarno Agreement Establishing an International Classification for Industrial Designs of 196823 Patent Cooperation Treaty (PCT) of 1970, amended in 1979, modified in 1984 and 2001,24 with 26 Amendments to Regulations under the PCT of 200925 Patent Law Treaty of 2000,26 Strasbourg Agreement Concerning the International Patent Classification of 197127 Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure of 197728   OG RC IT 12/2008 and 09/2009.   OG RC IT 12/2008. 12   Entered into force in Croatia on 9 May 2006, OG RC IT 9/2004. 13   Entered into force in Croatia on 4 July 2006, OG RC IT 9/2004. 14   OG RC IT 12/1993 and 3/1999. 15   Entered into force on 20 November 2004, OG RC IT 7/2004 and 11/2004. 16   OG RC IT 12/1993 and 3/1999. 17   Entered into force in Croatia on 20 April 2000, OG RC IT 12/1999. 18   Entered into force in Croatia on 20 April 2000, OG RC IT 12/1999. 19   OG RC IT 4/1994. 20   Entered into force in Croatia on 6 March 2002, OG RC IT 6/2000. 21   Entered into force on 20 May 2002, OG RC IT 6/2000. 22   The Hague Act in force in Croatia on 12 February 2004, and the Geneva Act on 12 April 2004. OG RC IT 14/2003 and 1/2004. 23   OG RC IT 12/1993 and 3/1999. 24   Entered into force in Croatia on 1 July 1998. OG RC IT 3/1998 and 10/1998. 25   With effect from 1 July 2010, OG RC IT 12/2008. 26   Entered into force in Croatia on 28 April 2005, OG RC IT 10/2004. 27   Entered into force in Croatia on 25 November 2000, OG RC IT 11/1999 and 4/2000. 28   Entered into force in Croatia on 25 February 2000, OG RC IT 11/1999 and 4/2000. 10 11

Croatia  481 International Convention for the Protection of New Varieties of Plants (the UPOV Convention) of 196129 Convention on the Grant of European Patents of 1973, (European Patent Convention, EPC) of 1973, amended by the Act revising Article 63 EPC of 1991 and by decisions of the Administrative Council of the European Patent Organisation of 1978, 1994, 1995, 1996, 1998.30 8.  In addition to this list, there are a certain number of bilateral treaties which directly or indirectly concern the field of intellectual property law,31 the most specific being the Memorandum of understanding between the Government of the Republic of Croatia and the Government of the United States of America on protection of intellectual property rights of 1998.32 This Memorandum lays down a number of obligations for the parties related to both countries’ substantive or procedural laws as well as the rule on national treatment. However, it does not contain rules on international jurisdiction, applicable law or recognition or enforcement of foreign judicial or administrative decisions. 9.  The issues related to intellectual property rights are regulated in the Croatian domestic law by means of several statutes, including the following: Copyright and Related Rights Act,33 Patent Act34 Trade Mark Act35 Industrial Design Act36 Semiconductor Product Topographies Act37 Protected Designation of Origin and Protected Geographical Indication of Products and Services Act38 Protected Designation of Origin, Protected Geographical Indication and Traditional Speciality Guaranteed of Agricultural Products and Foodstuff Act (hereinafter: the Geographical Indications Act)39 Agricultural Plant Variety Protection Act40 Vines Act.41   Entered into force in Croatia on 1 September 2001, OG RC IT 1/2001 and 10/2001.   OG RC IT 8/2007. The revised text entered into force on 13 December 2007. The Republic of Croatia became a member of the European Patent Organisation on 1 January 2008. Previous to that, the Agreement between the Government of the Republic of Croatia and the European Patent Organisation on co-operation in the field of patents (Co-operation and Extension Agreement) of 2003, OG RC IT 14/2003 and 2/2004, was in force as of 1 April 2004. 31   The Republic of Croatia concluded a number of bilateral agreements on encouraging and protecting the foreign investments as well as those on scientific and technological co-operation which recognise national treatment or most favoured nation treatment. Some are listed in I Gliha, Autorsko pravo [Copyright] (Zagreb, Informator, 2000) 4, fn 15. The not-so-recent scholarship mentions the trade agreement with Czechoslovakia of 14 November 1928 (Art 26) and the trade agreement with France of 30 January 1929 (Arts 14 and 15) which contain specific provisions on intellectual property rights. See B Eisner, Med- unarodno privatno pravo, Knjiga II [Private International Law, Book II] (Zagreb, Pravni fakultet u Zagrebu, 1956) 223. 32   OG RC IT 2/2004. 33   OG RC 167/2003 and 79/2007. 34   OG RC 173/2003, 87/2005, 76/2007 and 30/2009. 35   OG RC 173/2003, 76/2007 and 30/2009. 36   OG RC 173/2003, 76/2007 and 30/2009. 37   OG RC 173/2003, 76/2007 and 30/2009. 38   OG RC 173/2003, 186/2003 and 76/2007. 39   OG RC 84/2008, 75/2009, 107/2009 and 20/2010. 40   OG RC 131/1997, 62/2000 and 67/2008. 41   OG RC 69/2003. 29 30

482  Ivana Kunda 10. Certain special issues are dealt with under the Representation in the Field of Industrial Property Rights Act42 and Administrative Fees in the Field of Intellectual Property Rights Act,43 as well as a number of by-laws rendered on the basis of the above statutes. 11.  Unfair competition is regulated under specific provisions of the Trade Act,44 and trade secrets are protected under the provisions of the Information Confidentiality Protection Act.45 All cited statutes are fully harmonised with European Union law, but they regulate only the specific issues related to intellectual property rights, while a number of general questions are to be resolved under other statutes such as the Obligations Act,46 the Labour Act,47 the Civil Procedure Act,48 and the Courts Act.49 Criminal offences and misdemeanours are sanctioned in the Criminal Code50 and the Misdemeanours Act.51 1.1.2  Types of Intellectual Property Rights 12.  There is a traditionally rooted delineation between copyright and related rights, on the one hand, and industrial property rights, on the other. This distinction is also found in the Croatian literature on intellectual property rights. This classical view, reflected also in the first intellectual property international treaties such as the Paris Convention and the Berne Convention, historically results from early conceptual delineations between copyright and industrial property rights, ie copyright was understood as a part of the civil law, while the industrial property rights were thought to belong to the field of commercial law. However, as is evident in recent publications and in university curricula, this strict traditional delineation has in the past few decades been conceptually shifting towards the commercial law side.52 13.  The classification of intellectual property rights remains based on classical criteria. These are the subject-matter of protection and the manner in which they arise. Based on the first criterion, the following intellectual property rights exist in Croatia: copyright (ie authors’ rights), rights related to copyright (namely, performers’ rights, phonogram pro  OG RC 54/2005.   OG RC 64/2000, 160/2004, 62/2008 and 30/2009. 44   OG RC 87/2008, 96/2008 and 116/2008. 45   OG RC 108/1996 and 79/2007. 46   OG RC 35/2005 and 41/2008. 47   OG RC 149/2009. 48   OG SFRY 47/1977, 36/1977, 36/1980, 69/1982, 58/1984, 74/1987, 57/1989, 20/1990, 27/1990 and 35/1991, OG RC 53/1991, 91/1992, 58/1993, 112/1999, 88/2001, 117/2003, 88/2005, 2/2007, 84/2008, 96/2008 and 123/2008. 49   OG RC 150/2005, 16/2007, 113/2008 and 153/2009. 50   OG RC 110/1997, 27/1998, 50/2000, 129/2000, 51/2001, 111/2003, 190/2003, 105/2004, 84/2005, 71/2006, 110/2007 and 152/2008. 51   OG RC 107/2007. For more on criminal misdemeanours and offences, see eg I Josipovic´ and R Matanovac, ‘Zaštita prava intelektualnog vlasništva u hrvatskom kaznenom i prekršajnom pravu i prilagodba europskom pravu’ [‘Protection of Intellectual Property in Croatian Criminal and Misdemeanour Law and Harmonisation with European Law’] in R Matanovac (ed), Hrvatsko pravo intelektualnog vlasništva u svjetlu pristupa Europskoj uniji [Croatian Intellectual Property Law in the Light of Accession to the European Union] (Zagreb, Narodne novine/ Državni zavod za intelektualno vlasništvo Republike Hrvatske, 2006) 169–220. 52   A relatively strict delineation is still reflected in the curriculum of some law faculties in Croatia, the Faculty of Law in Rijeka being an exception as at the fifth year of law studies it offers the elective course ‘Intellectual Property Right’ covering all intellectual property rights listed in this subsection, including copyright, regardless of the fact that it is organised within the Chair of Commercial and Company Law. For joint treatment in the literature, see eg in R Matanovac (ed), Hrvatsko pravo intelektualnog vlasništva u svjetlu pristupa Europskoj uniji [Croatian Intellectual Property Law in the Light of Accession to the European Union] (Zagreb, Narodne novine/ Državni zavod za intelektualno vlasništvo Republike Hrvatske, 2006); R Matanovac (ed), Prilagodba hrvatskog prava intelektualnog vlasništva europskom pravu [Harmonisation of Croatian Intellectual Property Law with European Law] (Zagreb, Državni zavod za intelektualno vlasništvo/Narodne novine, 2007). 42 43

Croatia  483 ducers’ rights, film producers’ rights, publishers’ rights, broadcasting organisations’ rights, and database rights), patent, supplementary protection certificate, consensual patent, trade mark, collective mark, certification mark, protected designation of origin, protected geographical indication of products, traditional speciality guaranteed, and plant variety right. The Croatian literature has generally held both the protection against unfair competition and know-how to be industrial property rights, irrespective of the fact that they are not protected by an exclusive right such as patents, trade marks and similar rights.53 There is also trade name protection. Based on the manner in which they arise, intellectual property rights in Croatia may be either those which arise ex lege (unregistered rights), or those which are granted under a state administrative act (registered rights). The rights which typically arise ex lege, ie by the very fact that certain statutory conditions are fulfilled, are copyright and related rights, while those arising only when granted by the act of a state body are patent, supplementary protection certificates, consensual patent, trade mark, collective mark, certification mark, protected designation of origin, protected geographical indication of products, traditional speciality guaranteed, and plant variety right. 14.  There is no scope here for more detailed analysis of the various aspects of intellectual property rights in Croatia. Further information may be found in the English language overview of the matter in comparative law collections.54

1.1.3  Bodies Competent to Decide Intellectual Property Matters 15.  The competence for deciding intellectual property cases in the Republic of Croatia is divided between the administrative bodies and the courts. Among the administrative bodies, the State Intellectual Property Organisation of the Republic of Croatia (hereinafter: the SIPO) is the most active in this field, being competent to grant the following Croatian registered intellectual property rights: patents, supplementary protection certificates, consensual patents, trade marks, collective marks, and certification marks. The Ministry of Agriculture is authorised to grant geographical indications: protected designation of origin, protected geographical indication of products, and traditional speciality guarantee.55 The Ministry of Agriculture and the Institute for Seed and Seedlings are jointly authorised to grant plant variety rights.56 16.  The respective administrative bodies, the SIPO and the Ministry of Agriculture, in addition to registration (grant) of intellectual property rights, are also competent for deciding on the invalidity, abandonment, revocation etc of these rights. Thus, the Patent Act provides that the SIPO shall conduct the administrative proceedings for granting the patent and consensual patent as well as the supplementary protection certificate.57 It is further laid down that the claim for invalidity of a patent shall be brought before the SIPO,58 the request for abolishing the decree on granting the patent,59 as well as that the legal effects of   See A Verona, Pravo industrijskog vlasništva [Industrial Property Law] (Zagreb, Informator, 1978) 2–3.   See H Sikiric´ , I Gliha and M Vukmir, Intellectual Property – Croatia, International Encyclopaedia of Laws, supp 36 (Kluwer Law International, The Hague, 2006). 55   Arts 8(1) and 9 of the Geographical Indications Act. 56   Art 17(1) of the Agricultural Plant Variety Protection Act. 57   Art 15(1) of the Patent Act. Similarly, in relation to granting trade marks, see Art 4 of the Trade Mark Act, and in relation to granting an industrial design, see Art 14 in conjunction with Art 23(1) of the Industrial Design Act. 58   Arts 80(1) and 108m of the Patent Act. Similarly, in relation to cancellation of a trade mark, see Art 46 of the Trade Mark Act, in relation to invalidity of a trade mark, see Arts 49–51 of the Trade Mark Act, and in relation to invalidity of an industrial design, see Art 44(1) of the Industrial Design Act. 59   Art 86(1) of the Patent Act. 53

54

484  Ivana Kunda the qualified statement of abandoning the patent are conditional upon delivery of that statement to the SIPO.60 All first-instance decisions rendered by the SIPO may be appealed.61 The Board of Appeals is the body competent to decide all above-mentioned matters in the second instance. There is also a judicial review available against all unappealable administrative decisions; it may be initiated before the Administrative Court of the Republic of Croatia. 17.  All the above-mentioned matters are reserved exclusively for the Croatian administrative bodies and may under no circumstances be decided by any other body, including the Croatian courts, not even when they are faced, for example, with the issue of invalidity of a registered right as an incidental question needed to be resolved prior to deciding on the main disputed issue. The exception to this general rule relates to the invalidity of a registered industrial design, so the defendant may attempt to prove invalidity of the disputed registered industrial design in the court proceedings.62 18.  The court competence related to registered intellectual property rights is thus generally limited to the following matters: deciding on the contracts involving any sort of transaction concerning the intellectual property rights, determining the person entitled to claim protection (prior to claiming the protection, and upon the registration), ordering the entry of the inventor’s name in a patent application or a patent, determining the infringement and ordering the wrongdoer to terminate the acts of infringement, ordering the seizure and/or destruction of the infringing objects, ordering compensation of damages on the basis of the damage reparation provisions, ordering payment of the usual compensation, ordering restitution or compensation on the basis of the provisions on the condictio sine causa, ordering the publication of the judgment, and ordering delivery of information.63 The courts are also competent to decide all issues (contractual, non-contractual, entitlement, existence, etc) related to non-registered rights such as copyright and related rights, unfair competition and trade secrets. Here, the referred courts are those courts specialised in commercial matters: the Commercial Courts in the first instance,64 and the High Commercial Court in the second instance.65 There is also the possibility of review by the Supreme Court of the Republic of Croatia.66 These courts are, moreover, competent in proceedings on securing evidence and rendering preliminary/interim measures in commercial cases,67 such as those concerning the delivery of information and securing of evidence, tem60   Art 76(1) of the Patent Act. Similarly, in relation to the statement on abandoning the trade mark see Art 45(3) of the Trade Mark Act, and in relation to the statement on abandoning the industrial design, see Art 43(1) (2) of the Industrial Design Act. 61   Art 88(1) of the Patent Act, Art 47a(1) of the Trade Mark Act, Art 52a(1) of the Industrial Design Act. In the case of plant variety rights, the first-instance administrative decision on grant or refusal of the protection is appealable and the second-instance decision is rendered by the Appeals Committee (Art 26 of the Agricultural Plant Variety Protection Act). On the contrary, the first-instance decision of the Ministry of Agriculture in the proceedings for grant of geographical indications are not appealable, but may be challenged before the Administrative Court of the Republic of Croatia (Art 48(1) of the Geographical Indications Act). 62   Art 56b of the Industrial Design Act. 63   The listed claims are envisaged in Arts 95a–95g and 95i of the Patent Act. Similarly, in relation to trade marks, see Arts 76–79a of the Trade Mark Act, in relation to the industrial design, see, Arts 54–56a, 56c and 57 of the Industrial Design Act, and in relation to plant varieties see Arts 41–46 of the Agricultural Plant Variety Protection Act. 64   There is a concentrated territorial jurisdiction of only four Commercial Courts in Croatia, in Osijek, Rijeka, Split and Zagreb, pursuant to Art 4 of the Courts’ Territories and Act (OG RC 85/2008). 65   Art 34b(1)(8) and (9) of the Civil Procedure Act and Art 22(1) of the Courts Act. 66   Art 24(1) of the Courts Act. 67   Art 20(1)(7) and (8) of the Courts Act.

Croatia  485 porary termination of infringement,68 as well as all preliminary measures generally applicable pursuant to the Enforcement Act, in all types of cases, including those concerning intellectual property rights. Specifically, the Patent Act provides for the competence of the Commercial Court in Zagreb in matters on granting the compulsory licence,69 whereas for granting the compulsory licence for use of the protected plant variety, the competence is vested on the ministry competent for agriculture matters.70 19.  The enforcement proceedings which are concerned with intellectual property rights are carried out before the courts normally competent for enforcement. However, there is one legal particularity in such cases: an ex officio duty of the enforcement court to notify the SIPO of the enforcement over a patent, trade mark, industrial design, etc for the purpose of making the entry in the respective register kept by the SIPO.71 An analogous duty is provided for the insolvency court where a patent is included in the insolvency debtor’s assets,72 while in relation to trade marks and industrial designs, no such duty is prescribed but it is stated that the entry on insolvency is registered in the respective register kept by the SIPO upon the request of the competent body.73 20.  At this point, it seems necessary to offer information on the volume of infringement cases before the Croatian courts and share of specific types of intellectual property right. This information may provide an insight into the actual situation concerning the intellectual property enforcement and explain the reasons for the lack of cross-border cases cited in this report. The available information relating to infringement gives an idea of the overall picture. According to the official statistical report for 2009, there was a total number of 945 lawsuits for intellectual property infringement submitted before the Croatian commercial courts, out of which 759 relate to enforcement of the copyright regime of collective management, 113 to individual enforcement of copyright, 41 to enforcement of trade marks, 12 to enforcement of patents, 11 to enforcement of industrial design, and 9 to enforcement of geographical indications. There were 235 appeal cases received in 2009 by the High Commercial Court, in addition to 411 appeal cases pending before the High Commercial Court in that year.74

1.2  International Jurisdiction 21.  This subsection devoted to international jurisdiction is intended to provide an overview of the following issues: the international and domestic legal sources governing jurisdiction issues, general grounds for exercising and declining international jurisdiction, and the choice of court agreements.

68   These measures are envisaged in Arts 95i–95l of the Patent Act. Similarly, in relation to trade marks, see Arts 79a–79d of the Trade Mark Act, and in relation to industrial design, see Arts 56c–56f of the Industrial Design Act. 69   Art 67a(1) of the Patent Act. 70   Arts 38(2) and 40 of the Agricultural Plant Variety Protection Act. 71   See eg Art 62a(3) of the Patent Act, Art 40 of the Trade Mark Act and Art 40 of the Industrial Design Act. 72   Art 62b of the Patent Act. 73   Art 41 of the Trade Mark Act and Art 41 of the Industrial Design Act. 74   SIPO ‘Statistical report on the infringements of intellectual property rights in Croatia: Annual report 2009’ (Zagreb, March 2010), available online at: www.dziv.hr/en/webcontent/file_library/inf_sources/pdf/izvjesce_ povrede_IV_2009_ENG.pdf, 99.

486  Ivana Kunda

1.2.1 International and Domestic Legal Sources 22.  Croatia is a party to no multilateral international convention which contain rules on international jurisdiction relevant to this report.75 The only multilateral conventions related to the topic of this report are those which regulate arbitration issues.76 Because the focus of this report is not on arbitration, further comments related to arbitration rules will be made only incidentally. There are a few bilateral conventions containing provisions on international jurisdiction. A case in point is the 1960 Convention on Legal Assistance in Civil and Criminal Matters with Poland,77 Article 43 of which provides for jurisdiction in contract cases, except for those related to immovables, which is based on the criterion of the defendant’s residence. For jurisdiction in tort cases, there are several alternative criteria: the place where the tortious act was committed, the place of the defendant’s residence, and the place where the defendant’s property is located. 23.  The basic domestic legal source for three following subsections on conflict of laws (1.3.2, 1.3.3 and 1.3.4) is the Resolution of Conflict of Law with the Laws of Other Countries in Certain Relations Act (referred to hereinafter as the PIL Act).78 This Act dates back to the early 1980s and was only marginally modified when incorporated into Croatian law in 1991.79 This is the codification of both the conflicts and procedural rules relevant to matters having international elements. It applies whenever international treaties in force in Croatia or special domestic laws do not contain a specific rule. There is a number of lege specialis which contain rules regulating only limited number of legal relations, some of which are relevant to the topic of this report such as the Legalisation of Documents in International Relations Act,80 the Civil Procedure Act,81 the Enforcement Act,82 the Insolvency Act83 and the Arbitration Act.84

75   Croatia is a party to multilateral conventions regulating international jurisdiction in tort cases involving eg vessel collisions, nuclear damage, oil pollution and transport. 76   The most important of these conventions are: the New York Convention on Recognition and Enforcement of Arbitration Decisions of 1958, SFRY IT 11/1981 and OG RC IT 4/1994; the European Convention on International Commercial Arbitration of 1961, OG SFRY IT 12/1963 and OG RC IT 4/1994; the Washington Convention on Settling the Investment Disputes between the States and Nationals of Other Sates of 1965, OG RC IT 2/1998; as well as the Protocol on Arbitration Clauses of 1923, OG FPRY IT 4/1959 and OG RC IT 4/1994 and the Convention on Execution of Foreign Arbitral Awards of 1927, OG FPRY IT 4/1959 and OG RC IT 4/1994. 77   Official Gazette of the Socialist Federal Republic of Yugoslavia (hereinafter: OG SFRY) – Addendum 5/1963. It entered into force on 5 June 1963. 78   OG SFRY 43/1982 and 72/1982, OG RC 53/1991. 79   Although there has been an initiative to draft a new legislation, it has been losing momentum, probably due to the anticipated Croatian membership in the European Union, after which the EU legal instruments on private international law will become applicable on these basis. The discussion, nevertheless, yielded the proposal on the conflicts rules and partial response, as well as some sporadic opinions. See, K Sajko, H Sikiric´ , V Bouˇcek, D Babic´  and N Tepeš, Izvori hrvatskog i europskog med–unarodnog privatnog prava [Sources of Croatian and European Private International Law] (Zagreb, Informator, 2001) 259–340; P Šarcˇevi c´  and V Tomljenovic´ , ‘Primjedbe na teze za zakon o med–unarodnom privatnom pravu, autora prof dr Krešimira Sajka, prof dr Hrvoja Sikiric´ a i doc dr Vilima Bouˇceka’ [‘Remarks to the Thesis for the Private International Law Act Proposed by Prof Dr Krešimir Sajko, Prof Dr Hrvoje Sikiric´  and Assist Prof Dr. Vilim Bouˇcek’] (2001) 22 Zbornik Pravnog fakulteta Sveuˇcilišta u Rijeci [Collected Papers of the Law Faculty of the University of Rijeka] 655–75. 80   OG SFRY 6/1973 and OG RC 53/1991. 81   OG SFRY 47/1977, 36/1977, 36/1980, 69/1982, 58/1984, 74/1987, 57/1989, 20/1990, 27/1990 and 35/1991, OG RC 53/1991, 91/1992, 58/1993, 112/1999, 88/2001 and 117/2003. 82   OG RC 57/1996, 29/1999, 173/2003, 151/2004 and 88/2005. 83   OG RC 44/1996, 161/1998, 29/1999, 129/2000, 123/2003, 197/2003, 187/2004 and 82/2006. 84   OG RC 88/2001.

Croatia  487

1.2.2  Grounds for Exercising and Declining International Jurisdiction 24.  This heading provides an insight into the grounds for establishing and declining international jurisdiction. The basic features of the system are explained at the outset, followed by the general grounds of international jurisdiction and special grounds for torts, contracts and other matters. Finally, the choice-of-court agreements and arbitration agreements are briefly described. 1.2.2.1  The System of International Jurisdiction 25.  The provision of Article 27 of the Civil Procedure Act provides that the Croatian courts are competent to hear international cases where it is provided by a statute or an international convention, meaning that Croatian legal system does not allow judicial discretion similar to the common law doctrines of forum non conveniens or forum conveniens. Consequently, a Croatian court may establish its jurisdiction in an international case only where there is a provision conferring such jurisdiction upon the Croatian courts and the circumstances of the case fall within it. It may decline its jurisdiction only where such provision does not exist, or where the application of the provision to the circumstances of the case does not result in the international jurisdiction of the Croatian courts.85 The court’s task of establishing or declining jurisdiction is not contingent on the parties’ submissions, since the court has to ex officio verify its international jurisdiction to adjudicate in casu.86 It is also important to note that Croatian law adopts the doctrine of perpetuatio iurisdictionis, meaning that for the purpose of examining its international jurisdiction the Croatian court looks at the circumstances that existed at the moment the proceedings (corresponding to the German notion of Gerichtsanhängigkeit) or litigation (lis pendens, corresponding to the German notion of Streitanhängigkeit) commenced, depending on the interpretation adopted.87 Therefore, subsequent change of the relevant circumstances of the case on which the jurisdiction may be based does not affect the international jurisdiction of the Croatian courts.88

85   See M Dika, in M Dika, G Kneževic´  and S Stojanovic´  (eds), Komentar Zakona o med–unarodnom privatnom i procesnom pravu [Commentary on the Statute on Private International and Procedural Law] (Belgrade, Nomos, 1991) 176. 86   See Art 15 of the Civil Procedure Act. 87   It is highly debatable in the Croatian legal doctrine whether the provision of Art 81 of the PIL Act, which actually defines this moment to be the commencement of litigation (ie the moment when the defendant is delivered the lawsuit), is to be understood literally, or should be taken as an editors’ mistake and construed in line with the perpetuatio fori rule for domestic cases which takes into consideration the moment when the proceedings are commenced (ie the moment when the lawsuit was submitted to the court) which precedes the moment when the defendant received it. The former position is favoured by Dika, in Dika, Kneževic´  and Stojanovic´ , above n 85, 261, as well as adopted in the relatively recent decision of the Supreme Court of the Republic of Croatia. The latter interpretation is upheld by P Bosnic´ , Hrvatsko med–unarodno privatno i procesno pravo, Knjiga II [Croatian Private International and Procedural Law, Book II] (Split, Pravni fakultet u Splitu, 2003) 17; Đ Vukovic´  and E Kunštek, med–unarodno grad–ansko procesno pravo [International Civil Procedural Law] (Zagreb, Zgombic´  & Partneri, 2005) 85. Vukovic´  and Kunštek disagree with this legislative solution. The latter interpretation has also been present in certain lower court decisions such as the decision of the Commercial Court in Rijeka P-633/00 of 30 December 2002, confirmed by the decision of the High Commercial Court Pž-1487/03 of 13 May 2003. 88   This does not apply in cases when its jurisdiction depends on the defendant’s (tacit) consent. See below 1.2.2.2.

488  Ivana Kunda 1.2.2.2  General Grounds 26.  The rules of the PIL Act that are pertinent to establishing the international jurisdiction of the Croatian courts and other bodies in intellectual property cases are primarily those on general jurisdiction. The Croatian courts shall have international jurisdiction if the defendant is domiciled in Croatia. The Croatian courts shall also have jurisdiction if the defendant is domiciled neither in Croatia nor in another country, but has residence in Croatia. If the litigants are Croatian nationals and the defendant has residence in Croatia, the Croatian courts shall also have international jurisdiction to hear any type of case. The jurisdictional rule on joinder of parties provides that if two or more defendants are sued on the same legal and factual grounds, and between whom this legal and factual connection existed even before the lawsuit was initiated (Croatian materijalni suparnicˇ ari, corresponding to the German notion of materielle Streitgenossenschaft), the Croatian courts shall have supplemental jurisdiction to adjudicate the case against all defendants, provided one of those defendants has domicile or seat in Croatia.89 There is a further rule on the general head of jurisdiction concerning the proceedings against a Croatian national who lives abroad where he or she has been sent on duty or to work by a state body, a company or another legal person. In such a case the Croatian courts shall have jurisdiction, provided that the Croatian national in question was domiciled in Croatia.90 27.  Although not reported to have been used in practice since the late 1960s,91 it is necessary to mention here the provision of the PIL Act on the so-called retorsion head of jurisdiction: where the law of a foreign state provides a criterion for establishing the jurisdiction of its courts in the proceedings against a Croatian national, the same criterion, although not provided in Croatian law, may be used for establishing the jurisdiction of the Croatian courts in the proceedings against the national of that foreign state.92 1.2.2.3  Special Grounds in Torts and Contracts 28.  Further heads of jurisdiction concern special legal relations such as contracts and torts, and although none of them specifically refers to intellectual property, they may be applied in these cases as well. 29.  In addition to the general heads of jurisdiction, all of which may be used in tort (including the infringement of intellectual property) cases, special head jurisdiction for torts provides that the Croatian court shall have jurisdiction if the damage has occurred on the territory of the Republic of Croatia.93 The Croatian scholarship is divided in interpreting this provision. Some tend to believe that the phrase ‘damage occurring in the Republic of Croatia’ has to be construed in a limited sense to encompass only those situations in which the place of the damage, ie the consequences of tortious act (locus damni) is in Croatia.94 Other scholars hold that irrespective of this phrase the broader interpretation would be in line with the doctrine of ubiquity according to which the damage occurs both, in the place where the tortfeasor acts (locus actus) and in the place where the consequence 89   Art 46(1)–(4) of the PIL Act. It has to be pointed out that where a provision of the PIL Act designates jurisdiction to Croatian courts or other bodies based on Croatian nationality, in the case of stateless persons such jurisdiction shall exist provided that person is domiciled in Croatia (Art 51 of the PIL Act). 90   Art 52 of the PIL Act. 91   See the references by Dika in Dika, Kneževic´  and Stojanovic´ , above n 85, 178. 92   Art 48 of the PIL Act. 93   Art 53(1) of the PIL Act. 94   Dika in Dika, Kneževic´  and Stojanovic´ , above n 85, 197.

Croatia  489 of such wrongful action is felt (locus damni).95 However, this would exclude the possibility of bringing a lawsuit in Croatia if only an indirect damage occurs there, as has been confirmed several times over the past 15 years by the Supreme Court of the Republic of Croatia.96 The judicial interpretation of this provision, ie of the scope of the locus delicti commissi, in the event of an infringement of an intellectual property right has not been reported. Likewise, the Croatian scholarship, because discussing this issue primarily within the European Union context, did not take either position.97 Thus, the issue whether an act taking place in the territory of one country may quality as an act of infringement of the right protected in another country for the purpose of establishing jurisdiction, remains unanswered in the Croatian law. What has been clearly stated in the legal scholarship already in the 1950s is that the principle of territoriality does not prevent the courts of one country A to enforce an infringed intellectual property right (copyright, patent or another right) protected in another country B if the acts of infringement have been committed in that other country B.98 30.  Additionally, the international jurisdiction in tort may be based on the tacit prorogation where a defendant enters a plea in merits without challenging the jurisdiction.99 Yet, based on the wording of Article 53(1) of the PIL Act, it appears that Croatian law does not allow parties to explicitly agree on international jurisdiction in tort cases. This may be explained by the reasons of protection of the injured party, which is generally the weaker party in this relationship. Although it is held that an injured party’s agreement on choice of court before damage occurred should not be allowed, such consent subsequent to the occurrence of damage is not considered harmful to the injured party’s interests, and thus tacit prorogation would be possible. In any case, the situations in which the injured party will be in the defendant’s position are relatively rare, lessening the practical importance of this provision in tort cases. All criteria for international jurisdiction available in tort cases are available also to the plaintiffs in the proceedings against insurers on the grounds of direct action for third-party liability, provided that direct action is allowed under the 95  K Sajko, ‘Perspektiva razvoja med–unarodnog privatnog prava: O Briselskoj i Luganskoj konvenciji o nadležnosti i izvršenju odluka u grad–anskim i trgovaˇckim predmetima i kako Hrvatsko pravo uskladiti s tim konvencijama’ [‘Development Prospect of Private International Law: On the Brussels and Lugano Conventions on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters and How to Harmonise Croatian law with these Conventions’] in N Gavella et al (eds), Hrvatsko grad–anskopravno ured–enje i kontinentalnoeuropski pravni krug [Croatian Civil Regulation and Eurocontinental Legal Circle], 2nd edn (Zagreb, Pravni fakultet, 1994) 239; V Tomljenovic´ , ‘Posebna med–unarodna nadležnost u sporovima izvanugovorne odgovornosti za štetu – neka otvorena pitanja tumaˇcenja i kvalifikacije’ [‘Special International Jurisdiction in Non-Contractual Disputes – Some Open Questions of Interpretation and Qualification’] (1998) 19 Zbornik Pravnog fakulteta Sveuˇcilišta u Rijeci [Collected Papers of the Law Faculty of the University of Rijeka] 867, 907–8. 96   In the Supreme Court of the Republic of Croatia decision Rev 2390/94 of 3 September 1997, published in (1998) 4 Sudska praksa [Court Practice] 91, it was clearly stated that the term ‘occurrence of damage’ means the bodily injury, death or damage to a thing. This was transformed into legal opinion accepted at the meeting of the Supreme Court Civil Law Section (III/07) Su-IVg-46/2007-3 held on 26 February 2007. See also the Supreme Court of the Republic of Croatia decisions Rev-758/1995-2 of 6 May 1998, accessible at: sudskapraksa.vsrh.hr/ supra/, and Revt-51/03-2 of 27 February 2007, accessible at: sudskapraksa.vsrh.hr/supra/. 97   I Kunda, ‘Med–unarodna nadležnost u postupcima povodom povrede prava intelektualnog vlasništva u europskoj uniji: priprema za izravnu primjenu acquisa’ [‘International Jurisdiction in the Proceedings for Infringement of Intellectual Property Rights in the European Union: Preparation for Direct Application of the Acquis’] in R Matanovac (ed), Prilagodba hrvatskog prava intelektualnog vlasništva europskom pravu [Harmonisation of the Croatian Intellectual Property Law with the European Law] (Zagreb, Državni zavod za intelektualno vlasništvo/Narodne novine, 2007) 297–300. 98   Eisner, above n 31, 208. 99   Art 50 of the PIL Act.

490  Ivana Kunda applicable law, as well as for recourse against regress debtors on the grounds of liability for damages.100 31.  In contracts, the international jurisdiction of Croatian courts may be based on the above-mentioned general headings as well as several special headings of jurisdiction. In the proceedings concerned with a claim involving an economic interest101 (Croatian imovinskopravni zahtjev, corresponding to the German notion of vermögensrechlicher Anspruch), the Croatian courts shall have jurisdiction if the defendant’s property or the object claimed in the lawsuit is located in Croatia.102 Likewise, the Croatian courts shall have international jurisdiction in respect to obligations which were created during the defendant’s stay in Croatia.103 In the proceedings against a natural or legal person having its seat abroad, concerning the obligations created in the territory of Croatia or to be performed in the territory of Croatia, the Croatian courts shall have international jurisdiction provided that this person’s representative or agent is located in Croatia or a company which has been entrusted to carry out the business on its behalf is located in Croatia.104 It has been confirmed that the mentioned criteria needs to be fulfilled cumulatively, meaning that the fact that the defendant’s agent is in Croatia is insufficient if the obligation either has to be created or has to be fulfilled in Croatia.105 Additionally, the parties may explicitly agree to confer the jurisdiction in contract to the Croatian court, provided that at least one of them is a Croatian national or a legal person having seat in Croatia.106 The jurisdiction in contract may also be based on the tacit prorogation where a defendant enters a plea on the merits without challenging the jurisdiction.107 As in the case of infringement, the Croatian scholarship has declared a long time ago that it is not contrary to the principle of territoriality to decide on a contract related to a foreign intellectual property right (publishing contract, patent licence agreement etc) because enforcing a contract at dispute against the holder of the right does not amount to denial of the right itself.108 32.  It has been submitted in Croatian scholarship that the forum solutionis rule determining the domestic territorial jurisdiction109 can be used as the special heading of international jurisdiction for both torts and contracts.110 This seem to be an incorrect approach,   Art 53(2) of the PIL Act.   This does not include the rights in rem in an immovable or tenancy rights. Pursuant to Art 56 of the PIL Act, the actions concerning such rights are subject to the exclusive jurisdiction of Croatian courts if the immovable is located in the territory of Croatia. 102   Art 54(1) of the PIL Act. 103   Art 54(2) of the PIL Act. 104   Art 55 of the PIL Act. For more details on the interpretation of the provision see D Babi c´ , ‘Med–unarodna nadležnost za ugovorne sporove u europskom, hrvatskom i ameriˇckom pravu’ [‘International Jurisdiction for Contractual Disputes in European, Croatian and American Law’] (Doctoral Thesis, University of Zagreb, Faculty of Law, 2005) 241–50. 105   The Supreme Court of the Republic of Croatia, Rev-79/91 of 21 January 1992, cited in: Sajko et al, above n 79, 160–61. 106   Art 49(2) of the PIL Act. 107   Art 50 of the PIL Act. 108   B Eisner, above n 31, 208. 109   Art 58(3) of the Civil Procedure Act. 110  Babi c´ , above n 104, 220 et seq; D Babi c´ , ‘Med–unarodna nadležnost prema mjestu ispunjenja ugovorne obveze u europskom i hrvatskom pravu’ [‘International Jurisdiction Based on the place of Performance of Contractual Obligation in European and Croatian Law’] in V Tomljenovic´ , E Culinovic´  Herc and V Butorac (eds), Hrvatska na putu prema europskom pravosudnom podruˇcju: Rješavanje trgovaˇckih i potrošaˇckih sporova [Croatia on the Way to the European Judicial Area: Resolving Commercial and Consumer Disputes] (Rijeka, Pravni fakultet Sveuˇcilišta u Rijeci, 2009) 112 et seq. See also the decisions of the High Commercial Court: Pž-2826/93 of 1 February 1994, Pž-2698/96 of 14 January 1997, Pž-2622/99 of 6 July 1999 (in contracts) and Pž-2468/96 of 25 November 1997 and Pž-3092/97 of 9 December 1997 (in torts). 100 101

Croatia  491 since the provisions on domestic territorial jurisdiction may be ‘converted’ into the provisions on international jurisdiction only under the condition that there is no special provision on international jurisdiction for these types of legal relations in Croatian law.111 Given that there are such special provisions, which are cited above, there is no room for expanding the international jurisdiction of Croatian courts in these matters.112 1.2.2.4  Special Grounds in Certain Other Matters 33.  An additional question that needs to be addressed within this subsection is international jurisdiction to decide on the issues such as grant (registration), validity, abandonment, revocation, etc of an intellectual property right, international jurisdiction to decide who is the initial holder (initial entitlement) of an intellectual property right and international jurisdiction to decide on granting the compulsory licence. Neither of these issues is explicitly mentioned in any of the provisions on international jurisdiction in the international conventions to which Croatia is a party, or in the Croatian statutes. 34.  As for the international jurisdiction to decide on granting the compulsory licence, one may doubt whether the provision in the Patent Act which provides for the competence of the Commercial Court in Zagreb113 may by analogy be used for establishing international jurisdiction on the basis of already cited Article 27 of the Civil Procedure Act.114 The affirmative answer to this question might be supported by the fact that the relevant provision of the Patent Act determines the subject-matter-specific domestic territorial jurisdiction, ie its concentration in Zagreb, and that consequently may be transformed into the rule on international jurisdiction because there is no special provision on international jurisdiction for this type of legal relation in Croatian law. 35.  However, such a gap-filling technique would not be helpful for the remaining issues, since there are no rules on domestic territorial jurisdiction applicable to them, either because they are not mentioned in any of the subject-matter-specific rules on domestic territorial jurisdiction (initial entitlement dispute), or because there is a single administrative body in Croatia which has competence (grant or registration, validity, abandonment or revocation). Therefore, all these matters may be decided by the Croatian court where such jurisdiction can be based on the general headings of jurisdiction or on retorsion headings of jurisdiction as described above. An interesting issue arises as to the possibility to establish the jurisdiction of Croatian courts on the basis of a parties’ agreement, discussed in more detailed below.115 36.  In the context of international jurisdiction, it is important to further note that in the situation of simultaneous lis pendens before a Croatian court and a foreign court, the Croatian court shall suspend the proceedings at the request of either of the parties,   Art 27 of the Civil Procedure Act.   I Grbin, ‘Nadležnost sudova u grad–anskim stvarima s med–unarodnim elementom’ [‘Jurisdiction of the Courts in Civil Matters with and International Element’] (1996) 35 Pravo u gospodarstvu [Law in Economy] 227, 234; V Tomljenovic´ , ‘Pravila o mjesnoj nadležnosti u funkciji pravila o med–unarodnoj nadležnosti: kada i kako?’ [‘The Rules on Territorial Jurisdiction as Rules on International Jurisdiction: When and How?’] (1998) 2 Vladavina prava [The Rule of Law] 93, 104. 113   Art 67a(1) of the Patent Act. 114   According to the second sentence in this provision, the Croatian courts shall be competent to decide an international case irrespective of the fact that neither international treaties nor domestic statutes provide for any grounds of international jurisdiction for a specific type of legal matter (a subject-matter-specific international jurisdiction), based on subsidiary application by analogy of the rules on domestic territorial jurisdiction to the international cases. 115   See below 1.2.3. 111 112

492  Ivana Kunda provided that: a) both disputes are between the same parties and in the same legal matter, b) the proceedings before the foreign court commenced earlier, c) the legal matter does not fall under the Croatian rules on exclusive international competence, and d) there is reciprocity.116

1.2.3  Choice-of-Court Agreements 37.  In addition to what was previously briefly presented regarding the choice of court as the ground of jurisdiction, the attention here is on choice-of-court agreements. The PIL Act contains no provisions on the validity of such agreements, save for the conditions which differ depending on whether the jurisdiction of Croatian court is prorogated or derogated. In the former case, the jurisdiction may be conferred on the Croatian courts only if one of the parties is a natural person of Croatian nationality, or a legal person having its registered seat in the Republic of Croatia. If the parties wish to confer jurisdiction to a foreign court and at the same time derogate from the otherwise existing jurisdiction of the Croatian court, their agreement is recognised by Croatian courts, provided that: a) at least one of the parties is a foreign national or legal person having seat in a foreign country (not necessarily the one whose courts are chosen), b) the matter is not related to personal status or family including marital relations, and c) the matter does not fall within the exclusive jurisdiction of the Croatian courts.117 As stated above, based on the wording of the provision of Article 53(1) of the PIL Act, it appears that Croatian law does not allow parties to explicitly agree on international jurisdiction in tort cases.118 38.  The above-mentioned provisions do not directly resolve the issue of whether it is possible to derogate from the Croatian jurisdiction in favour of a foreign jurisdiction in matters such as grant or registration, validity, abandonment or revocation of an intellectual property right, or granting the compulsory licence. Because intellectual property rights are not among the matters explicitly excluded from the prorogability and derogability in the PIL Act, there is no explicit rule that would invalidate such an agreement if general conditions are met.119 Nevertheless, one could argue that the PIL Act cannot be understood as all-encompassing, and that it does not remain unaffected by other provisions, including the implicit ones. Perhaps the concept of a ‘settleable claim’, a claim in respect to which it is permissible to settle (Croatian pravo kojime se može slobodno raspolagati, German Rechte, über die die Parteien frei verfügen können, French le droit sur lequel il est permis de transiger), might be applied to clarify the discussed issue. This concept is explicitly used in the Arbitration Act as a delineating criterion between arbitrable and non-arbitrable legal matters.120 By applying this criterion, the court could establish its jurisdiction based on the choice-of-court agreement in neither of the listed matters, because the parties’ settlement is not allowed in these matters.121

  Art 80 of the PIL Act.   Art 49 of the PIL Act. 118   See above 1.2.2.2. 119   Art 49(3) of the PIL Act. 120   Art 3(1) of the Arbitration Act. 121   Sajko has submitted that because the state administrative body is exclusively competent for these matters and because these matters are regulated by mandatory provisions (ius cogens), they cannot be held arbitrable. K Sajko, ‘Arbitrabilnost u domac´ am i inozemnom pravu’ [‘Arbitrability in Domestic and Foreign Law’] in S Triva et al (eds), Arbitraža i poduzetništvo [Arbitration and Entrepreneurship] (Zagreb, Progres, 1991) 26. 116 117

Croatia  493 39.  Despite the absence of a specific provision in Croatian private international law, the legal scholarship holds that formal validity of choice-of-court agreements in cross-border cases should be governed by the same provisions as the formal validity of agreements prorogating and derogating the domestic territorial jurisdiction, where the written form is a prerequisite.122 Further as a precondition it must relate to a single dispute or multiple disputes if they derive from the same legal relationship.123 It has been submitted that an invoice containing the prorogation clause is not sufficient to constitute an agreement since it is a unilateral statement by one party.124 Likewise, the general conditions (rules) of a game of chance determining, inter alia, the territorial jurisdiction, do not amount to an agreement on choice of court because the written consent of the other party is missing.125

1.3  Conflict of Laws 40.  The conflict-of-law subsection discusses the topic of international and domestic legal sources of conflict-of-law rules, general principles of conflict of laws in torts, general principles of conflict-of-law in contracts including the transfer of rights, and general principles of conflict-of-law in matters other than contract and torts.

1.3.1  International and Domestic Legal Sources 41.  As previously explained, the international conventions have priority over the national statutes in the Croatian legal system. Therefore, it is important to resolve the difficult issue of whether the international conventions, especially those dealing with intellectual property matters that Croatia is a party to contain conflict-of-law rules.126 This primarily includes the Berne Convention and the Paris Convention, which are referred to in the TRIPS Agreement. There are several principles underlying these conventions, among which is the principle of national treatment. Mirroring the international divide in the field, Croatian scholarship is also divided between two poles in interpreting the provisions on national treatment. 42.  One group of scholars, the conflictualists, claims that the international conventions (the Berne Convention in its Art 5 and the Paris Convention in its Art 2) resolve, inter alia, the issue of which law applies.127 The other group of scholars holds the opposite, stating that the cited provisions are not intended to lay down the conflict rules, but the rules on the status of foreigners (Croatian pravni položaj stranaca, German Fremdenrecht, French 122   Art 70(3) and (4) of the Civil Procedure Act. See S Triva and M Dika, Grad–ansko parniˇcno procesno pravo [Civil Litigation Procedural Law], 7th edn (Zagreb, Narodne novine, 2004) 287. 123   Art 70(3) of the Civil Procedure Act. 124   The Supreme Court of the Republic of Croatia Gr-90/96, Izbor odluka Vrhovnog suda Republike Hrvatske [Selection of the Decisions of the Supreme Court of the Republic of Croatia], vol 2 (Zagreb, Narodne novine, 1996) No 107. 125   The Municipal Court in Zadar Gž-647/88, Pregled sudske prakse [Case Law Reports], 39 (Zagreb, Narodne novine, 1988) 100–1. 126   See above 1.1.1. 127   In the Croatian scholarship see I Henneberg, ‘Bernska konvencija za zaštitu književnih i umjetniˇckih djela od 1886. i njezini kasniji akti do 1971’ [‘The Berne Convention for the Protection of Literary and Artistic Works of 1886 and its succeeding acts until 1971’] (1983) 16 Prinosi za poredbeno prouˇcavanja prava i med–unarodno pravo [Contributions to Comparative Study of Law and International Law] 1, 50; K Sajko, Med–unarodno privatno pravo [Private International Law], 4th edn (Zagreb, Narodne novine, 2005) 279.

494  Ivana Kunda condition des étrangeres) in order to remove discrimination among nationals of the respective Union.128 43.  It appears that the conflictualist position may have been adopted in Croatian case law. This conclusion can be drawn on the basis of two cases, neither of which was finally decided. The first case is Freistaat Bayern v Croatiaknjiga doo,129 initiated before the Commercial Court in Zagreb in 2007, by the State of Bavaria alleging to be the holder of copyright over Adolf Hitler’s Mein Kampf and requesting that the defendant be ordered to cease printing, publishing and offering for sale this book in the German language as well as its translation into the Croatian language, and taking other similar actions infringing the plaintiff ’s rights. They also requested that all copies of the book be destroyed and that the court decision be published in Croatia and in Germany at the defendant’s costs. The defendant challenged the plaintiff ’s right of action (corresponding to the German notion of Aktivlegitimation), claiming that the copyright had expired in 1995 under former Croatian law which provided for 50 years’ protection following the author’s death. In respect of the issue of applicable law, the plaintiff claimed that German law was to apply to the matter of existence and duration of the copyright, while Croatian law was to be applied to the issue of its enforcement, whereas the defendant argued that Croatian law exclusively was to be applied to the issue of existence, duration and enforcement of copyright. In resolving this matter the court of first instance addressed the issue of applicable law, concluding that the defendant was correct in stating that Croatian law is applicable in these proceedings. The reasoning invoked the Berne Convention, ie its provision of Article 6bis(3) which, as the Commercial Court in Zagreb explained, provides that ‘the means of redress for safeguarding the granted rights [be] governed by the legislation of the country in which protection is claimed’.130 The Court further stated that according to Article 7(8) of the Berne Convention, ‘the term of protection is governed by the legislation of the country in which protection is claimed’.131 The Court’s quite interesting final conclusion on the matter of applicable law was that ‘the application of a national law in copyright cases with an international element is a generally accepted principle of all international treaties and conventions’,132 the Court probably intending to refer to the application of domestic (forum) law rather than simply any national law. In any event, this decision has to be viewed against the background of its political implications which might weaken its role of the leading case as well as the scientific conclusions drawn on it. 44.  Irrespective of whether one agrees with the conflictualist interpretation, the Court’s reasoning would have been more credible had it invoked Article 5(2) instead of Article 6bis(3), as the latter deals with moral rights which were not at dispute in the case at hand. 128   I Kunda, ‘Pravo mjerodavno za povrede prava intelektualnog vlasništva’ [‘Law Applicable to Infringements of Intellectual Property Rights’] (Doctoral Thesis, University of Zagreb, Faculty of Law, 2008) 231–45. It would also appear that A Verona shares this opinion, as he puts an emphasis on the legal position of foreigners. See Verona, above n 53, 25. Although somewhat unclear, it seems that the same position is adopted in I Gliha and R Matanovac Vuˇckovic´ , ‘Pravni položaj stranaca kao nositelja autorskog i srodnih mu prava’ [‘The Legal Position of Foreigners as Holders of Author’s Right and Neighbouring Rights’] (2009) 10 Zbornik Hrvatskog društva za autorsko pravo [Review of Croatian Copyright Association] 69–86. 129   The Commercial Court in Zagreb, P-2946/2007 (unpublished). The decision discussed here is the firstinstance decision of 18 February 2008, and the appeal is pending before the High Commercial Court. For a detailed comment on this decision see I Kunda, ‘Two Recent Croatian Decisions on Copyright Infringement: Conflict of Laws and More’ in P Volken and A Bonomi (eds), Yearbook of Private International Law, vol 10 (2008) (Berlin, Sellier, 2009) 617–28. 130   ibid 3. 131   ibid 3. 132   ibid 3.

Croatia  495 In addition, the reference of the Commercial Court in Zagreb to the lex fori on the basis of literary interpretation of the wording ‘in which the protection is claimed’, to the knowledge of the author of this chapter, neither has precedents in Croatian case law, nor derives from Croatian scholarly opinions. When interpreting Article 5(2) of the Berne Convention, Croatian conflictualists construe it as a rule calling for application of the law of the country for which the protection is claimed (lex loci protectionis).133 45.  Regardless of contrary scholarly opinions, the High Commercial Court was also inclined towards this grammatical reading of the Berne Convention in another case, Sten Eric Odman v Adris Grupa dd, originally brought before the Commercial Court in Rijeka in 2002.134 This case concerned an alleged copyright infringement by a Croatia-based company through the unauthorised use and alteration of the ‘Walter Wolf ’ logo on cigarette packages. The plaintiff, a natural person of Swiss nationality and domicile, claimed that he held the copyright on a stylised letter ‘W’ combined with a drawing of a wolf in different colour variations since he had designed the logo in the late 1970s. According to the statement of claim, the design was commissioned by the Swiss company Alesia Parfumes SA, which subsequently acquired the rights to use the logo on different cosmetic products and further license it to others. The plaintiff also alleged that in 2000 he became aware that the defendant was producing and offering for sale cigarettes under the name of ‘Walter Wolf ’ with the accompanying copyrighted logo without permission from him or Alesia Parfumes SA. Furthermore, the plaintiff claimed to have noticed that the defendant had altered the logo by removing the wolf drawing in certain promotional materials. Hence, the plaintiff alleged that both his moral and economic rights had been infringed, and demanded compensation of damages. The defendant replied that there was no infringement, because it claimed to have had obtained, in 1989, a licence to use the logo and the name through a contract with Mr Walter Wolf and the Dutch company Womar BV, the author and holder of the copyright over the disputed logo, respectively. Additionally, the defendant invoked the presumption of authorship, pointing to the signature of Mr Walter Wolf in the logo. The plaintiff responded that it was not the actual signature, but a stylised signature forming an integral part of the design. As a result, the Court had to determine authorship prior to issuing any ruling on the main infringement claim. The Commercial Court in Rijeka failed to examine conflict-of-law questions arising in this case, save for the issue of authorship (as explained below). Deciding on the appeal the High Commercial Court invoked the PIL Act and the Berne Convention and concluded that the applicable law was Croatian. The High Commercial Court accepted the appeal and remitted the case for the new proceedings before the Commercial Court in Rijeka.135 The decision has not yet been made in those proceedings at the time of this report. 46.  In the opinion of the author of this Report, the international conventions regulating the issues of intellectual property in force in Croatia do not contain conflict-of-law rules. 133   Sajko, above n 127, 279. Perhaps the Court’s rulings might be attributable to a somewhat unclear explanation in I Henneberg, Autorsko pravo [Copyright] (Zagreb, Informator, 2001) 49, where it is stated that in certain cases the Berne Convention contains conflict-of-law rules where the lex protectionis is combined with the lex originis, while on the same page (when using Croatian edition) it is stated that ‘the scope and legal remedies for protection are defined by the law of the country in which the protection is claimed, unless the Convention prescribed otherwise.’ 134   The decisions discussed in this comment are the first-instance decision by the Commercial Court in Rijeka, P-749/2002 of 12 October 2007, and the second-instance decision by the High Commercial Court, Pž-277/08–3 of 9 December 2009 (both unpublished). 135   The High Commercial Court, Pž-277/08-3 of 9 December 2009, 3. For more details see below 1.3.2.

496  Ivana Kunda Neither do the domestic laws on intellectual property as explained elsewhere.136 Therefore, one has to look for the conflict-of-law provisions in the other sources, primarily in the statute which is the sedes materiae of the Croatian private international law – the PIL Act. Additionally, in cases where parties conclude an arbitration agreement the Arbitration Act should prevail, and in situations where one party is a consumer the Consumer Protection Act137 creates some limitations. 1.3.2  General Principles of Conflict of Laws in Tort 47.  At the outset, it is important to state that there are no special conflict-of-law provisions in Croatian law that would designate the law applicable to infringements of intellectual property rights. Hence, the general conflict-of-law provision for non-contractual obligations should be decisive. It provides that the law applicable to non-contractual liability for damages, unless otherwise provided by law, is the law of the place where the act was committed (lex loci actus) or the law of the place where the consequence has occurred (lex loci damni), dependent on which of them is more favourable to the injured party.138 The same law is also applicable to the non-contractual liability occurring in relation to the quasi-contracts (condictio sine causa and negotiorum gestio).139 There is a special conflict-of-law provision on the illegality of the alleged tortuous act, which states that this illegality is governed by either the law of place where the act was committed or the law of the place where the consequence has occurred, and if the act was committed or the consequence has occurred in more than one place – it is sufficient that the act is illegal under the law of any of those places.140 48.  These provisions are inspired by the theory of ubiquity and favor laesionis principle, but the provision on the law applicable to non-contractual obligation does not clearly resolve the question whether the choice between the lex loci actus and lex loci damni is to be left to the injured party, or should be made by the court. Although the court practice would suggest the former solution,141 the legal scholarship seems to be united in adopting the latter calling for the ex officio activity of the court in establishing the most favourable law from the perspective of the injured party.142 136   See Kunda, above n 128. For instance, the Copyright and Related Rights Act in c VII, entitled ‘The Act’s Field of Application’, provides that just as Croatian citizens authors and holders of related rights have their seat in Croatia, foreign natural or legal persons enjoy protection under this Act to the extent required under the obligations Croatia assumed on the basis of international treaties or on the basis of factual reciprocity. In all other situations, foreigners shall not enjoy Croatian protection wider than that her state of citizenship or seat, so long as the authors and holders of related rights who are Croatian citizens or have their seat in Croatia in that foreign country enjoy lesser protection than under the Copyright and Related Rights Act. See Art 194(1), (2) and (4) as well as Arts 196–201 of the Copyright and Related Rights Act. In respect to the old laws see also Eisner, above n 31, 216. 137   OG RC 79/2007, 125/2007, 79/2009 and 89/2009. 138   Art 28(1) of the PIL Act. 139   Art 28(2) of the PIL Act. 140   Art 28(3) of the PIL Act. 141   The Supreme Court of the Republic of Croatia Rev 3197/1995-2, 22 November 1995, accessible at: sudskapraksa.vsrh.hr/supra/. 142  V Bouˇcek, ‘Prijedlog Uredbe Rim II iz 2003. i op c´ e odredbe deliktnog statuta u hrvatskom zakonu o med–unarodnom privatnom pravu’ [‘Proposal on the Rome II Regulation of 2003 and general provision on the law applicable to delicts in Croatian private International Law Act’] in R Knez, S Kralji c´  and D Stojanovi c´  (eds), Zbornik prispevkov ‘Evropski sodni prostor’ [Collection of Papers ‘European Judicial Area’] (Maribor, Pravna fakulteta Univerze v Mariboru, 2005) 210; Sajko, above n 127, 169; H Sikiric´ , ‘Primjena kolizijskih pravila i stranog prava u sudskom postupku’ [‘Application of the Conflict-of-Law Rules and Foreign Law in the Court Proceedings’] (2006) 56 Zbornik Pravnog fakulteta u Zagrebu [Collected Papers of the Faculty of Law in Zagreb] 617, 679; V Tomljenovic´ , Pomorsko med–unarodno privatno pravo [Maritime Private International Law] (Rijeka, Pravni fakultet Sveuˇcilišta u Rijeci, 1998) 193–94.

Croatia  497 49.  Although the provision on lex loci delicti commissi was drafted to include in its scope all types of non-contractual obligations which are not specifically regulated,143 it was understood from the very beginning that it is inappropriate for certain special types of delicts.144 This is specifically so in cases concerned with infringement of intellectual property rights, where as a consequence of the principle of territoriality of these rights, the acts committed in the territories outside the borders of the country for which the protection is claimed, are not considered infringing acts. It is therefore suggested that the provision of Article 28 of the PIL Act should be applied in the adjusted manner to the infringements of intellectual property rights taking account of the fact that such rights are territorial, meaning that they provide their holder with the protection against third parties only for the acts taking place within the country of protection. Such approach eventually reduces the locus delicti commissi only to the single connecting factor which corresponds with the locus protectionis and eliminates the plurality of potentially applicable laws to a single law, that of the country of protection. Thus, the locus protectionis connecting factor is to be understood as the embodiment of the locus delicti commissi connecting factor. Such is deemed necessary for special situations involving the infringements of intellectual property rights, in order not to disregard the principle of territoriality.145 This principle has repeatedly been affirmed as fundamental in the field of intellectual property law by Croatian scholars.146 Thus, as early as the 1950s the most respected Croatian private international lawyer, Eisner, stated that it was consistent with territoriality to hold the claim for infringement of a foreign intellectual property right committed in Croatia unfounded, and vice versa, to hold the claim for infringement of a Croatian intellectual property right committed abroad groundless.147 50.  Croatian case law does not seem to be particularly appreciative of the problems related to application of Article 28 of the PIL Act to the infringement of intellectual property rights. In the recent case Sten Eric Odman v Adris Grupa dd, the first to discuss this issue directly, the High Commercial Court pointed out that the PIL Act contains the provisions of Article 28 for the non-contractual obligations and that these provisions are ‘also in accordance with Article 5 of the Berne Convention which provides for the means of redress for to protection of copyright, and the law of the country in which the protection is claimed is to be applied.’148 Even if this statement seems to be overly simplified, revealing also the Court’s lack of full awareness of the differentiation between the ‘country in which’ and ‘country for which’ the protection is claimed, it is an important step forward in the path to   Tomljenovic´ , above n 142, 192–93.   Ž Matic´ , ‘Med–unarodno privatno pravo obveza iz vanugovorne odgovornosti za štetu’ [‘Private International Law concerning Non-contractual Liability for Damages’] (1967) 5 Zbornik za pomorsko pravo JAZU [The YASA Collected Papers for Maritime Law] 271, 285 and 295. See also V Tomljenovi c´ , ‘Med–unarodno privatnopravna problematika izvanugovorne odgovornosti’ [‘Private International Law Issues concerning the Non-Contractual Liability’] (1989) 10 Zbornik Pravnog fakulteta Sveuˇcilišta u Rijeci [Collected Papers of the Law Faculty of the University of Rijeka] 329, 333. The inappropriateness of the locus delicti commissi connecting factor for intellectual property rights infringement has also been taken as the possible basis for claiming that there is a regular or at least unechter lacuna legis in the PIL Act which would necessitate the application of the rule for filling the gaps leading to the conclusion that the lex loci protectionis is the law applicable to infringement claims as the one in line with the principles of Croatian legal system, the Croatian private international law, and comparative private international law. See Kunda, above n 128, 487–98. 145   Kunda, above n 128, 504–8. The locus protectionis connecting factor has been pointed out in relation to infringements without going into details by some other scholars, including Sajko, above n 127, 151. 146   Eisner, above n 31, 207–8 and 216–17; Verona, above n 53, 21. 147   Eisner, above n 31, 208. 148   The Court concluded that Croatian law is applicable. See above n 134, 3. 143 144

498  Ivana Kunda full appreciation of the matter and possibly even the interpretation of the provision of Article 28 of the PIL Act in an adjusted manner to accommodate the territoriality of the intellectual property rights, as advocated above. 51.  The court decisions in the field of infringement mainly overlook the conflict-of-law issues. A case in point is Labello/Lip Balm, which concerned a claim of the German company BDF Beiersdorf AG against several Croatian companies based on trade mark infringement and unfair competition. The claim was rejected and the case went all the way to the Supreme Court of the Republic of Croatia, which found that the first-instance and secondinstance decisions were not correct, and remitted the case back for the new trial, and referred directly to Croatian law without discussing the issue of the applicable law.149 Likewise, in United Colors of Benetton, the Italian company Benetton SpA sued a trader in Osijek, Croatia for trade mark infringement based on unauthorised use of the sign in the defendant’s store, and the Supreme Court of the Republic of Croatia quashed the firstinstance and second-instance decisions without any mention of the international element or conflict-of-law provisions.150 In the third case, Reebok and Starcrest, a company established in the United Kingdom filed a lawsuit against seven Croatian companies or other entities for trade mark infringement and acts of unfair competition. In the first instance, the Commercial Court in Zagreb rendered a decision in favour of the plaintiff, which was later confirmed by the High Commercial Court and the Supreme Court of the Republic of Croatia.151 Here also the courts failed to observe the international element. In the Mercatone case, the Italian company Salzam Srl sued the Croatian company Eki-Mercatone Invictus doo before the Commercial Court in Rijeka for trade mark infringement. The first-instance decision, later confirmed by the High Commercial Court, was rendered in favour of the plaintiff save for the claim of erasing the defendant’s trade name from the Register of Companies, because such claims do not exist under Croatian law.152 Again there was no mention of the cross-border element, but, as in other three formerly cited cases, this did not create any problems in the outcome of the cases because the claims were all limited to the Croatian intellectual property rights, mainly those registered before the SIPO, and the alleged infringing activities were taking place within Croatia. Therefore, the conflict-of-law analysis would have applied Croatian law.

1.3.3  General Principles of Conflict of Laws in Contract 52.  Eisner wrote in the 1950s that it was not contrary to the principle of territoriality to enforce a contract related to copyright recognised or patent granted by a foreign country, because that would not have affected the existence and validity of the right itself. Eisner further stated that the same reasons justify the conclusion that contracts may be governed by the law of a country different from where right originated and where the contract related.153 149   The Supreme Court of the Republic of Croatia Rev-163/1999-2 of 24 February 2000, accessible at: sudskapraksa.vsrh.hr/supra/. 150   The Supreme Court of the Republic of Croatia Revt-50/02-2 of 17 October 2002, accessible at: sudskapraksa. vsrh.hr/supra/. 151   The Supreme Court of the Republic of Croatia Revt-52/04-2 of 15 September 2004, accessible at: sudskapraksa.vsrh.hr/supra/. 152   The High Commercial Court Pž-5393/02–3 of 23 November 2004, accessible at: sudskapraksa.vsrh.hr/ supra/. 153   Eisner, above n 31, 208.

Croatia  499 53.  It is commonly accepted among scholars that the international conventions do not contain conflict-of-law provisions for contractual obligations related to intellectual property rights; hence the PIL Act is of crucial importance.154 The most important provisions are those of Articles 19 and 20 of the PIL Act. According to the former, the law applicable to contract is that chosen by the parties. This provision is very simple and non-limiting, and has been interpreted in the sense that no connexion is necessary with the chosen law in order for the choice to be valid.155 Likewise, the depeçage has been seen as incorporated in the party autonomy as well as the possibility of subsequent choice of change of the already chosen applicable law.156 54.  In the absence of the parties’ choice, the law is determined on the basis of objective connecting factors, but the outcome may be modified by virtue of the escape clause. Two provisions in Article 20 of the PIL Act refer directly to intellectual property rights. Article 20(14) of the PIL Act provides that the applicable law for the contract on copyright is the law of the place where the author’s domicile or seat was at the time of the receipt of the offer. The other provision is Article 20(18) which states that in the case of a ‘contract on technology transfer (licences and other), the law of the place where the domicile or the seat of the receiver of the technology was at the time the contract was concluded’ will be determinative. Another provision contained in Article 20(20) of the PIL Act is important for the discussion; it provides that contracts not listed in this Article are governed by the law of the place where domicile or seat of the offeror was at the time the offer was made. This provision might be relevant for contracts such as distribution contracts or franchising contracts both of which can implicate some sort of intellectual property rights. 55.  It is important to first attempt to define the ratione materiae scope of the provisions in question. As to Article 20(14) of the PIL Act, the notion of ‘the contract on copyright’ is to be understood as any contract whose object is ‘assignment’ or ‘licence’ of copyright irrespective of the actual name such contract might have in the national laws. For instance, under Croatian law, copyright cannot be assigned, because of its monistic legal nature, but this provision would still apply to a contract on assignment of copyright in order to determine the applicable law. The only transaction possible in relation to the copyright under the Croatian copyright law is ‘establishing the right of use of the work to the benefit of another person’ (German Nutzungsrecht einräumen). This is often erroneously referred to as license in Croatian legal literature, but its legal nature is different from licences, and hence it does not fall under the substantive or conflict-of-law provisions on licences.157 An additional question that needs to be addressed here is whether the notion of ‘the contract on copyright’, or more precisely ‘the contract on author’s right’, includes also the related rights. The answer to this question should be affirmative since these rights traditionally share common characteristics and it seems more reasonable to treat them similarly for the purpose of the conflict of laws, than to look for an applicable law under the provision of Article 20(20) of the PIL Act which is a general default rule. 154   See K Sajko, ‘Koje se pravo primjenjuje na zidavaˇcke ugovore s med–unarodnim obilježjem?’ [‘Which Right Applies to Publishing Contracts with an International Element?’] in P Atanackovic´  and M Joviˇcic´ , Autorsko pravo i izdavaˇci [Copyright and Publishers] (Belgrade, Poslovna zajednica izdavaˇca i knjižara Jugoslavije, 1984) 227; I Kunda and R Matanovac Vuˇckovi c´ , ‘Raspolaganje autorskim pravom na raˇcunalnom programu – materijalnopravni i kolizijskopravni aspekti’ [‘Transactions concerning the Copyright in Computer Programs: Substantive and Conflict of Laws Aspects’] (2010) 31 supp Zbornik Pravnog fakulteta Sveuˇcilišta u Rijeci [Collected Papers of the Law Faculty of the University of Rijeka] 112. 155   See also Sajko, above n 127, 144. 156   ibid, 137 and 145. 157   Kunda and Matanovac Vuˇckovic´ , above n 154, 95.

500  Ivana Kunda 56.  The other provision contained in Article 20(18) of the PIL Act applies to ‘the contract on technology transfer (licences and other)’. The term ‘technology transfer’, though used on a regular basis, seems somewhat imprecise from the legal perspective. Nevertheless, it is commonly understood that this notion includes assignment and licences of industrial property rights. This should also include know-how and trade secrets, in particular technology know-how and trade secrets. Whenever either Article 20(14) or Article 20(18) of the PIL Act are not applicable, the general default rule in Article 20(20) comes into play. The general default provision should apply to contracts such as distributing and franchising contracts. Therefore, resorting to depeçage by applying either Article 20(14) or Article 20(18) to intellectual property aspects of that contract, and other conflict-of-law provisions to other aspects thereof, should be avoided. The parties may of course decide differently, but in the absence of their choice this approach is justifiable in view of the fact that, in principle, intellectual property right aspects of the entire transaction are not the main objectives of the contracts. 57.  More detailed analysis of the above provisions leads to the conclusion that they do not follow the same connecting principle. Article 20(14) of the PIL Act uses the author’s domicile/seat, while Article 20(18) of the PIL Act uses the technology receiver’s domicile/ seat. It has been submitted in Croatian scholarship that the former connecting factor embodies the widely accepted doctrine of characteristic performance, while the latter departs from this doctrine.158 This departure has been explained by the intention to favour the domestic parties, given that formerly Yugoslav and now Croatian parties159 to the technology transfer agreements were and still are usually receivers rather than transferors. Thus the provision would lead to application of the forum law. Determining the applicable law pursuant to the provision of Article 20(20) of the PIL Act departs from the doctrine of characteristic performance, although this doctrine is the principal inspiration for the provisions of Article 20 of the PIL Act in general. The connecting factor used in the provision of Article 20(20) of the PIL Act refers to the law of the offeror’s domicile or seat. Such connecting factor is hardly justifiable because the applicable law might be other than the law which the contract is most closely connected to, and may be a result of the purely incidental set of circumstances. In practical terms, it is not always easy to determine which party was the offeror.160 In fact, this exercise involves a circular process, since the court has to determine which party placed the offer, before determining the applicable law governing the contract, including its formation. These problems are reflected in the case law where the courts have resorted to the characteristic performance test instead of applying the offer test.161 58.  Where ‘the special circumstances of the case point towards another law’ different from the law determined pursuant to former provisions, that other law will be applicable. This provision has been interpreted also as the closest connection, but it is submitted here 158   M Župan, Pravo najbliže veze u hrvatskom i europskom med–unarodnom privatnom ugovornom pravu [The Law of the Closest Connection in Croatian and European Private International Law of Contracts] (Rijeka, Pravni fakultet Sveuˇcilišta u Rijeci, 2006) 186. 159   The PIL Act dates back to the time before the dissolution of the former Yugoslavia and it entered into force in 1982. It became Croatian law in 1991 when Croatia declared its independence. 160  D Babi´c , ‘Odred–ivanje mjerodavnog prava za ugovore u praksi Stalnog izabranog sudišta pri HGK’ [‘Determining the Applicable Law for the Contracts in the Practice of the Permanent Court of Arbitration attached to the CCH’] (2000) 12 Hrvatska pravna revija [Croatian Law Review] 159; Župan, above n 158, 186. 161   The Commercial Court in Rijeka P-1176/2000 of 6 May 2003, cited in Župan, above n 158, 193. See also the Permanent Court of Arbitration attached to the Croatian Chamber of Commerce IS-P-12/93 of 13 April 1993 and IS-P-5/93 of 24 May 1994, cited in Sajko et al, above n 79, 146.

Croatia  501 that its wording and the surrounding provisions are sufficient basis for arguing that this is the escape clause.162 The author of this chapter is unaware of any decision that would use this escape clause as basis for applying law different from that designated by the provision of Article 20(1)–(20) of the PIL Act. There are few decisions which merely state such special circumstances do not exist, but no reasons are given and are thus of little help in construing the scope of this exception. 59.  In determining the applicable law, one has to be mindful of the delineation between two sorts of issues related to a copyright contract: purely contractual issues which are governed by the lex contractus, and those which concern the intellectual property right. The latter are excluded from the application of the lex contractus due to territoriality principle embodied in the connection to locus protectionis.163 It is submitted in the scholarly opinions that also the following issues are outside the reach of the lex contractus and are always governed by the lex loci protectionis: the issue of whether the publisher may contract out the obligation to publish a work and what are the consequences if it fails to publish it,164 payment of the reasonable compensation, and validity of the subsequent licence following the prior exclusive licence.165 Other typical questions related to the intellectual property right itself and thus excluded from the realm of the lex contractus are: initial entitlement to the right and question whether the precondition for protection are met, the duration of the right, the content of the exclusive rights and limitations to these exclusive rights, transferability of the right as a whole or certain aspects thereof as well as effects of the transfer or licence towards the third parties. These issues may be viewed from the perspective of determining the scope of the law applicable to contracts or from the perspective of the operation of internationally mandatory rules, which seems to be two sides of the same coin in the field of intellectual property rights. The deviation may arise to the extent that the forum law will not allow foreign internationally mandatory rules to take effect although they are part of the lex loci protectionis. 60.  Special attention has to be paid to the consumer-protective rules in determining the applicable law for consumer contracts involving the intellectual property rights. In such instances Article 4 of the Consumer Protection Act lays down that the choice of applicable law may not deprive the Consumer having habitual residence in Croatia of the protection it enjoys pursuant to the mandatory rules contained in the Consumer Protection Act.166 These rules are given mandatory force to strike down the choice of non-Croatian law to the extent that the mandatory provisions (ius cogens) of the Consumer Protection Act would be substituted by the provisions of the foreign law less favourable to the consumer habitually resident in Croatia. Therefore, these rules disallow conflict-of-law autonomy of the parties (German kollisionrechtliche Verweisung) but permit substantive autonomy of the parties (German materiellrechtliche Verweisung). The conflict-of-law autonomy of the parties allows the parties to choose the foreign law in its entirety including the mandatory provisions, replacing the law applicable in the absence of choice together with its mandatory provisions. Conversely, substantive autonomy of the parties permits the parties only to   For detailed analysis see Kunda and Matanovac Vuˇckovic´ , above n 154, 121–22.   In relation to the publishing contracts see Sajko, above n 154 231–32. 164   Art 66 of the Copyright and Related Rights Act. 165   Sajko, above n 163, 236–37. 166   The Consumer Protection Act is basically the result of the implementation in the Croatian law of the provisions of EU law which afford protection to consumers in private legal relations. The consumer is defined as any natural person who concludes a legal transaction at the market for purposes other than his or her occupation or professional activity or business operation (Art 3(1) of the Consumer Protection Act). 162 163

502  Ivana Kunda substitute the dispositive (supplemental) provisions of the law applicable in the absence of choice, by the provisions of the chosen law, while the mandatory provisions of the law applicable in the absence of choice continue to apply. Thus, the substantive autonomy of the parties is equivalent to incorporation of certain provisions into the contract without the consequence of choosing another law as applicable. 61.  Croatian scholarship has pointed out the importance of the choice-of-law clause in the standard form contract or contract of adherence drafted by multinational companies which do not necessarily involve consumers, and may still produce unjust result for the adhering party.167 Even in such cases where the consumer-protective provisions do not play a role, there are some provisions which are aimed at assuring certain balance between the parties, such as the author-protective ones. Thus, in Croatian law it is prohibited for an author to transfer inter vivos to another person his or her moral rights, just as he or she may not waive his or her copyright.168 This rule has been qualified as an internationally (or overriding) mandatory rule (French loi de police, règles d’application immédiate, German Eingriffsnormen) because the moral rights of an author are aimed at protecting crucial elements of the Croatia’s social organisation. The moral rights of an author embody the unique personal connection between the author and his or her work, while on a general scale, the recognition of rights of an author serve as important means for realising the objectives of the country’s cultural and innovation policy.169 Further examples of internationally mandatory rules, specific to the software copyright, are some provisions on exceptions to the exclusive rights, such as making a back-up copy, observing, studying or testing the functioning of the computer program as well as decompiling under certain statutory conditions.170 The purpose is to assure the balance of the conflicting interests of the author and the public, which has repercussions over the economic structure of the country.171 62.  Regarding the issue of formal validity of the contract, the PIL Act provides that the legal transaction or legal act will be valid if it is valid under the law of the place where it was undertaken or under the law governing the substance of the legal transaction or legal act.172 This may be applied to the contracts related to intellectual property rights to the extent that the lex loci protectionis does not contain provisions of an internationally mandatory nature, or when they do that they are applied primarily.173

1.3.4  General Principles of Conflict of Laws in Certain Other Matters 63.  The early Croatian scholarship stated that the law of the country which granted an intellectual property right governs it as its lex rei sitae (the equivalent to the lex loci protectionis in the contemporary language), thus the Croatian law is lex rei sitae for the copyright over the work first published in Croatia. It was further stated that this lex rei sitae governed 167   M Bareti c´  and S Nikši c´ , ‘Standard Contract of Multinational Companies vs. National Copyright Contract Law – Particular Examples’ in I Gliha et al (eds), Cultural Diversity: Its Effects on Authors and Performers in the Context of Globalisation (Zagreb, Pravni fakultet Sveuˇcilišta u Zagrebu/Hrvatsko društvo za autorsko pravo – ALAI, 2009) 435. 168   Arts 14–17, 42 and 50 of the Copyright and Related Rights Act. 169   Kunda and Matanovac Vuˇckovic´ , above n 154, 126. 170   Arts 110(2), 110(3) Art 111 of the Copyright and Related Rights Act. 171   Kunda and Matanovac Vuˇckovic´ , above n 154, 127. 172   Art 7 of the PIL Act. 173   Thus, the Copyright and Related Rights Act provides that the contract on the basis of which the right to use the copyright is acquired has to be concluded in writing, with the exception of small publishing contracts (Arts 51 and 59).

Croatia  503 the scope of the right (ie the individual rights which the holder has against other persons), the transferability of the right with control over the form of the right, and the possibility to encumber that right by creating certain rights in rem (ususfructus or lien) etc.174 Likewise, the statutory preconditions for protection, the duration of the right, the limitations to the exclusive rights and their dispositive or mandatory nature, transferability of the right as a whole or certain aspects thereof as well as effects on the transfer or licensing to the third parties are all under the realms of the lex loci protectionis. 64.  The issue of what law applies to the initial entitlement to the right is not sufficiently debated in the Croatian scholarly writings and the case law is, also, inconclusive. In the previously cited case Sten Eric Odman v Adris Grupa dd, the Commercial Court in Rijeka attempted to resolve the issue of authorship by referring both to the Croatian Copyright Act of 1978 and the Swiss Federal Copyright Act of 1922, both of which were in force at the time the work in question was created.175 Interestingly, the Court’s reasoning did not provide an explanation as to why both Acts were consulted. The Court stated that these two Acts contain identical rules on the presumption of authorship176 so that there was no need to decide which was more relevant. The Court embraced this as a way out, almost as if it was acting in imitation of Currie’s approach of true and false conflict. The Court’s conflictof-law analysis did not actually reveal its actual motives. Most probably, the Swiss law was taken into consideration as the lex originis, while the Croatian law was considered either as the lex fori or the lex protectionis. It is almost certain that the Court did not consider both laws as cumulatively applicable, and the fact that the Court actually looked into the Swiss law at all may be seen as an indication of its preference for the lex originis, ie for the country of origin principle (German Ursprungslandprinzip). The Rijeka Court eventually decided correctly on the applicable substantive rule, but it remains unclear what would have been the result if the substantive rules had Swiss and Croatian laws differed. 65.  Another interesting issue has arisen in Freistaat Bayern v Croatiaknjiga doo cited above, concerning the right of action (German Aktivlegitimation) and the related issue of transferability of copyright. In ascertaining whether the State of Bavaria could assume the role of plaintiff in this dispute, the Court simply applied the Croatian Copyright Act. Bavaria presented itself as the copyright-holder, and under Croatian law copyright-holders are entitled to an action for unauthorised copyright use. In order to decide on the defendant’s objection, the Court had to answer the question whether the State of Bavaria became a holder of copyright over Mein Kampf, ie whether it lawfully acquired a copyright on the basis of confiscation. This issue should be characterised as falling under the broader notion of transferability of copyright. The judgment’s substantive reasoning follows the conflictof-law reasoning, but it mentions only the means of legal redress and the copyright term. Therefore, absent the Court’s express statement on what law applies to transferability of copyright, the application of Croatian law to the right of action and the legality of transfer might be understood as a consequence of either the lex fori rule or the lex causae rule. A likely construction would be that the Court considered these matters so closely related to the means of redress that they fell under the same conflict-of-law rule, which in the opinion of the author of this Report is not a valid conclusion.   Eisner, above n 31, 209.   See above n 134, 23. 176   The author shall be the person whose name and surname or pseudonym appears on the work, unless proven otherwise. 174 175

504  Ivana Kunda 66.  The right of action is different from the capacity to sue (locus standi), which by its very procedural nature is governed by the forum’s law. Generally, the right of action is substantive in nature since it derives from the substantive rules defining rights. When an intellectual property right is granted through a legislative act, there is a person with whom this right is vested. This person is usually given a legal remedy to protect its right before the courts. For these reasons, the right of action issue should be decided under the same applicable law rule as the disputed right itself (the lex causae, ie in intellectual property cases, the lex protectionis). 67.  The issue of intellectual property right transferability is particularly important from the conflict-of-law perspective and, due to the implications and significance for the country of protection, transferability, and the legal forms for transfer in particular, are often said to be governed by the lex protectionis.177 Although it did not explicitly resolve these matters, the Commercial Court in Zagreb unintentionally succeeded in properly designating the Croatian law as applicable to the issue of whether the confiscation is a permissible mode of copyright transfer, because under the facts of Freistaat Bayern v Croatiaknjiga doo, Croatian law was both the lex fori and the lex protectionis.178 68.  Regarding the term of protection, the Commercial Court in Zagreb employed a technique analogous to that used to resolve the infringement issue. Satisfied that the conflict-of-law solutions were provided by the Berne Convention, the Court invoked Article 7(8) and concluded that Croatian law was applicable as the lex fori. As a result, the Court rejected the defendant’s contention that this issue should be governed by German law. This again seems to be correct only in its outcome because of the facts at hand. Together with the existence and scope of the copyright, the term of protection is actually a core copyright issue, and as such is governed by the lex loci protectionis. In addition to applying Croatian law, the Court verified through Article 7(8) of the Berne Convention that the term of protection under Croatian law, which it found to be 70 years post mortem auctoris, was not longer than the term under German law.179

1.4  Recognition and Enforcement 69.  Chapter 4 of the Croatian PIL Act regulates the issues of recognition and enforcement of foreign judgments and some aspect of the proceedings in which these issues are decided. Recognition of a foreign judgment is generally understood as making it equal in respect of its legal effects to the domestic judgment.180 Article 86 of the Croatian PIL Act provides that a foreign judicial decision shall produce legal effects in the Republic of Croatia if recognised by a Croatian court. It is further provided that a judicial settlement, as well as a decision of a body different than the court which in the country of origin is equivalent to a judicial decision or judicial settlement, shall be considered a judicial decision for the pur177   In the 1950s, Eisner stated that, due to the territoriality principle, transferability is governed by the law of each country of protection. This means that if the invention is protected in countries A and B and both patents are assigned to another person, if such assignment is not permitted in country B, this assignment shall have legal effect only in country A. Eisner, above n 31, 217. 178   For further comments on the judgment see Kunda, above n 129, 624 et seq. 179   The problematic aspect of the court decision in applying the Croatian Copyright and Related Rights Act retroactively is explained in Kunda, above n 129, 627–28. 180   I Grbin, ‘Priznanje i izvršenje stranih sudskih odluka’ [‘Recognition and Enforcement of Foreign Judicial Decisions’] (1992) 46 Zakonitost [Legality] 620.

Croatia  505 poses of recognition. The notion of a ‘foreign judicial decision’ is not statutorily defined, and Croatian scholarship agrees that a foreign judicial decision is a judicial decision rendered not in the name of the country of recognition, but in the name of a foreign authority regardless of the place where the rendering body is seated.181 Although not explicitly discussed in the scholarship, the same criteria would apply for determining whether a decision ordering a preliminarily/interim measure is foreign or not, because the decisions ordering such measures fall under the scope of Article 86 of the Croatian PIL Act. 70.  According to the Articles 20–23 of the Croatian Enforcement Act, the enforcement is carried out on the basis of the titulus executionis which, in addition to a domestic decision, may also be a foreign decision provided that it fulfils the requirements for recognition and enforcement prescribed by a statute or an international agreement.182 The Enforcement Act provides that the enforcement on the basis of the decision of the foreign court may be ordered and carried out in the Republic of Croatia only if such decision fulfils the requirements for recognition and enforcement under the international treaty or statute.183 This is the reference to the PIL Act, unless there is a bilateral or multilateral international treaty.184 If the object of preliminary/interim measure or enforcement is the property of a foreign state, the enforcement is conditional upon consent being given by the Croatian Ministry of Justice. Naturally, such consent is not required if the respective foreign state has agreed to the measure or enforcement. 71.  Due to the public law character of the provisions, the law applicable to the proceedings for preliminary/interim measures or enforcement proceedings is Croatian law as the lex fori.185 The crucial issue for establishing whether the Croatian court is competent to proceed is the location of the object of measure or enforcement because Croatian enforcement law generally adopts the territoriality principle. This means that, in principle, the object of a preliminary/interim measure or enforcement has to be located in Croatia in order for the Croatian court to be competent in the matter. The provision of Article 101(1) of the Croatian PIL Act states that the internal territorial competence for recognition and enforcement of foreign judicial decisions belongs to the court where the recognition or enforcement should be carried out. Obviously, the jurisdiction is not prescribed specifically for international cases, and is derived from the rules on internal territorial jurisdiction pursuant to Article 27 of the Civil Procedure Act.186 This directs the court to look at the rules on internal territorial competence in the Enforcement Act. It also leaves unresolved the issue of internal territorial competence for recognition.187 72. It is important to note that, in addition to the possibility that the recognition proceedings are carried out at a separate hearing, which are non-contentious by their nature, 181   ibid, 621–22; M Dika, ‘O pojmu priznanja stranih sudskih odluka po jugoslavenskom internom pravu’ [‘On the Notion of Recognition of Foreign Decisions under Yugoslav Domestic Law’] (1987) 26 Privreda i pravo [Economy and Law] 600, 603–4; V Tomljenovic´ , ‘Kako kvalificirati pojam strane sudske odluke?’ [‘How to Qualify the Notion of the Foreign Judicial Decision?’] (1986) 7 Zbornik Pravnog fakulteta Sveuˇcilišta u Rijeci [Collected Papers of the Law Faculty of the University of Rijeka] 171, 179. 182   It has been stated that foreign authenticated documents, if enforceable in the country of origin, should be treated as equal to such documents which are given the titulus executionis under Croatian law, such as notary public deeds or solemnised private deeds, and thus are a basis of enforcement (Notary Public Act, OG RC 78/1993, 29/1994, 162/1998, 16/2007 and 75/2009). Vukovic´  and Kunštek, above n 87, 545. 183   Art 17 of the Enforcement Act. 184   See the list in Vukovic´ and Kunštek, above n 87. 185   ibid, 535 and 550. 186   ibid, 536 and 550–51. 187   Dika, in Dika, Kneževic´ and Stojanovic´ , above n 85, 338–39.

506  Ivana Kunda there is an option for each court to decide on certain legal matters, to give effect to those proceedings only on the issue of recognition of the preliminary questions of the foreign judicial decision.188 The first-instance decision on recognition and/or enforcement is appealable within 15 days from the day the decision was served on the appealing party.189 73. The general requirements for recognition and enforcement of foreign judicial decisions, including the decisions on interim/preliminary measures, are those prescribed in the Croatian PIL Act. The Croatian court shall refuse recognition of a foreign judicial decision (or an equivalent to it) if: (a) exclusive jurisdiction in the matter is reserved for the Croatian courts;190 (b) the matter is a res iudicata;191 (c) the decision is contrary to Croatian ordre public;192 (d) there is no reciprocity;193 (e) on the basis of the objection of the party against whom the decision was rendered, it is established that that party was not given the opportunity to participate in the proceedings due to the procedural irregularity.194 Further, a precondition for recognising a foreign judicial decision is that the certificate issued by the competent foreign court or other body certifying the decision is unappealable (final and binding) according to the law of the country of origin.195 In case of enforcement of a foreign judicial decision, all the above cited provisions on recognition (Arts 87–92) apply accordingly, while the applicant also has to submit the certificate that the decision is enforceable under the law of the country of origin.196 74.  The above listed requirements apply equally to cases involving intellectual property rights. Understanding that ex parte proceedings are very important in the field of intellectual property law, it is important to verify whether these rules would prevent the recognition and enforcement of judgments and provisional measures handed down in such proceedings. Two provisions might be of particular importance, the provision on ordre public and the due process provision embodying the principle of audiatur et altera pars. Normally, the decisions rendered in ex parte proceedings should not be considered contrary to Croatian ordre public or due process clause since such proceedings are envisaged in the Croatian intellectual property statutes as well.197

  Art 101(5) of the PIL Act.   Art 101(3) of the PIL Act. 190   Art 89 of the PIL Act. 191   Art 90 of the PIL Act. In the situation where there is an unappealable decision rendered or recognised in Croatia in the same matter the court shall refuse the recognition. While in cases where there is an earlier lis pendens before a Croatian court, the recognition court shall suspend the proceedings until the unappealable decision is rendered by the litigation court. 192   Art 91 of the PIL Act. 193   Art 92 of the PIL Act. Reciprocity is presumed to exist until proved otherwise, and in case of doubt the Ministry of Justice may be requested to provide a clarification. 194   Art 88 of the PIL Act. This ground exists, in particular, if the party against whom the decision was rendered was not able to participate in the proceedings since he or she was not personally delivered the summons, statement of claim or decree on the commencement of the proceedings, unless he or she has pleaded on the merits in the first instance. Whether there was actually a procedural irregularity is decided under the law of the country where these proceedings took place, ie the country of the origin of the decision in question. 195   Art 87 of the PIL Act. 196   Art 96 of the PIL Act. 197   See eg, Arts 95j(4) and 95k(3) of the Patent Act. 188 189

Croatia  507 75.  Problematic in recognition and enforcement under Croatian law is the fact that there are no explicit provisions which confer on courts or administrative bodies exclusive international jurisdiction in cases concerned with grant, registration, validity, abandonment or revocation of the registered intellectual property right. This is further complicated by Article 47 of the Croatian PIL Act, which states that the Croatian courts shall have exclusive jurisdiction only where such jurisdiction is explicitly prescribed by the Croatian PIL Act or another statute. Therefore, it might be concluded that exclusive jurisdiction of Croatian courts could not be used as a ground for refusal of recognition of foreign decisions which invalidate a Croatian patent registered before the SIPO, because such exclusive jurisdiction is not explicitly prescribed. An alternative option for a Croatian court asked to recognise such decisions would be to invoke ordre public. The following reasons may be relevant to this discussion. Above all, the principle of territoriality of intellectual property rights requires that issues such as grant, registration, validity, abandonment or revocation of the registered intellectual property rights are not decided by foreign courts or bodies. In Croatia, moreover, such issues are almost without exception decided before administrative bodies, even the Croatian courts are excluded.198 Verona’s comments, furthermore, highlight that each country views the patent protection as its exclusive right, just as in the period of privileges, because the exclusive right of an inventor my not exist without the patent, and the patent is an act of public law that may not extend beyond the borders of the issuing state. As a result, no foreign body may judge the validity of the patent.199 Based on these reasons, it might be possible to claim that it would be contrary to the Croatian ordre public to recognise or enforce a foreign decision on the issues such as grant, registration, validity, abandonment or revocation of the registered intellectual property right. As a final resort, one might claim that the decisions on grant, registration, validity, abandonment or revocation of the registered intellectual property right are not private law matters under Croatian law, but fall under the public law sphere where the PIL Act does not apply and where the principle of sovereignty excludes the possibility of the laws of one state having legal effects on the territory of another state. 76.  The courts competent to carry out the recognition and enforcement proceedings in commercial matters, including the intellectual property matters, are the Commercial Courts in the first instance, and the High Commercial Court in the second instance.200

Section II: Hypothetical Case Studies Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. 198   See above 1.1.3. This circumstance has been pointed out as one of the justifications of the exclusive jurisdiction by the Court of Justice of the European Union in Case C-4/03 Gesellschaft fur Antriebstechnik GmbH & Co KG v Lamellen und Kupplungsbau Beteiligungs KG of 13 July 2006, accessible at: curia.europa.eu/jcms/jcms/j_6/, paras 22–23. 199   Verona, above n 53, 55. 200   Art 20(1)(6) of the Courts Act.

508  Ivana Kunda Case 1(1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country?

Courts in Croatia cannot establish their jurisdiction on the basis of the defendant’s residence, but merely on the basis of the defendant’s domicile. The residence may be relevant only subsidiarily, in a situation in which the defendant has no domicile in Croatia or in any other country in the world. If the defendant was a corporation having its main place of business in a third country, and the branch in Croatia, the situation would not be altered just because of the presence of the branch in Croatia, since the general jurisdiction for corporations (and all legal persons) is based on their seat. In both above cases, the lack of contact may be cured if a defendant enters a plea without challenging the jurisdiction (prorogatio tacita). Case 1(2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)?

If the copies of the journal were distributed in Croatia in Croatian, the court would have jurisdiction on special grounds for tort since the damage would then have occurred in the Republic of Croatia, which is the relevant criterion for establishing jurisdiction. A decision of the Supreme Court of the Republic of Croatia seems to be pertinent to this case:201 The damage caused to the plaintiff by publishing to her damaging information simultaneously in the Republic of Croatia and the Republic of Slovenia represents the total damage, and for enforcing that damage before the court, in accordance with provision of Article 28 paragraph 1 of the Resolution of Conflict of Law with the Laws of Other Countries in Certain Relations Act (‘Official Gazette’, No 53/91) the applicable substantive law is the law of the place where the act was committed or the law of the place where the consequence has occurred, depending on which of the two laws is more favourable to her. Hence, the plaintiff could at her choice claim compensation of damage either according to the substantive laws of the Republic of Slovenia, or the laws of the Republic of Croatia. The jurisdiction of the court of the Republic of Croatia to proceedings in matters with an international element is based on the provision of Article 53 paragraph 1 of the same Act.

If the journal was printed in Croatia for distribution in neighbouring country X, the legal situation is unclear due to the absence of case law. Moreover there are conflicting scholarly opinions on this issue. It might happen that nothing would change since the relevant provision containing the phrase ‘damage occurring in the Republic of Croatia’ has been interpreted in in line with the ubiquity theory according to which the damage occurs both, in the place where the wrongdoer acts (locus actus) and in the place where the consequence of 201   The Supreme Court of the Republic of Croatia Rev 3197/1995-2, 22 November 1995, accessible at: sudskapraksa.vsrh.hr/supra/.

Croatia  509 such wrongful action is felt (locus damni), but only as to direct damages. The contrary scholarly opinions would limit the scope of this phrase only to the place of the damage, ie the consequences of tortuous act (locus damni). Therefore, it is hard to predict which direction the courts and ultimately the Supreme Court of the Republic of Croatia would follow. The effect that questions of a foreign language used in the journal and not spoken in Croatia might have over the jurisdiction issue is, to the knowledge of the author of this Report, never been discussed in the context of Croatia. In the opinion of the author of this Report, the language should not have any effect over determining the jurisdiction on the basis of the provisions as they are now, since language is not among the prescribed criterions in any of the provisions on jurisdiction, and Croatian courts may not decline jurisdiction if the prescribed criteria are met. Case 1(3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published?

This has not been at issue in any of the available court rulings. Perhaps the same interpretation might be adopted as in respect to language. However, taking account of the sometimes creative approach of the Supreme Court of the Republic of Croatia it would not be surprising that it would follow the interpretations adopted in the comparative law (such as in the rulings of the Court of Justice of the European Union).

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X:

Case 2(1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights?

In the situation where a dispute between A and B concerning an infringement of a foreign patent issued in country Y is brought before a Croatian court, the court would have international jurisdiction provided that any of the grounds is met: defendant’s domicile/seat in Croatia; defendant’s residence in Croatia if the defendant is domiciled neither in Croatia nor in another country; the parties to a dispute are Croatian nationals and the defendant has residence in Croatia; one defendant’s domicile/seat in Croatia is sufficient for jurisdiction against other defendants provided that they are sued on the same legal and factual grounds; defendant is Croatian national domiciled in Croatia, and lives abroad where he or she has been sent on duty or to work by a state body, a company or another legal person;

510  Ivana Kunda criterion of jurisdiction provided in the law of a foreign state applicable in the proceedings against a Croatian national, which although not provided in Croatian law, may be used for establishing the jurisdiction of the Croatian courts in the proceedings against the national of that foreign state; if damage occurred in the Republic of Croatia; or if a defendant enters a plea without challenging the jurisdiction. Case 2(2) Would the court have international jurisdiction to decide upon the issues of validity (and regis­ tration) of foreign intellectual property rights? If so what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and nonregistered intellectual property rights?

Whether the Croatian court would have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights (such as the B’s patent) because a counter-claim was raised in the course of infringement proceedings, is neither regulated in the statutes nor has it been decided before the Croatian courts, to the knowledge of the author of this chapter. In fact, the courts in Croatia do not have the subjectmatter jurisdiction to decide such issues regarding the Croatian registered intellectual property rights, but the question if they do have such jurisdiction in regard to the foreign registered intellectual property rights is not possible to answer under the current state of affairs. There is a provision in Article 189 of the Croatian Civil Procedure Act which states that the court entertaining the claim is competent to decide on the counter-claim by which a defendant is requesting that certain right is established and the decision on the claim depends partially of fully on the existence or non-existence of that right. This provision has also been interpreted as the provision on international jurisdiction pursuant to Article 27 of the Civil Procedure Act.202 Consequently, there would not seem to be any explicit basis for the Croatian court to decline its jurisdiction and it should probably proceed with the case, unless it resorts to creative reasoning. The situation seems less problematic for non-registered intellectual property rights since their validity is under the competence of the courts in Croatia and no act of a foreign state authority would have to be judged. Therefore, the Croatian court would probably not be prevented from establishing its jurisdiction only due to the fact that it has to decide on the counter-claim for validity of the foreign non-registered intellectual property right. If the Croatian court does decide upon the issues of validity (and registration) of a foreign intellectual property right due to the counter-claim in the course of infringement proceedings, this decision would have an erga omnes effect because it will have equal effects as the decision on the claim itself. Conversely, if the issue of validity is to be decided on the basis of simple objection raised in the proceedings, that decision would only be producing legal effects inter partes. Case 2(3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties? 202   The County Court in Rijeka Gž-2157/88 of 25 January 1989, Pregled sudske prakse [Case Law Reports], 41 (Zagreb, Narodne novine, 1988), No 84.

Croatia  511 In opposition to the scenario involving the counter-claim, if the issue of validity is to be decided on the basis of the simple objection raised in the proceedings, thus creating a preliminary question, that decision would only be producing legal effects inter partes. If such objection would be unchallenged by the parties, then the decision of the court might be affirmative but that would eventually depend on the provisions regulating the onus probandi. One of the fundamental principles on burden of proof in Croatian law is that the truthfulness of the allegation made by a party should be proven by the same party, and not by the party denying it (probatio incubit ei qui affirmat non ei qui negat), especially if those allegations are favourable to the party making the allegation.203 This rule is subject to certain exceptions, so it is impossible to provide an answer on an abstract level.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W.

Case 3(1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract?

The question whether the Croatian courts would have jurisdiction to join claims against defendants B, C and D would depend on the interpretation of the provision of Article 46(4) of the PIL Act. This provision states that if there are two or more defendants who are sued on the same legal and factual grounds and between whom this legal and factual connection existed even before the lawsuit was initiated (Croatian materijalni suparni ari, German materielle Streitgenossenschaft), the Croatian court shall have supplemental jurisdiction to adjudicate the case against all defendants provided one of those defendants has domicile or seat in Croatia. Under the circumstances of this hypothetical case, there seems to be no grounds for international jurisdiction on the basis of joinder because neither of the defendants is domiciled or seated in Croatia. In passing, the question whether parallel, identical patents in different countries constitute the same legal ground has not been addressed by either the Croatian case law or legal scholarship. Case 3(2) Assuming that B, C, and D are members of a group of a corporation and takes identical steps in infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country of X is a court of your country would (and if so under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C, and D raised counterclaims that A’s patents are invalid?   Triva and Dika, above n 122, 499–500.

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512  Ivana Kunda The issue whether Croatian court would and under what conditions consolidate the proceedings if it was to decide upon the request of A, does not actually depend on the corporative structure of the defendants, but on the same circumstances as explained under Case 3(1). In order for the Croatian court to be competent under Article 46(4) of the PIL Act, the defendants have to be sued on the same legal and factual grounds and this legal and factual connection must have existed between them even before the lawsuit was initiated (Croatian materijalni suparni ari, German materielle Streitgenossenschaft). The condition missing under Case 3(1), the domicile or seat of at least one of the defendants in Croatia, would be fulfilled since B is located in Croatia (provided that ‘location’ in the hypothetical is equal to the registered seat). Regarding the same factual situation, the court might find this requirement is fulfilled due to the fact that all defendants took identical steps in infringing A’s patent. However, the other cumulative condition that there is also the same legal ground might prove decisive since there are several patents, which are independent rights and their infringement is sanctioned by each country’s law, hence the court might conclude that defendants are not sued on the same legal grounds. Or, the court might conclude that since the patents are identical and the laws concerning the patent infringement are too, there are the same legal grounds. It may hardly be expected that the court might conclude that same legal grounds exist if the patent laws of the respective countries differ in regulating (defining) the infringement. The question as to whether the Croatian court decision on jurisdiction might change if B, C and D raised counterclaims that A’s patents are invalid, would depend on the circumstances not clearly stated here, but it is assumed that the defendants did not previously object to the jurisdiction of the Croatian court. Thus, if the defendants, without objecting to the jurisdiction of the Croatian court, raised counterclaims (which would mean that they have practically entered a plea) the jurisdiction against them would be based on the provision of prorogatio tacita, as against all defendants not having domicile/seat in Croatia, and on the basis of the general heading of jurisdiction (defendant’s domicile/seat) as against B. The question would still remain as to whether the Croatian court might be competent to decide the validity of foreign patents, which has been addressed above.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country:

Case 4(1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made (new) choice of court agreement at the time when the dispute arose?

Croatia  513 A choice-of-court clause in a non-exclusive licence agreement between A, the holder of a bundle of patents in different countries, and B, the licensee, pursuant to which B received a licence to make, use or offer for sale and otherwise dispose of the licensed products, would be enforceable provided that this clause is otherwise valid. The additional elements for validity of the choice-of-law clause which confers jurisdiction to the Croatian court is that at least one of the parties is a natural person with Croatian nationality, or a legal person having its registered seat in the Republic of Croatia. The situation would remain the same if parties make a (new) choice-of-court agreement at the time the dispute arises. Case 4(2) Would the court enforce an exclusive choice of court clause if the defendant raised a counter-claim that patents are invalid?

Assuming that the defendant raised a counter-claim that patents are invalid, the Croatian court would decide on enforcing an exclusive choice-of-court clause independently from such a counter-claim, on the basis of the criteria described under Case 4(1). In passing, if the defendant raises the counter-claim without objecting to the jurisdiction of the Croatian court, that might be interpreted as a plea entered by the defendant, thus creating grounds for the court to establish its jurisdiction even if the choice-of-court clause is not valid. Case 4(3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings?

If the choice of court agreement is in patent infringement proceedings, the Croatian court cannot establish its jurisdiction because of wordings described under Article 53(1) of the PIL Act, which appears not to allow the parties to explicitly agree on international jurisdiction in tort cases, including patent cases. Case 4(4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

The parties’ arbitration agreement would be enforceable under Croatian law both in respect to contract and infringement of an intellectual property right, and such decision would have a res iudicata effect in Croatian legal system. In opposition, the arbitration tribunal cannot decide upon the validity of intellectual property rights because it is explicitly stated that arbitrable claims are only the ‘settleable claims’, ie claims in respect to which it is permissible to settle (French le droit sur lequel il est permis de transiger, German Rechte, über die die Parteien frei verfügen können, Croatian pravo kojime se može slobodno raspolagati).204

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to countries   See the text accompanying nn 120 and 121 above.

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514  Ivana Kunda X and Y. Having found out about the infringing activities A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country:

Case 5(1) What procedural steps would a court of a country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration?

Assuming that the court of country Z is Croatia, the procedural steps that a Croatian court would take regarding pending proceedings in countries X and Y are as follows. The Court could take an action regarding the simultaneous lis pendens before a Croatian court and a foreign court only upon the request of a party to the proceedings. If such request has been made pursuant to Article 80 of the PIL Act, the Croatian court shall suspend the proceedings205 provided that three conditions are cumulatively met: a) both disputes are between the same parties and in the same legal matter, b) the proceedings before the foreign court commenced earlier, c) the legal matter falls under the Croatian rules on exclusive international competence, and d) there is reciprocity. The issue of which proceedings commenced first is to be judged by the laws of the respective countries where the proceedings are taking place (each country’s lex fori).206 Furthermore, the reciprocity requirement is considered met only if there is factual reciprocity, regardless of whether Croatia and the other country have concluded an international agreement or whether the other country has enacted a law on suspension of proceedings in case of an international lis pendens. What matters is that the other country, where the parallel proceeding have commenced later, would also recognise, under certain conditions, the priority of the Croatian proceedings if commenced earlier.207 As previously stated, the exclusive international competence is not prescribed for the cases of infringement of intellectual property rights, irrespective of whether the claims are condemnatory or declaratory. Finally, it has been submitted that parties do not need to be in the same procedural roles for the subjective identity requirement to be met,208 and that objective identity exists when the res iudicata effect of the decision in the proceedings would extend to the dispute which is the subject-matter of the parallel proceedings.209 At issue here is whether there is an objective identity between the condemnatory infringement claim and the declaratory non-infringement claim. Although Croatian legal scholarship and case law have not specifically addressed the issues in the context of intellectual property rights, it may be concluded that in evaluating these matters the Croatian court would 205   The suspension lasts until the completion of the foreign proceedings. If the foreign decision is recognised in Croatia the claim made in the Croatian proceedings will be dismissed, whereas if the foreign decision refused recognition in Croatia, the Croatian proceedings will be continued. 206  Đ Vukovi c´ , ‘Litispendencija kod grad–anskopravnih stvari s med–unarodnim elementom’ [‘Lis Pendens Concerning the Civil Law Matters with an International Element’] (1986) 10 Godišnjak Pravnog fakulteta u Banjaluci [Annals of the Faculty of Law in Banjaluka] 107. 207   There are certain disputes in the scholarly writings about the extent to which the foreign rules on lis pendens should be equivalent to the Croatian rules in order for the reciprocity requirement to be met. See Dika in Dika, Kneževic´ and Stojanovi  c´ , above n 85, 257–58. 208   It was also established in the case law that the parties are not identical in the case where the plaintiff in the first proceedings was the Clinical Centre of the University of Sarajevo, and the party in the other proceedings was the Republic of Bosnia and Herzegovina. The Supreme Court of the Republic of Croatia Revt-110/05–2 of 13 July 2006, accessible at: sudskapraksa.vsrh.hr/supra/. 209   Triva and Dika, above n 122, 419.

Croatia  515 need to establish that the two litigations have the same type of claim and the same factual ground for the claim (equivalency theory).210 It has been opined that if the plaintiff requests the court to prevent the defendant from doing something, including making payment, or refraining from some act, there is no obstacle to a parallel proceeding in which the defendant could request the court to declare that there is no legal relationship constituting legal grounds for the plaintiff ’s condemnatory claim in the first proceedings. In such a case if the defendant’s declaratory claim were to be accepted, the plaintiff ’s condemnatory claim should be refused. If, however, the plaintiff ’s condemnatory claim is accepted, such condemnatory judgment would not at the same time encompass the declaration that there is a legal relation which is grounds for a condemnatory claim, but only that there is an obligation to do something (such as pay a sum of money) or to refrain from doing something.211 Applying this to the facts presented in the hypothetical case, a possible conclusion might be that because the two claims differ in type (one is condemnatory claim ordering termination of infringement and compensation of damages, and the other is declaratory claim establishing there is no infringement), there is no objective identity and thus no obstacle for the parallel proceedings to continue. To be exact, the res iudicata effect of the decision in the infringement proceedings before the Croatian court would not extend to a dispute on non-infringement which is the subject-matter of the parallel proceedings because the declaration on infringement is not included in the dispositive part of the judgment (conclusio) rendered by the Croatian court, but only in the reasons, which are never covered by the res iudicata effect. All the above-stated facts apply equally to the dispute that would be related to intellectual property rights that are not subject to registration. Case 5(2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

If B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y, the procedural steps that the court in Croatia (again assuming that the court of country Z is Croatia) would take are difficult to predict.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time.

210   ibid, 646. The Supreme Court of the Republic of Croatia has ruled that there is no objective identity in a case in which the first proceedings were for the declaration on illegality of the cancellation of an employment contract (on the grounds that there was no workplace in the employer’s enterprise which is included in the employment contract and that the employee’s workplace was not appropriate to her physical and professional capabilities) and that the employment had not been terminated. While the second proceedings were for the cancellation of the employment contract due to its breach by the employee, ie the condemnatory claim (for returning to work and offering a new employment contract appropriate to the employee’s physical and professional capabilities). The Supreme Court of the Republic of Croatia, Revr-742/07-2 of 28 November 2007, accessible at: sudskapraksa.vsrh. hr/supra/. 211   Triva and Dika, above n 122, 649–50.

516  Ivana Kunda Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.

Case 6(1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z?

Assuming that country X is Croatia, the question is whether a Croatian court would apply the Croatian Patent Act to allegedly infringing acts occurring only in country Z. To the awareness of the author of this chapter, the Croatian courts have not yet been in a position of deciding such matters, because the infringing acts committed abroad have never been in dispute. There have been certain decisions where the Croatian courts have stated, invoking the Berne Convention, that the law applicable to infringement is that of ‘the country in which protection is claimed’, suggesting that the lex fori rules applies.212 Nevertheless, when interpreting these ruling one should be aware that the courts have simply written down the exact wording of the Berne Convention and in these situations only acts in Croatia were at issue. It should also be noted that the scholarly opinions are unanimous in supporting the territoriality principle and consequently the rule on lex loci protectionis.213 Therefore the conclusion would be that the Croatian Patent Act should not extend to activities abroad, however, the courts will have the final say. Case 6(2) Assuming, first, that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Under a different scenario where the claim for the infringement of patent granted in country X is brought before the Croatian court (a court of country Z), the question arises as to whether the Croatian court could apply the patent statute of country X for allegedly infringing acts that occur in Croatia. Because the Croatian courts have not had an opportunity to decide on such issues, the same concerns apply as under Case 6(1).

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C requesting to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case:   See above nn 130 and 148.   See above nn 133, 145 and 146.

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Croatia  517 Case 7(1) What law would be applied to determine the liability of A, B and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Assuming that the Croatian court has international jurisdiction in such a case, the question arises as to the law that would be applied to determine the liability of A, B and C for direct infringement acts. The relevant conflict-of-law provision is Article 28(1) of the PIL Act which provides that the law applicable to non-contractual liability is either the law of the place where the act was committed (lex loci actus) or the law of the place where the consequence has occurred (lex loci damni), depending on which of them is more favourable to the injured party. Although it was stated in the legal scholarship that this provision needs to be adjusted by interpretation in order to comply with the territoriality principle, it has been interpreted by the High Commercial Court to be in line with the Berne Convention in Sten Eric Odman v Adris Grupa dd.214 In that case, the Court concluded that Croatian law is applicable without any reasoning explaining where the acts were committed or where the consequences occurred, but perhaps this was due to the acts of alleged infringement being limited to Croatian territory only. It is possible to state with more certainty that the parties would not be allowed to agree on the applicable law (infringement and remedies) since such agreement is not allowed under the PIL Act for non-contractual damages. Nevertheless, to the extent that this matter is arbitral, it would be possible for the parties to agree on the applicable law. Case 7(2) Would the choice of law differ if the claim for damages was brought against the internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

In a case where the claim for damages was brought against an internet service provider (ISP) as a secondary infringer, the situation would not be any clearer than under Case 7(1). Likewise, the conclusion under Case 7(1) applies also to the possibility of choosing the applicable law in this case. Case 7(3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

The ability of the Croatian court to decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights does not seem to be excluded by the provisions on international jurisdiction. Therefore, provided that any of the criteria for jurisdiction are met, the court could proceed. The law that the court would apply would be determined in the same vein as under Case 7(1). There is no legal of definition ‘ubiquitous infringement’ in Croatian case law or statutes, and defining it seems to be of no relevance because the legal situation remains unchanged.   See the accompanying text, above n 148.

214

518  Ivana Kunda

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B’s is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation, arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country:

Case 8(1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning the right to obtain patents be enforceable in your country?

There are no conflict-of-law provisions that would designate the law applicable in determining the initial holder of the invention, and this issue has not been addressed by the Croatian courts. In Sten Eric Odman v Adris Grupa dd, the Commercial Court in Rijeka attempted to resolve the issue of authorship by referring both to Croatian copyright law and Swiss copyright law, as lex fori (or lex loci protectionis) and lex originis respectively.215 Nevertheless, the initial entitlement to the patent (invention) could not be viewed in the same fashion as the initial entitlement to the copyright even if Croatia were to accept the country of origin principle. Therefore, a solution might be in applying the provision on lacuna legis contained in Article 2 of the PIL Act, which states that in such a case the provisions and principles of that Act, principles of the Croatian legal system and principles of private international law, should be applied mutatis mutandis. Consequently, the court might resort to the principle of territoriality and determine that this is one of the issues under the scope of the lex loci protectionis. Case 8(2) Would the decision differ if A made an invention in joint collaboration with other researchers?

If A made an invention in joint collaboration with other researchers, the issue might also arise as to his initial entitlement to patent (invention). Croatian law does not contain special conflict-of-law provisions for these types of cases. Hence, reference should be made to the explanation on lacuna legis under Case 8(1). Case 8(3) Would the applicable law differ in case of initial authorship or initial title to trade mark?

The applicable law in case of initial authorship was at issue in Sten Eric Odman v Adris Grupa dd. In resolving this issue, the Commercial Court in Rijeka referred both to Croatian copyright law and Swiss copyright law, as lex fori (or lex loci protectionis) and lex originis respectively.216 The Court’s reasoning did not provide an explanation as to why both Acts were consulted. The Court stated that these two Acts contained identical rules on the pre  See above n 175.   ibid.

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Croatia  519 sumption of authorship, so that there was no need to decide which one was relevant. It remains unclear what would have been the result if the substantive rules if Swiss and Croatian laws had differed. As for the initial title to trade mark, reference should be made to explanations on lacuna legis under Case 8(1). Case 8(4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

If A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries, the law applicable would depend on the classification of this issue. Croatian law does not contain special conflict-of-law provisions for these types of cases, hence the reference is made to explanation on lacuna legis under Case 8(1).

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of its concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus has been infringed. Assuming that a court of your country is a court of country X:

Case 9(1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors?

Assuming that country X is Croatia, several questions arise. With relatively high levels of certainty, the court would enforce the parties’ choice of law clause regarding the transfer of economic rights of authors, but would not enforce transfer of moral rights of authors. Namely, Article 19 of the PIL Act allows the parties to a contract to choose the applicable law. However, in Croatian law the author is prohibited to transfer inter vivos to another person his or her moral rights.217 This rule has been qualified as an internationally mandatory rule (French loi de police, German Eingriffsnormen) because the moral rights of an author are aimed at protecting crucial elements of Croatia’s social organisation.218 It has to be pointed out, though, that this is merely a prediction since this issue has not been dealt with by the Croatian courts. Case 9(2) How will the court deal with the issue of transferability?

The issue of transferability of copyright was to a certain extent part of the reasoning of the Commercial Court in Zagreb in Freistaat Bayern v Croatiaknjiga doo. In deciding on the   See above n 168.   See text accompanying above n 169.

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520  Ivana Kunda defendant’s objection that the State of Bavaria cannot take the role of the plaintiff, the Court had to answer the question whether the State of Bavaria became a holder of copyright over Mein Kampf, ie whether it had lawfully acquired a copyright on the basis of confiscation. Although the Court developed certain conflict-of-law reasoning, it did not mention transferability, only the means of legal redress and the copyright term. Therefore, absent the Court’s express statement on what law applies to transferability of copyright, the application of Croatian law to the right of action and the legality of transfer might be understood as a consequence of either the lex fori rule or the lex causae rule. A likely construction would be that the Court considered these matters so closely related to the means of redress that they fell under the same conflict-of-law rule, which in the opinion of the author of this Report is not a valid conclusion. The consistent approach would be that the issue of transferability should also be removed from the scope of the lex contractus because it is one of the core issues and thus should be treated under lex loci protectionis. Case 9(3) What would be the applicable law in a case where there is no choice of law made by the parties?

In the absence of the parties’ choice, Article 20 of the PIL Act applies. Two provisions in Article 20 of the Act refer directly to intellectual property rights, out of which one is relevant to copyright. Article 20(14) provides that the applicable law for the contract on copyright is the law of the place where the author’s domicile or seat was at the time of the receipt of the offer. If ‘special circumstances of the case point towards another law’ to the law determined pursuant to the former provision, that other law will be applicable. This provision functions as an escape clause enabling correction of the objective connecting factor. In the absence of parties’ choice of applicable law, one should be mindful of the delineation between the scope of the lex contractus and that of the lex loci protections.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment.

Case 10(1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court?

To the awareness of the author of this chapter, the courts in Croatia have not had the opportunity to decide on such a case, so the following opinion is merely that of the author. There are no explicit provisions in Croatian law which would confer on Croatian courts or administrative bodies an exclusive jurisdiction. In such cases, the provision of Article 47 of the Croatian PIL Act states that the Croatian courts shall have exclusive jurisdiction only where such jurisdiction is explicitly prescribed by the Croatian PIL Act or another statute. Therefore, the exclusive jurisdiction of Croatian courts could not be used as a ground for refusal of recognition of a foreign decision invalidating the Croatian patent registered before the SIPO, because such exclusive jurisdiction is not explicitly prescribed. An alterna-

Croatia  521 tive option for the Croatian court would be to recognise such decisions as invoking the ordre public ground. If a foreign court, however, decides on who is the holder of a Croatian patent, there is no threat to the principle of territoriality.219 All the more, the issue of who the holder of a patent is does not fall under the subject-matter jurisdiction of the SIPO but of the courts in Croatia. Case 10(2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in registry of a recognising country?

If a decision by the court of a foreign country X is recognised by the Croatian court, it would produce the same legal effects as if the Croatian court had rendered it and it could be the basis for registration of the new owner in the patent registry. However, if recognition is refused, the parties would be required to re-litigate the dispute in order to have the decision on ownership registered in the registry of a recognising country (Croatia). Case 10(3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary, or would it suffice to present the original judgment to the enforcing authority?

Assuming that the judgment is recognised, the procedural steps which have to be taken to enforce the judgment in Croatia are regulated by the provisions of Articles 96 and 101 of the PIL Act. It is provided that the enforcement of a foreign decision is subject to the same rules as recognition, and that in addition the applicant for enforcement has to submit also the certificate of enforceability of the decision under the law of the country in which the decision was rendered. There is legal scholarship to suggest that if enforcement on the basis of a foreign decision is carried out in separate enforcement proceedings, in which the decree on enforcement has to be rendered (as in domestic cases), the enforcement court must additionally verify whether the foreign decision has become enforceable. This decree is not concerned with declaring the enforceability, but only with constitutive approval of the requested enforcement. If prior to enforcement a decision was rendered on recognition in separate proceedings, this decision is binding for the enforcement court. If such recognition proceedings did not take place, the recognition may be decided by the enforcement court as a preliminary question prior to deciding on the enforcement.220 The other part of the legal scholarship holds that a decree on enforcement of a foreign decision also has to contain the affirmation of enforceability. 221 The available case law seems to suggest that the courts have adhered to the former simpler standard.222

219   Contrary opinion is presented in respect to the registration, validity, abandonment or revocation of the registered intellectual property right. See above 1.4. 220   Triva and Dika, above n 122, 111. 221   Contra I Grbin, ‘Pravni lijekovi dužnika protiv rješenja o izvršenju donesenog na temelju strane sudske odluke’ [‘Debtor’s Legal Remedies against the Decree on Enforcement Rendered on the Basis of Foreign Judicial Decision’] (1985) 39 Naša zakonitost [Our Legality] 281. 222   See the County Court in Zagreb Gž-716/99 of 8 February 2000, cited in K Sajko et al, above n 79, 181.

522  Ivana Kunda

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there:

Case 11(1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)?

Assuming that both A and B are resident in Croatia and the main infringing activities take place there the question arises as to whether a Croatian court would have jurisdiction to issue provisional measures or injunctions (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects. The Enforcement Act envisages an international element in determining the jurisdiction of the enforcement courts,223 but does not contain any provision which would indicate that Croatian courts may or may not render the enforcement decree producing extraterritorial effects. If the Croatian court does not have jurisdiction over the main dispute, eg, if B was resident in country Y and infringing acts were made in country Y, this would not affect the jurisdiction of the Croatian court to issue provisional measures or injunctions which would also have extraterritorial effects. Case 11(2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad?

If the trade mark for which the protection is sought was registered abroad, the competence of the Croatian court to issue an injunction or protective measure would depend on whether the criteria for the jurisdiction are met. The registration of the right abroad is not among the explicitly provided criteria. Nevertheless, the Croatian courts have not had the opportunity to rule on this point. Case 11(3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee?

A Croatian court would not normally require the person seeking issuance of provisional measures to grant a guarantee. A person seeking the issuing of preliminary measures related to pecuniary claims has to prove: a) the likelihood that the claim exists, and b) the risk that in the absence of such measures the other party will prevent or make it significantly more   See eg Art 147 of the Enforcement Act.

223

Croatia  523 difficult to collect on a claim by transferring, hiding or otherwise disposing of her property.224 However, the court may dispense with these conditions provided the person seeking the provisional measures provides a guarantee to indemnify any damage that might be suffered by the other party.225 There is also no general provision on guarantees for the person seeking issuance of preliminary measures. However, there is a possibility that the other party may request that a guarantee be provided by the person seeking the preliminary measure and the court will order that in the amount of potential damage to the other party. Such court order is available only where the preliminary measure is requested on either of the bases: a judgment rendered due to recognition of the claim by the defendant, which has been appealed, or a court settlement or an administrative settlement establishing that the debt has not yet matured, which has been challenged by an appropriate legal remedy.226 Case 11(4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings?

Croatian courts would not be pre-empted from issuing a preliminary or provisional injunction if the parties had submitted the dispute to arbitration proceedings; both the courts and the arbitration tribunals may issue a preliminary or provisional measure in the matter covered by the arbitration agreement.227 However, the Croatian courts would be preempted from issuing an injunction on the merits (which is of permanent, and not of preliminary or provisional nature), ie a judgment to cease infringing acts, if the parties had submitted the dispute to arbitration proceedings because the valid arbitration agreement derogates the courts’ competence. Case 11(5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

If the claimant asked to issue a preliminary or provisional injunction to cease infringing acts, a Croatian court would probably conceive this type of injunction as a procedural measure. It has been submitted that the procedural litigation law does not only regulate the form of the acts (including measures) that are taken, but also the basic substantive preconditions concerning the enforcement of the rights, which have to be met.228 The Enforcement Act, which also regulates preliminary and provisional measures, is based on the assumption that enforcement is ordered and carried out in Croatia on the basis of the Enforcement Act, meaning that the Croatian court will not apply foreign laws in establishing the requirements for issuing a preliminary or provisional measure to be carried out in Croatia. On the other hand, the formal aspects of an injunction on the merits (which is of a permanent, rather than preliminary or provisional nature), ie a judgment to cease infringing acts would be conceived as procedural (a form of the statement of the claim, or course of   Art 296(1) of the Enforcement Act.   Art 301(1) of the Enforcement Act. 226   Art 285(2) of the Enforcement Act. 227   Arts 16 and 44 of the Arbitration Act. 228   Triva and Dika, above n 122, 7. 224 225

524  Ivana Kunda the proceedings etc), while the aspects related to the merits would be regarded as substantive (grounds for claim, types of claims, or amount of damages, etc).

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y:

Case 12(1) Could intellectual property rights be used as collateral pursuant to the law of your country?

In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y, the intellectual property rights and royalties from those intellectual property rights could be used as collateral pursuant to the Croatian law. Unlike for instance the Patent Act and the Trade Mark Act, 229 the Copyright and Related Rights Act does not provide for the possibility to establish a security right over a copyright. The Copyright and Related Rights Act only provides that the enforcement is permissible, not on the copyright itself, but on the economic benefits acquired through its use (royalties).230 By analogy one could conclude that the copyright may not be used a collateral, only the royalties deriving from it. On the other hand, the interpretation might be that the legislator intended not to allow that either the copyright or the royalties deriving from it may serve as security for payment of debt. Case 12(2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights?

To the knowledge of the author of this chapter, the issue of what law governs the creation, effectiveness against third parties, priority and the enforcement of these security rights has not been decided by the Croatian courts. The scholarly opinion has stated in respect to most of these issues that they should be governed by the lex loci protectionis.231 Case 12(3) Would a court of your country apply the same law to registered and non-registered intellectual property rights?

The author of this chapter would expect that the same law would be applied to registered and non-registered intellectual property rights in the context of secured transactions, but there is no case law to confirm this opinion.

  See eg Art 62a(1) of the Patent Act and Art 40(1) of the Trade Mark Act.   Art 43 of the Copyright and Related Rights Act.   See above 1.3.4.

229 230 231

France MARIE-ELODIE ANCEL*

Contents Section I.................................................................................................................................................. 526 1. Legal Sources and Institutional (Administrative/Judicial) Competence to Apply these Legal Sources in the Following Areas of Law:........................................................................................... 526 1.1. Intellectual Property............................................................................................................. 526 1.1.1. Main Supranational Sources in Force in France................................................... 526 1.1.2. French Written Sources of Law.............................................................................. 528 1.1.3. Intellectual Property Rights Protected according to French Law......................... 528 1.1.4. Specially Competent Authorities and their Competence in France..................... 528 1.2. International Jurisdiction.................................................................................................... 530 1.2.1. International Sources on Court Jurisdiction........................................................ 530 1.2.2. National Sources on International Court Jurisdiction......................................... 530 1.2.3. Default Provisions on Jurisdiction........................................................................ 531 1.2.4. General Causes for Refusal of Jurisdiction............................................................ 532 1.2.5. Choice of Court Clauses........................................................................................ 533 1.3. Conflicts of Laws / Choice of Law....................................................................................... 535 1.3.1. International Sources on Matters of Conflicts of Laws........................................ 535 1.3.2. National Sources on Matters of Conflicts of Laws................................................ 536 1.3.3. Rules on Conflicts of Law in Tort Matters536 1.3.4. Rules on Conflicts of Law in Contract Matter...................................................... 536 1.3.5. Rules on Conflicts of Law in Matters Concerning the Transfer of Property....... 536 1.4. Recognition and Enforcement of Foreign Judgments and Interim Measures.................. 537 1.4.1. Definition of Foreign Judgment............................................................................ 537 1.4.2. Definition of Provisional and Protective Measures.............................................. 538 1.4.3. General Conditions for the Recognition and Enforcement of Judgments and Provisional Measures Rendered Abroad................................................................ 538 1.4.4. Recognition and Enforcement of Judgments and Provisional Measures Rendered after Non-Contradictory Proceedings.................................................. 539 1.4.5. Problems Connected to the Recognition of Judgments Handed Down in Certain States.......................................................................................................... 541 2. Intellectual Property and Private International Law...................................................................... 542 2.1. Jurisdiction: Industrial Property......................................................................................... 542 2.2. Jurisdiction: Copyright........................................................................................................ 544 2.3. Applicable Law: Copyright.................................................................................................. 545 2.4. Applicable Law: Industrial Property.................................................................................... 547 *  Professor at the University of Paris 12 (UPEC), Faculty of Law, Team Obligations, Goods and Markets (Equipe Obligations, Biens, Marchés) (EA n°4394), PRES Université Paris-Est. This chapter has been translated from French into English by Ruben GA Pauwels, Assistant Professor (Kyushu University, Faculty of Law).

526  Marie-Elodie Ancel Section II Hypothetical Case Studies.................................................................................................... 548 Case 1. General Special Grounds of Jurisdiction...................................................................... 548 Case 2. Subject-Matter Jurisdiction.......................................................................................... 552 Case 3. Consolidation of Proceedings....................................................................................... 554 Case 4. Choice of Court Agreements........................................................................................ 557 Case 5. Parallel Proceedings....................................................................................................... 560 Case 6. Principle of Territoriality (Choice of Law).................................................................. 563 Case 7. Infringement of Intellectual Property Rights............................................................... 565 Case 8. Applicable Law to Initial Ownership............................................................................ 568 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 572 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 573 Case 11. Provisional Measures and Injunctions......................................................................... 575 Case 12. Securities in Intellectual Property................................................................................ 579

Section I 1  Legal Sources and Institutional (Administrative/Judicial) Competence to Apply these Legal Sources in the Following Areas of Law 1.1  Intellectual Property For a long time, France has been involved in the protection of intellectual property. France is bound by numerous supranational texts;1 the norms of EU law will not be mentioned due to lack of space.2 Domestic sources are as plentiful as the supranational ones.

1.1.1 Main Supranational Sources in Force in France Multilateral Texts Paris Convention for the Protection of Industrial Property, 20 March 1883 (latest version by which France is bound: Stockholm, 1967) Convention Establishing the World Intellectual Property Organisation (WIPO), 14 July 1967 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 15 December 1994

1   For the texts administered by the World Property Organisation (WIPO), see wipo.int/treaties/fr/ShowResults. jsp?country_id=60C&start_year=ANY&end_year=ANY&search_what=C&treaty_all=ALL (for the Frenchlanguage site) and www.wipo.int/treaties/en/ShowResults.jsp?country_id=60C&start_year=ANY&end_ year=ANY&search_what=C&treaty_all=ALL (for the English-language site). 2   For EU sources, see ec.europa.eu/internal_market/top_layer/index_52_fr.htm (for the French-language site) and ec.europa.eu/internal_market/top_layer/index_52_en.htm (for the English-language site).

France  527 Copyrights Berne Convention for the Protection of Literary and Artistic Works, 9 September 1886 (latest version by which France is bound: Paris, 1971) Universal Copyright Convention, 6 September 1952 (latest version by which France is bound: Paris, 1971) Treaty on the International Registration of Audiovisual Works (Film Register Treaty), 20 April 1989 Neighbouring Rights International (Rome) Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, 26 October 1961 Geneva Convention for the Protection of Producers of Phonograms Against Unauthorised Duplication of Their Phonograms, 29 October 1971 Vienna Agreement for the Protection of Type Faces and Their International Deposit, 12 June 1973 Patents Strasbourg Convention on the Unification of Certain Points of Substantive Law on Patents for Invention, 27 November 1963 Patent Cooperation Treaty, 19 June 1970 Munich Convention on European Patents, 5 October 1973 (latest version by which France is bound: 2000) Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure, 28 April 1977 Strasbourg Agreement Concerning the International Patent Classification, 24 March 1971 New Plant Varieties International Convention for the Protection of New Varieties of Plants (UPOV Convention), 2 December 1961 (latest version by which France is bound: 1978) and the Additional Act, 2 November 1972 Marks Madrid Agreement Concerning the International Registration of Marks, 14 April 1891 (latest version by which France is bound: Stockholm, 1967) Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, 27 June 1989 Trademark Law Treaty, 27 October 1994 Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, 15 June 1957 (latest version by which France is bound: Geneva, 1977) Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks, 12 June 1973

528  Marie-Elodie Ancel Designs The Hague Agreement Concerning the International Registration of Industrial Designs, 1925–34 (France is bound by the London Act of 1934, the Hague Act of 1960, the Complementary Act of Stockholm of 1967, the Protocol of Geneva of 1975, and, in the last place, the Geneva Act of 1999) and the Additional Act of Monaco, 1961 Locarno Agreement Establishing an International Classification for Industrial Designs, 8 October 1968 Indications of Origin, Indications of Source Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods, 14 April 1891 (latest version by which France is bound: Lisbon, 1958; Additional Act of Stockholm, 1967) Lisbon Agreement for the Protection of Appellations of Origin and their International Registration, 31 October 1958 (latest version by which France is bound: Stockholm, 1967)

1.1.2  French Written Sources of Law We will restrict ourselves here to codified sources of law. France devotes a whole code to intellectual property (the Intellectual Property Code, hereinafter ‘IPC’), which covers literary and artistic property (copyright, neighbouring rights, rights of database producers) and industrial property (especially designs, patents and marks). Provisions concerning intellectual property are also found in other codes: the Consumer Code and the Rural Code, for appellations d’origine contrôlée (AOC – ‘controlled appellation of origin’) and indications of source; the Labour Code; the Public Health Code; the Code of Cinema and Animated Images; the General Tax Code; and the Code of Judicial Organisation (hereinafter ‘CJO’), among others.

1.1.3  Intellectual Property Rights Protected according to French Law In France, intellectual property entails numerous rights: copyright, accompanied by substantial moral rights; rights of performers, of producers of phonograms and video recordings and of audiovisual communication enterprises that broadcast programmes (neighbouring rights); sui generis rights on databases; patents; utility certificates; complementary certificates for the protection of medicines; complementary certificates for the protection of phytopharmaceutical products; rights on new plant varieties; rights on the topographies of semiconductors; rights on industrial designs; rights on factory marks, trade marks and service marks; collective certification marks; indications of origin; and indications of source.

1.1.4 Specially Competent Authorities and their Competence in France There are numerous authorities in the field of intellectual property possessing various functions (advisory as well as constitutive). Concerning jurisdictional matters, private lawsuits concerning intellectual property are progressively concentrated in a small number of first instance courts (hereinafter ‘FIC’).

France  529 1.1.4.1  Granting of Industrial Property Titles The National Institute of Industrial Property (hereinafter ‘NIIP’), a public administrative institution, is the main organisation in charge of the granting of industrial property titles (patents, marks, designs, topographies of semiconductors; however, the Committee for the Protection of New Plant Varieties is in charge of ‘new plant variety certificates’). Although the Director General of the NIIP decides on applications for registration, oppositions and requests for revocation, he is considered to be acting as an independent administrative authority. Appeals against his decisions can be lodged at nine Appeal Courts (Art R 411-19 of the IPC; Art D 411-19-1 of the IPC; table XVI appended to Art D 311-8 of the CJO). As a rule, the jurisdiction of these Appeal Courts is determined by the place where the person lodging an appeal resides. Where the appeal is lodged by a person who resides abroad, the Appeal Court of Paris shall have jurisdiction. The Paris Court is also the only competent body for appeals lodged against decisions by the Director of the NIIP concerning the granting, refusal or maintenance of patents, utility certificates, complementary certificates for protection and for topographies of semiconductors (Art D 411-19-1 of the IPC). 1.1.4.2  Intellectual Property Lawsuits (other than Granting of Industrial Property Titles) These lawsuits are divided between administrative courts, criminal courts and judicial courts (ie non-criminal courts) stricto sensu. As a rule, the administrative jurisdiction shall only be exercised in case of expropriation or within the context of a lawsuit related to the public sphere. Normally, criminal courts shall be competent to try forgery crimes and other crimes related to intellectual property. However, the plaintiff is free to bring a forgery lawsuit in a civil court, which in practice often occurs. In a civil court, the jurisdiction ratione materiae (French: compétence d’attribution) shall be conferred exclusively to certain FICs, with some variation in the extent of this competence. Two recent decrees (no 2009-1204 and no 2009-1205, of 9 October 2009) have brought about some modifications.3 With regard to literary and artistic property, since a Law of 4 August 2008, the IPC states that: all disputes concerning the application of the provisions of Part One of this Code [ie literary and artistic property] which are within the jurisdiction of the civil courts shall exclusively be brought to the competent courts (FICs), without undermining the right of the injured party to institute criminal proceedings under the general rules of law (Art L 331-1, para 1 of the IPC).

There are nine FICs that, specifically, have jurisdiction over disputes relating to literary and artistic property, including any disputes that involve matters related to unfair competition (Art L 331-1, para 2 of the IPC; Art D 211-6-1 of the CJO and appended table). As for marks (Art L 716-3 of the IPC), the same Law of 4 August 2008 places an emphasis on the exclusiveness of the jurisdiction of the specialised FICs, stipulating that ‘civil proceedings and claims relating to marks shall be heard exclusively by the First Instance Courts, including any proceedings and claims involving both matters concerning marks as well as matters concerning unfair competition’. A similar provision is made for designs (Art L 5213-1 of the IPC) and geographical indications (Art L 722-8 of the IPC). The FICs that, 3   Until the decrees of 9 October 2009, each FIC enjoyed the competence of attribution for intellectual property, marks, designs and geographical indications: CA [Appeal Court] Paris, 11 February 2009, no 08/21586, 20.

530  Marie-Elodie Ancel specifically, have jurisdiction over disputes on these matters, including disputes involving matters related to unfair competition, are the same as in matters concerning literary and artistic property (Art D 211-6-1 of the CJO and appended table). As for patents, since the entry into force of Decree No 2009-1205, on 1 November 2009 (Art D 211-6 of the CJO), only the FIC of Paris has had jurisdiction over ‘all disputes arising from the present title’ [ie patents for an invention], ‘with the exception of appeals from decrees, orders and other administrative decisions taken by the Minister responsible for industrial property, which shall fall within the jurisdiction of the administrative courts’ (Art L 615-17, para 1 of the IPC). Moreover, only the FIC of Paris has jurisdiction for ‘ascertaining that a French patent ceases to have effect’ (Art L 615-17, para 4 of the IPC).4 Lawsuits concerning unfair competition that are related to patent forgery fall within the jurisdiction of the same Court (Art L 615-19, para 2 of the IPC). Ten FICs have jurisdiction over lawsuits involving new plant varieties (Art D 211-5 of the CJO). Only the FIC of Paris has jurisdiction over lawsuits involving EU marks and EU designs (Art R 211-7 of the CJO).

1.2  International Jurisdiction 1.2.1  International Sources on Court Jurisdiction In France, rules on court jurisdiction are mainly established under EU law. In this way, French courts have been applying the Brussels Convention of 27 September 1968 since 1973, and then the Conventions that have modified it. Since 2002, they have applied Regulation (EC) No 44/2001 (hereinafter ‘Brussels I Regulation’). France is also bound by the Lugano Convention of 16 September 1988, which has been in force since 1992. The accession of France to the European Community also implies that it is bound by the new Lugano Convention and by the Hague Convention on the Choice of Court Agreements, as of 30 June 2005, when they became applicable. Of course, the rules on court jurisdiction enacted in the Regulations on EU marks and on EU designs have also to be applied by French courts. Except texts within the scope of the EU, French courts assert their direct jurisdiction in accordance with French default rules. One can, however, observe that, while the standard of French default rules is close to that of EU law, French courts tend to interpret French rules exactly according to the instructions provided by the European Court of Justice (hereinafter ‘ECJ’).

1.2.2  National Sources on International Court Jurisdiction In France there is neither a code nor a general text to establish a framework for dealing with conflicts of jurisdictions in a structured way. Therefore, the main source of French law on conflicts of jurisdictions is case law, mainly that of the Court of Cassation. Moreover,

4   Previously, when the number of competent FICs was higher, several Appeal Courts have judged that the exclusive jurisdiction of these FICs extended to criminal cases on patent forgery: CA Poitiers [Poitiers Appeal Court], ch corr, 6 December 2001, JurisData no 2001–209656; CA Lyon [Lyon Appeal Court], 16 April 2003, JurisData no 2003-209663.

France  531 Batiffol has emphasised ‘the important character of court decisions’ in French private international law.5 The ordinary direct jurisdiction of French courts is the result of an extrapolation of the rules on internal territorial jurisdiction, exercised by the courts. Of relevance here for the most general provisions on jurisdiction are Articles 42 and 43 (domicile of the defendant or co-defendant), and Article 46 (contractual and tort matters) of the Code of Civil Procedure (hereinafter ‘CCP’). There exist also provisions on extraordinary direct jurisdiction that are based on the French nationality of the plaintiff or defendant, and that are provided for in Articles 14 and 15 of the Civil Code (hereinafter ‘CC’). However, these provisions are also the subject of influential interpretations by the courts. Thus, this exorbitant jurisdiction can be exercised for almost all matters, but only alternative cases, ie when no provisions on ordinary jurisdiction designate a court in France, and on the condition that it has been invoked by the plaintiff. As for all exorbitant jurisdiction of the states that are bound by them, the Brussels I Regulation and the Lugano Convention modify the effects of these grounds of jurisdiction (irrelevance of the nationality of defendants domiciled in a state that is bound by these texts, extension to the advantage of plaintiffs domiciled in France when the defendant is domiciled in a third state).

1.2.3 Default Provisions on Jurisdiction We will limit ourselves here to a discussion of the French default rules, and will not discuss EU legislation. There is, however, reason to observe certain similarities with provisions on jurisdiction established under the Brussels I Regulation and the Lugano Convention, which can be explained by a mutual influential relation. 1.2.3.1 Domicile Generally, French courts have jurisdiction if the defendant resides in the territory over which the court is competent (Arts 42 and 43 of the CCP). 1.2.3.2  Multiple Defendants Based on Article 42 paragraph 2 of the CCP, the plaintiff may bring his case before the French court in the jurisdiction of which a co-defendant resides. Case law requires the existence of ‘a close connection’ between the claims.6 In this way, a plaintiff who brings an action for the same patent infringement may file a lawsuit against the American manufacturer of counterfeited objects, and the French retailer of these objects, before the court in the domicile of either one of them.7 1.2.3.3 Branch Although there is no recent example of an international lawsuit, case law allows the plaintiff to bring his suit before a French court in the jurisdiction of which the branch of the 5   H Batiffol, ‘Préface’ in B Ancel and Y Lequette (eds), Les grands arrêts de la jurisprudence française de droit international privé [The major rulings of French jurisprudence in private international law] (Paris, Dalloz, 2006) v. 6   Cass 1re civ, 24 February 1998, Bull civ I, no 79; (1999) Revue Critique de Droit International Privé 309, note A Sinay-Cytermann. 7   CA Paris, 30 June 1999, (2000) 111 Revue de Droit de la Propriété Intellectuelle 13.

532  Marie-Elodie Ancel defendant is situated, on condition that the lawsuit is related to the activity of this branch.8 1.2.3.4  Special Jurisdiction Based on Article 46 of the CCP, plaintiffs can freely choose in which court to file a lawsuit: (1) ‘in the case of contract matters, before the court of the place of the actual delivery of the chattel, or the place of the performance of the agreed service’; (2) ‘in the case of tort matters, before the court of the place of the event causing damage, or the place in whose jurisdiction the damage was suffered.’9

1.2.3.5  Defences, Incidental Claims, Compulsory Interventions Based on Articles 49 and 51 of the CCP, and without damage to the exclusive jurisdiction of another court, French courts have jurisdiction over all the grounds of defence raised before them, as well as over incidental claims that fall within their jurisdiction ratione materiae (this jurisdiction is general for the FICs). Based on Article 133 of the CCP, in case of compulsory interventions, a third party can be summoned before the French court to which the original claim is brought. In lawsuits of an international nature, provided that the case law is precise, the third party can raise an objection against the defendant who is about to bring an action pursuant to the contractual clause conferring jurisdiction upon another court or arbitration tribunal.10 1.2.3.6  Exorbitant Jurisdiction Plaintiffs can choose the French court before which the case will be brought, unless such choice of French court is fraudulent or arbitrary (Arts 14 and 15 of the CC). In other words, a plaintiff ’s choice must fulfil the requirements of good administration of justice.11

1.2.4  General Causes for Refusal of Jurisdiction In general, French private international law does not recognise the exception of forum non conveniens. French judges do not have the power to evaluate the pertinence of the grounds of jurisdiction based upon which they hear a case. If a case is brought to a French court and the court asserts jurisdiction, French judges must follow the rules on jurisdiction and adjudicate the dispute. Nevertheless, French courts have certain control over and can decline jurisdiction over actions which are arbitrary, fraudulent or excessive. This is a control of the ‘procedural morality’.

8   Cass 1re civ, 18 June 1958; (1958) Revue Critique de Droit International Privé 754, note E Mezger; Cass 1re civ, 12 May 1959; (1959) Revue Critique de Droit International Privé 714, note Y Loussouarn; (1960) Journal du Droit International 164, obs JB Sialelli; (1960) Revue Critique de Droit International Privé 243, obs Y Loussouarn. 9   Cass com, 4 July 1995, No 93-15.575: ‘The Appeal Court that has certified that an act of infringement may have been committed on French territory has, justifiably, decided that French courts were competent to have jurisdiction over it’ (based on Art 46, para 3). 10   Cass com, 30 March 1993, (1993) Revue Critique de Droit International Privé 680, note H Gaudemet-Tallon; DMF 1993, 294, note Y Tassel; JCP 1993 I 3723, no 7, obs L Cadiet and II, 22182, note P Guez; Cass 1re civ, 12 May 2004, (2004) Revue Trimestrielle de Droit Civil 553, obs R Perrot. 11  For an illustration on matters of transfer of patents, see: CA Paris, 30 January 1991; D 1993, 380, obs M Mousseron and J Schmidt.

France  533 When the plaintiff brings his suit before a French court based on Articles 14 or 15 of the CC, the judges over the main dispute may start to consider whether the plaintiff has made an arbitrary or fraudulent choice. In the event that there is more than one defendant, French courts will make sure that the claim filed against the defendant domiciled in their jurisdiction is real and serious, ie that it is not just a pretext to assign to a French court a case in which the co-defendant is not domiciled in France.12 It is undoubtedly possible to argue that French judges would tend to assert jurisdiction over the main dispute in case of an offence allegedly committed through the Internet, if there exists a ‘sufficient, substantial and significant link’ between the alleged act and the damage invoked. Indeed, by doing so, French judges want to fight against ‘forum shopping’ and exorbitant French jurisdiction.13 Furthermore, in the case of conflicting parallel procedures, French judges may decline to exercise their jurisdiction, when they are second seised: when an identical procedure (the exception of lis pendens derived from Art 100 of the CCP) or a related procedure (the exception of relatedness derived from Art 101 of the CCP) is taking place abroad, they have the right to relinquish the case, or to stay the procedure. These hypotheses have been linked by certain authors to the practice of forum non conveniens.14 The existence of an arbitral agreement also leads French judges to declare themselves incompetent, unless the arbitral clause is obviously null and void and unenforceable. This negative effect of the principle of competence-competence is very often used.

1.2.5  Choice of Court Clauses In French national law, choice of court clauses are regarded with distrust: such clauses can only be stipulated between businessmen and in a very clear way (Art 48 of the CCP). In addition, choice of court clauses will not be taken into consideration when one of the parties is summoned by the other in a compulsory intervention before a non-elected French court (Art 333 of the CCP). On the other hand, when the lawsuit contains an international element, the Court of Cassation adopts a more liberal approach.

12   Cass 2e civ, 15 March 1968, (1969) Revue Critique de Droit International Privé 506, 2e esp, note J Normand; Cass 2e civ, 16 July 1975, JCP 1976 II 18313, note JJ Daigre, (1975) Journal du Droit International 875, note P Kahn; CA Rouen [Rouen Appeal Court], 21 November 1963, D 1965, 395, note Marin; CA Paris, 25 April 1979, D 1980, IR, 331 obs B Audit; CA Versailles [Versailles Appeal Court], 4 November 2004, (2005) Revue de Droit des Affaires Internationales 791. 13   CA Paris, 26 April 2006; CCE (Communication Commerce Electronique) 2006, comm 106, obs C Caron; L Pech, ‘Contrefaçon de marque sur Internet et compétence des jurisdictions françaises: la (saine) substitution du critère de destination au critère de l’accessibilité’ [‘Infringement of trade marks on Internet and competence of French jurisdictions: the (sound) substitution of the criterion of destination for the criterion of accessibility’] (2006) 18 Revue Lamy Droit de l’Immatériel no 523; M Lecardonnel, Expertises, 2006, 358; CA Paris, 6 June 2007; JCP 2007 II 10151, note ME Ancel; CA Paris, 9 November 2007, JCP 2008 II 10016, note C Chabert, Adde, sur le fondement de l’article 5.3 de la Convention de Lugano: CA Paris, 30 January 2008 [Adde, based on Art 5.3 of the Lugano Convention: Paris Appeal Court, 30 January 2008], quoted in ME Ancel, ‘Un an de droit international privé du commerce électronique’ [‘One year of private international law on electronic commerce’] CCE 2009, Chronique no 1. 14   C Chalas, L’exercise discrétionnaire de la compétence juridictionnelle en droit international privé [The discretionary exercise of jurisdictional jurisdiction in private international law], preface H Muir Watt (Aix-Marseille, Presses universitaires d’Aix-Marseille, 2000) 415 et seq.

534  Marie-Elodie Ancel 1.2.5.1 Lawfulness In French international common law, the capacity of businessman or the nature of the contract do not matter much: choice of court clauses are ‘in principle lawful, when there is an international lawsuit . . . and when the clause does seek to override imperative territorial jurisdiction of French courts’.15 Furthermore, in the framework of the Brussels I Regulation and the Lugano Convention, choice of court clauses are generally considered to be lawful, except for specific cases where it is necessary to protect the insured, employees and consumers, as well as exclusive grounds of jurisdiction established by these texts. 1.2.5.2  Jurisdictional Effectiveness On an international level, the choice of court clause will impede a request for compulsory intervention. In fact, the Court of Cassation decided that Article 333 of the CCP allowing the choice of court clause to be disregarded in national law ‘is not applicable to lawsuits of international nature’16 or ‘in the international order’.17 On the other hand, when the plaintiff summons more than one defendant in France, based on Article 42, paragraph 2 of the CCP, the situation is more uncertain. Some years ago, the Court of Cassation judged that a choice of court clause to which objections have been raised by a co-defendant against the plaintiff must be revoked, if the claims made against different defendants are indivisible.18 However, it is perilous to attempt to define the trends in case law on the matter, since the judgments delivered more recently in matters of compulsory intervention perhaps herald a systematic effectiveness of the choice of court clause, that is to say, even when the claims presented against the co-defendants are indivisible. Nevertheless, when the Brussels Convention and the Brussels I Regulation are applicable, the Court of Cassation gives precedence to choice of court clause over the grounds of jurisdiction established in Articles 6(1) and 6(2).19 1.2.5.3  Material Scope In the field of intellectual property, certain difficulties arise with regard to the interpretation of the material scope of the choice of court agreements. The ECJ allows the court seised by virtue of the choice of court clause under the Brussels Convention (or, currently, the Brussels I Regulation) to interpret the material scope of application of the clause.20 It is therefore interesting to see how this happens in France.

15   Cass 1re civ, 17 December 1985, in B Ancel and Y Lequette, above n 5, 645 no 72. Moreover, the possibility that a French public policy would be applicable to the lawsuit does not give body to an imperative and exclusive jurisdiction in the advantage of French jurisdictions: Cass 1re civ, 22 October 2008, Bull civ I, no 233. 16   Cass com, 30 March 1993; (1993) Revue Critique de Droit International Privé 680, note H Guademet-Tallon; DMF 1993, 294, note Y Tassel; JCP 1993 I 3723, no 7, obs L Cadiet et II, 22182, note P Guez. 17   Cass 1re civ, 12 May 2004; Procédures 2004, no 12, 24, obs H Croze; (2004) Revue Trimestrielle de Droit Civil 553, obs R Perrot. 18   Cass 1re civ, 23 October 1990, Bull civ I, no 219, concerning the film adaptation of the novel La Guerre du feu [Quest for fire] by JH Rosny Aîné. 19   Cass 1re civ, 20 June 2006, no 05-16.706; Cass 1re civ, 6 January 2004, Bull civ I, no 1; Procédures 2004, no 74, 11; (2004) Revue Trimestrielle de Droit Civil 553, obs R Perrot. 20   Case C-214/89 Powell Duffryn Plc v Wolfgang Petereit [1992] ECR I-01745; Case C-269/95 Francesco Benincasa v Dentalkit Srl [1997] ECR I-03767.

France  535 Generally, litigants as well as French courts have had a tendency to restrict the scope of choice of court clauses to disputes of a contractual nature arising between the parties.21 This tendency seems to have been strengthened in the field of copyright by the French rule that consists of interpreting contracts for the exploitation of copyright works in favour of the author; any act beyond the permission agreed by the author is considered an infringement in French literary and artistic property law. When transposed to the level of jurisdiction, this reasoning allows the author to avoid the application of a choice of court clause stipulated in the contract, since the lawsuit is therefore considered to be of a tortious nature.22 Nevertheless, this situation may be evolving. On the one hand, the Court of Cassation generally has recently admitted that the parties can be heard by the court competent for ‘any dispute’, of whatever (contractual or tortious) nature, ‘originating from the breach of their contractual relations’.23 The scope of a choice of court clause that is broadly drafted would henceforth be heard for lawsuits that are considered as tort cases but that still possess a connection with the contract. On the other hand, in a lawsuit in which comic strip authors opposed their publishers, the judges of the main dispute declined their jurisdiction to the advantage of a designated Belgian court by virtue of a choice of court clause, holding that the distribution of derived products beyond the number provided for in the publishing contract, the distribution of comic strip albums through ‘occult channels’ and without compensation for the authors, as well as the continuation of the sale of the works in spite of the termination of the contracts at issue, constituted breaches in the execution of the contracts and that the description of infringement utilised by the authors was ‘artificial’. According to the judges of the main dispute, the lawsuit was ‘basically and mainly contractual matter, and the possible acts of infringement that could be established were only the consequence of non-performance of a contract’. The Court of Cassation approved of their reasoning.24 Therefore, it seems that the preferential treatment of the author, which remains a factor in French material literary and artistic property law, is no longer used in order to interpret choice of court clauses.

1.3  Conflicts of Laws/Choice of Law 1.3.1  International Sources on Matters of Conflicts of Laws France is bound by a number of Hague Conventions.25 As a Member State of the European Union, it is bound by EU laws containing provisions concerning conflicts of law (Regulation (CE) No 864/2007, of 11 July 2007, on the law applicable to non-contractual obligations, hereinafter ‘Rome II’; Regulation (CE) No 593/2008, of 17 June 2008, on the law applicable to contractual obligations, hereinafter ‘Rome I’).

21   Cass com, 9 April 1996, No 94-14.649; Cass com, 21 March 2000, No 98-12.688, (2000) Revue Critique de Droit International Privé 792, note A Sinay-Cytermann. 22   Cass 1re civ, 21 November 2006, No 04-16.612. 23   Cass 1re civ, 6 March 2007, No 06-10.946, Bull civ I, no 93. 24   Cass 1re civ, 13 March 2007, No 05-12.563. 25   See www.hcch.net/index_fr.php?act=states.details&sid=39.

536  Marie-Elodie Ancel

1.3.2  National Sources on Matters of Conflicts of Laws There are no comprehensive texts in this field; special provisions are rare (existing, above all, in matters of family relations), scattered and often atypical. Therefore, the essential source on conflicts of law in France is case law.

1.3.3  Rules on Conflicts of Law in Tort Matters Outside the field of application of the international conventions by which France is bound (the Hague Convention of 1971; the Hague Convention of 1973) and of the Rome II Regulation, the law applicable to tort liability is ‘the one of the State of the place where the event causing damage has taken place . . . in complex tort cases, this place can be interpreted as the place of the event causing the damage as well as the place where the damage occurred’.26 In those cases, French judges have to deduce the connection with the countries concerned and apply the law of the one of these countries with which the situation exhibits ‘the closest link’.27 Such close connection is absent if ‘the place where the damage occurred [is] fortuitous’.28 The connection is weaker in cases where the same damage had been caused by events in several different countries.29 In practice, the decision on the law applicable to tort liability is not very predictable. In the first place, one has to determine whether the tort is complex, and then situate the event(s) causing damage and the damage itself. The matter is not always easy. In the second place, when a complex tort has been identified, one has to compare the connection between the law of the country where the event causing damage occurred and the law of the country of the damage. Therefore, everything seems to be decided case by case.30

1.3.4  Rules on Conflicts of Law in Contract Matters Nowadays it is rare that a conflict of laws in contractual matters arises outside the scope of an international convention (the Hague Convention of 1955; the Hague Convention of 1978; the Rome Convention of 1980, or, in the future, outside the scope of the Rome I Regulation). What is certain is that, before the entry into force of these texts, French courts recognised the right of the parties to choose the law applicable to their contractual relations. In the absence of a choice of an applicable law by the parties, the law of the country where the parties have ‘localised’ their contract has to be determined. In other words, they adopt the theory of Battiffol.

1.3.5  Rules on Conflicts of Law in Matters Concerning the Transfer of Property Transfers of property are partly governed by the lex rei sitae31 and partly by the law of the cause of the transfer (the lex contractus, if the transfer is conventional). The respective   Cass 1re civ, 27 March 2007, No 05–10.480.   Cass 1re civ, 11 May 1999, No 97–13.972; Cass 1re civ, 27 March 2007, mentioned above. 28   Cass 1re civ, 27 March 2007, mentioned above. 29   Cass 1re civ, 11 May 1999, mentioned above. 30   cp Cass 1re civ, 27 March 2007, mentioned above, and CA Versailles [Versailles Appeal Court], 5 February 2009, (2009) Revue Critique de Droit International Privé 298, note D Bureau. 31   Art 3 of the Civil Code, extended to movable property by Cass req, 19 March 1872, Craven; Req 34 May 1933, Kantoor de Mas. 26 27

France  537 domains and the roles of these two laws are the objects of discussion, since the lex rei sitae can be perceived as the expression of a real conflict rule32 or else as a matter of public policy.33 The formalities of the effects vis-à-vis third parties of the transfer or the inalienability of property are determined by the lex rei sitae (also called ‘loi réelle’). However, for certain movables, the situs rule is not applicable (whether it is taken as a connecting factor or as a criterion for the effectiveness of public policy). If they are registered movables (vessels, aircraft, industrial property rights, etc), it is their registration (or their flag) that will serve as the reference point. The situation of conflict for movables has led to controversial case law in the domain of securities of movables. Thus, when a security has validly been set up abroad on movable property that was located abroad, and when this property is moved to France, the Court of Cassation will very generally consider that ‘independent of the law governing the concluded contract, French law is only applicable to rights in rem over movable property located in France’.34 The effects of securities vis-à-vis third parties in France are governed by French law, the law of the new situs. However, they seem to trigger questions on the acquisition of the right, which is nevertheless supposed to remain subject to the law of the country of the original situs.

1.4  Recognition and Enforcement of Foreign Judgments and Interim Measures 1.4.1  Definition of Foreign Judgment In French common law, a foreign judgment is an act: emanating from an authority that is lawfully vested with jurisdictional power by a foreign sovereign; giving a ruling in a private lawsuit (which excludes criminal law); ‘having effects with regard to effects regarding persons or property, rights or obligations’.35 This last criterion is sometimes considered too imprecise, and the doctrine proposes other distinctions, for example, according to which the foreign court proceeds to a confirmation of a right by virtue of an appropriate power of valuation, or according to which the court limits itself to establishing a fact or to receiving an act.36 In reality, the Court of Cassation seems to reason in terms of functional equivalence: it treats as a judgment every foreign act that has a function equivalent to the one that would have been carried out by a French court exercising its power of valuation discretion.37 32   Y Loussouarn, P Bourel and P de Vareilles-Sommières, Droit international privé [Private international law] (Paris, Dalloz, 2007) 419. 33   P Mayer and V Heuzé, Droit international privé [Private international law] (Paris, Montchrestien, 2007) 649 and 655; D Bureau and H Muir Watt, Droit international privé [Private international law], vol 2 (Paris, PUF, 2007) 645 et seq; L d’Avout, Sur les solutions du conflit de lois en droit des biens [On the solutions of conflicts of law in property law] (Paris, Economica, 2006). 34   Cass 1re civ, 3 May 1973; see also Cass 1re civ, Diac, 8 July 1969 in Ancel and Lequette, above n 5, 48. 35   Cass 1re civ, 17 October 2000, (2001) Revue critique de droit international privé 121, notes JP Rémery and H Muir Watt; Gaz Pal 2001, doct 814, note ML Niboyet; (2001) Journal du Droit International 859, note G Cuniberti, concerning an order for relief emanating from an American bankruptcy judge. 36   ML Niboyet and G de Geouffre de la Pradelle, Droit international privé [Private international law] (Paris, LGDJ, 2009) 640 et seq. 37   For example an ‘order for relief ’, that is starting a bankruptcy procedure and suspending individual proceedings, which, in French law, is done through an opening judgment.

538  Marie-Elodie Ancel In EU law, it is advisable to refer to case law of the ECJ interpreting Article 25 of the Brussels Convention38 and, from now onwards, Article 32 of the Brussels I Regulation.

1.4.2  Definition of Provisional and Protective Measures In French domestic common law, there is no general legal definition of provisional or protective measures. On the other hand, there exist numerous procedures that bring to mind this definition. At the level of private international law, one author, adapting the reasoning of the ECJ in Reichert II to French law, has proposed the following definition: a provisional measure is ‘a measure taken in expectation of the final decision and corresponding to the establishment of a temporary protective status’.39 In French law, four types of circumstances would justify the benefit of the particular protection provided by a provisional measure: (1) emergency; (2) safeguarding of property and procedural rights, for the duration of the proceedings; (3) evidence; (4) appearance. In EU law, it is advisable to refer to the case law of the ECJ interpreting Article 24 of the Brussels Convention40 and, from now onwards, Article 31 of the Brussels I Regulation. In this context, a French court considered that the licence to commercialise a product during the duration of the proceedings on the revocation of a patent of a competitor, increased with a non-infringement lawsuit is not a protective measure in the sense of French law, since it would be a ‘creator of law’ (créatrice de droit).41

1.4.3  General Conditions for the Recognition and Enforcement of Judgments and Provisional Measures Rendered Abroad Apart from simplified proceedings such as those put in place by the Brussels I Regulation or the Regulation (CE) No 805/2004 on the European Enforcement Order, a foreign judgment shall have effects in France if four conditions, laid down by case law, are met: 1. The foreign court that has rendered the decision must have international jurisdiction. Therefore, French courts will verify ‘whether the lawsuit is clearly connected with the country of the court before which the case is brought, and whether the choice of court is not fraudulent’.42 Nevertheless, a foreign court will never be recognised as internationally competent if, concerning the lawsuit that it has decided upon, a French court had exclusive jurisdiction.43 2. The foreign decision must not permit fraud. 38   Case C-414/92 Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237; Case C-39/02 Maersk Olie & Gas A/S v Firma M de Haan en W de Boer [2004] ECR I-9657; Case C-394/07 Marco Gambazzi v Daimler Chrysler Canada Inc and CIBC Mellon Trust Company [2009] ECR I-2563. 39   P de Vareilles-Sommières, ‘La compétence internationale de tribunaux français en matière de mesures provisoires’ [‘The international jurisidiction of French courts in matters of provisional measures’] (1996) Revue Critique de Droit International Privé 397 et seq, especially no 6. 40   Case 143/78 Jacques de Cavel v Louise de Cavel [1979] ERC 1055; Case 120/79 Louise de Cavel v Jacques de Cavel [1980] ERC 731; Case 25/81 CHW v GJH [1982] ERC 1189; Case C-261/90 Mario Reichert, Hans-Heinz Reichert and Ingeborg Kockler v Dresdner Bank AG [1992] ECR I-2149; Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091; Case C-99/96 Hans-Hermann Mietz v Intership Yachting Sneek BV [1999] ECR I-2277; Case C-104/03 St Paul Diary Industries NV v Unibel Exser BVBA [2005] ECR I-3481. 41   TGI [First Instance Court] Paris, 11 August 1997, RG no 97/6630; LPA 1998, no 69, 30, note J Passa. 42   Cass 1re civ, 6 February 1985, Simitch, in B Ancel and Y Lequette, above n 5, 70. 43   Cass 1re civ, 23 May 2006, Prieur, in B Ancel and Y Lequette, above n 5, 87.

France  539 3. The foreign judgment must be not contrary to French international public order (substantial as well as procedural). 4. The foreign judgment must not be irreconcilable with French judgments rendered in France or with foreign judgments that already have been recognised in France. Since 2007, it is not required anymore that a decision be made on foreign judgments in application of the French law designated by the choice of law rule, or that the judgment reaches a result equivalent to the one this law would have produced.44 In matters of provisional measures ordered abroad, it is advisable to distinguish: 1. Measures in personam (mandatory injunctions, freezing orders) issued abroad can have effect in France. This is what emerges from a judgment of the Court of Cassation, rendered within the scope of the Brussels Convention and concerning the Mareva injunction: the prohibition . . . of the debtor to dispose of his property in general, inasmuch as it is a matter of preserving the legitimate rights of the creditor, does not infringe the fundamental rights of the debtor. Such measure also does not adversely affect indirect interests of a foreign State nor the court jurisdiction of the requested State (except ‘anti-suit injunctions’).45

The general nature of the motives makes one think that measures in personam can equally produce effects within the scope of common law. However, the question on the exact scope of the exequatur in France of such a Mareva injunction remains unanswered, if one takes into consideration that the criminal punishment that it carries is not capable of having effects in French territory. In matters of patent infringement, a kort geding decision that prohibited for the time being the commercialisation of products that allegedly infringed the French part of a European patent was recognised in France.46 2. Measures in rem (seizure): these are capable of having effect in France according to the Brussels I Regulation, under certain conditions (see below). However, such a hypothesis seems to be the textbook example in which the plaintiffs prefer, for reasons of effectiveness, to start a lawsuit in the country where the property of the defendants is located.

1.4.4  Recognition and Enforcement of Judgments and Provisional Measures Rendered after Non-Contradictory Proceedings Concerning the condition of the compliance of the foreign judgment with the French international public order, French courts verify whether the rights of the defence and the   Cass 1re civ, 20 February 2007, Cornelissen, No 05-14.082.   Cass 1re civ, 30 June 2004, Bull civ I, no 191; (2004) Revue Critique de Droit International Privé 815, note H Muir Watt; (2005) Journal du Droit International 112, note G Cuniberti; JCP 2004 II 10198, avis J Sainte-Rose. Concerning ‘anti-suit injunctions’, see nevertheless a recent judgment that is more friendly, at any rate if the ‘antisuit injunction’ does not fall within the scope of the West Tankers judgment (ECJ, 10 February 2009): Cass 1re civ, 14 October 2009, No 08-16.369, 08-16.549. 46   CA Paris, 28 January 1994, (1995) 57 Revue de Droit de la Propriété Intellectuelle 18, adde P Véron, ‘Les euroinjonctions devant la justice française’ [‘European injunctions before French justice’] (1995) Revue de Droit de la Propriété Intellectuelle 13; TGI Paris, 11 August 1997, mentioned above. The refusal to authorise the commercial exploitation in France of allegedly infringing products can also be explained because the authorisation has been requested ‘with the only goal, like the plaintiffs write in their conclusions, “of checking the implementation of the prohibition procedure in the Netherlands”’. In fact, for the French court, ‘it does not fall within the sphere of power of the pre-trial judge, who has to evaluate neither the competence of the Dutch judge nor the lawfulness of his decisions, to order a measure that has not been stipulated by the texts and is non-protective, that has no raison d’être in the current state of the procedure in France, and that has as it only objective to create a situation of a nature to prevent a decision that is very likely to be rendered by the foreign judge to produce its effects in France.’ 44 45

540  Marie-Elodie Ancel principle of audi alteram partem have been respected during the foreign proceedings.47 Generally, all the requirements concerning the right to a fair trial in the sense of the European Convention on Human Rights need to be respected.48 Thus, the ECJ reserves the benefit of simplified procedures of circulation in the midst of Member States to ‘judicial decisions which, the recognition and enforcement of them are sought in a State other than the State of origin, have been, or have been capable of being, the subject in that State or origin, under various procedures, of an inquiry in adversary proceedings’.49 In other words, a decision handed down at the conclusion of a unilateral procedure can come under simplified EU procedures when it has been or when it ‘could have been the subject of an inquiry in adversary proceedings in the State of origin’.50 The vigilance is strong in such a context, since the EU exequatur procedure is particularly alleviated and partly unilateral.51 Nevertheless, ‘fundamental rights, such as respect for the rights of the defence, do not constitute absolute prerogatives, but may be subject to restrictions’ that must in that case ‘effectively correspond to the objectives of public interest pursued by the measure in question and must not constitute, with regard to the aim pursued, a manifest and disproportionate infringement of the rights thus guaranteed’.52 In common law, the Court of Cassation recommends a defence in concreto of the fundamental rights: ‘the contradiction of a foreign decision to the international procedural public order can only be recognised if it has been proven that the interests of a party have objectively been undermined by a violation of the fundamental principles of the procedure’.53 Especially in matters concerning provisional and protective measures, it is starting from one of these measures that the Court of Justice has reserved the EU regime on recognition and enforcement to these measures that are taken ‘in adversary proceedings, even though by default’.54 Therefore, French courts check whether the principle of audi alteram partem has been respected in the granting of such measures. Thus, shortly before the ECJ Hengst Import judgment, an Italian measure concerning protective seizure, granted by petition, had been refused recognition, pursuant to Title III of the Brussels Convention.55 On the other hand, the Court of Cassation has recently recognised the exequatur in France of a Mareva injunction, in which the defendant had been called to appear in court through a specific quotation (notice of motion): In this specific case, the procedures before the High Court have been followed according to the rules of applicable law. Mr X, who has regularly been summoned, has neither appeared in court nor had he been represented . . . the injunction could have been modified or reversed on his request 47   The refusal of allowing the foreign judgment to produce effects in France can also originate in fraudulent manoeuvres by the plaintiff, who falsely claims that the defendant has no known address and who gets the green light to summon him in such a way that the latter has no chance of being informed. In that case, the French jurisprudence considers that there is a ‘violation of the rights of the defence’ (Cass 1re civ, 30 September 2003, No 01-13.142; Gaz Pal 2004, No 248, 32, note ML Niboyet). 48  ECHR, Pellegrini v Italy (2004) Revue critique de droit international privé 106, note LL Christians; Case C-7/98 Dieter Krombach v André Bamberski [2000] ECR I-1956; Case C-394/07 Marco Gambazzi v Daimler Chrysler Canada Inc and CIBC Mellon Trust Company [2009] ECR I-2563. 49   Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553, point 13. 50   Case C-474/93 Hengst Import BV v Anna Maria Campese [1995] ERC I-2113. 51   Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553, mentioned above. 52   Case C-394/07 Marco Gambazzi v Daimler Chrysler Canada Inc and CIBC Mellon Trust Company [2009] ECR I-2563, mentioned above. 53   Cass 1re civ, 19 September 2007; (2008) Journal du Droit International 153, note C Chalas. 54   Case C-125/79 Denilauler v Couchet Frère [1980] ECR I-1553, mentioned above. 55   CA Paris, 8 June 1995; (1996) Journal du Droit International 145, obs A Huet.

France  541 even before he incurred the possibility of a criminal punishment at any moment. Mr X has not been deprived of the right to defend himself before the British courts.56

In common law, the exequatur has often been granted for foreign decisions handed down by petition and/or writ of execution without prior notification to the convicted party.

1.4.5 Problems Connected to the Recognition of Judgments Handed Down in Certain States It is difficult to identify a particular state whose judgments arouse more difficulties than others. One may, however, draw attention to two types of decisions that require a particularly careful examination.57 1.4.5.1  Civil Penalty for Contempt of Court The Court of Cassation has very recently recognised that an American judgment which sentenced a defendant to pay a sum of more than $13 million for contempt of court can be enforced in France.58 On the one hand, the decision has been analysed as being, in this particular case, of a civil nature (contempt of court can be of a criminal nature or a civil nature).59 On the other hand, based on Article 8 of the Declaration of the Rights of Man and of the Citizen and on Article 1 of the First Additional Protocol of the European Convention on Human Rights, the Court has agreed with the judges on appeal in having considered that the amount of the fine was not contrary to the principle of proportionality, since the embezzlement attributed to the defendant was estimated at $200 million. 1.4.5.2  Punitive Damages French courts are not as hostile towards foreign decisions ordering punitive damages as courts of some other states. With regard to the French international public order, it is above all necessary to be alert to whether the judgment has been rendered in order to punish acts which are considered illicit according to the forum, or in other words, whether the interest defended by the penalty is legitimate.60 In the case of an infringement of an intellectual property right, this condition is obviously met from the French point of view. Undoubtedly, it is also necessary that foreign measures, due to their repressive nature, respect the principle of legality of crimes and penalty as it is understood by the European Court of Human Rights.61 It is especially the principle of proportionality of the penalty to the offence that may stop the enforcement of the foreign punitive measure.62 This principle, considered   Cass 1re civ, 30 June 2004, mentioned above.   Adde G Cuniberti, ‘La reconnaissance en France des jugements par défaut anglais’ [‘The recognition in France of British judgments by default’] (2009) Revue Critique de Droit International Privé 685. 58   Cass 1re civ, 28 January 2009, No 07-11.729. 59   Comp Cass 1re civ, 30 June 2004, mentioned above. 60   J Ortscheidt, ‘Les dommages-intérêts punitifs en droit de l’arbitrage international’ [‘Punitive damages in the law of international arbitration’] LPA (Petites affiches), 20 November 2002, no 232, 17 et seq. 61   M Béhar-Touchais, ‘L’amende civile est-elle un substitut satisfaisant à l’absence de dommages-et-intérêts punitifs?’ [‘Is the civil fine a satisfactory substitute in the absence of punitive damages?’] LPA, 20 November 2002, no 232, 36 et seq; ‘Comment indemniser la victime de la contrefaçon de façon satisfaisante?’ [‘How to satisfactorily compensate victims of forgery?’] in La contrefaçon: l’entreprise face à la contrefaçon de droits de propriété intellectuelle [Forgery: companies facing infringements of intellectual copy rights] (Paris, Litec, 2003) 105 et seq. 62   J Ortscheidt, above n 60; O Boskovic, La réparation du préjudice en droit international privé [Compensation for damage in private international law] (LGDJ, Paris, 2003), preface P Lagarde, no 408; ‘Les dommages et intérêts 56 57

542  Marie-Elodie Ancel sacrosanct especially by the Constitutional Council of France (Conseil constitutionnel), is applicable not only in the criminal sphere but also extends to administrative sanctions as well as civil law, fines (astreinte) and penalties. Nevertheless, with regard to federal American law concerning intellectual property, French requirements concerning proportionality are usually supposed to be satisfied.

2  Intellectual Property and Private International Law In France, private international law concerning intellectual property appears to be relatively fragmented: no ample codification or legislation has been laid down. Therefore, the resort to general rules happens rather frequently. This is particularly true for intellectual property infringements, which are understood as civil offences, except for industrial property, when the territoriality principle prevails, and in matters of copyright, when an ambiguous rule, such as Article 5(2) of the Berne Convention, sows seeds of discord.63

2.1  Jurisdiction: Industrial Property For a long time, the territoriality principle has had a strong influence on the question of jurisdiction, thus giving a certain uniqueness to conflicts of jurisdiction in matters of industrial property. However, since the Brussels Convention (and the ECJ’s Duijnstee judgment64), jurisdiction in matters concerning ‘entitlement’ no longer concerns actions for intellectual property infringement, nor contract lawsuits. This restriction of the exclusive territorial jurisdiction and the switch towards the rules of common law (forum rei, special rules in tort and contractual matters, choice of court) aroused fears among practitioners in the 1970s.65 Even so, the evolution has been achieved without too much opposition and the number of intellectual property lawsuits increased.66 Nevertheless, two recent phenomena have rehabilitated the status of territorial jurisdiction. The first phenomenon took place in France and arises from the transposition by the Court of Cassation of the Fiona Shevill decision in a lawsuit on the infringement of Internet

en droit international privé, Ne pas manquer une occasion de progrès’ [‘Damages in private international law; Not missing a chance to progress’] JCP 2006 I 163. 63   For these two aspects of territoriality, see H Gaudemet-Tallon, ‘Droit international privé de la contrefaçon: aspects actuels’ [‘Private international law concerning intellectual property infringements: current aspects’] D 2008, 735, no 3. 64   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663. 65   ‘Droit international et actions en contrefaçon de brevet dans la CEE’ [‘International law and patent infringement actions in the European Economic Community’] (1974) [special no] Propriété Industrielle Bulletin Documentaire especially 56–60. 66   For the contract lawsuit: Caen, 6 May 2003, No RG 02/03523 (contract including the transfer of a French patent, but Portuguese competence); TGI Paris, 29 January 1988, D 1990, somm at p 155, obs JM Mousseron and J Schmidt (licence covering 24 countries, including France; impossibility of giving competence to a French court based on Art 5 of the Brussels Convention; competence of German jurisdictions based on Art 2); TGI Paris, 28 May 1997, (1997) 3 Propriété Industrielle Bulletin Documentaire 547. For the infringement of a French design: Cass 1re civ, 31 January 2006, No 03-16.980, (2006) Propriété industrielle [Industrial property] Etude no 28, by AC Chiariny-Daudet; JCP E 2007, 1039, note S Hovasse.

France  543 trade marks.67 At first sight, it is simply a matter of treating an international cyber infringement lawsuit as an international lawsuit on libel by means of the press and, therefore, of continuing to go down the route of an increased number of lawsuits in matters of intellectual property. However, the Court of Cassation considers it sufficient that the plaintiff is holder of a French right and that the website in dispute is accessible in France, ‘even though passively’, for the ‘alleged damage consisting of the mere act of the dissemination [of the website] [to be] neither virtual nor possible’. By doing so, the Court makes it easier for the plaintiff to bring an infringement action in cases concerning intellectual property rights. It is true that in its reasoning the Court is employing a different requirement of connection. Namely, for the Court it is a matter of allowing it to ‘swiftly find a competent court’ based on a criterion applied in the initial stage, so that the facts of the case and the functioning of the website could subsequently be assessed from all angles in the main proceedings.68 It is interesting to point out that this judgment of the Court of Cassation has provoked some controversy and brings about two types of arguments. First, from the point of view of the subject-matter jurisdiction, partly supported by doctrine, in which one can discover a rather strong tendency that consists of demanding ‘a sufficient, substantial or significant connection’ between the act attributed to the defendant and the damage allegedly suffered in France69 (besides evidence of an industrial property title designating France). This appears to correspond with a causal connection between the two and therefore refers to a reasoning in terms of responsibility.70 Secondly, one extreme territorialist commentator expressed the view that one cannot have complex offences in matters of industrial property and that the event generating the damage must inevitably be located in France. This leads to the requirement that the website at issue should in some way or another target at a certain public in France.71 The second phenomenon stems from the GAT judgment of the ECJ.72 This judgment refutes the analyses that had been made in France concerning the incidental question concerning the validity of an industrial property right. Indeed, the majority of the authors considered, even with nuances, that the court before which such a dispute had been brought did not have the obligation to dismiss the case or to stay the judgment.73 As is known, the 67   Cass 1re civ, 9 December 2003, Bull civ I, no 245; JCP 2004 I 159, no 14, obs C Delpy and 2004 II 10055, note C Chabert; CCE 2004, no 40, obs C Caron; D 2004, AJ, at p 276, obs C Manara; Procédures 2004, no 52, obs C Nourissat; Gaz Pal 25 May 2004, 17, note D Challamel and 20 July 2004, note E Barbry and N Martin; (2004) Journal du Droit International 872, obs A Huet; (2004) Revue Critique de Droit International Privé 632, note O Cachard; (2004) Revue Trimestrielle de Droit Commercial et de Droit Economique 281, obs F Pollaud-Dulian; LPA, 23 February 2005, no 38, 5, note C Brière. 68   Rapport annuel de la Cour de cassation pour 2005 [Annual report of the Court of Cassation for 2005] 64–65. 69   CA Paris, 26 April 2006, CCE 2006, comm 106, obs C Caron; (2006) 18 Revue Lamy Droit de l’Immatériel no 523, obs L Pech; ME Ancel, ‘Un an de droit international privé du commerce électronique’ [‘One year of private international law on electronic commerce’], no 8, CCE 2007, Chronique no 1; CA Paris, 6 June 2007, JCP 2007 II 10151, note ME Ancel; (2007) 29 Revue Lamy Droit de l’Immatériel no 964, obs JB Auroux. See, however, very unclear: CA Paris, 2 December 2009, JCP G 2010, 216, note C Chabert. 70   ME Ancel, ‘Contrefaçon de marque sur un site web: quelle compétence intracommunautaire pour les tribunaux français?’ [‘Mark infringements on websites: which competence within the EU for French courts?’] in Études à la mémoire du Professeur Xavier Linant de Bellefonds [Studies in memory of Professor Xavier Linant de Bellefonds] (Paris, Litec, 2007) 1. 71   J Passa, ‘Territorialité de la marque et protection contre un signe exploité sur un site internet étranger’ [‘Territoriality of marks and protection of marks against exploitation on foreign internet sites’] Légipresse, 2005, no 221, III, cours et tribunaux, no 220–17, 77–81. 72   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 73   GAL Droz, ‘Rapport’ and P Lagarde, ‘Rapport’, in Droit international et actions en contrefaçon de brevet dans la CEE [International law and patent infringement actions in the European Economic Community] (1974) [special

544  Marie-Elodie Ancel ECJ imposes dismissal of the case, which de facto leads plaintiffs in infringement disputes to act, in order to avoid any complication in the country, or the countries, of their right(s). Therefore, these two phenomena exhibit a certain re-territorialisation, or a re-publication, of industrial property infringement disputes. However, it is important to point out that they are controversial in France.74

2.2  Jurisdiction: Copyright The question of jurisdiction in matters of copyright is obviously not so strongly subject to the restrictions of territoriality as industrial property. The resort to the rules of common law is done more naturally. However, there are some delicate points. With regard to lawsuits between contracting parties, the forum contractus and the elected forum have struggled to assert themselves before the forum delicti. In other words, at the jurisdictional level, an infringement attributed by an author to his contractual partner is often considered to be of a tortious nature, rather than being a breach of the contract. This appears to be explained by a rule of French copyright law: the interpretation of contracts for the exploitation of copyright works is restrictive. It is not a manifestation of territoriality, but rather a trace of this favour for the author, which allows the author to escape from the jurisdiction clauses the French literary and artistic property law possesses. However, this ‘bias’ appears to be fading (cf above 1.2.5). In the field of copyright infringement, the Court of Cassation has very quickly adopted the Shevill judgment, in a lawsuit between authors and a British publishing house.75 Since this judgment, which transposed the notion of complex offence in copyright infringement in a straightforward manner, one can notice a certain terminological and conceptual wavering. In case of distant infringements through the distribution of comic strips or the sending of items of clothing from abroad to France, the Court of Cassation has repeated the words of the judges over the main dispute and has considered it to be a matter of an ‘event causing damage’ that took place in France, while the act at the origin of the damage sustained in France was located abroad. However, this way of formulating it has remained without effect, since the French court considering the ‘event causing damage’ is only competent to render a judgment concerning the damage suffered in France.76 no] Propriété Industrielle Bulletin Documentaire especially at 15 and 49; JB Blaise and JP Stenger, Fascicule 563-A, Juris-Classeur Droit international, Paris, 1981, no 64 and the quoted authors; F Pollaud-Dulian, note under CA Paris, 15 April 1992, (1993) Journal du Droit International 998. 74   Opinions on the Cristal judgment diverge rather distinctly (cp, besides the above-mentioned references, C de Haas, ‘L’omnipotence du juge français de la propriété intellectuelle face à l’Internet ou l’histoire d’une incompétence largement ignorée’ [‘The omnipotence of French intellectual property judges with regard to Internet or the history of a largely unknown incompetence’] LPA 2001, no 226, 4; F Pollaud-Dulian, ‘A propos des conflits de juridictions en matière de contrefaçon par Internet’ [‘Concerning conflicts of jurisdiction in matters of Internet infringement’] Gaz Pal 2008, no 311, 5). Opposition to the GAT judgment appears to be more homogeneous (criticism or reservations): J Raynard, D 2007, 342; ME Ancel, CCE 2007, Etude no 10, 11; JC Galloux, (2006) Propriétés intellectuelles [Intellectual property] 471; H Gaudemet-Tallon, above n 63; M Wilderspin, ‘La compétence juridictionnelle en matière de litiges concernant la violation des droits de propriété intellectuelle (les arrêts de la Cour de justice dans les affaires C-4/03, GAT c/ Luk et C-539/03, Roche Nederland c/ Primus et Goldenberg)’ [‘Jurisdiction in matters of disputes concerning intellectual property right infringements (the judgments of the Court of Justice in the cases C-4/03, GAT v Luk and C-539/03, Roche Nederland v Primus and Goldberg)’] (2006) Revue Critique de Droit International Privé 777). 75   Cass 1re civ, 16 July 1997, (1998) Journal du Droit International 136, obs A Huet. 76   E Treppoz, note to appear (2009) Revue Critique de Droit International Privé, under the judgment Saint Tropez, Cass 1re civ, 25 March 2009, No 08-14.119; Procédures 2009, comm 151, obs C Nourissat; Palimpseste

France  545 Furthermore, cyber infringements of intellectual property rights also cause difficulties. For the moment, jurisdiction over the substance of the case has often been exercised in cases where a ‘sufficient, substantial or significant link’ between the attributed act and the damage allegedly sustained was established. Nevertheless, the characterisation of this link is more delicate in matters concerning marks.77 Certain authors consider that in matters of copyright the simple representation of the work is an infringement. Consequently, the accessibility of the website in dispute is supposed to be sufficient to justify the jurisdiction of French courts.78

2.3  Applicable Law: Copyright The question of the applicable law pursuant to second sentence of Article 5.2 of the Berne Convention is ambiguous. The general tendency in France is to consider that this provision contains a conflict of laws rule.79 However, there is discussion on the exact content of the category of this rule, on the one hand, and on its connecting factor, on the other. The doctrine is strictly divided into two camps.80 On the one hand, there are those who assess that Article 5.2 designates the law applicable to the infringement and the penalty thereof (‘the scope of the protection’ and ‘means of resort’), as well as to the conditions, such as the requirements for the protection of the work or the initial title to the copyright. On the other hand, there are those who view Article 5.2 as only covering the infringement and the results thereof, and that the other aspects, preliminary issues, (eg the conditions for the protection) fall outside the scope of the Berne Convention, and are therefore a matter of common law and, consequently, a matter of the law of the country of origin of the work.81 On this controversy, case law of the Court of Cassation is scanty, not to say nonexistent. By contrast, the Appeal Court of Paris is firmly maintaining its course, which [Palimpsest], www.masterpia.com, June 2009, obs ME Ancel. See also: Cass 1re civ, 21 November 2006, No 04-16.612. 77   CA Paris, 9 November 2007; D 2008, 8, obs C Manara and p 1507, obs P Courbe and F Jault-Seseke; JCP 2008 II 10016, note C Chabert; (2008) Revue Trimestrielle de Droit Commercial et de Droit Economique 95, obs P Gaudrat and p 310, obs F Pollaud-Dulian; CA Paris, 9 September 2009, www.legalis.net. 78   F Pollaud-Dulian, above n 74; H Gaudemet-Tallon, above n 63, especially no 8 (and especially when there is an alleged infringement of moral rights). 79   See also: E Treppoz, ‘La lex loci protectionis et l’article 8 du règlement Rome II’ [‘The lex loci protectionis and Article 8 of the Rome II Regulation’] D 2009, 1643, especially nos 5 and 6. 80  For a presentation, see HJ Lucas, ‘Propriété littéraire et artistique, Droit international, Droit commun’ [‘Literary and artistic property, international law, common law’] Juris-Classeur Civil Annexes, Fasc 1910, no 36 et seq. 81   Outside the application of the Berne Convention, the Le Chant du Monde judgment, Cass civ, 22 December 1959, (1960) Revue Critique de Droit International Privé 361, note F Terré; D 1960, 93, note G Holleaux; (1960) Revue Trimestrielle de Droit Commercial et de Droit Economique 351, obs H Desbois; (1961) Journal du Droit International 420, note B Goldman, is interpreted as laying down two rules of conflict. One is the rule of which the category includes the existence of intellectual property law (‘private law’ (in French droit privatif )) and that has as the connecting factor the country of origin of the work. The subsequent jurisprudence has included in this category the question of the protectable character of the work, the question of the identity of the holder and the question of the duration of the right. The law applicable to the existence of the right is therefore the law of the country of origin of the work (country of the first publication or, in default, the country of the nationality of the author). The other is the rule of which the category includes ‘the civil protection against infringements’ of intellectual property law (the protection of the right and especially the civil punishment for the infringement) or, more widely, the exercise of the right, and that has as the connecting factor the country where ‘the infringements have taken place’. The law applicable to the protection of the right is therefore the law of the country where the right would have been violated or misunderstood.

546  Marie-Elodie Ancel consists of considering that the protectable character of the work or the initial title are matters of common law and, therefore, matters of the law of the country of origin of the work.82 Concerning the connecting factor, the situation is equally confusing. However, in this respect, the confusion originates above all from the Court of Cassation, of which one does not know whether it really follows the principles that it lays down itself in matters of tort responsibility, or whether it creates a special rule emanating from the second sentence of Article 5(2) of the Berne Convention. If everybody (ie courts and authors) agrees to say that ‘the country where the protection is sought’ is neither the country of origin nor the country of the forum, the Court of Cassation is in an unstable position with regard to the connecting factor to be retained. In a judgment of 2002, where several French and foreign defendants stood accused of making counterfeit copies of software in different countries,83 the Court has thus held: that in the terms of Article 5(2) of the Berne Union Convention, the scope of the protection as well as the means of relief guaranteed to the author in order to protect his rights are exclusively determined according to the legislation of the country where the protection is sought; that the Appeal Court has exactly considered that this law does not designate the law of the country of origin or the law of the court where the case has been brought, but the law of the State or the States on the territory of which the delictual/tortious acts have occurred.

However, the strong connection with the law of the country where the ‘delictual acts’ were committed (and, in this particular case, of a plurality of laws) has weakened partly because such a connection is difficult to establish. According to the decision, ‘the result is that in the case of more than one infringement, French law, as the law of the “place of the damage”, has no exclusive jurisdiction to govern the whole of the dispute in absence of a closer, not proven, connection, with France.’ Thus, the law of the domicile of the victim (who claims that the damage he suffered in various countries is maximised in his domicile) should not be taken into consideration, unless there is a ‘closer connection’ in his favour. Nevertheless, the Court of Cassation has not yet defined when such a particular case exists. It appears that the Court wanted to go back to a solution it adopted in 1999 in matters of tort responsibility, where ‘the closest links’ played a certain role in the determination of the applicable law.84 In 2007, the Court appeared to come back to a much more rigid connection and no longer mentions any possible ‘closer connection’.85 On the other hand, in this particular case, it characterised the connection with the ‘delictual acts’ in a surprising way. The action was brought by the author of a novel, against two French companies who were assignees for the French market of the rights of representation and the publishing rights to the movie Waterworld. The court hearing the main dispute had established that it was competent to 82   CA Paris, 19 September 1994, (1996) Revue Critique de Droit International Privé 90, note JS Bergé; CA Paris, 9 February 1995, (1995) 166 Revue Internationale du Droit d’Auteur [International Copyright Journal] 310, JCP E 1996 I 582, no 14, obs HJ Lucas; CA Paris, 14 March 1991, (1992) Journal du Droit International 148, obs F Pollaud-Dulian; JCP 1992 II 21780, note JC Ginsburg; CA Paris, 4 June 2004, JCP E 2005, 279, note A Singh; CA Paris, 16 February 2007, (July 2007) Propriétés intellectuelles 338, obs A Lucas and p 483, obs P de Candé; JCP E 2007, no 45, 2337, note A Singh; CA Paris, 30 May 2008, (2009) Propriété Industrielle, no 1, comm 5, obs JP Gasnier. 83   Cass 1re civ, 5 March 2002, Bull civ I, no 75; D 2002, 2999, note N Bouche; D 2003, 58, note M Josselin-Gall; JCP 2002 II 10082, note H Muir Watt; JCP E 2003, 278, no 10, obs HJ Lucas; (2002) Propriétés intellectuelles no 5, 56, obs A Lucas; (2003) Revue Critique de Droit International Privé 440, note JM Bischoff. 84   Cass 1re civ, 11 May 1999, No 97-13.972 (see above 1.3.3). 85   Cass 1re civ, 30 January 2007, (2007) Revue Critique de Droit International Privé 769, note T Azzi; (2008) Journal du Droit International 169, note ME Ancel; adde E Treppoz, Gaz Pal, 2008, no 131, 27.

France  547 give a ruling on the events that had taken place in France and they had considered that, based on case law of 2002, American law was applicable. The Court of Cassation, rather than breaking with the relaxation referred to in 2002, upheld the decision of the judges over the main dispute and considered that ‘the movie has been made, realised and presented in the US and that the novel derived from it has been published in the same country’. Therefore, the Appeal Court had ‘exactly decided that American law was applicable’. In other words, in spite of the events in dispute having taken place on French territory, the Court of Cassation had located the ‘delictual acts’ in the country where the alleged infringement had its source, even if this source is attributable to individuals other than the defendants. It is to be noted that the first instance court (Tribunal de grande instance) of Paris has applied the formula of the Waterworld judgment in a case between a copyright collecting society managing photograph rights and Google Inc, concerning the thumbnails in the Google Images search engine. Therefore, in this case, Californian law was applied.86 However, in a more recent decision, the same court succeeded in escaping from the application of American law by evading Article 5(2) of the Berne Convention and by searching for the law presenting the closest links with the lawsuit. In doing so, the court has avoided the Waterworld judgment and found more room for manoeuvre in the solutions developed by the Court of Cassation in matters of non-contractual responsibility.87 As one can see, the Waterworld judgment has sown seeds of discord among French judges. As for moral rights, an important decision of the Court of Cassation considered them as ‘a law of imperative application’, which commentators have analysed as designating them as a ‘mandatory rules’ (loi de police).88 However, a certain number of authors would rather prefer that the protection of moral rights is made by the application of the public policy exception and not consider them as a part of ‘mandatory rules’. Such an approach is considered to be too offensive. Certain authors also suggest that moral rights be connected with copyright law, so that the law of the contract would be without effect with regard to moral rights.89

2.4  Applicable Law: Industrial Property The application of the law of the title or, more precisely, of the country for which the protection has been granted, is firmly established in French positive law,90 so that the question is generally not discussed before the courts. Even concerning an Internet site, no one would dream of reviewing the application of the law of the title,91 with the exception of authors 86   TGI Paris, 20 May 2008, Y Gaubiac, ‘La Convention de Berne, encore méconnue’ [‘The Berne Convention, still disregarded’] CCE 2008, Etude no 22; ME Ancel, ‘Un an de droit international privé du commerce électronique’ [‘One year of private international law on electronic commerce’] no 10, CCE 2009, Chronique no 1; J Lacker, (2008) Revue Lamy Droit de l’Immatériel no 42, 19. 87   TGI Paris, 12 December 2009, Editions du Seuil et al v Google Inc et al (the Google Search Books case). 88   Cass 1re civ, 28 May 1991, JCP E 1991, 220, note J Ginsburg, P Sirinelli; JCP 1991 II 21731, note A Françon; (1991) Revue Critique de Droit International Privé 782, note PY Gautier; (1992) Journal du Droit International 133, note B Edelman; D 1993, 197, note J Raynard. 89   See below Case 9. 90   Cass com, 26 March 1973, Bull civ IV, no 136. 91   Cass com, 16 July 2007, D 2007, 2112, obs J Daleau; JCP G 2007, II, 10161 (2e esp), note C Chabert; C Caron, CCE 2007, comm 119; (2007) 30 Revue Lamy Droit de l’Immatériel no 997, obs L Costes; (2007) 31 Revue Lamy Droit de l’Immatériel no 1024, obs E Tardieu-Guigues; JCP E 2007, 2269, note J Passa; M Malaurie-Vignal, (2007) Contrats Concurrence Consommation comm 275; E Treppoz, (2008) Revue Critique de Droit International Privé 322.

548  Marie-Elodie Ancel who reflect on the schematic plan of offences and who cannot acknowledge that French law is applicable while there is, in substance and in this particular case, no infringement in France.92 What is striking, on the other hand, is that, at the level of French substantive law, the Court of Cassation has adapted the notion of mark infringement to the Internet-related lawsuits: the infringement does not occur when, taking into consideration the architecture of the website in dispute, ‘the inclusion of the mark in the website, although it is accessible for Internet users from this country, it cannot be considered as aiming at a French public, and constitutes an act of business on French territory’.93 Concerning contracts, one may consider that ‘industrial property law does not show, from this point of view, any particularities in relation to common law of private international law. The matter remains dominated by the principle of the law of autonomy’.94

Section II  Hypothetical Case Studies Case 1: General Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit.

Case 1(1) Would a French court have international jurisdiction if the defendant B had its residence in France? Would the decision regarding international jurisdiction of the French court differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located in France?

(i)  B is a natural person If B has its ‘domicile’ in France, in the French meaning of the term (main establishment, reinforced with the intention of settling in this place on a long-term basis, Art 102 and 103 of the Civil Code), then the French court in whose jurisdiction the ‘domicile’ is located shall be competent. Indeed, the presence in France of the domicile of B will have made the Brussels I Regulation applicable (Arts 2(1) and 59(1) of the Brussels I Regulation) and the special competence of the court of the domicile shall ensue from Articles 42(1) and 43(1) of the Code of Civil Procedure (CCP).

  See also Treppoz, above n 91.   Cass 1re civ, 10 July 2007, No 05-18.571; D 2007, 2112, obs J Daleau; JCP 2007 II 10161 (2e esp), note C Chabert; C Caron, CCE 2007, comm 119 and ME Ancel, ‘Un an de droit international privé du commerce électronique’ [‘One year of private international law on electronic commerce’] no 22, CCE 2008, Chronique no 1; (2007) 30 Revue Lamy Droit de l’Immatériel no 997, obs L Costes; JCP E 2007, 2269, note J Passa; M MalaurieVignal, (2007) Contrats Concurrence Consommation comm 275. 94   J Azéma and JC Galloux, Droit de la propriété industrielle [Industrial property law] (Paris, Dalloz, 2006) no 750 (concerning patents). 92 93

France  549 If B is settled in France but without intention to stay, it is not a matter of its ‘domicile’, in the meaning of French law, but a matter of a ‘residence’ in France. If, furthermore, B has no domicile in any state bound by the Brussels I Regulation or by the Lugano Convention, these texts shall not be applicable. For this reason, coming back to common law, the French court where the residence is located shall be competent based on Article 43(1) of the Code of Civil Procedure (CCP): ‘The place where the defendant lives means: in relation to a natural person, the place where he has his domicile or, in default thereof, his residence’. (ii)  B is a legal person If B has its statutory headquarters, or its general management, or its main establishment in France, the Brussels I Regulation shall apply to give general jurisdiction to French courts (Arts 2(1) and 60(1) of the Brussels I Regulation). In application of Article 43(2) of the CCP, A would be able to bring his case before the French court in whose jurisdiction B is ‘settled’, in other words, where the management functions of the company are actually being exercised, in a stable manner. If B has its main establishment in the meaning of the Brussels I Regulation in a Member State other than France, the Brussels I Regulation shall apply. In that case, A would be able to bring his case before the French court in whose jurisdiction the French branch of B is located, but on condition that the lawsuit is related to ‘the operation [of this] branch’ (Art 5.5 of the Brussels I Regulation). The result is identical if B has its main establishment in Iceland, Norway or Switzerland: applying private international law based on Article 53(1) of the Lugano Convention, the French court will consider that B has its headquarters in one of these three countries, that the text of the Convention is applicable, and that A is entitled to invoke the forum of the branch for which provision is made. The French court will again reach the same result if B has its main establishment (as well as its statutory headquarters and its management) outside the states bound by the Regulation and the Lugano Convention: by letting work the internal solution called ‘main stations’, the court will consider that it has jurisdiction if B has a branch whose activity is related to the dispute in its jurisdiction. Case 1(2) Would a French court have international jurisdiction if the copies of the journal were distributed in France in the language which is officially spoken? Would the decision differ if the journal was printed in France for distribution in neighbouring country X (in a language which is not spoken in France)?

Operative Rules (i)  The journal is distributed in France in French If B is domiciled in the European Union (but outside France), or in Iceland, Norway or Switzerland, the international jurisdiction of the French court will be examined with regard to the Brussels I Regulation and the Lugano Convention. The interpretation rendered by the ECJ will also be taken into consideration. In particular, an application of the solution given by the Court in the Fiona Shevill judgment,95 related to the forum of the infringement   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415.

95

550  Marie-Elodie Ancel (Art 5(3) of the Brussels Convention), will be made. In this particular case, in so far as the copies under dispute are being distributed in France in French and A, the international pop-music star, is certainly known in France, the French court will be led to consider that A can invoke damage suffered in France, in the meaning the Court of Justice has defined it in the Fiona Shevill judgment. Therefore, the French court will consider itself to be internationally competent, but only, as the Court of Justice has also specified, to possess jurisdiction over the compensation for the damage suffered by A in France. In the other cases, the international jurisdiction of the French courts will be determined by the transposition of Article 46(2) of the CCP. Then, the French courts are not bound by the definitions the Court of Justice has given to the causal event and damage in the sense of the European documents. Therefore, they would be able to consider that the distribution in France, as such, constitutes an ‘event causing damage’.96 However, whatever the characterisation of the ‘event causing damage’ would be, the French courts would also consider that A can invoke a damage suffered in France. Therefore, they would deem themselves competent. As for the scope of this competence, one should note that the Appeal Court of Orléans has pointed out very clearly in an unfair competition case that the French courts before which the case has been brought on the ground of damage suffered in France only possess jurisdiction over the compensation for this damage, following in this matter the model of the Court of Justice.97 (ii)  The journal has been printed in France, in a foreign language, with the aim of being distributed in a neighbouring country We would assume that it is only the material operation of the printing of the journal that took place in France. If the European texts (Brussels I Regulation and the Lugano Convention) are applicable (see Case 1(2)(i) above), the Fiona Shevill judgment leads to the conclusion that A cannot invoke neither causal event nor damage in France, since the causal event is located in the country of business of B (which is, by hypothesis, situated outside France) and the damage supposes distribution. Consequently, the French courts will decline international jurisdiction. According to common law, one can wonder whether the mere printing in France of the copies under dispute does not constitute the ‘event causing damage’ in the sense of Article 46(2) of the CCP. In fact, in an unfair competition case in the sphere of sale through the Internet, the Appeal Court of Colmar had seen in the fact that a former employee of the plaintiff had set up a competing company in Germany ‘a material act that starts a process of direct competition’, ‘the trigger element . . . that allowed unfair and parasitic acts to take place’. It had concluded that the French courts did not have jurisdiction (since the damage invoked was of more concern to the German market).98 Therefore, the French courts are not excluded from adopting a prosaic interpretation of the ‘event causing damage’, and retaining their jurisdiction on the grounds of the fact that the defamation allegedly sustained abroad takes its very concrete origin in France. However, conversely, it is also possible that they will allow themselves to be influenced by the Fiona Shevill judgment and by 96   This analysis has been made by the Court of Cassation in the field of conflicts of law: Cass 1re civ, 14 January 1997. 97   CA Orléans [Orléans Appeal Court], 6 May 2003, (2004) Revue Critique de Droit International Privé 139, note H Gaudemet-Tallon. 98   CA Colmar [Colmar Appeal Court], 5 April 2005, No 1A04/05496.

France  551 the description given by the Court of Justice, especially when, as is the case here, the case presented to them is very close to the facts presented to the Court. Legal Formants In cases which fall under the material scope of the EU legislation, French courts follow the Fiona Shevill judgment of the ECJ. The latter locates the causal event in a forced way in the place of business of the defendant, which contributes to a certain degree of predictability on this point. Moreover, by preventing the plaintiff from claiming compensation for the whole of the damage(s) in one of the countries where he claims to be victim, the ECJ restricts the option that the Mines de potasse d’Alsace judgment had opened the option for the benefit of the plaintiff. This fragmentation of the jurisdiction is repeated by the courts when they apply common law, which makes one think that they find a well-balanced solution. French authors from their side find the Fiona Shevill solution excessively complicated and, in cases of infringements of personality rights, advocate giving competence to the court of the domicile of the victim. Case 1(3) Under the law of France, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published?

In short, the ‘domicile’ of B in France or, in certain cases (see Case 1(1)(i) above), his ‘residence’ in France give a universal or complete jurisdiction to the French courts. The situation will be the same if the French branch of B is responsible for the international distribution of the journal (see Case 1(1)(ii) above). If one manages to distinguish the domicile, or the residence, and ‘the establishment’ of B in the sense of the Fiona Shevill judgment in the facts, this ‘establishment’ in France is also a ground of universal jurisdiction according to this same judgment (see Case 1(2)(i) above). It is also possible that the printing in France can be considered as the ‘event causing damage’ in the sense of Article 46(2) of the Code of Civil Procedure, at the origin of the international distribution of the journal (see Case 1(2)(ii) above). Universal jurisdiction could be also exercised on the ground of the Civil Code provided that the case involves subsidiary title and is the jurisdiction is invoked by A: – A is a French national, or A is domiciled in France (Art 4(2) of the Brussels I Regulation), and B is not domiciled neither in the European Union, nor in Iceland, Norway, or Switzerland (and no bilateral convention protects him): A is entitled to invoke Article 14 of the Civil Code. – A is not French and B is French national: A is entitled to invoke Article 15 of the Civil Code against B. One may also point out that, according to the Court of Cassation, when a co-defendant has his domicile in France, the French court in whose jurisdiction this domicile is located has universal jurisdiction with regard to this defendant, but, of course, also with regard to the other defendants who are domiciled abroad, on condition that the claims are connected.99 99   Cass 1re civ, 6 May 2003, No 01-01.774, for a copyright infringement, on the ground of Art 6.1 of the Brussels Convention.

552  Marie-Elodie Ancel Please specify if answers to these questions were different in cases where intellectual property rights are at stake.

At first sight, there would be no difference.

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a French court is the court of country X:

Case 2(1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights?

On preliminary title, it has been pointed out that the question has been answered taking into consideration only patent lawsuits. Operative Rules As for rationae materiae, the international jurisdiction of a French court includes infringements of a foreign industrial property right that would have been infringed abroad, even if this situation rarely arises in practice.100 Descriptive Formants In cases which fall within the scope of EU legislation, it is known that the hypothesis has been recognised by the Duijnstee judgment of the ECJ and illustrated by the GAT case. The idea is that infringement lawsuits are a matter of private interests and aim at compensating and ceasing damage. Therefore, it is dealt with like any ordinary lawsuit in private law. In common law, French courts considered themselves incompetent to decide upon infringements of foreign intellectual property rights during a rather long period, for fear of encroaching upon foreign sovereignty and in order to maintain their own exclusive jurisdiction concerning infringements of French intellectual property rights.101 As a digression, and recognising the competence of French courts to hear infringements of a foreign title, one can quote a very old judgment of the Appeal Court of Paris102 and another, more recent one, of the same Court, dated 9 July 1980.103 Metalegal Formants The Brussels Convention has reactivated the ‘privatist’ vision on infringement lawsuits. Therefore, its model effect on common law could contribute to a return to this privatist vision in common law. Nevertheless, the ECJ has thwarted this movement in the GAT judg  For an example, Cass com, 26 March 1973, Bull civ IV, no 136.   TGI Paris, 4 May 1971, (1974) Revue Critique de Droit International Privé 110, note G Bonet. 102   CA Paris, 4 August 1896, (1899) Journal du Droit International 148, competence implicitly founded on Art 15 of the Civil Code: infringement of a British mark by a Frenchman. 103   CA Paris, 9 July 1980, (1980) 2 Propriété Industrielle Bulletin Documentaire 237, competence founded on Art 14 of the Civil Code. 100 101

France  553 ment (see Case 2 below, Questions 2 and 3) and risks de facto causing the return to publicist solutions. For fear that the other party would impede the infringement proceedings instituted outside the state which granted the intellectual property right by contesting, even minimally, the validity of this right, the plaintiff of the infringement action will be tempted, or be forced, to institute the infringement proceedings in the state which granted the right. Case 2(2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and nonregistered intellectual property rights?

Case 2(3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Question (2) and (3) will be dealt with together. Operative Rules In application of the Brussels I Regulation and the Lugano Convention, a French court shall decline to give a ruling on a principal claim for revocation of a right registered in another state bound by these texts.104 Furthermore, in application of the GAT judgment (see, moreover, Art 22(4) of the Lugano II Convention), it shall equally decline to give a ruling on any incidental claim related to the validity or the registration, counterclaims for revocation or simple means of defence. In common law, the French court shall also decline to give a ruling in an action for revocation. Equally French courts shall also decline to give a ruling on counterclaims for revocation.105 There is no decision that directly illustrates the position of French courts with regard to the exception of invalidity of a foreign title. Descriptive Formants The refusal of the French jurisdiction to invalidate foreign intellectual property rights is a tradition106 and is justified by a reluctance to interfere in the operation of foreign public services or to call into question the actions of public services. A sense of reality also leads one to consider that a possible French decision of revocation will remain a dead letter in the country of registration. With regard to the exception of invalidity (invalidity of the right of the plaintiff invoked in a purely defensive manner by someone who is sued for infringement), the general tendency, outside the influence of the GAT judgment, is to consider that a French court would have jurisdiction to hear actions.107 104   A contrario, Cass 1re civ, 31 January 2006, No 03-16.980: ‘By right . . . the Appeal Court certifying that the lawsuit was not brought before it as the main claim [italics added] [in matters of registration or validity of patents, trademarks, designs and other similar rights required to be deposited or registered], has revoked the exception of competence based on Article 16.4 of the Brussels Convention.’ 105   M Vivant, ‘Régime international’ [‘International system’] Juris-Classeur Brevets, Fasc 4900, May 2002, no 91. 106   TGI Seine, 16 November 1966, (1969) Annales de la propriété industrielle 38. 107   In this sense, J Raynard, obs D 2002, 1193.

554  Marie-Elodie Ancel Thus, the Court of Cassation appeared inclined to recognise the jurisdiction of French courts when the validity of an industrial property right is not raised ‘as the main claim’.108 It is clear that in that case the Court has made an a contrario interpretation of Article 19 of the Brussels Convention (and today, Art 25 of the Brussels I Regulation), in a way as the French doctrine has done it very early (nevertheless, with various interpretations). The solution of the GAT judgment has received criticism in French legal literature (see 1.2 above). A judgment of the Appeal Court of Paris, giving a ruling in a case of recourse to invalidation of a settlement by arbitration (see Case 4 below), seems to confirm that French courts may have jurisdiction over exceptions of invalidity related to foreign rights, but that their decision will only have inter partes effect. In other words, French courts would be able to establish the inopposability of the foreign right to the defendant. Metalegal Formants The review of the Brussels I Regulation could bring about the relinquishment of the GAT judgment in so far as it concerns exceptions of invalidity. Moreover, the Hague Convention of 30 June 2005 on Choice of Court Agreements recognises, to a certain extent, that the chosen judge can have competence to hear a case on the validity of a title ‘by way of defence’ (Art 2(3)). If, for these reasons, the GAT judgment would have to be relinquished, that would not arouse much regret in France.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D are infringing its patents in countries X, Y and Z. A institutes patent infringement proceedings against the alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs, A seeks the consolidation of claims forum of country W.

Case 3(1) Assuming that the court of country W is a French court, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract?

(i)  Concentration of proceedings in France, country of plaintiff A Operative Rules In the first place, it is necessary to emphasise that, in such a configuration, the jurisdiction of the French court rests on a very narrow base. Regardless of whether the matter falls within the scope of the EU legislation (Art 6(1) of the Brussels I Regulation and Lugano Convention) or of common law (Art 42(2) of the CCP), A will not be able to bring an action against B, C and D by virtue of the rules of derived jurisdiction (French: compétence dérivée), because, in order to do so, one of the 108   Cass 1re civ, 30 January 2006, mentioned above, a judgment rendered within the framework of the Brussels Convention, but before the GAT judgment.

France  555 defendants would need to have his domicile (even, by default, his residence) in France, which, by hypothesis, is not the case, and it would be necessary that the claims are joined by a link of connection, which does not emerge from the facts either. Likewise, jurisdiction of French courts could not be based on the ground that the damage suffered by A is located in France, where A is established. In the case of a patent infringement, it is in the countries for which the patents are granted that the damage is located. The only way to find a ground for French jurisdiction against B, C and D would be for A to rely upon Article 14 of the Civil Code, which would require that B, C and D are not established in a Member State or in Iceland, Norway or Switzerland (ie that one is located outside the scope of application of the EU legislation), or in a country with which a bilateral convention would prohibit the use of Article 14 of the Civil Code. It is true that the fact that A has first taken action in X, Y and Z could pose problems: the proceedings instituted by A abroad will create a presumption that A has waived his privilege of jurisdiction. Nevertheless, this presumption can be reversed if A proves that he acted under coercion, or in emergency, or that he afterwards abandoned actions abroad. In the second place, admitting that A has taken action in X, Y and Z under coercion or has not yet abandoned the proceedings he instituted, he could request the French court second seised not to follow rules of lis pendens or of connection. Indeed, in common law, French judges are never obliged to follow rules of lis pendens or of connection. Eventually, a French court would be able to exercise jurisdiction over the action instituted by A against B, the action instituted by A against C, and the action instituted by A against D. The question remains whether, on the request of A, the court would be able to join the different legal proceedings, considering that there exists ‘a link between the claims such that it would be in the interest of justice to investigate or to determine them together’ (Art 367 of the CCP). This is not self-evident, since the patents and the attributed facts are distinct and concern different countries. Descriptive and Metalegal Formants The author lacks indications on this point, since the concentration of actions in France seems highly unlikely: the thoughtless strategy of A, the narrow base of jurisdiction of French courts, the power of appraisal of French judges, in the first place concerning the exception of lis pendens and of connection, and in the second place concerning the joinder of the legal proceedings. (ii)  Concentration of proceedings in France based on a breach of contract Operative Rules The jurisdiction of French courts seems just as limited, because if the lawsuit is labelled as contract-related, the different rules which are usable and characteristic to contractual matters (Art 5(1) of the Brussels I Regulation; Art 5(1) of the Lugano Convention; Art 46(1) of the CCP) are supposed to lead to the granting of jurisdiction to the courts of the different countries for which the patents have been conceded: X, Y and Z. It is indeed there that ‘the obligation is the basis of the claim’ or ‘the provision services’ (if one can use this description with regard to the contract concerned) needed to be carried out. In this case again, A would only be able to have recourse to Article 14 of the Civil Code. This being stated, if B, C and D are parties to the same licence agreement with A (this means a single quadripartite agreement), the connection will more easily be established.

556  Marie-Elodie Ancel Case 3(2) Assuming that B, C and D are members of a group of a corporation and take identical steps in infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country of X is a French court, would (and if so, under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

(i)  Joinder of the requests against B, C and D in France Operative Rules In the framework of the texts of the sphere of influence of the EU, the Roche Nederland109 judgment prevents A from basing himself on the rule of derived jurisdiction in order to be able to directly bring an action against C and D before the French court of the domicile of B. Indeed, A cannot take the risk of contradictory decisions in accordance with the conception of the Court of Justice: there is no risk of irreconcilable decisions, if one fits oneself into ‘the same position in fact and in law’ when the patents are valid for different countries, and that the facts in dispute took place in different countries. In common law, one cannot rule out the Court of Cassation adjusting the interpretation of Article 42(2) of the CCP to the Roche Nederland judgment. Descriptive Formants Some authors, nevertheless, consider that the rule of derived jurisdiction has a residual domain.110 If A can provide proof that B is coordinating the actions of C in Y, it is not difficult to recognise that the requests formulated against B and C fit into ‘the same position in fact and in law’: their responsibilities are overlapping; B and C together commit an infringement of the patent of A in Y; judging B and C separately, for the same facts threatening the same patent, could lead to irreconcilable solutions. If A can prove that B also directed D, who is acting in country Z, the same reasoning can be followed and will allow A to bring the case before the French court of the domicile of B and to summon D there. In this case, the result that is obtained is a juxtaposition, before the same court (the court of the domicile of B), of several derived jurisdictions (B-C; B-D). However, a complete centralisation will only be realised on condition that French law allows the joinder of these proceedings. This should be the case: the link of connection of Article 367 of the CCP will undoubtedly be accepted, taking into account the orchestration of the behaviour. (ii)  B, C and D claim that the patents of A are invalid Operative Rules If, summonsed in France, C and D make a counterclaim for the revocation of the patents of A for country Y and for country Z, the French court before which the case has been brought 109   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. 110   Wilderspin, above n 74, 791; P Véron, in T Cottier and P Véron (eds), Concise International and European IP Law: TRIPS, Paris Convention, European Enforcement and Transfer of Technology (Alphen aan den Rijn, Kluwer Law International, 2008) 282.

France  557 will consider itself incompetent to give a ruling on this claim and will stay the proceedings, as long as the case is pending before the courts of these countries. This will also be the case if Y and Z are countries of the European Union (or Iceland, Norway or Switzerland), in application of Article 22(4) of the Brussels I Regulation (or Art 16(4) of the current Lugano Convention, or Art 22(4) of the revised version) and according to the GAT judgment. However, the situation will be the same if one bases oneself on common law (see above, answer to Case 2(2) and (3)). If C and D limit themselves to pleading the invalidity of the foreign patents of A, it is well known that, according to EU law since the GAT judgment, French courts cannot decide upon this claim. In common law, it is not ruled out that a French court will consider itself competent to give a ruling inter partes (see above answer to Case 2(2) and (3)).

Case 4: Choice of Court Agreements A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products did not fall under the scope of the licenced patents. A files a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not French and do not have any place of business in France:

Case 4(1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made (new) choice of court agreement at the time when the dispute arose?

Operative Rules The countries for which the patents have been granted to A are not deciding factors for the legality of the clause in the exact context of Case 4(1): the lawsuit such as it is described calls into question the agreement and is not a matter of the rule of exclusive jurisdiction.111 This is not about designating French courts to an action for the revocation of the patents in dispute. Everything obviously depends on the drafting of the choice of forum clause, but this undoubtedly concerns, at a minimum, disputes on the performance or non-performance of the licence agreement. And yet, in so far as A considers that B commercialises the products under licence without paying the agreed licence fee, A forms a claim for compensation for breach of contract and this request falls into the material field of the clause. Admittedly, B contests breaching the licence agreement, but the respective positions of A and B need to be resolved with regard to what the agreement makes provision for. And yet, once more, the interpretation of the agreement is surely comprised in the material field of the clause. If this is the case, French courts will consider that the clause applies. 111   Cass com, 9 February 1970, (1971) Journal du Droit International 108, note JM Mousseron and A Huet: implicitly recognising the competence of Moroccan jurisdictions over the transfer of French patents, but not based on a choice of court clause.

558  Marie-Elodie Ancel The date of the conclusion of the clause does not appear to be a deciding factor. At the very most, one can consider that, if the parties agree on the clause at the time when the lawsuit occurs, they understand that this clause applies to the lawsuit. In that case, the interpretation of the scope of the clause is obvious. Descriptive Formants Both in case law and legal doctrine, it is agreed that choice of court clauses should be enforceable when the lawsuit concerns foreign intellectual property rights and when the lawsuit remains of a contractual nature. However, in a decision, albeit a marginal one, the Appeal Court of Paris declined to apply a clause designating French courts concerning the transfer of a Moroccan patent, on the grounds that the clause, which provided that ‘all disputes related to the current licence and its effects would be in the exclusive jurisdiction of French courts’, had a ‘too imprecise’ content.112 Commentators found this decision surprising and strange.113 In matters of copyright, the trend of court practice has been mentioned earlier (see 1.2.5 above). Choice of court clauses have been interpreted restrictively. This particularity appears to be on the way to disappearing. Case 4(2) Would the court enforce an exclusive choice of court clause if the defendant raised a counter-claim that patents are invalid?

Operative Rules If the court chosen is French and if the patents in dispute concern other countries bound by the Brussels I Regulation and the Lugano Convention, the French court will decline to give a ruling on counterclaims for invalidation and even on a simple exception of invalidity (GAT judgment). In such circumstances the French court will stay the proceedings. If the patents in dispute are within the material scope of the EU legislation, the French court will decline to invalidate a foreign patent, on the ground that its decision will remain without effect in the country of issue of the patent. It could stay the proceedings, or even propose that the parties treat the claim as a simple exception of invalidity. Descriptive Formants The solution follows from the rules concerning the choice of court clauses of jurisdiction by the Brussels I Regulation (Art 23(5)) and the Lugano Convention: these clauses cannot depart from the rules on exclusive jurisdiction concerning the validity of titles of industrial property. In common law, the Court of Cassation has in 1985 reserved the respect to French imperative territorial jurisdiction.114 Case 4(3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings?   CA Paris, 30 January 1991, D 1993, 380, obs JM Mousseron and J Schmidt.   Mousseron and Schmidt, above n 112; Vivant, above n 105 no 83.   Cass 1re civ, 17 December 1989, in B Ancel and Y Lequette, above n 5 no 72.

112 113 114

France  559 One can assume that A has brought an action against B before a French court that normally has no jurisdiction. Before this court, A and B indicate that they agree to confer jurisdiction to the court before which the action has been brought (hypothesis 1), or else B indicates that he does not contest the jurisdiction of the court before which A has brought the action (hypothesis 2), or, moreover, B appears in court without contesting the jurisdiction of a court (hypothesis 3). Operative Rules Regarding EU legislation, the lawsuit does not bring up any question relevant to a rule of exclusive jurisdiction, and therefore the court before which the case is brought will retain its jurisdiction, if the defendant does not contest it (Art 24 of the Brussels I Regulation). In that case, it will be a matter of a voluntary prorogation of jurisdiction, which one can consider as conventional in hypothesis 1, as unilateral and express in hypothesis 2, and as unilateral and tacit in hypothesis 3. Common law does not seem to have any place, since the ECJ has ruled that ‘the voluntary appearance in court of the defendant establishes the jurisdiction of a court of a Contracting State before which the plaintiff has brought proceedings, without the place of the domicile of the defendant being relevant’.115 Nevertheless, relatively recently the Appeal Court of Paris has ruled the opposite and, placing itself on the field of common law, it has implicitly rejected the idea that the appearance in court of the defendant can be a provision of case law for French courts.116 The non-application of the judgment of the ECJ has been criticised.117 Case 4(4) Would parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be legal effects of such decision?

In French law, arbitration clauses are rather widely accepted in agreements relating to intellectual property (see Art L615-17, para 3 of the IPC (Intellectual Property Code): ‘The above-mentioned provisions [ie on the exclusive jurisdiction of certain state courts in matters of patents] shall not prevent recourse to arbitration in accordance with Articles 2059 and 2060 of the Civil Code’; Art L716-4 of the IPC: ‘The provisions of Article L716-3 [ie on the exclusive jurisdiction of certain state courts in matters of marks] shall not prevent recourse to arbitration in accordance with Articles 2059 and 2060 of the Civil Code’). Lawsuits on the interpretation or on the enforcement of an agreement can therefore be entrusted to an arbitration tribunal.118 However, certain points raise difficulties, first of all, due to the reference to the ‘rights’ of which one has ‘the free disposal’ in Article 2059 of the Civil Code and to the ‘matters in which public order is concerned’ in Article 2060 of the Civil Code; secondly, due to the existence of texts on French law that attach an ‘absolute effect’ to the decision of revocation of industrial property rights (Arts L613-27 and L714-3 of the IPC).   Case C-412/98 Group Josi Reinsurance Comp v UGIC [1998] ECR I-7091.   CA Paris, 6 March 2008; (2009) Journal du Droit International 171, note G Cuniberti. 117   G Cuniberti, above n 116. 118   CA Paris, 24 March 1994, (1994) Revue de l’Arbitrage 515, note C Jarrosson. 115 116

560  Marie-Elodie Ancel Thus, the possibility of bringing to arbitration a question on the very existence of moral copyright, or on its transfer, or on its transferability, is very doubtful, since the French court will be tempted to consider copyright as an inalienable right.119 In practice, a French court before whom such a question is brought and whose jurisdiction would be contested due to the existence of an arbitration clause by which the litigants are bound could revoke it as ‘manifestly invalid and inapplicable’. Therefore, it would decline to make work the negative effect of the competence-competence principle in order to decide itself on the core of the question.120 On the other hand, nothing seems to conflict with an arbitration tribunal determining whether an infringement of moral rights has taken place, if the existence of the latter is undisputed, and drawing the consequences from a possible infringement.121 In matters of industrial property, if the lawsuit on the title of marks and patents is arbitrable,122 it is not accepted that an arbitration tribunal can give a ruling on the validity of the industrial property right.123 Confronted with an exception of invalidity brought up in a lawsuit originally concerning the non-performance of an agreement, the arbitration tribunal would, according to certain authors, have to stay the proceedings while waiting for a state decision.124 However, in this particular hypothesis, an evolution has recently taken place, in the sense that there is a broader opening towards arbitration. Giving a ruling on the resort to invalidation of a settlement by arbitration, the Appeal Court of Paris has recently ruled that: the question of the validity of the patent raised incidentally during a lawsuit of a contractual nature can, as well as the arbitrator pointed it out, be referred to it, while the possibly established invalidity, not more than if it is the decision of a court, has no authority over the lawsuit for which a ruling is given, because it notably does not figure in the intention . . . it only has effect among the parties, and also in the same way as a decision in favour of the validity, while the third party can still request the invalidity of the patent for the same reasons.125

Thus, the decision upon the validity of intellectual property rights only has an inter partes effect.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B who is located in country Z produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a French court: 119   JL Goutal, ‘Arbitrage et propriété incorporelle’ [‘Arbitration and intangible property’] Gazette du Palais, 1997, doctr 28. 120   M Josselin-Gall, ‘Arbitrage et propriétés intellectuelles’ [‘Arbitration and intellectual property’] (2002) 105 Droit et Patrimoine 63. 121   B Oppetit, Arbitrage et propriété intellectuelle [Arbitration and intellectual property] (Paris, Litec, 1994) 130; A Lucas and HJ Lucas, Traité de la propriété littéraire et artistique [Treatise on literary and artistic property] 629, no 907; JL Goutal, above n 119. 122   CA Paris, 31 October 2001, (2002) Propriété Industrielle no 8, comm 76, note J Raynard; with nuances, affecting inventions of employees. 123   Expressly, CA Paris, 3 February 1992, RTD com 1993, 293, note E Loquin. 124   See notably, JL Delvolvé, ‘L’instance arbitrable’ [‘Arbitrable proceedings’] in B Oppetit, Arbitrage et propriété intellectuelle (Paris, Litec, 1994), above n 121, 41, especially 449. 125   CA Paris, 28 February 2008, LPA 2008, no 199, 3, obs VL Bénabou, Rev arb 2008, 712, note T Azzi.

France  561 Case 5(1) What procedural steps would a French court take having regard to pending proceedings in countries X and Y? Would the decision of a French court be different if the dispute was related to intellectual property rights that are not subject to registration?

(i)  Registered rights Operative Rules Regarding cases which fall under the scope of the EU legislation (X, Y and Z are states bound by the Brussels I Regulation or by the Lugano Convention), the French court will consider that there is a lis pendens situation involving the infringement action instituted before it and the previous action for declaration of non-infringement. It will be led to make this reasoning in the light of the Tatry judgment of the ECJ.126 The French court will therefore be forced to stay the proceedings until the court first seized has decided upon its jurisdiction. If the court first seised decides to assert jurisdiction, the French court will dismiss the action. In the framework of common law, French courts have discretion with regard to the measures available. They can therefore refuse to follow lis pendens rules (and, likewise, rules of connection, if this concept has been retained in common law) ‘if appropriate’, or, in other words, if the referral to the foreign proceedings indicates ‘a suspicious haste’127 or in the case of ‘excessive tardiness in the conduct of the foreign proceedings’.128 Legal Formants According to EU law, the authors admit that it is necessary to follow the Tatry judgment (even more than the Gasser judgment129), which forbids taking into consideration the absence of swiftness of the foreign court to which the action has been brought first.130 Nevertheless, it is necessary to draw attention to a judgment of the first instance court of Paris, which declined to regard the situation as a lis pendens. Indeed, the Paris court considered that the object of claims brought before a foreign court and a French court was not same: [T]he action started in the Court of Céans by the plaintiffs is an patent infringement action aiming at sanctioning the infringement of their rights in France while the action initiated before the Court of Milan is an action for declaration of non-infringement aiming at permitting them the exploitation of their product . . . It appears that, under these conditions, the two actions do not have the same object. It follows that the provisions of Article 21 of the Brussels Convention are not applicable in this particular case.131   Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439.   Niboyet and de Geouffre de la Pradelle, above n 36 no 467. 128   Chalas, above n 14, 2, nos 417, 545 et seq. 129   Case C-116/02 Erich Gasser GmbH v MISAT Srl [2003] ECR I-14693. 130   In this sense: P Véron, ‘Les torpilles revigorées par la Cour de justice européenne?’ [‘Torpedoes invigorated by the European Court of Justice?’] (2004) 160 Revue de Droit de la Propriété Intellectuelle 9. 131   TGI Paris, 28 April 2000, D 2002, at p 1193, obs J Raynard. The first instance court equally refuses to make use of the exception of connection based on Art 22 of the Brussels Convention: ‘[T]he assignation of which an official notice has been given by the plaintiffs before the Court of Milan shows that by resorting to the European rules of civil procedure, they wanted to block the infringement action started against them in France by launching an action in Italy themselves seeking a declaration of non-infringement of the party of the European patent in force in this State. It cannot be seriously contested that this instrumentalisation of European civil procedure 126 127

562  Marie-Elodie Ancel Metalegal Formants In the framework of the Brussels I Regulation, the harmful effects of the mechanical working of Article 27 are well perceived. The Green Paper of the Commission also raises the question of the improvements to be carried out within the framework of the revision of the Regulation. (ii) Non-registered Rights Operative Rules The Court of Cassation has applied the exception of lis pendens (Art 27 of the Brussels I Regulation) in a case in which an author had brought an infringement action before a French court while his contractual partner, an Italian company, also had brought an action before an Italian Court seeking to terminate their contract and to declare the use by it of the designs created in the framework of this contract lawful.132 The Court, which has invalidated the decision of the Court of Appeal, has considered that the parties, the cause and the object were the same because, while the author wanted to have the production and sale of the products in dispute prohibited, the Italian company had notably requested an Italian Court to declare the commercialisation of these products lawful. The French Court before which the suit had been brought in second instance was therefore under an obligation to stay the proceedings and then to dismiss the case. In the framework of common law, see Case 5(1)(i) above. Descriptive Formants The jurisdictions over the main dispute appear to be more attached to their competence than the Court of Cassation. The commentators on the judgment of 17 January 2006 approved of the Court of Cassation for having followed the line set by the ECJ.133 Metalegal Formants See Case 5(1)(i) above. Case 5(2) What procedural steps would the French court . . . take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Operative Rules According to the EU law (applicable if W is also a country bound by the Brussels I Regulation or by the Lugano Convention), the French court would undoubtedly consider constitutes a misappropriation of these procedures of which the main aim is to avoid that jurisdictions of two Contracting States render contradictory decisions in identical or connected cases, not to allow a party to deliberately block proceedings during several years even if this serves his personal interests. In the light of these elements, there is no room for applying Art 22 of the Brussels Convention. Consequently, the claim for a stay of the judgment is rejected.’ In the same sense: TGI Paris, 9 March 2001, (2002) 33 International Review of Intellectual Property and Competition Law 225, quoted by P Véron, ibid. 132   Cass 1re civ, 17 January 2006, Bull civ I, no 16. 133   C Nourissat, obs Procédures, 2006, comm 213; AE Kahn, ‘Un an de droit de la mode’ [‘One year of fashion law’] no 10, CCE 2006, Chronique no 8.

France  563 that there is lis pendens situation by virtue of the Gubisch judgment.134 Due to this fact, it will stay the proceedings until the jurisdiction of the court of country W is established (Art 27(1) of the Brussels I Regulation; Art 27(1) of the Lugano II Convention). Since it is difficult to imagine that the court of country W will recognise itself as competent (since exclusive jurisdiction has been conferred by Art 22(4) to the courts of countries X and Y respectively), this court will declare itself incompetent and the French court will be able to resume the course of its proceedings. Taking into account the actual formulation of Article 27 and the Gasser judgment mentioned above, the French court cannot anticipate the decision of the court of country W and must therefore respect the obligation to stay the proceedings. In the framework of common law, the French court will undoubtedly consider that it is more a situation of connection than of lis pendens. However, in every hypothesis, having discretion to decide upon the possibility of the recognition of the foreign decision in France and of the procedural behaviour of the plaintiff in the foreign proceedings, it is very likely that the court will refuse to stay the proceedings.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.

Case 6(1) Assuming that the court of country X is a French court, could it apply the French patent statute for allegedly infringing acts occurring in country Z?

Operative Rules Traditional French patent law obeys the principle of territoriality. As a result, the protection conferred only covers acts committed on French territory (in civil law135; in criminal law, the application of French law is more easily admitted). In particular, Article L613-4 of the Intellectual Property Code prohibits: ‘save consent by the owner of the patent, to supply or offer to supply, on French territory, to a person other than those entitled to exploit the patented invention, the means of implementing, on that territory, of the invention with respect to an essential element thereof ’. There is only an infringement if the supply or the offer to supply concerns France and, furthermore, if the ‘use’ of the patented invention is projected on French territory, even if the supply or offer to

  Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861.   CA Paris, 8 June 1978, (1979) 3 Propriété Industrielle Bulletin Documentaire 57: acts committed in the US ‘are not illicit with regard to French law, which is not applicable outside France’; Cass com, 26 March 1973, Bull civ IV, no 136. 134 135

564  Marie-Elodie Ancel supply takes place on French territory136 (and, a fortiori, if they take place abroad). The export to a foreign country is therefore not included in French patent law, and broader infringement acts committed abroad are not included either. The Rome II Regulation is applicable to the events causing damage that occurred after 11 January 2009 (according to the most plausible interpretation). Article 8 mandates the application of the law ‘of the country for which the protection is claimed’. Descriptive Formants Concerning Article 8, its formulation, which does not pretend to be innovative (recital 26 of the Rome II Regulation), may raise interpretation problems. On the one hand, it is a matter of the law of the country ‘for which the national protection is claimed’,137 and if A requests the application of French law by virtue of his French patent, the court should conform to it, but to conclude that in accordance with French law, there cannot be an infringement related to acts committed in Z. On the other hand, it is a matter of the law of the country where the alleged acts have been committed (and against which the protection is claimed) and, in this case, the court will apply the law of country Z.138 If the invention is not protected in Z, the court will dismiss the infringement action. Case 6(2) Assuming, first, that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a French court, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Operative Rules By virtue of the same principle of territoriality, the French court will apply the law of country Z for infringement acts that would have occurred in Z. It will not apply French law. For events causing damage that occurred after 11 January 2009, the French court will apply Article 8(1) of the Rome II Regulation. Descriptive Formants On the difficulty of the interpretation of Article 8(1), see Case 6(1) above.

136   C Le Stanc, ‘Acte de contrefaçon, Elément matériel’ [‘Infringement acts, material elements’] Juris-Classeur Brevets, fasc 4600, 2003, nos 41 et seq; JM Mousseron, ‘Droit des brevets’ [‘Patent law’], JCP E 1999, at p 413, no 28; M Boizard, ‘Contrefaçon et fiction d’extra-territorialité’ [‘Infringement and the fiction of extra-territoriality’] (2008) Propriété Industrielle comm 38, quoting TGI Paris, 27 June 1997, (1997) 3 Propriété Industrielle Bulletin Documentaire 581; confirmed by CA Paris, 19 January 2000, (2000) 3 Propriété Industrielle Bulletin Documentaire 303. 137   Defending this reading, carefully taking into consideration the formulation of Art 8.2, Treppoz, above n 79. Nevertheless, this interpretation of Art 8.1 is difficult to maintain for non-registered intellectual property rights, whereas the regulation does not exclude them a priori. 138   In this sense, supported by the preparatory works, T Azzi, ‘Atteintes aux droits de propriété intellectuelle et conflits de lois – De l’utilité de l’article 8 du règlement Rome II’ [‘Intellectual property right infringements and conflicts of laws: on the usefulness of Article 8 of the Rome II Regulation’] (October 2009) Propriétés intellectuelles 332.

France  565

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B, and C, have created a website which facilitates speedy exchange of digital files (music, videos, software etc) among users from all over the world. After several months when the website became very popular, A, B, and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B, and C know that some files that are stored in the server of their website are illegal, they do not take any action to prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C requesting to close the website and pay damages. Assuming that a French court has international jurisdiction in such a case:

Case 7(1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)?

(i)  Applicable Law Operative Rules If one sticks to a copyright infringement action,139 French courts follow the second sentence of Article 5(2) of the Berne Convention, pursuant to which ‘Consequently, apart from the provisions of this Convention, the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed.’ According to a recent judgment, in this case they will decide that the applicable law is the one of the country where alleged illegal acts have taken place and, precisely, where A, B and C have their centre of decisions.140 It is nevertheless advisable to note that, through a judgment of 18 December 2009, the first instance court of Paris has applied French law in the infringement action launched by several French publishers against the company Google Inc concerning extracts of works generated by Google Books. The court has reached this result, ignoring the Berne Convention and resorting to the conflict of laws rule peculiar to non-contractual liability (see 1.2.1 above).141 Descriptive Formants Giving a ruling based on Article 5(2) of the Berne Convention, concerning the alleged infringement by a novel of the movie Waterworld, the Court of Cassation has indicated in 2007 that ‘the law of the country where the protection is claimed is not the law of the 139   There seem to be no French decisions on internet infringements on neighbouring rights. Through a judgment of 9 December 2003, the Court of Cassation has given jurisdiction to French law, concerning a music video produced in France without the agreement of the performer who had realised his piece of work in Belgium, by taking French law as the exploitation law of the piece of work (Cass 1re civ, 9 December 2003, (2004) Revue Critique de Droit International Privé 595, note T Azzi). See also, concerning Monégasque and Luxemburgish companies broadcasting songs in France without the agreement of their performers, the application of ‘the law where the damage has been realised, ie in this case French law’, CA Paris, 19 December 1989, (1990) 144 Revue Internationale du Droit d’Auteur 138, obs A Kérever; JCP G 1990 II 21462, concl Lupi. 140   TGI Paris, 20 May 2008, SAIF v Google France and Google Inc; Gaubiac, above n 86, Etude no 22; ME Ancel, ‘Un an de droit international privé du commerce électronique’ [‘One year of private international law on electronic commerce’] CCE 2009, Chronique no 1, no 10; J Lacker, (2008) Revue Lamy Droit de l’Immatériel no 42, 19. 141   TGI Paris, 12 December 2009, Editions du Seuil et al v Google Inc et al.

566  Marie-Elodie Ancel country where the damage was sustained, but the legislation of the State on the territory of which the delictual acts have taken place, while the obligation to compensate is only the possible consequence thereof ’. Moreover, the Court has in a very particular way characterised the delictual/tortious acts: while the French courts had asserted jurisdiction with regard to the French companies that had distributed the movie Waterworld and its derived products in France, the Court of Cassation considered that the delictual acts had occurred in the United States, where the allegedly infringing movie had been ‘made, realised and presented’. In the case SAIF v Google Inc and Google France, the First Instance Court of Paris has expressly referred to this decision of the Court of Cassation and has applied an identical reasoning in the infringement action instituted by a copyright collecting society managing photograph rights concerning the search engine Google Images. For the first instance court, it is evident that [the] search engine development activity . . . is the central and first activity of the company Google Inc and that it is therefore the headquarters of the company Google Inc, which is the place where the decisions are taken and where the activity of the search engine is implemented in the offices of the company Google Inc, that must determine the law applicable to the lawsuit.

French doctrine is rather circumspect with regard to the Waterworld judgment. First, the Court of Cassation has reasoned as if it was facing a complex offence consisting of a primary event in the US and damage in France, while in reality, there was a ‘complete infringement’142 in France, committed by French companies and related to the distribution of the movie and derived products.143 Then, the extension of the solution of the Waterworld judgment to cyber-infringement situations (real complex offences) would be particularly untimely, because it risks leading to a ‘cyber paradise’144 law. Nevertheless, it is on this extension that the First Instance Court of Paris has proceeded in the Google Images case. The result reached in the Google Books case should satisfy the commentators more, while the erratic nature and the change of logic by the first instance court of Paris certainly deserve criticism. Metalegal Formants Some difficulties exist in French doctrine defining the scope of Article 8(1) of the Rome II Regulation in matters of cyber infringement of copyright.145 According to certain commentators, Article 28 of the Regulation would make Article 5(2) of the Berne Convention prevail (in the second sentence, which is interpreted by the Court of Cassation as a conflict of laws rule) and, therefore, the Court would urgently have to come back to the Waterworld judgment and/or adjust its reasoning in matters of cyber infringement.146 According to other commentators, Article 5(2) of the Berne Convention is not applicable to complex infringements, which means that the Rome II Regulation would be fully applicable. Since Article 8(1) is not conceived for complex infringements either, according to these authors, it would therefore be possible to come back to Article 4 and, particularly, to Article 4(1) of the Regulation, mandating the application to the law of the country in which   T Azzi, note on the Waterworld judgment, (2007) Revue Critique de Droit International Privé 777.   ME Ancel, note on the Waterworld judgment, (2008) Journal du Droit International 163. 144   Azzi, above n 85; Ancel, above n 85; Treppoz, above n 85. 145   See for a discussion, Azzi, above n 138, especially at 138 et seq. 146   Ancel, above n 85. 142 143

France  567 the damage occurs.147 Doing so, the harmful effect of the Waterworld judgment would be eliminated. (ii)  Scope of an Agreement of the Parties on the Applicable Law Operative Rules In French common law, the parties may agree on the law applicable to the infringement. This solution follows from the general rule of French private international law which authorises a procedural agreement, when procedural rights are available. In other words, the parties to a lawsuit may designate the law applicable to this lawsuit. Since the rights involved in civil proceedings for infringement are considered as available, there is no obstacle for the litigants to indicate, by a common agreement, to the French court before which the lawsuit has been brought the law it has to apply (in any case, this is French law). There is no obstacle, but, in fact, there is no known example either.148 In application of Article 8(3) of the Rome II Regulation, the choice of the applicable law is prohibited. One can suppose that it is necessary to consider that even a procedural agreement, which is only valid for lawsuits in progress, is prohibited, and therefore the procedural rights have become unavailable.149 In either case, the French commentators regret the rigidity imposed by Article 8(3).150 It is only in the field of copyright infringements, where it is generally agreed that Article 5(2) of the Berne Convention endures, so that the possibility of the choice of the applicable law would remain. Case 7(2) Would the choice of law differ if the claim for damages was brought against the internet service provider (ISP) as a secondary infringer? Would the parties be allowed to agree on the applicable law (infringements and remedies)?

One supposes here that the ‘majors’ act against the ISP of A, B and C before the French courts. If the instituted action is an infringement action and if the French court maintains this qualification, it is likely to follow the same reasoning as the First Instance Court of Paris in the Google Images case: it would end up with the law of the country where the centre of decisions of the ISP is located, ie, in practice, the law of the country where A, B and C operate. If one remains within the framework of the Berne Convention and outside the Rome II Regulation (or Art 4 of the Rome II Regulation, as is advocated by certain French authors), Article 8(3) will not prevent the parties to the lawsuit from coming to an agreement on the application of another law.   Azzi, above n 85; Gaudemet-Tallon, above n 10.   However, in the Google Images case, the First Instance Court of Paris has taken legal cognisance of the agreement of the parties on using Art 5.2 of the Berne Convention in order to determine the law applicable to the invoked infringement. 149   T Azzi, ‘Le statut de l’artiste-interprète en droit international privé’ [‘The status of performers in private international law’] in M Vivant, N Mallet-Poujol and JM Bruguière (eds), Quels droits pour les artistes du spectacle? [Which rights for performance artists?] (Paris, Dalloz, 2008) 103. 150   N Joubert, ‘Les règles de conflit spéciales en matière de délits dans le règlement du 11 juillet 2007 (Rome II)’ [‘The special rules of conflict in matters of offences in the regulation of 11 July 2007 (Rome II)’] in S Corneloup and N Joubert, Le règlement communautaire ‘Rome II’ sur la loi applicable aux obligations non contractuelles [The EU regulation ‘Rome II’ on the applicable law of non-contractual obligations] (Paris, Litec, 2008) 55 et seq, no 27; E Treppoz, above n 79 no 11. 147 148

568  Marie-Elodie Ancel It is also possible that the action instituted in France is qualified (or re-qualified lege fori by the French court before which the action is brought) as an action on responsibility. Indeed, following EU law in this matter, the French legislator has set up a particular responsibility regime, which is very limited, for ISPs, and equally for Internet hosts (Art 6 of Law no 2004-575 of 21 June 2004).151 In the framework of the Rome II Regulation, this qualification should very directly lead to designating the law of the country in which the damage occurred (Art 4(1), subject to the Arts 4(2) and 4(3) of the Regulation). Therefore, the parties would be able to choose the law applicable to non-contractual obligations (Art 14 of the Rome II Regulation). Case 7(3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the French court define ubiquitous infringement of intellectual property rights?

Jurisdiction: the French court will have in certain cases universal jurisdiction (if A, B and C are domiciled in France or if they act from France; if the privileges of Art 14 and 15 of the CCP can be applied). Law applicable to infringements: see the indications given in the answer to Case 7(1) above. Definition of ubiquitous infringement. Ubiquitous infringement is not really defined by the French courts, as, most often, the action is only aiming at obtaining compensation for a damage sustained in France. However, following the schema set up by the Fiona Shevill judgment for court jurisdiction, the courts analyse the question of the law applicable to infringement in terms of complex offences, by locating the event causing the damage in the country where the defendant in the infringement action is established and by considering that there may be damage in France and in other countries.152

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a French court:

Case 8(1) What law would the French court apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning the right to obtain patents be enforceable in your country? 151   C Caron, Droit d’auteur et droits voisins [Copyright and neighbouring rights] (Paris, Litec, 2006) no 526; C Feral-Schuhl, Cyberdroit, Le droit à l’épreuve de l’internet [Cyber law, law at the test of the internet] (Paris, Dalloz, 2008) ch 113; for the absence of responsibility of an ISP sued by a comic strip publishing house: TGI Paris, 5 February 2008, SNE et al v Free, Iliad, www.legalis.net. 152   For copyright, see clearly: TGI Paris, 20 May 2008, Google Images case.

France  569 (i)  Applicable Law The question of the ‘right to a patent’ is subject to the law of the country for which the patent is requested according to French case law.153 However, inventions by employees are a somewhat delicate case. French law sets out particular rules in this field that allow the employer, under certain conditions, to be the holder of the patents covering the inventions made by his employees (Art L611-7 of the Intellectual Property Code (IPC)). Under this doctrine the question of the right to a patent on the invention of an employee depends on the law applicable to his employment contract (see Art 6 of the Rome Convention; Art 8 of the Rome I Regulation), subject to the possible application of the exception of ordre public.154 It should also be mentioned, for European patents, that the Munich Convention confers jurisdiction to the law of the state of the territory where the main activity of the employee is performed (Art 60). (ii)  Choice of Law Clause There is no known case concerning such a hypothesis. In so far as it is the law of the country of the protection that is normally applied (as the law of the title delivered by the public authority or as lex rei sitae), it is difficult to imagine that a choice of law clause would be effective. At the extreme, the operation could be analysed as a patent transfer. In the particular context of an invention by an employee, one needs to observe that the Rome Convention or the Rome I Regulation leave some leeway for the choice of the law applicable to the employment contract. This is not the case under the Munich Convention. Case 8(2) Would the decision differ if A made an invention in joint collaboration with other researchers?

The author of the current chapter does not think so. Case 8(3) Would the applicable law differ in the case of initial authorship or initial title to trade mark?

(i)  Initial Title of Copyright Operative Rules A judgment of the Appeal Court of Paris, frequently referred to for 15 years, considers that ‘the law of the country where the protection is claimed’ in Article 5(2), second sentence of the Berne Convention does not concern the protection conditions of a work nor the question of the initial title of the rights to this work. Since the Berne Convention does not comprise conflict of laws rules concerning these questions, the Appeal Court of Paris made reference to common law such as had been laid down in the Le Chant du Monde judgment (see 1.2.3 above). Thus the question of the initial title was decided according to the law of

153   See CA Paris, 28 April 1976, D 1977, 511, note JM Mousseron, for a civil action for a property claim; M Vivant, Jurisclasseur Brevets, above n 105 no 31. 154   M Vivant, above n 105 at no 36.

570  Marie-Elodie Ancel the country of origin of the work.155 In principle this is the country of the first publication. In this case, one can assume that the first publication has occurred in the country where the laboratory of B is located. On the other hand, even if the country of origin of the work is a foreign country, the Appeal Court of Paris allows the application of the presumption of title (which, in French law, benefits the legal person who exploits the work, as long as he is not subject to a claim from a natural person) when an infringement action concerning facts that took place in France is brought before it.156 In other words, this presumption – which does not concern the initial title but which is intended to facilitate the exercising of the infringement action – is treated as an exercising modality of the protection and it falls under the lex loci protectionis. The nature of the work (according to the case, ‘collective work’ if one uses the expression of Art L113-5 of the Intellectual Property Code, a work of collaboration, or a composite work) does not change the reasoning. For the Appeal Court of Paris, every question concerning an initial title falls under the law of the country of origin of the work, including when the work is the result of the collaboration of several natural persons.157 Descriptive Formants The question of the law applicable to the initial title to a work is very controversial in France. Certain authors support the view that the law of the country of origin should be applied to all matters concerning the right; this would add more legal certainty.158 Other authors, relying on the history and exegesis of the Berne Convention, consider that it is necessary to apply the law of the country for which protection is claimed to this question.159 There is no clear decision of the Court of Cassation. However, as explained above, the Appeal Court of Paris applies the law of the country of origin. (ii)  Scope of an Agreement of the Parties on the Applicable Law Operative Rules In certain decisions the Appeal Court of Paris applied the law of the contract to the question of the identity of the initial title to the work.160 However, it is certain that in France the 155   See also eg: CA Paris, 16 February 2007, (July 2007) Propriétés intellectuelles 338, obs A Lucas and p 483, obs P de Candé; JCP E 2007, no 45, 2337, note A Singh: ‘if in the terms of the Berne Convention, the authors who are citizens of a Member State enjoy in the other Member States, for the works protected in the said State, the same rights as those that are granted by each of the other Member States to national authors, no particular indications related to the title itself of the copyright, to their acquisition, or to their transfer emerge from this text; that from that moment that it would be able to be judged that, without being added to the provisions of the abovementioned convention, the title would be applicable to the facts of the case; that it is therefore advisable to resort to the French conflict of laws rule which leads to the application of the law of the country of origin of the work, this being the title thereof.’ 156   CA Paris, 30 May 2008, (2009) Propriété Industrielle comm 5, note JP Gasnier. 157   CA Paris, 14 March 1991, mentioned above. 158   See eg, F Pollaud-Dulian, Le droit d’auteur [Copyright] (Paris, Economica, 2005) no 1479; M Josselin-Gall, Les contrats d’exploitation du droit de propriété littéraire et artistique [Contracts for the exploitation of literary and artistic property rights] (Paris, Editions GLN Joly, 1995); A Singh, above n 155. 159   See eg, A Lucas and HJ Lucas, above n 121 no 1310; J Raynard, Droit d’auteur et conflits de lois – Essai sur la nature juridique du droit d’auteur [Copyright and conflicts of laws: Essay on the legal nature of copyright] nos 529 et seq and, with nuances, JS Bergé, La protection internationale et communautaire du droit d’auteur [International and EU protection of copyright], preface P Lagarde (Paris, LGDJ, 1996) nos 391 et seq. 160   CA Paris, 6 February 1986, JCP G 1989 I 3376, obs B Edelman; CA Paris, 1 February 1989, (1989) Journal du Droit International 1005, note B Edelman, (1989) 142 Revue Internationale du Droit d’Auteur 301, note P Sirinelli.

France  571 law applicable to the title of the moral rights cannot be modified by the parties (see Case 9 below).161 It is also necessary to acknowledge that, in the judgments to which reference has been made, the lex contractus has always coincided with the law of the country of origin of the work. Legal Formants One author has demonstrated convincingly that in case law, courts are anxious to apply a unique and permanent law to the question of the initial title (as well as to the legality of the consecutive transfer of rights). When the judges openly admit that the initial title falls under the law of the origin, the law of the contract has a superfluous and secondary role. When the courts consider that the initial title is, in theory, not governed by the law of the country of origin, they go back to the law of the contract, which, in practice up to the present, has coincided with the law of the country of origin.162 In the event that the two laws would not coincide, this author proposes to follow the lex fori qualification as regards the availability of procedural rights. First, if the lex fori provides that such a right is available, the question that it brings up should be solved by the lex contractus. Secondly, if the lex fori provides that such a right is not available (ie not likely to be transferred or to be the object of an abnegation), the question that it brings up should be solved either by the law of origin of the work (if the existence of the right is involved in the matter), or by the lex loci protectionis (if the exercising of the right is involved in the matter). Thus, ‘the questions related to the characteristics of author who is the first holder of the right, whatever is the nature of the prerogative – moral or economic – involved in the matter’ are governed by the law of the country of origin of the work.163 Metalegal Formants Article 8 of the Rome II Regulation is generally not considered as governing the title of intellectual property rights, in such a way that the prohibition against departing from the applicable law, provided for in paragraph 3, remains without effect. (ii)  Initial Title of the Right to a Trade Mark The original title of the rights to a trade mark is governed by the law of the country where the trade mark has been registered. Case 8(4) What law would a French court apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries? See also, but rather obscure, Cass 1re civ, 29 April 1970, (1970) Journal du Droit International 936, note A Françon, (1971) Revue Critique de Droit International Privé 270, note H Batiffol. 161   Huston judgment, JCP E 1991, 220, note J Ginsburg, P Sirinelli; JCP G 1991 II 21731, note A Françon; (1991) Revue Critique de Droit International Privé 782, note PY Gautier; (1992) Journal du Droit International 133, note B Edelman; D 1993, 197, note J Raynard. 162   JS Bergé, above n 159 no 334. The coincidence can also be explained by the theory of the ‘localisation’ of the contract, by virtue of which the law applicable to a contract follows from the legal environment in which the parties wanted to locate the contract: in fact, the elements that serve to determine the country of origin of a work may serve as indications of the will of the parties to determine a location. 163   JS Bergé, above n 159 no 335 et seq.

572  Marie-Elodie Ancel If the contract uniting A and B is a labour contract, the French court will apply the law that governs that contract.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of the concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and was thus infringed. Assuming that a French court is a court of country X:

Case 9(1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors?

Case 9(2) How will the court deal with the issue of transferability?

Case 9(3) What would be the applicable law in a case where there is no choice of law made by the parties?

Under Case 9(1), it will be assumed that a written agreement (and not just an oral one) has been concluded between A and B, and the three cases will be examined together. Operative Rules French courts will decline to enforce choice of law clause concerning moral rights against a third party. In the famous Huston judgment, the Court of Cassation imposed respect for the French norm consecrating moral rights in a contract governed by American law involving the film-maker John Huston and the producer of the movie Asphalt Jungle. This primacy of the French text was realised by the Court of Cassation by using mechanisms of the mandatory rules (or, to quote the Court, ‘rules of imperative application’).164 For other aspects of a purely economic nature (notably, the payment of a non-­ proportional remuneration), the French courts respect without difficulty the choice of law made by the parties in the cases submitted to them.165 Other operations, such as the global transfer of future works or a very extensive preferential right, might arouse more resistance.166 The situation would be the same with regard to a foreign law that declines every economic right to an author or that would deprive him of it under inadmissible conditions.167

  Cass 1re civ, 28 May 1991, mentioned above.   See also CA Paris, 1 February 1989, D 1990 somm 52, obs C Colombet; (1989) Revue Internationale du Droit d’Auteur 301, note P Sirinelli; (1989) Journal du Droit International 1005, note B Edelman; CA Lyon, 16 March 1989, (1990) Revue Internationale du Droit d’Auteur 237 (global transfer of rights). 166   Edelman, above n 165. 167   Lucas and Lucas, above n 121 no 1218. 164 165

France  573 Descriptive Formants Concerning moral rights, the reasoning in terms of mandatory rules is sometimes accepted by the doctrine.168 Most often, however, it is called into question in its principle as well as in its application.169 Multiple alternative ways of reasoning have been proposed. Thus it has been argued: (a) that the public policy exception must be applied before the lex contractus rather than resorting to the mechanism of the mandatory rules170 (moreover, there are Appeal Court judgments supporting this view);171 or (b) that one must consider that the legality of the transfer or the abnegation is a matter of the law of the country of origin of the work, subject to the exception of international public order.172 In these two cases ((a) and (b)), the authors agree to apply the exception of international public order on a case-by-case basis, by distinguishing prerogative by prerogative. The relinquishment of ownership of the work would call into question the exception of public order. However, it would not be the same for the rights of integrity, which would not be covered by the exception; or (c) that one must better delimit the domains of the laws applicable to copyright and to the lex contractus and attribute to copyright law all the questions in which, lege fori, inalienable rights are involved. Thus, if the court before which the case is brought is French, all the questions related to the initial title, whatever the prerogative called into question and whatever the law of the country for which the protection is claimed, questions related to the relinquishment of moral rights, resale rights and rights to future works would be a matter of the law of the country of origin of the work. On the other hand, the presumptions of transfer, the principle of speciality or interpretation would only be applicable if the law of the contract makes provision for them;173 or (d) that one must apply the law of the country for which the protection is claimed, with the possible correction of the exception of public order.174

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B ruling that A is the owner of a patent registered in France. A refers to a French court asking it to recognise and enforce the foreign judgment.

  Edelman, above n 88.   Lucas and Lucas, above n 121 no 1199; PY Gautier, ‘Propriété littéraire et artistique’ [‘Literary and artistic property’] in D Carreau et al (eds), Répertoire Droit international [Directory of international law] (Paris, Dalloz, 1998) no 68 (‘from that moment when the lawsuit is located in one way or another’ in France). 170   Raynard, above n 88; PY Gautier, Propriété littéraire et artistique [Literary and artistic property] (Paris, PUF, 1991) no 291; T Azzi, ‘Les contrats d’exploitation des droits de propriété littéraire et artistique en droit international privé: état des questions’ [‘Contracts for the exploitation of literary and artistic property rights in private international law: Status quaestionis’] (2007) 214 Revue Internationale du Droit d’Auteur 3 et seq, especially no 27, advocating this solution for neighbouring rights and with regard to global transfers of future works. 171   CA Paris, 1 February 1989, mentioned above, exactly on the attribution right; CA Lyon, 16 March 1989, (1990) Revue Internationale du Droit d’Auteur 237; CA Versailles, 19 December 1994, JCP E 1996 I 582, no 12, obs HJ Lucas. 172   J Ginsburg, under CA Paris, 14 March 1991, above n 88. 173   Bergé, above n 159 no 336. 174   A Lucas and HJ Lucas, above n 121 no 1199; M Josselin-Gall, above n 158 no 365. 168 169

574  Marie-Elodie Ancel Case 10(1) Could the foreign judgment concerning the ownership be recognised in France? How would the recognising court assess the international jurisdiction of the rendering court?

Operative Rules First of all, the question concerning a patent right does not fall under the rules of exclusive jurisdiction in France (Art 22(4) of the Brussels II Regulation, interpreted by the ECJ in the Duijnstee judgment),175 which would constitute an insurmountable obstacle to recognition. Then, in common law (that is to say, if the country X is neither bound by the Brussels I Regulation, nor by the Lugano Convention, nor by a less demanding bilateral convention) the French court will verify: (1) the indirect international jurisdiction of the foreign court; (2) conformity of the decision with the French international public order, in terms of the main dispute and in terms of the proceedings; (3) absence of fraud; and (4) non-contradiction with a decision rendered in France or already recognised in France. Concerning the indirect international jurisdiction, the French court will verify whether there exists a ‘clear link’ between the lawsuit and the foreign court before which the case has been brought and whether there is no fraud (the Simitch and Cornelissen judgments mentioned above). Such a link may stem from the fact that the defendant resides in country X, that an agreement between A and B related to the invention has been or must be performed in country X, that a choice of court clause has designated the courts of this country, or from other circumstances which the French court will evaluate. In cases to which EU law applies (ie if the judgment originates from a state bound by the Brussels I Regulation or the Lugano Convention, in which case one needs to apply bilateral conventions), the court will only verify the conformity with the international public order and the non-contradiction with a decision rendered in France or already recognised in France. Case 10(2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in France by the INPI (Institut national de la propriété industrielle [National Industrial Property Institute])?

No. Case 10(3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in France? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the INPI?

Operative Rules Such a judgment relating to a patent right presents no enforcement problems, and it imposes no acts of constraint on goods or persons.

175   See also F Pollaud-Dulian, note under CA Paris, 15 April 1992, (1993) Journal du Droit International 989, especially 995.

France  575 In cases to which EU law applies (ie if the judgment was handed down in a state bound by the Brussels I Regulation or the Lugano Convention, in which case one needs to apply bilateral conventions), this judgment will be recognised de plano. Therefore, it will immediately have inter partes effects, subject to a possible appeal to a higher court by the defendant. As for the effects against third parties, Article L613-9 of the Intellectual Property Code stipulates that, in order for third parties to be able to oppose, modifications of the rights attached to a patent must be inscribed in the National Patent Register that is held by the INPI. The foreign judgment being recognised de plano, the party who benefits from the foreign judgment will only have to present the (translated) judgment to the INPI, while respecting the formalities provided in French law. In common law, the situation is more uncertain. The tradition states that a declarative patrimonial judgment can only produce effects after an exequatur procedure, even when its enforcement is not at stake. The solution has tended to lose ground, since the authors consider the exequatur to be useless when the enforcement is not at issue. Nevertheless, as a precaution, it is better to obtain this exequatur. Descriptive Formants In the two situations, it should be noted that the Court of Cassation itself has refused to recognise foreign decisions concerning the ownership of a good or title and considered them as having merely ‘effects of a fact’176 in France. This approach has been contested by certain commentators, as in these cases the decisions have not been understood through the situation of the fact they have created, but more for their substantial effectiveness, or even their ‘effect of title’ (the state of the right they consecrate). In this regard, it may be possible to argue that the foreign judgment that has to be registered in the National Patent Register has effect of title. However, in this case, the judgment would be not be recognised a priori or a posteriori, no matter whether one is operating under common law or under the scope of EU legislation. Currently, the effects of foreign judgments do not fall under a clear regime in France and the notions of substantial effectiveness, effect of fact, effect of title and probative effect, are far from being perceived in a clear way by the courts. The general trend according to the EU legislation as well as according to common law is to limit the exequatur to the cases where the enforcement of the decision is necessary.

Case 11: Provisional Measures and Injunctions A owns a world-famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize the infringing goods. Assuming that both A and B are resident in France and the main infringing activities take place there:

176   Cass com, 4 October 2005, Gaz Pal 2006, no 56, 26, note ML Niboyet; (2006) Journal du Droit International 593, note G Cuniberti; (2006) Revue Critique de Droit International Privé 405, note H Muir Watt; Cass 1re civ, 11 July 2006, (2007) Revue Critique de Droit International Privé 414, note H Muir Watt; (2007) Journal du Droit International 554, note E Fohrer.

576  Marie-Elodie Ancel Case 11(1) Would a French court have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the French court did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)?

(i)  The French Court before Which the Case Has Been Brought Has Jurisdiction over the Main Dispute In common law, it is generally accepted that a French court which has jurisdiction over the main dispute also has jurisdiction to order provisional measures. It may have reservations concerning protective measures aiming at foreign countries. However, these reservations are weakening:177 the Court of Cassation has accepted that a French court could order a creditor not to carry out the sale by auction of a property in Spain belonging to his debtor, who himself was bankrupt in France.178 The protective seizure of goods located in foreign countries arouses more discussion179 and is difficult to consider in practice in every hypothesis, notably due to the delay imposed for having the measure enforced.180 As for cases which fall within the scope of EU law, the ECJ equally accepts that the court which has jurisdiction over the main dispute may impose provisional and protective measures, by virtue of the relevant EU legislation, without any condition and even if the requested measure has no territorial link with the forum (cf Van Uden and Mietz judgments).181 The French courts respect this trend and are ready to exercise their jurisdiction, in the case of provisional or protective measures. In some occasions, the French courts specify that a foreign court would be better placed to impose a measure in rem to be enforced in that particular country, especially when it is a matter of ordering the destruction of materials allowing an infringement.182 (ii)  The French Court before Which the Case Has Been Brought Has No Jurisdiction over the Main Dispute In common law, the French courts accept their jurisdiction to impose provisional measures when they have to be enforced in France. The rule is a transposition of domestic law which, in summary proceedings, allows the plaintiff to seize the court of the place of enforcement of the measure rather than the court that has jurisdiction over the main dispute. When it is a matter of protective seizure, it seems that only the court of the place of enforcement has international jurisdiction, and that the domestic rule conferring jurisdiction on the court of the domicile of the debtor does not apply.183 177   See nevertheless R Perrot and P Théry, Procédures civiles d’exécution [Civil enforcement procedures] (Paris, Dalloz, 2005) no 42. 178   Cass 1re civ, 19 November 2002, Gaz Pal 2003, no 177, 29, note ML Niboyet, (2003) Revue Critique de Droit International Privé 631, note H Muir Watt. 179   M Santa Croce, ‘Les mesures provisoires et conservatoires dans le contentieux international’ [‘Provisional and protective measures in international lawsuits’] Gal Pal 2000, no 62, 3. 180   Niboyet and de Geouffre de la Pradelle, above n 36 no 609. 181   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091; Case C-99/96 Hans-Hermann Mietz v Intership Yachting Sneek BV [1999] ECR I-2277. 182   CA Orléans, 7 November 2002, (2003) Revue Critique de Droit International Privé 326, note B Ancel. 183   Santa Croce, above n 179.

France  577 As for the cases which fall within the scope of the EU law, the ECJ established as a condition in the Van Uden judgment mentioned above that there should be ‘a real link between the object of the requested measures and the territorial jurisdiction of the Contracting State of the court before which the case has been brought’. French doctrine and case law show the tendency of interpreting this condition as the requirement of a territorial link.184 Case 11(2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad?

If the French court has jurisdiction over the main dispute, it would be able to impose such measures, even if the mark has been registered abroad (see Case 11(1)(i) above). If the French court has no jurisdiction over the main dispute, it would need to have jurisdiction only with regard to measures that are to be enforced in France, or if there is a ‘real link’ with France (see Case 11(1)(ii) above). It remains to be determined which situations this could cover without the French court having jurisdiction over the main dispute. A possibility to examine would be an injunction affecting a defendant established abroad that would prohibit him from creating publicity in France aimed at encouraging French customers to purchase his products commercialised abroad in violation of the rights of the holder of the mark. Case 11(3) Would a French court require the person seeking issuance of provisional measures to grant a guarantee?

No, not necessarily. See likewise Article L615-3 of the Intellectual Property Code, which provides that: Seised in summary proceedings or by petition, the jurisdiction may condition the enforcement of the measures it imposes to the furnishing by the plaintiff of a guarantee aimed to cover the possible indemnification of damages suffered by the defendant if the infringement action is subsequently judged to be unfounded or if the measures are invalidated.

Case 11(4) Would a French court be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings?

In common law, the parties may provide to reserve the jurisdiction over provisional measures to the arbitrator. Nevertheless, the scope of this abnegation of state justice is questionable, when measures, by their nature, cannot be imposed by a private tribunal (injunction issued against a third party; measures having constraining effect). In the absence of an agreement by the parties to exclude the intervention of the state court to order provisional measures, the court retains jurisdiction under the conventional conditions. Thus, the French court in summary proceedings may, in case of emergency, enact a measure aimed at abating a manifestly illegal nuisance (Art 809 of the CCP), even if the case has already been brought before the arbitration tribunal.

  Niboyet and de Geouffre de la Pradelle, above n 36 no 612.

184

578  Marie-Elodie Ancel Therefore, it is thought that the intervention of the state court does not really encroach upon the jurisdiction of the arbitration tribunal, as the measure does not have a final nature.185 As for cases which fall under the scope of the EU law (and when these texts would be applicable on the main dispute), the ECJ has decided that, when the requested provisional measures aim to safeguard the rights that fall under the material scope of application of the Brussels Convention (or of the Brussels I Regulation), such as contractual rights, a request for a provisional measure may be made to the court of a Contracting State pursuant to Article 24 of the Convention (Art 31 of the Brussels I Regulation), in each situation: irrespective of whether the proceedings on the main dispute have already been brought before the arbitration tribunal, or not.186 French doctrine has generally criticised the Van Uden judgment, as it considers the EU texts not to have been applicable to such a hypothesis: since no other state court had jurisdiction over the main dispute, Article 24 of the Brussels Convention cannot be applied. The ECJ would therefore have to leave the question to the realm of the law of the Member States.187 Case 11(5) If the claimant asked to issue an injunction to cease infringing acts, would a French court conceive of an injunction to cease as a procedural or substantive measure?

The reporter supposes that this question concerns which law a French judge applies when he is requested to enact the cessation of infringement acts abroad: the foreign lex causae or the French lex fori? Case law and authors agree in considering that the French court will identify the measures it can take according to French law.188 There are various explanations justifying this solution. French law will be applied as lex fori or, when a protective seizure of a good located in France is requested, as lex rei sitae.189 It is also possible to consider that, in reality, the question does not trigger a conflict of laws, as only French law can define and delimit the action of the French provisional judge who implements his imperium.190 That does not mean that the foreign lex causae has no effect on the imposition of provisional and protective measures by a French court. Thus, a French court which is requested to take measures of the nature to abate a ‘manifestly illegal nuisance’ will be led to identify the law applicable to the situation in order to establish whether the nuisance invoked is ‘manifestly illegal’. However, the particular conditions in which the French court has to give a ruling (especially the speed that is expected) lead to toleration of the occasional failure to 185   C Seraglini, in J Béguin and M Menjucq, Droit du commerce international [International commercial law] (Paris, Litec, 2005) no 2557, reserving the case of summary proceedings and provision. 186   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091. 187   H Gaudemet-Tallon, Compétence et exécution des jugements en Europe [Jurisdiction and enforcement of judgments in Europe] (Paris, LGDJ, 2002) no 48-1. 188   Cass 1re civ, 31 January 1984, Bull civ I, no 39, (1984) Revue Critique de Droit International Privé 638, note Y Lequette; (1985) Journal du Droit International 444, note G Légier; JCP 1985, II, 20362, obs F Boulanger. 189   P de Vareilles-Sommières, note under Cass 1re civ, 16 April 1996, (1997) Revue Critique de Droit International Privé 716, especially §§ 3–4, and the references quoted. 190   JP Rémery, ‘Le juge des référés face aux conflits de lois’ [‘Judges dealing with conflicts of laws in summary proceedings’] in Mélanges en l’honneur de Paul Lagarde: Le droit international privé: esprit et methodes [Collection of papers in honour of Paul Lagarde: private international law: spirit and methods] (Paris, Dalloz, 2005) 707.

France  579 resolve the conflict of laws, when the task is too complicated, and to tolerating that it simply protects the rights of everyone involved in expectation of a decision on the main dispute.191

Case 12: Securities in Intellectual Property In order to get loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as a collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y:

Case 12(1) Could intellectual property rights be used as a collateral pursuant to the law of your country?

Yes. The law expressly stipulates the existence and the regime of securities in industrial property rights (patents: Arts L613-24, R612-38 and R613-55 of the Intellectual Property Code (IPC); ‘new plant variety certificates’: Arts L623-14 and R623-36 of the IPC; topographies of semiconductors: Art L622-7 of the IPC; designs: Arts R512-15 and R512-9-1 of the IPC; marks: Arts L714-1, R712-21 and R714-4 of the IPC). For literary and artistic property, only movies, on the one hand (Art 31 et seq of the Cinematographic Industry Code), and software, on the other hand (Arts L132-34 and R132-8 et seq of the IPC) fall under special stipulations. Since the reform of the securities law in 2006, the new Article 2355 of the Civil Code allows the use of intangible property, or a collection of intangible property, as collateral, by referring to the rules for securities in the case of intangible property other than claims or other than those that are governed in a special way. Case 12(2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights?

Case 12(3) Would a French court apply the same law to registered and non-registered intellectual property rights?

(i)  Industrial Property Rights The matter in Case 12(2) will be governed by the law of the country for which the intellectual property right has been granted. Therefore, one will reason based on the model of the lex rei sitae. (ii)  Literary and Artistic Property According to the usual principles in this field, the possibility of using an intellectual property right as a real collateral depends on the law applicable to the right taken as property (without damage to the application of the law applicable to the meeting of the minds   de Vareilles-Sommières, above n 189; Rémery, above n 190.

191

580  Marie-Elodie Ancel between the constituent and the creditor). In the case of an intellectual property right, it is therefore the law of the country for which the right exists that will determine whether it is possible to use it as the basis of a security. In the case of copyright, one needs, in theory, to apply the law of the country of origin, or even the law of the country of protection (see above under the discussion on Art 5.2 of the Berne Convention). The questions of opposability, rank and realisation of the security would need to be governed by the law of the country for which the industrial property right has been issued and by the law of the country where the protection of the copyright is sought (ie in practice, the law of the country of publication).

Germany AXEL METZGER*

Contents 1. Introduction................................................................................................................................... 581 2. Sources and Principles Regarding Cross-Border Enforcement of Intellectual Property............ 582 2.1. Legal Sources........................................................................................................................ 582 2.1.1. Intellectual Property............................................................................................... 582 2.1.2. Jurisdiction............................................................................................................. 588 2.1.3. Applicable law......................................................................................................... 588 2.1.4. Recognition and Enforcement............................................................................... 589 2.2. Principles of Jurisdiction and Applicable Law.................................................................... 590 2.2.1. Jurisdiction............................................................................................................. 590 2.2.2. Applicable Law........................................................................................................ 596 3. Hypothetical Case Studies.............................................................................................................. 602 Case 1. General/special Grounds of Jurisdiction...................................................................... 602 Case 2. Subject-matter Jurisdiction........................................................................................... 604 Case 3. Consolidation of Proceedings....................................................................................... 605 Case 4. Choice of Court............................................................................................................. 606 Case 5. Parallel Proceedings....................................................................................................... 607 Case 6. Principle of Territoriality (Choice of Law).................................................................. 609 Case 7. Infringement of Intellectual Property Rights............................................................... 610 Case 8. Applicable Law to Initial Ownership............................................................................ 611 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 612 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 613 Case 11. Provisional Measures and Injunctions......................................................................... 615

1 Introduction Lacking significant natural resources such as oil, gas, or valuable metals, Germany’s economy is mainly based on immaterial goods, including technological inventions in the fields of engineering, chemistry and pharmaceuticals, media content, other copyrightable subject matter and trade marks. German law traditionally provides a high level of protection for *  Prof Dr iur (Munich and Paris), LLM (Harvard), Professor of Law at Leibniz University Hanover, Germany. I am grateful to Dr Christian Heinze, LLM (Cambridge), Hamburg for his thoughtful comments.

582  Axel Metzger intellectual property. This tendency has been amplified since the 1980s by regulations and directives of the European Union. German courts are constantly called upon to resolve intellectual property disputes. In recent years, legal practice has been successful in establishing Germany as one of the most important fora for international litigation in intellectual property cases.1 As a consequence, Germany provides rich material for a comparative analysis. The following national report compiles the main legal sources, explains the guiding principles of jurisdiction and applicable law regarding cross-border enforcement of intellectual property (section 1) and provides an analysis of the eleven hypotheticals drafted by the IACL Questionnaire (section 2).

2  Sources and Principles Regarding Cross-Border Enforcement of Intellectual Property 2.1  Legal Sources 2.1.1  Intellectual Property The range of legal sources in German intellectual property law is complex and manifold. International treaties, European Community law and national legislation co-exist in most areas of intellectual property, from copyright protection and neighbouring rights to patents, trade marks and designs. Hence, intellectual property cases in general, and cases with an international dimension in particular, require an overview of this multi-level system. The following list compiles the main international, European and national instruments. Agreements, regulations and other enactments on the administrative procedure of patent and trade mark offices and on the fees payable to the offices have been omitted. 2.1.1.1  International Instruments Germany is member of most international treaties in the field of intellectual property. Regarding copyright protection, Germany is member of the: – Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886, revised 24 July 1971;2 and – WIPO Copyright Treaty of 20 December 1996.3 In the field of neighbouring rights, Germany has ratified the: – Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations of 26 October 1961;4 –  Geneva Convention for the Protection of Producers of Phonograms against Unauthorised Duplication of Their Phonograms of 29 October 1971;5 1   For current trends in international patent litigation see D Harhoff, ‘Economic Cost-Benefit Analysis of a Unified and Integrated European Patent Litigation System’ Final Report to the European Commission (26 February 2009) ec.europa.eu/internal_market/indprop/docs/patent/studies/litigation_system_en.pdf. 2   1161 UNTS 30. See also BGBl (German federal law gazette) II 1973, 1071 and 1985, 81. 3   36 ILM 65. See also BGBl II 2003, 754. 4   496 UNTS 43. See also BGBl II 1965, 1245. 5   866 UNTS 67. See also BGBl II 1973, 1670.

Germany  583 –  Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite of 21 May 1974;6 and the – WIPO Performances and Phonograms Treaty of 20 December 1996.7 Germany is also a member of the main international conventions concerning industrial property, being the: – Paris Convention for the Protection of Industrial Property of 20 March 1883, revised 14 July 1967;8 – Madrid Agreement Concerning the International Registration of Marks of 14 April 1891; revised 14 July 1967;9 – Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957; revised 13 May 1977;10 – Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks of 27 June 1989;11 – Trade Mark Law Treaty of 27 October 1994;12 – Patent Cooperation Treaty of 19 June 1970;13 – Strasbourg Agreement Concerning the International Patent Classification of 24 March 1971;14 – Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure of 28 April 1977;15 – International Convention for the Protection of New Varieties of Plant of 2 December 1961, revised 19 March 1991;16 – Hague Agreement Concerning the International Registration of Industrial Designs of 6 November 1925; revised 28 November 1960;17 – Locarno Agreement Establishing an International Classification for Industrial Designs of 8 October 1968;18 and the – Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) of 15 April 1994.19 In addition, several ‘recommendations’ drafted under the joint auspices of WIPO and Paris Union deserve attention. Although not legally binding, they may be used by courts as persuasive authority when deciding intellectual property cases. This type of instrument has been used specifically in the law of trade marks, being the: – Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks of 20–29 September 1999;20 and the   13 ILM 1444. See also BGBl II 1979, 113.   36 ILM 76. See also BGBl II 2003, 754.   828 UNTS 303. See also BGBl II 1984, 799. 9   828 UNTS 389. See also BGBl II 1970, 418. 10   WIPO Pub no 292. See also BGBl II 1981, 359. 11   WIPO Pub no 204. See also BGBl II 1995, 1017. 12   2037 UNTS 35. See also BGBl II 2002, 175. 13   1160 UNTS 231. See also BGBl II 1976, 664. 14   1160 UNTS 483. See also BGBl II 1975, 284. 15   WIPO Pub no 277. See also BGBl II 1980, 1104 and 1984, 679. 16   UPOV Publ no 438. See also BGBl II 1998, 259. 17   WIPO Pub no 269. See also BGBl II 1962, 774 and 1970, 448. 18   WIPO Pub no 271. See also BGBl II 1990, 1677. 19   1869 UNTS 299. See also BGBl II 1994, 1730. 20   WIPO Pub no 833. 6 7 8

584  Axel Metzger – Joint Recommendation Concerning the Protection of Marks, and Other Industrial Property Rights in Signs, on the Internet of 24 September–3 October 2001.21 Although regional by territorial scope, the European Patent Convention of 5 October 1973, revised 29 November 2000, is part of the international level of legal sources ratified by Germany, since it is not European Union law but an international treaty with European Union members and other members like Switzerland, Turkey or Norway.22 The European Patent Office in Munich executes a uniform application procedure and a uniform opposition and revocation procedure for all Member States of the Convention, see Articles 75 and 99. Opposition is only possible as integral part of the administrative procedure of the European Patent Office within nine months of the publication of the mention of the grant of the patent, see Article 99(1). Afterwards, a European patent may only be revoked with effect for single Contracting States according to Article 138. In Germany, the revocation is effected by the Federal Patent Court according to section 81 of the German Patent Act.23 Infringement claims and all other civil claims relating to the patent must be filed at the national courts, see Article 64 of the European Patent Convention and sections 139–45 of the German Patent Act. 2.1.1.2 European Union Law The European Union has been very active regarding copyright, trade marks, designs and plant variety rights since the late 1980s. Today, in these areas, the law of the Member States is for the most part determined by the acquis communautaire. In addition, the European Union has established Union-wide intellectual property rights with a unitary character, ie the Community trade mark, Community design and Community plant variety right. By contrast, patent law, has only been touched incidentally by the European Union so far. In addition to the listed directives and regulations, a large of body of case law has been handed down by the European Court of Justice. In the field of copyright law, seven European directives and one recommendation have been adopted so far. The directives have all been transposed into German law and are applied by German courts: – Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission;24 – Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases;25 – Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society;26 – Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art;27   WIPO Pub no 845.   13 ILM 268. See also BGBl II 2007, 1082.   Patentgesetz, 16 December 1980, BGBl I 1981, 1, lastly revised 31 July 2009, BGBl I 2009, 2521. 24   OJ L248/15. 25   OJ L77/20. 26   OJ L167/10. 27   OJ L272/32. 21 22 23

Germany  585 – Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version);28 – Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version);29 Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (codified version)(Text with EEA relevance)30 and – Commission Recommendation of 18 May 2005 on collective cross-border management of copyright and related rights for legitimate online music services.31 In the law of trade marks, the European Union has harmonised the main principles of national law regarding registered trade marks and has created a Union-wide unitary intellectual property right, the Community trade mark: – Directive 2008/95/EC of the European Parliament and the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks (Codified version);32 and – Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (codified version).33 Registration and revocation of Community trade marks is effected by the Office for the Harmonisation in the Internal Market in Alicante, Spain. The Community trade mark courts, which are national courts designated by the Member States, have exclusive jurisdiction for infringement proceedings regarding Community trade marks and for counterclaims for revocation and declaration of invalidity, Articles 95 and 96 of the Regulation. Similar to the law of trade marks, design protection has been harmonised on the Member States’ level and supplemented by a Union-wide right: – Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs:34 and – Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs.35 Registration and revocation of Community design rights are administered by the Office for the Harmonisation in the Internal Market in Alicante, Spain. For infringement procedure, counterclaims for declaration of invalidity and claims for the declaration of invalidity of unregistered Community design rights, Member States designate Community design courts, Articles 80 and 81 of the Regulation. Regarding patent law, only one Directive has been passed so far, namely Directive 98/44/ EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions.36   OJ L376/28.   OJ L372/12. 30   OJ L111/16. 31   OJ L276/54. 32   OJ L299/25. 33   OJ L78/1. 34   OJ L289/28. 35   OJ L3/1. 36   OJ L213/13. 28 29

586  Axel Metzger In addition, a Union-wide plant variety right has been established by Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights.37 The grant, the declaration of nullity and the cancellation of Community plant variety rights is effected by the Community Plant Variety Office in Angers, France. For infringement claims and other claims listed in Articles 94 to 100 of the Regulation, the courts of the Member States have jurisdiction according to Article 101. For topographies of semiconductor products, a special scheme of protection on the Member States’ level is provided by the Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products.38 Finally, remedies, enforcement and custom actions have been harmonised for all types of intellectual property: – Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights;39 and – Council Regulation (EC) No 1383/2003 of 22 July 2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights.40 The measures provided by the Regulation No 1383/2003 are enforced by the national customs authorities of the EU Member States. 2.1.1.3  National Law In German law relating to intellectual property, the main legal sources are legislative enactments. However, case law handed down by the Bundesgerichtshof (the Federal Supreme Court) and the lower courts plays an important role in legal practice. Since the parties to a case are not disclosed to the public, cases are mostly cited by the names of the work of art, invention etc which was the subject matter of the case, eg, ‘Olanzapin’, as the name of a pharmaceutical being subject of a patent litigation.41 The protection and management of copyright and neighbouring rights is regulated by the following acts: Copyright Act of 1965,42 Act on the Management of Copyrights and Neighbouring Rights of 1965,43 and Act on Publishing Contracts of 1901.44 The German Copyright Act is applied by courts without any administrative authority being involved. However, the German Patent- and Trade Mark Office in Munich is responsible for the regulatory supervision of German collecting societies, according to section 18 of the Act on the Management of Copyrights and Neighbouring Rights.

  OJ L 227/1.   OJ L 24/36. 39   OJ L 195/16. 40   OJ L 196/7. 41   See eg BGH (Federal Supreme Court), 16 December 2008, X ZR 89/07, (2009) Gewerblicher Rechtsschutz und Urheberrecht 382 – Olanzapin. 42   Gesetz über Urheberrecht und verwandte Schutzrechte, 9 September 1965, BGBl 1965 I, 1273, lastly revised 17 December 2008, BGBl I 2008, 2586. 43   Gesetz über die Wahrnehmung von Urheberrechten und verwandten Schutzrechten, 9 September 1965, BGBl 1965 I, 1294, lastly revised 26 October 2007, BGBl I 2007, 2513. 44   Gesetz über das Verlagsrecht, 19 June 1901, BGBl III no 441-1, lastly revised 22 March 2002, BGBl I 2002, 1155. 37 38

Germany  587 Trade mark protection is regulated by the Trade Mark Act of 1994.45 The registration and revocation of German trade marks is effected by the German Patent and Trade Mark Office in Munich, under sections 32, 53, 54 of the Trade Mark Act.46 Appeal against the decisions of the Office may be filed with the Federal Patent Court, under section 66 of the Trade Mark Act. Appeals against decisions of the Federal Patent Court may be filed with the Federal Supreme Court, under section 83 of the Trade Mark Act. Infringement proceedings (and all other civil claims with respect to a trade mark) have to be lodged before the regular courts for civil claims, under section 140 of the Trade Mark Act. The following laws are of relevance for the protection of technological inventions and related subject matters: – – – –

Patent Act of 1980;47 Utility Model Act of 1986;48 Employees’ Inventions Act of 1957;49 Act on International Patent Agreements of 27 November 1963.50

The competence of the German Patent and Trade Mark Office, the Federal Patent Court, the Federal Supreme Court for registration and validity matters and of the regular courts for infringement and other civil claims follows the model described for trade marks, see sections 34, 65, 81, 100, 143 of the Patent Act and sections 4, 16, 18, 17 of the Utility Model Act. Designs are protected by the Design Protection Act of 2004.51 The German Patent and Trade Mark Office is responsible for the registration of design rights, under section 11, whereas revocation and infringement proceedings are effected by regular courts for civil claims, under sections 33 and 52. The protection of plant variety rights is regulated by the Plant Variety Act of 1985, as revised 1997.52 Plant variety rights are granted and revoked by the Federal Plant Variety Office in Hanover, under sections 16 and 31. Appeal against the decisions of the Office may be filed to the Federal Patent Court, under section 34. Appeal may be filed against the decisions of the Federal Patent Court, with the Federal Supreme Court, under section 35. Infringement proceedings have to be lodged before the regular courts for civil claims, under section 38. Finally, in relation to the protection of semiconductors, a special enactment has to be mentioned which has but little significance in legal practice:53 the Act on the Protection of Topographies of Microelectronic Semiconductors of 1987, as revised 2009.54 45   Gesetz über den Schutz von Marken und sonstigen Zeichen, 25 October 1994, BGBl I 1994, 3082 and 1995, 156, lastly revised 31 July 2009, BGBl I 2009, 2521. 46   Some grounds for revocation may be lodged before the regular courts for civil claims, see s 55 Trade Mark Act. 47   Patentgesetz (see above n 23). 48   Gebrauchsmustergesetz, 28 August 1986, BGBl I 1986, 1455, lastly revised 31 July 2009, BGBl I 2009, 2521. 49   Gesetz über Arbeitnehmererfindungen, 25 July 1957, BGBl III no 422-1, last revised 31 July 2009, BGBl I 2009, 2521. 50   Gesetz über Internationale Patentübereinkommen, 21 June 1976, BGBl II 1976, 649, last revised 7 July 2008, BGBl I 2008, 1191. 51   Gesetz über den rechtlichen Schutz von Mustern und Modellen, 12 March 2004, BGBl I 2004, 390, last revised 31 July 2009, BGBl I 2009, 2521. 52   Sortenschutzgesetz, 11 December 1985, as revised 19 December 1997, BGBl I 1997, 3164, last revised 17 December 2008, BGBl I 2008, 2586. 53   According to the German Patent and Trade Mark Office’s Annual Report, there was only one application in 2008 (2007: 2; 2006: 2; 2005: 6): www.dpma.de/service/veroeffentlichungen/ jahresberichte/index.html. 54   Gesetz über den Schutz der Topograhien von mikroelektronischen Halbleitererzeugnissen, 22 October 1987, BGBl I 1987, 2294, lastly revised 31 July 2009, BGBl I 2009, 2521.

588  Axel Metzger

2.1.2 Jurisdiction 2.1.2.1  International Instruments Regarding jurisdiction over defendants domiciled in EFTA states, the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 16 September 1988 is applicable.55 A revised version of the Convention was signed on 30 October 2007 in Lugano.56 It has entered into force on 1 January 2010 for the European Union, Norway and Denmark. Switzerland has ratified the revised Convention on 22 October 2010.57 The Hague Convention of 30 June 2005 on Choice of Court Agreements has been signed by the European Union, the United States and Mexico, but it has not yet entered into force.58 2.1.2.2  European Union Law The main legal source for jurisdiction of German courts in the field of intellectual property is the Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (‘Brussels I Regulation’).59 The Regulation is not applicable to Denmark (see Art 1(3) and Recital 21). It provides rules on general (Art 2) and special jurisdiction (especially for contracts, torts, delicts or quasi-delicts, Art 5(1) and 5(3)) as well as an exclusive jurisdiction for proceedings concerned with registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered (Art 22(4)). 2.1.2.3  National Law The autonomous German rules on jurisdiction are applicable if the defendant is not domiciled in a European Union or EFTA Member State. In this case the rules on venue provided by sections 12 to 40 of the Code of Civil Procedure of 1877, as revised 2005, apply mutatis mutandis for jurisdiction.60

2.1.3  Applicable law 2.1.3.1  International Instruments The only international rule on the law applicable to intellectual property disputes applicable for Germany is Article 60(1)(2) European Patent Convention on the law governing employee’s inventions.61 Besides this rule, no specific international instruments on the private international law regarding intellectual property have been signed by Germany. However, it is disputed whether the general principle of national treatment as it is stated by

  OJ L/9. See also BGB II 1994, 2660.   OJ L339/3. 57   See www.ejpd.admin.ch. 58   On the status, see www.hcch.net. 59   OJ L12/1. 60   Zivilproceßordnung, 30 January 1877, revised 5 December 2005, BGBl I 2005, I 3202, 2006, 431 and 2007, 1781, lastly revised 24 September 2009, BGBl I, 2009, 3145. 61   Above n 22. 55 56

Germany  589 the Berne Convention62 may be interpreted as comprising a reference to the law of the country of protection.63 2.1.3.2  European Union Law Article 8 of the Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II)64 provides rules for the law applicable to infringements of intellectual property pointing to the country for which protection is sought. For contractual relationships, the general principles of the Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I)65 apply without special rules for intellectual property contracts. 2.1.3.3  National Law The autonomous German principles on private international law apply to all questions not dealt with in the Rome I and Rome II Regulations, eg initial ownership and transferability of intellectual property rights, compulsory licences and security interests in intellectual property rights. For these issues, legal practice is guided by the principles developed by the Federal Supreme Court since statutory rules are lacking.

2.1.4  Recognition and Enforcement 2.1.4.1  International Instruments Regarding recognition and enforcement of foreign judgments, the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters of 16 September 1988 is applicable for judgments rendered by EFTA courts.66 In addition, the bilateral agreements with Israel67 and Tunisia68 are applicable to the recognition of judgments of the courts of these states. 2.1.4.2  European Union Law For judgments rendered by the courts of the Member States of the European Union, the Brussels I Regulation is applicable.69

  Above n 2.   See eg BGH, 17 June 1992, I ZR 182/90, BGHZ 118, 394, 397 – ALF. See also A Metzger, ‘Zum anwendbaren Recht bei grenzüberschreitendem Rundfunk’ (2006) Praxis des Internationalen Privat- und Verfahrensrecht 242, 243–44 with further references. 64   OJ L199/40. 65   OJ L177/6. 66   Above n 55. 67   Deutsch-israelischer Vertrag über die gegenseitige Anerkennung und Vollstreckung gerichtlicher Entscheidungen in Zivil- und Handelssachen, 20 July 1977, BGBl I 1980, 925 and 1531. 68   Deutsch-tunesischer Vertrag über Rechtsschutz und Rechtshilfe, die Anerkennung und Vollstreckung gerichtlicher Entscheidungen in Zivil- und Handelssachen sowie über die Handelsschiedsgerichtsbarkeit, 19 July 1966, BGBl I 1989, 889. 69   Above n 58. 62 63

590  Axel Metzger 2.1.4.3  National Law For all other foreign judgments, the autonomous German rules on recognition and enforcement set out in section 328 of the Code of Civil Procedure of 1877, as revised 2005, apply.70

2.2  Principles of Jurisdiction and Applicable Law 2.2.1 Jurisdiction Regarding jurisdiction, the Brussels I Regulation and the Lugano Convention71 provide for special rules on exclusive jurisdiction for proceedings concerned with registration or validity of registered intellectual property rights (1). Apart from these rules, the general principles on general (2) and special jurisdiction for infringements (3) and contracts (4) and other special grounds of jurisdiction (5) apply to intellectual property proceedings. Finally, choice of court agreements (6) and provisional measures (7) are of importance in intellectual property cases. 2.2.1.1  Exclusive Jurisdiction According to Article 22(4) of the Brussels I Regulation and Article 16(4) of the Lugano Convention, proceedings concerned with registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered can only be brought before the courts of the country of registration. This rule applies even if the defendant’s domicile is not in a European Union or EFTA Member State (‘regardless of domicile’). Autonomous rules on jurisdiction of German courts for validity and registration claims may only be applied in proceedings concerning registered rights granted by non-EU/EFTA states.72 The ECJ has given a broad interpretation of exclusive jurisdiction under Article 22(4) of the Brussels I Regulation in its decision in GAT v LuK,73 holding that this rule is not only applicable to proceedings having as their main object the registration or validity of a registered intellectual property right but also in cases, in which validity or registration arises as a merely incidental question, especially if invalidity is raised as a defence in infringement proceedings. The revised Lugano Convention has taken up the approach of the ECJ in Article 22(4) (‘in proceedings concerned with the registration or validity of patents, trademarks, designs, or other similar rights required to be deposited or registered, irrespective of whether the issue is raised by way of an action or as a defence’ (emphasis added)). However, this wide concept of exclusive jurisdiction has been criticised by most commentators.74 The   Above n 60.   Above nn 58 and 55. 72   For the details see M Schauwecker, ‘Die Entscheidung GAT gegen LuK und drittstaatliche Patente’ (2009) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 187–95. 73   Case C-4/03, Gesellschaft für Antriebstechnik mbH & Co. KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 74   See European Max-Planck Group for Conflict of Laws in Intellectual Property (CLIP), ‘Intellectual Property and the Reform of Private International Law – Sparks from a Difficult Relationship’ (2007) Praxis des Internationalen Privat- und Verfahrensrechts 284, 287; B Heß, T Pfeiffer and P Schlosser, Report on the application of Regulation 44/2001/EC (Study JLS/C4/2005/03) 334 et seq, available at ec.europa.eu/civiljustice/news/docs/ study_application_brussels_1_en.pdf. See also CA Heinze and E Roffael, ‘Internationale Zuständigkeit für Entscheidungen über die Gültigkeit ausländischer Immaterialgüterrechte’ (2006) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 787, 795; A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decisions 70 71

Germany  591 current trend in international legal scholarship is to restrict exclusive jurisdiction to cases in which invalidity is the main object of a claim or counterclaim, whereas in all other cases in which the validity or registration arises as a merely incidental question, courts should have jurisdiction to adjudicate with inter partes effect on the validity of intellectual property rights registered abroad. The American Law Institute’s Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes of 2007 (ALI Principles) adopt this solution in sections 211(2) and 212(4).75 A similar approach has been advocated by the European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP) in Article 2:401 of the ‘Principles for Conflict of Laws in Intellectual Property’ (CLIP Principles).76 The Community regulations on unitary community rights provide for special rules on exclusive jurisdiction, see Articles 96, 97 of the Community Trade Mark Regulation No 207/2009, Articles 81, 82 of the Community Designs Regulation (EC) No 6/2002, and Article 101 of the Community Plant Variety Rights Regulation No 2100/94.77 2.2.1.2  General Jurisdiction Subject to the rule of exclusive jurisdiction, a person infringing intellectual property rights can always be sued in his domicile. This basic principle is recognised by Article 2 of the Brussels I Regulation and of the Lugano Convention and has been regularly applied by European courts in intellectual property matters.78 For the determination of the ‘domicile’ of natural persons, no autonomous European rule exists; see Article 59 of the Brussels I Regulation, Article 52 of the Lugano Convention and Article 59 of the revised Lugano Convention. Whether a person is domiciled in the forum’s state has to be determined according to the lex fori. In Germany, the domicile of a natural person under the Brussels I/Lugano system is interpreted in accordance with sections 7 to 11 of the German Civil Code.79 For legal persons, an autonomous European standard has been established by Article 60(1) of the Brussels I Regulation and Article 60(1) of the revised Lugano Convention. According to these provisions, a ‘company or other legal person or association of natural or legal persons’ is domiciled at the statutory seat, the central administration and the principle place of business. Therefore, Articles 2 and 60 may provide up to three different fora for the plaintiff. The Lugano Convention of 1988 refers in Article 53 for the ‘seat of a company or other legal person’ to the law of the forum, without providing an autonomous definition. It is generally accepted under the Brussels-I/Lugano system that the court of the defendant’s domicile can decide on all claims arising out of the infringement of parallel intellectual property rights, whether they arise in the forum state or in any other country. The GAT v. LuK and Roche Nederland v. Primus and Goldenberg’ (2006) International Review of Intellectual Property and Competition Law 844, 847–49; PLC Torremans, ‘The Way Forward for Cross-Border Intellectual Property Litigation: Why GAT Cannot Be the Answer’ in S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, Mohr Siebeck, 2009), 191, 209–10. 75  The American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law and Judgments in Transnational Disputes (Chestnut, ALI Publishers, 2008). 76   European Max Planck Group on Conflict of Laws in Intellectual Property (CLIP), Principles for Conflict of Laws in Intellectual Property, Second Preliminary Draft (6 June 2009), available at www.cl-ip.eu. 77   See Heinze and Roffael, above n 74, 796. 78   See eg BGH, 2 October 1997, I ZR 88/95, BGHZ 136, 380 – Spielbankaffaire; BGH, 8 July 2004, I ZR 25/02, (2004) Gewerblicher Rechtsschutz und Urheberrecht 855 – Hundefigur. 79   See J Kropholler, Europäisches Zivilprozessrecht, 8th edn (Frankfurt am Main, 2005), Comments on Art 59, marginal number 6.

592  Axel Metzger extent of the general jurisdiction at the defendant’s domicile is unlimited. In cases concerning Internet communication, the court may decide on all alleged infringements occurring anywhere in the world.80 The Community regulations on unitary community rights provide for special rules on general jurisdiction, see Article 97 of the Community Trade Mark Regulation No 207/2009, Article 82 of the Community Designs Regulation (EC) No 6/2002, and Article 101 of the Community Plant Variety Rights Regulation No 2100/94. 2.2.1.3  Special Jurisdiction for Infringement Proceedings Apart from jurisdiction at the defendant’s domicile, right-holders may bring suit at their choice at the forum delicti commissi, according to Article 5(3) of the Brussels I Regulation (or Art 5(3) of the Lugano Convention) or section 32 of the German Code of Civil Procedure. Article 5(3) of the Brussels I Regulation is applicable if the defendant is domiciled in an EU Member State (with the exception of Denmark). Article 5(3) of the Lugano Convention is applicable if the defendant is domiciled in a Member State of the Lugano Convention and not of the EU. In all other cases, the autonomous rule of section 32 of the German Code of Civil Procedure applies.81 Article 5(3) of the Brussels I Regulation (and Lugano Convention) provides a broad concept of non-contractual liability. According to the ECJ’s ruling in Kalfelis, Article 5(3) covers all claims ‘which seek to establish the liability of a defendant and which are not related to a contract’.82 Hence, claims concerning the infringement of intellectual property rights are also covered.83 The same applies to section 32 of the German Code of Civil Procedure.84 In multi-state cases, especially on the Internet, the crucial question remains where the infringement of a trade mark or a copyright protected work can be localised. Article 5(3) refers to the ‘place where the harmful event occurred or may occur’, without further specification. The ECJ took the general position in Handelskwekerij Bier that Article 5(3) covers both the place where the damage occurred and the place of the event giving rise to it.85 This is also accepted under section 32 of the German Code of Civil Procedure.86 However, giving the plaintiff a choice should not be understood as Article 5(3) asserting jurisdiction in each place ‘where the adverse consequences can be felt of an event which has already caused damage actually arising elsewhere’, as the ECJ held in Marinari.87 Applying these standards, one could argue that Internet services can be used and downloaded all over the world and 80  R Hye-Knudsen, Marken-, Patent- und Urheberrechtsverletzungen im europäischen Internationalen Zivilprozessrecht (Tübingen, Mohr Siebeck, 2005) 20; S Kubis, Internationale Zuständigkeit bei Persönlichkeits- und Immaterialgüterrechtsverletzungen (Bielefeld, Gieseking, 1999) 198 et seq. See also JJ Fawcett and PLC Torremans, Intellectual Property in Private International Law (Oxford, Oxford University Press, 1998) 143. 81   See P Mankowski, Comments on Art 4 Brüssel I-VO in T Rauscher (ed), Europäisches Zivilprozessrecht, 2nd edn (Munich, Sellier, 2006) marginal no 1; Kropholler, above n 79, Comments on Art 4, marginal no 1. 82   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565. 83   P Mankowski, ‘Comments on Art 5’ in U Magnus and P Mankowski (eds), Brussels I Regulation (The Hague, Sellier, 2007) marginal no 200. See also Fawcett and Torremans, above n 80, 150. 84   R Geimer, Internationales Zivilprozessrecht, 6th edn (Cologne, Otto Schmidt, 2009) 535 and 543 et seq. 85   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735. 86  H Schack, Internationales Zivilverfahrensrecht, 4th edn (Munich, Beck, 2006) marginal nos 293–306a; H Nagel and P Gottwald, Internationales Zivilprozessrecht, 6th edn (Cologne, Otto Schmidt, 2007) 181. See also BGH, 20 December 1963, BGHZ 40, 391, 394 (choice of law). 87   Case C-364/93 Marinari v Lloyds Bank and Another [1995] ECR I-2719. The same applies under s 32 German Code of Civil Procedure, see Geimer, above n 84, 536.

Germany  593 possibly violate existing intellectual property rights and give rise to damages in a multitude of states. If the place of a potential download was relevant without further requirement, the right-holder would have a high number of competent courts in which to bring suit, and the defendant would possibly be required to defend himself at rather far-fetched places. To avoid such arbitrary results, for jurisdiction of German courts the Bundesgerichtshof requires, following the decision in Hotel Maritime, that websites are ‘intentionally directed’ to German users.88 In the case, jurisdiction was granted for the allegedly infringing use of a mark on a Danish website with a ‘.dk’ top-level domain which addressed customers in Germany and offered hotel booking and reservation services in the German language. The Court made express reference to the WIPO and Paris Union Joint Recommendation Concerning the Protection of Marks on the Internet of 2001.89 Shortly afterwards, in the decision Arzneimittelwerbung im Internet, the Court held that service providers may use disclaimers to indicate explicitly to which users the services are not directed.90 The lower courts have taken up this restrictive approach and declined jurisdiction in cases in which the websites did not specifically address German users.91 This tendency matches with the general approach of the ECJ to set limits on the plaintiff ’s choices under the special grounds of jurisdiction because otherwise the general rule of Article 2 of the Brussels I Regulation would be undermined.92 The same arguments are put forward under section 32 of the German Code of Civil Procedure.93 Following the principles laid down in Handelskwekerij Bier, a second approach could be to localise the infringement at the place where the defendant mainly acted, and characterise this site as the place where the event giving rise to the damage took place. However, intellectual property lawyers rightly emphasise that the distinction of place of the act and place of the damage as it is used in general rules of private international law is not suitable for intellectual property cases. Copyrights, trade marks and patents vest the right-holder with the power to forbid third parties specific actions, as described in the respective copyright, trade mark and patent acts. The infringement occurs wherever these specific actions take place, eg wherever a book is copied or a good is sold under a trade mark. Hence, conceptually the place of act and the place of infringement are identical.94 Regarding the extent of jurisdiction, it is the majority opinion that the courts in the country of infringement are only competent in respect of the infringement that occurred in that country. Some justify this limited extent of jurisdiction by an analogy to the ECJ’s interpretation of Article 5(3) in the Shevill case.95 In Shevill the ECJ held that for claims concerning a defamatory newspaper publication the plaintiff may either bring a suit at the place of the event giving rise to the damage, ie the place where the publisher is established

88  BGH, 13 October 2004, I ZR 163/02 (2005) Gewerblicher Rechtsschutz und Urheberrecht 431 – Hotel Maritime. 89   Above n 21. 90   BGH, 30 March 2006, I ZR 24/03 (2006) Gewerblicher Rechtsschutz und Urheberrecht 513 – Arzneimittel­ werbung im Internet. 91   See OLG Köln, 30 October 2007, 6 W 161/07 (2008) Gewerblicher Rechtsschutz und Urheberrecht-RR 71 – Internet-Fotos; see also OLG München, 6 December 2007, 29 U 2713/07 (2008) Neue Juristische Online Zeitschrift 675 (unfair competition case). 92   Case C-256/00 Besix SA v Wasserreinigungsbau Alfred Kretzschmar GmbH & Co [2002] ECR I-1699 and CA Heinze, Einstweiliger Rechtsschutz im europäischen Immaterialgüterrecht (Tübingen, Mohr Siebeck, 2007) 227. 93  Geimer, above n 84, 535 et seq. 94  Schack, above n 86, marginal no 306a; see also Fawcett and Torremans, above n 80, 156 et seq. 95   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415.

594  Axel Metzger and which typically (though not necessarily96) coincides with Article 2 of the Regulation, asking for damages for all the harm caused by the unlawful act. Alternatively, he may bring suit at each place where the damage occurred, ie where the defamation produced its harmful effects on the victim. In this case it may only claim for the damage occurring in the forum state, since the forum seems best placed to assess the effects of the defamation and the extent of damage in that state. In addition, such limitation prevents forum shopping. According to some authors, the same arguments plead for a limited extent of jurisdiction in intellectual property cases.97 A similar solution has been adopted in Article 94(2) of the Community Trade Mark Regulation.98 Others plead against the application of the Shevill doctrine but come to similar results by a strict reading of the territorial scope of intellectual property rights. If one adheres to the idea that the place of act and the place of infringement are always identical for intellectual property matters, than it might seem dubious to grant jurisdiction on the basis of infringement for activities or damages occurring outside the territory of the forum state. Hence, jurisdiction at the forum delicti would always be restricted to the infringement occurring in the forum state. This approach has been applied by the Court of Appeal in Düsseldorf in the Schussfadengreifer decision for a patent infringement claim concerning the distribution of physical goods in several countries.99 It is supported by a considerable group of authors100 and is also invoked regarding section 32 of the German Code of Civil Procedure.101 The Community regulations on unitary community rights provide for rules on special jurisdiction for infringement proceedings; see Article 97 para 1 of the Community Trade Mark Regulation No 207/2009, Article 82(5) of the Community Designs Regulation (EC) No 6/2002, and Article 101 para 3 of the Community Plant Variety Rights Regulation No 2100/94. 2.2.1.4  Special Jurisdiction in Contractual Matters Another special ground of jurisdiction of importance in intellectual property cases is the special jurisdiction in contractual matters under Article 5(1) of the Brussels I Regulation. According to the ECJ ruling in Falco Privatstiftung, a licence contract may not be qualified as a service contract under Article 5(1) lit b) of the Brussels I Regulation.102 As a result, the doctrine developed by the ECJ in the Tessili decision103 applies according to which the place of performance under lit a) has to be determined pursuant to the substantive law applica  Mankowski, above n 83, marginal no 210.   S Leible, ‘Comments on Art 5 Brüssel I-VO’ in T Rauscher (ed), Europäisches Zivilprozessrecht, 2nd edn (Munich, Sellier, 2006) marginal no 92; C Berger, ‘Die internationale Zuständigkeit bei Urheberrechtsverletzungen in Internet-Websites aufgrund des Gerichtsstands der unerlaubten Handlung nach Art 5 Nr 3 EuGVO’ (2005) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 465, 468–69; Kropholler, above n 79, Comments on Art 5, marginal no 156. See also Cour de Cassation, Arrêt n° 1367 P, 16 July 1997, (1998) 176 Revue international du Droit d’Auteur 402, 405 – Wegmann/Elsevier. 98   See E Schaper, Durchsetzung der Gemeinschaftsmarke (Cologne, Heymanns, 2006) 125 et seq. 99   OLG Düsseldorf, 22 July 1999, 2 U 127/98 (2001) Praxis des Internationalen Privat- und Verfahrensrechts 336 – Schussfadengreifer. 100  K Grabinski, ‘Zur Bedeutung des Europäischen Gerichtsstands- und Vollstreckungsübereinkommens (Brüsseler Übereinkommens) und des Lugano-Übereinkommens in Rechtsstreitigkeiten über Patentverletzungen’ (2001) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 199, 204 et seq; CA Heinze, above n 92, 228 et seq; H Schack, above n 86, marginal no 306a. See also Suisse Bundesgericht, 23 October 2006, 4C.210/2006 (2007) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 534. 101  Geimer, above n 84, 543 et seq; H Nagel and P Gottwald, above n 86, 183. 102   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327. 103   Case 12/76 Industrie Tessili Italiana Como v Dunlop AG [1976] ECR I-1473. 96 97

Germany  595 ble to the obligation in question.104 This is also the rule under Article 5(1) of the Lugano Convention and section 29 of the German Code of Civil Procedure.105 2.2.1.5  Other Special Grounds of Jurisdiction It is not the task of this chapter to provide a comprehensive overview of all possible special grounds of jurisdiction under European and autonomous rules but to focus on the intellectual property specific fora. Under the Brussels I/Lugano system, jurisdiction may also be asserted for civil claims arising out of criminal proceedings (Art 5(4)), for disputes arising out of the operation of a branch (Art 5(5), see also s 21 of the German Code of Civil Procedure), for multiple defendants (Art 6(1)),106 for indemnification (Art 6(2)), and for counterclaims (Art 6(3), see also s 33 German CCP). For defendants not domiciled in the EU or a Member State of the Lugano Convention, section 23 of the German Code of Civil Procedure is of particular relevance. Under this rule, jurisdiction of German courts may be asserted if the defendant has assets in Germany, irrespective of their value.107 2.2.1.6  Choice of Court Agreements It is a widely accepted principle that parties are free to choose a forum before or after the infringing activities have taken place. It is also uncontroversial that the chosen court can decide upon infringements arising anywhere in the world if the choice of court agreement stipulates explicitly or implicitly an unlimited extent of jurisdiction.108 This is accepted under Article 23 of the Brussels I Regulation (Art 17 of the Lugano Convention, Art 23 of the revised Lugano Convention) and sections 38 to 40 of the German Code of Civil Procedure. The parties’ freedom in intellectual property cases is only limited with regard to questions of exclusive jurisdiction, especially by the rules on jurisdiction in validity matters, see eg Articles 23(5) and 22(4) of the Brussels I Regulation, and by the special jurisdiction rules on consumer or employment contracts according to Articles 23(5), 17, and 21 of the Brussels I Regulation. 2.2.1.7  Provisional Measures Provisional measures are of particular importance in intellectual cases, which raises the question of jurisdiction in this field. According to Article 31 of the Brussels I Regulation (Art 24 of the Lugano Convention, Art 31 of the revised Lugano Convention), courts of the Member States are free to assert jurisdiction for provisional measures under the national rules of jurisdiction provided there is a real connecting link between the subject-matter of

104  Kropholler, above n 79, marginal no 29; Leible, above n 97, marginal no 40; Mankowski, above n 83, marginal no 138. 105  Geimer, above n 84, 525. 106   On the specific issues of cross-border patent litigation under Art 6(1) see Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535 and the critical comments of the European Max-Planck Group for Conflict of Laws in Intellectual Property (CLIP), Exclusive Jurisdiction and Cross-Border IP (Patent) Infringement – Suggestions for Amendment of the Brussels I Regulation, (2007) European Intellectual Property Review 195–203. 107   On the details see Geimer above n 84, 486 et seq. 108   See A Peukert, ‘Contractual Jurisdiction Clauses and Intellectual Property’ in J Drexl and A Kur (eds), Intellectual Property and Private International Law (Oxford, Hart Publishing, 2005) 55, 81 et seq.

596  Axel Metzger the measures sought and the territorial jurisdiction of the forum state.109 In addition, courts having jurisdiction as to the substance of a case in accordance under the Brussels I/Lugano system also have jurisdiction to order provisional or protective measures. Article 103 of the Community Trade Mark Regulation, Article 90 of the Community Design Regulation and Article 24 of the Community Plant Variety Right Regulation provide special rules for provisional measures regarding these rights.110

2.2.2  Applicable Law In intellectual property proceedings, the questions of existence and validity of the intellectual property right (1), (initial) ownership and transferability (2), infringement and remedies (3) and licence contracts (4) are of particular importance. 2.2.2.1  Existence and Validity The law applicable to the existence and validity of registered and unregistered intellectual property rights is not explicitly dealt with in any legislative enactment applicable in Germany. According to the case law of the Bundesgerichtshof and most authors, these questions must be determined according to the law of the state which has granted the intellectual property right, be it by an individual decision of the patent, trade mark, design office or other administrative authority, or be it by a general recognition of a subject matter as protectable without registration, especially under copyright law. Existence and validity are core areas of the territoriality principle and the lex loci protectionis principle both for registered111 and unregistered industrial property rights, eg unregistered trade marks112 and copyright.113 For copyright, the lex loci protectionis is often derived from Article 5(2) of the Berne Convention (‘The enjoyment and the exercise of these rights shall not be subject to any formality; such enjoyment and such exercise shall be independent of the existence of protection in the country of origin of the work. Consequently, apart from the provisions of this Convention, the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed.’)114 However, some authors plead for the application of the lex originis for the question of whether an intellectual creation may be protected by copyright or not.115 For Community rights such as the Community trade mark, the respective Community regulations apply exclusively for all questions concerning the existence and validity. For European ‘bundle patents’ granted under the European Patent Convention, the rules of the 109   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091. 110   For the details, see Heinze, above n 92, 176 et seq. 111   For registered trade marks, see BGH, 7 June 1955, I ZR 64/53, BGHZ 18, 1, 13 – Hückel; see also KH Fezer, Markenrecht, 4th edn (Munich, Beck, 2009) Einleitung, H, Internationales Markenprivatrecht, marginal no 25. 112   For unregistered trade marks, see Fezer, above n 111, marginal no 25. 113   BGH, 26 June 2003, I ZR 176/01, BGHZ 155, 257, 261 – Sendeformat; BGH, 17 June 1992, I ZR 182/90, BGHZ 118, 394, 397 – ALF. See also P Katzenberger, Comments on Vor ss 120 et seq UrhG, in G Schricker (ed), Urheberrecht, 3rd edn (Munich, Beck, 2006), marginal no 129 with further references. 114   For interpretation of Art 5(2) as stating implicitly the lex loci protectionis principle, see eg BGH, 17 June 1992, I ZR 182/90, BGHZ 118, 394, 397 – ALF; Case C-192/04 Lagardère Active Broadcast v SPRE & GVL [2005] ECR I-7199 – see also Metzger, above n 63, 243–44 with further references. 115   See H Schack, Urheber- und Urhebervertragsrecht, 4th edn (Tübingen, Mohr Siebeck, 2007) 464–65, who nevertheless wants to apply the lex loci protectionis for the requirement of originality.

Germany  597 Convention apply irrespective of whether the validity is challenged in a revocation procedure under Article 99 of the European Patent Convention or in proceedings for a declaration of nullity under Article 138 of the Convention and section 81 of the German Patent Act.116 2.2.2.2  Initial Ownership and Transferability One of the most controversial questions in international intellectual property disputes is the issue of initial ownership. National copyright systems provide for different solutions on the substantive law level, especially in cases of employed authors, ie work-made-for-hire situations. Some jurisdictions define the employer as the initial owner of the copyright in the work. This solution is common to the so-called ‘copyright systems’, especially the United States and the United Kingdom,117 but it can also be found elsewhere, eg, in the Netherlands and in Japan.118 By contrast, the traditional approach in the ‘droit d’auteur’ states is to define the natural person who has created the work without any exceptions as the author, and hence as the initial owner of the author’s right.119 Similar questions may arise in the field of technological inventions made by employees. Here, the entitlement may either be attributed to the employer or to the employee.120 Therefore, the conflict rule determining the law governing initial ownership is of major importance. In Germany, the only statutory rule dealing explicitly with initial ownership is the second sentence of Article 60(1) of the European Patent Convention on the law governing employee’s inventions: If the inventor is an employee, the right to a European patent shall be determined in accordance with the law of the State in which the employee is mainly employed; if the State in which the employee is mainly employed cannot be determined, the law to be applied shall be that of the State in which the employer has the place of business to which the employee is attached.

It is controversial whether the provision allows for a renvoi by the choice-of-law rules of the contracting state in which the employee habitually carries out his work, including the contractual choice of different law,121 or whether such renvoi is excluded.122 The better arguments plead against renvoi since international conventions typically do not allow for renvoi.123 Furthermore, allowing for renvoi and for freedom of choice under national conflict rules would bypass the protection afforded by Article 60 of the Convention. Besides this specific rule, initial ownership is not dealt with in statutory provisions or European or international instruments. The Bundesgerichtshof and the majority of 116   Art 138(1) lit a) European Patent Convention: ‘Subject to Article 139, a European patent may be revoked with effect for a Contracting State only on the grounds that: (a) the subject-matter of the European patent is not patentable under Articles 52 to 57.’ 117   See s 201(b) US Copyright Act of 1976 and s 11(2) of the UK Copyright, Designs and Patents Act of 1988. 118   See Art 7 of the Dutch Copyright Act and s 15 of the Japanese Copyright Act. 119   See, eg, s 7 of the German Copyright Act and Art L 111-1 of the French Intellectual Property Code. 120   For the US, see Magnetic Mfg Co v Dings Magnetic Separator Co, 16 F2d 739 (7th Cir 1927). For Germany, see s 4 of the Employee’s Inventions Act. 121   J Straus, ‘Die international-privatrechtliche Beurteilung von Arbeitnehmererfindungen im europäischen Patentrecht’ (1984) Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 1, 5. 122   M Singer and D Stauder (eds), European Patent Convention, 3rd edn (London, Wolters Kluwer, 2003) Art 60, marginal no 20; KJ Melullis, Comments on Art 60, in G Benkard (ed), Europäisches Patentübereinkommen (Munich, Beck, 2003) marginal no 23. 123   See J Kropholler, ‘Der Renvoi im vereinheitlichten Kollisionsrecht’ in Festschrift Henrich (Munich, Gieseking, 2000), 393 et seq.

598  Axel Metzger commentators determine the applicable law according to the lex loci protectionis principle. Hence, the law of country of registration or – as it is regularly put for copyright – the law of the country for which protection is sought determines the original allocation of the copyright in a work.124 But this solution is controversial for copyright cases. Here, some authors plead for the lex originis. At first glance, the application of the lex originis approach may seem better suited for authors and media industries with an international public because it provides for the worldwide application of one national copyright law to the question of ownership. But the practical experience with the approach has shown that courts are not willing to accept the consequences of the lex originis and apply their national copyright law as part of the public policy of the forum.125 By contrast, the practical problems of lex loci protectionis are often exaggerated. Admittedly, the territorial approach may lead to the application of a multitude of applicable laws in multistate situations. As a result, the initial owner of copyright in the work may be a natural person in one state and a legal entity in another state. But legal practice has developed pragmatic means to cope with this problem. It is the majority opinion in German copyright law, that employees explicitly or tacitly grant an exclusive licence for all economic rights in the work to the employer.126 Hence, the economic result will often be the same, even if the employee is regarded as the original right-holder. Closely related to the issue of initial ownership is the question whether intellectual property rights can be transferred. The question, again, is of particular interest for copyright law because the droit d’auteur systems often provide restrictions on the transferability of the copyright or of particular claims.127 Therefore, according to the Bundesgerichtshof, transferability of intellectual property rights is also governed by the law of the state for which protection is sought.128 2.2.2.3  Infringement and Remedies Since 11 January 2009, the law applicable to infringement and remedies has to be determined according to Article 8 of the Rome II Regulation.129 Article 8 of the Rome II Regulation determines that infringement and remedies in intellectual property cases are governed by the law of the country for which protection is sought. Article 8(3) excludes freedom of choice in the field of intellectual property.130 From a doctrinal point of view, 124   For copyright see BGH, 2 October 1997, I ZR 88/95, BGHZ 136, 380 – Spielbankaffaire; Katzenberger, above n 113, marginal no 129. See also A Birkmann, ‘Die Anknüpfung der originären Inhaberschaft am Urheberrecht’ (Baden-Baden, Nomos, 2009) 121–46. Generally for all intellectual and industrial property rights, see J Drexl, ‘Comments on Internationales Immaterialgüterrecht’ in Münchener Kommentar zum Bürgerlichen Gesetzbuch, vol 11, 4th edn (Munich, 2006), marginal nos 129 and 15 et seq. 125   See eg French Court of Cassation, 28 May 1991, D 1993, jur 197 – John Huston. 126   See S Rojahn, Comments on s 43 UrhG, in G Schricker (ed), Urheberrecht, 3rd edn (Munich, Mohr Siebeck, 2006) marginal no 40. 127   See eg s 29 of the German Copyright Act, s 23 of the Austrian Copyright Act and Art L 21-1 al 3, 131-1, 1313, and 131-6 of the French Intellectual Property Code. 128  See BGH, 15 October 1987, I ZR 96/85 (1988) Gewerblicher Rechtsschutz und Urheberrecht 296, 298 – GEMA-Vermutung IV; BGH, 2 October 1997, I ZR 88/95, BGHZ 136, 360 – Spielbankaffaire (copyright). For industrial property, see A Metzger, ‘Transfer of Rights, License Agreements and Conflict of Laws’ in J Basedow, J Drexl, A Kur and A Metzger (eds), Intellectual Property in the Conflict of Laws (Tübingen, Mohr Siebeck, 2005) 61, 63. 129   Above n 64. 130   On Art 8 Rome II Regulation, see J Basedow and A Metzger, ‘Lex loci protectionis europea – Anmerkungen zu Art 8 des Vorschlags der EG-Kommission für eine “Verordnung über das auf außervertragliche Schuldverhältnisse anzuwendende Recht” (“Rom II”)’ in Festschrift für Mark Moiseeviˇc Boguslavskij (Berlin,

Germany  599 there are valuable arguments for the restrictive position taken by the Rome II Regulation regarding party autonomy. One can argue that the remedies, eg, the availability of double damages, are a crucial element of the level of protection of intellectual property and therefore part of the national trade policy that cannot be derogated from by contract.131 However, many authors criticise this line of argument and plead for a more liberal approach.132 But this is a merely academic discussion for the moment, since Article 8(3) is unambiguous on this point. A question of major interest under the Rome II Regulation is that of characterisation. What issues have to be characterised as being part of the law applicable to ‘non-contractual obligations arising from an infringement’? Article 15 of the Rome II Regulation on the scope of law provides a list of the most crucial elements for infringement cases, comprising inter alia the ‘basis and extent of liability including the persons who may be held liable’ (lit a), which should encompass the questions of whether an activity has infringed an intellectual property right and whether persons are liable as contributory infringers etc, the ‘grounds for exemption from liability’ (lit b) which should comprise eg copyright limitations and exceptions or the first sale doctrine, ‘the existence, the nature and the assessment of damage or the remedy claimed’ (lit c), which covers explicitly the remedies (and, as a consequence, excludes party autonomy for remedies).133 Article 8 of the Rome II Regulation does not provide for any deviation from the lex loci protectionis principle for Internet cases amounting to truly ubiquitous infringements. If the provision is interpreted as conclusive, right-holders would be urged to plead under the laws of 200 or more jurisdictions to receive worldwide remedies. However, it should be considered whether specific rules for ubiquitous infringements cases may be applied praeter legem, since the Regulation obviously was not enacted as an exhaustive answer for infringement cases on the Internet.134 The current trend in international scholarship is to allow for the application of one single law in ubiquitous infringement cases.135 It will be interesting to see whether German (and European) courts will be courageous enough to refine the rules of the Rome II Regulation by case law, or whether the European legislator will modify the rules at a later stage. The Community regulations on unitary community rights provide for special rules on the applicable law for sanctions not provided for in the regulations, especially damages, see Article 102(2) Community Trade Mark Regulation No 207/2009, Article 89(1) lit d) and Community Designs Regulation (EC) No 6/2002. The Community plant variety rights Berliner Wiss-Verlag, 2004) 153–72; N Boschiero, ‘Infringement of Intellectual Property Rights, A Commentary on Article 8 of the Rome II Regulation’ (2007) IX Yearbook of Private International Law 87; M Leistner, ‘The Law Applicable to Non-Contractual Obligations Arising from an Infringement of National or Community IP Rights’ in S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, Morh Siebeck, 2009) 97–121; H Schack, ‘The Law Applicable to (Unregistered) IP Rights: After Rome II’ in S Leible and A Ohly (eds), ibid 79–96. 131  See Basedow and Metzger, above n 130 at 160; H Heiss and L Loacker, ‘Die Vergemeinschaftung des Kollisionsrechts der außervertraglichen Schuldverhältnisse durch Rom II’ JB 2007, 613, 633 et seq. 132   N Boschiero, above n 130, 107 et seq; M Leistner, above n 130, 105–6; DM Vicente, ‘La propriété intellectuelle en droit international privé’ (2008) 335 Recueil des cours 352; Schack, above n 130, 83. 133   See Basedow and Metzger, above n 130, 162; Leistner, above n 130, 103–4 with further references. 134   cp Drexl, above n 124, 212 (‘empfindliche Lücke’ [‘regrettable lacuna’]). 135   See Art 3:603 Draft CLIP Principles, above n 76; s 321 ALI Principles, above n 75; Art 302 Transparency Proposal on Jurisdiction, Choice of Law, Recognition and Enforcement of Foreign Judgments in Intellectual Property, October 2009, in J Basedow, T Kono and A Metzger (eds), Intellectual Property in the Global Arena – Jurisdiction, Applicable Law, and the Recognition of Judgments in Europe, Japan and the US (Tübingen, Mohr Siebeck, 2010) Annex 2.

600  Axel Metzger Regulation No 2100/94 contains autonomous rules for most sanctions including damages in Article 94, but refers to national law for claims based on unjust enrichment in Article 97(1). The problem with the choice of law rules in the regulations is that they refer to ‘law of the Member State in which the acts of infringement or threatened infringement were committed, including the private international law’ (Art 102(2) Community Trade Mark Regulation No 207/2009) and hence allow for renvoi. But if an infringing activity has taken place in Germany, German choice of law rules for trade mark infringements, ie the lex loci protectionis principle, would refer back to Community law since the ‘country’ of protection is the Community in its entirety. Article 8(2) of the Rome II Regulation (as lex posterior) allows escape from this vicious circle. The law applicable to the infringement of Community rights is, for all questions not dealt with in the Regulations, the law of the country ‘in which the act of infringement was committed.’ Article 24 of the Rome II Regulation excludes renvoi. Therefore, as an example, for an infringement of a Community trade mark committed in Germany, German substantive trade mark law would govern the assessment of damages.136 2.2.2.4  Contracts Relating to Intellectual Property The law applicable to contracts in the area of intellectual property is not explicitly determined in any European, international or autonomous German conflict rule. Instead, the general principles of the Rome I Regulation on the law applicable to contractual obligations apply.137 This raises the question of which issues should be characterised as ‘contractual’. It has already been emphasised that the transferability of intellectual property rights is governed in Germany by the lex loci protectionis and not by the lex contractus.138 By contrast, according to the predominant theory, the transfer of an intellectual property right is regarded as being covered by the lex contractus.139 Article 12 of the Rome I Regulation provides a list of other general issues which are contractual by nature, comprising especially the interpretation of contracts (lit a). Hence, interpretation of licence contracts is governed by the lex contractus even if special rules of interpretation are inserted in the German (or foreign) Copyright Act.140 For all contractual issues, freedom of choice is granted according to Article 3 of the Rome I Regulation. If the parties have not made a choice, the law applicable has to be determined according to Article 4 of the Regulation. Article 4(1) does not provide a special rule 136   On Art 8(2) of the Rome II Regulation, see M Leistner, above n 130, 109–11; A Metzger, ‘Community IP Rights & Conflict of Laws: Community Trademark, Community Design, Community Patent – Applicable Law to Claims for Damages’ in J Drexl and A Kur (eds), Intellectual Property and Private International Law (Oxford, Hart, 2005) 215–25; Schack, above n 130, 84–87; E Schaper, ‘Choice-of-Law Rules in the EU – Special Issues with Respect to Community Rights – Infringement of Community Trade Marks and Applicable’ in J Drexl and A Kur (eds), Intellectual Property and Private International Law (Oxford, Hart, 2005) 201–13; W Tilmann, ‘Community IP Rights and Conflict of Laws’ in J Basedow, J Drexl, A Kur, and A Metzger (eds), Intellectual Property in the Conflict of Laws (Tübingen, Mohr Siebeck, 2005) 123–27. 137   Above n 65. 138   Above n 127. 139   See OLG (Court of Appeal) Frankfurt, 3 December 1996, 11 U 58/94 (1998) Gewerblicher Rechtsschutz und Urheberrecht 141 – Mackintosh-Entwürfe (copyright case); OLG München, 10 December 2002 (2003) Zeitschrift für Urheber- und Medienrecht 141, 143 – Spielbankaffaire II (copyright case); Katzenberger, above n 113, 149. See also P Mankowski, ‘Contracts Relating to Intellectual and Industrial Property Rights under the Rome I Regulation’ in S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, Mohr Siebeck, 2009) 31, 44–46. But see BGH, 2 May 2002, I ZR 300/99 (2002) Gewerblicher Rechtsschutz und Urheberrecht 972 – FROMMIA (lex loci protectionis; trade mark case). 140   See eg s 31(5) of the German Copyright Act. See also Metzger, above n 128, 70, with further references.

Germany  601 on agreements concerning intellectual property141 The European Commission’s Proposal for the Rome I Regulation of December 2005 proposed such a rule pointing to the law of the transferor or licensor.142 But the finally adopted version of the Regulation abandoned this approach because submissions to the European Institutions pointed to the fact that the proposed rule would not be suitable for many contracts having as their main object the transfer or licence of an intellectual property right.143 For typical intellectual property contracts, it may also be that the licensee is to effect the performance which is characteristic of the contract (or that the contract is more closely connected with the licensee’s country, although none of the performances is characteristic for the whole contract). A contract between an author and a publisher may serve as an example. If the book is already written and the publisher has the duty to publish and distribute it and pay royalties expressed as a percentage of the sales price, while the author has no other duty but to accept the use of his work, it may well be that the publisher is to effect the characteristic performance (or that the contract is more closely connected to the publisher’s habitual residence without qualifying his duties as characteristic performance).144 In this case, the law of the habitual residence of the publisher applies according to Article 4(2) (or Art 4(4)) of the Rome I Regulation. In contrast, it may be that the contract has a closer connection to the transferor’s country if the transferee has no other duty but to pay a flat sum as money consideration.145 In this case, the contract resembles an outright sale of the intellectual property right and should be governed by the law of the transferor’s habitual residence.146 Another approach applied by German courts in case of patent licences is to apply the law of the protecting country if the licence is only granted for one single country.147 A question of particular interest in intellectual property cases is the relationship of employers and employees, in particular the right of the employer to claim the intellectual property right and the corresponding right of the employee to claim for additional remuneration eg under the German Employees’ Inventions Act.148 According to Article 8 of the Rome I Regulation, the relationship of employer and employees is governed by the law chosen by the parties, subject to the protection afforded to the employee by the state where he habitually carries out his work, see Article 8(1) and (2) of the Rome I Regulation. In the 141   On Art 4 of the Rome I Regulation, see N Boschiero, ‘Spunti critici sulla nuova disciplina comunitaria della legge applicabile ai contratti relativi alla proprietà intellettuale in mancanza de scelta ad opera delle parti’ in Liber Fausto Pocar (Milan, Giuffrè, 2009) 141 et seq; PA de Miguel Asensio, ‘Applicable Law in the Absence of Choice to Contracts Relating to Intellectual or Industrial Property Rights’ (2007) IX Yearbook of Private International Law 199; PLC Torremans, ‘Licenses and Assignments of Intellectual Property Rights under the Rome I Regulation’ (2008) 4 Journal of Private International Law 397, 404 et seq. 142   See Proposal for a Regulation of the European Parliament and the Council on the law applicable to contractual obligations (‘Rome I’) of 15 December 2005, COM(2005) 650 final. This solution is also provided by Art 122(1) of the Federal Swiss Private International Law Act. 143   See eg Comments on the European Commission’s Proposal for a Regulation on the Law Applicable to Contractual Obligations (‘Rome I’) of 15 December 2005 and the European Parliament Committee on Legal Affairs’ Draft Report on the Proposal of 22 August 2006, reprinted in (2006) International Review of Intellectual Property and Competition Law 472. 144   See de Miguel Asensio, above n 141, 214; M Josselin-Gall, Les contrats d’exploitation du droit de propriété littéraire et artistique (Paris, Joly, 1995) 379; Moura Vicente, above n 132, 322; E Ulmer, Die Immaterialgüterrechte im internationalen Privatrecht (Cologne, Heymann, 1975) 54; but see F Dessemontet, ‘Transfer of Technology under UNCTAD and EEC Draft: A European View on Choice of Law in Licensing’ (1978) 12 Journal of International Law and Economics 1, 43–53. 145   Metzger, above n 128, 69; Ulmer, above n 144, 54. 146  Mankowski, above n 139, 52; Metzger, above n 128, 64. 147   See OLG Düsseldorf, 4 August 1961, 2 U 66/61 (1962) Gewerblicher Rechtsschutz und Urheberrecht Ausl 256, 257 – Tubenverschluß. 148   See above n 49.

602  Axel Metzger absence of choice, the law of the state where he habitually carries out his work is applicable according to paragraph 2.149

3  Hypothetical Case Studies Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in a neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

Case 1(1)150 If defendant B – as a natural person – has residence in Germany according to section 7(1) German Civil Code, German courts would have jurisdiction under Article 2 of the Brussels I Regulation (and Art 2 Lugano Convention). If defendant B is a corporation having its main place of business (and its statutory seat and central administration)151 in country X, but having a branch in Germany, German courts would have special jurisdiction under Article 5(5) of the Brussels I Regulation (and Art 5(5) old and revised Lugano Convention) for disputes ‘arising out of operations of a branch’ if country X is member of the EU or EFTA; otherwise German courts would be competent under the autonomous rule of section 21 of the German Code of Civil Procedure. As with other special grounds of jurisdiction, the scope of jurisdiction would not be unlimited. According to the ECJ’s ruling in Somafer v Saar-Ferngas, disputes arising out of ‘operations of a branch’ must be based on:

  See Straus, above n 121, 2.   The following case analysis is based on the assumption that A would only file a defamation suit. However, it should be taken into consideration that challenging the authorship can give rise to copyright claims based on the violation of moral rights, see eg s 13 of the German Copyright Act. Under German substantive law, claims based on moral rights would supersede defamation claims (lex specialis derogat legi generalis). 151   See Art 60 Brussels I Regulation and Art 60 revised Lugano Convention. 149 150

Germany  603 actions relating to the undertakings which have been entered into at the above-mentioned place of business in the name of the parent body and which must be performed in the contracting state where the place of business is established and also concerning non-contractual obligations arising from the activities in which the branch, agency or other establishment within the above defined meaning, has engaged at the place in which it is established on behalf of the parent body.152

Therefore, a suit against B as the ‘parent body’ could only be filed before German courts if the German branch had published the music journal on behalf of B. One criterion may be whether the branch has contracted on its own account or for account of B.153 The same principles apply under section 21 of the German Code of Civil Procedure.154

Case 1(2) If copies in German language were to have been sold in Germany and the defendant is domiciled in another EU/EFTA country, German courts would have jurisdiction under Article 5(3) of the Brussels I Regulation (and Art 5(3) of the old and revised Lugano Convention and section 32 of the German Code of Civil Procedure).155 If the journal was printed in Germany in a foreign language for distribution in neighbouring country X, B would probably be either domiciled or would at least have a branch in Germany (see Question 1). Otherwise, the question would arise whether the mere printing of a journal with defamatory contents may be characterised as having occurred in a ‘place where the harmful event occurs’ under Article 5(3) of the Brussels I Regulation. The problem here may be that the printing as such arguably does not injure the reputation of A. However, according to the Shevill decision, suit may be filed for defamation claims ‘in the courts for the place of the event which gives rise to and is at the origin of that damage’.156 This place must not be identical with the domicile of the publisher. Therefore, it may be argued that German courts would have jurisdiction in this case under Article 5(3) of the Brussels I Regulation157 and section 32 of the German Civil Code of Procedure.158

Case 1(3) Under the Brussels I/Lugano system, the scope of jurisdiction would be unlimited at the domicile of B and, under Article 5(3), at the place of the event given rise to the injury. However, if jurisdiction of German courts could only be based on the fact that copies were sold in Germany, according to the ECJ’s ruling in Shevill, German courts would have jurisdiction ‘to rule solely in respect of the harm caused in the State of the court seised.’159 It is controversial among commentators whether this limitation of jurisdiction is also applicable under section 32 of the German Code of Civil Procedure.160

  Case 33/78 Somafer SA v Saar-Ferngas AG [1978] ECR 2183 para 13.   P Gottwald, ‘Comments on Art 5 EuGVO’ in Münchener Kommentar zur ZPO, vol 3, 3rd edn (Munich, Beck, 2008) marginal no 80. 154   Nagel and Gottwald, above n 86, 169–70. 155   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415. 156   ibid, 20. 157   cp the analysis of Mankowski, above n 83, marginal nos 215–16; Nagel and Gottwald, above n 86, 100. 158   Nagel and Gottwald, above n 86, 181–83. 159   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415 (33 and 33). 160   Against such limitation Schack, above n 86, 112 with further references. 152 153

604  Axel Metzger

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Case 2(1) and 2(2) In general, German courts could have jurisdiction concerning the infringement of a patent issued in country Y, provided that the requirements of a ground of general or special jurisdiction (in particular: domicile of the defendant in Germany, jurisdiction agreement in favour of the German courts) are met.161 For the counterclaim, jurisdiction might be based on the special ground of Article 6(3) of the Brussels I Regulation/3 33 ZPO. However, in the special case of patent disputes which concern the validity of the right, the special rules on exclusive jurisdiction need to be observed. According to these rules, the courts of country Y would have exclusive jurisdiction to decide on a counterclaim concerning the validity of a patent issued in Y under Article 22(4) of the Brussels I Regulation, Article 16(4) of the Lugano Convention and Article 22(4) of the revised Lugano Convention. As a consequence, German courts would have to deny their jurisdiction according to Article 25 of the Brussels I Regulation for the counterclaim of invalidity. Whether a German court would also be obliged to deny jurisdiction for the infringement claim, is controversial.162 For unregistered rights, especially copyrights, no rule comparable to Article 22(4) of the Brussels I Regulation exists. The protection of a subject matter under the copyright laws of country Y could be examined by a German court.163 The same approach should apply to unregistered trade marks.

 Grabinski, above n 100, 202.   The consequences for the proceedings of the court first seised regarding the infringement claim have not been decided by the ECJ yet. However, paras 16, 24 and 25 of the ECJ ruling in the Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509 may be interpreted as if the court would apply Art 25 of the Brussels I Regulation also to the infringement proceeding in case of a counterclaim or invalidity defence, see Heinze and Roffael, above n 74, 798; Torremans, above n 74, 199. Some authors argue that Art 25 must only be applied to the infringement proceeding if invalidity may be examined by the court of the infringement procedure as, eg in England. If, as is the case in Germany, invalidity of a patent must be lodged at a different authority (ie the Federal Patent Court) then jurisdiction for the infringement proceeding shall not be undermined by Art 22(4), see eg P Gottwald, ‘Comments on Art 22 EuGVO’ in Münchener Kommentar zur ZPO, vol 3, 3rd edn (Munich, Beck, 2008) marginal no 38. 163   See P Mankowski, Comments on Art 22 Brüssel I-VO, in T Rauscher (ed), Europäisches Zivilprozessrecht, 2nd edn (Munich, Sellier, 2006) marginal no 45. 161 162

Germany  605

Case 2(3) According to the ECJ’s ruling in GAT v LuK, 164 the rules of exclusive jurisdiction of Article 22(4) of the Brussels I Regulation and Article 16(4) Lugano Convention are not only applicable if the validity of the patent is challenged as a counterclaim but also if it is raised as a mere defence. Article 22(4) of the revised Lugano Convention has codified this approach recently (‘irrespective of whether the issue is raised by way of an action or as a defence’). However, the solution remains controversial in Germany and has been criticised by many authors because it undermines the regular grounds for jurisdiction under Article 2 and 5 significantly.165

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y, and Z. B, C and D are competitors of A and are located in countries X, Y, and Z respectively. A finds that B, C and D infringe its patents in countries X, Y, and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y, and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C, and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C, and D on the ground of the infringement of a contract? (2) Assuming that B, C, and D are members of a group of a corporation and takes identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country would (and if so, under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C, and D raised counterclaims that A’s patents are invalid?

Case 3(1) In the first scenario, German courts would have to deny a consolidation of the claims filed. A, B and C are not domiciled in W (Germany), therefore the infringement of patents issued for X, Y, and Z may not be litigated in Germany based on general jurisdiction. As a consequence, the question of consolidation in the courts of W must be answered in the negative. In the second scenario and in the absence of a choice of court agreement in favour of the courts of country W, a different solution would only be conceivable if the place of performance of the duty of A, B and C to abstain from any infringing activities would be in Germany (W). In this case, German courts would have jurisdiction under Article 5(1) lit a) of the Brussels I Regulation (Art 5(1) of the Lugano Convention, section 29 of the German Code of Civil Procedure). However, it is doubtful if (under the applicable law) the place of performance can be localised exclusively in Germany. Either, the defendants have to abstain from infringing activities in their respective licence territories (X, Y or Z) or they have a worldwide duty. In the latter case, according to the ECJ’s ruling in Besix v WABAG, 164   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 165   Above n 74.

606  Axel Metzger Article 5(1) would not be applicable with the effect that claims could only be filed at the defendant’s domicile under Article 2 of the Brussels I Regulation.166

Case 3(2) In the first scenario, German courts would have jurisdiction for the claims raised against the coordinator of the infringing activities under Article 2 and Article 60 of the Brussels I Regulation. Here the question would be whether the claims against the two other defendants may be joined with the proceedings against the coordinator according to Article 6(1) of the Brussels I Regulation. Following the ECJ’s ruling in Roche Nederland v Primus, such consolidation would not be possible. According to the ECJ, European patent infringement proceedings involving a number of companies established in various Contracting States in respect of acts committed in one or more of those States even where those companies, which belong to the same group, may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them. Since neither the patent infringements of which the various defendants are accused nor the national law in relation to which those acts are assessed are the same there is no risk of irreconcilable decisions being given in European patent infringement proceedings brought in different Contracting States, since possible divergences between decisions given by the courts concerned would not arise in the context of the same factual and legal situation.167

This approach has been criticised by many commentators.168 The solution applied by the Court of Appeal of The Hague to allow for a consolidation under Article 6(1) at the court of the defendant coordinating the infringing activities (‘spider in the web’) seems to be the better approach.169 It is also advocated in Article 2:206(2) CLIP Principles.170 In the second scenario, under the law as it stands after Roche Nederlands v Primus, the result would be the same as in the first scenario. If B, C and D can only be sued in X, Y and Z, there would be no issue of exclusive jurisdiction under Article 22(4) of the Brussels I Regulation since the defendants would be sued in the respective countries of registration. If one allowed consolidation under Article 6(1), the principles described in Case 2(1) and (2) would apply.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice-of-forum clause, arguing that the issue is related to foreign patents and thus the   Case C-256/00 Besix SA v Wasserreinigungsbau Alfred Kretzschmar GmbH & Co [2002] ECR I-1699.   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535 (summary of judgment). 168   See European Max-Planck Group for Conflict of Laws in Intellectual Property (CLIP), above n 74, 284–90; Heinze, above n 92, 236–41; Hess, Pfeiffer and Schlosser, above n 74, 334 et seq. 169   Gerechtshof ’s-Gravenhage (The Hague Court of Appeal), 23 April 1998, (1998) Nederlands Internationaal Privaatrecht no 317 – Expandable Grafts Partnership/Bosten Scientific. 170   Above n 76. 166 167

Germany  607 asserted choice-of-court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1) W  ould such a choice-of-court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that the patents are invalid? (3) Would the court assert jurisdiction if the choice-of-court agreement was made in patent infringement proceedings? (4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

Case 4(1) and 4(3) Parties are free to choose a forum before or after the infringing activities have taken place according to Article 23 of the Brussels I Regulation (Art 17 of the Lugano Convention, Art 23 of the revised Lugano Convention) and sections 38 to 40 of the German Code of Civil Procedure. It is uncontroversial that the chosen court can decide upon infringements arising anywhere in the world if the choice of court agreement stipulates explicitly or implicitly an unlimited extent of jurisdiction. Therefore a German court as court chosen by the parties would have jurisdiction to adjudicate all claims arising out of the infringement of German or foreign patents.

Case 4(2) The parties’ freedom in intellectual property cases to choose the forum is limited with regard to questions of exclusive jurisdiction, especially by the rules on jurisdiction in validity matters, see Articles 22(4) and 23(5) of the Brussels I Regulation, Articles 16(4) and 17(3) of the Lugano Convention, Articles 22(4) and 23(5) of the revised Lugano Convention, section 40(2) sentence 1 no 2 of the German Code of Civil Procedure. Therefore, in the event of a counterclaim raised by B, German courts would have to decline jurisdiction according to the principles described in case 2, question 1 and 2. This would extend not only to the counterclaim itself, but also to the infringement action if this action cannot be decided without (even an only incidental) assessment of the validity of the patent.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B who is located in country Z produces the identical product to that for which A has patents, and exports that infringing product to countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

608  Axel Metzger

Case 5(1) Regarding parallel proceedings in several countries, it has to be distinguished whether the countries are members of the Brussels I/Lugano system or whether parallel proceedings are pending in third countries. In the first scenario, a German court would decline jurisdiction according to Article 27 of the Brussels I Regulation (Art 21 of the Lugano Convention, Art 27 of the revised Lugano Convention) if the proceedings in Germany and the proceedings in X and Y involve the same cause of action. According to the ECJ’s judgment in Gubisch v Palumbo it is not necessary for Article 27 that both claims are entirely identical. In Gubisch the Court held that an action for enforcement of a sales contract and an action for rescission of the same contract are governed by Article 27, since the question of whether the contract is binding ‘lies at the heart of the two actions’.171 In application of this extensive concept of ‘same cause of action’, the Bundesgerichtshof explicitly stated that an action for a negative declaratory judgment first seised will block an enforcement action second seised under Article 27.172 Therefore, a German court would decline jurisdiction in the first scenario irrespective of whether the claim involves an infringement of registered or unregistered rights. In the second scenario, the provisions of the German Code of Civil Procedure would apply. According to the case law of the Bundesgerichtshof, the rules on parallel proceedings before German courts in section 261(3) no 1 would apply mutatis mutandis. A German court must consider pending proceedings before a foreign court by its own motion. However, it would decline jurisdiction only if recognition and enforcement of the expected judgment of the foreign court in Germany is likely.173 If recognition and enforcement in Germany is uncertain, the court may exceptionally stay its proceedings in analogy to section 148 of the Code.174

Case 5(2) Again, it has to be distinguished whether the forum states are members of the Brussels I/ Lugano system or whether parallel proceedings are pending in third countries. In the first scenario, under the rule of Article 27 of the Brussels I Regulation, courts are not in a position to examine the jurisdiction of the court first seised. The ECJ has taken a very strict position with regard to any attempts of courts to enter into a review of the jurisdiction of other Brussels I/Lugano courts.175 According to the ECJ, such examination runs counter to the principle of mutual trust which underpins the Regulation and ‘prohibits a court, except in special cases occurring only at the stage of the recognition and enforcement of foreign judgments, from reviewing the jurisdiction of the court of another Member State.’176 Among these special cases allowing for a review of jurisdiction at the stage of recognition and enforcement is the judgment rendered by a court disregarding the exclusive jurisdiction of another court according to Articles 22(4) and 35(1) of the Brussels I   Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861.   BGH, 11 December 1996, VIII ZR 154/95, (1997) Neue Juristische Wochenschrift 870. 173   BGH, 10 October 1985, I ZR 1/83, (1986) Neue Juristische Wochenschrift 2195; BGH, 18 March 1987, IVb ZR 24/86, (1987) Neue Juristische Wochenschrift 3083, 3084. 174   BGH, 10 October 1985, I ZR 1/83, (1986) Neue Juristische Wochenschrift 2195, 2196. The requirements are controversial, see E Becker-Eberhard, Comments on s 261, in Münchener Kommentar zur ZPO, vol 1, 3rd edn (Munich, Beck, 2008) marginal nos 77–79 with further references. 175   Case C-159/02 Gregory Paul Turner v Felix Fareed Ismail Grovit and Others [2004] ECR I-3565. 176   ibid (summary of judgment). 171 172

Germany  609 Regulation. However, such review is only allowed in the recognition and enforcement stage not in parallel proceedings according to Article 27 of the Regulation.177 In the second scenario, under German autonomous principles of jurisdiction, a German court would assert its jurisdiction because a judgment of a court of a third country (W) concerning the validity of patents granted by other states (X and Y) would not be enforceable in Germany according to section 328(1) no 1 German Code of Civil Procedure. The courts of W would lack jurisdiction for validity claims regarding patents issued for X and Y according to Article 22(4) of the Brussels I Regulation. Therefore, recognition and enforcement of a judgment rendered in W would be denied in Germany. As a consequence, proceedings in W would not prevent proceedings before a German court according to the principles described in question 1.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, firstly, that the claim for the infringement of the patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Case 6(1) It is uncontroversial that German patent law is not applicable to activities conducted outside the German territory. According to the lex loci protectionis principle, only infringing activities conducted in Germany may fall under the provisions of the German Patent Act.178 An extraterritorial application is neither allowed under choice of law principles, nor does the Patent Act provide for any special rules covering activities outside the German borders. Therefore, activities of B conducted in Z may not infringe A’s patent issued for Germany. However, if B would produce the separate parts of the engine in Germany to export them to Z, German courts would be willing to characterise the mere export as distribution in Germany and to prohibit such export according to German patent law.179

177   See Kropholler, above n 79, Comments on Art 27, marginal no 19; but see R Fentiman, ‘Introduction to Arts 27–30’ in U Magnus and P Mankowski (eds), Brussels I Regulation (The Hague, Sellier, 2007) marginal no 55. 178   BGH, 16 June 1994, I ZR 24/92, BGHZ 126, 252 – Folgerecht bei Auslandsbezug (copyright case explaining the principles for all types of intellectual property in general terms). See also J Drexl, above n 124, marginal nos 7 and 8. 179   BGH, 15 January 1957, I ZR 39/55, BGHZ 23, 100 – Taeschner (trade mark case); BGH, 3 March 2004, 2 StR 109/03, BGHSt 49, 93 – Tonträgerpiraterie durch CD-Export (criminal copyright case).

610  Axel Metzger

Case 6(2) The lex loci protectionis principle bars any extraterritorial application of foreign patent law for activities conducted in Germany. As a consequence, a German court would not engage in enforcing foreign patent legislation that provides for its extraterritorial application. Therefore, if A would bring suit before a German court pleading for infringement of his patents issued for X, a German court would only consider activities conducted in X irrespective of whether the Patent Act of X prohibits activities in foreign countries or not.180

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B, and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website becomes very popular, A, B, and C introduced an additional paid service which allows the speedy exchange of big capacity digital files. Although A, B, and C know that some files that are stored in the server of their website are illegal, they do not take any action to somehow prevent infringement of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C, requesting they be made to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places / countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Case 7(1) and 7(3) According to Article 8(1) of the Rome II Regulation, the law applicable to infringement and remedies would be the law of the country for which protection is claimed. In case of a multistate infringement, the result would be that the laws of all the states would be applicable for which the plaintiff seeks protection (so called ‘mosaic approach’). Article 8(1) of the Rome II Regulation does not provide for any deviations from this approach for multi-state or ubiquitous infringement cases, even if the defendant’s activity may infringe the plaintiff ’s copyrights in 200 or even more jurisdictions. Such a literal application of the ‘mosaic approach’ is burdensome and may produce high litigation costs in Internet cases. However, it should suffice in practice to ask for damages or injunctions for the most important markets to force the infringer to shut down its service. One may nevertheless ask whether Article 8(1) of the Rome II Regulation was meant to be an exhaustive answer for copyright infringements on the Internet or whether one of the proposals drafted by legal scholarship for the consolidation of such cases under one single law should apply praeter legem.181 But   See J Drexl, above n 124, marginal no 176.   For the different approaches, see above n 135.

180 181

Germany  611 German courts have not yet ventured to depart from the territorial approach in Internet cases. Hence, at least for the moment, the plaintiff would have to plead the law for each country for which protection is sought. A choice of law would not be allowed according to Article 8(3) and Article 14 of the Rome II Regulation.

Case 7(2) Regarding secondary liability of Internet service providers, Article 15 lit g) of the Rome II Regulation is decisive. According to this provision, the law applicable to the infringement under Article 8(1) of the Rome II Regulation, ie the lex loci protectionis, is also applicable to the issue of ‘liability for the acts of another person’. As a consequence, the liability of the Internet service provider would follow the principles explained in questions 1 and 3.182

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country? (2)  Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in the case of initial authorship or initial title to trade mark?

Case 8(1) For inventions made in the course of an employment relationship, two aspects have to be distinguished. The first question of who is regarded as an inventor is governed by the lex loci protectionis. The determination of the person to be stated as the inventor in the patent registry would be governed by German law for a patent issued for Germany; for a European patent, Article 62 European Patent Convention provides an autonomous right of the inventor to be mentioned as such before the European Patent Office. The second question of who has a right to claim the patent at the patent office would be governed by different choice of law rules. In the case of an application under the European Patent Convention, according to Article 60(1) sentence 2, the right to a European patent would be determined in accordance with the law of the state in which the employee is mainly employed or, subsidiary, if the state in which the employee is mainly employed cannot be determined, the law the state in which the employer has the place of business to which the employee is attached. According to the predominant theory, parties would not be free to choose the applicable law.183 By contrast, for a German patent application, the right 182   In this sense see Leistner, above n 130, 104; see also with further references M Leistner and G Spindler, ‘Secondary Copyright Infringement – New Perspectives in Germany and Europe’ (2006) International Review of Intellectual Property and Competition Law 788, 816. 183   See above n 122.

612  Axel Metzger to claim the patent in the case of an employee’s invention would be characterised as a question of the employment contract. As a consequence, freedom of choice under Article 3 of the Rome I Regulation would be allowed. However, according to Article 8(1) and (2) of the Rome I Regulation, this choice would not have the result of depriving the employee of the protection afforded to him by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. Therefore, the choice of A and B would be enforced. However, if A has conducted his research in laboratories situated in Germany, the provisions of the German Employee’s Inventions Act would apply.184

Case 8(2) The principles described in Case 8(1) apply mutatis mutandis for an invention made in joint collaboration of a group of employed researchers. If the researchers are not employed, the right to the patent may be subject to contractual agreements governed by the rules of Articles 3 and 4 of the Rome I Regulation.185

Case 8(3) For the initial title to a trade mark, no specific statutory conflict of law rule or reported case law exists. Therefore, it is likely that German courts would apply the lex loci protectionis for the questions of who is proprietor of a trade mark, who is entitled to register a trade mark and who may claim an unregistered trade mark.186

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B made some arrangements for the distribution of the debut album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work was not transferred and was thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How would the court deal with the issue of transferability? (3) What would be the applicable law in a case where there is no choice of law made by the parties?

Case 9(1) and 9(3) In Germany, it is controversial whether (the modus operandi of) the transfer of the copyright in a work or of single economic and moral rights claims should be characterised as a contractual issue and therefore fall under the liberal regime of the Rome I Regulation or 184   See R Kraßer, Patentrecht, 6th edn (Munich, Beck, 2009) 394–95, with further references. See also BGH, 27 November 1975, X ZB 24/73, BGHZ 65, 347, 353 – Rosenmutation (rules on employee’s inventions governed by the law governing the employment relationship). 185   Melullis, above n 122, marginal no 20. 186   See Drexl, above n 124, marginal no 129; Fezer, above n 111, marginal no 17.

Germany  613 whether the transfer should be characterised as an issue of copyright law governed by the lex loci protectionis. German courts tend to support the first approach – at least in copyright cases.187 Under this approach, parties are free to choose the law applicable to the contract and to the transfer according to Article 3 of the Rome I Regulation. In the absence of a choice, the applicable law has to be determined according to Article 4 of the Rome I Regulation. Under Article 4, the determination of the applicable law depends upon the details of the contractual relationship.188

Case 9(2) The issue of transferability of the copyright in a work or of single economic or moral right has to be characterised as a question of copyright governed by the lex loci protectionis and not as contractual questions governed by the provisions of the Rome I Regulation.189 If A sues B for an infringement of moral rights in Germany, the question of whether the right of integrity can be waived or transferred would be governed by German law.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking it to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in a registry of a recognising country? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Case 10(1) Regarding the recognition and enforcement of foreign judgments, it has to be distinguished whether the decision has been rendered by a court of a Member State of the Brussels I/ Lugano system or whether it is a decision of a court of a third country. Under the Brussels I/Lugano system, the recognition and enforcement of a decision handed down by the courts of another Member State may not be denied because of insufficient jurisdiction of the rendering court. Only in exceptional circumstances, especially if the rendering court has ignored the exclusive jurisdiction of another court, recognition and enforcement may be declined according to Article 35(1) and Article 22 of the Brussels I Regulation (Art 28(1) and Art 16 of the Lugano Convention, Art 35(1) and Art 22 of the 187   OLG Frankfurt, 3 December 1996, 11 U 58/94 (1998) Gewerblicher Rechtsschutz und Urheberrecht 141 – Mackintosh-Entwürfe; OLG München, 10 December 2002 (2003) Zeitschrift für Urheber- und Medienrecht 141, 143 – Spielbankaffaire II. But see BGH, 2 May 2002, I ZR 300/99 (2002) Gewerblicher Rechtsschutz und Urheberrecht 972 – FROMMIA (lex loci protectionis; trade mark case). See also the further references above in n 139. 188   For the application of Art 4 to licence contracts, see above n 141. 189   See BGH, 15 October 1987, I ZR 96/85, (1988) Gewerblicher Rechtsschutz und Urheberrecht 296, 298 – GEMA-Vermutung IV; BGH, 2 October 1997, I ZR 88/95, BGHZ 136, 380 – Spielbankaffaire. But see Schack, above n 115, 469 (lex originis).

614  Axel Metzger revised Lugano Convention). According to the ECJ’s ruling in Duijnstee v Goderbauer exclusive jurisdiction under Article 22(4) of the Brussels I Regulation does not encompass proceedings involving the (initial) ownership of patents or other registered rights.190 Therefore, the decision of a Brussels I/Lugano court concerning the ownership of a patent issued for Germany would be recognised and enforced in Germany ‘without any special procedure being required’ (see Art 33(1) of the Brussels I Regulation, Art 26(1) of the Lugano Convention, Art 33(1) of the revised Lugano Convention).191 Recognition and enforcement of a decision not rendered by a Brussels I/Lugano court according to the autonomous German rules of international civil procedure requires – among other prerequisites – a review of the jurisdiction of the rendering court, section 328(1) no 1 German Code of Civil Procedure. Recognition of the judgment rendered by the court of country X could not be denied because of insufficient jurisdiction of the rendering court under Article 22(4) of the Brussels I Regulation. However, a conclusive answer to the question of whether the decision could be recognised or not would require additional analysis of the facts, eg to the basis of jurisdiction of the rendering court, the question of reciprocity of recognition of decisions by the two countries (section 328(1) no 5), etc.

Case 10(2) and 10(3) Article 33(1) of the Brussels I Regulation (Art 26(1) of the Lugano Convention, Art 33(1) of the revised Lugano Convention) and the German autonomous principles of international civil procedure (section 328 of the German Civil Code of Procedure) do not require a formal decision by a German court or other authority for a foreign judgment to be recognised.192 However, for the enforcement of a foreign decision, Article 38(1) of the Brussels I Regulation (Art 31(1) of the Lugano Convention, Art 38(1) of the revised Lugano Convention) and section 722 of the German Civil Code of Procedure require a declaration of enforceability by court decision (exequatur). The registration of A as the owner of the patent would be governed by German law as the law of the country of registration. Under section 30(3) sentence 1 of the German Patent Act, the office would register any change in the name of the patent owner if the ownership has been proven by sufficient evidence. According to the practice of the German Patent and Trade Mark Office, only evidence by documents may be submitted.193 Court decisions may only be used if enforceable.194 Documents in foreign language need to be translated.195 As a consequence, a foreign court decision declared enforceable under section 722 German Civil Code of Procedure and translated into German would suffice to oblige the office to change the name of the patent owner.   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663.  See also PA de Miguel Asensio, ‘Recognition and Enforcement of Judgments in Intellectual Property Litigation: The CLIP Principles’ in J Basedow, T Kono and A Metzger (eds), Intellectual Property in the Global Arena – Jurisdiction, Applicable Law, and the Recognition of Judgments in Europe, Japan and the US (Tübingen, Mohr Siebeck, 2010) n 121. 192   See P Gottwald, Comments on s 328, in Münchener Kommentar zur ZPO, vol 1, 3rd edn (Munich, Beck, 2008) marginal no 7; see also marginal nos 10–11 for the exceptional cases in which a formal procedure is required, eg a divorce decision. 193   See A Schäfers, Comments on s 30 PatG, in G Benkard (ed), Patentgesetz, 10th edn (Munich, Beck, 2006) marginal no 13a. 194   Schäfers, ibid, marginal no 13c. 195  ibid. 190 191

Germany  615

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

Case 11(1) The answer has to distinguish between provisional measures granted against a defendant domiciled in another EU/Lugano Member State and against a defendant domiciled in a third state. In the context of the Brussels I/Lugano regime, provisional measures may either be granted by the courts competent as to the substance of the case (Arts 2–24 of the Brussels I Regulation, below a) or by the courts competent according to the forum’s autonomous rules of international civil procedure (Art 31 of the Brussels I Regulation, below b). However, jurisdiction in the latter (Art 31) case requires not only that the conditions of the relevant national provisions for provisional measures (in Germany sections 919 and 937 of the German Code of Civil Procedure) be fulfilled, but also that a ‘real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought’ exists. Outside the scope of the Brussels/Lugano regime (ie if measures against defendants against an non-EU/ Lugano country are concerned), jurisdiction for provisional measures is governed by sections 919 and 937 of the German Code of Civil Procedure. a. As far as the European regime of Brussels I/Lugano applies, it is – although only indirectly stated in Article 31 of the Brussels I Regulation (Art 24 of the Lugano Convention, Art 31 of the revised Lugano Convention) – uncontroversial that courts having jurisdiction as to the substance of a case under the Brussels I/Lugano system also have jurisdiction to order provisional or protective measures.196 The extent of jurisdiction would be territorially unrestricted if B is domiciled in Germany as the forum state.197 If another ground of jurisdiction forms the basis for the interim measures (eg jurisdiction at the forum delicti), the extent of jurisdiction corresponds with the extent of jurisdiction for the main proceedings.   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091.   Heinze, above n 92, 210–12.

196 197

616  Axel Metzger b. If German courts did not have jurisdiction over the main proceedings under the Brussels I/Lugano system, the availability of provisional measures would depend, according to Article 31 of the Brussels I Regulation (Art 24 of the Lugano Convention, Art 31 of the revised Lugano Convention), on the forum’s autonomous rules of international civil procedure (which are directly applicable in all actions against defendants from third states). However, to prevent an erosion of the system of jurisdiction erected by the Brussels I Regulation, the ECJ requires ‘the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought.’198 Under the German Code of Civil Procedure, jurisdiction for provisional measures would be determined according to sections 919 and 937, which allow, inter alia, a court to order precautionary seizure of assets if the assets are located in its district or if the court has jurisdiction for the main proceedings. According to the majority opinion, the reference to jurisdiction for the main proceedings in sections 919 and 937 of the German Code of Civil Procedure is understood to mean the German autonomous rules of international jurisdiction, not the rules of the Brussels Regulation or the Lugano Convention.199

Case 11(2) The registration of a trade mark abroad would not prevent the jurisdiction of German courts according to the principles described in question 1. If the defendant would be domiciled in Germany, German courts would have territorially unlimited jurisdiction to order preliminary measures.

Case 11(3) The court may require a guarantee for the issuance of preliminary measures according to section 921 German Civil Code of Procedure.200 In addition, the person who has been granted a preliminary measure is strictly liable for damages arising from preliminary measures which have been issued without justification or are revoked later, see section 945 of the German Code of Civil Procedure.

Case 11(4) A German court would not be pre-empted from issuing preliminary measures if the parties had submitted the dispute to arbitration proceedings, see section 1033 of the German Code of Civil Procedure. The authority of state courts to order preliminary measure covers also preliminary injunctions.201 The order of injunctive relief in main proceedings would be pre-empted by the arbitration proceedings, see section 1026 of the German Code of Civil Procedure. 198   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091. 199  See OLG Düsseldorf, 28 January 1999, 5 U 128/98 (1999) Recht der Internationalen Wirtschaft 873; J Kropholler, above n 79), marginal no 17. If the court has jurisdiction for the main proceedings under the Brussels or Lugano regime, it will normally also have jurisdiction to grant provisional measures as a result of what has been said under a. above, with no need to resort to jurisdiction under Art 31 in connection with the national rules. 200   For the details see I Drescher, Comments on s 921 ZPO, in Münchener Kommentar zur ZPO, vol 2, 3rd edn (Munich, Beck, 2008) marginal nos 2–7. 201   See J Münch, Comments on s 1033 ZPO, in Münchener Kommentar zur ZPO, vol 2, 3rd edn (Munich, Beck, 2008), marginal number 6.

Germany  617

Case 11(5) An injunction to cease infringing activities is characterised as a measure of substantive law in German law of intellectual property.202

  See Schack, above n 115, 367–68 for copyright.

202

Greece ANASTASIA GRAMMATICAKI-ALEXIOU and TATIANA SYNODINOU

Contents 1. General Overview........................................................................................................................... 619 2. Hypothetical Case Studies.............................................................................................................. 622 Case 1. General/Special Grounds of Jurisdiction..................................................................... 622 Case 2. Subject-Matter Jurisdiction.......................................................................................... 623 Case 3. Consolidation of Proceedings....................................................................................... 625 Case 4. Choice of Court............................................................................................................. 626 Case 5. Parallel Proceedings....................................................................................................... 627 Case 6. Principle of Territoriality.............................................................................................. 628 Case 7. Infringement of Intellectual Property Rights............................................................... 628 Case 8. Applicable Law to Initial Ownership............................................................................ 630 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 632 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 633 Case 11. Provisional Measures and Injunctions......................................................................... 634 Case 12. Securities in Intellectual Property................................................................................ 636

1  General Overview Greece has ratified almost all international conventions concerning copyright and related rights: the Berne Convention,1 the Rome Convention that protects performers, producers of phonograms and broadcasters,2 the TRIPS Agreement,3 the Geneva Copyright Treaty,4 the WIPO Performances and Phonograms Treaty,5 and the Brussels Convention of 1974 relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite.6 Besides these conventions which have worldwide scope, Greece has ratified a number of conventions created by the Council of Europe for its members: the 1974 European Agreement concerning Programme Exchanges by means of Television Films,7 the 1960 European   Paris Act, L 3057/2002.   L 2054/1992.   L 2290/1995. 4   L Decree 4254/1962. 5   L 3183/2003. 6   L 1944/1991. 7   L 4216/1961. 1 2 3

620  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou Agreement on the Protection of Television Broadcasts,8 and the 1965 European Agreement for the Prevention of Broadcasts Transmitted from Stations Outside National Territories.9 Certain difficulties accompany the coexistence of EU law, especially its principle of free movement of goods and services, and the differing national rules. To combat this problem the EU has produced several directives aiming at the harmonisation of the rules on intellectual property among the Member States. Most laws on intellectual property in Greece implement EU Directives. The main statute dealing with intellectual property is L 2121/199310 and Article 8 L 2557/97 harmonising Greek legislation with European Community Directives 93/85 and 93/98. It provides for the author’s right of copyright (both the moral and economic right). These are exclusive and absolute rights, including the right to permit or prohibit a) the fixation and direct or indirect, temporary or permanent reproduction of the work, in whole or in part in any form or by any means, b) the translation of the work, c) the arrangement, adaptation and alteration of the work, d) the distribution of the original work or its copies, e) its rental or public lending, f) its public performance, g) its broadcasting or re-broadcasting to the public by radio or TV, by wireless means, cable, any kind of wire or any other means or by satellite, h) its communication to the public by any means and, i) the import of its copies produced without the consent of its creator or the import of copies from a country outside the Community, when the right over such imports has been retained by the author through contract. As for economic rights, they may be transferred inter vivos or mortis causae. Article 7 of L 2819/2000 harmonises Greek law with Directive 96/9 on the legal protection of databases. Article 14 of L 3049/2002 amends Article 18 of the basic law 2121/1993 as regards reasonable payment for reproduction for private use. Article 81 L 3057/2002 harmonises Greek law with Directive 2001/29 as regards the protection of the author and certain neighboring rights in the information society. It should be mentioned here that Greece was the first European Community member to complete the harmonisation process within the deadline provided (22 December 2002) and for that reason it received the Cyber Champion Award in 2002. To the above-mentioned laws one must add Article 10(33) of L 3207/2003 on issues of reasonable payment for private reproduction,11 L 3524/2007 which harmonises Greek law with Directive 2001/84 on the ‘droit de suite’ and with Directive 2004/48 on the enforcement of intellectual property rights. There are also three ministerial decisions on intellectual property issues. Article 2 of L 2121 offers an indicative enumeration of intellectual creations that are considered ‘works’, which may be the basis of the author’s rights. Thus the term ‘work’ indicates any original intellectual, literary, artistic or scientific creation expressed in any form (texts, musical compositions, dramatic works, choreographies, pantomimes, audiovisual works, artworks, architectural works, works of applied art, illustrations, maps, etc. ‘Works’ are also translations, adaptations and the like. Special reference is made to computer programs, databases, multimedia, creative commons licenses, which are protected as literary works. Ideas and principles underlying a computer program are not protected under the above-mentioned law. 8   L 4414/1964 as amended by four Protocols in 1965 (the only one ratified by Greece by L Decree 4565/1966), 1974, 1983 and 1989. 9   L 896/1979. 10   As amended by Art 4 L 2173/1993, Art 59 L 2218/1994, Art 3 L 2435/1996. 11   Art 18 L 2121/93.

Greece  621 Intellectual property includes two individual, exclusive and absolute rights: moral and economic. The moral right is of a personal character protecting the personal link between the author and his work. The economic right is capable of exploitation. Copyright is enforceable against any third party and allows actions for any infringements. Moral rights are not transferable, but economic rights can be transferred, according to certain rules that are intended to protect the author from the economically more powerful counterparty. Protection of the moral rights includes the right of paternity to the work, the right of divulgence, the right of integrity, the right of access and the right of rescission. Protection of the economic rights includes the right of fixation and reproduction, the right of translation, the right of adaptation, arrangement or alteration, the right of distribution the right of rental or public lending, the right of public performance, and broadcasting rights. There are no specialised courts or agencies for intellectual property disputes. However, L 2479/1997 provides for special chambers, comprising judges specialising in private international law issues, to be established in the First Instance Courts of Athens, Piraeus and Thessaloniki and in the Athens Court of Appeals. Arbitration is a solution as well. International jurisdiction in intellectual property cases is regulated either by domestic provisions of the Greek Code of Civil Procedure or, for cases falling within the scope of European Community legislation, by Regulation 44/2001 on jurisdiction and enforcement of judgments in civil and commercial matters. Also, there is the Lugano Convention, ratified by L 2460/1997, concerning jurisdiction and enforcement between the European Union countries and the EFTA countries. According to Article 3 of the Code of Civil Procedure, which departs totally from the criterion of nationality, Greek civil courts have international jurisdiction for Greeks and foreigners alike, insofar as territorial competence of a Greek court exists. Prorogation of the international jurisdiction of Greek courts is possible, since prorogation of territorial competence12 is regarded as also offering the rules for the prorogation in international jurisdiction. Pursuant to Article 22 of the Code, unless otherwise provided, general territorial competence is based on the domicile of the defendant. Concurrent with the general territorial competence is the court of the district where a juridical act has been drawn or the court of the place where a tort has been committed. Regulation (EC) 44/2001 in Article 2 adopts a similar approach, whereby persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. Persons who are not nationals of the Member State in which they are domiciled are governed by the rules of jurisdiction applicable to nationals of that state. If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23, be determined by the law of that Member State. A person domiciled in a Member State may be sued in another Member State, in matters relating to a contract, in the courts of the place of performance of the obligation in question; in matters relating to tort, delict or quasi-delict, in the courts of the place where the harmful event occurred or may occur. These rules apply in case of contracts, or torts related to intellectual property disputes. In proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or   Arts 42–44 of the Code of Civil Procedure.

12

622  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou is under the terms of a Community instrument or an international convention deemed to have taken place, have exclusive jurisdiction, regardless of domicile. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that state.

2  Hypothetical Case Studies Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in a neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

Case 1(1) According to Article 2(1) of Regulation 44/2001, Greek courts would have international jurisdiction if the defendant B were domiciled in Greece. If the defendant were a corporation having a branch in Greece, Greek courts would also have international jurisdiction, according to Article 5(5) of Regulation 44/2001, should the dispute have arisen out of the operations of that branch. In a preliminary ruling13 the ECJ has stated that the concept of ‘operations’ comprises ‘actions concerning non-contractual obligations arising from the activities in which the branch has been engaged at the place in which it is established, on behalf of the parent body’. Case 1(2) The issue involves the application of Article 5(3) of Regulation 44/2001, which provides that a person domiciled in a Member State may be sued in another Member State in matters relating to a tort, delict or quasi-delict, if that state is the place where the harmful event   Case 33/78 Somafer SA v Saar-Ferngas AG [1978] ECR 2183.

13

Greece  623 occurred or may occur. So the answer depends on the interpretation of the term ‘place where the harmful event occurred’. If the distribution of the journal took place in Greece, then Greek courts would certainly have jurisdiction. If the copies were printed in Greece and distributed in another Member State, where the victim suffered injury to his reputation, again Greek courts would have international jurisdiction.14 Case 1(3) If all countries where the journal was published were EU Member States, Greek courts would have international jurisdiction over A’s claim for the overall damage sustained in all those countries.15 If EU rules do not apply, Greek rules of Civil Procedure come into play. In case of a joinder of more co-defendants, if one of them is domiciled or resides in Greece, Greek courts have jurisdiction.16

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counterclaim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Case 2(1) If the defendant was domiciled in Greece or if the infringement took place in Greece, Greek courts would have jurisdiction. However, according to Article 6(3) of Regulation 44/2001, Greek courts, before which the original claim is pending, would have international jurisdiction in the case of a counterclaim arising from the same contract or facts on which the original claim is based. Case 2(2) The court would not, according to Article 22(4) of Regulation 44/2001, have international jurisdiction to decide upon issues of validity and registration of foreign intellectual property rights. Article 22(4) states: In proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place.   See Case C-68/93 Fiona Shevill et al v Presse Alliance [1995] ECR I-415.   See ibid.  Art 37(1) Code of Civil Procedure.

14 15 16

624  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that state. Additionally, Article 25 of the same Regulation provides that where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction. The decision would differ with regard to nonregistered intellectual property rights, such as copyright works, where no registration is required for awarding protection. In such instances Article 22 is inapplicable and the general provisions of Articles 2 and 5(3) of the Regulation or Article 3 of the Greek Code of Civil Procedure apply, if the case falls outside the scope of the Regulation. According to prevailing doctrinal opinion,17 the judgment on the validity of a patent is declaratory and, consequently, according to Articles 324–25 of the Greek Code of Civil Procedure, has legal effects only inter partes. Nevertheless one can discern a tendency in Greek legal doctrine towards the recognition of an erga omnes effect of the decision about the validity of a patent. The main argument of those supporting this view is based on the understanding that the attribution of a patent is an act of administrative nature that grants private rights, provided that specific substantive conditions are met. If a court rules that the patent is invalid, its erga omnes validity is also overturned. The judgment declaring the patent invalid abolishes the presumption of validity of the patent. Even if the decision does not produce a res judicata erga omnes effect, it is not possible to file a new action against the validity of the same patent, provided that due to the previous decision that declares the invalidity of the patent there is no patent covered by the presumption of validity erga omnes any more. However, if the argument on the invalidity of the patent is rejected, the decision does not have legal effects erga omnes on the basis of Articles 324–25 of the Greek Code of Civil Procedure. Case 2(3) Probably, Greek courts would not be competent to examine as a preliminary question the issue of the validity of the foreign patent on the basis of ECJ Case C-4/03.18 In that case, the Düsseldorf Court of Appeal in Germany had referred to the ECJ the question whether the exclusive jurisdiction established by Article 16(4) of the Brussels Convention applies only to complaints, which are designed to invalidate the patent, or if it also comprises proceedings where invalidity is only a preliminary question for the court to come to a decision on the merits. The ECJ recognised to a broad extent the exclusive jurisdiction over patents and ruled that Article 16(4) of the Brussels Convention is to be interpreted as meaning that the rule of exclusive jurisdiction laid down therein concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection.

  Supported by the judgment of the three-member First Instance Court of Athens 5841/1995.   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 17 18

Greece  625

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y, and Z. B, C and D are competitors of A and are located in countries X, Y, and Z respectively. A finds that B, C and D infringe its patents in countries X, Y, and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y, and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C, and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C, and D on the ground of the infringement of a contract? (2) Assuming that B, C, and D are members of a group of a corporation and takes identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country would (and if so, under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C, and D raised counterclaims that A’s patents are invalid?

Case 3(1) Patent infringement took place in countries X, Y and Z, and not in country W (Greece). General rules will apply. The courts of the former three countries have jurisdiction because the wrongful acts (infringement) took place there, and because B, C and D are located in those countries. Country W (Greece) does not have jurisdiction to joint claims against the defendant. If A were a licensor, Greek courts would probably have jurisdiction on the basis of Article 5(1) of the Brussels Convention that states: ‘A person domiciled in a Contracting State may, in another Contracting State, be sued (1) in matters relating to a contract, in the courts of the place of performance of the obligation in question.’ Similarly, EC Regulation 44/2001 Article 5(1) (a) states: ‘A person domiciled in a Member State may, in another Member State, be sued: 1. (a) In matters relating to a contract, in the courts of the place of performance of the obligation in question’. According to that rule, the courts of the place where the main obligation is to be performed (ie the payment of the fee by the licensee to the licensor), in other words the courts in Greece, provided that there is no specific agreement of the parties that establishes another place as the place where the payment of the fee must be effected. Case 3(2) Article 6(1) of Regulation 44 states: ‘A person domiciled in a Member State may also be sued: 1. where he is one of a number of defendants, in the courts of the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.’ On the basis of this, there would probably exist a possibility for A to consolidate the proceedings before a court of country X where the coordinator of the infringing activities has its main place of business (Greece). However, it should also be taken into consideration that after the decision of the European Court of Justice in Roche Nederland 19 there is little place for consolidation of claims under Article 6(1) of Regulation   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535.

19

626  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou 44/2001. Here the ECJ stated that the provisions of EU law concerning jurisdiction do not allow the inclusion of multiple companies for the infringement of various national parts of a European patent in one lawsuit before the courts of one Member State, even if they have acted on the same business policy in an identical or similar way. The reasoning of the ECJ again emphasised that the acts committed in various countries by several defendants concern separate patents and, therefore, are not the same and cannot form the basis for a common decision of only one court. If B, C, and D raised counterclaims that A’s patents are invalid, the decision would change. The cases should split and be judged separately in X, W, Y and Z because for every patent there exists exclusive jurisdiction of the courts of the country of registration.20

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice-of-forum clause, arguing that the issue is related to foreign patents and thus the asserted choice-of-court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1) Would such a choice-of-court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that the patents are invalid? (3) Would the court assert jurisdiction if the choice-of-court agreement was made in patent infringement proceedings? (4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

Case 4(1) The answer would be positive on the basis of Article 23 of Regulation 44/2001, if A or B was domiciled in a Member State and the agreement states that a court or the courts of a Member State are to have jurisdiction. If such an agreement was made by parties, none of whom is domiciled in a Member State, the courts of other Member States would have no jurisdiction over the disputes, unless the court or the courts chosen had declined jurisdiction.21

20   Art 22(4) of Reg 44/2001 and Case C-4/03 GAT v LuK [2006] ECR I-6509: the exclusive jurisdiction applies in all proceedings where the validity of the patent is decisive, irrespective of whether this is raised by way of an action or a plea in objection. Art 3 of Reg 44/2001. 21   Art 23(3) of Reg 44/2001.

Greece  627 Case 4(2) No, because it is not possible to enforce a choice of court clause for matters where exclusive jurisdiction exists, as is the case of patent validity issues.22 Case 4(3) Yes, according to Article 23 of Regulation 44, if, for example, infringement proceedings follow a breach of contract, provided that the agreement is in writing or evidenced in writing, and in a form which accords with the provisions of paragraphs 1 b and c, and 2 of Article 23. Case 4(4) Greece has adopted the UNCITRAL Model Law on International Commercial Arbitration by L 2735/1999. Assuming that the arbitration in question falls within the scope of that law (Art 1 of the above-mentioned law), the arbitration agreement would be enforceable, if it conforms to the requirements of Article 7 of the law and is made according to the law governing it (Art 34 II a aa provides that the agreement is governed by the law to which the parties have subjected it and, if such a choice does not exist, by Greek law). The arbitral tribunal can decide on the validity of intellectual property rights and the decision will be enforceable.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B who is located in country Z produces the identical product to that for which A has patents, and exports that infringing product to countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Case 5(1) B has launched negative declaratory actions in countries X and Y before A brings a suit in country Z (Greece, place of where the harmful event occurred and location of the defendant). Assuming that Regulation 44 applies, Greek courts should stay the proceedings, according to Article 27(1), until the jurisdiction of the court first seised is established.23 However, if it were a torpedo case, the court would ignore the action of B right from the beginning, on the grounds that the exercise of the action is a misuse of procedural rights. There is no exclusive jurisdiction of countries X and Y because the action of B does not   Arts 22 and 23 of Reg 44/2001.   Case C-116/02 Erich Gasser GmbH v MISAT Srl, [2003] ECR I-14693.

22 23

628  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou concern the registration or the validity of the patents. If the dispute was related to intellectual property rights that are not subject to registration, the decision would not be different. Nevertheless, if the infringement case also raised the invalidity argument, the court of Z would have to declare that it has no jurisdiction.24 Case 5(2) Exclusive jurisdiction over issues about the validity of the two patents in countries X and Y belongs to the courts of those countries (countries of the patents’ registration). If B brought a suit before the courts of country X or Y or both, the courts in country Z would have to declare of their own motion that they have no jurisdiction. If B brought an action before the courts of country W, Greek courts (country Z) would a) declare that they have no jurisdiction because the issue of the validity of the patents has been previously brought before another country’s courts or, b) stay the proceedings and wait till the courts of country W declare that they do not have jurisdiction.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, firstly, that the claim for the infringement of the patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Case 6(1) Greek patent law does not contain specific provisions on the extraterritorial effect of patent protection. There is no published case so far. Therefore, the answer is no, on the basis of the territoriality principle. Case 6(2) According to the principle of lex loci protectionis the answer is negative.

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B, and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website becomes very popular A, B, and C introduced an additional paid service which allows   Art 25 of Reg 44.

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Greece  629 the speedy exchange of big capacity digital files. Although A, B, and C know that some files that are stored in the server of their website are illegal, they do not take any action to somehow prevent infringement of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C, requesting they be made to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places / countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Case 7(1) Here it is important to cite Article 67 of the Greek Copyright Law 2121/1993: Article 67: Applicable law: 1. The law of the State where the work is first made lawfully accessible to the public governs copyright in a published work. The law of the State whose national is the author shall govern copyright of an unpublished work. 2. Related rights shall be governed by the legislation of the State in which the performance is realised or in which the sound or visual or the sound and visual recording is produced, or in which the radio or television broadcast is transmitted or in which the printed publication is effected. 3. In all cases the determination of the subject, object, content, duration and limitations of the right shall be governed by the law applicable pursuant to paragraphs 1 and 2 above, with the exception of any exploitation arrangement. The protection of a right shall be subject to the law of the State where the protection is sought. 4. Paragraphs 1, 2 and 3 above shall apply except where they run contrary to any international convention ratified by Greece. In the case of States not conjoint with Greece through the ratification of an international convention, paragraphs 1, 2, and 3 above shall be applicable as regards the protection of copyright or of any particular object of copyright or of any particular related right, provided that the law of the relevant State offers adequate protection to works first made accessible to the public in Greece and to related rights stemming from acts effected in Greece.

On the basis of Article 67(4) L 2121/1993, paragraphs 1, 2, and 3 of the same article apply only if they are not contrary to any international convention ratified by Greece that indicates the applicable law, such as the Berne Convention, which prevails. Consequently, the said provisions apply only in matters not covered by the Berne Convention. In copyright infringement, if there is no contractual relationship between parties, the issue is characterised as tort. The law applicable for such torts after 11 January 2009 is indicated by Regulation 864/2007 (Rome II) and is the law of the country for which protection is claimed.25 Recital 26 of the Regulation states that regarding infringements of intellectual   Art 8(1).

25

630  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou property rights (meaning for instance copyright, related rights, the sui generis right for the protection of databases, and industrial property rights) the universally acknowledged principle of lex loci protectionis should be preserved. For torts that happened before the coming into force of the Regulation, the Berne Convention and Article 67 (above) apply. Both adopt the connecting factor of the locus protectionis. Under the Rome II Regulation26 choice of law agreements are not allowed. Case 7(2) Greek copyright law does not know the concepts of direct and indirect or secondary copyright. Internet service providers that simply provide Internet access are exempted from liability under certain conditions on the grounds of the provisions of Article 12 of the E-Commerce Directive.27 According to Article 64a right-holders may apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or a related right. If it was accepted that claims for damages could be brought against internet access providers due to the violation of conditions set by Articles 12 of the E-Commence Directive and 11 of Presidential Decree 131/2003, the choice of law question would receive the same answer and the lex loci protectionis would apply. The parties again could not agree on the applicable law. Case 7(3) This question has not been treated by doctrine or case law in Greece so far.

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country? (2) Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in the case of initial authorship or initial title to trade mark?

Case 8(1) Since a licence involves the disposal of an IP right, we assume that A was granted patent rights over the inventions of B. The country where the infringement took place is the country where B has registered the patents (presumably Greece). Registered IP rights, such as patents, (industrial) designs and registered trade marks owe their existence to their registration in a state register. Consequently, registered IP rights are invariably governed by the law of the protecting country. In Greece the issue whether a person is the initial owner of a   Art 8(3).   Implemented in Greece by Art 11 of Pres Decree 131/2003.

26 27

Greece  631 patent is governed by the lex loci protectionis. The law of the protecting country is the law where the infringement took place, and in the case in question it is the law of the country where the patent was granted. Assuming that this country is Greece, the applicable law is Greek law. As regards European patents, the European Patent Convention28 provides that the law of the state in which the employee is mainly employed governs the initial ownership of a right to a European patent. If that state cannot be determined, the law applicable shall be the law of the state where the employer has his place of business to which the employee is attached. In the present case this would probably be Greece, where the laboratory is located. Concerning non-European patents, the answer to the second question depends on the scope of the applicable law according to Rome I Regulation, which allows the parties to an employment contract to choose the applicable law, provided that their choice does not deprive the employee of the protection afforded by the mandatory provisions of the law in the State where the employee habitually carries out his work.29 Moreover, Article 6(2) indicates the law applicable in the absence of choice. In our case there is no agreement on the law applicable in the employment contract between A and B and, assuming that the laboratory of B is in Greece and A habitually carries out his work in Greece, the employment contract is governed by Greek law. Nevertheless, it is doubtful whether the Rome I rules could be applied to the question of the law applicable as regards initial ownership related to an employment contract. According to the wording of Article 12 of Rome I, initially the law governing the employment does not cover ownership over a patent contract. On the other hand Article 12 is only indicative (‘in particular’) and one might consider initial ownership over inventions made under the terms of an employment contract an issue closely connected with the execution of the employee’s obligations stemming from the contract. If that is so, the applicable law could be the law governing the employment contract. Therefore, there may be two possible interpretations: the first one is to consider the initial ownership issue so inextricably linked to the employment contract that any clause concerning the applicable law to the initial authorship should be governed by the law governing that contract, on condition that it would not restrict the application of mandatory rules of Greek law. According to Article 6(4) of L 1733/1986, an invention made by an employee shall belong to him/her (free invention) unless such invention is either a service invention, in which case it entirely belongs to the employer, or is a dependent invention, in which case 40 per cent of it belongs to the employer and 60 per cent to the employee.

Article 6(6) of the same law provides that: a dependent invention is the invention made by an employee with the use of materials, means or information of the enterprise in which he/she is employed. The employer shall be entitled to exploit the dependent invention by priority against compensation to the inventor, proportionate to the economic value of the invention and the profits it brings. The inventor of the dependent invention shall promptly notify the employer in writing on the accomplishment of the invention and shall provide the necessary data for the filing of a joint patent application. If the employer does not answer in writing within four months from the said notification that he is interested in jointly filing the patent application, the latter will be filed by only the employee and in such a case the application will belong entirely to the employee.

  Art 60.   Art 6(1).

28 29

632  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou Moreover, Article 6(7) of the above-mentioned law clearly states that ‘any agreement that restricts the above-mentioned rights of the employee shall be considered null’. This is a mandatory rule. Therefore, if A and B had agreed on a clause on an applicable law restricting the rights of B, that choice of law could not be enforced in Greece. The second interpretation clearly distinguishes the question of initial ownership from the issue of the law governing the employment contract. If the focus is placed simply on the principle of territoriality, only the law of the country that granted the patent could be applied as regards initial ownership issues (lex loci protectionis). Thus Greek law would apply only if the patent was registered in Greece. In our opinion this interpretation should prevail. Case 8(2) If we apply the rule of the lex loci protectionis the answer to the second question is no. Consequently Greek law applies in that case as well (which is also an initial ownership issue). Case 8(3) The answer is no. A title to a trade mark is also a registered IP right and as such is governed by the law of the protecting country.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B made some arrangements for the distribution of the debut album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work was not transferred and was thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How would the court deal with the issue of transferability?

Case 9(1) The Berne Convention does not apply when one has to indicate the applicable law in the transfer of rights agreements and licences. The law applicable to such agreements is designated by domestic conflicts rules and international conventions ratified by each country. Article 3(1) of the Rome I Regulation allows the choice of the applicable law by the parties. If there is no choice, the court will apply the law of the place where the party required to effect the characteristic performance of the contract has his habitual residence, unless it is clear from all the circumstances of the case that the contract is manifestly more closely connected to another State and its law is applied.30 Greek courts would enforce the choice of law clause regarding the transfer of economic rights. However, as regards the transfer of moral rights, Greek courts would not enforce the choice of law clause, because in Greek   Art 4.

30

Greece  633 copyright legislation moral rights cannot be transferred and this may be regarded as an overriding mandatory provision of the law of the forum. Case 9(2) The issue of transferability of IP rights is not covered by the lex loci contractus. For that issue Greek courts would apply the law of the place of first publication of works for published works, which in the present case, is the law of the country of the release of the album.31 If the country of release is another country whose law permits the transferability of moral rights, that law will not apply due to the public policy reservation32 or the overriding mandatory rules of the forum.33

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking it to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in a registry of a recognising country? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Recognition and enforcement of foreign judgments is regulated by Regulation 44/2001 and, if the latter is not applicable, by Articles 905 and 323 of the Greek Code of Civil Procedure. Case 10(1) According to Regulation 44, a judgment rendered in an EU Member State is recognised in all other Member States without any special proceedings. Recognition is denied if it is manifestly contrary to the public policy of the forum where recognition is sought, in the case of default judgments, the defendant was not properly served, if it is irreconcilable with a judgment given in a dispute between the same parties in the country where recognition is sought, or if it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed. Moreover, a judgment shall not be recognised if it conflicts with sections 3, 4 or 6 of Chapter II, or in a case provided for in Article 72 of the Regulation. In its examination of the grounds of jurisdiction referred to in the foregoing articles, the court or authority applied to shall be bound by the findings of fact on which the court of the Member State of origin based its jurisdiction.   Art 67(1) and (3) of L 2121/1993.   Art 33 of the Civil Code, Art 21 of the Rome I Reg.   Art 9(2) of the Rome I Reg.

31 32 33

634  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou The jurisdiction of the court of the Member State of origin may not be reviewed. The test of public policy referred to in point 1 of Article 34 of the Regulation may not be applied to the rules relating to jurisdiction. Where the Regulation is not applicable, and since simple recognition is a matter of voluntary jurisdiction not applicable in foreign judgments related to patent disputes, Article 905 in combination with Article 323 of the Greek Code of Civil Procedure will apply. According to these provisions and without prejudice to international conventions, the first instance courts in Greece may declare the foreign judgment enforceable as long as it is enforceable in its country of origin and is not contrary to the public policy of the forum. Additionally, it has to constitute res judicata according to the law of the country of issue: the case must, according to Greek law, fall within the jurisdiction of the courts of the country where the judgment was rendered, the losing party must not have been deprived of the right of defence, and the judgment is not contrary to an existing judgment on the same case of a Greek court constituting res judicata. Case 10(2) No, re-litigation is not required. Case 10(3) A decision of a Greek court is required in order to declare the judgment enforceable.

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

Case 11(1) According to Article 27 of L 2239/1994 (trade mark legislation), the court of first instance of the district in which the goods are produced or the services provided, or of the district where the undertaking whose goods or services bear the trademark has its registered office, shall be competent to allow provisional measures. Therefore, the answer to the first ques-

Greece  635 tion is affirmative. Greek doctrine is divided on the issue of extraterritorial effects of provisional measures. According to one opinion, Greek courts do not have jurisdiction to allow provisional measures if their object (eg the infringing goods that are going to be seised), is located outside Greece (no extraterritorial effect). According to another opinion, it is possible to order provisional measures even if their object is located abroad.34 Article 31 of Regulation 44 states that provisional measures as prescribed by the law of a Member State may be asked from the courts of that Member State, even if the courts of another Member State have jurisdiction for hearing the substance of the matter. On the basis of this provision as well as of Articles 16, 25 and 31 of L 1814/1988, a decision of provisional measures issued in Greece may be enforced in another Member State, provided that the decision has taken the form of exequatur (capias of execution) of the state where it is going to be enforced after a petition of the interested party. Therefore, the answer to the first question is negative, unless the various countries where the infringing goods are located are all EU Member States (with the exception of Denmark). It has been decided by the First Instance Court of Athens35 that Greek courts may grant provisional measures in a dispute between foreigners, provided that there is a real need to grant them in order to preserve the rights of the claimant that may be in jeopardy in case of delay, even when Greece has no connection with the case.36 As far as it concerns provisional measures to be enforced in another EU Member State, it has been decided37 that through a combination of Article 26 (law applicable to torts) of the Greek Civil Code and Articles 5(3) (special jurisdiction of the place of the tort) and 24 (provisional measures) of the Brussels Convention on Jurisdiction and Enforcement (predecessor of Regulation 44), provisional measures can be allowed by a Member State, even if it does not have jurisdiction over the main dispute, when that jurisdiction belongs to the courts of another Member State. So, as far as it concerns EU countries, the answer to the first question is positive. Case 11(2) The registration abroad of the trade mark leads to the exclusive jurisdiction of the country where the registration was effected (on the basis of Art 22 Regulation 44). However one should bear in mind what has been already said above in the previous answer. So, as regards EU Member States, the answer is positive. Case 11(3) Yes, by application of Article 694 of the Greek Code of Civil Procedure. Case 11(4) No, according to Article 9 of L 2735/1999,38 it is not incompatible with an arbitration agreement for courts to grant an injunction before or during the arbitration proceedings.

  First Instance Court of Thessaloniki, Cases 833/1983, 18185/1982.   Decision 20375/1993. 36   Decided by application of Art 683(3) of the Greek Code of Civil Procedure. 37   First Instance Court of Thessaloniki 3115/1991. 38   UNCITRAL Model Law. 34 35

636  Anastasia Grammaticaki-Alexiou and Tatiana Synodinou Case 11(5) This is an issue of characterisation of course. In Greek legal tradition, an injunction to cease infringing acts would most probably be characterised as procedural. Article 692 of the Code of Civil Procedure states that provisional measures must not aim at the satisfaction of the right for which they are sought. Directive 2004/48/EU on the enforcement of intellectual property rights in its Article 9, speaking about provisional or precautionary measures and after, listing what form these measures may take, makes a distinction between such measures and a judgment on the merits of the case.39 Even if it was accepted that provisional measures should be considered a substantive measure, still, the satisfaction granted through them would be automatically reversed in case of revocation of the provisional measure after the defendant had won the case on the merits.

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y: (1) Could intellectual property rights be used as collateral pursuant to the law of your country? (2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights? Case 12(1) Domestic Greek law on intellectual property does not contain a complete system of rules for contracts concerning intellectual property. In principle there is no reason not to use intellectual property rights as a collateral. However there are certain problems. If, for example, a bank accepts intellectual property rights as a collateral, the relevant transaction would be a cession of rights (voluntary assignment). When it would be time to ‘return’ the intellectual right to its original owner, another cession would have to take place. Greek doctrine and case law has not come to definitive answer on whether the transfer of intellectual property rights is governed by the rules on cession of rights or those on the transfer of movables. Case 12(2) Article 14 of the Rome I Regulation would be applicable.

 Art 9(5).

39

Hungary LEVENTE TATTAY

Contents 1. General Overview............................................................................................................................. 638 1.1. The Legal Sources and the Institutional Competence........................................................ 638 1.1.1. The Relationship between Hungarian and European Laws and Regulations..... 638 1.1.2. International Treaties which are Valid in Hungary............................................... 640 1.2. The National Competence of Hungarian Authorities Related to Intellectual Property... 640 1.2.1. The Competence of the Hungarian Patent Office................................................ 640 1.2.2. The Competence of Hungarian Courts................................................................. 641 1.3. The International Jurisdiction of Hungarian Authorities (International Intellectual Property Addressed by Domestic Statutes)......................................................................... 643 1.3.1. The Competence of Hungarian Authorities Based on International Treaties..... 643 1.3.2. The Competence of Hungarian Courts in Cases Concerning Community Trade marks and Community Designs.................................................................. 644 1.4. International and Domestic Sources Governing Jurisdiction Issues................................. 644 1.4.1. General Legal Sources of the Jurisdiction of National Authorities...................... 644 1.4.2. General Legal Sources of International Jurisdiction: General, Special and Exclusive Grounds of Jurisdiction in Brussels I and Decree Law................. 646 1.4.3. General Grounds for the Exercise and Decline of International Jurisdiction in Cases Concerning Intellectual Property....................................... 649 1.5. Choice of Law....................................................................................................................... 653 1.5.1. Conflicts Concerning Choice of Law..................................................................... 653 1.5.2. General Principles of Choice of Law in Torts, Contracts and Transfer of Rights.................................................................................................................. 653 1.6. Recognition and Enforcement of Foreign Judgments........................................................ 657 1.6.1. Recognition of Foreign Judgments........................................................................ 657 1.6.2. Enforcement of Foreign Judgments...................................................................... 658 1.6.3. Procedural Questions Concerning Recognition................................................... 658 1.7. Intellectual Property Issues Addressed in Conflict of Laws Rules..................................... 659 1.7.1. Potential Tensions which May Arise from the Conflict of Different Rules Governing Choice of Law............................................................................. 659 1.7.2. Notable Hungarian Case Law Concerning Intellectual Property........................ 661 2. Hypothetical Case Studies................................................................................................................ 667 Case 1. General/Special Grounds of Jurisdiction..................................................................... 667 Case 2. Subject-Matter Jurisdiction.......................................................................................... 669 Case 3. Consolidation of Proceedings....................................................................................... 670 Case 4. Choice of Court............................................................................................................. 671 Case 5. Parallel Proceedings....................................................................................................... 672

638  Levente Tattay Case 6. Case 7. Case 8. Case 9. Case 10. Case 11. Case 12.

Principle of Territoriality (Choice of Law).................................................................. 673 Infringement of Intellectual Property Rights............................................................... 674 Applicable Law to Initial Ownership............................................................................ 674 Applicable Law to the Transfer of Rights Agreements................................................. 676 Recognition and Enforcement of Foreign Judgments................................................. 677 Provisional Measures and Injunctions......................................................................... 677 Securities in Intellectual Property................................................................................ 679

1 General Overview 1.1  The Legal Sources and the Institutional Competence 1.1.1  The Relationship between Hungarian and European Laws and Regulations Important social, economic and political changes took place in Hungary at the end of the twentieth century. In the regulation of intellectual works, the most important factor was Hungary’s Euro-Atlantic orientation. In 1991 Hungary signed an Association Treaty with the European Community which entered into force on the 1 January 1994. The Association Treaty prescribed a framework for the full regulation of intellectual works. In 2004, Hungary joined the European Union, thereby allowing direct applicability of all EU directives and regulations with effect from 1 May 2004. The changes which subsequently occurred involved the full-range regulation of intellectual works. The European Community has set itself the objective of maintaining and developing an area of freedom, security and justice, in which the free movement of persons is ensured. In order to progressively establish such an area, the European Community is adopting, amongst other things, measures relating to judicial cooperation in civil matters of jurisdiction, enforcement of intellectual property rights and reasonable choice-of-law rules. These national and international legal sources are necessary for the sound operation of an internal market. Accordingly, Hungarian laws have been drafted to ensure compliance of these legal rules with the acts of the European Union, or otherwise contain regulations that allow for the approximation of the legislation with that of the European Communities. In the event of a conflict of laws between the European legal rules with Hungarian legislation occurs, European law takes priority. Thus where Hungarian legislation differs from European regulations and directives on the same subject, the latter will take precedence. Community law overrides the national law of Hungary in every respect – a doctrine commonly known as ‘supremacy’. 1.1.2  International Treaties which are Valid in Hungary 1.1.2.1 Copyright Universal Copyright Convention as revised at Paris on 24 July 1971, with Appendix Declaration relating to Article XVII and Resolution concerning Article XI, promulgated by Law Decree 3 of 1975 Berne Convention for the Protection of Literary and Artistic Works, promulgated by Law Decree 4/1975 (hereinafter referred to as Berne Convention)

Hungary  639 Geneva Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of Their Phonograms, promulgated by Law Decree 18/1975 (hereinafter referred to as Geneva Convention) Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, promulgated by Act No XLIV of 1998 (hereinafter referred to as Rome Convention) WIPO Copyright Treaty, ratified by 57/1998 (XI.29.) OGY Parliament resolution WIPO Performances and Phonograms Treaty, ratified by 57/1998 (XI.29.) OGY Parliament resolution (hereinafter referred to as WIPO WPPT Treaty) Agreement on Trade-Related Aspects of Intellectual Property Rights, promulgated by Act IX of 1998 (hereinafter referred to as TRIPS Agreement). 1.1.2.2 Patents Paris Convention for the Protection of Industrial Property (1883), promulgated by Law Decree 18/1970 (hereinafter referred to as Paris Convention) European Patent Convention 2000 (EPC 2000), promulgated by Act CXXX of 2007 (hereinafter referred to as EPC) Implementing Regulations to the European Patent Convention 2000, promulgated by Government Decree 319/2007 (XII.5) Act LI of 2002 on the Promulgation of the International Convention for the Protection of New Varieties of Plants 2 December 1961, as revised at Geneva on 10 November 1972, on 23 October 1978, and on 19 March 1991 (hereinafter referred to as UPOV Convention) Patent Cooperation Treaty, Promulgated by Decree 14/1980 (hereinafter referred to as PCT) Regulations under the Patent Cooperation Treaty, promulgated by Decree 34/2002 (XII.25) IM Patent Law Treaty, promulgated by Act CXXXI of 2007 (hereinafter referred to as Patent Law Treaty) Regulations under the Patent Law Treaty, promulgated by Government Decree 320/2007 (XII.5) Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure, promulgated by Decree 1/1981 (hereinafter referred to as Budapest Treaty) Regulations under the Budapest Treaty on the International Recognition on the Deposit of the Microorganisms for the Purposes of Patent Procedure, promulgate by Decree 21/2002 (XII.13). 1.1.2.3  Trade Marks Paris Convention for the Protection of Industrial Property (1883), promulgated Law Decree 18/1970 (Paris Convention) Madrid Agreement for the International Registration of Marks (1891), promulgated by Law Decree 29/1973 (hereinafter referred to as Madrid Agreement) Madrid Agreement for the repression of False or Deceptive Indications of Source of Goods and Services (1891), promulgated by Law Decree 19/1970 (hereinafter referred to as Madrid Agreement II)

640  Levente Tattay Nice Agreement for the International Classification of Goods and Services for the Purposes of Registration of Marks (1957), promulgated by Law Decree 29/1973 (hereinafter referred to as the Agreement of Nice Classification) Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol 1989), promulgated by Act LXXXIII of 1999 (hereinafter referred to as Madrid Protocol) Trade Mark Law Treaty (1994), promulgated by Act LXXXII of 1999 (hereinafter referred to as the Trade Mark Law Treaty) Arrangement on Trade Related Aspects of Intellectual Property Rights 1993, promulgated by Act IX of 1998 (hereinafter referred to as the TRIPS Agreement). 1.1.2.4 Designs Paris Convention for the Protection of Industrial Property, promulgated by Law Decree No 18/1970 (Paris Convention) The Hague Agreement Concerning the International Registration of Industrial Design, Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs, promulgated by Act XLIII of 2001 (hereinafter referred to as Hague Agreement) The Hague Agreement Concerning the International Deposit of Industrial Designs, promulgated by Law Decree 29/1984 Locarno Agreement Establishing an International Classification for Industrial Designs, Agreement signed at Locarno on 8 October 1968, promulgated by Law Decree 29/1973 (hereinafter referred to as Locarno Agreement).

1.2  The National Competence of Hungarian Authorities Related to Intellectual Property The following acts comprise the most important sources of law with regard to the national competence of Hungarian authorities over matters related to intellectual property: Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (hereinafter referred to as Brussels I) Act No III of 1952 on the Code of Civil Procedure (hereinafter referred to as Civil Proceedings) Act XXXIII of 1995 on the Protection of Inventions by Patents (hereinafter referred to as Patent Act) Act XI of 1997 on the Protection of Trade Marks and Geographical Indications (hereinafter referred to as the Trade Mark Act) Act XLVIII of 2001 on the Legal Protection of Designs (hereinafter referred to as the Design Act) Act LXXVI on the Protection of Copyright (hereinafter referred to as Copyright Act). 1.2.1  The Competence of the Hungarian Patent Office In accordance with Article 44(1) of the Patent Act, Article 37(1) of the Trade Mark Act and Article 30(1) of the Design Act, the Hungarian Patent Office (hereinafter referred to as the

Hungary  641 Office) shall have exclusive jurisdiction to handle patent, trade mark, design and related matters. (A) The Office has exclusive competence in the following matters of industrial property:

(a) granting of protection of patents, trade marks and designs; (b) declaration of termination of protection of patents, trade marks and designs; (c) declaration of invalidity of protection of patents, trade marks and designs; (d) registration of patent, trade mark and design applications and registered patents trade marks and designs; (e) division of patent, trade mark and design protection; (f) provision of official notice in patent, trade mark and design matters; (g) enforcement of provisions relating to the Community.

(B) By virtue of Article 44(1) and (2) of the Patent Act, the Office also has exclusive competence in the following patent matters:

(a) decision on existence of infringement; (b) interpretation of patent descriptions; (c) upkeep of the registers of patent applications and patents, including matters concerning their maintenance; (d) matters relating to supplementary protection certificates; (e) matters relating to compulsory licences; (f) matters deriving from the application of provisions relating to European patent applications, European patents and international patent applications.

(C) By virtue of Article 37(1) of the Trade Mark Act, the Office shall have competence in the renewal of trade mark protection. (D) By virtue of Article 30(1) of the Design Act, the Office has authority in the renewal of designs and declaration of non-infringement. It is also important to note the cases of invalidation of patents, trade marks and industrial designs. Invalidation may occur in accordance with Article 42 of the Patent Act, Article 28 of the Design Act and Article 72(1) of the Trade Mark Act. Pursuant to Article 46(1) of the Patent Act and Article 39(1) of the Trade Mark Act, the Office shall resolve patent, trade mark and design cases by way of decision. The decisions of the Hungarian Patent Office shall be considered binding when served, unless an action is filed to have it reversed. By virtue of Article 53/A §(2) of the Patent Act, Article 43(2) of the Trade Mark Act and Article 32/A§(2) of the Design Act, all decisions of the Hungarian Patent Office adopted in patent, trade mark and design matters may be reviewed by the court in non-judicial proceedings. According to Article 85(6) of the Patent Act, Article 77(6) of the Trade Mark Act and Article 61(6) of the Design Act, the deadline for the submission of a petition for reversal shall be thirty days from the date of delivery of the decision to the party or other persons involved in the proceedings. 1.2.2  The Competence of Hungarian Courts The Metropolitan Court of Budapest has jurisdiction to hear all disputes relating to patents, trade marks and designs.

642  Levente Tattay 1.2.2.1  Exclusive Jurisdiction of Metropolitan Court In accordance with Article 86 of the Patent Act, Article 78 of the Trade Mark Act and Article 63(1) of the Design Act, the Metropolitan Court of Budapest shall have jurisdiction and exclusive competence to conduct proceedings for the reversal of decisions made by the Office. In Accordance with Article 86(2) of the Patent Act, the Metropolitan Court of Budapest shall have exclusive jurisdiction to hear cases relating to the following aspects of patents: (a) actions for the granting, modification and withdrawal of compulsory patent licences; (b) court actions relating to any rights for preliminary and extended use; (c) court actions concerning any infringement of inventions or patents. In Accordance with Article 95(1) of the Trade Mark Act, the Metropolitan Court of Budapest shall have exclusive jurisdiction to hear cases relating to the following aspects of trade marks: (a) actions for the transfer of trade marks; (b) application for the registration of a trade mark in the name of a representative or an agent without the holder’s authorisation; (c) court actions concerning any infringement of trade marks. In accordance with Article 63(1) of the Design Act, the Metropolitan Court of Budapest shall have exclusive jurisdiction to hear cases relating to the following aspects of designs: (a) court actions relating to any rights for preliminary and extended use of designs; (b) court actions concerning any infringements of designs. Pursuant to Article 23(1) item (c) of the Code of Civil Procedure, the Metropolitan Court of Budapest has jurisdiction to conduct the proceedings of first instance in matters concerning copyright inclusive pecuniary claims from collective management of copyright and rights of industrial property. In others cases (such as claims arising out of remuneration, exhaustion of protection, contracts, patents for hire etc) the local courts of general competence have jurisdiction. The national competence of Hungarian authorities is harmonised with the prescriptions of the European Union. The Hungarian Acts concerning the competence of Hungarian authorities ensure compliance of legal rules with the acts of the European Union or contain regulations that allow for the approximation of the legislation of the European Communities. Decisions regarding the registration or refusal of a patent, trade mark or design application and its invalidation fall under the exclusive competence of the Metropolitan Court of Budapest. The rules outlining the competence of local courts meet the requirements of the Brussels I Regulation. Accordingly, pursuant to Article 22(4) of Brussels I, in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place, that is the Hungarian courts, shall have exclusive jurisdiction. (A) In accordance with Article 104(1)(c) of the Patent Act, Article 95(1) of the Trade Mark Act and Article 63(1) of the Design Act, the Metropolitan Court of Budapest shall

Hungary  643 have exclusive jurisdiction over court actions concerning any infringement of inventions or patents, trade marks and industrial designs. This prescription is harmonised with Brussels I by virtue of Article 22(1) of Brussels I concerning exclusive jurisdiction which holds that in matters related to infringement of intellectual property rights in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for or has taken place shall have exclusive jurisdiction. (B) It should be noted that on the further cases of the intellectual property local courts have authority. This competence of courts is not exclusive.

1.3  The International Jurisdiction of Hungarian Authorities (International Intellectual Property Addressed by Domestic Statutes) 1.3.1  The Competence of Hungarian Authorities Based on International Treaties Litigation relating to patents, trade marks, designs and geographical indications which are registered on the basis of international agreements fall under the competence of Hungarian authorities. The Hungarian acts include provisions relating to the application of international treaties to local legislation. Part Three of the Patent Act contains provisions relating to the European Patent System (European Patent Convention 2000 (EPC 2000) – promulgated by Act CXXX of 2007). Chapter X/A of the Patent Act contains Regulations Relating to European Patent Applications and European Patents. A European patent application may be submitted and a European patent may be granted effect within the territory of the Republic of Hungary. A European patent application whose date of application has been certified by the European Patent Office shall be treated as if it had been submitted to the Hungarian Patent Office on the same day; the priority requested for the European patent application will be retained (Art 84/D§ (1) of Patent Act). In Accordance with Article 84/G of the Patent Act, a European patent shall have the effect of and be subject to the same conditions as a patent granted by the Hungarian Patent Office. A European patent shall be considered granted when the notice concerning its grant is published in the Official Journal of the European Patent Office. The Trade Mark Act includes prescriptions relating to the application, treatment and interpretation of international trade mark treaties. Part Four of the Trade Mark Act contains provisions concerning the international registration of trade marks. Chapter X/B of the Trade Mark Act involves general provisions relating to applications for the international registration of trade marks. According to Article 76/N(1) of the Trade Mark Act, an application indicating the Republic of Hungary shall have the same effect from the date of international registration as if the application for the registration of a trade mark had been properly filed with the Hungarian Patent Office. Chapter VIII/B of the Design Act contains provisions relating to applications for the international registration of industrial designs. In Accordance with Article 60/K of the Design Act, an application for the international registration of an industrial design designating the Republic of Hungary shall have the same effect from the date of the

644  Levente Tattay international registration as if the application for a design had been properly filed with the Hungarian Patent Office. The Metropolitan Court of Budapest shall have exclusive jurisdiction in relation to court actions concerning European patents, international trade marks registered by virtue of the Madrid Agreement and Madrid Protocol and international designs based upon the Hague Agreement. Appeals against the decisions of the Metropolitan Court of Budapest shall be adjudicated by the Budapest High Court of Appeal. 1.3.2  The Competence of Hungarian Courts in Cases Concerning Community Trade Marks and Community Designs Hungary joined the European Union in 2004. Thereby all EU directives and regulations have been directly applicable in Hungary since 1 May 2004. Hungary has also since adhered to the Community trade mark system and the Community design system. Consequently all Community trade marks and designs are valid in Hungary. The Metropolitan Court is acknowledged as the Community trade mark court and the Community design court. The Community trade mark system was established based on Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark in 1994. The Community design system was created in accordance with Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs in 2003. Part Three of the Trade Mark Act includes provisions concerning Community trade mark applications and Community trade marks. Chapter VIII/A of the Design Act contains provisions relating to Community design. In accordance with Article 76/H of the Trade Mark Act and Article 60/E of the Design Act, in the Republic of Hungary, the Metropolitan Court shall have jurisdiction in the first instance to perform the functions of a Community trade mark and a Community design court as assigned in Article 91(1) of the Regulation on Community Trade Marks and Article 80(1) of the Regulation on Community Designs. Appeals against decisions of the Metropolitan Court of Budapest shall be adjudicated by the Budapest High Court of Appeal, performing the functions of the Community trade mark court and Community design court of second instance.

1.4  International and Domestic Sources Governing Jurisdiction Issues 1.4.1  General Legal Sources of the Jurisdiction of National Authorities The main sources of exercising of jurisdiction are as follows: Act No III of 1952 on the Code of Hungarian Civil Procedure (Civil Proceedings) Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (hereinafter referred to as Brussels I) Law Decree No 13 of 1979 on International Private Law (hereinafter referred to as the Decree Law). 1.4.1.1  General Jurisdiction of Hungarian Courts The questions of competence by Hungarian authorities relating to intellectual property have been explained above at 1.2; however in the present section the general sources of

Hungary  645 general, special, and exclusive jurisdiction and venue of Hungarian courts are not mentioned. The main source of national jurisdiction and venue of Hungarian courts is Act IV of 1953 on the Hungarian Code of Civil Procedure (Civil Proceedings Act) and the essential provisions of competence proceedings by Hungarian authorities found in the Patent Act, Trade Mark Act, Design Act and Copyright Act. Cases falling within the jurisdiction of civil courts are civil cases. The notion of civil case does not merely denote civil law disputes taken in a narrow sense (Article 7 of Act IV of 1959 on the Hungarian Civil Code), but also any case tried and adjudicated by the court based on the rules of civil procedural law. As such, cases dealing with intellectual property law shall be qualified as civil cases. In accordance with Article 22(1) of Civil Proceedings Act, the subject matter of jurisdiction extends to all lawsuits which this Act has not allotted to the jurisdiction of county or labour courts. This rule indicates the general subject matter of jurisdiction of local (town, district) courts. It does not provide an itemised list of the types of cases to be heard by local courts. In Hungary the local courts have general jurisdiction over civil cases. The Civil Proceedings Act provides an exhaustive list of areas falling within the competence of county courts. In accordance with Article 23(1) of the Civil Proceedings Act, county courts are competent to exercise jurisdiction over the following actions: (a)  actions relating to property where the amount sought exceeds HUF 5 million (c. €17,000). The value of the dispute must be determined and will determine whether the dispute falls within the subject-matter jurisdiction of a local or county court; (b) compensation claims relating to damage caused by administrative organs within the scope of their authority; (c) proceedings in matters concerning copyright, including pecuniary claims from collective management of copyright and rights of industrial property and furtherance of proceedings relating to know-how; (d) actions relating to international transportation of goods; (e) actions relating to companies and trusts; (f) actions relating to violation of personal rights; (g) actions relating to securities; (h) administrative actions; (i) press correction suits; (j) actions relating to unfair contract terms; (k) claims for damages against the court; (l) violation of personal rights; (m) actions against health service providers; (n) actions for annulment of decisions made by courts of arbitration; (o) actions relating to damages. 1.4.1.2  The General and Special Rules of Venue of Courts in Hungarian Procedural Law The concept of ‘venue’ concerns the division of cases between the courts of the same level. Each court has its own territory and its jurisdiction extends only to this territory. In Hungarian civil procedural law, venue is usually based on the defendant’s domicile in

646  Levente Tattay Hungary for the policy reason that a defendant sued in a location outside his domicile could face difficulties preparing a defence. In accordance with Article 29(1) of the Civil Proceedings Act the appropriate venue in all lawsuits is the court in the territory of which the defendant is domiciled. The general rule of venue based on the defendant’s domicile is supplemented with other auxiliary considerations such as the place where the defendant currently resides, the defendant’s last domicile within the country, and in some cases, the claimant’s domicile and the place where the claimant resides. In actions against legal entities, venue is generally based on the registered office of either the legal entity or the organ authorised to represent it. A ‘registered office’ is defined as the place where the legal entity’s business is carried out. In lawsuits against business associations not having legal personality, general rules of venue relating to legal entities shall duly apply for establishing the appropriate venue (Art 30 of Civil Proceedings Act). In lawsuits where the court with exclusive jurisdiction has not been established, the claimant may choose among a court based on special grounds of venue. Amongst the special rules under the Civil Proceedings Act, the following are worthy of mention: (a) Pursuant to Article 32(1) as a ground of venue, the place of residence may be applied. In actions concerning property claims, the court of the region in which a defendant stays under conditions indicative of a long-term residence for a considerable length of time (eg an employee or student) shall also be considered as an appropriate venue. (b) By virtue of Article 31(3), the location of the assets may be considered. This ground for venue may only be applied with regard to property claims and in the case of a defendant having no domicile or place of residence in the country. In this situation the action may be brought in the court of the territory in which the subject-matter of litigation or the defendant’s assets are located. (c) In accordance with Article 31(4), the location of the representative of the foreign legal entity may apply. Against foreign legal entities, an action may be brought in the court of the territory in which the person charged with the management of the affairs of the legal entity lives, and with regard to property claims, the court of the territory in which the seat of the Hungarian subsidiary or trade representative of the foreign legal entity is based may be considered an appropriate venue. 1.4.2  General Legal Sources of International Jurisdiction: General, Special and Exclusive Grounds of Jurisdiction in Brussels I and Decree Law The main sources of law concerning the exercise of international jurisdiction are Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I), and Law Decree 13 of 1979 on International Private Law (Decree Law). 1.4.2.1  The Provisions Concerning the Exercise of International Jurisdiction on the Basis of Brussels I The Community has set itself the objective of maintaining and developing an area of freedom, security and justice, in which the free movement of persons is ensured. In order to progressively establish such an area, the Community should adopt, amongst other things, the measures relating to judicial cooperation in civil matters which are necessary for the

Hungary  647 sound operation of the internal market. The rules dictating jurisdiction of the European Community may be characterised as having the following principles: (a)  Subsidiarity and proportionality: the principles of subsidiarity and proportionality as set out in Article 5 of the Treaty are applicable where the objectives of this Regulation cannot be sufficiently achieved by a Member State and can therefore be better achieved by the Community. This Regulation confines itself to the minimum required in order to achieve those objectives and does not go beyond what is necessary for that purpose (Art 1(4) of Brussels I). (b) The autonomy of the parties: according to Recital 14 of Brussels I, the autonomy of the parties to a contract, other than an insurance, consumer or employment contract, where only limited autonomy to determine the courts having jurisdiction is allowed, must be respected subject to the exclusive grounds of jurisdiction laid down in this Regulation. (c) Mutual recognition of judgments: by virtue of Recital 17 of the Preamble of Brussels I, mutual trust in the administration of justice in the Community justifies judgments given in a Member State being recognised automatically without the need for any procedure except in cases of dispute. (d) Equal opportunities in proceedings: Recital 18 of the Preamble of Brussels I contains the principle of equal opportunities in proceedings. However, respect for the rights of defence means that the defendant should be able to appeal in an adversarial procedure, against the declaration of enforceability if he considers one of the grounds for nonenforcement to be present. Redress procedures should also be available to the claimant in the event his application for a declaration of enforceability is rejected. (e)  Defendant’s domicile: the jurisdiction of courts in the EU is based on the defendant’s domicile. Pursuant to Recital 8 of the Preamble of Brussels I there must be a link between proceedings to which this Regulation applies and the territory of the Member States bound by this Regulation. Accordingly, common rules on jurisdiction should, in principle, apply when the defendant is domiciled in one of those Member States. In accordance with Recital 11 of the Preamble of Brussels I, the rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile. Additionally jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. The domicile of a legal person must be defined autonomously so as to make the common rules more transparent and avoid conflicts of jurisdiction. 1.4.2.2  The General Provisions of Jurisdiction in Brussels I By virtue of Article 2(1) of Brussels I, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. According to Article 2(2) of Brussels I, persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that state. 1.4.2.3  Special Rules of Jurisdiction in Brussels I Pursuant to Article 4(1) persons domiciled in a Member State may be sued exceptionally in the courts of another Member State:

648  Levente Tattay in matters relating to a contract, in the courts of the place of performance of the obligation in question. For the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be: in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered; in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided; in matters relating to tort (delict or quasi-delict), in the courts for the place where the harmful event occurred or may occur; as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated. 1.4.2.4  Exclusive Rules of Jurisdiction in Brussels I According to Article 22(1) and (4) of Brussels I, the following courts shall have exclusive jurisdiction regardless of domicile: in proceedings which have as their object, rights in rem in immovable property or tenancies of immovable property, the courts of the Member State in which the property is situated; in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that state. 1.4.2.5  General Rules on the Exercise of International Jurisdiction in Decree Law The 1979 Decree Law regulates jurisdiction by one-sided norm of conflict, applicable only in the absence of Community law and international agreements. The rules of jurisdiction contained in Decree Law are mainly applicable in the areas of law not regulated by Community law and with respect to states with which Hungary has not signed an international agreement relating to jurisdiction in civil cases, such as the United States, Canada and Japan. The Hungarian courts may proceed in all cases where the domicile or habitual residence of the defendant, or the registered office of a legal entity (or business association without legal entity) is located in Hungary, unless the jurisdiction of Hungarian courts is not excluded by the Law Decree (Art 54 of Decree Law). In cases with more than one defendant, a Hungarian court may proceed against all defendants where at least one defendant has his domicile, registered seat or habitual residence in Hungary. 1.4.2.6  Special Rules on the Exercise of International Jurisdiction in Decree Law Under the heading of special jurisdiction, the Decree Law provides grounds for jurisdiction that render it possible to have recourse to a Hungarian court in specific matters regardless

Hungary  649 of the defendant’s domicile or habitual residence. The main essential cases are as fol-­ lows: Hungarian courts shall have jurisdiction over legal disputes arising from contracts if the place of performance is located in Hungary; Hungarian courts may also exercise jurisdiction over matters relating to tort if the tortuous conduct or harmful event occurred in Hungary; Hungarian courts shall have jurisdiction in lawsuits filed against foreign enterprises if the enterprise has a branch office or representative in Hungary and the litigation pertains to the operations of the Hungarian branch; Hungarian courts shall have jurisdiction in lawsuits relating to property where the defendant has no domicile or residence in Hungary but has assets in Hungary that can be attached. 1.4.2.7  Exclusive Rules on the Exercise of International Jurisdiction in Decree Law The state extends its unconditional and exclusive jurisdiction over legal relations the subject matter of which directly concerns public order or important political and economic interests. These provisions can be found in Article 65/A of the Decree Law. The most important cases in which Hungarian courts can exercise exclusive jurisdiction are as follows: in actions pertaining to rights in rem in immovable property that is located in Hungary and in proceedings concerning lease and usufructuary lease agreements; in actions filed against a Hungarian state or government agency, unless the Hungarian State has expressly waived its right to immunity; in actions filed for the destruction of securities and official instruments issued in Hungary; in proceedings concerning the registration, extension or termination of industrial property rights in Hungary; in proceedings concerning the registration of rights, facts and data in a public Hungarian register; in actions concerning enforcement in Hungary; in matters relating to the personal status of a Hungarian citizen. The Decree Law excludes jurisdiction in proceedings in connection with the registration, extension and termination of industrial property rights abroad (Article 62/C item f) of Decree Law). 1.4.3  General Grounds for the Exercise and Decline of International Jurisdiction in Cases Concerning Intellectual Property After a careful examination of the jurisdiction relating to copyright, patents, trade marks, designs, copyright licences, industrial property licences, personal rights, and legal entities as owners of intellectual property, with regard to the general grounds for the exercise and decline of international jurisdiction, the following can be ascertained: 1.4.3.1 Copyright The regulations of the Community do not contain specific provisions concerning copyright. As such, in copyright cases the exercise of international jurisdiction is governed by the law of the country where the protection is claimed, regardless of the defendant’s

650  Levente Tattay domicile or habitual residence. In accordance with Article 5(2) of the Berne Convention, copyright shall be adjudicated according to the law of the state in the territory of which protection is required. However the copyright of a foreign author may be adjudicated according to Hungarian law if the work was first published abroad. Article 5(3) of the Berne Convention provides that the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country, where protection is claimed. In accordance with Article 2 of the Copyright Act, copyright protection shall extend to a work first published abroad only if the author is a Hungarian national, or if the author is entitled to the protection pursuant to an international agreement. The Hungarian courts do not have exclusive jurisdiction for copyrighted works published in Hungary. In summary, Article 22(1) of Civil Proceedings provides: In proceedings in matters concerning copyright, including pecuniary claims from collective management of copyright, the Hungarian Metropolitan Court and county courts have jurisdiction.

1.4.3.2  Industrial Property The national authorities in Hungary have exclusive jurisdiction in cases relating to industrial property. The general grounds for exercising international jurisdiction are determined by the law of the state in which the patent, trade mark or design etc was granted and registered. In accordance with Article 22(4) of Brussels I the Hungarian courts shall have exclusive jurisdiction, regardless of domicile in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights. Questions relating to jurisdiction have been discussed extensively in 1.2 above. This rule of jurisdiction deviates from the general ground of jurisdiction of the defendant’s domicile. Article 23(1)(c) of the Civil Proceedings Act also provides for the exclusive jurisdiction of Hungarian courts. And by virtue of Article 65/A of the Decree Law, in proceedings concerning the registration, extension or termination of industrial property rights in Hungary, the Hungarian courts have exclusive jurisdiction. Accordingly, the Decree Law excludes jurisdiction of foreign courts in proceedings in connection to the registration, extension and termination of industrial property rights abroad (Article 62/ C item f) of Decree Law). 1.4.3.3  Copyright Licence Contracts There are no obligatory Hungarian and European prescriptions concerning the jurisdiction related to licence contracts. Where they are concerned, only the general prescriptions relating to contracts apply. According to Article 5 of Brussels I a person domiciled in a Member State may be sued in another Member State. This is because in matters relating to a contract, the courts for the place of performance of the obligation in question have jurisdiction. Article 5 (item b) Brussels I provides the definition of the place of performance. The place of performance of the obligation in question shall be: in general, the place of performance stipulated in the contract; in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered; in the case of the provision of services, the place in a Member State where, under the contract, the services were should have been provided.

Hungary  651 In accordance with Article 55 of the Decree Law Hungarian courts shall have jurisdiction arising from contracts if the place of performance located in Hungary. The place of performance may be: the place stipulated in contract; in the case of the sale of goods, the place under the contract, the goods were delivered; in the case of the provision of services, the place where, under the contract, the services were provided or should have been provided; in other cases the place prescribed by legal norms. In summary, with regard to copyright licences, neither Hungarian law nor European regulations make obligatory provisions relating to jurisdiction concerning the contracts. The provisions of Hungarian law or foreign law may be applied equally. A person domiciled in Hungary may be sued in another state. By virtue of alternative provisions in Brussels I and in the Decree Law, claims relating to copyright licences may be filed not only in Hungary but also filed abroad. 1.4.3.4  Patent, Trade Mark and Industrial Design Licence Contracts Under a patent, trade mark or design licence contract (ie exploitation contract), authorisation for the exploitation of the invention shall only be given by the owner of the patent, trade mark or design in exchange for a fee to be paid by the person enjoying the exploitation rights. In accordance with Article 19(1) and (2) of the Patent Act, a licensee may use a patent on the basis of the patent licence contract in question. This means that the licensee may: (a) manufacture, use, distribute or offer for distribution, the product that is the subject matter of the invention or keep stock of this product or import it into the country for such purposes; (b) use the process that forms the subject matter of the invention or offer the process for use to others when he is aware, or it is evident on the basis of the relevant circumstances, that the process cannot be used without the authorisation of the holder of the patent; (c) manufacture, use, distribute, offer for distribution, keep stock of or import into the country for such purposes, the product produced directly through the process that forms the subject matter of the invention. Licence agreements do not meet the requirements of the provisions of contracts listed in Article 4 of Brussels I, and thus may not be categorised. The provisions of jurisdiction relating to copyright licence contracts are also relevant to patent, trade mark and industrial design licence contracts (see 1.4.3.3 of this Report above). 1.4.3.5  Personal Rights of Intellectual Property Owners There are no special provisions of jurisdiction concerning the personal rights of owners of intellectual property rights. The Rules of Brussels I shall apply. By virtue of Article 2(1) of Brussels I, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. Hungarian citizens may be sued in the case of infringement of personal rights of owners of intellectual property rights in Hungary. In general, foreign persons may only be sued abroad. The Hungarian Courts do not have exclusive

652  Levente Tattay jurisdiction over matters of personal rights of owners of intellectual property rights, however they do have special jurisdiction in the following scenarios. In accordance with Article 23(1)(l) of Civil Proceedings, the Hungarian county courts and Metropolitan Court have jurisdiction in actions relating to the violation of personal rights. In general, the rules of Article 1(1) and (2) of Brussels I shall apply. Also, by virtue of Article 2(1) of Brussels I, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. Personal rights may generally be adjudicated by the court of the state in question. 1.4.3.6  Legal Entities as Owners of Intellectual Property Rights Legal entities may be the owner of an intellectual property right (owner of patents, trade marks etc). The general ground of jurisdiction, that is, the defendant’s domicile in Brussels I shall apply. Nevertheless in accordance with Article 1(5) of Brussels I, as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated. Analysis In making an analysis of the international and domestic sources governing jurisdictional issues, the following points should be observed. First, in the event of conflict between the European legal rules and Hungarian legislation, the European law takes priority. Thus if Hungarian legislation clashes with European regulations and directives, the latter will have precedence. The Community Law overrides the national law of Hungary in every respect, a doctrine commonly known as ‘supremacy’. In relation to copyright, since there are no European prescriptions, the prescriptions of the Berne Convention shall apply. In proceedings concerned with the registration or validity of patents trade marks, designs, or other similar rights, the main rules of the Hungarian Patent Act, Trade Mark Act, Design Act, Civil Proceedings Act and Decree Law apply. Furthermore, it should be noted that the prescriptions of Brussels I are practically identical to the aforementioned acts. As such, when encroaching upon the domain of industrial property, the Hungarian authorities have exclusive jurisdiction. With regard to contracts related to copyright, patent, trade mark and industrial design licences, there are no compulsory prescriptions. By virtue of Article 2(1) of Brussels I persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. Accordingly, such personality rights may be adjudicated generally by the courts of the country where the person in question is domiciled. According to Article 2(2) of Brussels I, persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that state. Legal entities which own intellectual property rights shall be sued according to the law of country in which they are situated.

Hungary  653

1.5  Choice of Law Choice of law shall be determined based on: the law of whichever country has applicable jurisdiction if a foreign person or foreign component is involved. In cases involving intellectual property and consequent legal relationships, the laws of several countries would be applicable; the jurisdiction and procedural rules to be followed in a legal dispute containing a foreign component. The main rules governing choice of law can be found in the following acts: Regulation (EC) No 593/ 2008(of the European Parliament and the Council of 17 June 2008 on the law applicable to contractual obligations (hereinafter referred to as Rome I); Regulation (EC) No 864/2007 of the European Parliament and the Council of 11 July 2007 on The law applicable to non-contractual obligations (hereinafter referred to as Rome II); and Hungarian Law Decree 13 of 1979 on International Private Law (the Decree Law). 1.5.1  Conflicts Concerning Choice of Law There are certain differences between national rules governing jurisdiction and those governing recognition of judgments in relation to intellectual property rights. Conflicts relating to intellectual property rights may arise out of the choice of law. For example, potential conflicts in choice of law may arise: (a) in the case of torts which occur on foreign soils; (b) in the case of the violation of the personal rights of an inventor abroad in foreign country; (c) in the case of a Hungarian work first published abroad; (d) in the case of the infringement of copyrighted work through the internet; (e) in the case of joint authorship of copyrighted works, patents, industrial designs, where one or more of the co-authors are foreign nationals; (f) in the case of a licence agreement concluded with partners from several different countries; (g) in the case of a contract concluded abroad relating to the utilisation of rights falling under copyright protection; (h) in the case of a contract concluded abroad relating to the utilisation of rights of trade marks, patents and designs under industrial rights protection; (i) in the case of claims against foreign legal entities that are not registered in Hungary; (j) in the case of refusal of the recognition and enforcement of a Hungarian judgment in a foreign country. 1.5.2  General Principles of Choice of Law in Torts, Contracts and Transfer of Rights From the point of view of intellectual property the choice of law in torts, contracts and transfer of rights are recognised to be factors of great importance.

654  Levente Tattay 1.5.2.1  General Principles of Choice of Law in Torts Rome II regulates choice of law arising from non-contractual obligations. In general, it advocates the principle that the place in which the activity causing damage takes place determines the choice of law for tort. According to Article 4(1) of Rome II, unless otherwise provided for in this Regulation, the law applicable to a non-contractual obligation arising out of a tort/delict shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur. In addition to that, Rome II also contains special rules related to torts arising from an infringement of intellectual property rights. Pursuant to Article 8(1) of Rome II, the law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which the protection is claimed. Article 8(2) of Rome II further states that in the case of a non-contractual obligation arising from an infringement of a unitary Community intellectual property right, the law applicable shall, for any question that is not governed by the relevant Community instrument, be the law of the country in which the act of infringement was committed. Rome I regulates the choice of law in tort cases arising from contracts. It establishes that within the limits of the powers conferred on the court by its procedural law, the consequences of a total or partial breach of obligations, including the assessment of damages in so far as it is governed by the law, shall be determined by the choice of law in the concluded contract. Pursuant to Article 32 of the Decree Law, the law applicable at the place and time of the activity or omission causing damage shall apply to the liability for damage caused outside of the contracts. The damaged person may also choose the law to be applied. By virtue of Article 32(2) of Decree Law, if it is more favourable for the injured party, the law of that state shall apply instead of that of the territory in which the damage came about. The Decree Law simplifies the proceeding if the places of residence of the party causing the damage and the injured party are in the same state. In that scenario, the rule is simply that the law of that state shall apply (Art 32(3) of the Decree Law). In summary, the rules of choice of law in torts have nothing in common. The applicable law may be: the law of the place in which the activity causing damage took place in accordance with Rome II (in the case of non-contractual obligations); the law of the country for which the protection is claimed by virtue of Rome II (infringement of intellectual property rights); the law of the country in which the act of infringement was committed pursuant to Rome II (infringement of a unitary Community intellectual property rights); the rules of law which shall apply to contracts in accordance with Rome I (in the cases arising from contracts); the law of that state in whose territory the damage came about by virtue of the Decree Law (in the case of non-contractual obligations). 1.5.2.2  General Principles of Choice of Law in Contracts Article 12 of Rome I defines the scope of the law applicable for contracts. The law applicable to a contract by virtue of this Regulation governs different aspects of contract, in particular:

Hungary  655 the interpretation of the terms and conditions of the contract; the manner of performance and the steps to be taken in the event of defective performance (regard shall be had to the law of the country in which performance takes place); within the limits of the powers conferred on the court by its procedural law, the consequences of a total or partial breach of obligations, including the assessment of damages in so far as it is governed by rules of law; the various ways of extinguishing obligations, and prescription and limitation of actions; the consequences of nullity of the contract. In general, the place of performance of the obligation in question determines the choice of law in contracts. Article 4 of Rome I has prescriptions related to applicable law in the absence of a preselected choice. The extent to which the law applicable to the contract shall be determined is as follows: contracts for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; contracts relating to a right in immovable property or to a tenancy of immovable property shall be governed by the law of the country where the property is situated; franchise contracts shall be governed by the law of the country where the franchisee has his habitual residence; distribution contracts shall be governed by the law of the country where the distributor has his habitual residence; contracts for the sale of goods by auction shall be governed by the law of the country where the auction takes place, if such a place can be determined. In accordance with Article 4(2) of Rome I, when the contract in question is not covered by any of the cases mentioned in Article 4(1) of Rome I (see above) or where the elements of the contract are overlapped by more than one of the points of Article 4(1) of Rome I, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. The Decree Law also regulates the general principles of choice of law in contracts. Pursuant to Article 24 of the Decree Law the law selected by the parties on concluding the contract or at a later date shall apply to the contract in question. In the absence of a selected law, the law applicable to each contract shall be determined as follows. The law relating to contracts shall be the law of the state in which the following persons have their place of residence, usual place of abode, central office or premises at the date of the conclusion of the contract: in the case of a contract on commission, the commissioned party; in the case of a contract on consignment, the consignee; in the case of a contract relating to commercial representation, the representative (agent); in the case of a contract relating to banking and credit transactions, the financial institution providing the banking services in the case of insurance contracts, the insurance company, unless otherwise prescribed by other specific legislation; in the case of a loan or loan for use contract, the lender; in the case of a rent or leasing contract, the leaser; in the case of a contract relating to the utilisation of rights falling under copyright protection, the user of said rights;

656  Levente Tattay in the case of a contract relating to the utilisation of rights of industrial right protection and other rights representing pecuniary value, the party ceding use; in the case of a deposit (warehousing) contract, the custodian. In the case of contracts, the Law Decree provides potential justification for the choice of Hungarian Law to be made. 1.5.2.3  General Principles of Choice of Law in Torts The transfer of rights means the assignment of a right by the owner of such rights (assignor) to a physical person or legal entity (assignee) as a property. As opposed to a licence which only includes the granting of permission to perform certain specified acts, the transfer (assignment) of a right, at least in the case of exclusive rights, means that the right of authorisation or prohibition of acts covered by the right itself is transferred to the assignee. In essence, the assignor transfers the ownership of the work to the assignee. Article 4 of Rome I has prescriptions relating to the law applicable to transfer in the absence of a preselected choice. The extent to which the law is applicable to the contract of transfer is prescribed as follows: a contract for the sale of goods shall be governed by the law of the country where the seller has his habitual residence; a contract for the sale of goods by auction shall be governed by the law of the country where the auction takes place, if such a place can be determined. According to Article 24 of the Decree Law, the choice of law selected by the parties on the conclusion of the contract or at a later date shall apply to contract in question. In the absence of a selected law the law relating to contracts shall be the law of the state in which the following persons have their place of residence, usual place of abode, central office or premises at the date of the conclusion of the contract: in the case of a contract on sale, the seller; in the case of a contract of donation, the donor. In summary, the main ground for determining the applicability of the chosen law in transfer of rights is the habitual residence of the obligee. Analysis In making an analysis of the international and domestic sources governing jurisdiction the following issues may be distinguished. In the event of conflict between the European legal rules with Hungarian legislation, European law takes priority. Thus in cases where there is a clash between Hungarian legislation and European regulations and Directives, the latter will have precedence. The Community Law overrides the national law of Hungary in every respect, a doctrine commonly known as ‘supremacy’. The rules of choice of law in torts have nothing in common, notwithstanding the main principle of choice of law as the place in which the activity causing damage occurs. In accordance with the principles of subsidiarity and proportionality, if the objectives of the EU regulations cannot be sufficiently achieved by the Community and can be better achieved by the Member State, the law of the Member State may be considered applicable.

Hungary  657 There is no obligatory principle of choice of law governing contracts. For this reason, depending on the circumstances of the case, the national principles of choice of law may be applied. As a general principle, the choice of law based on the habitual residence of the obligee may be acknowledged. The law applicable to a contract by virtue of Rome I shall govern different aspects of contract, in particular: interpretation, performance, procedural law and the consequences of nullity of the contract. General principles of choice of law in contracts are different in Rome I and in the Decree Law. Pursuant to the Decree Law, the law selected by the parties upon conclusion of the contract or at a later date shall apply to the contracts in question. In the absence of a selected law, the law applicable to each contract shall be determined in accordance with the 10 special cases defined in the Decree Law (contract of loan, contract on consignment, contract of commission, etc). The general and special rules of choice of law in contracts are different in the Decree Law as compared to European regulation. General principles of choice of law in transfer of rights have several features. The principles of choice-of-law are not comparable; however, the most important format for transfers is via contract for sale. In the case of such contract, according to Rome I and the Decree Law the prescriptions of choice of law are analogous.

1.6  Recognition and Enforcement of Foreign Judgments 1.6.1  Recognition of Foreign Judgments As a general rule on the recognition of foreign judgment in the European Union, such judgments shall be recognised without any additional requirement for special procedures. Pursuant to Article 33 of Brussels I a judgment given in a Member State shall be recognised in other Member States without any special procedure being required. Any interested party who raises the recognition of a judgment as a principal issue in a dispute applies for a decision that the judgment be recognised. If the outcome of proceedings in a court of a Member State depends on the determination of an incidental question of recognition, that court shall have jurisdiction over that question. In accordance with Article 34 of Brussels I a judgment shall not be recognised in Member States of the European Union if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought; where it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought; if it is irreconcilable with an earlier judgment given in another Member State or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed.

658  Levente Tattay In accordance with Article 6 of Brussels I, under no circumstances may a foreign judgment be reviewed as to its substance. Pursuant to Article 37 of Brussels I a court of a Member State in which recognition is sought of a judgment given in another Member State may stay the proceedings if an ordinary appeal against the judgment has been lodged. 1.6.2  Enforcement of Foreign Judgments Pursuant to Article 38 of Brussels I, a judgment given in a Member State and enforceable in that state shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there. (a) According to Article 72(1) of the Decree Law, the decisions of foreign courts and other foreign authorities on matters shall be recognised, if: the jurisdiction of the court or authority in question is found legitimate under the rules of jurisdiction of Hungarian law; the decision is construed as definitive by the law of the state in which it was made; and there is reciprocity between Hungary and the state of the court or authority in question. (b) In accordance with Article 71 of the Decree Law, the decision of a foreign court or another foreign authority shall be recognised even if it pertains to a matter in which the Hungarian court has no jurisdiction, provided that recognition does not violate the provisions laid down in section 72(2)(a)–(c) (violation of public order, disregard of the hearing of concerned party, violation of the procedural rules). With regard to refusal of recognition, in general the decisions of foreign courts and other foreign authorities shall not be recognised if a Hungarian court or another Hungarian authority has exclusive jurisdiction concerning the matter to which the decision pertains. Pursuant to Article 72(2) of the Decree Law, an official foreign decision shall not be recognised if: (a) doing so would violate public order in Hungary; (b) the party against whom the decision was made did not attend the proceeding either in person or by proxy because the subpoena, statement of claim, or other document on the basis of which the proceeding was initiated was not served at his domicile or residence properly or in a timely fashion in order to allow adequate time to prepare his defence; (c) it was based on the findings of a procedure that seriously violates the basic principles of Hungarian law; (d) the prerequisites for litigation for the same right from the same factual basis between the same parties in front of a Hungarian court or another Hungarian authority have materialised before the foreign proceeding was initiated (suspension of plea); or (e) a Hungarian court or another Hungarian authority has already resolved a case by definitive decision concerning the same right from the same factual basis between the same parties. 1.6.3  Procedural Questions Concerning Recognition As a general rule, no special procedure is necessary for the recognition of an official foreign decision). This matter shall be resolved by the proceeding court or authority (Art 74 (1) of

Hungary  659 Law Decree. The party concerned may request a special court procedure for the recognition of an official foreign decision in Hungary. This procedure shall be under the jurisdiction and exclusive competence of the Metropolitan Court and the Central District Court of Buda if: the Metropolitan Court of the county where the domicile or residence (registered address) of the counter-claimant is located (in Budapest, the Central District Court of Buda) or, in respect of foreign arbitration awards, the county court (in Budapest, the Court of Budapest) or, in the absence of such; the Metropolitan Court of the county where the domicile or residence (registered address) of the petitioner is located (in Budapest, the Central District Court of Buda) or, in respect of foreign arbitration awards, the county court (in Budapest, the Metropolitan Court of Budapest) or, if the petitioner has no domicile or residence (registered address) in Hungary either; the Central District Court of Buda or, in respect of foreign arbitration awards, the Metropolitan Court. These proceedings and the available legal remedies shall be subject to the provisions of the Act on Judicial Execution pertaining to confirmation of execution. Official foreign decisions shall not be subject to review. The conditions required for the recognition of such decisions in Hungary shall be investigated ex officio, with the exception of the conditions ((violation of public order, disregard of the hearing of concerned party) specified in section 72(2)(b) and (c) of the Decree Law).

1.7  Intellectual Property Issues Addressed in Conflict of Laws Rules 1.7.1  Potential Tensions which May Arise from the Conflict of Different Rules Governing Choice of Law Tensions may potentially arise under the following circumstances: (1)  From a conflict of choice of law related to intellectual property rights A Hungarian author writes a book and has it first published in countries A and B. The publisher who is domiciled in country A refuses to pay remuneration. In this case Hungarian law may be applied by virtue of the Hungarian Copyright Act. The effect of Hungarian copyright law extends to a work first published abroad (Art 2 of the Copyright Act). On the other hand, in accordance with the general rules of copyright this debate shall be adjudicated according to the law of the state, in the territory of which protection is required. In accordance with Article 19 of the Decree Law copyright shall be adjudicated according to the law of the state in which protection is required. In this case a conflict of choice of law arises between different rules applicable to intellectual property rights and foreign law may be applied instead. (2)  From a conflict of choice of law related to general rules A foreign person infringes the personal rights of a Hungarian inventor who has registered his invention in Hungary. In this case, on the one hand in consideration of the personal rights of the offended party, the law of the inventor’s jurisdiction may be applied. On the

660  Levente Tattay other hand, an inventor and his legal successor shall receive protection according to the law of the state and in the state in which the patent was granted. Thus a conflicting choice of law may arise if the offended party commences an action against the foreign person as a defendant abroad, since in matters relating to tort, the courts of the place in which the harmful event occurred have jurisdiction. Consequently the offended party has a choice between Hungarian and foreign law and may choose to apply foreign law. In accordance with Article 10(1) of the Decree Law, legal capacity, disposing capacity as a human being and, in general, all personal status and rights attached to a person, shall be adjudicated according to his personal law. (3)  From a conflict of choice of law between Hungarian and EU Law (A) With effect from the date of Accession of Hungary to European Union, the protection of all existing Community trade mark registrations (since 1996) and applications automatically extended to the territory of Hungary in order to have equal effect throughout the Community. Community trade marks and applications extended this way may not be invalidated or refused on any relative grounds for refusal or invalidity, respectively, if the grounds became applicable merely because of the accession of a new member state. This means that extended Community trade marks may not be invalidated or refused on the basis of national trade marks or other national rights existing in Hungary at the time of accession in accordance with Article 142a(3) of Council Regulation 40/94/EC of 20 December 1993 on the Community trade mark. Notwithstanding the above-mentioned Community Regulation, trade marks may be cancelled after registration if the marks are registered in contradiction of rules of the absolute grounds of refusal by virtue of Article 33 of the Hungarian Trade Mark Act. (B) A foreign person who is a citizen of country X (which is a Member State of the EU) concludes a licence agreement with a Hungarian inventor for the exploitation of a patent registered in country Y. In accordance with the case of a contract relating to the utilisation of rights of industrial right protection and other rights representing pecuniary value, the rights of the party ceding use shall be applied. In this relationship the right of the Hungarian licensor, that is the Hungarian right may be applied. Notwithstanding that the Decree Law unambiguously prescribes the rule for choice of law, according to the above-mentioned principle governing contractual relations, Hungarian Law shall apply. Brussels I enacts the other rule of choice of law. In accordance with Article 5 of Brussels I, a person domiciled in a Member State may file an action in another Member State in matters relating to a contract, in the courts for the place of performance of the obligation in question. The rule of choice of law in accordance with Hungarian prescriptions relating to intellectual property cannot be contrary to EU regulation. Consequently Brussels I applies. (4)  From a conflict of choice of law between Hungarian and foreign law A foreign person who is a citizen of country K concludes a licence agreement for the exploitation in country L of a registered Hungarian industrial design. This foreign person subsequently brought an action in country L against the registered owner of the industrial design on grounds that the industrial design is invalid. In relation to the licensee agreement, the rule of choice of foreign law shall apply. However the invalidity of the Hungarian industrial design may not be adjudicated by the

Hungary  661 prescriptions of country L. In this case a conflict of choice of law may arise as between different national rules. In accordance with Article 44 of the Patent Act, the Hungarian Patent Office shall have jurisdiction to handle the declaration of invalidity of industrial design. The regulations of the EU shall enforce the rule of choice of law. In accordance with Article 22(4) of Brussels I, the national courts have exclusive jurisdiction in proceedings concerned with the validity of industrial designs. In proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place, ie the national courts shall have exclusive jurisdiction, regardless of domicile. (5)  From the conflict of choice of law between the general rules and special rules of intellectual property rights A Hungarian citizen infringes the personal rights of a foreign inventor who has registered a patent for his invention in Hungary. In this case, on the one hand in consideration of the personal rights of the offended party the law of the foreign inventor’s jurisdiction may be applied. On the other hand, an inventor and his legal successor shall receive protection according to the law of the state and in the state in which the patent was granted. A conflict of choice of law may thus arise between the general rules and special rules of choice of law relating to intellectual property rights. In this case, in accordance with Article 20 of Decree Law, an inventor and his legal successor shall receive protection according to the law of the state and in the state in which the patent was granted or where the report was made. This rule shall duly apply also to other rights of industrial right protection (industrial design protection, trade mark, etc). Thus the rule of intellectual property right shall apply. 1.7.2  Notable Hungarian Case Law Concerning Intellectual Property 1.7.2.1  Trade Marks (a) MANPOWER In the matter of the MANPOWER trade mark the Hungarian Patent Office refused to accept evidence filed by a trade mark owner. The proprietor of the mark, an Austrian firm, had neither a registered office nor commercial representation in Hungary. As evidence of his claim, he submitted a four-page leaflet which had been disseminated by individual agents in several places, eg at the entrances of underground station exits. Having examined the invoice of the printer’s shop (in German) submitted by the owner, it was impossible to determine whether it was issued in connection with the printing of the leaflet. The trade mark proprietor also did not prove that the supposed dissemination actually ever occurred and, if it did, when it occurred. Due to the above reasons, the Office declared the protection of the mark MANPOWER to have lapsed by reason of non-use (Supreme Court upheld Pfv.IV 20.557/2001).

662  Levente Tattay (b) SEIKOSHA The trade mark SEIKO may be qualified in Hungary as a well-known trade mark. In an action to cancel the protection of the trade mark SEIKOSHA, which was registered in classes 16, 35 and 42 by an Italian company, the validity of the trade mark was attacked on account of its similarity to the earlier existing trade mark, SEIKO, which was registered in class 14. The goods and services for which SEIKOSHA was registered were unrelated to the goods for which SEIKO was registered. The proprietor of the SEIKO trade mark submitted a number of documents showing worldwide registrations of the trade mark as well as evidence of its use and publicity in Hungary and good repute worldwide. The Trade Mark Office established that the SEIKO trade mark was well-known both in Hungary and worldwide, and had a reputation in Hungary for clocks and watches. The use of the SEIKOSHA trade mark would take advantage of the distinctive character of the SEIKO trade mark without due cause and would be detrimental to its repute. The registration SEIKOSHA was cancelled and the decision has become final (Metropolitan Court of Appeal 8 Pkf 35.953/ 2005/4). (c)  DAS GESUNDE PLUS The applicant made a request to the Office for the registration of the Phrase DAS GESUNDE PLUS in relation to goods and services in classes 3, 5, and 30 in accordance with the Nice Agreement. The Office rejected the application on the basis that the phrase DAS GESUNDE PLUS does not possess any requisite distinctive character. The applicant filed an appeal with the Metropolitan Court. The Metropolitan Court decided that the appeal was well-founded, and in its decision, ordered registration of the applied sign. In its opinion the Metropolitan Court referred to the Trade Mark Act, according to which a sign shall be excluded from protection if it is not suitable as a distinguishing label, in particular if it consists exclusively of signs or indications which may serve, in trade, to designate the type or intended purpose of the goods. The entirety of the mark should be considered as a whole in the examination, as opposed to merely the individual words, as emphasising only a single word could lead to a false conclusion. In this case the word combination cannot be considered as an everyday phrase in German. The Court provided the phrase ‘Mehr Gesundheit’ (More healthy) as an illustration. Although the word Gesundheit (health) is used in general, and as a result it can be considered as descriptive relating to all goods and services, when the entire phrase is taken together it can be recognised as having a character distinct enough to distinguish a product. The phrase DAS GESUNDE PLUS is an unusual word combination, a kind of pun, therefore its specific sound is capable of distinguishing goods (Metropolitan Court, 1; Pk. 633.535/2004). (d) RAPIDE The applicant requested the registration of the trade mark RAPIDE under class 5 concerning pharmaceutical preparations and substances, primarily of an analgesic and anti-pyretic nature. The Hungarian Patent Office refused the application based on the reasoning that the trade mark cannot be granted protection under class 5 since it lacks the requisite distinctive character. The Metropolitan Court upheld the decision. The applicant filed a reconsideration appeal against this decision. The applicant referred to the decision of the European Court of Justice in the case of the trade mark BRAVO and

Hungary  663 to the Council Directive on Community Trade Mark, according to which designs which consist exclusively of signs or information used in the colloquial language or which are used in fair practice generally and customarily, are excluded from protection. Moreover, he referred to the fact that the designation obtained secondary meaning by its continuous and widespread use. Another decision of the European Court of Justice was also referred by the Metropolitan Court concerning the trade mark HAVE A BREAK. In this decision it was explained that it should be regarded as trade mark use if the trade mark is used as part of a slogan. In accordance with the decision of the Metropolitan Court of Appeal, the sign RAPIDE with its known meaning was held to be suitable to distinguish the applicant’s pharmaceutical products from other similar products as in consideration of its nature as an antipyretic, the sign did not describe or define the type, intended purpose or characteristics of this type of medicine. In line with the above arguments, the application for the registration of the sign RAPIDE was found to be suitable for distinction from other goods in class 5, therefore it was not excluded from trade mark protection (Metropolitan Court of Appeal 8: Pkf 25.501/2006/3). (e) PLAYBOY Establissements Laporte, a French company, was the owner of the coloured figurative mark with registration no 447.801 PLAYBOY and of word mark no 2R 154.487. PLAYBOY. The trade mark protection included various clothing products and textiles listed in goods classes 23, 24, and 25, respectively. Playboy Enterprise Inc submitted a request to the Hungarian Patent Office requesting that the trade mark be declared cancelled due to lack of usage. Through its ruling, the Office terminated the protection of the trade mark, whereupon Laporte submitted a request to the Metropolitan Court. It for reconsideration, demonstrating during the court proceedings that its advertisements had appeared regularly in several publications, including Paris Match, Vogue, and La Point. However, the Metropolitan Court, and the Supreme Court did not consider the request for reconsideration to be well-founded, taking the position that the extent of usage was insufficient for the preservation of rights in Hungary. It has been considered that the advertisement, which appeared in French periodicals reaching only very few Hungarian customers, did not meet the quantitative expectations required for usage in order to preserve rights since it was entirely insufficient to familiarise Hungarian customers and competitors with the applicant’s trade marks (Journal of Court Decisions; 1994, Case 479). 1.7.2.2 Patents The System of European Patent Convention has been established as a parallel existence of the European and national patent systems and the granting of European patents are of unitary character. However, the effect of a granted European patent is non-unitary in the entire covered territory. As such, review by court is still a valuable part of the procedure in respect to patent law. The most important cases of patent litigations are as follows: refusal of patent protection; invalidation of protection; repeal of decision of the Hungarian Patent Office.

664  Levente Tattay (a) Refusal of Patent Protection When a refused patent application is appealed for review, in certain cases the applicant should prove that the solution applied for is appropriate for patent protection. The conditions of the functional accomplishment should be demonstrated by the applicant. Theoretically this can be accomplished by showing that the relevant patent was operational at the time of application, or that the solution is workable contrary to the theoretic objections. In concrete cases, the applicant would prove or disprove such facts and also state that there are no miscalculations in connection with a particularly sized machine. The applicant can also request that the Supreme Court order the production of a test piece. However, in reality there is no such possibility; the testing of the invention should take place before filing the patent application and not during the patent examination and related court procedures (Supreme Court Pkf III.21.960/2005). (b)  Invalidation of Patent Protection The Supreme Court has made an interesting decision in connection with lack of novelty with reference to a university textbook. In principle the contents of the textbook may be known by anybody who attends the university lectures. In the absence of a preliminary announcement of reservation, knowing the contents of the textbook depended on chance. Namely, in this case it was not decisively known if the contents of the textbook had been made known by the lecturers, as the content was not available to everyone. Use of the textbook within a narrow circle was held not to provide basis to establish lack of novelty (Supreme Court Pkf IV.24.782/1999). (c)  Repeal of a Decision of the Hungarian Patent Office Repeal of a decision of the Hungarian Patent Office will take place in all cases if a condition of the patentability was not examined by the Patent Office or if it did not make a decision thereon. Accordingly, invalidation of the decision of the Hungarian Patent Office has taken place, for example in a revocation procedure relating to a partially identical prior patent application in which the Patent Office had not yet conducted the examination procedure. Consequently the court judged that further receipt of evidence and completion of the statement of facts were necessary (Metropolitan Court 3 Pk. 22.924/1999). 1.7.2.3  Preliminary Injunctions Law CLXV of 2005 effective since 15 April 2006 has introduced changes in the legal system whereby compliance with the 2004 /48/EC IP Enforcement Directive has been implemented by means of the preliminary injunction. Preliminary measures can be initiated before the start of the main infringement process; this latter process must have started 15 days prior to the issuance of a decision of preliminary injunction. Article 104(5)(c) and (6) of the Patent Act has introduced the possibility of requesting the lodging of a counter-guarantee from the defendant instead of requesting discontinuation of the infringement, which is intended to ensure the patentee receives some form of compensation. In addition to civil remedies applicable in the case of infringement, the patentee may request that the court, on conditions relating to provisional measures, order the lodging of security, if in place of demanding discontinuance of the patent infringement, the patentee consents to the continuation, by the infringer, of the allegedly infringing activity. The court

Hungary  665 may order the lodging of security even in the absence of a request of the patentee to this effect, provided that the patentee filed a request for the discontinuance of patent infringement, which the court does not allow (Art 104(6) of the Patent Act). The first court decision related to preliminary injunction and damage compensation after the IP Enforcement Directive was implemented was brought forth on 19 February 2007 by the Hungarian Metropolitan Court in the form of a first instance, so-called interim judgment, in which the Court established that that the plaintiff in a pharmaceutical infringement lawsuit was obliged to compensate the defendant for its damages deriving from a preliminary injunction ordered in that lawsuit. This court decision is rather special because the compensation is foreseen to be pursued (later on when the level of the damages becomes proven), from a security bond provided by the plaintiff amounting to an extraordinary and even on an international level unusually high sum: the Hungarian Forint equivalent of c. US$15 million. The prohibition of the defendant’s distribution of its pharmaceutical products, ordered by means of the preliminary injunctions, was effective from the beginning of the infringement lawsuit until the declaration of invalidity of the subject product patent of the plaintiff that took place in a parallel nullification procedure by a final and enforceable court decision of the Metropolitan Court of Appeal on January 17, 2006. The Metropolitan Court’s interim judgment is very special and unique in Hungary, since it establishes compensation on an objective basis, i.e. without any unlawful behaviour on the side of the plaintiff requesting the preliminary injunction. Another interesting aspect of the decision of the Metropolitan Court is that, although the Hungarian civil procedure law fails to define the exact mode of implementation of the security bonds provided by plaintiffs, when the preliminary injunction was ordered, the Metropolitan Court ordered the use of a security deposit by the plaintiff for the purpose of this objective liability-based damage compensation. Current effective rules fail to define the exact manner of implementation of security bonds provided in preliminary injunction proceedings. The current Hungarian court decision seems to aim at granting a possible solution for these problems on the legislation, but by such means causes a serious conflict with both the effective Hungarian civil law and the hundred-year-old Hungarian legal tradition. 1.7.2.4  Unfair Trade Practices The Hungarian Competition Act (Act LVIII of 1996) also protects certain objects of industrial property. It is important to emphasise that since 1 November 2005, the Competition Act has made it possible for business competitors to turn each other in to court officials immediately on the basis of misleading of consumers. It has hence become important to make the initiation of court procedures with reference to misleading of consumers as widely available as possible as it is a generally accepted ground in several EU countries. The most important prescription of the Competition Act from the point of view of protection of intellectual property is set out in Article 6. In accordance with this rule, without the express prior consent of the competitor, goods or services (hereinafter referred to as the goods) may not be produced, placed on the market or advertised with such typical external appearance, packaging or marking (including the indication of origin) by which the competitor or its goods are normally recognised; furthermore, any such name, marking or indication of goods by which the competitor or its goods are normally recognised may not be

666  Levente Tattay used (slavish imitation). Two cases will be presented, in which action was brought for the establishment of slavish imitation. (a) TIC-TAC The relevant facts of the case were the following: the plaintiffs were the manufacturer and distributor of confectioneries and other food products. They had been present for decades on the Hungarian market with their products named ‘TIC-TAC’. The defendant appeared on the market with the product name ‘SUPER ORANGE’ and ‘SUPERMINT’. The plaintiffs filed a petition for the establishment of trade mark infringement and unfair market practice, ie slavish imitation under Article 6 of Competition Act. The court of first instance established that in this case, too, the overall impression exerted on the average consumer shall be taken into consideration. It was also established, that dragees satisfy everyday necessities, during the purchase of which the consumer probably make their choice only superficially and without particular care. In the present case, the court took the view that minor differences between the plaintiff ’s and defendant’s products carried no significance. The court therefore established trade mark infringement. The Court of Appeal overruled the judgment on the basis of the appeal of the plaintiffs. The Court established that the defendant distributed its ‘SUPER ORANGE’ and ‘SUPERMINT’ products in a characteristic packaging from which the plaintiffs and their ‘TIC-TAC’ product could be recognised. The court established that the products of the plaintiffs, which were widely known on the Hungarian market, were recognised by consumers by that characteristic packaging. When consumers chose between products, they distinguished the products also on the basis of the practical box in spite of the different label; this property was the distinctive characteristic of the product. Therefore, the use of packaging that was confusingly similar to the distinctive packaging of the plaintiffs constituted unfair trade practice (Metropolitan Court of Appeal, 8 Pf.20.387/2005). (b) JEREZ The plaintiff of the case was the internationally known manufacturer of sports equipment whose products are recognisable by consumers by their characteristic three stripes. The plaintiff was the owner of several internationally registered trade marks, and had established a presence on the Hungarian market with its ‘JEREZ’ model since 2004. The defendant appeared on the market in the summer of 2005 with sports shoes named ‘MONTEIRO’. The plaintiff filed a petition for the establishment of trade mark infringement and slavish imitation and won the lawsuit. However, here only the competition-related part of the case will be discussed in detail. In the competition lawsuit, concerning which separate hearings were held, the court of first instance established that with regard to the forming of the sole, the decoration, the design of the heel, the upper part and the stripes, the overall impression made by the ‘MONTEIRO’ shoes was completely identical to the overall impression made by the ‘JEREZ’ shoes. The court accepted the plaintiff ’s arguments that the average consumer who has seen the defendant’s product could think that the designation on the shoes was a new member of the trade mark family comprised of three parallel stripes. The court furthermore established that in the course of shopping the consumers had no opportunity to put the two products beside each other and to compare them thoroughly. Therefore, the court established that the defendant violated Article 6 of the Competition Act. The court also established that average consumers, by paying the usual attention expected of them, would

Hungary  667 not discover any differences between the product of the plaintiff and the product of the defendant. Consumers should be able to consider and to decide which product they want to chose in the course of competition (High Court Jász – Nagykun – Szolnok 8G.20.032/2007).

2  Hypothetical Case Studies Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in neighboring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions would be different in cases where intellectual property rights are at stake.)

Case 1(1) In this case the Hungarian courts have jurisdiction. The decision regarding international jurisdiction of the Hungarian court will differ if the defendant was in a corporation having its main place of business in a third country X. In this case A would file the defamation suit in country. The general provisions of Brussels I would apply. By virtue of Article 2(1) of Brussels I, persons (including legal persons) domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State In accordance with Article 45 of Brussels I, if the defendant has its main place of business in a third country but a branch located in Hungary. In this case Hungarian law may be applied. Case 1(2) The Hungarian courts will have international jurisdiction, if the journal were distributed in Hungary in the language which is officially spoken. The decision will not differ if the journal was printed in Hungary (in a language which is not spoken in Hungary) for distribution in neighbouring country X. In this case the national courts have jurisdiction by virtue of Brussels I. According to Article 2(2) of Brussels I, persons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that state. In the cases of violation of personal rights (Art 23(1) item 1) of Civil Proceedings Act) the county courts have competence.

668  Levente Tattay The violation of personal rights, causing non-pecuniary loss, production of infringing materials or distribution of such infringing materials is sufficient to enable the Hungarian court to exercise jurisdiction. In Hungary the local courts have general jurisdiction on civil cases. According to Article 84 of the Civil Code, the rights-holder has the following recourses in civil action against the infringer, according to the circumstances of the case: (a) he may demand a court ruling establishing that infringement has occurred; (b) he may demand cessation of the infringement or threat of infringement, and impose an injunction aimed at prohibiting the continuation of the infringement; (c) he may demand that the infringer provide information on the parties taking part in the manufacture of and trade in goods or performance of services which infringe on the personality; (d) he may demand that the infringer make amends for his action, by declaration or in some other appropriate manner, and, if necessary, that such amends should be given due publicity by and at the expense of the infringer; (e) he may demand the seizure of those assets and materials used exclusively or primarily in the infringement as well as of the products infringing on the personality, or demand that they are delivered to a particular person, recalled and definitively withdrawn from commercial circulation, or destroyed; or (f) he may demand compensation for damages in accordance with the provisions of civil liability. Case 1(3) Under Hungarian law, it is not necessary for a court to consider the residence of the defendant in order to exercise international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published. The law applicable at the place and time of the activity or omission causing damage shall apply. The Hungarian courts may proceed in all cases where the domicile or habitual residence of the defendant (or the registered office if the defendant is a legal entity or business association without legal entity) is located in Hungary, unless the jurisdiction of Hungarian courts is expressly excluded by the Law Decree (Art 54(1) of Law Decree). Pursuant to Article 23(1) item l) of the Civil Proceedings Act the county courts have jurisdiction in the cases of violation of personal rights. Hungarian courts may also exceptionally have international jurisdiction to decide over the violation of personal rights which occur in another state. In accordance with Article 6(1) of Brussels I, a person domiciled in a Member State who is one of a number of defendants may also be sued abroad in the courts for the place in which any one of the other defendants are domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. In cases with more than one defendant, a Hungarian court may proceed against all defendants where at lest one defendant has his domicile, registered seat or habitual residence in Hungary (Art 54(2) of the Decree Law). In this regard, the Shevill case1 of the ECJ should be mentioned. On the basis of this decision, if the plaintiff is a victim of libel by a newspaper article distributed in several countries, he is entitled to bring an action for damages against the publisher either before the   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415.

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Hungary  669 court of the state in which the publisher or the defamatory publication is established or before the court of the state in which the publication was distributed.

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Case 2(1) The Hungarian courts do not have international jurisdiction and competence to decide upon infringement of foreign patents. In accordance with Article 22(4) of Brussels I, the national courts shall have exclusive jurisdiction regardless of domicile in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered in the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place. In accordance with Article 65/A of the Decree Law, in proceedings concerning the registration, extension or termination of industrial property rights in Hungary, the Hungarian courts have exclusive jurisdiction. In accordance with Article 104(1) item c) of the Patent Act, the Metropolitan Court shall have exclusive jurisdiction related to court actions concerning any infringement of inventions or patents. Case 2(2) The Hungarian courts do not have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights. The Hungarian courts may bring about decisions which differ with regard to non-registered intellectual property rights (know-how or copyright). The Decree Law excludes jurisdiction in proceedings in connection to the registration, extension and termination of industrial property rights abroad (Art 62/C item f) of the Decree Law). Notwithstanding that, in accordance with Article 23(1)(c) of the Civil Proceedings Act, the Hungarian county courts have competence in proceedings in matters concerning copyright, inclusive pecuniary claims from collective management of copyright and proceedings relating to know-how.

670  Levente Tattay Case 2(3) The decision of a court, if the question of the validity of a foreign intellectual property right arises as a preliminary question, shall be rejected. In accordance with Article 22(4) of Brussels I the national courts shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the validity of patents.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries W, X, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A starts patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of Hungary, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract? (2) Assuming that B, C and D are members of a group of a corporation and takes identical steps in infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country of X is a court of your country would (and if so under what conditions) it consolidates the proceedings if it was to decide upon the request of A? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

Case 3(1) In this case the infringement failed to materialise in country W (Hungary). As such, the Hungarian courts do not have jurisdiction over the proceedings concerned with the infringement and do not have jurisdiction over joint claims and consolidation of proceedings against defendants B, C, and D. The claim of consolidation will consequently be rejected. The decision of a court will be different, if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract. In accordance with Article 86(2) of the Patent Act, the Metropolitan Court of Budapest shall have exclusive jurisdiction to hear the following types of patent cases: (a) actions for the granting, modification and withdrawal of compulsory patent licences; (b) court actions relating to any rights for preliminary and extended use; and (c) court actions concerning any infringement of inventions or patents. In accordance with Article 22(4) of Brussels I, the national courts have exclusive jurisdiction in proceedings concerned with the validity of patents. According to Article 8(1) of Rome II the law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed. Case 3(2) Country W (Hungary) does not have jurisdiction in proceedings related to infringement of foreign patents and consolidation of proceedings against defendants. The Hungarian court does not have jurisdiction to adjudicate invalidity of foreign patents.

Hungary  671 The Hungarian courts will not have jurisdiction to decide over counter-claims in infringement cases of patents registered abroad. In accordance with Article 86(2) of the Patent Act, the Metropolitan Court of Budapest shall have exclusive jurisdiction to hear patent infringement cases. In relation to Case 3, the Roche Nederland case2 of the ECJ in connection with application of Article 6 of Brussels I should be mentioned. By virtue of this decision, infringement cases which have occurred in several countries cannot be joined.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products did not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and referring to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that patents are invalid? (3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings? (4) Would a parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be legal effects of such a decision?

Case 4(1) The parties may include choice-of-law clauses in a licence agreement. The choice of court clause of the licence agreement may be enforceable in Hungary. The decision will not differ if the parties had made a new choice of court agreement at the time when the dispute arose. In the absence of a chosen law for contracts relating to the utilisation of rights of industrial right protection and other rights representing pecuniary value, the law of the state shall apply in which the party ceding use has their place of residence, usual place of abode, central office or premises at the date of the conclusion of the contract (Art 24 of Decree Law). Case 4(2) The court will not enforce an exclusive choice of court clause if the defendant has raised a counter-claim that patents are invalid, since in this case the other court will have exclusive jurisdiction. In accordance with Article 63(1) and Article 104(1)(c) of the Patent Act, the Municipal Court of Budapest shall have exclusive jurisdiction in relation to court actions concerning any infringement. The regulation of the EU shall enforce the rule of   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535.

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672  Levente Tattay choice-of-law. In accordance with Article 22(4) of Brussels I, national courts have exclusive jurisdiction in proceedings concerned with the validity of patents. Case 4(3) The court will not assert jurisdiction if a choice of court agreement was made in patent infringement proceedings. The Decree Law excludes jurisdiction of foreign courts in proceedings in connection with the registration, extension and termination of industrial property rights abroad (Art 62/ C item f) of Decree Law). Case 4(4) The arbitration Agreement would be enforceable under Hungarian law. However, the arbitration tribunal will not be empowered to decide upon the validity of intellectual property rights. The Hungarian Patent Act stipulates that exclusive competence exists in the following matters: (a) granting of patents, trade marks, design protection; (b) declaration of termination protection of patents, trade marks , and designs (c) declaration of invalidity protection of patents, trade marks and design (d) registration of patents, trade marks and design applications and registered patents, trade marks and designs; (e) provision of official notice in patent, trade mark and design matters

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of a country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Case 5(1) The court of country Z (Hungarian court) shall reject the infringement suit, since it only has exclusive jurisdiction in relation to the infringement of Hungarian patents, regardless of pending proceedings in countries X and Z. In accordance with Article 63(1) and Article 104(1) item c) of the Patent Act, the Municipal Court shall have exclusive jurisdiction related to court actions concerning any infringement of Hungarian patents. The Hungarian county courts have jurisdiction over proceedings in matters concerning copyright, rights of industrial property and to further proceedings relating to know-how (Art 23(1) of Civil Proceedings Act). In accordance with Article 19 of the Decree Law, copyrights shall be adjudicated according to the law of the state in the territory of which protection is required.

Hungary  673 The decision of a Hungarian court may be different if the dispute was related to intellectual property rights that are not subject to registration (know-how or copyright). In this case the competence of Hungarian courts will not be excluded. The provision of suspension of proceedings according to Article 27(1) of Brussels I may be applied. According to Article 27(1) of Brussels I where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. Case 5(2) Generally the national courts have exclusive jurisdiction in relation to judgment of validity of patents registered in country concerned. The court of country W will reject the suit challenging the validity of patents in countries X and Y. In accordance with Article 63(1) and Article 104(1) item c) of the Patent Act, the Metropolitan Court shall have exclusive jurisdiction related to court actions concerning any infringement. In all countries which maintain a Patent Office, said Offices have exclusive jurisdiction to adjudicate over the invalidity of patents.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, first, that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Case 6(1) The court of country X (assuming it is a Hungarian court) will not apply its patent statute (ie the Patent Act) for infringing acts occurring in country Y and Z. The territorial effect of all objects of industrial property and the independence of patents are basic requirements of the Paris Convention. Case 6(2) In Hungary the principle of territoriality will be considered. As such, the effect of the Hungarian Patent Act shall not extend to patents registered in foreign countries. The Hungarian court will hence not apply the patent statute of country X for allegedly infringing acts that occur in country Z. Once again, this is because the territorial effect of all objects of industrial property and the independence of patents are basic requirements of the Paris Convention.

674  Levente Tattay

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C, requesting to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1) What law would be applied to determine the liability of A, B and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)? Would parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Case 7(1) Assuming that the website was created in Hungary, Hungarian law will apply. The parties will not have the ability to agree on the applicable law (infringement and remedies). The website of A, B and C would be considered as a service provider. Act CVIII of 2001 on Electronic Commerce and on Information Society Services (hereinafter referred to as the Electronic Commerce Act) regulates the liability of website proprietors as service providers. According to Article 2(k) of the Electronic Commerce Act, ‘service provider’ shall mean any natural or legal person, or business association lacking the legal status of a legal person providing a social information service. Case 7(2) The jurisdiction of Hungarian courts and application of Hungarian law would not differ even if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer. Pursuant to Article 7 of the Electronic Commerce Act, service providers shall be liable for any unlawful information they have made available.

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning the right to obtain patent be enforceable in your country? (2) Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in case of initial authorship or initial title to trade mark?

Hungary  675 (4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Case 8(1) Assuming that A is a Hungarian citizen and B has his residence in Hungary, the Hungarian court will apply the Hungarian Patent Act. The parties may not rely on a choice of law clause concerning initial authorship in this case. In accordance with Article 9(2) of the Patent Act ‘employee invention’ means any invention created by a person who is not required to do so under his contract of employment. However it should be noted that the exploitation of such invention falls within the sphere of activities of his employer. According to Article 10(2) of the Patent Act, in connection with employee inventions, patent entitlement shall be vested in the inventor; the employer, however, is entitled to exploit the invention. The employer’s right of exploitation is nonexclusive; the employer may not grant a licence of exploitation. The right of exploitation may only be transferred to a successor in title in the event of the winding-up of the employer, or the separation of its department; otherwise, it may not be transferred or assigned to any other person. Case 8(2) The decision will not differ if A made the invention in joint collaboration with other researchers; however the court will take into account the collective authorship. Case 8(3) The applicable law will differ in case of initial authorship or initial title to trade mark. The prescriptions of the Copyright Act would be applied instead. The creation of a mark may be recognised as a creation of a copyrighted work. In Accordance with Article 20 of the Trade Mark Act, the economic rights relating to a work ordered for publicity purposes shall be assignable to the user. According to Article 20(2) of the Trade Mark Act the mode of use, its extent, the scope of territory, the terms, the specification of the carrier of the advertisement, as well as the remuneration due to the author shall be particularly essential issues when a contract on the assignment of economic rights is concluded. Case 8(4) A may raise the claim, arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries, separately in each foreign country. It is a generally accepted principle that the place of performance of the obligation in question should determine the choice of law in contracts. In accordance with Article 5 of Brussels I a person domiciled in one Member State may be sued in another Member State in matters relating to a contract, in the courts of the place of performance of the obligation in question.

676  Levente Tattay

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of the concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How would the court deal with the issue of transferability? (3) What would be the applicable law in a case where there is no choice of law made by the parties?

Case 9(1) The Hungarian court will not enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors. In accordance with Article 9(2) of the Copyright Act, authors cannot assign or waive their moral rights or have these rights assigned to another person in any other manner. According to Article 9(1) of Rome I the effective protection of personal rights of authors is essential from the point of view of public interests laid down in the Hungarian Constitution and shall be recognised as overriding mandatory provision. The assignment of personal law is illegal. Pursuant to Article 9(1) of Rome, overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests (such as its political, social or economic organisation) to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract. Case 9(2) Generally the court will not permit the transfer of economic and moral rights of authors. Pursuant to Article 9(3) of the Copyright Act, economic rights cannot be assigned or waived; nor can these rights be assigned to any other person in any other manner. In the absence of a selected law the law, when dealing with contracts relating to the utilisation of rights falling under copyright protection the law of the state in which the user has their place of residence, usual place of abode, central office or premises at the date of the conclusion of the contract shall apply (Art 24 of Decree Law). Case 9(3) The applicable law is in this case is such that no choice of law can be made by the parties. The law of the state in which the recording company B has their place of residence shall apply.

Hungary  677

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the court recognising the case assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in registry of a country recognising the case? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Case 10(1) In the case of the ownership of patent, the Hungarian courts do not have exclusive jurisdiction. Consequently, the foreign judgment concerning the ownership may be recognised in Hungary. In accordance with Article 33(1) of Brussels I a judgment given in a Member State of the EC shall be recognised in the other Member States without any special procedure being required. In accordance with Article 74(1) of the Decree Law no special procedure is necessary for the recognition of an official foreign decision. Unless otherwise prescribed by law, this matter shall be resolved by the proceeding court or authority. The rendering court may refer to the foreign decision on transfer ownership of patent carried out on the basis of assignment. Case 10(2) With reference to the recognition of foreign judgments it is unnecessary to re-litigate the dispute in order to reach the ownership decision. According to Article 74(3) of the Decree Law official foreign decisions shall not be subject to review. Case 10(3) No special procedure is necessary for the recognition of an official foreign decision. The enforcement judgment is not necessary and it will suffice to present the original judgment to the enforcing authority. A general rule of recognition of foreign judgments in the European Union may be considered in that the EU will recognise judgments without any special procedure. Pursuant to Article 33 of Brussels I a judgment given in a Member State shall be recognised in the other Member States without any special procedure being required.

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods, A files an infringement suit also asking the court to issue an injunction to stop infringing activities

678  Levente Tattay and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg if B was resident in country Y and infringing acts were made in country)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

Case 11(1) The Hungarian court (in this case, the Metropolitan Court has exclusive jurisdiction) shall order interim injunctions exclusively in Hungary. The interim measures do not have extraterritorial effect. The trade mark may be infringed through an internet auction. According to Article 26(8) of the Copyright Act authors have the exclusive right to transmit their works to the public in manners other than broadcasting, and they also have the exclusive right to authorise other persons to do so. This right extends, in particular, to the case in which works are made accessible to the public by cable or by any other means or in any other manner in a way in which the members of the public can determine individually the time and place of access. This rule extends to illegal use of trade marks on the Internet. The situation will not change if the court of Hungary did not have jurisdiction over the main dispute. Case 11(2) The Hungarian courts do not have jurisdiction if the trade mark for which the protection is sought was registered abroad, and will not order interim measures in this case. In accordance with Article 95(1) of the Trade Mark Act the Metropolitan Court shall have exclusive jurisdiction in relation to court actions concerning any infringement of trade marks. Pursuant to Article 95(5) of the Trade Mark Act, a request for provisional measures may be lodged before filing for court action in connection with a trade mark infringement, and it shall be adjudicated by the Metropolitan Court in non-litigious proceedings. Non-litigious proceedings relating to provisional measures shall be governed by the provisions of this Act and the general rules of the CPC, subject to the exceptions stemming from the special characteristics of non-litigious proceedings. If the applicant has filed charges in accordance with sub-section (8) in connection with the trade mark infringement, the court costs of the lawsuit shall be due and payable in addition to the fees paid for the non-litigious proceedings. Case 11(3) The Hungarian court shall not require the person seeking issuance of provisional measures to grant a guarantee. This possibility does not exist in Hungary. The Metropolitan Court

Hungary  679 may order the interim measures in case of an infringement of a Hungarian trade mark. In accordance with Article 95(3) of the Trade Mark Act, the trade mark proprietor, apart from the civil claims available in connection with infringements, may request the court to order under the conditions applicable to provisional measures: (a) protective measures in accordance with the provisions laid down in the Act on Judicial Enforcement, if he able to verify that any subsequent attempt for the recovery of profits made by the infringement or the payment of damages is in jeopardy; (b) the infringer to notify of and to present bank, financial or commercial information and documents for the purpose of ordering the protective measures referred to in the previous paragraph (a); (c) the provision of security if in exchange, in lieu of demanding the termination of the infringement, the trade mark proprietor agrees for the infringer to continue the alleged acts of infringement. Pursuant to Article 31 of Brussels I, application may be made to the courts of a Member State for such provisional (including protective) measures as may be available under the law of that State even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter. The Hungarian authorities are not empowered to approve applications for preliminary injunctions or interim measures if the courts of another Member State of EC have jurisdiction as to the substance of the matter.

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y: (1) Could intellectual property rights be used as a collateral pursuant to the law of your country? (2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights? (3) Would a court of your country apply the same law registered and non-registered intellectual property rights?

Case 12(1) According to Hungarian intellectual property law, IP rights (with the exception of copyright creations) may be used as collateral. In accordance with Article 9(3), subject to the exceptions of inheritance, the economic rights of copyrighted works may not be assigned in Hungary. In accordance with Article 25(1) of the Patent Act, Article 19(1) of the Trade Mark Act and Article 21(1) of the Design Act, all rights originating from an invention and from patent protection, deriving trade mark protection and conferred by a design may be assigned, transferred and encumbered, with the exception of the rights attached to the person of the inventor and designer. Rights deriving from trade mark protection may be pledged. A right of pledge shall only be constituted if the mortgage contract is made in writing and the right of pledge is entered in the trade mark register (Art 20 of the Trade Mark Act).

680  Levente Tattay Case 12(2) The law chosen by the parties on concluding the contract or at a later date shall apply to the contracts in question. In the absence of a selected law, in the case of a contract relating to banking and credit transactions, the law of the place of residence of the financial institution providing the banking service may be applied. Pursuant to Article 24 of the Decree Law, generally Hungarian law can be applied. Case 12(3) Non-registered intellectual property rights (eg know-how, software, artistic and literary work) can also have high pecuniary value. In accordance with Article 19 of the Decree Law, copyrights shall be adjudicated generally according to the law of the state in the territory of which protection is required. In consideration of the point of view of collateral, these works will be treated as registered industrial property rights. Accordingly the law of the place of residence of the financial institution providing the banking service may be applied. In general, Hungarian legislation shall apply.

India VANDANA SINGH*

Contents 1. General Overview........................................................................................................................... 681 1.1 Introduction......................................................................................................................... 681 1.2 General Overview of Indian law.......................................................................................... 682 1.3 Judiciary System................................................................................................................... 683 1.4 Jurisdiction........................................................................................................................... 684 1.5 Choice of Law....................................................................................................................... 685 1.6 Recognition and Enforcement of Foreign Judgments........................................................ 686 1.7 Conflict of Laws Rules with Regard to Intellectual Property............................................. 687 2. Hypothetical Case Studies.............................................................................................................. 687 Case 1. General/Special Grounds of Jurisdiction..................................................................... 687 Case 2. Subject-Matter Jurisdiction.......................................................................................... 690 Case 3. Consolidation of Proceedings....................................................................................... 692 Case 4. Choice of Court............................................................................................................. 693 Case 5. Parallel Proceedings....................................................................................................... 694 Case 6. Principle of Territoriality (Choice of Law).................................................................. 695 Case 7. Infringement of Intellectual Property Rights............................................................... 695 Case 8. Applicable Law to Initial Ownership............................................................................ 700 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 701 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 702 Case 11. Provisional Measures and Injunctions......................................................................... 703 Case 12. Securities in Intellectual Property................................................................................ 705

1  General Overview 1.1 Introduction Conflict of laws, also referred to as private international law, is a branch of Indian law applied by Indian courts whenever a dispute before it involves a foreign element.1 ‘Foreign element’ in this context means a fact relevant to the issues involved in the proceedings which * Doctor, Assistant Professor of Law, University School of Law and Legal Studies, Guru Gobind Singh Indraprastha University, Delhi. 1   Viswanathan (R) v Rukn-Ul-Mulk Syed Abdul Wajid AIR 1963 SC 1.

682  Vandana Singh has a geographical or other connection with a territorial unit other than the territorial unit where the court is dealing with the proceedings. There may be a foreign element because the parties may be citizens of a foreign country, or domiciled in a foreign country. In all these cases, there is a foreign or non-Indian element. The relationship between intellectual property and private international law is a fascinat­ing and multi-faceted one. Both fields are inherently international, but it is the exponential increase in conflicts involving trans-border elements, in a world characterised by global trade and borderless communication structures, that has, in modern times, drawn the two disciplines close. The protection and commercial exploitation of intellectual property rights are seldom confined to one country and the introduction of a foreign element inevitably raises potential problems of private international law. In the following section I will give a general overview of Indian law with regard to conflict-of-laws issues in matters of intellectual property. In section 2, hypothetical case studies will be examined from the viewpoint of Indian law.

1.2  General Overview of Indian law Property, it would seem, was one of the four pillars upon which stood firmly the complete framework of ideal Indian life: Dharma (religion, or that which one ought to bear as one’s solemn duty), Artha (finance, loosely meaning all roots of worldly property), Kama (desires, ambitions, etc) and Moksha (liberation from worldly connections or salvation). We can relate the concept of Artha with the modern term ‘property’. The Latin word proprius is the root of the word proprietas, much in the same way as the word ‘property’ in English is a noun formed from the word ‘proper’. So, if we want to become familiar with the literal meaning of the word ‘property’, we should look at the root word, proprius. In Latin, the word proprius means: ‘one’s own, special’.2 One’s property is what one owns or what one has as especially as one’s own. Intellectual property falls under the category of intangible property. Intellect, as a word, has its roots in the Latin word intellectus, meaning perception.3 Thus, speaking etymologically, intellect is perception. It is the faculty of knowing and reasoning. It is the barometer of one’s understanding of persons or things, of events and concepts; individually or collectively. It is the birthplace of ideas, rather than the idea itself. It is the laboratory of the intelligible vibrations of brains, trying to bring forth certain ideas and concepts or combinations of them. At the national level, India as a free nation has not only updated some earlier legislation (eg Patents and Designs Act 1911) but has also enacted new laws aimed at the protection of IPRs at the national as well as international level. The Acts which have been enacted and are in force are: the Copyright Act 1957,4 the Patents Act 19705 (as amended in 2005), the Trademarks Act 1999,6 the Geographical Indications of Goods (Registration and Protection)

  JB Sykes (ed), Concise Oxford Dictionary, 7th edn (Oxford, Clarendon Press, 1982, Reprint 1985) 825.   ibid 521. 4   The Copyright Act No 14, June 1957, as amended by Amendment Acts of 1983, 1984, 1992. 5   The Delegated Legislation Provisions (Amendment) Act No 4 of 1985. 6   The Trade and Merchandise Marks Act No 43, October 1958. 2 3

India  683 Act 1999,7 the Designs Act 2000,8 the Protection of Plant Varieties and Farmers’ Rights Act 20019 and the Biological Diversity Act 2002. In 2008, India came out with the Traditional Knowledge Digital Library (TKDL) in an effort to protect her traditional knowledge and traditional cultural expressions. Also, the facility of electronic filing (e-filing) of applications has been available since July 2007 to bring the Indian Intellectual Property Regime into line with international requirements. To this end, the Trade Marks (Amendment) Bill 2008 was passed by the Lok Sabha on 25 February 2009. It makes amendments in the trade mark law necessary for providing the facility of international filing of applications for registration, as required by the Madrid Protocol 1989.

1.3  Judiciary System The judiciary of India is an independent body and is separate from the executive and legislative bodies of the Indian government. In India we have a three-tier court system. At the apex is the Supreme Court, which is followed by High Courts at the state level and district courts at the district level. India’s judiciary system is based on the British legal system that was prevalent in the country during the pre-independence era. Very few amendments have been made in the judicial system of the country. Supreme Court in India The Supreme Court is the highest judicial body in India. The jurisdiction of the Supreme Court is divided into original jurisdiction, advisory jurisdiction and appellate jurisdiction. The Supreme Court also has advisory jurisdiction.10 High Courts in India There are High Courts in almost all the states of India and the Union Territories.11 They decide on both civil as well as criminal cases. Most of the cases that are handled by the High Courts of the country are passed on from the district or lower courts. District courts in India The district courts in India take care of judicial matters at the district level. Headed by a judge, these courts are administratively and judicially controlled by the High Courts of the respective state to which the district belongs. There are many secondary courts also at this level, which work under the district courts. There is a court of the civil judge as well as a court of the chief judicial magistrate. While the former takes care of the civil cases, the latter looks into criminal cases and offences. There is also a ministry and some departments that look after the judicial arrangements of the country. The Ministry of Law and Justice and the National Informatics Centre are endowed with the responsibility of maintaining law and order in the country. There are also many legal committees and commissions in India so that the judiciary can run smoothly and render all possible help to the general masses of India in solving their legal problems. The principal laws in relation to Intellectual Property Enforcement in India are the following: 7   The Geographical Indication of Goods (Registration and Protection) Act No 48 of 1999, in force September 2003. 8   The Designs Act 2000, in force since 2001. 9   Entered into force in June 2002. 10   Art 143 of the Constitution of India. 11   At present in India there are 28 High Courts.

684  Vandana Singh the Code of Civil Procedure; the Indian Penal Code; the Civil and Criminal Rules of Practice. The Civil Procedure Code provides for civil remedies and enforcement through civil courts, the Indian Penal Code provides for penal remedies. The Rules of Practice of the trial courts, High Courts and the Supreme Court of India set the finalities of the enforcement procedure. India’s intellectual property laws provide for statutory enforcement mechanisms. These legislations are supported by the following rules: the Patents Rules 1972 as amended by the Patents (Amendment) Act of 1999; the Trade Rules 2001; the Copyright Rules 1958; the Designs Rules 2000. The Geographical Indications Rules provide administrative mechanisms for the registration and enforcement of geographical indications. The Semi Conductor Integrated Circuits Layout Design Act does not yet have rules to support the administrative mechanism thereunder. The Information Technology Act 2000 also plays an important role in relation to areas of the interface between information technology and intellectual property rights. India’s intellectual property legislation provides built-in enforcement mechanisms and detailed procedures thereof.12

1.4 Jurisdiction Rules relating to jurisdiction prescribe when a court will entertain a suit. The principal applicable law in India is the Code of Civil Procedure 1908. This contains detailed provisions laying down rules as to when a court has, or does not have, jurisdiction. The Code of Civil Procedure contains no specific provision regarding international jurisdiction; however, on the basis of case law we can infer certain guidelines. Section 20 of the Code of Civil Procedure 1908 enables an Indian court to assume jurisdiction over a suit if the defendant actually and voluntarily resides or carries on business, or personally works for gain, at a place within the jurisdiction of the court, or where the cause of action, or a part of it arises. It is useful, first, to clarify the meaning of words used in section 20. ‘Resides’ is not defined; as a matter of language, it means to dwell permanently, or for a considerable time, to have one’s regular home.13 ‘Dwells’, the word used in the Letters Patent of the Bombay, Calcutta and Madras High Courts in connection with the original jurisdiction of those courts, means the same. A person dwells in a place if he hires a house and he and his family stay there, meaning to remain for several months.14 A person can dwell at more than one place at the same time.15 The word ‘corporation’ in the explanation to section 20 includes companies incorporated under the Companies Acts.16 Where a company has a principal and a subordinate office, a 12  These provisions deal with the constitution and functions of the Intellectual Property Appellate Board (IPAB). In India certain powers are given to the IPAB to deal with disputes related to intellectual property. 13   Shorter Oxford English Dictionary (Oxford, Oxford University Press, 2002). 14   Srinivasa Moorthy v Venkatavarada Iyrngar (1911) LR 38 IA 129. 15   Orde v Skinner (1880) LR 7 IA 196. 16   Hakam Singh v Gammon (India) Ltd AIR 1971 SC 740.

India  685 suit against a subordinate office can only be filed where the company has a subordinate office.17 ‘Cause of action’ means the bundle of facts the plaintiff will have to establish to succeed.18 In determining whether a court has jurisdiction under section 20, the nationality of the defendant is irrelevant.19 If the cause of action, or a part of it, has arisen within the jurisdiction of the court, the court can proceed against non-resident foreigners.20 Even if the cause of action has arisen outside India, if the defendants are within jurisdiction, the court can entertain the suit.21 An Indian court can proceed against a defendant if he is resident in India.22 Similarly, a suit can be filed against a defendant carrying on business in India through an agent.23 If a part or whole of the cause of action has arisen in India, the court has, under the Code, jurisdiction over non-residents, whatever the position may be in international law.24 If a defendant not resident in India had submitted to the jurisdiction of the court, the court has jurisdiction.25 An Indian court has jurisdiction over foreign companies if they carry on business within the jurisdiction of the court.26

1.5  Choice of Law As far as private international law is concerned, in India there are few international treaties that can be considered a direct source for it. The most prominent examples are the two conventions in the field of arbitration, that is the Geneva Convention 1927, and the New York Convention 1958. India is also a party to the Berne Convention 1923 of Copyright and the Universal Copyright Convention. Another method by which the treaties have been a source for PIL is through judicial reference. India is not a party so far to any of the conventions arising from the Hague Conference. Although they cannot be considered a direct source of private international law in India, they do carry persuasive value to some extent, with reference being made to them by the authors and also in the reports of the Law Commission of India. In their decisions, the judges nevertheless invoke some of the conventions to which India is not a party. For example, in Y Narasimha Rao v UY Venkatalakshmi,27 the judge invoked the Hague Convention of 1968 on the Recognition of Divorce and Legal Separation, as well as the Judgments Convention of the European Community 1968.

  Patel Roadways Ltd v Prasad Trading Co AIR 1992 SC 1514.   Rajasthan High Court Advocates’ Association v Union of India AIR 2001 SC 416.   VE Smith v Indian Textile Co AIR 1927 ALL 413. 20   Giradhar Damodar v Kassigar Hiragar (1892) ILR 17 Bom 662. 21   Muthia Chettiar v Shanmugham AIR 1969 SC 552. 22   Haveli Shah v Khan Saheb Shaikh Painda Khan AIR 1926 PC 88. 23   Janoo Hassan v Batchu Kamandu AIR 1924 Mad 158. 24   Maistry Rajabhai Narain v Haji Karim Mamod (1935) 35 Mad LJ 189. 25   Viswanathan (R) v Rukm-ul-Mulk Syed Abdul Wajid AIR 1963 1. 26   Babulall Choukhani v Caltex (India) Ld AIR 1967 Cal 205. 27   Y Narasimha Rao v UY Venkatalakshmi (1991) 3 SCC 45. 17 18 19

686  Vandana Singh

1.6  Recognition and Enforcement of Foreign Judgments Sections 1328 and 1429 of the Code of Civil Procedure 1908 deal with the enforcement of foreign judgments; section 44A deals with the execution of some foreign judgments, and section 41 of the Indian Evidence Act 1872 deals with the effect of judgments in rem.30 India is party to the following international conventions in relation to intellectual property laws.31 Most of the cross-border disputes are resolved on the basis of provisions of these conventions: Digital Millennium Copyright Act of 1998 Berne Convention for the Protection of Literary and Artistic Works 1886 International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 1961 WIPO Copyright Treaty, the Convention Relating to the Distribution of Programme Carrying Signals Transmitted by Satellite Convention for the Protection of Producers of Phonograms Against Unauthorised Duplication of Their Phonograms Universal Copyright Convention as revised at Paris on 24 July 1971 Singapore Treaty on the Law of Trademarks Madrid Agreement Concerning the International Registration of Marks Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks Common Regulations Under the Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to that Agreement Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure Patent Law Treaty Adopted at Geneva on 1 June 2000 Strasbourg Agreement Concerning the International Patent Classification Regulations Under the Patent Cooperation Treaty 28   A foreign judgment is conclusive as to any matter directly decided in it between the same parties or parties claiming under them except where the judgment:

(1) has not been pronounced by a court of competent jurisdiction; (2) has not been given on the merits of the case; (3) where, on the face of it, it is founded on an incorrect view of international law or a refusal to recognise (where it is applicable) Indian law; (4) where it was delivered in proceedings which were opposed to natural justice; (5) has been obtained by fraud; or (6) sustains a claim founded on a breach of Indian law. 29   A judgment would be a ‘public document’ within the meaning of the expression in the Indian Evidence Act 1972, and the usual method of producing a certified copy under s 78 of that Act would be to have it certified by the appropriate officer of the court, along with a certificate of an officer of the central government as required under s 86. 30   Before 1951, s 44 also permitted the execution of the judgments of the courts of Indian States which had been notified. 31  See, ‘Summary Table of Membership of the World Intellectual Property Organisation (WIPO) and the Treaties Administered by WIPO, plus UPOV and UN’, available at www.wipo.int/treaties/en/summary.jsp.

India  687 Locarno Agreement Establishing an International Classification for Industrial Designs Signed at Locarno Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods Lisbon Agreement for the Protection of Appellations of Origin and their International Registration Resolution by the Diplomatic Conference Supplementary to the Singapore Treaty on the Law of Trademarks and the Regulations Thereunder.

1.7  Conflict of Laws Rules with Regard to Intellectual Property In India at present no statutes deal with intellectual property and conflict of laws. However, Indian courts are developing laws in this area. There are certain judgments in the field of copyright but these are specifically related to jurisdiction issues. Thus the ordinary laws in the respective statutes which we have discussed above also deal with international disputes.

2 Hypothetical Case Studies Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in a neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

Answer Infringement under Indian law is governed by the Copyright Act 1957 section 51.32 The Act applies to alleged infringement within India. However, powers have been vested to the   ‘51. When copyright infringed

32

Copyright in a work shall be deemed to be infringed (a) when any person, without a license granted by the owner of the Copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a license so granted or of any condition imposed by a competent authority under this Act cont./

688  Vandana Singh Central Government under section 4033 to extend copyright to foreign works. If there is an infringement of a copyright of a convention country (for example the Berne Convention), it is definitely actionable in India. Case 1(1) Under section 20 of the Civil Procedure Code, the suit can be filed in the place where the defendant stays. In the case of Dhodha House & Patel Field Marshal Industries v SK Maingi

(i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright, or (ii) permits for profit any place to be used for the performance of the work in public where such performance constitutes an infringement of the copyright in the work unless he was not aware and had no reasonable ground for believing that such performance would be an infringement of copyright, or

(b) when any person

(i) make for sale or hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire, or (ii) distributes either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright, or (iii) by way of trade exhibits in public, or (iv) imports (except for the private and domestic use of the importer) into India, any infringing copies of the work.

Explanation. For the purposes of this section, the reproduction of a literary, dramatic, musical or artistic work in the form of a cinematograph film shall be deemed to be an “infringing copy”.’ 33  ‘40. Power to extend copyright to foreign works The Central Government may, by order published in the Official Gazette, direct that all or any provisions of this Act shall apply (a) to works first published in any territory outside India to which the order relates in like manner as if they were first published within India; (b) to unpublished works, or any class thereof, the authors whereof were at the time of the making of the work, subjects or citizens of a foreign country to which the order relates, in like manner as if the authors were citizens of India; (c) in respect of domicile in any territory outside India to which the order relates in like manner as if such domicile were in India; (d) to any work of which the author was at the date of the first publication thereof, or, in a case where the author was dead at that date, was at the time of his death, a subject or citizen of a foreign country to which the order relates in like manner as if the author was a citizen of India at that date or time; and thereupon, subject to the provisions of this Chapter and of the order, this Act shall apply accordingly : Provided that



(i) before making an order under this section in respect of any foreign country (other than a country with which India has entered into a treaty or which is a party to a convention relating to copyright to which India is also a party), the Central Government shall be satisfied that that foreign country has made, or has undertaken to make, such provisions, if any, as it appears to the Central Government expedient to require for the protection in that country of works entitled to copyright under the provisions of this Act; (ii) the order may provide that the provisions of this Act shall apply either generally or in relation to such classes of works or such classes of cases as may be specified in the order; (iii) the order may provide that the term of copyright in India shall not exceed that conferred by the law of the country to which the order relates; (iv) the order may provide that the enjoyment of the rights conferred by this Act shall be subject to the accomplishment of such conditions and formalities, if any, as may be prescribed by the order; (v) in applying the provisions of this Act as to ownership of copyright, the order may make exceptions and modifications as appear necessary, having regard to the law of the foreign country; (vi) the order may provide that this Act or any part thereof shall not apply to works made before the commencement of the order or that this Act or any part thereof shall not apply to works first published before the commencement of the order.’

India  689 & PM Diesel 34 it was held by the Supreme Court that the plaintiff corporation shall have at least one branch office within the local limits of where the suit is situated. Therefore, India would have international jurisdiction if B had its residence or a branch in India. Case 1(2) India would have jurisdiction if the cause of action is in India and if any one of the parties is an Indian party. This is as per the provision of section 6235 of the Copyright Act. Case 1(3) No. This is not possible in India. In Exphar SA & Anr v Eupharma Laboratories Ltd & Anr,36 the Supreme Court finally settled the position in this regard. The Court observed: Section 62(2) cannot be read as limiting the jurisdiction of the District Court only to cases where the person instituting the suit or other proceeding or where there are more than one such persons, any of them actually and voluntarily resides or carries on business or presently works for gain. It prescribes an additional ground for attracting the jurisdiction of a court over and above the ‘normal’ grounds as laid down in Section 2037 of the CPC. Even if the jurisdiction of the Court were restricted in the manner construed by the Division Bench, it is evident not only from the cause title but also from the body of the plaint that the Appellant No 2 carries on business within the jurisdiction of the Delhi High Court. The Appellant No 2 was certainly ‘a person instituting the suit’. The   Dhodha House & Patel Field Marshal Industries v SK Maingi & PM Diesel 2006 (32) PTC 1.   ‘62. Jurisdiction of court over matters arising under this Chapter

34 35

(1) Every suit or other civil proceeding arising under this Chapter in respect of the infringement of copyright in any work or the infringement of any other right conferred by this Act shall be instituted in the district court having jurisdiction. (2) For the purpose of sub-section (1), a ‘district court having jurisdiction’ shall notwithstanding anything contained in the Code of Civil Procedure 1908 (5 of 1908), or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain.’ 36   Exphar SA & Anr v Eupharma Laboratories Ltd & Anr AIR 2004 SC 251. 37   ‘20. Other suits to be instituted where defendants reside or cause of action arises Subject to the limitations aforesaid, every suit shall be instituted in court within the local limits of whose jurisdiction – ­ (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. [Explanation]. A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. Illustrations (a) A is a tradesman in Calcutta, B carries on business in Delhi. B, by his agent in Calcutta, buys goods of A and requests A to deliver them to the East Indian Railway Company. A delivers the goods accordingly in Calcutta. A may sue B for the price of the goods either in Calcutta, where the cause of action has arisen or in Delhi, where B carries on business. (b) A resides at Simla, B at Calcutta and C at Delhi A, B and C being together at Benaras, B and C make a joint promissory note payable on demand, and deliver it to A. A may sue B and C at Benaras, where the cause of action arose. He may also sue them at Calcutta, where B resides, or at Delhi, where C resides; but in each of these cases, if the non-resident defendant objects, the suit cannot proceed without the leave of the court.’

690  Vandana Singh Division Bench went beyond the express words of the statute and negatives the jurisdiction of the Court because it found that the Appellant No 2 had not claimed ownership of the copyright, infringement of which was claimed in the suit. The appellant No 2 may not be entitled to the relief claimed in the suit but that is no reason for holding that it was not a person who had instituted the suit within the meaning of Section 62(2) of the Act.

If intellectual properties are at stake, then the copyright of nationals of countries who are members of the Berne Convention for the Protection of Literary and Artistic Works, Universal Copyright Convention and the TRIPS Agreement is protected in India through the International Copyright Order. In other words, it can be said that in the case of foreign works, only those works of nations which are members of the Berne Convention for the Protection of Literary and Artistic Works, Universal Copyright convention and the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement through the International Copyright Order are protected in India. Similarly, to grant protection to Indian works throughout the world, India has also entered into the following international conventions on copyright and neighbouring (related) rights: the Berne Convention for the Protection of Literary and Artistic works; the Universal Copyright Convention; the Multilateral Convention with the motto of protecting the producers of phonograms against the phonograms duplication done unauthorisedly; the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPS).

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Case 2(1) Patent infringement cases can only be initiated in India after the grant of a patent in India. Foreign patent holders can file a patent application under PCT with India as its designated place and get recognised therein in India. Also the counter-claim can only be initiated if the original patent was registered in India. Case 2(2) Indian courts do not have jurisdiction to decide upon the issues of validity of foreign intellectual property rights vis-a-vis patents.

India  691 Case 2(3) The decision of the court in such a situation would mainly be based on the provisions of TRIPs and the Indian Patent Act.38   ‘Chapter XXII International Arrangements

38

133. Notification as to convention countries. (1) With a view to the fulfilment of a treaty, convention or arrangement with any country outside India which affords to applicants for patents in India or to citizens of India similar privileges as are granted to its own citizens in respect of the grant of patents and the protection of patent rights, the Central Government may, by notification in the Official Gazette, declare such country to be a convention country for the purposes of this Act. (2) A declaration under sub-section (1) may be made for the purposes either of all or of some only of the provisions of this Act, and a country in the case of which a declaration made for the purposes of some only of the provisions of this Act is in force shall be deemed to be a convention country for the purposes of those provisions only. 134. Notification as to countries not providing for reciprocity. Where any country specified by the Central Government in this behalf by notification in the Official Gazette does not accord to citizens of India the same rights in respect of the grant of patents and the protection of patent rights as it accords to its own nationals, no national of such country shall be entitled, either solely or jointly with any other person, (a) to apply for the grant of a patent or be registered as the proprietor of a patent; (b) to be registered as the assignee of the proprietor of a patent; or (c) to apply for a licence or hold any licence under a patent granted under this Act. 135. Convention applications. (1) Without prejudice to the provisions contained in section 6, where a person has made an application for a patent in respect of an invention in a convention country (hereinafter referred to as the ‘basic application’), and that person or the legal representative or assignee of that person makes an application under this Act for a patent within twelve months after the date on which the basic application was made, the priority date of a claim of the complete specification, being a claim based on matter disclosed in the basic application, is the date of making of the basic application. [Explanation]. Where applications have been made for similar protection in respect of an invention in two or more convention countries, the period of twelve months referred to in this sub-section shall be reckoned from the date on which the earlier or earliest of the said applications was made. (2) Where applications for protection have been made in one or more convention countries in respect of two or more inventions which are cognate or of which one is a modification of another, a single convention application may, subject to the provisions contained in section 10, be made in respect of those inventions at any time within twelve months from the date of the earliest of the said applications for protection: Provided that the fee payable on the making of any such application shall be the same as if separate applications have been made in respect of each of the said inventions, and the requirements of clause (b) of sub-section (1) of section 136 shall, in the case of any such application, apply separately to the applications for protection in respect of each of the said inventions. 136. Special provisions relating to convention applications. (1) Every convention application shall (a) be accompanied by a complete specification; and (b) specify the date on which and the convention country in which the application for protection, or as the case may be, the first of such applications was made; and (c) state that no application for protection in respect of the invention had been made in a convention country before that date by the applicant or by any person from whom he derives title. (2) Subject to the provisions contained in section 10, a complete specification filed with a convention application may include claims in respect of developments of, or additions to, the invention in respect of which the application for protection was made in a convention country, being developments or additions in respect of which the applicant would be entitled under the provisions of section 6 to make a separate application for a patent. (3) A convention application shall not be post-dated under sub-section (1) of section 17 to a date later than the date on which under the provisions of this Act the application could have been made. 137. Multiple priorities. (1) Where two or more applications for patents in respect of inventions have been made in one or more convention countries and those inventions are so related as to constitute one invention, one application

692  Vandana Singh

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y, and Z. B, C and D are competitors of A and are located in countries X, Y, and Z respectively. A finds that B, C and D infringe its patents in countries X, Y, and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y, and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C, and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C, and D on the ground of the infringement of a contract? (2) Assuming that B, C, and D are members of a group of a corporation and takes identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country would (and if so, under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C, and D raised counterclaims that A’s patents are invalid?

Case 3(1) If country W is India, then the courts in India would not have jurisdiction to join claims against defendants B, C and D. As in India, patent is a territorial right, claims against defendants B, C and D cannot therefore be joined together. may be made by any or all of the persons referred to in sub-section (1) of section 135 within twelve months from the date on which the earlier or earliest of those applications was made, in respect of the inventions disclosed in the specifications which accompanied the basic applications. (2) The priority date of a claim of the complete specification, being a claim based on matters disclosed in one or more of the basic applications, is the date on which that matter was first so disclosed. (3) For the purposes of this Act, a matter shall be deemed to have been disclosed in a basic application for protection in a convention country if it was claimed or disclosed (otherwise than by way of disclaimer or acknowledgment of a prior art) in that application, or any documents submitted by the applicant for protection in support of and at the same time as that application, but no account shall be taken of any disclosure effected by any such document unless a copy of the document is filed at the patent office with the convention application or within such period as may be prescribed after the filing of that application. 138. Supplementary provisions as to convention applications. (1) Where a convention application is made in accordance with the provisions of this Chapter, the applicant shall furnish, in addition to the complete specification, copies of the specifications or corresponding documents filed or deposited by the applicant in the patent office of the convention country in which the basic, application was made, certified by the official chief or head of the patent office of the convention country, or otherwise verified to the satisfaction of the Controller, along with the application or within three months thereafter, or within such further period as the Controller may on good cause allow. (2) If any such specification or other document is in a foreign language, a translation into English of the specification or document, verified by affidavit or otherwise to the satisfaction of the Controller, shall be annexed to the specification or document. (3) For the purposes of this Act, the date on which an application was made in a convention country is such date as the Controller is satisfied by certificate of the official chief or head of the patent office of the convention country or otherwise, is the date on which the application was made in that convention country. 139. Other provisions of Act to apply to convention applications. Save as otherwise provided in this Chapter, all the provisions of this Act shall apply in relation to a convention application and a patent granted in pursuance thereof as they apply in relation to an ordinary application and a patent granted in pursuance thereof.’

India  693 The situation would have been different if A was a licensor and B, C and D were licensees and in the contract it was mentioned that, in the case of disputes, Indian courts would have jurisdiction. Case 3(2) There would be no consolidation of proceedings unless B, C and D have their offices in India. India does not follow the group of companies doctrine in the case of patent infringement.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that the patents are invalid? (3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings? (4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

Case 4(1) The choice of court clause would not enforceable. It would be enforceable only if the parties agreed to arbitration in India. The decision would not differ if the new choice of court agreement at the time when the dispute arose agreed for resolution in India. Case 4(2) No, the court cannot enforce an exclusive choice of court clause. Case 4(3) If there were valid patent infringement proceedings in India, then the court could assert jurisdiction if the choice of court agreement was made.

694  Vandana Singh Case 4(4) Yes, the parties’ arbitration agreement would be enforceable under Indian laws.39 In India the arbitration proceedings are created as per the arbitration agreement and parties are free to make their agreement in respect of any subject. So, the arbitral tribunal would have competence to decide the intellectual property matter if the parties agreed to that. Further, the award of an arbitral tribunal is final as per sections 35 and 36 of the Arbitration and Conciliation Act 1996.40

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B who is located in country Z produces the identical product to that for which A has patents, and exports that infringing product to countries X and Y. Having found out about the infringing activities A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Case 5(1) In India, to start the infringement proceedings or to grant an injunction it is to be proved that the said patent is a valid patent or the patent is registered. In this case, A does not have its patent registered in India (country Z), so the proceedings will be infructuous in India. If A files a suit in India, then B can however file an anti-suit injunction in India under section 151 of the CPC and say that proceedings in X and Y countries are the forum of convenience in this matter. Case 5(2) No, the court cannot apply the patent statute of country X for allegedly infringing acts that occur in country Z. However, procedural steps can be taken under the Code of Civil Procedure.

  As per the provisions of Arbitration and Conciliation Act 1996.   ‘Finality and enforcement of arbitral awards

39 40

35. Finality of arbitral awards. Subject to this Part an arbitral award hall be final and binding on the parties and persons claiming under them respectively. 36. Enforcement. Where the time for making an application to set aside the arbitral award under award shall be endorsed under the Code of Civil Procedure 1908 (5 of 1908) in the same manner as if it were a decree of the court.’

India  695

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, firstly, that the claim for the infringement of the patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Case 6(1) The Patent Act 1970 would apply only to those infringing acts which have occurred in India and not in another country. Case 6(2) In India, for deciding the alleged infringement cases of patents, only the Patents Act 1970 passed by the Indian legislature can be applied and no other foreign law.

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B, and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website becomes very popular A, B, and C introduced an additional paid service which allows the speedy exchange of big capacity digital files. Although A, B, and C know that some files that are stored in the server of their website are illegal, they do not take any action to somehow prevent infringement of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C requesting they be made to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places / countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

696  Vandana Singh Answer In India the following types of infringement are recognised in the field of copyright. Direct Infringement Direct infringement is a strict liability offence and guilty intention is not essential to fix criminal liability. The requirements to establish a case of copyright infringement under this theory are: (1) ownership of a valid copyright; and (2) copying or infringement of the copyrighted work by the defendant. Thus, a person who innocently or even accidentally infringes a copyright may be held liable under the Copyright Act of India and under the laws of various other countries. The guilty intention of the offender can be taken into account for determining the quantum of damages to be awarded for the alleged infringement. Contributory Infringement The contributory infringement presupposes the existence of knowledge and participation by the alleged contributory infringer. To claim damages for infringement of the copyright, the plaintiff has to prove: (1) that the defendant knew or should have known of the infringing activity; and (2) that the defendant induced, caused, or materially contributed to another person’s infringing activity. Vicarious Infringement Vicarious copyright infringement liability evolved from the principle of respondent superior. To succeed on a claim of vicarious liability for a direct infringer’s action, a plaintiff must show that the defendant: (1) had the right and ability to control the direct infringer’s actions; and (2) derived a direct financial benefit from the infringing activity. Thus, vicarious liability focuses not on the knowledge and participation but on the relationship between the direct infringer and the defendant. Legal precedent for vicarious copyright infringement liability has developed along two general relational lines. The first relational line involves the employer/employee relationship, whereas the second involves the lessor/lessee relationship. Internet and Copyright Infringement Theories The advent of information technology has made it difficult to apply traditional theories to various cyberspace entities and organisations. These cyberspace players can be grouped under the following headings: (1) (2) (3) (4)

Internet service providers (ISPs); bulletin board services operators (BBSO); commercial web page owner/operators; and private users.

India  697 An ISP most often provides Internet access and may be held liable for copyright infringement. In Religious Technology Center v Netcom On-Line Communication Services, Inc a former minister uploaded some of the copyrighted work of the Church of Scientology to the Internet. He first transferred the information to a BBS computer, where it was temporarily stored before being copied onto Netcom’s computer and other Usenet computers. Once the information was on Netcom’s computer, it was available to Netcom’s subscribers and Usenet neighbours for downloading for up to 11 days. The plaintiffs informed Netcom about the infringing activity; nonetheless, Netcom refused to deny the subscriber’s access because it was not possible to pre-screen the subscriber’s uploads, and kicking the subscriber off the Internet meant kicking off the rest of the BBS operator’s subscribers. Thus, the plaintiffs sought a remedy against Netcom for infringement under all three theories – direct, contributory, and vicarious. The court first analysed whether Netcom directly infringed the plaintiff ’s copyright. Since Netcom did not violate the plaintiff ’s exclusive copying, distribution, or display rights, Netcom was held not liable for direct infringement. The court then analysed the third party liability theories of contributory and vicarious infringement. The court held that Netcom would be liable for contributory infringement if plaintiffs proved that Netcom had knowledge of the infringing activity. The court then analysed whether Netcom was vicariously liable. Here, once again the court found that a genuine issue of material fact supporting Netcom’s right and ability to control the uploader’s acts existed. The court found that Netcom did not receive direct financial benefit from the infringement. Thus, the court found that the Netcom was not liable for direct infringement, could be liable for contributory infringement if the plaintiffs proved the knowledge element, and was not liable for vicarious infringement. On-line Copyright Issues in India Reference to on-line copyright issues can be found in the following two major enactments: (1) the Copyright Act 1957; and (2) the Information Technology Act 2000. Copyright Act 1957 and On-line Copyright Issues The following provisions of the Copyright Act 1957 can safely be relied upon for meeting the challenges of information technology: (a) The inclusive definition of computer is very wide and includes any electronic or similar device having information processing capabilities. Thus, a device storing or containing copyrighted material cannot be manipulated in such a manner as to violate the rights of a copyright-holder. (b) The term computer program has been defined to mean a set of instructions expressed in words, codes, schemes or in any other form, including a machine-readable medium, capable of causing a computer to perform a particular task or achieve a particular result. It must be noted that section 13(a) read with section 2(o) confers copyright on computer programs and its infringement will attract stringent penal and civil sanctions. (c) The inclusive definition of literary work includes computer programs, tables and compilations including computer databases. Thus, the legislature has taken adequate care and provided sufficient protection for computer-related copyrights.

698  Vandana Singh (d) The copyrighted material can be transferred or communicated to the public easily and secretly through electronic means. To take care of such a situation, the Copyright Act has provided the circumstances which amount to communication to the public. Thus, making any work available for being seen or heard or otherwise enjoyed by the public directly or by any means of display or diffusion other than by issuing copies of such work regardless of whether any member of the public actually sees, hears or otherwise enjoys the work so made available, may violate the copyright. The communication through satellite or cable or any other means of simultaneous communication to more than one household or place of residence including residential rooms of any hotel or hostel shall be deemed to be communication to the public. (e) The copyright in a work is infringed if it is copied or published without its owner’s consent. The Copyright Act provides that a work is published if a person makes available a work to the public by issue of copies or by communicating the work to the public. Thus, the ISPs, BBS providers, etc may be held liable for copyright violation if the facts make out a case for the same. (f) The copyright in a work shall be deemed to be infringed when a person, without a licence granted by the owner of the copyright or the Registrar of Copyrights under this Act, or in contravention of the conditions of a licence so granted or of any condition imposed by a competent authority under this Act(i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright, or (ii) permits for profit any place to be used for the communication of the work to the public where such communication constitutes an infringement of the copyright in the work, unless he was not aware and had no reasonable ground for believing that such communication to the public would be an infringement of copyright. (g) The Copyright Act specifically exempts certain acts from the purview of copyright infringement. Thus, the making of copies or adaptation of a computer program by the lawful possessor of a copy of such computer program from such copy in order to utilise the computer program for the purpose for which it was supplied or to make back-up copies purely as a temporary protection against loss, destruction, or damage in order only to utilise the computer program for the purpose for which it was supplied, would not be copyright infringement. Similarly, the doing of any act necessary to obtain information essential for operating inter-operability of an independently created computer program with other programs by a lawful possessor of a computer program is not a copyright violation if such information is not otherwise readily available. Further, there will not be any copyright violation in the observation, study or test of functioning of the computer program in order to determine the ideas and principles, which underline any elements of the program while performing such acts necessary for the functions for which the computer program was supplied. The Act also makes it clear that the making of copies or adaptation of the computer program from a personally legally obtained copy for non-commercial personal use will not amount to copyright violation. (h) If a person knowingly makes use on a computer of an infringing copy of a computer program, he shall be held liable for punishment of imprisonment for a term which shall not be less than seven days but which may extend to three years and with a fine which shall not be less than 50,000 rupees but which may extend to two lakh rupees.

India  699 However, if the computer program has not been used for gain or in the course of trade or business, the court may, for adequate and special reasons to be mentioned in the judgment, not impose any sentence of imprisonment and may impose a fine which may extend to 50,000 rupees. It must be noted that copyright can be obtained in a computer program under the provisions of the Copyright Act 1957. Hence, a computer program cannot be copied, circulated, published or used without the permission of the copyright-owner. If it is illegally or improperly used, the traditional copyright infringement theories can be safely and legally invoked. Further, if the medium of Internet is used to advance that purpose, invoking the provisions of the Copyright Act 1957 and supplementing them with the stringent provisions of the Information Technology Act 2000 can prevent the same. Information Technology Act 2000 and On-line Copyright Issues The following provisions of the Information Technology Act 2000 are relevant to understand the relationship between copyright protection and information technology: (a) Section 1(2) read with section 75 of the Act provides for extra-territorial application of the provisions of the Act. Thus, if a person (including a foreign national) violates the copyright of a person by means of computer, computer system or computer network located in India, he would be liable under the provisions of the Act. (b) If any person without permission of the owner or any other person who is in charge of a computer, computer system or computer network accesses or secures access to such computer, computer system or computer network or downloads, copies or extracts any data, computer data base or information from such computer, computer system or computer network including information or data held or stored in any removable storage medium, he shall be liable to pay damages by way of compensation not exceeding one crore rupees to the person so affected. Thus, a person violating the copyright of another by downloading or copying the same will have to pay exemplary damages up to the tune of rupees one crore which is deterrent enough to prevent copyright violation. Case 7(1) The reference to on-line copyright issues can be found in the following two major enactments: (1) the Copyright Act 1957; and (2) the Information Technology Act 2000. Case 7(2) Yes, on the basis of points discussed above. Case 7(3) The courts in India can decide the matter on the ubiquitous infringement of intellectual property rights. The applicable law would be: the Code of Criminal Procedure, the Code of Civil Procedure, the Copyright Act and the Information Technology Act.

700  Vandana Singh

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country? (2) Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in the case of initial authorship or initial title to trade mark? (4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Case 8(1) In India, the law relating to inventions is the Patents Act 1970.41 If the cause of action arose in India, then the claim for ownership is going to be decided under Indian law. If B is not a resident of India or the cause of action did not arise in India, Indian courts would not have jurisdiction to try the case. Case 8(2) Yes, if there is a valid agreement and the parties have decided the choice of law clause in the agreement, then that particular law would decide the original owner. But this does not stop the Indian courts from applying Indian laws to decide the original owner. If interference by Indian courts is not needed, parties should have an arbitration clause in the original contract with the choice of law clause mentioned.

  s 3 of the Patent Act sets out what are not inventions:

41

‘The following are not inventions within the meaning of this Act, – an invention which is frivolous or which claims anything obvious contrary to well established natural laws; an invention the primary or intended use of which would be contrary to law or morality or injurious to public health; the mere discovery of a scientific principle or the formulation of an abstract theory; the mere discovery of any new property of new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant; a substance obtained by a mere admixture resulting only in the aggregation of the properties of the components thereof or a process for producing such substance; the mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way; a method or process of testing applicable during the process of manufacture for rendering the machine, apparatus or other equipment more efficient or for the improvement or restoration of the existing machine, apparatus or other equipment or for the improvement or control of manufacture; a method of agriculture or horticulture; any process for the medicinal, surgical, curative, prophylactic or other treatment of human beings or any process for a similar treatment of animals or plants to render them free of disease or to increase their economic value or that of their products.’

India  701 If each had a share in the ideas forming the invention, then they are the joint inventors and a patent will be issued to them jointly on the basis of a proper patent application. If, on the other hand, one of these persons has provided all of the ideas of the invention, and the other has only followed instructions in making it, the person who contributed the ideas is the sole inventor and the patent application and patent shall be in his/her name alone. This will be decided by Indian law. Case 8(3) No. The applicable law would not change. Case 8(4) If A raised a claim with regard to inadequate compensation, then A would have a remedy in the Code of Civil Procedure 1908 and have the option to file either a review or revision petition.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B made some arrangements for the distribution of the debut album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work was not transferred and was thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How would the court deal with the issue of transferability? (3) What would be the applicable law in a case where there is no choice of law made by the parties?

Answer The author of a work has the right to claim authorship of the work and to restrain or claim damages in respect of any distortion, mutilation, modification or other acts in relation to the said work which is done before the expiration of the term of copyright if such distortion, mutilation, modification or other act would be prejudicial to his honour or reputation. Moral rights are available to the authors even after the economic rights are assigned. It is also accepted principle in India that moral rights are independent of the author’s copyright and remains with him even after assignment of the copyright. Case 9(1) Yes, the court is empowered to enforce the parties’ choice of laws clause regarding the transfer of economic and moral rights of authors. Case 9(2) The issue of transferability would be decided under sections 18 to 21 and section 57 of the Indian Copyright Act.

702  Vandana Singh Case 9(3) In the absence of a choice of law clause, the national courts would apply various legal maxims such as lex protectionis (law of the country of protection), lex fori (law of the forum), locus delicti comissi (law of the place where the tort was committed), all concepts that reflect territorial based systems.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking it to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in a registry of a recognising country? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Answer The Indian Code of Civil Procedure 1908 (CPC) governs the execution of decrees, whether foreign or domestic, in India. There are two ways of getting a foreign judgment enforced. The first is by filing an Execution Petition under section 44A of the CPC (in case the conditions specified therein are fulfilled) and the second is by filing a suit upon the foreign judgment/decree. Under section 44A of the CPC, a decree of any of the superior courts of any reciprocating territory are executable as a decree passed by the domestic court. Therefore if the decree does not pertain to a reciprocating territory or a superior court of a reciprocating territory, as notified by the central government in the Official Gazette, the decree is not directly executable in India. If the decree pertains to a country which is not a reciprocating territory, then a fresh suit will have to be filed in India on the basis of such a decree or judgment, which may be construed as a cause of action for the said suit. In the fresh suit, the said decree will be treated as another piece of evidence against the defendant. Under section 13 of the Code of Civil Procedure, a foreign judgment becomes inconclusive and consequently unenforceable in the following circumstances: where it has not been pronounced by a court of competent jurisdiction; where it has not been given on the merits of the case; where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable; where the proceedings in which judgment was obtained are opposed to natural justice; where it has been obtained by fraud; where it sustains a claim founded on a breach of any law in force in India.

India  703 A ‘reciprocating territory’ is defined in explanation 1 to section 44A of India’s Civil Procedure Code as: ‘Any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare as a reciprocating territory.’

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure? Case 11(1) The court is not empowered to issue provisional measures with regard to counterfeited goods located in different countries. Case 11(2) Civil remedies include: Injunction/stay against the use of the trade mark. Damages. Accounts and handing over of profits. Appointment of local commissioner by the court for custody/sealing of infringing material/accounts. Application under order 39 rules 1 and 2 of the CPC for grant of temporary/ad interim ex parte injunction. Procedure for filing a civil suit: Filing of plaint, with supporting evidence at the time of filing of the suit. Filing of application under order 39 rules 1 and 2 read with section 151 of the Code of Civil Procedure for grant of ex parte ad interim.

704  Vandana Singh Filing of application under order 26 of the CPC for appointment of a local commissioner, to make inventory and/or to take possession of the infringing material from the premises of the defendants, their agents, retailers and distributors etc. Hearing of arguments by court on application for grant of ex parte injunction and appointment of local commissioner. If the court is satisfied, the court may grant ex parte and interim injunction and appoint a local commissioner. Remedies in case of non-compliance of interim injunction/final decision of the court: Contempt of court action, leading to punishment in terms of fine and/or imprisonment. Execution of decree. Applicable sections: Section 134/135 of the Trade Marks Act 1999, the Copyright Act 1957, the Specific Relief Act. Common law principles, ie principles of natural justice. The court can issue an injunction even if the trade mark was registered abroad on the basis of the concept of ‘well-known trade marks’. In Caterpillar Inc v Kailash Nichani, the plaintiff, a foreign company, was carrying on business in several places in India, including Delhi, through its Indian distributors and collaborators. The plaintiff claimed the relief of ad interim injunction for preventing infringement of its copyright by the defendant, though the defendant was dealing in different goods. The Delhi High Court held that it was not necessary to show that the business being carried on by the plaintiff in Delhi should necessarily be in respect of footwear and articles of clothing as well. It is sufficient if the business was being carried on by the plaintiff in Delhi and further that there was an infringement of the plaintiff ’s copyright in respect of certain goods, which were being sold by the defendant in Delhi. The Court further held that section 62 of the Copyright Act makes an obvious and significant departure from the norm that the choice of jurisdiction should primarily be governed by the convenience of the defendant. The legislature in its wisdom introduced this provision laying down absolutely the opposite norm than the one set out in section 20 CPC. The purpose is to expose the transgressor with inconvenience rather than compelling the sufferer to chase after the former. Case 11(3) Yes, the courts in India have jurisdiction to issue provisional injunctions regarding infringing acts. Case 11(4) As per section 8 of the Arbitration and Conciliation Act 1994,42 the court is pre-empted from issuing an injunction if the parties have submitted the dispute to arbitration proceedings.   ‘8 Power to refer parties to arbitration where there is an arbitration agreement.

42

(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.’

India  705 Case 11(5) No, this is not required in India.

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y: (1) Could intellectual property rights be used as collateral pursuant to the law of your country? (2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights? (3) Would a court of your country apply the same law to registered and non-registered intellectual property rights?

Case 12(1) In India, ‘property’ is defined in various laws, the latest being section 2(1)(t) of the SARFAESI Act, which defines property.43 As per this provision and certain provisions of Companies Act (sections 17 and 144 of Companies Act), intellectual property could be used as collateral security. Case 12(2) The Code of Civil Procedure and Companies Act are applicable in such situations. Case 12(3) In India registration of intellectual property is not mandatory and, except for certain evidentiary value, there is no difference between registered and unregistered intellectual property.

  ‘ “[P]roperty” means –

43

immovable property; movable property; any debt or any right to receive payment of money whether secured or unsecured; receivables, whether existing or future; intangible assets, being know-how, patent, copyright, trade mark, licence, franchise or any other business or commercial right of similar nature.’

Italy NERINA BOSCHIERO* and BENEDETTA UBERTAZZI**

Contents 1. Legal Sources................................................................................................................................... 708 1.1 Intellectual Property............................................................................................................. 708 1.1.1 Treaties.................................................................................................................... 708 1.1.2 Community Legal Instruments............................................................................. 709 1.1.3 Italian Substantive Rules........................................................................................ 711 1.1.4 Italian Domestic Procedural Rules........................................................................ 712 1.2 Intellectual Property and Private International Law.......................................................... 712 1.2.1 International Jurisdiction: General Overview....................................................... 712 1.2.2 International Jurisdiction in IP cases.................................................................... 714 1.2.3 Conflict of Laws / Choice-of-Law.......................................................................... 727 1.2.4 Recognition and Enforcement of Foreign Judgments and Interim Measures.... 730 1.3 Peculiarities of the Italian PIL System Concerning the IP Sector...................................... 735 2. Hypothetical Case Studies.............................................................................................................. 736 Case 1. General / Special Grounds of Jurisdiction................................................................... 736 Case 2. Subject Matter Jurisdiction........................................................................................... 739 Case 3. Consolidation of Proceedings....................................................................................... 742 Case 4. Choice of Court............................................................................................................. 743 Case 5. Parallel Proceedings....................................................................................................... 746 Case 6. Principle of Territoriality (Choice of Law).................................................................. 747 Case 7. Infringement of Intellectual Property Rights............................................................... 749 Case 8. Applicable Law to Initial Ownership............................................................................ 751 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 754 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 755 Case 11. Provisional Measures and Injunctions......................................................................... 758 Case 12. Securities in Intellectual Property................................................................................ 761

*  Prof Dr Nerina Boschiero, International Law, International Commercial Law, University of Milan. **  Dr Benedetta Ubertazzi, LLM (Spain), Full Tenured Researcher of International Law, Faculty of Law, University of Macerata (Italy); Research Fellow, Von Humboldt Foundation Fellowship for Experienced Researchers.

708  Nerina Boschiero and Benedetta Ubertazzi

1  Legal Sources 1.1 Intellectual Property 1.1.1 Treaties Italy is a Member of the World Trade Organization,1 and of the World Intellectual Property Organization (WIPO), as well as a signatory of several treaties concerning IP rights, including the treaties administered by WIPO, the International Union for the Protection of New Varieties of Plants (‘UPOV’) and the UN.2 With regard to Italian Membership of the European Patent Convention and the related Protocols administered by the European Patent Office, see the list provided by the EPO website.3 Treaties on IP ratified by Italy:

Italian ratification law:

Paris Convention for the Protection of Industrial Property

Law No 424 of 28 April 1976 (GU n 160, suppl ord, del 19 giugnio 1976)

Madrid Agreement, Additional Act of Stockholm (1967)

Law No 424 of 28 April 1976 (GU n 160, suppl ord, del 19 giugno 1976)

Madrid Protocol

Law No 169 of 12 March 1996 (GU n 76, suppl ord, del 30 marzo 1996)

TRIPS

Law No 747 of 29 December 1994 (GU n 7, suppl ord, Vol II, del 10 gennaio 1995)

Patent Cooperation Treaty

Law No 260 of 26 May 1978 (GU n 156, suppl ord, del 7 giugno 1978)

Convention on the Grant of European Patents

Law No 260 of 26 May 1978 (GU n 156, suppl ord, del 7 giugno 1978)

Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent (Protocol on Recognition)

Law No 260 of 26 May 1978 (GU n 156, suppl ord, del 7 giugno 1978)

1   See A Lupone, ‘Gli aspetti della proprietà intellettuale attinenti al commercio internazionale’ in G Venturini (ed), L’organizzazione mondiale del commercio (Milan, Giuffré, 2004) 131; G Venturini, ‘La disciplina degli scambi e la tutela della proprietà intellettuale a fronte delle nuove sfide della contraffazione’ in N Boschiero and R Luzzatto (eds), I rapporti economici internazionali e l’elevazione del loro regime giuridico. Soggetti, valori e strumenti, XII Convegno, Milano 8-9 giugno 2007 (Naples, Editoriale Scientifica, 2008) 153; A Di Blase, ‘L’attuazione delle norme internazionali sulla proprietà intellettuale nell’ordinamento comunitario’ (2008) 44 Rivista di diritto internazionale privato e processuale 269 et seq. 2   For the list of treaties concerning IP rights in force in Italy, including the treaties administered by WIPO, the UPOV and the UN, refer to the WTO website at www.wto.org/english/docs_e/legal_e/legal_e.htm agreements and the WIPO website at www.wipo.int/treaties/en/summary.jsp. 3  At www.epo.org/about-us/organisation/member-states.html.

Italy  709 Regulation implementing Convention for the Protection of Cultural Property for the Protection in the Event of Armed Conflict

Law No 279 of 7 February 1958 (GU n 87, 11 aprile 1958)

Geneva Act of the Hague Agreement concerning the International Registration of Industrial Designs

Law No 37 of 25 January 1983 (GU n 310, suppl ord, del 12 novembre 1980)

Berne Convention

Law No 399 of 20 June 1978 (GU n 214, suppl ord, del 2 agosto 1978)

Universal Copyright Convention

Law No 306 of 16 May 1977 (GU n 163, suppl ord, del 16 giugno 1977)

Rome Convention

Law No 866 of 22 November 1973 (GU n 3 del 3 gennaio 1974)

WIPO Performances and Phonograms Treaty

Law No 68 of 9 April 2003 (GU n 87 del 14 aprile 2003, Supplemento Ordinario n 61)

WIPO Copyright Treaty

Law No 68 of 9 April 2003 (GU n 87 del 14 aprile 2003, Supplemento Ordinario n 61)

Patent Law Treaty

Law No 224 of 29 November 2007 (GU 3 dicembre 2007)

1.1.2  Community Legal Instruments With regard to the Community legal instruments concerning industrial property rights, see the list provided on the EU website.4 With regard to the Community legal instruments concerning intellectual property rights, see the list provided on the EU website.5 In primis, the following Regulations also grant Community IP rights that are effective in Italian territory: Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights6; Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs7; Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark (codified version) (text with EEA relevance).8 Italy has also implemented the following Community Directives related to IP rights: Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks,9 transposed by the Italian legislative decree 480/1992.

  At ec.europa.eu/internal_market/indprop/index_en.htm.  At ec.europa.eu/internal_market/copyright/index_en.htm. 6   [1994] OJ L227/1. 7   [2002] OJ L3/1. 8   [2009] OJ L78/1. 9   [1989] OJ L40/1. 4 5

710  Nerina Boschiero and Benedetta Ubertazzi Computer Program Directive, Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs,10 transposed by the Italian legislative decree 518/1992. Rental and Lending Directive, Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property,11 transposed by Italian legislative decree 685/94, and modified by the Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version),12 not yet transposed in Italy. Satellite and Cable Directive, Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission,13 which is transposed by the Italian legislative decree 581/1996. Term Directive, Council Directive 93/98/EEC of 29 October 1993 harmonising the term of protection of copyright and certain related rights,14 transposed by the Italian law 52/96 and by the Italian legislative decree 154/97, and modified by the Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version)15 (not yet transposed in Italy). Database Directive, Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases,16 transposed by the Italian legislative decree 169/99. Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions,17 transposed by the Italian legislative decree 2006/3. Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society,18 transposed by the Italian legislative decree 68/2003. Resale Right Directive, Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art,19 transposed by the Italian legislative decree 118/2006. Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the Enforcement of Intellectual Property Rights (Text with EEA Relevance),20 transposed by the Italian legislative decree 140/2006.

  [1991] OJ L122/42.   [1992] OJ L346/61.   [2006] OJ L376/28. 13   [1993] OJ L248/15. 14   [1993] OJ L290/9. 15   [2006] OJ L372/12. 16   [1996] OJ L77/20. 17   [1998] OJ L213/13. 18   [2001] OJ L167/10. 19   [2001] OJ L272/32. 20   [2004] OJ L157/45. 10 11 12

Italy  711 1.1.3  Italian Substantive Rules In Italy, industrial property issues are addressed in the Industrial Property Code.21 The intellectual property issues of copyright and neighbouring rights are addressed in the Italian Statute on Copyright and Neighbouring Rights No 633 of 22 April 1941.22 According to the Italian code of industrial property rights, ‘the following IP rights are to be included in the notion of industrial property rights: trade marks and other distinctive signs, geographical indications and denominations, designs and registered designs, patents, utility models, topographies of semiconductor products, know-how and plant variety’. The Italian law on copyright and related rights explicitly grants those two different kinds of IP rights. The Italian legal system also encompasses certain IP provisions relevant for IP cases in its Civil Code: Articles 2584–91 concerning patent rights for industrial inventions; Articles 2592–94 on patent rights for registered design and for design; Articles 2569–74 on trade mark rights; and Articles 2575–83 on copyright. In the Italian Penal Code we can also find several relevant Articles: Articles 473–75 on ‘false seals or instruments or signs of authentication, certification or recognition’; Articles 515 and 517 on ‘delicts against industry and commerce’. Certain Italian substantive statutes of minor importance also introduce provisions relating to IP rights: Statute No 99 of 23 July 2009 encompassing Provisions on the Development and Internationalisation of Enterprises, and in Matter Relating to Energy. Bill 1141 of 2 July 2008 on Provisions on Economic Development, Simplification, Competitiveness, Fiscal Stabilisation and Tax Equalisation. Economic Development Ministerial Decree of 27 June 2008 on Anteriority Search with respect to Patents. Ministerial Decree on Economic Development of 3 October 2007 on Delegation to the European Patent Office of Competence to Conduct the Anteriority Search on patent applications which have been submitted to the Italian Patent and Trade Mark Office. Statute No 46 of 6 April 2007, which transposes into a statute the Italian legislative decree No 10 of 15 February 2007, which encompasses provisions necessary to implement the Italian obligations arising from community and international norms. This Statute also encompasses rules on copyright and designs both registered and unregistered. Economic Development Ministerial Decree of 2 April 2007 on determination of the Rights on Patents and Designs, ex Article 1(851) of the Statute No 296 of 27 December 2006. Decree of the President of the Council of Ministers of 25 September 2006 on Determination of the Competent Central Authority for the Receipt of Rogatory Letters from the European Patent Office. Ministerial Decree related to the Productive Activities of 10 April 2006 on Computerised Deposit of the Patents and Registered Designs Applications, and of the Registered Designs, Designs and Trademarks Registration.

21  ‘Codice della proprietà industriale, a norma dell’articolo 15 della legge 12 dicembre 2002, n 273’, D lgs 10 February 2005 n 30, Gazzetta Ufficiale n 52 of 4 March 2005 – Supplemento Ordinario n 28. 22   Legge 22 April 1941 n 633, ‘Protezione del diritto d’autore e di altri diritti connessi al suo esercizio’, GU n 166 of 16 July 1941, consolidated version of 9 February 2008.

712  Nerina Boschiero and Benedetta Ubertazzi Statute No 178 of 22 February 2006, on Conversion into Statute of the Legislative Decree No 3 of 10 January 2006 on the Implementation of the Directive 98/44 on the Legal Protection of Biotechnological Inventions. Ministerial Decree No 171 of 9 May 2003 establishing a Regulation on the new Forms for the Presentation and the Verbalisation of the Patent, Registered Designs, Designs and National Trade Mark Applications. Decree of the President of the Council of Ministers of No 244 of 3 January 1994, establishing a Regulation on the Public Special Register for Computer Programs. 1.1.4  Italian Domestic Procedural Rules Twelve specialised courts were instituted in 2003 through a specific Italian statute, to preside over industrial and intellectual property disputes.23 These courts are not competent to rule on unfair competition cases, unless they are strictly related to IP rights.24

1.2  Intellectual Property and Private International Law 1.2.1  International Jurisdiction: General Overview In Italy international jurisdiction is governed in primis by Community instruments, since Community law prevails over the domestic statutes. Hence, international grounds of jurisdiction are primarily ruled by Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters25 (hereinafter: Brussels I Regulation), with effect from 1 March 2002 (and with effect from 23   D lgs 27 June 2003, n 168, ‘Istituzione di Sezioni specializzate in materia di proprietà industriale ed intellettuale presso tribunali e corti d’appello, a norma dell’articolo 16 della legge 12 dicembre 2002, n 273’. 24   See Trib Venezia, Sezione IP, 6 December 2005, in (2006) 15 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 1107/1, p 544; Trib Venezia, Sezione IP, ordinanza 9 July 2004, in (2005) 14 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 1041/1, p 528. 25   [2001] OJ L12/1. Regulation 44/2001 transformed in a Community legal instrument (communitarised) the Brussels Convention on jurisdiction and recognition and enforcement of judgments in civil and commercial matters of 27 September 1968. See recently the Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of 21 April 2009 (COM(2009) 174 def. at eurlex.europa.eu/Result.do?T1=V5&T2=2009&T3=174&RechType=RECH_naturel& Submit=Cercare) and the Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (COM(2009) 175 def. at eurlex.europa.eu/Result.do?T1=V5&T2=2009&T3=175-&RechType=RECH_naturel&Submit=Cercare). On the Brussels Convention, see F Pocar, La convenzione di Bruxelles sulla giurisdizione e l’esecuzione delle sentenze, 3rd edn (Milan, Giuffrè, 1995) passim; L Mari, Il diritto processuale civile della convenzione di Bruxelles, I, Sistema della competenza (Padova, Cedem, 1999) passim. On the Brussels I Regulation, see F Salerno, Giurisdizione ed efficacia delle decisioni nel regolamento (CE) n 44/2001 (Padova, Cedam, 2003) passim; SM Carbone, M Frigo and L Fumagalli (eds), Diritto processuale civile e commerciale comunitario (Milan, Giuffrè, 2004) passim; T Rauscher (ed), Europäisches Zivilprozessrecht (Munich, Sellier, 2004) passim; A Layton and H Mercer (eds), European Civil Practice, 2nd edn (London, Thomson, 2004) passim; J Kropholler, Europäisches Zivilprozessrecht, 8th edn (Frankfurt am Main, Recht und Wirtschaft GmbH, 2005) passim; R Geimer and A Schütze (eds), Europäisches Zivilverfahrensrecht, 2nd edn (Munich, Beck, 2004) passim; U Magnus and P Mankowski (eds), Brussels I Regulation (Munich, Sellier, 2007) passim; B Hess, T Pfeiffer and P Schlosser (eds), The Brussels I Regulation 44/2001. Application and Enforcement in the EU. The Heidelberg Report on the Application of Regulation Brussels I in 25 Member States (Study JLS/C4/2005/03) (Munich, Beck, 2008) passim; P Schlosser, EU-Zivilprozessrecht, 3rd edn (Munich, Beck, 2009) passim; A Bonomi, ‘Il sistema della competenza giurisdizionale nel Regolamento “Bruxelles I”’ in A Bonomi (ed), Diritto internazionale privato e cooperazione giudiziaria in materia civile (Turin, Giappichelli, 2009) 55 et seq.

Italy  713 1 July 2007 with respect to litigation related to Denmark). This Regulation converted the Brussels Convention of 1968 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters into a Community legal instrument which remains in force for every issue not covered by the Brussels I Regulation but still governed by the Convention itself. The Brussels I Regulation applies where the defendant is domiciled in an EU Member State (Art 2, general jurisdiction forum), or where an exclusive jurisdiction forum exists in an EU Member State (Art 22), or where the parties have chosen a competent Court of an EU Member State (Arts 23 and 24). Moreover, where the defendant is domiciled inside EU territory, the Brussels I Regulation establishes other special jurisdiction rules under Article 5 that allow the plaintiff to seize a different court other than the one where the defendant is domiciled in. Thus, Article 6 of the Brussels I Regulation provides rules for the consolidation of proceedings. Finally, Articles 27–30 encompass specific provisions for the declining of Italian jurisdiction where another court is hearing a case. In this situation, the case integrates a lis pendens or a related actions hypothesis. Where the Brussels I Regulation does not apply, Italian law then applies. In particular, Title II of the Italian Statute of 1995 on Private and Procedural International Law26 (hereinafter: Italian PIL Statute) determines the jurisdiction criteria with respect to international cases (Arts 3–12). Article 3 adopts as a general ground of jurisdiction the domicile of the defendant (as the Brussels I Regulation does). As for cases not directly encompassed by the Brussels I Regulation, Article 3 of the Italian PIL Statute explicitly recalls certain sections of the Brussels Convention of 1968 rendering those jurisdictional criteria applicable, albeit in cases falling outside the scope of the same Convention (ie, defendant not domiciled in the EU). As far as it is of interest here, among the provisions of the Brussels Convention always applicable in Italy are the aforementioned Articles 2, 5 and 6. The Italian Supreme Court recently interpreted the references to the Brussels Convention as not extending to the Brussels I Regulation, and therefore concerning only the recalled norms of the Brussels Convention.27 Finally, where the Brussels I Regulation or the Brussels Convention are not applicable, either directly or by way of reference to the latter made by Article 3 of the Italian PIL Statute, the other norms on jurisdiction of this last Statute are applicable, namely Articles 1–12 governing, inter alia, choice of court by the parties, lis pendens and related actions. With respect to the cases not regulated by the Brussels I Regulation or by the Brussels Convention, directly or indirectly, Italian domestic provisions apply. Thus, Article 3 of the Italian PIL Statute establishes that Italian jurisdiction exists also where the defendant has a legal representative authorised to represent him in Italian proceedings, and where other domestic jurisdiction criteria confer competence to Italian courts.

26   Legge 31 May 1995, n 218, ‘Riforma del sistema italiano di diritto internazionale privato’, in Suppl ord GU Serie gen 128 del 3 June 1995. 27   See Cass s u 21 October 2009, n 22239, Guida al diritto, 2, 71 (2010).

714  Nerina Boschiero and Benedetta Ubertazzi

1.2.2  International Jurisdiction in IP cases 1.2.2.1  A General Jurisdiction The Brussels I Regulation attributes general jurisdiction to the courts of the defendant’s domicile.28 This notion has led to occasional misunderstandings in common law countries where the notion of domicile adopted by domestic legislation differs from that used under the Brussels I Regulation.29 Accordingly the CLIP principles30 attribute general jurisdiction to the courts of the defendant’s habitual residence (Art 2:102(1)), rather than to that of his/her domicile, as does the Brussels I Regulation. Analogously, the ALI Principles31 referring to ‘personal’ rather than general jurisdiction, attribute it to the courts of the defendant’s residence and localise a natural person as resident in the place where he/she is habitually found or maintains significant professional or personal connections. Therefore, according to the official comment to those Principles, without using the term ‘habitual residence’ they ‘incorporate its same notion’.32 28   On the notion of habitual residence and the differences between this notion and the one of domicile, with particular regard to IP law, see T Kono, ‘Intellectual Property Rights, Conflict of Laws and International Jurisdiction: Applicability of ALI Principles in Japan’ (2005) 30 Brooklyn Journal of International Law 865, 870. 29   See C Heinze, ‘A Framework for International Enforcement of Territorial Rights: The CLIP Principles on Jurisdiction’ in J Basedow, T Kono and A Metzger (eds), Intellectual Property in the Global Arena: Jurisdiction, Applicable Law, and the Recognition of Judgments in Europe, Japan and the US (Tübingen, Mohr Siebeck, 2010). 30   See European Max Planck Group on Conflict of Laws in Intellectual Property, Principles for Conflict of Laws in Intellectual Property, Third Preliminary Draft (1 September 2010), www.cl-ip.eu/. On the CLIP Principles, see P de Miguel Asensio, ‘Propuestas para la mejora de la protección transfronteriza de la propiedad intelectual: los trabajos del ALI y del Grupo Europeo del Max Planck’ (2007) 59 Revista Española de Derecho Internacional 873; A Kur and B Ubertazzi, ‘The ALI Principles and the CLIP Project – A Comparison’ in S Bariatti (ed), Litigating Intellectual Property Rights Disputes Cross-Border (Padova, Cedam, 2010) passim; A Metzger, ‘Jurisdiction in Cases Concerning Intellectual Property Infringements on the Internet, Brussels I Regulation, ALI-Principles and Max Planck Proposals’ in S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, Mohr Siebeck, 2009) 251; E Treppoz, ‘Un autre regard: étude comparée des Principes de l’American Law Institute et du Max Planck Institut sur le droit international privé et la propriété intellectuelle’ in C Nourissat and E Treppoz (eds), Droit international privé et propriété intellectuelle: un nouveau cadre pour de nouvelles stratégies (Rueil-Malmaison, Lamy, 2010); P de Miguel Asensio, ‘Recognition and Enforcement of Judgments in Intellectual Property Litigation: The CLIP Principles’ in Basedow, Kono and Metzger, above n 29, 239 et seq; Heinze, above n 29, 53 et seq; A Metzger, ‘Applicable Law under the CLIP Principles: A Pragmatic Revaluation of Territoriality’ in Basedow, Kono and Metzger, above n 29, 157 et seq. 31  See American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (St Paul, ALI, 2008). On the ALI Principles, see Kono, above n 28, 865 et seq; C Kessedjian, ‘Current International Development in Choice of Law: An Analysis of the ALI Draft’ in J Basedow, J Drexl, A Kur and A Metzger (eds), Intellectual Property in the Conflict of Laws (Tübingen, Mohr Siebeck, 2005) 35; A Metzger, ‘Transfer of Rights, License Agreements, and Conflict of Laws: Remarks on the Rome Convention of 1980 and the Current ALI Draft’ in Basedow, Drexl, Kur and Metzger, above n 31, 9, 61 et seq; F Dessemontet, ‘A European Point of View on the ALI Principles – Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes’ (2005) 30 Brooklyn Journal of International Law 849, 859; R Dreyfuss, ‘The ALI Principles on Transnational Intellectual Property Disputes: Why Invite Conflicts?’ (2005) 30 Brooklyn Journal of International Law 819, 836; de Miguel Asensio, above n 30, 873 et seq; F Beckstein, ‘The American Law Institute Project on Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes. Summary of the Presentation given by Rochelle Dreyfuss’ in Leible and Ohly, above n 30, 22; F Dessemontet, ‘Los principios del American Law Institute: propiedad intelectual y litigios transfronterizos’ (2009) 2 InDret Revista para el Análisis del Derecho 20; JC Ginsburg, ‘Jurisdiction and Recognition of Judgments under the ALI Principles’ in Bariatti, above n 30, 9; M Vicente, ‘La propriété intellectuelle en droit international privé’ (2008) 335 RC 424; Metzger, above n 30, 251; Kur and Ubertazzi, above n 30, 9, passim; Treppoz, above n 30. 32   See the Official Comment to the ALI Principles, in American Law Institute, Intellectual Property, above n 31, 35.

Italy  715 1.2.2.2 Special Jurisdiction: Contracts As for Article 5(1) of the Brussels I Regulation,33 in the Falco decision34 the ECJ established that: the second indent of Article 5(1)(b) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and enforcement of judgments in civil and commercial matters, is to be interpreted to the effect that a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration is not a contract for the provision of services within the meaning of that provision.

The ECJ also maintained that: in order to determine, under Article 5(1)(a) of Regulation No 44/2001, the court having jurisdiction over an application for remuneration owed pursuant to a contract under which the owner of an intellectual property right grants to its contractual partner the right to use that right, reference must continue to be made to the principles which result from the case-law of the Court of Justice on Article 5(1) of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, as amended by the Convention of 26 May 1989 on the Accession of the Kingdom of Spain and the Portuguese Republic.

The main problem with this Article is that of related actions. Hence, as happened in the Falco case, licensors generally bring against their licensees both actions for the infringement of licensed IP rights and actions in contract for the royalty payments provided for by the licence agreements. Such actions generally have in common the parties, the IP rights involved and the territory where they are exercised and as such, they are closely connected. However, the issue regarding ‘related actions’ is governed by Article 6 of Regulation 44/2001, which does not consider the objective connection between proceedings a criterion sufficient enough to extend the jurisdiction existing for one of these proceedings to the other even when the latter proceeding is strictly connected to the former. In contrast, the CLIP Principles deal with the issue of related actions which are of utmost importance in IP law. Thus, according to its Article 2:201(3), in disputes concerned with infringement claims arising out of a contractual relationship between the parties, a court having jurisdiction with regard to the contract shall also be competent to deal with the infringement action, ‘without prejudice to Article 2:202’. 33   According to which: ‘a person domiciled in a Member State may, in another Member State, be sued: 1. (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question; (b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be:

– in the case of the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered, – in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided; (c) if subparagraph (b) does not apply then subparagraph (a) applies.’ 34   ECJ decision of 23 April 2009, Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela WellerLindhorst [2009] ECR I-3327, accessible at curia.europa.eu/. On the Falco case, see P de Miguel Asensio, ‘Nota a Falco’, ready to be published in (2009) Revista Española de Derecho Internacional; B Ubertazzi, ‘Licence Agreements Related to IP Rights and the EC Regulation on Jurisdiction’ (2009) 40 IIC International Review of Intellectual Property and Competition Law 912 et seq, and further references; N Boschiero, ‘I contratti relativi alla proprietà intellettuale alla luce della nuova disciplina comunitaria di conflitto. Analisi critica e comparatistica’ in N Boschiero (ed), La nuova disciplina comunitaria della legge applicabile ai contratti (Roma I) (Turin, Giappichelli, 2009) 520 et seq; E De Götzen, ‘La licenza d’uso di diritti di proprietà intellettuale nel regolamento Bruxelles I: il caso Falco’ (2010) 46 Rivista di diritto internazionale privato e processuale 383 et seq; P Franzina, ‘Struttura e funzionamento del foro europeo della materia contrattuale alla luce delle sentenze Car Trim e Wood Floor’ (2010) 46 Rivista di diritto internazionale privato e processuale 656 et seq.

716  Nerina Boschiero and Benedetta Ubertazzi 1.2.2.3 Infringements In relation to infringements, Article 5(3) of the Brussels Regulation establishes that ‘a person domiciled in a Member State may, in another Member State, be sued . . . in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur’. In relation to this rule the ECJ has rendered many different interpretative judgments, one of the more relevant of which is the ECJ Shevill decision.35 According to this decision, the expression of Article 5(3) of the Brussels I Regulation ‘place where the harmful event occurred’ shall be interpreted in the sense that: the victim of a libel by a newspaper article distributed in several Contracting States may bring an action for damages against the publisher either before the courts of the Contracting State of the place where the publisher of the defamatory publication is established, which have jurisdiction to award damages for all the harm caused by the defamation, or before the courts of each Contracting State in which the publication was distributed and where the victim claims to have suffered injury to his reputation, which have jurisdiction to rule solely in respect of the harm caused in the State of the court seized.

Indeed, it seems that the Shevill jurisprudence does not apply to IP rights cases by reason of their territorial nature.36 Also, the ECJ has recently been asked to interpret Article 5(3) with particular regard to the infringements which occur through the internet. Thus, in the case Olivier Martinez, Robert Martinez v Société MGN Limited 37 the Tribunal de grande instance de Paris referred to the ECJ the following question: [M]ust Article 2 and Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters be interpreted to mean that a court or tribunal of a Member State has jurisdiction to hear an action brought in respect on an infringement of personal rights allegedly committed by the placing online of information and/or photographs on an Internet site published in another Member State by a company domiciled in that second State – or in a third Member State, but in any event in a State other than the first Member State – : On the sole condition that that Internet site can be accessed from the first Member State, On the sole condition that there is between the harmful act and the territory of the first Member State a link which is sufficient, substantial or significant and, in that case, whether that link can be created by: – the number of hits on the page at issue made from the first Member State, as an absolute figure or as a proportion of all hits on that page, /- the residence, or nationality, of the person who complains of the infringement of his personal rights or more generally of the persons concerned, – the language in which the information at issue is broadcast or any other factor which may demonstrate the site publisher’s intention to address specifically the public of the first Member State, /- the place where the events described occurred and/or where the photographic images put on-line were taken, /- other criteria? 35   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415. On the Shevill decision, see for all A Gardella, ‘Diffamazione a mezzo stampa e Convenzione di Bruxelles del 27 settembre 1968’ (1997) Rivista Diritto Internazionale Privato e Processuale 657. 36   See N Boschiero, ‘Il principio di territorialità in materia di proprietà intellettuale: conflitti di leggi e giurisdizione’ (2007) 16 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 34, 81. 37   Case C-278/09 Olivier Martinez, Robert Martinez v Société MGN Limited, in curia.europa.eu/.

Italy  717 By answering this question and also by eventually clarifying in the near future whether the Shevill decision applies to IP rights, the ECJ will hopefully put forward a market impact rule, such as the one envisaged by the CLIP Principles according to which an IP right infringement occurs only when one of two other requirements is met. First, according to Article 2:202(3)(a), an infringement occurs in the state where the defendant has substantially acted or has taken substantial preparatory action to initiate or further the infringement. Secondly, according to Article 2:202(3)(b), an infringement occurs in the state where the activity by which the right is claimed to be infringed has substantial effect within, or is directed to, the territory of that state. This last requirement results from a more ‘effectsoriented approach’, and encompasses three different elements, of which the first is the ‘substantiality of action or effect’, that ‘serves as a filter to sort out minor infraction’ of IP rights,38 while the second and third are the requirements of ‘commercial effect’ and ‘directed to’, respectively. Moreover, the CLIP Principles also deal with the extent of jurisdiction over infringement claims, and establish that a court whose jurisdiction is based on Article 2:202 shall have jurisdiction in respect of infringements that occur or may occur within the territory of the state in which such court is situated (Art 2:203(1)).39 Indeed, this restriction does not apply to those cases coming within the scope of Article 2:203(2), which gives a single court seized under Article 2:202 the competence to adjudicate all infringements actions without territorial limitation, provided that four requirements, of which two are alternative, are met. The first requirement is that the IP rights infringement be carried out through ubiquitous media, such as the Internet (so-called ubiquitous infringements40). Secondly, the defendant must direct almost all his activities to states other than that in which he/she is resident. Thirdly, substantial activities in furtherance of the infringement in its entirety must have been carried out within the territory of the country in which the court is situated. Fourthly, and in the alternative to the third requirement, the harm caused by the infringement in the state where the court is situated must be substantial in relation to the infringement when considered in its entirety. Analogously, the ALI Principles deal with infringement jurisdiction and the extent of jurisdiction over infringement claims in a single norm, which is Article 204. The issue of infringement jurisdiction and that of the extension thereof are addressed separately according to the scheme adopted by the CLIP Principles and will be addressed separately, therefore, by this manuscript also. Moreover, Article 204(1) establishes that the plaintiff may bring his/her claim in the court of the state in which the defendant has substantially acted, or taken substantial preparatory acts, to initiate or to further an alleged infringement. Then, Article 204(2) states that the plaintiff may utilise the court of any state in which the defendant’s activities give rise to an infringement claim, if such defendant directed41 those activities to that state. Article 204(3) provides also that the plaintiff may utilise the courts of any state in which the defendant’s activities give rise to an infringement claim where three   As such Heinze, above n 29, 9, 10.  This rule is probably grounded on the above-mentioned Shevill jurisprudence. See J Fawcett and P Torremans, Intellectual Property in Private International Law (Oxford, Oxford University Press, 1998) 161; P de Miguel Asensio, ‘Cross-Border Adjudication of Intellectual Property Rights and Competition between Jurisdictions’ (2007) 16 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 105, 123; A Nuyts, ‘Suing At the Place of Infringement: the Application of Article 5(3) of Regulation 44/2001 to IP Matters and Internet Disputes’ in A Nuyts (ed), International Litigation in Intellectual Property and Information Technology (The Hague, Kluwer Law International, 2008) 117; Heinze, above n 29, 9, 10. 40   See Kur and Ubertazzi, above n 30, 9, s I. 41   On this requirement, see Dreyfuss, above n 31, 831. 38 39

718  Nerina Boschiero and Benedetta Ubertazzi requirements are met: first, the defendant cannot be sued in a WTO Member State according to the ALI Principles;42 secondly, the defendant must reasonably be seen as having directed those activities to that state; thirdly, the defendant must solicit or maintain contacts, business or an audience in the state of the seized court on a regular basis, whether or not such activity initiates or furthers the infringing activity. With regard to the extent of the infringement jurisdiction, the second sentence of Article 204(1) establishes that where the court is situated in the place where the defendant has substantially acted, or taken substantial preparatory acts, to initiate or to further an alleged infringement, the court’s jurisdiction extends to claims respecting all injuries arising out of the conduct, wherever the injuries occur. The second sentence of Article 204(2) specifies that where the court seized is located in the state where the defendant’s activities directed to such state give rise to an infringement claim, such court’s jurisdiction is limited to those injuries occurring in that state. Finally, the second sentence of Article 204(3) establishes that the court seized by virtue of Article 204(3) first sentence is competent to adjudicate claims with respect to injuries arising out of conduct occurring outside the forum state, but related to the infringement within that state, wherever those injuries arise. 1.2.2.4  Multiple Defendants As for Article 6(1) of the Brussels Convention, now Article 6(1) of the Brussels I Regulation,43 with the Roche decision44 the ECJ established that it: must be interpreted as meaning that it does not apply in European patent infringement proceedings involving a number of companies established in various Contracting States in respect of acts 42   On this requirement, see the Official Comment to Art 204, according to which ‘the principles use membership in a WTO State as a proxy for procedural and substantive fairness’. On this requirement, see also Dreyfuss, above n 31, 836; Dessemontet, above n 31, 9. 43   According to Art 6 of the Brussels I Regulation: ‘a person domiciled in a Member State may also be sued:

1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings; 2. as a third party in an action on a warranty or guarantee or in any other third party proceedings, in the court seized of the original proceedings, unless these were instituted solely with the object of removing him from the jurisdiction of the court which would be competent in his case; 3. on a counter-claim arising from the same contract or facts on which the original claim was based, in the court in which the original claim is pending; 4. in matters relating to a contract, if the action may be combined with an action against the same defendant in matters relating to rights in rem in immovable property, in the court of the Member State in which the property is situated.’ On this rule see for all FM Buonaiuti, Litispendenza e connessione internazionale. Strumenti di coordinamento tra giurisdizioni statali in materia civil (Naples, Jovene, 2008) passim. 44   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. On this case, see A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decisions GAT v LuK and Roche Nederland v Primus and Goldenberg’ (2006) 37 IIC International Review of Intellectual Property and Competition Law 844; C González Beilfuss, ‘Nulidad e infracción de patentes en Europa después de GAT y ROCHE’ (2006) 6 Anuario español de derecho internacional privado 269; M Wilderspin, ‘La compétence juridictionnelle en matière de litiges concernant la violation des droits de propriété intellectuelle. Les arrêts de la Cour de justice dans les affaires C-4/03, GAT c Luk et C-539/03, Roche Nederland c Primus ET Goldberg’ (2006) 95 Revue Critique de Droit International Privé 777; CLIP, Exclusive Juridiction and Cross Border IP (Patent) Infringement. Suggestions for Amendment of the Brussels I Regulation, www.cl-ip.eu/; L Lundstedt, ‘In the Wake of GAT/LuK and Roche/Primus’ (2007) 2 Nordiskt Immateriellt Rättsskydd 122, 123; M Norrgård, ‘A Spider Without a Web? Multiple Defendants in IP Litigation’ in Leible and Ohly, above n 30, 217; L Fumagalli, ‘Litigating Intellectual Property Rights Disputes Cross-Border: Jurisdiction and Recognition of Judgments under the Brussels I Regulation’ in Bariatti, above n 30, 15; Kur and Ubertazzi, above n 30, s 1 and sub-s 2.c.

Italy  719 committed in one or more of those States even where those companies, which belong to the same group, may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them.

In other words, with this decision the ECJ maintained that there is no risk of irreconcilable judgments resulting from separate proceedings, and therefore that they could not be connected ex Article 6(1), where the IP rights at stake pertain to different states and therefore are different (even though they are granted by the same organism and are related to the same invention, as is the case with European patents), and also where the multiple defendants are different companies (even though they belong to the same group or may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them). As before, the Roche decision is highly criticised due to its ‘excess of territoriality’45 especially in the light of the results of a recent study undertaken by Professor Harhoff of the University of Munich for the European Union Commission, delivered on 26 February 2009, and entitled ‘Economic-Cost Benefit Analysis of a Unified and Integrated European Patent Litigation System’.46 According to this study, ‘between 146 and 311 [patent] infringement cases are being duplicated annually in EU Member States. By 2013, this number is likely to increase to between 202 and 431 duplicated cases. Total private savings from having access to a unified patent [proceeding] would span the interval between EUR 148 and 289 million’.47 Moreover, the costs of the duplication of proceedings are even higher where the systems involved are such as the UK’s. Accordingly, ‘the average cost of pursuing through to first instance trial a patent infringement action in the UK is approximately €500,000, and this is about three times the cost of an infringement action in most other European jurisdictions’.48 Furthermore, the duplication of proceedings in IPR cases can lead to divergent outcomes, as has occurred in a recent series of cases: [I]n the Epilady case (EP0101656), infringement suits of the patent-holder were successful in Belgium, Germany, Italy and the Netherlands, but not successful in Austria, France and the United Kingdom. In Securities System Inc v ECB (EP0455750), the German and Dutch Courts upheld the patent, while it was revoked in France and the UK. In the Senseo case (EP0404717), initial divergent rulings have been issued by Belgian and Dutch Courts, but several other domestic cases are still pending. In the Monsanto case (EP0546090), the District Court of The Hague gave an interim judgment on 19 March 2008 and referred the case to the European Court of Justice for an interpretation of Directive 98/44/EC of 6 July 1998 on the legal protection of biotechnological inventions; several parallel cases are pending in different Member States.49

Another case that exemplifies the risk of divergent outcomes due to the duplication of proceedings is the European Central Bank v Document Security Systems Incorporated   See the critical comments of the doctrine quoted at the previous footnotes.  Available at ec.europa.eu/internal_market/indprop/patent/index_en.htm. On this study, see T Jaeger, R Hilty, J Drexl and H Ullrich, ‘Comments of the Max Planck Institute for Intellectual Property, Competition and Tax Law on the 2009 Commission Proposal for the Establishment of a Unified Patent Judiciary’ (2009) 40 IIC International Review of Intellectual Property and Competition Law 818. 47   This study refers explicitly to the Unified Patent Court (ECPC), on which see below. However, its results are extensible to any other unitary enforcement system of national and foreign patents. 48   See D Knight, ‘The Reducing Cost of European and UK Patent Litigation?’ (2008) Patent World, and available at www.ffw.com/publications/all/articles/reducing-cost-patent.aspx. 49  See fn 20 of the study ‘Economic-Cost Benefit Analysis of a Unified and Integrated European Patent Litigation System’, available at ec.europa.eu/internal_market/indprop/patent/index_en.htm. On this study, see Jaeger, Hilty, Drexl and Ullrich, above n 46, 13, 818. 45 46

720  Nerina Boschiero and Benedetta Ubertazzi case50 (hereinafter: ECB and DSS respectively). To properly describe this case it is relevant to refer to the wording of the decision rendered by the UK Court of Appeal on 19 March 2008. The controversy, according to the Court, was that a US company ‘contends that’ its: patent . . . and its sister patents are infringed by euro banknotes. Imaginatively but overoptimistically it tried to bring central proceedings before the Court of First Instance of the EU. On 5 September 2007, that Court held, not surprisingly, it had no jurisdiction to hear patent infringement proceedings even against an EU institution, case T-295/05. Meanwhile the ECB had started revocation proceedings in France, Germany, the Netherlands, Spain, Italy, Belgium, Luxembourg and Austria. These are ongoing.51

Prior to the Court of Appeal decision, a UK court of first instance held the patent void. Likewise, ‘in Germany and France there have been first instance decisions. None of the other proceedings have got that far’.52 The German Federal Patent Court (Bundespatent­ gericht) did not agree with the UK decision, and ‘held the patent valid. Then, on 9 January 2008, the French Court (le Tribunal de Grande Instance de Paris) agreed with’ the UK first instance decision, and disagreed with the German Court. On 12 March 2008 the Dutch Court agreed with the German Court. In sporting terms, the score is currently 2-2 to the ECB at first instance level. All this is deeply regrettable. It illustrates yet again the need for a one-stop patent shop (with a ground floor department for first instance and a first floor department for second instance) for those who have Europe-wide businesses.53

Finally, the UK Court of Appeal dismissed the plaintiff ’s appeal and confirmed the first instance decision holding the patent void. In this situation, first the Green Paper on the review of Council Regulation (EC) No 44/2001 recognised the need to amend the Brussels I Regulation in the sense of allowing a consolidation of proceedings with respect to the European patents infringements perpetrated by companies belonging to the same group.54 Secondly, the 2009 Council presidency ‘Proposal for the Establishment of a Unified Patent Judiciary’ (ECPC),55 which ‘enjoys the support of the Commission, which is now seeking to receive a mandate to open negotiations with State parties to the European Patent 50   See England and Wales Court of Appeal (Civil Division), European Central Bank v Document Security Systems Incorporated [2008] EWCA Civ 192 (19 March 2008), available at www.bailii.org/ew/cases/EWCA/Civ/2008/192. html. 51  ibid, [3]. 52   ibid, [4]. 53   ibid, [3-5]. 54   Green Paper, [4]. 55   See the Council of the European Union, Proposal for a Council Regulation on the European Union patent (Text with EEA relevance), Brussels, 27 November 2009, Interinstitutional File 2000/0177 (CNS), available at register.consilium.europa.eu/pdf/en/09/st16/st16113-ad01.en09.pdf. See also the Council of the European Union, Brussels, 23 March 2009, 7928/09 PI 23 COUR 29, European Community Patents Court Draft Agreement, available at documents.epo.org/projects/babylon/eponet.nsf/0/3C42A8FB1B30CA1AC125770D0030AB65/$File/ draft_agreement_European_and_Community_Patents_Court_en.pdf. See Jaeger, Hilty, Drexl and Ullrich, above n 46, 13, 817 et seq, containing further references. For an historical perspective, see C Wadlow, ‘Strasbourg, the Forgotten Patent Convention, and the Origins of the European Patent Jurisdiction’ (2010) 41 IIC International Review of Intellectual Property and Competition Law 123 et seq. See also Opinion 1/09, Request for an opinion submitted by the Council of the European Union pursuant to Art 300(6) EC, in OJ 12 September 2009, C-220, 15; and the ‘statement of position by the Advocates General’ presented on 2 July 2010 but published over 6 weeks after the date of 2 July given on the document in French (the official language of the document) on a patent lawyer’s blog. See the informal English translation of this document at www.eplawpatentblog.com/eplaw/2010/08/euopinion-on-the-compatibility-of-the-proposed-european-patent-court-system-with-european-treaty-la.html.

Italy  721 Convention (EPC) over the Draft Agreement, and to obtain an opinion from the ECJ under Article 300(6) of the EC on the compatibility with the EC Treaty’,56 aimed at establishing a unitary and specialised patent judiciary, ‘a new international organisation’ (ECPC), with a central division and several regional and local divisions, which will be designated by Member States as their national exclusively competent court to deal with European patents and respectively future Community patents validity and infringement issues. Particularly, the ECPC central division will be competent to address the actions for revocations, ie, the validity claims principally raised, the validity issues incidentally raised, and all the claims for which the local and regional divisions are competent to handle. In contrast, the ECPC regional or local divisions will be competent to address infringement claims (when localised in the state where the defendant is domiciled, or alternatively in the state where the infringement occurs), including provisional measures, damages etc, and revocation counter claims, ie, validity issues incidentally raised. Thus, in the majority of cases, the ECPC will grant unitary litigation with significant positive effects as compared to the status quo of fragmented litigation. Thirdly, the CLIP Principles establish, at Article 2:206, that a plaintiff may sue before the court of the state in which a defendant has his habitual residence, a number of other defendants non-resident in such state, provided that two out of three requirements are satisfied.57 First, the claims must be so closely connected that it is expedient to hear and determine them together, so as to avoid the risk of irreconcilable judgments resulting from separate proceedings (Art 2:206(1), first sentence). Secondly, Article 2:206(2), first sentence, requires that the court seised be that of the habitual residence of the defendant who conducted the infringing activity (eg, the court of the state in which is situated the parent company that coordinated the activity of the subsidiary companies, as in the ECJ Roche case). Thirdly, and as an alternative to this, Article 2:206(2), second sentence, requires that in lieu of the state of habitual residence of the defendant, the court seised be situated in the state most closely connected with the dispute when viewed as a whole (eg, the court of the state where the defendant who produces counterfeit products, which are then distributed to several other defendants that purchase them in many other jurisdictions, has his habitual residence). Thus, with such requirements, the CLIP Principles attempt to determine the jurisdiction of the court of the state in which the centre of the parallel infringing activities is situated. Finally, Article 2:206(1), second sentence, defines the risk of irreconcilable judgments within the meaning of Article 2:206(1), first sentence, by establishing that such a risk exists where the disputes in question involve ‘essentially the same legal and factual situation’. The ALI Principles establish a ‘more extensive provision’58 applicable in the case of multiple defendants, at Article 206. This Article imposes three requirements, of which two are alternatives, in order to be able to consolidate in the court of the residence of one defendant, infringement actions involving multiple defendants. First, Article 206 of the ALI Principles establishes that the claims against the resident defendant and the non-resident defendants must be so closely connected that they should rightly be adjudicated together in order to avoid the risk of inconsistent judgments. Secondly, according to Article 206 it is possible to consolidate infringement actions where there is a substantial, direct, and   As such Jaeger, Hilty, Drexl and Ullrich, above n 46, 13, 818 et seq.   See M Norrgård, ‘Provisional Measures and Multiple Defendants in the MPI Proposal’ in J Drexl and A Kur, Intellectual Property and Private International Law: Heading for the Future (Oxford, Hart, 2005) 45. 58   As such Heinze, above n 29, 9. 56 57

722  Nerina Boschiero and Benedetta Ubertazzi foreseeable connection between the forum’s IP rights involved and each non-resident defendant. Thirdly, and as an alternative to the second requirement, according to Article 206 it is possible to consolidate infringement actions where, as between the forum and the states in which the defendants to be added are resident, there is no forum more closely related to the dispute when viewed as a whole. Article 206(2) of the ALI Principles then defines the risk of irreconcilable judgments, within the meaning of Article 206(1), and for this purpose establishes three different criteria. First, there is deemed to be a risk of irreconcilable judgments where the ensuing judgments would impose redundant liability. Secondly, there is deemed to be a risk of irreconcilable judgments where the ensuing judgment ‘would conflict in that the judgment in one case would undermine the judgment in another case’. Thirdly, there is deemed to be a risk of irreconcilable judgments where the ensuing judgment ‘would conflict in that a party would not be able to conform its behaviour to both judgments’. Article 206(3) establishes then that actions may not be consolidated where a defendant invokes an exclusive choice-of-jurisdiction agreement entered into by the plaintiff, which agreement conforms with the ALI Principles provision on prorogation of jurisdiction (Art 202). Finally, Article 206(4) of the ALI Principles sets forth an objective limitation on the scope of the court seized on the basis of such Article, according to which such court has jurisdiction with respect to injuries, wherever occurring, that arise out of those activities that allegedly gave rise to the risk of inconsistent judgments. 1.2.2.5  Exclusive Jurisdiction The specific provisions of the Brussels I Regulation covering IP cases will be listed in the second part of this report, which discusses practical cases. As such, the following remarks will address the specific decisions of the ECJ on the Brussels I Regulation’s rules that were rendered in IP cases. Article 22(4) of the Brussels I Regulation, according to which the following courts shall have exclusive jurisdiction, regardless of domicile: 4.  in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State.

The Article was interpreted by the ECJ on two different occasions. First, with the Duijnstee judgment59 the ECJ maintained that Article 16(4) of the Brussels Convention, now Article 22(4) of Regulation 44/2001, applies only to proceedings ‘concerned with the registration or validity of patents’, but does not apply to proceedings related to IP rights infringement or to the determination of what party is entitled to an existing IP right on the basis of a previous legal relationship between the parties. Subsequently, the ECJ with the GAT decision60 main  Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, available at curia.europa.eu.   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. On this decision, see the critique of A Kur, above n 44, 844; González Beilfuss, above n 44, 269; Wilderspin, above n 44, 777; Lundstedt, above n 44, 123; ME Ancel, ‘L’arrêt GAT: une occasion manquée 59 60

Italy  723 tained that Article 16(4) of the Brussels Convention, now Article 22(4) of Regulation 44/2001, is to be interpreted as meaning that the rule of exclusive jurisdiction laid down therein concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection.

The ECJ GAT decision, then, is in line with a series of judgments of different countries that adopt very broad exclusive jurisdiction rules. Among those decisions we can recall the South African Supreme Court of Appeal’s decision of 3 September 2010 in Gallo, the US Court of Appeals for the Federal Circuit judgment of 1 February 2007 in Voda v Cordis Corp61 and the UK Court of Appeal decision of 16 December 2009 in Lucasfilm v Ainsworth.62 These decisions have been highly criticised also in Italy due to their ‘excess of territoriality’.63 In this frame, the CLIP and Ali Principles abandon the exclusive jurisdiction provisions with respect to IPRs infringement issues and to IPRs validity claims raised as a defence in infringements proceedings. Hence, the CLIP principles establish exclusive jurisdiction criteria for certain disputes concerning registered IP rights.64 Thus, in disputes having as their object a judgment relating to the grant, registration, validity, abandonment or revocation of a patent, a mark, an industrial design or any other IP right protected on the basis of registration, Article 2:401(1) grants exclusive jurisdiction to the courts in the state where the IP right was registered or is deemed to have been registered. In any case, the first sentence of Article 2:401(2) does not adopt the model of the ECJ GAT v LuK decision, and clarifies that Article 2:401(1) does not apply where the validity or registration of the registered IP right is challenged in a context other than by principal claim or counterclaim. Indeed, the second sentence of Article 2:401(2) establishes that decisions arising from such disputes do not affect the validity or registration of the IP rights questioned as against third parties. pour la défense de la propriété industrielle en Europe’ (2007) 8 ERA Forum 27; P Torremans, ‘The Widening Reach of Exclusive Jurisdiction: Where Can You Litigate IP Rights after GAT?’ in A Nuyts (ed), International Litigation in Intellectual Property and Information Techonology (The Hague, Kluwer Law International, 2008) 61; L Fumagalli, ‘Litigating Intellectual Property Rights Disputes Cross-Border: Jurisdiction and Recognition of Judgments under the Brussels I Regulation’ in Bariatti, above n 30, 15; Kur and Ubertazzi, above n 30, s 1 and sub-s 2.c. In favour of the GAT decision, see the speech on Gli standards di tutela dell’UE a confronto con gli standard internazionali. Proprietà intellettuale, given at the Italian Society of International Law XV Congress in Bologna, 10-11 June 2010, by M Frigo, available in streaming at streaming.cineca.it/SIDI-XV/play.php?dim_get=320&player_get=flash& flusso_get=flash, according to which the GAT decision should be positively evaluated since it grants the principle of legal certainty in conformity with Art 6 of the ECHR. Indeed, this Article militates against exclusive jurisdiction provisions. See B Ubertazzi, ‘Intellectual Property Rights, Exclusive (Subject-Matter) Jurisdiction and Public International Law’ (2011) Marquette Intellectual Property Law Review 357. 61   Voda v Cordis Corp, 476 F 3d 887 (Fed Cir 2007). See M Schauwecker, ‘Zur internationalen Zuständigkeit bei Patentverletzungsklagen. Der Fall Voda v Cordis im Lichte europäischer und internationaler Entwicklungen’ (2008) 57 Gewerblicher Rechtsschutz und Urheberrecht – Internationaler Teil 96 et seq; JC Ginsburg, ‘Jurisdiction and Recognition of Judgments under the ALI Principles’ in Bariatti, above n 30, 9, fn 2. See also Ubertazzi, above n 60. 62   [2009] EWCA Civ 1328. The judgment of the Court (Rix, Jacob and Patten LJJ) was delivered by Jacob LJ. On this judgment see A Dickinson, ‘The Force be with the EU? Infringements of US Copyright in the English Courts’ (2010) 2 Lloyd's Maritime and Commercial LQ 181 et seq. On the court of first instance decision of this same case, see RC Austin, ‘The Concept of “Justiciability” in Foreign Copyright Infringement Cases’ (2009) 40 IIC International Review of Intellectual Property and Competition Law 393 et seq. See also Ubertazzi, above n 60. 63   See particularly Boschiero, above n 36, 11, 94; Boschiero, above n 65, 18, passim. On the territoriality principle and on the reasons against its interpretation as a conflict of jurisdiction provision in relation to IPRs, see also J Drexl, ‘Internationales Immateralgüterrecht’ in Münchener Kommentar zum Bürgerlichen Gesetzbuch, vol 11, 4th edn (Munich, Verlag Beck, 2006) 819; GB Dinwoodie, ‘Developing a Private International Intellectual Property Law: the Demise of Territoriality’ (2009) 51 William and Mary Law Review 711 et seq, and further references there. 64   The first Draft of the CLIP Principles of April 2009 established an exclusive jurisdiction also for unregistered IP rights. On the exclusive jurisdiction of unregistered IP rights, see recently R Austin, above n 62, 393.

724  Nerina Boschiero and Benedetta Ubertazzi The ALI principles do not adopt the model of the US Court of Appeal for the Federal Circuit Voda v Cordis decision, and rather, permit the competent court to adjudicate claims arising under foreign laws (Art 211(1)). Indeed, those principles limit the effectiveness of a court decision holding invalid the registered rights granted under the law of another state. Hence, Article 211(2) of the ALI Principles states that such a decision shall be effective only between parties, but does not affect the validity or registration of the IP rights in question as against third parties. The same result is reached under Articles 213(2) and 213(3) of the ALI principles, concerning proceedings to obtain a declaration of invalidity of registered IP rights. 1.2.2.6  Italian Case Law As for Italian case law related to the rules above recounted, it is relevant to bear in mind the following: (i) Italian case law generally accepts jurisdiction in cases concerned solely with the issue of infringement of foreign IP rights.65 (ii) In Italy whenever a court declines its jurisdiction by reason of Article 22(4) of the Brussels I Regulation with respect to validity issues related to foreign IP rights, it also declines its jurisdiction with respect to any claim of non-infringement related to the same foreign IP rights, raised as a defence.66. (iii) The court of first instance of Milan, with a decision on 6 August 2008,67 applied Article 22(4) to a copyright infringement case. Indeed, it is not disputed that Article 22(4) does not concern either copyright or IP rights infringements claims.68 (iv) Before the ECJ’s GAT decision Italian jurisprudence did not apply Article 16(4) of the Brussels Convention, now Article 22(4) of the Brussels Regulation, to validity issues raised as a defence or incidentally and related to foreign registered IP rights.69 In contrast, after the ECJ’s GAT judgment the Italian courts have applied Article 22(4) of the Brussels I Regulation with respect to validity issues raised incidentally or as a defence in relation to foreign IP rights.70 (v) The court of first instance of Milan71 confirmed that Article 16(4) of the Brussels Convention (now Art 22(4) of the Brussels I Regulation) attributes exclusive jurisdiction to Italian courts when registration and/or validity issues of an Italian trade

65   See Trib Roma, 1 February 2000, (2000) 9 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 870 n 716. On this decision see N Boschiero, ‘Art 54 (Beni immateriali)’ in Commentario del codice civil, Scialoja-Branca (Bologna, Zanichelli, 2010). 66   See Trib Milano, 10 December 2007, (2007) Giurisprudenza annotata di diritto industriale 1103, n 5177; Trib Milano, 24 January 2004, cit, 788; Trib Milano, 23 May 2002, (2002) Giurisprudenza annotate di diritto industriale 912, n 4437. On these decisions see Boschiero, above n 65, 18. 67   Ready to be published in (2009) 18 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo, on which see Boschiero, above n 65, 18. 68   See all other Italian judgments on Art 22(4) hereafter mentioned and for all Boschiero, above n 36, 11, 94. 69   See Trib Torino, 19 May 2000 (ord), (2001) Giurisprudenza annotata di diritto industriale 225, n 4224/1; Corte App Milano, 16 March 1990, (1990) 26 Rivista di diritto internazionale privato e processuale 698. Contra Trib Milano, 24 January 2004, cit, 787; Trib Milano, 17 September 1992, (1992) Giurisprudenza annotata di diritto industriale 2851, 814. On these decisions, see Boschiero, above n 65, 18. 70   See Trib Torino, 10 March 2009, forthcoming in Rivista di diritto internazionale privato e processuale; Trib di Milano, 10 December 2007, cit, 1103, n 5177; Trib Milano, 24 January 2004, (2004) Giurisprudenza annotata di diritto industriale 783, n 4711. On these decisions, see Boschiero, above n 65, 18. 71   See decision of 17 September 1992, cit, 814, on which see Boschiero, above n 65, 18.

Italy  725 mark is concerned, albeit the trade mark is internationally registered according to the Madrid Arrangement. (vi) The court of second instance of Milan72 excluded the application of Article 16(4) of the Brussels Convention (now Art 22(4) of the Brussels I Regulation), therefore accepting its jurisdiction, in a case where the question at stake was related not to the registration and validity of a specific trade mark, but to a right of prior use of the same trade mark. Hence, according to the Court of Appeal this issue is not covered by Article 16(4). (vii) The court of first instance of Milan73 stated that the notion of domicile as a general jurisdiction criterion must be interpreted according to Italian substantive law: therefore, the defendant is domiciled in Italy only where he/she has his/her main place of business in Italy. In contrast, ‘eventually special domiciles’ existing in Italy ‘are to be intended as jurisdiction criteria with the sole regard to the litigation that concerns the business for which the special domicile was elected’74. (viii)  The Italian Supreme Court excludes the applicability of Article 5(3) to non-­ infringement claims on IP rights75, because the object of those claims would be different from those for infringement as far as jurisdiction. This approach is followed by other lower instance courts.76 Due to the modification of Article 5(3) of the Brussels Convention introduced by the Brussels I Regulation (that refers also to threatened wrongs, thus no longer requiring ‘damage’), few Italian courts seem to be open to applying Article 5(3), even to IP rights non-infringement claims (denial of existence of a tort).77 (ix) At least two Italian first instance courts in obiter dicta maintained that the exclusive jurisdiction rules of the Brussels system shall be extended to pure infringement proceedings not only of a negative nature but also of a positive character, emphasising that even in the absence of a validity issue, a proceeding on the infringement as well as on the non-infringement of an IPR always requires, as an essential and implicit assumption, a preliminary evaluation of the scope of the patent. It follows, then, the exclusive jurisdiction

72   Judgment of 16 March 1990, (1990) 26 Rivista di diritto internazionale privato e processuale 698, on which see Boschiero, above n 65, 18. 73   Decision of 23 May 2002, above n 66, 18, 907, on which see Boschiero, above n 65, 18. 74   In the same sense, see Cass 3657/89. So, the domicile election ex Art 75 of the Italian Patent Law (now substituted by the Italian IP Code) before a patent attorney office grounds the sole jurisdiction with respect to the ‘claims related to the inventions’ connected to the Italian portion of the European patent. 75   Cass 3657/89, (1989) II RDI 224, on which see Boschiero, above n 65, 18. See also the Italian Supreme Court’s ruling in BL Macchine Automatiche ApA v Windmoller & Holscher KG of 2003: Cass 19 December 2003 n 19550, (2005) Gewerblicher Rechtsschutz und Urheberrecht – Internationaler Teil 264, annotated by Wurmnest. 76   See Trib Venezia, 16 April 2011, RG 6549/09 and RG 7538/09 unreported; Trib Milano, 10 January 2009, (2009) Giurisprudenza annotata di diritto industriale 637, n 5395; Trib Milano, 10 December 2007, cit, 1105; Trib Milano, 29 November 2007, RG 60696/07; Corte di Appello di Milano, 2 March 2004, (2004) Giurisprudenza annotata di diritto industriale 837, n 4719; Trib Milano, 23 May 2002, above n 66, 18, 911, on which see Boschiero, above n 65, 18. 77   See the aforementioned judgment of the court of first instance of Milan of 6 August 2008, cit, and also the following decisions: Tribunale di Milano, 29 March 2005, (2005) 14 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 640. Before the Brussels I Regulation, see Tribunale di Roma, ordinanza 1 February 2000, (2000) 9 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 870; Trib di Brescia, 11 November 1999, (2000) Giurisprudenza annotata di diritto industriale 505 n 4107, on which see Boschiero, above n 65, 18. See above for the decline of jurisdiction with respect to the non-infringement of foreign IP rights connected with the decline of the same jurisdiction with respect to foreign IP rights validity issues.

726  Nerina Boschiero and Benedetta Ubertazzi ex Article 22(4) of the (EC) Regulation 44/2001 of the court of the State that granted the patent (or the portion of the European patent).78

(x) Article 5(3) is applied whenever the infringement of the IP right at stake occurs in the state where this same right is protected, and not where the relevant party suffers pecuniary damages. In particular, in accordance with case law, infringement occurs in a certain state where the IP right exists whenever the counterfeit product ‘is advertised or sold’ in the market of this state.79 Finally, among the specific domestic jurisdiction provisions that by virtue of Article 3 of the Italian PIL Statute determine the international jurisdiction of the Italian courts, there is Article 120 of the Italian industrial property code, on international jurisdiction to hear international cases and on competence,80 which gives the international jurisdiction to Italian courts whenever the case relates to an Italian registered or deposited IP right validity issue, raised as a claim or counterclaim or as a defence. As such, this provision coincides with (and therefore is absorbed by) Article 22(4) of the Brussels I Regulation. The question is whether Article 120 grants international jurisdiction also to Italian courts in other cases. Therefore, although it is apparent that Article 120 is intended to bring before the Italian courts all the cases that are related to IP rights registered or deposited in Italy, this provision has to cope with the Community jurisdiction rules, which prevail over it. Thus, Article 120 does not apply where the case is covered by Article 5(3) of the Brussels I Regulation on IP rights infringements, or by Article 5(1) of the same Regulation, on contractual claims related to IP rights licence/assignment agreements.81   Trib Venezia, 16 April 2011, cit, referring to Trib Milano, 29 November 2007, cit.   See for all Trib Milano, spec section, 29 March 2005, (2005) 14 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo n 1064, p 641, on which see Boschiero, above n 65, 18. 80   According to which: 78 79

‘1. Any action related to IP rights already granted or in the process of being granted shall be raised before the court of the State, irrespective of the citizenship, the domicile, or the residence of the parties. If the validity action is raised when the IP right is not yet granted, then the judgment can be rendered only after that the Italian Office competent regarding patents and trademarks has judged on the same action, examining it with a precedence on the other claims that were previously raised. 2. The actions mentioned at paragraph 1 shall be raised before the court of the place where the defendant is resident or domiciled, and if the residence and domicile are unknown, of the place where the defendant has his/her home, save what provided for at paragraph 3. When the defendant has no residence, domicile or home in the territory of the State, the actions shall be raised before the court of the place where the plaintiff has his/her residence or domicile. In the case where neither the defendant neither the plaintiff have their residence, domicile or home in the territory of the State the court of Rome has jurisdiction to hear the case. 3. The election of domicile that is made with the trademark registration or with the patent application and that is indicated in the register has the effect of an election of an exclusive domicile in respect of the determination of the jurisdiction and every notification of filings related to proceedings before the ordinary and administrative courts. The domicile so elected can be modified only with a special instance of substitution that shall be annotated on the register by the Italian trademark and patent Office. 4. The competence in matters of industrial property rights belongs to the courts expressly mentioned to this purpose by the legislative decree 27 June 2003, n 168. 5. The same courts mentioned at paragraph 4 are also the competent courts with respect of the Community trademarks and designs and registered designs ex Article 91 of the EC Regulation n 40/94 and Article 80 of the EC Regulation n. 2002/6. 6. The claims based on facts that could infringe copyrights could be raised also before the court with a specialised section in the circumscription of which the facts have been perpetrated.’ On this rule, see S Bariatti, ‘La giurisdizione e l’esecuzione delle sentenze in materia di brevetti di invenzione nell’ambito della CEE’ (1982) 18 Rivista di diritto internazionale privato e processuale 484 et seq. 81   As such see Trib Roma, 2 February 2000, (2000) Giurisprudenza annotata di diritto industriale 778. In con-

Italy  727 Jurisdiction rules are encompassed also by the Community Regulations on the Community IP rights aforementioned,82 which make explicit reference to the Brussels Regulation 44/2001, and thus apply unless the Regulations provide for different specific jurisdiction rules. Finally, jurisdiction rules are also included in Articles 4, 5 and 6 of the Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent (Protocol on Recognition), of 5 October 1973, to which Italy is a Member State.83

1.2.3  Conflict of Laws/Choice-of-Law In Italy conflict of laws/choice-of-law rules for tort, contracts and transfer of rights are mainly ruled by Community instruments. Hence, the law applicable to non-contractual obligations is determined by EC Regulation 864/2007 of 11 July 2007 of the European Parliament and the Council on the law applicable to non-contractual obligations (Rome II).84 This Regulation establishes that IP rights infringements aspects shall always be ruled by the lex loci protectionis. The law applicable to contractual obligations was determined by the Rome Convention of 1980 on the law applicable to contractual obligations.85 Indeed, from 17 December 2009 the lex contractus will be determined according to EC Regulation 593/2008 of 17 June 2008 of the European Parliament and the Council on the law applicable to contractual strast, according to another Italian court, Art 120 should apply to any proceeding related with IP rights registered in Italy and, therefore, also to the infringement proceedings, notwithstanding the fact that those last ones enter into the scope of Art 5(3) of the Brussels I Regulation: see Trib Roma, 9 March 2000, (2000) 9 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 913, which refers to Art 56 of the previous Italian Statute on Trade Marks, now substituted by Art 120 of the Italian Code on IP Rights. On these decisions, see Boschiero, above n 65, 18. 82   Arts 94-107 of the Council Regulation (EC) No 2100/94 on Community plant variety; Arts 79-94 of the Council Regulation (EC) No 6/2002 on Community designs; and Arts 94-107 of the Council Regulation (EC) No 207/2009 on the Community trade mark. 83   See www.epo.org/patents/law/legaltexts/html/epc/2000/e/ma4.html. 84   In [2007] OJ L199/40. On the Rome II Regulation, see C Nourissat and E Treppoz, ‘Quelques observations sur l’avant-propos de proposition de règlement du Conseil sur la loi applicable aux obligations non contractuelle “Rome II”’ (2003) 130 Journal du droit international 7; KF Kreuzer, ‘La comunitarizzazione del diritto internazionale privato in materia di obbligazioni extracontrattuali (“Roma II”)’ in P Picone (ed), Diritto internazionale privato e diritto comunitario (Padova, Cedam, 2004) 421; SC Symeonides, ‘Tort Conflicts and Rome II: A View from Across’ in HP Mansel et al (eds), Festschrift für Eric Jayme, vol I (Munich, Sellier European Law Publishers, 2004) 935; S Bariatti, ‘La futura disciplina delle obbligazioni non contrattuali nel quadro della comunitarizzazione del diritto internazionale privato’ (2005) 41 Rivista di diritto internazionale privato e processuale 5; G Carella, ‘La disciplina internazionalprivatistica delle obbligazioni da fatto illecito nella proposta di regolamento “Roma II” ’ (2005) 41 Rivista di diritto internazionale privato e processuale 25; RJ Weintraub, ‘Rome II and the Tension between Predictability and Flexibility’ (2005) 41 Rivista di diritto internazionale privato e processuale 561; A Malatesta (ed), The Unification of Choice of Law Rules on Torts and Other Non-Contractual Obligations in Europe (Padova, Cedam, 2006) passim; C Fröhlich, The Private International Law of Non-contractual Obligations according to the Rome II Regulation (Hamburg, Verlag Dr Kovac, 2008) passim. 85   80/934/EEC: Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980, Consolidated version CF 498Y0126(03), in [1980] OJ L266/1–19. On this convention, see for the Italian doctrine T Ballarino (ed), La convenzione di Roma sulla legge applicabile alle obbligazioni contrattuali. II. Limiti di applicazione. Lectio notariorum (Milan, Giuffrè, 1994) passim; G Sacerdoti and M Frigo (eds), La convenzione di Roma sul diritto applicabile ai contratti internazionali, 2nd edn (Milan, Giuffrè, 1994) passim; CM Bianca and A Giardina (eds), ‘Convenzione sulla legge applicabile alle obbligazioni contrattuali. Commentario’ (1995) Nuove leggi civili e commentate 901; U Villani, La Convenzione di Roma sulla legge applicabile ai contratti, 2nd edn (Bari, Cacucci, 2000) 8.

728  Nerina Boschiero and Benedetta Ubertazzi obligations (Rome I)86 which replaced the Rome Convention. This Regulation establishes the application of the law chosen by the parties. In the absence of a law chosen by the parties, the Rome I Regulation, contrary to the European Commission proposal that lead to its adoption, does not provide anymore for a specific provision on the law applicable to IP rights transfer contracts, but includes those agreements in the general rule on the law applicable to every contract.87 Specific rules exist for IP rights transfer agreements if the contract can be characterised as a franchising or distribution contract.88 Nevertheless, there are certain issues that are certainly not covered by the aforementioned Rome I and Rome II Regulations, and that therefore fall under the provisions of the Italian PIL Statute. For instance, defamation issues were left aside by the Rome II Regulation for the lack of general consent on the possible applicable law. Therefore, defamation issues are governed in Italy by the law determined for torts in general, namely by Article 62 of the Italian Statute of Private and Procedural International Law, according to which: 1. Liability for unlawful acts is governed by the law of the State where the event occurred. Nevertheless, the injured person may demand the application of the law of the State where the fact which caused the damage occurred. 2. If the unlawful act involves only persons who are citizens of the same State and reside in it, the law of such State applies.

1.2.3.1 Conflict of Laws/Choice-of-Law in Relation to IP Cases With specific reference to the IP field, it is unclear whether Article 8 of the EC Rome II Regulation, which determines the law applicable to IP right infringement aspects, also applies to other ‘preliminary’ issues like the first ownership one, especially with regard to 86   In [2008] OJ L177/6. On the Rome I Regulation, see for all A Bonomi, E Cashin Ritaine and GP Romano, (eds), Le nouveau règlement européen ‘Rome I’ relatif à la loi applicable aux obligations contractuelles (Zürich, Schulthess, 2009) passim; FJ Garcimartín Alférez, ‘The Rome I Regulation: Much Ado about Nothing?’ (2008) European Law Forum 61; A Bonomi, ‘The Rome I Regulation on the Law Applicable to Contractual Obligations’ (2008) 10 Yearbook of Private International Law 165; P Lagarde and A Tenenbaum, ‘De la Convention de Rome au règlement Rome 1’ (2008) Revue critique de droit international privé 727; AAVV, Il nuovo diritto europeo dei contratti: dalla convenzione di Roma al regolamento «Roma I». Atti del convegno (Bari, 23-24 marzo 2007) (Milan, Giuffrè, 2008) passim; F Pocar, ‘Roma I’ in Il Sole-24 Ore, 9 January 2008; Boschiero, above n 34, 10, passim. 87   See Clip, ‘Comments on the European Commission’s Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Contractual Obligations (Rome I)’ (2006) 38 IIC International Review of Intellectual Property and Competition Law 471; Clip, ‘Intellectual Property and the Reform of Private International Law – Sparks from a Difficult Relationship’ (2007) Praxis des Internationalen Privat- und Verfahrensrechts 290; P de Miguel Asensio, ‘Applicable Law in the Absence of Choice to Contracts Relating to Intellectual or Industrial Property Rights’ (2008) 10 Yearbook of Private International Law 212; P Torremans, ‘Licenses and Assignments of Intellectual Property Rights under the Rome I Regulation’ (2008) Journal of Private International Law 405; Boschiero, above n 34, 10, 520; N Boschiero, ‘Spunti critici sulla nuova disciplina comunitaria della legge applicabile ai contratti relativi alla proprietà intellettuale in mancanza di scelta ad opera delle parti’ in S Bariatti and G Venturini (eds), Liber Fausto Pocar, vol 2 (Milan, Giuffrè, 2009) 151. On the applicable law to contracts related to copyright, see A Metzger, ‘Transfer of Rights, License Agreements, and Conflict of Laws: Remarks on the Rome Convention of 1980 and the Current ALI Draft’ in Basedow, Drexl, Kur and Metzger, above n 31, 9, 77; H Schack, ‘Internationally Mandatory Rules in Copyright Licensing Agreements’ in Basedow, Drexl, Kur and Metzger, above n 31, 114. See also M Josselin-Gall, Les contrats d’exploitation du droit de propriété littéraire et artistique: étude de droit comparé et de droit international privé (Paris, GLN Joly, 1995) passim; R Mastroianni, Diritto internazionale e diritto d’autore (Milan, Giuffrè, 1997) 402; C Mettraux, La loi applicable entre droit d’auteur et droit des contrats (Zürich, Schulthess Juristische Medien AG, 2003) passim; T Azzi, Recherche sur la loi applicable aux droits voisins du droit d’auteur en droit international privé (Paris, Bibliothèque de droit privé, 2005) passim; A Tarruella Martínez, Contratos internacionales de software (Valencia, Tirant lo blanch, 2006) passim. 88   See ME Ancel, ‘The Rome I Regulation and Distribution Contracts’ (2008) 10 Yearbook of Private International Law 221; L García Gutiérrez, ‘Franchise Contracts and the Rome I Regulation on the Law Applicable to International Contracts’ (2008) 10 Yearbook of Private International Law 233.

Italy  729 copyright. In any case, even if this issue is covered by the scope of application of Article 8 of the Rome II Regulation, it falls under Article 54 of the Italian PIL Statute on ‘rights relating to intangible assets’, according to which ‘the rights relating to intangible assets shall be governed by the law of the State in which they are used’. This rule is currently interpreted as recalling the lex loci protectionis. Other controversial issues are the transferability of IP rights and the transfer (of property) of IP rights by way of contracts. These two issues are currently characterised as proprietary IP rights issues, consequently they are covered neither by the Rome I Regulation nor by the Rome II Regulation. Thus, the transferability and the transfer aspects are ruled once again by Article 54 of the Italian PIL Statute. In contrast, as far as all other contractual obligations related to IP rights transfer agreements are concerned, Rome I Regulation applies. Another relevant applicable law provision in force in Italy concerns the law applicable to the initial ownership of European Patents, which is provided for by Article 60 of the Munich European Patent Convention, according to which: (1) The right to a European patent shall belong to the inventor or his successor in title. If the inventor is an employee the right to the European patent shall be determined in accordance with the law of the State in which the employee is mainly employed; if the State in which the employee is mainly employed cannot be determined, the law to be applied shall be that of the State in which the employer has his place of business to which the employee is attached.

As far as the European Patent is concerned, specific provisions on jurisdiction are encompassed by the Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the grant of a European Patent (Protocol on Recognition), of 5 October 1973.89 Moreover, specific applicable law rules are encompassed also by the Community Regulations on the Community IP rights aforementioned,90 which make explicit reference to the national rules of each Member State, including its private international law provisions as applicable, to establish the lex causae for every issue not covered by the Regulations. In this context it is relevant to mention that Article 8(2) of the Rome II Regulation specifically addressed the aspect of the law applicable to Community IP rights infringements. Finally, the unconditional application of lex protections established by Article 8 of the Rome II Regulation strikes in comparison with the several departures from strict territoriality proposed by the most recent soft law initiatives. Both the Ali Principles and the set of principles established by the CLIP group envision, in cases where the alleged infringement is ubiquitous (and the laws of several states are pleaded), the possibility for the courts to apply to the issues of existence, validity, durations, attributes and infringements of IPRs and remedies, one single set of rules, or a small set of rules of specific states, precisely the law or the laws of the state or states with the closest connections to the dispute, supplemented by a market impact assessment. This approach, which takes into consideration situations regularly arising with regard to (copyright) infringements carried out on the Internet, is pursued in parallel to the consolidation of territorial claims before one court, even in the absence of an agreement by the parties. The objective of the drafters is to simplify the task for both parties and courts in the interest of efficiency. Both sets of rules seek to gain the simplification advantages of a single applicable law, instead of the laws of each   On which see www.epo.org/patents/law/legal-texts/html/epc/1973/e/ma4.html.   Art 88 of the Council Regulation (EC) No 6/2002 on Community designs; and Art 101 of the Council Regulation (EC) No 207/2009 on the Community trade mark. 89 90

730  Nerina Boschiero and Benedetta Ubertazzi affected state to the portion of infringement occurring within each state’s borders, while assuring as far as possible, compliance with the sovereignty interests underlying the territoriality approach. Thus, both sets of rules emphasise the ‘exceptional circumstances’ in which a court might override the general principle of the lex protectionis and provide that, whenever a court applies a single or reduced number of applicable law(s), the alleged infringer retains the right to demonstrate that his or her conduct is admissible with respect to a state in which the alleged activity is not actually infringing, even if the same activity is unlawful in all the other states concerned. Likewise, the Rome II Regulation, should equally provide for a more flexible solution.91

1.2.4  Recognition and Enforcement of Foreign Judgments and Interim Measures In Italy, recognition and enforcement of foreign judgments rendered by courts of EU Member States is governed by the Brussels I Regulation.92 The Brussels I Regulation establishes recognition and enforcement provisions that apply to every judgment of EU Member States, regardless of whether the competence of the court that rendered the judgment to recognise is determined by the norms of the Regulation or by the internal rules of the Member States on international competence, in the event that the case falls outside the scope of the Brussels I Regulation. Moreover, according to Article 32 of the Regulation, ‘judgment’ ‘means any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court’. Finally, the Brussels I Regulation renders the procedure for obtaining the recognition and enforcement extremely quick and easy. Hence, recognition and execution can be immediately granted and the defendant may only contest this recognition and execution granting decision in a second moment. In the event of such contestation, the Italian court may then overturn its recognition decision. However this only occurs in very few cases and does not include review of the substance of the judgment and verification of the jurisdiction of the court that rendered the judgment unless the case judged entered into an exclusive jurisdiction criterion. In Italy, recognition of foreign judgments rendered by courts of non-EU Member States is governed by the Italian PIL Statute, and specifically by Articles 64 and 67. Also according to the Italian PIL Statute, the notion of judgment encompasses any decision with a juridical effect, notwithstanding that this decision is not a definitive (or final) one. Indeed, according to the domestic rule on recognition, even if ‘a foreign judgment is recognised in Italy without the necessity of resorting to any proceeding’, the verification of the fulfilment of certain requirements is necessary. These requirements include the evaluation of the jurisdiction rules that granted recognition to the judgment, and namely that ‘the judge who pronounced it could take cognisance of the case in accordance with the principles of the Italian system on jurisdictional competence’. 91   See N Boschiero, ‘Infringement of Intellectual Property Rights. Comments on Article 8 of the Rome II Regulation’ (2007) 9 Yearbook of Private International Law 110 et seq. 92   On the issue of recognition and enforcement of foreign judgments in Italy see O Lopez Pegna, I procedimenti relativi all’efficacia delle decisioni straniere in materia civile (Padova, Cedam, 2009). See also S Tonolo, ‘Pluralità di giudicati ed opposizione all’esecuzione delle decisioni straniere’ in N Boschiero and P Bertoli (eds), Verso un ‘ordine comunitario’ del processo civile. Pluralità di modelli e tecniche processuali nello spazio europeo di giustizia, Convegno interinale SIDI Como, 23 novembre 2007 (Naples, Editoriale Scientifica, 2008) 71-96; P De Cesari, ‘La procedura semplificata di exequatur nei regolamenti Bruxelles I, Bruxelles II-bis e n 1346/2000 e la sua applicazione pratica’ ibid, 19-44.

Italy  731 According to the Brussels I Regulation, Italian jurisdiction with respect to provisional measures is grounded by its Article 31, according to which: application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.

The ECJ in the Van Uden case93 interpreted Article 24 of the Brussels Convention, now Article 31 of the Brussels I Regulation, by stating that: 3.  Where the subject-matter of an application for provisional measures relates to a question falling within the scope ratione materiae of the Convention of 27 September 1968, that Convention is applicable and Article 24 thereof may confer jurisdiction on the court hearing that application even where proceedings have already been, or may be, commenced on the substance of the case and even where those proceedings are to be conducted before arbitrators. 4.  On a proper construction, the granting of provisional or protective measures on the basis of Article 24 of the Convention of 27 September 1968 is conditional on, inter alia, the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought.

Moreover, in the St Paul case94 the ECJ excluded from the notion of provisional measures any measures: which, in matters within the scope of the Convention, are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case.

Therefore, those that ‘order the hearing of a witness’ or that aim at the acquisition of evidences ‘for the purpose of enabling the applicant to decide whether to bring a case, determine whether it would be well founded and assess the relevance of evidence which might be adduced in that regard’ are not to be intended as provisional measures. For cases not covered by the Brussels I Regulation, Italian jurisdiction with respect to provisional measures is grounded by Article 10 of the Italian PIL Statute, according to which ‘Italian jurisdiction exists where the relevant measure is to be implemented in Italy or where the Italian judge has jurisdiction’. 1.2.4.1 Recognition and Enforcement of Foreign Judgments and Interim Measures in Relation to the IP Field of Law With respect to IP, the rules related to the recognition and enforcement of foreign judgments and interim measures present certain peculiarities.95   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091.   Case C-104/03 St Paul Diary Industries NV v Unibel Exser BVBA [2005] ECR I-3481. On this case, see the comment of Pataut (2005) Revue critique de droit international privé 746; G Esteban de la Rosa, ‘La realización de pruebas en el espacio europeo de justicia: a propósito del reglamento 1206/2001 y su compatibilidad con el reglamento 44/2001’ (2006) Anuario español de derecho internacional privado 316; K Szychowska, ‘Taking of Evidence in Intellectual Property Matters under Regulations 44/2001 and 1206/2001’ (2006) Intellectuele Rechten – Droits Intellectuels 123; A Nuyts, ‘Le règlement communautaire sur l’obtention des preuves: un instrument exclusif?’ (2007) Revue critique de droit international privé 61; C Besso, ‘L’assunzione preventiva della prova sganciata dal periculum in mora non è – secondo la Corte europea di giustizia – un procedimento provvisorio o cautelare’ (2006) Int’l lis 76, 80; G Di Fazzio, ‘Istanza di istruzione preventiva (“esplorativa”) olandese e foro competente europeo’ (2006) 61 Rivista di diritto processuale 785. 95   On this issue, see the following recent decisions: Case C-38/98 Régie Nationale des Usines Renault SA v Mexicar SpA and Orazio Formento [2000] in curia.europa.eu; US District Court for the Southern District of New 93 94

732  Nerina Boschiero and Benedetta Ubertazzi First, during recent years the IP field has been particularly interested by the phenomenon of the so-called ‘cross-border prohibitory injunction’, on the basis of which the courts of the Netherlands used to grant interim measures to protect foreign IP rights from infringing activities perpetrated abroad, also in the absence of their jurisdiction on the merit. However, this practice is definitively overcome by the aforementioned ECJ case law on the territorial limit of the interim measures granted by courts that do not have jurisdiction over the merits.96 Secondly, it is relevant to mention that as far as the European Patent is concerned, specific provisions on recognition of judgments are encompassed by the aforementioned Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent (Protocol on Recognition), of 5 October 1973. Thirdly, another question arises as to whether a ‘description’ of allegedly counterfeiting goods97 falls into the category of preliminary measures ex Article 31 of the Brussels I Regulation, or rather can be encompassed by the Council Regulation (EC) No 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters.98 This question was referred to the ECJ by an Italian court in the Tedesco case.99 Hence, Article 128 of the Italian Code of Intellectual York, Sarl Louis Feraud Intern v Viewfinder, Inc, 406 F Supp 2d, 274–81, 2005; Supreme Court of Canada, Pro Swing Inc v Elta Golf Inc [2006] 2 SCR, 612; 2006 SCC 52, available at scc.lexum.umontreal.ca/en/2006/2006scc52/2006scc52. html. On those decisions, see M Trimble Landova, ‘Public Policy Exception to Recognition and Enforcement of Judgments in Cases of Copyright Infringement’ (2009) 40 IIC International Review of Intellectual Property and Competition Law 654 et seq. 96   See C Honorati, ‘La cross-border prohibitory injunction olandese in materia di contraffazione di brevetti: sulla legittimitá dell’inibitoria transfrontaliera alla luce della Convenzione di Bruxelles del 1968’ (1997) 33 Rivista di diritto internazionale privato e processuale 301 et seq. 97   On the description in general, see point 50 of the conclusions of Advocate General Kokott for the Tedesco case, on which see below. See also MA Tavassi, ‘Tutela dei diritti in sede civile. Sequestro e descrizione – aspetti processuali’ in P Frassi and S Giudici (eds), Adeguamento della legislazione nazionale agli accordi TRIPS e procedimenti cautelari in materia di proprietà industriale (Milan, Giuffrè, 1996) 4; M Norrgård, above n 57, 15, 35; A Ibbeken, Das TRIPS-Ubereinkommen und die vorgerichtliche Beweishilfe im gewerblichen Rechtssihutz (Cologne, Carl Heymanns Verlag, 2004) 109; Szychowska, above n 94, 25, 116; Nuyts, above n 94, 25, 76; C Heinze, Einstweiliger Rechtsschutz im europäschen Immaterialgüterrecht (Tübingen, Mohr Siebeck, 2008) 653. 98   On this Regulation in general, see ‘UE: regolamento n. 1206/200l sull’assunzione delle prove all’estero in ambito comunitario’ in C Consolo and M De Cristoforo (eds), Il diritto processuale civile visto da Int’l Lis dal 2002 ad oggi (Milano, Ipsoa, 2006); G Gioia, ‘Cooperazione fra autorità giudiziarie degli Stati CE nell’assunzione delle prove in materia civile e commerciale’ (2001) Nuove leggi civili e commentate 1159; L Fumagalli, ‘La nuova disciplina comunitaria dell’assunzione delle prove all’estero in materia civile e commerciale’ (2002) 38 Rivista di diritto internazionale privato e processuale 327; D Borghesi, ‘Convenzione dell’Aja (1970) e regolamento CE n 1206/2001 sull’assunzione delle prove all’estero in materia civile e commerciale’ in F Ferrari (ed), Le convenzioni di diritto del commercio internazionale, 2nd edn (Milan, Giuffrè, 2002) 335; N Trocker, ‘Note sul regolamento n 1206/2001 relativo all’assunzione delle prove in materia civile e commerciale’ (2003) Rivista di diritto internazionale 670; M Frigo and L Fumagalli, L’assistenza giudiziale internazionale in materia civile (Padova, Cedem, 2003) 159; R Bonatti, ‘Sovranità nazionale e leggi processuali nell’armonizzazione del diritto delle prove in Europa’ (2004) Rivista trimestrale di diritto e procedura civile 711; P Biavati, ‘Problemi aperti in materia di assunzione delle prove civili in Europa’ (2005) Rivista trimestrale di diritto e procedura civile 425; L Sandrini, ‘L’assunzione delle prove all’estero. Dalla convenzione dell’Aja del 1970 al regolamento CE 1206/’2001’ in I Ambrosi and LA Scarano (eds), Diritto civile comunitario e cooperazione giudiziaria civile (Milan, Giuffrè, 2005) 215. 99   See Case C-175/06 Alessandro Tedesco v Tomasoni Fittings SrL, RWO Marine Equipment Ltd [2007] ECR I-7929, finally settled by an agreement between the parties and therefore not decided by the ECJ. See also the opinion of the Advocate General of 18 July 2007 in C-175/06 Tedesco, published in (2008) European Legal Forum 1-42. On the Tedesco case, see B Ubertazzi, ‘The EC Council Regulation on evidence and the “description” of goods infringing IP rights’ (2008) European Legal Forum 1-80; L Fumagalli, ‘Il caso “Tedesco”: un rinvio pregiudiziale relativamente al Regolamento n 1206/2001’ in Bariatti and Venturini, above n 87, 391; C Heinze, ‘Beweissicherung im europäischen Zivilprozessrecht’ (2008) Praxis des Internationalen Privat- und Verfahrensrechts 480; B Hess, ‘Preservation and Taking of Evidence in Cross-Border Proceedings – Comparative Remarks in the Context of IP

Italy  733 Property on ‘description’ states that: l. The owner of an industrial property right may request to order the description of any objects infringing his right, as well as of the means used in the production of such objects and of the items of evidence concerning the reported infringement and its entity. 2. The petition is filed with the President of the specialised section of the court competent for ruling on the merits pursuant to Article 120. 3. The President of the specialised section issues a summons for a hearing and sets the final date for notification of the summons. 4. After having heard the parties and admitted summary information, if necessary, the same court decides by non-appealable order and, if provided by the description, indicates the necessary measures to be adopted so as to ensure the protection of confidential information and may authorise the seizure of samples of the objects mentioned in paragraph 1. When the summons of the counterpart might prejudice the implementation of the decision, it decides on the request by a reasoned judgment, derogating the provisions of paragraph 3. 5. The judgment of acceptance, in cases where the request was filed before the case on the merit has been initiated, has to set a final time limit not exceeding 30 days for initiating the trial on the merits.

This Article was codified as a result of the adoption of the Community Enforcement Directive. In 2005 an Italian company lodged a request for ruling ante causam with the IP section of the Court of Genoa regarding the ‘description’ of the goods pursuant to Article 128 of the CPI against an English company and its Italian distributor. In particular, the plaintiff alleged to be the owner of an Italian patent for an industrial invention, claimed that the English company produced the goods in dispute in England and sent them from there to the Italian distributor, who resold them on the national market; he qualified the activity of the two companies as infringement of his patent. Accordingly, he requested a ‘description’ of goods in accordance with Article 128 of the CPI, and sought its performance in Italy ex Article 128 of the CPI, addressing a request for judicial assistance to the competent body in the United Kingdom, with a view to the latter taking evidence in respect of evidential material situated in the United Kingdom according to said rule as well as Council Regulation (EC) No 1206/2001 of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters. He demanded in particular that the description in the United Kingdom should extend to the counterfeited products and to further ‘items of evidence such as, for example but not exclusively, invoices for purchase and sale, delivery notes, orders, letters of commercial offers, advertising and promotional material, data recorded in the computerised archives, clearance documents’. The President of the IP section of the Court of Genoa admitted the petition, ordered the description in Italy and requested the British court to proceed with the description on its own territory. The reply from the Senior Master of the Queen’s Bench Division of the Supreme Court of England and Wales, however, was negative, ‘a short note, without signature’ to the effect that ‘this is not a matter which we consider should fall to be dealt with by this office under the Letter of Request procedure’. Then, by Order of 14 March 2006, the President of the IP section of the Court of Genoa referred the following questions to the ECJ, requesting a preliminary ruling on the interpretation of Council Regulation (EC) No 1206/2011: Litigation’ in A Nuyts (ed), International Litigation in Intellectual Property and Information Technology (The Hague, Kluwer Law International, 2008) 298.

734  Nerina Boschiero and Benedetta Ubertazzi l.  Is a request for obtaining a description of goods under Articles 128 and 130 of the Italian Code of Industrial and Intellectual Property, in accordance with the formal terms of the order made by this court in the present case, one of the forms of the taking of evidence prescribed by Council Regulation (EC) No l23612001 of 28 May 2001 (on co-operation between the courts of the Member States in the taking of evidence in civil and commercial matters) by which the courts of one Member State may, on the basis of that regulation, request that the competent court of another Member State should itself take that evidence?

On 18 July 2007 Advocate General Kokott presented her own conclusions in the proceedings C-175106 before the ECJ. Nevertheless, the private parties to the case in question reached medio tempore a settlement of their dispute. Then, by Order of 26 March 2007, the President of the IP section declared that there was no need to adjudicate the case, and thus, by Order of 27 September 2007, the ECJ considered that ‘the questions referred for a preliminary ruling had become devoid of purpose’ and ordered that the case be removed from its register. Indeed, the above-mentioned national judgment and the Community judgment have nevertheless raised a question which remains of interest even beyond the case itself that is now closed. As Advocate General Kokott maintained in her conclusion to the case in question, precautionary taking of evidence falls within the scope of Regulation (EC) No 1206/2001. The description constitutes a provision for precautionary taking of evidence. Therefore it is covered by the autonomous Community concept of relevant evidence according to Regulation (EC) No 1206/2001. This conclusion is supported by many arguments, of which for the purposes of this article, it suffices to recall the one referred to in the ECJ St Paul Dairy judgment. According to this judgment, measures of precautionary taking of evidence do not fall within the scope of Article 24 of the Brussels Convention (now Art 31 of the Brussels I Regulation) and therefore this Regulation does not apply to them. Thus, it seems that the coordination among the PIL legal instruments of a European nature maintains the position that the measures of precautionary taking of evidence should at least conform with the EC Regulation on the acquisition of evidence. Fourthly, the public policy exception can play an important role with respect to the issue of recognition/enforcement of foreign decisions and interim measures. Hence, this exception is adopted so as not to recognise/enforce a foreign decision, interim measure and/or a remedy that (i) in the case of copyright does not recognise moral rights;100 or (ii) is based on a balance among the IP rights and other fundamental human rights (such as the freedom of speech and the right of property) that is different from the accepted standard in the legal system of the requested state;101 or (iii) awards punitive damages.102 In contrast, although economic rationales play a great role in shaping copyright law courts do not consider economic considerations to be fundamental public policies with the potential to trigger the public policy exception. This conclusion is based on two recent decisions: the ECJ judgment in Régie Nationale des Usines Renault SA v Mexicar SpA of 11 May 2000 and that   See Mastroianni, above n 87, 403.   See Trimble Landova, above n 95, 654 et seq. See also A Di Blase, ‘Human-Right-Related Aspects in the Settlement of International Disputes on Intellectual Property Rights’ in Bariatti and Venturini, above n 87, 275 et seq. 102   See the Italian Supreme Court decision of 19 January 2007 n 1183, (2007) 43 Rivista di diritto internazionale privato e processuale 781, on which see M Lopez De Gonzalo, ‘Punitive Damages e ordine pubblico’ (2008) 44 Rivista di diritto internazionale privato e processuale 77, according to which punitive damages in general are completely counter to Italian public policy. Contra particularly with regard to IP rights in legal systems other than the Italian, see Trimble Landova, above n 95, 663 and further case law references mentioned there. 100 101

Italy  735 of the US District Court for the Southern District of New York in Sarl Louis Fearud Intern v Viewfinder, Inc of 2005.

1.2  Peculiarities of the Italian PIL System Concerning the IP Sector Article 54 of the new Italian PIL Statute is one of the greatest and most important innovations in Italian traditional choice of law rules. It adopts the lex loci protectionis as the general conflict of laws principle, referring to ‘the place of exploitation’, on the presupposition that it is always possible to identify the place where the right is used. The law of the protecting country addresses all the issues and problems arising from transnational disputes in intellectual property, without making any distinction between registered and unregistered rights: ie, the existence and creation of the right, the scope of the right, its validity, transferability, duration, attributes, moral rights, infringement and (civil) remedies. The lex loci protectionis applies also to some controversial issues, such as the authorship and first ownership of copyrights works, as our choice of law rule does not contain any exception pointing to the law of the country of origin for specific issues. The only exception is for the initial title of works created pursuant to a contractual relationship. According to legal writing103 it is submitted that the link is stronger with the employment relationship, and the appropriate choice of law rule should be that contained in Article 6 of the Rome Convention (now Art 8 of the Rome I Regulation). According to a minority, albeit very authoritative, opinion,104 Article 54 could not be construed like a normal choice of law rule. The inherent territoriality of IP rights removes the need for general choice of law rules, since each state cannot but apply its own national substantive rules to creation, scope and termination of intellectual property rights. Consequently, Article 54 should be interpreted (according to this opinion) as a pure unilateral and introvert choice of law rule, clarifying that Italian law is the only possible applicable law when someone wants to exploit an IP right in Italy. What is lacking is ‘a same juridical category, or a same legal paradigm’ in relation to which different laws can come into consideration. Foreign laws can only be considered ‘indirectly’ in order to identify the types of IP rights protected under other laws, and the owners of these rights, and in order to solve any ‘preliminary issue’ concerning the infringement of the rights and the possible remedies (question answered in any case by other conflict of law rules). Apart from the high level of sophistication of this construction and the fact that it is in contrast with the statutory intervention of the Italian legislator, opposed by the large majority of legal writing and denied by Italian courts practice,105 its implementation leads to the same practical results envisaged by those who recognise in this rule a normal ‘bilateral’ choice of law rule. The problem with Italian judicial practice is that in a large number of cases our courts are prevented from moving on to the next stage of private international legal reasoning (applying the appropriate choice of law rule), being obliged to deny possession of jurisdiction. This is mainly due to the fact that, disputes related to creation, registration and validity of industrial property rights will inevitably come within the special exclusive   Boschiero, above n 34, 10, 463 et seq.   R Luzzatto, ‘Art 54 (diritti su beni immateriali)’ in S Bariatti (ed), Commentario della riforma del sistema italiano di diritto internazionale privato, (1996) Nuove leggi civili e commentate 259 et seq. 105   For a recent analysis of the Italian jurisprudence on IP issues, see Boschiero, above n 65, 18. 103 104

736  Nerina Boschiero and Benedetta Ubertazzi jurisdictional rule contained in Article 22(4) of Brussels I Regulation, and very few cases fall outside the scope of this rule. Secondly, according to some recent developments in the ECJ’s practice in the field of intellectual property, emphasis has been given to the substantive principle of territoriality. The natural consequences of this new approach, are (first) that almost any patent proceedings need to be brought in each country of registration and (second) that the possibility of consolidating proceedings against several infringers acting in different Member States has been definitively precluded. Furthermore, jurisdiction grounds in infringement claims (like Art 5(3) of the Brussels I Regulation) are inherently ‘territorial’: their jurisdiction is limited to injuries that arise in the forum. In those cases, when jurisdiction is accepted, there is a natural coincidence between the forum and the jus. The same occurs when provisional (including protective) measures are sought: the EU courts have no further jurisdiction to order cross-border injunctions other than for measures that are intended to prevent, preserve, to seize intellectual property rights in the state where the right exists. In sum, the advantages provided by the general basis of jurisdiction in the ‘Brussels System’ (the defendant’s domicile) have been greatly reduced, and consequently so has the possibility for the courts of the Member States to apply other Member States’ substantive law, according to their choice of law rules. Still, some disputes deserve a ‘strict’ private international law reasoning. Here, the process of a ‘proper’ classification or characterisation can raise some problems: non-contractual issues must be clearly distinguished from other issues, primarily from contractual issues. Issues such as transferability or assignability of an IP right, for example, fall outside the scope of the lex contractus: as do preliminary issues which are linked with the grant of the right which are governed by the law which governs the right itself: the lex loci protections. It is truly a pity that the European ‘legislator’ has lost the opportunity to clarify the exact scope of the lex loci protectionis, that is to say, the statutory choice of law rules chosen at European level for questions of intellectual property in infringement cases. Articles 8 and 15 of the Rome II Regulation are still subject to very different interpretations, ranging from the broadest possible scope (covering any possible issue) to the narrowest possible understanding (exclusively the issues of violation of the right and remedies as such). On problematic issues such as initial ownership, the Community Regulation is silent, thus legitimising divergent interpretation and application, at least since the ECJ will be asked to clarify the exact scope of the ‘universally acknowledged principle of the lex loci protectionis’.106

2  Hypothetical Case Studies Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit.

  Recital 26 of the Rome II Regulation.

106

Italy  737 (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located in your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in a neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

The rules relevant to answering this first question are the following: Article 2 of the Brussels I Regulation,107 Article 5(3) of the Brussels Regulation,108 Article 5(5) of the Brussels I Regulation109 and Article 60 of the Brussels I Regulation.110 Also, it is important to remember the ECJ Shevill decision,111 according to which the expression used in Article 5(3) of the Brussels I Regulation, ‘place where the harmful event occurred’, shall be interpreted in the sense that the victim of libel by a newspaper article distributed in several Contracting States may bring an action for damages against the publisher either before the courts of the Contracting State of the place where the publisher of the defamatory publication is established, which have jurisdiction to award damages for all the harm caused by the defamation, or before the courts of each Contracting State in which the publication was distributed and where the victim claims to have suffered injury to his reputation, which have jurisdiction to rule solely in respect of the harm caused in the State of the court seized.

Moreover, the answers to the questions addressed here are based on the relevant Italian case law, which is in line with the Shevill judgment. Italian case law even specifies that when the injured person is suffering honour and reputation damages in a state different than the country where the paper was printed and distributed, the place where the harmful event occurred is not to be intended as the place where the injured person suffered injury to his reputation but as the place where the paper was distributed.112 Moreover, the Italian Supreme Court decision stated that in the event that the newspaper was only distributed in Italy but the publisher of the defamatory publication has his establishment outside of Italy, it is nevertheless possible to attract the foreign defendant before an Italian court ex Article 107   According to which: ‘subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State’. 108   According to which: ‘a person domiciled in a Member State may, in another Member State, be sued:

. . . 3. in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur’. 109   According to which: ‘a person domiciled in a Member State may, in another Member State, be sued: . . . 5. as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated.’ 110   According to which: ‘1. For the purposes of this Regulation, a company or other legal person or association of natural or legal persons is domiciled at the place where it has its: (a) statutory seat, or (b) central administration, or (c) principal place of business.’ 111   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415. 112   See Trib Milano, 18 April 2008, (2008) Il diritto dell’informazione e dell’informatica 351; Cass s u, 27 October 2000, n 1141, (2000) Diritto e giustizia 28.

738  Nerina Boschiero and Benedetta Ubertazzi 6(1) of the Brussels Convention (now 6(1) of the Brussels I Regulation). In this case it is possible to overcome the limits established by the Shevill decision, and thus the Italian court could award damages that occur not only inside its territory, but could adjudicate on the entirety of the damage suffered in every other state where the paper was also distributed. 113 In this framework, the answer to the first question posed here is that an Italian court would have jurisdiction to adjudicate the case since the defendant B has its residence/domicile in Italy ex Article 2 of the Brussels I Regulation. Moreover an Italian court would have jurisdiction over the case since the defendant B has its main place of business outside Italy and its branch in Italy, but only in relation to a dispute arising out of the operations of the branch ex Article 5(5) of the Brussels I Regulation. Also, according to Article 60 of the Brussels I Regulation, a company is to be considered domiciled in Italy not only where its main place of business is located in Italy, but also where its statutory seat, or central administration is located in Italy. Therefore, if the defendant B has its statutory seat or central administration in Italy, then Italian jurisdiction would be competent to adjudicate the entire case. Finally, the answers to the questions here addressed would not be different in cases where IP rights are at stake. The answers to questions no 2 and 3 addressed here are the following. (i) An Italian court would have jurisdiction where the copies of the journal are distributed in Italy, without any relevance of the language adopted by them. But, according to the ECJ Shevill decision, in this case the Italian court would have jurisdiction to rule solely in respect of the harm allegedly caused in Italy. (ii) In contrast, an Italian court would not have jurisdiction where the copies of the journal are printed in Italy but distributed outside Italy, without any relevance of the language adopted by them. (iii) Also, an Italian court would have jurisdiction where the copies of the journal are printed in Italy by a publisher resident in Italy but distributed outside Italy, without any relevance of the language adopted by them. In this case according to the ECJ Shevill decision, the Italian court would have jurisdiction as the court of the Contracting State of the place where the publisher of the defamatory publication is established and will have jurisdiction to award damages for all the harm caused (both locally and abroad) by the defamation. (iv) The answers to questions 2 and 3 would be different in cases in which the issue in question does not relate to ‘defamation’ but to IP rights. Hence, according to the prevailing opinion among academics, in Italy the Shevill jurisprudence does not apply to IP cases since they have a territorial character, which renders it inconceivable that an IP right could be infringed in a state where it does not exist. As a consequence, in an IP rights ‘pure infringement’ case, it seems impossible to distinguish between the state where the harmful event occurs and the state where the illegal action takes place. As those two states necessarily coincide, an infringement act can only be localised in the state where the IP right to protect exists. Thus, an Italian court would have international jurisdiction to hear the case only: 1) when the defendant is domiciled in Italy; or 2) if Italy is the protecting country and the IP right is allegedly infringed in Italy. In the case of a defendant domiciled in the forum state, the Italian courts could adjudicate the entire damage (including any damage which arose in foreign countries where the journal has   See Cass s u, 21 June 2006, n 14287, (2006) Il diritto dell’informazione e dell’informatica 545.

113

Italy  739 been distributed, albeit by applying each single lex loci protectionis). Conversely, when the only connecting factor is the occurring infringing act in the forum, the Italian courts can adjudicate the sole damage produced in Italy. Other circumstances, such as the printing of the journal in Italy (later distributed elsewhere), or the language of the journal, are irrelevant to establish Italian jurisdiction on the case. Finally, it is relevant to highlight that the Shevill decision has been criticised by some Italian scholars, since a) the place where the publisher of the defamatory publication is established does not always coincide with the printing place; b) the fact that damage is not constituted by the printing of the paper, but rather by its distribution; and c) the limits established by the ECJ to the competence of each court to award damages suggests to the victim to start a single proceeding always at the place of the domicile of the defendant: such render de facto inapplicable the alternative basis of jurisdiction provided by Article 5(3).114 Also, the Shevill jurisprudence does not apply to IP rights cases by reason of their territorial nature.115

Case 2: Subject Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

The relevant rules to address these questions are Article 2 of the Brussels I Regulation, Article 5(3) of the same Regulation, Article 22(4) of the Brussels I Regulation116 and Article 25 of the Brussels I Regulation.117 Also, it is necessary to remember that Article 22(4) has 114   See A Saravalle, ‘Forum damni o fora damni’ (1995) 4 Il foro italiano 337–340; MB Deli, ‘Giurisdizione competente ed illeciti transfrontalieri commessi a mezzo di stampa’ (1995) Il diritto dell’informazione e dell’informatica 830, 836. 115   See Boschiero, above n 36, 11, 81. 116   According to which: ‘the following courts shall have exclusive jurisdiction, regardless of domicile:

4. in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place. Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State.’ 117   According to which: ‘where a court of a Member State is seized of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction.’

740  Nerina Boschiero and Benedetta Ubertazzi been interpreted by the ECJ on two different occasions. First, with the already recalled Duijnstee judgment the ECJ maintained that Article 16(4) of the Brussels Convention, now Article 22(4) of the Regulation 44/2001, applies only to proceedings ‘concerned with the registration or validity of patents’, but does not apply to proceedings related to IP rights infringement or to the determination of which party is entitled to an existing IP right on the basis of a previous legal relationship between the parties. Subsequently, the ECJ with the aforementioned GAT decision maintained that Article 16(4) of the Brussels Convention, now Article 22(4) of the Regulation 44/2001, is to be interpreted as meaning that the rule of exclusive jurisdiction laid down therein concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection.

Also, according to the Jenard Report to the Brussels Convention,118 Article 16(4) of the Brussels Convention, now Article 22(4) of the Brussels I Regulation, ‘applies to proceedings concerned with the registration or validity of patents, trade marks, designs or other similar rights, such as those which protect fruit and vegetables varieties, and which are required to be deposit or registered.’ Moreover, it is relevant to remember Italian case law on the point. Italian courts commonly accept jurisdiction in cases concerned solely with the issue of positive infringement of foreign IP rights.119 In Italy whenever a court declines jurisdiction by reason of Article 22(4) with respect to foreign IP rights validity issues, then it also declines its jurisdiction with respect to the claim of non-infringement of the same foreign IP rights, raised as a defence.120 The court of first instance of Milan, in its judgment of 6 August 2008121 applied Article 22(4) to a copyright infringement case. Indeed, it is not disputed that Article 22(4) does not concern copyright or even IP rights infringements generally.122 Before the ECJ’s GAT decision, Italian jurisprudence did not apply Article 16(4) of the Brussels Convention, now 22(4) of the Brussels Regulation, to foreign-registered IP rights validity issues raised as a defence, or to be examined incidentally with an inter partes effect.123 Since the ECJ’s GAT judgment, the Italian courts apply Article 22(4) of the Brussels I Regulation with respect to foreign IP rights validity issues raised incidentally or as a defence.124 The court of first instance of Milan125 confirmed that Article 16(4) of the Brussels Convention (now Art 22(4) of the Brussels I Regulation) attributes exclusive jurisdiction to Italian courts so long as the registration and validity issues of an Italian trade mark are concerned, notwithstand118   See the Report on the Convention by Mr Jenard, [1979] OJ C59/1, 36. See also ‘Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, signed in Lugano on 30 October 2007. Explanatory Report by Professor Fausto Pocar (Holder of the Chair of International Law at the University of Milan)’, [2009] OJ C319/01, 25. 119   See Trib Roma, 1 February 2000, cit, 870. See, however, the obiter dicta of the Trib Venezia, 16 April 2011, cit, and of the Trib Milano, 29 November 2007, cit. For the negative infringement actions, see, however, the Italian Supreme Court’s negative approach, below. 120   See Trib Milano, 10 December 2007, cit, 1103; Trib Milano, 23 May 2002, above n 66, 18, 912; Trib Milano, 24 January 2004, cit, 788. 121   (2009) 18 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo, on which see Boschiero, above n 65, 18. 122   See all other Italian judgments on Art 22(4) hereafter mentioned and for all Boschiero, above n 36, 11, 94. 123   See Trib Torino, 19 May 2000 (ord), cit, 225; Corte App Milano, 16 March 1990, cit, 698. Contra Trib Milano, 24 January 2004, cit, 787; Trib Milano, 17 September 1992, cit, 814. 124   See Trib Torino, l0 March 2009, cit; Trib di Milano, 10 December 2007, cit, 1103, n 5177; Trib Milano, 24 January 2004, cit, 783. 125   See decision of 17 September 1992, cit, 814.

Italy  741 ing the fact that the trade mark itself had been registered internationally (according to the Madrid Arrangement). The court of second instance of Milan126 excluded the application of Article 16(4) of the Brussels Convention (now Art 22(4) of the Brussels I Regulation), therefore accepting its jurisdiction, in a case in which the question at stake was related not to the registration and validity of a specific trade mark, but to a right of prior use of the same trade mark. According to the Appeal court this issue is not covered by Article 16(4). As regards to the general ground of jurisdiction criterion (defendant’s domicile) the Court of first instance of Milan127 stated that the notion of domicile must be interpreted and construed according to Italian substantive law: therefore, the defendant is domiciled in Italy only where his or her main place of business is in this country. In contrast, ‘eventually special domiciles’ existing in Italy ‘are to be intended as jurisdiction criteria with sole regard to the litigation that concerns the business for which the special domicile was elected’.128 When the Brussels Convention was still in force, the Supreme Court excluded the applicability of Article 5(3) to IP rights non-infringement claims,129 followed by the majority of lower instance courts even in the frame of the Brussels I Regulation.130 Due to the modification of Article 5(3) of the Brussels Convention introduced by the Brussels I Regulation (that refers also to threatened wrongs, thus not requiring a ‘damage’), few Italian courts seem to be more open to apply Article 5(3), even to IP rights non-infringement claims (denial of existence of a tort).131 Article 5(3) is applied whenever IP rights infringement occurs in the state where the right is protected, and not where the relevant party suffers pecuniary damages. In accordance with this case law, the infringement occurs in a certain state where the IP right exists, whenever the counterfeit product ‘is advertised or sold’ in this state market.132 In this context, it is possible to answer the first question raised here in the sense that an Italian court would have jurisdiction to adjudicate the infringement of foreign IP rights ex Article 2 or 5(3) of the Brussels I Regulation, but only if it is a ‘pure’ infringement case, ie, without the issue of validity being raised at all. The answer to question no 2 is that an Italian court would not have jurisdiction to adjudicate the validity of a foreign registered IP right; but there is no limitation on jurisdiction preventing our courts from adjudicating on the validity of a foreign unregistered IP right. Such a decision would have an erga omnes effect if raised in a principal way; otherwise if the validity issue is raised incidentally or by way of defence, it would have a solely inter partes effect. With respect to question no 3 it is possible to maintain that according to Article 25 of the Brussels I Regulation an Italian Court shall declare of its own motion that it has no jurisdiction to try the issue of validity of a foreign registered IP right. As far as the unregistered IP rights are concerned, then the decision on the validity raised as ‘a preliminary question’ would have an inter partes effect.

  Judgment of 16 March 1990, cit, 698.   Decision of 23 May 2002, above n 66, 18, 907. 128   In the same sense, see Cass 3657/89. 129   Cass 3657/89, cit, 224; Cass 19 December 2003 n 19550, cit. See also the relevant case law of the lower instance courts already recalled. 130   See Trib Milano, 10 December 2007, cit, 1105; Trib Milano, 23 May 2002, above n 66, 18, 911. 131   See the judgment aforementioned of the court of first instance of Milan of 6 August 2008, cit; Tribunale di Milano, 29 March 2005, cit, 640. In the frame of the Brussels Convention, see also Tribunale di Roma, ordinanza 1 February 2000, cit, 870; Trib di Brescia, 11 November 1999, cit, 505. 132   See for all Trib Milano, spec section, 29 March 2005, cit, 641. 126 127

742  Nerina Boschiero and Benedetta Ubertazzi Finally, it is important to highlight that in Italy the majority of scholars criticise the ECJ GAT judgment due to its ‘excess of territoriality’.133

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y, and Z. B, C and D are competitors of A and are located in countries X, Y, and Z respectively. A finds that B, C and D infringe its patents in countries X, Y, and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y, and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C, and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C, and D on the ground of the infringement of a contract? (2) Assuming that B, C, and D are members of a group of a corporation and take identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country would (and if so, under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C, and D raised counterclaims that A’s patents are invalid?

The relevant rules to answer these questions are Articles 2 and 6(1) of the Brussels I Regulation.134 Also, it is relevant to remember that the ECJ with the aforementioned Roche decision established that Article 6(1) of the Brussels Convention, now Article 6(1) of the Brussels I Regulation, must be interpreted as meaning that it does not apply in European patent infringement proceedings involving a number of companies established in various Contracting States in respect of acts committed in one or more of those States even where those companies, which belong to the same group, may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them.

Thus, the ECJ maintained that there is no risk of irreconcilable judgments resulting from separate proceedings, and therefore that they could not be connected ex Article 6(1), where the IP rights involved pertain to different states and therefore are different (albeit they are granted by the same organism and are related to the same invention, as is the case with European patents), and also where the multiple defendants are different companies (albeit belonging to the same group or acting in an identical or similar manner in accordance with a common policy elaborated by one of them). It is important to consider the relevant Italian case law. With regard to patents, Italian case law, even before the ECJ Roche decision, interpreted and still interprets Article 6(1) of the Brussels I Regulation in a restrictive way, analogous to the interpretation of this norm

133   See particularly Boschiero, above n 36, 11, 94; Boschiero, above n 65, 18, passim. Contra see Frigo, above n 60, 17. 134   According to which: ‘a person domiciled in a Member State may also be sued:

1. where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.’

Italy  743 supported by the ECJ Roche judgment.135 In contrast, with respect to trade marks, an Italian decision after the Roche judgment interpreted Article 6(1) of the Brussels I Regulation in a broad way, and as such accepted the joining of claims related to the ownership of an Italian and a US trade mark.136 In this context, the answer to the first question here raised is that an Italian court would not have jurisdiction to join claims against defendants B, C and D, since the ECJ excluded this possibility with the Roche decision’s interpretation of Article 6(1) of the Brussels I Regulation. The answer to the second question is uncertain, since there is no Community or Italian case law on the point. Indeed, the ECJ examined similar cases with the Roche decision, but the decision concentrated only on the IP rights infringement claims and did not enter at all into contractual issues. In any case, it would be possible to maintain that the ECJ decision should not be extended to the contractual claims here in question, since the Roche decision poses exceptional limits on the general criterion of the forum connexitatis; that moreover go clearly against the procedural efficiency ratio. Thus, the Roche decision shall be interpreted restrictively and not extended to contractual claims as the ones analysed here. The answer to the third question is that an Italian Court would not have jurisdiction to join claims against defendants B, C and D since the ECJ excluded this possibility with the Roche decision’s interpretation of Article 6(1) of the Brussels I Regulation. There is no need to answer the fourth question, since the answer to the previous question is negative. Finally, it is important to highlight that in Italy the majority of scholars criticise the ECJ Roche judgment due to its ‘excess of territoriality’.137

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1)  Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that the patents are invalid? (3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings? (4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?   See Trib Milano, 23 May 2002, above n 66 at 18, 912; Trib Milano, 24 January 2004, cit, 788.   See Trib Ancona, 17 October 2008, forthcoming in Rivista di diritto internazionale privato e processuale.   See particularly Boschiero, above n 36, 11, 94; Boschiero, above n 65, 18, passim.

135 136 137

744  Nerina Boschiero and Benedetta Ubertazzi In order to answer these questions, Articles 23138 and 24139 of the Brussels I Regulation are relevant. It is also relevant to remember that two new provisions were recently inserted in the IP Italian code: Article 122(1), according to which the intervention of the General Prosecutor in IP rights proceedings is no longer necessary when these proceedings are started by private persons; and Article 134(2), which permits the arbitration proceedings with respect to unfair competition and IP rights, without limits.140 Also, it is relevant to remember the Italian case law on the point. First, this case law maintains that whenever the issue at stake is the efficacy of a licence agreement or of a licence agreement termination, rather than the validity of the licensed trade mark, Article 16(4) of the Brussels Convention (now Art 22(4) of the Brussels I Regulation) does not come into effect, with the consequence that the competent jurisdiction is the court that had been designed as such by the parties by way of a choice of court agreement.141 Also, Italian case law is settled in affirming that arbitrators can decide on IP rights validity issues, with the only limitation being the effect of the decision on third parties: arbitral decisions on validity issues are enforceable only between the parties, and do not have erga omnes effects. Conversely, scholars’ positions on this point are discordant: according to a first opinion arbitral decisions on IP right validity should only have inter partes effect,142 whereas another thesis maintains that they

  According to which:

138

1. If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. Such an agreement conferring jurisdiction shall be either: (a) in writing or evidenced in writing; or (b) in a form which accords with practices which the parties have established between themselves; or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned. 2. Any communication by electronic means which provides a durable record of the agreement shall be equivalent to ‘writing’. 3. Where such an agreement is concluded by parties, none of whom is domiciled in a Member State, the courts of other Member States shall have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction. 4. The court or courts of a Member State on which a trust instrument has conferred jurisdiction shall have exclusive jurisdiction in any proceedings brought against a settlor, trustee or beneficiary, if relations between these persons or their rights or obligations under the trust are involved. 5. Agreements or provisions of a trust instrument conferring jurisdiction shall have no legal force if they are contrary to Articles 13, 17 or 21, or if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22 139   According to which: ‘apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 22.’ 140   With respect to the validity of arbitration decisions in cases concerning breaches of licence agreements related to trade marks, see Cass Civ, 3 November 2006, in database De Jure 2009; Cass civ, 19 May 1989, (1989) 1 Giustizia Civile 2605. With respect of the non-contrariety with Italian public policy of an arbitration decision on a trademark coexistence agreement, see App Milano, 1 February 2000, (2000) Giurisprudenza annotata di diritto industriale 740. 141   See Trib Roma, 22 October 1979, (1979) Giurisprudenza annotata di diritto industriale 767, n 1223. 142   L Mansani, ‘Arbitrabilità e privative comunitarie titolate’ (2006) 15 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 16, 21; L Fumagalli, ‘Arbitrato Ip e diritto internazionale processuale privato’(2006) 15 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 136, 150.

Italy  745 could also have erga omnes effects.143 Italian case law admits that the parties are free to choose an arbitration proceeding for their contractual issues related to IP rights, and therefore a contrario can be interpreted as confirming that the parties are free to choose also a court for the same issues.144 With respect to the issue of arbitrability of the validity issues of IP rights, Italian case law seems to limit the effects of the arbitration tribunal decision to the parties of the concrete case in question.145 In this context the answer to the first question raised here is that the clause would be enforceable in Italy and thus an Italian court would have jurisdiction to award patent infringement damages, provided that the choice of court clause covered also this issue and that this clause fulfils the formal requirements of Article 23 of the Brussels I Regulation. The answer to the second question is the same as for the former question discussed above. The answer to the third question is that the Italian court would enforce the exclusive choice of court clause even if the defendant raises a counterclaim that patents are invalid, where the patents are national patents. Where the patents are foreign patents, then (according to Art 23 of the Brussels I Regulation) the exclusive choice of court agreement could not prevail over the exclusive jurisdiction to rule on the validity issue provided for by Article 22 of the Brussels I Regulation. Hence, according to Article 23(5) ‘agreements . . . conferring jurisdiction shall have no legal force if they are contrary to . . . Article 22’. The answer to the fourth question is that the choice of court agreement could also cover IP rights ‘pure’ infringement proceedings, since Article 23(5) of the Brussels I Regulation excludes the efficacy of the choice of court agreements only with regard to ‘Articles 13, 17 or 21, or . . . 22’. Thus, this Article does not exclude the choice of court agreements with regard to the matters covered by other Articles, like the IP rights infringements that are subject to Article 2 or Article 5(3) of the Brussels I Regulation. The answer to the fifth question is that a parties’ arbitration agreement is enforceable under Italian law. This conclusion is upheld by the two new provisions recently inserted in the IP Italian code, namely Article 122(1) and Article 134(2). Hence, as a consequence of those provisions, an Arbitration Tribunal can decide in Italy upon issues related to IP rights.146 Finally, with respect to the arbitrability of validity issues related to IP rights, it is possible to make the following remarks. Notwithstanding the fact that the Italian statutes allow the arbitrability of IP rights validity issues, Italian case law is still limited. Nonetheless, the statutes and the (scarce) case law on the point seem to lead to the conclusions that in Italy Article 22(4) of the Brussels I Regulation, as interpreted by the ECJ GAT decision, would not be considered by the arbitration tribunals as a mandatory provision.147 Neither would 143   G Guglielmetti, ‘Arbitrato e diritti titolati’ (2006) 15 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 3, 12. 144  See, eg, Trib Ancona, 17 October 2008, cit. 145   See Arb 25 June 2001, (2003) Rivista dell’Arbitrato 525; Arb 23 March 1992, (1992) Giurisprudenza annotata di diritto industriale 511; App Milan, 4 March 1980, (1980) Giurisprudenza annotata di diritto industriale 251; Arb 23 June 1975, (1975) Giurisprudenza annotata di diritto industriale 473; App Bologna, 19 June 1959, (1959) 2 Rivista di diritto industriale 218. See also Trib Milan, 21 April 1983, (1984) 2 Rivista di diritto industriale 199 and its related comment, ibid, 200. 146   With respect to the validity of arbitration decisions in cases concerning breaches of licence agreements related to trade marks, see Cass Civ, 3 November 2006, in database De Jure 2009; Cass civ, 19 May 1989, (1989) 1 Giustizia Civile 2605. With respect of the non-contrariety with Italian public policy of an arbitration decision on a trademark coexistence agreement, see App Milano, 1 February 2000, (2000) Giurisprudenza annotata di diritto industriale 740. 147  On the relation between mandatory provisions and arbitrations in general, see Radicati di Brozolo, ‘L’arbitrage international et les règles impératives de fond’ (2005) 315 Recueil des Cours.

746  Nerina Boschiero and Benedetta Ubertazzi it be possible to invoke the public policy exception to deny recognition to an arbitral decision that adjudicated the validity of a foreign IP right with mere inter partes effects.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B who is located in country Z produces the identical product to that for which A has patents, and exports that infringing product to countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

The rules relevant to answer these questions are Articles 27,148 29149 and 30150 of the Brussels I Regulation, Article 7 of the Italian Statute on Private and Procedural International Law,151 and Article 8 of the Italian Statute on Private and Procedural International Law.152 The case law relevant to answer the same question posed here is the following. First, with   According to which:

148

1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seized shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seized is established, any court other than the court first seized shall decline jurisdiction in favour of that court. 149   According to which: ‘where actions come within the exclusive jurisdiction of several courts, any court other than the court first seized shall decline jurisdiction in favour of that court’. 150   According to which: for the purposes of this section, a court shall be deemed to be seized: 1. at the time when the doc instituting the proceedings or an equivalent doc is lodged with the court, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have service effected on the defendant, or 2. if the doc has to be served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the doc lodged with the court. 151   According to which: 1. Where, during a proceeding, an objection is raised in relation to the prior existence of a question pending between the same parties, having the same object and being based on the same grounds, before a foreign judge, the Italian judge shall stay the proceeding if he thinks that the foreign judgment may produce effects within the Italian system. If the foreign judge declines jurisdiction or if the foreign judgment is not recognised by the Italian legal system, the proceeding started in Italy shall continue, subject to their resumption at the request of the relevant party. 2. The law of the State in which the proceeding takes place shall determine the existence of a suit pending before a foreign judge. 3. In the event of a prior suit pending abroad, the Italian judge may stay the proceeding if he thinks that the foreign judgment may have an effect on the Italian legal system. 152   According to which: ‘Article 5 of the Italian code of civil procedure shall apply for determining Italian jurisdiction. However, jurisdiction exists if the facts and the rules determining it supervene in the course of the proceeding.’

Italy  747 the Overseas Union decision153 the ECJ established that Article 21 of the Brussels Convention, now Article 27 of the Brussels I Regulation, shall be interpreted in the following sense: without prejudice to the case where the court second seized has exclusive jurisdiction under the Convention and in particular under Article 16 thereof, Article 21 of the Convention must be interpreted as meaning that, where the jurisdiction of the court first seized is contested, the court second seized may, if it does not decline jurisdiction, only stay the proceedings and may not itself examine the jurisdiction of the court first seized.

Secondly, with the Tatry decision154 the ECJ established that Article 21 of the Brussels Convention, now Article 27 of the Brussels I Regulation, shall be interpreted in the following sense: ‘on a proper construction of Article 21 of the Convention, an action seeking to have the defendant held liable for causing loss and ordered to pay damages has the same cause of action and the same object as earlier proceedings brought by that defendant seeking a declaration that he is not liable for that loss’. In this normative and jurisprudential context, in order to answer the first question raised here it is necessary to distinguish between two different hypotheses. First, where countries X and Y are EU Member States, according to the ECJ Tatry decision an Italian court indicated as the court of country Z would ‘stay its proceedings until such time as the jurisdiction of the court [of countries X and Y, in the hypothesis] first seized is established’. Where the jurisdiction of the court first seized is established the Italian court would ‘decline jurisdiction in [its] favour’. Second, where countries X and Y do not belong to the EU, according to the unanimous Italian case law, a proceeding where the plaintiff seeks the defendant to be held liable for causing loss and ordered to pay damages has the same cause of action and the same object as brought by that defendant in an earlier proceeding seeking a declaration that he is not liable for that loss.155 The answer to the second question is thus negative as the decision would not be different. The answer to the third question is that, regardless of whether or not country W is an EU Member State, according to the ECJ Overseas Insurance decision or, respectively to Article 7 of the Italian PIL Statute, the Italian court could not stay its proceeding.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, firstly, that the claim for the infringement of the patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of 153   Case C-351/89 Overseas Union Insurance td et al v New Hampshire Insurance Company Co [1991] ECR I-3317. 154   Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439. 155   See the case law references in FM Buonaiuti, above n 43 at 13.

748  Nerina Boschiero and Benedetta Ubertazzi your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

The relevant rules to answer these questions are Article 8 of the EC Rome II Regulation156 and Article 54 of the Italian PIL Statute.157 Italian case law is also relevant to address the questions raised here. This case law applies always the lex loci protectionis, but reaches this result in different ways. On one single occasion an Italian court had to adjudicate foreign IP rights infringements and therefore applied the foreign lex loci protectionis by referring itself explicitly to Article 54 of the Italian Statute of Private International Law.158 On another occasion, the Italian court did not have to adjudicate foreign IP rights infringements, but was asked to adjudicate Italian IP rights infringement cases, therefore it applied Italian law without mentioning any specific rule of conflict of laws, due to coincidence between forum and jus.159 Many decisions decline the Italian jurisdiction with respect to claims of European patent foreign portions infringement allegedly taking place abroad. In those cases, among the reasons to decline the jurisdiction, the courts mention also as obiter dicta the necessity of applying distinct laws to the different portions of the European patent at stake that would render the proceeding difficult and inefficient. Indeed, those decisions refer themselves not to Article 54 of the Italian Statute of Private International Law, but to Article 64 of the EPC as the norm that demands the application of the lex loci protectionis.160 In one case,161 the court referred itself directly to the substantive territoriality principle in order to support the conclusion according to which the validity of an Italian patent shall be ruled in conformity with Italian law and no effect can be to this purpose given to the circumstance that a corresponding foreign patent had been limited for the lack of novelty. In this context the answer to the first question raised here is that according to Article 8 of the Rome II Regulation, the Italian court could not apply its patent statute to the activities carried out by B in countries Y and Z, since Italian law is not the law of the protecting country. The answer to the second question is negative, since according to Article 8 of the Rome II Regulation, the Italian court of country Z could not apply the patent statute of State X to the activities carried out by B in countries Y and Z. Finally, it is important to highlight that the Italian scholarly community criticises the excessive rigidity of Article 8 of the Rome II Regulation. The norm result is unbalanced and   According to which:

156

1. The law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed. 2. In the case of a non-contractual obligation arising from an infringement of a Unitary Community intellectual property right, the law applicable shall, for any question that is not governed by the Community instrument, be the law of the country in which the act of infringement was committed. 3. The law applicable under this Article may not be derogated from by an agreement pursuant to Article 14. 157   On ‘Rights relating to intangible assets’, according to which: ‘the rights relating to intangible assets shall be governed by the law of the State in which they are used’. According to a minority opinion, then, the applicable law should be determined according to Art 62 of the same Italian PIL statute, according to which: 1. Liability for unlawful acts is governed by the law of the State where the event occurred. Nevertheless, the injured person may demand the application of the law of the State where the fact which caused the damage occurred. 2. If the unlawful act involves only persons who are citizens of the same State and reside in it, the law of such State applies. 158   See Trib Ancona, 17 October 2008, cit. 159   See for instance Trib Milano, 6 August 2008, cit, passim. 160   In this sense, see Trib Milano, 23 May 2002, above n 66, 18, 912; Trib Milano, 24 January 2004, cit, 788. 161   Trib Bologna, 13 December 2000, (ord), (2002) Giurisprudenza Italiana 333.

Italy  749 particularly detrimental to the principle of party autonomy (banned even with regard to the remedies available once the infringement has been determined).162

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B, and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website becomes very popular A, B, and C introduced an additional paid service which allows the speedy exchange of big capacity digital files. Although A, B, and C know that some files that are stored in the server of their website are illegal, they do not take any action to somehow prevent infringement of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C requesting they be made to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1)  What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places / countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

The relevant rules to answer these questions are the following. First, it is relevant to remember Article 8 of the EC Rome II Regulation, already recalled earlier. Also, it is important to remember that the ECJ has recently been asked to interpret Article 5(3) with particular regard to infringements which occur over the internet. Thus, in the case Olivier Martinez, Robert Martinez v Société MGN Limited 163 the Tribunal de grande instance de Paris referred to the ECJ the following question: must Article 2 and Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters be interpreted to mean that a court or tribunal of a Member State has jurisdiction to hear an action brought in respect of an infringement of personal rights allegedly committed by the placing online of information and/or photographs on an Internet site published in another Member State by a company domiciled in that second State – or in a third Member State, but in any event in a State other than the first Member State: On the sole condition that that Internet site can be accessed from the first Member State, On the sole condition that there is between the harmful act and the territory of the first Member State a link which is sufficient, substantial or significant and, in that case, whether that link can be created by: – the number of hits on the page at issue made from the first Member State, as an absolute figure or as a proportion of all hits on that page, – the residence, or nationality, of the person who complains of the infringement of his personal rights or more generally of the persons concerned,   See for instance N Boschiero, above n 91 at 23, 36.   Case C-278/09 Olivier Martinez, Robert Martinez v Société MGN Limited, in curia.europa.eu.

162 163

750  Nerina Boschiero and Benedetta Ubertazzi – the language in which the information at issue is broadcast or any other factor which may demonstrate the site publisher’s intention to address specifically the public of the first Member State, – the place where the events described occurred and/or where the photographic images put online were taken, – other criteria?

In this context, the answer to the first question raised here is that according to Article 8 of the Rome II Regulation, the Italian court would apply the law of each single state for which protection is required. The answer to the second question is that according to the Rome II Regulation, neither pre-tort nor post-tort choice of law agreements are permitted (Art 8(3)). Similarly, the parties and the courts cannot have recourse to the escape clause embodied into the general rule, as Article 4 (Rome II’s central provision for cases in which the parties have not agreed or cannot agree on the applicable law) only covers obligations for which the Regulation itself does not lay down ‘special rules’. Article 8 is a ‘special’ rule expressly dictated for IP infringement. Consequently, the answer to the question is negative. The answer to the third question is analogous to the one just mentioned, since according to Article 8 of the Rome II Regulation, the solution does not differ if the claim was brought against the ISP. Thus, the Italian court would once again not allow the parties to choose the applicable law either to infringement or to damages. The answer to the fourth question is that the Italian courts have jurisdiction over infringements of foreign IPRs whenever a basis for jurisdiction is provided under the Convention/Regulation system, ie, under the general head of jurisdiction (the domicile of defendant), or under special heads of jurisdiction (Arts 6(1) and 5(3)). Actually, no market impact rule is present in the current European and Italian international procedural system. However the ECJ could soon give instruction in this regard by answering the question referred to it in the above-mentioned case Olivier Martinez, Robert Martinez v Société MGN Limited. Also, assuming that Italian jurisdiction is granted according to Article 8 of the Rome II Regulation, the Italian court would apply the law of each single state for which protection is required (lex loci protectionis) and would not allow the parties to choose the applicable law either to infringement or to damages. As for the definition of ubiquitous infringement of IP rights, the Italian system does not encompass such definition and therefore an Italian court could eventually adopt the definition proposed either by the ALI Principles or by the CLIP project. Finally, the unconditional application of lex protectionis established by Article 8 of the Rome II Regulation strikes, in comparison with the several departures from strict territoriality proposed by the most recent soft law initiatives. Both the ALI Principles and the set of principles established by the CLIP group envision, inter alia, in cases where the alleged infringement is ubiquitous (and the laws of several states are pleaded), the possibility for the courts to apply to the issues of existence, validity, durations, attributes and infringements of IPRs and remedies, one single set of rules, or a small set of rules of specific states, precisely the law or the laws of the state or states with the closest connections to the dispute, supplemented by a market impact assessment. This approach, which takes into consideration situations regularly arising with regard to (copyright) infringements carried out on the internet is pursued in parallel to the consolidation of territorial claims before one court, even in the absence of an agreement between the parties. The objective of the drafters is to simplify the task for both parties and courts in the interest of efficiency. Both sets of rules seek to gain the simplification advantages of a single applicable law instead of the laws of

Italy  751 each affected state to the portion of infringement occurring within each state’s borders, while assuring, as far as possible, compliance with the sovereignty interests underlying the territoriality approach. Thus, both sets of rules emphasise the ‘exceptional circumstances’ in which a court could override the general principle of the lex protectionis and provide that, whenever a court applies a single or reduced number of applicable law(s), the alleged infringer retains the right to demonstrate that his or her conduct is admissible with respect to a state in which the alleged activity is not really infringing, even if the same activity is unlawful in all the other states concerned. The Rome II Regulation, equally, should provide for a more flexible solution.164

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country? (2)  Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in the case of initial authorship or initial title to trade mark? (4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

In order to answer these questions the following rules come into play: Articles 8165 and 9166   See N Boschiero, above n 91 at 23, 110 et seq.   According to which:

164 165

1. An individual employment contract shall be governed by the law chosen by the parties in accordance with Article 3. Such a choice of law may not, however, have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable pursuant to paragraphs 2, 3 and 4 of this Article. 2.  To the extent that the law applicable to the individual employment contract has not been chosen by the parties, the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country. 3.  Where the law applicable cannot be determined pursuant to paragraph 2, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated. 4. Where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated in paragraphs 2 or 3, the law of that other country shall apply. 166   According to which: 1. Overriding mandatory provisions are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation. 2. Nothing in this Regulation shall restrict the application of the overriding mandatory provisions of the law of the forum. 3. Effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful. In considering whether to give effect to those provisions, regard shall be had to their nature and purpose and to the consequences of their application or non-application.

752  Nerina Boschiero and Benedetta Ubertazzi of the EC Rome I Regulation, and Article 60 of the Munich European Patent Convention.167 In this framework it is necessary to highlight that the first question here addressed does not specify whether or not the patent at stake is a European patent. Let us first assume that it is a European patent. According to Article 60 of the European Patent Convention, in employment relationships the applicable law to the initial ownership issue is: the law of the State in which the employee is mainly employed. If the State in which the employee is mainly employed cannot be determined, the law to be applied shall be that of the State in which the employer has his place of business to which the employee is attached.

Thus, if the patent at stake is a European patent according to the European Patent Convention the choice of law to determine who has the right to obtain the patent related to the invention is not allowed, and a choice of law clause would not be enforced in Italy. If, alternatively, the patent at stake is not a European patent, the answer is less certain. First of all there is no Italian case law on the point of the applicable law to initial ownership of rights and works created by employees. Indeed, according to well established opinion, the European Patent Convention could serve as a model to rely on to identify the applicable law to any employees’ invention. In any case, the legal opinions diverge on the point of the ‘correct’ interpretation of Article 60 of the European Patent Convention. Hence, according to a first opinion (followed in Germany) this Article refers to the lex loci protectionis. In contrast, according to other (Italian) authors, Article 60 of the European Patent Convention refers rather to the lex contractus. Save for the choice of law (not allowed by the European Patent Convention, but permitted by the Rome I Regulation) the connecting factors adopted by the former are the same as the ones utilised by the latter: Article 60 refers to the: law of the State in which the employee is mainly employed. If the State in which the employee is mainly employed cannot be determined, the law to be applied shall be that of the State in which the employer has his place of business to which the employee is attached.

Article 8 of the Rome I Regulation either indicates the: law of the country in which or, failing that, from which, the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country. 3. Where the law applicable cannot be determined pursuant to paragraph 2, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated.

Even if one could argue that there is no reason to deviate from the general rule (the law of the protecting countries), this specific issue (ownership of employees ’inventions) presents a very strong link with the employment relationship. The advantage would be that (at least at EU level) this issue would be assessed uniformly and according to the same law designated by the Rome I Regulation. Moreover, the ECJ also seems to interpret the issue at stake

  According to which:

167

(1) The right to a European patent shall belong to the inventor or his successor in title. If the inventor is an employee the right to the European patent shall be determined in accordance with the law of the State in which the employee is mainly employed; if the State in which the employee is mainly employed cannot be determined, the law to be applied shall be that of the State in which the employer has his place of business to which the employee is attached.

Italy  753 in favour of the lex contractus. In the Duijnstee case the ECJ excluded from the scope of the exclusive jurisdiction criteria (Art 16(4) of the Brussels Convention, now Art 22(4) of the Brussels I Regulation) the proceedings related to the first ownership of a patent arising out of an employment relationship, because this issue was to be determined on the basis of the ‘legal relationships which exists between the parties’ and as such by the lex contractus. Consequently, if the patent in question is not a European patent, the Italian court would apply the law chosen by the parties according to Article 8(1) of the Rome I Regulation. Therefore, the parties’ choice of law clause concerning the right to obtain a patent would be enforceable in Italy. In any case, this law (according to Art 8) shall not have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable pursuant to paragraphs 2, 3 and 4 of this Article.

Thus, the mandatory rules of the forum (like the Italian provisions relating to the necessity of fair remuneration for the employee) or of the other laws that would be applicable in the absence of a choice of law, can put aside the parties’ choice of law. The answer to the second question is that the decision would not differ if A made an invention in joint collaboration with other researchers. In this case though, the Italian court will verify the law applicable as the one which was effectively chosen by all researchers. In the event it was not, then the applicable law would be determined according to Article 8(2) of the Rome I Regulation, which will pose problems where the researchers’ employment contracts are ruled by different laws, for instance because the researchers do not carry out their activities in the same place or there are more than one place of business through which the researchers were engaged. In this case Article 8(4) could help determine the lex contractus, by allowing the court to maintain that all the researchers’ employment contracts are more closely connected with a same single country, for instance the one for which the IP right protection at stake is sought. At any rate the court will be bound by the mandatory rules mentioned in Article 8(1) of the Rome I Regulation. The answer to the third question is that the applicable law would not differ in the case of initial authorship or initial title to a trade mark, since the conclusion reached with respect to patents is generally extended by way of interpretation to other IP rights. However we do not have case law on this point. Indeed, as far as the initial authorship is concerned, according to our legal system this right is not transferrable, therefore, it seems that the applicable law should always be the lex loci protectionis. As far as initial title to trade mark is concerned, the applicable law would probably always be the lex loci protectionis, considering that according to our legal system only the one who uses the trade mark can register it: it seems very uncommon that an employee can personally register a trade mark (even if it was created by him/her) in the course of the employment relationship. The answer to the fourth question is related to the previous answers. If the patents are European patents, the Italian court would apply the lex loci protectionis to the issue of reasonable compensation; particularly for the case in question, the law of each state for which the European patent is considered will apply. In contrast, if the patent is a non-European patent, then the Italian court could apply to the reasonable compensation issue the law chosen by the parties, unless it deprives the employee of the ‘protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable pursuant to paragraphs 2, 3 and 4 of this Article’ (as per Art 8 of the Rome I Regulation). Thus, the mandatory rules of the forum (like the

754  Nerina Boschiero and Benedetta Ubertazzi Italian provisions relating to the necessity of fair remuneration for the employee) or of the other laws, that would be applicable in the absence of a choice of law, could put aside the parties’ choice of law. Finally, it is relevant to remember that the Italian doctrine highlights that the Rome II Regulation is not clear on the point of which law should be applicable to initial ownership. The issue is not expressly addressed in Article 15 of the Rome II Regulation (scope of the applicable law). In this context, uncertainty could arise as to the law applicable to initial ownership, particularly in the light of the fact that some Member States expressly apply the lex originis to the issue of first ownership of copyright works. According to Article 54 of the Italian PIL Statute the lex loci protectionis applies to initial ownership, with the exception of first ownership of works created by employees, governed by the lex contractus.168

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B made some arrangements for the distribution of the debut album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work was not transferred and was thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How would the court deal with the issue of transferability? (3)  What would be the applicable law in a case where there is no choice of law made by the parties?

In order to answer these questions the following rules come into play: Articles 3169 and 4170 168   See LC Ubertazzi, Profili soggettivi del brevetto (Milan, Giuffrè, 1985) 278; L Liuzzo, ‘Titolarità e trasferimento del brevetto europeo’ in Studi in onore di Remo Franceschelli: sui brevetti di invenzione e sui marchi (Milan, Giuffrè, 1983) 518; N Boschiero, above n 34 at 10, 484 et seq. 169   According to which:

1. A contract shall be governed by the law chosen by the parties. The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or to part only of the contract. 2. The parties may at any time agree to subject the contract to a law other than that which previously governed it, whether as a result of an earlier choice made under this Article or of other provisions of this Regulation. Any change in the law to be applied that is made after the conclusion of the contract shall not prejudice its formal validity under Article 11 or adversely affect the rights of third parties. 3. Where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, the choice of the parties shall not prejudice the application of provisions of the law of that other country which cannot be derogated from by agreement. 4. Where all other elements relevant to the situation at the time of the choice are located in one or more Member States, the parties’ choice of applicable law other than that of a Member State shall not prejudice the application of provisions of Community law, where appropriate as implemented in the Member State of the forum, which cannot be derogated from by agreement. 5. The existence and validity of the consent of the parties as to the choice of the applicable law shall be determined in accordance with the provisions of Articles 10, 11 and 13. 170   According to which in the absence of a choice of law ex Art 3: 2. the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence. 3. Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. 4. Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected.

Italy  755 of the Rome I Regulation, as well as the above-mentioned Article 9 of the Rome I Regulation on overriding mandatory provisions, and Article 21 of the Rome I Regulation.171 The answer to the first question is that according to Article 3 of the Rome I Regulation, the Italian courts would apply the law chosen by the parties to the transfer of the copyright economic rights. As to the moral rights, the solution can vary according to their ‘characterisation’ as seen by the court which hears the case. These rights could be seen as an integral part of the copyright, or as separate rights, but in either case, are considered strictly under the scope of the copyright that has been granted. In this case, the applicable law would be the general one: the law of the protecting country. This choice of law solution is also confirmed by Article 6bis(3) of the Berne Convention. However, moral rights could also be characterised as a ‘personality right’, linked to the person of the author of the work. According to this second classification, the applicable law would then be Article 24 of the Italian PIL Statute (personality rights): ie, the law of author’s nationality. According to the same choice of law rule, the consequences of an infringement of this ‘personal’ right are to be governed by the general law applicable to non-contractual obligations arising out of a tort/delict (Art 4 of Rome II Regulation). In any case, as the moral rights are recognised by all national laws in order to protect the author against the abuse of his work, from a choice of law point of view the provisions on moral rights could be considered as forming part of the public policy of each forum, or even classified as an overriding mandatory rule, immediately applicable irrespective of the choice of law process (this was the approach taken by the court in the very famous John Huston case). Finally, it is submitted that in order to define the content and the nature of moral rights the correct choice of law solution is to apply the general rule: the law of the protecting country. If this law is the Italian one, our court would not enforce the parties’ choice of law regarding the transfer of the moral rights of the author as, according to our substantive law, this right is inalienable. The answer to this question is that if the applicable law (lex loci protectionis) admits the transferability of moral rights, then the Italian court would refuse the application of this foreign provision, considering its application manifestly incompatible with the public policy (l’ordre public) of the forum (ex-Art 21 of the Rome I Regulation).172 The answer to the third question is that the applicable law in the absence of a choice of law would be determined by the aforementioned Article 4(2)-(4) of the Rome I Regulation, which leaves a certain flexibility to the interpreter.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking it to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in a registry of a recognising country? 171   According to which: ‘the application of a provision of the law of any country specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum’. 172   On the public policy exception for moral rights, see Mastroianni, above n 87, 22, 403.

756  Nerina Boschiero and Benedetta Ubertazzi (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

In order to answer these questions, the following rules come into play: Article 33 of the Brussels I Regulation,173 Articles 34,174 35,175 36,176 41,177 42,178 43,179, 64180 and 67181 of the   According to which:

173

1. A judgment given in a Member State shall be recognised in the other Member States without any special procedure being required. 2. Any interested party who raises the recognition of a judgment as the principal issue in a dispute may, in accordance with the procedures provided for in sections 2 and 3 of this ch, apply for a decision that the judgment be recognised. 3. If the outcome of proceedings in a court of a Member State depends on the determination of an incidental question of recognition that court shall have jurisdiction over that question. 174   According to which:   A judgment shall not be recognised: 1. if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought; 2. where it was given in default of appearance, if the defendant was not served with the doc which instituted the proceedings or with an equivalent doc in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; 3. if it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought; 4. if it is irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed. 175   According to which: 1. Moreover, a judgment shall not be recognised if it conflicts with sections 3, 4 or 6 of ch II, or in a case provided for in Article 72. 2. In its examination of the grounds of jurisdiction referred to in the foregoing paragraph, the court or authority applied to shall be bound by the findings of fact on which the court of the Member State of origin based its jurisdiction. 3. Subject to the paragraph 1, the jurisdiction of the court of the Member State of origin may not be reviewed. The test of public policy referred to in point 1 of Article 34 may not be applied to the rules relating to jurisdiction. 176   According to which ‘under no circumstances may a foreign judgment be reviewed as to its substance’. 177   According to which ‘the judgment shall be declared enforceable immediately on completion of the formalities in Article 53 without any review under Articles 34 and 35. The party against whom enforcement is sought shall not at this stage of the proceedings be entitled to make any submissions on the application.’ 178   According to which: 1. The decision on the application for a declaration of enforceability shall forthwith be brought to the notice of the applicant in accordance with the procedure laid down by the law of the Member State in which enforcement is sought. 2. The declaration of enforceability shall be served on the party against whom enforcement is sought, accompanied by the judgment, if not already served on that party. 179   According to which: 1. The decision on the application for a declaration of enforceability may be appealed against by either party. 2. The appeal is to be lodged with the court indicated in the list in Annex III. 3. The appeal shall be dealt with in accordance with the rules governing procedure in contradictory matters. 4. If the party against whom enforcement is sought fails to appear before the appellate court in proceedings concerning an appeal brought by the applicant, Article 26(2) to (4) shall apply even where the party against whom enforcement is sought is not domiciled in any of the Member States. 5. An appeal against the declaration of enforceability is to be lodged within one month of service thereof. If the party against whom enforcement is sought is domiciled in a Member State other than that in which the declaration of enforceability was given, the time for appealing shall be two months and shall run from

Italy  757 Italian PIL Statute. The previously mentioned ECJ Duinjstee decision also deserves to be remembered. According to this decision the issue related to IP rights ownership does not fall into the court’s exclusive jurisdiction, ex Article 22(4) of the Brussels I Regulation. Hence, according to the ECJ the exclusive jurisdiction rule applies to proceedings ‘concerned with the registration or validity of patents’, rather than to proceedings related to IP rights infringement or to the determination of which party is entitled to an existing IP right on the basis of a previous legal relationship between the parties.This decision is important because among the very limited and exhaustive number of grounds for refusal of the recognition listed in Articles 34 and 35 of the Brussels I Regulations one is of particular interest to IP matters: the breach of the exclusive jurisdiction rule. Indeed, according to Article 35 of the Brussels I Regulation, a judgment shall not be recognised if it conflicts with section 6 of chapter II which establishes the rules on exclusive jurisdiction. In this context, the answer to the first question here raised is that the court of the foreign country X did not breach Article 22(4) of the Brussels I Regulation by rendering its judgment on the ownership of a foreign patent. Considering that the purpose of the Brussels regime is to simplify the formalities governing the reciprocal recognition and enforcement of judgments, the principle of the automatic recognition and enforcement takes place in the absence of grounds for refusal. Thus, according to the ‘Brussels system’ the judgment shall be recognised in Italy, and the Italian court shall not assess the international jurisdiction of the rendering court. In the event that the judgment to be recognised falls outside of the Brussels I Regulation’s scope and enters into the scope of one of the relevant national PIL Statute, the Italian court can assess the international jurisdiction of the rendering court, and recognise its decision only where the judge who delivered it could adjudicate the case according to the same jurisdictional criteria as those applicable in Italy. the date of service, either on him in person or at his residence. No extension of time may be granted on account of distance. 180   According to which: 1. A foreign judgment is recognised in Italy without the necessity of resorting to any proceeding when: (a) the judge who pronounced it could take cognisance of the case in accordance with the principles of the Italian system on jurisdictional competence; (b) the doc introducing the proceedings was made known to the defendant in conformity with the provisions of the law of the place where the proceedings were held and the essential rights of defence were not infringed; (c) the parties entered appearances in the proceedings in accordance with the law of the place where the proceedings were held or their failure to appear was declared in conformity with that law; (d) the judgment became res iudicata in accordance with the law of the place where it was pronounced; (e) the judgment is not in conflict with any other judgment rendered by an Italian judge and which became res iudicata; (f) no proceedings are pending before an Italian judge for the same matter and between the same parties, which were initiated prior to the foreign proceedings; (g) its provisions do not produce any effects contrary to the ordre public. 181   According to which: 1. In the event of non-compliance with or challenge to the recognition of foreign judgments or foreign measures of a non-contentious jurisdiction, or where enforcement is necessary, any concerned party may apply to the Court of Appeal of the place of implementation for the ascertainment of the existence of the pre-requisites for recognition. 2. The foreign judgment or measure of non-contentious jurisdiction, together with the order accepting the application referred to in paragraph 1 above, constitute a ground for the implementation and for the enforcement. 3. If the challenge occurs during a proceeding, the relevant judge shall issue his judgment with effects limited to that proceeding.

758  Nerina Boschiero and Benedetta Ubertazzi The answer to the second question is negative since in order to recognise a foreign judgment the Italian court can never re-litigate the dispute (see explicitly Art 36 of the Brussels I Regulation and implicitly Art 64 of the Italian PIL Statute). The answer to the third question is that if the decision was rendered by a court of an EU Member State, according to Articles 41-43 of the Brussels I Regulation, it is sufficient to present the original judgment to the enforcement authority, provided that the ‘decision on the application for a declaration of enforceability may be appealed against by either party’. If, in contrast, the foreign judgment is not covered by the Community regulation, then the Italian rules apply and it is necessary to enforce the judgment according to Article 67 of the Italian PIL Statute. Finally, it is relevant to highlight that the rules of the Italian PIL Statute on recognition and enforcement of foreign judgments have been strongly inspired by the Brussels Convention, sharing the same ratio, namely to facilitate the free circulation of judgments, by providing a ‘parallel’, almost automatic, recognition mechanism and a very simplified procedural enforcement mechanism. Recognition is required for judgments that are not enforceable (ie, those that create, establish or confirm the existence of legal rights or personal status). According to Article 64 of the Italian PIL Statute, a foreign judgment may be recognised without any special procedure and may be given the same effects in Italy as it has in the state in which it was rendered. This means that, according to Article 67 of the Italian PIL Statute, jurisdictional control of the defences against the recognition is necessary only in very limited cases: in the event of non-compliance with or challenge to the recognition of foreign judgments or foreign measures of a non-contentious jurisdiction, or where enforcement is necessary. The Italian enforcement procedure is not ex parte, as occurs under the Brussels system, the decision is rendered in the presence of both parties: the one seeking enforcement and the party against whom enforcement is sought.

Case 11:  Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunctions (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

The following rules are relevant to answer these questions: Article 31 of the Brussels I Regulation (according to which ‘application may be made to the courts of a Member State

Italy  759 for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter’) and Article 10 of the Italian PIL Statute (according to which ‘Italian jurisdiction exists where the relevant measure is to be implemented in Italy or where the Italian judge has jurisdiction’). Certain judicial decisions also come into play. First, in its judgment of 17 November 1998, Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others,182 the ECJ stated: 3. Where the subject-matter of an application for provisional measures relates to a question falling within the scope ratione materiae of the Convention of 27 September 1968, that Convention is applicable and Article 24 thereof may confer jurisdiction on the court hearing that application even where proceedings have already been, or may be, commenced on the substance of the case and even where those proceedings are to be conducted before arbitrators. 4. On a proper construction, the granting of provisional or protective measures on the basis of Article 24 of the Convention of 27 September 1968 is conditional on, inter alia, the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought.

Secondly, in its judgment of 28 April 2005, St Paul Dairy v Unibel,183 the ECJ also stated that notion of provisional measures encompasses any measure that: is to be understood as referring to measures which, in matters within the scope of the Convention, are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case.

Therefore neither measures that ‘order the hearing of a witness’ nor those that aim at the acquisition of evidence ‘for the purpose of enabling the applicant to decide whether to bring a case, determine whether it would be well founded and assess the relevance of evidence which might be adduced in that regard’ are to be intended as provisional measures. The following Italian case law is also relevant to answering the questions raised here. According to a first decision, provisional measures related to foreign IP rights cannot have any extraterritorial effect, and where a validity issue of a foreign IP right is raised as a defence before a court competent as to provisional measures, this court shall stay its proceeding and defer it to the competent court, ex Article 22(4) of the Brussels I Regulation.184 According to another decision, jurisdiction with respect to provisional measures that shall not be executed in Italy exists only if the Italian court is competent as to the merits.185 At any rate, where the alleged infringement takes place through the Internet, the market impact rule should apply, with the consequence that an Italian court cannot grant a provisional measure that would prevent a US Internet website from displaying a sign allegedly infringing an Italian trade mark, if the related products are not effectively commercialised in Italy. According to other decisions, then, jurisdiction as to the merits permits the granting of cross-border injunctions, even in cases in which the alleged infringement took place through the Internet and the alleged infringing information was transmitted by persons and websites located abroad. In those cases the Italian courts do not limit the effect 182   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091. 183   Case C-104/03 St Paul Dairy Industries NV v Unibel Exser BVBA [2005] ECR I-3481, in curia.europa.eu. 184   See Trib Di Modena, 10 November 2003 (ord), (2003) Giurisprudenza annotata di diritto industriale 1203, n 4595. 185   See Trib Roma, (2000) 9 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 870.

760  Nerina Boschiero and Benedetta Ubertazzi of the injunction to the transmission of information through the Internet in Italy, but simply order the shutting down of the incriminated website as such without any territorial limitation.186 In this context the answer to the first question is in the affirmative, according to both Article 31 of the Brussels I Regulation and Article 10 of the Italian PIL Statute. The answer to the second question is that the situation would then change. According to the prevailing opinion, after the ECJ judicial intervention in IP matters, with the two abovementioned judgments of 2006, under the Brussels system it is no longer possible to issue provisional measures/injunctions with extraterritorial effects where the jurisdiction as to the merits is grounded on Article 5(3) or Article 6(1) of the Brussels I Regulation, and the foreign IP right infringement act occurred abroad. Thus, only the general ground of jurisdiction (defendant domicile ex Art 2) permits cross-border injunctions. The same solution follows the adoption of the relevant Italian PIL Statute rules. Hence, according to Article 10 of the Italian PIL Statute, if the Italian court does not have jurisdiction on the merit, the Italian jurisdiction with respect to provisional measures exists only ‘where the relevant measure is to be implemented in Italy’. The answer to the third question is in the affirmative if the validity issue of the trademark is not raised during the case. In contrast, it is still doubtful if the raising of a validity issue during a provisional measures proceeding requires that the court is competent to grant provisional measures to stay its proceeding until the court that is competent to adjudicate the validity issue renders its decision. The ECJ’s GAT decision did not clarify this point, and therefore it could be possible for the court competent to grant provisional measures to go on with its proceeding. The answer to the fourth question is negative. The answer to the fifth question is also negative, since according to the Van Uden ECJ decision, Article 24 of the Brussels Convention, now Article 31 of the Brussels I Regulation, ‘may confer jurisdiction on the court hearing that application even where . . . proceedings are to be conducted before arbitrators’. In order to answer the sixth and last question, it is necessary to remember that an injunction of the kind here in issue is a measure of a jurisdictional nature, with which to impede the defendant from continuing his/her infringing activity by obliging the defendant to adopt certain behavioural steps related to obligation of a non-fungible nature. This kind of injunction could be rendered in Italy in the course of a proceeding on provisional measures or even in the course of a proceeding on the merits. Its granting is governed by both substantive and procedural norms. Hence the aspects related to the timing of the asking/granting of the injunctions are ruled by procedural norms, whereas substantive provisions shall govern the issues concerning the effective existence of the right to protect (to be examined in a very quick way as fumus boni iuris in a provisional measure proceeding, or in an exhaustive way in a proceeding on the merit).

186   See Trib Teramo (ord), 11 December 1997, (1998) 7 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 709, n 549. In the same sentence, see Trib Firenze, (decr) 6 June 2006, and (ord) 10 July 2007, unpublished.

Italy  761

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y: (1) Could intellectual property rights be used as collateral pursuant to the law of your country? (2)  What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights? (3)  Would a court of your country apply the same law to registered and non-registered intellectual property rights?

In order to answer these questions the following rules come into play. As for EU substantive rules, Articles 19, 23(1), 23(2), 24 and 49(3) of the EC Regulation on the Community Trade Mark regulate the use of Community trade marks as collateral, and Articles 29, 33 and 34 of the EC Regulation on the Registered Designs regulate the use of Community registered designs as a collateral. As for Italian substantive rules, Articles 104, 107, 110 and 111 of the Italian Copyright and Related Rights Statute No 633 of 22 April 1941 regulate the use of copyright as a collateral. Additionally, Article 46 of the Italian legislative decree No 385 of 1 September 1993 on Banking Law establishes a special security interest device that allows for the use of copyright as collateral, Articles 63, 138 and 140 of the Italian IP Code regulate the use of patents as collateral, Articles 23, 138 and 140 of the Italian IP Code regulate the use of trade marks as collateral, and Articles 22(1) and 22(2) of the Italian Statute No 153 of 1 March 1994 on ‘urgent measures in favour of the film industry’ expressly contemplate the use of copyright on films as collateral, namely establishing that security interests must be registered on a specialised register managed by SIAE (the Italian Collecting Society for copyrights and related rights), in order to become effective against third parties. However, it should be noted that this Italian Statute has not been implemented as of yet. As for Italian PIL rules, Article 54 of the Italian PIL Statute designates the lex loci protectionis as the applicable law for most of the issues concerning both registered and unregistered IP rights. As for Italian case law, Italian courts have seldom dealt with juridical issues related to security interests over IP rights.187 The lack of Italian case law specifically addressing the issues related to security interests on IP rights does not signify that these assets are never used as collateral. There are numerous Italian cases that evidence the use of IP assets as collateral.188 In this context the answer to the first question is therefore affirmative. The answer to the second question is that the applicable law is the lex loci protectionis.189 The answer to the third question is once again in the affirmative.

187   The scarse existing case law has been listed and analysed by A Tosato, ‘Garanzie “reali” e diritti IP: per un censimento dei materiali’ (2009) Il diritto d’autore 557-601. In particular, see App Napoli, 29 July 1904, (1905) 2 Rivista del diritto commerciale e del diritto generale delle obbligazioni 90, concerning the valid creation of a security interest on trade marks; Trib Roma, 24 September 1964, (1966) Foro Padano 15, in which the court assessed the validity of a security right over the copyrights on a film; Comm Ricorsi, 21 July 1973, (1973) Giurisprudenza annotata di diritto industriale 440, which examines the issue of the creation of security interests on trade marks. 188   For instance, see Tribunale Roma, 7 November 2008, forthcoming in (2010) 19 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo, with a comment of A Tosato. 189   See S Bariatti, ‘La legge applicabile alle garanzie sui diritti di proprietà intellettuale’ (2009) 18 AIDA Annali italiani di diritto d’autore, della cultura e dello spettacolo 89-106.

762  Nerina Boschiero and Benedetta Ubertazzi Finally, it is relevant to remember that Italy is actively participating in the negotiations surrounding the Supplement to the UNCITRAL Legislative Guide on Secured Transactions dealing with security rights in intellectual property.

Japan DAI YOKOMIZO*

Contents Introduction........................................................................................................................................... 763 1. General Overview of Japanese Law................................................................................................ 764 1.1. Legal Sources and Institutional Competence...................................................................... 764 1.1.1. Intellectual Property............................................................................................... 764 1.1.2. International Jurisdiction....................................................................................... 767 1.1.3. Conflict of Laws...................................................................................................... 767 1.1.4. Recognition and Enforcement of Foreign Judgments and Interim Measures.... 769 1.2. Conflict of Laws Rules with Regard to Intellectual Property............................................. 770 2. Hypothetical Case Studies.............................................................................................................. 771 Case 1. General/Special Grounds of Jurisdiction..................................................................... 772 Case 2. Subject-Matter Jurisdiction.......................................................................................... 774 Case 3. Consolidation of Proceedings....................................................................................... 775 Case 4. Choice of Court............................................................................................................. 778 Case 5. Parallel Proceedings....................................................................................................... 779 Case 6. Principle of Territoriality (Choice of Law).................................................................. 781 Case 7. Infringement of Intellectual Property Rights............................................................... 783 Case 8. Applicable Law to Initial Ownership............................................................................ 785 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 786 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 787 Case 11. Provisional Measures and Injunctions......................................................................... 788 3. Conclusion...................................................................................................................................... 790

Introduction Until recently there had been few cases and articles regarding conflict-of-laws issues in matters of intellectual property in Japan. Due to the existence of the principle of territoriality and international conventions, the prevalent view in Japan, as well as other countries, has been that no conflict-of-laws issues exist in the field of intellectual property. Since the end of the last century, and especially after the Card Reader case,1 however, these issues have * Professor of Law, Nagoya University, School of Law. 1   Supreme Court, Judgment of 26 September 2002, 56 Minsh¯u [Supreme Court of Civil Reports] 1551. The

764  Dai Yokomizo become a topic of enthusiastic discussion among practitioners and scholars of conflict-oflaws and IP law, and judgments with regard to international IP disputes have been on the increase. In the following, Section 1 will give a general overview of Japanese law with regard to conflict-of-laws issues in matters of intellectual property. In Section 2, hypothetical case studies will be examined from the viewpoint of Japanese law. Finally, one specific issue which has been discussed in Japan will be mentioned in the conclusion.

1  General Overview of Japanese Law In this section, the legal sources and the institutional competence to apply these legal sources in IP law and conflict of laws will be described first. Conflict-of-laws rules as regards IP issues will then be addressed.

1.1  Legal Sources and Institutional Competence 1.1.1  Intellectual Property Japan has so far ratified the following conventions with regard to intellectual property:2 Convention establishing the World Intellectual Property Organization (WIPO Convention) Paris Convention for the Protection of Industrial Property (Paris Convention)3 Berne Convention for the Protection of Literary and Artistic Works (Berne Convention)4 Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods (Madrid Agreement (Indications of Source)) Patent Cooperation Treaty (PCT) Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (Rome Convention) Convention for the Protection of Producers of Phonograms Against Unauthorised Duplication of Their Phonograms (Phonograms Convention) Trade Mark Law Treaty WIPO Copyright Treaty (WCT) WIPO Performances and Phonograms Treaty (WPPT) Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (Budapest Treaty) Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (Nice Agreement) Strasbourg Agreement Concerning the International Patent Classification (Strasbourg English text can be found in (2003) 46 Japanese Annual of International Law 168. 2   See ‘Summary Table of Membership of the World Intellectual Property Organization (WIPO) and the Treaties Administered by WIPO, plus UPOV and UN’, available at www.wipo.int/treaties/en/summary.jsp. 3   Stockholm Act (1967). 4   Paris Act (1971).

Japan  765 Agreement). Japan is also a Member State of the World Trade Organization (WTO) and has thus accepted the requirements of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).5 As for domestic statutes,6 industrial properties are addressed in the following acts: Tokkyo Ho- (Patent Act)7 Jitsuyo- Shinan Ho- (Utility Model Act)8 Isho- Ho- (Design Act)9 Sho-hyo- Ho- (Trade Mark Act)10 Fusei Kyo-so Bo-shi Ho- (Unfair Competition Prevention Act).11 Copyrights are generally contained in Chosaku ken Ho- (Copyright Act).12 The protection of new plant varieties are stipulated by Shubyo- Ho- (Plant Variety Protection and Seed Act).13 Layout-Design Exploitation Rights are contained in Hand o- Tai Sh u- seki Kairo no Kairo Haichi ni kansuru Ho-ritsu (Act on the Circuit Layout of a Semiconductor Integrated Circuits).14 Finally, Chiteki Zaisan Kihon Ho- (Intellectual Property Basic Act)15 declares the strategic programme of the Japanese government with regard to intellectual property and the establishment of the Intellectual Property Strategy Headquarters. Under Japanese law, intellectual property rights comprise ‘a patent right, a utility model right, a plant breeder’s right, a design right, a copyright, a trademark right, a right that is stipulated by laws and regulations on other intellectual property or right pertaining to an interest that is protected by acts.’16 Japan has a three-tier court system.17 For cases relating to intellectual property, the Tokyo District Court or the Osaka District Court have exclusive18 or complementary jurisdiction.19 With regard to objections against the results of examinations done by the Japan 5   Japan is also a Member State of the International Union for the Protection of New Varieties of Plants (UPOV) and the United Nations. 6   English translations of Japanese laws are available at the following site: ‘Japanese Law Translation’, www.japaneselawtranslation.go.jp/?re=02. 7   Act No 121 of 1959. 8   Act No 123 of 1959. 9   Act No 125 of 1959. 10   Act No 127 of 1959. 11   Act No 47 of 1993. 12   Act No 48 of 1970. 13   Act No 83 of 1998. 14   Act No 43 of 1985. 15   Act No 122 of 2002. 16   Intellectual Property Basic Act, Art 2(2). 17   For more details, see M Otsuki, ‘Japan’ in D Wilson (ed), International Patent Litigation (London, Globe Law and Business, 2009) 159. 18   Minji Sosh¯o H¯o (Code of Civil Procedure), Law, No 109 of 1996, Art 6(1): With regard to an action relating to a patent right, utility model right, right of layout-designs of integrated circuits or an author’s right over a computer program (hereinafter referred to as an ‘action relating to a patent right, etc’), if any of the courts listed in the following items shall have jurisdiction pursuant to the provisions of the preceding two Articles, such action shall be subject exclusively to the jurisdiction of the court specified in the respective items: (i) A district court located within the jurisdictional district of the Tokyo High Court, the Nagoya High Court, the Sendai High Court or the Sapporo High Court: the Tokyo District Court (ii) A district court located within the jurisdictional district of the Osaka High Court, the Hiroshima High Court, the Fukuoka High Court or the Takamatsu High Court: the Osaka District Court. 19   Art 6bis of the Code of Civil Procedure:

766  Dai Yokomizo Patent Office (JPO) for the determination of the granting of exclusive patent or other rights, the Appeals Department of JPO is authorised to act as the court of first instance for a local court in accordance with the Civil Procedure Code.20 On 1 April 2005, the Intellectual Property High Court (‘IP High Court’) was established as a court specialising in intellectual property cases. The IP High Court hears suits against appeal or trial decisions made by the Japan Patent Office (JPO) as the court of first instance, and civil cases relating to intellectual property as the court of second instance.21 First, suits against appeal or trial decisions made by the JPO come under the exclusive jurisdiction of the Tokyo High Court,22 and are heard by the IP High Court as a special branch of the Tokyo High Court.23 Second, appeals from district courts in civil cases relating to patent rights, utility model rights, rights of layout-designs of integrated circuits, and rights of the authors of a program work come under the exclusive jurisdiction of the Tokyo High Court,24 and are heard by the IP High Court.25 In consequence, all such appeals are exclusively heard by the IP High Court. The IP High Court also hears other civil and administraWith regard to an action relating to a design right, trademark right, author’s right (excluding an author’s right over a computer program), right of publication, neighboring right or breeder’s right or an action pertaining to the infringement of business interests by unfair competition (meaning unfair competition prescribed in Article 2(1) of the Unfair Competition Prevention Act (Act No 47 of 1993)), if any of the courts listed in the following items shall have jurisdiction pursuant to the provisions of Article 4 or Article 5, such action may also be filed with the court specified in the respective items: (i) The court set forth in paragraph (1)(i) of the preceding Article (excluding the Tokyo District Court): the Tokyo District Court (ii) The court set forth in paragraph (1)(ii) of the preceding Article (excluding the Osaka District Court): the Osaka District Court. 20  See Japan Patent Office, ‘The Role of Japan Patent Office’, available at www.jpo.go.jp/cgi/linke.cgi?url=/ shoukai_e/soshiki_e/yakuwae.htm. 21   See Intellectual Property High Court, ‘Jurisdiction’, available at www.ip.courts.go.jp/eng/aboutus/jurisdiction.html. 22   As an example, see Art 178(1) of the Patent Law: ‘The Tokyo High Court shall have exclusive jurisdiction over any action against a trial decision or a ruling to dismiss a written request for a trial or a retrial.’ 23   Chiteki Zaisan K¯ot¯o Saibansho Secchi H¯o (Law for Establishing the IP High Court), Art 2: Notwithstanding the provisions of Article 22, Paragraph 1 of the Court Organisation Act (Act No 59 of 1947), the Intellectual Property High Court shall be established within the Tokyo High Court as a special branch that shall handle the following intellectual property cases over which the Tokyo High Court has jurisdiction: (i) Appeals against final judgments rendered by district courts in the first instance on actions pertaining to patent rights, utility model rights, design rights, trademark rights, rights of layout-designs of integrated circuits, copyrights, publication rights, neighbouring rights or plant breeders’ rights or actions pertaining to infringements of business interests through acts of unfair competition provided for in Article 2, Paragraph 1 of the unfair competition Prevention Act (Act No 47 of 1993), in which specialised knowledge is required for examination. (ii) Lawsuits pertaining to actions set forth in Article 178, Paragraph 1 of the Patent Act (Act No 121 of 1959), Article 47, Paragraph 1 of the Utility Model Act (Act No 123 of 1959), Article 59, Paragraph 1 of the Design Act (Act No 125 of 1959), or Article 63, Paragraph 1 (including the cases where it is applied mutatis mutandis pursuant to Article 68, Paragraph 5) of the Trademark Act (Act No 127 of 1959). (iii) Cases in addition to what is listed in the preceding two items in which specialised knowledge on intellectual property is required for examination of the major points at issue. (iv) Lawsuits for which oral proceedings should be carried out jointly with lawsuits set forth in Item 1 or 2 or cases set forth in the preceding Item that have been brought as lawsuits. 24   Art 6(3) of the Code of Civil Procedure: An appeal to the court of second instance against the final judgment on an action relating to a patent right, etc that is made by the court specified in paragraph (1)(ii) as the court of first instance shall be subject exclusively to the jurisdiction of the Tokyo High Court; provided, however, that this shall not apply to an appeal to the court of second instance against the final judgment on an action pertaining to a suit transferred pursuant to the provision of Article 20-2(1). 25   Art 2(i) of the Law for Establishing the IP High Court.

Japan  767 tive cases under the jurisdiction of the Tokyo High Court that require expertise in intellectual property matters in order to conduct proceedings and render judgments on the main issues.26 1.1.2  International Jurisdiction As for international judicial jurisdiction, there is no specific provision prescribing international jurisdiction in Japan. The case law gives the following guidelines: a defendant shall be subject to the jurisdiction of Japan when the conditions of the case establish international territorial jurisdiction (or local venue) as provided in the Code of Civil Procedure (the defendant’s domicile, the place where the obligation is to be performed, the place where the tort occurred, the place where the property is located, etc), unless exceptional circumstances are found or if a trial in a Japanese court would contradict the promotion of fairness between the parties, and the equitable and prompt administration of justice would not be served.27 As regards choice-of-courts agreements, the case law allows such agreements designating a foreign court to be effective under the following conditions: 1) the case in question is not subject to the exclusive jurisdiction of Japan; 2) the foreign court designated by the choice of court agreement should have international jurisdiction under its own law; and 3) the agreement in question is not unreasonable and contrary to Japan’s public policy.28 The agreement should be made in such a manner that at least a court of the specific country is so manifestly designated in the document drafted by one of the parties that the existence and content of the agreement is evident.29 New legislation regarding international jurisdiction is now being discussed by the government. The interim draft of the legislation on international jurisdiction of the International Jurisdiction Legislative Committee of Japan’s Legislative Council (hereafter referred to as the ‘Interim Draft’) was published in July 2009.30 The draft is based on the above-mentioned framework established by the case law. This interim draft was further elaborated as a part of the draft for amendment of a Part of the Code of Civil Procedure and Civil Provisional Remedies Act31 (hereafter referred to as the ‘Final Draft’) and, on 2 March 2010, was submitted to the Diet.32 1.1.3  Conflict of Laws As for choice of law, Japan has ratified only two Hague Conventions: the Convention of 5 October 1961 on the Conflicts of Laws Relating to the Form of Testamentary Dispositions, and the Convention of 2 October 1973 on the Law Applicable to Maintenance Obligations. Hence, Japanese national law prescribes a large number of legal issues in this field, and a new law entitled Ho- no Tekiyo- ni kansuru Ts¯usoku H¯o (the Act on the General Rules of the Application of Laws) (hereafter referred to as ‘Ts¯usoku H¯o’) was enacted in 2006.33   Art 2(iii) of the Law for Establishing the IP High Court.   Supreme Court, Judgment of 11 November 1997, 51 Minsh¯u 4055. English text can be found in (1998) 41 Japanese Annual of International Law 117. 28   Supreme Court, Judgment of 28 November 1975, 29 Minsh¯u 1554. English text can be found in (1976) 20 Japanese Annual of International Law 106. 29  ibid. 30   Available at search.e-gov.go.jp/servlet/Public?Doing (Japanese only). 31   Minji sosh¯o h¯o oyobi minji hozen h¯o no ichibu wo kaisei suru h¯oritsu (Law amending a part of the Code of Civil Procedure and Provisional Civil Remedies Act). 32   The text of the Final Draft is available at www.moj.go.jp/houan1/saibankan9_refer02.html. 33   Law No 78 of 2006. English text is available at wwwsoc.nii.ac.jp/pilaj/text/tsusokuho_e.htm. It is also found 26 27

768  Dai Yokomizo Under the Ts¯usoku H¯o,34 legal relations arising from torts will usually be governed by the law of the place where the results of the tort were felt. If the occurrence of the results in that place could not normally be predicted, the applicable law will be that of the place where the tortious act took place.35 If there is a place clearly more closely connected than those specified by this general rule, the law of that place governs instead.36 Also, parties are allowed to change the governing law by agreement after the claim has arisen.37 Legal issues regarding contracts, such as the validity and the effect of a contract and the interpretation of its provisions are determined by the law applicable to the contract.38 With regard to contracts, parties can freely choose the applicable law, not only explicitly but also implicitly.39 In the absence of any choice made by the parties, the governing law is the law of the place most closely connected with the contract.40 This is presumed to be the place where the party who is to make the characteristic performance of the contract is habitually resident.41 Finally, as for the transfer of rights, it is almost unanimously claimed by academic opinions that the transfer of corporeal property is governed by the law applicable to the in: J Basedow, H Baum and Y Nishitani (eds), Japanese and European Private International Law in Comparative Perspective (Tübingen, Mohr Siebeck, 2008) 405-19, as well as (2007) 50 Japanese Annual of International Law 87–98. See generally, K Takahashi, ‘A Major Reform of Japanese Private International Law’ (2006) 2 Journal of Private International Law 311; Y Okuda, ‘Reform of Japan’s Private International Law: Act on the General Rules of the Application of Laws’ (2006) 8 Yearbook of Private International Law 145. 34   See generally, T Kono, ‘Critical and Comparative Analysis of the Rome II Regulation on Applicable Laws to Non-contractual Obligations and the New Private International Law in Japan – Seeking a Common Methodological Approach in Japan and Europe’ in Basedow, Baum and Nishitani, above n 33, 221; Y Nakanishi, ‘New Private International Law of Japan, Torts’ (2007) 50 Japanese Annual of International Law 60. 35   Art 17 of Tsu-soku H¯o provides: ‘The formation and effect of claims arising from a tort shall be governed by the law of the place where the results of the infringing act are produced. However, if it was not foreseeable under normal circumstances that the results would be produced at that place, the law of the place where the infringing act occurred shall apply.’ 36   Art 20 of Tsu-soku H¯o provides: ‘Notwithstanding the provisions of the preceding three articles, the formation and effect of claims arising from a tort shall be governed by the law of the place which is manifestly more closely connected with the tort than the place determined pursuant to the preceding three articles, considering that the parties had their habitual residence in the same jurisdiction at the time when the tort occurs, the tort constitutes a breach of obligations under a contract between the parties, or other circumstances of the case.’ 37   Art 16 of Tsu-soku H¯o provides: ‘The parties to a negotiorum gestio or unjust enrichment may, after the events causing either to occurs, change the law governing the formation and effect of claims arising therefrom. However, if the change of the governing law would prejudice the rights of a third party, the change may not be asserted against such third party.’ 38   As for rules regarding the law to the contract, see generally, Y Nishitani, ‘Party Autonomy and Its Restrictions by Mandatory Rules in Japanese Private International Law: Contractual Conflicts Rules’ in Basedow, Baum, Nishitani, n 33 above, 77; Y Hayakawa, ‘New Private International Law of Japan, General Rules on Contracts’ (2007) 50 Japanese Anuual of International Law 25. 39   Art 7 of Tsu-soku H¯o: ‘The formation and effect of a juristic act shall be governed by the law of the place which was chosen by the party/parties at the time when the act was made’. 40   Art 8(1) of Tsu-soku H¯o: ‘If there is no applicable law chosen by the party/parties as in the preceding article, the formation and effect of a juristic act shall be governed by the law of the place with which the act was most closely connected at the time the act was made.’ Under the old Act, the governing law was the law of the place where the contract was concluded. Art 7(2) of H¯orei. 41   Art 8(2) of Tsu-soku H¯o provides: In the case of the preceding paragraph, if the characteristic performance of a juristic act is to be made by one party, the law of his/her habitual residence (if the party has an establishment which is related to the juristic act, the law of the place where the establishment is located, and if the party has several establishments in different jurisdictions which are related to the juristic act, the law of the place where the principal establishment is located) is presumed to be the law of the place with which the juristic act is most closely connected.

Japan  769 property.42 The transfer of receivables is governed by the law applicable to the receivable which is to be assigned.43 1.1.4  Recognition and Enforcement of Foreign Judgments and Interim Measures Foreign final judgments can be recognised and enforced pursuant to Article 118 of the Code of Civil Procedure and Article 24 of the Code of Civil Enforcement.44 The conditions for the recognition and enforcement are procedural and the effects of foreign judgments are to be recognised without Japanese courts reviewing the case.45 The foreign judgment to be recognised (‘judgment of a foreign court’) refers to ‘the final judgment rendered by a foreign court on private law relations by providing procedural guarantee to both parties, regardless of the name, procedure, or form of judgment’.46 The requirements for recognition are: i) that the foreign court had international jurisdiction for the case from the viewpoint of Japan;47 ii) that a service of process was appropriately sent to the defendant; iii) that the content of the judgment and the court proceedings are not contrary to public policy; and iv) the existence of reciprocity between the rendering state and Japan with regard to the recognition of judgments.48 There has so far been no case in which courts have decided whether judgments handed down after ex parte proceedings would be recognised or enforced. Generally speaking, this issue would be determined on a case-bycase basis from the viewpoint of procedural public policy.49 The reciprocity requirement

  Art 13 of Tsu-soku H¯o:

42

Rights in Rem and Rights Requiring Registration (1) Rights in rem and other rights requiring registration with regard to movables or immovables shall be governed by the law of the place where the subject property is located. (2) Notwithstanding the preceding paragraph, the acquisition and loss of the rights provided for in the preceding paragraph shall be governed by the law of the place where the subject property is located at the time when the events causing the acquisition or loss are completed. 43   Art 23 of Tsu-soku H¯o. ‘The effect of an assignment of a receivable in relation to a debtor and other third parties shall be governed by the law applicable to the receivable which is to be assigned’. 44   Minji Shikk¯o H¯o, Law, No 4 of 1979. 45   Art 24(2) of the Civil Execution Act: ‘An execution judgment shall be made without investigating whether or not the judicial decision is appropriate’. 46   Supreme Court, Judgment of 28 April 1998, 52 Minsh¯u 853. English text can be found in (1999) 42 Japanese Annual of International Law 155. 47   As for the relationship between the direct jurisdictional rules and the indirect jurisdictional rules, academic opinions are divided and the Supreme Court’s decision is open to interpretation. See T Kono, N Tada and M Shin, ‘Recognition and Enforcement of Foreign Judgments Relating to IP Rights and Unfair Competition’ in J Basedow, T Kono and A Metzger (eds), Intellectual Property in the Global Arena – Jurisdiction, Applicable Law, and the Recognition of Judgments in Europe, Japan and the US (Tübingen, Mohr Siebeck, 2010). 48   Art 118 of the Code of Civil Procedure: A final and binding judgment rendered by a foreign court shall be effective only where it meets all of the following requirements: (i) The jurisdiction of the foreign court is recognised under laws or regulations or conventions or treaties. (ii) The defeated defendant has received a service (excluding a service by publication or any other service similar thereto) of a summons or order necessary for the commencement of the suit, or has appeared without receiving such service. (iii) The content of the judgment and the court proceedings are not contrary to public policy in Japan. (iv) Reciprocity exists. 49   cf Tokyo District Court, Judgment of 25 February 1998, 972 Hanrei Taimuzu 258 (examination of a foreign summary judgment from the viewpoint of procedural public policy). English text is available at kanzaki2.lawd. gakushuin.ac.jp/~conflict/procedure/index.html.

770  Dai Yokomizo has been broadly interpreted50 and has now been confirmed to exist even between Japan and common-law countries.51 However, recognition of a judgment from China was recently denied by this requirement, since China seems to recognise and enforce foreign judgments handed down only in countries with which it has concluded bilateral treaties relating to mutual recognition and enforcement of judgments.52 Finally, there is no provision relating to the recognition and enforcement of foreign interim/preliminary measures in Japan. Also, there have been no cases where the recognition or enforcement of foreign measures was permitted. Rather, in some cases recognition and enforcement of provisional measures on custody of a child were denied on the grounds that such measures are of a provisional nature and do not fall within the scope of Article 118 of the Code of Civil Procedure.53 In academic opinions, whereas some authors have supported the denial of recognition and enforcement of foreign interim/preliminary measures, recently most scholars have acknowledged the possibility of recognition and enforcement under the same conditions as those in case of recognition and enforcement of foreign judgments.54

1.2  Conflict of Laws Rules with Regard to Intellectual Property As regards conflict of laws rules with respect to IP issues, there is no special provision or Supreme Court decision which provides special rules relating to international jurisdiction on this matter. So far, Japanese courts have been willing to hear cases regarding the infringement of foreign IP rights without any hesitation.55 Thus, ordinary jurisdictional rules govern international civil disputes in matters of intellectual property, like other international civil disputes. The only exception is the validity of registered IP rights. On this issue, whereas there is no explicit provision and no decision of the Supreme Court, it has been broadly accepted in judgments of lower courts and in academic opinion that courts of the country which granted the registered IP right in question shall have exclusive jurisdiction.56 Additionally, in the Final Draft on international jurisdiction, it is proposed that proceedings concerned with the existence or effects of IP rights registered in Japan shall be subject to the exclusive jurisdiction of Japanese courts.57 50   Supreme Court, Judgment of 7 June 1983, 37 Minsh¯u 611. English text can be found in (1984) 27 Japanese Annual of International Law 119. 51  ibid. 52   Osaka High Court, Judgment of 9 April 2003, 1841 Hanrei Jih¯o 111. English text can be found in (2005) 48 Japanese Annual of International Law 171. 53   Great Court of Judicature, Judgment of 28 May 1917, 23 Minroku [Great Court of Judicature Civil Cases Reporter] 793; Supreme Court, Judgment of 26 February 1985, 60 Kasai Gepp¯o [Monthly Bulletin on Family Courts] 26. 54   Kono, Tada and Shin, n 47 above. 55   Tokyo District Court, Judgment of 12 June 1953, 4-6 Kaminsh¯u [Lower Courts Reports (Civil Cases)] 847 (Manchurian Patent); Supreme Court, Judgment of 8 June 2001, 55 Minsh¯u 27 (Ultraman). English text can be found in (2002) 45 Japanese Anuual of International Law 151; Supreme Court, Judgment of 26 September 2002 (Card Reader), n 1 above; Tokyo District Court, Judgment of 16 October 2003, 1874 Hanrei Jih¯o 23 (Coral Sand); Tokyo High Court, Judgment of 25 February 2004 (Gigantor) (unpublished). 56   See, eg Tokyo District Court, 16 October 2003 (Coral Sand), n 55 above. However, in some cases, courts decided on the merits without referring to international jurisdiction. See Tokyo District Court, Judgment of 22 October 1993, 26 Chizaish¯u [IP Case Reports] 729; Tokyo High Court, Judgment of 20 July 1994, 26 Chizaish¯u 717; Supreme Court, Judgment of 24 January 1995, unpublished; Tokyo District Court, Judgment of 4 March 2004, available at www.courts.go.jp; Tokyo High Court, Judgment of 9 August 2005, available at www.courts.go.jp/. 57   No 3(3): ‘Japanese courts shall have the exclusive jurisdiction on proceedings concerned with the existence or the effects of intellectual property rights . . . the creation of which is subject to the registration, if the place of the registration is located in Japan.’

Japan  771 As for choice of law, there is no specific provision stating which state’s law is applicable to intellectual property rights and unfair competition in the Ts¯usoku H¯o, except for defamation (Art 19).58 Thus, general rules provided by the Ts¯usoku H¯o also apply to intellectual property issues. However, in the famous Card Reader case the Supreme Court established a rule on the law applicable to the effects of patent rights, according to which the law of the country where the patent right in question was registered shall govern this issue.59 This rule covers in particular the right to claim an injunction on the grounds of patent infringement. Also, some lower courts and scholars have claimed the existence of the special choice-oflaw rule relating to the relief against copyright infringement in Article 5(2) of the Berne Convention.60 According to this rule, the law of the country for which protection is claimed shall be applied. However, others doubt the existence of such a choice-of-law rule in the Berne Convention.61 Lastly, as for unfair competition, the IP High Court held in a recent case that the issue relating to injunction against unfair competition shall be determined by Jo-ri (justice and reason), since explicit provision is lacking in the Ts¯usoku H¯o,62 whereas in other cases issues relating to unfair competition were generally characterised as tort.63 Finally, there is no special provision relating to the recognition and enforcement of foreign judgments with regard to IP issues.

2  Hypothetical Case Studies In this section, the hypothetical case studies provided in the questionnaire will be examined from the viewpoint of Japanese law.

58   As for intellectual property, since the significance of the lex loci protectionis is still unclear and academic opinion is divided, it was considered that a new provision would be premature. As for unfair competition, it could not be determined whether a single choice-of-law rule based on the law of the place where the market is located would be sufficient for all kinds of acts regarding unfair competition. See the Explanatory Note on the Proposal of 22 March 2005 (in Japanese) (www.moj.go.jp/PUBLIC/MINJ57/refer02.pdf) 96-97. 59   n 1 above. 60   Tokyo District Court, Judgment of 31 May 2004, 1935 Hanrei Jih¯o 140; Tokyo District Court, Ruling of 11 July 2006, 1933 Hanrei Jih¯o 68, 1212 Hanrei Taimuzu 93; Tokyo District Court, Judgment of 14 December 2007 (unpublished); IP High Court, Judgment of 24 December 2008 (unpublished); M Dogauchi, ‘Kokky¯o wo koeta chiteki zaisan ken no hogo wo meguru hhomondai’ [‘Issues concerning cross-border protection of intellectual property rights’] (2002) 1227 Jurisuto [Jurist] 52, 56; Y Tamura, Chosaku ken h¯o gaisetsu [Copyright Law], 2nd edn (Tokyo, Y¯uhikaku, 2003) 562. 61   D Yokomizo, ‘Chiteki zaisan ni kansuru jakkan no teishoku h¯o teki k¯osatsu’ [‘Some Reflections on Intellectual Property from the Viewpoint of Conflict of Laws’] in Y Tamura (ed), Shin sedai chiteki zaisan h¯osei sakugaku no s¯osei [Establishment of Jurisprudence on Intellectual Property Law and Policy in the New Era] (Tokyo, Y¯uhikaku, 2008) 445, 459-61. See generally, Y Nishitani, ‘Intellectual Property in Japanese Private International Law’ (2005) 48 Japanese Annual of International Law 87, 95. 62   IP High Court, Judgment of 27 December 2005, available at www.courts.go.jp/. 63   Tokyo District Court, Judgment of 24 September 1991, 709 Hanrei Taimuzu, 280 (Trade Secret). English text is available in (1992) 35 Japanese Annual of International Law 175; Tokyo District Court, Judgment of 16 October 2003 (Coral Sand), n 55 above. However, as a case where the court seemed to consider Art 2(1)(i) of the unfair competition act as an international mandatory rule, see Osaka District Court, Judgment of 9 November 2005, 1897 Hanrei Jih¯o, 103.

772  Dai Yokomizo

Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in a neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

Case 1(1) Under the above-mentioned ordinary jurisdictional rules, Japanese courts have international jurisdiction if the defendant resides in Japan,64 unless there are exceptional circumstances. Thus, if the defendant B had its residence in Japan, Japanese courts would usually have international jurisdiction. The Final Draft follows this general jurisdiction.65 In cases where the defendant is a corporation having its main place of business in a third country and a branch was located in Japan, the decision would be different. In a case involving an air traffic accident in Malaysia, the Supreme Court affirmed international jurisdiction on the grounds that the defendant had an office in Japan.66 However this decision was harshly criticised by academics, and as a result in a decision in 1997,67 the Supreme Court introduced the condition of ‘exceptional circumstances’, as mentioned in Section 1. Thus, it is highly probable under the current framework that Japanese courts would deny international jurisdiction by using the ‘exceptional circumstances’ condition in the cases concerned. Under the Final Draft, general jurisdiction is limited to cases where the defendant corporation has its main place of business in Japan.68 In cases where only the defendant’s branch is in Japan, a Japanese court would have special international jurisdiction only on claims with regard to such branch’s activities.69 Hence, if the branch disseminated a journal in 64   cf Art 4(1) of the Code of Civil Procedure: ‘An action shall be subject to the jurisdiction of the court that has jurisdiction over the location of the general venue of the defendant.’ 65   Art 3bis(1). 66   Supreme Court, Judgment of 16 October 1981, 35 Minsh¯u 1224 (Malaysian Airline). English text can be found in (1983) 26 Japanese Annual of International Law 122. 67   n 27 above. 68   Art 3bis(2): ‘Japanese courts shall have jurisdiction if the defendant legal entity, other corporation or nonprofit organisation has its principal office or business office in Japan’. 69   Art 3ter(iv) provides that regarding claims against persons who have their office or business branch in Japan, Japanese courts shall have jurisdiction regarding claims related with business in the said office or business branch.

Japan  773 Japan, a Japanese court would have international jurisdiction, albeit only regarding claims related to such activities. Case 1(2) In tort cases, Japanese courts would have international jurisdiction if the act giving rise to damage or the result arising out of the alleged tortious act occurred in Japan70 unless there are exceptional circumstances. Thus, if the copies of the journal were in Japanese and distributed in Japan, Japanese courts would, in principle, have jurisdiction since the result of the alleged tortious act occurred in Japan. Also, if the journal was printed in Japan for distribution in country X, Japanese court would have international jurisdiction since the act giving rise to damage occurred in Japan. Due to the lack of case law and academic opinion on the issue, it is not certain in Japan whether both cases could be different with regard to the scope of the trial.71 However, under the Japanese rule relating to objective joinder, which will be discussed further below, even if the scope of the trial were limited to the damages which occurred in Japan, when a Japanese court has international jurisdiction on the grounds of the result arising out of the alleged tortious act, Japanese courts would probably have international jurisdiction on damages which occurred in other countries on the grounds of that rule.72 Some authors claim that, in that case, Japanese courts should have recourse to the ‘exceptional circumstances’ condition to decline Japan’s international jurisdiction when there is scarce connection between the case and Japan.73 Case 1(3) It is evident that, when the defendant has its residence in Japan, Japanese courts have jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published. However, the residence of the defendant would not always be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries. A Japanese court would also have international jurisdiction over the overall damage in cases where the act giving rise to the damage occurred in Japan. In addition, as mentioned above, even when Japanese courts have international jurisdiction on the grounds of the result arising out of the alleged tortious act, Japanese courts would probably have international jurisdiction on damages which occurred in other countries on the grounds of the rule relating to objective joinder. 70   See Nishitani, n 61 above, 87, 89. Cf Art 5 of the Code of Civil Procedure: ‘Actions listed in the following items may be filed with the court that has jurisdiction over the place specified in the respective items: . . . (ix) An action relating to a tort: The place where the tort was committed.’ 71   See, N Tada, ‘Huh¯o k¯oichi kankatsuHuhô Kôichi Kankatsu’ [‘The Place of Tort as a Basis for International Judicial Jurisdiction’], (2008) 10 Kokusai Shih¯o Nenp¯o [Japanese Yearbook of Private International Law] 49, 60. This issue is also open to interpretation under the Interim Draft. 72   Y Nakanishi, ‘Shuppan butsu ni yoru meiyo kison jiken no kokusai saiban kankatsu ni kansuru o¯ sh u¯ Shih¯o Saibansho 1995 nen 3 gatsu 7 nichi hanketsu ni tsuite’ [‘On the ECJ Judgment of 7 March 1995 with regard to international jurisdiction on defamation by way of published works’] (1998) 142 H¯ogaku Rons¯o [Kyoto Law Review] 181, 211; Nishitani, n 61 above, 87, 94. 73   Nishitani, n 61 above, 87, 94; Y Nishitani, ‘Copyright Infringement on the Internet and Service Provider’s Liability: A Japanese Approach from a Comparative Perspective’ in A Schutz (ed), Legal Aspects of an E-Commerce Transaction. International Conference in The Hague, 26 and 27 October 2004 (Munich, Sellier European Law Publ, 2006) 41, 44; M D¯ogauchi, ‘Judicial Jurisdiction in the Era of E-Commerce’ in T Kono et al (ed), Selected Legal Issues of E-Commerce (The Hague, Kluwer Law International, 2002) 127, 140–41.

774  Dai Yokomizo

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Case 2(1) It should be first confirmed that, if B claimed the invalidity of the foreign patent as a counter-claim, a Japanese court would have no international jurisdiction on this issue, since the issue on the validity of the patent belongs to the exclusive jurisdiction of the court of the country which granted it.74 As for cases where the invalidity of the IP right is raised merely as a defence in an infringement action, in the Coral Sand case the Tokyo District Court explicitly denied the exclusive jurisdiction of courts of the state of the registration over such cases, on the grounds that a decision on validity as a presupposed question would have effect only between the parties to the action and no erga omnes effect.75 Thus, if B claims the invalidity of the foreign patent as a defence in the infringement action, a Japanese court would have international jurisdiction and can decide on the issue of the infringement. Case 2(2) The Tokyo District Court explicitly affirmed in the above-mentioned Coral Sand case the capability of Japanese courts to decide upon the issue of validity (and registration) of foreign IP rights, although it did not decide on the invalidity of a US patent right in that case.76 According to this judgment, the legal effect of the decision would be limited to the parties in the action (inter partes effects).77 There seems so far to be no objection to this judgment in academic opinions.78 However, in light of the fact that the creation of registered IP rights requires the intervention of foreign public authorities, the question of whether Japanese courts can fully examine the validity of such rights or only recognise their validity under   See n 56 above and accompanying text.   Tokyo District Court, Judgment of 16 October 2003 (Coral Sand), n 55 above . 76  ibid. 77  ibid. 78  Nishitani, n 61 above, 87, 92; S Chaen, ‘Gaikoku-tokkyo shingai jiken no kokusai saiban kankatsu’ [‘International Judicial Jurisdiction in Patent Infringement Cases’] (1998) 21 Nihon k¯ogy¯o shoy¯uken h¯o gakkai nenpô [Annual of Industrial Property Law] 59–61, 73–74; M D¯ogauchi, ‘Jurisdiction over Foreign Patent Infringement from a Japanese Perspective in Consideration of the Hague Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters as of June 2001’ (2001) 44 Japanese Annual of International Law 35, 50–59. 74 75

Japan  775 formal conditions in the same manner as in cases on foreign judgments should be further considered.79 As for non-registered IP rights like copyrights, many scholars deny that the court of the country which granted the copyright would have exclusive jurisdiction over the validity of the rights.80 Thus, according to their view, there would be no obstacle to Japanese courts having international jurisdiction over the validity of foreign non-registered IP rights. However, some scholars claim that Japanese courts would have international jurisdiction in the same manner over both registered and non-registered IP rights, referring to the similarity in nature between both rights from the viewpoint of state policies.81 In practice, there has so far been no case where courts have decided on the validity of foreign unregistered IP rights. Case 2(3) There has so far been no case where a court has decided on this issue, and no discussion in academic opinions. However, it seems that the court would have no obligation to determine the validity of a foreign IP right if that question remained unchallenged. Otherwise, the court would have to decide on the validity of a foreign IP right in every infringement action, since the issue of the validity of a foreign IP right can be always regarded as a preliminary question in an IP infringement action.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y, and Z. B, C and D are competitors of A and are located in countries X, Y, and Z respectively. A finds that B, C and D infringe its patents in countries X, Y, and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y, and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C, and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C, and D on the ground of the infringement of a contract? (2) Assuming that B, C, and D are members of a group of a corporation and takes identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country would (and if so, under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C, and D raised counterclaims that A’s patents are invalid?

As for the consolidation of proceedings, before answering the questions, it would be appropriate to explain the specific rule relating to objective joinder in Japan. With respect to the objective joinder of international jurisdiction, although there is a view that no particular 79   cf S Bollée, Les méthodes du droit international privé à l’épreuve des sentences arbitrales (Paris, Economica, 2004) 151. 80   D¯ogauchi, n 60 above, 54; Nishitani, n 61 above, 87, 89. 81   D Yokomizo, ‘Denshi Sh¯otorihiki ni kansuru teishoku h¯o j¯o no shomondai’ [Some conflict-of-laws issues with regard to E-commerce] (2001) 124 Minsh¯oh¯o Zasshi [The Journal of Civil and Commercial Law] 163, 174, 180, n 67.

776  Dai Yokomizo restrictions should be imposed,82 a majority of authors currently take the view that a connection between the claims is required.83 Factors pointed out include the need to consider the difficulty of collecting evidence or the burden on the defendant in defending an action in Japan, in the context of international jurisdiction where, unlike in the case of domestic jurisdiction, there are no means of transferring a matter.84 In a Supreme Court decision of 8 June 2001 (Tsuburaya Production),85 in which a Japanese company claimed for damages against a Thai person over issues including permission to exploit copyrights and the ownership of copyrights in Japan and Thailand, the Court ruled that a close connection between the claims should be found with respect to an objective joinder, reasoning from the perspective of the rational allocation of judicial functions in international society and the requirement of avoiding complication and prolongation of the trial, giving Supreme Court confirmation as to the existing majority view for the first time. Additionally, in its specific decision, the Supreme Court gave examples to illustrate that whether or not the disputes are substantively the same should be one of the benchmarks for determining the existence of a close connection.86 Thus, even though Japanese courts do not ordinarily have international jurisdiction over claims based on the infringement of IP rights in foreign countries, if the disputes are substantively the same, they would have international jurisdiction over such claims. Case 3(1) Since the defendants B, C and D are not located in Japan (country W) and there occurs no infringement against A’s patent in Japan, a Japanese court would have no international jurisdiction, even though A’s main place of business is in Japan.87 Thus, it would also have no jurisdiction to join claims against defendant B, C and D. If A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract, the decision of a court could differ. If an obligation under the contract was to be performed in Japan, Japanese courts would have international jurisdiction over the claim with regard to that obligation. However, in many cases a subjective joinder is allowed only where there are special circumstances such that conducting a trial in the courts of Japan, in the light of specific facts, conforms to the principles of fairness as between parties and the expectation of a proper and speedy trial, as a result of considering the extent of the disadvantage to a defendant who would be forced to respond to an action 82   Tokyo District Court, Interlocutory Judgment of 23 October 1987, 1261 Hanrei Jih¯o 48; Tokyo District Court, Interlocutory Judgment of 30 March 1989, 1348 Hanrei Jih¯o 91; Tokyo District Court, Interlocutory Judgment of 19 June 1989, 703 Hanrei Taimuzu 246; S Ikehara, ‘Kokusai saiban kankatsu ken’ [‘International Judicial Jurisdiction’] in C Suzuki and A Mikazuki (eds), Shin jitsumu minji sosh¯o k¯oza 7 Kokusai minji sosh¯o / Kaisha sosh¯o [New Practical Lectures on Civil Procedure 7 International Civil Litigation / Litigation with regard to Company] (Tokyo, Nihon Hyo¯        ronsha, 1982) 35. 83   On the discussions, see S Watanabe, ‘Kyakkan teki heig¯o ni yoru kokusai saiban kankatsu’ [‘International Judicial Jurisdiction on the grounds of Objective Joinder’] in Ishikawa Akira Sensei koki shukuga, Gendai shakai ni okeru minji tetsuzuki h¯o no tenkai [j¯o] [In honour of Professor Akira Ishikawa’s 70 Anniversary, Development of Civil Procedure Law in Modern Society (1)] (Tokyo, Sh¯oji H¯omu, 2002) 367; Y Nakanishi, Case Note, (2002) 2 Shih¯o rema¯kusu [Remarks on Civil Law] 150. 84   Tokyo District Court, Judgment of 27 November 1998, 1037 Hanrei Taimuzu 235. 85  55 Minsh¯u 727. 86   D Yokomizo, Case Note, (2002) 119 H¯ogaku Ky¯okai Zasshi [Journal of the Jurisprudence Association of the University of Tokyo] 2095, 2105. As a lower tribunal judgment which followed this supreme court decision, see Tokyo District Court, Judgment, of 4 April 2006, 1940 Hanrei Jih¯o 130. 87   In Japan, the main place of business of victim companies is normally not to be regarded as the locus damni.

Japan  777 in a foreign country.88 Thus, the possibility where the other claims could be joined is very low. Under the Final Draft, subjective joinder would be allowed with respect to actions where ‘the rights or obligations, which are the purpose of the actions, are common among several persons, or are based on the same factual and legal causes.’89 However, it would be open to interpretation whether claims against B, C and D ‘are based on the same factual and legal causes’, since patents in countries X, Y and Z are legally independent from each other. Case 3(2) Under the circumstances described, even in cases involving the infringement of Japanese patent rights, the joinder of the claims on the grounds of joint torts against the foreign parent company in addition to the Japanese company that manufactured and sold the products in Japan is denied.90 Thus, it is inconceivable that a Japanese court would allow consolidation of the proceedings in cases where B, C and D are members of a group of a corporation and take identical steps in infringement of A’s patent.91 The decision would not change if B, C and D raised counterclaims that A’s patents are invalid. In academic opinions, some scholars claim the legislative introduction of the so-called ‘spider in the web’ doctrine92 that a court in Netherlands adopted, in order to respond to situations where IP rights in multiple countries are separately infringed by companies belonging to the same corporate group and selling the same product in different countries, under a uniform command from the corporate headquarters.93 In particular, one legislative proposal drafted by a Japanese academic research group (hereafter referred to as ‘the Transparency Proposal’) provides a provision which introduces this doctrine.94

88   Tokyo District Court, Interlocutory Judgment of 8 May 1987, 1232 Hanrei Jih¯o 40, 637 Hanrei Taimuzu 87; Tokyo District Court, Judgment of 28 July 1987, 1275 Hanrei Jih¯o 77; 669 Hanrei Taimuzu 219; Tokyo District Court, Judgment of 23 October 1990, 1398 Hanrei Jih¯o 87; Tokyo District Court, Judgment of 29 January 1991, 764 Hanrei Taimuzu 256; Tokyo District Court, Judgment of 25 April 1995, 898 Hanrei Taimuzu 245; Tokyo High Court, Judgment of 25 December 1996, 49 K¯o Minsh¯u 109; Tokyo District Court, Judgment of 5 February 1997, 936 Hanrei Taimuzu 242. 89   Arts 3–6. 90   Tokyo District Court, Judgment of 14 May 2001, 1754 Hanrei Jih¯o 148; Tokyo District Court, Judgment of 28 November 2007 (unpublished). 91   The Final Draft gives no solution to this issue since it is open to interpretation. 92   The Hague Court of Appeal, 23 April 1998, Expandable Grafts, Ethicon & Cordis Europe v Boston Scientific [1999] FSR 352. 93  E Katayama, ‘Yôroppa ni okeru Kurosub¯oda¯ Injankushon’ [‘Cross-border Injunction in Europe’] in N Nakayama (ed), Chiteki zaisan h¯o to gendai shakai – Makino Toshiaki hanji taikan kinen [Intellectual Property and Modern Society – In honour of the Retirement of Judge Toshiaki Makino] (Tokyo, Shinzansha, 1999) 265, 279. 94  See, S Chaen, T Kono and D Yokomizo, ‘International Jurisdiction in Intellectual Property Cases: The Transparency Proposal’ in Basedow, Kono and Metzger (eds), n 47 above. Article 110(3): In cases of multiple claims against different defendants, where the intellectual property rights that are the basis for each claim have been granted in different countries, where Japanese courts have international jurisdiction over one of the claims, and where each of the intellectual property rights is substantively related to the others, Japanese courts shall have international jurisdiction over the other claims as well; provided, however, that when Japanese courts shall have international jurisdiction in accordance with provisions regarding special jurisdiction, international jurisdiction of Japanese courts shall be limited to cases where the primary obligations should be or should have been performed in Japan, or the primary facts occurred or should occur in Japan, and that in regard to different defendants, international jurisdiction of Japanese courts shall be limited to persons who would ordinarily foresee that Japanese courts would have international jurisdiction over them.

778  Dai Yokomizo

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice-of-forum clause, arguing that the issue is related to foreign patents and thus the asserted choice-of-court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1) Would such a choice-of-court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that the patents are invalid? (3) Would the court assert jurisdiction if the choice-of-court agreement was made in patent infringement proceedings?

Case 4(1) There is no Supreme Court decision on whether and under what circumstances a choiceof-court clause designating a Japanese court would be effective. Although some scholars claim that the choice-of-court clause designating a Japanese court would not be effective unless there is a close connection between the agreement and Japan,95 most scholars claim that such a clause would be effective even in cases where there is no relationship between the agreement and Japan.96 Thus, the choice-of-court clause of the licence agreement in question would be enforceable. The position of the Final Draft is clear97 since it is explicitly provided that the condition of exceptional circumstances would not cover cases where Japanese courts have international jurisdiction based on a choice-of-court clause. This means that courts should recognise international jurisdiction even if there is scarce connection between the agreement in question and Japan. There is no court decision and academic opinion in Japan on the cases where a choiceof-court agreement is made by the parties at the time when the dispute arises. Under the Final Draft, the solution on this issue is not clear and is open to interpretation. The decision would probably be the same, as will be mentioned in Case 4(3). Case 4(2) There is no court decision and no academic opinion on cases where the defendant raises a counter-claim for the invalidity of patents when there is a choice-of-court clause designating a Japanese court. Under the Final Draft, the solution on this issue is not clear and is open to interpretation. However, it seems that the court would enforce an exclusive choice95   See K Ishiguro, Gendai kokusai shih¯o [j¯o] [Modern Conflict of Laws in Japan] (Tokyo, Tokyo University Press, 1986) 367–68, 372–76; Y Kaise, Kokusaika jidai no minji sosh¯o [Civil Litigation in the Era of Internationalisation] (Tokyo, Shinzansha, 1993) 350. 96   cf Kobe District Court, Judgment of 10 November 1997, 984 Hanrei Taimuzu 191. 97   Arts 3–9.

Japan  779 of-court clause regardless of the counter-claim with regard to the invalidity of patents, whereas Japanese courts would deny international jurisdiction on the counter-claim. Case 4(3) There is no court decision and no academic opinion on this issue. Under the Final Draft, the solution on this issue is not clear and is open to interpretation. However, considering that under the Final Draft a choice-of-court clause agreed upon between a consumer and a business operator or between an employee and an employer after a dispute has arisen would be effective,98 it is conceivable that Japanese courts would assert jurisdiction in cases where the choice-of-court agreement was made in patent infringement proceedings.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B who is located in country Z produces the identical product to that for which A has patents, and exports that infringing product to countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Case 5(1) The following opposing theories exist in Japan: the ‘exceptional circumstances’ theory, where the suit that is pending in a foreign country is considered to be an element of a specific decision based on ‘exceptional circumstances’;99 the theory based on anticipated recognition where the suit filed later in Japan is dismissed in cases where it is anticipated that the judgment in a prior foreign suit will be recognised in Japan in the future,100 and the theory that suggests treating international parallel litigation as an issue of the standing of the suit.101 Judicial precedents initially displayed the approach of giving no consideration whatsoever to suits pending in foreign countries,102 but later decisions do consider suits pending in foreign countries to some degree. Whilst there are some cases in which the theory based

  No 4(3)(c)(i) and no 4(4)(c)(i).   K Ishiguro, Kokusai minji funs¯o shori no shins¯o [Depth of International Civil Dispute Resolution] (Tokyo, Nihon Hy¯oronsha, 1992) 101. 100   M D¯ogauchi, ‘Kokusai teki sosh¯o ky¯og¯o (5)’ [‘International Parallel Litigation (5)’] (1983) 100 H¯ogaku Ky¯okai Zasshi [Journal of the Jurisprudence Association] 715, 722. 101   S Watanabe, ‘Kokusai teki nij¯u sosh¯o ron – Uttae no rieki ni yoru shori shiron’ [‘On International Parallel Litigation – Standing of the Suit Approach’] in Hanrei minji sosh¯o h¯o no riron (ge) [Theory of Civil Procedure Law Based on Case Law (2)] (1995) 475. 102   Tokyo District Court, Judgment of 23 December 1955, 6 Ka Minsh¯u 127; Tokyo High Court, Judgment if 18 July 1956, 8 Ka Minsh¯u 1282; Osaka District Court, Interlocutory Judgment of 9 October 1973, 728 Hanrei Jih¯o 76. 98 99

780  Dai Yokomizo on anticipated recognition was clearly adopted,103 when considering pending foreign suits, many courts have relied on the ‘exceptional circumstances’ theory.104 Thus, according to those cases, the Japanese court (country Z) considers the pending proceedings in countries X and Y in order to determine whether there are any ‘exceptional circumstances’ to deny Japan’s international jurisdiction. If it considers that X or Y is a more appropriate forum than Japan, the Japanese court would dismiss the case. The decision of the Japanese court would be the same if the dispute was related to unregistered IP rights. In addition to this solution, it was proposed under the Interim Draft to introduce a provision which provides for the suspension of Japanese court proceedings based on the doctrine of anticipated recognition, on the presupposition that the international parallel litigation should be dealt with as an issue of the standing of the suit.105 However, this pro­ vision was dropped in the later meeting of the International Jurisdiction Legislative Committee, since it was fiercely criticised in public comments made by courts and lawyers.106 Case 5(2) Even if B brought a suit before a court of W challenging the validity of patents in countries X and Y, the procedural steps that a Japanese court would take are basically the same as those in Case 5(1). However, the court would have less regard to the suit in country W, since this would not be regarded as the appropriate forum to determine the validity of patents in countries X and Y. 103   Tokyo Family Court, Judgment of 31 March 2005 (unpublished), but reversed, Tokyo High Court, Judgment of 14 September 2005 (unpublished). Cf Tokyo District Court, Interlocutory Judgment of 30 March 1989, 1348 Hanrei Jih¯o 91 (anticipated recognition was mentioned). 104   Tokyo District Court, Judgment, 15 February 1984, 1135 Hanrei Jih¯o 70; Tokyo District Court, Judgment of 23 June 1987, 639 Hanrei Taimuzu 253, 1240 Hanrei Jih¯o 27; Tokyo District Court, Interlocutory Judgment of 19 June 1989, 703 Hanrei Taimuzu 246; Tokyo District Court, Judgment of 29 January 1991, 1390 Hanrei Jih¯o 98; Shizuoka District Court, Hamamatsu Local Branch, Judgment of 15 July 1991, 1401 Hanrei Jih¯o 98; Tokyo District Court, Judgment of 27 November 1998, 1037 Hanrei Taimuzu 235; Tokyo District Court, Judgment of 30 January 2004, 1854 Hanrei Jih¯o 51; Tokyo District Court, Judgment of 20 March 2007, 1974 Hanrei Jih¯o 156. 105   International Parallel Litigation

[Version 1] [Version A] 1. In cases where a suit was filed in the same case as that which is pending in a foreign court, Japanese courts may, upon a party’s request or of their own motion, stay the procedure until the judgment over the case becomes final, provided that it is anticipated that the case which is pending in the foreign court finish by the judgment, and that judgment, which will become final, is likely to be effective under the provisions of Article 118 of the Civil Procedure Code. 2. An objection may be applied against the decision made under Paragraph 1. [Version B] 1. In cases where a suit was filed in the same case as that which is pending in a foreign court, Japanese courts may stay the procedure until the judgment over the case becomes final, provided that it is anticipated that the case which is pending in the foreign court finish by the judgment, and that judgment, which will become final, is likely to be effective under the provisions of Article 118 of the Civil Procedure Code. 2. An objection may not be applied against the decision made under Paragraph 1. [Version 2] No special provision with respect to international parallel litigation. 106   See the 14th meeting of the International Jurisdiction Legislative Committee, available at www.moj.go.jp/ SHINGI/091120-1.html (Japanese).

Japan  781

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, firstly, that the claim for the infringement of the patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Case 6(1) The answer to this question depends upon the interpretation of the principle of territoriality. In Japan, the principle of territoriality in the field of intellectual property is generally understood as follows: the existence, transfer, effect, etc of each country’s intellectual property rights are governed by that country’s law, and the effects of intellectual property rights are recognised only in the territory of that country.107 There is one lower court case where the issue at hand was whether a process patent in Japan was infringed if one of the processes was made in a foreign country.108 The Tokyo District Court dismissed the case, holding that the process patent was not exploited in Japan in light of the principle of territoriality. In addition, there are three cases where the courts denied indirect infringements based on the principle of territoriality when the activities which should be regarded as direct infringements were done in foreign countries.109 Thus, according to the tendency towards the strict interpretation of the principle of territoriality, Japanese courts would not apply the patent statute for allegedly infringing acts occurring in country Z. It should be noted that some scholars claim that patent rights in Japan should be regarded to be infringed when ‘substantial activity’ or a substantial part of exploitation activities are done in Japan.110

107   As regards patents, see, Supreme Court, Judgment of 1 July 1997 (BBS), 51 Minsh¯u 2299. English text can be found in (1998) 41 Japanese Annual of International Law 100. 108   Tokyo District Court, Judgment of 20 September 2001, 1094 Hanrei Taimuzu 245, 1764 Hanrei Jih¯o 112. 109  Osaka District Court, Judgment, 24 October 2000, 1081 Hanrei Taimuzu 241; Osaka District Court, Judgment of 21 December 2000, 1104 Hanrei Taimuzu 270; Osaka High Court, Judgment of 30 August 2001 (unpublished). 110  H Shiomi, ‘Buntan sareta jisshi k¯oi ni taisuru tokkyo kansetsu shingai kitei no tekiy¯o to mondai ten’ [‘Application of provision relating to indirect infringement of patents against shared exploitation activities’] (2006) 41 Tokkyo Kenky¯u [Patent Research] 10, 14; M Takeda et al, Bijinesu h¯oh¯o tokkyo [Business Process Patent] (Tokyo, Seirin Shoin, 2004) 515 (N Matsumoto); D Yokomizo, Case Note, (2006) 1322 Jurisuto [Jurist] 178.

782  Dai Yokomizo Case 6(2) One famous Supreme Court case (the Card Reader case) should be mentioned here.111 In that case, the plaintiff (a Japanese national residing in Japan) sought an injunction against the production and export of a product which the defendant (a Japanese company) produced within Japan, not based on the Japanese patent law, but on US patent law, claiming that his American patent right has been infringed. The Supreme Court characterised the claim for injunction as the effect of a patent right, and established a choice-of-law rule relating to the effects of patent rights: ‘the effects of patent rights should be governed by the law of the country where the patent right in question was registered’. In accordance with this rule, the Court chose American law as the applicable law and acknowledged the possibility that, under US patent law, the claims would be granted for the defendant’s active inducement of infringement. However, the Court excluded the application of US patent law on the grounds of public policy (ordre public),112 in holding that granting such extra-territorial effects to US patent rights would be contrary to the principle of territoriality, a fundamental philosophy of Japan’s patent law order.113 Thus, although the Court chose US patent law, it rejected its application using the principle of territoriality. As for damages, the Supreme Court characterised the issue as tort and chose US law as the law of the place where the infringement of the said patent right occurred. However, the Court rejected the application of US law by way of the so-called double actionability rule,114 holding that under Japanese law, which applies the principle of territoriality, acts actively inducing the infringement which are done beyond the territory of the country of registration would not be unlawful and not constitute tortious acts. Thus, according to case law, Japanese courts would not apply the patent statute of country X for allegedly infringing acts that occur in Japan.115

111   n 11 above. On this case, see, D Yokomizo, Case Note, (2003) 120 H¯ogaku Ky¯okai Zasshi 2299. See also, Nishitani, n 61 above, 87, 91–92; D Yokomizo, ‘Intellectual Property and Conflict of Laws: Between State Policies and Private Interests’ (2010) 35 AIPPI Journal 119, 122–23; T Kono, ‘Intellectual Property Rights, Conflict of Laws and International Jurisdiction: Applicability of ALI Principles in Japan?’ (2005) 30 Brooklyn Journal of International Law 865, 877–78. 112   Art 33 of H¯orei (Art 42 of Tsu-soku H¯o): ‘Where a foreign law is to apply but its application would be contrary to public policy (ordre public), it shall not apply.’ 113   ‘However, Japan has adopted the principle of territoriality in regard to patents as mentioned above. Hence to recognise injunctions and so on against conduct in Japan based on the relevant United States patent despite the patent of each country only having effect in the territory of that country would produce substantially the same result as extending the effect of the relevant U.S. patent to Japan, which is outside the territory of the United States, and violates the principle of territoriality adopted by Japan. Futher, since there is no treaty between Japan and the United States providing that the effect of patents of the other country are to be recognised mutually in each country, to order an injunction against conduct within Japan or the destruction of objects in Japan as a result of the application of United States patent law to the engaging, within Japan, in conduct actively encouraging infringement of the relevant United Sates patent is contrary to fundamental ideology of the patent law order of Japan.’ 114   Art 11(2) of H¯orei (Art 22(1) of Tsu-soku H¯o) provides: ‘If the rights and obligations relating to a tort shall be governed by a foreign law, claims for damages or any other remedies under that law may not be claimed if the actions causing the tort are not unlawful under Japanese law.’ 115   The characterisation the Supreme Court established for damages applies to the infringement of other rights. See Tokyo District Court, Judgment of 26 November 2009 (unpublished) (copyright); Tokyo District Court, Judgment of 4 July 2008 (unpublished) (copyright). As for injunction on the grounds of the copyright infringement, lower courts tend to apply the lex loci protectionis based on Art 5(2) of the Berne Convention. See n 60 above.

Japan  783

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B, and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website becomes very popular A, B, and C introduced an additional paid service which allows the speedy exchange of big capacity digital files. Although A, B, and C know that some files that are stored in the server of their website are illegal, they do not take any action to somehow prevent infringement of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C, requesting they be made to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places / countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Case 7(1) According to the Supreme Court decision in the Card Reader case and some lower court judgments on copyright infringements,116 the applicable laws would be determined separately as to the closure of the website and as to damages. First, as for the closure of the website, the legal issue would be characterised as the effect of patent rights in cases of patent infringements and as the means of redress117 in cases of copyright infringements. In the former case, the law of the country where the patent right in question was registered shall govern, whereas in the latter case, the law of the country for which protection is claimed (lex loci protectionis) shall govern. In both cases, the applicable law would be almost the same.118 Thus, the law applicable to the closure of the website would be the law of the country for which protection is claimed. Second, as for damages, the legal issue would be characterised as tort. Thus, the applicable law would be the law of the place where the results of the tort were felt.119 There has so far been only one case in Japan where the court decided on the applicable law relating to tort through the Internet.120 In this case, the plaintiff claimed damages on the grounds of copyright infringement, inter alia, by the defendant’s making a part of the plaintiff ’s works public through the Internet. The Tokyo District Court chose Japanese law as the law applicable to the tort (Art 17), since ‘the claims in the present case are claims for damages on the grounds of the defendant’s copying or making transmittable the images of the works for   See n 60 and 115 above.   cf Art 5(2) of the Berne Convention. 118   As for theoretical problems on these connecting factors, see Yokomizo, n 111 above, 2308. 119   Art 17 of Tsu-soku H¯o (n 35 above). 120   Tokyo District Court, Judgment of 26 November 2009 (unpublished). 116 117

784  Dai Yokomizo which the plaintiffs residing in Japan hold the copyrights’ (emphasis added). This decision is not so clear, but it can be interpreted to mean that the court adopted as the place where the results of a tort were felt the place where the victim has its principal establishment, perhaps by analogy with the rule on defamation.121 Some authors propose the other possibility, namely, the place of the market where the most substantial effect occurred (marketoriented approach).122 Thus, under the current situation, it is difficult to predict which country Japanese courts would consider as the place of the results of a tort in the case in question. Since according to case law the legal issue as regards damages is characterised as tort, parties would be allowed to agree on the applicable law, at least with regard to remedies.123 However, the Supreme Court decision in the Card Reader case was handed down before the Ts¯usoku H¯o was enacted. In addition, there was no discussion in the legislative process on the possibility of change of the applicable law by the parties’ agreement in cases of IP infringements. Thus, it is not clear if parties could agree on the applicable law in cases of IP infringement. It should be noted that some authors claim there is a distinction between the infringement and the remedies. According to them, the lex loci protectionis should apply to the infringement, whereas the law applicable to tort should govern the issue of remedies.124 Thus, parties would be allowed to agree on the applicable law only for remedies. Case 7(2) There is one case in Japan where the claims for injunction and damages were brought against an Internet service provider.125 This case concerned peer-to-peer music file-sharing that used the same technique as ‘Napster’.126 The host server was located in Canada, but the courts did not mention the choice-of-law process at all. In academic opinions, although some propose a cascading approach,127 this approach is strongly criticised since it would be incompatible with the rules of Ts¯usoku H¯o.128 Others claim more convincingly that it is expedient to subject both the primary and secondary liability of service providers to the law applicable to the IP infringement as a principle, since it does not make sense to distinguish between the direct and indirect infringement at 121   Art 19 of Tsu- soku H¯o provides: ‘Notwithstanding Art 17, the formation and effect of claims arising from defamation against an individual or an entity shall be governed by the law of the place of such defamed person’s habitual residence (the law of the place of its principal establishment, if the defamed person is a juristic person or other association or foundation).’ 122   See R Kojima, R Shimanami and M Nagata, ‘Applicable Law to Exploitation of Intellectual Property Rights in the Transparency Proposal’ in Basedow, Kono and Metzger (eds), n 47 above. 123   Art 21 of Tsu-soku H¯o provides: ‘The parties to a tort may, after the tort has occurred, change the law governing the formation and effect of claims arising therefrom. However, if the change of the governing law would prejudice the rights of a third party, the change may not be asserted against such third party.’ 124   See Yokomizo, n 81 above, 186-87. 125   Tokyo District Court, Ruling of 9 April 2002, 1780 Hanrei Jih¯o 71; Tokyo District Court, Ruling of 11 April 2002, 1780 Hanrei Jih¯o 25; Tokyo District Court, Intermediary Judgment of 29 January 2003, 1810 Hanrei Jih¯o 29; Tokyo District Court, Judgment of 17 December 2003, 1845 Hanrei Jih¯o 36; Tokyo High Court, 31 March 2004 (unpublished). 126   As for this case, see, Nishitani, n 73 above, 50. 127   S Kidana, ‘Service provider no h¯oteki chii to sekinin – Kokusaishih¯o-j¯o no mondai’ [‘Legal position and Liability of Service Providers – Issues of Private International Law’], (2001) 28 Chosakuken Kenky¯u [Research on Copyrights] 100, 104 (first, the server’s location, second, the provider’s principal place of business, and third, the place of downloading). 128   Nishitani, n 73 above, 52.

Japan  785 the level of conflict of laws, and, with regard to IP infringement, the issue of primary importance is not who the direct infringer was, but rather that victims are compensated for their damages.129 Thus, the choice of law would not differ in the case in question. That is to say, the result of the tort in question would be the place where the victim has its principal establishment or the place of the market where the most substantial effect occurred. If the latter was adopted, the place of the market where the most substantial effect occurred would not be different between Cases 7(1) and 7(2).130 As for the choice-of-law agreement, what was mentioned in Case 7(1) would also be the case here. Case 7(3) There is no case where the court has characterised an intellectual infringement as ‘ubiquitous infringement’. Thus, it is inconceivable that a Japanese court would decide on the ubiquitous infringement and apply the special rule for that type of infringement in the near future. It should be noted that some scholars have offered the legislative proposal where the introduction of a special rule relating to ‘ubiquitous infringement’ is proposed. According to the Transparency Proposal, ‘ubiquitous infringement’ is defined as ‘concurrent multiterritorial infringements evoked by a single act of operation’.131 IP infringements where the alleged infringing act is ‘ubiquitous’ shall be governed by the law of the place where the results of the exploitation of intellectual property are or are to be maximised.132

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country? (2)  Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in the case of initial authorship or initial title to trade mark?

 Ibid.   It is not still clear how the specific rules which delineate the liability of a service provider as an intermediary apply. If they are considered to be international mandatory rules, it is possible that they apply separately and independently from the applicable law. Cf Nishitani, n 73 above, 53. 131   Kojima, Shimanami and Nagata, n 122 above. 132   Transparency Proposal, Art 302, ‘Ubiquitous Infringement’: 129 130

(1) Intellectual property infringements where the alleged infringement act is ‘ubiquitous’ shall be governed by the law of the place where the results of the exploitation of intellectual property are or to be maximised. (2) If the result of the application of paragraph 1 is extremely unreasonable in relation with specific country, the liability or remedy based on the law determined by paragraph 1 shall not be applied in relation to the specific country.

786  Dai Yokomizo Case 8(1) As for the issue of who the initial owner of the invention is, lower courts have considered that this issue would be determined by the law of the country where the patent was registered, in light of the principle of territoriality.133 The Supreme Court accepted this characterisation in the Hitachi Seisakusho case, in obiter dicta.134 Some scholars have claimed that this issue should be determined by the law applicable to the employment relationship, since it falls within the relationship between an employer and an employee.135 However, most authors support the Court’s position, either from the viewpoint of the principle of territoriality or on the grounds of Article 35 of the Patent Law, which holds that inventions made for hire should be regarded as an international mandatory rule.136 Thus, Japanese courts would apply the law of the country where the patent was registered. Accordingly, the parties’ choice-of-law clause concerning initial ownership would not be enforceable in Japan, since it would violate the principle of territoriality. Case 8(2) There is no court decision on cases where an invention in joint collaboration is at stake. However, according to the above-mentioned position which is based on the principle of territoriality, the decision of Japanese courts would not differ in cases where an invention is made in joint collaboration. Case 8(3) The applicable law would not differ in cases of initial ownership or initial title to trade mark, although there is no case law with regard to this issue, since it is considered that registered IP rights should be dealt with in the same manner in the conflict-of-law field in Japan.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B made some arrangements for the distribution of the debut album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work was not transferred and was thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How would the court deal with the issue of transferability?   See, Tokyo District Court, Judgment of 29 November 2002, 1807 Hanrei Jih¯o 33.   Supreme Court, Judgment, 17 October 2006, 60 Minsh¯u 2853. English text is available at www.tomeika.jur. kyushu-u.ac.jp/chizai/pdf119-148/17%20October%202006.pdf. 135   Y Tamura, ‘Shokumu hatsumei ni kansuru teishoku h¯o j¯o no sho-mondai’ [‘Conflict of Laws and Invention Made for Hire’] (2005) 5 Chiteki Zaisan H¯o Seisaku Gaku Kenky¯u [Intellectual Property Law and Policy Journal] 1, 8–9. 136   For details, see D Yokomizo, ‘Shokumu hatsumei wo meguru kokusaiteki h¯o tekiy¯o kankei’ [Case Note, Conflict of Laws and Invention Made for Hire (Supreme Court, 17 October 2006)] (2007) 18 Chiteki Zaisan H¯o Seisaku Gaku Kenky¯u [Intellectual Property Law and Policy Journal] 201. 133 134

Japan  787 (3) What would be the applicable law in a case where there is no choice of law made by the parties?

Case 9(1) By analogy with the case of the transfer of corporeal property, courts have consistently confirmed a choice-of-law rule on the transfer of copyright: the transfer shall be governed by the law of the country for which the protection is claimed.137 Thus, the ownership and transfer of copyrights are governed by the lex loci protectionis in Japan, not the law applicable to the contract.138 Case 9(2) As has already been mentioned, the court would apply the law of the country for which the protection is claimed to the issue of transferability. Case 9(3) There would be no change in a case where there is no choice of law made by the parties. The issue of the transfer of rights would be always governed by the lex loci protectionis.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking it to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in a registry of a recognising country? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Case 10(1) Cases must be distinguished according to whether or not the issue concerns the initial owner of IP rights. If a foreign court had decided on the initial owner of a patent registered in Japan, then the foreign judgment cannot be recognised in Japan since the issue would be considered to be subject to the exclusive jurisdiction of Japanese courts.139 However, if a foreign court decided on the owner of a patent registered in Japan, for example in a dispute with regard to a licence contract, then the foreign judgment would be recognised in Japan, 137   For example, Tokyo High Court, Judgment of 30 May 2001, 1797 Hanrei Jih¯o 111; Tokyo High Court, 28 May 2003, 1831 Hanrei Jih¯o 135; Tokyo District Court, Judgment of 26 October 2007 (unpublished); IP High Court, Judgment of 27 March 2008 (unpublished); Tokyo District Court, Judgment of 30 April 2009 (unpublished). 138   D Yokomizo, ‘Cross-Border Exchange of Music Content and Trade Secrets: A View from Japanese Private International Law’ (2009) 28 Zeitschrift für Japanisches Recht 165, 171–72. 139   cf Tokyo District Court, Judgment of 26 September 2003 (unpublished).

788  Dai Yokomizo since this issue would not be covered by the scope of the exclusive jurisdiction of Japanese courts. Under the Interim Draft, these solutions would be the same, since the issue of ownership would not be covered by the provision relating to exclusive jurisdiction.140 Thus, except for the case relating to the initial ownership of registered IP rights, the international jurisdiction of the rendering court would be assessed by ordinary jurisdictional rules. Case 10(2) It follows from the answer to the first question that the parties would be required to relitigate the dispute in order to have the ownership decision registered in Japan only in cases where the foreign court decided on the initial ownership of a patent registered in Japan. Case 10(3) The enforcement judgment would always be necessary in order for foreign judgments to be enforced in Japan.141

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

  No 4(2) (n 57 above).   Art 24 of the Code of Civil Enforcement [Minji Shikk¯o H¯o] (Law, No 4 of 1979) provides:

140 141

(1) An action seeking an execution judgment for a judgment of a foreign court shall be under the jurisdiction of the district court having jurisdiction over the location of the general venue of the obligor, and when there is no such general venue, it shall be under the jurisdiction of the district court having jurisdiction over the location of the subject matter of the claim or the seisable property of the obligor. (2) . . . (3) . . . (4) An execution judgment shall declare that compulsory execution based on the judgment by a foreign court shall be permitted.

Japan  789 Case 11(1) It is not clear under the current situation whether a provisional measure ordering inaction or an injunction with regard to acts in a foreign country is possible. Authors have so far been centred on a provisional measure against an act in Japan,142 and few articles refer to this issue. However, generally speaking, under Japan’s procedural law, courts have handed down orders granting injunctions against acts in a foreign country and there seems to be no reason why such orders would not be available in the context of provisional measures.143 With respect to intellectual property however, a separate issue arises regarding the relationship with the principle of territoriality. In the above-mentioned Card Reader case,144 in which the demand for injunction and disposal of an act in Japan pursuant to the Patent Act in the United States was at issue, the claim for injunction and disposal was not allowed pursuant to the principle of territoriality. In accordance with this decision, which was based on the principle of territoriality, it would be impossible to demand an injunction against the other party’s acts outside Japan, at least when IP rights in Japan are the rights being preserved. On the other hand, however, when IP rights in a foreign country are the rights being preserved, it is interpreted that an injunction against the other party’s acts in such foreign country would be allowed in accordance with this decision.145 Thus, the situation would be different according to which country’s intellectual property right is allegedly infringed. The situation would not change if Japanese courts did not have jurisdiction over the main dispute. Case 11(2) As has been mentioned, even if the trade mark for which the protection is sought was registered abroad, Japanese courts could issue an injunction/protective measures.146 Case 11(3) The Japanese courts could require the person seeking issuance of provisional measures to provide security, if they find it appropriate.147

142   Eg Y Nakamura, ‘Fusakui wo meizuru karishobun meirei to kokusai saiban kankatsu’ [‘Provisional Measure to order the inaction and International Jurisdiction’], (1993) 798 Hanrei Taimuzu 43. 143   See Chaen, Kono and Yokomizo, n 94 above. 144   n 1 above. 145   cf Tokyo District Court, Judgment of 16 October 2003, n 55 above (Coral Sand Case), where the court determined the case for the confirmation of the non-existence of injunction claim in applying US patent law. Contra, M Takabe, ‘Tokkyo ken shingai sosh¯o to kokusai saiban kankatsu’ [‘Patent Infringement Litigation and International Jurisdiction’] in N Nakayama (ed), n 93 above, 125, 136 (based on the idea that the judicial power is spatially limited to the territory of its country). 146  Ibid. 147   Minji Hozen H¯o [Civil Preservation Act], Law, No 91 of 1989, Art 14(1): ‘Preservation orders can be made, with the requirement to provide security . . . or without the requirement to provide security.’

790  Dai Yokomizo Case 11(4) Under the above-mentioned jurisdictional framework established by the case law,148 the courts will refer to Article 12 of the Civil Preservation Act149 with respect to provisional measures in the context of Japan’s international jurisdiction and in the absence of exceptional circumstances, such as in cases where Japanese courts have jurisdiction over the case on the merits, or where rights that should be preserved or the subject of the dispute is located in Japan, Japanese courts will affirm international jurisdiction.150 The fact that the parties have submitted the dispute to arbitration proceedings would be considered as one element in order to determine whether there are exceptional circumstances. Thus, the question of whether a court in Japan would be pre-empted from issuing an injunction by arbitration proceedings would be decided on a case-by-case basis. Case 11(5) Japanese courts would conceive of an injunction to cease as a substantive measure, arising out of enforcement of the right to claim for the injunction which the right-holder would have as the effect of IP rights.151

3 Conclusion As has been mentioned above, court decisions and academic discussions on conflict-of-law issues in matters of IP rights have been evolving rapidly in Japan. Finally, it would be appropriate to refer to one interesting issue which is being currently discussed in Japan: the relation between works from a non-recognised state and obligations under the Berne Convention. In a recent case, the plaintiffs, a public authority of North Korea and a Japanese company licensed by the former, claimed an injunction and damages against Japanese companies on the grounds of copyright infringement, in claiming that the defendants had made unauthorised broadcasts in Japan of parts of audiovisual works for which the plaintiff has copyright. North Korea has been a Member State of the Berne Convention since 28 April 2003. Japan does not however recognise North Korea as a state. Thus, the problem is whether Japan has an obligation to protect the works of North Korea under the Berne Convention. Both Tokyo District Court and IP High Court denied such an obligation, holding that ‘it should be interpreted that, in principle, a non-recognised state has no rights or obligations   See n 27 above and accompanying text.   ‘Provisional measures cases are under the jurisdiction of the court that has jurisdiction on the merits or the district court that has jurisdiction over the place of the location of the object that is to be provisionally seised or the subject of the dispute.’ 150   Asahikawa District Court, Ruling of 9 February 1996, 1610 Hanrei Jih¯o 106, 927 Hanrei Taimuzu 254; Tokyo District Court, Ruling of 28 August 2007, 1991 Hanrei Jih¯o 89, 1272 Hanrei Taimuzu 282. M D¯ogauchi, ‘Hozen sosh¯o no kokusai saiban kankatsu’ [‘International Jurisdiction with regard to Litigation on Provisional Measures’] in A Takakuwa and M D¯ogauchi (eds), Shin saiban jitsmu taikei 3 kokusai minji sosh¯o h¯o (Zaisanh¯o kankei) [New System on Judicial Practice 3 International Civil Procedure Law (Patrimonial Cases)] (Tokyo, Seirin Shoin, 2002) 399; H Kobayashi, ‘Kokusai minji hozen h¯o josetsu – Kokusai minji hozen h¯o no riron teki k¯ochiku ni mukete’ [‘Introduction for International Civil Preservation Law – For the Establishment of International Civil Preservation Law’] (1994) 38 J¯ochi H¯ogaku Ronsh¯u [Sophia Law Review] 33. 151   See Supreme Court, Judgment of 26 September 2002, n 1 above (Card Reader). 148 149

Japan  791 based on a multilateral treaty in relation to states which do not recognise it as a state, even when the non-recognised state entered the said treaty, since the right-and-obligation relationship between states as subjects in international law are not acknowledged.’152 However, such a holding, based on the general theory in international law with regard to state recognition, is strongly criticised by academic opinion, which claim that the conclusion cannot be easily deduced from such a general theory, considering the current situation where exercises of states are divided concerning open multilateral treaties.153 The Supreme Court also denied, in the judgment of 8 December 2011, Japan’s obligation to protect works of North Korea under the Berne Convention, in holding that each State can determine whether it has rights or obligations based on a multilateral treaty in relation to a nonrecognised state which entered the said treaty, and principally following the statements of administrative bodies such as the Ministry of Foreign Affairs and the Ministry of Education, Culture, Sports, Science and Technology.154

  Tokyo District Court, Judgment of 14 December 2007 (unpublished).   As for academic opinions, see D Yokomizo, Case note (2009) 198 Bessatsu Jurisuto [Jurist, Special Issue] 228; D Yokomizo, ‘Mi-sh¯onin kokka no chosakubutsu to Berunu j¯oyaku j¯o no hogo gimu – Kita-Ch¯osen chosakubutsu jiken’ [‘Works of a Non-Recognised State and Obligations under Berne Convention (Works of North Korea Case, Tokyo District Court, 14 December 2007)’] (2008) 21 Chiteki Zaisan H¯o Seisaku Gaku Kenky¯u [Intellectual Property Law and Policy Journal] 263; S Hamamoto, Case Note (2011) 204 Bessatsu Jurisuto [Jurist, Special Issue] 34; E Usuki, Case Note (2011) 1376 Jurisuto [Jurist] 321. 154   Supreme Court, judgment of 8 December 2011, available at www.courts.go.jp/hanrei/pdf/20111208164938. pdf (in Japanese). As for this judgment, see, K Naoki, Case Note (2012) 1437 Jurisuto [Jurist] 6. 152 153

Korea GYOOHO LEE*

Contents Section I  General Overview.................................................................................................................. 794 1. Legal Sources................................................................................................................................... 794 1.1. Intellectual Property............................................................................................................. 794 1.1.1. International Conventions..................................................................................... 794 1.1.2. National Legislation............................................................................................... 797 1.2. International Jurisdiction.................................................................................................... 810 1.2.1. International Conventions..................................................................................... 810 1.2.2. National Legislation............................................................................................... 811 1.3. Choice of Law....................................................................................................................... 811 1.3.1. International Conventions..................................................................................... 811 1.3.2. National Legislation............................................................................................... 812 1.4. Recognition and Enforcement of Foreign Judgments........................................................ 812 1.4.1. International Conventions..................................................................................... 812 1.4.2. National Legislation............................................................................................... 812 2. Intellectual Property and Private International Law.................................................................... 815 2.1. International Jurisdiction.................................................................................................... 815 2.2. Applicable Law...................................................................................................................... 817 2.3. Recognition and Enforcement of Foreign Judgments........................................................ 820 2.4. Korean Principles on International Intellectual Property Litigation................................. 821 2.4.1. General provisions.................................................................................................. 821 2.4.2. International Jurisdiction....................................................................................... 823 2.4.3. Choice of Laws........................................................................................................ 827 2.4.4. Recognition and Enforcement of a Foreign Adjudiction..................................... 828 2.4.5. Arbitration.............................................................................................................. 829 Section II  Hypothetical Case Studies................................................................................................... 830 Case 1. General/Special Grounds of Jurisdiction..................................................................... 830 Case 2. Subject-Matter Jurisdiction.......................................................................................... 833 Case 3. Consolidation of Proceedings....................................................................................... 834 Case 4. Choice of Court Agreements........................................................................................ 836 Case 5. Parallel Proceedings....................................................................................................... 838 Case 6. Principle of Territoriality (Choice of Law).................................................................. 839 Case 7. Infringement of Intellectual Property Rights............................................................... 840 Case 8. Applicable Law to Initial Ownership............................................................................ 842 *  Professor, School of Law, Chung-Ang University (Seoul, Republic of Korea).

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794  Gyooho Lee Case 9. Case 10. Case 11. Case 12.

Applicable Law to the Transfer of Rights Agreements................................................. 844 Recognition and Enforcement of Foreign Judgments................................................. 845 Provisional Measures and Injunctions......................................................................... 846 Securities in Intellectual Property................................................................................ 848

Section I  General Overview 1  Legal Sources 1.1  Intellectual Property 1.1.1  International Conventions International protection of intellectual property rights can be classified into multilateral, regional, and bilateral protection. The multilateral protection of intellectual property rights covers WIPO-administered treaties, UNESCO-developed treaties such as the Universal Copyright Convention (‘UCC’), and WTO-administered agreements such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPs’). One example of regional protection of intellectual property rights is NAFTA, whereas bilateral protection of intellectual property rights includes free trade agreements between two countries. The WIPO-administered treaties are as follows: (i) the Convention Establishing the World Intellectual Property Organization; (ii) conventions or treaties defining internationally agreed basic standards of intellectual property protection in each country (‘IP Protection’); (iii) conventions, treaties, agreements, or protocols simplifying and reducing the cost of making individual applications or filings in all nations where protection is sought for a given intellectual property right, by guaranteeing that one international registration or filing will be effective in any of the relevant signatory states (‘Global Protection System’); and (iv) agreements creating classification systems that organise information concerning inventions, trade marks, and industrial designs into indexed, manageable structures for easy retrieval (‘Classification’).1 Korea ratified the WIPO Convention, ie, the Convention Establishing the World Intellectual Property Organization (1967), which has 184 contracting countries as of 1 June 2010. It became effective on 1 March 1979 in Korea. In terms of IP protections administered by WIPO, Korea became a signatory to the following IP agreements with effect from the dates in parentheses: (i) the Berne Convention for the Protection of Literary and Artistic Works (1886) (effective in Korea on 21 August 1996); (ii) the Paris Convention (effective in Korea on 4 May 1980); (iii) the Convention for the Protection of Producers of Phonograms Against Unauthorised Duplication of their Phonograms (1971) (effective in Korea on 10 October 1987); (iv) the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (1961) (effective in Korea on 18 March 2009); (v) the Trade Mark Law Treaty (effective in Korea on 25 February 2003); (vi) the WIPO Copyright Treaty (1996) (effective in Korea  www.wipo.int/treaties/en/.

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Korea  795 on 24 June 2004); and (vii) the WIPO Performances and Phonograms Treaty (effective in Korea on 18 March 2009). The Global Protection System administered by the WIPO includes the following: (i) the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1977), which came into effect on 28 March 1988 in Korea; (ii) the Hague Agreement Concerning the International Registration of Industrial Designs (1925); (iii) the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration (1958); (iv) the Madrid Agreement Concerning the International Registration of Marks (1891); (v) the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989) (‘Madrid Protocol’), whose effective date in Korea was 10 April 2003; and (vi) the Patent Cooperation Treaty (1970) (‘PCT’), whose effective date in Korea was 10 August 1984. The Classification administered by the WIPO consists of the following: (i) the Locarno Agreement Establishing an International Classification for Industrial Designs (1968); (ii) the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (1957), whose effective date in Korea was 8 January 1999; (iii) the Strasbourg Agreement Concerning the International Patent Classification (1971), whose effective date in Korea was 8 October 1999; and (iv) the Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks (1973). The UCC, developed by the United Nations Educational, Scientific and Cultural Organisation (‘UNESCO’), was adopted at Geneva in 1952. Korea acceded to the UCC on 1 July 1987. As of 1 June 2010, the total number of its signatories was 65. In the past, the United States only provided copyright protection for a fixed, renewable term, and required that it must contain a copyright notice and be registered at the Copyright Office in order for a work to be copyrighted. The UCC allows those states which had a system of protection similar to that of the USA for fixed terms, at the time of signature, to retain them. On the other hand, the Berne Convention provides for copyright protection for a single term based on the life of the author, and does not require registration or inclusion of a copyright notice for copyright to exist. The Second Protocol of the UCC (Paris Text, 14 July 1971) provides that protection under copyright law in the USA is expressly required for works published by the United Nations, UN specialised agencies, the Organisation of American States, and other Contracting States. The UCC includes a clause prescribing that parties which were also signatories to the Berne Convention need not apply the provisions of the UCC to any former Berne Convention State which renounced the Berne Convention after 1951. Hence, any country which adopts the Berne Convention is penalised should it subsequently decide to waive it and adopt the UCC instead, because its copyrights might then no longer exist in the Berne Convention States. The UCC has lost its importance since almost all of the states on the globe, as members of the World Trade Organization, conform to the TRIPs. The TRIPs is an international agreement administered by the WTO that establishes the basic standards for many forms of intellectual property regulations. It contains requirements that domestic laws must satisfy for (i) copyrights, (ii) related rights of performers, producers of sound recordings and broadcasting organisations, (iii) geographical indications, including appellations of origin, (iv) industrial designs, (v) integrated circuit layout-designs, (vi) patents, (vii) monopolies for the developers of new plant varieties, (viii) trade marks, (ix) trade dress, and (x) undisclosed or confidential information. Also, it specifies enforcement procedures, remedies, and dispute resolution procedures. In

796  Gyooho Lee addition, it introduces IP law into the international trading system for the first time and remains the most comprehensive international agreement on IP to date. Additionally, an international convention about plant varieties needs to be mentioned. According to the principles established in the International Convention for the Protection of New Varieties of Plants (‘UPOV Convention’), the parties to the Convention should undertake to grant plant breeders’ rights. The UPOV Convention was adopted on 2 December 1961 at a Diplomatic Conference held in Paris and came into force on 10 August 1968, having been ratified by the United Kingdom, the Netherlands and Germany.2 The UPOV Convention was amended on 10 November 1972, 23 October 1978, and 19 March 1991. Korea became a signatory to the 1991 enactment of the UPOV Convention on 7 January 2002.3 Korea has concluded negotiations on several bilateral agreements including provisions related to intellectual property rights.4 Some of them came into effect as of 15 March 2012. Those agreements are the Free Trade Agreement between the Republic of Korea and the Republic of Chile (‘FTA between Korea and Chile’),5 the Free Trade Agreement between the Republic of Korea and the Republic of Singapore (‘FTA between Korea and Singapore’),6 the Free Trade Agreement between the Republic of Korea and the EFTA states (‘FTA between Korea and EFTA’),7 the Framework Agreement on Comprehensive Economic Cooperation Among the Republic of Korea and the Member Countries of the Association of Southeast Asian Nations (‘FTA between Korea and ASEAN’),8 the Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Republic of Korea and the Member Countries of the Association of Southeast Asian Nations,9 the Agreement on Dispute Settlement Mechanism under the Framework Agreement on Comprehensive Economic Cooperation among the Governments of the Republic of Korea and the Member Countries of the Association of Southeast Asian Nations,10 and the Comprehensive Economic Partnership Agreement between the Republic of Korea and the Republic of India (‘FTA between Korea and India’).11 Also, the Free Trade Agreement between the Republic of Korea and the United States of America (‘KORUS FTA’)12 has been ratified by the Korean and US legislatures after it was signed on 30 June 2007. It has been effective since 15 March 2012. In addition, the Free Trade Agreement between the European Community and its Member States and the Republic of Korea was initialled on 15 October 2009 and signed on 6 October 2010, and came into effect on 1 July 2011. Furthermore, the Free Trade Agreement between Korea and  www.upov.int/en/about/upov_convention.htm.  www.upov.int/en/about/members/. 4  www.fta.go.kr/new/index.asp. 5   FTA between Korea and Chile c 16. It was signed on 15 February 2003 and came into effect on 1 April 2004. 6   FTA between Korea and Singapore c 17. It was signed on 4 August 2005 and came into effect on 2 March 2006. 7   EFTA states refer to the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway, and the Swiss Confederation. See also c 7 of FTA between Korea and EFTA that deals with intellectual property rights, signed on 15 December 2005 and coming into effect on 1 September 2006. 8   Member Countries of the Association of Southeast Asian Nations (‘ASEAN’) refer to Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand, and the Socialist Republic of Vietnam. See Art 3.1(j) of the FTA between Korea and ASEAN. It was signed on 13 December 2005 and ratified on 2 April 2007. 9   Signed on 24 August 2006, ratified on 2 April 2007, and came into effect on 1 June 2007. 10   Ratified on 2 April 2007. 11   FTA between Korea and India c 12. 12   KORUS FTA c 18. 2 3

Korea  797 Peru (‘Korea-Peru FTA’) negotiations were concluded on 30 August 2010 and became effective on 1 August 2011.13 1.1.2  National Legislation The history of Korean law protecting intellectual property rights dates back to 1908. The Korean Empire that succeeded the Chosun Dynasty promulgated a Patent Decree, a Design Decree, a Trade Mark Decree, and a Copyright Decree for the first time in 1908.14 In 1910, when Japan colonised Korea, the Royal Decrees were replaced by Japanese IP laws with minimal modifications.15 Those laws remained effective until 1945, when Korea was liberated from Japan.16 Currently, the major intellectual property laws in Korea include the Patent Act,17 the Utility Model Act,18 the Trade Mark Act,19 the Design Protection Act,20 the Copyright Act,21 the Seed Industry Act,22 the Quality Control of Fishery Products Act,23 the Agricultural Products Quality Control Act,24 the Act on the Layout-Designs of Semiconductor Integrated Circuits,25 the Unfair Competition Prevention and Trade Secret Protection Act,26 the Content Industry Promotion Act,27 and the Act on Prevention of Divulgence and Protection of Industrial Technology.28 The Patent Act is to encourage, protect and utilise inventions, thereby promoting the development of technology and contributing to the development of industry.29 In this regard, the term ‘invention’ is referred to as ‘the highly advanced creation of technical ideas utilising rules of nature’.30 Patents protect inventions, usually defined as any technical solution of a problem in any field of human activity which is new, involves an inventive step, and is industrially applicable. Inventions liable to contravene public order or morality, or to injure public health, shall not be patentable.31 The duration of a patent protection is 20 years from the date of the filing of the patent application.32 Utility models are also referred to as a ‘petty’ patent for they pertain to solutions to technically less complex problems or for inventions with short commercial life. A utility model is protected under the Utility Model Act if a device, related to a shape or a structure of an article or a combination of articles, meets the requirements of industrial applicability,  www.fta.go.kr/new/ftakorea/borderpsd_read.asp.   Ji-Hyun Park, South Korea, in P Goldstein et al (eds), Intellectual Property in Asia: Law, Economics, History and Politics (Berlin, Springer, 2008). 15   ibid. 16   ibid. 17   Act No 11117, amended on 2 December, effective on 15 March 2012. 18   Act No 11114, amended on 2 December 2011, effective on 15 March 2012. 19   Act No 11113, amended on 2 December 2011, effective on 15 March 2012. 20   Act No 11111, amended on 2 December 2011, effective on 15 March, 2012. 21   Act No 11110, amended on 2 December 2011, effective on 15 March 2012. 22   Act No 11076, amended on 14 November 2011, effective on 15 May 2012. 23   Act No 10932, amended on 25 July 2011, effective on 26 January 2012. 24   Act No 10932, amended on 25 July 2011, effective on 26 January 2012. 25   Act No 9183, amended on 26 December 2008, effective on 27 March 2009. 26   Act No 11112, amended on 2 December 2011, effective on 15 March 2012. 27   Act No 11318, amended on 17 February, effective on 18 August 2012. 28   Act No 10962, amended on 25 July 2011, effective on 26 January 2012. 29   Art 1 of the Patent Act. 30   ibid, Art 2 subpara 1. 31   ibid, Art 32. 32   ibid, Arts 88(1) and (2). 13 14

798  Gyooho Lee novelty, and low level of inventive step.33 The term of a utility model right shall commence on the registration date and expire on the tenth anniversary of the filing date of the application.34 The Design Protection Act governs a design which refers to ‘the shape, pattern, or colour, or a combination of these in an article including part of an article and font . . . which produces an aesthetic impression in the sense of sight’.35 In other words, industrial design relates to the new ornamental appearance of an article of manufacture. The duration of a design right under the Design Protection Act is 15 years from the date of registration.36 The expiration date of the term of a design right relating to a design similar to a basic design is identical to that of a design right relating to the basic design.37 Prior to its revision on 2 December 2011, the Trade Mark Act covered trade marks, service marks,38 collective marks,39 geographical indications, certification marks, and business emblems.40 In this regard, a trade mark was defined as ‘a sign, letter, figure, threedimensional shape, colour, hologram, movement or the combination thereof or any other items that can be visually recognised’, which is used by a person who produces, processes, certifies, or sells goods as his/her business in order to distinguish the goods related to his/ her business from those of other persons.41 In short, a trade mark is any visible sign capable of distinguishing the goods (trade mark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods. In relation thereto, a trade name means the name or designation identifying or distinguishing an enterprise. Also included under the rubric of the Korean Trade Mark Act are geographical indications that identify goods as originating in a certain country or area and attributing the characteristics of the goods to their geographical origin. In this regard, the current Trade Mark Act recognises a geographical collective mark. Also, a geographical certificate mark is recognised. The duration of a trade mark right is 10 years from the date of its registration and may be renewed in 10-year increments.42 A trade mark right comes into effect upon its registration.43 Any person who has infringed a trade mark right or an exclusive licence is subject to punishment by imprisonment for no more than seven years or a fine not exceeding 100 million Korean won.44 It should be noted that the Korean Trade Mark Act affords protection to sound marks, olfactory marks and certificate marks, because the Korean Trade Mark Act, effective on 15 March 2012, recognises them.45 33   Art 4 of the Utility Model Act; Young Sik Song, Sang-Jeong Lee, and Byung Il Kim, Intellectual Property Law (Seoul, Sechang Pub, 2008) 128–29. 34   Art 22(1) of the Utility Model Act. 35   Art 2 subpara 1 of the Design Protection Act. 36   ibid, Art 40(1). 37   ibid, Art 40(1). 38   The term ‘service mark’ is defined as ‘a mark which is used by a person who carries on a service business for the purpose of distinguishing his/her service business from those of others’. See Art 2(2) of Trade Mark Act. 39   The term ‘collective mark’ connotes ‘a mark which is intended to be used directly by a corporation jointly founded by the persons who produce, manufacture, process, certify, or sell goods as their business or the persons who carry on service business or which is intended to be used with respect to the goods or services of members of the corporation who are controlled by it’. See ibid, Art 2(1)(3). 40   The term ‘business emblem’ means ‘a mark which is used by a person who carries on a nonprofit business for the purpose of indicating his/her business’. See ibid, Art 2(1)(4). 41   ibid, Art 2(1)(1). 42   ibid, Art 42(1) and (2). 43   ibid, Art 41(1). 44   ibid, Art 93. 45  See Gyooho Lee, ‘A Study on the Protection of Collective Marks and Certification Marks Indicating Geography’ (2009) 2–3 Kyungwon Law Review 119, 141.

Korea  799 Closely related to trade mark rights are rights that protect against unfair competition or such acts that effectively falsely present to the public the goods of one man as the goods of another. The Unfair Competition Prevention and Trade Secret Protection Act (‘Unfair Competition Act’) is designed to prevent unfair competitive acts,46 such as unjust use of   ‘Unfair competitive act’ is defined as ‘any fact falling under any of the following acts:

46

(a) Creating confusion between one’s own goods and any other person’s goods, by using any one identical with or similar to a name, trade name, trade mark, container or package of goods of the other person, or a mark indicating the other person’s goods, known to the public in Korea, or by selling, distributing, importing or exporting goods using any of the above enumerated manners; (b) Creating confusion with any other person’s business facilities or activities by using any one identical with or similar to the other person’s name, trade name, or emblem, or other mark indicating the other person’s business which is known to the public in Korea; (c) Other than creating confusion under items (a) and (b), damaging the identity of mark or the fame of any other person, by using any one identical with or similar to a name, trade name, trade mark, or container and package of goods of the other person, or other mark indicating the other person’s goods or business, known to the public in Korea, without any justifiable grounds prescribed by Presidential Decree, such as non-commercial uses, or by selling, distributing, importing or exporting goods using any of the above enumerated manners; (d) Misleading the public to understand the place of origin of any goods either by falsely marking that place on any commercial document or communication, in said goods or any advertisement thereof or in any manner of misleading the general public, or by selling, distributing, importing or exporting goods bearing such false mark; (e) Making a mark misleading people to understand as if any goods were produced or processed in an area other than that where said goods are produced, manufactured or processed, on any commercial document or communication, in said goods or any advertisement thereof, or in any manner of misleading the general public, or selling, distributing, importing or exporting goods bearing such mark; (f) Assuming any other person’s goods, or publicising any goods or making a mark in any manner of leading the public to misunderstand their quality, contents, manufacturing process, use, or quantity, in latter goods or advertisement thereof, or selling, distributing, importing or exporting goods using such method or mark; (g) Using the relevant trade mark, without any justifiable grounds, on the goods identical with or similar to the designated goods of the trade mark, or selling, distributing, exporting, or importing the goods that use the trade mark by an agent or a representative of a holder of the right to a trade mark registered in any of the following countries or to a similar trade mark, or by a person who was an agent or a representative one year before such act was conducted: (i) Any party to the Paris Convention for the Protection of Industrial Property; (ii) Any Member State of the World Trade Organisation; and (iii) Any signatory of the Trade Mark Law Treaty; (h) Registering, holding, transferring or using the domain name identical with or similar to the name, firm name, trade mark, or other mark of any other person, which is widely known in Korea by any person who holds no justifiable title to do so for any of the following purposes: (i) The purpose of selling or renting marks, including trade marks, to any person who holds a justifiable title thereto or any third party; (ii) The purpose of impeding the registration and use of the domain name by any person who holds the justifiable title therefore; and (iii) Other purpose of making commercial profits; (i) Transferring, renting, exhibiting, importing or exporting goods manufactured by counterfeiting the form (referring to the shape, appearance, colour and gloss or the combined one of them, including the form of test products and the form in goods brochure; hereinafter the same shall apply) of goods manufactured by other person: Provided, That any of the following acts shall be excluded: (i) Transferring, renting, exhibiting, importing or exporting goods manufactured by counterfeiting the form of goods for which three years elapse from the date on which the form of the goods, including test products, takes shape; and (ii) Transferring, renting, exhibiting, importing or exporting goods manufactured by counterfeiting the common form of goods identical to goods manufactured by any other person (in cases where the goods of the same kind are nonexistent, referring to the goods identical or similar to other goods in terms of function and efficiency)’; See Art 2 subpara 1 of the Unfair Competition Act.

800  Gyooho Lee another person’s trade mark, trade name, etc, known to the public in Korea, and any act infringing on another person’s trade secret.47 The Unfair Competition Act extends its application to domain names.48 A domain name is the object of unfair competitive acts. The term ‘act of infringing on trade secret’ is defined as any of the following acts: (i) obtaining any trade secret by larceny, fraud, menace, or other unfair means (referred to as ‘unfair obtaining act’), or using a trade secret so obtained or disclosing it to the public, inclusive of informing any specific person thereof while keeping it undisclosed; (ii) obtaining any trade secret with knowledge that an unfair obtaining act was involved, or without knowledge but by gross negligence, or using a trade secret so obtained or disclosing it to the public; (iii) using any trade secret or disclosing it to the public with knowledge that any unfair obtaining act was involved after obtaining it, or without knowledge but by gross negligence; (iv) an act that a person obliged to keep any trade secret undisclosed owing to any contractual duty or otherwise, uses or discloses it to the public with the intention to obtain any unfair profit or to inflict any damage on the person holding it; and (v) obtaining any trade secret with knowledge that it is disclosed to the public in such manner as provided for in (iv) above mentioned or with knowledge that such disclosing act was involved after obtaining it, or without knowledge but by gross negligence.49 If any business profit is or might be infringed on by any act infringing on the trade secret, the person who holds said secret may file a claim before the court for prohibition or prevention of said act against the person who infringed or intends to infringe the trade secret.50 The person holding the trade secret may, in filing a claim for prohibition or prevention of the act infringing on the trade secret, additionally claim destruction of goods used for the infringing act, removal of facilities used for the infringing act, or any measures required for its prohibition or prevention.51 Also, any person who has inflicted any damage on a person holding a trade secret, by infringing on any business profit through an act intentionally or negligently infringing on said trade secret, is liable to compensate for such damage.52 A court may, at the request of a person holding a trade secret, order a person who has intentionally or negligently impaired the business credit of a person holding a trade secret by any act infringing on said secret, to take measures necessary to restore such business credit, in addition to or in lieu of the compensation for damages.53 The right to file a claim for prohibition or prevention of an act infringing on any trade secret pursuant to the Unfair Competition Act is extinguished by prescription unless it is exercised within three years of the person holding said secret learning of the infringing act and the person who has committed such act. The right to file a claim for the prohibition or prevention mentioned above will lapse 10 years after such infringing act occurred.54 Any person who has made an illegal profit or used trade secrets of any enterprise abroad for the purpose of causing damage to such enterprise, or acquired or used trade secrets, or 47   The term ‘trade secret’ means any technical or operational information useful for any production and sale methods and other business activities, which is not known to the public, has an independent economic value, and has been maintained in secret by considerable effort. See ibid, Arts 1 and 2 subpara 2. 48   The term ‘domain name’ is defined as ‘figures, letters, signs or the combinations of them that are equivalent to digitalised addresses on the Internet’. See ibid, Art 2 subpara 4 and Art 4(2)(3). 49   ibid, Art 2 subpara 3. 50   ibid, Art 10(1). 51   ibid, Art 10(2). 52   ibid, Art 11. 53   ibid, Art 12. 54   ibid, Art 14.

Korea  801 leaked such trade secrets to any third party knowing that they are used or will be used overseas, is punishable by imprisonment with prison labour for no more than 10 years or a fine equivalent to an amount ranging from no less than two times to no more than 10 times the amount of the profit in property.55 Any person who has acquired and used useful trade secrets of any enterprise for the purpose of making an illegal profit or causing damage to the enterprise, or leaked the trade secrets to any third party, is punishable by imprisonment with prison labour for no more than five years or a fine equivalent to the amount ranging from no less than two times to no more than 10 times the amount of the profit in property.56 In addition, any person who has attempted a crime mentioned above is also punishable.57 The Seed Industry Act intends to develop the seed industry and to contribute to the stabilisation of the production of agriculture, forestry, and fishery by providing protection of the breeder’s rights, performance management of variety of major crops, seed production, certification, marketing, etc, concerning a new plant variety.58 The Act defines the term ‘variety’ as ‘a plant grouping within a single botanical taxon of the lowest known rank, regardless of whether or not it satisfies the conditions of variety protection . . . which grouping can be distinguished from any other plant grouping by virtue of at least one of the genetic characteristics, and considered as a unit with regard to its suitability for continued propagation’.59 A variety protection right is referred to as ‘a right granted to a person who is entitled to have variety protection’ pursuant to the Seed Industry Act.60 A variety is protected when the following requirements are met: (i) novelty,61 (ii) distinctiveness,62 (iii) uniformity,63 (iv) stability64 and (v) the subject of a denomination established pursuant to the provisions of Article 108(1) of the Seed Industry Act.65 The requirements for a variety protection are different from those for a patent protection which calls for industrial applicability, novelty, and inventive step. The Content Industry Promotion Act, replacing the Online Digital Contents Industry Development Act,66 aims to lay the groundwork for the content industry and to enhance its competitiveness, thereby improving national livelihood and contributing to the sound development of the national economy. To this end, the Content Industry Promotion Act provides for matters necessary for the development of the content industry.67 The Act defines ‘content’ as ‘data or information expressed in codes, characters, colour, voices, sounds, images or pictures, and a combination thereof etc’.68 This Act encourages the implementation of a policy to   ibid, Art 18(1).   ibid, Art 18(2). 57   ibid, Art 18bis. 58   Art 1 of the Seed Industry Act. 59   ibid, Art 2 subpara 4. 60   ibid, Art 2 subpara 6. 61   ibid, Art 13. 62   ibid, Art 14. 63   ibid, Art 15. 64   ibid, Art 16. 65   ibid, Art 108(1) prescribing that ‘A variety falling under any of the following subparagraphs shall have its unique variety denomination: 55 56

1. A variety for which an application for variety protection is to be filed under Art 26 (1); 2. A variety for which an application for the entry in a catalogue of varieties is to be submitted under Art 115(1); 3. A variety for which a declaration to produce or import to sell its seed is to be submitted under Art 138(3)’. 66   Act No 10220, amended on 31 March 2010, effective on 1 January 2011. 67   Art 1 of the Content Industry Promotion Act. 68   ibid, Art 2 para 1 subpara 1.

802  Gyooho Lee protect intellectual property rights regarding contents both domestically and internationally.69 Article 29 of the Content Industry Promotion Act prescribes that a committee is established to conciliate disputes related to transaction and exploitation of contents between content providers and/or between a content provider and its user or users. The Copyright Act pre-empts the Content Industry Promotion Act when a content producer is protected by the Copyright Act.70 Under the Copyright Act a copyright protects the expression of the idea and not the idea itself.71 Also known as author’s rights, copyright refers to the acts that only an author has a right to perform, prohibit or authorise. In other words, copyright is defined as the right obtained by the creator or author of a work which contains the expression of a person’s idea or emotion.72 An author’s copyright consists of economic and moral rights. The economic rights allow the author to derive financial gain from the exploitation of his work while the moral rights enable the author to preserve his authorship as well as the integrity of his creation.73 The Korean Copyright Act (‘KCA’) protects an author’s property rights: right of reproduction (Art 16), right of public performance (Art 17), right of public transmission (Art 18), right of exhibition (Art 19), right of distribution (Art 20), right to lend (Art 21), and right of production of derivative work (Art 22). Aside from economic rights, the moral rights of authors or creators are also protected in both laws. These are the author’s rights to require attribution of authorship (also known as right of paternity), to preserve the integrity of the work and to decide whether to make it public. These rights are independent of the economic rights. The author may assign his economic rights, but the moral rights remain with him. Under the KCA an author or a copyright-holder may institute a civil action to recover damages for an infringement of any of his or her rights.74 It is significant that the infringement may be committed intentionally or negligently.75 The King’s Man case in Korea shows the criteria applied to determine whether a copyrighted work has been infringed by an alleged infringer. In that case,76 the plaintiff was the author of a play called ‘Kiss’ and the defendants were the producer, the director, and the distributor of a film referred to as ‘King’s Man’. The plaintiff sought a provisional disposition to prevent the defendants from continuously infringing the former’s copyright on the play, alleging that its lines, ‘I am here and you are there’, had been exploited in the infringing film without authorisation. The court in the King’s Man case ruled that a copyright infringement must satisfy two requirements: under the subjective requirement, it must be shown that the infringer copied a copyrighted work; under an objective requirement, it must be shown that there is a substantial similarity between the infringing and the infringed works. The court also ruled that ‘as far as a literary work is concerned, we must take into account whether the infringing and infringed works share fragmented literal similarity and comprehensive nonliteral similarity as well in order to determine whether the allegedly infringed work has been truly infringed’.   ibid, Art 3 subpara 1.   ibid, Art 4(2). 71   G Lee, Copyright: Explanations and Cases (Seoul, Jinwonsa, 2010) 12. 72   HW Lee, Copyright Law (Seoul, Pak Young Sa, 2007) 32–34; cf Art 2 of KCA. 73   Understanding Copyright and Related Rights, 9, available at www.wipo.int/freepublications/en/ intproperty/909/wipo_pub_909.pdf. 74   Art 125 of KCA. 75   Art 125 of KCA. 76   Ruling rendered by the Seoul High Court on 14 November 2006, Case No 2006La503. 69 70

Korea  803 But that general concept of infringement encompasses other specific acts, such as the importation into the Republic of Korea for the purpose of distributing therein objects which, if made in the country, would constitute copyright infringement.77 Possession of that imported object is deemed infringement if the possessor knows that it was produced through a violation of copyright.78 Also considered as infringement is the mere possession of objects, intended for distribution, produced by any act that infringed a copyright or other protected right; in such cases, the possessor must also know that the product was the result of infringement.79 The manufacture and distribution of services and products made primarily to neutralise technological protection measures for copyrights constitute copyright infringement. Specifically, Article 124(2) of the KCA deems infringement as any act of providing, producing, importing, transferring, lending, or interactively transmitting such services, products, technologies, devices, or significant parts thereof. The primary purpose of those services, technologies, devices or products is accomplished by, among others, eliminating, modifying, or bypassing the technological protection measures. In these cases, the specified acts are deemed infringement of copyright even without any allegation or proof that specific economic rights or other rights have actually been infringed. In other words, infringement is committed by the mere act of providing, producing, importing, transferring, lending, or interactively transmitting those products or technologies. The KCA also deems as infringement certain acts that cause or conceal the violation of any protected right. Intentionally eliminating, changing or falsely adding right management information in electronic format are among these acts.80 Also included are acts of distributing, publicly performing, communicating to the public, or importing for the purpose of distribution of the original or reproduction of the works, and knowing that the right management information in an electronic format has been eliminated, changed, or falsely added.81 On the other hand, the exploitation of a work in a manner prejudicial to the honour of the author is deemed infringement of his moral rights. To halt these acts of infringement, the author or copyright-holder has several remedies. He may make a demand that the person infringing his rights suspend those acts, to abandon the objects made as a result of the infringement, or to take other necessary measures.82 He may also make a demand that a person likely to infringe his rights take preventive measures or provide a security for compensation for damages.83 In such cases, the court may issue an order to temporarily suspend the infringing act, to seize the objects made by reason of the infringement, or to take other necessary measures. In any of these cases, the court has the discretion whether or not to require security. In a civil action, the person whose economic rights were infringed may ask for compensation for damages sustained as a result of the infringement. He may seek either the amount he himself would normally earn in the exercise of his rights, or the profit, if there is any, derived by the infringer from the infringement.84 In the event that the damage sustained by   Art 124(1)(1) of KCA.   Art 124(1)(2) of KCA. 79   ibid. 80   Art 124(3)(1) of the KCA. 81   Art 124(3)(2) of the KCA. 82   Art 123(1) and (2) of the KCA. 83   Art 123(1) of the KCA. 84   Art 125(1) and (2) of the KCA. 77 78

804  Gyooho Lee the copyright holder exceeds what he would have earned in exercising his right, he may also claim the excess.85 In cases where it is difficult to estimate the amount of damages, the court may set a reasonable amount after considering the arguments and evidence of the parties.86 The author or performer may also institute a civil action to redress the infringement of his moral rights. In addition to compensation for damages, he may demand that the infringer take the necessary measures for the recovery of his honour or reputation.87 Upon his death, his surviving family or the executor of his will may also make the same demand from a person who has violated his moral rights. It is significant that the demand may be made even on a person likely to violate those rights.88 The institution of criminal actions is another mode of redressing copyright infringement. In general, the KCA penalises any person who infringes an author’s protected economic rights by means of reproduction, public performance, communication to the public, exhibition, distribution, or rental of a work or production of derivative work.89 The following acts are good examples where criminal sanctions are also imposed: 1. Infringement of the moral rights of authors or performers and defamation of their honour.90 2. Registration by false means of a copyright,91 transfer by assignment (except by testate or intestate succession) of author’s property rights, restriction on the disposal of author’s property rights, establishment of the right of pledge on author’s property rights, alteration or expiry of author’s property rights,92 the right of publication,93 neighbouring rights94 and rights of database makers.95 3. Infringement of a database maker’s rights by means of reproduction, distribution, broadcasting or interactive transmission.96 4. Importation into the Republic of Korea for the purpose of distributing therein of objects which, if made in the country, would constitute copyright infringement.97 5. Possession, for the purpose of distribution, of the aforementioned imported objects or any other objects, with the knowledge that their production resulted from a violation of copyright.98 6. Production, importation, transfer, lending, or interactive transmission of services, products, technologies, devices, or significant parts thereof made primarily to neutralise technological protection measures for copyrights, the enumerated acts done in the conduct of business or for a profit-making purpose.99 7. Elimination, change, or addition of right management information in electronic format, as well as the distribution, public performance, public communication, or impor  Art 125(3) of the KCA.   Art 126 of the KCA.   Art 127 of the KCA. 88   Art 128 of the KCA. 89   Art 136 of the KCA. 90   Art 136(2)(1) of the KCA. 91   Arts 136(2)(2) and 53 of the KCA. 92   Arts 136(2)(2) and 54 of the KCA. 93   Arts 136(2)(2) and 63(3) of the KCA. 94   Arts 136(2)(2) and 90 of the KCA. 95   Arts 136(2)(2) and 98 of the KCA. 96   Art 136(2)(3) of the KCA. 97   Arts 136(2)(4) and 124(1)(1) of the KCA. 98   ibid. 99   Arts 136(2)(3–3) of the KCA. 85 86 87

Korea  805 tation for the purpose of distribution of the original works or reproduction of the works, the right management information of which has been eliminated, changed, or added.100 These acts are required to be done in the conduct of business or the pursuit of profit, with the offender knowing that those acts cause or conceal the infringement of copyright. 8. Publication of a work under the real name or a pseudonym of a person other than that of the author.101 9. Public performance or public communication of works or distributed reproductions of a performance under the real name or a pseudonym of a person other than that of the performer.102 10. Violation of an author’s moral rights.103 11. Operation of copyright trust services without the prescribed permit from the Minister of Culture, Sports, and Tourism.104 12. Exploitation of a work prejudicial to the honour of the author.105 13. Interference with the business of an online service provider by deliberately requesting it to stop or resume the reproduction or interactive transmission of works under the procedure laid down in Article 103 of the law, the offender knowing that he or she has no legitimate rights to make the request.106 14. Exploitation of a portrait or similar photographic work produced by commission, without the consent of the person who commissioned the work.107 15. Failure to indicate the source, as required by Article 37, in the exploitation of copyrighted works, performances, phonograms, broadcasts, and database.108 16. Failure of the owner of the right of publication to indicate in each copy of a published work a notice of the owner of the right to reproduce and distribute the work.109 Article 57 of the KCA allows the owner of the right to reproduce and distribute (or reproduce and transmit) a work to authorise another to publish a work. The notice required must be indicated in each copy to show that the right of the publisher is confined to the publication, and that the right to reproduce and distribute the book is vested on another person. 17. Failure of the owner of the right of reproduction and distribution to notify the author in advance about his intention to make a new edition of the subject work.110 18. Management of a copyright agency or brokerage service without reporting to the Minister of Culture, Sports, and Tourism as required by Article 105(1) of the KCA.111 19. Continuation of copyright management services despite the cancellation of the service provider’s permit by the Minister of Culture, Sports, and Tourism under Article 109(2).112 In this offence, the permit may have been cancelled because it had been obtained by false or unlawful means, or because the service provider continued to   Arts 136(2)(3–4) of the KCA.   Art 137(1) of the KCA. 102   Art 137(2) of the KCA. 103   Art 137(3) of the KCA. 104   Art 137(4) of the KCA. 105   Arts 137(5) and 124(4) of the KCA. 106   Arts 137(6) and 124(4) of the KCA. 107   Arts 138(1) and 35(4) of the KCA. 108   Arts 138(2), 37, 87 and 94 of the KCA. 109   Arts 138(3) and 58(3) of the KCA. 110   Arts 138(4) and 59(2) of the KCA. 111   Art 138(5) of the KCA. 112   Art 138(5) of the KCA. 100 101

806  Gyooho Lee transact business despite notice of an order of suspension of its business. Some of the crimes defined in the KCA are punishable with imprisonment not exceeding five years, or a fine not exceeding 50 million won, or both; while some are punishable only with a fine not exceeding five million won. The crimes under KCA, in principle, are prosecuted only when the injured party has made a complaint, with a few exceptions including an infringement crime committed habitually for profit-making.113 Aside from the institution of criminal actions for the enumerated acts, the KCA provides a procedure for the imposition of a fine for failure to comply with specific requirements. The fine may be imposed on the following: (1) A person who fails to take necessary steps like technological measures that intercept illegal interactive transmissions as required under Article 104. (2) Copyright trust service providers who fail to list the works they manage into a book or in an electronic format available for anyone during business hours, or to provide information requested in writing that is necessary for the execution of a contract for the exploitation of a work, as required by Article 106. (3) Persons who reproduce or interactively transmit works, or online service providers that do not abide with the order of the Minister of Culture, Sports, and Tourism under Article 133(4) to delete or suspend reproductions or interactive transmissions through the information and telecommunications network that infringe copyright and protected works. The fine shall be levied and collected by the Minister of Culture, Sports, and Tourism. If a dissatisfied person files an objection within 30 days of notice, the Minister shall notify the competent court which shall proceed to trial under the Non-Contentious Litigation Procedure Act. If the fine is not paid and an objection is not raised within the prescribed period, the fine shall be collected in accordance with the procedure for collecting unpaid national taxes. The Korean Copyright Act of 2009114 was designed to incorporate the Computer Program Protection Act in Korea into the Copyright Act and to establish the Korea Copyright Commission by merging the former Copyright Commission and the Computer Program Protection Commission, and to efficiently bar potential infringers from committing online piracy piracy of copyrighted contents.115 As mentioned above, the KCA of 2009 incorporated the Computer Program Act into the Copyright Act116 in order for the Korean government to maintain a consistent policy and provide efficient enforcement in terms of both ordinary copyrighted works and computer program works.117 Also, the KCA of 2009 introduced a so-called ‘strikeout’ rule which would prevent anyone caught repeatedly pirating copyrighted works via the Internet from using his/her Internet account for a maximum of six months, despite protests from IT companies and civil right advocates that it could jeopardise the freedom of expression on the Internet.118   Art 140 subpara 1 of KCA.   Act No 9625, amended on 22 April 2009 and effective since 23 July 2009 (‘KCA of 2009’).   Art 133 bis and ter of the KCA. 116   Act No 9625, amended on 22 April 2009, effective on 23 July 2009. 117  www.law.go.kr/LSW/lsInfoP.do?lsiSeq=92767&lsId=000798&chrClsCd=010202&urlMode=lsEfInfoR&vie wCls=lsRvsDocInfoR#hongBot. 118   Arts 133bis, 133ter, and 134 of the KCA. 113 114 115

Korea  807 The ‘strikeout’ rule was a striking reform of Korea’s copyright landscape. The rule is somewhat similar to the ‘Law Promoting the Distribution and Protection of Creative Works on the Internet’ in France. The French law was introduced during 2009 as a means to control and regulate Internet access and to encourage compliance with copyright laws, and is often referred to as the ‘H’Adopi’ law. The original version of the French law was held unconstitutional. On 22 October 2009 the Constitutional Council of France approved a revised version of the H’Adopi law, requiring judicial review before revoking a person’s internet access. Korea’s ‘strikeout’ rule is more similar to the original version of the H’Adopi law, in that it does not require judicial review before revoking a person’s internet access. Since the KCA of 2009 became effective and until the middle of February 2010, more than 30,000 warnings were issued to online pirates under Article 133.119 The Ministry of Culture, Sports, and Tourism declared on 18 February 2010 that, for the first time, it would order 10 web storage service providers to warn reproducers or transmitters of pirated copies to delete and/or stop transmission of the pirated copies, pursuant to Article 133 bis of the KCA.120 Article 1 of the Agricultural Products Quality Control Act prescribes to secure the safety of agricultural products, to enhance the commercial value of agricultural products through proper quality control, to contribute to the increase of farmers’ incomes, and to protect consumers through inducing fair and transparent trade. The term ‘geographical indication’ in this Act refers to ‘an indication displaying that agricultural products or processed agricultural products (excluding processed agricultural products in which marine products are used as a principal material or main ingredient) the reputation, quality and other attributes of which are essentially originated from the geographical characteristics of a specific region are produced and processed in the specific region’.121 Hence, the requirements for registration of geographical indication under the Agricultural Products Quality Control Act are much stricter than those for registration of trade mark under the Trade Mark Act.122 In addition, the term ‘homonymic geographical indication’ connotes ‘a geographical indication, the pronunciation of which is identical to that of another person’s geographical indication for the same item but refers to a different region’.123 The Agricultural Products Quality Control Act affords protection on geographical indication. In this Act a right to geographical indication stands for ‘intellectual property right to exclusively use geographical indications registered pursuant to the Act’. In this regard, it should be compared to a right granted on geographical indication under the Trade Mark Act, because the right to geographical indication pursuant to the Agricultural Products Quality Control Act is clearly prescribed as a kind of intellectual property right.124 The Agricultural Product Quality Control Deliberation Committee was established under the Minister for Food, Agriculture, Forestry and Fisheries to deliberate on matters concerning the quality control of agricultural products under the Agricultural Products Quality Control Act. The Committee deliberates on the matters related to the registration

 blog.naver.com/parkisu007?Redirect=Log&logNo=100527476.   Press release by the Ministry of Culture, Sports, and Tourism on 18 February 2010.   Art 2, subpara 7 of the Agricultural Products Quality Control Act. 122   G Lee, ‘A Study on the Protection of Collective Marks and Certification Marks Indicating Geography’ (2009) 2–3 Kyungwon Law Review 119, 143 (hereinafter ‘Lee, Geographical Indication’). 123   Art 2 subpara 8 of the Agricultural Products Quality Control Act. 124   ibid, Art 2 subpara 9. 119 120 121

808  Gyooho Lee of geographical indications.125 The Minister for Food, Agriculture, Forestry and Fisheries implements a geographical indication registration system to seek the improvement of quality of agricultural products or processed agricultural products having geographical characteristics, to foster regional speciality industries, and to protect consumers.126 The Minister for Food, Agriculture, Forestry and Fisheries shall, when receiving an application for registration pursuant to the Agricultural Products Quality Control Act,127 submit it for the deliberation of the subcommittee for registration. When an advance application for registration of geographical indication is filed pursuant to the Trade Mark Act or the geographical indication is identical or similar to another person’s registered trade mark, including a collective mark indicating geography, the Minister for Food, Agriculture, Forestry and Fisheries will reject its registration and notify the applicant concerned thereof.128 The Minister for Food, Agriculture, Forestry and Fisheries established the Geographical Indication Protection Judgment Committee to supervise trials and retrials on the protection of geographical indications, trials and retrials on the rejection of registration of geographical indications, or cancellation of registration, or other matters concerning the protection of geographical indications determined by Presidential Decree.129 The Patent Court has jurisdiction over an appeal against trial decisions rendered by the Geographical Indication Protection Judgment Committee.130 The purpose of the Quality Control of Fishery Products Act is ‘to contribute to the increase of fisherperson’s income and the protection of consumers by enhancing the marketability and stability of fishery products and fostering the processing industry of fishery products through the adequate quality control on the fishery products’.131 In this context, the term ‘geographical marking’ is referred to as ‘when the fame, quality and other peculiarity of the fishery products and processed fishery products are essentially attributable to the geographical features of specific areas, the marking to the effect that the relevant fishery products and processed fishery products have been produced in the relevant areas’.132 The Fishery Products Quality Control Deliberation Council is supposed to deliberate over matters related to the geographical indications pursuant to Articles 4(1) and (2) (5) of the Quality Control of Fishery Products Act. However, unlike the Agricultural Products Quality Control Act, the Quality Control of Fishery Products Act lacks provisions on a ‘homonymic geographical indication’ and a ‘right to geographical indication’, on the grounds for rejection of a registration of a geographical indication, on the effect of a right to a geographical indication, on the transfer and succession of the right to a geographical indication, on remedies against interference with the right to a geographical indication, on the establishment of the Geographical Indication Protection Judgment Committee and its trial, and on its appeal against the trial.133 It is very problematic that the mechanism for protection of a geographical indication under the Quality Control of Fishery Products Act differs from that for its protection pursuant to the Agricultural Products Quality Control Act. The essential solution to this problem is that the Trade Mark Act should govern all marks including a geographical indication under the Agricultural Products Quality   ibid, Art 3 bis subpara 5.   ibid, Art 8(1). 127   ibid, Art 8(2). 128   ibid, Art 8(7) subpara 2. 129   ibid, Art 8-9(1). 130   ibid, Art 8-20(1). 131   Art 1 of the Quality Control of Fishery Products Act. 132   ibid, Art 2 subpara 12. 133  Lee, Geographical Indication, 143. 125 126

Korea  809 Control Act and the Quality Control of Fishery Products Act, and that the latter Acts cover only quality control of agricultural and fishery products respectively.134 The Act on the Layout-Designs of Semiconductor Integrated Circuits (‘Semiconductor Act’) is intended to contribute to the sound development of the national economy through the promotion of industries and technologies relating to semiconductors by protecting the rights of persons who create a layout-design for a semiconductor integrated circuit and by encouraging the fair use of such a layout-design.135 Layout-design rights are created when the creation of a creative layout-design is registered with the Commissioner of the Korean Intellectual Property Office.136 The term of a layout-design right is 10 years from the date of registration of the creation thereof.137 The Act on Prevention of Divulgence and Protection of Industrial Technology (‘Industrial Technology Protection Act’) purports to prevent undue divulgence of industrial technology and protect industrial technology in order to strengthen the competitiveness of Korean industries and contribute to national security and development of the national economy.138 In terms of trade secrets, this Act somewhat overlaps with the Unfair Competition Act. In this regard, incorporating trade secret provisions from the Unfair Competition Act into the Industrial Technology Protection Act is logical and appropriate in the long run after separating the trade secret portion from the unfair competition acts portion in the Unfair Competition Act.139 Next, some administrative dispute resolution mechanisms will be explored in terms of intellectual property rights. The Intellectual Property Tribunal was established under the jurisdiction of the Commissioner of the Korean Intellectual Property Office to be responsible for trials and retrials regarding patents, utility models, designs and trade marks, and the investigation and research thereof.140 Hence, the Intellectual Property Tribunal does not deal with copyright cases. The Intellectual Property Tribunal is composed of the President and trial examiners.141 A trial against a decision of refusal of a patent, a decision of refusal of an application for extension of the term of a patent right,142 or a trial to invalidate a patent143 can be heard in the Patent Court. The Patent Court has the authority to deal with cases of the first instance as provided in Article 186(1) of the Patent Act, Article 33 of the Utility Model Act, Article 75 of the Design Protection Act, and Article 86(2) of the Trade Mark Act, and cases to which the Patent Court is competent under other Acts.144 The Patent Court located in Daejeon, South Korea has exclusive jurisdiction over any action against a trial decision rendered by the Intellectual Property Tribunal or against dismissal of a request for a trial or retrial before the Tribunal.145   ibid, 144.   Art 1 of the Semiconductor Act. 136   ibid, Art 6. 137   ibid, Art 7(1). 138   Art 1 of the Industrial Technology Protection Act. 139   Seung Woo Yang, ‘A Study on Protection of National Core Technology and Regulation of Foreign Investment’ (PhD dissertation, Chung-Ang University, Department of Law, 2010) 225. 140   Art 132bis(1) of the Patent Act. 141   ibid, Art 132bis(2). 142   ibid, Art 132 ter. It prescribes that ‘Where a person who has received from the examiner a decision of refusal of a patent or a decision of refusal of an application for extension of the term of a patent right under Art 91 has an objection to such decision, such person may request a trial within thirty days from the date of receipt of the certified copy of the decision’. 143   ibid, Art 133. 144   Art 28 quart subparas 1 and 2 of the Court Organisation Act. 145   Art 186(1) of the Patent Act. 134 135

810  Gyooho Lee The adjudicative power of the Patent Court is exercised by a collegiate panel of the Court composed of three judges.146 The Supreme Court reviews and judges the cases of a final appeal against a judgment rendered by a High Court, Appellate Court, or Patent Court, the case of a re-appeal against a decision or order of a Court of Appeal on a ruling High Court, Appellate Court, or Patent Court, and those cases falling under the jurisdiction of the Supreme Court pursuant to other Acts.147 Hence, any person who has received a judgment from the Patent Court may appeal to the Supreme Court.148 The Korea Copyright Commission (‘KCC’) has the authority to deal with (i) mediation or conciliation of disputes; (ii) deliberation of matters concerning the rate or amount of fee and usage fee for copyright management service providers and deliberation of matters presented for consideration by the Minister of Culture, Sports and Tourism or jointly by three members or more; (iii) projects for imposing order in the use of works, etc, and for devising fair use of works; (iv) international cooperation for the protection of copyright; (v) research, education, and publicity of copyright; (vi) support the formulation of policy on copyright; (vii) measures of technical protection and support the formulation of policy on rights management information; (viii) construction and operation of an information management system for the provision of copyright information; (ix) appraisal of infringement, etc of copyright; (x) recommendation of correction to an online service provider and request for orders for correction to the Minister of Culture, Sports and Tourism; (xi) matters prescribed as duties of the KCC or duties entrusted to the KCC pursuant to Acts and Presidential Decrees; and (xii) other duties entrusted by the Minister of Culture, Sports and Tourism.149 Any person who intends to receive mediation on a dispute may apply for mediation by filing an application for mediation with the KCC.150 Also, any person who intends to receive conciliation of a dispute may apply by filing an application for conciliation in which the effect of and ground for application are imposed by the KCC.151 In order for the KCC to effectively execute the duties conciliating a dispute, there is a conciliation division comprised of one member, or three or more members, among which one member shall have the qualification of lawyer.152 Conciliation shall take effect by entering the matters that have been agreed upon between the persons concerned in the record.153 The conciliation record mentioned above shall have the same force as the court settlement.154 In other words, the conciliation record shall have claim preclusion effect.

1.2  International Jurisdiction 1.2.1  International Conventions Korea is not a signatory to any international convention regarding international jurisdiction.155   Art 7(3) of the Court Organisation Act.   Art 14 subparas 1 to 3 of the Court Organisation Act. 148   Art 186(8) of the Patent Act. 149   Art 113 of the KCA. 150   Art 113bis(1) of the KCA. 151   Art 114bis(1) of the KCA. 152   Art 114(1) of the KCA. 153   Art 117(1) of the KCA. 154   Art 117(2) of the KCA. 155   Korea Private International Law Association, ‘International Rules on Recognition and Enforcement of a Foreign Judgment and Our Proposals, Final Report submitted to the National Court Administration’ (2009), 241– 330 (‘KOPILA, International Rules’). 146 147

Korea  811 1.2.2  National Legislation Article 2(1) of the Private International Act prescribes that ‘In case a party or a case in dispute is substantially connected to the Republic of Korea, a court shall have the international jurisdiction. In this case, the court shall obey reasonable principles, compatible to the ideology of the allocation of international jurisdiction, in judging the existence of the substantial connection.’ Furthermore, Article 2(2) of the Private International Act provides that ‘A court shall judge whether or not it has the international jurisdiction in the light of jurisdictional provisions of domestic laws and shall take a full consideration of the unique nature of international jurisdiction in the light of the purport of the provision of paragraph (1).’ Hence, the Supreme Court in Korea reasoned that: the court should determine whether or not a court in Korea has international jurisdiction by virtue of the fundamental ideology that is to contribute to fairness between the parties, appropriateness, expediency of adjudication, and judicial economy. Specifically, the court should take into account personal interests such as fairness between the parties, convenience for them, and predictability from their viewpoint, as well as interests of the judicial body or the State such as appropriateness, expediency, efficiency of adjudication process, and effectiveness of a judgment. The court should reasonably determine what interests it would protect among them, considering it as the objective standard the substantial connection between a court of the forum State and the parties and between a case in dispute and a court of the forum State.156

Let us suppose that defendant X has residence in Korea and the injury caused by the defamation, a kind of tort, occurred in Korea on the basis of the double actionability rule followed by the courts in Korea.157 In this regard, the case of Square Enix v Fantom Entertainment Group et al (‘Sonata of Temptation case’)158 needs to be explored. The court in the Sonata of Temptation case159 ruled that a court in Korea will have international jurisdiction under the following circumstances: 1. one of the two defendants is a legal entity incorporated in the Republic of Korea whose main place of business is located in Korea, and the other is a natural person having Korean nationality whose domicile, a concept recognised in civil law countries and different from that of common law countries, is located in Korea; 2. the copyright infringement took place in Korea; and 3. there are no special grounds for which the court in Korea believes that adjudicating in Korea contravenes the procedural goals to achieve fairness between the parties, or the appropriateness and expediency of the adjudication.

1.3  Choice of Law 1.3.1  International Conventions On 17 February 2004, Korea acceded to the United Nations Convention on Contracts for the International Sale of Goods (‘CISG’) which was concluded at Vienna on 11 April 1980 156   Judgment rendered by the Supreme Court on 27 January 2005, Case No 2002Da59788; Judgment rendered by the Supreme Court on 29 May 2008, Case No 2006Da71908, 71915; Judgment rendered by the Supreme Court on 15 July 2010, Case No 2010Da18355. 157   Judgment rendered by the Supreme Court on 28 January 1994, Case No 93Da18167. 158   Judgment rendered by the Seoul Central District Court on 13 March 2008, Case No 2007Gahap53681. 159   ibid.

812  Gyooho Lee and came into effect on 1 January 1988. It has an indirect impact on the applicability of the Private International Act.

1.3.2  National Legislation Article 24 of the Private International Act,160 whose title is ‘protection of intellectual property rights’, stipulates that ‘the protection of intellectual property rights shall be governed by the law of the place where such rights are violated’.

1.4  Recognition and Enforcement of Foreign Judgments 1.4.1  International Conventions On 8 February 1973, Korea acceded to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (concluded at New York 10 June 1958 and effective 7 June 1959).161 In addition, Korea has signed international treaties on judicial assistance in civil and commercial matters with Australia and China. The treaty with Australia was signed on 17 September 1999 and came into effect on 16 January 2000. The treaty with Australia governs the service of documents, the taking of evidence, and the exchange of legal information. The treaty with China was signed on 7 July 2003 and came into effect on 27 April 2005. The treaty with China governs the service of documents, the taking of evidence, the exchange of legal information, and the recognition and enforcement of a foreign arbitral award. The treaty with China differs from that with Australia in that the recognition and enforcement of a foreign arbitral award is governed by the former.162 However, Korea has yet to sign any international convention regarding recognition and enforcement of a foreign judgment. 1.4.2  National Legislation Article 217 of the Civil Procedure Act163 in Korea prescribes as follows: A final and conclusive judgment by a foreign court shall be acknowledged to be valid only upon the entire fulfilment of the following requirements: 1. That an international jurisdiction of such foreign court is recognised in the principles of an international jurisdiction pursuant to the Acts and subordinate statutes of the Republic of Korea, or to the treaties; 2. That a defeated defendant received, pursuant to a lawful method, a service of a summons or a document equivalent thereto, and a notice of date or an order, with a time leeway sufficient to defend (excluding the case pursuant to a service by public notice or similar service), or that he responded to the lawsuit even without being served;   Act No 6465, comprehensively amended on 7 April 2001.   ‘By virtue of para 3 of Art 1 of the present Convention, the Government of the Republic of Korea declares that it will apply the Convention to the recognition and enforcement of arbitral awards made only in the territory of another Contracting State. It further declares that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under its national law’. See treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII-1&chapter=22&lang=en. 162   KH Suk, Private International Law and International Litigation, vol 4 (Seoul, Pak Young Sa, 2007) 208 (hereinafter ‘Suk, vol 4’). 163   Act No 9171, amended on 26 December 2008. 160 161

Korea  813 3. That such judgment does not violate good morals and other social orders of the Republic of Korea; and 4. That there exists a mutual guarantee.

In addition, Article 27 of the Civil Enforcement Act164 prescribes that: (1) An enforcement judgment shall be made without making any examination as to whether the judgment is right or wrong. (2) A lawsuit seeking an enforcement judgment shall be dismissed if it falls under any of the following subparagraphs:

1. When it has not been proved that the judgment of a foreign court has become final and conclusive; and 2. When the foreign judgment fails to fulfil the conditions under Article 217 of the Civil Procedure Act.

On the basis of Article 217 subparagraph 2 of the Korean Civil Procedure Act, the Supreme Court in Korea held that a default judgment rendered by a court in the State of Washington in the United States165 could not be enforced in Korea because it did not meet the requirement of Article 217 subparagraph 2 of the Korean Civil Procedure Act.166 In this case, the Washington court had given only 20 days to the Korean defendants, instead of the usual 60 days, to appear before the court.167 The Supreme Court ruled that the question of whether the service of complaint and summons in a case meets the requirements prescribed in Article 217 subparagraph 2 of the Korean Civil Procedure Act, should be determined by the law of the state of the rendering court.168 Also, it proceeded to maintain that the requirements under Article 217 subparagraph 2 of the Korean Civil Procedure Act were subject to an ex officio examination by a court.169 On the basis of Article 217 subparagraph 3 of the Korean Civil Procedure Act, a Korean court ruled that the Washington court’s award of excessive damages violated good morals and other social orders of Korea and could not be recognised to the extent to which they substantially exceeded the reasonable amount recognised under the fundamental principle of law relating to damages in Korea and good morals within Korean society.170 Accordingly, substantially excessive damages including punitive damages awarded by a court of a foreign state cannot be recognised to the extent to which they substantially exceed compensatory damages allowed under Korean law.171 This decision regards substantive public policy. Recently, the Supreme Court ruled that a judgment by confession rendered by a court in California did not fall within the category of ‘judgment of a foreign court’ pursuant to   Act No 10376, amended on 23 July 2010, effective on 24 October 2010.   Its official name is the ‘Superior Court of the State of Washington for the County of Clark’. 166   Judgment rendered by the Supreme Court on 22 July 2010, Case No 2008Na31089. 167   Revised Code of Washington § 4.28.180 prescribes that ‘Personal service of summons or other process may be made upon any party outside the State. If upon a citizen or resident of this State or upon a person who has submitted to the jurisdiction of the courts of this State, it shall have the force and effect of personal service within this State; otherwise it shall have the force and effect of service by publication. The summons upon the party out of the State shall contain the same and be served in like manner as personal summons within the State, except it shall require the party to appear and answer within sixty days after such personal service out of the State.’ 168   Judgment rendered by the Supreme Court on 22 July 2010, Case No 2008Na31089. 169   ibid. 170   Judgment rendered 22 January 2009, Case No 2008Gahap309. 171  TA Rho, ‘Public Policy as the Requirements for Recognition and Enforcement of a Foreign Judgment: Focused on Analysis of Recent Supreme Court’s Decisions’ in Lis Pendens and Recognition and Enforcement of a Foreign Judgment, the Second Joint Seminar on Korean and Japanese Civil Procedure Law held at Sungkyunkwan University School of Law on 26 to 27 June 2010, at 103 (hereinafter ‘Rho, Public Policy’). 164 165

814  Gyooho Lee Article 26(1) of the Civil Enforcement Act in Korea because a law clerk entered the judgment by confession.172 The right to be heard cannot be warranted without a judge’s involvement, so that a judgment by confession violates ‘procedural public policy’.173 If a court of another state rendered judgment by a party’s fraud, the judgment cannot be recognised because it will violate procedural public policy.174 The meaning of ‘fraud’ will be determined by the law of the recognition state rather than that of the rendition state.175 However, in this regard, the Supreme Court in Korea held that ‘Article 27(2)(2) of the Civil Enforcement Act and Article 217(3) of the Civil Procedure Act prescribe that a final and conclusive judgment of a foreign court must not violate good morals and other social order[s] of Korea’. Hence, the recognition court must deny recognition of the foreign judgment if it determines that the contents or establishment process of the foreign judgment are repugnant to good morals and other social orders of Korea. However, Article 27(1) of the Civil Enforcement Act prescribes that ‘An enforcement judgment shall be made without making any examination as to whether the judgment is right or wrong’. For this reason, it is contrary to the effect of enforcement judgment provisions separately prescribed in the Civil Enforcement Act that the recognition court fully re-examine the merit of the foreign judgment in order to determine whether the foreign judgment was wrongfully acquired by fraud, so that its full re-examination will not be allowed. The recognition court, in principle, cannot deny recognition and enforcement of a foreign judgment even if the foreign judgment was acquired by means such as using forged, modulated, or discarded documents or exploiting perjury. Exceptionally, the recognition court may deny recognition or enforcement of the foreign judgment only if the defendant could not argue such a fraud before the rendition court of the foreign state in light of Articles 451(1)(6) and (7), 451(2) of the Civil Procedure Act regarding grounds for re-trial, and there is high level of proof such as a conviction as to the fraudulent act being criminally liable. In such exceptional cases, it is unnecessary that separate proceedings invalidate the foreign judgment which is the subject of recognition or enforcement in Korea.176 The requirement for ‘mutual guarantee’ prescribed in Article 217 subparagraph 4 of the Civil Procedure Act will be satisfied when the requirements for recognition of a judgment of the same kind rendered by courts of Korea and a foreign state are not substantially out of balance and the requirements for recognition of a foreign judgment in Korea are not burdensome, taken as a whole, as compared to those in the foreign state so that the former can be almost identical to the latter in the light of material aspects of the recognition requirements.177 The court in Korea should make an ex officio examination as to whether the recognition requirements of both Korea and another state are mutually guaranteed. In this regard, the statute, case law and practice of the foreign state will be examined. The requirement of ‘mutual guarantee’ can be met even though there is no bilateral agreement between the two countries. Also, it can be satisfied if a judgment rendered by a Korean court is expected to be recognised by a court of the foreign state, despite the fact that the foreign state has yet to recognise the judgment rendered by the Korean court.178   Judgment rendered 25 June 2009, Case No 2009Da22952.   Rho, Public Policy, 105. 174   ibid. 175   ibid. 176   Judgment rendered by the Supreme Court on 28 October 2004, Case No 2002Da74213. 177   ibid. It was followed by the judgment rendered by the Supreme Court on 25 June 2009, Case No 2009Da22952. 178   Judgment rendered by the Supreme Court on 28 October 2004, Case No 2002Da74213. 172 173

Korea  815

2  Intellectual Property and Private International Law 2.1  International Jurisdiction As mentioned above, Article 2(1) of the Private International Act in Korea prescribes that ‘in a case where a party or a case in dispute is substantially related to the Republic of Korea, a court shall have international jurisdiction over the case. In this case, the court shall obey reasonable principles, compatible to the ideology of the allocation of international jurisdiction in judging the existence of the substantial relations’. Furthermore, Article 2(2) of the Private International Act states that ‘A court shall determine whether or not it has the international jurisdiction in the light of jurisdictional provisions of domestic laws and shall take a full consideration of the unique nature of international jurisdiction in the light of the purport of the provision’ of Article 2(1) of the Private International Act. Hence, the Supreme Court in Korea emphasised that the court should determine whether or not a court in Korea has international jurisdiction by virtue of the fundamental ideology to contribute to fairness between the parties, appropriateness, expediency of adjudication, and judicial economy. Specifically, the court should take into account personal interests such as fairness between the parties, convenience for them, predictability from their viewpoint, and interests of the judicial body or the State such as appropriateness, expediency, efficiency of adjudication process, and effectiveness of a judgment. The court should reasonably determine what interests it would protect among them, considering it as the objective standard, the substantial connection between a court of the forum State and the parties and between a case in dispute and a court of the forum State.179

In the Sonata of Temptation case,180 the Court concluded that the parties or the disputed subject-matters were substantially connected with the Republic of Korea and thus it had international jurisdiction on the basis of the following findings: 1. that one of the two defendants is a legal entity incorporated in the Republic of Korea whose main place of business is located in Korea and the other of them is a natural person having Korean nationality whose domicile, a concept recognised in a civil law countries and different from that of common law countries, is located in Korea; 2. that copyright infringement took place in Korea; and 3. that there are no special grounds on the basis of which the court in Korea believes that adjudicating in Korea contravenes the procedural goals to achieve fairness between the parties, and appropriateness and expediency of the adjudication. In the 49 Things to Do in Your Life case,181 Seoul Central District Court ruled that, in terms of international jurisdiction, ‘[h]eadquarters of the defendants are located in Korea, translation, publication and distribution of the plaintiff ’s book were carried out in Korea. In addition, the plaintiff brought this lawsuit in a Korean court and the defendants did 179   Judgment rendered by the Supreme Court on 27 January 2005, Case No 2002Da59788; Judgment rendered by the Supreme Court on 29 May 2008, Case No 2006Da71908, 71915; Judgment rendered by the Supreme Court on 15 July 2010, Case No 2010Da18355. 180   Judgment rendered by the Seoul Central District Court on 13 March 2008, Case No 2007 Gahap53681. 181  See Shenyang Yuanliu Co, Ltd v Wisdom House et al (Judgment rendered on 20 June 2008, Case No 2007Gahap 43936) (hereinafter ‘49 Things to Do in Your Life case’).

816  Gyooho Lee appear and dispute the case without any objection. Hence, the Korean court is substantially related to the parties and the disputed subject-matters. As a result, a Korean court can entertain international jurisdiction over the case at bar.’ A judgment rendered by the Seoul High Court on 21 January 2009182 concluded that: The parties and dispute concerned have substantial connection with Korea’ after taking into account the following facts: 1. That both parties agreed to designate Korean law as the law that will govern all or part of their dispute pursuant to the contract to assign a patent right; 2. That it appears to be necessary to take evidence on the circumstances at the time when the defendant had worked at the Korean company and contents of his tasks in order to determine the validity of the said contract.

In terms of an action on existence, grant, registration, validity and revocation of a patent right registered in a state, the registered state has exclusive international jurisdiction over the action.183 In a case where a court of a certain state has exclusive international jurisdiction, a choice of court agreement is not valid even though the parties choose a court of another state designated by the choice of court agreement.184 As mentioned above, the registered state has exclusive international jurisdiction in a case where a plaintiff brings a lawsuit to declare whether a patent right is valid or to revoke registration of the patent right. However, a Korean court ruled that ‘since a lawsuit to seek transfer registration of a patent right registered in foreign countries or to seek the performance of process which changes the name of a patent applicant is basically an action to seek performance of a contract which assigns a patent right to another, the subject of its main dispute and review is limited to interpretation and validity of the assignment contract while not invoking exclusive international jurisdiction of the Registered State’.185 In this case, the parties agreed to designate Korean law as the law that governs the assignment contract of a patent right. The inventions on which the patent right was based were allegedly made at the time when the defendant had worked at the company located in Korea. The court held that ‘the case in dispute and the parties have substantial connection to Korea and, thus, a court in Korea has international jurisdiction over the case at hand, taking into account the facts that taking of evidence on situation and scope of employment at the time when the defendant works for the company in order to determine the effect of the assignment contract, that the plaintiff was incorporated in Korea and that the defendant has resided in Korea’.186 In terms of international jurisdiction on joinder of claims, a Korean court ruled that ‘a Korean court is able to entertain international jurisdiction over multiple claims against same opposing party of different states in cases where the claims are closely connected, including in cases where the facts or issues on which multiple claims are based are identical or mutually related’.187

  Case No 2007Na96470.   Judgment rendered by the Seoul High Court on 21 January 2009, Case No 2007Na96470; Judgment rendered by the Seoul Central District Court on 23 August 2007, Case No 2006Gahap89560; Judgment rendered by the Seoul District Court on 30 August 2007, Case No 2006Gahap53066 (‘Myspace’ Domain Name case). 184   Judgment rendered by the Seoul Central District Court on 23 August 2007, Case No 2006Gahap89560. 185   Judgment rendered by the Seoul High Court on 21 January 2009, Case No 2007Na96470. 186   ibid. 187   Judgment rendered by the Incheon District Court on 24 July 2003, Case No 2003Gahap1768. 182 183

Korea  817 As far as international jurisdiction on joinder of parties is concerned, the Korean Supreme Court has held that: In deciding whether a court has international jurisdiction over multiple defendants from different States, the court should carefully take into account overall factors, such as relations among the claims, possibility of dispute resolution in a single proceeding, and practical possibility of appearance before the court of the defendant, so that the defendant cannot be unreasonably forced to attend at the hearing of the court.188

2.2  Applicable Law Article 24 of the Private International Act,189 whose title is ‘Protection of Intellectual Property Rights’, stipulates that ‘the protection of intellectual property rights shall be governed by the law of the place where such rights are violated’. In terms of the governing law on the effect of trade mark rights, the ‘Myspace’ Domain Name case190 ruled that The effect of a trade mark right is governed by the Registered State, which falls under the category of lex protectionis pursuant to Article 24 of the Private International Act, having the closest connection with the trade mark right. Each country grants an exclusive right on a trade mark throughout its application and registration process. Many countries have employed territoriality principles in terms of trade mark rights. Accordingly, creation, transfer, and effect of a trade mark registered in a country will be governed by the law of the country, and its effect will be limited only to the country’s territory. In this regard, the State where protection is claimed is the Registered State, so that the nation having closest connection with the trade mark right is the Registered State.

According to the ‘Myspace’ Domain Name judgment, applying the Anticybersquatting Consumer Protection Act (‘ACPA’) of the United States to the infringement of a trade mark registered in the United States, and thus imposing on a Korean defendant a duty not to use the domain name and a duty to transfer it to the plaintiff, is not acceptable from the standpoint of the fundamental ideology of the Korean Trade Mark Law scheme and is contrary to a social order prescribed in Article 10 of the Private International Act.191 Hence, the court applied the Unfair Competition Act in Korea to the case in question, instead of ACPA of the United States. Overall legal issues on intellectual property rights including determination of a copyright holder, existence and transfer will be determined pursuant to the law of the state where protection is claimed. The Von Dutch case192 held that the law of the state where protection is claimed should govern all legal issues related to intellectual property rights inclusive of the determination as to who owns a copyright or existence, extinction, and assignability of the copyright even though Article 24 of the Private International Act deals with only the infringement of intellectual property rights. There are two interesting cases which dealt with the relationship between Article 24 of the Private International Act and the choice of law provision of the Berne Convention for 188   Judgment rendered by the Supreme Court on 26 September 2003, Case No 2003Da29555 (dealing with international jurisdiction in a case involving a tort on the Internet). 189   Act No 6465, comprehensively amended on 7 April 2001. 190   Judgment rendered by the Seoul District Court on 30 August 2007, Case No 2006Gahap53066. 191   ibid. 192   Judgment rendered by the Seoul High Court on 8 July 2008, Case No 2007Na80093.

818  Gyooho Lee the Protection of Literary and Artistic Works (‘Berne Convention’). The first one is the Sonata of Temptation case.193 The facts of this case are that Square Enix, a Japanese popular game maker, filed a civil suit against the co-defendants, Fantom Entertainment Group, and a Korean music video director before the Seoul Central District Court in March 2007, alleging that the music video of 2007 for Ivy, a Korean pop singer, ‘Sonata of Temptation’, had copied its 2005 sequel to the popular Final Fantasy VII franchise, ‘Final Fantasy VII Advent Children’. The plaintiff alleged that the defendants had produced the ‘Sonata of Temptation’ music video by exploiting plotlines, background, characters, and their hand movements, look, and outfitting without any authorisation of the plaintiff. The plaintiff claimed compensation for damages caused by the fact that the defendants had violated its economic and moral rights, and elucidation ads necessary to recover his reputation caused by its moral rights infringement. In this regard, the elucidation ads will be placed in a newspaper in the way how the defendants concede the facts that they infringed the plaintiff ’s moral rights. In addition to dealing with issues as to whether the court has international jurisdiction over the case at hand, the Sonata of Temptation case delved into the following issues: 1. What law is applied to the case in question in terms of actions for damages caused by infringement of economic rights or moral rights. 2. Whether co-defendants are liable for infringement of the plaintiff ’s economic rights (ie, reproduction rights, right to create derivative works, broadcasting rights, transmission rights) and of its moral rights (ie, its right to maintain integrity). 3. Whether the plaintiff is allowed to claim elucidation ads necessary to recover his reputation caused by its moral rights infringement. In the Sonata of Temptation case the court held that it: deem[ed] the Japanese plaintiff entitled to the rights enjoyed by Korean nationals in Korea pursuant to Article 5(1) of the Berne Convention, to which both countries are signatories. Applying Article 5(2) of the Berne Convention which provided that the extent of protection, as well as the means of redress afforded to the author shall be governed exclusively by the laws of the country where protection is claimed, we rule that the claim for injunction is governed by Korean law.194   Judgment rendered by the Seoul Central District Court on 13 March 2008, Case No 2007 Gahap53681.   The relevant provisions of the Korean Copyright Act were as follows:

193 194

Art 93 [Claim for Damages] [corresponding to Art 125 of KCA of 2010]: 1. The owner of authors’ property rights or other rights protected by this Act (excluding authors’ moral rights) (hereinafter referred to as ‘owner of authors’ property rights, etc’) may claim compensation for damages from a person who has infringed his rights intentionally or by negligence. 2. If the owner of authors’ property rights, etc claims compensation under section 1, the amount of profit which the infringing person has gained by his act of infringement shall be presumed to be the amount of damages sustained by the owner of authors’ property rights, etc. 3. The owner of authors’ property rights, etc may claim, in addition to the amount of compensation for damages as referred to in section 2, an amount of compensation for damages equivalent to that which he could have earned by the ordinary exercise of his moral rights. 4. The infringing act of the person who infringed the copyright, right of publication, neighbouring rights, or database producer’s right shall be presumed to be carried out by negligence. Art 94 [Determination of the amount of compensation] [corresponding to Art 126 of KCA of 2010] When the court found that the victim’s injury was incurred but that it is difficult to determine the amount of compensation pursuant to Art 93 [corresponding to Art 125 of KCA of 2010], the court may determine reasonable amount of compensation by taking into account the gist of the oral hearing and the outcome of the evidential investigation. Art 95 [Right of Demanding Recovery of Honour, etc] [corresponding to Art 127 of KCA of 2010]

Korea  819 The Sonata of Temptation court went on to apply ‘Article 6(3) of the Berne Convention which provided that the means of safeguarding moral rights shall be governed by the laws of the country where protection is claimed’. Hence, the court concluded that Korean law also governs the claim for recovery of the author’s reputation. As to the claim for damages, the court deemed copyright infringement as tort and applied Korean law, consistent with Article 32 of the Korean Private International Law that tort cases are governed by the law of the place where the tortuous act took place. The court found the defendant liable for infringement of the plaintiff ’s economic rights and right to maintain the integrity, and ordered it to pay 300 million won to the Japanese game maker for plagiarising the popular film ‘Final Fantasy VII’. However, the court dismissed the plaintiff ’s claim for elucidation ads because it had failed to prove the co-defendants’ defamation against the plaintiff. The Sonata of Temptation case is related to a cinematographic work which is a work for hire. In this regard the Sonata of Temptation court omitted or misunderstood some issues in terms of international jurisdiction and choice of laws. I reach the following conclusions, criticising some holdings observed by the court. First of all, the court should touch upon issues as to whether joinder of claims is available in the instant case. Secondly, the court ought to discuss the applicable law on the ownership of copyright as far as the facts in the case are based on a cinematographic work as a work for hire. Unfortunately, it seems to impliedly follow the lex fori approach rather than the lex loci protectionis test without any further discussion in its holdings. Thirdly, the court applied Article 5(2) of the Berne Convention to injunctive relief based on infringement of moral rights, whereas it applied Article 6 bis of the Convention to a claim for elucidation ads. I certainly agree with its holding on this claim.195 Fourthly, I am out of accord with the court’s holding that characterised a damages action caused by torts as an action for damages caused by infringement of economic rights or moral rights and applied Article 32(1) of the Korean Private International Act to the case at hand.196 Instead, I think that Article 5(2) of the Convention should be applied to damages claims based on violation of economic rights and Article 6bis(3) of the Convention applied to an action for damages incurred in violation of moral rights. Unlike the Sonata of Temptation case, which applied Article 32 of the Korean Private International Act in an action to seek damages incurred by copyright infringement in terms of an international copyright dispute, the 49 Things to Do in Your Life case correctly applied Article 5(2) of the Berne Convention.197 The author or performer may demand the person who has infringed his moral rights intentionally or by negligence to take measures necessary for the recovery of his honour or reputation in return for or together with compensation for damages. 195   Arts 5, 6 bis, and 14 bis of the Berne Convention for the Protection of Literary and Artistic Works. 196   Arts 2, 24, and 32 of the Korean Private International Act (Act No 6465, comprehensively amended on 7 April 2001). 197  Judgment rendered by the Seoul Central District Court on 20 June 2008, Case No 2007Gahap 43936; Kwang-Hyun Suk, ‘Comments on International Intellectual Property Law: Expressing My Regret at Some of Recent Lower Courts’ Cases’ (2008) 3656 Law Times; Gyooho Lee, ‘Some Issues on International Dispute Related to Entertainment Industries: Focused on Choice of Law’ (2008) 14 Korea Private International Law Journal 40, 65 (hereinafter ‘Lee, Entertainment’); but see judgment rendered by the Seoul High Court on 23 September 2008, Case No 2007Na127657 (hereinafter ‘Desperado case’) having applied Art 24 of the Private International Act rather than relevant provisions of the Berne Convention in terms of an action for damages incurred by an infringement of economic rights and moral rights of a copyright holder. In the Desperado case, the Court did not explain why it applied Art 24 of the Private International Act. See Sang Ick Ha, ‘International Dispute about the Copyright Issue and the International Private Law of Korea: A Brief Introduction about the Judgments [Rendered] by the Courts of Korea in 2008’ (2008) 14 Korea Private International Law Journal 3, 34.

820  Gyooho Lee The facts of 49 Things to Do in Your Life case are as follows. The Chinese book 99 Things to Do in Your Life is a collection of moral anecdotes compiled and published by Tan Zhuoying and Wang Jing in 2003. The compilers’ copyright was taken over that year by Shenyang Yuanliu, who then then signed a publishing contract with the Beijing Industrial University’s publishing firm. The Beijing Industrial University publisher later reached a deal with the Korean office of Wisdom House, the multinational publisher. Wisdom House selected 45 excerpts from the original book and added four others for the Korean book. Shenyang Yuanliu filed a compensation suit in 2007 against Wisdom House and Korea’s eight largest bookstores, including Kyobo Book Center, alleging that they infringed its copyright and ignored its call to suspend sales. In the 49 Things to Do in Your Life case, the court had to determine: (i) whether a Korean court has international jurisdiction over this case; (ii) what law is applied to an action to claim damages caused by copyright infringement; and (iii) whether the Beijing Industrial University publisher had obtained worldwide monopolistic licence from Shenyang Yuanliu, and Wisdom House et al had reason to believe that the Chinese publisher did.198 In this regard, international jurisdiction issues will not be dealt with because they were explained above. As far as choice of law issues are concerned, the court ruled that ‘Article 24 of the Korean Private International Act is supplemental to Article 5(2) of the Berne Convention for the Protection of Literary and Artistic Works . . . Therefore, the former is preempted by the latter. As a corollary, Article 5(2) of the Berne Convention will be applied in copyright infringement cases including an action to seek damages. According to its provision, Korean substantive law, the law of the country where protection is claimed, is applied in this case.’ The court went on to hold that ‘The fact that Wisdom House translated and published 45 excerpts with the approval of the Beijing Industrial University publisher and not with Shenyang Yuanliu is a violation of the latter’s secondary copyright’. That is, the court observed that 49 Things to Do in Your Life, the best-selling book of 2005 in Korea, was illegal as its Korean publisher, Wisdom House, issued the book via a contract with its Chinese publisher, not its copyright-holder; the Beijing Industrial University publisher had monopolistic licence only within Chinese territory. The court consequently ordered Wisdom House to recall and destroy all copies of the best-selling self-help book and pay compensation to its Chinese copyright-holder of an amount equal to a 3 per cent royalty on the total sales of 1.13 million copies in Korea.

2.3  Recognition and Enforcement of Foreign Judgments There are special provisions regarding the recognition and enforcement of a foreign judgment in terms of intellectual property rights. They are Article 217 of the Civil Procedure Act and Articles 25 to 27 of the Civil Enforcement Act which deal with the recognition and enforcement of foreign judgments related to intellectual property rights.

198   In this case, the defendants argued that Shenyang Yuanliu had a right to license the translation and overseas publication of the Chinese book and that Wisdom House published its translated version in Korea under legal licensing contract between Wisdom House and Shenyang Yuanliu. Also, the defendants went on to argue that the Shenyang Yuanliu had an apparent authority to represent the plaintiff and, if not, the plaintiff impliedly authorised the defendants to publish the Korean version of the Chinese book.

Korea  821

2.4. Korean Principles on International Intellectual Property Litigation 2.4.1  General Provisions The Korean Principles on International Intellectual Property Litigation (‘Korean Principles’)199 purport to set forth rules for international jurisdiction, conflict of laws, recognition and enforcement of foreign adjudication, and arbitration on international intellectual property disputes.200 According to the Korean Principles, the term ‘intellectual property rights’ is defined as the rights granted to intellectual assets, which means intangible assets such as inventions, designs, works, trade secrets, trade marks that are derived from intellectual creation, device, or use by human beings.201 The concept of ‘intellectual assets’ pursuant to the Korean Principles is broad enough to cover one protected under unfair competition laws or intangible property, which may be included in intellectual property in the near future.202 The Korean Principles define registered intellectual property rights as ‘Intellectual Property Rights being effective by registration or deposit such as patent’, distinguishing registered from non-registered intellectual property rights.203 In addition, Article 2 of the Korean Principles defines the terms ‘State’,204 ‘Registered State’,205 ‘Protecting State’,206 ‘Habitual Residence’,207 ‘International Intellectual Property Disputes’,208 ‘Existence/Validity Disputes’,209 ‘Non-negotiated Contract’,210 ‘Interim 199   The Korean Principles were approved at the general meeting held by the Korean Private International Law Association on 26 March 2010. The Drafting Committee for the Korean Principles consists of five members: Professor Kyung-Han Sohn at Sungkyungwan University School of Law, its chairman Professor Kwang-Hyun Suk at Seoul National University School of Law, Chief Judge Seong Ho Lee at Seoul High Court, Chief Judge Ta Ak Rho at Patent Court, Professor Gyooho Lee at Chung-Ang University School of Law, and Jin-A Park at Ewha Women’s University School of Law. 200   Art 1 of the Korean Principles. 201   Art 2 subparas 1 and 2 of the Korean Principles. 202   Korean Private International Law Association, ‘A Commentary to Principles on International Intellectual Property Litigation’ (2010) 3 Principles on International Intellectual Property Litigation (hereinafter ‘KOPILA, A Commentary to Korean Principles’). 203   Art 2 subpara 3 of the Korean Principles. 204   Art 2 subpara 4 of the Korean Principles: ‘ “State” means a territory or region that maintains independent legislative and judicial body’. 205   Art 2 subpara 5 of the Korean Principles: ‘ “Registered State” means a State in which Intellectual Property Rights are registered or deposited, or in which IPRs are deemed to have been registered or deposited by provisions of a treaty’. 206   Art 2 subpara 6 of the Korean Principles: ‘ “Protecting State” means a State that grants Intellectual Property Rights or for which their protection is sought. In case of infringement of IPRs, it means the State of infringement regardless of their registrations of the rights. In order to be qualified a place of infringement, its market must be substantially affected by the infringement. If the case is infringement of the moral rights of an author, the rights must be affected within the State.’ 207   Art 2 subpara 7 of the Korean Principles: ‘The term Habitual Residence’ refers to ‘the place where a party habitually resides, including the party’s principal place of business. The Habitual Residence also includes the State where it has its statutory seat of legal entity or the State under whose law it was incorporated or formed’. 208   It connotes intellectual property disputes whose parties have habitual residence in a different state, and include disputes related to intellectual property rights that are registered or protected in a foreign state and disputes that occurred by activities related to intellectual property rights in a foreign state. See Art 2 subpara 8 of the Korean Principles. 209   Art 2 subpara 9 of the Korean Principles: ‘disputes regarding granting, validity, abandonment, or cancellation of intellectual property rights’. . 210   Art 2 subpara 10 of the Korean Principles: a ‘contract that is concluded with the terms and conditions determined in advance by one party for repeated use’.

822  Gyooho Lee Measures’,211 ‘Adjudication’,212 ‘Preliminary Questions’,213 ‘Foreign Adjudication’,214 ‘Foreign Arbitral Award’,215 ‘Recognition State’216 and ‘Enforcement State’.217 These Korean Principles apply to civil or commercial disputes regarding intellectual assets including existence/ validity disputes.218 Hence, the Korean Principles extend their application to administrative trials on disputes regarding granting, validity, abandonment, or cancellation of intellectual property rights.219 Also, the Korean Principles are applied to interim measures, taking into account its importance in intellectual property-related disputes.220 As mentioned above, the Korean Principles distinguish registered from non-registered intellectual property rights, taking into account the facts that the term ‘Protecting State’, or the state where protection is sought, cannot be clearly defined, whereas the term ‘Registered State’ is straightforward, and that a law governing registered intellectual property rights needs to be differentiated from one governing non-registered intellectual property rights in terms of their initial ownership.221 In other words, initial ownership of registered intellectual property rights is governed by the law of each registered state while initial ownership of the non-registered intellectual property rights is governed by the law of the state in which the intellectual assets are first created or devised, such as the law of the state of habitual residence of the person who created or devised them.222 If there is more than one person involved in the creation or devise of non-registered intellectual property rights, the law of the state with the closest connection to the creation, devise and the first publication shall govern unless the parties agreed otherwise.223 However, the law of the protecting states in which the rights are first exploited will govern if the governing law regarding initial ownership of non-registered intellectual property rights does not recognise the intellectual property rights.224 Next, let us turn to the international jurisdiction context.

211   Art 2 subpara 11 of the Korean Principles: ‘provisional seizure, provisional disposition, and other provisional measures against a party ordered by a judge or arbitrator in reply to a petition of the other party prior to the final judgment or arbitral award’. 212   Art 2 subpara 12 of the Korean Principles: ‘judgments, decisions, orders, etc rendered by a court or administrative body including interim measures and decisions on disputes between private parties such as invalidity of a patent’. 213   Art 2 subpara 13 of the Korean Principles: ‘the problems of which the determination is unavoidable as a prerequisite for the adjudication process, but that need not be explicitly included in the conclusion of an adjudication of a court or, of an arbitral award’. 214   Under Art 2 subpara 14 of the Korean Principles it means an adjudication that is not regarded as domestic adjudication.. 215   An arbitral award that is not regarded as one under the law of the enforcement state. See Art 2 subpara 14 of the Korean Principles. 216   A state that recognises or is requested to recognise a foreign adjudication or a foreign arbitral award. See Art 2 subpara 15 of the Korean Principles. 217   A state that enforces or is requested to enforce a foreign adjudication or a foreign arbitral award. See Art 2 subpara 15 of the Korean Principles. 218   Art 3 of the Korean Principles. 219   KOPILA, A Commentary to Korean Principles, 4. 220   Art 2 subpara 11 of the Korean Principles. See KOPILA, A Commentary to Korean Principles, 5. 221   KOPILA, A Commentary to Korean Principles, 6. 222   Art 24(1) and (2) of the Korean Principles. 223   Art 24(3) of the Korean Principles. The application of this provision is not limited to copyright. 224   Art 24(4) of the Korean Principles.

Korea  823 2.4.2  International Jurisdiction The Korean Principles purport a substantial connection principle in regards to the requirement for international jurisdiction, similar to Article 2(1) of the Korean Private International Act.225 It is a fundamental principle regarding international jurisdiction. The Korean Principles prescribe that ‘A State that has no substantial connection with either the party or the case in dispute shall not have jurisdiction.’226 The Korean Principles take a mixed convention approach similar to the American Law Institute’s Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (‘ALI Principles’), while deviating from a double convention approach such as the third preliminary draft of ‘Principles for Conflict of Laws in Intellectual Property’ drafted by the European Max-Planck Group on Conflict of Laws in Intellectual Property (‘CLIP Principles’).227 Under the Korean Principles, a court of the recognition state may recognise a foreign judgment of another state, the ground for whose international jurisdiction was not prescribed in the Korean Principles unlike the CLIP Principles.228 In this regard, the Korean Principles enumerate the examples where no substantial connection is recognised.229 In other words, substantial connection may not be recognised solely on the basis of one or more of the following grounds: (i) the nationality or habitual residence of the plaintiff; (ii) the nationality of the defendant; (iii) the location of tangible assets of the defendant; (iv) the location of intellectual property rights of the defendant being determined under the law of the forum state; (v) the conduct of commercial or non-commercial activities of the defendant; (vi) the place of temporary residence or simple presence of the defendant or service of summons thereupon; and (vii) completion of the formalities necessary to execute the contract to which the dispute pertains.230 However, in cases where the dispute in question is directly connected with the location of the tangible assets of the defendant, the location of intellectual property rights of the defendant being determined under the law of the forum state, or the conduct of commercial or non-commercial activities of the defendant, the Korean Principles regard substantial connection with either the party or the case in dispute as being recognised.231 Taking into account the ‘Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters adopted by the Special Commission on 30 October 1999’ (‘Hague Preliminary Draft’), the ALI Principles, and the CLIP Principles, the Korean Principles have drafted the provision on jurisdiction of state of habitual residence of a defendant,232 exclusive jurisdiction over existence/validity disputes of registered intellectual property rights,233 jurisdiction over disputes regarding the infringement of   KOPILA, A Commentary to Korean Principles, 6.   Art 8(1) of the Korean Principles.   Seong Ho Lee, ‘Principles of Private International Law Related to Intellectual Property Rights: Focusing on the Differences Between Korean and Japanese Proposals’, 9 to 11 September 2009, seminar hosted by GCOE of Waseda University Legal Institute and Korea Private International Law Association at Chung-Ang University School of Law, at 77 (hereinafter ‘Lee, Korean and Japanese Proposals’). 228   ibid. 229   Art 8(2) of the Korean Principles. 230   Art 8(2) of the Korean Principles. 231   Art 8(3) of the Korean Principles. 232   Art 9 of the Korean Principles prescribe that ‘Except for the case of Art 10, the court of State of Habitual Residence of the defendant shall have jurisdiction over any and all cases related to Intellectual Assets filed against him’. 233   Art 10(1) of the Korean Principles state that ‘The court of State which has registered Intellectual Property Rights shall have exclusive jurisdiction over the Existence/Validity Disputes of the IPRs’, which stands for 225 226 227

824  Gyooho Lee intellectual property rights,234 and jurisdiction over disputes regarding a contract related to intellectual property rights.235 The Hague Preliminary Draft, ALI Principles, and Clip Principles are good legal sources in drawing up provisions on international jurisdiction by agreement236 or appearance.237 Article 13(2) of the Korean Principles prescribes that jurisdiction by an agreement between the parties is by nature exclusive, taking into account the fact that interpreting it as a nonexclusive choice of court agreement contravenes genuine intention of the parties because a forum of another state, irrelevant to a court of the states prescribed by law, is frequently chosen in international business transactions, and the fact that the ALI Principles, the CLIP Principles, and the Convention on Choice of Court Agreements, concluded 30 June 2005, have the same provisions as Article 13(2) of the Korean Principles.238 Article 13(3) of the Korean Principles has reflected provisions on consumer protection of the Regulation of Standardised Contracts Act239 and the Private International Act.240 As far as jurisdiction by intellectual property rights. Art 10(2) of the Korean Principles stipulates that ‘Paragraph 1 shall not apply if the Existence/Validity Dispute of Intellectual Property Rights is Preliminary Questions. The determination thereon shall not be legally binding in any subsequent legal actions’. 234   Art 11 of the Korean Principles: (1) The court of State in which the defendant committed main infringing activities upon the Intellectual Property Rights shall have jurisdiction over the disputes regarding IPR infringement. In this case, the jurisdiction of the court shall be extended to all claims for injuries caused by the defendant’s infringing activities, wherever the injuries occurred. (2) The court of State shall have jurisdiction over the claim for injuries caused by infringement of Intellectual Property Rights if the defendant’s activity is directed to the State in which the injuries occurred. 235   Art 12 of Korean Principles: (1) The court of State where the Intellectual Property Rights will be exploited or exercised shall have jurisdiction over the disputes regarding assignment, providing as security, licence or any other form of disposal of the IPRs. (2) In case of Paragraph 1, the court of one State shall have jurisdiction only over the contract disputes on the Intellectual Property Rights which will be exploited or exercised in that State, if the contract is related to the IPRs which will be exploited or exercised in more than one State. 236   Art 13 of the Korean Principles: (1) In case the parties agree that a court of a certain State shall adjudicate the disputes which the parties faced or will face under certain legal relationship, the court of the said State shall have jurisdiction over the disputes. (2) Jurisdiction under Paragraph 1 shall be exclusive unless the parties agreed otherwise. (3) The agreement under Paragraph 1 shall be valid only if it is valid under both the law of the State chosen by the agreement and the law of the State of forum where the case is pending. (4) This Article shall not apply to Existence/Validity Disputes of Registered IPRs; provided, however, it applies to the disputes when they are raised as Preliminary Questions or the parties agree the adjudication thereon be effective only between them. 237   Art 14 of the Korean Principles: (1) If a defendant, who voluntarily attended a hearing of a court of State which does not have jurisdiction under these principles, pleaded his case on the merits without claiming lack of jurisdiction, the court shall have jurisdiction over the case. The defendant may argue lack of jurisdiction until the first statement or answer on the merits of the case is to be made. (2) Paragraph 4, Article 13 shall apply, mutatis mutandis, to the cases of Paragraph 1. 238   See Lee, Korean and Japanese Proposals, 81. 239   Act No 10303, amended on 17 May 2010, effective on 18 November 2010. 240   Art 27 of the Private International Act: (1) In case a contract, which a consumer concludes for a purpose besides his occupational or business activities, falls under any of the following subparagraphs, the protection given by the mandatory provisions

Korea  825 appearance is concerned, the Korean Principles determine the term when the defendant may argue lack of jurisdiction.241 Adoption of provisions on coordination among courts of different states prescribed in the ALI Principles242 needs to be sincerely considered after upgrading the level of international judicial cooperation.243 Hence, Chapter III of the Korean Principles deals only with consolidation of actions which consists of provisions on consolidation of related actions244 and multiple defendants.245 The requirements for consolidation of related actions pursuant of the country, where the habitual residence of the consumer is located, shall not be deprived even if the parties choose the applicable law: 1. In case, prior to the conclusion of the contract, the opposite party of the consumer conducted solicitation of transactions and other occupational or business activities by an advertisement in that country or conducted solicitation of transactions and other occupational or business activities by an advertisement into that country from the areas outside that country and the consumer took all the steps necessary for the conclusion of the contract in that country; 2. In case the opposite party of the consumer received an order of the consumer in that country; or 3. In case the opposite party of the consumer induced the consumer to go to a foreign country and give his order in the foreign country. (2) In case the parties do not choose the applicable law, the contract under the provision of paragraph (1) shall be governed by the law of the habitual residence of the consumer irrespective of the provision of Article 26. (3) The method of a contract under the provision of paragraph (1) shall be governed by the law of the habitual residence of the consumer irrespective of the provisions of Article 17 (1) through (3). (4) In case of the contract under the provision of paragraph (1), the consumer may file a lawsuit against the opposite party of the consumer even in the country where the habitual residence of the consumer is located. (5) In case of the contract under the provision of paragraph (1), a lawsuit entered by the opposite party of the consumer against the consumer may be filed only in the country where the habitual residence of the consumer is located. (6) The parties of the contract under the provision of paragraph (1) may agree on the international jurisdiction in writing: provided that such agreement shall be effective only in any of the following subparagraphs: 1. In case a dispute already occurred; or 2. In case filing a lawsuit with other courts in addition to the competent court under this Article is permitted to the consumer. See Lee, Korean and Japanese Proposals, 82. 241   Art 14(1) of the Korean Principles. 242   Arts 221, 222 and 206 of the ALI Principles. 243   KOPILA, A Commentary to Korean Principles, 7. 244   Art 15 of the Korean Principles provides that: (1) A court which has jurisdiction over a claim shall also have jurisdiction over other claims between the parties which have been raised from the same, or series of transactions or infringing activities, regardless of the place of the transactions or infringements. Provided, however, jurisdiction of the court, which has jurisdiction under Paragraph 2, Article 11, shall be limited to the claims related to the transactions and infringing activities occurred within that State. (2) Paragraph 1 shall not apply to Existence/Validity Disputes of Registered IPRs. (3) Any argument regarding consolidation of the cases may be raised until the first statement or answer on the merits of the case is being made. (4) Appeal to the decision on consolidation shall be made at the first opportunity to do so. 245   Art 16 of the Korean Principles prescribes that: (1) The court of the State where one of the defendants has his Habitual Residence shall have jurisdiction over other defendants who do not have Habitual Residence in the State if there is a substantial, direct, and predictable connection between the forum’s Intellectual Property Rights and the other defendants and if the claims are so closely connected that they should be adjudicated together to avoid the risk of contradictory judgments. (2) Paragraph 1 shall not apply to the co-defendant who entered into an exclusive choice of court agreement with the plaintiff. (3) Once an action is filed in a court of a State in accordance with Paragraph 1, the court of the State shall have jurisdiction over the claims for injuries caused by the activities that lead to the risk of contradictory judgments, regardless of the place of injury.

826  Gyooho Lee to Article 15(1) of the Korean Principles are more lenient than those under Korean case law246 because the Korean Principles deem the close connection requirement, recognised by Korean case law, satisfied when claims between the parties have been raised from the same, or series of transactions or infringing activities, regardless of the place of the transactions or infringements.247 Chapter IV of the Korean Principles provides for several rules on lis pendens. The scope of parallel proceedings under Article 17 of the Korean Principles is not limited to cases involving the same cause of action between the same parties as prescribed in Article 21(1) of the Hague Preliminary Draft. Article 17(1) of the Korean Principles provides that: The court first seised shall have jurisdiction over the cases between the same parties who filed actions against the other in the courts of [a] different State if the claims are related to each other which may be caused by the same, or series of transactions or infringing activities, regardless of the remedies sought.

The court second seised shall stay its proceedings if the state of the court first seised has jurisdiction over its case, and it is expected that the court will render an adjudication on the case pending before that of the court second seised, either by consolidation or other means which can be recognised by the state of the court second seised.248 However, the court second seised is not allowed to stay its proceedings if the state of the court second seised has exclusive jurisdiction over the case in accordance with the jurisdiction agreement of the parties or under its jurisdictional rules.249 The court second seised shall dismiss the case immediately if the adjudication of the court first seised, which can be recognised, is submitted.250 The court second seised may proceed with the case by the request of the parties if the plaintiff of the court first seised does not take necessary action to reach the adjudication on the merits of the case or the court first seised does not adjudicate the case on the merits within a reasonable time.251 The Korean Principles have a provision to prevent torpedo litigation.252 Article 17(5) of the Korean Principles provides that: The primary jurisdiction of the court first seised is denied if the litigation is an action confirming non-existence of certain obligations and action for performance of the very obligation is filed with the court second seised while the defendant has not filed an initial statement or answer on the merits of the case with the court first seised. The court first seised shall stay the case if the court second seised is expected to render an adjudication to be recognised by the State of the court first seised.

The Korean Principles provide the criteria to determine which court is seised first.253 As far as international jurisdiction on provisional measures is concerned, the court that has   Judgment rendered by the Incheon District Court on 24 July 2003, Case No 2003Gahap1768.   Lee, Korean and Japanese Proposals, 83. 248   Art 17(2) of the Korean Principles. 249   Art 17(2) of the Korean Principles. 250   Art 17(3) of the Korean Principles. 251   Art 17(5) of the Korean Principles. 252  Art 17(5) of the Korean Principles; see G Lee, ‘Torpedo Litigation’, in Lis Pendens and Recognition and Enforcement of a Foreign Judgment, the Second Joint Seminar on Korean and Japanese Civil Procedure Law held at Sungkyunkwan University School of Law 26 to 27 June 2010, 23. 253   Art 17(6) of the Korean Principles: 246 247

(6) Applying this Article, a case is regarded to have been filed at the following time.

1) When a written document that initiates the proceedings or a document equivalent thereto is submitted to the court; provided, however, the case shall not be regarded to have been filed if the plaintiff afterwards does not take the step to serve the document on the defendant. cont./

Korea  827 jurisdiction over the merits of the case may take provisional measures on the merits of the case.254 The court of either the state of registered IPRs or the state of location of tangible assets may take provisional measures with regard to the concerned IPRs or tangible assets that will be effective within the territory.255 2.4.3  Choice of Laws Unless the Korean Principles provide otherwise, the law of the registered state applies to the issues of existence/validity disputes, the contents, extinguishment, infringement, assignability, and the effect of assignment of registered IPRs as against a third party, and the law of the protecting state shall apply to the same issues of the non-registered IPRs.256 A choice of law agreement, unlike choice of court agreement or arbitration agreement, which should be proved in writing, does not need to be proved in writing.257 The legal capacity of the party to enter into a choice of law agreement is governed by the law of the state of nationality of each party under the Korean Principles, which follow the tradition of civil law system in relying on the law of the state of nationality of each party rather than on the law of the state of habitual residence under the ALI Principles.258 If a choice of law agreement is concluded by a non-negotiated contract, it is valid only if it is reasonable in its consideration of the location, interests and sophistication of the nondrafting party, and the interests of the state related to the parties of the dispute.259 The scope of a non-negotiated contract is so broad that it is not limited to a contract with multiple persons. In this regard, it is distinguished from a mass-market contract prescribed in the ALI Principles.260 The Korean Principles provide the governing law of intellectual property rights disputes in multiple states. If an infringement of intellectual property rights takes place or is likely to take place in multiple nations which are unidentifiable or difficult to identify, the law of the countries with the closest connection governs the issues of all infringements.261 The factors which a court should take into account in identifying the state with the closest connection are as follows: habitual residence of the defendant,262 the state where the activities that cause infringement are primarily conducted or to which the activities are directed, and the extent of activities and investment of the holder of intellectual property right.263 If a court cannot determine the state that has the closest connection with infringement in spite of a full consideration of those factors mentioned above, the state of habitual residence of the defendant will be deemed as the state with the closest connection with the infringement.264 2) When the document of the preceding Item is submitted to the authority for the service in cases where the document needs to be served before submission to the court; provided, however, the case shall not be regarded to have been filed if the plaintiff afterwards does not take the step to submit the document to the court. 254   Art 18(1) of the Korean Principles. 255   Art 18(2) of the Korean Principles. 256   Art 19 of the Korean Principles. 257   Art 4(1) of the Korean Principles. 258   Art 5 of the Korean Principles, which applies to a choice of court agreement and an arbitration agreement; cf § 302(3)(b) of the ALI Principles. 259   Art 6 of the Korean Principles, which applies to a choice of court agreement and an arbitration agreement. 260   KOPILA, A Commentary to Korean Principles, 9; cf § 202(3)(a) of the ALI Principles. 261   Art 21(1) of the Korean Principles. 262   The specific place of business is regarded as the habitual residence if the infringement has been caused by activities at the place of business. See Art 21(2)(1) proviso of the Korean Principles. 263   Art 21(2) of the Korean Principles. 264   Art 21(3) of the Korean Principles.

828  Gyooho Lee If the law of the country with the closest connection applies to all infringement of intellectual property rights, the defendant may argue that his/her activities are legally allowed under the law of another state which is affected by the activities causing the infringement. If the argument is valid, the court may neither prohibit nor limit the activities of the defendant in the other state. However, the court may act otherwise if the prohibition or limitation is inevitable for appropriate protection of the rights of the person whose intellectual property rights were infringed.265 Furthermore, the Korean Principles provide the law governing disputes incidental to disputes on infringement of intellectual property rights,266 the law governing assignment, security or licence agreement for intellectual property rights,267 and the law governing initial ownership of intellectual property rights.268 2.4.4  Recognition and Enforcement of a Foreign Adjudication Article 26(1) of the Korean Principles prescribes that international jurisdiction of a foreign court is recognised under the Korean Principles. Therefore, Article 26 of the Korean principles does not provide the ‘mutual guarantee’ requirement that is established in Article 217 subparagraph 4 of the Civil Procedure Act. Also, the Korean Principles allow for recognition of provisional measures under Article 26(2) of the Korean Principles.269 The Korean   Art 21(4) of the Korean Principles.   Art 22 of the Korean principles prescribing that ‘If the disputes have arisen regarding existence or validity, the contents, extinguishment, infringement, assignability, and the effect of its assignment as against a third party which are incidental to the disputes on infringement of Intellectual Property Rights arising under Article 21, they shall also be governed by the rules for the governing law as determined under Article 21.’ 267   Art 23 of the Korean Principles: (1) If there is no choice of law agreement for assignment of Intellectual Property Rights, providing them as security or licence thereof, the law of the State which has the closest connection shall apply. The law of the State of the Habitual Residence of the assignee, security holder, or licensee is presumed to be the law of the State with the closest connection. (2) When the contractual relationship of assignment of Intellectual Property Rights, providing them as security or licence thereof, is interfered by a tort, the governing law of the contractual relationship shall also govern it. 268   Art 24 of the Korean Principles: 265 266

(1) Initial ownership of Registered Intellectual Property Rights shall be governed by the law of each Registered State. (2) Initial ownership of the Non-registered Intellectual Property Rights shall be governed by the law of State in which the Intellectual Assets are first created or devised, such as the law of the State of Habitual Residence of the person who created or devised them. (3) If there is more than one person involved in the creation or devise under Paragraph 2, the law of the State with the closest connection to the creation, devise and the first publication shall govern unless the parties agreed otherwise. (4) If the governing law under Paragraphs 2 or 3, does not recognise the Intellectual Property Rights, the law of the Protecting States in which the rights are first exploited shall govern.’ Art 25 of the Korean Principles: (1) For the cases of Article 24, if the Intellectual Assets have been generated by a contract or other preexisting relationship between the parties, the governing law of the contract or relationship shall govern. (2) Notwithstanding Paragraph 1, initial ownership of the Intellectual Property Rights or succession thereof, which is generated as employee’s invention, commissioned work or under a similar relationship, shall be governed by the law of the State where the employer has Habitual Residence unless the parties have agreed otherwise. 269   Art 26 of the Korean Principles: ‘The court of the Recognition State may recognise a Foreign Adjudication which has not become final and non-appealable yet after trial or other procedure equivalent thereto, if it meets all requirements under Paragraph 1. Provided, however, the court of the Recognition State may hold the recognition or enforcement until the adjudication become final when there is a fair reason to do so.’

Korea  829 Principles extend the scope of recognisable adjudication to judicial settlement, waiver of claims, acceptance of claims, etc, which are deemed to have the same effect as adjudication under the law of the rendition state.270 The court of the recognition state may deny the recognition and enforcement of a foreign adjudication that awards punitive damages or excessive damages if it determines that those remedies exceed compensatory damages or actual loss.271 Even statutory damages, pre-established damages, or legal costs such as attorney fees may be denied by the recognition court.272 A foreign adjudication that ordered an injunction against the infringement of intellectual property rights, inclusive of seizure orders or destruction orders of the infringing items and/or the copying or manufacturing means, may be enforced by similar legal remedies available under the law of the enforcement state under the same circumstances.273 The effects of the foreign adjudication which can be recognised by the recognition state shall be limited to the range that the state of adjudication designates.274 Also, a foreign adjudication with respect to existence/validity disputes of intellectual property rights or disputes on termination or infringement of intellectual property rights is recognised or enforced to the extent to which similar legal remedies can be rendered by the recognition or enforcement state under the same situation.275 An adjudication which declares the intellectual property rights registered in a foreign state to be invalid may only be recognised or enforced between the parties of the proceedings.276 In addition, partial recognition of a foreign judgment is possible.277 2.4.5 Arbitration Articles 33 to 49 of the Korean Principles prescribe arbitration. As far as arbitration of intellectual property rights-related disputes is concerned, the matters that are not provided specifically in the Korean Principles are determined pursuant to the Model Law on International Commercial Arbitration of UNCITRAL, including its 2006 Amendment.278 They consist of general provision, arbitrability of intellectual property disputes, arbitration agreements of international intellectual property disputes, arbitral proceedings of international intellectual property disputes, and recognition and enforcement of arbitral award. In this regard, several features of the Korean Principles need to be noted. In terms of arbitration of intellectual property rights-related disputes, party autonomy is stressed. The arbitrator or court, to the fullest extent, respects the principle of party autonomy in consideration of the purport of the arbitration system, in determining the validity or the subject of the arbitration agreement.279 Also, the Korean Principles place considerable weight on the place of arbitration. Parties can freely select the place of arbitration and can further agree to the omission of a place of arbitration. Unless otherwise agreed, the arbitrator determines the location with regard to the circumstances of the intellectual   Art 27 of the Korean Principles.   Art 28 of the Korean Principles. 272   Art 28(1) and (2) of the Korean Principles. 273   Art 32 of the Korean Principles. 274   Art 29(1) of the Korean Principles. 275   Art 29(2) of the Korean Principles. 276   Art 29(3) of the Korean Principles. 277   Art 30 of the Korean Principles. 278   Art 35 of the Korean Principles. 279   Art 33 of the Korean Principles. 270 271

830  Gyooho Lee property rights-related disputes in question, inclusive of the convenience of the parties.280 In addition, the Korean Principles provide for online arbitration procedure.281

Section II  Hypothetical Case Studies Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit.

Case 1(1) Would a Korean court have international jurisdiction if the defendant B had its residence in Korea? Would the decision regarding international jurisdiction of the Korean court differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located in Korea?

Article 2(1) of the Private International Act prescribes that: In case a party or a case in dispute is substantially connected to the Republic of Korea, a court shall have international jurisdiction. In this case, the court shall obey reasonable principles, compatible to the ideology of the allocation of international jurisdiction, in judging the existence of the substantial connection.

Furthermore, Article 2(2) of the Private International Act provides that: A court shall judge whether or not it has international jurisdiction in light of jurisdictional provisions of domestic laws and shall take a full consideration of the unique nature of international jurisdiction in light of the purport of the provision of paragraph (1).

Hence, the Supreme Court in Korea held that the court should decide whether or not a court in Korea has international jurisdiction by virtue of the fundamental ideology that is to contribute to fairness between the parties, appropriateness, expediency of adjudication, and judicial economy. Specifically, the court should take into account personal interests such as fairness between the parties, convenience for them, predictability from their viewpoint, and interests of the judicial body or state such as appropriateness, expediency, efficiency of adjudication process, and effectiveness of a judgment. The court should reasonably determine what interests it would protect among them, considering it as the objective standard the substantial connection between a court of the forum state and the parties, and between a case in dispute and a court of the forum state.282 Let us suppose that defendant X has residence in Korea and the injury caused by the defamation, a kind of tort, occurred in Korea on the basis of the double actionability rule   Art 34 of the Korean Principles.   Art 46 of the Korean Principles. 282   Judgment rendered by the Supreme Court on 27 January 2005, Case No 2002Da59788; Judgment rendered by the Supreme Court on 29 May 2008, Case No 2006Da71908, 71915; Judgment rendered by the Supreme Court on 15 July 2010, Case No 2010Da18355. 280 281

Korea  831 followed by the court in Korea.283 In this regard, the Sonata of Temptation case284 needs to be explored. In the Sonata of Temptation case285 mentioned above, the Supreme Court reasoned that the court in Korea has international jurisdiction based on the following grounds: 1. one of two defendants is a legal entity incorporated in the Republic of Korea whose main place of business is located in Korea and the other of them is a natural person having Korean nationality whose domicile, a concept recognised in civil law countries and different from that of common law countries, is located in Korea; 2. copyright infringement took place in Korea; and 3. there are no special grounds for which the court in Korea believes that adjudicating in Korea contravenes the procedural goals to achieve fairness between the parties, and appropriateness and expediency of the adjudication. A court in Korea is very likely to have the international jurisdiction if defendant X has residence in Korea.286 Even though it is governed by case law 287 prior to the 2001 full revision of the Private International Act having adopted general principles on international jurisdiction, the decision regarding international jurisdiction of the Korean court might not differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located in Korea. Article 5(1) of the Civil Procedure Act prescribes that: [the] general forum of a juristic person or any other association or foundation shall be determined pursuant to the place where its principal office or business place is located, and in cases where there exists no office and business place, it shall be determined pursuant to the domicile of the person principally in charge of its duties.

In addition, Article 5(2) of the Civil Procedure Act provides that: In cases where the provisions of paragraph (1) are applied to a foreign juristic person and any other foreign association or foundation, their forums shall be determined pursuant to their offices, business places, or the domiciles of the persons in charge of their duties, in the Republic of Korea.

Furthermore, Article 12 of the Civil Procedure Act states that: A lawsuit concerning the affairs of an office or business place against a person who keeps such an office or business place may be brought to the court located in the place of such an office or business place.

Article 5 of the Civil Procedure Act prescribes a general jurisdiction, whereas Article 12 of the same Act provides a special jurisdiction. The Supreme Court held that a court in Korea had international jurisdiction, basing its rationale on Article 12 of the Civil Procedure Act, in a case where foreign employees working at the Seoul office of a company incorporated in another country had brought an action seeking damages against the foreign company on the basis that they were wrongfully fired.288   Judgment rendered by the Supreme Court on 28 January 1994, Case No 93Da18167.   Judgment rendered by the Seoul Central District Court on 13 March 2008, Case No 2007Gahap53681. 285   ibid. 286  Judicial Research and Training Institute, Private International Law and International Civil Litigation 86 (2011) (hereinafter ‘JRTI’). 287   Judgment rendered by the Supreme Court on 28 July 1992, Case No 91Da41897; Judgment rendered by the Supreme Court on 9 June 2000, Case No 98Da35037. 288   Judgment rendered by the Supreme Court on 28 July 1992, Case No 91Da41897. 283 284

832  Gyooho Lee In a case where the defendant was a corporation incorporated in a third country X, but a branch was located in Korea, a court in Korea had international jurisdiction even if the dispute is irrelevant to the business of the Korean branch, basing its rationale on Article 5 of the Civil Procedure Act. However, the Korean court would not have international jurisdiction if there were special circumstances under which forcing the defendant to appear before the court was substantially unreasonable.289 The difference between these two judgments rendered by the Supreme Court is that the former case recognised only special jurisdiction over the dispute whereas the latter recognised general jurisdiction over it.290 However, the two cases mainly relied on domestic jurisdictional provisions. We need to explore the changing trends after the 2001 revision of the Private International Act. Even though the domestic jurisdictional provisions became one of factors considered by a court to determine international jurisdiction following the Act’s revision, they are still important factors in terms of the determination of international jurisdiction. In this regard, it should be noted that exercising international jurisdiction based on general jurisdiction under Article 5 of the Civil Procedure Act is unreasonable so that it can invoke the exorbitant ground of jurisdiction. For example, in a case where a Korean national brings a lawsuit against a foreign juristic person having its offices in Korea in terms of a claim irrelevant to the business of the foreign legal person, a Korean court may entertain international jurisdiction.

Case 1(2) Would a Korean court have international jurisdiction if copies of the journal were distributed in Korea in the language which is officially spoken? Would the decision differ if the journal was printed in Korea for distribution in neighbouring country X (in a language which is not spoken in Korea)?

Whether a court of the states where plaintiff A’s injury occurred has international jurisdiction depends on whether there is substantial connection between B and Korea, one of the states where A’s injury took place, so that it can reasonably be foreseen that A will bring the defamation lawsuit against B in Korea.291 A Korean court can be considered a court of the states where A’s injury took place because copies of the journal were distributed in Korea in Korean. I think a court in Korea will have international jurisdiction because there is substantial connection between B and Korea so that it can reasonably be foreseen that A will bring the lawsuit in Korea. The decision would not differ if the journal was printed in Korea for distribution in Japan in Japanese, because Korea is the place where the defamatory act occurred, irrespective of language. Case 1(3) Under the law of your country, would residence of the defendant be necessary for a Korean court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

  Judgment rendered by the Supreme Court on 9 June 2000, Case No 98Da35037.   KH Suk, A Commentary on Private International Law of 2001 (Seoul, Jisan Publ, 2003) 49 (hereinafter ‘Suk, Commentary’) (criticising the decision of the Supreme Court having recognised general international jurisdiction pursuant to Art 5 of Civil Procedure Act because the legislative intent to provide Art 12 of the same Act separately in addition to Art 5 of the same Act was disregarded and general jurisdiction based on doing business recognised in America was criticised as a typical example of exorbitant grounds of jurisdiction). 291   See Judgment rendered by the Supreme Court on 21 November 1995, Case No 93Da39607. 289 290

Korea  833 The residence of the defendant need not be considered in order for a Korean court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published.292 Article 11 of the Korean Principles prescribes that a court of the state in which the defendant committed the main infringing activities involving the intellectual property rights has jurisdiction over the disputes regarding infringement of intellectual property rights. The Korean Principles proceed to provide that ‘In this case, the jurisdiction of the court shall be extended to all claims for injuries caused by the defendant’s infringing activities, wherever the injuries occurred’.293

Case 2: Subject-Matter Jurisdiction A Korean court is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of the infringement proceedings, B makes a counterclaim that the patent is invalid.

Case 2(1)  Would a Korean court have international jurisdiction? Would a Korean court be competent to decide the question of the infringement of foreign intellectual property rights?

Even though the law of the state where protection is sought is the governing law pursuant to Article 24 of the Private International Act in terms of protection of intellectual property rights, there is no provision on international jurisdiction which specifically deals with intellectual property rights. As a result, a Korean court can determine whether it has international jurisdiction based on Article 2 of the Private International Act. Hence, a court of the registered state would not have exclusive international jurisdiction.294 According to Article 11(1) of the Korean Principles, the court of state in which the defendant committed the main infringing activities upon intellectual property rights has international jurisdiction over these disputes. It follows that courts of country Y have international jurisdiction in accordance with Article 11(1) of the Korean Principles. Case 2(2) Would the Korean court have international jurisdiction to decide upon the issues of validity and registration of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights?

The Korean court would not have the international jurisdiction to decide upon the issues of validity and registration of foreign intellectual property rights. The lower court’s decisions held that a court of the registered state has exclusive international jurisdiction to decide upon the issues of validity and registration of foreign intellectual property rights.295 Article 10(1) of the Korean Principles also is consistent with the holding of the lower court in Korea. Such a decision upon the issues of validity and registration would have the legal   See KH Sohn (ed), Essays on Korean Patent Law (Seoul, Bub Young Sa, 2005) 929 (hereinafter ‘Sohn, Patent’).   Art 11, second sentence of the Korean Principles. 294   Sohn, Patent, 928. 295   Judgment rendered by the Seoul High Court on 21 January 2009, Case No 2007Na96470. 292 293

834  Gyooho Lee effects only between the parties.296 The decision would differ with respect to registered and non-registered intellectual property rights. Article 10 of the Korean Principles prescribes only exclusive international jurisdiction over a dispute on the existence or validity of registered intellectual property rights. Case 2(3) What would be the decision of the Korean court if the question of the validity of foreign intellectual property rights arose as a preliminary question and remained unchallenged by the parties?

According to Article 10(2) of the Korean Principles, a court of the state where intellectual property rights have been registered does not have exclusive international jurisdiction if a dispute on the existence or validity of intellectual property rights is raised as a preliminary question. The determination thereon is not legally binding in any subsequent legal actions.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries W, X, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A discovers that B, C and D are infringing its patents in countries X, Y and Z. A institutes patent infringement proceedings against the alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims to the forum of country W.

Case 3(1) Assuming that the court of country W is a Korean court, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the grounds of an infringement of a contract?

The Korean Supreme Court has held that, in deciding whether a court has international jurisdiction over multiple defendants from different states, the court should carefully take into account overall factors such as relations among the claims, the possibility of dispute resolution in a single proceeding, and the practical possibility of appearance before the court of the defendant, so that the defendant cannot be unreasonably forced to attend the hearing of the court.297 In this case, B, C, and D are located in X, Y and Z respectively. A has his/her principal office of business in Korea and is an owner of identical patents registered in X, Y, Z and Korea. It is clear that a Korean court has international jurisdiction over the claim arising from the infringement of the patent registered in Korea. However, it is difficult to determine if a Korean court can join the claims arising from the infringement of the patent registered in X, Y and Z, after taking into account the fact that B, C and D have nothing to do with the patent rights registered in Korea, and for their convenience, they need to be tried in X, Y and Z respectively. The decision would differ if A was a licensor and the claims were raised against licences B, C and D on the grounds of an infringement of a contract. In an action related to property rights, a court of the state where the contractual duty should be performed has international jurisdiction by virtue of Article 8 of the Civil Procedure Act unless otherwise   Sohn, Patent, 929.   Judgment rendered by the Supreme Court on 26 September 2003, Case No 2003Da29555.

296 297

Korea  835 agreed.298 This decision’s application needs to be confined to a duty arising out of a contract because applying it to a duty arising from a tort or unjust enrichment may result in some disadvantages over defendants, in that the defendants can be compelled to appear before a court of the state where he/she does not expect that he/she will be sued.299 A Korean court will entertain international jurisdiction if Korea is the state where the contractual duty should be performed in this regard. Article 16 of the Korean Principles states as follows: (1) The court of the State where one of the defendants has his Habitual Residence [sic] shall have jurisdiction over other defendants who do not have Habitual Residence [sic] in the State if there is a substantial, direct, and predictable connection between the forum’s Intellectual Property Rights [sic] and the other defendants and if the claims are so closely connected that they should be adjudicated together to avoid the risk of contradictory judgments. (2) Paragraph 1 shall not apply to the co-defendant who entered into an exclusive choice of court agreement with the plaintiff. (3) Once an action is filed in a court of a State in accordance with Paragraph 1, the court of the State shall have jurisdiction over the claims for injuries caused by the activities that lead to the risk of contradictory judgments, regardless of the place of injury.

In addition, habitual residence includes a party’s principal place of business, the state where it has its statutory seat of legal entity, and the state under whose law it was incorporated or formed pursuant to Article 2, subparagraph 7 of the Korean Principles. Case 3(2) Assuming that B, C and D are members of a group of a corporation and take identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of X where the coordinator of infringing activities has its main place of business. Assuming that the court of X is a Korean court, would it consolidate the proceedings if it was to decide upon the request of A? And, if so, under what conditions? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

A seeks to consolidate the proceedings before a court of Korea where the coordinator of infringing activities has its main place of business. As far as international jurisdiction on joinder of parties is concerned, the Korean Supreme Court held that, in deciding whether a court has international jurisdiction over multiple defendants from different states, the court should carefully take into account overall factors such as relations among the claims, the possibility of dispute resolution in a single proceeding, and the practical possibility of appearance of the defendant before the court, so that the defendant cannot be unreasonably forced to attend the hearing of the court.300 B, C, and D are members of a group of a corporation, and the coordinator of infringing activities has its main place of business in Korea so that the claims against them can be closely connected to one another and be solved in a single proceeding before a Korean court. If allowing the Korean court to entertain international jurisdiction over the consolidation of the parties does not create too great a burden upon B, C, and D in appearing before the Korean court, the Korean court could consolidate the proceedings.   Judgment rendered by the Supreme Court on 20 April 1972, Case No 72Da248.   KOPILA, International Rules, at 129; JRTI, 107-8. 300   Judgment rendered by the Supreme Court on 26 September 2003, Case No 2003Da29555 (dealing with international jurisdiction in a case involving a tort on the Internet). 298 299

836  Gyooho Lee The decision would not change, even though B, C and D raised counterclaims that A’s patents are invalid, because invalidity of the patents registered in foreign countries will be handled as part of the preliminary questions of an infringement action consolidated in a Korean court. In this regard, Article 10(1) of the Korean Principles prescribes that the court of the state where intellectual property rights have been registered has exclusive international jurisdiction over the existence/validity disputes of the intellectual property rights. Article 10(2) of the Korean Principles stipulates that Article 10(1) of the Korean Principles does not apply if the existence/validity dispute of intellectual property rights is a preliminary question and the determination thereon is not legally binding in any subsequent legal actions.

Case 4:  Choice of Court Agreements A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing inter alia that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not Korean nationals and do not have any place of business in Korea:

Case 4(1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose?

A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. According to the overwhelmingly prevalent views among Korean scholars, the registered state does not have exclusive international jurisdiction over the action for damages arising out of the patent infringement.301 Hence, such a choice of court clause of the licence would be enforceable. However, in a case where such a choice of court clause is exclusive in nature, excluding a Korean court from exercising the international jurisdiction will be valid only if the following requirements are met: (i) the case is not subject to exclusive international jurisdiction of the Korean court; (ii) the forum agreed upon by both parties has international jurisdiction over the case; and (iii) the case has reasonable connection with the forum agreed upon by both parties.302 In a case where such a choice of court clause designating a court of a foreign state is valid, a Korean court should dismiss the lawsuit if A filed the lawsuit against B seeking the 301  Suk, vol 4, 601–2; Kyung-Han Sohn, ‘International Jurisdiction regarding an Action Arising from Infringement of Intellectual Property Rights’ (2003) 8 Korea Private International Law Journal 520; SH Lee, ‘International Jurisdiction and Choice of Law Regarding Intellectual Property Rights Disputes on Cyberspace’ (2003) 8 Korea Private International Law Journal 231. 302   Judgment rendered by the Supreme Court on 25 March 2004, Case No 2001Da53349.

Korea  837 patent infringement damages in Korea.303 The decision would not differ if the parties made a new choice of court agreement at the time when the dispute arose. Now, let us review the Korean Principles. In the case where the parties agree that a court of a certain state will adjudicate any disputes which the parties face or will face within a certain legal relationship, the court of the said state has jurisdiction over the disputes.304 The international jurisdiction mentioned above is exclusive in nature unless the parties agreed otherwise.305 The choice of court agreement is valid only if it is valid under both the law of the state chosen by the agreement and the law of the state of forum where the case is pending.306 Case 4(2) Would the Korean court enforce an exclusive choice of court clause if the defendant raised a counterclaim that the patents are invalid?

The Korean court would enforce an exclusive choice of court clause if the defendant raised a counterclaim that patents are invalid. As mentioned above, the registered state will entertain exclusive international jurisdiction over the issues on validity of patents, and the exclusive choice of court clause will be invalid in this regard. However, the Korean court can enforce the exclusive choice of court clause if its validity issues are raised as preliminary questions. The issue here is whether a counterclaim that patents are invalid can be categorised into one of the preliminary questions. Unfortunately, Article 2 subparagraph 13 defines them as ‘the problems of which the determination is unavoidable as a prerequisite for the adjudication process, but that need not be explicitly included in the conclusion of an adjudication of a court or, of an arbitral award’. The common principles finalised by the Korean and Japanese working groups do not have a provision on the definition of preliminary questions, leaving their definition to the interpretation of academics, attorneys and courts. Case 4(3) Would the Korean court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings?

The Korean court would not assert jurisdiction if the choice of court agreement was made in patent infringement proceedings, because the international transfer of the proceedings is impossible. Case 4(4) Would the parties’ arbitration agreement be enforceable according to Korean law? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

The parties’ arbitration agreement will be enforceable according to Korean law if it pertains to civil or commercial matters. In accordance with Article 37(1) of the Korean Principles,   SY Lee, New Civil Procedure (Seoul, Pak Young Sa, 2009) 101.   Art 13(1) of the Korean Principles. 305   Art 13(2) of the Korean Principles. 306   Art 13(3) of the Korean Principles. 303 304

838  Gyooho Lee existence/validity disputes of registered intellectual property rights and the defence of their invalidity are arbitrable. However, the arbitral award on the existence/validity of registered intellectual property rights is effective between the parties only.307

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a Korean court:

Case 5(1) What procedural steps would a Korean court take with regard to pending proceedings in countries X and Y? Would the decision of the Korean court be different if the dispute was related to intellectual property rights that are not subject to registration?

Before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. In other words, B exploits torpedo litigation. In this regard two questions will be raised. The first is whether the two lawsuits involve the same cause of action. The second is whether the Korean court may proceed with the case. Several solutions have been proposed but the most desirable is that prescribed in the Korean Principles. According to the Korean Principles, the pre-emptive jurisdiction of the court first seised is denied if the litigation is an action confirming non-existence of certain obligations, and an action for performance of the very obligation is filed with the court second seised while the defendant has not filed an initial statement or answer on the merits of the case with the court first seised. The court first seised shall stay the case if the court second seised is expected to render an adjudication to be recognised by the state of the court first seised.308 If B brings an infringement suit in country Z, ie, a Korean court, before B has filed an initial statement or answer on the merits of the cases with the courts of X and Y, the primary international jurisdiction of the courts of X and Y will be denied. Rather, the courts of X and Y shall stay the case if the Korean court is expected to render an adjudication to be recognised by the state of the courts of X and Y. Case 5(2) What procedural steps would the Korean court take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

The Korean Principles apply lis pendens provisions to the cases between the same parties who filed actions against the other in the courts of a different state if the claims are related to each other, which may be caused by the same, or a series of transactions or infringing activities, regardless of the remedies sought.309 In this case, the court first seised has juris  Art 37 proviso of the Korean Principles.   Art 17(5) of the Korean Principles.   Art 17(1) of the Korean Principles.

307 308 309

Korea  839 diction over the cases.310 The infringement suit and validity dispute are related to each other which may be caused by the same, or series of transactions or infringing activities, regardless of the remedies sought. Hence, the Korean court should determine which court has been first seised. Applying the provisions on lis pendens by virtue of the Korean Principles, an action is regarded to have been commenced when a written document that initiates the proceedings or a document equivalent thereto is submitted to the court or when the document is submitted to the authority for the service in cases where the document needs to be served before submission to the court.311 However, an action shall not be considered to have been commenced if the plaintiff afterwards does not take the step to serve the document to the defendant or to submit the document to the court respectively.312 The court second seised shall stay its proceedings if the state of the court first seised has jurisdiction over its case and it is expected that the court will render an adjudication on the case pending before the court second seised by consolidation or other means, which can be recognised by the state of the court second seised. However, it does not apply if the state of the court second seised has exclusive jurisdiction over the case in accordance with choice of court agreement of the parties or under its jurisdictional rules.313 The court second seised shall dismiss the case immediately if the adjudication of the court first seised, which can be recognised, is submitted.314 According to the Korean Principles, the court second seised may proceed with the case, by the request of the parties, if the plaintiff of the court first seised does not take necessary action to reach the adjudication on the merits of the case or the court first seised does not adjudicate the case on the merits within a reasonable time.315

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.

Case 6(1) Assuming that the court of country X is a Korean court, could it apply the patent statute for allegedly infringing acts occurring in country Z?

A Korean court cannot apply the Korean Patent Act for allegedly infringing acts occurring in country Z based on territoriality principles.316   ibid.   Art 17(6) of the Korean Principles. 312   ibid. 313   Art 17(2) of the Korean Principles. 314   Art 17(3) of the Korean Principles. 315   Art 17(4) of the Korean Principles. 316   Territoriality principles were followed in the judgment rendered by the Seoul Central District Court on 30 August 2007, Case No 2006Gahap53066 in terms of the governing law on the effect of trade mark rights. 310 311

840  Gyooho Lee Meanwhile, Article 19 of the Korean Principles prescribes that: [u]nless these principles provide otherwise, the law of Registered State shall apply to the issues of existence/validity disputes, the contents, extinguishment, infringement, assignability, and the effect of assignment of registered IPRs as against a third party, and the law of Protecting State shall apply to the same issues of the non-registered IPRs.

However, if an infringement of intellectual property rights occurs or is likely to occur in multiple states which are unidentifiable or difficult to identify, the law of the state with the closest connection governs the issues of all infringement.317 Case 6(2) Assuming firstly that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a Korean court, could the court apply the patent statute of country X for allegedly infringing acts that occur in Korea?

According to Article 24 of the Private International Act, the law of the state where protection is sought is the law of the registered state, X.318 However, a Korean court cannot apply the patent statute of country X for allegedly infringing acts that occur in Korea because applying the patent statute of country X to the instant case results in extraterritorial effects of the patent granted in country X, violating a social order in Korea pursuant to Article 10 of the Private International Act in Korea.319

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software etc) among users from all over the world. After several months when the website became very popular A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C requesting that they close the website and pay damages. Assuming that the Korean court has international jurisdiction in such a case:

Case 7(1) What law would be applied to determine the liability of A, B and C for direct infringement acts?

Article 24 of the Private International Act provides that infringement of intellectual property rights will be governed by lex protectionis. However, in terms of copyright infringement, Article 5(2) of the Berne Convention will be applied in this context.320 In this regard, lex protectionis is the respective law of the states where the infringing acts took place or where the injury occurred. However, this approach is difficult to apply in a digital environment such as online piracy because too many lex protectionis can be created.321 The Korean Principles provide a solution to this approach.   Art 21(1) of the Korean Principles.   Judgment rendered by the Seoul Central District Court on 30 August 2007, Case No 2006Gahap53066. 319   ibid. 320   Judgment rendered by the Seoul Central District Court on 20 June 2008, Case No 2007 Gahap 43936. 321   Lee, Entertainment, 71. 317 318

Korea  841 Case 7(2) Would parties be allowed to agree on the applicable law (infringement and remedies)?

Article 20 of the Korean Principles provides for the choice of law agreement regarding infringement of intellectual property rights. However, the common Principles finalised by both the Korean and Japanese working groups allow the choice of law agreement regarding remedies against their infringement. In this regard, Article 20 of the Korean Principles needs to be interpreted to permit the choice of law agreement regarding infringement of intellectual property rights. Case 7(3) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

The governing law would not be different if the claim for damages was brought against the Internet service provider as a secondary infringer. The lex protectionis will be applied to the claim for damages under Article 5(2) of the Berne Convention rather than Article 24 of the Private International Act. Parties are allowed to agree on the applicable law regarding infringement and remedies in accordance with Article 20 of the Korean Principles. Case 7(4) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Article 24 of the Private International Act provides that infringement of intellectual property rights will be governed by lex protectionis. In this regard, lex protectionis is the respective law of the states where the infringing acts took place or where the injury occurred. However, this approach is difficult to apply in a digital environment such as online piracy because too many lex protectionis can be created.322 The Korean Principles provide a solution to this approach. Article 21 of the Korean Principles prescribes that: (1) If an infringement of intellectual property rights occurs or is likely to occur in multiple States which are unidentifiable or difficult to identify, the law of the State with the closest connection shall govern the issues of all infringement. (2) The court shall consider the following factors in determining the State with the closest connection:



1. The habitual residence of the defendant. However, the specific place of business shall be regarded as the Habitual Residence if the infringement has been caused by activities of the place of business; 2. The State where the activities which cause infringement are primarily conducted or to which the activities are directed; and 3. The extent of activities and investment of the holder of intellectual property rights.

322   G Lee, ‘Some Issues on International Dispute Related to Entertainment Industries: Focused on Choice of Law’ (2008) 14 Korea Private International Law Journal 40, 71.

842  Gyooho Lee (3) If the State that has the closest connection with infringement cannot be determined by Paragraph 2, the State where the habitual residence of the defendant is located, as determined by Item 1, Paragraph 2, is considered to be the State with the closest connection. (4) If the law of the State with the closest connection applies to all infringement of intellectual property rights, the defendant may argue that his activities are legally allowed under the law of another State which is affected by the activities causing the infringement. If the argument is valid, the court may neither prohibit nor limit the activities of the defendant in the other State. Provided, however, the court may act otherwise if the prohibition or limitation is inevitable for appropriate protection of the rights of the person whose IPRs were infringed.

Parties may enter into a choice of law agreement regarding all or part of the disputes anytime before or after the disputes arise in accordance with Article 20 of the Korean Principles. It seems to me that a Korean court would define ubiquitous infringement of intellectual property rights as the cases where infringing acts of intellectual property rights occur or are likely to occur in multiple states which are unidentifiable or difficult to identify by virtue of Article 21 of the Korean Principles.

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B’s is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a Korean court:

Case 8(1) What law would the Korean court apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning the right to obtain patents be enforceable in Korea?

According to Article 24 of the Private International Act, the law of the state where protection is sought will be applied to determine who the initial owner of the invention is. In terms of registered intellectual property rights, the law of the registered state will be the law of the state where protection is claimed in accordance with some lower court decision in Korea.323 The parties’ choice of law clause concerning the right to obtain patents would not be enforceable in Korea. In this respect, the Korean Principles deal with the governing law of initial ownership of both registered and non-registered intellectual property rights respectively. In terms of non-registered intellectual property rights, the Korean Principles do not limit its application to copyright, anticipating their future extension. Initial ownership of registered intellectual property rights is governed by the law of each registered state.324 Initial ownership of the non-registered intellectual property rights is governed by the law of state in which the intellectual assets are first created or devised, such as the law of the state of habitual residence of the person who created or devised them.325 If there is more than one person   See eg Judgment rendered by the Seoul Central District Court on 30 August 2007, Case No 2006Gahap53066.   Art 24(1) of the Korean Principles.   Art 24(2) of the Korean Principles.

323 324 325

Korea  843 involved in the creation or devise of non-registered intellectual assets, the law of the state with the closest connection to the creation, devise and first publication governs, unless the parties agreed otherwise.326 As far as non-registered intellectual property rights are concerned, the law of the protecting state in which the rights are first exploited will govern if the intellectual property rights are recognised neither by the law of state in which the intellectual assets are first created or devised, nor the law of the state with the closest connection to the creation, devise and first publication.327 Case 8(2) Would the decision differ if A made an invention in joint collaboration with other researchers?

The decision would not be different if A made an invention in joint collaboration with other researchers. According to Korean case law and the Korean Principles, initial ownership of registered intellectual property rights shall be governed by the law of each registered state.328 Case 8(3) Would the applicable law differ in the case of initial authorship, initial title to trade mark, or other intellectual property rights?

Initial ownership of registered intellectual property rights such as a patent and trade mark will be governed by the law of the registered state, whereas that of non-registered intellectual property rights will be governed by the law of the state where protection is claimed. Sometimes, it is difficult for a Korean court to identify the law of the state where protection is sought. Case 8(4) What law would the Korean court apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

In accordance with Article 25(1) of the Private International Act, the Korean court will apply the law explicitly or implicitly agreed upon by both parties. The law which has closest connection with the contract will be applied if there is no choice of law agreement between both parties.329 The state where the habitual residence of the defendant is located is presumed to be the state having the closest connection with the contract.330 Hence, the Korean court will presumably apply the law of the state where the habitual residence of B is located. Now, let us turn to the Korean Principles. According to the Korean Principles, the contractual relationship on assignment, security, or licensing of intellectual property rights will be governed by the law applied to the contractual relationship.331 When the contractual relationship on assignment, security or licensing of intellectual property rights is interfered with by a tort, the governing law of the   Art 24(3) of the Korean Principles.   Art 24(4) of the Korean Principles.   Judgment rendered by the Seoul Central District Court on 30 August 2007, Case No 2006Gahap53066; Art 24(1) of the Korean Principles. 329   Art 26(1) of the Private International Act. 330   Art 26(2) of the Private International Act. 331   Art 20 of the Korean Principles. 326 327 328

844  Gyooho Lee contractual relationship shall also govern it.332 If there is no choice of law agreement for assignment, security or licensing of intellectual property rights, the law of the state which has the closest connection shall apply. The law of the state of the habitual residence of the assignee, security-holder, or licensee is presumed to be the law of the state with the closest connection.333

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus infringed. Assuming that a Korean court is a court of country X:

Case 9(1) Would the Korean court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors?

The Korean court cannot enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors because the Korean copyright law does not allow the transfer of moral rights of authors, and applying the clause under which the parties agreed to choose a foreign law as the governing law violates the public policy of Korea.334 In this regard, Article 20 of the Korean Principles prescribes that: (1) The parties may enter into a choice of law agreement for all or part of disputes anytime before or after the disputes arise. Provided, however, the choice of law agreement regarding the issues of existence/validity disputes, the contents, extinguishment, infringement, assignability, and the effect of assignment of intellectual property rights on a third party, and registration of registered IPRs shall be binding only on the parties concerned. (2) The choice of law agreement between parties shall not affect the rights of third parties that are established before the agreement. (3) The existence and validity of the choice of law agreement shall be governed by the law chosen thereby.

Case 9(2) How will the court deal with the issue of transferability?

The Von Dutch Court335 has dealt with the issue of transferability as one concerning the nature of intellectual property rights itself. Case 9(3) What would be the applicable law in a case where there is no choice of law made by the parties?   Art 23(2) of the Korean Principles.   Art 23(1) of the Korean Principles. 334   Art 10 of the Private International Act. 335   KH Suk, ‘Principles on Private International Law Regarding Intellectual Property Rights: Choice of Law’, seminar held by Waseda University Legal Institute GCOE and Korea Private International Law Association on 25 to 27 September at Seoul National University, 141. 332 333

Korea  845 The Seoul High Court in the Von Dutch case336 held that all issues related to intellectual property rights including creation, extinction, and transferability should be governed by the law of the country where protection is sought pursuant to Article 24 of the Private International Act. The law of the state where protection is claimed will be the governing law. The Korean copyright law will govern the transferability issue of the copyright in a case where there is no choice of law agreement between the parties. Article 23 of the Korean Principles prescribes that: (1) If there is no choice of law agreement for assignment of Intellectual Property Rights, providing them as security or licence thereof, the law of the State which has the closest connection shall apply. The law of the State of the Habitual Residence of the assignee, security holder, or licensee is presumed to be the law of the State with the closest connection. (2) When the contractual relationship of assignment of Intellectual Property Rights, providing them as security or licence thereof, is interfered by a tort, the governing law of the contractual relationship shall also govern it.

Case 10: Recognition and Enforcement of Foreign Judgments A court of foreign country X decides a case between parties A and B and rules that A is the owner of a patent registered in Korea. A refers to a Korean court seeking recognition and enforcement of the foreign judgment.

Case 10(1) Could the foreign judgment concerning the ownership be recognised in Korea? How would the recognising court assess the international jurisdiction of the rendering court?

The foreign judgment concerning an ownership can be recognised in Korea pursuant to Article 217 of the Civil Procedure Act. The recognising court can assess the international jurisdiction of the rendering court, ie, the court of X on the basis of the Act and subordinate decrees of Korea, or to the treaties.337 Case 10(2) Would the parties be required to re-litigate the dispute in order to register the ownership decision in the registry of a recognising country?

A, the owner of the patent registered in Korea, is not required to re-litigate the dispute in Korea in order to have the ownership decision registered in the registry of the Korean Intellectual Property Office. Case 10(3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Enforcement is necessary to enforce the foreign judgment rendered by a court of country X.338 Article 27 of the Civil Enforcement Act prescribes as follows:   Judgment rendered by the Seoul High Court on 8 July 2008, Case No 2007Na80093.   Art 217 subpara 1 of the Civil Procedure Act.   Arts 25 and 26 of the Civil Enforcement Act, Act No 9525, amended on 25 March 2009.

336 337 338

846  Gyooho Lee (1) A judgment of enforcement shall be made without making any examination as to whether the judgment is right or wrong. (2) A lawsuit seeking a judgment of enforcement shall be dismissed if it falls under any of the following subparagraphs:

1. When it has not been proved that the judgment of a foreign court has become final and conclusive; and 2. When the foreign judgment fails to fulfil the conditions under Article 217 of the Civil Procedure Act.

A compulsory enforcement based upon a foreign judgment may be carried out only if a Korean court has made a declaration of its legality by means of an enforcement judgment.339 A lawsuit seeking an enforcement judgment is under the jurisdiction of the District Court located at the debtor’s general forum. If there is no general forum, it shall fall under the purview of the court having jurisdiction over a lawsuit against the debtor under the provisions of Article 11 of the Civil Procedure Act.340

Case 11: Provisional Measures and Injunctions A owns a worldwide famous accessories trade mark. After discovering that B is selling fake goods, which infringe A’s trade mark, on an Internet auction, A files an infringement suit asking the court to issue an injunction to stop the infringing activities and to seize the infringing goods. Assuming that both A and B are residents in Korea and the main infringing activities take place in Korea:

Case 11(1) Would a Korean court have jurisdiction to issue provisional measures/injunctions regarding infringing acts and counterfeited goods located in different countries, which would also have extraterritorial effects? Would the circumstances change if the Korean court did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)?

The Korean court would have international jurisdiction to issue provisional measures/ injunctions regarding infringing acts and counterfeited goods located in different countries. This would also have extraterritorial effects because both A and B are residents in Korea and the main infringing activities took place in Korea. Thus, both parties and the case in dispute have substantial connection with the Republic of Korea by virtue of Article 2 of the Private International Act. Article 11(1) of the Korean Principles clearly states that: The court of State in which the defendant committed main infringing activities upon the intellectual property rights shall have jurisdiction over the disputes regarding IPR infringement. In this case, the jurisdiction of the court shall be extended to all claims for injuries caused by the defendant’s infringing activities, wherever the injuries occurred.

The circumstances would change if the Korean court does not have jurisdiction over the main dispute. In this case, the Korean court might find that it does not have international   Art 26 of the Civil Enforcement Act.   Art 11 of the Civil Procedure Act prescribes that ‘A lawsuit concerning a property right against a person who has no domicile in the Republic of Korea or against a person whose domicile is unknown, may be brought to the court located in the place of the objects of a claim or those of the security, or any seizable property of a defendant’. 339 340

Korea  847 jurisdiction to issue provisional measures/injunctions regarding infringing acts and counterfeited goods located in different countries. If the defendant’s activity is directed to the state in which the injuries occurred, the court of the state shall have jurisdiction over the claim for injuries caused by infringement of intellectual property rights.341 Case 11(2) Could a Korean court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad?

A Korean court cannot issue provisional measures/injunctions regarding infringing acts and counterfeited goods located in different countries which would also have extraterritorial effects. A District Court in Korea held that an injunction to prevent the defendant from using a domain name and a claim for registration of its transfer based on a trade mark registered in the United States will be governed by the registered state, ie, US law. However, the injunction and the claim for registration of its transfer in Korea on the basis of a trade mark recognised in the United States would result in extraterritorial effects, contravening territoriality principles employed by Korea. Unless there is no international agreement between Korea and another state allowing the effect of a trade mark to reach into the other country’s territory, a Korean court will stick to territoriality principles.342 According to the court’s holding, applying the ACPA of the USA to the infringement of a trade mark registered in the USA, and thus imposing on a Korean defendant a duty not to use the domain name and a duty to transfer it to the plaintiff, is not acceptable from the standpoint of the fundamental ideology of the Korean Trade Mark Law scheme and is contrary to a social order prescribed in Article 10 of the Private International Act.343 Hence, the court applied the Unfair Competition Act in Korea to the case in question instead of the ACPA of the USA. Case 11(3) Would a Korean court require the person seeking issuance of provisional measures to grant a guarantee?

A Korean court would require the person seeking issuance of provisional measures to grant a guarantee if the person has no domicile, office or business place in Korea. In such cases where a plaintiff has no domicile, office or business place in the Republic of Korea, the court shall order the plaintiff to furnish a security for the costs of the lawsuit, upon request of a defendant.344 A defendant who has filed a request for furnishing a security may refuse to respond to the lawsuit until the plaintiff furnishes such security.345 Case 11(4) Would a Korean court be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings?   Art 11(2) of the Korean Principles.   Judgment rendered by the Seoul Central District Court on 30 August 2007, Case No 2006Gahap53066 (the ‘Myspace’ domain name case). 343   ibid. 344   Art 117 of the Civil Procedure Act. 345   Art 119 of the Civil Procedure Act. 341 342

848  Gyooho Lee The Korean court would be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings.346 Case 11(5) If the claimant asked to issue an injunction to cease infringing acts, would a Korean court conceive of an injunction to cease as a procedural or substantive measure?

The Korean court would conceive of an injunction to cease as a substantive measure.347

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and the royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y:

Case 12(1) Could intellectual property rights be used as collateral according to Korean law?

Intellectual property rights can be used as collateral according to Korean law. Some examples are as follows: 1. The pledge of a patent right or of an exclusive or non-exclusive licence is allowed under the Korean Patent Act.348 Article 121 of the Patent Act prescribes that a pledgee of a patent right or of an exclusive or non-exclusive licence thereon may not exploit the patented invention except as otherwise provided by a contract when one of those rights is the subject of a pledge. 2. Article 47 of the Copyright Act provides that: (1) The right of pledge on the author’s economic right may be exercised with respect to money or other goods to be received by the holder of the author’s economic right as a result of a transfer of the author’s economic right or utilisation of the work (including remuneration for the establishment of the right of publication and exclusive publication rights of a computer program): provided that the money or other goods shall be seised before payment or delivery. (2) The author’s economic right which has become the object of the right of pledge shall be exercised by the holder of the author’s economic right unless there is a special agreement in the establishment of the right of pledge.

3. Unlike each intellectual property law such as the Patent Act, the Trade Mark Act, the Utility Model Act and the Copyright Act, which deals with offering only intellectual property rights as collateral, the Act on Security for Movables, Credit and the Like349 gives debtors an opportunity to loan large sums from banks by offering a single combined collateral package of all of movables, credits, and intellectual property rights owned by the debtor.350   Art 9(1) of the Arbitration Act (Act No 10207, amended on 31 March 2010, effective on 31 March 2010).   See, eg, Art 126 of the Patent Act. 348   See eg, ibid, Arts 94 (for a patent rightholder) and Art 100(4) (for an exclusive licensee). 349   Act No 10366, enacted on 10 June 2010, effective 11 June 2012. 350   Art 1 of the Act on Security for Movables, Credit and the Like. 346 347

Korea  849 Case 12(2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights?

The Seoul High Court in the Von Dutch case351 held that all issues related to intellectual property rights including creation, extinction, and transferability should be governed by the law of the country where protection is sought pursuant to Article 24 of the Private International Act. The Von Dutch case has followed Professor Kwang-Hyun Suk’s opinion that Article 24 of the Private International Act purports to govern the applicable law of other legal issues such as creation and transfer of intellectual property rights, and of their infringement as well.352 I think the law of country X will be the governing law because it is the law of the state where protection is claimed. In this regard, the law of country Y is the law of the nationality of B. Assuming that the forum is in country X, the court in country X will prefer the law of X to the law of Y as the governing law. Hence, at first glance, the law of X, ie, lex protectionis, seems to be applied to issues such as the creation, effectiveness against third parties, priority and the enforcement of security rights. However, there is an issue as to whether this approach is appropriate and equitable. In this regard, the Korean Principles propose an alternative. According to Article 23(1) of the Korean Principles, the governing law of security agreements for intellectual property rights is the law of the state which has the closest connection unless there is no choice of law agreement for the assignment of intellectual property rights. The second sentence of Article 23(1) of the Korean Principles proceeds to prescribe that ‘The law of the State of the habitual residence of the assignee, security holder, or licence is presumed to be the law of the State with the closest connection’. Even when the security agreement of intellectual property rights is interfered with by a tort, the governing law of the contractual relationship shall govern it. Case 12(3) Would a Korean court apply the same law to registered and non-registered intellectual property rights?

A Korean court will apply the same law, ie, lex protectionis to registered and non-registered intellectual property rights.353

  Judgment rendered by the Seoul High Court on 8 July 2008, Case No 2007Na80093.   Suk, Commentary, 192; See also SH Lee, ‘Current Situation on International Disputes Related to Intellectual Property Rights and Agenda on Private International Law’ (2003) 9 Korea Private International Law Journal 195, 249; Gyooho Lee, Entertainment, 52. 353   Suk, Commentary, 195; KH Suk, ‘Comments on International Intellectual Property Law: Expressing My Regret at Some of Recent Lower Courts’ Cases’ (2008) Law Times 3656. 351 352

The Netherlands DICK VAN ENGELEN*

Contents 1. Introduction................................................................................................................................... 852 2. European Union Law and National Conflict Rules...................................................................... 852 3. International Jurisdiction............................................................................................................... 853 3.1 Cross-Border Jurisdiction.................................................................................................... 854 3.2 General Rule: Defendant Entitled to a ‘Home Game’......................................................... 855 3.3 Special Jurisdiction: Court of the Place of the Harmful Event.......................................... 856 3.4 Special Jurisdiction: Court of Co-Defendant’s Domicile................................................... 858 3.5 Special Jurisdiction: Provisional Measures Only................................................................ 860 3.6 Exclusive Jurisdiction: Validity of Registered IPRs............................................................. 860 3.7 European Litigation Strategies: Mind the Torpedoes......................................................... 862 3.8 Conclusion: Cross-Border Jurisdiction............................................................................... 863 4. Applicable Law: IPR Enforcement – Rome II Regulation............................................................ 863 4.1 International Enforcement of IPRs..................................................................................... 863 4.2 Law Applicable to Infringement of IPRs – Lex Protectionis............................................... 864 4.3 The Multiple Jurisdiction Infringement Under Rome II................................................... 865 4.4 Scope of Applicable Law: Liability, Remedies and Evidence.............................................. 867 4.5 Conclusion: Applicable Law to IPR Infringement.............................................................. 868 5. Applicable Law: IPR Agreements – Rome I Regulation............................................................... 869 5.1 Freedom of Choice............................................................................................................... 869 5.2 Applicable Law in the Absence of Choice: Franchising...................................................... 869 5.3 Licence: Characteristic Performance – Close Connection................................................. 871 6. Applicable law: IPRs as object of property.................................................................................... 871 6.1 Original Title to IPRs........................................................................................................... 872 6.2 Transfer of IPRs – Lex Protectionis....................................................................................... 872 6.3 Transfer of IPRs – Lex Proprietatis....................................................................................... 873 6.4 Transfer of IPRs – Choice of Law........................................................................................ 875 6.5 Conclusion: Transfer of IPRs............................................................................................... 875

* Prof dr ThCJA van Engelen, Professor of Industrial Property Law, Centre for Intellectual Property Rights (CIER), Molengraaff Institute, Utrecht University, the Netherlands.

852  Dick van Engelen

1 Introduction Intellectual property law is by definition international in scope. Immaterial objects like inventions, designs, brands or works of authorship cross borders easily – in the cyberspace era, literally at the push of a button. Consequently, issues of jurisdiction and applicable law arise on a regular basis when it comes to enforcing intellectual property rights (‘IPRs’) visà-vis alleged infringers or exploiting the economic value of IPRs through transferring or licensing IPRs to third parties. Against this background one might assume that there is a well-developed body of case law from Dutch courts available in which such issues have been tackled in great detail.1 Such an assumption, however, will lead to disappointment. Compared with the large volume of IPR cases that are brought before Dutch courts each year,2 the number of cases in which matters of private international law take centre stage in the debate among the parties or the judgment of the courts is relatively low. The bulk of the cases where this did occur date back to the 1990s, when Dutch courts gained some notoriety by taking the lead within Europe by granting cross-border injunctions in international patent infringement cases. However, since the 2006 judgments of the European Court of Justice (ECJ) in GAT v LuK 3 and Roche v Primus 4 – discussed below – the number of cross-border cases has dropped dramatically.

2  European Union Law and National Conflict Rules That two ECJ decisions have had such a major impact on Dutch IPR litigation is also evidence of the fact that issues of jurisdiction and applicable law with regard to IPRs have increasingly become a matter of European Union (EU) law instead of national law. This is primarily due to increased legislative activities by the European Union in the last decade in the field of private international law. International jurisdiction is governed by the Brussels I Regulation of 2000,5 which replaced the earlier Brussels Convention of 1968.6 Since 2002, similar jurisdictional principles have also been incorporated into the Dutch Statute on Civil Procedures. Applicable law to contractual obligations is the subject of the EU regulation of 2008 referred to as Rome I,7 which replaced the 1980 Rome Convention.8   All Dutch IP decisions can be found at www.iept.nl (in Dutch).   Research shows that during the last decade around 350-plus IPR cases were tried before Dutch courts on a yearly basis. 3   IEPT20060713, HvJEG, GAT v LuK. 4   IEPT20060713, HvJEG, Roche v Primus cs. 5   Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (‘Brussels I’). 6   Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968 (‘Brussels Convention’). 7   Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) [2008] OJ L177/6. 8  Convention 80/934/EEC on the law applicable to contractual obligations, [2005] OJ C344/1 (‘Rome Convention’). 1 2

The Netherlands  853 Non-contractual obligations are governed by the Rome II Regulation of 2007,9 which contains a specific section dealing with IPRs. Rome II makes the earlier Dutch Statute on conflict of laws regarding torts of 2001 (Wet Conflictenrecht Onrechtmatige Daad) obsolete.

3  International Jurisdiction International jurisdiction is primarily governed by the Brussels I Regulation of 2000. That regulation does not – with regard to IP matters – differ substantially from its predecessor, the Brussels Convention of 1968. Therefore the case law of the European Court of Justice, as developed under the Brussels Convention, is still fully relevant. The Brussels I Regulation applies to ‘persons domiciled in a Member State’ of the European Union. This underscores that the goal of this instrument of European law is to enhance the functioning of the internal European market. The Lugano Convention of 1988 serves the same purpose with regard to the three Contracting States – Iceland, Liechtenstein and Norway – of the European Free Trade Association (EFTA), part of the European Economic Area (EEA) and thus participating in the European single market without actually being Member States of the EU.10 The Lugano principles are basically the same as those of the Brussels I Convention. With regard to defendants who are not domiciled in an EU or EEA country, Dutch national jurisdiction rules still govern. However, as of 1 January 2002, the principles of the Brussels Convention and the Brussels I Regulation have been incorporated into the Dutch Statute on Civil Procedure. Consequently, Dutch national rules on international jurisdiction are now basically the same as European Union law, but Dutch legislature assumes that Dutch law does not necessarily have to be fully synchronised with EU law. Therefore, Dutch law may develop differently from EU law. International jurisdiction primarily means that a court may have jurisdiction over a foreign defendant, ie a defendant not having a domicile in that court’s national jurisdiction. If such a jurisdiction is established, it will come as no surprise that this national court is then entitled to order the defendant to refrain from certain acts within that court’s jurisdiction. However, international jurisdiction becomes a more controversial issue if that national court should also use its jurisdiction over the defendant to order him to refrain from any acts outside that national court’s own territory. Within the context of intellectual property rights this may lead to a situation in which, for instance, a Dutch court may render a judgment, with regard to infringement of an IPR in one or more foreign jurisdictions, and order the defendant to refrain from such infringements outside that court’s own jurisdiction. This principle is referred to as cross-border jurisdiction.

9   Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), [2007] OJ L199/40. 10   Switzerland is an EFTA Contracting State but not a member of the EEA.

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3.1  Cross-Border Jurisdiction In an era in which IPRs are still for the most part national rights – a proprietor mostly owns a bundle of national IPRs instead of one supranational IPR11 – having to deal with an infringement in multiple jurisdictions still means, as a starting position, that one may have to litigate in a great number of countries to enforce one’s IPR. Needless to say, the financial and economic costs of such an exercise are horrendous and the outcome usually very much resembles a ‘patchwork quilt’, with different results for different countries (and changing over time). It is against this background that the Dutch Supreme Court ruled in its landmark decision of 1989, Focus Veilig v Lincoln Electric,12 that as a matter of Dutch private international law there is no reason why an order by a Netherlands court should have to be limited to acts that take place in the Netherlands. The Dutch Supreme Court argued in this trade mark case that it would be disadvantageous to general business interests if, when a tort is committed in a number of jurisdictions, one were to be forced to commence separate proceedings in all national jurisdictions concerned. In this context the Court specifically mentioned international infringements of intellectual property rights, next to international acts of unfair competition and international environmental torts. Since Lincoln, Dutch courts have granted a great number of cross-border injunctions, in particular in those intellectual property cases dealing with trade marks, copyrights and, for the most part, patents. In 2004 the Dutch Supreme Court underscored the strength of this doctrine by ruling in Philips v Postech13 that if a Dutch court has jurisdiction it generally can issue a cross-border injunction and that there was no need to apply restraint, for instance in the case of preliminary injunctions. In the Philips judgment, the Dutch Supreme Court reversed a decision of the Court of Appeals of The Hague that had applied such restraint in connection with a preliminary injunction for patent infringement against Swiss and Taiwanese defendants. When granting a cross-border injunction, a court will have to apply the applicable national law of the place of the infringement, given the lex loci delicti or lex loci protectionis rule. That explains why cross-border injunctions have been granted mostly in patent cases. First of all, because European patent law is to a large extent unified law under the European Patent Convention – that provides unified rules on validity and scope of protection, the two main issues in any patent case. Second, technology is not perceived differently by users in different markets or speaking different languages. As a result thereof, a finding of infringement will not be biased by national languages or market conditions, as opposed to what may be the situation with regard to trade marks or copyrights.14 That national courts may have cross-border jurisdiction with regard to infringements of IPRs has, since the Lincoln case, been an established principle of Dutch private interna11   The Community IPRs for trade marks, industrial designs and plant variety rights being the exception to that rule. 12   IEPT19891124, HR, Focus Veilig v Lincoln Electric. 13   IEPT20040319, HR, Philips v Postech. 14   In a recent judgment in Safeway v Kedge, the District Court at The Hague did, however, deny cross-border relief in a patent case because the national patent law differs with regard to, for instance, the use of the prosecution history and the potential scope of allowing a doctrine of equivalence. The court took the position that it needed to be briefed by the parties on the status of these issues under the relevant national patent laws. Before this judgment, it was generally assumed that since all jurisdiction need to apply Art 69 of the European Patent Convention, any subtle differences as to how this was actually done under national patent laws could be ignored. See IEPT20100310, Rb Den Haag, Safeway v Kedge.

The Netherlands  855 tional law. One can also note that prior to the Lincoln judgment by the Dutch Supreme Court, similar judgments had already been rendered for a number of years by lower Dutch courts. Therefore, the Lincoln ruling did not incite new Dutch private international law but basically confirmed lower court precedents. Since the Lincoln case, the Benelux Court of Justice has also embraced the concept of cross-border jurisdiction. The Benelux Court of Justice has jurisdiction in trade mark and design matters that are subject to a multi-jurisdictional unified law for the three Benelux countries (Belgium, the Netherlands and Luxembourg). In its 1993 Barbie ruling15 the Benelux Court found that no rule of the Benelux law opposed the granting of a crossborder injunction by a national court in case of infringement of a Benelux trade mark. A year later, the Benelux Court found in its Renault judgment that the granting of a crossborder injunction for the entire Benelux actually is the default rule. Consequently, in cases where the injunction is not expressly limited to only the national jurisdiction of the national court issuing the injunction, by operation of law the injunction has Benelux-wide effect.16 More important is that as a matter of European Union law it also has become an established principle that courts of a Member State may issue a cross-border injunction in case of an infringement of one of the Community IPRs that were introduced since the 1990s for community trade marks, community designs and community plant variety rights. All three EU regulations contain a regime that provides that the national courts that are designated as community courts, for purposes of the respective Community IPR, shall have jurisdiction over acts of infringement committed or threatened within the territory of any of the Member States, if that court has jurisdiction because it is the home court of the defendant.17 Below we will concentrate on the specific jurisdictional regimes and the extent to which they may provide for cross-border jurisdiction. In that context we will look at European Union law under the Brussels Regulation – which is applicable when a defendant is domiciled in a Member State – as well as Dutch national private law rules which are relevant when the Brussels Regulation does not apply.

3.2  General Rule: Defendant Entitled to a ‘Home Game’ Article 2 of the Brussels I Regulation provides the general rule of jurisdiction as emphasised by the ECJ in its case law, the basis being that a defendant is entitled to a ‘home game’. Accordingly, Article 2 provides that persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State. The same rule is provided for in Article 2 of the Dutch Statute on Civil Procedures, in which Dutch courts have jurisdiction in cases where the defendant has its domicile in the Netherlands. Article 3 of the Brussels I Regulation underscores this leading principle by providing that persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in the Regulation. As a matter of Dutch private international law, the court of the defendant’s domicile, having jurisdiction on the basis of Article 2 of the Brussels I Regulation, has cross-border   IEPT19930326, BenGH, Barbie.   IEPT19940613, BenGH, Renault v Reynolds. 17  Art 98(1)(a) Community Trade Mark Regulation; Art 83(1) Community Design Regulation; Art 101(2) Community Plant Variety Rights Regulation. 15 16

856  Dick van Engelen jurisdiction over that defendant. This follows, among others, from the ruling of the Dutch Supreme Court in Philips v Postech of 200418 and, for instance, the judgment of the Court of Appeals at The Hague in EGP v Boston Scientific.19 As a matter of European law, the same principle applies under the three Community IPR Regulations for community trade marks, community designs and community plant variety rights. If the competent national court – as a community court – has jurisdiction because it is the court of the domicile of the defendant, that court has jurisdiction over infringements (committed or threatened) throughout the entire European Union.20 The European Court of Justice has not directly ruled on the question of whether a national court having jurisdiction on the basis of Article 2 of the Brussels I Regulation – or its predecessor, the Brussels Convention – may have cross-border jurisdiction. One may perhaps also take the position and probably assume that this question is not a matter of European law. The Regulation only provides which particular national court has jurisdiction without necessarily dealing with the actual scope of that jurisdiction. The scope of that jurisdiction is then – unless the Regulation expressly addresses that scope, such as in the context of Article 5(3) or Article 6(1) (see below) – to be regarded as a matter of national law.21 However, one may argue that the European Court of Justice has – indirectly – already ruled on the possibility that the court of a defendant’s domicile may have cross-border jurisdiction under Article 2 of the Brussels Convention. In the Shevill case22 the ECJ had to answer questions with regard to the special jurisdiction of Article 5(3) of the Brussels Convention. The case concerned a publication by France Soir, which also had a limited distribution in the United Kingdom, where France Soir was sued by the plaintiffs. In that case the ECJ ruled that the UK courts only had jurisdiction over France Soir with regard to the damages that had actually been suffered in the United Kingdom. However, the Court also expressly ruled that the plaintiff always ‘has the option of bringing his entire claim before the courts either of the defendant’s domicile or of the place where the publisher of the defamatory publication is established.’ Although this case did not concern infringement of IPRs and also did not actually concern the scope of Article 2 of the Brussels Convention as such, it does seem to indicate that the European Court of Justice does favour broad jurisdictional authority for the defendant’s home court.

3.3  Special Jurisdiction: Court of the Place of the Harmful Event In case of a tort, a defendant can also be sued before the courts of the place where the harmful event occurred or might occur. This is provided for in Article 5(3) of the Brussels I Regulation and in Article 6(e) of the Dutch Statute on Civil Procedures.   IEPT20040419, HR, Philips v Postech en Princo.   IEPT19980423, Hof Den Haag, EGP v Boston Scientific. 20  Art 98(1)(a) Community Trade Mark Regulation; Art 83(1) Community Design Regulation; Art 101(2) Community Plant Variety Rights Regulation. 21   An alternative approach might be to assume that European law might as such be opposed to national courts having cross-border jurisdiction, so that any judgment in which cross-border jurisdiction might be assumed could not benefit from the Regulation in that it has to be enforced in other Member States. However, given the fact that the three Community IPR Regulations do grant cross-border jurisdiction with regard to infringements, if the court is the home court of the defendant, it seems hard to imagine that the principle of cross-border jurisdiction might be regarded as a violation of European law. If anything, cross-border jurisdiction has been acknowledged to facilitate efficient legal procedures with the single common market. 22   IEPT19950307, HvJEG, Shevill v Presse Alliance. 18 19

The Netherlands  857 With regard to Article 5(3) of the Brussels I Regulation, or more in particular Article 5(3) of the Brussels Convention, the case law of the ECJ has determined that there may be multiple locations that can qualify as the place where the harmful event occurs. Both the place of the event giving rise to the damage, as well as the place where the damage occurred, may qualify in this regard and consequently the courts of each of these locations may have jurisdiction under Article 5(3). This was first decided in the context of environmental torts and further developed with regard to defamatory publications in the Shevill case. There are a number of cases by Dutch courts in which it is held that when a court’s jurisdiction is based on Article 5(3) of the Brussels I Regulation, that court does not have crossborder jurisdiction with regard to infringements of IPRs.23 This view is also in line with the system incorporated in the three community regulations for community trade marks, designs and plant variety rights respectively.24 For instance, Article 98(2) of the Community Trade Mark Regulation provides that a community trade mark court whose jurisdiction is based on Article 97(5) – the equivalent of Article 5(3) of the Brussels I Regulation – has jurisdiction only with respect to acts committed or threatened within the territory of the Member State in which that court is located.25 To the extent jurisdiction based on the place of the harmful event is based on Dutch law only – ie in case the Brussels I Regulation does not apply – the judgment of the Dutch Supreme Court in Philips v Postech of 200426 determined that a Dutch court will nevertheless have cross-border jurisdiction, in spite of the approach by Dutch courts with regard to Article 5(3) of the Brussels Regulation. However, the Philips judgment concerned a case that was decided under Dutch private international law as it stood prior to the implementation of the New Dutch Statute on Civil Procedure in 2002. The new statute basically did away with old private international law rules, such as outdated ‘exorbitant jurisdiction provisions’ under which Dutch courts might have jurisdiction simply when there is a Dutch plaintiff. The new code of 2002 aimed at implementing the principles of the Brussels I Regulation. Although Philips v Postech does not contain any reservation in this regard, it does not seem unthinkable that Dutch private international law, as its stands under the new code of 2002, will eventually take a different stance in its regard to the broad view on crossborder jurisdiction as demonstrated in the Philips judgment of 2004.

23   After a few judgments in the 1990s in which cross-border jurisdiction on the basis of Art 5(3) was denied as well as awarded, the District Court at The Hague has from DSM v Orffa of 29 September 1999 (IEPT19990929, Rb Den Haag, DSM v Orffa) consistently ruled that Art 5(3) of the Brussels Convention does not allow for crossborder jurisdiction. See, eg the District Court at The Hague in Acco v Noble of 27 February 2008 (IEPT20080227, Rb Den Haag, Acco v Noble) and in Vacu Products v WMF of 24 March 2010 (IEPT20100324, Rb Den Haag, Vacu Products v WMF). 24   Art 98(2) Community Trade Mark Regulation (CTM Regulation); Art 101(3) Community Plant Variety Rights Regulation (CPVR Regulation) and Art 83(2) Community Design Regulation (CD-Regulation). 25   The view that cross-border jurisdiction is lacking in the case of Art 5(3) is usually based on the Shevill judgment of the ECJ. In Shevill, the European Court of Justice ruled that the courts of the places where the damage only was suffered – as opposed to the place giving rise to the damage – only had jurisdiction with regard to the damage in their territory. However, in Shevill, the ECJ also ruled that the court of the place of the event giving rise to the damage has jurisdiction to hear the action for the total damages caused by the unlawful act. It does not seem clear from Shevill whether this view is taken because the ECJ expressly found that the place giving rise to the damage in case of a libellous publication is the same as the domicile of the publisher. Therefore the jurisdiction with regard to all damages as mentioned in Shevill can be seen as based either on Art 2 or on the place giving rise to the harmful event within the meaning of Art 5(3). It therefore seems that it follows from Shevill that jurisdiction based on Art 5(3) allows for cross-border rulings. 26   IEPT20040419, HR, Philips v Postech en Princo.

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3.4  Special Jurisdiction: Court of Co-Defendant’s Domicile Article 6(1) of the Brussels I Regulation (and the Brussels Convention) covers situations where there are multiple defendants in ‘one case’. Article 6(1) of the Brussels Convention simply stated that in the case of a number of defendants, a defendant can be sued in the state where one of them is domiciled. The ECJ narrowed down this broad language in its 1988 judgment in Kalfelis v Schroder, where it required that there must be a ‘connection’ between the claims against the various defendants. That connection must be of ‘such a kind that it is expedient to determine those actions together in order to avoid the risk of irreconcilable judgments resulting from separate proceedings’. This case law has been codified in Article 6(1) of the Brussels I Regulation, which clause now expressly requires that the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. The Court of Appeals at The Hague used Article 6(1) of the Brussels Convention as a basis for cross-border jurisdiction in its 1998 judgment in EGP v Boston Scientific.27 In that case the Court primarily reversed earlier precedents in which Article 6(1) was used as a platform for cross-border jurisdiction against any group of defendants that infringed in their respective territories’ national patents that are part of the same ‘bundle of national patents’ originating from a European patent as granted under the European Patent Convention. The Court of Appeals basically found that Article 6(1) did not allow for crossborder jurisdiction simply because certain defendants infringed the same European bundle of patents. By dismissing that line of reasoning, the Court of Appeals at The Hague effectively reversed a great number of cases in which this was used as the basis for establishing cross-border jurisdiction of Dutch courts in European patent cases. However, the Court of Appeals did not completely do away with Article 6(1) as a basis for cross-border jurisdiction against a group of international defendants. It allowed cross-border jurisdiction if the defendants formed part of a group of companies and that group markets identical products in different national markets and acts on the basis of a joint plan. In such a situation, the Court of Appeals took the position that the court of the domicile of the ‘head office’ of that group, which court would have jurisdiction against that company on the basis of Article 2, also had cross-border jurisdiction against all members of the group on the basis of Article 6(1). This doctrine has become known as the ‘spider in the web’ doctrine. Whether this doctrine was indeed valid as a matter of European law was eventually ruled upon by the European Court of Justice in its Roche v Primus judgment of 2006.28 In the Roche judgment the ECJ clearly did away with the application of ‘spider in the web’ doctrine with regard to European patents. However, it may be mistaken to believe that Roche v Primus made the doctrine completely obsolete. In Roche v Primus, the ECJ ruled that it is not sufficient for judgments to be irreconcilable under Article 6(1), and that there can be a divergence in the outcome of the dispute. For Article 6(1) to apply, such a divergence should arise in the context of ‘the same situation of law and fact’. The European Court was of the opinion that in the case of a European (bundle) patent with infringement proceedings involving a number of companies established in various Contracting States and involving acts committed in one or more of those states, the existence of the same situation of fact cannot be inferred, since the defendants are different   IEPT19980423, Hof Den Haag, EGP v Boston Scientific.   See n 4 above.

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The Netherlands  859 and the infringements they are accused of are committed in different Contracting States and are therefore not the same. The Court argued that possible divergences between decisions therefore would not arise in the context of the same factual situation. In addition, the ECJ also observed that it is clear from Articles 2(2) and 64(1) of the European Patent Convention that such a patent is governed by the national law of each of the Contracting States for which it has been granted. It is against this background that the ECJ ruled that any divergences between decisions given by national courts would also not arise in the context of the same legal situation. This decision has been criticised in patent circles because the ECJ does not seem to properly appreciate that under Article 2 of the European Patent Convention the so-called ‘bundle of national patents’ under a granted European patent is for all practical purposes subject to unified European law as provided for in that convention with regard to most of the topics that really matter in patent infringement litigation. Article 2(2) EPC does provide that a European patent shall, in each of the Contracting States for which it is granted, have the effect of and be subject to the same conditions as a national patent granted by that state, but it adds that such is the case only ‘unless this Convention provides otherwise’. Given that the European Convention fully governs all issues with regard to both the validity of European patents as well as its scope of protection, the application of national law is effectively limited to issues of ownership and acts of infringement. Therefore, the ECJ’s findings that these various national courts deciding on the national parts of a European patent – as it is referred to in Article 2(1) EPC – do not deal with the same legal situation, is not necessarily very convincing. As a matter of European Union law, however, Roche v Primus seems to be the final word and seems to indicate that cross-border jurisdiction based on Article 6(1) is not possible in the case of a European patent. Nevertheless, in cases where the Brussels Regulation does not apply – ie, in the case of non-EU defendants – national law may take a different perspective. Therefore, it might be possible that the Dutch Supreme Court would not come to the same finding as the ECJ on the issue of ‘the same legal situation’ in the case of an infringement of a European patent in different European countries. The Court of Appeals at The Hague also made it clear in its Bacardi v Mad Bat judgment of 200729 that a close reading of Roche v Primus shows that there still is room for the ‘spider in the web’ doctrine in the context of the three Community IPRs for trade marks, designs and plant variety rights. Under point 34 of the Roche judgment the ECJ does seem to conclude that the factual situation may be the same in a situation where defendant companies, belonging to the same group, have acted in an identical or similar manner in accordance with a common policy elaborated by one of them. Contrary to European patents granted under the European Patent Convention, the Community IPRs granted under the applicable Community Regulations do create truly single, supranational IPRs that are effective throughout the entire European Union. That also seems to justify the conclusion that this results in the same legal situation when such defendants infringe a single unitary Community IPR in various Member States. That means that both requirements for ‘irreconcilable judgments’ – the same factual and legal situation – are met. The Roche judgment therefore seems to leave room for an ‘itsy-bitsy spider in the web’ doctrine to survive with regard to Community IPRs.

  IEPT20070823, Hof Den Haag, Bacardi v Mad Bat.

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3.5  Special Jurisdiction: Provisional Measures Only Article 31 of the Brussels I Regulation – as well as Article 24 of the Brussels Convention – provides that a court may grant provisional relief if its national laws so allow, even if the courts of another state do have jurisdiction with regard to the proceedings on the merits. Dutch law allows for this special jurisdiction with regard to provisional measures. Article 13 of the Dutch Statute on Civil Procedure states that jurisdiction with regard to preliminary or conservatory measures cannot be refused on the sole ground that Dutch courts do not have jurisdiction with regard to the case on the merits. Confirming earlier precedents of the District Court at The Hague, the Court of Appeals ruled in EGP that any jurisdiction that is based on Article 24 of the Brussels Convention is limited to that court’s national territory. As a matter of European law this special jurisdiction limited to provisional measures is therefore regarded as not giving a platform for cross-border jurisdiction. However as a matter of Dutch law – ie in situations where European law does not apply – the judgment of the Dutch Supreme Court of 2004 in Philips v Postech illustrates that this type of jurisdiction may nevertheless allow cross-border measures.

3.6  Exclusive Jurisdiction: Validity of Registered IPRs In addition to the special jurisdiction rules as provided by Article 5(3) and Article 6(1), Article 22(4) of the Brussels I Regulation provides for exclusive jurisdiction of national courts. It states that in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place, shall have exclusive jurisdiction regardless of domicile. Article 16(4) of the Brussels Convention contains the same provision. The mandatory character of this exclusive jurisdictional rule is underscored by the circumstance that Article 25 of the Brussels I Regulation provides if a court is confronted with a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall of its own motion declare that it has no jurisdiction. As to the scope of this exclusive jurisdiction regime, the ECJ ruled in its judgment of 1983 in Duijnstee v Goderbauer 30 that the term ‘proceedings concerned with the registration or validity of patents’ is limited to proceedings where the validity of the right or the existence of the registration is at issue. It does not apply when there is a dispute about who is entitled to the patent, as was the matter in the Duijnstee case. There the dispute was between an employee and the receiver in the bankruptcy of his employer concerning the entitlement to the patent rights for inventions made under an employment contract. In that judgment the ECJ also spoke of the restrictive nature of this provision, referring to the Jenard report on the Brussels Convention. Since validity of a patent, trade mark or design is an issue in almost all infringement cases, if only as a means to ring-fence scope of protection, the question arises of what the   IEPT19831115, HvJEG, Duijnstee v Goderbauer.

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The Netherlands  861 impact of this exclusive jurisdiction is when validity is raised as a defence in cross-border infringement proceedings. Does it mean that the infringement court no longer has jurisdiction with regard to those jurisdictions for which validity is made an issue or does it only mean that the infringement case can still proceed as long as it only gives a preliminary estimate of the chances of success with the invalidity defence? In its EGP v Boston Scientific judgment of 1998,31 the Court of Appeals at The Hague had found that infringement and validity are indeed inseparable, since infringement of an invalidated patent – where invalidation also has retro-active effect – does not seem feasible. Therefore, in case of proceedings on the merits, a court will have to apply restraint if confronted with a nullity defense that cannot be brushed aside as ‘frivolous’. As a general rule, a court will then have to stay the infringement proceedings and await the outcome of the foreign validity proceedings, according to the Court of Appeals in EGP. The Court also made it clear that it did not applaud this result, but that it was of the opinion that an amendment of the Convention would be required in order to be able to achieve another result. The Court also indicated that in the context of provisional measures, less restraint was required. In that particular case the Hague Court came to the conclusion that it could not beforehand rule out that the nullity arguments might be successful, so that it had to deny the cross-border relief requested. In its Roche v Primus judgment of 200332 the Dutch Supreme Court found that a Dutch court, having cross-border jurisdiction with regard to infringement, can still rule on infringement even though there might be serious indications as to the invalidity of the patents concerned. In the Roche case, the Dutch Supreme Court did not even find it necessary to submit questions for a preliminary ruling to the ECJ on this issue, even though it did submit questions to the ECJ on the implications of Article 6(1). On the same day as its judgment in the Roche case, the ECJ also rendered judgment in GAT v LuK.33 In that judgment, the ECJ made it very clear that the impact of Article 16(4) of the Brussels Convention is that when nullity is an issue, a foreign court ruling on infringement has to step on the brakes. The provision is to be interpreted as meaning that the rule of exclusive jurisdiction concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or only a defence. To allow a foreign infringement court to establish, indirectly, the (in)validity of the IPR at issue would undermine the binding nature of this exclusive rule of jurisdiction and circumvent its mandatory nature. In addition, the alternative would have the effect of multiplying the number of courts having jurisdiction and undermine the predictability of the rules of jurisdiction and consequently undermine the principle of legal certainty. Finally, to allow decisions in which courts, other than the courts of the state in which the IPR is registered, rule indirectly on the validity of that right would also multiply the risk of conflicting decisions. In GAT v LuK the ECJ did not indicate exactly what actions the infringement court has to take when validity of a foreign-registered IPR is raised. In its second judgment in Roche v Primus of 30 November 2007, the Dutch Supreme Court found that the consequence of the issue being raised is not that the infringement court loses its jurisdiction as to the foreign infringements, but that it has to stay the infringement proceedings and should refrain from judgment until the competent foreign court has ruled on validity. It also indicated that   IEPT19980423, Hof Den Haag, EGP v Boston Scientific.   IEPT20031219, Hoge Raad, Roche v Primus.   IEPT20060713, HvJEG, GAT v LuK.

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862  Dick van Engelen once this issue is raised, the plaintiff should be given the option to amend his claims, so that by dropping the cross-border questions, he may create jurisdiction for the infringement cases with the relevant national courts. Otherwise these national courts would not have jurisdiction since under the lis pendens rule – see below – the same case was already pending before another court.

3.7  European Litigation Strategies: Mind the Torpedoes In cross-border European IP infringement cases, it will of course be crucial for both the plaintiff as well as the defendant to have the case tried in a court that is likely to be most favourable to their side. A plaintiff will have on his agenda any jurisdiction (i) the national laws of which allow for cross-border relief, (ii) in which proceedings are relatively fast and not too expensive, and (iii) in which courts tend to be friendly to IPRs. It will come as no surprise that the potential defendant has a list that contains the same items, but in reverse. This has on occasion resulted in situations where the plaintiff and the defendant ended up in a race to the courthouse of their preference, in order to take advantage of the lis pendens rule. The lis pendens rule of Article 27 of the Brussels I Regulation – and Article 21 of the Brussels Convention – provides that if a case involving the ‘same cause of action’ and the ‘same parties’ is already before a court, any court that will be involved at a later stage shall of its own motion stay its proceedings until such time as the jurisdiction of the first court is established. The consequence of this regime is that if one commences litigation to obtain a cross-border judgment, like a cross-border declaratory judgment of non-infringement, before one court, any other court that is involved at a later date to grant an injunction in an infringement case must stay its proceedings while the jurisdiction of the first court can be established. If one then chooses to start litigation in a jurisdiction where the ‘wheels of justice’ grind at a slow pace, one can effectively wreck an offensive litigation strategy by an IPR proprietor to take advantage of the possibilities of obtaining preliminary cross-border relief at short notice, as would for instance be possible in a jurisdiction like the Netherlands. Such defensive proceedings are referred to as ‘torpedoes’. Italy and Belgium have in the past gained some notoriety as jurisdictions where the fact that the courts were faced with an overload of cases could be taken advantage of. The cynical observation is that the likelihood that the court before which the so-called torpedo is launched will decline cross-border jurisdiction under its national law is irrelevant, provided that it will take a long time before this is finally decided. During the interim period all other foreign cases will then simply have to be put on hold, which is the precise purpose of torpedo cases. Since the torpedo strategy seems to amount to a clear abuse of rights, it may be tempting to try to dismantle the torpedo by allowing the court that is seised at a later stage for the infringement case to go ahead if, for instance, it is beyond dispute that the first court lacks jurisdiction. However, the judgments of the ECJ in Overseas Union (27 June 1991)34 and Gasser v Missat (9 December 2003)35 make it clear that there is little ‘wiggle room’ in this regard. The one exception the ECJ did make in Gasser v Missat was with regard to exclusive jurisdiction. Therefore, if the court first seised is to rule upon validity or registration of a foreign-registered IPR, a later seised court that has exclusive jurisdiction under Article 22   IEPT19910621, HvJEG, Overseas Union.   IEPT20031209, HvJEG, Gasser v Misat.

34 35

The Netherlands  863 of the Brussels I Regulation does not have to abide by the lis pendens rule with regard to the validity questions brought before it. This was also applied by the District Court at The Hague in its Nooteboom judgment of 2007.36 As a matter of Dutch law, the lis pendens rule, as laid down in Article 12 Rv, is less strict than its European counterpart. It provides that when a case is pending before a foreign court whose judgment can be recognised or enforced in the Netherlands, a Dutch court may stay its proceedings. Therefore, this is not a mandatory regime, but a system that gives discretionary room to the Dutch courts. In such cases torpedoes can therefore be dismantled more easily.

3.8  Conclusion: Cross-Border Jurisdiction Following the Dutch Supreme Court’s 1989 Lincoln judgment, the Netherlands experienced a bonanza of European patent infringement cases, taking full advantage of (i) the cross-border relief awarded by the District Court at The Hague and The Hague Court of Appeals,37 combined with (ii) the fast track proceedings that the District Court made available and – in addition – (iii) the relatively broad scope of protection granted by Dutch courts. Patent owners were rushing to get their cases on the docket not only to take advantage of these opportunities but also in fear of the threat of the potential defendant taking a counter-initiative and commencing torpedo proceedings in jurisdictions that might obstruct the whole case for a number of years. Since the EGP v Boston Scientific judgment of the Court of Appeals of 1998 – which introduced the ‘spider in the web’ doctrine – those hectic days have quietened down substantially. However, it took the rulings of the European Court of Justice in GAT v Luk and Roche v Primus in 2006 to restore things to normal. The combined effect of the broad impact of the regime of exclusive jurisdiction with regard to validity as determined in GAT v Luk and the restrictive reading of the possibilities to combine cases against multiple defendants as indicated in Roche v Primus, has – as a practical matter – resulted in a dramatic downturn in the number of cross-border European IPR infringement cases being brought before Dutch Courts. However, the possibility to commence such cases still exists and as The Hague Court of Appeals has made clear in its judgment in Bacardi v Mad Bat, the three Community IPRs – for trade marks, designs and plant varieties – are an area where the ‘spider in the web’ doctrine can still play a role (as an ‘itsy bitsy spider’).

4  Applicable Law: IPR Enforcement – Rome II Regulation 4.1  International Enforcement of IPRs In the context of international enforcement of IPRs the following questions arise in particular: (i) which law applies to the alleged infringement of an IPR?; and (ii) which law   See The Hague District Court: IEPT20070926, Rb Den Haag, Nooteboom v Faymonville.   The courts at The Hague have exclusive jurisdiction in patent infringement litigation.

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864  Dick van Engelen applies to the sanctions that may be available once an infringement is determined? International enforcement law assumes jurisdiction. As discussed above, a Dutch court can have cross-border jurisdiction. Jurisdiction can also be present where the parties have agreed to arbitrate an international dispute. Once the international jurisdiction of a judicial panel is established, the question needs to be addressed regarding the law to be applied by that panel to the alleged violation of rights in the territories over which the court has assumed jurisdiction. When it comes to determining which law applies to an infringement of an IPR, it seems that the Rome II Regulation that came into effect on 11 January 2009 will decide most, if not all, of the issues that can be considered. Article 8 of the Rome II Regulation38 has introduced a special regime for the law applicable to non-contractual obligations arising from an infringement of intellectual property rights. Put briefly, Article 8 states that (a) the law of the country for which protection is claimed – the lex loci protectionis – shall apply, and that (b) parties have no freedom of choice with regard to the applicable law. The application of Rome II is not limited to situations in which one or more parties is domiciled in the European Union or the event giving rise to the claim is situated within the European Union. The applicability of Rome II is basically tied to a court of an EU Member State39 having jurisdiction.40 Consequently, as of 11 January 2009, Rome II replaces national conflict of law rules, such as the Dutch Conflict of Laws Tort Act of 2001 (Wet conflictenrecht onrechtmatige daad). Article 3 of Rome II indicates that the applicable law under Rome II is not limited to the laws of EU Member States only, but that it subscribes to what is referred to as ‘universal application’: ‘Any law specified by this Regulation shall be applied whether or not it is the law of a Member State.’

4.2  Law Applicable to Infringement of IPRs – Lex Protectionis Article 8 of Rome II concerns infringement of ‘intellectual property rights’. That leads to the obvious question of what the actual scope of that term is in the context of this Regulation. Recital 26 sheds some light on this issue. It states that ‘for the purposes of this Regulation, the term “intellectual property rights” should be interpreted as meaning, for instance, copyright, related rights, the sui generis right for the protection of databases and industrial property rights’. This ‘definition’ does not strike one as being very exact, but that should probably be seen as an indication that the term should not be interpreted too narrowly. Further guidance can probably be found in the fact that the European Community is a signatory to the Agreement on trade-related aspects of intellectual property rights – better known as TRIPs. Rights that are within the scope of TRIPs include the IPRs covered by the Paris Convention (patents, utility models, industrial designs, trade marks, service 38   Regulation (EC) no 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), OJ L199/40. 39   Art 1(4) of Rome I: ‘For the purposes of this Regulation, “Member State” shall mean any Member State other than Denmark.’ 40   XE Kramer, ‘The Rome II Regulation on the Law Applicable to Non-Contractual Obligations: The European Private International Law Tradition Continued’ (2008) 4 Nederlands Internationaal Privaatrecht 414, 417. Recitals 6 and 7 mention that the proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation, for certainty as to the law applicable and the free movement of judgments under the Brussels I Regulation and the Rome II Regulation.

The Netherlands  865 marks, trade names, indications of source or appellations of origin), the Berne Convention (copyright), the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations and the Treaty on Intellectual Property in Respect of Integrated Circuits. In addition, it seems clear that the unitary Community IPRs are within the scope of Rome II, if only because Article 8(2) contains a special rule for these rights. That encompasses most rights that are generally considered to be IPRs, but still leaves room for discussion. Most national laws have (sui generis) forms of protection for certain subject matter that may be regarded as intellectual property. This is, for instance, the case with rights related to (i) the use of a portrait or likeness of (well-known) persons (also known as the right of publicity), (ii) non-original writings and (iii) slavish imitations or passing-offs. One may question whether such rights or forms of protection do qualify as IPRs in the context of Rome II. Another kind of borderline legal regime concerns the protection of (iv) technical ‘know-how’ or trade secrets in general. The protection granted to trade secrets is very much a matter of national law, and the actual protection available differs from country to country. Since these various ‘border-line’ rights and forms of protection probably may also qualify as ‘unfair competition’, this qualification issue does not seem critical as it would mean that such obligations might be outside the scope of Rome II altogether. However, the issue seems not to be of only academic interest, since the regime that applies to acts of unfair competition under Article 6 does substantially differ from the regime that applies to IPRs under Article 8. What strikes one as odd is that the regime of Article 8 of Rome II provides only for a general rule to determine the law that applies to an infringement of an IPR: the lex loci delicti for Community IPRs and the lex loci protectionis for all other IPRs. There is no set of additional sub-rules that may further refine the choice of law process for IPRs. On the contrary, Article 8(3) of Rome II expressly excludes the possibility for parties to derogate from the law that is applicable as a result of Article 8(1) or (2). This effectively means that the choice of law process for infringements of IPRs is a one-way street, without any crossroads or possibility of detours.41 Rome II therefore does not allow for any flexibility with regard to determining the law that applies to non-contractual obligations arising from an infringement of IPRs. Consequently the value of predictability and certainty has displaced the other values that should also be taken into consideration for a choice of law process, ‘such as the need for sensible, rational, and fair, decisions in individual cases’ as Symeonides observes.42

4.3  The Multiple Jurisdiction Infringement Under Rome II One of the clear problems facing litigants with regard to infringements of IPRs is that the alleged infringements may occur in numerous countries simultaneously. In this regard, one only has to think of an Internet publication or the distribution of a product throughout the entire single European market.

41   See also D van Engelen, ‘Rome II and Intellectual Property Rights; Choice of Law Brought to a Standstill’ (2008) 4 Nederlands Internationaal Privaatrecht 440, 440–48. 42  SC Symeonides, ‘Rome II and Tort Conflicts: A Missed Opportunity’ (2008) 56 American Journal of Comparative Law 173, 180.

866  Dick van Engelen Application of the lex loci protectionis will mean that the national IP laws of all 27 Member States will have to be applied. It seems obvious that such a thing is nothing less than a nightmare for the parties, whether they are plaintiffs or the defendants. However, it seems that both the plaintiff and the defendant will just have to live with this nightmarish scenario. Article 8(3) of Rome II states that ‘the law applicable under this Article may not be derogated from by an agreement.’ As a result, the parties to an IPR infringement case are not allowed to choose the law that will apply to their dispute. The same prohibition on choice of law is provided for in Article 6 with regard to non-contractual obligations arising out of acts of unfair competition. Party autonomy is denied as neither pre-tort nor posttort choice of law agreements are allowed. The reason to block party autonomy is not directly clear. The Explanatory Memorandum of the Commission simply states that ‘Freedom of will is not accepted . . . for intellectual property, where it would not be appropriate.’ Why party autonomy would not be appropriate for IPRs is not explained. The basis for this exclusion can probably be traced back to the position of the Hamburg Group, that party autonomy should not be allowed ‘where public interests are or may be involved’.43 However, the mere fact that public interests are involved, and the parties may therefore not be completely free to agree as they please, does not seem to be a convincing reason to ban party autonomy altogether. I fail to see why the public interests involved cannot properly be served by restraining party autonomy by competition (anti-trust) law and public policy exceptions. To the extent that unequal bargaining power between the parties is feared, again competition law (abuse of a dominant position) and general principles of contract law seem to be able to provide for the necessary ‘checks and balances’. One should not lose sight of the fact that in the case of an (allegedly) infringing activity throughout the entire single European market, the lex loci protectionis rule will result in the laws of 27 Member States being applicable. A total ban on a freedom of choice for the parties, forces the litigants to fight a ‘27-headed-lex-loci-protectionis dragon’, which will require gruelling legal fees and be a true nightmare for the parties (if not for the judge(s) that have to render judgment). I fail to appreciate that ‘public interests’ cannot allow for at least a post-tort agreement between the parties to manage their conflict and make it possible for them to agree on a practical and efficient way to resolve their conflict and manage their costs. That also qualifies as a public interest to me. One wonders what actual problem is supposed to be solved by this absolute ban on party autonomy in the absence of any known aberrations in case law. Given that Rome II applies irrespective of the domicile of the parties or the location of the place giving rise to the non-contractual obligation, the impact of this mandatory regime for IPRs is broad. Once a tribunal within the EU has jurisdiction, Rome II is to be applied. Consequently it also applies to litigation before a Dutch court with regard to an infringement of, for instance, a copyright both in the Netherlands, where the allegedly infringing goods may have been marketed, as well as in China, where these goods may have been produced. In such a case the litigants will not have the option to agree to Dutch law applying to both the alleged infringements in the Netherlands and in China, if only to provide for an efficient regime to have their dispute settled in a cost-effective way. 43   Comments on the European Commission’s Draft Proposal for a Council Regulation on the Law Applicable to Non-Contractual Obligations (‘Rome II’) from 28 September 2002, 38, available at www.mpipriv.de/de/data/ pdf/commentshamburggroup.pdf (reference added by the Editor).

The Netherlands  867 This approach was taken by and at the initiative of the Dutch District Court at Zutphen of 3 March 2010, with regard to acts committed prior to the date of the application of Rome II.44 This approach will not be available under the Rome II regime.

4.4  Scope of Applicable Law: Liability, Remedies and Evidence The national law that pursuant to Article 8 applies to an IPR infringement applies not only to the infringement as such, but also to the damages and remedies that may be available because of the infringement. Article 15 of Rome I deals with the scope of the applicable law and states that the applicable law shall govern in particular the following: (a) the basis and extent of liability, including the determination of liable persons; (b) the grounds for exemption from liability, any limitation of liability and any division of liability; (c) the existence, the nature and the assessment of damage or the remedy claimed; (d) within the limits of powers conferred on the court by its procedural law, the measures which a court may take to prevent or terminate injury or damage or to ensure the provision of compensation; (e) the question whether a right to claim damages or a remedy may be transferred, including by inheritance; (f) persons entitled to compensation for damage sustained personally; (g) liability for the acts of another person; (h) the manner in which an obligation may be extinguished and rules of prescription and limitation, including rules relating to the commencement, interruption and suspension of a period of prescription or limitation. The effect is that most, if not all, issues of liability are governed by the lex loci protectionis or the lex loci delicti, respectively. Given that Article 8(3) of Rome II expressly provides that the law applicable to an IPR infringement cannot be derogated from by party agreement, the result of this regime is that in the event of an infringement in multiple jurisdictions, any court that may have crossborder jurisdiction over one or more defendants will have to apply not only the various national IP laws with regard to the local infringement but also all other provisions of that applicable foreign law with regard to liability, damages and available remedies. This will mean that in many cases it will probably be of little advantage to try to concentrate any multiple jurisdiction IPR infringement with one court, because the efficiency advantages will be limited at best. Article 16 of Rome II makes one exception to these rules. Provisions of the law of the forum which are mandatory, irrespective of the law otherwise applicable to the noncontractual obligation, shall not be set aside. Article 22 of Rome II deals with the ‘burden of proof ’ as an issue that may have a material effect on the chances in litigation. Article 22(1) provides that rules of the applicable law which raise presumptions of law or determine the burden of proof shall also apply. In addition, Article 22(2) states that acts intended to have legal effect may be proven by any mode of proof recognised by the law of the forum or by any of the laws referred to in Article 21 under which that act is formally valid, provided that such mode of proof can be administered by the forum. All in all, the applicability of the law of the forum therefore seems limited.

  IEPT20100303, Rb Zutphen, Fashion Box v Vingino.

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868  Dick van Engelen

4.5  Conclusion: Applicable Law to IPR Infringement It seems that Rome II represents a major setback with regard to any efforts to try to provide for efficient and cost-effective ways to act against infringements of IPRs in multiple jurisdictions by trying to concentrate such cases in one court that may have cross-border jurisdiction. Given the immaterial nature of the objects protected by IPRs and given the ease with which multiple infringements can be a reality, the regime of Rome II does not support efforts to streamline the enforcement of IPRs and to support IPR owners in their fight against infringements and counterfeit products. As I stated before,45 the rigid and inflexible IPR regime of Rome II does not seem to be warranted by any major issues that need to be fixed with regard to multiple jurisdictional IPR infringements and cross-border litigation. If there is no real problem that needs resolving or – if there would be such a problem – the proper solution has not fully matured, a wise legislator will allow for flexibility, so that courts can fine-tune the solution and properly balance between conflicting interests. Good legislation should only give a rigid body of law, if the subject matter concerned has been fully explored and the law fully developed. This is certainly not true today for issues of applicable law to international IPR infringements, which means that any legislation concerning this subject matter that does not provide for at least some flexibility is ‘bad law’ by definition. The fact that the first draft of Rome II did not contain any provisions for IPRs, indicates the absence (i) of the perception that there was a problem or (ii) of a clear picture of the optimal solution. When Article 8 was included at a later stage, the ambition was not to create new law, but simply to codify ‘the universally acknowledged principle of the lex loci protectionis’, as recital 26 states. The ambition was simply to protect this universally acknowledged principle against the lex loci damni rule that Article 4(1) introduces as the general rule for non-contractual obligations arising out of torts in general. If the lex loci damni would indeed apply to IPRs, such could create the problem that the lex loci protectionis might be set aside. Because of the poor quality of the end product, one might have hoped that the impact of Rome II would be limited to the level of European law only. In that case one could have tried to achieve a more flexible outcome via the route of the various national lex loci protectionis. If the conflict of laws provisions of those applicable national laws have (i) a ‘manifestly closer connection’ sub-rule for IPR infringements, or (ii) allow for a choice of law by the parties, the litigants could then start chopping off a few heads of the ‘dragon’ – if not all but one – via the private international law rules of the applicable national laws. However, Article 24 of Rome II seems to eliminate that escape route, stating that the ‘application of the law of any country specified by this Regulation means the application of its rules of law in force in that country other than its rules of private international law’. Rome II therefore seems to have pre-emptive effect. Against this background¸ it seems that Rome II is probably worse for IPR infringements than simply ‘a missed opportunity’, as Symeonides concludes with regard to Rome II as a whole.46 I am afraid that Article 8 of Rome II is effectively the equivalent of ‘one step for45   D van Engelen, ‘Rome II and Intellectual Property Rights; Choice of Law Brought to a Standstill’ (2008) 4 Nederlands Internationaal Privaatrecht 440, 447–48. 46  Symeonides, above n 42; see also SC Symeonides, ‘The American Revolution and the European Evolution in Choice of Law: Reciprocal Lessons’ (2008) 82 Tulane Law Review 1741–1800.

The Netherlands  869 ward and at least one – if not two – steps back’ compared with a situation in which the European legislator would have left these issues to be first further developed by national law and to have waited for case law to mature.

5  Applicable Law: IPR Agreements – Rome I Regulation In the area of private international law that applies to contractual obligations, Dutch private international law is also primarily governed by European law. The Rome I Regulation – which replaces the Rome Convention of 198047 – does to the applicable law for contractual obligations what the Rome II Regulation does for non-contractual obligations. The default contract with regard to IPRs is a licence and therefore I will focus on the law applicable to a licence agreement in the following paragraphs.

5.1  Freedom of Choice Contrary to Rome II, Rome I does not contain specific regimes for IPRs and it basically subscribes to the freedom of contract as the guiding overall principle. Article 3 provides that ‘A contract shall be governed by the law chosen by the parties.’ Article 2 also contains the principle of so-called universal application by stating that ‘Any law specified by this Regulation shall be applied whether or not it is the law of a Member State.’ Article 3 requires that the choice of law shall be made expressly or shall be clearly demonstrated by the terms of the contract or the circumstances of the case. Although this standard seems to provide for a somewhat high threshold, the reality seems to be that it is easily met. Most, if not all, licence agreements – in particular those in an international setting – seem to contain a choice of law clause. Dutch case law on this topic is therefore almost non-existent.

5.2  Applicable Law in the Absence of Choice: Franchising When a contract does not contain a clear choice of law, Article 4 of Rome I gives some default rules to determine the applicable law. Article 4 starts by giving some clear rules for certain types of contracts, spelling out the familiar sub-rules that will provide guidance, such as the rule that the place of the habitual residence of the party is ‘required to effect the characteristic performance of the contract’ (Art 4(2)). Article 4(1)(e) contains a new default rule that may seem to be relevant for IPRs since it deals with franchising. It provides that ‘a franchise contract shall be governed by the law of the country where the franchisee has his habitual residence.’ However, recital 17 of Rome I makes it clear that this rule for franchise agreements is driven by the perspective that franchise contracts – as distribution contracts – are to be regarded as contracts for services, and that this rule for franchise agreements is intended to connect to the special rules of 47   Convention on the Law Applicable to Contractual Obligations [1980] OJ C334/1 (the 1980 Rome Convention).

870  Dick van Engelen jurisdiction as provided for in Article 5 of the Brussels I Regulation.48 The service rendered in a franchising contract – as in a distribution contract – is then apparently believed to be situated in the country where the franchisee has his habitual residence. That does indeed seem to be the default situation. However, in the event of a (master) franchisee’s territory covering more than one jurisdiction, or of the franchisee not having its habitual residence in the territory of the franchise, Article 4(3) may come to the rescue. It provides that ‘where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply.’ Does this rule for franchising give guidance for IPR licences in general? Given that the European legislator sees franchising as a contract regarding the provision of services – comparable with a distribution relationship – giving franchising such a leadership role for IP licences does not seem obvious. However, one must also admit that Dutch law lacks a definition of what a licence is supposed to be even though the Dutch IP legislator does give various rights to licensees vis-àvis third parties in, for instance, the Dutch Copyright Act, the Patent Act and the Benelux Treaty on Intellectual Property, which governs Benelux trade mark rights and Benelux industrial design rights. In practice a licence may vary from a mere authorisation of what would otherwise be an infringement – what I refer to as a licence in a broad sense – to a position in which the licensee does in effect take over the role of the proprietor and bears the full economic exploitation risk of the IPR concerned. This is what I refer to as a licence in a narrow sense.49 With the judgment of the European Court of Justice of 23 April 2009 in the Falco case,50 it seems clear that an IP licence is not to be treated as a franchising agreement. The Falco case concerned a claim for royalties under a copyright licence for sales of video recordings of a concert. The issue was whether the courts in Vienna had jurisdiction. That jurisdiction was assumed by the first instance court by qualifying the licence as the provision of a service and thereby facilitating jurisdiction under Article 5(1)(b) of the Brussels I Regulation. That clause allows for jurisdiction of the court of the place where, under the contract, the services were provided or should have been provided. That first instance judgment was reversed by the Vienna Oberlandesgericht. The Austrian Oberster Gerichtshof then referred the matter to the ECJ. The ECJ ruled that a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration is not a contract for the provision of services within the meaning of Article 5(1)(b) of Brussels I Regulation. Recital (7) of Rome I asserts that the substantive scope and the provisions of Rome I should be consistent with the Brussels I Regulation and Rome II. Against that background the question whether licences may be regarded as services, and whether the rule of Article 4 for franchise agreements is leading for licence seems answered with the Falco judgment of 2009. 48   Under Recital (17), as far as the applicable law in the absence of choice is concerned, the concept of ‘provision of services’ and ‘sale of goods’ should be interpreted in the same way as when applying Art 5 of Regulation (EC) No 44/2001 in so far as sale of goods and provision of services are covered by that Regulation. Although franchise and distribution contracts are contracts for services, they are the subject of specific rules. 49   Please note, however, that this distinction is not made in Dutch legislation or case law. It is simply a distinction I make to give direction to the analysis of what a licence should or could entail. 50  Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327; IEPT20090423, HvJEG, Falco Privatstiftung en Rabitsch v Weller-Lindhorst.

The Netherlands  871

5.3  Licence: Characteristic Performance – Close Connection Article 4(2) of Rome I holds as a general default rule that if a contract is not covered by paragraph 1 then it shall be governed by the law of the country where the party, required to effect the characteristic performance of the contract, has his habitual residence. Therefore the question arises what the characteristic performance of a licence is. Generally speaking and with a view to a licence in a broad sense – ie a mere authorisation to do what otherwise would constitute an infringement – it seems that the characteristic performance of a licence is the non-enforcement of the relevant IPR by the licensor. However, under Article 4(2) of Rome I that would not mean that the national law under which regime the licence is granted would apply, but that the national law of the habitual residence of the licensor would apply. Therefore in the case of a simple licence for the Netherlands granted by a foreign – ie German – licensor, that foreign law would apply under Article 4(2) of Rome I. In case of a licence that covers more than one jurisdiction this seems to make sense. It also seems to make perfect sense in case a licence effectively makes the licensee the placeholder of the IPR proprietor in one or more jurisdictions and in particular if that licence is a sole and exclusive licence. In that situation – ie a licence in a narrow sense – it seems clear that the law of the habitual residence of the licensor will indeed govern that contractual relationship in the absence of a clear choice of law in the licence contract. From the licensor’s perspective that would also make a bundle of licences with various licensees for different jurisdictions better manageable since they would all be subject to the same law, ie the law of his habitual residence. As a default rule, Article 4(2) of Rome I seems to play out well in this regard. The exception may perhaps be the situation in which a licence is given, in the sense of a simple authorisation, that only applies to one jurisdiction. In that case – ie a licence in a broad sense – it may be that the ‘close connection’ exemption rule of Article 4(3) of Rome I may have a role to play. Article 4(3) provides that where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. With a mere authorisation, ie a promise not to enforce an IPR, the national law under which that IPR may probably be seen as more closely connected than the law of the domicile of the licensor. Case law on these topics does not seem to be available in the Netherlands, which can probably be explained by the fact that in most international situations a written contract will exist and such a contract is likely to contain a choice of law clause. The practical implications of the regime of Article 4 of the Rome I Regulation therefore seem limited with regard to IPR licences.

6  Applicable Law: IPRs as Object of Property In the context of IPRs as an object of property, the following issues seem to be of particular relevance: (i) which law determines who has the original title to an IPR and (ii) which law applies to the transfer of title.

872  Dick van Engelen

6.1  Original Title to IPRs As IPRs are national rights, the starting position is that it is the law of the jurisdiction where the right is invoked – the lex protectionis – that determines who the proprietor of the right is upon its origination. The problem with this approach is that ownership of the IPR may therefore vary from country to country dependent upon what regimes national laws do contain. It certainly seems to leave something to wish for if one prefers a situation that can be easily managed by the interested parties. One can defend the position that the law of the domicile of the proprietor should govern this issue, but that results in a circular reasoning, because one would still then have to determine first who that original proprietor is. A more objective approach could be that the law of the place where the intangible was created – the lex originis – determines original ownership of the related IPRs under applicable national law. This will probably not provide a solution for all problems, but it does seem to be a step forward towards a more uniform and predictable result. As a matter of Dutch private international law, this approach seems defendable, but case law on the subject seems lacking. Given that the ultimate value of an IPR is that the proprietor is able to prohibit third parties from infringements, and given that infringement is governed by the lex protectionis, it also seems prudent not to put too much faith on a lex originis approach while this subject is not yet codified in any EU Regulation or IPR treaty. Initial ownership can, in particular, be troublesome in case of IPRs for intangibles that are made by employees or by third parties under a contract (as with ‘works made for hire’). Which law then distributes ownership between these parties? Also here, the lex protectionis is the undeniable starting point. However, the distribution of ownership rights between these parties to a contract seems primarily to be a subject that can and should be governed by that contract, without any public policy issues being involved. Therefore, the generally held view seems to be that the law of the contract should determine this issue. Consequently, the regime of the Rome I Regulation may provide for a manageable solution here. However, it must always be borne in mind that it will ultimately be the law of the jurisdiction under which protection is sought that has to subscribe to this view as well, at the risk of being left empty-handed when one finally wants to enjoy the blessings of the IPR that one always assumed oneself to be the proprietor of.51

6.2  Transfer of IPRs – Lex Protectionis Once it is determined who the original proprietor of an IPR is, the second question that may then have to be addressed is whether and how that original proprietor can transfer (title to) the IPR to a third party. Also here the lex protectionis will have to be the starting point that cannot be interpreted away, if only to avoid not being able to enforce the IPR in the jurisdiction concerned. This principle is also codified in Article 74 of the European Patent Convention where it is stated 51  In Duijnstee v Goderbauer, the ECJ ruled in its judgment of 15 November 1983 (see above n 30) that the District Court and the Court of Appeals had ruled that the lex protectionis governed and that therefore Art 10 of the Dutch Patent Act determined ownership with regard to the Dutch patents involved only, and did not apply to the ownership of the foreign patents. The Dutch Supreme Court did not address this issue in its judgment and the case was eventually settled after the ECJ ruling, before final judgment by the Dutch Supreme Court. The lower court rulings have received critical reviews in Dutch literature.

The Netherlands  873 that, unless the Convention provides otherwise, a European patent application as an object of property shall, in each designated Contracting State and with effect for such state, be subject to the law applicable in that state to national patent applications. From a property law perspective, the Convention therefore treats a single European patent application as a bundle of national rights. Given the fact that the end product of the European Patent Convention – a granted European patent – does not really exist, but immediately falls apart into a bundle of national patent rights, this solution only seems practical and efficient. If the granted European patent has to be treated as a bundle of national patents, which are subject to the laws of the relevant, designated states, surely one might as well do the same with regard to the application that is the stepping stone towards these granted patents? However, the result of a lex protectionis approach is that it does not necessarily result in low transaction costs for a transfer of IPRs, since the national laws of numerous jurisdictions may have to be checked before one can conclude that the transfer that the parties agreed to has indeed materialised, and that the buyer has indeed become the new proprietor of the IPRs. Under the lex protectionis rule one will have to determine whether a given transfer is indeed legally valid, binding and enforceable in each jurisdiction involved. In this context, one has to think of such issues as: (i) does a transfer need a valid title and what happens if that title is invalidated at a later stage, (ii) when does a transfer actually occur and what are the requirements for a valid deed of transfer, (iii) when can the assignor be deemed to be authorised to transfer, and (iv) when does a transfer have effect as between the parties involved and vis-à-vis third parties or a receiver in the bankruptcy of the owner of the patent application? These subjects may not seem to be that ‘sexy’, but if one pictures these questions against the background of a transfer being done, or a security interest being created, one day before a bankruptcy, one can probably imagine that these issues can turn out to be very critical and require close scrutiny.

6.3  Transfer of IPRs – Lex Proprietatis A more manageable system has been introduced for the three Community IPRs for trade marks, design rights and plant variety rights. Although these IPRs created pan-European, supranational IP rights, the European Union does not yet have a pan-European civil law system that could be applied. Trying to address all such issues in the Community Regulations probably was too ambitious. Therefore, the European legislator has provided that these Community IPRs ‘as an object of property’ shall be dealt with in their ‘entirety, and for the whole area of the Community, as a national’ IP right.52 The consequence of this regime is that property aspects of a community IP right are governed by a dual track system: the provisions of the applicable Community regulation as well as the provisions of one national law. The national law that will govern is – shortly put – the law of the domicile of the proprietor. If the owner does not have a domicile within the EU, nor an establishment, then the law of the relevant IP office will apply. This means that with regard to foreign – in terms of not having an establishment within the European Union – owners of Community IP rights, 52   See Art 16 of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark [1994] OJ L11/1; Art 22 of Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights [1994] OJ L227/1; Art 27 of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs [2002] OJ L3/1.

874  Dick van Engelen Spanish law applies in the case of a Community trade mark or Community design right, while French law governs in the case of a Community plant variety right. Although I fail to see why the applicable civil law has to be the law of a Member State, the system as such seems to provide a practical solution. Given that property is primarily concerned about establishing a legal connection between an object and its owner, it certainly seems to make perfect sense to have the civil law aspects of ownership of intangible properties governed by the law of the domicile of the proprietor. That law is also, for instance, likely to be the law that will govern the bankruptcy of that proprietor. I refer to this regime, as introduced by the three Community IPRs, as the lex proprietatis. As a matter of Dutch private international law this lex proprietatis approach also seems to be possible as a default rule. Although legal scholars are divided on the subject,53 the Court of Appeals at Den Bosch applied this approach in its judgment of 14 October 2008 in Michaud v Owens.54 The Court had to rule on a transfer of, among others, Dutch copyright on the design of a plastic bottle for honey and applied French law, being the law of the transferor (as well as of the transferee). Guidance as to the actual scope of what aspects will be governed by the lex proprietatis can probably be found in the regime that the Rome I Regulation provides for the assignment of claims in Article 14. Although that regime only applies to the contractual obligations to assign a claim under, for instance, a purchase agreement, the Dutch Supreme Court has in its Hansa judgment of 199755 also applied that regime to the actual transfer of the claims. If one looks at that regime for inspiration, the lex proprietatis will govern the transfer of the IPRs as between the transferor and the transferee. However, an IPR is still a right under national law and a right that can be invoked against third parties. Therefore, the aspects of a transfer that protect the interests of third parties, as well as the question as to whether the IPR concerned is transferable to begin with, will be issues that will remain governed by the lex protectionis. This is in line with the regime that Article 14 of Rome I provides for contractual obligations to assign a claim. Article 14(1) determines that the relationship between assignor and assignee under a voluntary assignment shall be governed by the law that applies to the contract between the assignor and assignee. However, the law governing the assigned claim shall determine its assignability, the relationship between the assignee and the debtor, the conditions under which the assignment can be invoked against the debtor and whether the debtor’s obligations have been discharged. This can be applied – mutatis mutandis – to the assignment of IPRs. Consequently, any issues related to third party effects of a transfer of an IPR, such as the right to be able to enforce that right against an infringer would still be subject to the lex protectionis. This would, for instance, mean that if national law requires that the proprietor is registered as such in the relevant IP register, such a requirement of the lex protectionis will need to be fulfilled, even though the lex proprietatis law would provide differently. These issues do not exist with regard to the transfer of a Community IPR, since the relevant Community Regulation addresses those third party effects in the relevant Regulation and they are therefore a matter of Community law. In case of the transfer of bundles of national IPRs such a general applicable law is missing and therefore demarcation lines 53   I happen to be in favor of the lex proprietatis approach (D van Engelen, Intellectuele eigendom en international privaatrecht (Den Haag, Boom Juridische Uitgevers, 2007). Van den Burg (IER 2006, 131) takes the position that the lex protectionis has to apply. 54   IEPT20081014, Hof Den Bosch, Michaud v Owens. 55   IEPT19970516, Hoge Raad, Hansa v Bechem.

The Netherlands  875 between the one – lex proprietatis – law that may apply to the transfer as between the transferor and the transferee, and the various national law that may govern the rights of the proprietor vis-à-vis third party infringers – the lex protectionis – will still need to be investigated.

6.4  Transfer of IPRs – Choice of Law If one accepts the possibility that one national law can govern the transfer of IPRs as between the transferor and the transferee and that the lex proprietas gives a proper default rule to determine which law then has to govern, it is only a small step to also allow for a choice of the applicable national law by the parties. As a matter of Dutch private international law, such a choice of law has been accepted by the Court of Appeals in The Hague in its Technip judgment of 20 September 2007.56 In that case the Court of Appeals had to deal with an assignment of international copyright in a computer program. The contract between the parties contained a choice of Swiss law and the Court of Appeals accepted that this chosen law also governed the actual transfer of the copyright, and in particular Dutch copyright. Consequently, the transfer was held to be valid even though the formal requirement of a deed of transfer – necessary as a matter of Dutch copyright – was not met, since according to the Court of Appeals, Swiss law does not require a deed for a valid transfer of copyrights.

6.5  Conclusion: Transfer of IPRs Although guidance from the Dutch Supreme Court is lacking, it seems that there are grounds to be reasonably optimistic that Dutch private international law can accommodate a transfer of international IPRs in a cost-effective way, either by applying the lex proprietatis approach as is also possible as a matter of European law with regard to Community IPRs, or by allowing a choice of law. However, until the Dutch Supreme Court has ruled on these issues, one should be cautious and not take this for granted. Another observation is that it is all very acceptable if Dutch law allows these regimes, but that such a thing is not very meaningful if the foreign law that applies to the national IPR concerned does not accept these regimes but takes the viewpoint that its national law – as the lex protectionis – is the sole applicable law. A prudent party will therefore at least have to look at the national laws of the most relevant countries concerned to avoid being confronted with unpleasant surprises later on. International harmonisation and codification of these property issues is therefore clearly essential.

  IEPT20070920, Hof Den Haag, Technip Kinetisch stroomschema.

56

Portugal ALEXANDRE DIAS PEREIRA*

Contents 1. General Overview of the Basic Features of Portuguese Law as it Relates to Cross-border Enforcement of Intellectual Property Rights................................................................................ 878 1.1. The Legal Sources and Institutional (Administrative/Judicial) Competence to Apply These Legal Sources in the Areas of Intellectual Property Law............................... 878 1.1.1. Intellectual Property............................................................................................... 878 1.1.2. International Intellectual Property Treaties and Community Law...................... 878 1.1.3. Intellectual Property in Domestic Statutes and Intellectual Property Rights that can be Granted................................................................................................ 881 1.2. The Existence of Specialised Courts/Agencies to Hear Intellectual Property Disputes.... 887 1.2.1. International Jurisdiction....................................................................................... 887 1.2.2. Conflict of Laws...................................................................................................... 895 1.2.3. Recognition and Enforcement of Foreign Judgments and Interim Measures.... 903 1.3. Intellectual Property in Private International Law............................................................. 907 1.3.1. International Jurisdiction over Intellectual Property Issues................................ 907 1.3.2. Law Applicable to Intellectual Property Issues..................................................... 909 2. Hypothetical Cases......................................................................................................................... 912 Case 1. General/Special Grounds of Jurisdiction..................................................................... 912 Case 2. Subject-Matter Jurisdiction.......................................................................................... 913 Case 3. Consolidation of Proceedings....................................................................................... 915 Case 4. Choice of Court............................................................................................................. 919 Case 5. Parallel Proceedings....................................................................................................... 922 Case 6. Principle of Territoriality.............................................................................................. 924 Case 7. Infringement of Intellectual Property Rights............................................................... 925 Case 8. Applicable Law to Initial Ownership............................................................................ 927 Case 9. Applicable Law to the Transfer of Rights Agreements................................................. 930 Case 10. Recognition and Enforcement of Foreign Judgments................................................. 932 Case 11. Provisional Measures and Injunctions......................................................................... 934 Case 12. Securities in Intellectual Property................................................................................ 938

*  University of Coimbra, Doctor of Laws, Professor and researcher (FDUC, CEIS20-UC). Member of the National Council of Culture (Copyright Section). National Report on Jurisdiction and Applicable Law in Matters of Intellectual Property, structured upon the questionnaire of the General Reporter Prof Toshiyuki Kono, to the XVIII International Congress of Comparative Law, presented by the Academie Internationale de Droit Comparé/ International Academy of Comparative Law and the American Society of Comparative Law, and hosted by the American University Washington College of Law, George Washington University Law School and Georgetown University Law Center (Washington DC, from 25 July to 1 August 2010).

878  Alexandre Dias Pereira

1  General Overview of the Basic Features of Portuguese Law as it Relates to Cross-border Enforcement of Intellectual Property Rights 1.1  The Legal Sources and Institutional (Administrative/Judicial) Competence to Apply these Legal Sources in the Areas of Intellectual Property Law 1.1.1  Intellectual Property Intellectual property (propriedade intelectual), including author’s rights (copyright) and industrial property, is referred to in Article 1303 of the Portuguese Civil Code (Código Civil Português) as a special kind of property regulated under special legislation that consists of two main instruments. First, the Code of Industrial Property (Código da Propriedade Industrial),1 concerning patents and utility models, integrated circuits, models and designs, marks, logotypes (names and brands), awards, denominations of origin and geographical indications, and unfair competition including the protection of undisclosed information. Secondly, the Code of Author’s Right and Related Rights (Código do Direito de Autor e dos Direitos Conexos 2) – brevis causa Copyright Act – concerning artistic and literary works and performances of artists, sound/video recordings, and broadcasts; the regulation of copyright is complemented by specific legislation concerning, namely certain categories of works (computer programs3 and databases4), specific rights (rental and public lending,5 satellite broadcasting and cable retransmission6), copyright levies7 and copyright collecting societies.8 Portuguese intellectual property legislation implements several international treaties, in particular WIPO-administered treaties9 ratified by Portugal, as well as several Community instruments to which Portugal is bound as a Member State of the European Union. 1.1.2  International Intellectual Property Treaties and Community Law Portugal has ratified several international treaties on intellectual property, including: Paris Convention for the Protection of Industrial Property (1883), as revised by the Stockholm Act (1967); Berne Convention for the Protection of Literary and Artistic Works (1886), as revised by the Paris Act (1971);

  Approved by Decree-Law 36/2003 of 5 March, and as last amended by Decree-Law 52/2008 of 28 August.   Approved by Decree-Law 63/85 of March 1985, and as last amended by Law 16/2008 of 1 April. 3   Decree-Law 252/94 of 20 October. 4   Decree-Law 122/2000 of 4 July. 5   Decree-Law 332/97 of 27 November. 6   Decree 333/97 of 27 November. 7   Decree-Law 62/98 of 1 September. 8   Law 83/2001 of 3 August. 9  www.wipo.int/treaties/en/. 1 2

Portugal  879 International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, adopted at Rome on 26 October 1961 (Rome Convention); European Patent Convention, signed at Munich on 5 October 1973 (revised in 2000); and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS 1994). Other IP international treaties include: the Patent Cooperation Treaty (1970); the Copyright Universal Convention (1952); the Budapest Treaty on international recognition of the deposit of microorganisms for purposes of the proceedings in matters of patents (1977, revised in 1980); the Treaty on Intellectual Property in Respect of Integrated Circuits, adopted at Washington on 26 May 1989 (Washington Treaty); the Hague Agreement on international deposit of industrial designs (1925, as revised in 1999); the Madrid Agreement on international registration of trade marks (1891, as revised in 1979); the Nice Agreement on the international classification of products and services in relation to trade marks (1957, as revised in 1977); the Madrid Agreement for the repression of false or deceptive indications of source on goods (1891); the Lisbon Agreement on the protection of denominations of origin and their international registration (1958, as revised in 1979); and the International Convention for the protection of vegetable products (1961, as revised in 1991). Moreover, as a Member State of the European Union, Portugal is bound by the intellectual property related provisions of the Treaty of Rome as well as to the instruments of Community legislation10 and the judgments given by European courts over matters of intellectual property law covered by Community law.11 As far as industrial property is concerned, Community law has not only harmonised the domestic legislation of the Member States but has also established unitary Community rights. Instruments of harmonisation include: Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products ([1987] OJ L24/36); Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks ([2008] OJ L299/25, which repealed Council Directive 89/104/EEC of 21 December 1988); Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions ([1998] OJ L213/13); and Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs ([1998] OJ L289/28). Instruments that create unitary Community rights include: Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights ([1994] OJ L227/1) (as last amended by Council Regulation (EC) No 15/2008 of 20 December 2007); Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products ([1996] OJ L198/30);

 ec.europa.eu/internal_market/top_layer/index_52_en.htm.  curia.europa.eu/jcms/jcms/j_6/.

10 11

880  Alexandre Dias Pereira Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs ([2002] OJ L3/1); Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark ([2009] OJ L78/1, which repealed Council Regulation (EC) No 40/94, [1994] OJ L11/1); and a proposal of Council Regulation on Community patent, currently under discussion.12 As for copyright and related rights, several Community instruments of harmonisation have been adopted, such as: Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs ([2009] OJ L111/16, which repealed Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, [1991] OJ L122/42, as amended by Directive 93/98/EEC); Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission ([1993] OJ L248/15); Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases ([1996] OJ L77/20); Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society ([2001] OJ L167/10); Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art ([2001] OJ L272/32); Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property ([2006] OJ L376/28, which repealed Council Directive 92/100/EEC, [1992] OJ L346/61, Council Directive 93/98/EEC, [1993] OJ L290/9, Art 11(2), and Directive 2001/29/EC of the European Parliament and of the Council, [2001] OJ L167/10, Art 11(1)); and Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights ([2006] OJ L372/12, which repealed Directive Council Directive 93/98/EEC, [1993] OJ L290/9). A common Community instrument of harmonisation has been adopted for both industrial property and copyright and related rights: Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights ([2004] OJ L157/45). Finally, other Community instruments of harmonisation have made an impact on intellectual property rights, notably Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) ([2000] OJ L178/1).

 ec.europa.eu/internal_market/indprop/patent/index_en.htm.

12

Portugal  881 1.1.3  Intellectual Property in Domestic Statutes and Intellectual Property Rights that can be Granted 1.1.3.1  Industrial Property Portuguese industrial property is codified in the 2003 Code of Industrial Property (hereinafter, CPI). Industrial property confers exclusive rights over patents, utility models and designs, trade marks, logotypes (brand names and insignia), awards, denominations of origin and geographical indications. Moreover, the Code of Industrial Property makes provisions for the regulation of unfair competition (including the protection of undisclosed information), which is complemented by the regulation of unfair business-to-consumer commercial practices.13 Industrial property rights in patents, utility models, topographies of semiconductors, models and designs, and trade marks can be, in whole or in part, transmitted or licensed by contracts concluded in writing (Arts 31 and 32 CPI). These rights have to be applied for at the Instituto Nacional da Propriedade Industrial (Industrial Property Office) which issues a title of industrial property in cases where the requirements of attribution are met. Most industrial property rights are subject to Community exhaustion (Arts 103, 146, 166, 205, 259 CPI). Infringements to industrial property rights are deemed criminal offences (Arts 321 to 330 CPI) and, as required by international treaties and Community legislation, the Code of Industrial Property lays down special enforcement provisions concerning, namely collecting and preserving evidences and provisional measures (Arts 308-C to 338-J CPI). 1.1.3.2  Patents, Models and Designs Patents are granted to protect inventions of products or processes, in all fields of technology, provided they are new to the state of the art, non-obvious (‘involve an inventive step’) and capable of industrial application: discoveries, scientific theories, mathematical methods and computer programs as such, as well as human cloning processes, cannot be patented (Arts 51 to 52 CPI). The right to patent an invention belongs to the inventor or inventors (Art 58 CPI). In cases where the invention is created by an employee in the course of his contract, the right to patent belongs to the employer with the employee entitled to remuneration in circumstances where it is not established in the contract (Art 59(1)(2) CPI). The same applies to inventions made for hire by independent contractors (Art 59(7) CPI). The inventor cannot waive his rights and he is entitled to a mention in the patent application and title (Arts 59(9) and 60 CPI). Patents have to be applied for at the Instituto Nacional da Propriedade Industrial (Industrial Property Office) and follow specific procedures: national, European, or the Patent Cooperation Treaty (Arts 61 to 96 CPI). The Industrial Property Office issues a patent document which describes the invention and entitles the patent-holder to a non-renewable period of 20 years with an exclusive right of economic exploitation of the patent, including 13   Decree-Law 57/2008 of 26 March, which implements Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (‘Unfair Commercial Practices Directive’), [2005] OJ L149/22.

882  Alexandre Dias Pereira a bundle of rights to make, use, sell, and import, with the exception of certain acts, namely private use without commercial purposes and acts for experimental purposes (Arts 99, 101 and 102 CPI). Patent-holders are required to exploit the patent invention and under certain circumstances they are subject to compulsory licences (Arts 106, 110 and 111 CPI). For patented medicinal products and plant protection products a supplementary protection certificate can be issued, which must be applied for at the Industrial Property Office (Art 115 CPI). 1.1.3.3  Patent-like Protection of Other Inventions The protection of utility models follows closely the regulation of patents (Arts 117 to 152 CPI). The term of protection is limited to six years, but may be extended twice for periods of two years, provided it does not exceed an overall 10-year term of protection (Art 142 CPI). A more sui generis right concerning requirements of protection is provided for topographies of semiconductor products (Art 155 CPI), but for most inventions the standard patent provisions apply. However, the term of protection is limited to 10 or 15 years, depending on the circumstances (Art 172 CPI). Models and designs are the ornamental aspect of a useful article which may be constituted by elements that are three-dimensional (the shape of the article) or two-dimensional (lines, designs, colours), provided they are not dictated solely or essentially by technical or functional considerations (Arts 173 and 176 CPI). To be eligible for industrial property protection, industrial designs must be original or novel, and must be registered at the Instituto Nacional da Propriedade Industrial (INPI) according to a certain application procedure (Arts 184 et seq CPI). In the case where protection of an industrial design is granted, any person without consent of the rightful owner may not, for a period of five to 25 years, make, sell or import, or store for such purposes, articles bearing or embodying a design which is a copy, or substantially a copy, of the protected design, when such acts are undertaken for commercial purposes (Arts 201, 203 and 204 CPI). 1.1.3.4  Distinctive Signs (Marks, Logotypes, Awards, Denominations of Origin and Geographical Indications) Marks are signs (eg emblems), or combinations of signs (eg a combination of colours), capable of graphic representation, which can be protected if they distinguish the goods or services of one undertaking from those of other undertakings (Art 222 CPI). Certain elements, such as signs or indications that have become customary in current language, cannot be granted an exclusive use, unless the signs have acquired distinctive character in commercial practice (Art 223(1) (2) CPI). In general, effective protection requires registration of the mark at the Industrial Property Office in accordance with the registration procedure (Arts 233 et seq CPI). However, well-known and prestigious unregistered trade marks also enjoy some protection (Arts 241 and 242 CPI). In order to be registered, a mark must comply with certain principles, such as veracity and distinctive capacity of the signs. Registration is made in respect of specified goods or services and therefore it will be refused if, for example, the sign is deceptive or misleading, meaning that it is likely to mislead the public, namely with respect to the nature, qualities, usefulness or geographical origin of the product or service for which the trade mark is to be used (Art 238(4)(d) CPI). Moreover, regardless of whether it is made in respect of specified

Portugal  883 products or services (the so-called ‘princípio da especialidade’), the registration shall be denied in cases where the mark is equal or similar to a mark of prestige for different products or services, the distinctive power or prestige of which the new mark would take advantage of, or cause damage to (Art 242 CPI). Registration of a mark confers on the owner an exclusive property right concerning the products or services to which the mark has been registered (Art 224(1) CPI). The owner of the registered mark has the right to prohibit any person from using an identical or similar mark in economic activities for identical or related products to those for which the mark has been registered, and that by virtue of such similarity between the signs or the products may lead to confusion or association in the minds of the public (Art 258 CPI). The exclusive right has several limitations, namely the rule of exhaustion within the European Economic Area, as well as certain uses for informative purposes (Arts 259 and 260 CPI). Registration lasts for 10 years and may be renewed without limit for equal durations (Art 255 CPI). Nonetheless, mark registration can be extinguished on the grounds of nullity, preclusion, or caducity. Grounds of caducity include non-serious use of the mark, or where the mark becomes generic or deceptive (Art 269(1)((2) CPI). Awards are any prizes or demonstrations of preference with official origin (Art 271 CPI). They can only be used for the products or services to which they have been conferred (Art 272 CPI). In order to obtain a award property right, a procedure is provided (Arts 274 to 277 CPI). Moreover, the regulation of brand names and insignia has been unified under the designation of logotypes. Logotypes can be composed of a sign or combination of signs, namely nominative or figurative elements, or a combination thereof, provided they are capable of graphic representation. To obtain protection, logotypes have to adequately distinguish an entity that provides services or trades products (Art 304-A CPI), and must follow a certain registration procedure (Arts 304-D et seq CPI). Several grounds of refusal of registration are provided for instances where a logotype contains or offends symbols of the state, or uses deceptive signs concerning the activity of the applicant (Art 304-H (3) CPI). Similar to marks, logotype registration lasts for 10 years and may be renewed without limit for equal durations (Art 304-L CPI). The owner of the logotype right can prevent any person from using, without his consent, any identical or confusable sign which is a reproduction or imitation of his logotype (Art 304-N CPI). Denominations of origin and geographical indications are the names of a region, a place or even a country used to designate or identify a product from which it originates; where registered, denominations of origin and geographical indications are considered common property of the people of that location and can be used by those who make the products locally with authorisation from the registration-holders (Art 305 CPI). A registration procedure must be observed (Arts 307 et seq CPI). Protection is not limited in time and in general it confers the exclusive right of economic exploitation of the denominations of origin or geographical indications (Art 312 CPI). Registration can be extinguished by several causes, namely nullity or caducity (eg in case the denomination becomes a mere generic designation of a production system or certain type of products – Art 315(1) CPI). 1.1.3.5  Unfair Competition The Code of Industrial Property also makes provisions for the prohibition of unfair competition in a general clause comprehending any act of competition that is against the norms

884  Alexandre Dias Pereira and honest usages of any economic activity (Art 317 CPI). This general clause is illustrated by several typical acts of competition that are deemed to be, in certain circumstances, unfair competition, such as acts of confusion, misleading advertising, wrongful comparisons, and parasitism. The protection of undisclosed information is included within the framework of unfair competition (Art 318 CPI). Unfair competition law does not grant an erga omnes exclusive right, as it is opposable only to economic operators within the socalled relevant market. 1.1.3.6  Copyright and Related Rights Portuguese copyright law belongs to the civil law family of droit d’auteur countries.14 Portuguese copyright law is codified in the 1985 Copyright Act (Código do Direito de Autor e dos Direitos Conexos, hereinafter CDA), which implements the Berne principles of national treatment (prohibition of discrimination on grounds of nationality of authors), minimum standard of protection (minimal rights), and automatic protection regardless of formalities and regardless of protection in the country of origin (independence). This Code is the centrepiece in the web of Portuguese legislation on copyright. Portuguese copyright law protects original works, ie intellectual creations in literary or artistic fields expressed in any perceptible form, regardless of their purpose or merits (Art 1(1) CDA). Originality is the basis of protection. A work is considered original if it is the result of the author’s own creative efforts and not merely the appropriation of another person’s creation. The normative concept of protected works is illustrated by an open catalogue of examples (Art 2 CDA). Derivative works and compilations may also be protected as original works (Art 3 CDA).15 Copyright protection starts as soon as the work is created and is independent of any formalities, such as registration or deposit (Art 12 CDA), except for the titles of works (Art 4(3) CDA). Copyright protection does not extend to ideas, procedures, operational methods or mathematical concepts as such (Art 1(2) CDA), nor to news or facts reports, nor political speeches (Art 7(1) CDA). Despite copyright’s configuration as a unitary right including both economic and moral rights, economic rights can be assigned, while moral rights, namely the right of paternity and the right of integrity, are always attached to the creator and cannot be waived or disposed of (Arts 9, 42 and 52(2) CDA). While the right of integrity is intended to protect the honour and reputation of the intellectual creator as such (Art 56(1) CDA), the author may agree on an identification of authorship (Art 28 CDA) and he can consent to modifications to the work (Arts 15(2) and 59 CDA). Other moral rights include the right not to publish the work, as well as the right to withdraw the work from circulation (Art 62 CDA). Another right that cannot be disposed of nor be waived is the droit de suite, provided for certain artistic works (Art 54 CDA). Copyright belongs to the intellectual creator of the work, ie the author, who is in principle the person identified as such – actor est quem opus demonstrat (Arts 11 and 27 CDA). 14   See A Dias Pereira, Direitos de Autor e Liberdade de Informação [Copyright and Freedom of Information] (Coimbra, Almedina, 2008) 240 ff. 15   Notwithstanding, and despite the open notion of work, computer programs and databases are protected under special copyright legislation, namely Decree-Law 252/94 of 20 October (Software Copyright Act) and Decree-Law 122/2000 of 4 July (Database Intellectual Property Act), which include provisions not familiar to copyright, such as the regulation of software ‘reverse engineering’ and the establishment of a sui generis right for producers of databases, as required under Community intellectual property law.

Portugal  885 However, in the case of works created by employees or made for hire, the parties may agree the transmission of the economic rights, which is presumed if the name of the creator is not mentioned in the work or in the usual place for purposes of authorship identification (Art 14(1)(3) CDA; see also Art 7-B of Law 1/99 of 13 January, as amended by Law 94/2007 of 6 November, concerning authorship and ownership of works of journalists). In the case of transmission, the intellectual creator will be entitled to a special remunerative compensation (Art 14(4), see also Art 49 CDA). Concerning a work created by several persons, copyright belongs jointly to its creators, unless it is deemed a collective work, where copyright is assigned by law to the natural or legal person that organises and directs its creation and in whose name it is published (Arts 16 to 19 CDA). Certain types of works are deemed to be joint works (or works in collaboration), namely cinematographic works, so that authorship is accorded to several persons (Art 22 CDA). Copyright protection starts as soon as the work is created, with no deposit or registration being required, and in principle lasts the author’s lifetime plus 70 years post mortem auctoris (Art 31 CDA). There are special criteria for certain categories of works, namely joint works and orphan works (Arts 32 to 34 CDA). After the term of protection, the copyright expires and the work falls into the public domain (Art 38 CDA). However, a ‘publisher copyright’ (rectius, a related right to copyright) lasting 25 years is granted to the publisher of a hitherto unpublished work for which the term of protection has already expired (Art 39 CDA). Economic rights are exclusive and disposable rights: the copyright owner has not only the exclusive right to authorise the use of the work by third persons but also the right to transfer and to use as security, in whole or in part, the economic rights (Art 40 CDA). Authorisations (licences) to use copyrighted works have to meet certain requirements, namely they have to be concluded in writing and specify the authorised usages and the conditions of time, place and payment thereof. Although the regulation of the normative prototype of copyright contracts of authorisation (copyright licences) provides that an edition contract that it is not concluded in writing may be declared null and void (Art 87 CDA), it is however stable jurisprudence that the writing requirement for copyright authoriations contains only proof value (formality ad probationem).16 Partial transfers of copyright are possible for specific economic rights but have to be concluded in writing and are subject to notary recognition of the signatures, otherwise they are null and void (Art 43(1)(2) CDA). Moreover, the complete and final transmission of economic rights can take place by contract, provided the work and the price are determined and it is concluded by public deed (formality ad substantiam); otherwise it is null and void (Art 44 CDA). Portuguese jurisprudence does not extend this requirement of form to works made for hire,17 but the transmission of copyright in future works remains unclear (Art 48 CDA). Copyright confers an exclusive and disposable right of economic exploitation of the work in any form known or later developed (Arts 67 and 68(1) CDA). The exclusive right comprises a bundle of independent rights which cover the most typical uses such as, 16   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgments of 31 April 1988 (summary available at www.dgsi.pt/jstj.nsf), of 15 December 1998 (482 Boletim do Ministério da Justiça – BMJ (1999) at 266), and of 14 March 2006 (available at www.dgsi.pt/jstj.nsf). See also Tribunal da Relação de Coimbra (Coimbra Court of Appeals), Judgment of 29 October 1985 (IV Colectânea de Jurisprudência – CJ (1985) at 86–89), and Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 17 February 2005 (available at www.dgsi.pt/jtrl.nsf). 17   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 31 March 2005 (available at www.dgsi. pt/jstj.nsf).

886  Alexandre Dias Pereira according to Article 68(2) CDA: (a) the right to copy or otherwise reproduce the work; (b) the right to distribute copies, including rental; (c) the right to perform in public, particularly musical, dramatic or audiovisual works; (d) the right to communicate to the public by cable and to broadcast, by radio, television or other wireless means; (e) the right to make available to the public on computer networks; and (f) the right to translate and the right to adapt. The regulation of these economic rights is complemented by special legislation concerning specific rights such as rental and public lending18 as well as satellite broadcasting and cable retransmission.19 The Copyright Act provides in Chapter III a detailed regulation for special uses, such as edition, stage performance, production of audiovisual works, fixation and publication of phonograms and videos, broadcasting, communication to the public, and translations. Economic rights can be exercised directly by the copyright-holders or through collective management entities (Arts 71 to 74 CDA)20. However, for certain situations, such as the right of cable retransmission,21 copyright collective management is compulsory. The exclusive right meets certain limitations and exceptions. To begin with, the right of reproduction does not apply to the activity of mere conduit, caching, hosting, browsing and linking conducted by a provider of information society services acting as mere intermediaries (Art 75(1) CDA, see also E-Commerce Act, Decree-Law 7/2004 of 7 January , Arts 11 to 17). Next, private copy and other uses such as press reviews, quotations, teaching illustrations, are examples of free uses listed under Article 75(2) CDA, ie they fall outside the scope of the exclusive right, provided however that such uses do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder (Art 75(4) CDA). These free uses are deemed mandatory user rights, as they cannot be derogated from by contract (Art 75(5) CDA). Moreover, copyright-holders are entitled to equitable compensation for some of the free uses (Art 76 CDA). In particular, a system of copyright levies is provided for with regard to free reproductions for private use (Art 82 CDA22). Title III of the Copyright Act makes provisions for the so-called related rights (direitos conexos). Artistic performers, phonogram producers, broadcasting organisations and entertainment organisers are granted related or neighbouring rights. These are economic rights similar to that of copyright, but the term of protection is limited to 50 years after the originating occurrence (Art 183 CDA). Moreover, a limited moral right is conferred to performers (Art 182 CDA). In addition to these ‘typical’ related rights, other related rights are identified such as the ‘right to show’ (direito do empresário do espectáculo) conferred to the promoter of public shows (Art 117 CDA). The sui generis right granted to the producer of a database to protect his substantial investments in the production of the database23 could also be added to this list of ‘atypical’ related rights in the sense that it is not included within the framework of an international treaty. Infringements to copyright and related rights are deemed criminal offences (Arts 195 to 202 CDA) and the Copyright Act lays down special enforcement provisions concerning the   Decree-Law 332/97 of 27 November.   Decree-Law 333/97 of 27 November.   The regulation of copyright management and collecting entities is established by Law 83/2001 of 3 August. 21   Decree-Law 333/97 of 27 November, Art 7(1). 22   The detailed regulation of copyright levies is provided for by Law 62/98 of 1 September 1998, as last amended by Law 50/2004 of 24 August. 23   Decree-Law 122/2000 of 4 July, c III, Arts 12 to 17. 18 19 20

Portugal  887 collection and preservation of evidence and provisional measures (Arts 209 to 211-B CDA). The same applies to the protection of technological protection measures and the integrity of copyright management information (Title VI, Arts 217 to 228 CDA). For example, it is a criminal offence to circumvent (or to facilitate the circumvention of) technological protection measures used by copyright and related rights-holders, including the sui generis right of the database producer (Arts 217 to 219 CDA). However, the protection of technological measures is limited by a number of the mandatory user rights (Art 221 CDA).

1.2  The Existence of Specialised Courts/Agencies to Hear Intellectual Property Disputes The Portuguese regulation of the organisation and operation of judicial courts24 provides in Article 74 that juízos (‘sections’) of specialised jurisdiction on intellectual property disputes can be created at tribunais de comarca (courts of first instance). In the event that such a specialised section (juízo) does not exist at the court of first instance, juízos de comércio (sections on commerce) have jurisdiction over proceedings on intellectual property (Art 121(5)) to exercise the competences provided for in Article 122. Moreover, Relações (District Courts of Appeal) have sections on matters of commerce and intellectual property according to the volume and complexity of the service to decide the appeals on these matters (Art 57). The law of judiciary organisation has also amended the Code on Industrial Property in order to confer jurisdiction to the section on intellectual property of the Tribunal de Comarca de Lisboa (Lisbon Court of First Instance) and to judge appeals of certain decisions of the Instituto Nacional da Propriedade Industrial (Industrial Property Office), unless such a section exists at the court of first instance of the domicile of the appellant (Art 40(1) CPI). Moreover, the juízo (section) on intellectual property of the Lisbon Court of First Instance (Comarca) and the Lisbon Court of Appeals (Relação) have jurisdiction in Portugal over proceedings concerning matters referred to in Articles 80 to 92 of Regulation 6/2002, and in Articles 91 to 101 of Regulation 40/94 (now Regulation 207/2009). 1.2.1  International Jurisdiction 1.2.1.1  International and Domestic Legal Sources International jurisdiction of Portuguese courts is governed by several legal sources, notably: Código de Processo Civil 25 (Code of Civil Procedure), Articles 65 and 65-A and Articles 1094 et seq; Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, concluded on 27 September 1968 (Brussels Convention);26 Lugano Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, concluded on 16 September 1988 between Member States and EFTA States (revised in 2007), which is a parallel Convention to the 1968 Brussels Convention;   Law 52/2008 of 28 August.   Approved by Decree-Law 329-A/95 of 12 December 1995, and as last amended by Law 12/2009 of 29 June 2009. 26   [1972] OJ L299/32, consolidated version in [1998] OJ C27/1. 24 25

888  Alexandre Dias Pereira Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I),27 which supersedes the Brussels Convention as between Member States, with the exception of Denmark;28 Council Regulation (EC) No 2201/2003 of 27 November 2003 concerning jurisdiction and the recognition and enforcement of judgments in matrimonial matters and the matters of parental responsibility, repealing Regulation (EC) No 1347/2000;29 and if and when the Hague Convention on Choice of Court Agreements, concluded on 30 June 2005, enters into force, Portugal will be bound by it by virtue of its conclusion by the European Community. Concerning supranational intellectual property rights, the international jurisdiction of Portuguese courts is governed by special legal sources, namely the Protocol on Jurisdiction and the Enforcement annex to the European Patent Convention. Concerning Community unitary IP rights, several instruments contain specific provisions on jurisdiction, notably Regulation 207/2009 on Community Trade Mark (refers to Brussels I), Regulation 2100/94 Community on Vegetable Products (refers to Lugano Convention), and Regulation 6/2002 Community Designs or Models (refers to Brussels Convention). 1.2.1.2  General Grounds of Exercising and Declining International Jurisdiction Article 65 of the Portuguese Code of Civil Procedure (Código do Processo Civil) provides that, without prejudice to the provisions of Community instruments or other international instruments, Portuguese courts have jurisdiction where: (i) proceedings can be initiated in a Portuguese court according to the rules of territorial jurisdiction provided for under Portuguese law; (ii) the invoked right cannot be effective unless proceedings are initiated in Portuguese territory or where there is considerable hardship in initiating proceedings in a foreign court, provided that between the matter of the dispute and the Portuguese legal order a relevant element of connection, either real or personal, exists. Moreover, Portuguese courts have exclusive competence where, according to Article 65-A of this Code, (a) such jurisdiction is provided for in Community regulations and other international instruments; (b) proceedings over rights in rem in immovable property are located in Portuguese territory; (c) bankruptcy and proceedings related to the termination of insolvent companies whose statutory seat is located in Portugal; (d) matters of companies or other legal persons which are situated in Portugal; and (e) proceedings where the main object is the validity of inscriptions in public registries of any rights subject to registry in Portugal. These rules embed the following principles of international jurisdiction as summarised by the Supremo Tribunal de Justiça (Supreme Court of Justice): (a) the principle of coincidence, meaning that proceedings are to be initiated in Portugal according to the territorial   [2001] OJ L12/1. Regulation as last amended by Regulation (EC) No 1791/2006, [2006] OJ L363/1.   Denmark opted-out based on the 1997 Protocol No 5 on the position of Denmark annexed to the Treaty on European Union and to the Treaty establishing the European Community ([1997] OJ C340/3). However, on 19 October 2005 the Community concluded an agreement with Denmark on jurisdiction and the recognition and enforcement of judgments that extended the provisions of the Regulation to that country. The agreement was approved on behalf of the Community by a Council Decision of 27 April 2006 ([2006] OJ L120/22), and entered into force on 1 July 2007 ([2007] OJ L94/70). 29   [2003] OJ L338/1. 27 28

Portugal  889 rules of jurisdiction provided for under Portuguese law; (b) the principle of causality, ie the event upon which the action is found has occurred in Portugal; (c) the principle of reciprocity, ie the possibility of Portuguese citizens to sue foreign citizens before Portuguese courts whenever the Portuguese citizen can be sued before the courts of the foreign country in which the foreign citizen is domiciled; (d) the principle of necessity, ie the enforcement of the judgment is not possible unless proceedings are initiated before Portuguese courts. These principles are independent of each other.30 As safeguarded in these provisions of the Code of Civil Procedure, in order to ascertain their international jurisdiction Portuguese courts should first look at Community instruments and other international instruments, in particular Brussels I, which supersedes the Brussels Convention, as between Member States, and its parallel Lugano Convention in relation with EFTA countries. As we shall see, these instruments render Portuguese domestic law almost residual,31 as they will only apply to matters covered by Brussels/Lugano where the defendant is neither domiciled in a Brussels/Lugano country nor has a branch therein, and provided it is neither a matter of exclusive jurisdiction nor a situation of a defendant entering into an appearance without contesting jurisdiction, for which Brussels I still applies regardless of domicile. Moreover, as the Lugano Convention is a parallel Convention to the Brussels Convention and this Convention has been superseded by Brussels I Regulation as between Member States, the following analysis focuses solely on Brussels I.32 1.2.1.3  Brussels I (Regulation 44/2001) In order to overcome certain differences between national rules governing jurisdiction and the recognition of judgments that hampered the sound operation of the internal market and the free circulation of judgments (which the ECJ already considered an objective of the Brussels Convention33), Brussels I lays down provisions that unify the rules of conflict of jurisdiction in civil and commercial matters, exclusive of certain well-defined matters, and simplifies the formalities with the intention of swift and simple recognition and enforcement of judgments from Member States bound by this Regulation (Recital 2). As stated in Recitals 11 to 13 of Brussels I, the rules of jurisdiction laid down in this Regulation are founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground except in a few welldefined situations in which the subject-matter of the litigation or the autonomy of the 30   STJ Judgment of 12 April 1997, Proc 98B292 (available at www.dgsi.pt/jstj.nsf), based upon M de Andrade, Noções Elementares de Processo Civil [Basic Notions of Civil Procedure] (Coimbra, Coimbra Editora, 1979) 92–93. 31   According to the Supremo Tribunal de Justiça (Supreme Court of Justice), the Brussels Convention had already replaced domestic provisions concerning the matters regulated under the Convention. STJ Judgment of 3 October 2007, Proc 07S922 (available at www.dgsi.pt/jstj.nsf). The ECJ had already decided that ‘The Convention of 27 September 1968, which seeks to determine the jurisdiction of the courts of the Contracting States in civil matters, must override national provisions which are incompatible with it’ – Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663. 32   Council Regulation (EC) No 44/ 2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. See, eg, D Moura Vicente, ‘Competência Judiciária e Reconhecimento de Decisões Estrangeiras no Regulamento (CE) No 44/2001’ [‘Jurisdiction and Recogniton of Foreign Judgments Under Regulation 44/2001’] (2002) 51 Scientia Iuridica 347; A Dias Pereira, ‘A Jurisdição na Internet segundo o Regulamento 44/2001 (e as alternativas extrajudiciais e tecnológicas)’ [‘Jurisdiction on the Internet according to Regulation 44/2001 (and extra-jurisdictional and technological alternatives)’] (2001) 77 Boletim da Faculdade de Direito Universidade de Coimbra 633. 33   Case C-7/98 Dieter Krombach v André Bamberski [2000] ECR I-1935.

890  Alexandre Dias Pereira parties warrants a different connection. In addition to the defendant’s domicile, this regulation establishes alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice (eg in proceedings which have as their object rights in rem in immovable property). Finally, the weaker party, in relation to insurance, consumer contracts and employment, is protected by rules of jurisdiction more favourable to his interests than the general rules provide for. Brussels I applies in civil and commercial matters whatever the nature of the court or tribunal. Revenue, customs or administrative matters are excluded from the scope of application of this Regulation as well as certain matters such as the status or legal capacity of natural persons: (i) rights in property arising out of a matrimonial relationship, wills and succession; (ii) bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings; (iii) social security; and (iv) arbitration (Art 1(1)(2)). The application of the framework provided by Brussels I to Portuguese courts has only general jurisdiction over proceedings in which the defendants are persons domiciled in Portugal, whatever their nationality (Art 2(1) actor sequitur forum rei). Companies or other legal persons or associations of natural or legal persons are deemed to be domiciled in Portugal in cases where their statutory seat, central administration, or principal place of business is said to be located (Art 60(1)). Concerning natural persons, the judge applies its internal legislation (Art 59(1)), and the Portuguese Código Civil (Civil Code) stipulates that a person has domicile at the place of his usual residence (Art 82(1)). As an alternative, Portuguese courts may have special jurisdiction over proceedings concerning persons domiciled in another Member State in special matters relating, namely to: a contract, if the place of performance of the obligation in question is located in Portugal (Art 5(1)); a tort, delict or quasi-delict, if the place where the harmful event occurred or may occur is located in Portugal (Art 5(3))34; a dispute arising out of the operations of a branch, agency or other establishment, if the branch, agency or other establishment is situated in Portugal (Art 5(3)); disputes where the person is one of a number of defendants and one of them is domiciled in Portugal, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings (Art 6(1)), as previously ruled by the ECJ concerning the Brussels Convention.35 Moreover, Portuguese courts may also have jurisdiction by virtue of special rules aimed at protecting the weaker party in relation to insurance, consumer contracts and employment. 34   However, concerning ubiquitous infringement on the Internet, the mere accessibility of a website in a country may not be enough to establish jurisdiction in case the defendant does not direct his activity to that country nor engage in activities therein. According to the ECJ, ‘the jurisdictional rules [are to be] interpreted in such a way as to enable a normally well-informed defendant reasonably to predict before which courts, other than those of the State in which he is domiciled, he may be sued’ – Case C-26/91 Handte v Traitements Mécanochimiques des Surfaces [1992] ECR I-3967. 35   Case 189/87 Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co and others [1988] ECR 5565 (‘For Art 6(1) of the Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters to apply, a connection must exist between the various actions brought by the same plaintiff against different defendants. That connection, whose nature must be determined independently, must be of such a kind that it is expedient to determine the actions together in order to avoid the risk of irreconcilable judgments resulting from separate proceedings’). See an application of the concept by the Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 18 January 2007 (available at www.dgsi.pt/jtrl.nsf).

Portugal  891 For example, concerning consumer contracts, Portuguese courts have jurisdiction over proceedings brought by a consumer against the other party if either of the parties is domiciled in Portugal, or have exclusive jurisdiction where proceedings are brought by the other party against the consumer who is domiciled in Portugal (Art 16(1) and (2)). It is required however that the contract be concluded between the consumer, for a purpose which can be regarded as being outside his trade or profession (Art 15(1)), and a person who pursues commercial or professional activities in the Member State of the consumer’s domicile or, in any way, directs such activities to that Member State or to several states including that Member State, with the contract falling within the scope of such activities (Art 15(1)(c)). Regardless of domicile, Portuguese courts may also have jurisdiction over consumer contracts in other restricted conditions, such as where the Portuguese courts are chosen by an agreement of the parties entered into after the dispute has arisen (Art 17(1)). Portuguese courts may also have jurisdiction, in principle exclusive, by virtue of a choice of court agreement by the parties, provided one or more of them is domiciled in a Member State, to settle any disputes which have arisen or which may arise in connection with a particular legal relationship (Art 23(1)). It is required that such an agreement conferring jurisdiction is either: (a) in writing or evidenced in writing, with the equivalence of any communication by electronic means which provides a durable record of the agreement (Art 23(2)); (b) in a form which accords with practices which the parties have established between themselves; or (c) in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned.36 According to relevant ECJ jurisprudence, recently taken into consideration by the Portuguese Supremo Tribunal de Justiça (Supreme Court of Justice),37 no other formal requirements, including language, can be provided under domestic law.38 Do disputes connected with a particular relationship include not only contractual obligations but also non-contractual obligations (eg torts, unjust enrichment)?39 In Portugal, the scope of jurisdiction of the chosen court is controversial. In fact, it is disputed in Portuguese jurisprudence whether a choice of court agreement concerning an agency contract includes the issue of compensation for the goodwill of an agent after the termination 36   The Supremo Tribunal de Justice (Supreme Court of Justice) has just decided that invoices with a standard term of jurisdiction can be considered a choice of court clause tacitly agreed (see Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1, available at www.dgsi.pt/jstj.nsf). Before this judgment, Portuguese courts had decided that invoices with a standard term of jurisdiction cannot be considered a choice of court agreement due to lack of acceptance in writing by one of the parties. See Tribunal da Relação de Coimbra (Coimbra Court of Appeals), Judgments of 12 June 2007 and 27 November 2007 (available at www.dgsi.pt/jtrc.nsf), and Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 25 September 2008 (available at www.dgsi.pt/jtrl.nsf). 37   Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1 (available at www.dgsi.pt/jstj.nsf). 38  Case C-150/80 Elefanten Schuh GmbH v Jacqmain [1981] ECR 1671 (‘Since the aim of Art 17 of the Convention is to lay down the formal requirements which agreements conferring jurisdiction must meet, Contracting States are not free to lay down formal requirements other than those contained in the Convention. When those rules are applied to provisions concerning the language to be used in an agreement conferring jurisdiction they imply that the legislation of a Contracting State may not allow the validity of such an agreement to be called into question solely on the ground that the language used is not that prescribed by that legislation.’) 39   A positive answer is provided for in the Hague Convention on choice of court agreements (Art 2(3)). It has been argued that the courts designated by the parties should also have jurisdiction over matters of validity of intellectual property rights which require registry or deposit, where they are raised as incidental questions and provided the decision would produce only inter partes effects. See D Moura Vicente, A Tutela Internacional da Propriedade Intelectual [International Protection of Intellectual Property] (Coimbra, Almedina, 2009) 387–99.

892  Alexandre Dias Pereira of the contract40. Moreover, concerning intellectual property-related contracts, there is the Portuguese jurisprudence holding that a choice of court agreement for a licence contract does not include litigations concerning the termination of the contract and tort liability caused by unlawful acts committed by the plaintiff in Portugal41. However, more recently the same court grounded its jurisdiction over tort liability arising out of illegal termination of a concession contract and compensation for goodwill under Article 5(1)(a) of Brussels I42, and it has ruled, in a different case, that a choice of court agreement concerns any dispute that arises out of the main contract and therefore jurisdiction of the chosen court includes all issues, either contractual or tort, that result thereof 43. On the other hand, it is understood in Portuguese jurisprudence that Brussels I does not provide the courts with the ability to control the grounds for jurisdiction of a court chosen by agreement,44 and that a party to a choice of court agreement can waive the agreement in cases where it is provided for therein.45 However, it should be considered as forum non conveniens, the fact that the court can declare null and void a choice of court agreement that is an unfair standard term,46 and that, according to the ECJ, the court shall decline of its own motion the jurisdiction conferred on it by virtue of such an unfair term47. Regardless of domicile, Portuguese courts have exclusive jurisdiction in certain matters by virtue of Article 22. For example, in proceedings concerned with the registration or validity of patents, trade marks, designs or other similar rights required to be deposited or registered,48 if Portugal is the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place (Art 22(4)).49 Moreover, according to Article 24, regardless of domicile, a Portuguese court has jurisdiction if it is the court before which a defendant enters an appearance without contesting the jurisdiction50 and provided that no other court has exclusive jurisdiction by virtue of Article 22. 40   Contra, Tribunal da Relação de Lisboa, Judgment of 24 October 2006 (available at www.dgsi.pt/jtrl.nsf). Pro, more recently, Tribunal da Relação do Porto (Oporto Court of Appeals, Judgment of 30 September 2008 (available at www.dgsi.pt/jtrp.nsf). 41   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 12 April 1997, Proc 98B292 (available at www.dgsi.pt/jstj.nsf). 42   Judgment of 9 October 2008, Proc 08B2633 (available at www.dgsi.pt/jstj.nsf). 43   Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1 (available at www.dgsi.pt/jstj.nsf). 44   Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment 21 May 2009, Proc 8748/2008-6 (available at www.dgsi.pt/jtrl.nsf). 45   Supremo Tribunal de Justiça, Judgment of 17 December 2004, Proc 04B4076 (available at www.dgsi.pt/jstj. nsf). 46   Unfair Standard Terms Act, approved by Decree-Law 446/85 of 25 October, Art 19(g). 47   Joined Cases C-240/98 to 244/98 Oceano Grupo Editorial v Roció Munciano Quintero [2000] ECR I-4941, paras 24, 29, 32. See A Dias Pereira, ‘A via electrónica da negociação (alguns aspectos)’ [‘Electronic transactions (some aspects)’] in A Pinto Monteiro (ed), 8 Estudos de Direito do Consumidor (Coimbra, Almedina, 2007) 287–89. 48  See Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663 (the term ‘proceedings concerned with the registration or validity of patents’ contained in Art 16(4) of the Convention of 27 September 1968 must be regarded as an independent concept intended to have uniform application in all the Contracting States’). 49   This rule of exclusive jurisdiction could apply to other rights subject to registration such as domain names. See Dias Pereira, above n 14, 368–71. 50   See Case C-150/80 Elefanten Schuh GmbH v Jacqmain [1981] ECR 1671 (‘Art 18 of the Convention of 27 September 1968 must be interpreted as meaning that the rule on jurisdiction which that provision lays down does not apply where the defendant not only contests the court’s jurisdiction but also makes submissions on the substance of the action, provided that if the challenge to jurisdiction is not preliminary to any defence as to the substance it does not occur after the making of the submissions which under national procedural law are considered to be the first defence addressed to the court seised’). Denying prorogation of jurisdiction under Art 24 of Brussels I in case the defendant contests the jurisdiction of the court and, then, in case such exception is not accepted, also contests the action, Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 3 October 2007, Proc

Portugal  893 A Portuguese court may have jurisdiction over proceedings involving the same cause of action and between the same parties that are brought before courts of different Member States (lis pendens), in the case where it is the court first seised; any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established and then decline jurisdiction in favour of that court (Art 27(1) and (2)). A Portuguese court may also have jurisdiction where, concerning related actions that are pending in the courts of different Member States, the Portuguese court is the court first seised and the other courts stay their proceedings, or if these actions are pending at first instance, those other courts, on the application of one of the parties, decline jurisdiction, provided the Portuguese court has jurisdiction over the actions in question and Portuguese law permits the consolidation thereof (Art 28(1) and (2)). Actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings (Art 28(3)). Portuguese courts may have jurisdiction concerning such provisional, including protective, measures as may be available under Portuguese law, even if, under Brussels I, the courts of another Member State have jurisdiction as to the substance of the matter (Art 31). Both the Portuguese Copyright Code and the Code of Industrial Property provide for such provisional measures as required by the TRIPS Agreement (Art 50) and the Enforcement Directive 2004/48 (Art 9). Furthermore, Portuguese jurisprudence also accepts that an international arbitration agreement does not exclude the international jurisdiction of Portuguese courts concerning related interim provisional procedures.51 1.2.1.4  Other International and Community Instruments The Lugano Convention (2007) provides rules similar to Brussels I Regulation, which apply when the defendant is domiciled in Switzerland, Norway or Iceland. The Lugano Convention is also applicable to proceedings concerning infringement to the Community protection law on vegetable varieties. Concerning Community models or designs, Portuguese courts have jurisdiction in cases where (a) the defendant is domiciled or established in Portugal, (b) the plaintiff is domiciled or established in Portugal and the defendant is not domiciled or established in any Member State, or (c) they are elected by the parties by choice of court agreement (Community Model and Design Regulation, Arts 79 et seq). The Community Trade Mark Regulation52 (hereinafter CTM) lays down a jurisdiction framework concerning infringement and validity proceedings over Community trade marks. It is understood that, in order to prevent inconsistent decisions on the part of the courts and the Office, and to ensure that the unitary character of Community trade marks is not undermined, decisions regarding their validity and infringement must have effect and cover the entire area of the Community (Recital 16). 07S922 (available at www.dgsi.pt/jstj.nsf), and Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 13 January 2009 (available at www.dgsi.pt/jtrl.nsf). 51   Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgments of 2 December 2003 and 13 March 2007 (available at www.dgsi.pt/jtrl.nsf). 52   Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark, [2009] OJ L78/1 (which repealed Council Regulation (EC) No 40/94, [1994] OJ L11/1).

894  Alexandre Dias Pereira To begin with, the Community Trade Mark Regulation refers to Brussels I concerning the jurisdiction and procedure in legal actions relating to Community trade marks and applications for Community trade marks, as well as to proceedings relating to simultaneous and successive actions on the basis of Community trade marks and national trade marks, unless the Community Trade Mark Regulation derogates from those rules (Art 94(1)(2) CTM). Member States are required to designate a limited number of national courts of first and second instance with jurisdiction in matters of infringement and validity of Community trade marks (Art 95 CTM). Jurisdiction of Community trade mark courts over proceedings relating to infringement and validity is exclusive (Art 96 CTM), and it is conferred to the courts of the Member State in which the defendant is domiciled or, if he is not domiciled in any Member State, in which he has an establishment (Art 97(1) CTM), or in case none of the these connections occur, jurisdiction is conferred to the courts of the Member State in which the plaintiff is domiciled or, if he is not domiciled in any Member State, in which he has an establishment (Art 97(2) CTM). In the event that none of these connections exist, jurisdiction belongs to the courts of the Member State where the European Trade Mark Office has its seat, ie Spanish courts (Art 97(3) CTM). However, if any of the parties is domiciled in a Member State, jurisdiction belongs to the courts designated by the parties in a choice of court agreement or, in absence of such an agreement, if the defendant enters an appearance before a different Community trade mark court, according to requirements laid down respectively in Articles 23 and 24 of Brussels I (Art 97(4)(a)(b) CTM). As an alternative, jurisdiction over infringement and validity proceedings, with the exception of actions for a declaration of non-infringement of a Community trade mark, can always be asserted to the courts of the Member State in which the act of infringement has been committed or threatened (Art 97(5) CTM), but only in respect of facts committed or threatened within the territory of the Member State in which that court is situated (Art 98(2) CTM). Moreover, in order to avoid contradictory judgments in actions which involve the same acts and the same parties and which are brought on the basis of a Community trade mark and parallel national trade marks, two different procedures are provided (Art 104 CTM): where the actions are brought in the same Member State, national procedural rules apply, and where the actions are brought in different Member States, provisions similar to the rules on lis pendens and related actions of Brussels I are provided for (Arts 27 et seq CTM). However, if ‘the Community trade mark court stays proceedings it may order provisional and protective measures for the duration of the stay’ (Art 104(3) CTM). Then, similar to Brussels I, the courts of a Member State have jurisdiction over provisional and protective measures in respect of a Community trade mark as may be available under the law of that state in respect of a national trade mark, even if, under the Community Trade Mark Regulation, a Community trade mark court of another Member State had jurisdiction as to the substance of the matter (Art 103(1) CTM). However, Community trade mark courts whose jurisdiction is based on Article 97(1), (2), (3) or (4) CTM have exclusive jurisdiction to grant provisional and protective measures which, subject to a necessary procedure for recognition and enforcement pursuant to Title III of Brussels I Regulation, are applicable in the territory of any Member State.

Portugal  895 1.2.2  Conflict of Laws 1.2.2.1  International and Domestic Sources of Law There are several sources of conflict of laws/choice-of-law provisions, notably: Código Civil Português (Portuguese Civil Code), Articles 14 to 65; special instruments of legislation may also contain relevant provisions, namely the Agency Contract Act53 Article 38; 1980 Convention on the Law Applicable to Contractual Obligations (Rome Convention)54; Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I);55 and Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II).56 Portuguese law has a codified system of conflict of laws, ie legal provisions that designate the applicable law as the law which, in the perspective of the law chosen by the law-maker, has the most relevant territorial connection (or most significant relationship) to the disputed questions. This system implements a complex set of general principles such as the principles of international harmony, material harmony, efficacy of judgments, sound administration of justice and parity of treatment.57 The Civil Code (hereinafter CC) regulates such general issues as qualification, renvoi, or ordre public (Arts 15, 17, 22 CC). Nationality is the general connection to establish the personal law of natural persons, which applies notably to the status or legal capacity of natural persons, family relationships, wills and succession, and rights of personality (Arts 25, 27 and 31 CC). The personal law of companies and other legal persons is the law of the country in which their central administration or principal place of business is located (Art 33(1) CC). The law applicable to contracts and contractual obligations is in principle the law designated by the parties (Art 41(1) CC). In the absence of choice, unilateral transactions are governed by the law of the country in which the person by whom it was done has habitual residence; concerning contracts, the law of the country of common residence of both parties (Art 42(1) CC); where there is no common residence, the law of habitual residence of the donator in gratuitous contracts, or the law of the place of conclusion in the other situations (Art 42(2) CC). Tort liability is in principle regulated by lex loci delicti commissi, ie the law of the country in which the main harmful activity occurred (Art 45(1) CC). In case the agent is not considered liable under this specified legislation but deemed liable under lex loci damni, this legislation applies provided the agent should predict the harmful result of his action or omission in that country (Art 45(2) CC). Concerning other non-contractual obligations specific rules are provided for, such as the law upon which the transfer of the patrimonial value took place in favour of the enriched concerning unjust enrichment (Art 44 CC).   Decree-Law 178/86 of 3 July 1986, as amended by Decree-Law 118/93 of 13 March 1993.   [2005] OJ C334/1. 55   [2008] OJ L177/7. 56   [2007] OJ L199/40. 57   See A Ferrer Correia, Direito Internacional Privado – Alguns Problemas [International Private Law – Some Problems] (Coimbra, Almedina, 1997). For an outline in English of sources and general principles of Portuguese international private law see D Moura Vicente, ‘Sources and General Principles of Portuguese International Private Law: An Outline’ in P Šarˇcevic´ , P Volken and A Bonomi (eds), (2007) 9 Yearbook of Private International Law (Munich, Sellier, 2008) 257. 53 54

896  Alexandre Dias Pereira Subsequently, rights in rem in immovable property are regulated by the law of the country in which the property is located (lex rei sitae) (Art 46(1) CC). Intellectual property is subject to a special provision (Art 48 CC), according to which the law applicable to copyright is the law of the first publication of the work and, if it is not published, the personal law of the author, without prejudice of special legislation; the law applicable to industrial property is the law of the country of its creation. Family relationships are governed by several laws depending on the subject matter. For example, while the capacity to marry is governed by the personal law of each party (Art 49 CC), the form of the marriage is in principle governed by the law of the country in which it takes place (Art 50 CC); the relationship between the consorts is governed firstly by their common national law, secondly by the law of their common habitual residence, and thirdly by the law of the country which family life is more closely connected with (Art 52 CC). Successions/wills are governed by the personal law of the deceased/testator at the time of his death/testament (Arts 62 and 63(1) CC). This law also applies to the formal validity of the will in case it requires a special form as a condition of validity or efficacy (Art 65 CC). These domestic provisions on conflict of laws do not apply where an international or Community instrument provides otherwise, such as the specific provisions provided for under international intellectual property treaties, the Rome Convention on the law applicable to contractual obligations, and most significantly, the Rome I Regulation (contractual obligations) and Rome II Regulation (non-contractual obligations), which have precedence over domestic legislation. Therefore, the following analysis will focus on these Community instruments. The Rome II Regulation58 on the law applicable to non-contractual obligations is binding in its entirety and directly applicable in the Member States of the European Union, with the exception of Denmark, which did not take part in its adoption and is not bound by it or subject to its application (Recital 40, Art 1(4)). Rome II applies, in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters. Revenue, customs or administrative matters and claims arising out of acta iure imperii, such as claims against officials who act on behalf of the state, and liability for acts of public authorities, including liability of publicly appointed office-holders, are excluded from the scope of application of Rome II (Art 1(1)). Moreover, this Regulation does not apply to noncontractual obligations arising out of (a) family relationships; (b) matrimonial property regimes, wills and succession; (c) bills of exchange and other negotiable instruments; (d) several matters of company law; and (e) violations of privacy and rights relating to personality, including defamation (Art 1(2)).

58   Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), [2007] OJ L199/40. See notably L de Lima Pinheiro, ‘O Direito de conflitos das obrigações extracontratuais entre a comunitarização e a globalização – uma primeira apreciação do Regulamento Comunitário Roma II’ [‘Conflict of Laws in Non-contractual Obligations between Communitarisation and Globalisation – A First Approach’] in I Galvão Telles (ed), O Direito (Coimbra, Edições Almedina, 2007) 1027; AL Calvo Caravaca and J Carrascosa González, Las obligaciones extracontractuales en Derecho internacional privado. El Reglamento «Roma II» [Non-contractual obligations in International Private Law. Regulation «Rome II»] (Granada, Comares, 2008); G Wagner, ‘Die neue Rom II-Verordnung’ [The New Rome II Regulation’] (2008) Praxis des Internationalen Privat- und Verfahrensrechts 1.

Portugal  897 The Rome I Regulation59 on the law applicable to contractual obligations replaces the Rome Convention in the Member States (Art 24) and is binding in its entirety and directly applicable in the Member States of the European Union, with the exception of Denmark and the United Kingdom, which did not take part in its adoption and are not bound by it or subject to its application (Recitals 45 and 46). This Regulation applies, from 17 December 2009 (Art 29), in situations involving a conflict of laws, to contractual obligations in civil and commercial matters. Revenue, customs or administrative matters are excluded from the scope of this Regulation (Art 1(1)), as well as various matters, such as, for example: (i) the status or legal capacity of natural persons; (ii) obligations arising out of family relationships and matrimonial property regimes, wills and succession; (iii) dealings prior to the conclusion of a contract; (iv) bills of exchange and other negotiable instruments; (v) arbitration agreements and agreements on the choice of court; and (vi) questions governed by company law (Art 1(2)). 1.2.2.2  Non-Contractual Obligations (Rome II) Rome II provides for the principle of universal application, ie any law specified by this Regulation is to be applied irrespective of whether or not it is the law of a Member State (Art 3). On the other hand, renvoi is excluded, meaning that the application of the law of any country specified by this Regulation refers to the rules of law in that country other than its rules of private international law (Art 24). Moreover, in states with more than one legal system, comprising several territorial units, each unit is considered a country for the purposes of identifying the law applicable under Rome II (Art 25(1)). Taking into account that the concept of ‘non-contractual obligation’ varies from one Member State to another, Rome II provides an ‘autonomous concept’ of non-contractual obligation (Recital 11), so that, on one hand, damage covers any consequence arising out of tort/delict, unjust enrichment, negotiorum gestio or culpa in contrahendo 60 (Art 2(1)), and, on the other hand, non-contractual obligations that are likely to arise are also addressed by the Regulation, including both events giving rise to damage that are likely to occur and damage that is likely to occur (Art 2(3)). Non-contractual obligations arising out of strict liability are also covered. As for the scope of the law applicable to non-contractual obligations under Rome II (Art 15), it governs: (a) the basis and extent of liability, including the determination of persons who may be held liable for acts performed by them; (b) the grounds for exemption from liability, any limitation of liability and any division of liability; (c) the existence, the nature and the assessment of damage or the remedy claimed; (d) within the limits of powers conferred on the court by its procedural law, the measures which a court may take to prevent or terminate injury or damage or to ensure the provision of compensation; (e) the question whether a right to claim damages or a remedy may be transferred, including by inheritance; (f) persons entitled to compensation for damage sustained personally; (g) liability for the 59   Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), [2008] OJ L177/7. On this Regulation see, eg, B Ubertazzi, Il regolamento Roma I sulla legge applicabile alle obbligazioni contrattuali [Rome Regulation on the Applicable Law to Contractual Obligations] (Milan, Giuffrè, 2008). 60   In order to overcome the differences in national law concerning the interpretation of culpa in contrahendo, an ‘autonomous concept’ is provided for in Recital 30 according to which it includes ‘the violation of the duty of disclosure and the breakdown of contractual negotiations’, and furthermore it is indicated that ‘Art 12 covers only non-contractual obligations presenting a direct link with the dealings prior to the conclusion of a contract’, so that it does not apply where, eg, a person suffers personal injury while a contract is being negotiated.

898  Alexandre Dias Pereira acts of another person; (h) the manner in which an obligation may be extinguished and rules of prescription and limitation, including rules relating to the commencement, interruption and suspension of a period of prescription or limitation. Rome II strikes a balance between the requirement of legal certainty and the need to do justice in individual cases, establishing rules that aim to create a flexible framework of conflict-of-law and to enable the court seised to treat individual cases in an appropriate manner by providing for the connecting factors which are deemed most applicable to achieve these objectives. Accordingly, Rome II provides for a general rule but also for specific rules and, in certain provisions, for an ‘escape clause’ which allows a departure from these rules where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country (Recital 14). As for the general rule, the law of the country in which the damage occurs (lex loci damni) is provided for in Article 4(1), ‘irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur’. For example, in cases of personal injury or damage to property, the country in which the damage occurs is considered to be, respectively, the country where the injury was sustained or the property was damaged (Recital 17).61 An exception to the general rule is provided for in Article 4(2), which creates a special connection where the parties have their habitual residence62 in the same country at the time when damage occurs, so that the law of that country applies. Moreover, where it is clear from all the circumstances of the case that the tort/delict is manifestly more closely connected with another country, the law of that country applies according to the ‘escape clause’ (Recital 18) provided for in Article 4(3). On the other hand, Rome II lays down specific rules for special torts/delicts where it is understood that the general rule does not allow a reasonable balance to be struck between the interests at stake (Recital 19). Such special torts/delicts are product liability, unfair competition and acts restricting free competition, environmental damage, infringement of intellectual property rights, and industrial action (Arts 5 to 9). These special rules are not considered exceptions but rather specifications or ‘clarifications’ of the general rule (lex loci damni). For example, in matters of unfair competition, Article 6(1) provides for the connection to the law of the country where competitive relations or the collective interests of consumers are, or are likely to be, affected. This conflict-of-law rule is intended to protect competitors, consumers and the general public and to ensure that the market economy functions properly (Recital 21). Then, concerning restrictions of competition, it is established as the law of the country where the market is, or is likely to be, affected, but in case it refers to more than one country, the claimant is able in certain circumstances to choose to base his/her claim on the law of the court seised (Art 6(3)).63 61   It is understood that the connection with the country where the direct damage occurred (lex loci damni) strikes a fair balance between the interests of the person claimed to be liable and the person sustaining the damage, and also reflects the modern approach to civil liability and the development of systems of strict liability (Recital 16), thus overcoming the uncertainty arising out of the practical application of the principle of lex loci delicti commissi. 62   A notion of habitual residence is provided for according to which the place of central administration is deemed the habitual residence of companies and other bodies, corporate or unincorporated, and where the event giving rise to the damage occurs, or the damage arises, in the course of operation of a branch, agency or any other establishment, the place where the branch, agency or any other establishment is located shall be treated as the place of habitual residence (Art 23(1)). Concerning a natural person acting in the course of his or her business, the habitual residence is his/her principal place of business (Art 23(2)). 63   Recital 23 informs that the concept of restriction of competition covers prohibitions on agreements between undertakings, decisions by associations of undertakings and concerted practices which have as their object or

Portugal  899 Infringements of intellectual property rights are special torts/delicts which the ‘universally acknowledged’ principle of lex loci protectionis is provided for under Article 8(1), ie the law of the country for which protection is claimed. However, concerning unitary Community intellectual property rights and only for any question that is not governed by the relevant Community instrument, the law applicable is the law of the country in which the act of infringement was committed, ie lex loci delicti (Art 8(2)). Along copyright and industrial property rights, Recital 26 refers the sui generis right for the protection of databases (Directive 96/9) as an intellectual property right, to prevent confusion with unfair competition. Some of these special criteria prevail over freedom of choice preserved in Article 14, as the law applicable under them may not be derogated from by any choice-of-law agreement (see Art 6(4) on unfair competition and acts restricting free competition, and Art 8(3) on infringement of intellectual property rights). Moreover, Rome II provides for in Chapter III special rules where damage is caused by an act other than a tort/delict, such as unjust enrichment, negotiorum gestio and culpa in contrahendo (Arts 10 to 13). These situations are in principle governed by the law that governs the relationship between the parties arising out of a contract or a tort/delict that gives rise to the non-contractual obligation and is closely connected with it (Arts 10(1), 11(1) and 12(1)). However, non-contractual obligations arising from an infringement of an intellectual property right are governed by the criteria laid down in Article 8 mentioned above (Art 13). Freedom of choice is a basic principle of private law. In order to respect the principle of party autonomy and to enhance legal certainty, the parties are allowed to make a choice as to the law applicable to a non-contractual obligation. In general, the parties may choose the applicable law by a agreement only after the event giving rise to the damage has occurred (Art 14(1)(a)). However, where all the parties are pursuing a commercial activity, they may choose the applicable law by an agreement freely negotiated beforehand (Art 14(1)(b)). The choice must be expressed or demonstrated with reasonable certainty by the circumstances of the case, with due respect to the intentions of the parties and the rights of third parties (Art 14, 2nd period, Recital 31). Moreover, the choice of the parties does not prejudice the application of provisions, which cannot be derogated from by agreement, of the law of a country – other than the country whose law has been chosen – where all the elements relevant to the situation at the time when the event giving rise to the damage occurs are located (Art 14(2)). A similar limitation to freedom of choice is provided for the application of provisions of Community law where appropriate, as implemented in the Member State of the forum, in case ‘all the relevant elements’ are located in one or more of the Member States, other than that of the parties’ choice (Art 14(3)). Rome II does not restrict the application of the provisions of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the noncontractual obligation (Art 16). The mandatory nature of such provisions is not to be interpreted in a broad way, as the title of the Article indicates: overriding mandatory provisions. This is also stressed in Article 26 on public policy of the forum, which provides that effect the prevention, restriction or distortion of competition within a Member State or within the internal market, as well as prohibitions on the abuse of a dominant position within a Member State or within the internal market, where such agreements, decisions, concerted practices or abuses are prohibited by the Treaty or by the law of a Member State.

900  Alexandre Dias Pereira the application of a provision of the law of any country specified by this Regulation (Rome II) may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum. Recital 32 stresses this concern with the application of mandatory provisions of lex fori: ‘Considerations of public interest justify giving the courts of the Member States the possibility, in exceptional circumstances, of applying exceptions based on public policy and overriding mandatory provisions’. And it offers a clarification for a situation of ordre public: non-compensatory exemplary or punitive damages of an excessive nature that would be awarded by the application of a provision of the law designated by this Regulation may be regarded as being contrary to the public policy, depending on the circumstances of the case and the legal order of the Member State of the court seised. Another example that seems to be therein implied is the Community economic ordre public for electronic commerce (eg rules on online gambling). 1.2.2.3  The Law Applicable to Contractual Obligations (Rome I) Rome I provides for the principle of universal application, ie any law specified by this Regulation is to be applied irrespective of whether or not it is the law of a Member State (Art 1). The scope of the law applicable to contractual obligations includes, in particular (Art 12(1)): (i) interpretation, (ii) performance, (iii) within the limits of the powers conferred on the courts by its procedural law, the consequences of a total or partial breach of obligations, including the assessment of damages in so far as it is governed by rules of law, (iv) the various ways of extinguishing obligations, and prescription and limitation of actions, and (v) the consequences of nullity of the contract. However, regard to the law of the country in which the performance takes place is required when it concerns the manner of performance and the steps to be taken in the event of defective performance (Art 12(2)). On the other hand, renvoi is excluded, ie the application of the law of any country specified by this Regulation means the application of the rules of law in that country other than its rules of private international law, unless provided otherwise in this Regulation (Art 20). Concerning states with more than one legal system, comprising several territorial units, each unit is considered a country for the purposes of identifying the law applicable under Rome I (Art 22(1)). Moreover, for reasons of legal certainty, ie in order to enable the parties to foresee the law applicable to their situation, and unlike Regulation 44/2001 which establishes three criteria in Article 60(1) for companies and other bodies, the conflict-of-law rule proceeds on the basis of a single criterion: the place of central administration (Art 19(1), 1st period). In case the contract is concluded in the course of operations of a branch, agency or any other establishment, or if, under the contract, performance is the responsibility of such a branch, agency or establishment, the place where they are located is treated as the place of habitual residence of the company (Art 19(3)). Concerning a natural person acting in the course of his business activity, the habitual residence is his principal place of business (Art 19(1), 2nd period). The time of conclusion of the contract is the relevant point in time to determine the habitual residence (Art 19(3)). Freedom of Choice The parties’ freedom to choose the applicable law is one of the cornerstones upon which the system of conflict-of-law rules in matters of contractual obligations, was laid down in Rome I. Contracts are governed by the law chosen by the parties, who can select the law

Portugal  901 applicable to the whole or to only part of the contract, provided the choice is made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case (Art 3(1)). Furthermore, freedom of choice means that the parties may at any time agree to subject the contract to a law other than that which previously governed it, either as a result of a choice-of-law agreement or of other provisions of Rome I (Art 3(2), 1st period). However, changes made after the conclusion of the contract do not prejudice its validity nor affect the rights of third parties (Art 3(2), 2nd period). Moreover, freedom of choice does not prejudice provisions which cannot be derogated from by agreement of the law of a country where all other elements relevant to the situation at the time of the choice are located, other than the country whose law has been chosen. The same applies mutatis mutandis concerning similar provisions of Community law, where appropriate as implemented in the Member State of the forum (Art 3(3)(4)). Applicable Law in the Absence of Choice In the absence of choice, Article 4(1) of Rome I provides for specific criteria for different types of contracts, such as: (i) contracts for the sale of goods are governed by the law of the country where the seller has his habitual residence; (ii) contracts for the provision of services are governed by the law of the country where the service provider has his habitual residence; (iii) although franchise and distribution contracts are considered contracts for services (Recital 17, 2nd period), they are subject to specific rules, as franchise and distribution contracts are governed by the law of the country where the franchisee or distributor has his habitual residence; and (iv) contracts relating to a right in rem in immovable property are governed by the law of the country where the property is situated. Where the contract cannot be categorised as being one of the specified types or where its elements fall within more than one of the specified types (eg a contract consisting of a bundle of rights and obligations), it is governed by the law of the country where the party required to effect the characteristic performance has his habitual residence (Art 4(2))64. The time of conclusion of the contract is the relevant point in time to determine the habitual residence (Art 19(3)). An ‘escape clause’ is provided in Article 4(3) for such cases where it is clear from all circumstances that the contract is manifestly more closely connected with a country other than that indicated in Article 4(1) or (2), so that the law of that other country applies. Recital 20 indicates that in order to determine that country, account should be taken, inter alia, of whether the contract in question has a very close relationship with another contract or contracts. Moreover where, in the absence of choice, the applicable law cannot be determined either (i) on the basis of the fact that the contract can be categorised as one of the specified types or (ii) as being the law of the country of habitual residence of the party required to effect the characteristic performance of the contract, the contract is governed by the law of the country with which it is most closely connected (Art 4(4)). Rome I provides for specific conflict-of-law rules on contracts of carriage, consumer contracts, insurance contracts, and individual employment contracts (Arts 5 to 8), implementing the principle of protection of the weaker party (Recital 23). For example, consumer contracts – ie contracts concluded by a natural person (the consumer) for a purpose 64   The theory of absorption seems to be indicated to apply to mixed contracts as ‘the characteristic performance of the contract’ is to be determined having regard to its ‘centre of gravity’ (Recital 19).

902  Alexandre Dias Pereira which can be regarded as being outside his trade or profession, with another person (the professional) acting in the exercise of his trade or profession – are governed by the law of the country of habitual residence of the consumer, provided that the professional pursues his commercial or professional activities in that country or, by any means, directs such activities to that country or to several countries including that country, and the contract falls within the scope of such activities (Art 6(1)).65 In these circumstances, although choice of law agreements are allowed, they cannot deprive the consumer of the protection afforded to him by provisions of the country of his habitual residence that cannot be derogated from by agreement (Art 6(2)). However, these consumer protective conflict-of-law rules meet various exceptions. In fact, they do not apply in certain cases, such as contracts for the supply of services where the services are to be supplied to the consumer exclusively in a country other than that in which he has his habitual residence (Art 6(4)). The application of the overriding mandatory provisions of the law of the forum is safeguarded under Rome I (Art 9(2)). It is understood that considerations of public interest justify giving the courts of the Member State the possibility, in exceptional circumstances, of applying exceptions based on public policy and overriding mandatory provisions. However, Recital 37 indicates that ‘overriding mandatory provisions’ are to be distinguished from ‘provisions which cannot be derogated from by agreement’, so that they are construed more restrictively. Article 9(1) provides for a definition of ‘overriding mandatory provisions’ according to which they ‘are provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation.’66 Moreover, overriding mandatory provisions of the law of the country, where the obligations arising out of the contract have been or are to be performed, may only be given effect in so far as they render the performance of the contract unlawful, having regard to their nature and purpose and the consequences of their application or non-application (Art 9(3)). One of these consequences may be the restrictions of free movement of goods and services as regulated by Community instruments, notably Directive 2000/31 on electronic commerce, referred to in Recital 40. Concerning consent and validity of contracts, Rome I establishes, through a rule of multiple alternative links, the principle of favor negotii, with some exceptions, concerning 65   Reference to the concept of directed activity as a condition for applying the consumer protection rule is intended to achieve a harmonious interpretation of the concept both in Regulation (EC) No 44/2001 and this Regulation, taking into account the joint declaration by the Council and the Commission on Art 15 of Regulation (EC) No 44/2001 according to which: ‘for Art 15(1)(c) to be applicable it is not sufficient for an undertaking to target its activities at the Member State of the consumer's residence, or at a number of Member States including that Member State; a contract must also be concluded within the framework of its activities’. The declaration also states that ‘the mere fact that an Internet site is accessible is not sufficient for Art 15 to be applicable, although a factor will be that this Internet site solicits the conclusion of distance contracts and that a contract has actually been concluded at a distance, by whatever means. In this respect, the language or currency which a website uses does not constitute a relevant factor.’ (Recital 24). See L de Lima Pinheiro, ‘Direito aplicável aos contratos com consumidores’ [‘Law applicable to consumer contracts’] (2001) 61 Revista da Ordem dos Advogados 155, 162; L de Lima Pinheiro, ‘Direito aplicável aos contratos celebrados através da Internet’ [‘Law applicable to contracts concluded by the Internet’] in J de Oliveira Ascensão (ed), Direito da Sociedade da Informação, vol 7 (Coimbra, Coimbra Editora, 2008) 389. 66   See, eg, Judgment of the Court (Fifth Chamber) of 9 November 2000, C-381/98, Ingmar GB Ltd v Eaton Leonard Technologies Inc [2000] ECR I-09305 (‘The purpose of the regime established in Art 17 to 19 of the Directive [86/653 on self-employed commercial agents], which is mandatory in nature, is to protect, for all commercial agents, freedom of establishment and the operation of undistorted competition in the internal market, so that they must be applied where the situation is closely connected with the Community’).

Portugal  903 namely consumer contracts and contracts regarding a right in rem in immovable property (Art 11(4) and (5)). To begin with, the existence and material validity of a contract, or of any term thereof, is determined by the law which would govern it under Rome I if the contract or term were valid; however, if it appears from the circumstances that it would not be reasonable for a party to determine the effect of his conduct in accordance with such law, such party may rely upon the law of the country in which he has his habitual residence in order to establish that he did not consent (Art 10(1) and (2)). With regard to formal validity, a contract concluded between persons who are in the same country at the time of its conclusion is formally valid if it satisfies the formal requirements of the law which governs it in substance under this Regulation or of the law of the country where it is concluded (Art 11(1)). If the parties are in different countries, it is also valid if it satisfies the formal requirements of the law of either of the countries where any of the parties had his habitual residence at the time of conclusion of the contract (Art 11(2)). The formal validity of consumer contracts is governed by the law of the country where the consumer has his habitual residence (Art 11(4)), and, concerning contracts encompassing a right in rem in immovable property or a tenancy of immovable property, the requirements of the law of the country where the property is situated apply if by that law those requirements are imposed irrespective of the country where the contract is concluded and irrespective of the law governing the contract, and cannot be derogated from by agreement (Art 11(5)). 1.2.3  Recognition and Enforcement of Foreign Judgments and Interim Measures 1.2.3.1  The Code of Civil Procedure and Brussels I In situations where the Brussels I Regulation as well as the Brussels and Lugano Conventions do not apply, a Portuguese court will follow the system of judicial review and confirmation provided for under the Portuguese Código de Processo Civil (Code of Civil Procedure, hereinafter CCP), according to which, without prejudice to the provisions of international conventions, Community regulations or special legislation, no judgment on private rights given by a foreign court can have effect in Portugal, whatever the nationality of the parties, without judicial review and confirmation (Art 1094(1)). However, revision is not required when such judgment is invoked in proceedings pending in Portuguese courts as a mere means of proof subject to the appreciation of the competent court (Art 1094(2) CCP). The District Court of Appeals of the domicile of the person against whom the judgment is to be enforced has jurisdiction over proceedings of revision and confirmation of foreign judgments (Art 1095 CCP). In order for a foreign judgment to be confirmed, several requirements must be fulfilled concerning the judgment (Art 1096 CCP): (a) no doubt can exist as to the authenticity of the document which contains the judgment nor to the intelligibility of the decision; (b) it has to be final and cannot be appealed according to the law of the country in which it has been given; (c) it must be given by a foreign court, the jurisdiction of which has not been fraudulently invoked, and the matters decided upon must not have been matters of exclusive jurisdiction of Portuguese courts; (d) the exceptions of lis pendens or final decision (caso julgado) cannot be invoked upon proceedings pending in a Portuguese court, unless the foreign court has declined jurisdiction; (e) the defendant has been regularly called to the proceedings, under the law of the country of origin, and the principles of contradictory

904  Alexandre Dias Pereira and equality of the parties have been observed in the proceedings; and (f) finally it is required that the foreign judgment does not contain any decision of which the recognition leads to a result manifestly incompatible with the principles of the international public order of the Portuguese state. The application is submitted with a document that contains the decision under review which the other party is notified to contest within 15 days (Art 1098 CCP). The application can only be contested upon grounds of a lack of any of the requirements necessary for the foreign judgment to be reviewed and upon other grounds of revision provided for in the Code (Art 1100 CCP). At its own motion, the court verifies whether the requirements laid down in Article 1096 are fulfilled, and denies confirmation where any of those requirements are not met, eg, where proceedings have not observed normal legal principles such as equality of the parties (Art 1101 CCP). The decision of the court can be appealed to the Supreme Court of Justice (Art 1102 CCP). A different exequatur system is set up under Brussels I, which in Chapter III lays down provisions on recognition and enforcement of foreign judgments and interim measures. As stated in Recitals 16 to 18, the principle of mutual trust in the administration of justice in the Community justifies automatic recognition of judgments given in another Member State without the need for any procedure except in cases of dispute, and demands that the procedure for enforcing in one Member State a judgment given in another should be efficient and rapid, so that the declaration that a judgment is enforceable is issued virtually automatically after purely formal checks of the documents supplied, without there being any possibility for the court to raise of its own motion any of the grounds for non-enforcement provided for by this Regulation. Nonetheless, in order to respect the rights of the defence, the defendant is able to appeal in an adversarial procedure, against the declaration of enforceability, if he considers that any of the grounds for non-enforcement is present, and redress procedures are also available to the claimant where his application for a declaration of enforceability has been rejected. 1.2.3.2  The Notion of a ‘Foreign Judgment’ and ‘Foreign Interim/Preliminary Measures’ Brussels I provides a comprehensive notion of judgment, according to which ‘ “judgment” means any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses by an officer of the court’ (Art 32). This notion of ‘judgment’ seems to include ‘foreign interim/preliminary measures’.67 Settlements are to be excluded from the notion of judgment, as ruled by the ECJ: The definition of a ‘judgment’ given in Article 25 of the [Brussels] Convention . . . refers, for the purposes of the application of the various provisions of the Convention in which the term is used, 67   These are excluded from the notion of judgment provided for in the Hague Convention, which however does not govern such measures (Art 4(1) and Art 7). This Convention is not yet in force. The European Community has declared, in accordance with Art 30 of the Convention on Choice of Court Agreements, that it exercises competence over all the matters governed by this Convention. Its Member States will not sign, ratify, accept or approve the Convention, but shall be bound by the Convention by virtue of its conclusion by the European Community. For the purpose of this declaration, the term ‘European Community’ does not include Denmark by virtue of Arts 1 and 2 of the Protocol on the position of Denmark annexed to the Treaty on European Union and the Treaty establishing the European Community.

Portugal  905 solely to judicial decisions actually given by a court or tribunal of a Contracting State deciding on its own authority on the issues between the parties. That is not the case as far as a settlement is concerned, even if it was reached in a court of a Contracting State and brings legal proceedings to an end, because settlements in court are essentially contractual in that their terms depend first and foremost on the parties’ intention.68

However, Brussels I provides for criteria on recognition and enforcement of settlements which are identical to those provided for authentic instruments and which follow procedures similar to those provided for judgments (Arts 57(1) and 58). 1.2.3.3  General Requirements for Recognition and Enforcement of Foreign Judgments and Interim Measures under Brussels I Recognition A judgment given in a Member State is to be automatically recognised in the other Member States without any special procedure (Art 33(1)). However, recognition is to be denied in case one or more of the following situations provided for in Article 34 occur, such as: (a) recognition is manifestly contrary to public policy in the Member State in which recognition is sought;69 (b) it concerns a judgment given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence (inaudita altera pars), unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so; (c) it is irreconcilable with a judgment given in a dispute between the same parties in the Member State in which recognition is sought; (d) it is irreconcilable with an earlier judgment given in another Member State or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed. Moreover, should recognition be contested by an interested party – either as the principal issue in a dispute or as an incidental question (Art 33(1)(2)) – a judgment is not to be recognised if it was given by a court without jurisdiction, according to Brussels I, concerning namely matters relating to insurance, consumer contracts, and proceedings subject to exclusive jurisdiction (Art 35(1)). In the examination of such grounds of jurisdiction, the court or authority applied is bound by the findings of fact on which the court of the Member State of origin based its jurisdiction (Art 35(2)). However, this justification for non-recognition of the judgment is not to be raised by the courts of their own motion, because the jurisdiction of the court of the Member State of origin may not be reviewed and the test of public policy may not be applied to the rules relating to jurisdiction (Art 35(3)). Moreover, under no circumstances may a foreign judgment be reviewed as to its substance (Art 36).

  Case C-414/92 Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237.   See Case C-38/98, Régie Nationale des Usines Renault SA v Maxicar SpA and Orazio Formento [2000] ECR I-2973, ruling that ‘the decision from a court of a Member State to recognise the existence of an intellectual property right in car body parts, and to confer on the holder of that right protection by enabling him to prevent third party trading in another Member State from manufacturing and commercialising in that State, cannot be considered to be contrary to public policy’. See RM de Moura Ramos, ‘Public Policy in the Framework of the Brussels Conventions: Remarks on two Recent Decisions by the European Court of Justice’ in P Šarˇcevi c´ and P Volken (eds), (2000) 2 Yearbook of Private International Law (Berlin, Sellier, 2000) 25–40. 68

69

906  Alexandre Dias Pereira Enforcement In order to be enforced in the other Member States, the judgment must be declared enforceable in the Member State of origin on the application of any interested party, to be submitted to a specific court or competent authority (Arts 38(1) and 39(1)), which issues the declaration of enforceability ‘immediately’ on completion of certain formalities and without any review of the impediments of recognition (Art 41): ie the courts are not to raise of their own motion the grounds for non-enforcement. Nonetheless, the decision on the application for a declaration of enforceability may be appealed against by either party (Art 43(1)). A declaration of enforceability is to be refused or revoked by the competent court of appeal (Arts 43 and 44) only on one of the grounds that justify non-recognition (Arts 34 and 35) ,70 but under no circumstances may the foreign judgment be reviewed as to its substance (Art 45(1)(2)). Settlements A settlement which has been approved by a court in the course of proceedings and is enforceable in the Member State in which it was concluded is to be enforced in the state addressed under the same conditions as an authentic instrument (Art 58). This means that ex vi Article 57(1) must follow the same procedure as provided for judgments: the settlement must be declared enforceable in the Member State of origin on the application of any interested party, to be submitted to a specific court or competent authority (Arts 38(1) and 39(1)), which issues the declaration of enforceability ‘immediately’ on completion of certain formalities and without any review of the impediments of recognition (Art 41). However, as provided for authentic instruments (Art 57(1), 2nd period), if an appeal is lodged, the competent court can refuse or revoke a declaration of enforceability only when enforcement of the instrument is manifestly contrary to public policy in the Member State addressed. This means that a declaration of enforceability cannot be refused or revoked upon any other grounds that justify non-recognition. 1.2.3.4  Recognition and Enforcement of Judgments and Provisional Measures Handed Down after Ex Parte Proceedings under Brussels I Under Brussels I, recognition of judgments and provisional measures handed down after ex parte proceedings71 is to be denied where it concerns a judgment given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in a manner as to enable him to arrange for his defence (inaudita altera pars), unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so (Art 34(b)). Moreover, if recognition is contested by an interested party – either as the principal issue in a dispute or as an incidental question (Art 33(1)(2)) – a judgment is not to be recognised if it was given by a court without jurisdiction, according to Brussels I, concerning proceedings subject to exclusive jurisdiction (Art 35(1)). However, this cause of non-recog70  See Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 16 December 2008, Proc 10053/2008-1 (available at www.dgsi.pt/jtrl.nsf). 71   ‘Ex parte measures mean, in the context of provisional measures, temporary orders issued by the court based on one party’s request without hearing from the other side’ – Green Paper on the Review of Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, COM(2009) 175 final, 8, fn 13.

Portugal  907 nition is not to be raised by the courts of their own motion. In particular, the test of public policy may not be applied to the rules relating to jurisdiction (Art 35(3)). Furthermore, in order to be enforced in the other Member States, judgments and provisional measures handed down after ex parte proceedings must be declared enforceable in the Member State of origin on the application of any interested party, to be submitted to a specific court or competent authority (Arts 38(1) and 39(1)), which issues the declaration of enforceability ‘immediately’ on completion of certain formalities and without any review of the impediments of recognition (Art 41). The decision on the application for a declaration of enforceability may be appealed against by either party (Art 43(1)). A declaration of enforceability is to be refused or revoked by the competent court of appeals (Arts 43 and 44) only on one of the grounds that justify non-recognition (Arts 34 and 35), but under no circumstances may the foreign judgment be reviewed as to its substance (Art 45(1)(2)). 1.2.3.5  Problems Related to the Recognition of Judgments from Particular Jurisdictions under Brussels I Under Brussels I, judgments given by the courts of Ireland or the United Kingdom pose specific problems. On one hand, generally for a court of a Member State in which recognition is sought of a judgment given in another Member State to stay the proceedings, it is required that an ordinary appeal against the judgment has been lodged (Art 37(1)). However, if the judgment was given in Ireland or the United Kingdom, the court may stay the proceedings if enforcement is suspended in the state of origin by reason of an appeal (Art 37(2)). On the other hand, concerning enforcement, in general a judgment given in a Member State and enforceable in that state is enforced in another Member State when, on the application of any interested party, it has been declared enforceable there (Art 38(1)), registration not being required. However, in the United Kingdom, for such a judgment to be enforced in England and Wales, in Scotland, or in Northern Ireland, it must have been registered for enforcement in that part of the United Kingdom on the application of any interested party (Art 38(1)). Finally, any form of appeal available in Ireland or the United Kingdom is treated as an ordinary appeal for the purposes of Article 46(1), which provides for that the court with which an appeal is lodged under Article 43 or Article 44 may, on the application of the party against which enforcement is sought, stay the proceedings if an ordinary appeal has been lodged against the judgment in the Member State of origin or if the time for such an appeal has not yet expired; in the latter case, the court may specify the time within which such an appeal is to be lodged.

1.3  Intellectual Property in Private International Law 1.3.1  International Jurisdiction over Intellectual Property Issues There is no domestic rule specifically designed for international jurisdiction over intel­lectual property issues. Nonetheless, Brussels I (as well as the Brussels and Lugano Conventions) provides for a special rule of international jurisdiction, regardless of domicile, for proceedings concerned with the registration or validity of patents, trade marks,

908  Alexandre Dias Pereira designs, or other similar rights required to be deposited or registered, according to which the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place, have exclusive jurisdiction (Art 22(4)). Choice of court agreements contrary to this rule of exclusive jurisdiction have no legal force (Art 23(5)), and a court of a Member State must declare of its own motion that it has no jurisdiction if it is seised of a claim which is principally concerned with such a matter over which the courts of another Member State have exclusive jurisdiction (Art 25). The case is rather sensitive with regard to European patents granted for several Member States, which could even justify the jurisdiction of the courts of a Member State in which a person is domiciled, where he is one of a number of defendants, as the claims would be so closely connected that it would be expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings (Art 6(1)). It might be argued, a contrario sensu, that if a claim concerned with such a matter is only incidentally raised and jurisdiction is not contested, the court could give a judgment over such questions, the effects of which would be inter partes only, provided such judgments are possible under lex fori, as suggested by CLIP.72 Within these constraints, choice of court agreements – eg, within licence agreements – would also be admitted to confer jurisdiction over such matters incidentally raised to the chosen court (as provided for under the Hague Convention). However, Portuguese courts are not expected to depart from the ECJ restrictive rulings,73 which have been later confirmed by the revision of the Lugano Convention (Art 22(4)), even if they may evidence ‘shortcomings of the current system’.74 In fact, Portuguese courts normally base their application of Brussels I upon the ECJ jurisprudence. For example, the Supreme Court of Justice ruled that an international licence to broadcast football matches is not to qualify as a contract for the provision of services within the meaning of the second indent of Article 5(1)(b) of Brussels I.75 Moreover, concerning choice of court agreements, the Court held that domestic law cannot add formal requirements to those provided for 72   European Max-Planck Group for Conflict of Laws in Intellectual Property (CLIP), ‘Exclusive Jurisdiction and Cross Border IP (Patent) Infringement: Suggestions for Amendment of the Brussels I Regulation’ (2007) 29 European Intellectual Property Review 195. For the US, see American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes. As Adopted and Promulgated by the American Law Institute at San Francisco, California 14 May 2007 (St Paul, Minnesota, American Law Institute Publishers, 2008) (ALI Principles). 73   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509, and concerning Art 6(1), Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. On the impact of this jurisprudence, see notably A Kur, ‘A farewell to cross-border injunctions? The ECJ decisions GAT v LuK and Roche Nederland v Primus and Goldenberg’ (2006) 37 International Review of Industrial Property and Copyright Law 844-55; PA Miguel Asensio, ‘Cross-Border Adjudication of Intellectual Property Rights and Competition between Jurisdictions’ (2007) 16 Annali Italiani del Diritto d’Autore, della Cultura e dello Spettacolo 105–54. 74   Green Paper on the Review of Council Regulation (EC) No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, COM(2009) 175 final, question 4, 7. See also Report from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the application of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, COM(2009) 174 final, Brussels, 21 April 2009; B Hees et al, Report on the Application of Regulation Brussels I in the Member States, Study JLS/C4/2005/03, Final Version September 2007. 75   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 21 May 2009, Proc 4986/06.3TVLSB. S1 (available at www.dgsi.pt/jstj.nsf). See Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela WellerLindhorst [2009] ECR I-3327.

Portugal  909 under Brussels I,76 and another court decided Brussels I does not provide the courts with the ability to control the grounds of jurisdiction of a court chosen by agreement, namely as forum non conveniens.77 There is also case law of the Supreme Court of Justice holding that a choice of court agreement concerning a licence contract does not cover litigation concerning the termination of the contract and tort liability caused by unlawful acts committed by the plaintiff in Portugal.78 However, the same Court ruled, in a different case, that a choice of court agreement concerns any dispute that arises out of the main contract, and therefore jurisdiction of the chosen court includes all issues, either contractual or tort, that are the result thereof.79 Furthermore, taking into consideration that a choice of court agreement can allow a party to depart from such agreement, the Court accepted that such a party could apply before a court the issuance of provisional measures, even if that court does not have jurisdiction over the substance of the action.80 Finally, there is Portuguese jurisprudence holding that an international arbitration agreement does not exclude the international jurisdiction of Portuguese courts concerning related interim provisional procedures.81 1.3.2  Law Applicable to Intellectual Property Issues 1.3.2.1  Law Applicable under Domestic Law and International Conventions Under domestic law, intellectual property is subject to a special provision of the Civil Code (Art 48), according to which the law applicable to copyright is the law of the first publication of the work or, if it has not been published, the personal law of the author, without prejudice of special legislation; the law applicable to industrial property is the law of the country of its creation. However, international conventions and Community regulations render this domestic provision almost irrelevant.82 According to well-established interpretation of Article 5(2), 2nd period, of the Berne Convention, copyright is governed by the law of the country for which protection is claimed (lex loci protectionis). In this regard, Article 63 of the Copyright Act is similarly interpreted, as it provides that the copyright protection claimed for Portugal is determined by Portuguese law. However, this principle meets several exceptions concerning, namely copyright ownership and issues related to copyright contracts.83 76   Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1 (available at www.dgsi.pt/jstj.nsf). See Case C-150/80 Elefanten Schuh GmbH v Jacqmain [1981] ECR 1671. 77   Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 21 May 2009, Proc 8748/2008-6 (available at www.dgsi.pt/jtrl.nsf). See Case C-281/02 Andrew Owusu v NB Jackson [2005] ECR I-1383, paras 37–40. 78   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 12 April 1997, Proc 98B292 (available at www.dgsi.pt/jstj.nsf). 79   Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1 (available at www.dgsi.pt/jstj.nsf). 80   Judgment of 17 December 2004, Proc 04B4076 (available at www.dgsi.pt/jstj.nsf). 81   Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgments of 2 December 2003 and 13 March 2007 (available at www.dgsi.pt/jtrl.nsf). 82   cf L de Lima Pinheiro ‘A lei aplicável aos direitos de propriedade intelectual’ [‘Law applicable to intellectual property rights’] (2001) 42 Revista da Faculdade de Direito Universidade de Lisboa 63-75; in J de Oliveira Ascensão (ed), Direito da Sociedade da Informação, vol 3 (Coimbra, Coimbra Editora, 2002) 131; Moura Vicente, above n 39, 230. 83  On this issue see de Lima Pinheiro, above n 82, 63; D Moura Vicente, ‘Direito internacional de autor’ [‘International Copyright Law’] in Estudos em Homenagem à Professora Doutora Isabel Magalhães Collaço, vol 1 (Coimbra, Almedina, 2002) 469; P Torremans, ‘Authorship, Ownership of Right and Works Created by Employees: Which Law Applies?’ (2005) 27 European Intellectual Property Review 220.

910  Alexandre Dias Pereira To begin with, the Supreme Court of Justice has ruled84 that copyright ownership is governed by the law of the country of origin of the work as defined by the Berne Convention (Art 5(4)). This solution is expressly provided for copyright ownership of software85 and databases.86 However, it has been argued that it should not apply to moral rights.87 Moreover, the Berne Convention in Article 14bis(2)(a) provides that copyright ownership ‘in a cinematographic work shall be a matter for legislation in the country where [ie for which] protection is claimed’ (lex loci protectionis). Concerning issues related to copyright contracts, including copyright ownership of works created by employees or works made for hire, these are considered to be governed by lex contractus or lex loci laboris.88 Moreover, the law applicable to copyright, either lex loci protectionis, lex originis or lex contractus, meets several limitations, concerning the principle of reciprocity,89 overriding mandatory provisions and ordre public (eg renunciation of moral rights). Industrial property is also governed, in general, by lex loci protectionis, ie the law of the country for which protection is claimed (Paris Convention, Arts 4bis(1), 6(2)(3) and 6quinquies(B)). This solution applies also to non-registered well-known trade marks which are to be protected according to the Paris Convention (Art 6bis). However, matters of registration and validity of industrial property rights are governed by lex originis, ie the law of the country of registration (Civil Code, Art 48(2)). Moreover, the Supreme Court of Justice has decided that the law chosen by the parties to govern their licence contract can also apply to torts related to such a contract (eg, in case the use of the licenced right exceeds the terms of the licence).90 Finally, the law applicable to industrial property litigations meets also several limitations, namely ordre public of lex fori (eg, the right of the inventor to be identified in the patent title91). 1.3.2.2  Law Applicable to Non-Contractual Intellectual Property Issues Under Rome II The Rome II Regulation on the law applicable to non-contractual obligations establishes specific criteria for torts/delicts concerning infringement of intellectual property rights. These criteria prevail over freedom of choice preserved in Article 14, as the law applicable under them may not be derogated from by a choice-of-law agreement (Art 8(3) Rome II). So, instead of the general rule which designates the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur (Art 4(1)), the ‘universally acknowledged’ principle of lex loci protectionis is provided for in Article 8(1) of Rome II, ie the law of the country for which protection is claimed.92 This principle corresponds to the Berne Convention (Art 5(2), 2nd period) as well as to the Paris Convention (Arts 2(2), 4-bis(1), 6(2)(3) and 6-quinquies(B)).   STJ, Judgment of 10 January 2008 (available at www.dgsi.pt/jstj.nsf).   Software Copyright Act, Decree-Law 252/94, Art 17(4). 86   Databases Copyright Act, Decree-Law 122/2000, Art 2(4). 87   Moura Vicente, above n 39, 230–31, 236–37. 88   See also Labour Code, Art 6. An application of this provision has been given by Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 2 April 2008 (available at www.dgsi.pt/jstj.nsf). 89   Berne Convention, Art 6(1), see also, concerning the droit de suite, Art 14ter(2), and Directive droit de suite, Art 7(1). 90   Supremo Tribunal de Justiça, Judgment of 16 October 2002, I Colectânea de Jurisprudência/Acórdãos do Supremo Tribunal de Justiça – CJ/ASTJ (2002), 11. 91   Moura Vicente, above n 39, 279. 92   See, eg, N Boschiero, ‘Infringement of Intellectual Property Rights: A Commentary on Article 8 of the Rome II Regulation’ in P Volken and A Bonomi (eds), (2007) 9 Yearbook of Private International Law (Berlin, Sellier, 84 85

Portugal  911 However, with regard to unitary Community intellectual property rights and for any question that is not governed by the relevant Community instrument, the law applicable is the law of the country in which the act of infringement was committed – lex deliciti comissi (Art 8(2) Rome II). 1.3.2.3  Law Applicable to Contractual Intellectual Property Issues under Rome I The parties may choose the law applicable to contractual obligations concerning intellectual property rights within the conditions laid down in Article 3 of Rome I. Portuguese courts have already accepted that the law chosen by the parties to govern their licence contract can also apply to torts related to such a contract (eg, when the use of the licensed right exceeds the terms of the licence)93. In the absence of choice, Article 4(1) of the Rome I Regulation provides specific criteria for different types of contracts. It is not clear however whether or how these criteria would apply to IPR contracts. Should a contract for transfer of intellectual property rights qualify as a contract for the sale of goods, then the law of the country where the seller has his habitual residence would apply. Moreover, should a contract of work made for hire qualify as a contract for the provision of services, then the law of the country where the service provider has his habitual residence would apply. These qualifications may however be disputed. For special contracts which normally comprehend intellectual property rights, namely franchise and distribution contracts and despite being considered contracts for services (Recital 17, 2nd period), Rome I provides specific rules, since franchise and distribution contracts are governed by the law of the country where the franchisee or distributor has his habitual residence. Nonetheless, the ECJ has held that the second indent of Article 5(1)(b) of Brussels I Regulation is to be interpreted to the effect that a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration is not a contract for the provision of services within the meaning of that provision.94

For reasons of consistency between Brussels I and Rome, this ECJ judgment should be taken into account. It means that, in the absence of choice, intellectual property licence contracts would be governed by the law of the country where the licensor has his habitual residence. If the contract cannot be categorised as being one of the specified types, or where its elements fall within more than one of the specified types (eg, a contract consisting of a bundle of rights and obligations), it is governed by the law of the country where the party required to effect the characteristic performance has his habitual residence (Art 4(2)), and it is indicated that ‘the characteristic performance of the contract’ is to be determined having regard to its ‘centre of gravity’ (Recital 19). An ‘escape clause’ is provided for in Article 4(3) for such cases where it is clear from all circumstances that the contract is manifestly more closely connected with a country other than that indicated in Article 4(1) or (2), so that the 2009) 87–114; G Palao Moreno, ‘La proteccion de los derechos de propiedad intelectual en Europa: el artículo 8 del Reglamento Roma II’ [‘Protection of intellectual property rights in Europe: Article 8 of Rome II Regulation’] (2008) 24 Revista Jurídica de Deporte y Entretenimiento 557–71. 93   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 16 October 2002, I CJ/ASTJ (2002) at 11. 94   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327.

912  Alexandre Dias Pereira law of that other country applies. Recital 20 indicates that in order to determine that country, account should be taken, inter alia, of whether the contract in question has a very close relationship with another contract or contracts. The same law applies where, in the absence of choice, the applicable law cannot be determined either on the basis of the fact that the contract can be categorised as one of the specified types or as being the law of the country of habitual residence of the party required to effect the characteristic performance of the contract (Art 4(4)).

2  Hypothetical Cases Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit.

Case 1(1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located in your country?

Under Brussels I, a Portuguese court would have jurisdiction if defendant B had his residence in Portugal. To begin with, defamation suits are not excluded from the scope of application of Brussels I (Art 1). Next, this Regulation provides for the general criterion of jurisdiction of the EU country of domicile of the defendant (Art 2(1)), regardless of his nationality (Art 2(2)). Finally, in order to ascertain whether a litigant has domicile in the territory of the Member State before whose courts an action is submitted, the judge applies its internal legislation (Art 59(1)), and the Portuguese Código Civil (Civil Code) provides for that a person has domicile at the place of his usual residence (Art 82(1)). Although legal persons are deemed to have domicile at the place of their head office, main administration, or main establishment (Art 60(1) of Brussels I), the decision regarding international jurisdiction of the Portuguese court would not differ if the defendant is a corporation having its main place of business in a third country X, but the dispute arises out of the operations of a branch situated in Portugal (Art 5(5) of Brussels I).

Case 1(2) Would a court of your country have international jurisdiction if copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)?

If copies of the journal were distributed in Portugal in the Portuguese language, the harmful event would be deemed to have occurred in Portugal and consequently Portuguese

Portugal  913 courts would have international jurisdiction, under Brussels I, provided the defendant had domicile in any Member State (Art 5(3)). The decision would not differ if the journal was printed in Portugal for distribution in neighbouring country X in a language which is not spoken in Portugal, because, as the ECJ already held, ‘the defendant may be sued, at the option of the plaintiff, either in the courts for the place where the damage occurred or in the courts for the place of the event which gives rise to and is at the origin of that damage.’95 Therefore, reading Brussels I in accordance with this relevant case law, a Portuguese court would have international jurisdiction under Article 5(3). Case 1(3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published?

In cases where the defendant is established in Portugal, the Portuguese courts would have international jurisdiction over A’s claim for overall damages sustained in all countries where the journal was published. According to the ECJ: the victim of a libel by a newspaper article distributed in several Contracting States may bring an action for damages against the publisher either before the courts of the Contracting State of the place where the publisher of the defamatory publication is established, which have jurisdiction to award damages for all the harm caused by the defamation, or before the courts of each Contracting State in which the publication was distributed and where the victim claims to have suffered injury to his reputation, which have jurisdiction to rule solely in respect of the harm caused in the State of the court seized.96

Observation: answers to Cases 1(1), 1(2) and 1(3) would not differ in cases where intellectual property rights are at stake.

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of the infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X:

Case 2(1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights?

Although a Portuguese court could, under Brussels I, have international jurisdiction and decide the question of the infringement of foreign intellectual property rights, namely if 95   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735 (‘Where the place of the happening of the event which may give rise to liability in tort, delict or quasi-delict and the place where that event results in damage are not identical, the expression “place where the harmful event occurred”, in Art 5(3) of the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters, must be understood as being intended to cover both the place where the damage occurred and the place of the event giving rise to it.’). 96   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415.

914  Alexandre Dias Pereira the defendant had domicile in Portugal (Art 2(1)) or if the harmful event occurred or might occur in Portugal (Art 5(3)), since B made a counterclaim during the course of infringement proceedings that the patent is invalid, according to relevant ECJ case law on Article 25 of Brussels I Regulation, a Portuguese court would have to declare of its own motion that it has no jurisdiction because it is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22. In fact, the ECJ held that: Article 16(4) of the [Brussels] Convention . . . is to be interpreted as meaning that the rule of exclusive jurisdiction laid down therein concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection.97

Case 2(2) Would the court have international jurisdiction to decide upon the issues of validity and registration of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and nonregistered intellectual property rights?

The Portuguese court would not have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights addressed in the case. In fact, under Brussels I, the validity of patents (and other industrial property rights for which registration or deposit is required) is an issue of exclusive competence of the courts of the Member State in which territory registration has been requested or has taken place, in accordance with a Community or international instrument (Art 22(4)). Moreover, the wording of Article 22(4), 2nd paragraph, is rather restrictive, as it provides that the courts of each Member State have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that state, without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973. Furthermore, according to the ECJ, ‘the rule of exclusive jurisdiction laid down [in Article 16(4) of the Brussels Convention] concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection.’98 The 2007 revision of the Lugano Convention has expressly included this understating into the international instrument: ‘irrespective of whether the issue is raised by way of an action or as a defence’ (Lugano Convention, Art 22(4), 2nd para, in fine). As a Portuguese court would not have international jurisdiction to decide upon the issues of validity of foreign patents, the issue of the legal effects (inter partes or erga omnes) of its decision would not arise. The possibility suggested by CLIP, to allow decisions that would not affect the validity or registration of registered intellectual property rights ‘as against third parties’, would not apply to this case, because the issue of patent validity has been made by defendant B as a ‘counterclaim’.99 97   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 98   ibid. 99   PLC Torremans et al, ‘Exclusive Jurisdiction and Cross Border IP (Patent) Infringement: Suggestions for Amendment of the Brussels I Regulation’ (2007) 29 European Intellectual Property Review 194 et seq (suggested Art 22(4)(b): ‘The provisions under lit (a) do not apply where validity of registration arises in a context other than by principal claim or counterclaim. The decisions resulting from such proceedings do not affect the validity or registration of those rights as against third parties.’).

Portugal  915 The decision would differ with regard to registered and non-registered intellectual property rights, because the criterion of exclusive jurisdiction applies only to registered IP rights. It means that a Portuguese court could have international jurisdiction over both infringement and validity issues of non-registered intellectual property rights. Case 2(3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

If the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties, a Portuguese court could decide to give a judgment both for registered and non-registered intellectual property rights. In fact, Article 25 of Brussels I provides that a court of a Member State has to declare of its own motion that it does not have jurisdiction where it is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22. Moreover, the ECJ ruling on GAT v LuK does not provide that ‘the rule of exclusive jurisdiction’ concerns all questions that arise in proceedings, but rather ‘all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection’ [emphasis added]. A contrario sensu, in proceedings in which the question of patent validity arises only as a preliminary question and remains unchallenged by the parties, ie in proceedings not relating to the registration or validity of a patent, it seems reasonable that the court would not have to declare of its own motion that it does not have jurisdiction, so that it could give a judgment with inter partes effects. One could even wonder whether the amendment to Brussels I suggested by CLIP is not already implied by the ECJ GAT v LuK judgment.100

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries W, X, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A discovers that B, C and D are infringing its patents in countries X, Y and Z. A institutes patent infringement proceedings against the alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs, A seeks the consolidation of claims to the forum of country W.

Case 3(1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the grounds of an infringement of a contract?

A Portuguese court would not have jurisdiction to join claims against defendants B, C and D because, even if they were domiciled in a Brussels I country and although ‘the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings’, none of the defendants is domiciled in Portugal, as required under Article 6(1) of Brussels I.   See also ALI Principles (§ 221(2)).

100

916  Alexandre Dias Pereira Nonetheless, as there may be related actions pending in the courts of different Member States (Art 28(3)), a Portuguese court could have jurisdiction to join claims against defendants B, C and D only if it is the court first seised and the courts of the other countries stay their proceedings (Art 28(1)) or, ‘where these actions are pending at first instance’, such courts, on the application of one of the parties, namely A, decline jurisdiction, provided the Portuguese court has jurisdiction over the actions in question and its law permits the consolidation thereof (Art 28(2)); however, the latter situation would not be possible because Portuguese courts do not have jurisdiction: neither the domicile of the defendants nor the place where the harmful event occurs or, according to the facts of the case, might occur, is located in country W, ie Portugal (Arts 2, 5(3) and 6(1)). If A was a licensor and claims were raised against licensees B, C and D on the grounds of an infringement of a contract, Portuguese courts would have jurisdiction in cases where the defendants were domiciled in a Brussels I country and Portugal was the place of performance of the obligation in question, either by virtue of agreement or by a connection provided for in Article 5(1). In the absence of agreement, it may be disputed whether, for the purposes of establishing the connection, licence contracts should qualify as sale of goods or rather as provision of services. According to the relevant ECJ jurisprudence, despite the fact that ‘the national court’s jurisdiction to determine questions relating to a contract includes the power to consider the existence of the constituent parts of the contract itself, since that is indispensable in order to enable the national court in which proceedings are brought to examine whether it has jurisdiction under the Convention’,101 the second indent of Article 5(1)(b) of Brussels I: is to be interpreted to the effect that a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration is not a contract for the provision of services within the meaning of that provision.102

In Portugal, the Supreme Court of Justice has recently applied this jurisprudence to an international licence to broadcast football matches.103 In short, licence contracts should not qualify as provision of services, and the court should establish its jurisdiction by virtue of the connection of the place in a Member State where, under the contract, the goods were delivered or should have been delivered, with this criterion applying to the sale of goods as well as to any other contract that does not qualify as provision of services (Art 5(1)(c)).104 The place where, under contract, the goods were delivered or should have been delivered, in the absence of an agreement concerning the place of delivery, is determined by national law. Under Portuguese law, the general principle is the domicile of the debtor, ie the licensor (Civil Code, Art 772(1)), which is also the place of performance of the obligation of payment (Civil Code, Art 885(1)). Therefore, a Portuguese court would have jurisdiction to join claims against defendants B, C and D on the ground of infringement of the licence contract, because Portugal would

  Case C-38/81 Effer SpA v Hans-Joachim Kantner [1982] ECR 825.   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327.   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 21 May 2009, Proc 4986/06.3TVLSB. S1 (available at www.dgsi.pt/jstj.nsf). 104   Considering that the wording ‘goods’ and ‘services’ of Art 5(1)(b) of Brussels I concern corporeal activities capable of delivery or provision, Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 17 December 2008 (available at www.dgsi.pt/jtrl.nsf). 101 102 103

Portugal  917 be deemed the place of performance of the obligations of delivery and payment of the licence.105 However, similar to matters relating to tort,106 jurisdiction is limited to ‘matters relating to a contract’, ie obligations ‘freely accepted by the parties’.107 Accordingly, jurisdiction of Portuguese courts would be limited to matters related to the contract, and would not extend to infringement claims arising out of the licence contracts. This has been criticised due to the fragmentation of jurisdiction, and it has been argued108 that it should be reviewed according to the CLIP suggestion: ‘In disputes concerned with infringement claims arising out of a contractual relationship between the parties, a court having jurisdiction with regard to the contract shall also have jurisdiction in respect of the infringement’ (2:201(c)). A similar solution is provided for the Hague Convention on choice of court agreements (Art 2(2)(a)), unless the agreement is null and void under the law of that state (Art 5(1)).109 In Portugal, the Supreme Court of Justice has already accepted that the law chosen by the parties to govern their licence contract can also apply to torts related to such a contract (eg, in case the use of the licensed right exceeds the terms of the licence).110 More recently, the same court ruled that a choice of court agreement concerns any dispute that arises out of the main contract and therefore jurisdiction of the chosen court includes all issues, either contractual or tort, that arise thereof.111 Case 3(2) Assuming that B, C and D are members of a group of a corporation and take identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X 105   However, it should be noted that, for purposes of the law applicable to contractual obligations, where the licensee has the obligation to exploit the licence, as in patent licences, this is considered to be the characteristic obligation (see Moura Vicente, above n 39, 294–96). And the place where the licensee has to exploit the licence is not the domicile of the licensor, but the territory or territories established under the contract. Moreover, copyright edition contracts as well as patent licences of production and distribution have relevant similarities with franchising contracts, which are to be governed by the law of the country of the franchisee according to Rome I Regulation. In order to achieve consistency with Brussels I, perhaps this should be considered, otherwise, for purposes of jurisdiction, the connection is limited to the place of delivery of the licence, ie, the licensor’s domicile (as the licensor is the debtor of the obligation of delivery). See also de Lima Pinheiro, above n 82, 73. 106   Case C-189/87 Athanasios Kalfelis v Bankhaus Schröder, Münchmeyer, Hengst and Co and others [1988] ECR 5565 (‘The expression “matters relating to tort, delict or quasi-delict” contained in Art 5(3) of the [Brussels] Convention must be regarded as an independent concept covering all actions which seek to establish the liability of a defendant and which are not related to a “contract” within the meaning of Art 5(1). A court which has jurisdiction under Art 5(3) over an action in so far as it is based on tort or delict does not have jurisdiction over that action in so far as it is not so based’). 107  Case C-26/91 Jakob Handte & Co GmbH v Traitements Mécano-chimiques des Surfaces SA [1992] ECR I-3967. See also Case C-334/00 Fonderie Officine Meccaniche Tacconi SpA v Heirinch Wagner Sinto Maschinenfabrik GmbH [2002] ECR I-10087 (‘In circumstances such as those of the main proceedings, characterised by the absence of obligations freely assumed by one party towards another on the occasion of negotiations with a view to the formation of a contract and by a possible breach of rules of law, in particular the rule which requires the parties to act in good faith in such negotiations, an action founded on the pre-contractual liability of the defendant is a matter relating to tort, delict or quasi-delict within the meaning of Art 5(3) of the [Brussels] Convention’). 108   cf Moura Vicente, above n 39, 411. 109   See also ALI Principles, § 211(1)). 110   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 16 October 2002, I CJ/ASTJ (2002) at 11. 111   Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1 (available at www.dgsi.pt/jstj.nsf). The Supreme Court had previously ruled that, for jurisdiction purposes, a choice of court agreement concerning a licence contract does not extend to litigation concerning the termination of the contract and tort liability caused by unlawful acts committed by the plaintiff in Portugal (Judgment of 12 April 1997, Proc 98B292, available at www.dgsi.pt/jstj. nsf).

918  Alexandre Dias Pereira where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country, would it consolidate the proceedings if it was to decide upon the request of A? And if so, under what conditions? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

As the coordinator of infringing activities has his main place of business in Portugal, he is considered to be domiciled in Portugal. Therefore, he could be sued in Portuguese courts under the general criterion of the defendants’ domicile (Art 2(1)). Moreover, B, C and D, as members of a group of a corporation that take identical steps in the infringement of A’s patents, could also be sued in a Portuguese court under Article 6(1) of Brussels I as the claims would be so closely connected that it would be expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Furthermore, under Brussels I (Art 28(3)), A could apply for consolidation of proceedings in the Portuguese court if this was the court first seised; this could be a ‘spider in the web’ situation. However, taking into account Community jurisprudence, Portuguese courts would deny jurisdiction to consolidate proceedings. In fact, the ECJ has rejected the possibility under Article 6(1) of the Brussels Convention of joint proceedings over patent infringement against companies belonging to the same group based upon concerted infringement by these companies against a bundle of patents issued for several Contracting States to the European Patent Convention. The Court argued that not only were the events not the same, but also joint proceedings would affect legal certainty and promote forum shopping. Moreover, it would not prevent fragmentation of fora whenever the issue of patent validity is raised as an incidental question, as it remained a matter of exclusive competence of the courts provided for in Article 16(4). In summary: Article 6(1) of the [Brussels] Convention . . . must be interpreted as meaning that it does not apply in European patent infringement proceedings involving a number of companies established in various Contracting States in respect of acts committed in one or more of those States even where those companies, which belong to the same group, may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them. Since neither the patent infringements of which the various defendants are accused nor the national law in relation to which those acts are assessed are the same there is no risk of irreconcilable decisions being given in European patent infringement proceedings brought in different Contracting States, since possible divergences between decisions given by the courts concerned would not arise in the context of the same factual and legal situation.112

If B, C and D raised counterclaims that A’s patents are invalid, the court would have to deny jurisdiction at its own motion (Brussels I, Art 25).113 As mentioned above, the ECJ ruled 112   Case C-539/03 Roche Nederland BV and Others v Fredrick Primus and Milton Goldberg [2006] ECR I-6535. In the US, the situation is similar. The United States Court of Appeals for the Federal Circuit, in Voda v Cordis of 1 February 2007, decided that for reasons of independence of patent rights, comity, judicial economy, forum non conveniens and Act of State, the court of first instance exceeded its supplemental jurisdiction in appreciating the validity of foreign patents, despite such patents having been issued under the PCT (Patent Cooperation Treaty). On this decision see eg ‘JK Voda, MD v Cordis Corporation’ (2007) 56 Gewerblicher Rechtsschutz und Urheberrecht, Internationaler Teil 442–47. 113   See Case C-288/82 Ferdinand MJJ Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, para 15: ‘Art 19 of the Convention of 27 September 1968 requires the national court to declare of its own motion that it has no jurisdiction whenever it finds that a court of another Contracting State has exclusive jurisdiction under Art 16 of the Convention, even in an appeal in cassation where the national rules of procedure limit the court's reviewal to the grounds raised by the parties.’

Portugal  919 that the rule of exclusive jurisdiction concerns ‘all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection’.114

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose licensed products. B paid the initial licence fee but later refused to pay other fees arguing inter alia that its products do not fall under the scope of the licensed patents. A files a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country:

Case 4(1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose?

Although A and B are not Portuguese nationals and do not have any place of business in Portugal, the choice of court clause which the parties agreed upon in the licence agreement would be enforceable under Brussels I in the case that one of them is domiciled in a Brussels I country. According to Article 23(1): ‘If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise.’ Moreover, if none of the parties is domiciled in a Member State, the courts of other Member States have no jurisdiction over their disputes unless the court or courts chosen have declined jurisdiction (Art 23(3)). Such a choice of court agreement would not have legal force if, as provided for in Article 23(5), the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22. However, as far as patents or other similar rights required to be deposited or registered are concerned, this rule of exclusive jurisdiction is limited to proceedings concerned with their registration or validity (Art 22(4)). Accordingly, the fact that the issue is related to foreign patents does not exclude the enforceability of such a choice of forum clause as the suit filed against B seeks patent infringement damages. Moreover, according to ECJ relevant jurisprudence,115 a Portuguese court has recently ruled that Brussels I does not provide the courts with the ability to control the grounds of jurisdiction of a court chosen by agreement, namely as forum non conveniens.116 Nonetheless, 114   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 115   Case C-281/02 Andrew Owusu v NB Jackson, Trading as Villa Holidays Bal In Villas and others [2005] ECR I-1383, paras 37–40 (‘No exception on the basis of the forum non conveniens doctrine was provided for by the authors of the Convention’). 116   Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgment of 21 May 2009, Proc 8748/2008-6 (available at www.dgsi.pt/jtrl.nsf).

920  Alexandre Dias Pereira it should be taken into account that the court can declare null and void a choice of court agreement that is an unfair standard term, even if concluded between professionals.117 Article 23(1) of Brussels I provides that the ‘parties, one or more of whom is domiciled in a Member State, may agree that a court or courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship’ (emphasis added). Therefore, the decision would not differ if parties made a (new) choice of court agreement only at the time when the dispute arose, provided however that such an agreement is in writing or evidenced in writing (with the equivalence of any communication by electronic means which provides a durable record of the agreement), or in a form which accords with practices which the parties have established between themselves, or in international trade or commerce, in a form which accords with a usage of which the parties are or ought to have been aware and which in such trade or commerce is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade or commerce concerned (Art 23(1) 2nd period). According to relevant ECJ jurisprudence, no other formal requirements, including language, can be provided for under domestic law.118 This ruling has recently been followed by the Portuguese Supreme Court of Justice.119 Case 4(2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that patents are invalid?

Should the defendant raise a counterclaim that patents are invalid, the court would not enforce an exclusive choice of court clause because, under Brussels I, patent validity is a 117   Unfair Standard Terms Act, approved by Decree-Law 44/85 of 25 October, and as last amended by DecreeLaw 249/99 of 7 July, Art 19(g). Considering the use of unfair terms as tort for purposes of Art 5(3) of the Brussels Convention, see Case C-167/00 Verein für Konsumenteninformation v KH Henkel [2002] ECR I-8111. With regard to consumer contracts, the ECJ ruled that the court shall decline of its own motion the jurisdiction conferred on it by virtue of an unfair term. See Judgment of the Court of 27 June 2000, Joined Cases C-240/98 to C-244/98 Océano Grupo Editorial SA v Roció Murciano Quintero (C-240/98) and Salvat Editores SA v José M. Sánchez Alcón Prades (C-241/98), José Luis Copano Badillo (C-242/98), Mohammed Berroane (C-243/98) and Emilio Viñas Feliú (C-244/98) [2000] ECR I-4941, paras 24, 29, 32 (‘1. Where a jurisdiction clause is included, without being individually negotiated, in a contract between a consumer and a seller or supplier and where it confers exclusive jurisdiction on a court in the territorial jurisdiction of which the seller or supplier has his principal place of business, it must be regarded as unfair within the meaning of Art 3 of Directive 93/13 on unfair terms in consumer contracts in so far as it causes, contrary to the requirement of good faith, a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer. / 2. The protection provided for consumers by Directive 93/13 on unfair terms in consumer contracts entails the national court being able to determine of its own motion whether a term of a contract before it is unfair when making its preliminary assessment as to whether a claim should be allowed to proceed before the national courts. The national court is obliged, when it applies national law provisions predating or postdating the said Directive, to interpret those provisions, so far as possible, in the light of the wording and purpose of the Directive. The requirement for an interpretation in conformity with the Directive requires the national court, in particular, to favour the interpretation that would allow it to decline of its own motion the jurisdiction conferred on it by virtue of an unfair term.’) 118  Case C-150/80 Elefanten Schuh GmbH v Jacqmain [1981] ECR 1671: ‘Since the aim of Art 17 of the Convention is to lay down the formal requirements which agreements conferring jurisdiction must meet, Contracting States are not free to lay down formal requirements other than those contained in the Convention. When those rules are applied to provisions concerning the language to be used in an agreement conferring jurisdiction they imply that the legislation of a Contracting State may not allow the validity of such an agreement to be called in question solely on the ground that the language used is not that prescribed by that legislation.’ 119   Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1 (available at www.dgsi.pt/jstj.nsf).

Portugal  921 matter of exclusive jurisdiction and cannot be excluded by choice of court clauses (Art 23(5)). As the issue of validity of patent is raised by the defendant as a counterclaim, under Brussels I, either as it stands or as read in accordance with the CLIP suggestion, a Portuguese court would not enforce such choice of court clause.120 Case 4(3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings?

Under Brussels I, choice of courts may be agreed to ‘settle any disputes which have arisen or which may arise in connection with a particular legal relationship’ (Art 23(1)). However, according to the ECJ jurisprudence, jurisdiction is limited to ‘matters relating to a contract’, ie obligations ‘freely accepted by the parties’.121 Therefore, jurisdiction of Portuguese courts would be limited to matters related to the contract, and not extend to infringement claims arising out of the licence contracts. The Portuguese Supreme Court has already held that, concerning intellectual property contracts, a choice of court clause agreed upon in a licence agreement does not extend to litigation concerning the termination of the contract or tort liability caused by unlawful acts committed by the plaintiff in Portugal.122 This restrictive solution has however been criticised due to the fragmentation of jurisdiction, and it has been argued123 that it should be reviewed according to the CLIP suggestion (2:201(c)): ‘In disputes concerned with infringement claims arising out of a contractual relationship between the parties, a court having jurisdiction with regard to the contract shall also have jurisdiction in respect of the infringement’. A similar solution is provided for the Hague Convention on choice of court agreements (Art 2(2)(a)), unless the agreement is null and void under the law of that state (Art 5(1)). In Portugal, the courts have accepted that the law chosen by the parties to govern their licence contract can also apply to torts related to such a contract (eg, where the use of the licensed right exceeds the terms of the licence).124 However, for jurisdiction purposes, the Portuguese Supreme Court holds that a choice of court agreement concerning a licence contract does not include litigations concerning the termination of the contract and tort liability caused by unlawful acts committed by the plaintiff in Portugal.125 However, more recently, the same Court grounded its jurisdiction over tort liability arising out of illegal termination of a concession contract and compensation for goodwill under Article 5(1)(a) of Brussels I,126 and moreover it ruled, in a different case, that a choice of court agreement 120   See also the Hague Convention, which does not apply to choice of court agreements concerning the validity of intellectual property rights other than copyright and related rights (Art 2(2)(n)), except where they ‘arise merely as a preliminary question and not as an object of the proceedings. In particular, the mere fact that a matter excluded under para 2 arises by way of defence does not exclude proceedings from the Convention, if that matter is not an object of the proceedings’ (Art 2(3)). 121   Case C-26/91 Handte v Traitements Mécanochimiques des Surfaces [1992] ECR I-3967 and Case C-334/00 Fonderie Officine Meccaniche Tacconi v HWS [2002] ECR I-7357. 122   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 12 April 1997, Proc 98B292 (available at www.dgsi.pt/jstj.nsf). 123   Moura Vicente, above n 39, 387–97. 124   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 16 October 2002, I CJ/ASTJ (2002) 11. 125   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 12 April 1997, Proc 98B292 (available at www.dgsi.pt/jstj.nsf). 126   Judgment of 9 October 2008, Proc 08B2633 (available at www.dgsi.pt/jstj.nsf).

922  Alexandre Dias Pereira concerns any dispute that arises out of the main contract and therefore jurisdiction of the chosen court includes all issues, either contractual or tort, that arise therefrom.127 Therefore, according to this new ruling of the Supreme Court of Justice, a Portuguese court would assert jurisdiction even if the choice of court agreement was made in patent infringement proceedings. However, the conformity of this approach with ECJ relevant jurisprudence may be disputed. Case 4(4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

Under the Portuguese Arbitration Act,128 arbitration agreements are not allowed where they are mandatorily subject to court decision or concern rights which the parties cannot dispose of (Art 1(1)). Arbitration agreements contravening this prohibition are deemed null and void (Art 3). Arbitration tribunals can decide upon their own jurisdiction (Art 21(1)), but their decisions can be annulled if such litigation cannot be decided by arbitration (Art 27(1)(a)). The exclusive jurisdiction rule provided for in Article 22(4) of Brussels I is interpreted as an exclusion of the possibility of submitting those matters to arbitrage.129 Accordingly, the validity of intellectual property rights subject to registration, such as patents or marks, cannot be decided by the arbitration tribunal. Concerning other intellectual property rights, such as copyright, the arbitration tribunal could decide upon their validity insofar as they can be disposed of by the parties, as would be the case with economic rights. Arbitration agreements have to be concluded in writing130 and comply with and specify the legal relationship concerning the litigation (Art 2). A decision of an arbitration tribunal has the same legal effects as a decision of a court of first instance (Art 26(2)) and therefore the parties have to comply with it, unless an action of annulment is brought before the court.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces an identical product to that for which A has patents, and exports that infringing product to countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country:

  Judgment of 8 October 2009, Proc 5138/06.8TBSTS.S1 (available at www.dgsi.pt/jstj.nsf).   Law 31/86 of 29 August (Lei da Arbitragem Voluntária). 129   cf D Moura Vicente, above n 39, 426–27 (with further references such as with a different understanding L Lima Pinheiro, Arbitragem internacional [Transnational arbitrage] (Coimbra, Almedina, 2005)). 130   See Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 27 March 2003, Proc 03B3145, (available at www.dgsi.pt/jstj.nsf). 127 128

Portugal  923 Case 5(1) What procedural steps would a court of country Z take with regard to pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration?

With regard to pending proceedings in countries X and Y, a Portuguese court would have to stay its proceedings until such time as the jurisdiction of the court first seised is established, according to Article 27(1) of Brussels I concerning proceedings involving the same cause of action and between the same parties which are brought in the courts of different Member States. In fact, actions launched by B in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A would have the ‘same cause of action’ and the ‘same parties’ as the infringement suit brought by A before the Portuguese court, according to the broad interpretation of Article 21 of the Brussels Convention given by the ECJ, so that it covers all situations of ‘lis alibi pendens’ before courts in Member States.131 Even if the courts of countries X and Y lacked jurisdiction, and regardless of the excessive duration of their proceedings, a Portuguese court, according to ECJ jurisprudence,132 would have to stay its proceedings until such time as the jurisdiction of the court first seised is established. Then, where the jurisdiction of the court first seised (court of country X) is established, both the courts of country Y and the Portuguese courts would have to decline jurisdiction in favour of that court (Art 27(2)). In order to escape from such a ‘torpedo’,133 A could argue abuse of rights and contest jurisdiction. However, according to ECJ jurisprudence: Without prejudice to the case where the court second seised has exclusive jurisdiction under the [Brussels] Convention and in particular under Article 16 thereof, Article 21 of the Convention must be interpreted as meaning that, where the jurisdiction of the court first seised is contested, the court second seised may, if it does not decline jurisdiction, only stay the proceedings and may not itself examine the jurisdiction of the court first seised.134

Nonetheless, it should be noted that, regardless of A having domicile in countries X or Y,135 the courts of these countries would also have jurisdiction over B’s claims for declarations of non-liability for the infringements of patents owned by A, because countries X and Y, as the place of destination of the infringing products, were the place where the harmful event occurred for purposes of Article 5(3) of Brussels I. 131   Case C-351/89 Overseas Union Insurance td et al v New Hampshire Insurance Company Co [1991] ECR I-3317. See also Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861: ‘The terms used in Art 21 of the Convention of 27 September 1968 in order to determine whether a situation of lis pendens arises must be regarded as independent. Lis pendens within the meaning of that article arises where a party brings an action before a court in a Contracting State for the rescission or discharge of an international sales contract whilst an action by the other party to enforce the same contract is pending before a court in another Contracting State.’ 132   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735. 133   M Franzosi, ‘Worldwide Patent Litigation and the Italian Torpedo’ (1997) 19 European Intellectual Property Review 382. 134   Case C-351/89 Overseas Union Insurance td et al v New Hampshire Insurance Company Co [1991] ECR I-3317. 135   ibid (‘Art 21 of the [Brussels] Convention . . . must be interpreted as meaning that the rules applicable to lis alibi pendens set out therein must be applied irrespective of the domicile of the parties to the two sets of proceedings.’). See however the Italian Supreme Court decision of 12 December 2003 (Macchine Automatiche v Windmoller & Holscher KG) and the Milan Court of First Instance decision no 3773 of 26 March 2007, according to which a cross-border claim for a declaration of non-infringement of a European patent is unlikely to succeed before an Italian court unless it is brought against an Italian domiciled party.

924  Alexandre Dias Pereira The decision of the Portuguese court (as a court of country Z) would not be different if the dispute was related to intellectual property rights that are not subject to registration. In any case, the exclusive jurisdiction rule does not apply because the issue of patent registration or validity is not in question. Case 5(2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

If B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y, the cause of action would not be the same, but rather there would be, under Brussels I, a situation of related actions, ie actions that are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings (Art 28(3)). For these, Article 28(1) provides for that, where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings. Article 28(2) adds that, where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. Because a court of country Z has jurisdiction over the proceedings on patent infringement under the general rule (domicile of the defendant, Art 2) and a court of a third country W does not have jurisdiction over the proceedings on patent validity, as such jurisdiction is exclusive of the courts of countries X and Y, a Portuguese court of first instance may not, on the application of the parties, decline jurisdiction in favour of a court of country W. Nonetheless, it may stay proceedings in accordance with Article 28(1).

Case 6: Principle of Territoriality A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.

Case 6(1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z?

A Portuguese court could apply the patent statute (Código da Propriedade Industrial) for allegedly infringing acts occurring in country Z as events that give rise to infringing acts likely to occur in Portugal. Torts arising out of infringements of intellectual property rights are a special tort for which Article 8(1) of Rome II Regulation provides the ‘universally acknowledged’ principle of lex loci protectionis, ie the law of the country for which protection is claimed. Protection may be claimed for a country in which the infringing acts are

Portugal  925 likely to occur.136 Accordingly, a Portuguese court could apply the Portuguese patent statute in case protection is claimed for Portugal, as allegedly infringing acts occurring in country Z could be considered, for the purposes of an injunction, as events that give rise to infringing acts likely to occur in Portugal, ie as evidence of an ‘imminent commission’ of a tort or delict137 which the application of Portuguese patent law would prevent. Case 6(2) Assuming, first, that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

A Portuguese court could only apply the patent statute of country X for allegedly infringing acts that occur in Portugal if it considers such acts, for purposes of an injunction, as events that give rise to infringing acts likely to occur in country X in order to prevent an ‘imminent commission’ of a tort or delict therein.

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months, when the website became very popular A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment companies file an infringement suit against A, B and C requesting that they close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case:

Case 7(1) What law would be applied to determine the liability of A, B and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)?

The law that would be applied to determine the liability of A, B and C for direct infringement acts would be the law of the country for which protection is claimed according to the special criterion provided for IPR torts under Article 8(1) of Rome II Regulation. The scope of the law applicable includes namely the determination of the persons whom liability can be attributed to due to their actions as well as the existence, nature and evaluation of damages or requested compensation and other provisions on remedies (Art 15(a)(d)). Accordingly, Portuguese courts would apply the law of each country for which protection is claimed. The parties would not be allowed to agree on a different applicable law (infringement and remedies) because the law applicable to infringement of intellectual property rights may not be derogated from by an agreement (Rome II, Art 8(3)). 136   See S Ricketson and J Ginsburg, International Copyright and Neighbouring Rights: The Berne Convention and Beyond, 2nd edn, 2 vols (Oxford, Oxford University Press, 2006) 320–21. 137   Case C-167/00 Verein fur Konsumenteninformation v Karl Heinz Henkel [2002] ECR I-8111.

926  Alexandre Dias Pereira Case 7(2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Under Rome II, the choice of law would not differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer (Art 15(a)(b)), and the parties would not be allowed to agree on the applicable law (Art 8(3)).138 Case 7(3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

The court could decide on the ubiquitous infringement, ie where the infringement to intellectual property rights occurs in multiple places/countries, concerning defendants domiciled in any Member State (Brussels I, Art 6(1)). The law applicable to such infringements would be the law of each country for which protection is claimed. It is disputed, however, whether the mere accessibility of an Internet website is enough to establish a substantial connection with the law of a country.139 For reasons of consistency with jurisdiction under Brussels I, concerning ubiquitous infringement on the Internet, the mere accessibility of a website in a country may not be enough to establish jurisdiction in the case where a defendant does not direct his activity to that country nor engage in activities therein. According to the ECJ, ‘the jurisdictional rules [are to be] interpreted in such a way as to enable a normally well-informed defendant reasonably to predict before which courts, other than those of the State in which he is domiciled, he may be sued’.140 Therefore, the applicable law should be reasonably predictable by a ‘normally wellinformed defendant’. That would be the case where the defendant does not exclude a country from his ‘stream of commerce’.141 A reasoning closer to the criteria on the law applicable 138   It has been suggested that the application of the law of the country of origin (introduction into the network) could apply in terms similar to the solution provided for by the Satellite and Cable Directive (Art 1(2)). Cf Moura Vicente, above n 39, 226. However, this community instrument does not apply to making it available on the Internet (different from webcasting) and moreover the principle of origin established for information society services under Directive 2000/31 on e-commerce does not apply to intellectual property matters. Nonetheless, by analogy with the ECJ’s Fiona Shevill ruling, it might be argued that a Portuguese court could apply the Portuguese Copyright Act for the overall ubiquitous infringement if any of the defendants were established in Portugal. 139   Two cases are pending at the ECJ for a preliminary ruling on the issue of whether the mere accessibility of a website is enough connection with the law of a country to establish its application (C-509/09, BGH; C-161/12, TGI Paris). On the issue see D Moura Vicente, Direito Internacional Privado: Problemática Internacional da Sociedade da Informação [Private International Law: Information Society International Problematic] (Coimbra, Almedina, 2005) 320; G Palao Moreno, ‘Competencia judicial internacional en supuestos de responsabilidad civil en Internet’ [‘International jurisdiction in Internet torts’] in J Plaza Penadés, Cuestiones Actuales de Derecho y Tecnologías de la Información e la Comunicación (TICs) (Cizur Menor, Navarra, Thomson Aranzadi, 2006) 293-95; Dias Pereira, above n 14, 360–61. 140   Case C-26/91 Handte v Traitements Mécanochimiques des Surfaces [1992] ECR I-3967. 141   On the ‘stream of commerce’ doctrine, see US Supreme Court International Shoe Co v Washington 326 US 310 (1945) and, concerning the interactivity of a website as a relevant connection, Zippo Manufacturing Co v Zippo Dot Com, Inc 952 F Supp 119. See MA Lemley et al, Software and Internet Law, 2nd edn (New York, Aspen, 2003) 584–605.

Portugal  927 to consumer contracts provided for under Rome I should arguably be taken into consideration.142 This implies, as indicated in Recital 24 of this Regulation, ‘a reference to the concept of directed activity’, as well as, quoting a joint declaration by the Council and the Commission on Article 15 of Brussels I,143 the mere fact that an Internet site is accessible is not sufficient for Article 15 to be applicable, although a factor will be that this Internet site solicits the conclusion of distance contracts and that a contract has actually been concluded at a distance, by whatever means. In this respect, the language or currency which a website uses does not constitute a relevant factor.

In the case of A, B and C, the IT students who have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world and who, after the website became very popular, have introduced an additional paid service for the speedy exchange of big capacity digital files, and who despite knowing that illegal files are stored in their website server do not take any action to somehow prevent infringements of intellectual property rights, it is fair that they could reasonably predict the application of copyright law of any of the countries to which they did not actually exclude their commercial activities. Accordingly, a Portuguese court would apply the law of each of such countries for which protection is claimed.144 The parties’ choice of a different law would not be allowed because the law applicable (lex loci protectionis) may not be derogated from by a choice-of-law agreement (Art 8(3) of Rome II). No reported Portuguese court decision defining ubiquitous infringement of intellectual property rights has been found. Nonetheless, a Portuguese court could define it as an infringement that may occur at the same time in different places arising out of the same causal event.

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B’s is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country:

Case 8(1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country?

  See ALI Principles, § 204(3) and CLIP Principles (Art 2:202).   available at ec.europa.eu/civiljustice/homepage/homepage_ec_en_declaration.pdf (reference added by the editor). 144   However, applying the ECJ Fiona Shevill ruling by analogy, it might be argued that a Portuguese court could apply the Portuguese Copyright Act for the overall ubiquitous infringement if any of the defendants were established in Portugal. 142 143

928  Alexandre Dias Pereira For reasons of consistency with ECJ jurisprudence concerning rules on jurisdiction,145 in order to determine who the initial owner of the invention is, a Portuguese court would apply the law applicable to individual employment contracts provided for in Article 8 of Rome I.146 Accordingly, Portuguese courts would apply either the law chosen by the parties or, in the absence of such an agreement, the law of the country in which the employee habitually carried out his work in performance of the contract (lex loci laboris), ie the law of the country in which the laboratory is established (Arts 8(1) and (2)). However, in this case, as the inventor is carrying his work as a visiting researcher, it falls under Article 8(2), 2nd period, which provides that the country where work is habitually carried out shall not be deemed to have changed if the employee is temporarily employed in another country. Therefore, the court would apply the law of the country where the visiting researcher habitually carried out his work. In case it is not possible to determine such country, the court applies the law of the country where the place of business through which the employee was engaged is situated (Art 8(3)). However, where it appears from the circumstances as a whole that the contract is more closely connected with a country other than the country of performance of the contract (lex loci laboris) and the country where is the place of business of the employer, the law of that other country applies (Art 8(4)).147 The parties’ choice of law clause concerning initial ownership would be enforceable in Portugal under Rome I if it did not have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement and that would apply pursuant to any of the alternative connection points provided for in Article 8 (Art 8(1), 2nd period). If Portuguese law, in the absence of choice, would have been applicable pursuant to any of these connection points, namely as lex loci laboris, then the parties’ choice of law concerning initial ownership would not be enforceable to the extent that it would deprive A of his inventor’s rights. Under Portuguese patent law an inventor cannot renounce in advance the rights recognised to him concerning patent ownership (Code of Industrial Property, Art 59(9)). Nevertheless, under Portuguese law, patent ownership is attributed to the company in cases where an invention is made during the performance of an employment contract in which the inventive activity is included and the inventor is entitled only to a right of remuneration in harmony with the importance of the invention if the inventive activity is not particularly remunerated (Art 59(1)(2), Code of Industrial Property)).

145   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663 (‘3. The term “proceedings concerned with the registration or validity of patents” contained in Art 16(4) of the Convention of 27 September 1968 must be regarded as an independent concept intended to have uniform application in all the Contracting States. 4. The term “proceedings concerned with the registration or validity of patents” does not include a dispute between an employee for whose invention a patent has been applied for or obtained and his employer, where the dispute relates to their respective rights in that patent arising out of the contract of employment’). 146   cf Moura Vicente, above n 39, 266. 147   Concerning European patents, the European Patent Convention provides for a special rule in Art 60(1) according to which the right to patent is governed by the law of the state in which the employee carries out his main activity, or, in case it cannot be determined, the law of the country where the place of business through which the employee was engaged is situated.

Portugal  929 Case 8(2) Would the decision differ if A made an invention in joint collaboration with other researchers?

The decision would not differ concerning the law applicable to initial ownership in the absence of choice, but it could differ on the enforceability of the parties’ choice of law on initial ownership in the case of different provisions that cannot be derogated from by agreement, and that would apply to other researchers pursuant to any of the alternative connections points indicated above. Case 8(3) Would the applicable law differ in the case of initial authorship or initial title to trade mark?

In general, copyright ownership is governed by the law of the country of origin of the work.148 However, copyright ownership of works created by employees or works made for hire is governed by lex contractus or lex loci laboris. Therefore, the applicable law would not differ in the case of initial authorship concerning works created by employees. Moreover, a parties’ choice of law clause would be enforceable in Portugal if it did not result in depriving an employee of the protection afforded to him by provisions that cannot be derogated from by agreement and that would apply pursuant to any of the alternative connection points provided for in Article 8 of Rome I (Art 8(1), 2nd period). If Portuguese law, in the absence of choice, would have been applicable pursuant to any of the connection points, eg, as lex loci laboris, then the parties’ choice of law concerning initial authorship would not be enforceable to the extent that it would deprive A of his author’s rights. Under Portuguese copyright law, although copyright is configured as a unitary right of economic and moral rights, economic rights can be assigned while moral rights, namely the right of paternity and the right of integrity, are always attached to the creator and cannot be disposed of or waived (Arts 9, 42 and 52(2) of Copyright Act). Moreover, in the case of works created by employees or works made for hire, the parties may agree on the transmission of the economic rights, which is presumed if the name of the creator is not mentioned in the work or in the usual place for purposes of authorship identification (Art 14(1)(3) of Copyright Act).149 In the case of transmission, the intellectual creator will be entitled to a special remunerative compensation (Art 14(4), see also Art 49 of Copyright Act). Concerning a work created by several persons, copyright belongs jointly to its creators, unless it is deemed a collective work, where copyright is assigned by law to the natural or legal person that organises and directs its creation and in the name of which it is published (Arts 16 to 19 of Copyright Act). The law applicable to the initial title to trade mark is the law of the country of registration (lex originis), according to the special criteria provided for under the Portuguese Civil Code (Art 48(2)), the Paris Convention (Art 6-quinquies(A)(1)) and the Code of Industrial Property (Art 254).150

148   Supremo Tribunal de Justiça (Supreme Court of Justice), Judgment of 10 January 2008 (available at www. dgsi.pt/jstj.nsf). However, the Berne Convention provides in Art 14bis(2)(a) that copyright ownership ‘in a cinematographic work shall be a matter for legislation in the country where [ie for which] protection is claimed’ (lex loci protectionis). 149   See also Law 1/99 of 13 January, as amended by Law 94/2007 of 6 November, concerning authorship and ownership of works of journalists (Art 7-B). 150   cf Moura Vicente, above n 39, 260–61, 265–66.

930  Alexandre Dias Pereira Case 8(4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Concerning such foreign patents, a Portuguese court would apply the law applicable to each individual employment contract provided for in Article 8 of Rome I: either the law chosen by the parties or, in the absence of such an agreement, the law of the country in which the employee habitually carried out his work in performance of the contract (lex loci laboris), ie the law of the country in which the laboratory is established (Arts 8(1) and (2)); or, if it is not possible to determine such country, the law of the country where the place of business through which the employee was engaged is situated (Art 8(3)); or, where it appears from the circumstances as a whole that the contract is more closely connected with a country other than the country of performance of the contract (lex loci laboris) and the country where the place of business of the employer, the law of that other country will apply (Art 8(4)).151 Moreover, the law chosen by the parties to govern each employment contract should not result in depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement and that would apply pursuant to any of the alternative connection points provided for in Article 8 (Art 8(1), 2nd period), which would therefore be applied by the Portuguese court.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of their concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements for the distribution of the debut album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus infringed. Assuming that a court of your country is a court of country X:

Case 9(1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors?

Under Rome I, for a Portuguese court to enforce the parties’ choice of law regarding the transfer of economic and moral rights of authors, the choice would have to be made expressly or be clearly demonstrated by the terms of the contract or the circumstances of the case (Art 3(1)). Moreover, the court would enforce such choice of law in so far as it did not prejudice the provisions which cannot be derogated from by agreement of the law of a country other than the country whose law has been chosen where all other elements relevant to the situation at the time of the choice are located (Art 3(3)). In this case, we infer from the question that such choice of law is made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. Otherwise, the court would not enforce it. 151   Concerning European patents, the European Patent Convention provides for a special rule in Art 60(1) according to which the right to patent is governed by the law of the state in which the employee carries out his main activity, or, in case it cannot be determined, the law of the country where the place of business through which the employee was engaged is situated.

Portugal  931 Assuming that there is such a choice of law, the court would have to check the existence and validity of the consent of the parties, especially the issue of formal validity, as the agreement was concluded orally. Under Article 3(5) of Rome I, the formal validity of choice of law clauses is determined in accordance with the provision on formal validity of the main contract, ie Article 11, paragraph (1) of which provides that ‘a contract concluded between persons who, or whose agents, are in the same country at the time of its conclusion is formally valid if it satisfies the formal requirements of the law which governs it in substance under this Regulation or of the law of the country where it is concluded’. Under Portuguese law, as the law of the country where the contract is concluded (country X), such contract would not be formally valid, because a public deed is required for the complete and final transfer of economic rights, otherwise it is null and void (Copyright Act, Art 44). However, it may be formally valid under the law which governs the transfer in substance under Rome I, ie the law chosen by the parties (Art 3(1)). Assuming that it is, a Portuguese court would still have to check whether the enforcement of such choice of law does not prejudice the provisions which cannot be derogated from by agreement of the law of a country other than the country whose law has been chosen where all other elements relevant to the situation at the time of the choice are located (Art 3(3)). As the contract has been concluded after one of the concerts in Portugal and assuming that A is a Portuguese resident, the court would have to check whether such choice of law does prejudice the relevant provisions of Portuguese copyright law that cannot be derogated from by agreement. In particular, concerning the transfer of moral rights, Article 56(2) of the Copyright Act expressly provides that moral rights are not transferable (alienable), and that any modification to be introduced into the work requires an express agreement of its intellectual creator and can only take place within the agreed conditions (Art 15(2)). These are mandatory provisions, that cannot be derogated from by agreement of the parties, otherwise such an agreement is null and void (Civil Code, Art 294). Case 9(2) How will the court deal with the issue of transferability?

The court will deal with the issue of transferability by taking into account the provisions of Portuguese copyright law that cannot be derogated from by agreement (Rome I, Art 3(3)). As noted above in relation to the transfer of moral rights, Article 56(2) of the Portuguese Copyright Act expressly provides that they are not transferable (alienable), and that any modification to be introduced into the work requires an express agreement of its intellectual creator and can only take place within the agreed conditions (Copyright Act, Art 15(2)). These are mandatory provisions that cannot be derogated from by agreement of the parties, otherwise such an agreement is null and void (Civil Code, Art 294). And even if Portugal is not considered the country where all other elements relevant to the situation at the time of the choice are located, for purposes of safeguarding those provisions which cannot be derogated from by agreement and that would be prejudiced by the law chosen by the parties, a Portuguese court would still apply those provisions on transferability of moral rights as ‘overriding mandatory provisions’ – despite these being construed more restrictive than the notion of provisions which cannot be derogated from by agreement (Rome I, Recital 37) – because moral rights are attached to the human personality of authors. As for the transfer of economic rights, where complete and final, despite being allowed under the dualistic Portuguese copyright system, a public deed is required, otherwise it is

932  Alexandre Dias Pereira null and void (Copyright Act, Art 44). Nevertheless, if the contract is formally valid under the law which governs it in substance, ie under the law chosen by the parties, then the formal requirements of Portuguese copyright law cannot oppose the transferability of the economic rights. Moreover, under Rome I, such formal requirements would not be considered as overriding mandatory provisions (Art 9) and the application of the law chosen by the parties rendering the transfer of economic rights formally valid would not be manifestly incompatible with the public policy (ordre public) of the forum (Art 21). Case 9(3) What would be the applicable law in a case where there is no choice of law made by the parties?

The applicable law in a case where there is no choice of law made by the parties would be, under Rome I, the law of the country where A has its habitual residence at the time of the conclusion of the contract (Arts 4(1)(a) and 19(3)). In the absence of choice, Article 4(1) of Rome I provides that the applicable law is determined in accordance with the rule specified for the particular type of contract, such as contracts for the sale of goods, contracts for the provision of services, as well as franchise and distribution contracts. Transfer of rights agreements, where final and against a price (eg a lump sum), should qualify as a sale contract. They are not to qualify as provision of services, for reasons of consistency with the relevant ECJ jurisprudence on Brussels I.152 Accordingly, it would be governed by the law of the country in which the seller (A) has his habitual residence (Art 4(1)(a)). A, as a rising popular music band, could qualify as a body, corporate or unincorporated, so that its habitual residence would be the place of central administration (Art 19(1), 1st para). However, in the case where A is a natural person acting in the course of his business, the principal place of his business is considered his habitual residence (Art 19(1), 2nd para).

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between parties A and B and rules that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment.

Case 10(1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court?

Under Brussels I, the foreign judgment concerning the ownership of a patent registered in Portugal could be recognised in Portugal if it is given by a court of a Brussels I country and its jurisdiction is not contested by an interested party either as the principal issue in a dispute or as an incidental question. In fact, if country X is a Brussels I country, a judgment given by a court of country X is to be automatically recognised in the other Member States without any special procedure (Art 33(1)). Recognition is to be denied only when one or 152   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327 (‘a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration is not a contract for the provision of services within the meaning of that provision’).

Portugal  933 more of the situations ‘exhaustively listed’153 under Article 34 occurs (eg if such recognition is manifestly contrary to public policy in Portugal) or if recognition is contested by an interested party – either as the principal issue in a dispute or as an incidental question (Art 33(1)(2)) – the judgment was given by a court without jurisdiction, concerning namely matters relating to insurance, consumer contracts, and proceedings subject to exclusive jurisdiction (Art 35(1)). Even if patent ownership was to be decided by the court of the country of registration, the recognising country is not to raise such questions at its own motion. Moreover, in case B or any other interested party should contest recognition, arguing that the judgment was given by a court without jurisdiction, as such matter would be of exclusive jurisdiction of Portuguese courts under Article 22(4) of Brussels I, such claim would not meet the relevant ECJ jurisprudence. In fact, considering that ‘the term “proceedings concerned with the registration or validity of patents” contained in Article 16(4) of the Convention of 27 September 1968 must be regarded as an independent concept intended to have uniform application in all the Contracting States’, the ECJ held that that term ‘does not include a dispute between an employee for whose invention a patent has been applied for or obtained and his employer, where the dispute relates to their respective rights in that patent arising out of the contract of employment’.154 In the examination of such grounds of jurisdiction, the court is bound by the findings of fact on which the court of the Member State of origin based its jurisdiction (Art 35(2)). Since the jurisdiction of the court of the Member State of origin may not be reviewed and the test of public policy (Art 34) may not be applied to the rules relating to jurisdiction (Art 35(3)), this ground for non-recognition of the judgment is not to be raised by the courts of their own motion. In other words, the issue has to be raised by the defendant (or by any other interested party). In any case, Article 36 provides that under no circumstances may a foreign judgment be reviewed as to its substance. Case 10(2) Would the parties be required to re-litigate the dispute in order to register the ownership decision in the registry of a recognising country?

Under Brussels I, if the defendant (or any other interested party) does not contest the recognition, the parties are not required to re-litigate the dispute in order to have the ownership decision registered in the registry of a recognising country. In the examination of such grounds of jurisdiction, the court or authority applied is bound by the findings of fact on which the court of the Member State of origin based its jurisdiction (Art 35(2)). Moreover, the jurisdiction of the court of the Member State of origin may not be reviewed and the test of public policy (Art 34) may not be applied to the rules relating to jurisdiction (Art 35(3)). So, this justification for non-recognition of the judgment is not to be raised by the courts of their own motion, and under no circumstances may a foreign judgment be reviewed as to its substance (Art 36).

153   Case C-414/92 Solo Kleinmotoren GmbH v Emilio Boch [1994] ECR I-2237 para 10 (‘Art 27 and 28 of the [Brussels] Convention list exhaustively the grounds for refusing to recognise such a judgment’). 154   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663. See above Case 8(1).

934  Alexandre Dias Pereira Case 10(3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary, or would it suffice to present the original judgment to the enforcing authority?

Brussels I provides that, in order to be enforced in Portugal, the judgment must be declared enforceable in the Member State of origin on the application of any interested party (Art 38(1)). This application is to be submitted to a specific court or competent authority (Art 39(1)), which issues the declaration of enforceability ‘immediately’ on completion of certain formalities and without any review of the impediments of recognition; the party against whom enforcement is sought cannot at this stage of the proceedings make any submissions on the application (Art 41). Moreover, the decision on the application for a declaration of enforceability is to be brought to the notice of the applicant and served on the party against whom enforcement is sought, accompanied by the judgment, if not already served on that party (Art 42), and may be appealed against by either party (Art 43). A declaration of enforceability is to be refused or revoked by the competent court of appeal (Arts 43 and 44) only upon one of the grounds that justify non-recognition (Arts 34 and 35), but under no circumstances may the foreign judgment be reviewed as to its substance (Art 45(1)(2)). The applicant has to produce a copy of the original judgment which satisfies the conditions necessary to establish its authenticity (Art 53(1)) as well as a certificate issued by the court or competent authority of the Member State where a judgment was given using a specific standard form (Art 54 and Annex V). In case this certificate is not produced, the enforcing authority may specify a time for its production or accept an equivalent document or, if it considers that it has sufficient information before it, dispense with its production (Art 55(1)). The enforcing authority may also require the production of a translation of the documents, which has to be certified by a person qualified to do so in one of the Member States (Art 55(2)). For these documents as well as for the copy of the judgment, no legalisation or other formality is required (Art 56).

Case 11: Provisional Measures and Injunctions A owns a worldwide famous accessories trade mark. After discovering that B is selling fake goods which infringe A’s trade mark, on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop the infringing activities and to seize the infringing goods. Assuming that both A and B are residents in your country and the main infringing activities take place there:

Case 11(1) Would a court of your country have jurisdiction to issue provisional measures/injunctions (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)?

A Portuguese court would have jurisdiction to issue provisional measures/injunctions (regarding infringing acts and counterfeited goods located in different countries) which

Portugal  935 could also have extraterritorial effects to some extent. In fact, the Code of Industrial Property provides for such provisional measures as required under the TRIPS Agreement (Art 50) and the Enforcement Directive (Art 9). In this case, since both A and B are residents in Portugal and the main infringing activities take place there, Portuguese courts would also have jurisdiction over the main dispute under Brussels I, as the courts of the country of both the domicile of the defendant (Art 2(1)) and of the place where the harmful event occurred or might occur (Art 5(3)), considering that A owns a worldwide famous accessories trade mark and that B is selling fake goods which infringe A’s trade mark on an internet auction. Moreover, Portuguese courts could have jurisdiction concerning such provisional, including protective, measures as may be available under Portuguese law, even if the courts of another Member State have jurisdiction as to the substance of the matter (Brussels I, Art 31). However, the extraterritorial effects of these measures are limited as a ‘real connecting link’ between the object of such measures and the country of the forum as required under ECJ jurisprudence.155 In summary: The granting of provisional or protective measures on the basis of Article 24 of the [Brussels] Convention is conditional on, inter alia, the existence of a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction of the Contracting State of the court before which those measures are sought.156

According to this jurisprudence, if B was a resident in country Y and infringing acts occurred in country Y, Portuguese courts would not have jurisdiction to issue provisional measures/injunctions where the internet auction of the counterfeited goods actually excluded the Portuguese market, because there would not be ‘a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction’ of the forum. Although under Article 31 of Brussels I Portuguese courts might have jurisdiction concerning such provisional (and protective) measures as may be available under Portuguese law, even if the courts of another Member State have jurisdiction as to the substance of the matter, the ECJ Van Uden ruling has limited the possibility of cross-border injunctions. In fact, if B was a resident in country Y and infringing acts were made in country Y, then the courts of country Y would have jurisdiction as to the substance of the matter as the courts of the country of domicile of the defendant (Art 2(1)) or of the place where the harmful event occurred or may occur (Art 5(3)). Nevertheless, under Article 31 of Brussels I, Portuguese courts might have jurisdiction concerning such provisional (and protective) measures as may be available under Portuguese law. However, the ECJ ruling has conditioned such jurisdiction to the existence of ‘a real connecting link between the subject-matter of the measures sought and the territorial jurisdiction’ of the forum, in order to prevent abuses of cross-border injunctions such as those facilitated by the so-called kort geding procedures of Dutch courts, which imposed no time limit to the initiation of the main proceedings, therefore rendering definitive what were supposed to be merely provisional protection measures. However, if B was a resident in country Y and infringing acts were made in country Y, a Portuguese court would still have jurisdiction not only as to the substance of the matter, but also to issue provisional measures/injunctions, in case infringing acts made in country   See CLIP Principles (Art 2:202) and ALI Principles (§ 214).   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091. 155 156

936  Alexandre Dias Pereira Y were events that give rise to infringing acts likely to occur in Portugal, ie as evidence of an ‘imminent commission’ of a tort (or delict) in Portugal. That would be the case if the Internet auction of fake goods did not actually exclude the Portuguese market. According to the ECJ, it is not possible to accept an interpretation of Article 5(3) of the Brussels Convention according to which application of that provision is conditional on the actual occurrence of damage. Furthermore, it would be inconsistent to require that an action to prevent behaviour considered to be unlawful . . . whose principal aim is precisely to prevent damage, may be brought only after that damage has occurred. 157

Case 11(2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad?

If the trade mark for which the protection is sought was registered not in Portugal but abroad, then the claimant would not be able to provide the required elements of proof of ownership of the trade mark right in Portugal (Code of Industrial Property, Art 338-I (2)158). However, unregistered worldwide famous trade marks can be protected under unfair competition law and benefit from similar provisional and protective measures (Art 317(2), Code of Industrial Property), which can be issued against any Internet intermediary whose services are used by third parties to infringe industrial property rights (Art 338I(3), Code of Industrial Property). Accordingly, on grounds of unfair competition, a Portuguese court could issue protective measures/injunctions even though the trade mark for which the protection is sought is registered abroad. Concerning Community trade marks, Portuguese courts, as the courts of the place of infringement, would have ‘exclusive jurisdiction to grant provisional and protective measures which, subject to a necessary procedure for recognition and enforcement pursuant to Title III of Brussels I Regulation, are applicable in the territory of any Member State’ (Community TM Regulation, Arts 96(a) and 103(2)).

157   Case C-167/00 Verein fur Konsumenteninformation v Karl Heinz Henkel [2002] ECR I-8111, para 48. See also, on Art 50 of TRIPS, which provides for that judicial authorities shall have the authority to order prompt and effective provisional measures namely ‘to prevent an infringement of any intellectual property right from occurring, and in particular to prevent the entry into the channels of commerce in their jurisdiction of goods, including imported goods immediately after customs clearance’ (Art 50(1)(a)) as well as the authority to adopt ‘provisional measures inaudita altera parte where appropriate, in particular where any delay is likely to cause irreparable harm to the right holder’ (Art 50(2)). See Joined Cases C-300/98 and C-392/98 Parfums Christian Dior SA v TUK Consultancy BV and Assco Gerüste GmbH and Rob van Dijk v Wilhelm Layher GmbH & Co KG and Layher BV [2000] ECR I-11307 (‘In a field in which the Community has not yet legislated and which consequently falls within the competence of the Member States, the protection of intellectual property rights, and measures adopted for that purpose by the judicial authorities, do not fall within the scope of Community law. Accordingly, Community law neither requires nor forbids that the legal order of a Member State should accord to individuals the right to rely directly on the rule laid down by Art 50(6) of the TRIPs Agreement or that it should oblige the courts to apply that rule of their own motion’). 158   Effective protection requires registration of the mark at the Industrial Property Office according to the registration procedure (Arts 233 et seq Code of Industrial Property) and, moreover, the court shall require the applicant of a provisional measure to provide elements of proof to demonstrate that he is the holder of the industrial property right, or that he is authorised to use it, and that an infringement takes place or is imminent.

Portugal  937 Case 11(3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee?

A Portuguese court could of its own motion require the person seeking issuance of provisional measures to grant an adequate guarantee where the judge finds it convenient, according to the circumstances of the case (Art 390(2) of Code of Civil Procedure, by remission of Art 338-P of Code of Industrial Property). Concerning the issuance of provisional measures to preserve evidence, the court may also require the person seeking issuance of such measures to grant an adequate guarantee also aimed to assure the compensation for damages that the defendant may be entitled to, under certain circumstances, as a result of the issuance of such measures (Art 338-G(1) of Code of Industrial Property). Case 11(4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings?

A Portuguese court would not be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings. Brussels I does not apply to arbitrage and neither do the Arbitration Act159 nor the Código de Processo Civil (Code of Civil Procedure) provide an answer to this question. Nonetheless, a Portuguese court of appeal held that an international arbitration agreement does not exclude the international jurisdiction of Portuguese courts concerning related interim provisional procedures.160 This domestic jurisprudence is in conformity with ECJ Van Uden ruling. In summary: On a proper construction of Article 5, point 1, of the [Brussels] Convention . . . , the court which has jurisdiction by virtue of that provision also has jurisdiction to order provisional or protective measures, without that jurisdiction being subject to any further conditions. However, where the parties have validly excluded the jurisdiction of the courts in a dispute arising under a contract and have referred that dispute to arbitration, it is only under Article 24 of the Convention that a court may be empowered to order such measures, since it cannot do so as the court having jurisdiction on the substance of the dispute. In that connection, where the subject-matter of an application for provisional measures relates to a question falling within the scope ratione materiae of the Convention, that Convention is applicable and Article 24 thereof may confer jurisdiction on the court hearing that application even where proceedings have already been, or may be, commenced on the substance of the case and even where those proceedings are to be conducted before arbitrators.161

It could be added that, considering that a choice of court agreement can allow a party to depart from such an agreement, the Supreme Court of Justice accepted that such a party could apply before a court the issuance of provisional measures, even if that court does not have jurisdiction over the substance of the action.162

  Law 31/86 of 29 August (Lei da Arbitragem Voluntária).   Tribunal da Relação de Lisboa (Lisbon Court of Appeals), Judgments of 2 December 2003 and 13 March 2007 (available at www.dgsi.pt/jtrl.nsf). 161   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091. 162   Judgment of 17 December 2004, Proc 04B4076 (available at www.dgsi.pt/jstj.nsf). 159 160

938  Alexandre Dias Pereira Case 11(5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

If the claimant made a such request, a Portuguese court would conceive of an injunction to cease not as a substantive but rather as a procedural measure. In Portugal, injunctions to cease infringing acts are conceived as procedural measures. The Code of Civil Procedure provides for in Article 383(1) that the provisional/protective measure is always dependent upon the action caused by the protected right. The procedural nature of these measures is evidenced by the fact that the provisional procedure is extinguished and, where ordered, the provisional measure ceases if one of the grounds provided for in Article 389(1) of the Code of Civil Procedure occurs, such as, for example, the plaintiff does not initiate the main proceedings within 30 days, or the defendant is not convicted, or the protected right is extinguished.

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and the royalties from those intellectual property rights as a collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y:

Case 12(1) Could intellectual property rights be used as collateral pursuant to the law of your country?

Pursuant to Portuguese law, intellectual property rights can be used as collateral. Economic copyrights and industrial property rights can be objects of usufruct rights (usufructus) and can be given as a guarantee (penhor) (Copyright Act, Arts 43, 45, 46 and 215(1)(a); Industrial Property Act, Arts 6, 30(1)(c) and 356(1)(l)). Case 12(2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights?

Insofar as such issues concern the legal status of IP rights they would be governed by the law of the country for which protection is claimed, ie lex loci protectionis (Berne Convention, Art 5(2); Paris Convention, Arts 4-bis(1), Art 6(2)(3)).163 However, the formal validity of the transactions would be governed by the law of the country designated according to Article 11 of Rome I.164   See Moura Vicente, above n 39, 222–23, 254–55, 305, 377.   Note that under Rome I, security rights over claims are included within the concept of voluntary assignment and this relationship is governed by the law applicable to the contract between the assignor and assignee, including the assignability of the assigned claim, the relationship between the assignee and the debtor, the conditions under which the assignment can be invoked against the debtor and whether the debtor’s obligations have been discharged (Art 14(1), (2), (3)). The law applicable to the assignor and the assignee can be chosen by the parties (Art 3). In the absence of choice, such an assignment of an intellectual property right should qualify, taking into account the ECJ judgment of 23 April 2009 (C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela WellerLindhorst), as a contract for the sale of goods, and therefore the law of the country where the seller (assignor) has his habitual residence would apply. 163 164

Portugal  939 Case 12(3) Would a court of your country apply the same law to registered and unregistered intellectual property rights?

A Portuguese court would apply the law of the country for which protection is claimed both to registered and unregistered intellectual property rights. However, concerning registered intellectual property rights, the jurisdiction of a Portuguese court could be contested if the question of registration or validity of such rights was raised according to Brussels I (Art 22(4)) and the relevant ECJ jurisprudence.

Slovenia DAMJAN MOŽINA*

Contents 1. Legal Sources and the Institutional Competence.......................................................................... 942 1.1 Intellectual Property............................................................................................................. 942 1.1.1. International Treaties Ratified by Slovenia........................................................... 942 1.1.2. Legislation of the European Union....................................................................... 944 1.1.3. Domestic Legislation – Intellectual Property Rights............................................ 946 1.2. A Brief Overview of Intellectual Property Rights in Slovenia............................................ 949 1.2.1 Copyright and Related Rights................................................................................ 949 1.2.2. Industrial Property................................................................................................. 949 1.2.3. Enforcement of Rights........................................................................................... 951 1.3. Private International Law..................................................................................................... 951 1.3.1. International Jurisdiction....................................................................................... 951 1.3.2. Conflict of Laws/Choice of Law............................................................................. 953 1.3.3. Recognition and Enforcement of Judgments and Interim Measures.................. 956 1.4. Intellectual Property in Private International Law in Slovenia.......................................... 957 1.4.1. Rules on International Jurisdiction Regarding Intellectual Property Issues....... 957 1.4.2 Choice-of-Law Rules Regarding Intellectual Property Issues................................. 958 2. Hypothetical Cases............................................................................................................................. 958 Case 1. General/special Grounds of Jurisdiction...................................................................... 958 Case 2. Subject-Matter Jurisdiction.......................................................................................... 960 Case 3. Consolidation of Proceedings....................................................................................... 962 Case 4. Choice of Court............................................................................................................. 963 Case 5. Parallel Proceedings....................................................................................................... 964 Case 6. The Principle of Territoriality (Choice of Law)........................................................... 965 Case 7. Infringement of Intellectual Property Rights............................................................... 965 Case 8. Law Applicable to Initial Ownership............................................................................ 967 Case 9. Law Applicable to the Transfer of Rights agreements................................................. 968 Case 10. The Recognition and Enforcement of Foreign Judgments......................................... 969 Case 11. Provisional Measures and Injunctions......................................................................... 971 Case 12. Securities in Intellectual Property................................................................................ 974

*  PhD, LLM, Lecturer, University of Ljubljana, Slovenia.

942  Damjan Moˇzina

1  Legal Sources and the Institutional Competence 1.1  Intellectual Property 1.1.1  International Treaties Ratified by Slovenia 1.1.1.1  Intellectual Property in General Agreement on Trade-Related Aspects of Intellectual Property Rights (Official Gazette1 – Int Treat No 10/1995) Convention Establishing the World Intellectual Property Organisation (Official Gazette SFRY2 – Int Treat No 31/1972 and 4/1986, Official Gazette No 24/1992, Official Gazette – Int Treat No 9/1992, No 3/2001, No 3/2007). 1.1.1.2 Copyright Berne Convention for the Protection of Literary and Artistic Works (Official Gazette SFRY – Int Treat No 14/1975 and 4/1986, Official Gazette No 24/1992, Official Gazette – Int Treat No 9/1992, No 3/2007) Universal Copyright Convention (Official Gazette SFRY – Int Treat No 54/1973, Official Gazette – Int Treat No 15/1992) Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite (Official Gazette SFRY – Int Treat No 13/1977, Official Gazette – Int Treat No 15/1992) Convention for the Protection of Producers of Phonograms against Unauthorised Duplication of Their Phonograms (Official Gazette – Int Treat No 8/1996) Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (Official Gazette – Int Treat No 8/1996) World Intellectual Property Organisation Copyright Treaty (Official Gazette – Int Treat No 25/1999) World Intellectual Property Organisation Performances and Phonograms Treaty (Official Gazette – Int Treat No 25/1999) 1.1.1.3  Industrial Property in General Paris Convention for the Protection of Industrial Property (Official Gazette SFRY – Int Treat No 5/1974, No 7/1986, Official Gazette – Int Treat No 24/1992, Official Gazette – Int Treat No 9/1992, No 3/2007) 1.1.1.4  Patents and Supplementary Protection Certificates Patent Cooperation Treaty (Official Gazette – Int Treat No 19/1993, No 3/2007) Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure (Official Gazette – Int Treat No 21/1997, No 3/2007)

  Official Gazette of the Republic of Slovenia.   Until 1991, the Republic of Slovenia was a part of the Socialist Federal Republic of Yugoslavia (SFRY).

1 2

Slovenia  943 Strasbourg Agreement Concerning the International Patent Classification (Official Gazette – Int Treat No 7/2001, No 3/2007) Patent Law Treaty (Official Gazette – Int Treat No 4/2002) Convention on the Grant of European Patents of 5 October 1973, as last amended on 10 December 1998 (Official Gazette – Int Treat No 19/2002) Protocol on the Interpretation of Article 69 of the Convention on the Grant of European Patents of 5 October 1973 (Official Gazette – Int Treat No 19/2002) Protocol on the Centralisation of the European Patent System and on its Introduction (Official Gazette – Int Treat No 19/2002) Protocol on Jurisdiction and the Recognition of Decisions in respect of the Right to the Grant of a European Patent (Official Gazette – Int Treat No 19/2002) Protocol on Privileges and Immunities of the European Patent Organisation (Official Gazette – Int Treat No 19/2002) Agreement dated 17 October 2000 on the application of Article 65 of the Convention on the Grant of European Patents (Official Gazette – Int Treat No 19/2002) Act Revising the Convention on the Grant of European Patents of 29 November 2000 (Official Gazette – Int Treat No 19/2002) Implementing Regulations to the Convention on the Grant of European Patents, as last amended by the decision of the Administrative Council of the EPO of 7 December 2006, and as applicable from 1 April 2008 Rules Relating to Fees of 20 October 1977, as applicable from 13 December 2007, and the Decision amending the Rules, as applicable from 1 April 2008 Agreement between the Government of Slovenia and the European Patent Organisation on co-operation in the field of patents (Official Gazette – Int Treat No 15/1993, No 11/2000) (applicable for requests for the extension of European patents filed before 1 December 2002) Agreement implementing Article 3(3) of the Agreement between the Government of Slovenia and the European Patent Organisation on Co-operation in the Field of Patents (Official Gazette – Int Treat No 2/1994, No 11/2000) (applicable for requests for the extension of European patents filed before 1 December 2002) 1.1.1.5  Industrial Designs Hague Agreement Concerning the International Deposit of Industrial Designs (Official Gazette – Int Treat No 20/1994, No 3/2007) Geneva Act of the Hague Agreement concerning the International Registration of Industrial Designs (Official Gazette – Int Treat No 4/2002) Common Regulations under the 1999 Act, the 1960 Act, and the 1934 Act of the Hague Agreement (Official Gazette – Int Treat No 15/2006) Locarno Agreement Establishing an International Classification for Industrial Designs (Official Gazette SFRY – Int Treat No 51/1974, Official Gazette No 24/1992, Official Gazette – Int Treat No 9/1992, No 3/2007) 1.1.1.6  Trade Marks Madrid Agreement Concerning the International Registration of Marks (Official Gazette SFRY – Int Treat No 2/1974, Official Gazette No 24/1992, Official Gazette – Int Treat No 9/1992, No 3/2007) Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (Official Gazette – Int Treat No 21/1997)

944  Damjan Moˇzina Common Regulations under the Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to that Agreement (Official Gazette – Int Treat No 2/2006) Trade Mark Law Treaty and Regulations (Official Gazette – Int Treat No 28/2001) Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks (Official Gazette SFRY – Int Treat No 51/1974, Official Gazette No 24/1992, Official Gazette – Int Treat No 9/1992, No 3/2007) Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks (Official Gazette – Int Treat No 7/2001, No 3/2007) Nairobi Treaty on the Protection of the Olympic Symbol (Official Gazette – Int. Treat., No 5/1998) 1.1.1.7  Plant Variety Rights International Convention for the Protection of New Varieties of Plants (Official Gazette – Int Treat No 13/1999)

1.1.2  Legislation of the European Union 1.1.2.1  Intellectual Property in General Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights ([2004] OJ L195/16) Council Regulation (EC) No 1383/2003 of 22 July 2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights ([2003] OJ L196/7) Commission Regulation (EC) No 1891/2004 of 21 October 2004 laying down provisions for the implementation of Council Regulation (EC) No 1383/2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights ([2004] OJ L328/16) Commission Regulation (EC) No 1172/2007 of 5 October 2007 amending Commission Regulation (EC) No 1891/2004 of 21 October 2004 laying down provisions for the implementation of Council Regulation (EC) No 1383/2003 concerning customs action against goods suspected of infringing certain intellectual property rights and the measures to be taken against goods found to have infringed such rights ([2007] OJ L261/12) 1.1.2.2 Copyright Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs ([1991] OJ L122/42) Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property ([1992] OJ L346/61) Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission ([1993] OJ L248/15) Council Directive 93/98/EEC of 29 October 1993 harmonising the term of protection of copyright and certain related rights ([1993] OJ L290/9)

Slovenia  945 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases ([1996] OJ L77/20) Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society ([2001] OJ L167/10) Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art ([2011] OJ L272/32) 1.1.2.3  Patents and Supplementary Patent Certificates Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions ([1998] OJ L213/13) Regulation (EC) No 469/2009 of the European Parliament and of the Council of 6 May 2009 concerning the supplementary protection certificate for medicinal products (Codified version) ([2009] OJ L152/1) Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products ([1996] OJ L198/30) Regulation (EC) No 1901/2006 of the European Parliament and of the Council of 12 December 2006 on medicinal products for paediatric use and amending Regulation (EEC) No 1768/92, Directive 2001/20/EC, Directive 2001/83/EC and Regulation (EC) No 726/2004 ([2006] OJ L378/1), amended by Regulation (EC) No 1902/2006 of the European Parliament and of the Council ([2006] OJ L378/20) Regulation (EC) No 816/2006 of the European Parliament and of the Council of 17 May 2006 on the compulsory licensing of patents relating to the manufacture of pharmaceutical products for export to countries with public health problems ([2006] OJ L157/1) 1.1.2.4  Industrial Designs Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs ([1998] OJ L289/28) Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs ([2002] OJ L3/1), amended by Council Regulation (EC) No 1891/2006 of 18 December 2006 ([2006] OJ L384/79) Commission Regulation (EC) No 2245/2002 of 21 October 2002 implementing Council Regulation (EC) No 6/2002 on Community designs ([2002] OJ L341/28) Commission Regulation (EC) No 2246/2002 of 16 December 2002 on the fees payable to the Office for Harmonisation in the Internal Market (Trade Marks and Designs) in respect of the registration of Community designs ([2002] OJ L341/54) 1.1.2.5  Trade Marks First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks ([1989] OJ L40/1) Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark ([1994] OJ L11/1), amended by Council Regulation (EC) No 207/2009 of 26 February 2009 ([2009] OJ L78/1)

946  Damjan Moˇzina Commission Regulation (EC) No 2868/95 of 13 December 1995 implementing Council Regulation (EC) No 40/94 on the Community trade mark ([1995] OJ L303/1), amended by Commission Regulation (EC) No 1041/2005 of 29 June 2005 ([2005] OJ L172/4) Commission Regulation (EC) No 216/96 of 5 February 1996 laying down the rules of procedure of the Boards of Appeal of the Office for Harmonisation in the Internal Market (Trade Marks and Designs) ([1996] OJ L28/11), amended by Commission Regulation (EC) No 2082/2004 of 6 December 2004 ([2004] OJ L360/19) Commission Regulation (EC) No 2869/95 of 13 December 1995 on the fees payable to the Office for Harmonisation in the Internal Market (Trade Marks and Designs) ([2002] OJ L303/33), amended by Commission Regulation (EC) No 1687/2005 of 14 October 2005 ([2005] OJ L271/14) 1.1.2.6  Topographies of Semiconductor Circuits Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products ([1987] OJ L24/36) 1.1.2.7  Geographical Indications Council Regulation (EC) No 1493/1999 of 17 May 1999 on the common organisation of the market in wine ([1999] OJ L179/1), amended by Commission Regulation (EC) No 1795/2003 of 13 October 2003 ([2003] OJ L262/13) Council Regulation (EEC) No 1576/89 of 29 May 1989 laying down general rules on the definition, description and presentation of spirit drinks ([1989] OJ L160/1), amended by Regulation (EC) No 1882/2003 ([2003] OJ L284/1) Commission Regulation (EEC) No 1014/90 of 24 April 1990 laying down detailed implementing rules on the definition, description, and presentation of spirit drinks ([1990] OJ L105/9), amended by Commission Regulation (EC) No 2140/98 of 6 October 1998 ([1998] OJ L270/9) Council Regulation (EC) No 510/2006 of 20 March 2006 on the protection of geographical indications and designations of origin for agricultural products and foodstuffs ([2006] OJ L93/12) Council Regulation (EC) No 509/2006 of 20 March 2006 on agricultural products and foodstuffs as traditional specialities guaranteed ([2006] OJ L93/1) 1.1.2.8  Plant Variety Rights Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights ([1994] OJ L227/1), amended by Council Regulation (EC) No 873/2004 of 29 April 2004 ([2004] OJ L162/38)

1.1.3  Domestic Legislation – Intellectual Property Rights 1.1.3.1  Intellectual Property in General General Administrative Procedure Act (Official Gazette No 24/2006, No 126/2007) Administrative Fees Act (Official Gazette No 42/2007, No 126/2007) Administrative Disputes Act (Official Gazette No 105/2006) Act Implementing the Customs Regulations of the European Community (Official Gazette No 25/2004, No 111/2007)

Slovenia  947 Penal Code of the Republic of Slovenia (Official Gazette No 55/2008) Criminal Liability of Legal Entities Act (Official Gazette No 98/2004) Rules on insuring the payment of expenses and determining the level of the costs of the safe-keeping and maintenance of goods during temporary detention and seizure of goods in the event of the application of customs measures in cases of intellectual property violations (Official Gazette No 33/2004) 1.1.3.2 Copyright Copyright and Related Rights Act (Official Gazette No 16/2007) Decree on the amounts of remuneration for private and other internal reproduction (Official Gazette No 103/2006) Decree on mediation in disputes concerning copyright and related rights (Official Gazette No 35/2005) Decision determining the list of mediators (Official Gazette No 82/2005) Decision supplementing the list of mediators (Official Gazette No 36/2007) Decree on arbitration in disputes concerning copyright and related rights (Official Gazette No 65/2006) 1.1.3.3  Industrial Property Industrial Property Act (Official Gazette No 51/2006) Decree on the fees of the Slovenian Intellectual Property Office (Official Gazette No 128/2006) Rules on the registers of applications and industrial property rights and on the certificate of the priority right (Official Gazette No 102/2001) Rules on passing the qualifying examination and entry into the register of agents maintained by the Slovenian Intellectual Property Office (Official Gazette No 111/2001) Order on the tariff of information services (Official Gazette No 71/2006) Employment Related Industrial Property Rights Act (consolidated version, Official Gazette No 15/2007) Rules on compensation for job-related inventions (Official Gazette No 65/2007) Decree on the fees of the Slovenian Intellectual Property Office (Official Gazette No 65/2006) 1.1.3.4  Patents and Supplementary Patent Certificates Decree on the legal protection of biotechnological inventions (Official Gazette No 81/2003) Decree implementing Council Regulations (EC) concerning the creation of a supplementary protection certificate for medicinal products and for plant protection products (Official Gazette No 56/2005, No 65/2006) Decree on the extension of European Patents to Slovenia (Official Gazette No 15/2002) (applicable to requests for the extension of European patents filed before 1 December 2002) Rules on the contents of patent applications and the divisional patent procedure (Official Gazette No 102/2001)

948  Damjan Moˇzina 1.1.3.5  Industrial Designs Decree implementing Council Regulation (EC) on Community trade marks and Council Regulation (EC) on Community designs (Official Gazette No 4/2007) Rules on the contents of industrial design applications (Official Gazette No 102/2001, No 112/2004) 1.1.3.6  Trade Marks Decree implementing Council Regulation (EC) on Community trade marks and Council Regulation (EC) on Community designs (Official Gazette No 4/2007) Rules on the contents of trade mark applications (Official Gazette No 102/2001) Rules on the procedure concerning requests for the international registration of trade marks (Official Gazette No 124/2006) 1.1.3.7  Geographical Indications Decree on the geographical indication of the Lipicanec (Lipizzaner) horse (Official Gazette No 4/1999) Wine Act (Official Gazette No 105/2006) Rules on the list of designation of geographical origin for wines and other grape and wine products (Official Gazette No 68/2002, No 42/2003) Rules on the designation of wine, must, and other grape and wine products and their packaging (Official Gazette No 40/2001, No 52/2003, No 44/2005) Agriculture Act (Official Gazette No 51/2006) Rules on procedures for the recognition of special agricultural products or foodstuffs (Official Gazette No 76/2003, No 18/1994, No 47/2005) Rules on the trade mark for labelling agricultural products or foodstuffs (Official Gazette No 58/2001, No 28/2004, No 87/2004, No 121/2006) Rules on the requirements for the use of the indication of geographical denomination of agricultural products and foodstuffs (Official Gazette No 7/2001) 1.1.3.8  Topographies of Semiconductor Circuits Act on the Protection of Topographies of Integrated Circuits (Official Gazette No 81/2006) Rules on the registration of topographies of integrated circuits (Official Gazette No 34/2003) 1.1.3.9  Plant Variety Rights Protection of New Varieties of Plants Act (Official Gazette No 113/2006) Decree on the annual fee for varieties entered in the Agricultural Plant Variety List and on fees and costs for plant variety protection (Official Gazette No 27/2005) Rules on the procedure for granting plant breeders’ rights (Official Gazette No 85/1999) Rules on standard methods for testing the distinctness, uniformity, and stability of new varieties of plants (Official Gazette No 30/1999)

Slovenia  949

1.2  A Brief Overview of Intellectual Property Rights in Slovenia 1.2.1  Copyright and Related Rights 1.2.1.1 Copyright Copyright is a result of the creation of a copyright work; it follows automatically and no registration is needed. Copyright works are individual intellectual creations in the domain of literature, science and art, which are expressed in any mode. In particular, copyright works are spoken works such as speeches, sermons and lectures; written works such as belletristic works, articles, manuals, studies and computer programs; musical works with or without words; theatrical, theatrico-musical works and works of puppetry; choreographic works and works of pantomime; photographic works and works produced by a process similar to photography; audiovisual works; works of fine art such as paintings, graphic works and sculptures; works of architecture such as sketches, plans and built structures in the field of architecture, urban planning and landscape architecture; works of applied art and industrial design; cartographic works; and presentations of a scientific, educational, or technical nature. A copyright is a uniform right of the author which consists of exclusive personal rights, protecting the author with regard to his spiritual and personal bonds with his work (moral rights), exclusive economic powers, according to which the author allows or forbids the use of his work (economic rights) and other rights of the author. Copyright lasts for the life of the author and for 70 years following the death of the author. 1.2.1.2  Related Rights Related rights are rights of natural or legal persons who contribute to the availability of the copyright work to the public. The holders of related rights are performers, producers of phonograms, film producers, broadcasting organisations, publishers, and makers of databases. Related rights last for 50 years from the performance, making of a recording, first broadcast, or lawful publication of the work, with the exception of the rights of makers of databases, which last for 15 years from the making of a database.

1.2.2  Industrial Property 1.2.2.1 Patent A patent is granted for an invention in the field of technology which is new, involves an inventive step and is susceptible of industrial application. An invention is considered new if it does not form part of the state of the art. An invention is considered to involve an inventive step if, with regard to the state of the art within the meaning of Article 9, it is not obvious to a person skilled in the art. After a patent application is filed, the patent office examines whether the application meets the requirements of patentability prima facie. Eighteen months after filing, the patent office publishes the application and grants a patent. The owner of the patent or holder of exclusive rights from a patent must submit to the office written evidence of the patentability of the invention before the expiry of the ninth year of the patent term, otherwise the patent lapses. A patent lasts for 20 years, provided the fees are paid. For a patent of shorter duration, a lower level of innovation is required and the maximum duration is 10 years.

950  Damjan Moˇzina 1.2.2.2  Industrial Design An industrial design is registered for a design to the extent that the design is new and has an individual character. Design entails the product’s appearance in whole or in part resulting from the features of the product itself and/or its ornamentation, in particular, the lines, contours, colours, shape, texture and/or materials of the product. Industrial design lasts for one or more five-year terms following the filing of an application, for a maximum of 25 years. 1.2.2.3  Trade Marks A sign or a combination of signs, capable of distinguishing the goods or services of one undertaking from those of another undertaking and capable of being graphically represented, can be registered as a trade mark. An owner of a trade mark has an exclusive right to prevent unauthorised third parties from using in trade: (a) any sign which is identical with the mark in relation to goods or services for which the trade mark is registered; (b) any sign regarding which, because of its identity with or similarity to the trade mark and the identity or similarity of the goods or services covered by the trade mark and the sign, there is a likelihood of confusion in the public, including the likelihood of association between the sign and the trade mark; and (c) any sign which is identical with or similar to the trade mark in relation to goods or services which are not similar to those for which the mark is registered, where the trade mark has a reputation in Slovenia and where unauthorised use of that sign would take unfair advantage of, or be detrimental to, the distinctive character or the reputation of the trade mark. A trade mark lasts for 10 years from the filing of the application and can be prolonged for another 10-year period an unlimited number of times, provided the fees are paid. 1.2.2.4  Geographical Indication A geographical indication eligible for registration is an indication which identifies a good as originating in a territory, or a region or a locality in that territory, where a given quality, reputation, or other characteristic of the good is essentially attributable to its geographical origin. Also eligible is the name of a good which has become generally known through long-term use in the course of trade as the name indicating that the good originates in a specific place or region. The registration of agricultural products and foodstuffs is regulated by the Agricultural Act and Wine Act. A geographical indication is a collective right; it may be used by the persons who produce and trade goods protected by the geographical indication. 1.2.2.5  The Topography of Semiconductor Circuits The topography of a semiconductor circuit (ie, a series of related images, however fixed or encoded, representing the three-dimensional pattern of the layers of which a semiconductor product is composed, and in which series each image has the pattern or part of the pattern of a surface of the semiconductor product at any stage of its manufacture) can be registered if it is original. The exclusive rights of the creator of the protected topography elapse with the expiry of the (calendar) year in which 10 years have elapsed from the day the topography was first economically exploited anywhere in the world or upon the expiry of 10 years from the day of the filing of the application.

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1.2.3  Enforcement of Rights 1.2.3.1  Civil Courts In the event of an infringement of intellectual property rights, the holder of these rights may claim (a) that the infringer be prohibited from infringements, preparatory acts and future infringements; (b) restitution for losses (material and immaterial); (c) that the unlawfully made objects of infringement be destroyed or altered, as well as the devices whose sole or prevalent purpose is to infringe on the intellectual property; and (d) that the judgment be published in public media. Furthermore, in cases of infringements of copyrights and related rights, punitive damages in the amount of three times the usual license fee may be sought – an exception in Slovenian tort law where punitive damages are generally not recognised. In disputes regarding intellectual property rights, there is a special rule on the competence of civil courts: the District Court of Ljubljana has exclusive competence to decide on disputes regarding intellectual property rights. Parties may file an appeal against the decision of this Court at the High Court of Ljubljana. There is no appeal against the decision of the latter, but parties may file a ‘revision’ (an extraordinary remedy) at the Supreme Court of the Republic of Slovenia. 1.2.3.2  Criminal Courts The infringement of intellectual property rights can also entail a criminal act. The Penal Code of the Republic of Slovenia determines, inter alia, the following five criminal offences: the infringement of the moral rights of the author (moral copyright), the infringement of the economic rights of the author (economic copyright), the infringement of related rights, unauthorised use of a trade mark or industrial design, and unauthorised use of a patent or topography. Except for copyright infringement, where the motion of the wronged party triggers prosecution by the police and the public prosecutor, all other offences are prosecuted ex officio. 1.2.3.3  Administrative Measures Administrative measures are carried out by the Customs Office and the Market Inspectorate of the Republic of Slovenia. When goods suspected of infringing intellectual property rights enter or leave Slovenia, the Customs Office may impound such goods. If the claim of the holder of the rights is successful, the goods are subsequently destroyed. With regard to the infringement of intellectual property rights, the Market Inspectorate of the Republic of Slovenia can impose measures against acts of unfair competition. Its duty is also to exercise control over the implementation of some provisions of the Copyright and Related Rights Act.

1.3  Private International Law 1.3.1  International Jurisdiction Slovenia is a member of the European Union. With regard to international jurisdiction in civil and commercial matters concerning defendants domiciled in one of the Member States of the EU (with the exception of Denmark), the relevant legal source is Council

952  Damjan Moˇzina Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the so-called Brussels I Regulation).3 1.3.1.1  EU Regulation 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters The general basis for the international jurisdiction of a court in a Member State is the domicile/seat4 of the defendant in that state, regardless of his/her nationality (Art 2(11)). The principle that the plaintiff must follow the defendant’s court (actor sequitur forum rei) is an expression of the procedural protection of the defendant. However, Article 3 of the Regulation states that the defendant domiciled in a Member State can also be sued in the court of another Member State in cases regulated by the Regulation. Article 5 defines the cases of special jurisdiction. The following cases bare special mention. In matters relating to a contract, the court of the place of the performance of the obligations in question has international jurisdiction (para 1(a)).5 Special (international) jurisdiction in matters relating to tort, delict, or quasi-delict rests with the (country of the) court of the place where the harmful event occurred or may occur. According to the case law of the ECJ, this covers both the place where the damage occurred, and the place of the event giving rise to it.6 The defendant may be sued either in one or another court, at the option of the plaintiff. If a civil claim for damages or restitution is based in an act giving rise to criminal proceedings, the court competent for criminal proceedings has international jurisdiction, provided it is competent for civil proceedings under its own law (Art 5(4)). In disputes arising out of the operation of a branch, agency, or other establishment, the court of the place where the branch, agency, or establishment is situated has international jurisdiction (Art 5(5)). If a person domiciled in a Member State is one of a number of defendants, he may also be sued in the court of the place where any of the defendants is domiciled, provided that the claims are closely connected (Art 6(1)). The court in which a claim is pending has jurisdiction for a counter-claim arising from the same contract or facts (Art 6(3)). Special rules on jurisdiction exist in insurance contracts (Arts 8–14), consumer contracts (Arts 15–17) and individual employment contracts (Arts 18–21). In cases of exclusive jurisdiction, the court has jurisdiction regardless of the domicile of the defendant (Art 22). One such case concerns disputes about the registration or validity of patents, trade marks, designs, or other similar rights: in this case the court of the Member State in which the deposit or registration has been applied for or has taken place has exclusive international jurisdiction. Parties may also confer jurisdiction to a court by concluding an agreement on the choice of jurisdiction (prorogatio fori). One of the parties must be domiciled in a Member State. Article 23 lays down the validity requirements for such a clause: the agreement must be in writing or another form in accordance with the practice between the parties or usages in   [2001] OJ L12/1.   Domicile is determined according to lex fori.   The Regulation autonomously defines the place of the performance of contracts for the sale of goods and the provision of services (Art 1(1)(b)). 6   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735; Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415; Case C-167/00 Verein fur Konsumenteninformation v Karl Heinz Kenkel [2002] ECR I-8111. 3 4 5

Slovenia  953 international trade or commerce. If a defendant appears before a court of a Member State which is not competent on the basis of the Regulation, he thereby tacitly agrees to the choice of jurisdiction (Art 24). 1.3.1.2  Slovenian Private International Law and Procedure Act (PILP)7 National rules on jurisdiction are applicable in cases where the defendants are domiciled outside the EU. The general ground for the international jurisdiction of a Slovenian court is the permanent residence (domicile) or place of business of the defendant in the Republic of Slovenia (Art 48(1) PILP). As does the Regulation, PILP determines a range of special (so called ‘elective’) grounds for jurisdiction. The following should be mentioned: in disputes about non-contractual liability for damages, a Slovenian court has jurisdiction if the wrongful act (the event giving rise to the damage) was committed on the territory of the Republic of Slovenia or the damage occurred on the territory of the Republic of Slovenia (Art 55(1) PILP). In disputes over contractual obligations, a Slovenian court has jurisdiction if the place of performance of the obligation in question is Slovenia (Art 56 PILP). A Slovenian court also has jurisdiction if an object to which the claim relates is situated on the territory of the Republic of Slovenia (Art 58 PILP). A Slovenian court has jurisdiction in disputes arising from the operation of a branch or an agency in Slovenia (Art 59 PILP). Special rules exist for individual employment disputes (Art 57 PILP), but not for disputes arising from consumer contracts. Parties may agree to the jurisdiction of a foreign court if at least one of the parties has a domicile/place of business outside Slovenia and the Slovenian court does not have exclusive jurisdiction (Art 52(1) PILP). Such derogation of Slovenian jurisdiction is excluded in disputes with consumers in disputes arising from insurance relationships if the consumer/ insured (natural) person is domiciled in Slovenia. Parties may agree to the jurisdiction of a Slovenian court if at least one of them is a Slovenian citizen or a legal person whose place of business is in Slovenia (Art 52(3) PILP). Furthermore, derogation and prorogation of jurisdiction are excluded in matrimonial disputes, divorce proceedings, procedures regarding paternity, custody of children, and maintenance obligations (Art 52(4) PILP). If the defendant answers the claim or appears before the court or starts arguing the case, he is deemed to have tacitly agreed to the jurisdiction (Art 53(2) PILP). In procedures with foreign plaintiffs, defendants may require a deposit of caution money to cover the costs of the process (Art 90 PILP). However, this is not the case with plaintiffs domiciled in the EU.8

1.3.2  Conflict of Laws/Choice of Law Generally, the main legal source for questions of a conflict of laws (ie, choice of law) in Slovenian courts is the Private International Law and Procedure Act (PILP).9 However, in the field of the law of obligations, national law has been replaced by European legislation: as of 11 January 2009, in situations involving a choice of laws, Regulation No 864/2007 (the

7   Zakon o mednarodnem zasebnem pravu in postopku [Private International Law and Procedure Act], Official Gazette No 56/1999. 8   See judgment of the Higher Court in Ljubljana of 12 April 2006, Case No II Cp 5686/2005. 9   Zakon o mednarodnem zasebnem pravu in postopku, Official Gazette No 56/1999.

954  Damjan Moˇzina so-called Rome II)10 has been applicable to non-contractual obligations in civil and commercial matters; and as of 17 December 2009, Regulation No 593/2008 (the so-called Rome I)11 has applied, in situations involving a choice of laws, to contractual obligations in civil and commercial matters. 1.3.2.1  Conflict of Laws in Contracts: Rome I According to the Rome I Regulation, the basic principle for the conflict of laws in contracts is the parties’ freedom to choose the law applicable to their contract (Art 3(1)). Their choice must be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. In the absence of choice, Article 4 of the Regulation established a threestep approach: first, a connecting factor for determining the applicable law for eight categories of contracts is provided for. The categories include, inter alia, contracts for the sale of goods, contracts for the provision of services, franchise contracts and distribution contracts. These contracts are governed by the law of the country where the seller/service provider/franchisee/distributor has their habitual residence. Secondly, contracts which are not covered by these categories, or which fall into more than one category, are governed by the law of the country where the party required to effect the characteristic performance of the contract has his/her habitual residence (Art 4(2) Rome I Regulation). For example, for a licence contract this would mean that the law of the country where the licensee is habitually resident is applicable. And thirdly, where the governing law cannot be determined by these two rules, the law of the country with the closest connection to the contract is applicable. However, there is an exception: if it is clear from all the circumstances that the contract is manifestly more connected with another country, the law of that country is applicable. 1.3.2.2  Choice of Laws in Contracts: PILP (Slovenia) As in the Rome I Regulation, the basic principle with regard to the choice of laws in contracts is the freedom of the parties to choose the applicable law (Art 19(1) PILP). Their agreement may be explicit or implicit – in this case it must unambiguously follow from the contract (Art 19(2) PILP). The validity of the agreement is judged from the viewpoint of the chosen law (Art 19(3) PILP). In the absence of a choice of law, the applicable law is the law of the country with the closest connection to the relationship between the parties. Unless special circumstances suggest otherwise, it is presumed that the closest connection exists with the country where the party required to effect the characteristic performance of the contract has his or her habitual residence or place of business (Art 20(2) PILP). This would, in principle, mean that for a contract on the transfer of IP rights, the law of the country where the licensor (the original holder of the rights) is domiciled is applicable. However, no Slovenian case law can be found as to the law applicable to contracts on the transfer of IP rights.

10   Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations, [2007] OJ L199/43. For exceptions from its scope, see Art 1(2). 11   Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, [2008] OJ L177/6. For exceptions from its scope, see Art 1(2).

Slovenia  955 1.3.2.3  Conflict of Laws in Delicts/Torts: Rome II According to Article 4(1) of the Rome II Regulation, the basic connecting factor for determining the applicable law for non-contractual obligations arising out of delicts/torts is the place where the (direct) damage occurs, irrespective of the country where the event giving rise to the damage occurred and of the country where the indirect consequences of that event occurred (Art 4(1)). This rule, sometimes referred to as the lex loci damni, is subordinate to the rule that when the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country, lex domicilii communis,12 applies (Art 4(2)). Both of these rules may need a correction if it is clear from the circumstances that the delict/tort is manifestly more closely connected with another country; in this case the law of that country should apply (Art 4(2)). For certain types of delict/tort, the Regulation lays down special rules in Articles 5–9: product liability, unfair competition and acts restricting free competition, environmental damage, infringements of intellectual property rights, and industrial action. The freedom of parties to choose the applicable law exists also in non-contractual obligations. According to Article 14(1), the parties may choose the law if they conclude an agreement after the event giving rise to the damage occurred; if all parties are engaged in commercial activity, they may conclude such an agreement even before the event giving rise to the damage occurred. The choice of the parties generally has priority over all other rules. Although the lex loci damni is the basic principle, it is therefore, from the viewpoint of the hierarchy of norms, at the rear of the assessment: first is the eventual choice of law in Article 14, then the special rules in Articles 5–9, then the ‘manifestly closer connection’ in Article 4(3), then the lex domicilii communis in Article 4(2), and, finally, Article 4(1) of the Regulation.13 With regard to non-contractual obligations arising out of infringements of intellectual property rights, the Regulation (Art 8(1)) provides that the law applicable is the law of the country for which protection is claimed. This rule, referred to as lex loci protectionis, corresponds with the principle of territoriality, according to which intellectual property rights do not have universal (global) legal effects but only effects recognised by the respective country for its territory. However, on the basis of international treaties (which enjoy priority according to Art 28), these rights are recognised in other countries, too. The term ‘intellectual property rights’ includes copyright, related rights and sui generis rights for the protection of databases and industrial property rights.14 However, the lex loci protectionis principle does not govern unitary Community intellectual property rights: for any question that is not governed by Community law, the law of the country in which the act of infringement was committed (lex loci delicti commissi) should apply (Art 8(2)). Agreements on the choice of law for non-contractual obligations from infringements of intellectual property rights are not allowed (Art 8(3)).

12   A Junker, ‘Die Rom II-Verordnung: Neues Internationales Deliktsrecht auf europäischer Grundlage’ (2007) 51 Neue Juristische Wochenschrift 3675, 3678. 13   Spickoff, in HG Bamberger and H Roth (eds), Kommentar zum Bürgerlichen Gesetzbuch, 2nd edn (Munich, Beck, 2008), Art 42, no 14. 14   See no 26 of the preamble to the Regulation.

956  Damjan Moˇzina 1.3.2.4  Choice of Laws in Delicts/Torts: PILP (Slovenia) It is presumed that the rule for delicts/torts would be applied for non-contractual liability arising from an infringement of an IP right; however, no such Slovenian case law could be found. According to PILP, the applicable law in disputes involving non-contractual liability for damages is the law of the country where the wrongful act (the event giving rise to the damage) was committed or occurred (lex loci delicti commissi). However, if it is more advantageous for the injured party, the law of the place ‘where the consequence (ie damage) occurred’ may be applied, but only if the person responsible (the tortfeasor) could and should have foreseen the place of consequence (Art 30(1) PILP). If, however, the law determined according to Article 30(1) of the PILP does not have a close connection with the relationship while a manifest connection exists with the law of another country, that law is applicable (Art 30(2) PILP).

1.3.3  Recognition and Enforcement of Judgments and Interim Measures With regard to the recognition and enforcement of judgments issued by the courts of the Member States of the EU (except Denmark), the Brussels I Regulation is the relevant source. The Regulation has established the principle of the automatic extension of the effects of the judgments of one Member State to another Member State. A special procedure by which a foreign judgment may be given effect is not mandatory; however, a party may apply for this (Art 33(2) Brussels I Regulation). Articles 34 and 35 of the Regulation lay down grounds for the denial of such recognition. This regime is applicable also to the interim measures of EU Member States. With regard to the recognition and enforcement of judgments issued by the courts of non-EU countries, Articles 94-103 of the Private International Law and Procedure Act (PILP) apply. A foreign judicial decision is equal to a Slovenian judgment only if a Slovenian court recognises it. A foreign judicial decision is a judgment or a decree, including a court settlement, in civil and commercial matters, issued by a foreign court or by some other body equal to a court in the country of origin (Art 94 PILP). A motion for the recognition of a judicial decision must be accompanied by the judicial decision itself and a confirmation of its finality (res iudicata), as well as by a certified translation.15 A court will deny a motion for recognition or enforcement on the basis of one the following reasons: – if it finds, upon a motion of the defendant, that the defendant could not have participated in the proceedings, especially if he was not served with the document which instituted the proceedings, except if he, in any way, has argued his case in the first instance proceedings; – if a Slovenian court has exclusive jurisdiction or the foreign court has disregarded the agreement on the choice of Slovenian jurisdiction; – if it finds, upon a motion of the defendant, that the jurisdiction of the foreign court was based exclusively on the citizenship of the plaintiff or on the fact that the defendant owns property in the country of origin of the judicial decision or on the fact that the document which instituted proceedings was personally served on the defendant; – if, in the same matter, a Slovenian court had already issued a final decision or if another foreign judicial decision had already been recognised in Slovenia;   Translated by a certified court translator from the original into the Slovenian language.

15

Slovenia  957 – if the effect of the recognition would be contrary to Slovenian ordre public ; or – if there is no reciprocity (which is presumed until proved otherwise).

1.4  Intellectual Property in Private International Law in Slovenia 1.4.1  Rules on International Jurisdiction Regarding Intellectual Property Issues As mentioned earlier, there are two principal legal sources for international jurisdiction in Slovenian law: the Brussels I Regulation (Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters) applies with regard to defendants domiciled in one of the Member States of the EU (except Denmark), and the Slovenian Private International Law and Procedure Act (PILP) applies with regard to other defendants. Neither of these acts specifically addresses intellectual property issues; therefore, the general rule on jurisdiction in tort/delict cases is applicable. According to the ECJ, the ‘place where the harmful event occurred’ from Article 5(3) of the Brussels I Regulation covers both the place where the damage occurred as well as the place where the event giving rise to it occurred (where the tortfeasor acted).16 However, since IP rights are not global (universal), the effect of an IP right is limited to the territory of the country where the protection (locus protectionis) is sought (the territoriality principle). As a rule, the place where the event giving rise to the damage occurred cannot be distinguished from the place where the damage occurred with regard to infringements of IP rights – they coincide.17 The same is true for Article 55(1) of the PILP, according to which the jurisdiction of Slovenian courts in disputes over non-contractual liability for damages depends on whether either the wrongful act or the damage occurred in Slovenia. This is, however, different with regard to Community IP rights: the content and the protection given by the Community Trade Mark,18 the Community Industrial Design,19 or the Community Plant Variety Right20 extend throughout the EU. The place where the event giving rise to the damage occurred and the place where the damage occurred are both in the same ‘country’ of protection – the EU – but may well be in different Member States.21 The court of the Member State where the defendant has his domicile, seat, or an establishment (or, if this is not met, the Member State where the plaintiff has his domicile, seat, etc) has international jurisdiction in respect of infringements alleged to have been committed in any of the Member States. The courts of the place where the harmful event occurred have international jurisdiction in respect of claims of infringement, too; however, it is limited to infringements alleged to have been committed in the territory of the respective Member State.

16   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735; Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415; Case C-167/00 Verein fur Konsumenteninformation v Karl Heinz Kenkel [2002] ECR I-8111. 17   See Leible, in T Rauscher (ed), Europäisches Zivilprozeßrecht: Kommentar, 2nd edn, vol 1 (Munich, Sellier, 2006) 202. 18   See Art 90 et seq of Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark. 19   See Art 79 et seq of Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs. 20   See Art 101 of Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights. 21   See: Leible, in T Rauscher (ed), Europäisches Zivilprozeßrecht: Kommentar [European law of civil procedure: Commentary], 2nd edn, vol 1 (Munich, Sellier, 2006) 203.

958  Damjan Moˇzina

1.4.2  Choice-of-Law Rules Regarding Intellectual Property Issues As already mentioned, the Rome II Regulation (Regulation 864/2007 on the law applicable to non-contractual obligations) specifically addresses choice-of-law questions with regard to infringements of IP rights: as opposed to the general delictual choice-of-law principle of lex loci damni (Art 4), Article 8(1) provides that the law of the country for which protection is claimed (lex loci protectionis) is applicable. For infringements of unitary Community IP rights (Art 8(2)), a different rule exists. Furthermore, agreements on the choice of law are excluded (Art 8(3)). The Rome I Regulation does not specifically address contracts on the transfer of IP rights; general rules are applicable. The Slovenian PILP does not contain any special rules either on liability for infringements of IP rights or for the question of the applicable law for contracts on the transfer of IP rights (licence contracts).

2  Hypothetical Cases Introductory Note Since no relevant Slovenian case law with regard to jurisdiction and applicable law in matters of intellectual property could be found, the following answers to the hypothetical cases present, to a large extent, the personal views of the reporter, based, of course, on the operative rules.

Case 1: General/special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit.

Case 1(1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding the international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch thereof was located in your country?

Operative Rules If the defendant B was a resident of Slovenia, a Slovenian court would have international jurisdiction on the basis of Article 2(1) of the Brussels I Regulation (general jurisdiction). The international jurisdiction of a Slovenian court in a suit against a corporation having its main place of business in a third country and a branch in Slovenia would depend on whether the dispute arose from the operation of this branch (Art 5(5) Brussels I Regulation, Art 59 PILP).

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Case 1(2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)?

Operative Rules In the absence of any domestic case law with regard to international delictual jurisdiction for defamation through the press, it is probably most reasonable to expect a Slovenian court to follow the case law of the European Court of Justice regarding Article 3(5) of the Brussels Convention (now the Brussels Regulation), ie, the decision in the case Shevill v Press Alliance (1995).22 In this decision the ECJ established the so-called ‘mosaic’ system: all the places where the (allegedly insulting) publication were distributed were considered places (countries) where the damage occurred; however, the court of each country has jurisdiction only with respect to the damage which occurred in that country. Furthermore, the occurrence of damage (defamation) is limited to the countries where the plaintiff was known. A Slovenian court would probably consider that the distribution of the publication in Slovenia in the language which is officially spoken (Slovenian) means that the damage occurred in Slovenia. It would therefore have international jurisdiction, but only with regard to the damage which occurred in Slovenia, provided that the plaintiff was known in Slovenia. The same solution would apply under the Slovenian PILP. Descriptive Formant It should perhaps be added that international jurisdiction does not require that the publication was in the language officially spoken, but in a language which is understood (including world languages). The fact that the language was officially spoken contributes to the extent of the (alleged) harm; however, the assessment of damages is governed by the applicable law and not by the Brussels I Regulation.

Case 1(3) Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)?

Operative Rules If the place of business of the publisher was abroad (and Art 2(1) of Brussels I Regulation was not applicable), the mere printing of the publication in Slovenia would not establish jurisdiction based on Article 5(3) of the Brussels I Regulation. Descriptive Formants If the journal was only printed in Slovenia for distribution in a neighbouring country (eg, Hungary) in a language which is not spoken in Slovenia (eg, Hungarian) – the court would probably say that it was not intended/foreseeable for the publication to reach readers   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415.

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960  Damjan Moˇzina in Slovenia, even if it would in fact be read by a small number of readers in Slovenia. Such an ‘overspill’ effect would most probably not be relevant with regard to international jurisdiction.23

Case 1(4) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions would be different in cases where intellectual property rights are at stake.)

Operative Rules Jurisdiction: Article 5(3) of the Brussels I Regulation, Shevill decision of the ECJ. Infringement of IP rights: Article 5(3) of the Brussels I Regulation, territoriality principle, exceptions for Community IP rights. Descriptive Formants The court would probably follow the Shevill decision of the ECJ; therefore, the court of general jurisdiction would have international jurisdiction to assess the overall damage. In the event of an infringement of an IP right, the jurisdiction of a court would probably be limited to the damage that occurred in Slovenia, since the content and the effect of IP rights is limited to the territory of the country where protection is sought (no case law exists). However, in cases of Community IP rights, the court of the Member State where the defendant has his domicile, seat, or establishment would have jurisdiction with respect to infringing acts in any of the Member States.24

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X:

Case 2(1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights?

Operative Rules A Slovenian court would have international jurisdiction to decide on the infringement of a foreign patent only on the basis of Article 2(1) of the Brussels I Regulation, ie, if the defendant was domiciled in Slovenia. 23   See D Možina, ‘Persönlichkeitsverletzungen im Internet – die internationale Zuständigkeit’ [‘Infringement of privacy on the Internet: International jurisdiction’] (2004) 1 Slovenian Law Review 77. 24   See Art 94(1) Regulation 40/94 on the Community trade mark, Art 83(1) Regulation 6/2002 on Community design and Art 101(2) Regulation 2100/94 on Community plant variety rights.

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Case 2(2) Would the court have international jurisdiction to decide upon the issue of the validity (and registration) of foreign intellectual property rights? If so, what would the legal effects (inter partes or erga omnes) of such a decision be? Would the decision differ with regard to registered and nonregistered intellectual property rights?

Operative Rules The court would not have international jurisdiction to decide disputes ‘concerned with the registration or validity of patents’ and other industrial property rights, since for such disputes the courts of the Member State in which the registration has been applied for or has taken place (or was deemed to have taken place) has exclusive jurisdiction – Article 22(4) of the Brussels I Regulation and Article 62 of the PILP. If, however, one of the parties has already started a dispute over the validity of a patent before the court of exclusive jurisdiction and the dispute is pending, then the Slovenian court could suspend the proceedings until the issue has been resolved. With regard to non-registered IP rights, there is no exclusive international jurisdiction. A Slovenian court would have general jurisdiction if the defendant was domiciled in Slovenia (Art 2(1)) or, if the infringement occurred in Slovenia, jurisdiction over the delict in Slovenia (Art 5(3)). If the outcome of the dispute depends upon the question of the existence of a right (preliminary question), the court could resolve the preliminary question if it has not already been resolved by the competent authority. The answer to the preliminary question would only have effect in the concrete dispute (inter partes) – Article 13 of the Slovenian Civil Procedure Act (consolidated version, Official Gazette No 73/2007). Descriptive Formants In (foreign) legal theory, the issue is controversial. According to some authors, the exclusive jurisdiction of Article 22(4) of the Brussels I Regulation exists only with regard to ‘claims’, whereas the court deciding on the infringement may decide a mere preliminary question as to the validity.25

Case 2(3) What would the decision of a court be if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Descriptive Formants If it was a registered IP right, the court would not be able to resolve the preliminary question due to the exclusive jurisdiction of another court (Art 22(4) Brussels I Regulation). The court would have to presume that the registered right exists. With regard to unregistered IP rights, the court could resolve the preliminary question, however, only with effect in the concrete dispute (inter partes).

25   See eg, Mankowski, in T Rauscher (ed), Europäisches Zivilprozeßrecht – Kommentar [European law of civil procedure: Commentary], 2nd edn, vol 1, (Munich, Sellier, 2006) 376–79.

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Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y and Z, and B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs, A seeks the consolidation of claims in the forum of country W.

Case 3(1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of the court differ if A was a licensor and the claims were filed against licensees B, C and D on the grounds of the infringement of a contract?

Operative Rules Since neither B, C nor D is domiciled in Slovenia, a Slovenian court does not have jurisdiction to join claims against B, C and D. This is true for the Brussels I Regulation as well as for Slovenian PILP. If A was a licensor and the claims were against licensees B, C and D on the grounds of the infringement of a contract, the international jurisdiction of a court in W would depend on the fact that the place of performance of the breached obligation was W (Art 5(1) Brussels I Regulation, Art 56 PILP). If B, C and D were in breach of a monetary obligation, then the place of performance of this obligation is the place of domicile or place of business of the creditor – country W (Art 295 of the Slovenian Obligations Code, Official Gazette No 83/2001).

Case 3(2) Assuming that B, C and D are members of a group of a corporation and they take identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X, where the coordinator of the infringing activities has its main place of business. Assuming that the court of country X is a court of your country, would (and if so under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C and D filed counterclaims that A’s patents are invalid?

Operative Rules At the request of A, a Slovenian court could consolidate the proceedings against B, C and D in the court of the place where B is domiciled (country X) since, considering the fact that B, C and D are members of a group whose actions are coordinated by B, it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments from separate proceedings (Art 6(1) Brussels I Regulation, Art 49(1) PILP). For the counterclaims filed by B, C and D arguing that A’s patents are invalid, the court where the patents were registered has exclusive jurisdiction (Art 22(4) Brussels I Regulation); therefore, the court in X (unless the patents were registered there) does not have jurisdiction over these counterclaims.

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Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B, pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice-of-forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice-of-forum clause, arguing that the issue is related to foreign patents and thus the asserted choice-of-court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country:

Case 4(1) Would such a choice-of-court clause of the licence agreement be enforceable? Would the decision differ if the parties made a (new) choice-of-court agreement at the time when the dispute arose?

Operative Rules If A or B are domiciled in one of the Member States of the EU, they may agree on the jurisdiction of a Slovenian court, provided their agreement is in writing or in an adequate form (Art 23(1) Brussels I Regulation). The decision would be the same if the parties agreed to a choice of court at the time when the dispute arose.

Case 4(2) Would the court enforce an exclusive choice-of-court clause if the defendant filed a counter-claim that the patents are invalid?

Operative Rules Since the court where the patent is registered enjoys exclusive jurisdiction in proceedings on the validity of the patent (Art 22(4) Brussels I Regulation), the choice-of-law agreement is not enforceable with respect to these counterclaims.

Case 4(3) Would the court assert jurisdiction if the choice-of-court agreement was made in patent infringement proceedings?

Operative Rules No, such an agreement would contradict the exclusive jurisdiction of Article 22(4) of the Brussels I Regulation.

Case 4(4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would the legal effects of such decision be?

964  Damjan Moˇzina Operative Rules The Slovenian Arbitration Act (Official Gazette No 45/2008) does not expressly exclude disputes over the validity of patents; however, it is the standpoint of legal experts that an arbitral tribunal may not decide on the validity of patents.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces an identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country:

Case 5(1) What procedural steps would a court of country Z take with regard to pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration?

Operative Rules Since the proceedings before the court in X and Y, on one side, and Z on the other, involve the same cause of action26 and the same parties, a Slovenian court (Z) would follow Article 27 of the Brussels I Regulation and upon its own motion stay the proceedings until the jurisdiction of the court first seised is established and then decline its jurisdiction in favour of the court first seised (X or Y). The decision would be no different if the dispute was related to non-registered IP rights. Descriptive Formants The holder of patents could protect himself from such a ‘torpedo action’ that could – especially if the court seised first is slow – deprive him of effective judicial protection by asking the court in country Z to grant temporary relief on the basis of Article 31 of the Brussels I Regulation.

Case 5(2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Operative Rules A court in W does not have jurisdiction, since the courts in the countries of registration (X and Y) have exclusive jurisdiction over issues involving the validity of patents – Article 22(4) of the Brussels I Regulation. Although infringement claims and claims challenging validity could be viewed as related claims in terms of Article 28(3) of the Brussels I   Case C-406/92 Tatry v Maciej Rataj [1994] ECR I-5439.

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Slovenia  965 Regulation, the (later seised) court in Slovenia would not stay its proceedings on the basis of Article 28(1) of the Brussels I Regulation.

Case 6: The Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.

Case 6(1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z?

Operative Rules As instructed by Article 8(1) of the Rome II Regulation, the court (provided it has jurisdiction) in country X (Slovenia) would apply the law of the country for which protection is claimed – the law of Z.

Case 6(2) Assuming, first, that the claim for the infringement of a patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Operative Rules As instructed by Article 8(1) of the Rome II Regulation, the court in country Z (Slovenia) would apply the law of the country for which protection is claimed – the law of Z.

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates the rapid exchange of digital files (music, videos, software, etc) among users from all over the world. After several months, when the website had become very popular, A, B and C introduced an additional paid service: the rapid exchange of large capacity digital files. Although A, B and C know that some files that are stored on the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C requesting that they close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case:

966  Damjan Moˇzina

Case 7(1) What law would be applied to determine the liability of A, B and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)?

Operative Rules As instructed by Article 8(1) of the Rome II Regulation, the court would apply the laws of the countries for which protection is claimed (lex loci protectionis). It is not possible to derogate the applicable law by a choice-of-law agreement – Article 8(3) of the Rome II Regulation.

Case 7(2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Operative Rules The choice of law would not differ. However, if Slovenian law was applicable, the ISP would, in principle, not be liable for being the ‘mere conduit’ of information if (a) he did not initiate the transmission; (b) he did not select the receiver of the transmission; and (c) he did not select or modify the information – Article 9(1) 1 of the Slovenian Electronic Commerce Market Act (Official Gazette No 61/2006, 79/2009). However, the court may order the ISP to stop or prevent the infringement, ie, by removing the illegal content or by blocking access to the illegal content. A choice-of-law agreement is not enforceable – Article 8(3) of the Rome II Regulation.

Case 7(3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would the applicable law be? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Operative Rules If the defendant was domiciled in the forum state and the court had general jurisdiction (Art 2(1) Brussels I Regulation), the court could decide on infringements of IP rights in multiple countries. The court would then apply the whole ‘bundle’ of laws of the countries for which protection is claimed (Art 8(1) Rome II Regulation). If the infringed IP rights were EC Community rights, Article 8(2) of the Rome II Regulation would apply. A choice-of-law agreement would not be enforceable per Article 8(3) of the Rome II Regulation. The court would probably consider that the infringement can be localised everywhere where the content can be reached and was in fact reached on the internet – which means virtually everywhere. The court could try to limit the number of relevant countries by applying the ‘target-approach’, provided that the targeted countries can be determined, eg, first of all through the language used and by other criteria, such as the nature of the content, etc.

Slovenia  967 Descriptive Formants See: Š Mežnar, Avtorsko kolizijsko pravo [Copyright conflict of laws] (Ljubljana, Cankarjeva založba, 2005) 282 et seq; D Možina, ‘Forum delicti commissi v internetu’ [‘Forum delicti commissi on the Internet’] (2002) 9-10 Pravnik 509.

Case 8: Law Applicable to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licenses to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licenses without A’s consent. Assuming that A files a claim before a court of your country:

Case 8(1) What law would the court of your country apply to determine who the initial owner of the inventions is? Would the parties’ choice-of-law clause concerning the right to obtain patents be enforceable in your country?

Operative Rules Article 8(1) of the Rome II Regulation only refers to non-contractual obligations arising from an infringement of an IP right. However, it could be expected that the court would apply the generally accepted principle of lex loci protectionis (the law of the country for which protection is sought) also with regard to other aspects of IP rights, including ownership. If, as suggested, the court would apply Article 8(1) of the Rome II Regulation, it would probably consider a choice-of-law agreement not to be enforceable – Article 8(3) of the Rome II Regulation. Descriptive Formants If Slovenian law was applicable, the Work Related Industrial Property Rights Act (consolidated version Official Gazette No 15/2007) would apply. B (the employer) has, in principle, the right to take over the right to use the inventions (direct and indirect work-related inventions). A could claim adequate compensation from B (the employer) for the use of the so-called direct work related invention (Art 3). If B’s laboratory was financed by public money, special rules would apply. Furthermore, A could claim acknowledgement that he is the inventor and to be listed as such in the patent application (Art 118 Industrial Property Rights Act).

Case 8(2) Would the decision differ if A made an invention in joint collaboration with other researchers?

No.

Case 8(3) Would the applicable law differ in case of initial authorship or initial title to trade mark?

No.

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Case 8(4) What law would the court of your country apply if A filed a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Operative Rules If B, by not having paid reasonable compensation for patents obtained by B in a number of foreign countries, broke a contract with A, then the court would apply the law chosen by the parties (Art 3(1) Rome I Regulation), or, in the absence of choice, the law where the party obliged to effect characteristic performance of the contract has his habitual residence (Art 4(2) Rome I Regulation). A’s claim could, on the other hand, rely on unjust enrichment. In this case, the law applicable would be determined by Article 9 of the Rome II Regulation.

Case 9: Law Applicable to the Transfer of Rights agreements A is a rising popular music band. After one of its concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements regarding the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of the integrity of a work has not been transferred and thus infringed. Assuming that a court of your country is a court of country X:

Case 9(1) Would the court enforce the parties’ choice-of-law clause regarding the transfer of the economic and moral rights of the authors?

Case 9(2) How would the court deal with the issue of transferability?

Operative Rules In principle, the question of the validity of contractual terms on the transfer of copyright is determined by the law which would govern the contract if the contract was valid (Art 10(1) Rome I Regulation). This means that the law chosen by the parties would be applicable, provided their choice was made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case per Article 3(1) of the Rome I Regulation (whether the oral agreement of A and B meets this criterion could be at issue). However, a Slovenian court could regard the rule on the non-transferability of the moral rights of the author (Art 70(1) Copyright and Related Rights Act) as an overriding mandatory provision of the law of the forum (Art 9(1) and (2) Rome I Regulation).

Case 9(3) What would the applicable law be in a case where there is no choice of law made by the parties?

Slovenia  969 Operative Rules In the absence of a choice of law made by the parties, the court would apply the law of the country where the party required to effect the characteristic performance has his habitual residence (Art 4(2) Rome I Regulation): in such a contract (on releasing the album of the musician) this would most probably be the licensor, in this case the musician.

Case 10: The Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country, asking it to recognise and enforce the foreign judgment.

Case 10(1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court?

Operative Rules With regard to the recognition of a judgment from a Member State of the EU (except Denmark), a Slovenian court would apply the provisions of the Brussels I Regulation. The court would asses the international jurisdiction of the rendering court only within the grounds of Article 35(1) of the Brussels I Regulation (see Art 35(3)). The dispute over the ownership of a patent does not fall within the exclusive international jurisdiction under Article 22(4) of the Brussels I Regulation.27 The court is bound by the findings of fact on which the rendering court in the Member State of origin based its jurisdiction (Art 35(2)). If, as it seems, Article 34 of the Brussels I Regulation is not applicable, the judgment would be recognised. With regard to the recognition of a judgment issued by a court from a non-Member State of the EU, Articles 94-103 of the Slovenian Private International Law and Procedure Act (PILP) apply. A motion for the recognition of a judicial decision must be accompanied by the judicial decision itself and a confirmation of its finality (res iudicata), as well as by a certified translation.28 A court will deny a motion for recognition or enforcement on the basis of one the following reasons: – if it finds, upon a motion of the defendant, that the defendant could not have participated in the proceedings, especially if he was not served with the document which instituted the proceedings, except if he, in any way, has argued his case in the first instance proceedings (Art 96 PILP); – If Slovenian courts have exclusive jurisdiction, or the foreign court has disregarded the agreement on the choice of Slovenian jurisdiction (Art 97 PILP); – if it finds, upon a motion of the defendant, that the jurisdiction of the foreign court was based exclusively on the citizenship of the plaintiff or on the fact that the defendant owns property in the country of origin of the judicial decision, or on the fact that the 27   See Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663. See also: Mankowski, in T Rauscher (ed), Europäisches Zivilprozeßrecht: Kommentar, 2nd edn, vol 1 (Munich, Sellier, 2006) 374. 28   Translated by a certified court translator from the original into Slovenian language.

970  Damjan Moˇzina document which instituted proceedings was personally served on the defendant (Art 89 PILP); – if, in the same matter, a Slovenian court had already issued a final decision or if another foreign judicial decision had already been recognised in Slovenia (Art 99 PILP); – if the effect of the recognition would be contrary to Slovenian ordre public (Art 100 PILP); or – if there is no reciprocity (which is presumed until proved otherwise) (Art 101 PILP). It seems that in this case no reason for denial of recognition exists; therefore, the court would recognise the judgment. Descriptive Formants Although, as stated, in European civil procedure law claims regarding the ownership of a patent are not covered by the exclusive international jurisdiction in Article 22(4) of the Brussels I Regulation, it is not possible to rule out the possibility that a Slovenian court would, in applying the PILP (the recognition of a judgment from a non-Member State) and in complete absence of any case law, consider a dispute over the ownership of a patent to fall within Article 62 of the PILP (which has essentially the same wording as Art 22(4) Brussels I Regulation: ‘exclusive jurisdiction exists . . . with regard to “proceedings concerned with the registration or validity of patents”’). In this case, the court could base its denial of recognition on Article 97 of the PILP (exclusive jurisdiction).

Case 10(2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in the registry of a recognising country?

Operative Rules Under the Brussels I Regulation, a judgment from a Member State may, under no circumstances, be reviewed as to its substance (Art 36 Brussels I Regulation), which includes the application of choice-of-law rules.29 Under the Slovenian PILP, the review of the substance of a foreign judicial decision (judgments from non-Member States of the EU) is limited to the application of the ordre public clause (Art 100 PILP), which makes re-litigation (among other things impossible. Descriptive Formants However, as stated earlier, the possibility exists that the court would consider proceedings on the ownership of a patent to fall within Article 62 of the PILP (‘exclusive jurisdiction exists . . . with regard to “proceedings concerned with the registration or validity of patents” ’). In this case the recognition would not be possible, and proceedings could be started again before a Slovenian court of exclusive jurisdiction.

29   See Leible in T Rauscher (ed), Europäisches Zivilprozeßrecht: Kommentar, 2nd edn, vol 1 (Munich, Sellier, 2006) 588.

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Case 10(3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would an enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Operative Rules According to Article 38 of the Brussels I Regulation, a judgment from a Member State of the EU is enforceable in Slovenia when it has been declared enforceable there, on the application of the interested party. A copy of the judgment and a certificate (the standard form from Annex V to the Regulation) must be attached to the application. In the procedure for the declaration of enforceability, the party against whom the application is sought cannot make submissions (Art 41 Brussels I Regulation); however, the decision on the application for a declaration may be appealed (Art 43 Brussels I Regulation). See also Articles 44–56 Brussels I Regulation. With regard to the enforcement of a recognised judgment from a non-Member State of the EU, Article 103(1) of the PILP provides that the provisions for the recognition of judgments apply (Arts 95–101 PILP). A motion for enforcement must be accompanied by the judicial decision itself and a confirmation of its finality (res judicata), as well as by a certified translation (Art 95 PILP). A motion for enforcement must be accompanied by a confirmation of the enforceability of the judgment, issued on the basis of the law of the country of origin (Art 103(2) PILP). The decision of a Slovenian court on the recognition of the judicial decision should also be attached.

Case 11:  Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit, also asking the court to issue an injunction to stop the infringing activities and seize the infringing goods. Assuming that both A and B are residents in your country and the main infringing activities take place there:

Case 11(1) Would a court of your country have jurisdiction to issue provisional measures/injunctions (regarding the infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects?

Operative Rules A Slovenian court may issue provisional measures and injunctions which are available under Slovenian law (see Art 272 Execution and Security Act, Official Gazette no 7/2007). The court may order B to stop the infringing activities. Since the main infringing activities are taking place in Slovenia, the execution of this injunction is not problematic. The fact that B performs activities over the internet (selling goods on an internet auction) with potentially world-wide effects does not mean that the court may not order him to stop his infringing activities in Slovenia, including uploading materials and conducting business over the internet. If the injunction includes measures which cannot be enforced in Slovenia, it will have to be enforced (and recognised) in the respective countries.

972  Damjan Moˇzina Descriptive Formants If the infringing acts were committed on the Internet rather than over the Internet, eg, by using a domain name (internet address) which would interfere with the trade mark of another person, then the court would probably exceed its jurisdiction by ordering the defendant to stop using the domain name. Such an injunction would mean that the Internet address could no longer be used anywhere, even if in other countries it would not amount to an infringement (which, in casu, is not very probable, since a famous trade mark is involved). Alternative: Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)?

Operative Rules A Slovenian court could, in principle, still issue provisional measures by virtue of Article 31 of the Brussels I Regulation. They would then have to be enforced in country Y. However, according to the case law of the ECJ, a ‘real connecting link’ between the subject matter of the measures sought and the Slovenian court should exist. Whether in casu such a connecting link exists is unclear. Descriptive Formants If B was a resident of country Y and the infringing acts were made in country Y, the court in country Y would have international jurisdiction based on Article 5(3) of the Brussels I Regulation, because Y was the place where the ‘event giving rise to the damage occurred’.30 However, a Slovenian court could have international jurisdiction (including jurisdiction for provisional measures) too, if the ‘damage occurred’ in Slovenia. Of course, a website on the Internet is available around the world, and it would be simply wrong if any country in the world was given international jurisdiction. Therefore a limitation of jurisdiction is needed. As suggested by the legal literature,31 a Slovenian court would only have international jurisdiction if the infringement over the Internet had ‘commercial effect’ in Slovenia. Several factors may be included in determining commercial effect, including, above all, the facts regarding whether B is directing his activities into the country and whether he is actually concluding contracts with customers in Slovenia.32

Case 11(2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad?

The court could, in principle, issue provisional measures by virtue of Article 31 of the Brussels I Regulation. However, according to the case law of the ECJ, a ‘real connecting link’ (such as the location of the object of enforcement) between the subject matter of the measures sought and the Slovenian court should exist.   Case 21/76 Handelskwekerij GJ Bier BV v Mines de potasse d’Alsace SA [1976] ECR 1735.   D Možina, ‘Forum delicti commissi v internetu’ [‘Forum delicti commissi on the Internet’] (2002) 9–10 Pravnik 509, 527. 32   See Art 3 WIPO Proposed Joint Recommendation Concerning Provisions on the Protection of Marks, and Other Industrial Property Rights in Signs, on the Internet (18 June 2001), available at www.wipo.int/meetings/en/ doc_details.jsp?doc_id=1799. 30 31

Slovenia  973

Case 11(3) Would a court in your country require the person seeking the imposition of provisional measures to grant a guarantee?

Operative Rules No, the court would not require a guarantee from the person seeking provisional measures. The court would impose a provisional measure if the person asking for such demonstrates with reasonable probability that he is the holder of the IP right and that his right was infringed or that an infringement may occur. Additionally, he must prove that the enforcement of his right would be impossible or substantially hindered,33 that the measure is necessary to prevent damage that would be difficult to repair, or that the alleged infringer would suffer less inconvenience if the provision later turns out to be unfounded than the applicant would suffer were a provisional measure not imposed (Art 123(1) and (2) Industrial Property Rights Act). A provisional measure may be imposed without hearing the alleged infringer if the applicant demonstrates with reasonable probability that any adjournment would cause him damage that would be difficult to remedy (Art 123(3) Industrial Property Rights Act). However, the court would deny the application for a provisional measure if the alleged infringer provides sufficient guarantee (Art 274 Execution and Security Act). Furthermore, the court may impose a provisional measure even if the applicant has not proved the existence of his right and the risk that its enforcement would become impossible or substantially hindered if he deposits sufficient security for the damage that may occur to the alleged infringer (Art 275(1) Execution and Security Act). Strictly speaking, the court may, on the motion of the alleged infringer and with regard to the circumstances, set the guarantee as a condition for a provisional measure even if the applicant has met the criteria (Art 275(2) Execution and Security Act); however, no such decisions are known.

Case 11(4) Could a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings?

Operative Rules No. According to Article 12 of the Arbitration Act, the existence of an arbitration agreement does not pre-empt the court from issuing or imposing provisional measures/injunctions related to the arbitration proceedings in Slovenia or abroad.

Case 11(5) If the claimant requested the issuance of an injunction to cease infringing acts, would a court in your country consider an injunction to cease to be a procedural or substantive measure?

33   The applicant is released from proving the impossibility or hindrance if he demonstrates that the provisional measure would cause only insignificant damage. It is presumed that the enforcement would be hindered if the claims must be filed in another country, except for EU Member States.

974  Damjan Moˇzina Descriptive Formants Such an injunction would probably be considered to be a procedural measure.

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y:

Case 12(1) Could intellectual property rights be used as collateral pursuant to the law of your country?

Operative Rules Yes. Rights can be used as collateral (a pledge). According to Article 190 of the Property Act (Official Gazette No 87/2002), the collateral on ‘other patrimonial rights’34 comes into existence in the way these rights are transferred; a contract and an act of disposition are required. Provisions on pledged movables apply accordingly.

Case 12(2) What law would be applied to such issues as the creation, effectiveness against third parties, priority, and the enforcement of these security rights?

Operative Rules The Rome I Regulation deals with the question of the law applicable to transfers of claims by way of security and pledges or other security rights. They are treated the same way as assignment (Art 14(3) Rome I Regulation). The law applicable to the relationship between assignor and assignee under a voluntary assignment is the law that applies to the contract between the assignor and assignee, ie the contract statute (Art 14(1) Rome I Regulation). In the absence of choice by the parties, this should be the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence, ie, the residence of the assignor – the original holder of the IP right) (Art 4(2) Rome I Regulation). However, it is possible that the circumstances suggest that the contract is manifestly more closely connected to another country; in this case the law of that country applies (Art 4(3) Rome I Regulation).

34   Collateral on ‘rights’ is divided into three categories: claims (receivables); commercial papers (bonds, shares, etc), and other rights, see Arts 179–81 Property Code.

Spain PEDRO A DE MIGUEL ASENSIO*

Contents 1. General Overview........................................................................................................................... 976 1.1. Legal Sources........................................................................................................................ 976 1.1.1. Intellectual Property............................................................................................... 976 1.1.2. International Jurisdiction....................................................................................... 986 1.1.3. Choice-of-Law........................................................................................................ 988 1.1.4. Recognition and Enforcement of Foreign Judgments.......................................... 990 1.2. Intellectual Property and Private International Law.......................................................... 992 1.2.1. International Jurisdiction....................................................................................... 992 1.2.2. Applicable Law........................................................................................................ 993 1.2.3. Recognition and Enforcement of Judgments........................................................ 994 2. Hypothetical Case Studies.............................................................................................................. 994 Case 1. General Special Grounds of Jurisdiction...................................................................... 994 Case 2. Subject-Matter Jurisdiction.......................................................................................... 997 Case 3. Consolidation of Proceedings..................................................................................... 1003 Case 4. Choice of Court........................................................................................................... 1006 Case 5. Parallel Proceedings..................................................................................................... 1009 Case 6. Principle of Territoriality (Choice of Law)................................................................ 1011 Case 7. Infringement of Intellectual Property Rights............................................................. 1012 Case 8. Applicable Law to Initial Ownership.......................................................................... 1014 Case 9. Applicable Law to the Transfer of Rights Agreements............................................... 1015 Case 10. Recognition and Enforcement of Foreign Judgments............................................... 1017 Case 11. Provisional Measures and Injunctions....................................................................... 1019 Case 12. Securities in Intellectual Property.............................................................................. 1022

*  Professor of Law, Complutense University of Madrid.

976  Pedro A de Miguel Asensio

1  General Overview 1.1  Legal Sources 1.1.1  Intellectual Property 1.1.1.1 International Conventions 1.  Spain has ratified the main international treaties in the field of intellectual property (hereafter, IP), covering both industrial property and copyright and related rights. First, Spain is a member of the WTO and has ratified the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).1 Spain is a member of WIPO and is a contracting party to most of the treaties administered by WIPO,2 including the following:3 Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886 (in force in Spain since 5 December 1887) Paris Act of 24 July 1971 (in force since 1974) Paris Convention for the Protection of Industrial Property (in force since 7 July 1884) Stockholm Act of 1967 (in force since 14 April 1972) Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations done at Rome on 26 October 1961 (in force since 14 November 1991) Convention for the Protection of Producers of Phonograms Against Unauthorised Duplication of Their Phonograms of 29 October 1971 (in force since 24 August 1974) Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods of 14 April 1891 and the Additional Act of Stockholm of 14 July 1967 (in force since 15 July 1892) Trade Mark Law Treaty adopted at Geneva on 27 October 1994 (in force since 17 March 1999) Singapore Treaty on the Law of Trade Marks (into force since 18 May 2009) Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure, of 28 April 1977, and amended on 26 September 1980 (in force since 19 March 1981) Wipo Copyright Treaty of 20 December 1996 (in force since 14 March 2010) Wipo Performances and Phonograms Treaty of 20 December 1996 (in force since 14 March 2010) In particular, Spain is a contracting party to the WIPO conventions establishing international registration systems, including the following: Madrid Agreement Concerning the International Registration of Marks of 14 April 1891 (in force since 15 July 1892) Stockholm Act (1967) (in force since 8 June 1979)   Spain has been a member of the WTO since 1 January 1995.   The full text of the treaties and the updated information concerning the contracting parties to the treaties administered by WIPO can be accessed at the official website of WIPO, wipo.int. 3   The information is provided as of 15 March 2010. 1 2

Spain  977 Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks adopted at Madrid on 27 June 1989 (in force since 1 December 1995) The Hague Agreement Concerning the International Deposit of Industrial Designs of 6 November 1925 (in force since 1 June 1928) Additional Act of Monaco (1961) (in force since 31 August 1969) Geneva Act of 1999 in force since 23 December 2003 Additionally, Spain is also a contracting party to the Patent Cooperation Treaty done at Washington on 19 June 1970 (in force since 16 November 1989). Spain is also a contracting party to the main classification treaties, including the following: Locarno Agreement Establishing an International Classification for Industrial Designs of 8 October 1968 (in force in respect to Spain since 17 November 1973) Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957 (in force since 8 April 1961) Strasbourg Agreement Concerning the International Patent Classification of 24 March 1971 (in force since 29 November 1975).4 2.  Spain is a party to the Munich European Patent Convention (hereafter, EPC) and therefore Spanish patent legislation is very much influenced by the uniform provisions concerning patentability and persons entitled to obtain patents. The EPC establishes a uniform system for the grant of so-called European patents that allows the applicant to obtain protection for the invention in several or all contracting parties – including Spain – by means of a bundle of national patent rights. A European patent confers on its proprietor, in each Contracting State in respect of which it is granted, the same rights as would be conferred by a national patent granted in that state, Article 64(1) EPC. The EPC is a source of far-reaching harmonisation of patent law, especially concerning granting requirements, procedures for examination, granting and opposition, and effects of the patents. However, the scope of harmonisation of substantive law is limited, especially with respect to infringement and nullity procedures. 1.1.1.2  EU Law: Approximation of Laws and Community Rights 3. Since Spain is a Member State of the European Union, the protection of IP and the content of the national legislation in this area are to a great extent determined by EU law. First, EU regulations establishing Community industrial property rights create rights that have a unitary character and cover the territory of Spain. As far as Community IP rights are concerned, their existence, registration, effects, use, transfer, duration, revocation, invalidity, legal actions resulting from them, and other issues related to the rights are governed by means of EU regulations which are directly applicable in all Member States. Secondly, membership in the EU has required Spanish legislation to implement the common standards of protection laid down by the EU directives on the approximation of national legislations in the area of intellectual property. Furthermore, although EU 4   Additionally, Spain has signed the following treaties administered by WIPO that are not in force in Spain: Lisbon Agreement for the Protection of Appellations of Origin and their International Registration of 31 October 1958 (signed on 31 October 1958); Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite done at Brussels on 21 May 1974 (signed on 21 May 1974); Nairobi Treaty on the Protection of the Olympic Symbol adopted on 26 September 1981 (signed on 24 October 1981); and Patent Law Treaty adopted at Geneva on 1 June 2000 (signed on 2 June 2000).

978  Pedro A de Miguel Asensio regulations on Community IP rights do not impose on states the obligation to lay down provisions approximating national rights to Community rights, the Spanish legislators considered desirable such an approximation, and hence many of the provisions of the national legislation on trade marks and designs stem directly from the respective EU regulation in order to prevent the possibility that two titles which produce identical effects in Spain could be subject to completely different provisions. 4.  Community industrial property rights established by EU regulations have equal effect throughout the Community – including Spain – and their territory of protection extends to the whole Community, although they coexist with national rights. Community rights can only be applied for and granted for the whole EU territory, but they do not replace national rights in each Member State since national and Community industrial property rights coexist and complement each other. EU regulations establishing Community industrial property rights provide a single application and a single registration before a single Community office which grants direct protection in all the Member countries of the EU through a unitary procedure. Community IP rights can only be registered, transferred, revoked, or declared invalid in respect of the whole Community. Registered Community industrial property rights are granted by a Community office and not by national authorities. In particular, Community trade marks and designs are registered and administered by the Office for Harmonisation of the Internal Market (hereafter, OHIM), which is located in Alicante (Spain) and is a body of the European Union.5 The possibility to register Community industrial property rights is open to any person domiciled or with an establishment in the EU or in a country which is a party to the Paris Convention or to the WTO. 5.  The regulations establishing Community industrial property rights include Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights;6 Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs;7 and Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community Trade Mark (codified version).8 Community trade marks protect any signs capable of distinguishing the goods or services of one undertaking from those of other undertakings and capable of being represented graphically, particularly words, designs, letters, numerals, and the shape or packaging of goods. Community trade marks are registered for a period of 10 years from the date of filing of the application, and the registration may be renewed for further periods of 10 years. Community designs protect the external appearance of a product including lines, contours, colours, forms, texture, materials, and its ornamentation. The Community Design Regulation recognises both registered and unregistered designs provided these meet the requirements of novelty and individual character. The initial term of protection of a registered Community Design is five years, but this term is renewable for additional periods of five years up to a maximum of 25 years from the date of application. By contrast, the protection granted to unregistered community designs is more limited. Unregistered designs are protected for a period of three years form the date on which the design was first

5  Community plant variety rights are registered by the Community Plant Variety Office that is also a Community body located in Angers (France). 6   [1994] OJ L227/1. 7   [2002] OJ L3/1. 8   [2009] OJ L78/1.

Spain  979 made available to the public within the Community. It only grants the right to prevent the commercial use of the design if the use results from copying. 6.  Harmonisation of national laws on IP rights by means of directives contributes to reducing the distortions resulting from the multiplicity of national exclusive rights within the EU but does not lead to the application of a unitary regime to those rights. Directives do not challenge the territorial nature of IP rights, nor their spatial scope limited to the territory of one Member State. Intellectual property, especially trade mark law and copyright law, is among the areas of private law in which harmonisation has been more intense in the EU. Harmonisation of IP law has focused on reducing disparities among Members States with respect to the protectable subject matter, the scope of the rights conferred, and their enforcement. Spanish legislation has implemented the undertakings resulting from EU membership that include high levels of harmonisation in coordination with international conventions. In particular the EU has adopted directives approximating the national laws of the Member States in many areas of IP, including the following: Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products9 Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission10 Directive 96/9/EC of 11 March 1996 on the legal protection of databases11 Directive 98/44/EC of 6 July 1998 on the legal protection of biotechnological inventions12 Directive 98/71/EC of 13 October 1998 on the legal protection of designs13 Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society14 Directive 2001/84/EC of 27 September 2001 on the resale right for the benefit of the author of an original work of art15 Directive 2004/48/EC of 29 April 2004 on the enforcement of intellectual property rights16 Directive 2006/115/EC of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property17 Directive 2006/116/EC of 12 December 2006 on the term of protection of copyright and certain related rights18 Directive 2008/95/EC of 22 October 2008 to approximate the laws of the Member States relating to trade marks (codified version)19 Directive 2009/24/EC of 23 April 2009 on the legal protection of computer programs (codified version).20   [1987] OJ L24/36.   [1993] OJ L248/15. 11   [1996] OJ L77/20. 12   [1998] OJ L213/13. 13   [1998] OJ L289/28. 14   [2001] OJ L167/10. 15   [2001] OJ L272/32. 16   [2004] OJ L157/45. 17   [2006] OJ L376/28. 18   [2006] OJ L372/12. 19   [2008] OJ L299/25. 20   [2009] OJ L111/16. 9

10

980  Pedro A de Miguel Asensio 1.1.1.3  National Legislation 7.  Intellectual property has traditionally been divided in Spain into two main branches: industrial property and copyright and related rights. In fact, this second branch has traditionally been referred to by legislation as propiedad intelectual (intellectual property). In recent times under the influence of international texts such as the TRIPS Agreement and Directive 2004/48/EC on the enforcement of intellectual property rights, a broader concept of intellectual property, covering both industrial property and copyright and related rights, has also been accepted in Spain, although the distinction between industrial and intellectual property remains an important feature of Spanish legislation. That new trend is illustrated by Law 19/2006 of 5 June 200621 that implements Directive 2004/48/EC and, in order to ensure an effective set of proceedings and remedies in IP litigation, amended Law 1/2000 of 7 January on Civil Procedure (Ley de enjuiciamiento civil, hereafter LEC 2000)22 and also the substantive laws on copyright and related rights, patent, trade mark, and industrial design. Therefore, under the influence of the scope of Directive 2004/48, Law 19/2006 covers both industrial and intellectual property rights in contrast with the traditional approach stressing the differences between industrial property rights and copyright and related rights. 8.  Legislation concerning copyright and related rights is contained basically in a single act, namely the Consolidated Law on Intellectual Property (Ley de propiedad intelectual), regularising, clarifying, and harmonising the applicable statutory provisions approved by Royal Legislative Decree 1/1996 of 12 April 199623 and revised lately by Law 23/2006 of 7 July 2006.24 This revision implemented Directive 2001/29/EC into Spanish law and aligned the content of Spanish legislation with the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty of 1996. Under Spanish legislation, copyright exists from the moment the relevant work is created, without any registration or other formalities being required. The author is the creator of literary, artistic, or scientific creations. The Intellectual Property Register is only an optional copyright registration mechanism that sets up a public record of copyright claims that may be used as evidence against third parties in copyright disputes, as established in the Royal Decree No 281/2003 of 7 March 2003, Approving the Regulations on the General Registry of Intellectual Property (Real Decreto 281/2003, de 7 de marzo, por el que se aprueba el Reglamento del Registro General de la Propiedad Intelectual ).25 The subject matter of intellectual property (propiedad intelectual in the sense of copyright and related rights) are original literary, artistic, or scientific creations expressed in any manner or medium, whether tangible or intangible, that is known at present or may be invented in the future, such as the following: books, writings, speeches, conferences, lectures, and any other similar works; musical compositions; films and any other audiovisual works; choreographic and theatrical works in general; works of art such as sculptures, paintings, graphics, engravings, or comics; architecture and engineering works, including projects, models, and drawings; maps and drawings from the field of topography, geography, and science in general; photographs; and computer programs. Additionally, derived works such as translations, adaptations, annotations, musical arrangements, and transfor  Boletín Oficial del Estado [Official Bulletin of the State] (hereafter, BOE) no 134, 6 June 2006.  BOE no 7, 8 January 2000. 23  BOE no 97, 22 April 1996. 24  BOE no 162, 8 July 2006. 25  BOE no 75, 28 March 2003. 21 22

Spain  981 mations of a literary, artistic, or scientific work that represents an intellectual work are also the subject matter of intellectual property. Computer programs are protected by copyright and, with certain exceptions, are treated as literary works. The Consolidated Law on Intellectual Property devotes a special chapter to computer programs, implementing the EC Directive on the legal protection of computer programs that has been codified in Directive 2009/24/EC Protected works create various economic and moral rights. The exclusive rights of exploitation of the author include the reproduction, distribution, communication to the public, and transformation of the work. Moral rights cannot be waived or assigned. They entitle the author to decide whether his work is to be published and how, to demand that he be recognised as the author and that the integrity of the work is respected, or to withdraw the work from the marketplace. Special sections of the Intellectual Property Law are devoted to the rights of performers, phonogram producers, producers of audiovisual recordings, and broadcasting organisations. 9. Regarding industrial property rights, at least one specific law has been adopted for each of the main categories of objects protectable by means of these rights, namely inventions, industrial designs, distinctive signs, and topographies of semiconductors products. The registration principle is the basic criterion in Spain concerning industrial property rights. Hence, industrial property rights are subject to registration, although some exceptions apply concerning the protection of well-known marks and certain non-registered designs. Additionally, the ‘first-to-file’ system prevails, and rights are awarded to the first person to apply, although previous use may be relevant to protect well-known marks. 10.  The main legislative text in the field of inventions is Law 11/1986 of 20 March on Patents (Ley de patentes).26 Under Spanish legislation both inventions and procedures may be patentable. Bio-technological inventions are patentable, although with significant restrictions in tune with the European Directive concerning these inventions. Computer programs as such are not patentable in Spain, but certain flexibility has been introduced in accordance with the practice of the EPO. The efforts to establish uniform rules within the EU, as illustrated by the Proposal of Community Directive on the Patentability of Inventions Implemented by Computers, have not yet been successful. The maximum term of patents in Spain is 20 years from the date on which the application was filed. The Law on Patents was amended in 2006 to include the so-called Bolar clause as an exception for experimental use. The Complementary Protection Certificate for pharmaceutical and phytosanitary products extends the duration of the patent by up to five additional years for the time it took to obtain the authorisation required to market the products concerned. Inventions are also protected under Law 11/1986 through utility models. This instrument of protection is intended for inventions whereby an object is given a configuration or structure that results in an advantage for its use or manufacture and requires a lesser degree of invention than patents since it only requires national novelty. Additionally, the term of protection is shorter since the maximum duration of utility models is 10 years. The device protected by a utility model is characterised by its utility and not for its appearance, contrary to industrial designs. 11.  The protection of plant varieties is regulated in Spain by the Law 3/2000 of 7 January on the Legal System of Plant Variety Protection, and national protection coexists in this area with the community system established in the EU by (EC) Council Regulation No  BOE no 73, 26 March 1986.

26

982  Pedro A de Miguel Asensio 2100/94 of 27 July on Community Plant Variety Rights. A plant variety is protectable when it is clearly distinguishable from any other variety whose existence is a matter of common knowledge on the date of application, it is sufficiently uniform in the expression of its characteristics, and it is stable because it remains unchanged after repeated propagation. Rights on topographies of semiconductor products protect the diagram of the various layers and elements making up an integrated circuit and were introduced in the Spanish system by the 1988 Act on the legal protection of Semiconductor Product Topographies. Law 11/198 implements in Spanish law the Community Directive 87/54/EEC of 16 December 1986. The subject matter of protection is the way in which the integrated circuit is physically mounted and the physical arrangement of all its elements. The law requires originality and creativity. Protection lasts for a period of 10 years starting from the end of the year in which it is exploited for the first time in the world or the topography is registered. 12.  The creative aspects of innovations may be protected as industrial designs, the basic regime of which is established in Law No 20/2003 of 7 July on Legal Protection of Industrial Designs (Ley de Protección Jurídica del Diseño Industrial ).27 The content of this act is very much influenced by that of the EU legal instruments in this field. Exclusive rights on industrial designs refer to the appearance of a product as a result from the lines, colours, shape, texture or materials of the product itself, or its ornamentation. Industrial designs protect the aesthetic appearance of goods rather than their functional novelty. Industrial designs last for five years from the filing date and can be renewed for one or more consecutive five years periods for a maximum of 25 years. 13.  The regime of national trade marks is established in the Law 17/2001 of 17 December on Trade Marks, that came into force on 31 July 2002. A trade mark is a title giving exclusive right to the use of a sign to identify a product or service on the market. Signs capable of constituting a trade mark include words or a combination of words, pictures, figures, symbols, graphics, letters, numbers, and three-dimensional forms such as containers or product formats. The Spanish Patent and Trade Mark Office (hereafter, SPTO) also awards trade names for the protection of distinctive signs that identify a company on the market. Trade mark and trade name registration is valid for ten years and can be renewed indefinitely for additional 10-year periods. The registration may lapse if the trade mark is not used during a five-year period, if it is not renewed, or if it becomes generic or deceptive. 1.1.1.4  Institutional Competences 14.  There are three procedures through which the registration of a trade mark having effect in Spain can be obtained: the national system, the international system in accordance with the Madrid Agreement and Madrid Protocol, and the Community system under the Community Trade Mark Regulation. National trade marks are registered by the SPTO. All the rights awarded by the Spanish Office have effects in the whole national territory. The SPTO only examines, ex officio, whether any absolute grounds for refusal of registration apply to the sign. The absolute grounds for refusal include cases where the mark is generic, misleading, descriptive, or contrary to public policy. Relative grounds for refusal, such as the existence of identical or similar marks registered for identical or similar products with the likelihood of confusion, are only considered when owners of earlier signs oppose the application filed for a new trade mark. At any rate, the SPTO performs a computer search concerning each new application and notifies the holders of previous identical or similar  BOE no 162, 8 July 2003.

27

Spain  983 signs, for informative purposes only, of the application in case they are interested in filing notice of opposition. Spanish trade marks may be obtained as a result of so-called international applications through a unified administrative procedure under the Madrid Agreement and the Protocol to the Madrid Agreement administered by the WIPO, whose International Bureau maintains an international register that, despite its name, does not grant international rights but facilitates obtaining several national registrations through a unified administrative procedure. An international trade mark may be applied for to the SPTO by persons with Spanish citizenship or residing in Spain or that possess a real and effective establishment in Spain. The EU has also adhered to the Madrid system, and it ratified the Madrid Protocol on 1 October 2004. Therefore, the Community trade mark application procedure is now connected with the international registration system. International applications designating non-EU Member States that are parties to the Madrid Protocol may be filed at the OHIM. Additionally an international registration in accordance with the Madrid Protocol designating the European Community produces under the Regulation the same effect as an application for a Community trade mark. Community trade mark applications may be submitted directly to the OHIM or to the SPTO who forwards the application to the OHIM. The OHIM examines the application to ensure that the trade mark applied for does not fall within any of the absolute grounds for refusal. By contrast, the relative grounds for refusal are only examined by the OHIM upon opposition by the proprietor of an earlier trade mark. In parallel with the situation described with respect to trade marks, there are also three procedures through which the registration of an industrial design having effect in Spain can be obtained: the national system, the international system resulting from the Hague Agreement Concerning the International Deposit of Industrial Designs, and the Community system under Regulation 6/2002 on Community designs. The international registration scheme may also be requested in order to obtain a Community design granting protections for the whole territory of the EU. The SPTO administers the registration of Spanish designs, and the OHIM is in charge of the Community registry. 15.  Concerning patent protection, it is noteworthy that Spain is also a contracting party to the Patent Cooperation Treaty aimed at reducing the costs of obtaining patent protection for an invention in several countries. Although under the scheme of this Treaty registration is granted by each of the relevant national or regional offices – in the case of Spain, the SPTO and the EPO – applicants benefit from unified initial application procedures and search reports that reduce the costs involved in determining the novelty of the invention and the inventive step when they are interested in seeking patent protection for an invention in several countries. The SPTO may receive international patent applications from persons who are Spanish or are resident in Spain; it may also act as International Search Administration for Spanish applicants and those from Latin America. In addition, it may act as International Preliminary Examination Administration for Spanish applicants and those from Latin America. Given that Spain is a Contracting State to the EPC, the regional registration system before European Patent Office (hereafter, EPO) coexists with the national patent application scheme before the SPTO. The EPC system enables protection to be obtained in all countries that are members to the Convention – including Spain – which are designated in a single European patent application. The procedure up to grant, the opposition procedure, and the appeals procedure are all regulated in the EPC. The validity of a European patent may be challenged before the EPO in opposition proceedings. The revocation of the

984  Pedro A de Miguel Asensio European patent affects all territories to which the European patent concerned has been extended. The Board of Appeal is responsible for the examination of appeals from the decisions of the Receiving Section, Examining Divisions, Opposition Divisions, and Legal Division. The courts of each Contracting State also have jurisdiction to revoke a European patent but only with effect for its territory. 16.  Although legislation on industrial and intellectual property falls within the exclusive competence of the state – as opposed to regional governments or Autonomous Communities – and industrial property rights can only be granted by national authorities – SPTO – (Art 149.1.9 of the Spanish Constitution), the regions have certain administrative competences concerning the management of registration related procedures. Applications can be filed with the competent body of the Autonomous Community where the applicant is domiciled or has a real and effective industrial or commercial establishment. Applicants not domiciled in Spain file their applications directly with the SPTO or with the competent body of the Autonomous Community where the applicant’s representative has his legal domicile or a real and effective subsidiary. The regional body that receives the application has to record the application number and the day, hour, and minute of its filing and forward it, along with data on the application in the form and with the content prescribed by regulation, to the SPTO within five days of receipt of the application. Appeal from decisions of the SPTO shall lie to the courts dealing with administrative issues (orden contencioso administrativo). 17.  The intellectual property rights in works and other productions protected by the Law on Intellectual Property (Ley de propiedad intelectual ) may be the subject of entries in the Intellectual Property Registry. Registration of the works is not a necessary condition for the author to benefit from copyright protection. Therefore, registration is voluntary and provides only a public record of the basic fact of a particular copyright that may serve to prove the existence of the work and its ownership in case of a dispute. Indeed, in the absence of proof to the contrary, it is presumed that the rights registered exist and belong to their owner in the form specified in the relevant entry. In the process of registration, the registrar shall consider applications filed and the legality of registrable instruments, having the right to refuse or suspend the making of the corresponding entries. Appeal from decisions of the Registry shall lie direct to the civil courts. The General Registry of Intellectual Property is the only such body for the entire national territory. The Central Registry is under the authority of the Ministry of Culture, which has adopted common provisions on registration and measures for coordination and information among all the competent public administrations. This is necessary because the Autonomous Communities have the authority to determine the structure and operation of the Registry in their own territories and are in charge of the keeping of the Register, in all cases complying with the common provisions 18.  Enforcement of industrial and intellectual property rights against infringements is possible in Spain in the framework of civil and criminal proceedings. The Spanish Criminal Code (Art 270 et seq) expressly includes the counterfeiting of all sorts of industrial and intellectual property rights, the unauthorised reproduction or multiplication thereof, and the unauthorised use of the name of said varieties as infringements that may be sanctioned by criminal fines, special disqualification, and even prison. These proceedings are brought before criminal courts. A criminal court seised of criminal proceedings may have jurisdiction to entertain civil actions concerning non-contractual liability, especially damages, resulting from an act – such as IP infringements – giving rise to the criminal proceedings.

Spain  985 19.  Specialised civil courts known as Commercial Courts (Juzgados de lo mercantil) were introduced in 2004 to deal, among other matters, with IP litigation other than criminal proceedings and controversies regarding proceeding before the SPTO. Notwithstanding that some aspects are contained in the substantive laws on the different IP rights, most procedural issues concerning civil IP litigation are contained in Law 1/2000 of 7 January on Civil Procedure (LEC 2000). Although preliminary proceedings and proceedings to secure evidence are established in Spanish legislation for all kinds of disputes, some specific provisions on disputes relating to IP rights were introduced by Law 19/2006 in order to ensure the implementation of Directive 2004/48/EC. These provisions ensure that when a party has presented reasonable evidence to support its claims and has specified evidence which lies in the control of the opposing party, courts may order that such evidence be presented by the opposing party. The decision on preliminary proceedings is adopted ex parte but the other party can oppose them before they are implemented except in the case of so-called description proceedings. Additionally, prompt and effective provisional measures are established to preserve relevant evidence in respect of the alleged IP infringement. These measures can be granted prior to the filing of the infringement action (such measures will become ineffective if the applicant does not bring a suit within 20 days) or in the course of infringement proceedings. Only under special circumstances can such measures be adopted ex parte, and the defendant may oppose the decision within 20 days. Additionally, IP right-holders and other parties filing IP related claims are entitled to seek interim relief protection, including interlocutory injunctions and seizure orders. These provisional measures cease to have effect, upon request of the defendant, if the applicant does not institute within 20 days proceedings leading to a decision on the merits of the case before the competent court. Only under exceptional circumstances can interim injunctions be granted ex parte. In accordance with the relevant substantive laws, the owner of an IP right is entitled to bring civil actions requesting the adoption of measures such as: cessation of the infringing acts; compensation of damages; seizure of the infringing goods and means of production; all necessary measures to prevent the continuation of the infringement; and the publication of the judgment in some media. The effectiveness of the relevant actions may be ensured by injunctive relief. Any party holding a legitimate interest may file a non-infringement action against the holder of the right to obtain a declaration by the court that a practice does not infringe an IP right. These actions are subject to certain requirements, such as the prior sending of a notice letter to the holder of the patent concerned. Interested parties may also file a revocation claim in order to have an industrial property right declared null. The revocation action may also be brought as a counterclaim in the framework of infringement proceedings. In these situations, the same court that deals with the infringement proceeding decides the nullity question in a single judgment. A final decision by a commercial court may usually be appealed before the Court of Appeal (Audiencia Provincial). Second instance decisions are subject to appeal before the Supreme Court (Tribunal Supremo) only when certain restrictive requirements are fulfilled. First instance decisions on IP disputes such as injunctions are provisionally enforceable even if an appeal has been brought against them. 20.  Jurisdiction concerning Community trade mark and Community design infringement actions is granted to Community Trade Mark Courts and Community Design Courts, which are national courts designated by each of the Member States. According to the relevant EU Regulations, Member States have to designate as limited a number as possible of

986  Pedro A de Miguel Asensio national courts and tribunals of first and second instance. In Spain Law 8/2003 of 9 July modified Organic Law 6/1985 on the Judiciary and designated the mercantile courts of Alicante and the Alicante Court of Appeal as first and second instance Community Trade Mark Courts in Spain, respectively, making their jurisdiction extensive to these effects to the entire Spanish territory. Litigation on infringements of European patents raises special difficulties given the disparities between the national systems and the lack of a common procedure for litigation covering the bundle of national patents which result from the uniform granting mechanism of the EPO. Among the efforts made to improve the situation, a draft agreement on the establishment of a patent litigation system, known as the European Patent Litigation Agreement, was drawn up within the framework of EPO.28 The Agreement envisages a central European Patent Court having jurisdiction over infringement and validity claims in relation to European patents across Contracting States, but a final agreement has not been reached and the prospects remain uncertain. 1.1.2  International Jurisdiction 1.1.2.1  EU Law: Scope of Application and Grounds of Jurisdiction 21. Regulation (EC) No 44/200129 (hereafter, Brussels I Regulation) is a binding and directly applicable Community instrument establishing uniform jurisdiction rules. Given that the scope of the Regulation covers all the main civil and commercial matters apart from certain exceptions listed on Article 1(2), IP disputes fall typically within its substantive scope of application. In accordance with Article 4(1), if the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State is to be determined by the law of that Member State. Therefore Spanish national legislation on international jurisdiction applies to IP disputes only in situations in which the defendant is not domiciled in the EU. Moreover, the provisions on exclusive jurisdiction and prorogation of jurisdiction of the Regulation may apply even to situations in which the defendant is not domiciled in the EU. The Brussels I Regulation establishes the defendant’s domicile as the basic and general ground of jurisdiction (Art 2) that is always available except in those situations to which the exclusive jurisdiction rules apply or when the parties reach a choice a forum agreement (Arts 22 and 23). In addition to the defendant’s domicile, the Regulation provides for a number of alternative grounds of jurisdiction based on a significant connection between the court and the action intended to facilitate the sound administration of justice, as shown by Articles 5 and 6 on special jurisdiction. Furthermore, specific provisions have been included to address jurisdiction in matters relating to insurance (Arts 8–14), jurisdiction over consumer contracts (Arts 15–17), and jurisdiction over individual contracts of employment (Arts 18–21). The Brussels I Regulation is currently under review to discuss, among other issues, the possibility of extending the special jurisdiction rules of the Regulation in order to apply them to third state defendants.30   Available at www.epo.org/patents/law/legislative-initiatives/epla.html.   Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1–23. 30   See EC Commission, ‘Green Paper on the review of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters’, of 21 April 2009, COM(2009) 175 final, 4. 28 29

Spain  987 1.1.2.2  International Conventions 22.  Although Spain is a contracting party to a great number of international conventions in the field of private international law (hereafter, PIL), only a few of them regulate international jurisdiction covering IP litigation. The most important is the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. This Convention used the 1968 Brussels Convention as a blueprint since it was intended to extend the scheme of the Brussels Convention to European countries (EFTA countries) other than the EU Member States. The revised Lugano Convention of 30 October 2007 adapts its text mainly to the changes introduced by the Brussels I Regulation with respect to the 1968 Brussels Convention. Therefore, with regard to the grounds of international jurisdiction available, there is almost total concurrence between the new Lugano Convention and the Brussels I Regulation. According to Article 64 of the new Lugano Convention, this Convention does not prejudice the application by the EU Member States of the Brussels I Regulation. Hence, Spanish courts apply the Lugano Convention typically to situations in which the defendant’s domicile is located in a Contracting State that is not a member of the EU, in particular, Iceland, Norway and Switzerland. Two bilateral conventions of a general character include jurisdiction rules that may be applicable to IP disputes since they were drafted using the Brussels Convention as a model: the Convention between Spain and Romania on Jurisdiction and Recognition and Enforce­ ment of Judgments in Civil and Commercial Matters done at Bucharest on 17 November 1997,31 and the Convention between Spain and El Salvador on Jurisdiction and Recognition and Enforcement of Judgments in Civil and Commercial Matters done at Madrid on 7 November 2000.32 On the accession of Romania to the EU, the Brussels I Regulation superseded the bilateral Convention with Romania. The prevailing view now is that, in line with the ECJ Opinion on the new Lugano Convention,33 the conclusion of international conventions on jurisdiction in the matters covered by the Brussels I Regulation falls entirely within the EC’s sphere of exclusive competence, and hence Member States are not allowed to negotiate and conclude such agreements on their own. 23.  The international conventions on IP rights, such as the TRIPS Agreement and those administered by WIPO, do not contain significant rules directly addressing the international jurisdiction of the courts of the Member States to adjudicate IP-related claims. The EPC does not regulate the determination of international jurisdiction in patent infringement claims, although it encompasses some specific rules on jurisdiction in respecting issues relevant to the grant or revocation of a European patent and has even annexed a Protocol on jurisdiction and the recognition of decisions. Pursuant to Article 138 EPC, the courts of each Contracting State have jurisdiction to revoke a European patent but only with effect for its territory. The coordination between the Brussels I Regulation and the EPC is based on the fact that the provisions of the EPC shall prevail in accordance with Article 71(1) of Brussels I. The conclusion of conventions dealing with the jurisdiction and the recognition of judgments in the area of patent litigation falls currently within the sphere of competence of the EC.

 BOE no 134, 5 June 1999.  BOE no 256, 25 October 2001.   ECJ Opinion 1/03 of 7 February 2006.

31 32 33

988  Pedro A de Miguel Asensio 1.1.2.3  National Legislation 24.  The national provisions on international jurisdiction are basically contained in Article 22 of Organic Law 6/1985 on the Judiciary (Ley Orgánica del Poder Judicial).34 In the matters covered by the Brussels I Regulation, national provisions apply in practice only to disputes in which the defendant is not domiciled in the EU (Art 4 Brussels I Regulation) or in other states bound by the Lugano Convention (Art 4) and when the provisions on exclusive jurisdiction and prorogation of jurisdiction (Arts 22 and 23) of these instruments do not apply. Article 22 of Organic Law 6/1985 on the Judiciary was modelled on the jurisdiction rules of the Brussels I Convention. Therefore, the defendant’s domicile and party autonomy are the basic and general grounds of jurisdiction (Art 22(2)) although now in IP disputes the Brussels I Regulation supersedes national legislation and applies directly to situations in which the defendant is domiciled in Spain or the parties have chosen the Spanish courts. Furthermore, Article 22 of Organic Law 6/1985 provides for a number of alternative grounds of jurisdiction that are basically the same as those of the Brussels Convention. In principle, Article 22 of Organic Law 6/1985 does not include excessive or exorbitant fora, as illustrated by the fact that no Spanish provisions are listed in Annex I to the Brussels I Regulation. 1.1.3 Choice-of-Law 1.1.3.1  International Conventions 25.  None of the international conventions on choice-of-law to which Spain is a contracting party relate directly to intellectual property. On the other hand, the basic multilateral treaties on IP, to which Spain is a party, affirm territoriality and independence as basic features of national rights, but they are aimed at creating substantive minimum rights and abolishing discrimination against foreign authors. Article 2(1) of the Paris Convention, Article 5(1) of the Berne Convention and Article 3 of the TRIPS Agreement enshrine the principle of national treatment that establishes a standard concerning the treatment of foreigners. The view that territoriality and independence are basic features of intellectual property rights, combined with the principle of national treatment, leading in practice to the lex loci protectionis as an implicit choice of law rule for the protection of those rights, achieved significant acceptance in Spain.35 According to other views, the provisions of those conventions, including Article 5(2) of the Berne Convention, do not affect the freedom of states to adopt the conflict rules they deem appropriate. Given the controversy on the issue and the fact that those conventions are not aimed at establishing choice of law rules, it seems appropriate from an international perspective to accept that the view that those conventions impose an implicit choice of law rule has not achieved general acceptance in the conventions’ interpretations in all Contracting States.  BOE no 157, 2 July 1985.   See JD González Campos and M Guzmán Zapater, ‘Articulos 155-158’ in R Bercovitz Rodríguez-Cano (ed), Comentarios a la Ley de propiedad intelectual, 2nd edn (Madrid, Tecnos, 1997) 2235; PA de Miguel Asensio, Derecho privado de Internet, 3rd edn (Madrid, Thomson-Civitas, 2002) 322; MA Amores Conradi and I Heredia Cervantes, ‘Artículos 163–67’ in R Bercovitz Rodríguez-Cano (ed), Comentarios a la Ley de propiedad intelectual, 3rd edn (Madrid, Tecnos, 2007) 2151–52; MA Michinel Álvarez, La radiodifusión vía satélite en la regulación española de derecho de autor internacional (Granada, Comares, 1998) 129–74; and P Jiménez Blanco, El derecho aplicable a la protección internacional de las patentes (Granada, Comares, 1998) 21–31. 34 35

Spain  989 Therefore, in the basic multilateral conventions on IP issues concerning the application of the lex loci protectionis, the criteria remain open since certain alternatives or limits to that rule, especially as far as initial ownership or the remedies available in case of infringement are concerned, may be compatible with the territorial nature of IP rights. 1.1.3.2  EU Law: Implications of the New Regulations 26.  Significant progress has been achieved within the EU in the creation of unitary choice of law rules by means of two instruments that include key IP disputes. Regulation No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (Rome II)36 covers infringements of IP rights. Article 8(1) of the Rome II Regulation establishes that the law applicable to a non-contractual obligation arising from an infringement of an IP right shall be the law of the country for which protection is claimed. The unification within the EU in this field is based on ‘the universally acknowledged principle of the lex loci protectionis’, as stated in paragraph 26 of its Preamble. Article 8 of the Rome II Regulation supersedes, within its scope of application, national PIL provisions. According to Article 3 the choice of law rules of the Regulation have universal application. The law specified by the Regulation applies whether or not it is the law of a Member State, and there is no requirement of a connection with the EU provided that the forum court of a Member State has international jurisdiction over the dispute. The Regulation applies irrespective of the nature of the court or tribunal seized. By contrast, the substantive scope of application of the Rome II Regulation and in particular of Article 8 is limited since it only relates to the non-contractual obligations arising from an infringement of an IP right (Arts 1 and 8). The introduction of the lex loci protectionis in the Regulation leads to the application of the same rule that usually applies to the IP right itself in national systems. However, the Regulation is not intended to cover all issues concerning IP rights. Article 8 comprises only some of the issues typically addressed by broad choice of law rules on IP rights in certain national legislations, such as Article 10(4) of the Spanish Civil Code. As an alternative to mere harmonisation, the creation of Community IP rights that have a unitary character eliminates conflicts of laws within the EU with respect to such rights, except in those aspects not covered by the uniform rules. Hence, although the creation of unitary community rights reduces significant legal risks otherwise linked to multi-state commercial activities, specific conflicts arise concerning the need to supplement EC law as the lex loci protectionis. Article 8(2) of the Rome II Regulation establishes that the law applicable to a non-contractual obligation arising from an infringement of a unitary Community IP right is, for any question that is not governed by the relevant Regulation, the law of the country in which the act of infringement was committed. 27.  Regulation 593/2008 of 17 June 2008 on the law applicable to contractual obligations (Rome I)37 has unified within the EU the choice of law rules in that area including contracts on IP rights, even though a specific rule for these contracts was not included in the final Regulation. This Regulation replaces the 1980 Rome Convention in the Member States. Both the Regulation and the Convention have a universal scope of application and apply, in situations involving a conflict of laws, to contractual obligations in civil and commercial matters.   [2007] OJ L199/40.   [2008] OJ L177/6.

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990  Pedro A de Miguel Asensio 1.1.3.3  National Legislation 28.  Article 10(4) of the Spanish Civil Code contains a broad choice of law rule establishing that intellectual and industrial property rights shall be protected in Spain in accordance with Spanish law without prejudice to international conventions in this field. It is widely accepted in the interpretation of this provision that it is to be understood as establishing the lex loci protectionis criterion as a bilateral choice of law rule to the extent that Spanish courts may have jurisdiction to adjudicate claims concerning the protection of foreign IP rights. Because of the limited scope of application of Article 8 of the Rome II Regulation, Article 10(4) of the Spanish Civil Code remains applicable to issues such as initial ownership, registration, existence, validity, content, duration, or transferability, and effects against third parties of IP rights are not in principle covered by the unified rules. As already noted, those questions remain typically outside the scope of the Regulation. 1.1.4  Recognition and Enforcement of Foreign Judgments 1.1.4.1  International Conventions 29.  Spain is a contracting party to a significant number of bilateral and multilateral agreements on recognition and enforcement of foreign judgments. Although there is no multilateral treaty on the recognition and enforcement of foreign judgments in the area of IP rights, some of the international conventions concluded by Spain cover IP disputes, although usually they have no specific provisions in this field. Therefore, the conditions applicable to recognition differ depending on the country of origin of the judgment since treaties on recognition and enforcement of judgments are usually subject to reciprocity. Indeed, Spain has built a network of bilateral treaties that, because of their general character, apply to the recognition and enforcement of most IP judgments coming from the respective Contracting States. In particular, leaving aside the Member States of the Brussels I Regulation and the Lugano Convention, Spain has concluded bilateral treaties with countries including Colombia (1908), Mexico (1989), Israel (1989), Brazil (1989), Russia (1990), China (1992), Morocco (1997), El Salvador (2000), Tunisia (2001), Algeria (2005) and Mauritania (2006). However, not all IP disputes fall within the scope of application of these conventions; in particular the convention with Mexico – by Article 3(j) – does not apply to disputes on non-contractual liability. Multilateral conventions or instruments covering recognition and enforcement of IP disputes have mainly been drafted at the regional level, especially in Europe. Spain is a ontracting party to the Lugano Convention parallel now to the Brussels I Regulation that establishes a uniform and coherent system of mutual recognition and enforcement of judgments. This system applies to the reciprocal recognition and enforcement between Member States of judgments in civil and commercial matters, including IP disputes. In accordance with Article 64 of the Lugano Convention, the Brussels I Regulation prevails between the EU Member States. 1.1.4.2  EU Law 30.  The recognition and enforcement provisions of the Brussels I Regulation apply to IP judgments. The term ‘judgment’ is understood broadly as covering ‘any judgment given by a court or tribunal of a Member State, whatever the judgment may be called, including a decree, order, decision or writ of execution, as well as the determination of costs or expenses

Spain  991 by an officer of the court’ (Art 32). Recognition is automatic, and the declaration that a judgment given in one Member State is enforceable in another may be issued virtually automatically after purely formal checks of the documents supplied, without there being any possibility for the court to raise of its own motion any grounds for non-enforcement. However, the defendant is able to appeal against the declaration of enforceability based on the presence of any of the grounds for non-enforcement provided for by the Regulation. As to the grounds for non-recognition, it is noteworthy that the jurisdiction of the court of origin may not be reviewed except in the situations referred to in Article 35(1) that include the verification that the judgment does not conflict with the exclusive jurisdiction rules provided for by Article 22 of the Brussels I Regulation. The other grounds for nonrecognition are the test of public policy, the verification of service of process where the judgment was given in default of appearance, conflict with a judgment given in a dispute between the same parties in the Member State in which recognition is sought, and conflict with an earlier judgment given in another state involving the same cause of action and between the same parties (Art 34). Finality, in the sense of judgment no longer subject to ordinary forms of review, is not necessarily a requirement for recognition and enforcement under the Brussels I Regulation (Arts 38(1) and 46(1)) since the decisive element is that the law of the country of origin confers upon the foreign judgment the effects that are to be extended to the requested state, and hence a judgment provisionally enforceable in the Member State of origin may be provisionally enforced in another Member State. 31.  The common recognition and enforcement rules of the Brussels I Regulation apply only to judgments given by the courts of other Member States. There is no uniform approach to the recognition of judgments rendered in third countries, and the dichotomy between the uniform intra-Community rules and the national rules for third country judgments still exists. The current EU system does not ensure equal treatment or effects to third country judgments throughout the EU. However, the debate is currently open as to the future extension of the common EU rules to cover third country judgments.38 1.1.4.3  National Legislation 32.  The Spanish national system of recognition and enforcement is established in Articles 951 to 959 of the old Civil Procedure Law (Ley de enjuciammiento civil) of 188139 (hereafter, LEC 1881) since the Civil Procedure Law of 2000 – LEC 2000 – did not cover recognition and enforcement of foreign judgments. These provisions apply to those judgments not covered by an international convention or EU Regulation. Although formally the system is subject to a reciprocity requirement (Arts 952 and 953 LEC 1881), in practice it does not play a significant role,40 and the grounds for non-recognition of Article 954 of the LEC 1881 usually apply.41 38   See ‘Report from the Commission on the application of Regulation (EC) No 44/2001’, COM(2009) 174 final of 21 April 2009, at 5; and ‘Green Paper on the review of Regulation (EC) No 44/2001’, COM(2009) 175 final of 21 April 2009, at 4. 39   Law of 3 February 1881, Gaceta de Madrid, 22 February 1881. 40   See, eg, the decisions (autos) of the Spanish Supreme Court of 5, 12 and 19 May 1998 (RAJ 4292, RAJ 4344, and RAJ 4451). 41   See PA de Miguel Asensio, ‘Revisión del sistema de reconocimiento y ejecución de resoluciones extranjeras’ (2000) Anuario Español de Derecho Internacional Privado 337–66; M Virgós Soriano and FJ Garcimartín Alférez, Derecho procesal civil internacional, 2nd edn (Cizur Menor (Pamplona), Thomson-Civitas, 2007) 599–603; JC Fernández Rozas and S Sánchez Lorenzo, Derecho internacional privado, 5th edn (Madrid, Thomson-Civitas, 2009) 217–38.

992  Pedro A de Miguel Asensio Under the prevailing interpretation of the LEC 1881, only final and conclusive foreign judgments can be recognised. Judgments meet that requirement when there is no possibility of an appeal because no further appeal is possible or the time for filing an appeal has elapsed. Provisional orders and interim decisions do not meet this requirement. Other grounds for non-recognition under Article 954 of the LEC 1881 are verification of jurisdiction of the rendering court, incompatibility with substantive or procedural public policy, control of the proper notification of the proceedings to the defaulting defendant, incompatibility of the foreign judgment with a judgment given or recognised in Spain, and pending proceedings between the same parties having the same cause of action before a Spanish court if the proceedings in Spain were first instituted. Additionally, the copy of the judgment must satisfy the conditions necessary to establish its authenticity.

1.2  Intellectual Property and Private International Law 1.2.1  International Jurisdiction 1.2.1.1  Infringement Claims 33.  Under the Brussels I Regulation and the Lugano Convention (2007), the main criteria establishing jurisdiction for these claims are the defendant’s domicile as a general forum (Art 2), and the place where the harmful event occurred or may occur (Art 5(3)). The specific provision on plurality of defendants (Art 6(1)) may also apply. Although it is not common in practice, parties are allowed to agree that the courts of a Member State have jurisdiction to settle infringement claims. Article 22 paragraphs 2 and 3 of Organic Law 6/1985 on the Judiciary establish the same grounds of jurisdiction in the national legal system. Given the broad scope of application of the EU system, only the interpretation of the internal rule based on the place where the harmful event occurred may be significant in practice in those cases in which the defendant is domiciled outside the EU. 1.2.1.2  Contractual Disputes 34.  In case the parties have not agreed on the prorogation of jurisdiction, the special forum granting jurisdiction to the courts of the place of performance in matters relating to a contract applies under the Brussels I Regulation as an alternative to the general forum of the defendant’s domicile. In disputes in which the defendant is not domiciled in a Member State of the EU or the Lugano Convention, it is noteworthy that Article 22(3) of Organic Law 6/1985 on the Judiciary grants jurisdiction to the Spanish courts not only when the place of performance is located in Spain, but also when the place of contracting is in Spain. 1.2.1.3  Exclusive Jurisdiction on Validity of Rights Subject to Registration 35.  Article 22.4 of the Brussels I Regulation grants exclusive jurisdiction in proceedings concerned with the registration or validity of industrial property rights protected on the basis of registration to the courts of the Member State in which the deposit or registration has been applied for, has taken place, or is deemed to have taken place. This is a mandatory ground of jurisdiction that may influence litigation on infringement claims and contrac-

Spain  993 tual disputes. According to the case law of the ECJ42 and the text of Article 22(4) of the Lugano Convention (2007), this exclusive jurisdiction applies irrespective of whether the issue is raised by way of an action or as a defence. It also applies regardless of the nature of the court of tribunal – in Spain, issues concerning registration may be decided in certain situations by courts in charge of administrative matters (orden contencioso-administrativo).43 Although Article 22 paragraph 1 of Organic Law 6/1985 on the Judiciary also contains a provision on exclusive jurisdiction similar to Article 22(4) of the Brussels I Regulation, it never applies due to the scope of application of Article 22 of the Brussels I Regulation. 1.2.2  Applicable Law 1.2.2.1  Infringement of IP Rights 36.  The Rome II Regulation is applicable since 11 January 2009. As already noted, Article 8 of the Rome II Regulation supersedes national PIL provisions on the law applicable to a non-contractual obligation arising from an infringement of an IP right. Therefore, Article 10(4) of the Spanish Civil Code does not apply now to that specific issue. According to Article 8(3) of the Rome II Regulation, recourse to the lex loci protectionis may not be derogated from by an agreement between the parties. 1.2.2.2  Territoriality and lex loci protectionis 37.  As noted earlier, after the date of application of the Rome II Regulation, Article 10(4) of the Spanish Civil Code remains applicable to issues such as initial ownership,44 registration, existence, validity, content, duration or transferability, and effects against third parties.45 Under Article 10(4) the law applicable to all these issues is the law of the country of protection. The conflict of laws rule is mandatory and choice of law by the parties is not allowed.46 1.2.2.3  Contracts Relating to Intellectual or Industrial Property Rights 38. The Rome I Regulation applies to contracts concluded after 17 December 2009. Contracts concluded prior to that date are governed by the Rome I Convention. Neither of these instruments contains specific provisions on contracts relating to IP rights, but all such contracts fall within the scope of application of the Convention or Regulation that supersede the national provisions of the Member States in this area. 42   Case C-4/03 Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 43   See C González Beilfuss, Nulidad e infracción de patentes en la Comunidad Europea (Madrid, Eurolex, 1996) 95. 44   See, eg, Amores Conradi and Heredia Cervantes, above n 35, 2153; and J Maseda Rodríguez, ‘Los derechos morales de los autores asalariados a nivel internacional (I): Regímenes aplicables’ (2006–2007) 27 Actas de Derecho Industrial y Derecho de Autor 243, 261–62. 45   PA de Miguel Asensio, ‘The Private International Law of Intellectual Property and of Unfair Commercial Practices: Coherence or Divergence?’ in S Leible and A Ohly (eds), Intellectual Property and Private International Law (Tübingen, Mohr Siebeck, 2009) 156–58; PA de Miguel Asensio, ‘La lex loci protectionis tras el Reglamento Roma II’ (2007) 7 Anuario Español de Derecho Internacional Privado 375, 385–87; MA Michinel Álvarez, ‘La regulación del derecho de autor internacional en España ante el proyecto de reglamento sobre ley aplicable a las obligaciones extracontractuales (Roma II)’ (2006–2007) 27 Actas de Derecho Industrial y Derecho de Autor 275, 289–93. 46   M Virgós Soriano, ‘Artículo 10. Apartado 4’ in M Albaladejo and S Diaz Alabart (eds), Comentarios al Código civil y compilaciones forales, 2nd edn, vol I, 2 (Madrid, Edersa, 1995) 604.

994  Pedro A de Miguel Asensio 1.2.3  Recognition and Enforcement of Judgments 1.2.3.1  Procedural Issues 39. Under the Brussels I and Lugano systems, recognition is automatic, since a judgment given in a Member State is recognised in the other Member States without any special procedure being required (Art 33). Article 38 and the following one of the Brussels I Regulation establish the procedure to obtain a declaration of enforceability (exequatur). Under Article 41 a judgment is to be declared enforceable immediately on completion of certain formalities but without any review of the grounds for non-recognition and without giving the party against whom enforcement is sought the possibility to make any submissions on the application at this stage of the proceedings. However, the decision on the application for a declaration of enforceability may be appealed before a court that shall refuse or revoke a declaration of enforceability in cases where any grounds for non-recognition are present. Contrary to the situation in most bilateral and multilateral conventions that are based on automatic recognition, under Article 955 of the LEC 1881 automatic recognition is not possible. Exequatur proceedings are governed by Articles 955 et seq of the LEC 1881 and are subject to the review of grounds for non-recognition under Article 954. 1.2.3.2  Grounds for Non-Recognition 40. There are no specific provisions on the recognition and enforcement of IP judgments. Therefore, the general grounds for non-recognition of the relevant system (Brussels I Regulation, Lugano Convention, bilateral convention, LEC 1881) apply to judgments in this area.

2  Hypothetical Case Studies Case 1: General Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit.

Case 1(1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located in your country?

Case 1(2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in a neighbouring country X (in a language which is not spoken in your country)?

Spain  995 Case 1(3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

Case 1(1) A Spanish court would have international jurisdiction over B if B had its domicile in Spain. Persons domiciled in Spain, whatever their nationality, may be sued in Spain for defamation based on Article 2 of the Brussels I Regulation. Given the scope of application of the Regulation under Articles 1 and 4, the national provisions of Article 22 of Organic Law 6/1985 on the Judiciary shall never apply to a defamation claim against a party domiciled in Spain. According to Article 59 Brussels I Regulation, in order to determine whether a party – other than a company or other legal person – is domiciled in Spain, the Spanish courts apply Spanish law. Under Articles 40 and 41 of the Spanish Civil Code, the domicile is located where the person has her or his habitual residence. Under Article 60 of the Brussels I Regulation, a company or other legal person is deemed to be domiciled at the place where it has its (a) statutory seat, (b) central administration, or (c) principal place of business. The treatment would be the same in cases concerning IP infringement claims, provided that the dispute does not involve a validity or registration claim of a foreign IP right in the relevant circumstances causing it to fall within the scope of exclusive jurisdiction as discussed in the answer to Case 1(2). In cases where the defendant was a corporation having its main place of business in a third country but a branch was located in Spain, the Spanish courts could also have international jurisdiction. If the corporation was domiciled in another Member State of the Brussels I Regulation, under Article 60, Article 5(5) of the Brussels I Regulation would apply. According to this provision, the courts of the place where the branch is located (Spain, in this hypothetical) have jurisdiction in regard to disputes arising out of the operations of the branch. This ground of jurisdiction does not apply to independent agents or other intermediaries that are not under the control of the defendant,47 and the protection of appearance plays a key role in the interpretation of this jurisdictional ground in the case law of the ECJ.48 Article 5(5) would grant international jurisdiction to Spanish courts over non-contractual claims (such as those arising from defamation or IP infringements) provided that the dispute results from the activities or operations of the branch located in Spain, including undertakings entered into by this branch in the name of its parent body that are performed outside of Spain.49 In cases where the defendant was a corporation located in Switzerland, Norway or Iceland, Article 5(5) of the parallel Lugano Convention would apply. If the defendant was a corporation located in a country not belonging to the EU or the Lugano Convention, the provision on branches of Article 22(4) of Organic Law 6/1985 on the Judiciary would apply leading also to the same result since the rule was modelled on Article 5(5) of the 1968 Brussels Convention.   See Case 14/76 A De Bloos, SPRL v Société en commandite par actions Bouyer [1976] ECR 1497, paras 20–22.   See Case 139/80 Blanckaert & Willems PVBA v Luise Trost [1981] ECR 819, paras 12–13.   See Case C-439/93 Lloyd’s Register of Shipping v Société Campenon Bernard [1995] ECR I-961, para 22.

47 48 49

996  Pedro A de Miguel Asensio Case 1(2) If the copies of the journal were distributed in Spain in Spanish, the international jurisdiction of the Spanish court would result from Article 5(3) of the Brussels I Regulation, Article 5(3) of the Lugano Convention (if the defendant is domiciled in Switzerland, Norway or Iceland), or Article 22(3) of Organic Law 6/1985 on the Judiciary (if the defendant is domiciled in a third country not belonging to the EU or the Lugano Convention). However, it is important to note that the scope of jurisdiction based on the place of the harmful event under those provisions is limited. In the Shevill judgment,50 concerning a non-contractual claim arising out of defamation, the ECJ stated that when a tort causes damages in several countries, Article 5(3) of the Brussels Convention allocates jurisdiction to the courts of those countries only in respect of the harm caused in the territory of the court seised. Significant uncertainty remains concerning Internet activities as to the level of connection between the website and the forum country (Spain) that is necessary to consider Spain as the place of infringement in such claims for the purposes of Article 5(3) of the Brussels I Regulation and Article 22(3) of Organic Law 6/1985. The need for further clarification on this point is illustrated by the preliminary questions referred to the ECJ by the German Federal Court of Justice on the interpretation of term ‘place where the harmful event may occur’ in Article 5(3) of the Brussels I Regulation.51 The questions have arisen in a case concerning the violation of personal rights but the application of Article 5(3) to claims on the infringement of IP rights in websites raises similar doubts in the courts of the Member States. The questions referred to the ECJ include the clarification of whether the phrase ‘place where the harmful event may occur’ in cases of violations of rights due to the content of an Internet website is to be interpreted as meaning that the person concerned can bring an action against the operator of the website before the courts of every Member State where the website can be accessed or if the jurisdiction of the courts of a Member State where the operator of the website is not established require a particular connecting link either between the forum and the content or the website itself which goes beyond the mere accessibility of the website. Moreover, in case the ECJ considers that such a particular connecting link with the forum is required, the German Federal Court of Justice asks for clarification about which criteria are decisive for establishing just a link. Therefore, a court having jurisdiction only by virtue of the circumstance that it is one of the countries where the damage happened may only hear a claim relating solely to the harm caused in its own country. The difference between the limited jurisdiction of the country in which the damage occurs – that leads to fragmentation – and the potential broader jurisdiction of the country in which the event giving rise to the damage takes place is founded by the ECJ in the idea that imposing such limitation to the jurisdiction based on the location of the harmful event derives from the exceptional nature of the jurisdictions established in Article 5 in contrast to the general jurisdiction of Article 2, and it is required to ensure the sound administration of justice, to respect the principle of proximity, and to avoid multiplication of forum shopping options. Additionally, it is noteworthy that according to Spanish practice, international jurisdiction based on Article 5(3) of the Brussels I Regulation in these situations is not limited to cases in which copies of the foreign journal were distributed in Spain in Spanish. Even if the foreign newspaper was only distributed in   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415.   See pending case C-509/09.

50 51

Spain  997 a foreign language or available through the Internet but is well-known in Spain, Spanish courts would be deemed competent in respect of the harm caused in Spain.52 Spanish courts would also have international jurisdiction if the journal was printed in Spain for distribution in a neighbouring country in a language which is not spoken in Spain. Jurisdiction would also be founded on Article 5(3) of the Brussels I Regulation, Article 5(3) of the Lugano Convention, or Article 22(3) of Organic Law 6/1985 on the Judiciary.53 As to the scope of the international jurisdiction of Spanish courts in such disputes, it is relevant to note that in Shevill the ECJ seemed to accept that Article 5(3) can allocate jurisdiction to the court of the place where the harmful event occurred – place of origin of the activity – without the above-mentioned limitation, and hence the court can be entitled to adjudicate overall damage sustained in all countries where the journal was published.54 However, the applicability of that distinction to the infringement of IP rights and to defamation claims concerning activities carried out through the Internet in order to broaden the territorial scope of the jurisdiction of one of the countries that can be allocated competence based on Article 5(3) remains controversial. Case 1(3) As explained in the answers to Cases 1(1) and 1(2), Spanish courts would have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published provided that the defendant is domiciled in Spain (Art 2 Brussels I Regulation). Additionally, although it remains controversial, it may also be argued that under Article 5(3) of the Brussels Regulation, the Lugano Convention, and Article 22(3) of Organic Law 6/1985 on the Judiciary, jurisdiction is granted to such an extent provided that Spain can be considered as the place where the activity having effects in several countries originated.55

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X:

Case 2(1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights?

52   Judgment of 10 January 2008 of the Juzgado de Primera Instancia núm 35 de Barcelona, Diario La Ley, No 6879, 8 February 2008, holding liable the French newspaper Le Monde for false doping allegations against a Spanish football team but imposing only damages with respect to those sustained in Spain. 53   de Miguel Asensio, above n 35, 306–18. 54   Case C-68/93 Fiona Shevill and Others v Presse Alliance [1995] ECR I-415, paras 24 and 26. 55   See, PA de Miguel Asensio, ‘Bienes inmateriales, Derecho de la competencia y responsabilidad extracontractual’ in JC Fernández Rozas, R Arenas García and PA de Miguel Asensio, Derecho de los negocios internacionales, 2nd edn (Madrid, Iustel, 2009) 119.

998  Pedro A de Miguel Asensio Case 2(2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and nonregistered intellectual property rights? 

Case 2(3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Article 22(4) of the Brussels I Regulation grants exclusive jurisdiction in proceedings concerned with the registration or validity of industrial property rights subject to registration to the courts of the Member State (including Spain) in which the registration has been applied for, has taken place, or is deemed to have taken place. Given the scope of application of Article 22(4) of the Brussels I Regulation, it supersedes for all situations concerning IP rights the exclusive jurisdiction rule of Article 22(1) of Organic Law 6/1985 on the Judiciary.56 The wording of the rule is intended to make clear that regardless of the use of mechanisms of international cooperation for its acquisition, such as the Madrid Agreement, the Madrid Protocol, or the Patent Cooperation Treaty, the validity of an industrial property right subject to registration can only be adjudicated by the country for which the contested right has been granted. In addition, with respect to European bundle patents granted under the EPC, Article 22(4) makes clear that such a rule means that the courts of each Member State shall have exclusive jurisdiction in proceedings concerned with the registration or validity of any European patent granted for that state.57 Such a rule is consistent with the independence of European bundle patents once they have been granted. In opposition to other jurisdiction provisions of the Brussels I Regulation, its rules on exclusive jurisdiction apply regardless of the defendant’s domicile and hence those criteria apply even if none of the parties is domiciled in a Member State. The rationale behind this exclusive jurisdiction is related to the idea that IP rights whose existence is subject to registration are created by a decision of a public body and grant exclusive rights that affect significant public interests within the territory of that country.58 Also, according to the case law of the ECJ, that rule on exclusive jurisdiction is justified by the fact that the courts of the state in which the deposit or registration has been applied for are best placed to adjudicate upon cases in which the dispute itself concerns the validity or registration of the IP right.59 Given that Article 22(4) is an exception to Article 2, the issues covered by the rules of Article 22 must be limited to what is essential to achieve their purposes. Article 22(4) of the Brussels I Regulation has a restrictive nature, and hence it does not cover other actions, 56   See A López-Tarruella Martínez, Litigios transfronterizos sobre derechos de propiedad industrial e intelectual (Madrid, Dykinson, 2008) 39. 57   The second para of Art 22(4) states: ‘Without prejudice to the jurisdiction of the European Patent Office under the Convention on the Grant of European Patents, signed at Munich on 5 October 1973, the courts of each Member State shall have exclusive jurisdiction, regardless of domicile, in proceedings concerned with the registration or validity of any European patent granted for that State.’ 58   The Explanatory Report to the Convention considered that this exclusive jurisdiction is justified because the granting of patents (and IP rights subject to registration) is an exercise of national sovereignty. See P Jenard ‘Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters signed at Brussels (Signed at Brussels, 27 September 1968)’, [1979] OJ C59/1. 59   See Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, para 22.

Spain  999 such as those for infringement of registered IP rights.60 Article 22(4) applies not only to patents, but to all IP rights whose existence is subject to registration or a granting decision, such as registered trade marks and designs.61 The scope of Article 22(4) has been marked by controversy, especially its application to cases in which the validity of an IP right has been challenged only by means of a counterclaim or as a defence. Certainly, significant divergences existed between the Member States of the EU regarding the treatment under Article 16(4) of the Brussels Convention of incidental challenges to the validity of patents in disputes concerning the infringement of foreign patents. It is undisputed that Article 22(4) covers all proceedings brought to declare (registered) IP rights invalid, that is to say, proceedings in which the registration or validity challenge is raised by way of an action, including a counterclaim. However, in litigation relating to IP infringements, and even in disputes concerning the breach of licence contracts, it is a common defence by the suspected infringer (or the licensee) to challenge the validity of the IP rights concerned as a plea in objection. In the GAT case62 the ECJ was requested by the Oberlandesgericht Düsseldorf to determine if the exclusive jurisdiction established under Article 16(4) of the Brussels Convention – Article 22(4) of the Brussels I Regulation – covers all proceedings concerned with the registration or validity of a patent, irrespective of whether the question is raised by way of an action or a plea in objection. This ruling of the ECJ is key in determining the response to the hypothetical posed in Case 2(2) in all EU Member States. The ECJ considered that it cannot be established from the wording of the Convention whether Article 16(4) applies only to cases in which the validity question is raised by way of an action or whether it extends to cases in which the question is raised as a plea in objection. However, the ECJ held that, given the objective of Article 16(4) and its position in the scheme of the Convention: The exclusive jurisdiction provided for by that provision should apply whatever the form of proceedings in which the issue of a patent’s validity is raised, be it by way of an action or a plea in objection, at the time the case is brought or at a later stage in the proceedings.

To reach that conclusion the ECJ remembered that such a provision is justified by the fact that the issue of patents necessitates the involvement of the national administrative authorities and because the courts of the state for which the right has been granted are best placed to adjudicate the claims concerned, since they will have to apply their own national law to rights issued in that state, a specialised area of the law in which, for the sound administration of justice, many states have established specialised courts. With regard to the scheme of the Convention, the ECJ also noted that, given the exclusive and mandatory nature of the   ibid paras 23–25.   Art 22(4) does not apply to copyright and related rights since copyright is protected without any formalities – as stated in Art 5(2) of the Berne Convention – and its existence is not subject to a procedure of registration. Notwithstanding the fact that registration is not a condition of copyright protection, it can be noted that most countries have established optional copyright registration mechanisms that set up a public record of copyright claims and provide some advantages to copyright owners, such as the ability to establish prima facie evidence in court of the validity of the copyright and of the facts stated in the register. In this respect, it should be borne in mind that concerning proceedings which have as their object the validity of entries in public registers, Art 22(3) of the Brussels I Regulation grants exclusive jurisdiction to the courts of the Member State in which the register is kept. Because of the limited effects of copyright registers, it is clear that Art 22(3) cannot in principle encompass disputes such as those relating, among others, to the existence, infringement, or exploitation of copyrights or to the entitlement to the right. 62   Case C-4/03 GAT v Lamellen und Kupplungsbau [2006] ECR I-06509. 60 61

1000  Pedro A de Miguel Asensio rules of jurisdiction provided for in Article 16(4), to allow a court seised of an action for infringement or for a declaration of non-infringement to establish indirectly the invalidity of the patent at issue would undermine the binding nature of that rule, since it would allow the claimant the possibility of circumventing the mandatory nature of the rule. Further, the ECJ stressed that such a possibility would multiply the heads of jurisdiction and could undermine predictability and legal certainty, and would also increase the risk of conflicting decisions. The ECJ rejected the view that such a risk would be avoided by limiting the effects of a judgment indirectly ruling on the validity of a patent to the parties to the proceedings, as established in German law, since the effects of a decision on the validity are determined by national law, and in several Contracting States a decision to annul a patent has erga omnes effect. The 2007 Lugano Convention codified the interpretation given in the GAT judgment. Article 22(4) of the new Convention includes an additional sentence stating that exclusive jurisdiction is granted ‘irrespective of whether the issue is raised by way of an action or as a defence.’ The arguments of the ECJ in the GAT case and the result reached have been roundly criticised.63 First, the arguments are criticised because the position of Article 16(4) in the scheme and structure of the Convention could have been invoked to reach a different result, especially given that such provision is an exemption to the general rule of the defendant’s domicile and that the structure of the Convention does not seem to support the claim that one of its aims is to avoid the existence of several fora as a means to prevent forum shopping. Secondly, the court is criticised because in its decision, the ECJ seems to neglect procedural efficiency considerations and leaves open basic issues regarding the adjudication of infringement claims. Thirdly, the arguments are also criticised because the claim that the involvement of national authorities in granting IP rights justifies the position of the ECJ seems to disregard the functioning of the EPC and also because the idea that the courts in the country of registration are best placed to adjudicate the validity of patents seems not to take into account the fact that a technical decision about the state of the art may be in practice the most important issue in determining the validity of a patent, regardless of the content of national patent law. Finally, the most significant criticism has to do with the lack of reasoning in the refusal by the ECJ of a special treatment for incidental decisions on validity lacking erga omnes effects under Article 16(4), given the established practice in certain Member States that distinguishes between erga omnes and inter partes decisions on the validity of patents.

63   See A Kur, ‘A Farewell to Cross-Border Injunctions? The ECJ Decisions GAT v LuK and Roche Nederland v Primus and Goldenberg’ (2006) 37 International Review of Intellectual Property and Competition Law 844, 847–49; European Max-Planck Group for Conflict of Laws in Intellectual Property (CLIP), ‘Exclusive Jurisdiction and Cross-border IP (Patent) Infringement: Suggestions for Amendment of the Brussels I Regulation’ (2007) 29 European Intellectual Property Review 195, 199–200; M Wilderspin, ‘La compétence juridictionnelle en matière de litiges concernant la violation des droits de propriété intellectuelle (Les arrêts de la Cour de justice dans les affaires C-4/03, GAT c LuK et C-539/03, Roche Nederland c Primus et Goldberg)’ (2006) 95 Revue critique de droit international privé 777, 785–88; C González Beilfuss, ‘Nulidad e infracción de patentes en Europa despues de GAT y Roche’ (2006) 6 Anuario Español de Derecho Internacional Privado 269, 273–78; CA Heinze and E Roffael, ‘Internationale Zuständigkeit für Entscheidungen über die Gültigkeit ausländischer Immaterialgüterrechte’ (2006) 55 Gewerblicher Rechtsschutz und Urheberrecht: Internationaler Teil 787, 791–96; J Adolphsen, ‘Renationalisierung von Patentstreitigkeiten in Europa’ (2007) 15 Praxis des Internationalen Privat- und Verfahrensrechts 15, 17–19; López-Tarruella, above n 56, 200–13; PLC Torremans, ‘The Way Forward for CrossBorder Intellectual Property Litigation: Why GAT Cannot Be the Answer’ in Leible and Ohly (eds), above n 45, 191–210.

Spain  1001 With regard to this last point, it is important to note the existence of significant divergences between the laws of the Member States.64 In some states, such as Germany, the subject matter jurisdiction to adjudicate invalidity claims and infringement claims is vested in different courts or authorities. Given that situation, in those systems the rule that the courts competent to adjudicate infringement claims can incidentally rule on the validity of the patent has become especially important, although a decision on validity shall only have inter partes effect. Spanish patent law ensures the possibility to challenge validity as a counterclaim and as a mere defence in all infringement proceedings.65 Therefore, regarding the position of a defendant in an infringement suit, there are significant differences with the situation in Germany, since under Spanish law the defendant is always allowed to bring a counterclaim and not just a defence. Therefore, the exclusion of validity challenges raised as mere defences from exclusive jurisdiction could have little practical impact as a means to combat delaying tactics. Article 126 of the 1986 Spanish Patent Act establishes that the person against whom an action is brought for infringement of rights derived from a patent may, in all forms of procedure, invoke, by means of a counterclaim or by means of defence, the invalidation of the plaintiff ’s patent, in accordance with the provisions of common procedural law and other rules, such as Article 113(3) of the 1986 Spanish Patent Act. Notwithstanding the fact that under Article 114(3), once it has become final, a declaration of invalidity of a patent shall become res judicata in respect of all persons; the dividing line between a counterclaim and a mere exception is especially vague in cases in which validity is challenged. Such an approach has been reaffirmed by Article 408 of the LEC 2000.66 The effect of GAT seems to rule out the possibility of obtaining cross-border relief in Europe concerning IP rights registered in foreign countries in cases in which the alleged infringer challenges the validity of the foreign IP right, in as much as the exclusive jurisdiction provided for in Article 22(4) includes the competence to adjudicate invalidity as an incidental matter. It seems undeniable that given the limited reasoning and content of the GAT judgment, some issues remain open, such as the impact of the exclusive jurisdiction on the ability of the court seised with the infringement action to adjudicate that claim, and the impact of challenging validity in the courts of the country for which the right is granted on the court prior seized over the infringement action.67 If the GAT judgment and Article 22(4) of the revised Lugano Convention are to be understood as compelling the courts of the Member States always to paralyse infringement proceedings by the mere fact that the 64   Communication of the EC Commission to the European Parliament and the Council ‘Enhancing the Patent System in Europe’, COM(2007) 165 final, 6. 65   PA de Miguel Asensio, ‘La protección transfronteriza de los bienes inmateriales en el comercio internacional’ in Cursos de Derecho internacional y relaciones internacionales de Vitoria-Gasteiz 2008 (Bilbao, Universidad del País Vasco, 2009) 422–31. 66   See R Bellido Penadés, El proceso civil sobre competencia desleal y propiedad industrial (Aproximación a la incidencia de la LEC de 2000 y de la Ley de Marcas de 2001) (Madrid, Civitas, 2002) 165-67. On the application of Art 126 of the Spanish Patent Act in a dispute concerning the infringement of a utility model, see Judgment of the Audiencia Provincial de Madrid (sección 10) of 16 March 1992 and the comment by M Botana Agra, ‘La reconvención de nulidad como reacción frente a la demanda por violación de un modelo de utilidad’ (1991–1992) 14 Actas de Derecho Industrial y Derecho de Autor 219, 222–30. On the interpretation of Art 126 of the Spanish Patent Act, with further references, see the following judgments: AP La Coruña no 135/1999 (Secc 2), of 15 March 1999 (AC 1999/6940); AP Barcelona (Secc 15), of 23 October 2000 (JUR 2001/25539); AP Barcelona (Secc 15), of 17 September 2003 (JUR 2004/55860); AP Zaragoza (Secc 5), of 22 February 2007 (AC 2007/814). 67   S Álvarez González, ‘Procesos por violación de patente extranjera y competencia judicial para conocer de la excepción de nulidad (GAT c LUK)’ (2007) 28 La Ley (núm 6683) para 3.

1002  Pedro A de Miguel Asensio invalidity of a foreign patent is invoked by the alleged infringer,68 this would certainly have extremely unfortunate consequences on the availability of effective IP protection in Europe, undermining important policy goals as illustrated by the EU Enforcement Directive. In this connection, it is noteworthy that GAT opens the possibility of jurisdiction being declined at any time, and that may decisively undermine legal certainty in cases where a defence is raised at a late stage in the proceedings. Therefore, it seems important to try to reach an understanding of Article 22(4) of the new Lugano Convention and the GAT judgment that makes it possible to consider that its ruling – stating that Article 16(4)/22(4) ‘is to be interpreted as meaning that the rule of exclusive jurisdiction laid down therein concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection’ – can be under certain circumstances compatible with the adjudication of infringement claims of foreign patents even if the patent validity is challenged by the alleged infringer. Moreover, Advocate General LA Geelhoed in his Opinion in the GAT case69 stressed the idea that the potential negative impact of Article 16(4) on infringement proceedings concerning foreign patents should be limited, given the mechanisms available under the Brussels Convention to achieve procedural efficiency. According to the Advocate General’s view, the court seised with the infringement claim has at its disposal a wide range of options, including the option to stay the proceedings until there has been a ruling on the validity issue and to continue with the proceedings if the defendant is acting in bad faith. In this connection, it seems possible to argue that under certain circumstances a court in a Member State may adjudicate on the infringement of a patent granted by another Member State without taking any decision on its validity even if the validity has been incidentally challenged by the alleged infringer. Such an approach should be combined with the possibility of staying the proceedings (or even declining jurisdiction) if an action of invalidity is brought before the courts of the country of registration or if after a preliminary examination the court seised finds that the validity challenge has a chance to be granted. Particularly noteworthy in that respect, especially to react against abusive incidental validity challenges, may be the fact that annulment decisions are typically of a constitutive nature and that existing IP rights are to be taken as valid and effective as long as they have not been declared invalid by the competent court. Given these circumstances, if a reasonable doubt about the validity of the existing patent has not been raised by the defendant’s activity before the infringement court and the defendant has not initiated annulment proceedings in the competent court, it could be appropriate for the court seised with the infringement action to decide whether to grant protection to the claimant while considering the valid existence of the patent. In deciding how to act, the court may consider whether the validity is challenged bona fide by the defendant and also the relative importance of the issues of validity and infringement in the dispute. Moreover, there are situations in which it seems especially clear that a court may be entitled to rule on a dispute despite a non-­validity defence concerning a foreign industrial property right. For example, it may happen that from facts and elements that appear during the proceedings, it becomes clear that the IP 68   According to para 25 of the GAT judgment, Art 16(4)/22(4) ‘should apply whatever the form of proceedings in which the issue of a patent’s validity is raised, be it by way of an action or a plea in objection, at the time the case is brought or at a later stage in the proceedings.’ However, this paragraph’s wording should not lead to the conclusion that the fact that the validity issue is ‘raised’ in the proceedings is enough to determine that the (infringement) dispute as a whole falls within the scope of Art 16(4). See Álvarez González, above n 67, para 6. 69   See Opinion of 16 September 2004, para 46.

Spain  1003 right is valid. Also, it may happen that relevant circumstances make clear that there is no infringement regardless of the validity of the IP right, and hence a decision on the latter becomes irrelevant. Additionally, if the court seised with the infringement proceedings considers likely the annulment of the patent by the competent court, or its existence or validity to be uncertain under the applicable law, it could stay its proceedings, allowing the defendant to obtain a judgment on validity and if necessary to adopt provisional measures. That possibility was suggested by the Advocate General in his conclusions in the GAT case (para 46). Once the judgment on the validity is rendered or if the time limit established by the court has elapsed without the annulment proceedings being initiated in the foreign country, the court seised with the infringement claim could adjudicate that claim, taking as valid the existing foreign patent. This approach is well-known with regard to the Community Trade Mark Regulation. Under Article 100(7) of the Regulation: The Community trade mark court hearing a counterclaim for revocation or for a declaration of invalidity may stay the proceedings on application by the proprietor of the Community trade mark and after hearing the other parties and may request the defendant to submit an application for revocation or for a declaration of invalidity to the Office within a time limit which it shall determine. If the application is not made within the time limit, the proceedings shall continue; the counterclaim shall be deemed withdrawn.70

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs, A seeks the consolidation of claims forum of country W.

Case 3(1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C, and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C, and D on the ground of infringement of contract?

Case 3(2) Assuming that B, C, and D are members of a group of a corporation and take identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country of X is a court of your country, would (and if so, under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

According to Article 6(1) of the Brussels Regulation, which is complementary to Article 2, a person domiciled in a Member State (such as Spain) may also be sued where he is one of a number of defendants in the courts for the place where any one of them is domiciled, provided that certain conditions are met. In particular, Article 6(1) of the Regulation   See also Art 86(3) of Regulation 6/2002 of 12 December 2001 on Community designs.

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1004  Pedro A de Miguel Asensio requires that the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments. Although this requirement was not mentioned in the text of Article 6(1) of the Brussels Convention, the need of a close connection between all the claims covered by Article 6(1) was already imposed by the ECJ in its Kalfelis judgment,71 in line with the idea that Article 6(1) is an exception to the general rule of Article 2 and must be interpreted restrictively. In addition, such a condition is deemed necessary to prevent abuses and to avoid discrimination against defendants who are sued in the country of domicile of another joint defendant for infringing IP rights outside the forum country. The application of Article 6(1) and the determination of under what circumstances the ‘close connection’ requirement is met have been very controversial in IP litigation within the EU, especially in cases concerning the infringement of European bundle patents. This issue was finally addressed by the ECJ in one of the two controversial judgments delivered on 13 July 2006. Certainly, the case that raised the preliminary question answered by the ECJ judgment in Roche 72 was a typical situation of cross-border adjudication of infringement of European bundle patents in line with the hypothetical posed in Case 3(2). The actions for infringement of a bundle of patents derived from a single European patent application had been brought before the Dutch courts against Roche Nederland and eight other members of the Roche group. Notwithstanding the fact that the companies in the Roche group not established in the Netherlands contested the jurisdiction of the Dutch courts and challenged the validity of the patent(s) allegedly infringed, the court of first instance and the Court of Appeal considered that the Dutch courts had jurisdiction under the ‘spider in the web’ criterion. The defendants appealed, and the Dutch Supreme Court (Hoge Raad) decided to stay the proceedings and refer the question to the ECJ for a preliminary ruling. The main question referred to the ECJ was if the connection required for the application of Article 6.1 exists when an action for patent infringement is brought by the holder of a European bundle patent against a group of companies established in various Member States in respect of acts committed in one or more of those states and, in particular, where the ‘spider in the web’ criterion exists, since the companies belong to the same group and have acted in an identical or similar manner in accordance with a common policy elaborated by one of them domiciled in the forum country. The ECJ established that even if the term ‘irreconcilable’ were to be understood in the broadest sense of contradictory decisions, there is no risk of such decisions in ‘European patent infringement proceedings brought in different Contracting States involving a number of defendants domiciled in those States in respect of acts committed in their territory’, since those decisions and their possible divergences do not arise in the context of the same situation of law and fact. Therefore, the position of the ECJ is that in the case of multinational infringements of European bundle patents, given that the defendants are different and the alleged infringements have been committed in different states, possible divergences between decisions would not arise in the context of the same situation of fact, and hence those decisions could not be contradictory since according to Articles 2(2) and 64(1) of the EPC, the patents are governed by national law. The ECJ considered that such a result should not be altered even if the conditions of the ‘spider in the web’ criterion were met because the differences between the factual situations exist even if the defendant companies belong   Case 189/87 Kalfelis v Bankhaus Schröder [1988] ECR 5565, para 12.   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535.

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Spain  1005 to the same group and have acted in an identical manner in accordance with a common policy elaborated by the main defendant.73 Moreover, the view of the ECJ is that, contrary to the idea traditionally advocated by many scholars, consolidation before one court of infringement actions based on European bundle patents against a number of defendants would not favour procedural economy since jurisdiction based solely on the factual criteria set out by the national court would raise significant risks. The determination as to whether the necessary criteria are satisfied would require the court seised to adjudicate on the substance of the case before it could establish its jurisdiction. Further, such approach could lead to a multiplication of the potential heads of jurisdiction and hence undermine predictability and legal certainty and encourage the practice of forum shopping. Finally, the consolidation of the patent infringement actions before a single court could not prevent in many cases a partial fragmentation of the patent proceedings since in practice it is very common to challenge indirectly the validity of the patent, and in those situations the exclusive jurisdiction rule of Article 22(4) would apply.74 However, with regard to this last argument, it is clear that it would not apply to disputes concerning IP rights, such as copyright, which are not subject to registration and remain outside the scope of Article 22(4). The Roche judgment decisively undermines the availability of cross-border relief against multiple infringements for the holders of European patents since it determines that Article 6(1) cannot be used to consolidate multinational infringement claims against a series of defendants before a single court even in the circumstances of the ‘spider in the web’ doctrine. In this connection, disapproval has been expressed regarding several shortcomings of the decision,75 mainly because the existence of a group of companies acting in an identical manner under a common strategy organised by one head office seems to give rise to a common factual situation covering all the infringements concerned. Therefore, the basic justification of the ECJ to exclude the risk of irreconcilable judgments is the existence of legal differences based on the applicability of different national patent laws to the infringements concerned. However, although according to Article 64(1) of the EPC, the rights conferred by a European patent are those established under national patent law, to stress legal divergences in the context of common acts of infringement of European bundle patents seems to disregard the level of harmonisation achieved by the EPC that, for instance, determines that the object of the alleged infringements shall be the same in all Contracting States designated since under Article 69(1) of the EPC, the extent of the protection conferred by a European patent shall be determined by the terms of the claims. The idea that the possibility of different interpretations of formally independent national provisions of harmonised law should remain an obstacle for the consolidation of claims under Article 6(1) of Regulation 44/2001 in cases such as those covered by the ‘spider in the web’ doctrine seems to hinder an efficient coordination of national proceedings in those areas of the law in which harmonising legislation has been adopted. Therefore, although further uniformity should be achieved in the national practice regarding EPC infringement rules, it seems appropriate to clarify the circumstances under which Article 6(1) is to be   ibid, paras 25–35.   ibid, paras 36–40. 75   See Kur, above n 63, 849–50; González Beilfuss, above n 63, 280–81; I Heredia Cervantes, ‘Infracción de patentes y pluralidad de demandados en el ámbito comunitario’ (2007) 28 La Ley (núm 6703) paras 10–13; LópezTarruella, above n 56, 126–36; M Norrgård, ‘A Spider Without a Web? Multiple Defendants in IP Litigation’ in Leible and Ohly (eds), above n 45, 219–23. 73 74

1006  Pedro A de Miguel Asensio applied in those areas of the law. That is the main goal of the proposal made by the CLIP Group to complement Article 6(1) of the Brussels I Regulation with a rule expressing that the risk of irreconcilable judgments may exist in situations in which different national laws are applicable to the separate claims provided that the relevant national provisions are harmonised to a considerable degree.76 In conclusion, under the current interpretation of the Brussels I Regulation by the ECJ, all the questions posed under Cases 3(1) and 3(2) are to be answered in the negative. However, it cannot be ruled out that the situation may be different in the near future. In the current review process of the Brussels I Regulation, one of the possible amendments suggested by the Commission would be to ‘provide for a consolidation of proceedings against several infringers of the European patent where the infringers belong to a group of companies acting in accordance with a coordinated policy.’ A possible solution envisaged by the Commission would be to establish a specific rule allowing certain infringement proceedings to be brought before the courts of the Member State where the defendant coordinating the activities or having the closest connection with the infringement is domiciled.77

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country:

Case 4(1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose?

Case 4(2) Would the court enforce an exclusive choice of court clause if the defendant raised a counter-claim that patents are invalid?

Case 4(3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings?

  CLIP, above n 63, 201.   See EC Commission, above n 30, 6–7.

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Spain  1007 Case 4(4) Would parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be legal effects of such decision?

Cases 4(1), 4(2) and 4(3): in opposition to the implications of territoriality on the law governing acts of infringement and the mandatory nature of the lex loci protectionis rule (Art 8 Rome II Regulation), with regard to jurisdiction the parties involved in an infringement dispute are allowed to choose the competent forum under Article 23 of Regulation 44/2001. Prorogation of jurisdiction by the parties under Articles 23 and 24 of Regulation 44/2001 derogates jurisdiction based on the general principle of Article 2 (defendant’s domicile) and the special rules of jurisdiction of Articles 5 and 6. Article 23 allows parties to agree that the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship – contractual or not – between the parties even if the dispute has no other connection with the chosen forum. Article 22(2) of Organic Law 6/1985 on the Judiciary establishes the same criterion in the Spanish national system. Given the scope of Article 23 of the Brussels I Regulation, the jurisdiction of the Spanish courts can be based on Article 22(2) of Organic Law 6/1985 on the Judiciary only in those situations in which none of the parties are domiciled in an EU Member State or a Contracting State to the Lugano Convention. A choice of court clause in favour of the Spanish courts included in a licence agreement as described in the hypothetical would be enforceable under Article 23(1) of the Brussels I Regulation, Article 23(1) of the Lugano Convention or Article 22(2) of Organic Law 6/1985 on the Judiciary. In the case where the parties made a new choice of court agreement at the time when the dispute arose, this would prevail. Under Article 24 of the Brussels I Regulation, Article 24 of the Lugano Convention, and Article 22(2) of Organic Law 6/1985 on the Judiciary, a Spanish court before which a defendant enters an appearance shall have jurisdiction provided that the appearance was not entered to contest the jurisdiction. However, prorogation of jurisdiction under the Brussels I Regulation, Lugano Convention, and Article 22(2) of Organic Law 6/1985 are excluded where another court has exclusive jurisdiction. Concerning issues of validity and registration of IP rights subject to registration, the case law of the ECJ has stressed that the mandatory nature of Article 22(4) determines that its application is specifically binding on both litigants and courts. Therefore, parties may not derogate from Article 22 by an agreement conferring jurisdiction or by the defendant’s voluntary appearance.78 Situations in which the validity of a foreign patent is challenged as a defence before the chosen court pose the same issues that arise in other cases in which the validity of a foreign patent is attacked before a court having jurisdiction to hear a dispute under other provisions of Regulation 44/2001, such as Article 5, sections 1 and 3. Therefore, in cases where the defendant raised a counter-claim that foreign patents granted by another EU Member State or Contracting State to the Lugano Convention are invalid, the exclusive jurisdiction provisions and their interpretation under the GAT ruling would prevail in the terms explained in case number 2. Case 4(4): an arbitration clause included in an IP licence agreement or an arbitration agreement concerning an infringement of IP rights between the parties involved would be enforceable under Spanish Law, in particular under the 2003 Spanish Arbitration Act.79   Case C-4/03 GAT v LuK [2006] ECR I-6509, para 24.   Ley 60/2003 de 23 de diciembre, de Arbitraje (BOE, 26 December 2003).

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1008  Pedro A de Miguel Asensio Spain is a party to the main multilateral conventions on arbitration, including the 1958 New York Convention on the recognition and enforcement of foreign arbitral awards and the 1961 European Geneva Convention. The increasing role of arbitration on IP disputes has been acknowledged by recent Spanish legislation, especially in connection with the registration of trade marks. Article 28 of Law 17/2001 of 7 December 2001 on trade marks is devoted to arbitration. This provision allows parties to submit to arbitration certain matters of dispute arising during the proceedings for the registration of a trade mark in the Spanish Patent and Trade Mark Office. However, the specific arbitration proceedings may deal only with the relative prohibitions provided for in Articles 6(1)(b), 7(1)(b), 8 and 9 of that law. In no case may matters referring to the existence or otherwise of formal defects or absolute registration prohibitions be subject to these arbitration proceedings.80 The limits of arbitrability with respect to claims involving the validity of IP rights may have significant implications in cases arising out of contractual or infringement claims. Article 2 of the 2003 Spanish Arbitration Act concerning the subject matter of arbitration establishes that all disputes relating to matters within the free disposition of the parties according to law are capable of arbitration. As noted earlier, it is beyond doubt that infringement and contractual claims concerning IP rights fall within the free disposition of the parties and may be submitted to arbitration81. In this connection, Article 40 of the 2001 Spanish Law on Trade Marks, concerning the possibility to bring infringement claims, states that the owner of a registered trade mark may, before the jurisdictional authorities, take appropriate civil or criminal action against those infringing his right, without any prejudice to submission of the case to arbitration, where possible. However, uncertainty remains as to the interpretation of the limits of arbitrability with respect to disputes involving a decision on the validity of intellectual property rights. It is widely accepted that an erga omnes declaration of non-validity of an industrial property right subject to registration goes beyond the scope of arbitrability and in typical infringement or contract disputes may also fall outside the scope of the arbitration agreement between the parties.82 Disputes concerning the erga omnes declaration of non-validity of an industrial property right subject to registration are regarded as dealing with the existence of a right granted by the public authorities and involving important public and general interests. Furthermore, disputes concerning invalidation (erga omnes) of such rights have special procedural implications and requirements. Under Article 114 of the Spanish Patent Act (and Art 61 of the Trade Mark Act), a declaration of invalidation shall imply that the patent has never been valid and that neither the patent nor its original application have had any of the effects. Given the broad scope of the effects of a declaration on invalidation, an action for invalidation must be communicated to all the persons owning rights in the patent and duly entered in the Register so that they may appear and take part in the hearing (Art 113 Spanish Patent Act). Notwithstanding this, the idea that the mere fact that validity of the industrial property right concerned has been incidentally challenged by the alleged infringer does not exclude 80   See JF Merino Merchán and JM Chillón Medina, Tratado de Derecho arbitral, 3rd edn (Madrid, ThomsonCivitas, 2006) 402–15; M Lobato, Comentario a la Ley 17/2001, de marcas (Madrid, Civitas, 2002) 508–16. 81   See PA de Miguel Asensio, ‘Arbitraje y contratos internacionales sobre propiedad industrial en el derecho español’ (1992) 8 Revista de la Corte Española de Arbitraje 27–47; de Miguel Asensio, ‘La protección’, above n 65, paras 58–59. 82   However, for a different approach in favour of the arbitrability of such disputes, see MP Perales Viscasillas, ‘Arbitrabilidad de los derechos de la propiedad industrial y de la competencia’ (2005) 6 Anuario de Justicia Alternativa 11, 69–76.

Spain  1009 the possibility by the arbitral tribunal to decide on the infringement of the rights has achieved significant acceptance in legal literature. A distinction83 is established between the situation in which an action for the declaration of invalidity (erga omnes) effect has been brought (that cannot be subject to arbitration) and disputes in which an incidental decision (inter partes) on validity may be needed to decide an infringement or contractual dispute (regarded as falling within the scope of arbitrability). In this respect, to the extent that an action for annulment has not been brought before the competent court, it seems reasonable to conclude that the arbitral tribunal does not exceed the limits of arbitrability when deciding on the alleged infringement given that existing IP rights are in principle to be taken for valid and effective as long as they have not been declared invalid by the competent court. In line with the progressive expansion of arbitration, the idea that arbitral tribunals have the possibility to decide incidentally and with effects inter partes on the validity of an IP right when the non-validity claim has been raised as a defence in a contractual or infringement claim has gained increasing support among legal scholars in Spain.84 In this respect, it is accepted that the scope of exclusive jurisdiction under Article 22(4) of the Brussels I Regulation and the ECJ judgment in GAT is broader than the limits to arbitrability in those situations.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country:

Case 5(1) What procedural steps would a court of a country Z take having regard to pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration?

Case 5(2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

If countries X or Y were also Member States of the Brussels I Regulation (or Lugano Convention), their specific provisions on lis pendens and related actions (Arts 27–30) would apply. These provisions may enable alleged infringers that have commenced proceeding for a declaration of non-infringement in an EU jurisdiction to block an infringement action initiated later by the IP right-holder in other EU jurisdictions. Under Article 83   As to judgments accepting this distinction in the framework of court proceedings, see AP Barcelona (Secc 15), of 17 September 2003 (JUR 2004/55860); and AP Zaragoza (Secc 5), of 22 February 2007 (AC 2007/814). 84   See F Vicent Chulia, ‘Nulidad y caducidad de patentes en derecho español (con referencia a los ordenamientos francés, británico, italiano y alemán)’ in F Vicent Chulia and JT García Maldonado, La propiedad industrial en España en su contexto europeo (Barcelona, CEFI, 1993) 50; M Lobato García-Miján, La marca comunitaria (Bolonia, Publicaciones del Real Colegio de España, 1997) 178–79.

1010  Pedro A de Miguel Asensio 27(1) of the Brussels I Regulation,85 if the court first seised has international jurisdiction regarding the declaration of non-infringement, the interpretation of the requirements of same cause of action and same parties in the framework of IP litigation becomes decisive in determining the possibilities of the IP right-holder to bring infringement proceedings.86 The case law of the ECJ seems to support the view that the objective of an action for declaration of non-infringement is the same as that of an action for infringement.87 The ECJ has stated that the Brussels I Regulation contains no provision under which Article 27 ceases to apply because of the length of the proceedings before the courts of the Member States concerned and that Article 27 of the Brussels I Regulation must be interpreted as meaning that it cannot be derogated from where, in general, the duration of proceedings before the courts of the Contracting State in which the court first seised is established is excessively long.88 However, with regard to torpedo claims, considerations other than the slowness of the proceedings before the court first seised that can be decisive to appreciate abuse of proceedings by one of the parties may be relevant for the courts involved. It is clear that under Article 28 – on related claims – if a torpedo claim is considered abusive, the court seised by the IP right-holder normally will not stay its proceedings based on the existence of the torpedo claim. On the contrary, under the circumstances of Article 27 the court seised later is obliged to stay its proceedings and decline its jurisdiction. Therefore, non-compliance with Article 27 based on a unilateral finding by the court seised by the patent-holder about the abusive nature of the non-infringement claim pending in the other court may seem incompatible with this provision. However, under the Brussels I Regulation, there is no doubt that jurisdiction based on Article 5(3) covers actions to prevent a tort which has not yet been committed,89 including actions for the declaration of non-infringement.90 At any rate, the position of Article 5(3) in the Brussels system as an exception demands a restrictive interpretation as to the jurisdiction of the courts to address claims for a declaration of non-infringement of foreign IP rights, even in cases concerning European bundle patents. Jurisdiction is to be limited to claims of non-infringement concerning the territory of the forum. Hence, in practice, jurisdiction for the declaration of non-infringement over foreign IP rights is limited to situations in which the defendant’s domicile is located in the forum, which is not usually the case in torpedo actions. Moreover, when the proceedings affect IP rights of different countries – even if they are parallel European patents – the condition that the actions pending involve the same cause of action is not met (regardless of whether the actions involved are infringement claims or 85   Art 27(1) on lis pendens establishes that ‘where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seized shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seized is established.’ 86   The so-called Belgian and Italian torpedoes were mainly based on the idea that non-infringement actions in any of those jurisdictions were very effective as an obstacle to impede an infringement claim by the IP owner in other EU countries. 87   Case 144/86 Gubisch Machinenfabrik KG v Giulio Palumbo [1987] ECR 4861, paras 15–19. 88   Case C-116/02 Erich Gasser GmbH v MISAT Srl [2003] ECR I-14693, paras 71–73. 89   cf Art 5(3) in fine of Regulation 44/2001 to Art 5(3) of the Brussels Convention. See also Case C-167/00 Verein fur Konsumenteninformation v Karl Heinz Henkel [2002] ECR I-8111, paras 48–49. 90   In Spanish case law see the decision by the AP Barcelona of 26 April 2007 (Auto 122/2007, JUR 20017/270652), holding that Spanish courts have international jurisdiction based on the place of the harmful event concerning an action for the declaration of non-infringement of a Spanish trade mark brought by the Spanish company that registered the domain name ‘mundial.com’ against the Brazilian company that owned the Spanish trade mark ‘mundial’.

Spain  1011 actions for the declaration of non-infringement). Anyway, although in those cases Article 27 should not apply, the court second seised will have the possibility to stay its proceedings in case it considers that the actions are related in terms of Article 28 of the Brussels I Regulation, but the margin of appreciation granted to that court under Article 28 will mean in practice that usually proceedings shall not be stayed when the first suit is a torpedo claim. Furthermore, according to the GAT decision of the ECJ, the court seised shall decline its jurisdiction if the action for declaration of non-infringement is based on the alleged invalidity of the IP right registered in a foreign country (or shall dismiss the action under the presumption of validity of the existing IP right). However, the application of the provision of the Brussels I Regulation on lis pendens to the IP field in cases in which there is a declaration of non-infringement pending in one state and an infringement action concerning the same IP right is brought in another country (forcing under Art 27 the court latter seised to stay the subsequent infringement proceedings initiated by the IP right-holder in the other jurisdiction) continues to raise significant doubts. Therefore, this is one of the issues currently subject to review. In this connection, the EU Commission has hinted at the possibility of amending the Brussels I Regulation in order to strengthen the communication and interaction between the courts seised in parallel proceedings and to exclude the application of the rule in the case of negative declaratory relief.91 If countries X or Y were not Member States of the Brussels I Regulation (or Lugano Convention), the effects in Spain of proceedings in countries X and Y should be established in accordance with Spanish Law. There are no specific provisions on international lis pendens in Spanish legislation since Articles 416 and 421 of the LEC 2000 apply only to situations in which proceedings are pending in different Spanish courts. Traditionally, Spanish courts have been reluctant to decline jurisdiction or even stay their proceedings based on international lis pendens.92 In light of traditional case law, it may happen that to the extent that the Brussels I Regulation or an international convention with specific provisions on lis pendens does not apply, pending proceedings in countries X and Y would be disregarded and would not affect an infringing suit brought in Spain. A more flexible approach has been advocated among authors, and even hinted at by courts in recent times, favouring the possibility to stay proceeding before the Spanish court to the extent that the foreign proceedings may result in a judgment that could be recognised or enforced in Spain. At any rate, given the current status of the law, it can be expected that in torpedo situations the infringing suit brought in Spain would not be stayed.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad.   See EC Commission, above n 30, 6.   See Judgment of the Supreme Court (Tribunal Supremo) of 19 December 1985, RAJ (1996) 6600.

91 92

1012  Pedro A de Miguel Asensio Case 6(1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z?

Case 6(2) Assuming, first, that the claim for the infringement of the patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Under Article 8(1) of the Rome II Regulation, the law applicable to IP infringements is the law of the country for which protection is claimed. This rule supersedes Article 10(4) of the Spanish Civil Code as far as infringement claims are concerned, although both provisions establish the lex loci protectionis criterion. Given the territorial and independent nature of national IP systems, the choice of law rule has a distributive nature. Different laws shall apply if protection is sough for the territory of several States except when a supranational unitary IP right is involved, as it is the case with Community IP rights. Article 8 is founded on the idea that because of their limited territorial scope, national IP rights can only be infringed in the country of protection. Even preparatory activities concerning products intended for foreign countries that take place in the country of protection shall typically infringe the exclusive IP rights of that country. By contrast, activities carried out in a foreign country that do not affect the country of protection typically cannot amount to an infringement.

Case 7: Infringement of Intellectual Property Rights Three IT students A, B and C have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C requesting closure of the website and payment of damages. Assuming that the court of your country has international jurisdiction in such a case:

Case 7(1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Case 7(2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)?

Spain  1013 Case 7(3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Case 7(1) As already noted, under Article 8 of the Rome II Regulation, the law of each protecting country should be applied to the direct infringement in the respective territory. Although there is no case law interpreting Article 8 of the Rome II Regulation in this respect, the better view seems that the places where the files are downloaded are the countries for which protection is sought. Under Article 8(3) the application of the law of the country for which protection is claimed may not be derogated from by an agreement between the parties.93 Case 7(2) Under Article 15 of the Rome II Regulation on the scope of the law applicable, the law of the country for which protection is claimed includes the determination of persons who may be held liable for acts performed by them and the liability for the acts of another person. Therefore, the law of the country for which protection is claimed applies also to determine the liability of ISPs as secondary infringers, and parties are not allowed to agree on the applicable law (Art 8(3)). Case 7(3) Ashas already been discussed, Spanish courts may be competent to adjudicate over the infringement of foreign IP rights, and hence within the limits previously noted they can decide on so-called ubiquitous infringements. There are no specific rules on ubiquitous infringements. According to the lex loci protectionis criterion established in Article 8 of the Rome I Regulation, different laws shall apply if protection is sough for the territory of several States leading to great fragmentation. Since Article 8(1) is mandatory parties are not allowed to choose the applicable law. Given that no special provisions apply, it cannot be expected that a definition of ubiquitous infringement of IP rights can be found in the current state of the law. Future-oriented proposals in Europe, like those made by the CLIP group,94 advocate certain flexibility including the adoption of specific choice of law rules for ubiquitous infringements95 and the introduction of a limited party autonomy concerning the law applicable to the remedies claimed for the infringement of an IP right.

93  Spanish doctrine has insisted on the need for a more flexible approach. See MA Amores Conradi and E Torralba Mendiola, ‘XI Tesis sobre el estatuto delictual’ (2004) 8 Revista Electrónica de Estudios Internacionales 1, 21; MA Amores Conradi and I Heredia Cervantes, above n 35, 2162–63; A López-Tarruella Martínez, ‘La ley aplicable a la propiedad industrial e intelectual en la Propuesta de Reglamento Roma II’ (2005) 235 Gaceta Jurídica de la UE y de la Competencia 23, 29, and 39–40. 94  www.cl-ip.eu. 95   See L Esteve González, Aspectos internacionales de las infracciones de derechos de autor en Internet (Granada, Comares, 2006) 184–85; PA de Miguel Asensio, ‘The Private International Law of Intellectual Property and of Unfair Commercial Practices: Coherence or Divergence?’ in Leible and Ohly (eds), above n 45, 182–90.

1014  Pedro A de Miguel Asensio

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country:

Case 8(1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country? Would the parties’ choice of law clause concerning the right to obtain patents be enforceable in your country?

Case 8(2) Would the decision differ if A made an invention in joint collaboration with other researchers?

Case 8(3) Would the applicable law differ in the case of initial authorship or initial title to trade mark?

Case 8(4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

It has to be recalled that the substantive scope of application of the Rome II Regulation and in particular of Article 8 is limited because it only relates to the non-contractual obligations arising from an infringement of an IP right. Therefore, Article 10(4) of the Spanish Civil Code remains applicable to issues such as initial ownership and initial co-ownership. Article 10(4) establishes the lex loci protectionis criterion and does not include specific provisions departing from that criterion with regard to initial ownership. Hence, initial ownership, including authorship of a copyrighted work and initial title to trade mark or other industrial property rights arising out of registration, is governed by the law of the state for which protection is sought. This criterion is also applicable to rights created in the framework of employment relationships. Due to the mandatory nature of Article 10(4), parties are not allowed to choose the law applicable to initial ownership. However, the obligations of employer and employee in relation to the transfer or licence of an IP right arising from the employee’s efforts are governed by the law applicable to the employment contract, and parties are allowed to choose the law applicable to the employment contract with certain restrictions (Art 6 Rome Convention and Art 8 Rome I Regulation). Also, to the extent that between co-owners there is a contractual relationship, issues such as the licensing, waiver, consent and any other form of exploitation, the division of revenues, and the authority to enforce the intellectual property rights and to bring suits, are governed by the law applicable to the contract, and the parties are allowed to choose the law applicable to the contract. Choice of law clauses included in contracts concerning the transfer of the right to obtain patents are in principle enforceable

Spain  1015 under Spanish law, as it may be the case with transfer of know-how contracts. Under Article 10(1) of the Spanish Patent Act, the right to a patent shall belong to the inventor or to his successors in title, and it shall be transferable by any of the means recognised in the law. Party autonomy as to the law applicable is allowed under Spanish and EU law (Rome I Regulation) in contracts having as their object the transfer of the right to a patent. However, with regard to employee inventions, Title IV of the Spanish Patent Act applies to the right to Spanish patents. According to Article 15(1) inventions made by an employee during the term of his contract, work, or service with a company and which are the result of research that is the object of his contract, shall belong to the employer. Applicability of these provisions in situations in which the employment contract is governed by a foreign law or to situations involving foreign patent applications remains uncertain.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of the concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus infringed. Assuming that a court of your country is a court of country X:

Case 9(1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors?

Case 9(2) How will the court deal with the issue of transferability?

Case 9(3) What would be the applicable law in a case where there is no choice of law made by the parties?

Under both Article 3 of the Rome Convention and Article 3 of the Rome I Regulation, parties have the freedom to choose the law applicable to the transfer agreement. The choice has to be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. However, the issue of transferability of IP rights falls within the scope of application of Article 10(4) of the Spanish Civil Code and is determined by the law of each state for which protection is sought.96 The conflict of laws provision of Article 10(4) is mandatory, and hence the parties’ choice of law clause cannot be enforced with respect to that specific issue. The law applicable to the contract in a case where there is no choice of law made by the parties shall be determined in accordance with Article 4 of the Rome I Regulation to all IP 96   See, eg, PA de Miguel Asensio, Contratos internacionales sobre propiedad industrial, 2nd edn (Madrid, Civitas, 2000) 168–85; A López-Tarruella Martínez, Contratos internacionales de software (Valencia, Tirant lo Blanch, 2006) 269–97.

1016  Pedro A de Miguel Asensio contracts after 17 December 2009. The new Article 4 only requires identification of the characteristic performance to determine the governing law in those cases where the contract cannot be categorised as being one of the specified types listed in the new paragraph 1 or where the elements of the contract fall within more than one of those types as provided for in the new paragraph 2. The new Article 4 reinforces the idea that the escape clause must be interpreted in a restrictive way.97 Given the structure of Article 4 of the Rome I Regulation, the following steps should be followed in order to determine the law applicable in the absence of choice to contracts relating to intellectual or industrial property rights. First, it has to be ascertained whether the relevant contract can be categorised as falling within only one of the types of contracts set forth in Article 4(1). If the response is negative, it will be necessary to find out if it is possible to determine the habitual residence of the characteristic performer. Hence, the determination of the characteristic performance still plays a significant role in these contracts. Only if the law applicable cannot be determined on the basis of the characteristic performance criterion shall it be necessary to establish which country is most closely connected with the contract. Finally, the law applicable by virtue of these rules may be disregarded in exceptional cases because of the escape clause of Article 4(3) of the Rome I Regulation. The final text of the Regulation does not include a specific provision referring to contracts relating to intellectual or industrial property rights as one of the categories of paragraph 1. The suppression during the legislative process of this provision was mainly due to the impossibility of finding a fixed rule capable of providing an adequate response to the diverse typology of IP contracts that have developed in business practice. Indeed, the differences with regard to the subject matter, the content, the scope of the parties’ obligations or the territorial reach of licences and assignments, and the complex nature of many of the agreements that include in their object industrial or intellectual property rights make it almost impossible to establish an appropriate solution for all of those contracts in a single rule.98 The debate as to the law applicable to these contracts under Article 4 of the Rome I Regulation has already been very intense in academic circles even before the application of the new provisions.99 Regarding the basic types of contract relating to intellectual or industrial property rights, the prevailing view is that it is possible to determine the performance of one of the parties as characteristic. Simple transfer or assignment of rights and simple licences are considered 97   As to the relationship between the presumption based on the characteristic performance and the escape clause in the Rome Convention, see ECJ Judgment of 6 October 2009, C-133/08, ICF, paras 53–64. 98   Art 4(1)(b) of the Rome I Regulation includes a specific rule on contracts for the provision of services; but see Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327, stating that a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration is not a contract for the provision of services, within the meaning of the second indent of Art 5(1)(b) of the Brussels I Regulation. 99   See P Torremans, ‘Licences and Assignments of Intellectual Property Rights under the Rome I Regulation’ (2008) 4 Journal of Private International Law 397–420; PA de Miguel Asensio, ‘Applicable Law in the Absence of Choice to Contracts Relating to Intellectual or Industrial Property Rights’ (2008) 10 Yearbook of Private International Law 199–219; P Mankowski, ‘Contracts Relating to Intellectual or Industrial Property Rights under the Rome I Regulation’ in Leible and Ohly (eds), above n 45, 31–78; Y Nishitani, ‘Contracts Concerning Intellectual Property Rights’ in F Ferrari and S Leible (eds), Rome I Regulation: The Law Applicable to Contractual Obligations in Europe (Munich, Sellier European Law Publishers, 2009) 51–84; N Boschiero, ‘I contratti relativi alla proprietà intellettuale alla luce della nuova disciplina comunitaria di conflitto. Analisi critica e comparatistica’ in N Boschiero (ed), La nuova disciplina comunitaria della legge applicabile ai contratti (Roma I) (Torino, G Giappichelli Editore, 2009) 463–538; D Moura Vicente, ‘La propriété intellectuelle en droit international privé’ (2008) 335 Receuil des Cours 105, 317–40.

Spain  1017 to be the basic types of contracts in this area. The prevailing opinion is that the party who is to effect the characteristic performance in typical assignment or transfer of rights contracts is the assignor or transferor. Characteristic of this is the performance of ceding the exclusive right to which the legal protection is bound. At any rate a different view has gained significant acceptance: to the extent that the licence is exclusive or the licensee assumes the obligation to exploit the subject matter of the contract (patent, trade mark, know-how, copyright, etc), the licensee is the party who effects the characteristic performance. Due to the complex nature of licence agreements, it has also been advocated that determining the characteristic performance requires a case-by-case analysis. Notwithstanding the idea that the assignor or the licensor is in principle the party that effects the characteristic performance in a contract having as its main subject matter the assignment or licence of an intellectual or industrial property right, it is important to note that the typology of contracts relating to intellectual or industrial property rights is very diverse. In practice, these contracts include categories of agreements in which the characteristic performance corresponds to the other party, contracts in which no characteristic performance can be determined, and contracts that are manifestly more closely connected with a country rather than that of the habitual residence of the transferor or licensor. When making the determination of the characteristic performance, it may happen that the licensing or even the transfer of rights is functionally subordinate to activities or obligations that the other party has to effect under the terms of the contract. Under those circumstances, typically it will be possible to establish that the other party is the characteristic performer. That may be the case with publishing agreements which under the relevant national provisions constitute a type of contract different from licensing contracts and have their own essential characteristic. The publishing house organises the reproduction and distribution of the work. It is the publisher who usually is the only party acting in the course of his trade or profession, and whose performances are the most relevant, when considering the function that the legal relationship involved fulfils in the economic and social life of any country. In typical situations, the performance of the publisher is the economic purpose of the contract. Therefore, it seems reasonable to conclude that under those circumstances the publisher is the party that effects the characteristic performance. Finally, the question may be raised as to the possible recourse to the escape clause of Article 4(3). In this connection, it has been argued that transfer and licence contracts whose subject matter is industrial or intellectual property rights of only one country may be manifestly more closely connected with the country of protection. Given the broad description of the agreement contained in the hypothetical, it does not seem possible to give a more specific response.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment.

Case 10(1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court?

1018  Pedro A de Miguel Asensio Case 10(2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in the registry of a recognising country?

Case 10(3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

The Brussels I Regulation does not apply to the recognition and enforcement in Member States of judgments given in Non-Contracting States.100 Therefore, the rules applicable vary in principle according to the country of origin of the judgment. However, the question posed raises mainly an issue related to the scope of the exclusive jurisdiction on industrial property rights and its implications in the field of recognition and enforcement. Article 22(4) of the Brussels I Regulation has a restrictive nature, and hence it does not cover other actions, such as those for infringement of registered IP rights or those relating to the determination of what party is entitled to an existing IP right on the basis of a previous legal relationship between the parties. In this connection, the ECJ held that proceedings relating to the validity, existence, or lapse of a patent or an alleged right of priority by reason of an earlier deposit are to be regarded as proceedings ‘concerned with the registration or validity of patents’ for the purposes of Article 16(4) of the Brussels Convention; by contrast, when the dispute does not itself concern the validity or the existence of the deposit or registration, there is no special reason to confer exclusive jurisdiction.101 The scope of the exclusive jurisdiction must be limited to what is essential to achieve its purposes. Therefore, not all disputes that may result in decisions that can be the basis for changes in the records of the registries of a state fall within the exclusive jurisdiction of the courts under Article 22(4) of the Brussels I Regulation. Judgments on some of those issues may not be concerned with the registration, grant, or the validity of the IP right as such. Only judgments that interfere in the functioning or operation of the public registry may be deemed to have as their object the registration of the right. As the ECJ put it, when a dispute does not itself concern the validity or the existence of the deposit or registration, there is no special reason to confer exclusive jurisdiction.102 Therefore, a foreign judgment on the entitlement or the ownership of an IP right subject to registration does not conflict with the exclusive jurisdiction of the courts of the country of registration under Article 22(4) of the Brussels I Regulation. To the extent that neither the validity of the IP right nor the legality of its registration are disputed by the parties, the claim does not fall within the scope of the exclusive jurisdiction.103 Therefore, the first question under Case 10(1) is to be answered in the affirmative. If the country of origin of the judgment is a Member State of the EU, the limits under which verification of the jurisdiction of the rendering court is possible are established in Article 35 of the Brussels I Regulation. In particular, recognition is to be denied if the foreign judg  Case C-129/92, Owens Bank Ltd v Fulvio Bracco and Bracco Industria Chimica SpA [1994] ECR I-117.   Case 288/82 Ferdinand Duijnstee v Lodewijk Goderbauer [1983] ECR 3663, paras 23–25. 102   ibid, paras 23–25. 103   ibid, paras 26–27, stressing the distinction between disputes concerning the right to a patent (not falling within the exclusive jurisdiction of Art 22(4) of the Brussels I Regulation) and disputes concerning the registration or validity of a patent which are covered by the exclusive jurisdiction. 100 101

Spain  1019 ment conflicts with the exclusive jurisdiction rules of Article 22 of the Brussels I Regulation. As already noted that is not the case of a foreign judgment on the entitlement or the ownership of an IP right subject to registration in the forum. A similar standard should apply in this respect under Article 954 of the LEC 1881 in those situations in which the national system is applicable. There is no need to re-litigate the dispute,104 although to the extent that the national law is applicable, it may be necessary to obtain an exequatur under the procedure of Articles 955 et seq, as a precondition for the foreign judgment to be the title for a change in the entries of the registry. That is not the case if the judgment comes from a Member State of the EU or Lugano Convention or any other country linked with Spain by means of a convention establishing that a judgment shall be recognised in Spain without any special procedure being required. Indeed, when recognition is automatic, no special procedure is required for updating the patent registry records on the basis of a foreign judgment on the entitlement or the ownership of such patent.

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there:

Case 11(1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)?

Case 11(2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad?

Case 11(3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee?

Case 11(4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings?

104   The decision (Auto) of the Spanish Supreme Court of 13 November 2001 ((2003) 132 Anuario Español de Derecho Internacional Privado 914–19) concerning the recognition and enforcement in Spain of a US judgment on trade mark infringement provides a good example of an approach favouring the extension of the effects of a foreign judgment under the Spanish national provisions on recognition and enforcement.

1020  Pedro A de Miguel Asensio Case 11(5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

International jurisdiction of Spanish courts to adopt such measures is to be determined by Article 31 of the Brussels I Regulation and Articles 22(5) and 22(2) of Organic Law 6/1985 on the Judiciary.105 Under these provisions Spanish courts have international jurisdiction to adopt provisional measures concerning persons or goods located in Spain. This restriction does not apply to the extent that Spanish courts have international jurisdiction over the main dispute. Therefore, in cases in which Spanish courts have international jurisdiction over the main dispute concerning a foreign trade mark they may adopt protective measures without territorial restrictions other than those resulting from the relevant ground of jurisdiction. In all other situations they can only adopt measures over persons or goods located in Spain. Article 31 of the Brussels I Regulation does not contain uniform jurisdiction rules for the adoption of provisional measures. On the contrary, it refers to the national rules on jurisdiction of the Member States. Therefore, the holders of IP rights may file their petitions for provisional injunctive relief either with a court competent for the main proceedings under the Brussels I Regulation or based on the national rules on jurisdiction of the court seised. However, the case law of the ECJ contains some directions for the interpretation of the concept of provisional measures and the conditions under which such measures may be granted in accordance with Article 31. The granting of provisional measures on the basis of Article 31 is conditional on, inter alia, the existence of a real connecting link between the subject matter of the measures sought and the territorial jurisdiction of the court before which those measures are sought .106 The required link is present if the measure is to be enforced within the territory of the state to which application is made and the measure relates to goods located in that state or to IP rights granted by that state. Moreover, the ECJ has stated that the aim of Article 31 is to avoid losses to the parties as a result of the long delays inherent in any international proceedings. In accordance with that aim, the meaning of the term ‘provisional, including protective, measures’ in Article 31 has to be understood as referring to ‘measures which are intended to preserve a factual or legal situation so as to safeguard rights the recognition of which is otherwise sought from the court having jurisdiction as to the substance of the case.’107 The ECJ has considered that such an aim is not pursued by a measure justified only in the interest of the applicant in deciding whether to bring proceedings on the substance. The ECJ excludes from the scope of Article 31 measures aimed at establishing facts on which the resolution of future proceedings could depend and in respect of which a court in another Member State has jurisdiction for the main proceedings.108 Such an interpretation may be too restrictive given the practical importance of provisional measures to preserve relevant evidence in cross-border IP litigation. 105   See Virgós Soriano and Garcimartín Alférez, above n 41, 337–53; Fernández Rozas and Sánchez Lorenzo, above n 41, 80–82. 106   See Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091, para 40. 107   See Case C-261/90 Mario Reichert, Hans-Heinz Reichert and Ingeborg Kockler v Dresdner Bank AG [1992] ECR I-2149, para 34; Case C-391/95 Van Uden [1998] ECR I-7091, para 37; and Case C-104/03 St Paul Dairy Industries NV v Unibel Exser BVBA [2005] ECR I-3481, paras 12–13. 108   See ECJ judgment in the St Paul Dairy case, paras 15–18, considering such a restriction is needed in order to avoid circumvention at the stage of preparatory inquiries of the jurisdictional rules of the Regulation.

Spain  1021 The enforcement within the EU territory of provisional measures concerning IP litigation adopted by courts in other EU Member States will typically fall within the scope of the Brussels I Regulation. It is important to note that, contrary to the situation in most international conventions and the Spanish national system as Article 954 et seq, of the LEC 1881 are interpreted, the Regulation does not require a foreign decision to be final or nonappealable to be enforceable in all Member States. It will be possible to enforce summary measures and injunctions in another EU country even when its national law does not establish a similar measure. According to the case law of the ECJ interpreting the Brussels Convention, the recognition and enforcement system of the Convention does not apply to provisional measures adopted without a prior hearing of the adverse party or if the decision is to be enforced without prior service of process to that party.109 The real connecting link required between the subject matter of the measures and the territorial jurisdiction of the court that may be competent under Article 31 according to the ECJ case law determines that those measures typically shall have very limited effects, if any, outside the territory of the court that grants the measures. Additionally, although according to Article 34, sections 3 and 4, of the Brussels I Regulation, a decision taken in a Member State has priority unless it is irreconcilable with a judgment given in the state in which recognition is sought, or with an earlier judgment given in another state on the same dispute that fulfils the conditions necessary for its recognition, due to the interim nature of the measures involved, the application of the provisional measures adopted under Article 31 of the Brussels I Regulation shall be in general always subject to the decisions taken by the courts having jurisdiction as to the substance of the matter. According to Article 737 of the LEC 2000, courts may require the person seeking issuance of provisional measures to grant a guarantee before the enforcement of the measures. Spanish legislation acknowledges that when parties have submitted to arbitration, the arbitral tribunal being competent to decide the main claim is also the main forum for the adoption of provisional measures, and the Spanish Arbitration Act (Ley 60/2003 de 23 de diciembre, de Arbitraje)110 grants arbitrators jurisdiction in this respect. Indeed, Article 23 of the Act regulates the power of the arbitrators to order interim measures. According to its first paragraph, unless the parties agreed otherwise, the arbitrators may, at the request of any party, order such interim measures as they may consider necessary in respect of the subject matter of the dispute. An additional safeguard is included so that arbitrators are allowed to require appropriate security from the applicant. Notwithstanding this, jurisdiction of arbitral tribunals to adopt provisional measures has two main limitations: arbitrators cannot enforce the measures to the extent that recourse to public coercion is needed to make them effective and arbitrators cannot adopt measures over third parties.111 However, under Spanish law a court would not be pre-empted from issuing an injunction if the parties have submitted the dispute to arbitration. The possibility of having recourse to Spanish courts in those situations is recognised in Article 722 of the LEC 2000 and Article 11(3) of the Arbitration Act. According to paragraph 3 of Article 11, the arbitration agreement shall not prevent any of the parties, before or during the arbitral proceedings, from applying to a court for interim measures of protection, nor shall it prevent the court from granting them.

  ECJ Judgment of 21 May 1980, 125/79, Denilauler.   See Virgós Soriano and Garcimartín Alférez, above n 41, 353–59.   See Virgós Soriano and Garcimartín Alférez, above n 41, 353–59.

109 110 111

1022  Pedro A de Miguel Asensio

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X, and B is a bank in country Y:

Case 12(1) Could intellectual property rights be used as collateral pursuant to the law of your country?

Case 12(2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights?

Case 12(3) Would a court of your country apply the same law to registered and non-registered intellectual property rights?

Intellectual property rights granted for Spain can be used as collateral. For instance, Article 74 of the Spanish Patent Act establishes that both patent applications and patents shall be transferable and may also be used as security for personal loans. Such use shall be notified to the Register of the SPTO. Additionally, acts on the use of patents as securities shall be in writing. Similar provisions may be found in Article 46 of the Spanish Trade Mark Act. According to Article 46, independent of the transfer of all or part of an enterprise, a trade mark and an application thereof may be used as a guarantee or be the subject of other real rights, and registered in the SPTO; in cases where a movable property mortgage is set up, the mortgage shall be entered in the Register of Movable Property, and said entry shall be notified to the SPTO for the purposes of inclusion in the Register of Trade Marks. Such legal acts shall be binding on third parties acting in good faith only after entry in the SPTO Register of Trade Marks. Article 53 of the Ley de propiedad intelectual allows movable property mortgages to be set up with regard to economic rights arising out of copyright. Some conflict of laws issues concerning securities on intellectual property remain highly controversial due to the lack of specific guidance in legislation and case law. However, it seems widely accepted that certain issues fall within the scope of Article 10(4) of the Civil Code and hence are subject to the lex loci protectionis or the law applicable to the IP right concerned. These issues include transferability, registration, and effectiveness against third parties. By contrast, agreements to create a security interest in intellectual property are governed by the law applicable to the relevant contract in accordance with the choice of law rules on international contracts (Rome I Regulation).

Sweden ULF MAUNSBACH*

Contents 1. Basic features of the relevant laws in Sweden.............................................................................. 1024 1.1 Intellectual Property Law................................................................................................... 1024 1.1.1 General Overview................................................................................................. 1024 1.1.2 Sources of Law...................................................................................................... 1024 1.1.3 Swedish Intellectual Property Protection............................................................ 1027 1.1.4 Community Rights............................................................................................... 1029 1.1.5 Procedure.............................................................................................................. 1029 1.2 Private International Law................................................................................................... 1030 1.2.1 General Overview................................................................................................. 1030 1.2.2 Sources of Law...................................................................................................... 1031 1.2.3 Jurisdiction, Recognition and Enforcement........................................................ 1031 1.2.4 Choice of Law....................................................................................................... 1036 2. Hypothetical Cases....................................................................................................................... 1038 Case 1. General/Special Grounds of Jurisdiction................................................................... 1038 Case 2. Subject-Matter Jurisdiction........................................................................................ 1039 Case 3. Consolidation of Proceedings..................................................................................... 1040 Case 4. Choice of Court........................................................................................................... 1040 Case 5. Parallel Proceedings..................................................................................................... 1042 Case 6. Principle of Territoriality (Choice of Law)................................................................ 1042 Case 7. Infringement of Intellectual Property Rights............................................................. 1043 Case 8. Applicable Law to Initial Ownership.......................................................................... 1044 Case 9. Applicable Law to the Transfer of Rights Agreements............................................... 1045 Case 10. Recognition and Enforcement of Foreign Judgments............................................... 1046 Case 11. Provisional Measures and Injunctions....................................................................... 1047 Case 12. Securities in Intellectual Property.............................................................................. 1049

*  Assistant Professor, Faculty of Law, Lund University (www.jur.lu.se).

1024  Ulf Maunsbach

1  Basic Features of the Relevant Laws in Sweden 1.1  Intellectual Property Law 1.1.1  General Overview The intellectual property laws in Sweden are to a large extent structured in accordance with the Paris and Berne Conventions (see 1.1.2 below). Sweden provides protection for industrial rights and copyright, and the rules are generally to be found in separate laws. Basically, Sweden provides protection for copyright, patent, design and trade marks, as well as other intellectual property rights, eg plant variety rights, protection of semiconductor products, topographies and trade names. In short, the protection that Sweden provides for intellectual property complies with international conventions and agreements as well as EU law.1 1.1.2  Sources of Law 2 Due to strong international influence, much of the relevant sources of law within the area of intellectual property are of international character. Already mentioned are the Berne Convention3 of 1886 and the Paris Convention4 of 1883. The states that have ratified those conventions formed a union, and Sweden has been a part of the Paris Union since 1885 and the Berne Union since 1904. Since then, Swedish intellectual property law can be characterised as largely influenced by the international environment. Among other things, Sweden has adopted all agreed amendments to the Paris and Berne Conventions. On the international level, Sweden takes active part in most of the work conducted by the World Intellectual Property Organization (WIPO) and other international bodies. Recent examples of this are Sweden’s adoption of the WIPO Performances and Phonograms Treaty (WPPT) and the WIPO Copyright Treaty (WCT),5 while the intellectual property laws in Sweden during recent years have been amended in order to comply with the TRIPs agreement.6 1   For a general presentation of the Intellectual Property Laws of Sweden, see L Svensäter, ‘Intellectual Property Law’ in M Bogdan (ed), Swedish Law in the New Millennium (Stockholm, Norstedts Juridik, 2006) 395. 2   For comprehensive surveys over Swedish intellectual property law see U Bernitz et al, Immaterialrätt och otillbörlig konkurrens [Intellectual Property Law and Unfair Competition] (Stockholm, Jure, 2009) and M Levin, Lärobok i Immaterialrätt [Textbook on Intellectual Property Law] (Stockholm, Norstedts juridik, 2007). 3   Berne Convention for the Protection of Literary and Artistic Works of 9 September 1886, completed at Paris on 4 May 1896, revised at Berlin on 13 November 1908, completed at Berne on 20 March 1914, revised at Rome on 2 June 1928, at Brussels on 26 June 1948, at Stockholm on 14 July 1967, and at Paris on 24 July 1971, and amended on 28 September 1979. See further www.wipo.int/treaties/en/ip/berne/trtdocs_wo001.html. 4  Paris Convention for the Protection of Industrial Property of 20 March 1883, as revised at Brussels on 14 December 1900, at Washington on 2 June 1911, at The Hague on 6 November 1925, at London on 2 June 1934, at Lisbon on 31 October 1958, and at Stockholm on 14 July 1967, and as amended on 28 September 1979. See further www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html. 5   Both the WPPT and the WCT were adopted by Sweden as part of Sweden’s implementation of Dir 2001/29/ EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. The Conventions are administered by WIPO and available at www.wipo.int/treaties/en/. 6   The TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement is Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization, signed in Marrakesh, Morocco on 15 April 1994. The agreement entered into force in 1995. See further www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm.

Sweden  1025 The international influence on Swedish intellectual property law is, as stated above, important. However it is quite clear that Sweden’s entry into the European Community (later Union) constitutes the most important impact on the development of its intellectual property laws, at least during recent years. Almost all amendments to the different intellectual property laws since the beginning of 1990 are a result of Sweden’s adaptation of EU law. Today, this means that it is more or less pointless to talk about intellectual property law merely as a national topic. To a large extent the rules applied are harmonised throughout the EU and in several areas it would be more correct to speak of European intellectual property law than of national law. Consequently, a full understanding of the laws applied in Sweden demands a deep understanding of the development of EU law within the area of intellectual property. I will not develop the European dimension in this report though, due to a lack of space and the fact that those rules are likely to have been described in all the different national reports emanating from EU Member States. Instead I will concentrate on areas which I consider specific to Sweden. It is inevitable, though, that some attention is paid to the European dimension. It will be covered briefly in my short presentation on the different intellectual property laws below and some of the most important European regulatory instruments that have had an influence on Swedish intellectual property law are highlighted below: Regulatory Instruments of General Interest Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of Article 81(3) of the Treaty to categories of technology transfer agreements Regulatory Instruments in the Area of Copyright Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, repealed by directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (Codified version) Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version) Regulatory Instruments in the Area of Trade Marks First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark

1026  Ulf Maunsbach Regulatory Instruments in the Area of Design Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs Regulatory Instruments in the Area of Patent Convention on the Grant of European Patents (European Patent Convention) of 5 October 1973 as revised by the Act revising Article 63 EPC of 17 December 1991 and the Act revising the EPC of 29 November 20007 Council Regulation (EEC) No 1768/92 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal protection of biotechnological inventions The above-mentioned regulations and directives8 are directly applicable or implemented in the various intellectual property laws of Sweden. The most important laws are the Copyright Act,9 Patent Act,10 Trade mark Act11 and Design Act.12 This means that the intellectual property laws of Sweden, as is the case in most Member States, must be applied with active knowledge of ECJ case law interpreting relevant directives and regulations. In areas where national legislation is based upon EU law, ECJ case law can be regarded as more relevant than case law from national Swedish courts. Another characteristic feature of the Swedish intellectual property system is the history of Nordic cooperation. Among the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) the major legislative developments within the area of intellectual property law have been coordinated within the frames of Nordic cooperation. The separate intellectual property laws in the different Nordic countries are, as a consequence, similar. There is also a history of research cooperation involving yearly Nordic network meetings and there is a cooperative Nordic journal for intellectual property law.13 On the national level very little can be done today without reference to the abovementioned international sources. Still there is of course in Sweden, as in all other Paris and Berne Union states, protection for intellectual property rights on a national level. 7   The European Patent Convention is not a traditional EU instrument insofar as it is open for signature for states that are not EU Member States. The convention entered into force in 1977 and it is applied by the European Patent Office (EPO). See further www.epo.org. 8   All relevant Swedish legislation (in force) can be found at: www.riksdagen.se/webbnav/index.aspx?nid=3910. The laws in the fields of intellectual property are amended on a regular basis (much due to the implementation of EU law) and it is therefore necessary to make sure that the law applied in a certain case includes all amendments. As a consequence of the consecutive amendments there is no recent English translation of the different intellectual property laws that presents the law in force. Older versions might be found but should be read bearing in mind that there have been additional amendments. For a brief look at the structure of Swedish legislation, WIPO’s Collection of Laws for Electronic Access (CLEA) might be used, with the proviso that the laws that are to be found there do not necessarily represent the legislation in force. See further www.wipo.int/clea/en/. 9   Lag (1960:729) om upphovsrätt till litterära och konstnärliga verk. 10   Patentlag (1967:837). 11   Varumärkeslag (2010:1877). 12   Mönsterskyddslag (1970:485). 13   Nordiskt Immateriellt Rättsskydd (NIR) [Nordic Journal for Intellectual Property Law]. See further www. nir.nu.

Sweden  1027 1.1.3  Swedish Intellectual Property Protection 1.1.3.1 Copyright Criteria for Protection As regards copyright, this is still an area which is not fully harmonised. In Sweden, a work must show originality and be the author’s individual creation. There is no prerequisite for this in the Copyright Act though. Instead the level of originality is primarily specified in case law. Due to the multifaceted nature of copyright it is more or less pointless to state something general about the originality criteria. The level of originality has to be investigated in relation to each specific creative work. One general observation however is that it can be noted that the perception is that the requirement of originality has declined over the years. If a creative work is original in accordance with the prerequisites of the Copyright Act, protection is granted without any formal requirements. Copyright protects the unique expression, which is the creative shape in which the creator has chosen to manifest an artistic idea. Consequently, the idea as such is not protected. Copyright comprises both economic and moral rights. Economic rights focus on the possibility for the right holder to control the copying and circulation of a protected work. Moral rights are focused on the creator’s right to respect, which includes the right to be named as the author (in accordance with proper usage) and the right to prevent his or her work from being changed in a way that is prejudicial to the author’s literary or artistic reputation. Connected to copyright are a wide number of limitations and exceptions whose purpose is to strike a fair balance between strong protection and access to knowledge. The limitations provide space for certain types of use that are not to be regarded as infringing (eg copying for private purposes and reproduction in the course of educational activities). The Swedish Copyright Act is to a large extent non-mandatory, and it is possible to transfer copyright. This does not apply to moral rights, though, which on the contrary are mandatory by nature. In line with this, the principal rule is that it is not possible to transfer moral rights with binding effect. The original creator therefore has a far-reaching right of respect, even in situations where the economic rights have been transferred. The Copyright Act encompasses rules regarding the protection of computer programs, technological measures and electronic rights management information. Furthermore, protection of related rights (eg producer rights and database rights) is included in the Copyright Act. Duration A copyrighted work is protected until the end of the seventieth year after the year in which the author deceased. Related rights are generally protected for 50 years, with the exception of databases, which are afforded protection for 15 years. 1.1.3.2 Patent Criteria for Protection Patent is protected by the Swedish Patent Act, in which the prerequisites for protection are found in section 1-3. It is specified that an invention must be susceptible of industrial application. Furthermore, it must be new in relation to what was known before the application was filed and must differ essentially therefrom. To receive protection the inventor must

1028  Ulf Maunsbach apply for registration. In Sweden, an application for patent must be filed with the Swedish Patent and Registration Office (Patent och Registreringsverket (PRV)).14 The application is then examined in relation to a vast number of formal as well as material criteria before the patent may be granted. It is highly recommended that the inventor makes the application through a Swedish patent counsel, due to the fact that it is easy to overlook some of the different requirements, with potential dismissal as a result. It is possible to transfer a Swedish patent right. Duration A granted patent can be protected for 20 years from the day when the patent application was filed (with a possible extension of 25 years for pharmaceuticals). 1.1.3.3  Trade Marks Criteria for Protection Trade marks are protected by the Trade Marks Act, where it is stated that any sign capable of distinguishing goods or services can be protected as a trade mark, with the precondition that it is possible to represent the trade mark graphically. If the prerequisites are fulfilled, protection might be obtained, either through registration or through use. A trade mark application is filed with PRV (as is the case with patents) and it will be examined in relation to both the prerequisites for protection and previous rights. As regards the possibility of acquiring protection through use, the claiming right-holder must show that the trade mark is established on the market, which means that it is known (to the relevant public) as a symbol for the goods or services which are being made available under it. Trade mark rights may be transferred. Duration Trade mark protection is not limited in time, although a registered right must be renewed every tenth year. 1.1.3.4 Design Criteria for Protection As regards the protection of designs, the Swedish Design Act was entirely modified in 2005 due to the implementation of the Design Directive.15 The amendments in 2005 are so extensive that it is relevant to talk about a completely new legal situation. There was a developed design protection in Sweden before 2005, but much of the old case law is outdated in relation to today’s amended Design Act, which can be regarded as fully harmonised in relation to EU law. A consequence of this new situation is that there is not yet much to say regarding the application of the Design Act, due to a lack of case law. The prerequisites for design protection are that the design must be new and have individual character. Design rights may be transferred.

  See further www.prv.se/In-English/.   Dir 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs. 14 15

Sweden  1029 Duration Protection can be granted for 25 years in total, with the exception of spare parts (that is, parts intended to repair a complex product so that it gets back its original look). Spare parts can be protected in Sweden, but never for more than 15 years. 1.1.3.5  Other Intellectual Property Rights Besides the above-mentioned rights, Sweden provides protection for other intellectual property rights as well such as trade names,16 plant breeder’s rights,17 and topographies for semiconductor products.18 1.1.4  Community Rights Sweden, as part of the EU, also provides protection for different Community rights. In this national report I will not specifically discuss those rights, but it is still worth mentioning that the two existing regulations providing protection for community trade mark and community design have an influence also on the application of national rules. The reason for this is that the ECJ’s interpretation of the different regulations to a large extent is connected to the interpretation of related directives, which in turn are implemented in national law. To fully understand national rules it is therefore important to be aware of this relation and study not only national case law but also ECJ cases regarding the interpretation of both directives and regulations. 1.1.5 Procedure Depending on its nature, an intellectual property related dispute might be tried in different courts in Sweden. In general, there are two different procedural systems. For civil law procedures, the general courts provide the proper forum. In Sweden, that means three instances, starting with the district courts (Tingsrätterna), followed by the appellate courts (Hovrätterna) and the Swedish Supreme Court (Högsta Domstolen) as the last instance. Disputes covered by civil law procedure would be tort claims and other civil claims related to intellectual property (eg disputes regarding the validity of an intellectual property right or disputes regarding an injunction or a declaratory judgment related to the use of an intellectual property right). The second procedural system is the administrative courts, dealing primarily with registered rights and disputes concerning registration. Even in those proceedings there are three instances starting with the registration office (PRV) and its decisions regarding a specific application for registration. A decision regarding registration may be appealed to the Swedish Court of Patent Appeals (Patentbesvärsrätten (PBR)) and then to the Supreme Administrative Court (Högsta förvaltningsdomstolen). Also worth mentioning is the Swedish Market Court (Marknadsdomstolen) that deals with disputes relating to competition and unfair marketing practices. Quite often decisions from the Market Court involve issues of relevance for the intellectual property area and it is important to be aware of the fact that the Market Court provides the right-holder with an additional instrument against a certain type of misuse of an intellectual property right.   Firmalag (1974:156) (the Trade Names Act).  Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights. See also Växtförädlarrättslag (1997:306) (the Plant Breeder’s Rights Act). 18   Lag (1992:1685) om skydd för kretsmönster för halvledarprodukter (the Protection of Topographies for Semiconductor Products Act). 16 17

1030  Ulf Maunsbach One example might be the marketing of a product using a brand similar to one already protected by trade mark law. This might be tried as an infringement in the general courts and it might also be tried as unfair marketing practise in the Market Court. A Market Court decision does not directly concern intellectual property law though. Instead, a decision from the Market Courts must be based on marketing law or competition law. This means that a decision from the Market Court does not involve the same cause of action as decisions from the general courts, and consequently there is no lis pendens between the different systems, even though the substantive issue might be the same. In particular, issues regarding the scope of protection are dealt with in both general and administrative courts (and to some extent by the Market Court). In situations like this it is important to be aware of case law from all three systems to be able to get the full picture of how to apply Swedish rules in specific cases. It is possible to find judgments and decisions on-line from the civil courts, the administrative courts, as well as the Swedish Market Court.19

1.2  Private International Law 1.2.1  General Overview 20 In Sweden, as in most other countries, private international law has historically been dealt with on a strictly national basis. In the field of commercial law, to which disputes related to intellectual property generally belong, there are few examples of early private international law rules even though there are some instruments that were agreed upon between the Nordic countries that were (and to some extent still are) relevant for commercial disputes.21 Everything changed when Sweden became a member of EU in 1994. Consequent to this membership Sweden entered into a harmonised system with well-developed private international law rules in the field of private and commercial law. Sweden adopted the Lugano Convention in 1993, the Rome Convention in 1998 and the Brussels Convention in 1999, and today we apply the Brussels I Regulation, the Rome I Regulation and the Rome II Regulation. This means that private international law in the fields relevant for intellectual property disputes is regulated on a harmonised European basis. Still there are situations where Swedish courts have to deal with disputes that are not directly handled by EU law. In the following I will continuously first describe how the harmonised European system works, after which I will focus on how Swedish courts handle situations where European rules are not directly applicable. First of all, though, a brief presentation of relevant sources of law will be given.

19   For further information about Swedish courts and for downloading recent judgments/decisions see: www. domstol.se/templates/DV_InfoPage____869.aspx (mainly Supreme Court Decisions), reg.pbr.se/fmi/iwp/cgi?db=PBRwebb&-loadframes (decisions from the Court of Patent Appeals) and www.marknadsdomstolen.se/ (decisions from the Swedish Market Court). 20   For a general presentation of Swedish private international law see M Bogdan, ‘Sweden’ in R Blanpain (ed), International Encyclopaedia of Laws – Private International Law – Suppl 17 (The Hague, Kluwer Law International, 2008). See also M Bogdan, Svensk Internationell Privat- och Processrätt [Swedish Private International Law] (Vällingby, Norstedts Juridik, 2008). 21   See eg Lag (1977:595) om erkännande och verkställighet av nordiska domar på privaträttens område [the Act on Recognition and Enforcement of Nordic Judgments in the Area of Private Law].

Sweden  1031 1.2.2  Sources of Law 22 Relevant sources in the area of intellectual property and private international law are to a large extent the previously mentioned EU instruments and the preparatory materials related to each of them.23 In a situation where EU law is the primary source, it is of course necessary to rely on the ECJ to gather information regarding interpretation of relevant rules. Furthermore European doctrinal writing is of interest even for the application of rules in Sweden.24 In situations where EU law is not directly applicable it might first be stated that there are few explicit Swedish rules regarding private international law relevant for disputes regarding intellectual property. Traditionally analogies have been made from the Swedish Code of Judicial Procedure (Rättegångsbalk (1942:740)) but today it is quite clear that Swedish courts might also base private international law decisions on analogies drawn from relevant EU law. 1.2.3  Jurisdiction, Recognition and Enforcement As to jurisdiction, the Brussels I Regulation is directly applicable in situations where the defendant is domiciled in a Member State or if the dispute concerns registrations or validity of a registered intellectual property right (and in some other exclusive cases mentioned in Art 22). As regards recognition and enforcement there is no necessary connection to a defendant domiciled in a Contracting State within the framework of the Brussels I Regulation. Instead, all judgments (in the area of commercial law as defined in the Regulation, Art 1) are to be recognised and enforced in other Member States in accordance with the rules in the Regulation. I will not describe the functions of the Brussels I Regulation in depth in this report, seeing that the situation is similar in all EU Member States.25 However, I will briefly discuss certain issues of direct relevance for intellectual property disputes. To begin with, it can be concluded that the principal rule in Article 2 is applicable in most intellectual property disputes, except those that concern the registration or validity of registered intellectual property rights, which are exclusively dealt with in the courts of the Member State in which the registration has been made (Art 22(4)). As to the application of Article 22(4), there are two ECJ cases dealing specifically with its interpretation. The first case is Duijnstee v Goderbauer,26 in which the ECJ concluded that the term ‘proceedings with registration or validity’ is to be considered as an independent concept intended to have a uniform application in the Member States and that the dispute in casu (rights   See Bogdan, ‘Sweden’, above n 20, 15–24 with further references.   See eg P Jenard, ‘Report on the Convention of 27 September 1968 on jurisdiction and the enforcement of judgements in civil and commercial matters’ [1979] OJ C59/1; P Schlosser, ‘Report on the Convention of 9 October 1978 on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern Ireland to the Convention on jurisdiction and the enforcement of judgements in civil and commercial matters and to the Protocol on its interpretation by the Court of Justice’ [1979] OJ C 59/71. 24   Regarding the specified field of intellectual property law and private international law see JJ Fawcett and P Torremans, Intellectual Property and Private International Law (Oxford, Oxford University Press, 1998) and C Wadlow, Enforcement of Intellectual Property in European and International Law (London, Sweet & Maxwell, 1998). 25  For a presentation of relevant EU rules see P Stone, EU Private International Law (Cheltenham, Elgar European Law, 2006). See also M Bogdan, Concise Introduction to EU Private International Law (Groningen, Europa Law Publishing, 2006). 26  Case 288/82 Duijnstee [1983] ECR 3663. An edited version of the case is available in M Bogdan and U Maunsbach, EU Private International Law: An EC Court Casebook (Groningen, Europa Law Publishing, 2006) 48. 22 23

1032  Ulf Maunsbach regarding a patent arising out of an employment contract) did not fall under the applicability of the exclusive rule. The second ECJ case regarding the interpretation of Article 22(4) is the much criticised case GAT v Lamellen und Kupplungsbau 27 in which the ECJ decided that the exclusive rule ‘is to be interpreted as meaning that the rule of exclusive jurisdiction laid down therein concerns all proceedings relating to the registration or validity of a patent, irrespective of whether the issue is raised by way of an action or a plea in objection.’ The critical arguments that are raised against this decision concentrate primarily on the fact that such an interpretation of Article 22(4) makes it possible for a defendant to delay infringement proceedings, before courts other than those where the rights are registered, by raising the question of validity as a defence.28 One interesting observation regarding the applicability of Article 22(4) in Sweden is that it has been applied by analogy even in situations where the Regulation is not directly applicable, due to the absence of a similar rule in national Swedish private international law.29 As regards the applicability of the Brussels I Regulation in disputes relating to licence agreements an important clarification is made in the case Falco Privatstiftung v Gisela Weller-Lindhorst,30 where the ECJ concluded that a contract under which the owner of an intellectual property right grants its contractual partner permission to use that right in return for remuneration is not a contract for the provision of services within the meaning of Article 5(1)(b). Thus this kind of contract is to be handled in accordance with the general rule in Article 5(1)(a), meaning that the question of where a licence agreement is deemed to be performed is to be decided by the court in which the case is tried, in accordance with the private international law rules that are applicable in the case (ie the Rome I Regulation).31 Furthermore it is possible to find grounds for jurisdiction in Article 5(3) regarding infringement disputes. Article 5(3) states that a person domiciled in a Member State may be sued in another Member State in matters relating to tort, in the courts of the place where the harmful event occurred or may occur. The expression ‘where the harmful event occurred’ has been interpreted by the ECJ as meaning both the place where the action took place and the place where the damage occurred.32 A further clarification is that the competence of a court which is competent due to the fact that damage occurred, is narrowed to the damage that occurred in the country where the court is situated.33 27   Case C-4/03 GAT [2006] ECR I-06509. An edited version of the case is available in Bogdan and Maunsbach, above n 26, 329. 28   See eg A Kur, ‘A Farewell to Cross-Border Injunctions? – The ECJ Decisions GAT v LuK and Roche Nederland v Primus and Goldenberg’ (2006) 37 International Review of Industrial Property and Copyright (IIC) 844 and L Lundstedt ‘In the Wake of GAT/LuK and Roche/Primus’ (2008) 2 Nordiskt Immateriellt Rättsskydd [Nordic Journal for Intellectual Property Law] (NIR) 122. See also U Maunsbach, ‘Gränsöverskridande patenttvister i ny gemenskapsrättslig belysning – en kommentar till EG-domstolens avgöranden i målen C-4/03 (GAT) och C-539/03 (Roche)’ [‘Border crossing patent suits in the light of recent community law – a comment on the decisions of the EC court in the cases C-4/03 (GAT) and C-539/03 (Roche)’] (2007) 3 Nordiskt Immateriellt Rättsskydd 240. 29   See Svea Court of Appeal Case no Ö 2786-03 concerning the revocation of a Swedish trade mark registration where the principles derogated from Art 22(4) by analogy were found to prevail over a prorogation contract between the (American and Swedish) parties in the case. 30   Case C-533/07 Falco [2009] ECR I-3327. 31   See further Case 12/76 Tessili [1976] ECR 1473. An edited version of the case is available in Bogdan and Maunsbach, above n 27, 1. 32   Case 21/76 Bier [1976] ECR 1735. An edited version of the case is available in Bogdan and Maunsbach, above n 26, 4. 33   Case C-68/93 Shevill [1995] ECR I-415. An edited version of the case is available in Bogdan and Maunsbach, above n 26, 130.

Sweden  1033 As to the applicability of Article 5(3) in infringement disputes there are no cases from the ECJ dealing explicitly with intellectual property rights. However, there are a few interesting examples from Swedish courts. A first case of interest would be NJA 2000 s 273 (Flootek). In this case a Swedish company, Flootek AB, applied for a negative declaratory judgment regarding a technique for water cleaning. Flootek wanted the court to declare that its product did not infringe a Swedish patent, possessed by the Norwegian company Kaldnes AS. The case was brought before the Stockholm District Court and Kaldnes argued that there was no jurisdiction. The question of jurisdiction was tried, first by the District Court, which held that it was not competent. Since the defendant was domiciled in Norway the principal rule of the Lugano Convention34 was not applicable and it was not possible to apply the alternative rule in Article 5(3) of the Lugano Convention (mirroring Art 5(3) of the Brussels I Regulation) regarding non-contractual obligations, due to the fact that the case did not concern damages. The case was appealed and the Appeal Court found no reason to change the decision of the District Court. Finally the case was appealed to the Supreme Court of Sweden, where the question of the applicability of Article 5(3) was investigated further. The Court found that a negative declaratory judgment does not concern damages in a way covered by the purpose of Article 5(3). Even if Article 5(3) does cover a case regarding injunction, it does not mean that a negative declaratory judgment can also be tried under the jurisdictional head of Article 5(3). It is a different form of judgment and the general principle, that exceptions to the general rule (jurisdiction at the domicile of the defendant) are to be interpreted narrowly, must prevail. In conclusion, the Swedish courts found no jurisdictional ground for a negative declaratory judgment under the jurisdictional head of Article 5(3).35 Another Swedish case regarding the applicability of Article 5(3) is NJA 2007 s 287 (Aredal). In this case a Swedish company, Aredal Foam Systems HB sued the German company MSR Dosiertechnik GmbH because of alleged trade mark infringement. The case concerned the ‘FireDos’ trade mark, which Arelad had registered in Sweden, Spain, Great Britain, Benelux and France. In the case before the Stockholm District Court, Aredal argued that MSR was infringing the trade mark in Sweden and in all the other countries where Aredal had the trade mark protected and that the Swedish court should decide on damages regarding the infringement not only in Sweden but also in the other relevant countries. Furthermore, Aredal claimed that the District Court should issue an injection forbidding MSR’s use of the trade mark in the countries where Aredal possessed the registered rights. The District Court found itself competent to try the entire case. The ground for competence was to be found in Article 5(3), whereas the principal rule regarding jurisdiction at the domicile of the defendant was not applicable. In the Court’s opinion the direct effect of the trade mark infringement was the damage caused to the right-holder’s assets. Due to the fact that Aredal was a company that only had assets in Sweden, the immediate economic damages must be located in Sweden, and in such a case a Swedish court would consequently be competent to try, not only infringements in Sweden, but also infringement in other countries. The case was appealed and the question of where the effect of an infringing action takes place was further developed. The Appeal Court concluded that the wording of 34  The Lugano Convention is applicable between the remaining EFTA States (ie Norway, Iceland and Switzerland) and the EU Member States. 35   See further L Lundstedt, ‘Jurisdiction and the Principle of Territoriality in Intellectual Property Law: Has the Pendulum Swung Too Far in the Other Direction?’ (2001) 32 International Review of Industrial Property and Copyright 124.

1034  Ulf Maunsbach Article 5(3) ‘the place where the harmful event occurred’ had not been expressly interpreted by the ECJ in relation to infringements. Consequently the question of where the direct effect of an infringement takes place had not been answered. Still there is consensus among scholars that the direct effect of an infringement occurs in the protecting country.36 In a situation where the direct effect of an infringing action takes place in the protection countries it is not possible to find jurisdiction in Sweden under Article 5(3) for foreign infringements. Consequently the Appeal Court found itself competent to try the infringement regarding the Swedish trade mark but it dismissed the actions regarding the infringements in Spain, Great Britain, Benelux and France. The case was appealed to the Supreme Court, which agreed with the Appeal Court as regards the interpretation of Article 5(3). In conclusion, it is settled case law in Sweden that the direct effect on an infringing action is considered to be located to the protecting country.37 Furthermore, it is relevant to mention the case RH 2008:4 (Arbeiderbladet) regarding copyright infringement. This case concerned publication of a photograph in a Norwegian newspaper, Arbeiderbladet, and on the Internet. The photographer was a Swedish citizen claiming that the publication in Norway (and on the Internet) was infringing his Swedish copyright. The case was brought before the District Court of Stockholm and the question arose whether it had jurisdiction. The defendant was domiciled in Norway but it was argued that competence was to be found in Article 5(3) of the Lugano Convention. The District Court found itself not competent, due to the fact that the publication of the photograph in Norway and on the Internet did not cause direct infringing damage in Sweden in a way making Article 5(3) applicable. The case was appealed and the Appeal Court found that the infringing action was located to Norway and that the effect of the action as regards the publication of the photograph in a Norwegian newspaper was also located to Norway. As to the publication of the photograph on the Internet the Court found that damage could likely appear in Sweden and consequently it could be concluded that there was jurisdiction in Sweden under the second jurisdictional head of Article 5(3) in relation to the damages that occurred (or may occur) in Sweden. Finally it is relevant to mention Roche Nederland BV et al v Frederick Primus and Milton Goldenberg,38 dealing specifically with the application of Article 6(1) in parallel infringement cases. Article 6(1) of the Brussels I Regulation provides for jurisdiction to try claims involving a number of defendants in one court where any of the defendants is domiciled if the claims are so closely connected that it is expedient to hear them together to avoid irreconcilable judgments. In several EU Member States this rule has been applied to assert jurisdiction over parallel infringement cases making it possible to gather all the claims expediently to one court.39 However, the ECJ concluded that Article 6(1) is not applicable in cases regarding parallel infringements of patent rights. On the contrary, Article 6(1) ‘must be interpreted as meaning that it does not apply in European patent infringement 36  In the case the court refers to U Maunsbach ‘Svensk domstols behörighet vid gränsöverskridande varumärkestvister’ [‘Swedish Jurisdiction in Cases on Cross-border Trade Mark Infringements’] (doctoral thesis, Lund University, 2006) and T Rauscher, Europäisches Zivilprozessrecht: Kommentar (Munich, Sellier, 2006). See also Fawcett and Torremans, above n 24 and Wadlow, above n 24. 37   The case is further commented in U Maunsbach ‘En effektiv hantering av tvister rörande parallella intrång? Kommentar till NJA 2007 s 287’ [‘Efficient handling of disputes about parallell infringements? A commentary on NJA 2007 p 287’] (2008) 1 Nordiskt Immateriellt Rättsskydd 79. 38   Case C-539/03 Roche [2006] ECR I-6535. An edited version of the case is available in Bogdan and Maunsbach, above n 26, 326. 39   One Swedish example would be the decision from the Svea Court of Appeals Ö 3913-99, RH 2001:81.

Sweden  1035 proceedings involving a number of companies established in various Contracting States in respect of acts committed in one or more of those States even where those companies which belong to the same group, may have acted in an identical or similar manner in accordance with a common policy elaborated by one of them.’ The reason for this quite narrow interpretation of Article 6(1) is primarily that intellectual properties are national rights and consequently parallel proceedings regarding such rights do not concern the same factual situation, which leads to the conclusion that there can be no risk of contradictory decisions. The case has been heavily criticised, not least due to its (presumed) negative impact on the efficient administration of justice in parallel infringement cases.40 In situations where the Brussels I Regulation is not directly applicable, a Swedish court would base its decision on jurisdiction either on analogies from the Swedish Code of Judicial Procedure or the Brussels I Regulation. This will, in a majority of cases, result in decisions on jurisdiction similar to those made in situations where the Brussels I Regulation is directly applicable. There are differences though, due to the fact that some of the relevant rules in the Code of Judicial Procedure differ from the rules laid down by the Brussels I Regulation. In particular there are two specific jurisdictional rules worth mentioning in cases regarding intellectual property. First the Swedish rule on contract-related disputes has a different approach compared to its counterpart in the Brussels I Regulation. In accordance with Article 4, Chapter 10 of the Swedish Code of Judicial Procedure, jurisdiction can be based on the place of contracting, whereas Article 5(1) of the Brussels I Regulation focuses on the place of performance. In cross-border cases this generally points in different directions and it gives Swedish courts a possibility to find a jurisdictional ground that would not have been available in situations where the Brussels I Regulation is directly applicable. One example would be if a defendant domiciled in New York enters into an agreement in Sweden regarding sales of goods that are to be delivered in New York. According to the Swedish rule there will be jurisdiction in Sweden because of the fact that the contract formation took place in Sweden but according to the Brussels I Regulation, jurisdiction would be at the place of performance and that would be where the goods are to be delivered in accordance with Brussels I Regulation, Article 5(1)(b). Other alternative Swedish rules are found in Article 3, Chapter 10 of the Swedish Code of Judicial Procedure. In this article there are specific rules dealing with situations where the defendant is not domiciled in Sweden. The second sentence of the Article states that disputes regarding property in general might be tried where the property is situated (property forum). In the first sentence of the paragraph, it is stated that disputes regarding payment (which include payment for goods or services as well as payment of damages) might be tried in Sweden if the defendant has assets in Sweden (general property forum). This last rule intends to protect Swedish claimants due to the fact that it is generally not possible to enforce foreign judgments in Sweden other than judgments decided by courts in an EU Member State. Concerning the closer interpretation of the above-mentioned rule, there are decisions from the Swedish Supreme Court clarifying, among other things, the nature of the assets that can constitute grounds for jurisdiction according to the general property forum rule.41 In general, the definition is quite generous to plaintiffs; all assets with a distrainable value can, as a principal rule, be considered. In relation to intellectual property rights, it can be   See above n 28.   See Bogdan, Svensk Internationell Privat- och Processrätt, above n 20, 121 with further references.

40 41

1036  Ulf Maunsbach noted that the Swedish Supreme Court (in case NJA 2006 s 354) found that a patent registered in Sweden was an asset in the meaning of the general property forum rule, making it possible for a Swedish plaintiff to bring a case before a Swedish court against a defendant domiciled in the United States. As regards enforcement and recognition (in intellectual property related disputes), there are few applicable rules outside of the applicability of the Brussels I Regulation. Usually enforcement and recognition require some kind of mutual agreement between the state of origin and Sweden, but Sweden has not entered into any such agreements related to judgments in the area of intellectual property, other than the Brussels I Regulation. This leads to a conclusion with two opposite situations. As to cases decided by courts within the scope of application of the Brussels I Regulation, the question of recognition and enforcement is explicitly answered in the Regulation. The principal rule is that such judgments are to be recognised and enforced without substantive review. As regards cases decided by other foreign courts the principal rule is the opposite; such foreign judgments are not recognised in Sweden and consequently are not enforceable. Instead a foreign judgment may be regarded as evidence in a new procedure and there are examples where Swedish courts have decided to base new judgments on a foreign judgment, without a new examination of the substantive issues. However, this simplified procedure is not mandatory, and consequently it cannot be argued that Swedish courts are obliged to perform in this way. Instead, foreign judgments must be regarded as unenforceable and therefore enforcement and recognition would normally demand a new procedure before a Swedish court. However, in situations where it would not be possible to assert Swedish jurisdiction to try a case, (eg, a case regarding the validity of a foreign intellectual property right), a foreign judgment regarding that particular issue is likely to be recognised in Sweden. 1.2.4  Choice of Law As to choice of law, Swedish courts will apply the Rome I and II Regulations to ascertain applicable law in intellectual property disputes. Both Regulations are directly applicable in Sweden and applied on a universal basis, which means that there is no necessary connection to an EU Member State. In all cases where there is conflict of laws in civil and commercial matters the Rome Regulations are to be applied to solve the choice of law issue. If the dispute relates to contractual obligations, the Rome I Regulation will apply and if the dispute relates to non-contractual obligations the Rome II Regulation will be applied. With this said it is relevant to mention that Member States may still apply international conventions to which they are parties and which lay down conflicts of law rules. As regards the Swedish conflict rules concerning contracts for the sale of goods, it is relevant to mention Act 1964:528 which implements the 1955 Hague Convention of 15 June on the Law Applicable to International Sales of Goods. The conflict of law rules laid down in this Act, however, apply only to sale of goods (chattels) and do not apply directly to sale of intellectual property, even if they might be relevant where intellectual property rights are included in a product for which the Act applies. One example could be the sale of computer programs, which is actually a sale of a licence to use the intellectual property right in question. The 1964 Act might be applicable to the sales contract, but in view of the space allowed in this report I will not develop the discussion further.42   See further Bogdan, Svensk Internationell Privat- och Processrätt, above n 20, 270.

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Sweden  1037 As regards choice of law issues relating to contracts, the Rome I Regulation will apply to contracts entered into on or after 17 December 2009 and the Rome Convention will be applied to contracts entered into before that date and after the 1 July 1998. As to contracts entered into before 1 July 1998, other conflict rules will be applied to ascertain applicable law and that would also be the case as regards choice of law in relation to non-contractual obligations arising before the entry into force of the Rome II Regulation (ie up to 11 August 2007). Older Swedish practice with reference to conflict of law rules will not be discussed further, although it remains relevant in relation to older contracts/non-contractual obligations.43 The Rome I Regulation will, accordingly, be applied by Swedish courts to solve choice of law issues in relation to contractual obligations. The Regulation recognises the wellestablished principle that the parties are free to choose applicable law (Art 3). This freedom applies whether or not the choice specifies the law of a Member State due to the universal application that characterises the Rome Regulations (Art 2 in both regulations). In the absence of an expressed choice, applicable law will be ascertained by establishing the country with which the contract has closest connection. Article 4(1) specifies the closest connection for certain contracts (eg the country where the seller/service provider has his habitual residence) if it is a contract for the sale of goods/provision of services. Furthermore, a franchise contract or a distribution contract is to be governed by the law of the habitual residence of the franchisee/distributor. If the contract does not fit in the specific rules mentioned in Article 4(1), the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence is to be applied. Finally, when there is a manifestly closer connection to a country other then that indicated by Article 4(1) and (2), the law of that other country shall apply according to Article 4(3) and in situations where applicable law cannot be established by Article 4(1) and (2), the law of the country to which the contract is most closely connected is to be applied, Article 4(4). In relation to consumer contracts, there are special rules in Article 6 stating that the law of the country where the consumer has his habitual residence will be applicable in certain situations (ie if the professional seller directs his commercial activities to that country). As regards intellectual property disputes it is likely that the principal rules in Article 3 and 4 will apply in most cases, due to the fact that consumers rarely conclude contracts regarding intellectual property rights. Borderline issues might appear though, for instance in relation to computer software and computer games. When disputes relate to non-contractual obligations, Swedish courts have, since 11 January 2009, applied the Rome II Regulation. As to infringements of intellectual property rights, there is a special rule in Article 8(1) stating that the law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed. In the case of infringement of unitary Community rights, Article 8(2) states that the law applicable shall be the law of the country in which the act of infringement was committed, for any question that is not directly governed by the relevant Community instrument (ie the Trade Mark or the Design Regulations). A general rule in the Rome II Regulation is that the parties have a freedom of choice and a possibility to enter into agreements as regards applicable law after the damage has occurred. This general rule, however, does not apply to infringements of intellectual property rights, Article 8(3).   See further Bogdan, Svensk Internationell Privat- och Processrätt, above n 20, 251 and 282.

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1038  Ulf Maunsbach

2  Hypothetical Cases Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (4) Please specify if answers to these questions were different in cases where intellectual property rights are at stake.

Case 1(1) Swedish courts would have international jurisdiction in cases regarding defamation if the defendant is domiciled in Sweden. If the defendant is a corporation with a branch in Sweden there would be jurisdiction in Sweden according to Article 5(5) of the Brussels I Regulation if the dispute arises out of the operations of that establishment. Case 1(2) If copies of the journal where distributed in Sweden there would be jurisdiction in Sweden as to the damage that occurred in Sweden, irrespective of the domicile of the defendant in accordance with Article 5(3) of the Brussels I Regulation. If the journal was printed in Sweden then Sweden would be the place where the action took place and consequently there would be international jurisdiction in Sweden as to all the damage that can be derived from that action. Case 1(3) No, it would be sufficient to locate the tortious action in Sweden in accordance with Article 5(3) of the Brussels I Regulation. Case 1(4) The answer to the questions above would be different if the validity of registered foreign intellectual property rights where at stake. Questions of this nature are to be handled exclusively by courts in the country of registration in accordance with Article 22(4) Brussels I Regulation.

Sweden  1039

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Case 2(1) In accordance with the judgment in GAT v Lamellen und Kupplungsbau (see above 1.2.3), a Swedish court would not have jurisdiction to try a case regarding the validity of a foreign patent, not even if the question of validity was raised as a defence in an ongoing infringement case. Case 2(2) Within the frames of the applicability of the Brussels I Regulation a Swedish court, in accordance with Article 22(4) of the Brussels I Regulation, would not be competent to try a case regarding the validity of an intellectual property right registered in another Member State. As regards unregistered rights, the Brussels I Regulation does not restrain the courts of Member States to try such questions. It is likely though, that a Swedish court would be hesitant to ascertain jurisdiction in a case regarding the validity (in other Member States) of an unregistered intellectual property right. In situations when the Brussels I Regulation does not apply, the questions may be answered in a slightly different way. In Swedish doctrinal writing it is argued that it should be possible to try the validity of intellectual property rights inter partes, eg in a case regarding infringement where the question of validity is raised as a defence.44 Considering the explicit rule as to registered rights in the Brussels I Regulation it is likely that Swedish courts would be less hesitant to try cases regarding nonregistered rights. Case 2(3) The answer to the question would be of a similar kind compared to that under the answer to question 2. Within the frames of the applicability of the Brussels I Regulation, and in the light of the ECJ’s interpretation in the case GAT v Lamellen und Kupplungsbau, Article 22(4) does not provide for jurisdiction to settle a question of validity even if that question arose preliminary. As to non-registered rights it would be more likely that a Swedish court would find itself competent and the same might be said as regards situations when the   See Maunsbach, above n 37, 191 (with further references). See also Wadlow, above n 24, 202.

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1040  Ulf Maunsbach Brussels I Regulation do not apply. Furthermore, there is a probability that the problem of international jurisdiction would not be developed explicitly if the question remains unchallenged.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract? (2) Assuming that B, C and D are members of a group of a corporation and takes identical steps in infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country of X is a court of your country would (and if so under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

Case 3(1) As regards consolidation of claims, Article 6(1) of the Brussels I Regulation would be applicable. According to said rule one of the preconditions for consolidation is that one of the defendants is domiciled in the country of the court to which related claims are to be consolidated. Thus the answer is that it would not be possible to consolidate the claims due to that fact that none of the defendants are domiciled in country W. If the claims were raised against licensees in different countries, the answer would probably be the same. There is a special rule regarding contracts in matters relating to rights in rem in Article 6(4) of the Brussels I Regulation stating that actions (under certain circumstances) may be consolidated to a court in the Member State in which the property is situated. One could argue that intellectual property rights should be dealt with in analogy with this rule but, in the light of the case Roche Nederland BV et al v Frederick Primus and Milton Goldenberg (see above 1.2.3), it is not likely that the ECJ would take that position. Case 3(2) Before the decision in Roche Nederland BV et al v Frederick Primus and Milton Goldenberg a Swedish court would consolidate such claims (see above 1.2.3) but after the ECJ’s decision that is clearly not an option, at least not as regards parallel patent infringements. The answer would be the same irrespective of a counterclaim as to the patents validity.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise

Sweden  1041 dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1) Would such a choice of court clause of the license agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that patents are invalid? (3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings? (4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such decision?

Case 4(1) Within the field of civil and commercial matters a choice of forum clause is enforceable as a principal rule, if it is not in conflict with the rules regarding exclusive jurisdiction in Article 22 of the Brussels I Regulation. However, an infringement dispute does not, by nature, involve issues regarding validity and consequently the exclusive rule in Article 22(4) of the Brussels I Regulation would not be applicable. Thus the choice of forum clause would be enforceable. Case 4(2) If the defendant raised the question of validity as a counter-claim, a Swedish court would not be competent to try that issue. It remains to be seen how that is going to affect the infringement dispute in the main proceeding. It is not settled by case law and it can be regarded as an open question if the court is to stay its proceeding until the question of validity is solved by a court in the protecting country, or if the ‘infringement-court’ shall decline jurisdiction as to the entire case. Case 4(3) Yes, in theory, as long as the case does not involve questions regarding validity. In practice that is not a likely scenario, as questions of validity are raised in almost all patent infringement cases. Case 4(4) An arbitration agreement would generally be enforceable under Swedish law. However, if the agreement is in conflict with rules on exclusive jurisdiction, such an agreement would not be enforceable. Accordingly, an arbitration tribunal could not decide upon the validity of foreign intellectual property rights and such a decision would not have legal effect in Sweden.

1042  Ulf Maunsbach

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of a country Z take having regard to pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Case 5(1) If the countries mentioned in the question are EU Member States, Article 27 and 28 of the Brussels I Regulation regarding lis pendens and related actions would be applied. As regards the applicability of Article 27, a court shall of its own motion stay its proceedings until jurisdiction is established in a court first seised if the proceedings involve the same parties and the same cause of action. There is insufficient information in the question to fully develop the answer, but it might be stated that an infringement action and a declaration for non-liability is likely to be regarded as the same cause of action. If so, the court of country Z is forced to stay its proceedings after which it shall decline jurisdiction when jurisdiction in the court first seised is established. The question is likely to be answered in the same way even in situations where the Brussels I Regulation does not apply directly, even if Swedish courts in such situation are not bound by the Regulation. Case 5(2) First it might be stated that a court, under the applicability of the Brussels I Regulation, will have to stay its proceedings until the court first seised has established its jurisdiction. Even if it is clear that there is no jurisdiction in the court first seised, as in a case where the question of validity is tried in a court in a country other than the county of protection, a decision on jurisdiction must be made before it is possible to try the case in courts of another county. However, this line of argument is only relevant if Article 27 of the Brussels I Regulation is to be regarded as applicable. It might be stated that an infringement case and a case regarding validity does not concern the same cause of action. Thus Article 27 does not prevent the proceedings in country Z. Instead Article 28 about related actions might be applied, but this rule is not mandatory and the question whether or not to stay the proceedings will be decided under the discretion of the court in country Z.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files

Sweden  1043 a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, first, that the claim for the infringement of patent granted in country X is brought before a court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Case 6(1) The easy answer would be no. The Swedish Patent Act only applies to acts of infringements having an effect in Sweden, due to the fact that a Swedish patent only provides protection in Sweden. The situation is not that simple though. Activities conducted abroad might very well have effect in Sweden and if so, the case can be tried under Swedish patent law. Case 6(2) In certain situations Swedish courts are bound to apply the intellectual property laws of other countries. According to Article 8 of the Rome II Regulation, a Swedish court shall apply the law of the country for which protection is claimed in cases regarding infringements of intellectual property rights. In this case protection is claimed for country X, and thus the laws of that country must be applied.

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C requesting to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1) What law would be applied to determine the liability of A, B and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Case 7(1) In the case described a Swedish court today would apply the Rome II Regulation. According to its Article 8 different laws are to be applied in respect of infringements conducted in

1044  Ulf Maunsbach different countries where the infringed intellectual property rights are protected. In a similar case, one interesting question is where direct infringement is to be located. An easy way to solve this quite tricky question is to settle that the infringement is conducted at the location of the servers hosting the services and at the location where the defendants suitably enough are domiciled. This was the situation in the much discussed decision from the District Court of Stockholm in the Swedish Pirate Bay case where the question of the location of direct infringement was not discussed in depth. Nor was the question regarding choice of law examined. It is likely though that those are questions that will be developed further by the appeal court in which the case now rests. According to Article 8(3) the parties will not be allowed to agree on applicable law in cases involving infringement of intellectual property rights. Case 7(2) No. It’s would still be a non-contractual obligation and the Rome II Regulation would still be applicable. Case 7(3) Article 8 of the Rome II Regulation will be applied. No choice would be allowed and the court will have to apply the law of each protecting country. As to the definition of ‘ubiquitous infringement’, that will eventually have to be decided by the ECJ. It is likely that Swedish courts would be reluctant to take a definite position regarding such definition without support from the ECJ.

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B’s is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning right to obtain patents be enforceable in your country? (2) Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in the case of initial authorship or initial title to trade mark? (4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Case 8(1) As a starting point, a Swedish court would apply the law of the protecting country to determine who the initial owner is. Support for this position is to be found in the general apprehension that questions regarding intellectual property rights are governed by law of the protecting country (see for instance the Bern Convention Art 5(1) and the Paris Convention Art 2(1)). A choice of law clause regarding the right to obtain a patent would therefore probably not be enforceable in Sweden due to the fact that the right to obtain a patent is

Sweden  1045 such that it should be governed by the law of the protecting country. In cases involving a contract (eg, an employment contract) the answer might be different though. There is nothing that prevents agreements regarding transfer of intellectual property rights from being enforced in Sweden. On the contrary, Swedish law supports the idea that inventions in certain situations are to be owned/controlled by the employer (see further Lag (1949:345) om rätten till arbetstagares uppfinningar (Act on the Right in Inventions Made by Employees)). The same might be said as to community design and computer programs. Case 8(2) No, the situation will, in general be more complicated but the factual legal framework would be the same. Case 8(3) No, probably not. The starting point in relation to all intellectual property rights would be the law of the protecting country. As to the question of transfer of rights there might be differences though. The expressed regulation as regards inventions does not apply in those situations but an agreement regarding ownership/authorship/initial title would to a large extent still be enforceable except as to moral rights. Case 8(4) The question of payment will probably be regarded as a contractual issue and it will be treated as such under the condition that there is an agreement/license. This means that a Swedish court would apply the law that governs the contract to decide the issue as to reasonable payment.

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of the concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How will the court deal with the issue of transferability? (3) What would be the applicable law in a case where there is no choice of law made by the parties?

Case 9(1) A choice of law clause would be enforceable as to the economic rights but not as regards the moral rights. The latter due to the fact that moral rights are governed by mandatory rules stating that it is not possible to transfer such rights with binding effect. However, in specifically expressed circumstances it might be possible to waive moral rights.

1046  Ulf Maunsbach Case 9(2) If the case involves Swedish moral rights, the issue of transferability would be dealt with in accordance with the Swedish Copyright Act. In accordance with Swedish law a right-holder cannot, as stated under Case 9(1), with binding effect transfer moral rights. Case 9(3) As stated above, a Swedish court will most certainly apply the law of the protecting country in relation to the moral rights. As to the agreement it will be dealt with under the law of the contract. If there is no choice of law clause the court will apply the Rome I Regulation to find out which law is to be applicable in relation to the agreement. In the absence of an expressed choice it will end up in a discussion regarding which country’s law the agreement has closest connection to. See further above 1.2.4.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in registry of a recognising country? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would an enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Case 10(1) The answer to the question depends to some extent on the nature of the foreign judgment. Within the frames of the Brussels I Regulation the principle rule is that a judgment given in a Member State shall be recognised in the other Member States without any special procedure being required. There are exemptions though. The foreign judgment in this case could be regarded as dealing with the registration or validity of the intellectual property right. Such a judgment could not be recognised in Sweden due to the exclusive rule on jurisdiction in Article 22(4) of the Brussels I Regulation which, according to Article 35(1) of the same Regulation, constitutes a mandatory prohibition as to recognition of foreign judgments. It is not clear to what extent the recognising court has to examine the international jurisdiction of the rendering court but according to the wording of the Brussels I Regulation it shall not be recognised. The question will eventually have to be answered by the ECJ but it is not likely to become problematic due to the fact that the right holder would oppose recognition in the described cases and consequently this question is not likely to be answered ex officio even though courts are supposed to do so. A relevant question in this specific case is to what extent a judgment regarding initial ownership is to be regarded as dealing with registration or validity. This question has been answered by the ECJ in the Duijnstee case, at least as far as employment rela-

Sweden  1047 tions are concerned.45 In a case where neither the validity of the patent nor the legality of the registration in the various countries is disputed by the parties to the main action and where the question as to ownership in relation the patent depends exclusively on the legal relationship which existed between the parties concerned, Article 22(4) of the Brussels I Regulation does not apply. In such cases recognition is possible. It may be regarded as an open question as to what extent this view is applicable outside employment relations.46 If the rendering court is situated in a country where the Brussels I Regulation does not apply, the judgment would not, as a principal rule, be recognised in Sweden. Case 10(2) In situations where recognition in Sweden is not possible the parties would be required to re-litigate the dispute in order to have the ownership decision registered in registry in Sweden. Case 10(3) A declaration of enforceability in accordance with the Brussels I Regulation would be required. The procedural steps to be taken are described in Articles 38–52 of the Brussels I Regulation. In Sweden an application for declaration of enforceability are to be handled by the Appeal Court in Stockholm (Svea Hovrätt).

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

45   Case 288/82 Duijnstee [1983] ECR 3663. An edited version of the case is available in Bogdan and Maunsbach, above n 26, 48. 46   See Case 288/82 Duijnstee [1983] ECR 3663, 26-27.

1048  Ulf Maunsbach Case 11(1) The question to what extent a Swedish court would be competent to issue provisional measures/injunction with extraterritorial effect depends on the nature of the dispute. Within the framework of the Brussels I Regulations the competence as to provisional measures are connected to the extent of jurisdiction for the main proceeding. In situations where jurisdiction in the main proceedings is based upon the fact that the defendant is domiciled in Sweden, jurisdiction may be regarded as unrestricted. In such situations it is possible to issue provisional measures with extraterritorial effect. Still, I would say that it is likely that Swedish courts would hesitate to issue extraterritorial provisional measures. Such reluctance would furthermore be in line with the recent ECJ decision in the West Tankers case47 which indicates that the ECJ tends to adopt a restrictive approach as to measures with an extraterritorial effect. In situations where there is no jurisdiction over the main proceedings it is still possible to issue provisional measures in accordance with Article 31 Brussels I Regulation which states that ‘Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.’ In Sweden, the possibility to issue provisional measures in such cases are regulated in the Code of Judicial Procedure and in the various intellectual property laws. Case 11(2) Yes it might be possible. As described under Case 11(1), the possibility of issuing provisional measures depends on the dispute and the jurisdictional ground. Case 11(3) Yes, in accordance with Swedish law. Case 11(4) No. Swedish courts can be regarded as having exclusive jurisdiction on provisional measures in Sweden and it would not be possible to derogate from this exclusivity by submitting the main proceeding to arbitration proceedings. Case 11(5) Provisional measures (including a provisional injunction to cease) are to be conceived as procedural measures and the applicable regulation in question are mainly found in the Code of Judicial Procedure. There are certain special rules in the different intellectual property laws as well, but those rules are framed in close connection with the general rules in the Code of Judicial Procedure.

47   Case C-185/07 Allianz SpA formerly Riunione Adriatica di Sicurtà SpA and Generali Assicurazioni Generali SpA v West Tankers Inc [2009] ECR I-663.

Sweden  1049

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as a collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y: (1) Could intellectual property rights be used as a collateral pursuant to the law of your country? (2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights? (3) Would a court of your country apply the same law in relation to registered and non-registered intellectual property rights?

Case 12(1) Yes, registered intellectual property rights can be used as collateral in accordance with Swedish law. This applies to copyright as well, even though the issue is more complicated in the area of copyright law. To put it simply, it is generally admitted that copyrights can be used as collateral (in particular, copies of protected works) but there are quite a lot of exceptions in relation to seizure. Case 12(2) Within the framework of an insolvency proceeding the question of applicable law would be governed by Article 4 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings and a principle rule would be that it is the law of the state of the opening of proceedings that shall determine more or less all questions in relation to the proceeding. The regulation is quite specific in relation to applicable law and Article 4 provides a detailed list regarding what the law of the state of the opening of proceedings shall determine in particular. There are some exceptions though (eg, rights in rem of creditors or third parties in respect to tangible or intangible, movable or immovable assets belonging to the debtor which are situated within the territory of another Member State at the time of the opening of proceedings). As to intellectual property rights, it is not clear whether or not it is the law of the state of the opening of proceedings that is to be applied. A likely scenario is that questions related to the rights as such will be tried in accordance with the law of the protecting country whereas other questions will be dealt with in accordance with the law of the state of the opening of proceedings. Case 12(3) Yes, that is the law of the protecting country as to questions that relate to the rights as such.

Switzerland* AMÉLIE CHARBON** and IRIS SIDLER***

Contents Part I: General Issues........................................................................................................................... 1051 Part II: Specific Issues.......................................................................................................................... 1055 Part III: Institutional Framework....................................................................................................... 1057

Part I: General Issues Question 1: Please briefly describe the general principles of territorial jurisdiction in international IP disputes. How would Swiss courts assume international jurisdiction in IP infringement disputes and disputes related to IP contracts? Switzerland has signed several international conventions, of different types.1 The simple conventions contain rules concerning indirect conflict of jurisdictions. They do not solve the issue of recognition and enforcement of foreign decisions, and leave the provisions for direct jurisdiction untouched. Examples include bilateral conventions that Switzerland has signed with Spain (19 November 1896), Czechoslovakia (21 December 1926) and Austria (16 December 1960). Most of these conventions have lost their importance since the entry into force of the Lugano Convention (19882). Nevertheless, they continue to have effect in areas that the Lugano Convention does not cover (see Arts 55 and 56 of the Lugano Convention). Switzerland has also signed ‘double’ conventions containing rules of direct and indirect jurisdiction. Additionally, these conventions often set out rules of conflict of laws. Such * Disclaimer: The views in this questionnaire are solely those of the authors and do not necessarily reflect those of the Swiss Federal Institute of Intellectual Property. ** MLaw. ***  Lic iur, lawyer of the Swiss Federal Institute of Intellectual Property. 1   cf Classified Compilation of Federal Legislation with legal texts in German, French and Italian on www. admin.ch/ch/d/sr/0.27.html#0.275. 2   Classified Compilation of Federal Legislation 0.275.11 with legal texts in German, French and Italian on www.admin.ch/ch/d/sr/c0_275_11.html.

1052  Amélie Charbon and Iris Sidler agreements only apply between the Contracting States. The rules they contain are therefore subject to reciprocity. They can be bilateral or multilateral. One example of a multilateral, ‘double’ convention is the Lugano Convention.3 The Lugano Convention entered into force in Switzerland on 1 January 1992. A revised version of the Lugano Convention entered into force on 1 January 2011.4 The first part of both the original and the revised Conventions contains jurisdiction rules that apply directly to all judges of the Contracting States. The second part lays down the rules on recognition and execution. The Convention contains provisions regarding civil and commercial matters only. The Lugano Convention does not contain any specific IP provisions, except Article 16 point 4 (Article 22 point 4 of the revised Convention). This Article states that the courts of the Contracting State in which the deposit or registration has been applied for, has taken place or is under the terms of an international convention deemed to have taken place, shall have exclusive jurisdiction, regardless of domicile in proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered ( forum protectionis). The revised convention states explicitly that this is irrespective of whether the issue is raised by way of an action or as a defence. In all other IP proceedings (for example in copyright proceedings because of the absence of a register) the general provisions of the Convention apply, in particular: Article 2 (in both original and revised Conventions) sets out a general rule: subject to the provisions of the Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that state. Article 5 point 1 (in the revised Convention: Art 5 point 1 letter a) contains provisions regarding matters relating to a contract (also applicable to IP contracts): a person domiciled in a Contracting State may, in another Contracting State, be sued in the courts for the place of performance of the obligation in question. Article 5 point 3 (in both original and revised Conventions) states that a person domiciled in a Contracting State may, in another Contracting State, be sued in matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred (or may occur). This article for example applies in cases of IP violations in the absence of a binding contract between the parties. Article 5 point 4 (in both original and revised Conventions) states that a person domiciled in a Contracting State may, in another Contracting State, be sued as regards a civil claim for damages or restitution which is based on an act giving rise to criminal proceedings, in the court involved in those proceedings, to the extent that that court has jurisdiction under its own law to entertain civil proceedings. The applicable convention has to be consulted to determine if Switzerland can be designated as the forum. If there is no such convention, the Federal Private International Act has to be consulted to determine which court has jurisdiction within Switzerland.5

3   F Knoepfler, P Schweizer and S Othenin-Girard, Droit international privé suisse, 3rd edn (Berne, Stämpfli Editions SA, 2005) 63 et seq. 4  More information in German, French and Italian on www.bj.admin.ch/bj/de/home/themen/wirtschaft/ gesetzgebung/lugano_uebereinkommen.html. 5   cf Classified Compilation of Federal Legislation 291 with legal texts in German, French and Italian on www. admin.ch/ch/d/sr/c291.html. For more information, see Part III Question 2.

Switzerland  1053

Question 2: Would Swiss courts have subject matter jurisdiction in disputes related to foreign IP rights? How would Swiss courts deal with such issues as existence or validity of foreign IP rights? Swiss courts have subject matter jurisdiction in disputes related to foreign IP rights if Swiss courts have jurisdiction. However, Swiss courts would generally not have subject matter jurisdiction in disputes pertaining to the existence or validity of foreign IP rights (cf Art 16 point 4 of the Lugano Convention/Art 22 point 4 of the revised Convention as mentioned in Question 1, and the similar provision in Art 109 para 1 of the Federal Private International Act; exception: Art 23 of the Lugano Convention/Art 29 of the revised Convention). In all other matters the following rules may apply: Article 8 of the Federal Private International Act states that the court before which the main claim is brought shall also entertain any counterclaim, provided there is a nexus between the claim and counterclaim. Hence the judge can have jurisdiction in foreign IP rights disputes when the counterclaim refers to them (cf Art 6 point 3 of the original and the revised Lugano Conventions with regard to international jurisdiction). Regarding interim relief, Swiss judicial or administrative authorities may grant interim relief even where they do not have jurisdiction to entertain the merits (Art 10 of the Federal Private International Act), so they can grant interim relief pertaining to foreign IP rights (cf Art 24 of the Lugano Convention/Art 31 of the revised Convention). Article 8 para 3 of the Federal Patents Act states that transit can be barred only when the patentee may prohibit the importation into the country of destination. The Swiss judge must determine the situation in the country of destination before making a decision.

Question 3: Please describe what choice of law principles are applied to initial title, transferability of IP rights. Which law would be applied to contracts for transfer of IP rights in the absence of choice by the parties? Which law would govern the infringement of IP rights? The parties may make a choice of law if there is no reservation of Swiss public policy or any other mandatory provision. The application of provisions of foreign law is excluded if such application would lead to a result that is incompatible with Swiss public policy (Art 17 of the Federal Private International Act). Some provisions of Swiss law are mandatory because of their special aim. They are applicable regardless of the law referred by the Federal Private International Act (Art 18 of the Federal Private International Act). Regarding a dispute related to an IP contract, the parties have the possibility to make a choice of law directly in the contract. They can also make this choice subsequently. With respect to claims arising out of tortious acts, the parties may always agree, after the damage has occurred, to apply the law of the forum. Article 110 para 2 of the Federal Private International Act states that such a choice can only be made for claims resulting from the tortious act, and not for the act itself. In the absence of a choice by the parties, agreements pertaining to IP are governed by the law of the state in which the transferor or grantor of the IP right has his habitual residence (Art 122 para 1 of the Federal Private International Act). Agreements made between an

1054  Amélie Charbon and Iris Sidler employer and an employee concerning IP rights to inventions made by the employee in the course of performing his work are governed by the law applicable to the employment contract (Art 122 para 3 of the Federal Private International Act). In the case of an infringement of IP rights and in the absence of a choice by the parties, when the tortfeasor and the injured party have their habitual residence in the same state, claims in tort are governed by the law of that state (Art 133 para 1 of the Federal Private International Act). When the parties do not have a habitual residence in the same state, these claims are governed by the law of the state in which the tort was committed. However, if the result occurred in another state, the law of that state applies if the tortfeasor should have foreseen that the result would occur there (Art 133 para 2 of the Federal Private International Act). When a tort breaches a legal relationship existing between the tortfeasor and the injured party, claims based on that tort are governed by the law applicable to such legal relationship (Art 133 para 3 of the Federal Private International Act).

Question 4: Under what conditions would a foreign judgment be recognised and enforced by a Swiss court? Are there any special issues related to recognition and enforcement of foreign judgments in IP disputes? The recognition and enforcement is part of Title III of the Lugano Convention. Barring exceptions (regarding IP see particularly Art 28 paras 1 and 2/Art 35 point 1 of the revised Convention, with reference to the mandatory forum of Art 16 point 4 of the Lugano Convention/Art 22 point 4 of the revised Convention) the Swiss judge does not have to control the jurisdiction of the former judge (Art 28 para 4/Art 35 point 3 of the revised Lugano Convention).6 If the Lugano Convention or another international Convention does not determine whether a foreign judgment can be recognised in Switzerland, the Federal Private International Act must be consulted. Article 111 of the Federal Private International Act contains special provisions regarding the recognition of foreign decisions in IP disputes. Foreign decisions relating to the infringement of IP rights shall be recognised in Switzerland if the decision was rendered in the state of the defendant’s domicile or if the decision was rendered where the act or the result occurred and the defendant does not have any domicile in Switzerland. By Article 111 paragraph 2, foreign decisions pertaining to the existence, validity or registration of IP rights shall be recognised only if they were rendered in a state with respect to which the IP protection is sought or if such decisions are recognised there. If the judgment neither treats an infringement, nor the existence, validity or registration of IP rights (for example IP contract), the general recognition provisions of the Federal Private International Act apply (Art 25 et seq).

6   F Knoepfler, P Schweizer and S Othenin-Girard, Droit international privé suisse, 3rd edn (Berne, Stämpfli Editions SA, 2005) 65.

Switzerland  1055

Part II: Specific Issues Question 1: How would Swiss courts deal with parallel court proceedings in IP disputes which are pending before a foreign court? Article 9 of the Federal Private International Act states that when an action having the same subject matter is already pending between the same parties in a foreign country, the Swiss court shall stay the case if it is to be expected that the foreign court will, within a reasonable time, render a decision capable of being recognised in Switzerland. The Swiss court shall terminate its proceeding as soon as it is presented with a foreign decision capable of being recognised in Switzerland (cf Art 21 of the Lugano Convention/Art 27 of the revised Convention). In order to determine when an action has been initiated in Switzerland, the conclusive fate is the first necessary act to initiate the proceeding. A notice to appear for conciliation is sufficient (Art 9 para 2 of the Federal Private International Act; cf Art 30 of the revised Lugano Convention).

Question 2: Could Swiss courts consolidate related claims against several parties domiciled in different countries, or disputes related to IP rights held in different countries (and if so, under what conditions)? Articles 22 and 23 of the Lugano Convention/Articles 28 and 29 of the revised Convention provide rules regarding related claims. Article 22 paragraph 3/Article 28 point 3 defines related claims: actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Where related actions are brought in the courts of different Contracting States, any court other than the court first seised may, while the actions are pending at first instance, stay its proceedings. A court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the law of that court permits the consolidation of related actions and the court first seised has jurisdiction over both actions. Where actions come within the exclusive jurisdiction of several courts, any court other than the court first seised shall decline jurisdiction in favour of that court. Furthermore, Article 109 paragraph 3 of the Federal Private International Act states: ‘if several defendants may be sued in Switzerland and if the claims are essentially based on the same facts and the same legal grounds, the action may be brought against all of them before the same court having jurisdiction; the court before which the case was first brought has exclusive jurisdiction.’7

7   cf the new Art 8a–8c of the Federal Private International Act which entered into force together with the revised Lugano Convention on 1 January 2011.

1056  Amélie Charbon and Iris Sidler

Question 3: Under what circumstances would Swiss courts have jurisdiction to grant provisional measures in IP disputes? Could a Swiss court order a provisional measure with extraterritorial effects? Are there any legal tools for the protection of the defendant (eg requirement of security, etc)? Swiss judicial or administrative authorities may grant interim relief even where they do not have jurisdiction to entertain the merits. It is an international and not a local competence. The foreign authority can also order a provisional measure that can be recognised and enforced in Switzerland. However, such a proceeding can take a long time and does not match with the urgent character of provisional measures. That is why Article 10 of the Federal Private International Act allows the Swiss administrative or judiciary authorities, even if they are incompetent on the substance, to order provisional measures in a specific case (although it might actually be faster to request for provisional measures directly in the country of enforcement).8 Article 10 applies to any provisional measure allowed by the lex fori, which means by the federal or cantonal law, depending on the case (cf Art 24 of the Lugano Convention/Art 31 of the revised Convention). The Federal Civil Procedure Act, which entered into force in 2011, states in Article 13, as a general rule, that the courts which have jurisdiction to entertain the merits or the courts at the place of enforcement are competent to grant provisional measures.9 Article 264 of the Federal Civil Procedure Act states that the court can order a deposit if a damage may occur to the defendant. Furthermore, the requesting party may be liable for damages caused by unjustified provisional measures.10

Question 4: Would a Swiss court enforce parties’ choice of court agreements in disputes related to foreign IP rights? Would such agreements be enforceable in contractual as well as infringement disputes? Article 5 of the Federal Private International Act contains provisions regarding the choice of forum. In matters involving an economic interest, parties may agree on the court that will have to decide any potential or existing dispute arising out of a specific legal relationship. Unless otherwise agreed, a choice of forum is exclusive. A choice of forum has no effect if it results in abusively depriving a party from the protection granted to it by a forum provided by Swiss law. The chosen court may not deny jurisdiction if a party is domiciled or has its habitual residence or a place of business in the canton where the chosen court sits or if, pursuant to the Federal Private International Law, Swiss law is applicable to the dispute. The choice of forum is limited to an economic interest, whether the action results from a contract, an unjust enrichment or a tort. The court agreement is excluded if the forum provided by the law is exclusive (cf Art 17 para 1 of the Lugano Convention/Art 23 point 1 of the revised Convention). 8   B Dutoit, Droit international privé suisse Commentaire de la loi fédérale du 18 décembre 1987 (Basle, Helbing & Lichtenhahn, 1996) 22. 9   Unless specific provisions prevail; cf legal text in German: www.admin.ch/ch/d/as/2010/1739.pdf. 10   If the requesting party proves that he asked for provisional measures in good faith, the court can reduce or abandon the compensation.

Switzerland  1057 The Swiss court, as provided by law, has to respect the parties’ agreement, unless the defendant proceeds on the merits without reservation (Art 6 of the Federal Private International Act, cf Art 18 of the Lugano Convention/Art 24 of the revised Convention).

Question 5: Could IP rights be used as collateral according to Swiss law? What law would be applied by Swiss courts to the creation, effectiveness against third parties, priority and enforcement of these security rights? Articles 899 et seq of the Federal Private Act contain rules regarding collaterals. Debts and other alienable rights, including IP rights, can be used as collateral. Article 105 of the Federal International Private Act provides special rules regarding the pledging of receivables, negotiable instruments and other rights. The pledging of receivables, negotiable instruments or other rights including IP rights is governed by the law chosen by the parties. Such choice of law may not be asserted against third parties. Failing a choice of law, the pledging of IP rights is governed by the law which applies to such rights (lex protectionis). A law other than the one governing the pledged right may not be asserted against the debtor. The principal interest of an approach based on the lex protectionis is that its application would result in the same law applying to both security rights and ownership rights in IP.11

Part III:  Institutional Framework Question 1: Please describe the existing institutional framework of IP disputes in Switzerland (eg the competence of courts/specialised agencies to hear IP disputes, the division of federal and state competence in IP matters, etc) A.  Civil Issues To ensure a concentration of IP knowledge in the courts, the Swiss IP Acts provide that each canton must designate a single court for civil actions in IP cases. A new Federal Patent Court commenced its activities at the beginning of 2011. This Court will largely relieve the cantonal courts of patent matters. Decisions of the cantonal courts, as well as decisions of the Federal Patent Court, may be appealed to the Federal Supreme Court. With the entry into force of the Federal Civil Procedure Act in 2011 the rule of the sole cantonal court is maintained (cf Art 5, the provisions of the Swiss IP Acts are abolished).

B.  Criminal Issues All IP acts contain criminal law provisions. The criminal prosecution falls within the competence of the cantons. Cantonal decisions may be appealed to the Federal Supreme Court.   This solution for IP rights differs from the general rules which follow the location of the grantor approach.

11

1058  Amélie Charbon and Iris Sidler The sole court is competent for civil actions only. Criminal actions in IP cases are matters of the ordinary criminal courts.12

C.  Administrative Issues The Swiss Federal Institute of Intellectual Property is the federal agency for intellectual property matters in Switzerland (trade marks, patents, designs and copyright). It examines Swiss national filing applications and grants and administers industrial property rights. The Institute’s statutes charge it with the tasks of drafting legislation in the field of intellectual property, acting as advisor to the Federal Council and other federal administrators, and representing Switzerland at the international level. In the field of trade marks, designs, patents and topographies, the Federal Administrative Court is competent to hear appeals against decisions of the Swiss Federal Institute of Intellectual Property in application and opposition proceedings. The opposition proceeding allows the right-holder of an older trade mark, after publication of a new one, to raise before the registration the relative reasons for exclusion. While its decisions in opposition proceedings are final, decisions in application proceedings may be further appealed to the Federal Supreme Court. In cases of geographical indications and appellations of origin for agricultural products and processed agricultural products, the Federal Office for Agriculture renders decisions in application and opposition proceedings. These decisions are subject to appeal to the Federal Administrative Court. Decisions in application as well as in opposition proceedings of the Federal Administrative Court may be appealed to the Federal Supreme Court.

Question 2: Please describe how IP issues are addressed in conflict of laws in your country (eg whether special conflict of laws/jurisdiction rules addressing IP matters are provided, etc) A. Jurisdiction The Federal Private International Act defines the local forum in Switzerland in international disputes.13 Articles 109-11 of the Federal Private International Act contain special IP provisions. Article 109 paragraph 1 states that the courts of the defendant’s domicile have jurisdiction to entertain actions pertaining to the validity or registration of IP rights in Switzerland. When a defendant does not have a domicile in Switzerland, actions shall be brought before the Swiss courts at the headquarters of the representative recorded in the register or, in the absence of such headquarters, before the courts at the place where the authority keeping the register has its office. Swiss courts at the defendant’s domicile or, in the absence of a domicile, those at the defendant’s habitual residence, have jurisdiction to entertain actions pertaining to the   This rule is contained in Art 22 of the Federal Criminal Procedure Act, which entered into force in 2011.   cf Question 1 for information about the Lugano Convention. With the adaptation of the Federal Private International Act with the revision of the Lugano Convention on 1 January 2011 the content of both, Act and Convention, will mainly provide analogue solutions. 12 13

Switzerland  1059 violation of IP rights. Swiss courts have jurisdiction over the place where the act or the result occurred, as well as the place where the acts of the subsidiary are taking place.14 Swiss courts at the domicile or, in the absence of a domicile, at the habitual residence or place of business of the defendant, have jurisdiction to entertain actions for unjust enrichment (Art 127 of the Federal Private International Act). Article 129 of the Federal Private International Act provides jurisdiction to entertain actions in tort. The foreseen fori are exactly the same as for Article 109 paragraphs 2 and 3. Article 112 of the Federal Private International Act states that Swiss courts at the defendant’s domicile or, in the absence of a domicile, those at the defendant’s habitual residence, have jurisdiction to entertain actions arising out of a contract. Swiss courts at the defendant’s place of business also have jurisdiction to entertain actions relating to an obligation arising out of the operation of such place of business. The distinction between the different disputes is important to determine the jurisdiction. Unfortunately, the terms (actions pertaining to the validity or registration/actions pertaining to the violation/actions arising out of a contract) are difficult to define and, depending on the circumstances, can have different meanings and terminologies. Actions pertaining to the validity or registration are all claims with the aim to register or to accord IP rights and the actions which aim to abolish IP rights. Infringement disputes deal with the prejudice of an IP right and its financial consequences. They are all claims the right-holder files to protect his rights against injuries or potential dangers. In international disputes, the positive declaratory relief of the existence of an IP right or a violation is considered as an infringement action. The nature of the claim for negative declaratory relief is disputed. According to the prevailing legal doctrine, a claim for negative declaratory relief of a violation against a foreign right-holder of a Swiss IP right cannot be filed at the forum where the alleged act occurred; the forum protectionis has jurisdiction. Contract-related disputes deal with rights following from contracts. When the contract content holds IP rights, it can be difficult to determine the difference between infringement and contractual disputes.15

B.  Applicable Law Article 110 of the Federal Private International Act states that IP rights are governed by the law of the state in respect of which IP protection is sought (lex protectionis16). With respect to claims arising out of violation of IP rights, the parties may agree after the damage has occurred, to apply the law of the forum. Articles 133 et seq of the Federal Private International Act contain provisions regarding the applicable law in tort actions (cascade: law of the state of habitual residence, law of the state in which the tort was committed, or law of the state in which the result occurred; cf Question 3 of Part I). IP-related agreements are governed by the provisions of the Federal Private International Act relating to contracts (cf Question 3 of Part I). 14   Art 109 of the Federal Private International Act has been revised together with Art 129 concerning tort actions due to the adaptation of the Patent Act. 15   Federal Supreme Court 4C.40/2007, ‘Zero/Zerorh+’; RM Stutz, S Beutler and M Künzi, Designgesetz DesG (Berne, Stämpfli Verlag AG, 2006) 713 ff. 16   Regarding copyright cf Art 5 para 2 of the revised Berne Convention, Classified Compilation of Federal Legislation 0.231.15 with legal texts in German, French and Italian on www.admin.ch/ch/d/sr/c0_231_15.html.

1060  Amélie Charbon and Iris Sidler Claims for unjust enrichment are governed by the law which governs the legal relationship, either existing or assumed, on the basis of which the enrichment occurred. Failing such a relationship, these claims are governed by the law of the state in which the enrichment occurred; the parties may agree to apply the law of the forum (Art 128 of the Federal Private International Act).

United Kingdom CHRISTOPHER WADLOW*

Contents 1. Introduction................................................................................................................................. 1062 1.1 Historical Background....................................................................................................... 1062 1.2 Stages in the Development of the Law.............................................................................. 1063 1.3 Background: The Nineteenth Century and Before........................................................... 1064 1.4 Jurisdiction, Justiciability and Judicial Abstention at Common Law.............................. 1064 1.5 Forum Non Conveniens, Declaratory Actions and Anti-Suit Injunctions........................ 1065 1.6 Between Common Law and Community Law: Def Lepp and Tyburn............................. 1066 1.7 Jurisdiction under Community Law: Copyright.............................................................. 1067 1.8 Jurisdiction under Community Law: Patents and Registered Rights.............................. 1068 1.9 An Interregnum, the Present Situation, and the Latest Developments........................... 1069 1.10 Contracts Relating to Intellectual Property...................................................................... 1071 1.11 Summary and Overview.................................................................................................... 1071 2. Responses to Hypothetical Cases................................................................................................. 1073 Case 1. General/Special Grounds of Jurisdiction................................................................... 1074 Case 2. Subject-Matter Jurisdiction........................................................................................ 1077 Case 3. Consolidation of Proceedings..................................................................................... 1081 Case 4. Choice of Court........................................................................................................... 1084 Case 5. Parallel Proceedings..................................................................................................... 1087 Case 6. Principle of Territoriality (Choice of Law)................................................................ 1089 Case 7. Infringement of Intellectual Property Rights............................................................. 1091 Case 8. Applicable Law to Initial Ownership.......................................................................... 1092 Case 9. Applicable Law to Transfer of Rights Agreements..................................................... 1094 Case 10. Recognition and Enforcement of Foreign Judgments............................................... 1097 Case 11. Provisional Measures and Injunctions....................................................................... 1099 Case 12. Securities in Intellectual Property.............................................................................. 1100

*  Professor of Law, UEA Law School, University of East Anglia, Norwich, UK.

1062  Christopher Wadlow

1 Introduction 1.1  Historical Background The law of the United Kingdom in terms of jurisdiction in intellectual property matters is confused, and many important points are unresolved. The present situation can only fully be understood in historical terms, and especially with regard to the changes caused by the United Kingdom’s membership of the European Union, whose rules have largely governed questions of jurisdiction since 1987, and have almost entirely governed the determination of the applicable law since 2009. A complicating factor, especially in the past, has been the United Kingdom’s common law tradition. This has resulted in some important points of law being governed, at least on a persuasive basis, by decisions of common law courts abroad. Developments in the United States of America have also had some impact, though probably not to the same extent. One point on which the United Kingdom would have benefited from following the example of the United States is in terminology. In the United States there is a clear and wellrecognised distinction between personal jurisdiction (jurisdiction ratione personae), subject matter jurisdiction (ratione materiae), and venue. Of course these distinctions are also recognised in many other jurisdictions, and not just the United States. However, in England the term ‘jurisdiction’ has sometimes been associated so strongly with personal jurisdiction over the defendant that the separate problem of subject matter jurisdiction has been ignored, or has had to go under another name, such as ‘justiciability’. Perhaps as a result of this terminological confusion, the relative functions of the entirely separate sets of rules governing jurisdiction and for determining the applicable law were not properly distinguished, so far as intellectual property was concerned, until the last decade of the twentieth century.1 The full implications of this will be explained in due course, but for the time being it suffices to say that the non-justiciability of actions on foreign intellectual property rights was taken for granted for most of the twentieth century, but that this was widely attributed (at least partly) to the working of the relevant choice-of-law regime,2 and not necessarily to any rule of jurisdiction.3 The situation is further confused by the fact that the United Kingdom is not a unitary jurisdiction, but consists of three separate jurisdictions: England and Wales, Scotland, and Northern Ireland. For simplicity this Report will concentrate on the situation in England and Wales, though actual decisions of the Scottish courts (of which there are relatively few in point) will be mentioned where necessary. This particular complication is of diminishing importance for the future because the European regimes which now govern most issues of jurisdiction, and all issues of applicable law, are of course uniform in their application across the United Kingdom, as they ought to be in their application across Europe. However, Scotland retains a separate court system, a separate body of procedural law, and a system of

1   See R Fentiman ‘Justiciability, Discretion, and Foreign Rights’ in A Nuyts (ed), International Litigation in Intellectual Property and Information Technology (Alphen aan den Rijn, Kluwer, 2008). 2   The so-called ‘double actionability’ rule of Phillips v Eyre (1870) LR 6 QB 1 (CA). 3   See K Lipstein, ‘Intellectual property: jurisdiction or choice of law?’ (2002) 61 Cambridge Law Journal 295 and K Lipstein, ‘Intellectual property: parallel choice of law rules’ (2005) 64 Cambridge Law Journal 593.

United Kingdom  1063 unwritten law to which both the English common law, and the Roman or civilian traditions, have contributed.4

1.2  Stages in the Development of the Law With that proviso, the development of United Kingdom law up to the present day may be divided up into the following periods: – In the late nineteenth century and the first decade of the twentieth century the relevant principles of private international law were established in cases of general application,5 and were then applied to intellectual property in a way which resulted in a settled and uncontroversial practice against the extraterritorial enforcement of foreign intellectual property rights, and a fortiori against challenges to their validity.6 – This practice was affirmed in three cases decided in the decade spanning the implementation of the Brussels Convention,7 in the United Kingdom.8 – In the light of developments in Continental Europe, new attempts were made to persuade the United Kingdom courts to assert extraterritorial jurisdiction in intellectual property cases. These attempts were successful in so far as infringement of copyright was concerned,9 but not for patents or for the other registered intellectual property rights.10 – By the end of this period, there was an unbridgeable difference of practice and opinion between the United Kingdom courts, and the courts of the Netherlands (in particular) as to the application of the Brussels Convention to the infringement of foreign registered intellectual property rights.11 As a practical matter, the references to the European Court in GAT v LuK12 and Roche v Primus13 appear for the present to have vindicated the restrictive United Kingdom position, and put an end to the expansive Dutch practice. – Since January 2009 the United Kingdom has had a new and harmonised regime for determining the applicable law in almost all cases of non-contractual liability, under the Rome II Regulation.14 This contains specific provisions for intellectual property at Article 8, but these are of little practical importance (except for copyright infringement) for as long as the relevant jurisdiction regimes (whether under the Jurisdiction Regulation, or at common law) remain opposed to extraterritoriality. 4   See AE Anton and PR Beaumont, Anton and Beaumont’s Civil Jurisdiction in Scotland: The Brussels and Lugano Conventions (Edinburgh, W Green, 1995); AE Anton and PR Beaumont, Anton’s Private International Law, 3rd edn (Edinburgh, W Green, 2010). 5   Phillips v Eyre (1870) LR 6 QB 1 (CA); British South Africa Co v Compania do Moçambique [1893] AC 602 (HL). 6   Morocco Bound Syndicate v Harris [1895] 1 Ch 534; Potter v Broken Hill (1906) 3 CLR 479. 7   The Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, 1968. The Brussels Convention has been replaced by Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1, sometimes known as the Brussels (I) Regulation. 8   Def Lepp Music v Stuart Brown [1986] RPC 273; Tyburn v Conan Doyle [1991] Ch 75; [1990] RPC 185; James Burrough Distillers v Speymalt Whisky Distributors [1991] RPC 130. 9   Pearce v Ove Arup [2000] Ch 403; [1999] FSR 525 CA, affirming [1997] FSR 641. 10   Coin Controls v Suzo [1997] FSR 660; Fort Dodge v Akzo Nobel [1998] FSR 222 (CA). 11   As recognised in Fort Dodge v Akzo Nobel [1998] FSR 222 (CA). 12   Case C-4/03 Gesellschaft fur Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) ([2006] ECR I-6509. 13   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. 14   Regulation (EC) 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), [2007] OJ L199/40.

1064  Christopher Wadlow – The most recent development concerns whether the Jurisdiction Regulation15 permits (or requires) the courts of the United Kingdom to assert jurisdiction over intellectual property infringements alleged to have taken place outside Europe, in the absence of any international consensus to that effect.16 The continued survival of the United Kingdom principle of forum non conveniens is also in doubt.17

1.3  Background: The Nineteenth Century and Before Though there was no known attempt to enforce foreign intellectual property rights in England until the very end of the nineteenth century, that century saw the development of the two principles which were to govern issues of jurisdiction, justiciability, and applicable law for as long as the rules of the common law prevailed. The first of these cases in point of time was Phillips v Eyre,18 which established the principle of ‘double actionability’ for claims in tort. According to Willes J: As a general rule, in order to found a suit in England for a wrong alleged to have been committed abroad, two conditions must be fulfilled. First, the wrong must be of such a character that it would have been actionable if committed in England . . . Secondly, the act must not have been justifiable by the law of the place where it was done.

In Chaplin v Boys19 the House of Lords approved the double-actionability rule, subject to the existence of exceptions under which a single system of law might apply. The other rule established in the nineteenth century was one of subject-matter jurisdiction, or justiciability. In its original formulation, the Moçambique rule precluded the UK courts from adjudicating on the ownership of foreign land, or from entertaining actions for trespass to foreign land.20

1.4  Jurisdiction, Justiciability and Judicial Abstention at Common Law As long as all issues of jurisdiction, justiciability, venue, applicable law and any other relevant doctrines were wholly subject to the common law, there was no doubt that the courts of the United Kingdom would invariably refuse to entertain actions for alleged infringement of foreign proprietary intellectual property rights, or for their nullification or revocation. For patents, the original authority in point was an Australian case, Potter v Broken Hill,21 in which the High Court of Australia held that infringement of a patent granted for New South Wales could not be adjudicated in the courts of the neighbouring state of Victoria.22 The arguments in Potter v Broken Hill were wide-ranging, and the three judges of   Regulation (EC) No 44/2001.   Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10. 17   As a result of Case C-281/02 Owusu v Jackson [2005] ECR I-1383. Lucasfilm v Ainsworth cannot be regarded as an application of forum non conveniens, because the American courts lacked in personam jurisdiction, so there was no alternative available forum. 18   Phillips v Eyre (1870) LR 6 QB 1 (CA). 19   Chaplin v Boys [1971] AC 356 (HL). 20   British South Africa Co v Compania de Moçambique [1893] AC 602 (HL). 21   Potter v Broken Hill Proprietary Co Ltd (1906) 3 CLR 479 (High Court of Australia) affirming [1905] VLR 612. 22   Prior to formation of the Commonwealth of Australia in 1902, each of the then separate states granted its own patents in the exercise of its own sovereign authority. 15 16

United Kingdom  1065 the High Court did not necessarily agree with one another as to what was the determinative point, although all agreed that the action for infringement of the New South Wales patent could not be entertained in Victoria. In England, however, the ratio decidendi of Potter v Broken Hill was unequivocally (but probably wrongly) attributed to the operation of the double-actionability rule of Phillips v Eyre,23 and since this interpretation was endorsed and perpetuated by Dicey and Morris, the leading practitioners’ textbook on private international law, this theory held sway until the double actionability rule itself was abolished.24 The corresponding situation with regards to copyright had been addressed, in England, a few years previously. In Morocco Bound Syndicate v Harris,25 Kekewich J refused to grant an interim injunction against a troupe of actors taking an (allegedly) copyright-infringing play on tour in Germany. Morocco Bound v Harris was argued on an application for an interim injunction, and the precise ratio decidendi was never very clear. At its simplest and most modest, it might simply have been doubts over the continuing existence of in personam jurisdiction over the majority of the defendants (who had already left the country), or the practical difficulties of enforcing the injunction against them in the event of breach. At a more sophisticated level, it may have been that the judge considered that he lacked subject-matter jurisdiction over any infringements of the relevant German copyright, or (supposing jurisdiction to exist) that there were reasons for not exercising it.

1.5  Forum Non Conveniens, Declaratory Actions and Anti-Suit Injunctions The development of the law in England, Continental Europe, and the European Court requires at least passing mention of three unusual features of the common law. The first is the principle of forum non conveniens, which means that the court has a residual discretion to decline to exercise jurisdiction, if there is another court elsewhere which it considers to be a more appropriate forum for the case.26 The converse of forum non conveniens was the anti-suit injunction, by which an English court could restrain a party over which it exercised personal jurisdiction from bringing or prosecuting legal proceedings in a foreign court, if it considered that those proceedings were vexatious and oppressive.27 In Skype Technologies v Joltid28 an anti-suit injunction was granted where proceedings were brought in the United States for breach of a worldwide copyright licence agreement containing an exclusive jurisdiction clause in favour of the courts of England and Wales.   Phillips v Eyre (1870) LR 6 QB 1 (CA).   By the Private International Law (Miscellaneous Provisions) Act 1995 s 11(1). 25   Morocco Bound Syndicate v Harris [1895] 1 Ch 534. 26  See Spiliada Maritime Corporation v Cansulex Ltd (The Spiliada) [1987] AC 460 (HL). Forum non conveniens was not originally a common law doctrine, but was adopted from Scots and United States law. It has had little application to intellectual property, because prior to the Brussels Convention it was inconceivable for courts in two different countries to have jurisdiction over the same infringements. Forum non conveniens also applies as between England and Scotland. See Vetco Gray UK Ltd v FMC Technologies Inc [2007] EWHC 540 (where English patent infringement proceedings were stayed), and Ivax Pharmaceuticals v Akzo Nobel NV [2005] EWHC 2658 (Ch); [2006] FSR 43 (where they were allowed to proceed). In Vetco Gray, the relevant infringement had occurred in Scotland, in Ivax there were no substantial connections with Scotland, where the litigation related to different patents. 27  See Société Nationale Industrielle Aerospatiale v Lee Kui Jak [1987] 1 AC 871 (HL) and Fort Dodge v Akzo Nobel [1998] FSR 222 (CA), where an anti-suit injunction was refused because of the uncertain state of the law. For the inconsistency of anti-suit injunctions with the Brussels Convention and the Jurisdiction Regulation, see Case C-159/02 Turner v Grovit [2005] 1 AC 101; [2004] ECR I-3565. 28   Skype Technologies v Joltid [2009] EWHC 2783 (Ch). 23 24

1066  Christopher Wadlow Finally, the English courts could in certain circumstances make declarations of nonliability, although this was normally conditional on the opposite party having asserted its supposed rights.29

1.6  Between Common Law and Community Law: Def Lepp and Tyburn The 1968 Brussels Convention on Jurisdiction and the Recognition and Enforcement of Judgments came into force for the United Kingdom on 1 January 1987.30 The Convention did not initially attract much interest among intellectual property circles, and its immediate effect was slight. In the event, the first case to revisit the question of jurisdiction over foreign intellectual property rights since the beginning of the century was decided slightly before the Brussels Convention came into force, while the second did not involve any issues which the Convention (as then understood) would have governed. The first of these cases was Def Lepp Music v Stuart Brown,31 in which the members of the pop group Def Leppard claimed to own the copyright in a recording of a performance which had been copied by the sixth defendant in Luxembourg, with the copies being sold to the eighth defendant in the Netherlands. The sixth and eighth defendants were served with the writ (with leave) in their respective home countries, and applied to have the service set aside, and the actions against them dismissed. Beyond that, the situation was complicated by the fact that the protection of sound recordings of live performances was very far from uniform across Europe at the time. Perhaps in consequence, the pleadings simply alleged that the acts complained of would have constituted copyright infringement had they taken place in the United Kingdom, and were ‘not justifiable’, according to the formula of Phillips v Eyre,32 in Luxembourg, or the Netherlands, as the case might be. No particulars of the relevant foreign laws were given. These defects or idiosyncrasies of pleading focused attention on the issue of the applicable law, rather than the more fundamental one of subject matter jurisdiction. The judge, Browne-Wilkinson J, chose to interpret the allegation in the statement of claim as being, on its face, a claim that the plaintiff ’s United Kingdom copyright had been infringed by acts wholly taking place in Luxembourg or the Netherlands. Since there is a strong presumption against extraterritoriality in the interpretation of United Kingdom legislation, and since the Copyright Act 1956 (as was then in force) very carefully did not purport to have any extraterritorial effect, it necessarily followed that nothing the sixth and eighth defendants might have done in their respective home countries, could have constituted an infringement of any copyright subsisting under the United Kingdom Act. So far, this was clear enough, though it more than arguably rested on a misunderstanding of the pleading. When counsel for the plaintiff tried to argue the point as a matter of liability under private international law, he got nowhere. The judge duly invoked the standard sources on the double actionabil29   Tyburn v Doyle [1991] Ch 75; [1990] RPC 185 is an attempted example. See A Bell, ‘The negative declaration in transnational litigation’ (1995) 111 Law Quarterly Review 674. There is also a statutory jurisdiction to make negative declarations under s 71 Patents Act 1977, even in the absence of a claim of right, but this required advance notice to be given to the patent-holder. Plastus Kreativ AB v 3M [1995] RPC 438 decided that the statutory declaratory procedure applied only to UK patents. 30   Civil Jurisdiction and Judgments Act 1982 s 2. See CM Wadlow, ‘Intellectual Property and the Judgments Convention’ (1985) 10 European Law Review 305. 31   Def Lepp Music v Stuart Brown [1986] RPC 273. 32   Phillips v Eyre (1870) LR 6 QB 1 (CA).

United Kingdom  1067 ity rule as approved in Chaplin v Boys,33 but since he admitted to not understanding what the commentary on the rule in Dicey and Morris actually meant, and since he continued to characterise the action as one for the extraterritorial infringement of the UK Copyright Act, none of this made any difference. The facts of Tyburn v Conan Doyle 34 are rather clearer, and the reasoning is very much more satisfactory. The plaintiffs, an American film production company, wanted to produce a television film including the characters of Sherlock Holmes and Dr Watson, but which was otherwise unconnected with the works of the late Sir Arthur Conan Doyle. They alleged that their efforts to do so had been interfered with by threats of legal action made by the defendant,35 which they were unable to counter because American law did not permit a declaratory action to be brought in these circumstances. They therefore sued, in England, for a declaration that production of the film would not infringe any of the defendant’s rights under American copyright, unfair competition, or trade mark laws, and for an injunction against her repeating the threats. The defendant successfully applied to have the action struck out. Vinelott J followed the persuasive authority of Potter v Broken Hill,36 and decided that the Moçambique rule37 applied to foreign intellectual property rights, as it applied to foreign land, and that the claims for declarations of non-infringement of the various American intellectual property rights were therefore not justiciable in the United Kingdom. He also held that entertaining the action for the declaration would have been futile and disproportionate, even as regarded the unfair competition claims, since the laws of 50 separate American states would have to be considered, and none of those states would have recognised any declaration the court might grant. The principle of Tyburn v Doyle 38 was accepted as correct in the Scottish case of James Burrough v Speymalt,39 which related to registered trade marks. The latter case also affirmed a point which had been accepted in Tyburn, which was that Moçambique rule did not prevent actions being brought in the United Kingdom for passing off abroad, provided there was personal jurisdiction, and provided the principle of forum non conveniens did not apply.40

1.7  Jurisdiction under Community Law: Copyright As a practical matter, renewed interest in the implications of the Brussels Convention in connection with the extraterritorial enforcement of intellectual property rights came from contemporary Dutch practice, though it is probably coincidental that the first infringement action in which the English courts asserted jurisdiction outside the United Kingdom involved an alleged copyright infringement in the Netherlands. This was in Pearce v Ove Arup,41 where the plaintiff alleged that the design of the Kunsthalle arts centre in Rotterdam   Chaplin v Boys [1971] AC 356 (HL).   Tyburn Productions Ltd v Conan Doyle [1991] Ch 75; [1990] RPC 185. See R Arnold, ‘Can one sue in England for infringement of foreign intellectual property rights?’ [1990] 12 European Intellectual Property Review 254. 35   Lady Bromet, the last surviving child of Sir Arthur Conan Doyle. 36   Potter v Broken Hill (1906) 3 CLR 479. 37   British South Africa Co v Compania do Moçambique [1893] AC 602 (HL). 38   Tyburn v Doyle [1991] Ch 75; [1990] RPC 185 39   James Burrough Distillers Plc v Speymalt Whisky Distributors Ltd [1991] RPC 130. 40   Alfred Dunhill Ltd v Sunoptic SA [1979] FSR 337. 41   Pearce (Gareth) v Ove Arup Partnership Ltd [1997] FSR 641, affirmed [2000] Ch 403; [1999] FSR 525 (CA). The reason for the choice of forum was almost certainly the existence of legal aid here. 33 34

1068  Christopher Wadlow was an infringement of the copyright in drawings made by him as a student exercise for a town hall in London’s Docklands. The first defendant, which was the principal contractor for the project, was domiciled in England, and the other defendants were joined under Article 6(1) of the Brussels Convention. By English common law standards, jurisdiction (if it had existed at all) would automatically have been declined, in respect of all the defendants, on the basis that it was for the Dutch courts, and the Dutch courts alone, to decide whether Dutch copyright subsisted in the drawings, and if so whether or not it had been infringed. However, there was no dispute that questions of jurisdiction were now entirely governed by the Brussels Convention, though questions of choice of law were still determined, in principle, by the old common law rules.42 The Court of Appeal, affirming the first instance judge, held that the exclusive jurisdiction provisions of Article 16(4) of the Brussels Convention were inapplicable, and that the normal rules of the Convention applied to infringements of non-registered intellectual property rights such as copyright. The Convention therefore gave the English courts jurisdiction over the alleged infringements, and the effective exercise of that jurisdiction could not be frustrated by the application of any residual common law rules which would have rendered it ineffective. Consequently, it did not matter whether the former common law rule(s) which had been applied in the Def Lepp43 and Tyburn 44 cases were really ones of jurisdiction, or justiciability, or comity, or applicable law, since on any basis they could not prevail over the rules of the Convention. However, the Court of Appeal specifically attributed the common law rule against extraterritorial jurisdiction to the Moçambique case,45 meaning that it would continue to apply in cases which were not governed, as to jurisdiction, by the Brussels Convention.

1.8  Jurisdiction under Community Law: Patents and Registered Rights The decision in Pearce v Ove Arup46 left the law unsettled for the registered intellectual property rights, since exclusive jurisdiction over their subsistence and validity was preserved by Article 16(4) of the Brussels Convention, though the Convention itself was unclear as to how its rules applied to actions for infringement, especially if validity was in issue.47 The question was complicated by the practice of the Dutch courts in fairly readily granting extraterritorial relief in summary Kort Geding proceedings, widely thought to be justified (if at all), at least in England, as ‘preliminary and protective measures’ under Article 24. The approach of the United Kingdom courts to the application of the Brussels Convention to infringement of patents and other registered intellectual property rights was 42   The Private International Law (Miscellaneous Provisions) Act 1995 s 11(1) abolished the double-actionability rule with effect from 1 May 1996, but the 1995 Act did not apply to Pearce v Ove Arup, because the relevant events had taken place before it came into force. 43   Def Lepp v Stuart-Brown [1986] RPC 273. 44   Tyburn v Conan Doyle [1991] Ch 75; [1990] RPC 185. 45   British South Africa Co v Compania de Moçambique [1893] AC 602 (HL). 46   Pearce v Ove Arup [1991] Ch 75; [1990] RPC 185 (CA), affirming [1997] FSR 641. There was an unusually long delay between the first instance decision and that on appeal. 47   See I Purvis and C Floyd, ‘Can an English court restrain infringement of a foreign patent?’ (1995) European Intellectual Property Review 110; G O’Sullivan ‘Cross-border jurisdiction in patent infringement proceedings in Europe’ (1996) European Intellectual Property Review 654.

United Kingdom  1069 established in Coin Controls v Suzo48 and Fort Dodge v Akzo Nobel.49 In Coin Controls, Laddie J decided that issues of validity and infringement were effectively inseparable, at least in English law and practice, which led to the conclusion that jurisdiction, even over the issue of infringement on its own, was prohibited in the case of the relevant foreign patents by Article 16(4). The situation (though not the result) was reversed in Fort Dodge v Akzo Nobel, where the plaintiffs (in England) were the defendants in a pan-European action for patent infringement which was already pending in the Netherlands. They (Fort Dodge) commenced revocation proceedings in England in respect of the UK patent, as well as an action for an interim anti-suit injunction which would have restrained the patent owners (Akzo) from attempting to enforce the UK patent, except in the UK courts. The Court of Appeal acknowledged that the British and Dutch interpretations of the Brussels Convention were entirely at variance with one another, but preferred to make a preliminary reference to the European Court of Justice, rather than attempting to resolve the differences themselves.50 It also followed that if the English courts were right in their interpretation of Article 16(4) of the Brussels Convention, then their infringement jurisdiction was not vulnerable to tactically motivated declaratory actions such as the Italian and Belgian ‘torpedoes’, or at least not in respect of the registered intellectual property rights.51 The reference in Fort Dodge was settled shortly afterwards,52 but cases were referred on similar issues by the German and Dutch courts in Gat v LuK,53 and Roche v Primus.54

1.9  An Interregnum, the Present Situation, and the Latest Developments The caution demonstrated in Coin Controls v Suzo55 and Fort Dodge v Akzo Nobel,56 and the pendency of the references in GAT v LuK 57 and Roche v Primus,58 as well as the restrictive

  Coin Controls Ltd v Suzo International (UK) Ltd [1997] FSR 660.   Fort Dodge Animal Health Ltd and Others v AKZO Nobel NV [1998] FSR 222 (CA).   The decision in Fort Dodge came just in time to be included in two book-length commentaries published in 1998: JJ Fawcett and P Torremans, Intellectual Property and Private International Law (Oxford, Clarendon Press, 1998) and C Wadlow, Enforcement of Intellectual Property in European and International Law (London, Sweet & Maxwell, 1998). 51   The tactic failed in Molins Plc v GD SpA [2000] 1 WLR 1741; [2000] FSR 893, but only because although the Italian proceedings had been issued, they had not been effectively served. Molins concerned the enforcement (or repudiation) of a patent licence agreement, but Art 16(4) of the Brussels Convention does not apply to such cases: Case C-288/82 Duijnstee v Goderbauer [1983] ECR 3663. See W Kennett, ‘Civil and commercial matters’ (2001) 50 International and Comparative Law Quarterly 190. 52  For a selection of responses to the decisions in Pearce, Coin Controls and Fort Dodge see (inter alia): GW Austin, ‘The infringement of foreign intellectual property rights’ (1997) 113 Law Quarterly Review 321; S Dutson, ‘The infringement of foreign intellectual property rights – a restatement of the terms of engagement’ (1998) 47 International and Comparative Law Quarterly 659; PLC Torremans ‘Jurisdiction in international intellectual property litigation: the courts start struggling with the Brussels Convention’ (1998) 2 Edinburgh Law Review 337; R Arnold, ‘Cross-border enforcement: the latest chapter’ (1999) Intellectual Property Quarterly 389; E Bragiel ‘  “A funny thing happened on the way to the forum” – actionability in the United Kingdom of infringements of intellectual property committed abroad’ (1999) Intellectual Property Quarterly 135; M Pertegás Sender, Cross-border Enforcement of Patent Rights (Oxford, Oxford University Press, 2002). 53   Case C-4/03 Gesellschaft fur Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 54   Case C-539/03 Roche Nederland BV v Primus [2006] ECR I-6535. 55   Coin Controls v Suzo [1997] FSR 660. 56   Fort Dodge v Akzo Nobel [1998] FSR 222 (CA). 57   Case C-4/03, [2006] ECR I-6509. 58   Case C-539/03, [2006] ECR I-6535. 48 49 50

1070  Christopher Wadlow decisions on the scope of Article 24 of the Brussels Convention in Mietz 59 and Van Uden,60 had the cumulative effect of halting developments in what had been the most rapidly developing field of law prior to then, which was that of pan-European interim injunctions against alleged patent infringement, while the actual results in the GAT and Roche references effectively put an end to the former Dutch practice, and to the corresponding development of the Italian and Belgian ‘torpedoes’, and the English anti-suit injunction.61 Consequently, developments in the first decade of the twenty-first century were relatively few and uncontroversial, and tended to concern points which arose accidentally in the course of litigation, rather than as a matter of deliberate strategy. Disagreements over policy also seemed either to have exhausted themselves in the immediate aftermath of the original references, or to have expressed themselves in contexts outside the scope of the present report,62 such as the abortive negotiations at the Hague Conference towards a global treaty regime for jurisdiction and judgments in all areas of law,63 the studies initiated by the American Law Institute,64 and the Max Planck Institute,65 and the still-unrealised proposals for a Community patent and a unified European patents jurisdiction. The major legislative development subsequent to 2006 was the adoption of the Rome (II) Regulation on the applicable law for non-contractual liability.66 In England, this replaced the Private International Law (Miscellaneous Provisions) Act 1995. Article 8 of the Regulation now provides that the applicable law for infringement of an intellectual property right is the law of the country for which protection is claimed. Article 8(3) makes it clear that this cannot be derogated from by agreement between the parties. The latest case law development in the United Kingdom is another copyright case, Lucasfilm v Ainsworth,67 which initially resulted in relief being granted against an English   Case C99/96 Mietz v Intership Yachting Sneek BV [1999] ECR I-2277.   Case C-391/95 Van Uden Maritime BV v Firma Deco-Line [1998] ECR I-7091. 61   See A Briggs, ‘Jurisdiction over defences and connected claims’ (2006) Lloyd’s Maritime and Commercial Law Quarterly 447; A Kur, ‘A farewell to cross-border injunctions? The ECJ decisions GAT v LuK and Roche Nederland v Primus and Goldenberg’ (2006) 37 International Review of Intellectual Property and Competition Law 844; S Warner and S Middlemiss, ‘Patent litigation in multiple jurisdictions: an end to cross border relief in Europe?’ (2006) 28 European Intellectual Property Review 580; P Joseph, ‘The rise and fall of cross-border jurisdiction and remedies in IP disputes’ (2006) 1 Journal of Intellectual Property Law and Practice 850; PLC Torremans, ‘The widening reach of exclusive jurisdiction: Where can you litigate IP rights after GAT?’ in A Nuyts (ed), International Litigation in Intellectual Property and Information Technology (Aalpen aan den Rijn, Kluwer, 2008). 62   See generally the papers in A Metzger, J Basedow and T Kono (eds), Intellectual Property in the Global Arena (Tübingen, Mohr Siebeck, 2010). 63   See A Kur, ‘International Hague Convention on Jurisdiction and Foreign Judgments: a way forward for IP?’ (2002) European Intellectual Property Review 175; S Petkova, ‘The potential impact of the draft Hague Convention on International Jurisdiction and Foreign Judgments in Civil and Commercial Matters on Internet-related disputes with particular reference to copyright’ (2004) Intellectual Property Quarterly 173. 64   Resulting in the publication of Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (St Paul, American Law Institute, 2008). The reporters were Rochelle C Dreyfuss, Jane C Ginsburg and François Dessemontet. 65   A Hellstadius and W Meier-Ewert, ‘Jurisdiction and choice of law in intellectual property matters – perspectives for the future (EU and worldwide)’ (2005) 36 International Review of Intellectual Property and Competition Law 313. The project, which began in 2001, is still in progress. 66   Regulation (EC) 864/2007. 67   Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10. See P Rogerson, ‘Conflict of laws – foreign copyright jurisdiction’ (2010) 69 Cambridge Law Journal 245; A Dickinson, ‘The force be with EU? Infringements of US copyright in the English courts’ [2010] Lloyd’s Maritime and Commercial Law Quarterly 181. See also GW Austin, ‘The concept of “justiciability” in foreign copyright infringement cases’ (2009) 40 International Review of Intellectual Property and Competition Law 393, with the proviso that it was written before the appeal in Lucasfilm v Ainsworth. (Editor’s note: the UK Supreme Court handed down a decision in 2011, see Lucasfilm v Ainsworth [2011] UKSC 39.) 59 60

United Kingdom  1071 defendant for admitted infringement of United States copyrights, but which was subsequently reversed on appeal to the Court of Appeal. The defendant had designed some props for the original Star Wars film, including the protective body armour of the stormtroopers, in respect of which Lucasfilm was held to have owned any relevant copyrights. Ainsworth had subsequently made copies of some of these props and had sold them to customers in the United States, in such circumstances as to amount to copyright infringement under United States law, and to expose him to the exorbitant jurisdiction of the American courts. At first instance the trial judge upheld the claims for infringement of the relevant US copyrights, but this was reversed on appeal, with the Court of Appeal holding that the Moçambique rule68 continued to apply to claims for infringement of foreign copyrights, and that nothing in the Jurisdiction Regulation obliged the English courts to assert jurisdiction in these circumstances. The Court of Appeal also refused to recognise or give effect to a default judgment issued in the United States, on the basis that there had been no personal jurisdiction over the defendant.

1.10  Contracts Relating to Intellectual Property In contrast to the situation regarding validity and infringement – which English law has always regarded as inseparable – there has never been any objection in principle to adjudicating purely contractual (or equitable) issues of entitlement to registered intellectual property rights, provided this was done on an in personam basis, and did not purport to settle issues of ownership in rem or erga omnes, for instance by purporting to alter the register on which ownership of the foreign intellectual property right was inscribed. In Griggs v Evans (No 2)69 the court decided that there was no objection to making orders as to the ownership of certain foreign copyrights in logos and promotional material for ‘Doc Marten’s’ shoes, provided that any conflicting interests arising under foreign laws were taken into account. In the result, the defendants were ordered to assign the foreign, as well as the UK, copyrights in the logo and materials.70

1.11  Summary and Overview So far as jurisdiction is concerned, English law has been entirely consistent over the past century in drawing a number of ‘bright line’ distinctions between issues relating to foreign intellectual property rights over which the English courts were prepared to assert jurisdiction (though always, at least prior to Owusu,71 on a discretionary basis, and subject to the doctrine of forum non conveniens) and those in which they were not. One such bright line separates the proprietary intellectual property rights (patents, trade marks, copyrights, registered designs, and so on), from the non-proprietary causes of action which have traditionally been included within intellectual property for reasons of convenience (principally passing-off, injurious falsehood, and breach of confidence, including trade secrets). Another bright line is between issues which fall to be decided in rem (such as the subsistence and   British South Africa Co v Compania de Moçambique [1893] AC 602 (HL).   R Griggs Group Ltd v Evans (No 2) [2004] EWHC 1088 (Ch); [2005] Ch 153; [2004] FSR 48. 70   The result and reasoning of Griggs were approved by the Court of Appeal in Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10. 71   Case C-281/02 Owusu v Jackson [2005] ECR I-1383. 68 69

1072  Christopher Wadlow validity of registered rights), and issues which can be decided inter partes (including contractual and equitable rights).72 The latter ‘bright line’ distinction invites the question of how one deals with the issues of infringement. At first sight, infringement might appear to be an inter partes issue par excellence, but English law reasons that issues of infringement and validity are so closely intertwined that infringement actions always fall on the prohibited side of the line. Conversely, one might have thought that issues of ownership would fall on the prohibited side of the line, and so they do, at least in so far as the validity of entries in official registers are concerned. However, in so far as claims to ownership (and a fortiori to contractual rights short of absolute ownership, such as licence rights) are concerned, then English law does not consider itself debarred from intervening, subject, again, to forum non conveniens.73 Another possible bright line, but one which English law has refused to draw, is that between final and interim relief. The English view has been that although the so-called ‘merits’ of the case (principally validity and infringement) are not wholly determinative on an application for interim relief, they are typically too important for the English court to trespass on the jurisdiction of the relevant foreign court(s) by granting or withholding interim relief in the form of an interim injunction against infringement. (Different issues arise when the interim relief is essentially to assist the foreign court without pre-judging the merits of the case, e.g. by providing security for a claim for damages, a so-called ‘freezing order’.)74 The common law jurisdiction rules continue to apply against defendants who are not domiciled in Europe (except that the exclusive jurisdiction of Article 22(4) depends not on domicile, but on the lex situs of the registered intellectual property right in question), and they also continue to influence how English courts approach controversial or undecided issues under the Jurisdiction Regulation.75 It will be noted that the bright lines recognised by English common law are not the same as the corresponding bright lines drawn under the Jurisdiction Regulation, or the Brussels Convention before it. In the Regulation, the equivalent to the proprietary/non-proprietary distinction is that which separates registered from unregistered rights, so that copyrights fall on the side of the line in which extraterritorial jurisdiction is permitted in European law, whereas patents and trade marks (for instance) do not. However, so far as validity and infringement are concerned, the English bright line has turned out to correspond reasonably closely to that adopted by the European Court in the GAT v LuK 76 and Roche v Primus77 cases, notwithstanding that the Brussels Convention (and the Jenard Report which preceded it) appeared to put validity on the prohibited side of the line, and infringement as such on the permitted side. Likewise in the case of interim and final injunctive relief, where the English position also seems to have been vindicated. The point at which the compatibility of the English approach 72   So in Molins Plc v GD SpA [2000] 1 WLR 1741; [2000] FSR 893 there was no problem in the English courts asserting jurisdiction over a claim for breach of a world-wide patent licence agreement. 73   For a recent overview, see Fentiman, above n 1. 74   See BJ Rodger and G Maher, ‘Provisional and protective remedies: the British experience of the Brussels Convention’ (1999) 48 International and Comparative Law Quarterly 302. 75   Notably as in Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10. 76   Case C-4/03 GAT v LuK [2006] ECR I-6509. 77   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535.

United Kingdom  1073 with the Regulation is most controversial is the question of whether the principle of exclusive jurisdiction extends to non-European rights, whether they are registered or not.78 So far as the applicable law in concerned, the common law rules may now be regarded as wholly superseded (except for defamation and personality rights) and the relevant rules are to be found entirely in the Rome II Regulation. For infringements of all kinds of intellectual property rights,79 Article 8 of the latter provides that the applicable law is always that of the protecting state, which will have to be applied on a distributive state-by-state basis, if the infringements take place in more than one state. This relatively conservative approach is probably what the majority of common lawyers would have favoured anyway, and there is no fundamental inconsistency with the respect for foreign sovereignty which both underlies, and sometimes undermines, the common law’s relationship with the Jurisdiction Regulation where intellectual property rights are concerned. Issues of jurisdiction and applicable law have never been interconnected for contracts, in the same way as they have for infringement, and each has served its traditional function independently of the other.80 The common law has always recognised party autonomy both as to choice of court (jurisdiction), and choice of law (applicable law). National sovereignty is rarely an issue, since English law considers that the adjudication of inter partes contractual rights in relation to foreign intellectual property rights does not, as a matter of principle, impinge on the sovereignty of the state or states under whose laws those rights subsist. Since most commercial contracts relating to intellectual property either provide for arbitration, or contain clauses for jurisdiction and applicable law to which the Jurisdiction Regulation and Rome (I) Regulation would give effect, the effect of the two regulations in actual everyday practice is rather slight. This is just as well, because the fall-back provisions of both, especially in so far as they depend on the concept of ‘characteristic performance’, are entirely unfamiliar to the common lawyer.

2  Responses to Hypothetical Cases Introductory Provisos In general, several layers of complexity have had to be excluded from consideration in order to make this a manageable exercise. In particular: – ‘Intellectual property’ is a wide and to some extent indeterminate category. It has not been possible to deal separately with all the different kinds of intellectual property rights, nor with non-proprietary rights which are sometimes included in, or with, intellectual property (such as unfair competition, trade secrets and breach of confidence, rights of privacy and publicity) but which may be subject to different regimes entirely. Propositions about intellectual property rights in general may not be valid without qualification for specific rights. 78   For possible future directions for European and English law after GAT and Roche, see PLC Torremans, ‘Exclusive jurisdiction and cross-border IP (patent) infringement: suggestions for amendment of the Brussels I Regulation’ (2007) 29 European Intellectual Property Review 195; Fentiman, above n 1. 79   Though not for unfair competition, Art 4. 80   There is one exception, in the form of the rule (now mainly of historical interest) that the English courts would assert jurisdiction over a contract governed by English law, even in the absence of personal jurisdiction over the parties.

1074  Christopher Wadlow – The term ‘Europe’ is used without distinguishing between the European Union and the European Economic Area. Likewise, no separate treatment is given for the former Brussels Convention, nor the Lugano Convention. It is assumed that the law under these conventions will not be significantly different to that applying under the Jurisdiction Regulation. – It is assumed that the concepts of ‘domicile’, ‘residence’ and ‘habitual residence’ may be treated as equivalent to one another on the facts, and no distinction between them is made. – There is no treatment of the unitary Community intellectual property rights, since they are subject to autonomous Community law. This applies to the Community Trade Mark, the Registered and Unregistered Community designs, and the Community Plant Variety Right. There is no Community Patent as yet. No distinction is made between national patents, and ‘European’ patents granted under the European Patent Convention. – There is no reference to the internal division of jurisdiction between the separate parts of the United Kingdom, nor to the fact that Scots law is not the same as English law. It is assumed for the sake of simplicity that the United Kingdom is a unitary jurisdiction. – Many specific points are still uncertain, undecided, or in a state of flux. The Jurisdiction Regulation itself is currently under revision, but definitive proposals for its reform have not been published. – The responses to the questionnaire do not constitute legal advice and should not be relied on in individual cases.

Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

United Kingdom  1075 Operative Rules Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the ‘Jurisdiction Regulation’ 81) Article 1 1. Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.

Article 4 1. If the defendant is not domiciled in a Member State, the jurisdiction of the courts of each Member State shall, subject to Articles 22 and 23, be determined by the law of that Member State.

Article 5 A person domiciled in a Member State may, in another Member State, be sued: . . . 3. In matters relating to tort, delict or quasi-delict, in the courts for the place where the harmful event occurred or may occur; . . . 5. As regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place in which the branch, agency or other establishment is situated;

See also (not reproduced): Companies Act 2006 s 1140(2)(b). Overseas Companies Regulations 2009 (SI 2009/1801) para 75. Civil Procedure Rules, Part 6 (Practice Direction) r 3.1(9). Descriptive Formants Separate rules apply according to whether any particular defendant is domiciled in Europe or not. In the case of European defendants, the Jurisdiction Regulation provides that jurisdiction may be based on either of two factors: the defendant’s domicile (Article 2(1) – the general jurisdiction), or the place of the tort (Article 5(3) – one of the special jurisdictions). Case 1(1) The defendant is assumed to be resident or domiciled in the United Kingdom, and the UK courts therefore have general and unqualified international jurisdiction. In the variant on Case 1(1), the defendant is assumed to be resident or domiciled outside the United Kingdom, but to have a branch in the United Kingdom. Provided that the third country (X) in which the defendant was domiciled, was in Europe, then another of the special jurisdictions, Article 5(5), provides for the courts of the United Kingdom to have special jurisdiction over disputes ‘arising out of the operations of [the] branch, agency or other establishment’. The existence, or not, of jurisdiction would therefore depend on whether the publication of the libel was the responsibility of the branch or not. The mere existence of the branch would not confer jurisdiction if this were not the case.   Also known as the ‘Brussels (I) Regulation’.

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1076  Christopher Wadlow If the defendant was domiciled or resident in a third country X outside Europe then the Jurisdiction Regulation would not apply. Jurisdiction at common law depends on the possibility of validly serving the claim form (formerly the writ) on the defendant. In the case of ‘overseas companies’ with a branch in the United Kingdom, there is provision for service of the claim form on them in the Companies Act 2006 and the Overseas Companies Regulations 2009. Jurisdiction based on service of the claim form on the branch of a company in the United Kingdom is not confined to acts arising out of the operations of the UK branch. Case 1(2) In Case 1(2), separate rules again apply according to whether any particular defendant is domiciled in Europe or not. If the only basis for asserting jurisdiction is that copies of the journal were being distributed in the United Kingdom, then jurisdiction against European defendants would arise under Article 5(3) of the Jurisdiction Regulation, providing for special jurisdiction in tort cases. By judicial interpretation, the place of the tort (or ‘the place where the harmful event occurred’, in the language of Article 5(3)), embraces both the place where the wrongful act took place, and the place where direct (non-consequential) damage to the defendant occurred, if different (Bier v Mines de Potasse (‘Reinwater’82) and Shevill v Press Alliance 83). By application of the principle of the Reinwater and Shevill cases, the UK courts would have jurisdiction by virtue of the distribution of copies here (but see answer to Case 1(3) below for the extent of this jurisdiction). In the variant on Case 1(2), the journal is assumed to be printed in the United Kingdom for distribution in a neighbouring country, X. By application of the principle of the Reinwater and Shevill cases, the UK courts would have international jurisdiction, notwithstanding that the copies printed in the United Kingdom were all to be distributed elsewhere. The language issue would not appear to be relevant to jurisdiction. Different rules would apply if the defendant were not domiciled in the United Kingdom, or elsewhere in Europe. In this case, the claimant would need to apply for leave to serve the claim form on the defendant outside the jurisdiction on the basis that the defendant was responsible for committing a tort within the jurisdiction (CPR Part 6 and Practice Direction 6B). Leave would normally be granted in such a case. The jurisdiction of the UK court would be confined to acts of defamation committed in the United Kingdom. In the case of the variant on (2), it is assumed that the journal is printed in the United Kingdom. In this case, there would presumably be no difficulty in serving the defendant with the claim form, without leave being required. Case 1(3) So far as Case 1(3) is concerned, four separate situations arise. For European defendants, to which the regime of the Jurisdiction Regulation applies, the Shevill case decides that the jurisdiction of the UK courts would without territorial limitation in cases based on Article 2(1) and on Article 5(3) in so far as the ‘harmful event’ originated in the United Kingdom. Their jurisdiction would be confined to damage suffered in   Case 21/76 Bier v Mines de Potasse [1976] ECR 1735.   Case C-68/93 Shevill v Press Alliance [1995] 2 AC 18; [1995] ECR I-415.

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United Kingdom  1077 the United Kingdom in so far as the basis of jurisdiction was the branch of Article 5(3) under which the harmful event originated outside the United Kingdom, but damage was suffered in the United Kingdom. For non-European defendants, the jurisdiction of the UK courts would be confined to damage suffered in the United Kingdom in the case in which leave to serve the defendant out of the jurisdiction was required. If the defendant could be served within the jurisdiction, without needing leave, then subject to the doctrine of forum non conveniens, the territorial jurisdiction of the UK courts would be unlimited.

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

Operative Rules Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Article 22 The following courts shall have exclusive jurisdiction, regardless of domicile: . . . 4.  In proceedings concerned with the registration or validity of patents, trade marks, designs, or other similar rights required to be deposited or registered, the courts of the Member State in which the deposit or registration has been applied for, has taken place or is under the terms of a Community instrument or an international convention deemed to have taken place.

Article 24 Apart from jurisdiction derived from other provisions of this Regulation, a court of a Member State before which a defendant enters an appearance shall have jurisdiction. This rule shall not apply where appearance was entered to contest the jurisdiction, or where another court has exclusive jurisdiction by virtue of Article 22.

Article 25 Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction.

1078  Christopher Wadlow Decisions of the European Court in GAT v LuK 84 and Roche v Primus.85 Decisions in Coin Controls v Suzo86 and Fort Dodge v Akzo Nobel.87 Descriptive Formants Case 2(1) Separate rules apply according to whether the patent is one subsisting in a European country, or not; and whether the defendant is domiciled in Europe or not. Separate rules also apply according to the nature of the intellectual property right in issue. If the patent is one granted by a European state (and whether or nor any of the parties is European), then Article 22(4) of the Jurisdiction Regulation assigns exclusive jurisdiction over matters relating to the patent to the courts of the country for which it was granted, ie country Y. The scope of Article 22(4), and its predecessor in Article 16(4) of the Brussels Convention, has long been in dispute. The UK courts early took the view (in Coin Controls v Suzo and Fort Dodge v Akzo Nobel) that issues of validity and infringement were so interrelated that it was impossible to entertain a suit for infringement, without offending the principle of exclusive jurisdiction. This view has subsequently seemed to have been affirmed by the European Court of Justice in Case C-4/03 GAT v LuK and Case C-539/03 Roche v Primus. The answer to case (1) is therefore that, provided country Y was in Europe, then the UK courts would not consider themselves to have any international jurisdiction over the issue of infringement of the patent in country Y. If Y is not a European country, then the question is not definitely resolved. Article 22(4) applies in terms only to patents (etc) issued by Member (ie European) States. It may be implicit that Article 22(4) has what is called a ‘reflexive’ operation so as also to apply to non-Member States, to preserve what is still generally regarded as a general principle of international comity.88 However, a literal and restrictive reading of Article 22(4) in conjunction with Article 2(1) suggests that actions for infringements of foreign, non-European, patents must be accepted and adjudicated if jurisdiction over the defendant is based on domicile in the United Kingdom. This proposition would almost certainly be resisted by the United Kingdom, but there is no decision directly in point at European level. So far as the United Kingdom is concerned, the Court of Appeal has recently held, in Lucasfilm v Ainsworth,89 that the Jurisdiction Regulation does not oblige the UK courts to assume jurisdiction over an alleged infringement of copyright committed in the United States, even assuming that the alleged infringer was domiciled in the United Kingdom. That being the case, the common law rule in British South Africa Co v Compania de Moçambique 90 applied, and obliged the court to decline jurisdiction. If Lucasfilm v Ainsworth is correctly decided as a matter of European law, then it applies a fortiori to patents, and the court of 84   Case C-4/03 Gesellschaft fur Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. 85   Case C-539/03 Roche Nederland BV v Primus [2006] ECR I-6535. 86   Coin Controls Ltd v Suzo International (UK) Ltd [1997] FSR 660. 87   Fort Dodge Animal Health Limited and Others v AKZO Nobel NV [1998] FSR 222 (CA). 88   See C Hare, ‘Forum non conveniens in Europe: game over or time for “reflexion”?’ [2006] JBL 157. The concept of the reflexive effect is neither new nor English in origin: it may be traced back to one of the earliest and most authoritative commentaries on the Brussels Convention, namely GAL Droz, La compétence judiciaire et l’effet des jugements dans la CEE (Paris, Dalloz, 1972) para 164. 89   Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10. 90   British South Africa Co v Compania de Moçambique [1893] AC 602 (HL).

United Kingdom  1079 country X in the example ought to decline jurisdiction. Alternatively, and even if Lucasfilm v Ainsworth is inconsistent with the Jurisdiction Regulation as regards copyright, then it is still possible that the unexplored ‘reflexive’ operation of Article 22 would result in the courts of the United Kingdom being obliged to decline jurisdiction over foreign patents and other registered intellectual property rights.91 If Case 2(1) is intended to apply to intellectual property rights other than patents, then Article 22(4) applies to registered intellectual property rights of all kinds, as it does to patents, but not to unregistered intellectual property rights. There is no provision in the Jurisdiction Regulation for exclusive jurisdiction over unregistered intellectual property rights, such as copyright. The normal rules for jurisdiction based on domicile, place of infringement, and submission (etc) therefore apply, provided the defendant is a European one. It follows that, as against a European litigant, the UK courts could decide on the infringement (or not) of the copyright or other unregistered intellectual property right alleged to have been infringed. This analysis was accepted by the Court of Appeal in the Pearce v Ove Arup case,92 and was not challenged in Lucasfilm v Ainsworth.93 This would have the normal consequences under the Jurisdiction Regulation, which would include incontestable inter partes effect in the other member states. In the case of copyright infringers not domiciled in Europe, the Jurisdiction Regulation does not apply. At common law, foreign intellectual property rights are considered to be analogous to foreign land, in respect of which the UK courts do not assert jurisdiction (British South Africa Co v Compania do Moçambique94). Consequently, jurisdiction would always have been declined over questions of the infringement, subsistence, and validity of foreign intellectual property rights of all kinds, whether registered or unregistered (Tyburn Productions Ltd v Conan Doyle;95 Def Lepp Music v Stuart Brown96). This analysis of the position at common law was accepted as accurate in Pearce v Ove Arup Partnership Ltd,97 where the alleged infringement had taken place in Rotterdam, and the relevant defendants were domiciled either in the Netherlands, or in the United Kingdom, so that the common law rules were superseded by those of the Jurisdiction Regulation. Most recently, in Lucasfilm v Ainsworth,98 the former common law rules have been held to apply to undisputed copyright infringements committed abroad (and outside Europe) by a defendant assumed to be domiciled in Europe. In that case, the trial judge had originally assumed jurisdiction over infringements of United States copyrights, which the defendant had admittedly committed by supplying infringing goods to American customers, from England. The Court of Appeal held that notwithstanding the judgment of the European Court of Justice in Owusu v Jackson99 (an action for personal injuries, not for infringement), nothing in the Jurisdiction Regulation obliged the United Kingdom court to assume jurisdiction over the alleged infringement of American copyright in these 91  For the ‘reflexive’ operation of Art 22(4) (formerly Art 16(4)). The possible reflexive operation of the Convention or Regulation has received only limited consideration in the United Kingdom, but see Catalyst Investment Group Ltd v Lewinsohn [2009] EWHC 1964 (Ch); [2010] Ch 218; and L Collins et al (eds), Dicey, Morris and Collins on the Conflict of Laws, 14th edn (London, Sweet & Maxwell, 2008) para 12–021. 92   Pearce (Gareth) v Ove Arup Partnership Ltd [1997] FSR 641, affirmed [2000] Ch 403; [1999] FSR 525 (CA). 93   Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10. 94   British South Africa Co v Compania do Moçambique [1893] AC 602 (HL). 95   Tyburn Productions Ltd v Conan Doyle [1991] Ch 75; [1990] RPC 185. 96   Def Lepp Music v Stuart Brown [1986] RPC 273. 97   Pearce v Ove Arup Partnership Ltd [2000] Ch 403; [1999] FSR 525 (CA). 98   Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10. 99   Case C-281/02 Owusu v Jackson (t/a Villa Holidays Bal Inn Villas) [2005] ECR I-1383.

1080  Christopher Wadlow circumstances, and that it was wrong for the court to have done so, in the absence of any international consensus to that effect. Case 2(2) In Case 2(2), the same distinctions and reservations apply. If Y is assumed to be a European country, then the UK courts would have no jurisdiction in respect of the registration and validity of patents issued by state Y, or any other European state. This arises directly from the wording of Article 22(4), and does not depend on judicial interpretation, except to decide that Article 22(4) is not over-ridden by Article 6(3), providing for jurisdiction over counterclaims. For patents issued by non-European countries, the situation at common law is again unresolved. So far as the variant on Case 2(2) is concerned, the reply to the variant on Case 2(1) applies, with ‘subsistence’ in place of ‘infringement’. Article 6(3), for jurisdiction over counterclaims, might also be relevant. Case 2(3) In Case 2(3), the distinctions between European and non-European countries, and registered and non-registered intellectual property rights apply again. For registered intellectual property rights existing under the law of a European country, Article 22(4) applies. According to the Official Report (the Jenard Report100) which accompanied the antecedent of Article 22 (ie Article 16 of the Brussels Convention 1968), the exclusive jurisdictions need not apply where the relevant issues arises as a ‘preliminary or incidental’ question. It is implicit from the UK (Coin Controls v Suzo101 and Fort Dodge v Akzo Nobel 102) and European (GAT v LuK 103 and Roche v Primus 104) cases cited above, that the validity of registered intellectual property rights cannot properly be characterised as merely ‘a preliminary or incidental’ to an issue over which unqualified jurisdiction would otherwise exist, so the present relevance of the proviso in the Jenard report is unclear. It is clear from the express terms of Articles 23(5), 24 and 25 of the Jurisdiction Regulation that the parties cannot override the exclusive jurisdictions by agreement or submission. This is illustrated by the decision in Duijsteen v Goderbauer,105 where the jurisdiction of the Dutch courts was raised only on a final appeal to the Dutch Supreme Court after being accepted at first and second instance. The European Court of Justice held that the Supreme Court was right to have entertained the jurisdiction question, although on the facts, Article 16(4) of the Brussels Convention did not apply. At common law, there is no separate provision for non-exclusive jurisdiction in relation to preliminary questions. In so far as an action involving a foreign intellectual property right was considered to infringe principles of international comity, the court would decline jurisdiction, notwithstanding any express or implicit agreement between the parties. 100   Report on the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters signed at Brussels, 27 September 1968 [1979] OJ C 59/79. 101   Coin Controls v Suzo [1997] FSR 660. 102   Fort Dodge v Akzo Nobel [1998] FSR 222 (CA). 103   Case C-4/03 GAT v LuK [2006] ECR I-6509. 104   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. 105   Case C-288/82 Duijnstee (Liquidator) v Lodewijk Goderbauer [1983] ECR 3663.

United Kingdom  1081 Metalegal Formants Specialists in intellectual property law are often at odds with those in private international law, but the Court of Appeal decision in Lucasfilm v Ainsworth is likely to give rise to a different set of divisions of opinion. Intellectual property specialists are generally in favour of respecting the exclusive jurisdictions in relation to all intellectual property rights, and for all countries which have not explicitly pooled or surrendered their sovereign rights in specific instances, and are therefore likely to welcome the decision. Among private international lawyers, it is probably safe to say that most UK practitioners, as well as many academics with practical day-to-day experience of actual litigation, have long deplored the tendency of the European Court to favour over-literal and over-dogmatic interpretations of the Jurisdiction Regulation, which ignore practical realities and (in some cases) international obligations. Conversely, ultramontane Europhiles, who find nothing objectionable in Owusu or its predecessors, are likely to condemn Lucasfilm v Ainsworth as regressive and insular.106 It is interesting that the Court of Appeal did not see fit to order a preliminary reference to the European Court in Lucasfilm v Ainsworth, but on its own interpretation the Jurisdiction Regulation did not apply at all, and on any analysis it may have wanted to avoid the delays of the GAT and Roche references.

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z, respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract? (2) Assuming that B, C and D are members of a group of a corporation and takes identical steps in infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country would (and if so under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

Operative Rules COUNCIL REGULATION (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Article 6 A person domiciled in a Member State may also be sued: 1. Where he is one of a number of defendants, in the courts for the place where any one of them is domiciled.   See P Rogerson, ‘Conflict of laws – foreign copyright jurisdiction’ (2010) 69 Cambridge Law Journal 245.

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1082  Christopher Wadlow Article 27 1. Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any court other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.

Article 28 1. Where related actions are pending in the courts of different Member States, any court other than the court first seised may stay its proceedings. 2. Where these actions are pending at first instance, any court other than the court first seised may also, on the application of one of the parties, decline jurisdiction if the court first seised has jurisdiction over the actions in question and its law permits the consolidation thereof. 3. For the purposes of this Article, actions are deemed to be related where they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

Court Decisions as for Case 2. Descriptive Formants Case 3(1) For European defendants, Article 6(1) of the Jurisdiction Regulation allows additional defendants to be joined to a claim against a defendant over whom jurisdiction exists by virtue of Article 2(1) (domicile). The possibility is illustrated by the copyright action Pearce v Ove Arup,107 where the named defendant (Ove Arup) was undoubtedly domiciled in the United Kingdom, another defendant (the firm of architects) might have been domiciled either in the United Kingdom or the Netherlands, and the third defendant (the City of Rotterdam) was undoubtedly domiciled in the Netherlands. However, the possibility of joining defendants B, C and D who are only liable for infringement in third states X, Y and Z is excluded by Article 22(4) if those states are in Europe. This is the result of the English decisions in Coin Controls v Suzo108 and Fort Dodge v Akzo Nobel,109 which are considered to have been endorsed by the European Court of Justice in GAT v LuK 110 and Roche v Primus.111 In the present case (1), there are two further factors to consider. First, no connection with country W is asserted except that it is the country of residence of A. The general rule of the Jurisdiction Regulation is that jurisdiction follows the domicile of the defendant, not that of the claimant, so there appears to be no prima facie basis for asserting jurisdiction over any of B, C and D, regardless of whether or not Article 22(4) applies. Secondly, since proceedings by A are already pending in states W, Y and Z, against B, C and D, any proceed  Pearce v Ove Arup [2000] Ch 403; [1999] FSR 525 (CA).   Coin Controls v Suzo [1997] FSR 660. 109   Fort Dodge v Akzo Nobel [1998] FSR 222 (CA). 110   Case C-4/03 GAT v LuK [2006] ECR I-6509. 111   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. For comments on Art 6(1) in the context of Roche v Primus and the other principal European cases, see M Rossler, ‘The court of jurisdiction for joint parties in international patent disputes’ (2007) 38 International Review of Intellectual Property and Competition Law 380; and ZS Tang, ‘Multiple defendants in the European Jurisdiction Regulation’ (2009) 34 European Law Review 80. 107 108

United Kingdom  1083 ings against the same defendants for the same causes of action would have to be stayed under the lis alibi pendens rule of Article 27. For all these reasons the answer to case (1) is that the infringement proceedings already pending against B, C and D in the courts of W, Y and Z cannot be consolidated into a single set of proceedings in the courts of country X (assumed to be the United Kingdom). For the variant on Case 3(1) the analysis is different. Claims for breach of contract are not considered to fall within the exclusive jurisdiction of Article 22(4), even if the contract is a patent licence.112 Jurisdiction over claims for breach of contract can be based on the defendant’s domicile under Article 2(1), or on the special jurisdiction of Article 5(1). In the present case, there is no indication that the courts of X have jurisdiction over any defendant, on either basis. In addition, the lis alibi pendens rule of Article 27 would require any proceedings in X to be stayed. If W, Y and Z are not in Europe, then the situation is unclear, for the reasons given above. Case 3(2) For Case 3(2), there would appear to be the possibility of A suing in the courts of country X (assumed to be the United Kingdom) for the unidentified defendant’s contributory liability for the infringements actually committed by B, C and D in W, Y and Z. In this case, jurisdiction over the unnamed coordinating defendant would be based on the latter’s domicile in X, and jurisdiction over B, C and D would be based on Article 6(1). However, all these claims would be subject to the exclusive jurisdiction provisions of Article 22(4), and as the latter is currently understood, the allegations of infringement would be considered to fall within the exclusive jurisdictions of the courts of W, Y and Z, whether or not counterclaims for infringement were raised. In addition, the lis alibi pendens rule of Article 27 would apply in so far as any proceedings against the same defendants for the same causes of action were involved, and that of Article 28 would apply in so far as similar causes of action were concerned. For this reason the answer to case (2) is that infringement proceedings against B, C and D in the courts of W, Y and Z cannot be consolidated into a single set of proceedings in the courts of country X (assumed to be the United Kingdom), notwithstanding that there is a defendant domiciled in X assumed to be responsible for coordinating the infringing activities of B, C and D. If W, Y and Z are not in Europe, then the situation is again unclear. Metalegal Formants Although the UK courts consistently refuse to entertain actions for infringement or nullification of foreign intellectual property rights, except as mandated by the Brussels Convention or the Jurisdiction Regulation, there is no such objection to determining purely contractual rights relating to intellectual property of any kind, whether registered or unregistered. Even in Lucasfilm v Ainsworth,113 where the Court of Appeal refused to entertain Lucasfilm’s action for infringement of the relevant American copyrights, it still had no difficulty in determining that Lucasfilm were contractually entitled to the world-wide copyrights in the 112   By inference from C-288/82 Duijnstee v Goderbauer [1983] ECR 3663; see also Molins Plc v GD SpA [2000] 1 WLR 1741; [2000] FSR 893 (CA) and R Griggs Group Ltd v Evans (No 2) [2004] EWHC 1088 (Ch); [2005] Ch 153; [2004] FSR 48. 113   Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10.

1084  Christopher Wadlow props which Ainsworth had designed, and affirming the first instance judge’s order that Ainsworth should assign them. For further examples of the English courts assuming jurisdiction over contractual claims relating to foreign intellectual property rights, see Satyam Computer Services v Upaid Systems,114 where the court expressly confined the Moçambique rule to issues of patent validity, and held that an agreement in settlement of United States patent litigation did not preclude an action to set aside a contract for fraud; Crucial Music v Klondyke Management,115 where London was held to be the ‘place of performance of the obligation’ for the purposes of the Lugano Convention, in respect of an obligation to assign various copyrights and trade marks; Celltech R&D Ltd v MedImmune,116 where the Court of Appeal held that it had jurisdiction (pursuant to an expansive interpretation of the relevant choice-of-court clause) to decide whether the defendant’s licensed product was covered by a ‘valid claim’ of a US patent;117 DSM Anti-Infectives v Smithkline Beecham,118 where the Court of Appeal held that the exclusive jurisdiction clause of an agreement made in settlement of worldwide patent (and trade secret) litigation conferred a contractual right on the claimant to bring suit in England; and Apple Corps v Apple Computer,119 which involved an international trade mark delimitation agreement, which had no express choice of governing law or jurisdiction. The Dutch ‘Spider in the Web’ doctrine, which was rejected by the European Court of Justice in Roche v Primus,120 has never applied in the United Kingdom.

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the licence agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: 114   Satyam Computer Services v Upaid Systems [2008] EWHC 31 (Comm); [2008] ILPr 29 (Queen’s Bench Division, Commercial Court). 115   Crucial Music v Klondyke Management [2008] EWHC 31 (Comm); [2008] 1 All ER (Comm) 737; [2008] ILPr 29. It is assumed that at least some of the copyrights and trade marks were foreign, though this is not stated and was not strictly relevant to the decision. 116   Celltech R&D Ltd v MedImmune [2004] EWCA Civ 1331; [200] FSR 21. The licence contract was governed by English law and had an English jurisdiction clause. 117   The licence agreement defined ‘valid claim’ as one which was subsisting and unrevoked, so avoiding the need for the Court of Appeal having to decide for itself whether any of the American patent claims were valid or not, even inter partes. 118   DSM Anti-Infectives v Smithkline Beecham [2003] EWCA Civ 1199; [2004] 2 CLC 900. Applying Case C-281/02 Andrew Owusu v NB Jackson [2005] ECR I-1383, and refusing to apply the principle of forum non conveniens so as to give preference to litigation pending in the United States. 119   Apple Corps v Apple Computer [2004] EWHC 768 (Ch); [2004] 2 CLC 720; [2004] ILPr 34. 120   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. For comments on Art 6(1) in the context of Roche v Primus and the other principal European cases, see M Rossler, ‘The court of jurisdiction for joint parties in international patent disputes’ (2007) 38 International Review of Intellectual Property and Competition Law 380; and Zheng Sophia Tang, ‘Multiple defendants in the European Jurisdiction Regulation’ (2009) 34 European Law Review 80.

United Kingdom  1085 (1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counterclaim that patents are invalid? (3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings? (4) Would parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be legal effects of such decision?

Operative Rules Hague Convention of 30 June 2005 on Choice-of-Court Agreements, especially Article 2(2)(n) and (o).121 2(2) This Convention shall not apply to the following matters: ... n)  the validity of intellectual property rights other than copyright and related rights; o)  infringement of intellectual property rights other than copyright and related rights, except where infringement proceedings are brought for breach of a contract between the parties relating to such rights, or could have been brought for breach of that contract;

COUNCIL REGULATION (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Article 23 1.  If the parties, one or more of whom is domiciled in a Member State, have agreed that a court or the courts of a Member State are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction. Such jurisdiction shall be exclusive unless the parties have agreed otherwise. . . . 5.  Agreements . . . conferring jurisdiction shall have no legal force . . . if the courts whose jurisdiction they purport to exclude have exclusive jurisdiction by virtue of Article 22.

Descriptive Formants In all four cases it is asserted that the claim is for patent infringement, not for breach of contract. On that basis: Case 4(1) Provided the patent(s) in question were issued in European states, then the effect of Article 22(4) as interpreted (see above) would be that the claims for infringement fell within the exclusive jurisdiction of the courts of those countries. A choice of court clause cannot override the exclusive jurisdiction of Article 22, see Article 23(5). For non-European states, the situation is uncertain.

  The Convention has been signed by the European Union, but not yet adopted by the Council.

121

1086  Christopher Wadlow Case 4(2) In Case 4(2) the situation is a fortiori to that in Case 4(1). Case 4(3) In Case 4(3) the exclusive jurisdiction provisions prevail over any conflicting choice of court provisions, regardless of whether the latter are made before the cause of action arose (Case 4(1) above), or afterwards. Case 4(4) In Case 4(4) the situation is unclear. It is likely that an agreement to arbitrate issues of patent infringement and validity would be given effect, provided that the arbitrators did not purport to give effect in rem to any finding of invalidity.122 However, this remains a matter of opinion. Metalegal Formants The problem is framed in terms of the licensor suing for patent infringement, rather than for breach of contract. The UK courts have no objection to entertaining actions for breach of contract, even if the question of infringement (or not) of the patent claims arises as an incidental matter, and with inter partes effect. See the cases cited for Case 3 above. The situation is less clear in so far as validity is concerned. It is certain that the UK courts would not rule on validity with effect in rem, but less clear whether they would allow invalidity to be raised as a contractual defence, with inter partes effect only. The situation did not quite arise in Celltech R&D Ltd v MedImmune Inc,123 where the Court of Appeal held that it had jurisdiction (pursuant to an expansive interpretation of the relevant choice-of-court clause) to decide whether the defendant’s licensed product was covered by a ‘valid claim’ of a US patent, but the licence agreement defined ‘valid claim’ as one which was subsisting and unrevoked, so the Court of Appeal could avoid having to decide for itself whether any of the American patent claims were valid or not, even inter partes. A contractual choice-of-court clause in a patent licence would obviously cover claims under the contract. Whether it would also cover claims for infringement is a matter of interpretation of the clause in question, although the English courts are inclined to interpret such clauses quite widely, if they can. So in DSM Anti-Infectives v Smithkline Beecham124 the Court of Appeal held that the exclusive jurisdiction clause of an agreement made in settlement of patent (and trade secret) litigation conferred a contractual right on the claimant to bring suit in England,125 and on that basis refused to stay a declaratory action pending the outcome of litigation in the United States. The Court also held in DSM that the Owusu judgment had removed any residual discretion a court might have had to decline jurisdiction on the basis of forum non conveniens. On the other hand, Owusu was distinguished in Skype Technologies v Joltid,126 where an exclusive jurisdiction clause in favour of 122  See Ch 17, ‘Arbitration of patent disputes’ in M Fysh et al (ed) The Modern Law of Patents (London, LexisNexis Butterworths, 2010) especially paras 17.34–17.43. 123   Celltech R&D Ltd v MedImmune Inc [2004] EWCA Civ 1331; [2005] FSR 21. The licence contract was governed by English law and had an English jurisdiction clause. 124   DSM Anti-Infectives v Smithkline Beecham [2003] EWCA Civ 1199; [2004] 2 CLC 900. 125   DSM was the party allegedly in breach. 126   Skype Technologies v Joltid [2009] EWHC 2783 (Ch).

United Kingdom  1087 the courts of England and Wales was enforced by granting an anti-suit injunction against proceedings in the United States for alleged breach of a worldwide copyright licence agreement. A choice-of-court clause cannot be regarded as binding non-parties. Though there was an exclusive jurisdiction clause in Knorr-Bremse v Haldex,127 the court held that the English courts could entertain an action for a declaration that a certain component did not infringe various European patents, because the party seeking the declaration was not a party to the settlement agreement, and so was not bound by a jurisdiction clause nominating the Dusseldorf courts. The problem will be considerably clarified when, as is expected, the Jurisdiction Regulation is amended to take account of the Hague Convention on Choice-of-Court Agreements.128 So far as arbitration is concerned, it is rather unlikely that any individual arbitrator (or an institution) would agree to act in an arbitration involving intellectual property, only to the extent of holding that he or they lacked competence. The enforceability of the arbitration agreement would only arise in practice if it was challenged in court by one of the parties, either to prevent the arbitration going ahead, or to challenge the enforcement of any award.

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B, who is located in country Z, produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of a country Z take having regard to pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Operative Rules COUNCIL REGULATION (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Article 25 Where a court of a Member State is seised of a claim which is principally concerned with a matter over which the courts of another Member State have exclusive jurisdiction by virtue of Article 22, it shall declare of its own motion that it has no jurisdiction.

127   Knorr-Bremse Systems for Commercial Vehicles Ltd v Haldex [2008] EWHC 156 (Pat); [2008] 2 All ER (Comm) 448; [2008] ILPr 26; [2008] FSR 30. 128   Hague Convention of 30 June 2005 on Choice-of-Court Agreements.

1088  Christopher Wadlow Article 22(4) – see above. Articles 27 and 28 – see above. Decisions of the European Court in Case C-406/92, The Tatry [1994] ECR I-5439 and Case C-4/03, Gesellschaft für Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) [2006] ECR I-6509. Descriptive Formants Case 5(1) Supposing that countries X and Y were European, then provided that the courts of X and Y had jurisdiction over A (for reasons which are not stated, and cannot be assumed) then those actions would be first seised, for the purposes of Article 27 of the Jurisdiction Regulation, and proceedings between the same parties, for infringement of the same patents, would be deemed to be for the same cause of action as the pre-existing declaratory actions (as decided for declaratory actions in general in The Tatry 129), and any infringement proceedings brought by A against B in country Z (assumed to be the United Kingdom) would have to be stayed. This analysis does not depend on the effect of Article 22, and to that extent applies regardless of whether the rights in question were registered intellectual property rights or not. However, if registered intellectual property rights were involved, then Article 22(4) would apply, and the courts of Z would be obliged to decline jurisdiction, for the same reasons as in Case 3. It is not yet certain whether the more appropriate course would be to stay the proceedings, or to decline jurisdiction altogether. The present commentator believes that declining jurisdiction immediately (in the case of registered intellectual property rights) would be the more appropriate option, but the practical consequences are slight. If the declaratory actions brought by B in countries X and Y also include claims for declarations that B is not liable for patent infringement in Z, then the situation is less clear. These claims contravene the exclusive jurisdiction of Article 22(4), as presently interpreted in in GAT v LuK130 and Roche v Primus,131 but the question remains as to whether the courts of country Z should stay its own proceedings and await the decisions of the courts of X and/or Y as to their own lack of jurisdiction, or whether the courts of Z can judge that issue for themselves. If X and Y are non-European, then Article 27 would not apply at all, and Article 22(4) would not apply in terms, even for registered rights, although the question of its possible ‘reflexive action’ would still arise.132 In the case of unregistered rights, the situation would be governed by the common law. Even assuming that the UK courts had personal jurisdiction over B by virtue of domicile, then it is still very unlikely that UK courts would assert jurisdiction over infringements occurring in X and Y, either by application of the Moçambique rule,133 or because the courts of X and Y are clearly the more appropriate fora   Case C-406/92, [1994] ECR I-5439   Case C-4/03 GAT v LuK [2006] ECR I-6509. 131   Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535. For comments on Art 6(1) in the context of Roche v Primus and the other principal European cases, see M Rossler, ‘The court of jurisdiction for joint parties in international patent disputes’ (2007) 38 International Review of Intellectual Property and Competition Law 380; and Zheng Sophia Tang, ‘Multiple defendants in the European Jurisdiction Regulation’ (2009) 34 European Law Review 80. 132   For the possible ‘reflexive’ application of Art 22 see n 88 above. 133   British South Africa Co v Compania de Moçambique [1893] AC 602, HL. 129 130

United Kingdom  1089 (doctrine of forum non conveniens).134 Conversely, there is no reason why the UK courts should take any notice at all of any revocation proceedings purportedly brought in X or Y for revocation of the UK patent (or other registered intellectual property rights), and neither the existence of such proceedings, nor their outcome, would cause the UK court to stay its own proceedings or to decline jurisdiction in relation to alleged infringement of UK rights. Case 5(2) An action by B for revocation or nullification of the patents existing in countries X and Y would not be ‘for the same cause of action’ as an action for infringement, so Article 27 would not apply to any action brought by A in the courts of country Z. However, if A alleged infringement of patents existing in countries X and Y, then Article 22(4) would apply, and the courts of Z would be obliged to decline jurisdiction over alleged infringements in those countries if registered intellectual property rights were involved, for the same reasons as in Case 3. In this case it is clear that the (mandatory) obligation to decline jurisdiction under Articles 22 and 25 means there is no discretion to be exercised under the ‘related actions’ rule of Article 28. In so far as infringement of patent(s) issued by country Z was concerned, then any attempt to challenge the validity of those patents in the courts of countries X or Y would be ineffective, since Article 28 (rather than Article 27) would apply, and there is no possibility of the UK courts granting a discretionary stay of infringement proceedings properly brought and within their own exclusive jurisdiction, on the sole basis of pre-existing foreign nullity proceedings commenced in obvious breach of Article 22. If X and Y are non-European, then the same analysis applies as for Case 5(1). Metalegal Formants Proceedings in Abkco Music & Records v Jodorowski 135 concerned only infringements of English copyright, and it was not therefore necessary or appropriate to stay them pending the outcome of an earlier-seised action relating only to the corresponding French copyrights. In another case involving a disputed settlement agreement, Prudential Assurance Co Ltd v Prudential Insurance Co of America (No 1),136 pre-existing revocation proceedings in France for the revocation of French trade marks did not preclude or pre-empt an action for infringement of the corresponding Community trade marks in England.

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time.

134   This assumes, following Lucasfilm v Ainsworth [2009] EWCA Civ 1328; [2010] FSR 10, that one or both of these principles continues to apply, notwithstanding Case C-281/02 Andrew Owusu v NB Jackson [2005] ECR I-1383. There may be a conflict in this respect between Lucasfilm, and DSM Anti-Infectives BV & Anor v Smithkline Beecham plc [2003] EWCA Civ 1199; [2004] 2 CLC 900. 135   Abkco Music & Records v Jodorowski [2003] ECDR 3 136   Prudential Assurance Co Ltd v Prudential Insurance Co of America (No 1) [2003] EWCA Civ 327; [2004] FSR 25.

1090  Christopher Wadlow Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, firstly, that the claim for the infringement of patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Operative Rules Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) Article 8 1. The law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed. . . . 3. The law applicable under this Article may not be derogated from by agreement pursuant to Article 14.

See also: Patents Act 1977, s 132. Descriptive Formants Case 6(1) No. The Patents Act 1977 is considered to be strictly territorial, except to the limited extent specified in section 132 (which extends its effect to the Isle of Man, territorial waters, and the continental shelf). Any infringement alleged to have occurred in country Z must be adjudged solely by the laws of country Z. This follows from Article 8(1) of the Rome II Regulation, which is of universal application (ie its application does not depend on either defendant B or country Z being European, or having any connection with the EC). Case 6(2) No. The applicable law in cases of non-contractual liability (including patent infringement) is specified by the Rome II Regulation. Article 8(1) provides that the applicable law shall be the law of the country for which protection is claimed, which in this case is the law of country Z. Metalegal Formants None.

United Kingdom  1091

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B, and C, have created a website which facilitates speedy exchange of digital files (music, videos, software etc) among users from all over the world. After several months when the website became very popular, A, B and C introduced an additional paid service: the speedy exchange of big capacity digital files. Although A, B, and C know that some files that are stored in the server of their website are illegal, they do not take any actions to somehow prevent infringements of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B, and C requesting to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case: (1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Operative Rules Rome II Regulation, Article 15(a). 15. The law applicable to non-contractual obligations under this Regulation shall govern in particular: (a) the basis and extent of liability, including the determination of persons who may be held liable for acts performed by them.

Descriptive Formants Case 7(1) The law of each country in which direct acts of copyright infringement occurred, or were alleged to have occurred, would be applied on a distributive basis according to Article 8(1) of the Rome II Regulation. For the variant case, no, the applicable law in cases of intellectual property infringement cannot be derogated from by agreement: Rome II Regulation, Article 8(3). Case 7(2) Article 8(1) of the Rome II Regulation presumably applies equally to secondary liability for infringement of copyright, on the basis that secondary liability in tort is within the scope of the Regulation, as defined in Article 15(a). For the variant case, no, the applicable law cannot be derogated from by agreement: Rome II Regulation, Article 8(3). Case 7(3) The court could decide infringement in respect of all countries in which it had jurisdiction over at least one defendant. The applicable law would be determined on a distributive (country-by-country) basis according to Article 8(1) of the Rome II Regulation.

1092  Christopher Wadlow The parties’ choice of law would not be allowed. The applicable law in cases of intellectual property infringement can never be changed by agreement: see Rome II Regulation, Article 8(3). Infringements committed in multiple jurisdictions must be dealt with on a so-called ‘distributive’ basis, and there is no such concept as ‘ubiquitous infringement’. Metalegal Formants So far as secondary liability is concerned, a distinction may need to be drawn between liability for contributory infringement under the relevant copyright legislation, to which Article 8(1) of the Rome II Regulation clearly applies in terms, as for any other infringement, and liability which arises under general principles of law, in the United Kingdom as a so-called ‘joint tortfeasor’.137 The wording of Article 8(1) ‘arising from an infringement of an intellectual property right’ is apparently broad enough to cover both categories, but this has yet to be confirmed.138

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B’s is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licenses without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning the right to obtain patents be enforceable in your country? (2) Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in case of initial authorship or initial title to trade mark? (4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Operative Rules Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) Article 3 1. A contract shall be governed by the law chosen by the parties. The choice shall be made expressly or clearly demonstrated by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or to part only of the contract. . . .

Article 8 1. An individual employment contract shall be governed by the law chosen by the parties in accordance with Article 3. Such a choice of law may not, however, have the result of depriving   See H Carty, ‘Joint tortfeasance and assistance liability’ (2006) 19 Legal Studies 489.   See generally G Dinwoodie, R Dreyfuss, A Kur, ‘The Law Applicable to Secondary Liability in Intellectual Property Cases’ (2009) 42 New York University Journal of International Law and Politics 201. 137 138

United Kingdom  1093 the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable pursuant to paragraphs 2, 3 and 4 of this Article. 2. To the extent that the law applicable to the individual employment contract has not been chosen by the parties, the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country. 3. Where the law applicable cannot be determined pursuant to paragraph 2, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated. 4. Where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated in paragraphs 2 or 3, the law of that other country shall apply.

Descriptive Formants This problem raises issues as to the relationship of the law of the employment relationship, and the laws of the individual patents considered as objects of property. Since their respective regimes may not coincide, the following analysis is to some extent provisional. Case 8(1) The better view is that the law of the employment contract would determine initial ownership of the invention and any resulting patents. According to Articles 3 and 8(1) of the Rome I Regulation, the law of the employment contract is normally that agreed by the parties, if there is such a clause in the employment contract. If there is no such agreement, then the applicable law according to Article 8(2) is the law of the place where the employee habitually carries out his duties, if that can be identified, or the law of the place of business through which he was engaged, if not. Case 8(2) There seems no reason why this should make any difference. Case 8(3) Trade marks are not works of authorship. There seems no reason, as a matter of substantive law, why an employee should enjoy any proprietary rights in respect of a trade mark devised by him in the course of his employment, unless there was specific agreement to the contrary, or unless the trade mark was a graphic one, in which case copyright might subsist. In so far as such a claim might be advanced, the applicable law would presumably be that of the employment contract. In so far as the trade mark might be a copyright work, UK law would provide for the employer to own the copyright, provided the work was created in the course of the author’s employment (Copyright Designs and Patents Act 1988 s 11(2)). Case 8(4) This would depend on proper characterisation of the claim. If such claims are capable of arising as a matter of contact and/or employment law, under the law identified as applicable, then that law would apply.

1094  Christopher Wadlow Assuming that no such claims arise under the chosen applicable law, but that such claims would have been possible under the law(s) of any of the countries identified in Article 8(2), (3) or (4), then those laws would apply if their provisions were such as cannot be excluded by agreement. If the law of hypothetical country X provided that employee-inventors were to have certain minimum rights to compensation for patents granted in country X, regardless of any agreement to the contrary, and regardless of the applicable law of the employment contract, then effect could be given to such provisions as ‘overriding mandatory provisions’ under Article 9. Metalegal Formants None.

Case 9: Applicable Law to Transfer of Rights Agreements A is a rising popular music band. After one of the concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B has made some arrangements of the debut single for the distribution of the album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work has not been transferred and thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How will the court deal with the issue of transferability? (3) What would be the applicable law in a case where there is no choice of law made by the parties?

Operative Rules Rome I Regulation, Article 3(1) – see above. Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) Article 4 1. To the extent that the law applicable to the contract has not been chosen in accordance with Article 3 and without prejudice to Articles 5 to 8, the law governing the contract shall be determined as follows:

...



(b) a contract for the provision of services shall be governed by the law of the country where the service provider has his habitual residence; (c) a contract relating to a right in rem in immovable property or to a tenancy of immovable property shall be governed by the law of the country where the property is situated; ...



2. Where the contract is not covered by paragraph 1 or where the elements of the contract would be covered by more than one of points (a) to (h) of paragraph 1, the contract shall be governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence.

United Kingdom  1095 3. Where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with a country other than that indicated in paragraphs 1 or 2, the law of that other country shall apply. 4. Where the law applicable cannot be determined pursuant to paragraphs 1 or 2, the contract shall be governed by the law of the country with which it is most closely connected.

Rome II Regulation, Article 8 – see above. Decision of the European Court in Case C-533/07 Falco Privatstiftung v Weller-Lindhorst [2009] ECR I-3327. Decision in Crucial Music Corp (formerly Onemusic Corp) v Klondyke Management AG [2008] EWHC 31 (Comm); [2008] 1 All ER (Comm) 737; [2008] ILPr 29,139 where London was held to be the ‘place of performance of the obligation’ for the purposes of the Lugano Convention, in respect of an obligation to assign various copyrights and trade marks. Decision in Knorr-Bremse Systems for Commercial Vehicles Ltd v Haldex Brake Products GmbH [2008] EWHC 156 (Pat); [2008] FSR 30. Descriptive Formants Case 9(1) Moral rights are ‘intellectual property rights’ for the purposes of Article 8 of the Rome II Regulation, so the law applicable to allegations of infringement of the moral rights would be the law(s) of the country(ies) for which protection was sought, which might mean that the laws of more than one country would have to be applied on a distributive basis. The applicable law for the issue of infringement cannot be derogated from by agreement. In so far as contractual issues were concerned, the Rome I Regulation would apply. According to Article 3(1) the applicable law of the contract would be that chosen by the parties, subject to certain derogations and exceptions in paragraphs (3) and (4) of Article 3 which do not appear to apply here. This would be relevant to any defence by B, that the moral rights in question had validly been transferred, or, as is more likely, validly waived. The conditions for valid transfer or waiver would be determined by the lex situs for each moral right in issue. However, the effect of Article 3(1) is only to identify the applicable law of the contract. Article 3(1) does not determine whether or not the parties’ intentions are capable of being given effect, to the extent that the contract relates to property rights strictly speaking, or to rights (such as moral rights) whose transferability (or not) is determined by the lex situs. Case 9(2) The issue of transferability is an inherent quality of the moral right in question, which is determined by the lex situs, and cannot be affected or overridden by the choice of the applicable law for the contract. Case 9(3) The applicable law of infringement is always that specified by Article 8(1) of the Rome II Regulation, and there is no scope for the parties to agree any other system of law. 139   It is assumed that at least some of the copyrights and trade marks were foreign, though this is not stated and was not strictly relevant to the decision.

1096  Christopher Wadlow The Rome I Regulation will identify the applicable law of the contract in all cases, regardless of the nationality or domicile of any or all of the parties, or the presence or absence of any factors connecting the contract with Europe. In the absence of an express choice of law clause, Article 4 applies. Metalegal Formants At this point the analysis becomes uncertain, and more so after the European Court’s decision in Falco v Weller-Lindhorst.140 I do not consider that Article 4(1)(c) (rights in rem in immovable property) applies, mainly because ‘immovable property’ in context is probably confined to land, but also because moral rights are not rights in rem in the normal sense, and because this interpretation would make it impossible for a single recording contract to have a single system of applicable law, if it covered rights arising under more than one legal system. It is more than arguable that a contract such as this is a contract for services (Article 4(1) (b)), but it is equally well arguable that the services are those performed by the band (writing and performing the music) or by the record company (recording the performance and issuing the recordings). A possible way forward is to apply Article 4(2), under which the applicable law is the law of the person required to effect the ‘characteristic performance’ of the contract. This raises the previous question in a new form, namely whether it is the provision of the performance, or the making and issuing of the recordings, which is (more) characteristic, but in this context it is legitimate to note that the concept of ‘characteristic performance’ is to be found in the Jurisdiction Regulation and in the Brussels Convention before it, and that the characteristic performance is never the mere payment of money. On the assumption that the band A will be paid for their performances by recording company B, this suggests, if only tentatively, that the determinative ‘characteristic performance’ is that of the band, rather than the record company. It must be admitted that this gives rise to practical problems in certain situations, for instance if the band does not have legal personality, and especially if the individual members are habitually resident in different countries. (Newly formed bands in the United Kingdom are normally unincorporated, and are treated as partnerships, which do not have separate legal personality; well established bands may be incorporated, but very probably in a tax haven). The complication which arises from Falco v Weller-Lindhorst is that the latter decided, in the context of Article 5(1)(b) of the Jurisdiction Regulation, that the existence of a copyright licence did not constitute the provision of services by the copyright owner, so as to engage the special jurisdiction. Given the close affinity which ought to exist between the regulations on jurisdiction and choice of law, this might be interpreted as implying that the present case did not involve the provision of services either, in which case the foregoing analysis would have to be revised. My preferred conclusion, however, is unaltered by Falco. So far as the law of the Jurisdiction Regulation is concerned, Falco gives effect to the principle that the special jurisdictions are to be interpreted narrowly, so as to preserve the general principle that jurisdiction of the courts of the defendants’ domicile is not displaced without good reason. However, in so far as the Rome I Regulation imposes a general rule, and recognises exemptions to it, this has nothing to do with the relative status of contracts for services, in relation to any more general rule. On the contrary, Article 4(1)(b) can only be regarded as a multifaceted general rule, in which all the individual paragraphs are of equal status.   Case C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst [2009] ECR I-3327.

140

United Kingdom  1097 As concerns the facts, there also seem to be sufficient differences with Falco. The latter held that the copyright licensor was not, on the facts, providing a service by licensing the copyright, but in the present case the record company is certainly providing a service by releasing and promoting the album, albeit that the service is not paid for in money. This (perhaps) leads to the conclusion that the contract is one for services in the sense of Article 4(1)(b) of Rome I (though perhaps not in the sense of Article 5(1)(b) of the Brussels Regulation), and that the characteristic performance is that of the record company. This is probably the more commercially acceptable result on the facts, but it may depend on the assumption that the recording had already taken place, at a live public performance, since this implies that the actual services rendered by the band, in terms of composing and performing the piece, are past history, and therefore irrelevant in terms of characteristic performance. This in turn leads to the scarcely satisfactory conclusion that the analysis for future albums, as yet unwritten, unsung, and unrecorded, will be different, since it is hard to see that the first two are somehow less characteristic of the commercial relationship than the activities of the record company in recording and releasing them.

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Wouldn’t be the parties be required to re-litigate the dispute in order to have the ownership decision registered in registry of a recognising country? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Operative Rules Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Article 22 – see above. Article 38 1.  A judgment given in a Member State and enforceable in that State shall be enforced in another Member State when, on the application of any interested party, it has been declared enforceable there. . . .

Article 45 2. Under no circumstances may the foreign judgment be reviewed as to its substance.

Decision of the European Court in C-288/82, Duijnstee (Liquidator) v Lodewijk Goderbauer [1983] ECR 3663. Decision of the High Court in R Griggs Group Ltd and Others v Evans [2004] EWHC 1088 (Ch); [2005] Ch 153.

1098  Christopher Wadlow Descriptive Formants Case 10(1) Provided country X was within Europe, then the UK courts would be obliged to recognise the decision. In particular, Article 22(4) has been interpreted so as not to apply to the determination of questions of ownership.141 The UK courts would be bound to respect the decision of the court of country X to assume jurisdiction. For judgments of courts not in Europe, the situation is unclear. By application of the rule in British South Africa Co v Compania de Moçambique,142 the UK courts would not recognise a foreign judgment in respect of the ownership of a UK patent, in so far as it purported to have effect in rem. However, the Moçambique rule does not prevent the recognition of in personam judgments determining purely contractual rights,143 and such a judgment might be recognised. The situation is too rare, and to uncertain, to provide detailed guidance. The most relevant factor would be whether states in general accepted the validity of extraterritorial jurisdiction in these circumstances. Case 10(2) No, this is expressly excluded in respect of European judgments by the Jurisdiction Regulation, Article 45(2) ‘under no circumstances may the foreign judgment be reviewed as to its substance’. For judgments to which the Jurisdiction Regulation does not apply, this is very likely, but the situation is unclear, and it may not be possible to re-litigate the issue in the recognising country. In Lucasfilm v Ainsworth the Court of Appeal refused to recognise or enforce a default judgment of a United States court for damages for copyright infringement, made against a UK defendant in default of appearance, because the basis on which the American court had asserted jurisdiction was exorbitant. In the same case, the Court of Appeal had already held that the UK courts had no jurisdiction to try the same copyright infringements themselves. Case 10(3) For judgments of European courts, the procedure for enforcement is specified in the Jurisdiction Regulation, Section 2 (Articles 38 to 52). This involves registering the (foreign) judgment, after which it is enforceable in the same way as a UK judgment. For non-European judgments, the likelihood is that an action would have to be commenced for the purposes of recognising (or not) the foreign judgment. Metalegal Formants None.

 C-288/82, Duijnstee v Goderbauer [1983] ECR 3663.   British South Africa Co v Compania de Moçambique [1893] AC 602 (HL).   R Griggs Group Ltd and Others v Evans [2004] EWHC 1088 (Ch); [2005] Ch 153.

141 142 143

United Kingdom  1099

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was resident in country Y and infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

Operative Rules Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Article 22(4) – see above. Article 31 Application may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this Regulation, the courts of another Member State have jurisdiction as to the substance of the matter.

Decisions of the European Court in Case C-391/95 Van Uden Maritime BV v Firma DecoLine [1998] ECR I-7091; and Case C-99/96, Mietz v Intership Yachting Sneek BV [1999] ECR I-2277. See also: Arbitration Act 1996 sections 9 and 44(1) and (2). Descriptive Formants Trade marks are registered intellectual property rights, and the same restrictions on extraterritorial jurisdiction apply as for patents, etc, with the same uncertainties, especially for trade marks to which Article 22(4) of the Jurisdiction Regulation does not apply in terms because they are not registered in a European state. Subject to that:

1100  Christopher Wadlow Case 11(1) The recent tendency in the case law of the European Court of Justice has been towards a restrictive interpretation of Article 31 of the Jurisdiction Regulation,144 and an expansive interpretation of Article 22(4).145 The combined effect is likely to be that the UK court would not have substantive extra-territorial jurisdiction over the alleged trade mark infringements (at least to the extent that European states were involved), and therefore would not have any greater jurisdiction in respect of interim relief. Case 11(2) As a practical matter, this is unlikely. Case 11(3) Yes, the claimant is always required to undertake to compensate the defendant if it turns out that the injunction should not have been granted. Case 11(4) Under the Arbitration Act 1996 section 44(2)(e), the court retains its power to grant an interim injunction, unless the arbitration agreement specifies otherwise. Case 11(5) This can only be addressed by reference to the context and practical effect of the distinction. If the distinction implies that matters of ‘procedural’ law are governed by the lex fori, then the latter probably governs whether the case is an appropriate one for an interim injunction to be granted or not, but the question of whether there was an infringement would have to be governed by the lex loci delicti commissi, as a matter of substantive law. Metalegal Formants None.

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as a collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y: (1) Could intellectual property rights be used as a collateral pursuant to the law of your country? (2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights? (3) Would a court of your country apply the same law to registered and non-registered intellectual property rights? 144   Case C-391/95 Van Uden Maritime v Kommanditgesellschaft in Firma Deco-Line and others [1998] ECR I-7091 and Case C-99/96 Mietz v Intership Yachting Sneek BV [1999] ECR I-2277. 145   Case C-4/03 GAT v LuK [2006] ECR I-6509; Case C-539/03 Roche Nederland BV and Others v Frederick Primus and Milton Goldenberg [2006] ECR I-6535.

United Kingdom  1101 Operative Rules EC Regulation 1346/2000 of 29 May 2000 on Insolvency Proceedings Article 11 ‘Effects on rights subject to registration’ The effects of insolvency proceedings on the rights of the debtor in immoveable property, a ship or an aircraft subject to registration in a public register shall be determined by the law of the Member State under the authority of which the register is kept.

Patents Act, 1977 sections 32 and 33, and especially section 33(3)(b) (3) This section applies to the following transactions, instruments and events: . . .

(b) the mortgage of a patent . . . or the granting of security over it;

Trade Marks Act, 1994 section 25, and especially section 25(2)(c) (2) The following are registrable transactions: . . .

(c) the granting of any security interest (whether fixed or floating) over a registered trade mark or any right in or under it;

Registered Designs Act 1977 (as amended) section 17, and Registered Designs Rules 2006 (SI 2006/1975) paragraph 27, especially paragraph 27(1)(c) (1) The following matters are prescribed for the purposes of section 17(1)(c): . . .

(c) the granting or cancelling of a security interest (whether fixed or floating) over a registered design or any right in or under it;

Companies Act 2006 Part 25 Company Charges, and especially section 860(7)(i) (7) This section applies to the following charges: . . .

(i) a charge on goodwill or on any intellectual property.

and section 861(4) (4) For the purposes of section 860(7)(i), “intellectual property” means –

(a) any patent, trade mark, registered design, copyright or design right; (b) any licence under or in respect of any such right.

Decision of the High Court in R Griggs Group Ltd and Others v Evans [2004] EWHC 1088 (Ch); [2005] Ch. 153. Descriptive Formants Case 12(1) All kinds of intellectual property rights are regularly used as collateral.146 In the case of patents, trade marks and registered designs, the security interest should be entered in the 146   See V Bromfield and J Runeckles, ‘Taking security over intellectual property: a practical overview’ (2006) European Intellectual Property Review 204.

1102  Christopher Wadlow relevant register, or it is ineffective against third parties. There is no register for copyrights or for the (unregistered) design right. In the case of security interests created by companies, they should also be recorded in the Companies Register, and this applies equally to registered and unregistered rights. If there is no relevant register, then the normal common law rule applies, which is that a bona fide purchaser of the property for value acquires a good title free of any adverse equitable or contractual rights of which he does not have notice, but is subject to any rights of which he does have notice. Case 12(2) The creation of the security interest and its enforcement would depend on the applicable law of the contract under which the security interest was effected, which would be that chosen by the parties, or (in the absence of express choice) that identified by the Rome (I) Regulation. In R Griggs Group Ltd v Evans147 the High Court decided that contractual and equitable claims arising under an English contract could be enforced against the purchaser of certain copyrights who had notice of the facts giving rise to the subsequent claim, but acknowledged that the situation might have been different for foreign rights which were subject (unlike copyright) to a registration system. The European Insolvency Regulation does not alter the substantive law applicable to the security interest, but provides a regime for determining which court(s) have jurisdiction over insolvency proceedings, and how the applicable law of the security interest is to be identified. Although ‘intellectual property’ is not referred to by name, it is likely that the registered intellectual property rights (though not copyright) are covered by Article 11, as ‘rights . . . in immoveable property . . . subject to registration in a public register’. Case 12(3) Fundamentally different questions as to registration, notice, and priority are likely to arise between registered and non-registered intellectual property rights. For registered rights, the requirement to register the security interests would probably apply as a ‘mandatory rule’, irrespective of the law applicable to the contract. Metalegal Formants The consolidation and reform of security interests in (registered) intellectual property rights was considered by the UK Law Commission in its 1995 Report on Company Security Interests.148 The Commission recommended that the system of dual registration in the Companies Register, as well as the Patents (or Trade Marks) Register, should be maintained.149

  R Griggs Group Ltd v Evans [2004] EWHC 1088 (Ch); [2005] Ch 153.   Law Commission, Company Security Interests (Law Com No 296, 1995). The Government has recently consulted on how the system for registering company charges may be reformed. See Department of Business, Innovation and Skills, Registration of Charges Created by Companies and Limited Liability Partnerships, Proposals to amend the current scheme and relating to specialist registers (March 2010). 149   See also I Davies, ‘Secured Financing of Intellectual Property Assets and the Reform of English Personal Property Security Law’ (2006) 26 Oxford Journal of Legal Studies 559. For comments on the proposed harmonisation of European law in relation to security over intellectual property rights, see S Bariatti, ‘The Law Applicable to Security Interests in Intellectual Property Rights’ (2010) 6 Journal of Private International Law 395. 147 148

United States HOWARD B ABRAMS*

Contents Introduction:  Sources of Law............................................................................................................ 1103 Part I  General Issues........................................................................................................................... 1105 Part II  Specific issues.......................................................................................................................... 1120 Part III  Institutional Framework...................................................................................................... 1121

Introduction: Sources of Law One preliminary point should be made about United States law of intellectual property. As a result of the federal system and the common law heritage of American law, the law of intellectual property in the United States comes from a variety of sources which can differ depending on which branch of intellectual property is involved. Because the broad term ‘intellectual property’ covers several diverse areas of law – copyrights, patents, neighbouring rights,1 trade marks and service marks, trade secrets, rights of publicity – the sources of law governing intellectual property in the United States include the Constitution, federal and state statutes, treaties and the common law. Each area of intellectual property has its own distinct sources of law, and may include some which are overlapping.

Copyrights and Patents The most obvious starting point is the Copyright-Patent clause of the Constitution: The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.2 *  Professor, University of Detroit Mercy. 1   The United States has no independent law concerning neighbouring rights, as those rights which other nations classify as neighbouring rights are included in the rights of copyright. 17 USC § 106 (2006). 2   US Const Art I, § 8, cl 8.

1104  Howard B Abrams This can be parsed into two parallel provisions: The Congress shall have Power . . . To promote the Progress of Science . . . by securing for limited Times to Authors . . . the exclusive Right to their respective Writings . . . The Congress shall have Power . . . To promote the Progress of . . . useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their respective . . . Discoveries.

The first of these would apply to copyright and the second would apply to patents. The net effect of the Copyright-Patent Clause is that if state laws (1) grant protection to such ‘Writings’ or ‘Discoveries’ as are included in Copyright and Patent Acts and (2) the rights granted are functionally equivalent to those provided by Copyright and Patent Acts, the state law is pre-empted except to the extent that Congress may have statutorily permitted the states to act.3 Thus copyright and patent rights must be embodied in a federal statute as a condition for their existence. This is also reflected in the fact that litigation arising under the Copyright Act4 and Patent Act5 are matters of exclusive federal jurisdiction.6

Trade Marks and Service Marks Trade marks and service marks had their origins in the common law. In addition there is a federal statute, the Lanham Act,7 enacted by Congress under the Commerce Clause of the Constitution,8 and state statutes.

Trade Secrets The law relating to trade secrets is regulated by either state statutes or state common law. There is no federal act relating to trade secrets.

Rights of Publicity The right of publicity – the right of an individual to control the use of his or her public persona for commercial advantage – was first recognised in the United States by judicial decision in 1953.9 Since then a number of states have recognised this right either judicially or by statute. 3   17 USC § 301 (2006); Bonito Boats Inc v Thunder Craft Boats Inc 499 US 141 (1989); Compco Corp v Day-Brite Lighting Inc 376 US 234 (1964); Sears, Roebuck & Co v Stiffel Co 376 US 225 (1964); but see Goldstein v California 412 US 546 (1973) (permitting states to outlaw unauthorised duplication of sound recordings fixed prior to inclusion of sound recordings as copyrightable works in the Copyright Act on 15 February 1972, on the ground that Congress had left the area ‘unattended’). For a detailed discussion and criticism of the Goldstein opinion, see HB Abrams, ‘Copyright, Misappropriation and Preemption: Constitutional and Statutory Limits on State Power’ (1983) Supreme Court Review 509. 4   17 USC § 101 et seq (2006). 5   35 USC § 1 et seq (2006). 6   28 USC § 1338(a) (2006) 7   15 USC § 1051 et seq. 8   US Const Art I, § 8, cl 3. 9   Haelan Laboratories Inc v Topps Chewing Gum Co 202 F 2d 866 (1953) (Frank J, applying New York law). For a general reference on the right of publicity, see JT McCarthy, Rights of Publicity and Privacy (St Paul, Thomson/ West, 2010) (treatise updated annually).

United States  1105 There is no federal statute providing a right of publicity per se, although section 43(a) of the Lanham Act10 provides some protection for the use of a person’s name or likeness where it is likely to mislead the public as to the source or origin of the goods or services involved. The courts have held that a cause of action for violation of the right of publicity is not preempted by the Copyright Act where it involves a person’s right to be correctly identified or to prevent incorrect identification,11 but not where it is used as a disguise for copying a work within the subject matter of copyright.12 In 2008 the American Law Institute, as part of its Principles of Law series, published the Principles of the Law – Intellectual Property – Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes.13 While this is not governing authority, it was compiled with a careful review of existing United States law and may well be persuasive in future decisions in this area. Finally, it must be remembered that the law may be different or interpreted differently from one jurisdiction to another within the United States. The law of a given state on an issue of intellectual property may differ from that of another given state. In the federal courts, the decision by one United States district court (the basic trial court in the federal system) is not controlling in other districts although it might be persuasive. Similarly, if a United States Court of Appeals (the appellate court in the federal system) makes a decision, that is binding on all district courts within its Circuit, but is not controlling and is only persuasive for other Courts of Appeal or for district courts outside of its Circuit.14

Part I General Issues Question 1: Please briefly describe the general principles of territorial jurisdiction in international IP disputes. How would American courts assume international jurisdiction in IP infringement disputes and disputes related to IP contracts? General Principles of Territorial Jurisdiction In international intellectual property disputes, the United States courts are strict in their application of territorial limits to the exercise of jurisdiction over issues of infringement. However, if the infringement occurs in the United States, then issues such as ownership of the rights and definition of the rights owned may be determined under the law of the country with the most substantial relationship to the works in question.   15 USC § 1125(a) (2006).   Midler v Ford Motor Co 849 F 2d 460 (9th Cir 1988). The opinion in Midler describes the cause of action as involving the appropriation of identity rather than as a right of publicity case, but it clearly fits. 12   Romantics v Activision Publishing Inc 574 F Supp 2d 758 (ED Mich 2008); Motown Record Corp v George A Hormel & Co 657 F Supp 1236 (CD Cal 1987). 13   RC Dreyfuss, JC Ginsburg and F Dessemontet, American Law Institute, Principles of the Law – Intellectual Property – Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (Chestnut, American Law Institute, 2008) (hereinafter ‘Principles’). 14  See below, text accompanying nn 15–17 and 26–27 (discussion of Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994), and Curb v MCA Records Inc 898 F Supp 586 (MD Tenn 1995)). 10 11

1106  Howard B Abrams Jurisdiction in International Intellectual Property Infringement Disputes Generally speaking, questions of infringement of intellectual property rights are to be determined by the law of the nation where the alleged infringement occurred and in the courts of that nation. Patents Before discussing the cases, it should be noted that the United States Court of Appeals for the Federal Circuit has exclusive appellate jurisdiction over all cases involving questions of patent law.15 As a consequence, when a patent issue is involved, the other Circuit Courts of Appeal are irrelevant. Thus all district courts are required to follow the rulings of the Federal Circuit on patent matters regardless of the circuit in which the district court is located. In Voda v Cordis Corp,16 the plaintiff initially sued for infringement of its United States patents in the United States. Subsequently the plaintiff amended its complaint to include infringement of its foreign patents in foreign countries, alleging that the infringing devices were manufactured in the United States and then sold abroad in violation of the patent laws of the foreign nations.17 The plaintiff argued that section 1367 of the Judicial Code provided the court with jurisdiction over the foreign patent claims. In relevant part, section 1367 provides: § 1367. Supplemental Jurisdiction (a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties. (b) . . . (c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if –

(1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.18

The trial court ruled that under the supplemental jurisdiction provisions of section 1367 it could properly hear the claims for infringement of foreign patents in foreign countries.19 The Federal Circuit granted leave to appeal.20   28 USC § 1295(a)(1) (2006).   Voda v Cordis Corp 476 F3d 887 (Fed Cir 2007) (2-1), rehearing and rehearing en banc denied, No 2005-1238, 2007 US App LEXIS 12955 (Fed Cir 14 May 2007). 17   Canada, France, Germany and the United Kingdom were identified as the nations involved. Voda v Cordis Corp 476 F3d 887, 899 (2007). 18   28 USC § 1367 (2006). 19   Voda v Cordis Corp No CIV-03-1512, 2004 WL 3392022 (WD Okla 2 August 2004). 20   Voda v Cordis Corp 122 Fed Appx 515 (Fed Cir 2005). 15 16

United States  1107 On appeal, the Federal Circuit began by noting that that for supplemental jurisdiction to exist, both the requirements for supplemental jurisdiction under section 1367(a) must be satisfied and the exercise of discretion to hear the supplemental claim under section 1367(c) must be proper.21 Although the court gave some consideration and analysis to the requirements of section 1367(a),22 it did not come to a final conclusion of the applicability of the various components section 1367(a) to the case because it found the issue of the trial court’s discretion to hear the foreign patent claims dispositive.23 Turning to the issue of whether the trial court could properly choose to hear the foreign patent claims, the majority opinion began by acknowledging that the exercise of supplemental jurisdiction was in the discretion of the trial court, but that a “district court’s discretion is not unfettered” and would be reviewed under an abuse of discretion standard.24 Relying on subsection 1367(c)(4),25 the Court held that the case presented ‘considerations of comity, judicial economy, convenience, fairness, and other exceptional circumstances [that] constitute compelling reasons to decline jurisdiction under § 1367(c) in this case and therefore hold that the district court abused its discretion by assuming jurisdiction.’26 First, and perhaps most importantly, the Court began with the Constitution’s statement that ‘all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land’,27 and listed the following intellectual property treaties to which the United States was a party: the Paris Convention,28 the Patent Cooperation Treaty 29 and the TRIPS agreement.30 The Court ruled that because these treaties were ‘the “supreme law of the land,” a district court’s exercise of supplemental jurisdiction could undermine the obligations of the United States under such treaties, which therefore constitute an exceptional circumstance to decline jurisdiction.’31 The Court next opined that the principle of comity did not support the district court’s assumption of supplemental jurisdiction.32 The Court articulated four factors33 involved in comity which, to the Court, militated against the exercise of supplemental jurisdiction. First, the plaintiff ‘ha[d] not identified any international duty, and we have found none, that would require our judicial system to adjudicate foreign patent infringement claims’, and that nothing in the international intellectual property treaties previously discussed

21   Voda v Cordis Corp 476 F3d 887, 891 (Fed Cir 2007) (‘A proper exercise of subject matter jurisdiction pursuant to § 1367 requires both the presence of jurisdiction under subsection [1367](a) and an appropriate decision to exercise that jurisdiction under subsection [1367](c).’) 22   ibid 893-97. 23   ibid 896 (‘[B]ecause we hold in infra Part III.A.2 that the district court abused its discretion under §1367(c), we deem it to be the more prudent course not to decide this “common nucleus of operative fact” question in the first instance’); ibid 897 (‘Accordingly, we refrain from deciding whether Voda’s foreign patent infringement claims fall within the scope of the “same case or controversy” requirement of § 1367(a)’). 24   ibid, 897. 25   See above, text accompanying n 3. 26   Voda v Cordis Corp 476 F3d 887, 898 (Fed Cir 2007). 27   US Const Art VI, cl 2. 28   Paris Convention for the Protection of Industrial Property on Sept 5, 1970 Arts 13-30, 21 UST 1583; Paris Convention on Aug 25, 1973 Arts 1–12, 24 UST 2140. 29   Patent Cooperation Treaty on Jan 24, 1978, 28 UST 7645. 30   Agreement on Trade-Related Aspects of Intellectual Property Rights, 1867 UNTS 154 (15 April 1994). 31   Voda v Cordis Corp 476 F3d 887, 900 (Fed Cir 2007). 32   ibid 900-02. 33   The Federal Circuit extracted these four factors from the Supreme Court’s decision in Sociétè Nationale Industrielle Aérospatiale v United States District Court for the Southern District of Iowa 482 US 522 (1987). Voda v Cordis Corp 476 F3d 887, 900-02 (Fed Cir 2007).

1108  Howard B Abrams ‘contemplates or allows one jurisdiction to adjudicate the patents of another.’ 34 Secondly, it would not be more convenient for United States courts to assume supplemental jurisdiction in patent cases.35 Thirdly, the plaintiff ‘ha[d] not shown the foreign courts will inadequately protect his foreign patent rights.’36 Fourthly, ‘assuming jurisdiction over Voda’s foreign patent infringement claims could prejudice the rights of foreign government.’37 Finally, after indicating that it believed the exercise of supplemental jurisdiction was counter-indicated by the factors of judicial economy,38 convenience39 and fairness,40 the majority opinion held ‘that the district court abused its discretion in exercising supplemental jurisdiction.’41 The Federal Circuit had ruled similarly in the earlier case of Mars Inc v Kabushiki-Kaisha Nippon Conlux,42 where a United States plaintiff sued a Japanese company for the infringement of both its United States and Japanese patents, arguing that the court had jurisdiction under both section 133843 and section 136744 of the Judicial Code. Subsection 1338(a) provides the federal courts with exclusive jurisdiction over cases involving patents, plant variety protection and copyrights and with non-exclusive jurisdiction over trade mark cases.45 Subsection 1338(b) provides that the district courts have jurisdiction over a claim of ‘unfair competition . . . when joined with a substantial and related claim under the copyright, patent, plant variety protection or trademark laws.’46 The Federal Circuit held that there was no jurisdiction under subsection 1338(b), as infringement of a foreign patent was not unfair competition within the meaning of that subsection.47 The claim for supplemental jurisdiction under section 1367 was rejected because ‘the foreign patent claim at issue here   Voda v Cordis Corp 476 F3d 887, 901 (Fed Cir 2007).   ibid. In essence, the Federal Circuit argued that (1) the district court did not pass on this issue, ibid 903, and (2) ‘the cost of obtaining and translating evidence, especially experts in foreign patent law pursuant to Fed R Civ P 44.1 (governing determination of foreign law), cuts against exercising supplemental jurisdiction’, ibid 904. 36   ibid 901. The foreign countries involved were Canada, France, Germany and the United Kingdom. 37   ibid. 38   ibid 903 (‘Because of our lack of institutional competence in the foreign patent regimes at issue in this case, more judicial resources could be consumed by the district court than the courts of the foreign patent grants.’). 39   ibid 903-04. See above n 20. 40   ibid 904. The Federal Circuit invoked the act of state doctrine which ‘requires that, in the process of deciding, the acts of foreign sovereigns taken within their own jurisdictions shall be deemed valid.’ Ibid 904 (quoting WS Kirkpatrick & Co v Environmental Tectonics Corp 4893 US 400, 409 (1990)). 41   ibid 904. An examination of the dissent by Judge Newman, ibid 905-17, is beyond the scope of this chapter. 42   Mars Inc v Kabushiki-Kaisha Nippon Conlux 24 F3d 1368 (Fed Cir 1994), aff ’d 825 F Supp 73 (D Del 1993). 43   Section 1338 provides: 34 35

§ 1338. Patents, plant variety protection, copyrights, mask works, designs, trademarks, and unfair competition (a) The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases. (b) The district courts shall have original jurisdiction of any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the copyright, patent, plant variety protection or trademark laws. (c) Subsections (a) and (b) apply to exclusive rights in mask works under chapter 9 of title 17, and to exclusive rights in designs under chapter 13 of title 17, to the same extent as such subsections apply to copyrights. 28 USC § 1338 (2006).   28 USC § 1367 (2006) (quoted in relevant part above text accompanying n 17. 45   28 USC § 1338(a) (quoted above n 43). 46   28 USC § 1338(b) (quoted above n 43). 47   Mars Inc v Kabushiki-Kaisha Nippon Conlux 24 F3d 1368, 1372–74 (Fed Cir 1994). 44

United States  1109 is not so related to the US patent infringement claim that the claims form part of the same case or controversy and would thus ordinarily be expected to be tried in one proceeding.’48 The Mars opinion’s treatment of section 1367 turned on this point and does not have the broader implications that Voda does. In Ideal Instruments Inc v Rivard Instruments Inc,49 the plaintiff sought a declaration that it was not infringing the defendant’s Canadian patent. The district court refused to exercise jurisdiction, based on the holding in Mars.50 The United States Supreme Court also emphasised the notion of territoriality in the patent infringement case of Microsoft Corp v AT&T Corp.51 The case involved the issue of whether the exportation of a master disk containing software that would infringe a United States patent rendered the exporter liable in the United States when copies of the software were installed on computers manufactured abroad.52 AT&T held a patent on an apparatus for digitally encoding and compressing recorded speech. Microsoft’s Windows operating system had the potential to infringe AT&T’s patent because it incorporated software code that, when installed, enabled a computer to process speech in the manner claimed by the patent. Microsoft would send a master disk to foreign computer manufacturers in a foreign country, who would then make the copies which were installed on the computers sold abroad. The Supreme Court phrased the question as ‘Does Microsoft’s liability extend to computers made in another country when loaded with Windows software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States?’53 The Court held that the copies of the operating system installed on the computers made abroad were not components made in the United States.54 To buttress its decision, the Court stated: Any doubt that Microsoft’s conduct falls outside of [35 USC] § 271(f)’s compass would be resolved by the presumption against extraterritoriality . . . The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law. The traditional understanding that our patent law ‘operate[s] only domestically and d[oes] not extend to foreign activities,’ is embedded in the Patent Act itself, which provides that a patent confers exclusive rights in an invention within the United States. 35 USC § 154(a)(1) (patentee’s rights over invention 48   ibid 1375. The opinion had analysed the differences between the United States and Japanese patents previously. Ibid 1374–75. 49   Ideal Instruments Inc v Rivard Instruments Inc 434 F Supp 2d 598 (ND Ia 2006). 50   ibid 627–33. 51   Microsoft Corp v AT&T Corp 500 US 437 (2007). 52   The case arose under s 271(f)(1) of the United States Patent Act, which provides:

(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. (2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial non-infringing uses use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. 35 USC § 271(f)(1)–(2) (2006).   550 US 452.   ibid 452–54.

53 54

1110  Howard B Abrams apply to manufacture, use, or sale ‘throughout the United States’ and to importation ‘into the United States’).55

Copyrights – Infringement In the leading copyright case of Subafilms Ltd v MGM-Pathe Communications Co,56 the defendants, acting in the United States, authorised the making of video cassettes of a film57 in both the United States and foreign nations, when they lacked the authority to do so. The video cassettes were sold in both the United States and foreign countries. Subafilms held that a United States court could grant the plaintiff monetary and injunctive relief only for the infringements which occurred within the United States. The first question posed by Subafilms was whether an act of infringement had been committed in the United States. This required an interpretation of section 106 of the Copyright Act, which provides: § 106. Exclusive rights in copyrighted works Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.58

The Ninth Circuit held that there was no independent ‘authorizing’ right to be found in section 106. The plaintiffs argued that the text of section 106 of the Copyright Act, by which ‘the owner of copyright under this title has the exclusive rights to do and to authorise any of ’59 a number of designated acts, was directly infringed by the defendants’ actions. The Ninth Circuit, however, held that because ‘wholly extraterritorial acts of infringement cannot support a claim under the Copyright Act’, that it was error to conclude ‘that the mere authorization of such acts supports a claim for infringement under the Act.’60 Thus a party could not be held liable as an infringer for authorising a third party to engage in acts in a foreign nation that would have violated the exclusive rights granted to a copyright holder by section 106.61

 ibid 454–55 (internal citations omitted).   Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994). 57   The film was the Beatles’ Yellow Submarine. 58   17 USC § 106 (2006) (emphasis added). 59   ibid. 60   Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088, 1095 (9th Cir 1994). 61   ibid 1090-95. 55 56

United States  1111 The second question posed by Subafilms was whether the United States Copyright Act could be applied to extraterritorial acts. The Ninth Circuit answered this in the negative, on the rationale was that it was for the courts of each sovereign country to determine whether the unauthorised act of manufacturing and distributing video cassettes of the film was an infringement, even though essentially identical acts of infringement occurred in the United States and the authorisations for the infringing foreign manufacture and distribution were given in the United States.62 There are earlier cases which are contrary to Subafilms, but their authority is doubtful after the Subafilms decision.63 It must be pointed out that not every court has followed the Subafilms decision. The holding of the Ninth Circuit in Subafilms was rejected by the Middle District of Tennessee in Curb v MCA Records Inc.64 As in Subafilms, a licensee in the United States issued an unauthorised licence for the reproduction of copyrighted works for distribution in the United States and other countries. The Curb court rejected Subafilms’ ‘peculiar interpretation of the scope and nature of the authorization right’ which by ‘tying the authorization right solely to a claim of justiciable contributory infringement appears contrary both to wellreasoned precedent, statutory text, and legislative history.’65 By contrast, where an act of infringement has been committed in the United States as well as extraterritorially, United States courts have taken account of the foreign infringements in assessing damages. In Sheldon v Metro-Goldwyn Pictures Corp,66 the defendant made a motion picture in the United States which infringed the plaintiff ’s play. A number of copies of the infringing film were made in the United States which were then sent to foreign countries for exhibition. In holding the defendants liable for damages in the foreign exhibitions of the motion picture, the court reasoned that section 1(d) of the then current Copyright Act gave the author the exclusive right to ‘make any transcription or record thereof . . . from which, in whole or in part, it may in any manner . . . be . . . reproduced.’67 The Second Circuit continued: The Culver Company made the negatives in this country, or had them made here, and shipped them abroad, where the positives were produced and exhibited. The negatives were ‘records’ from which the work could be ‘reproduced’, and it was a tort to make them in this country. The plaintiffs acquired an equitable interest in them as soon as they were made, which attached to any profits from their exploitation, whether in the form of money remitted to the United States, or of increase in the value of shares of foreign companies held by the defendants. We need not decide whether the law of those countries where the negatives were exploited, recognized the plaintiffs’ equitable 62   ibid 1095–98. In Robert Stigwood Group Ltd v O’Reilly 530 F2d 1096 (2d Cir 1976), cert denied, 429 US 848 (1976), a similar case arising prior to 1 January 1978, the effective date of the current Copyright Act, a similar ruling was made by the Second Circuit. The defendant had committed infringing performances of the plaintiff ’s musical play Jesus Christ Superstar in both the United States and Canada. The Second Circuit upheld the trial court’s refusal to award damages for the Canadian performances on the grounds that the performances were not copies or records of the play, nor was there any showing that any preparations in the United States for the Canadian performances constituted an act of infringement in the United States. Ibid 1100-01. 63   Peter Starr Production Co v Twin Continental Films Inc 783 F2d 1440 (9th Cir 1986) was expressly overruled by Subafilms. London Film Productions Ltd v Intercontinental Communications Inc 580 F Supp 47 (SDNY 1984) allowed an English plaintiff to proceed against a United States defendant for infringements committed in Chile. Given that this decision was from a trial court, was never appealed and has rarely if ever been cited, its precedential value is doubtful, in the aftermath of Subafilms. 64   Curb v MCA Records Inc 898 F Supp 586 (MD Tenn 1995). 65   ibid 594. 66   Sheldon v Metro-Goldwyn Pictures Corp 106 F2d 45 (2d Cir 1939) (L Hand, J), aff ’d, 309 US 390 (1940). 67   17 USC § 1(d) (quoted in Sheldon v Metro Goldwyn Pictures Corp 106 F2d 45, 52 (1939), aff ’d, 309 US 390 (1940)).

1112  Howard B Abrams interest; we can assume arguendo that it did not, for, as soon as any of the profits so realized took the form of property whose situs was in the United States, our law seized upon them and impressed them with a constructive trust, whatever their form.68

The Second Circuit’s later decision in Update Art Inc v Modiin Publishing Ltd,69 is probably the current leading case on this issue, as it was decided after 1 January 1978, the effective date of the 1976 General Revision of Copyright Act. The plaintiff held a United States copyright on a poster entitled Ronbo, an image of ‘President Reagan’s head superimposed on a bare-chested muscular man’s body wearing dog tags and carrying a machine-gun in a jungle setting.’70 This was reproduced by the defendant, an Israeli newspaper publisher in an unauthorised full-colour reproduction in the weekend edition of the Hebrew language newspaper Maariv, printed and distributed in Israel.71 The Court’s analysis began by stating that there was an exception to the general principle that the United States Copyright Act does not have extraterritorial application when the acts abroad arose from infringing acts in the United States.72 The Second Circuit decided that the poster had been copied in the United States for its later replication in Israel.73 This was sufficient for the Second Circuit to conclude that the plaintiff ’s ‘claim was fully cognizable under American copyright law’74 and ‘[d]amages accruing from the illegal infringement in the Israeli newspapers properly were awarded to Update’.75 Copyrights – Ownership The position of the United States courts on issues of ownership of the rights within a copyright in a work first created abroad, and the dimensions of those rights, is not monolithic. The dominant view is that these questions are to be decided under the law of the foreign nation which has the most significant relationship with the work’s origination, even though the act of infringement occurred in the United States and the law of the United States governed the issues of infringement and remedies. Probably the leading case is Itar-Tass Russian News Agency v Russian Kurier Inc.76 In Itar-Tass, a Russian press agency and various publishers of Russian language newspapers and magazines mainly in Russia and other foreign countries brought suit against the defendant in the United States. The defendant, a weekly Russian language newspaper, reproduced about 500 articles from the plaintiffs’ publications without permission. Relying on the second Restatement of Conflict of Laws,77 the   Sheldon v Metro-Goldwyn Pictures Corp 106 F2d 45, 52 (2d Cir 1939)   Update Art Inc v Modiin Publishing Ltd 843 F.2d 67 (2d Cir 1988). 70  ibid 68. The opinion characterised the poster as ‘intended to mimic the character “Rambo” portrayed by Sylvester Stallone.’ Ibid. Although not mentioned by the opinion, it was intended to satirise President Reagan as well. 71   ibid 68-69. 72   ibid 73. 73   ibid. Although there was no direct proof of this, the Second Circuit concluded from the defendants’ failure to provide any positive evidence or affidavit that the initial copying did not occur in the United States, and from the defendants’ failure to comply with discovery requests and orders for which it had been sanctioned. Indeed the major part of the opinion in Update Art is concerned with enforcing the sanctions. Ibid 69–72. 74   ibid 73. 75   ibid. See also Sheldon v Metro-Goldwyn Pictures Corp 106 F2d 45, 52 (2d Cir 1939) (L Hand, J) (‘the negatives [of the motion picture] were “records” from which the work could be “reproduced,” and it was a tort to make them in this country. The plaintiffs acquired an equitable interest in them as soon as they were made, which attached to any profits from their exploitation’), aff ’d, 309 US 390 (1941). 76   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82 (2d Cir 1998). 77   Restatement (Second) of Conflict of Laws (1971). 68 69

United States  1113 court reasoned that copyright was a form of property and that Russia was the country with ‘the most significant relationship’ to the copyrights, thus Russian law governed the ownership of the works involved and the dimensions of the rights owned.78 It is worth noting that even though Russian law applied to the issues of ownership and the definition of the rights owned, the United States court did not hesitate to determine Russian law and apply it in a United States proceeding. Similarly, section 104A of the Copyright Act, dealing with the restoration of foreign copyrights which were forfeited for lack of compliance with the now repealed formalities of the United States Copyright Act, also provides that the ownership of the restored copyright ‘vests initially in the author or initial rightholder of the work as determined by the law of the source country of the work.’79 The cases that have been decided under this section have applied foreign law to the determination of ownership of the copyrights in question.80 In light of these statutory provisions and judicial precedents, a United States court would exercise jurisdiction over an international intellectual property dispute only if there is an act of infringement in the United States.81 While it is a bit of an extrapolation, it seems fair to say that a United States court would exercise jurisdiction over issues of ownership of rights where the United States was the country with ‘the most significant relationship’ to the rights even where the acts of infringement occurred only outside of the United States but would decline to determine questions of infringement and remedies. Jurisdiction among United States Courts in Intellectual Property Disputes As a general statement, in an international dispute regarding a contract concerning intellectual property, there really are several questions. First, which court has subject matter jurisdiction? Secondly, does the court chosen by the plaintiff for the filing of an action have personal jurisdiction over the defendant? Thirdly, which law applies? Thus several aspects of United States federalism have to be considered. Subject Matter Jurisdiction Subject matter jurisdiction must exist for a court to hear the case and cannot be waived by the parties by contract, consent or otherwise.82 The subject matter jurisdiction of federal courts is limited to that provided in Section 2 of Article III of the Constitution, which provides: The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; to all Cases affecting Ambassadors, other public Ministers and Consuls; – to all Cases of admiralty and maritime Jurisdiction; – to Controversies to which the United States shall be a party; a – to   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82, 90 (2d Cir 1998).   17 USC § 104A(b) (2006).   Alameda Films SA de CV v Authors Rights Restoration Corp 331 F3d 472 (2003), cert denied, 540 US 1048 (2003); Laparade v Ivanova 387 F3d 1099 (9th Cir 2004) (per curiam). 81   What was at issue in Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994), and Curb v MCA Records Inc 898 F Supp 586 (MD Tenn 1995), was whether the unauthorised licensing in the United States of an act of infringement in another country was a direct violation of s 106 of the United States Copyright Act. 82   Louisville & Nashville R Co v Mottley 211 US 149 (1908); La Resolana Architects PA v Clay Realtors Angel Fire 416 F3d 1195, 1198 (10th Cir 2005) (‘It is axiomatic that subject matter jurisdiction, which gives the courts the power to adjudicate cases, cannot be waived.’). 78 79 80

1114  Howard B Abrams Controversies between two or more States; – between a State and Citizens of another State; – between Citizens of different States – between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens, or Subjects. 83

This makes it clear that the federal courts have subject matter jurisdiction over ‘Controversies . . . between a State, or the Citizens thereof, and foreign States, Citizens, or Subjects.’84 Thus most litigation between citizens of the United States and citizens of foreign countries takes place in the federal court system, rather than in the courts of one of the United States.85 The Judicial Code provides that as to cases ‘arising under’ the Copyright Act or the Patent Act, the federal courts have exclusive subject matter jurisdiction.86 Cases involving trade mark disputes can be brought in either state or federal courts.87 Disputes over contract terms involving intellectual property, however, such as whether a contract effectively transferred the ownership of a patent or copyright, are not considered cases ‘arising under’ the Copyright Act or Patent Act and thus are not subject matter for federal jurisdiction88 unless some alternate basis for federal jurisdiction exists such as one of the litigants being a foreign national.89 Thus only a state court would have jurisdiction over a contract dispute involving a contract concerning intellectual property between two United Citizens from the same state. Personal Jurisdiction If a court has subject matter jurisdiction over an issue, personal jurisdiction over a defendant is largely a question of whether the defendant has sufficient contacts with the forum territory of the specific chosen court to be subject to personal jurisdiction for the action without offending due process.90 Objections to personal jurisdiction can be waived and   US Const Art III, § 2.   US Const Art III, § 2. 85   If a case is brought in a state court between a citizen of the United States and a citizen of another country, it can be removed to the federal courts on a timely motion. It is possible, however, for the parties to choose not to remove the case, although this would be rare indeed. 86   28 USC § 1338(a) (2006). 87   ibid. 88  In TB Harms Co v Eliscu 339 F2d 823 (2d Cir 1964), the Second Circuit held that a case presenting the question of whether the ownership of a copyright had been transferred by a contract was not a case ‘arising under’ the copyright laws of the United States and thus was not eligible for federal jurisdiction under s 1338(a) of the United States Judicial Code, which gives the federal courts exclusive jurisdiction over cases arising under the federal Copyright and Patent Acts. 28 USC § 1338(a) (2006). 89   See above text accompanying n 36. 90   In essence, the contacts can be general or specific. An example of general contacts not related to the dispute would be the defendant residing or having a regular place of business in the state where the court sits. A specific contact would be committing the acts of infringement in the district where the court sits. Thus a defendant who resided and conducted business in New York and committed an act of copyright infringement in California but had no contact with the State of Massachusetts, could be sued for the infringement in the United States District Court for the District of California in which the infringement occurred, could be sued in the United States District Court for the District of New York where she or he resided or had his or her regular place of business, but could not be sued in the United States District Court for Michigan. In Yahoo! Inc v La Ligue Contre Le Racisme et, L’Antisemitisme 169 F Supp 2d 1181 (ND Cal 2001), rev’d and remanded on other grounds (controversy not ripe for adjudication), 433 F3d 1199 (9th Cir 2006)(en banc), cert denied sub nom, La Ligue Contre Le Racisme et, L’Antisemitisme v Yahoo! Inc 547 US 1163 (2006), French organisations serving papers on a California corporation, seeking to enforce the judgment of a French court in the United States by having papers served by the United States Marshals, were held to have sufficient specific contacts with California to support the exercise of personal jurisdiction over the defendants in the United States. Anything more than this casual overgeneralisation about personal jurisdiction is beyond the scope of this chapter. 83 84

United States  1115 contract clauses agreeing on the jurisdiction of any disputes between the parties to a contract are normally enforceable. In Burger King Corp v Rudzewicz,91 the United States Supreme Court held that a Michigan franchisee was not denied due process under the Constitution92 by being subjected to jurisdiction in Florida under a franchise agreement which required the franchisee to send payments to the franchisor’s office in Florida and provided that disputes between the parties would be governed by Florida law. Although holding that the facts in the case established sufficient specific contacts with Florida to permit Florida to exercise jurisdiction, the Court included this limitation: The quality and nature of an interstate transaction may sometimes be so random, fortuitous, or attenuated that it cannot fairly be said that the potential defendant should reasonably anticipate being haled into court in another jurisdiction. . . . [A]lso . . . jurisdiction may not be grounded on a contract whose terms have been obtained through fraud, undue influence, or overweening bargaining power and whose application will render litigation so gravely difficult and inconvenient that a party will for all practical purposes be deprived of his day in court.93

Choice of Law As to choice of law, the general position of the United States courts is that the parties are free to specify in their contract which jurisdiction’s law shall govern the interpretation of the contract. This is strongly reinforced by the Restatement of Conflict of Laws, which provides: § 187. Law of the State Chosen by the Parties. (1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue. (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either, (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which . . . would be the state of the applicable law in the absence of an effective choice of law by the parties. (3) In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law.94

In the absence of a contractual agreement as to the law governing a contract, the law applied will be ‘the local law of the state which, with respect to that issue, has the most significant relation to the transaction and the parties.’95

  Burger King Corp v Rudzewicz 471 US 462 (1985).   US Const amend XIV § 2. 93   Burger King Corp v Rudzewicz 471 US 462 485–86 (1985) (internal quotations and citations omitted). 94   Restatement (Second) of Conflict of Laws § 187 (1971). 95   ibid § 188. 91 92

1116  Howard B Abrams

Question 2: Would American courts have subject matter jurisdiction in disputes related to foreign IP rights? How would American courts deal with such issues as existence or validity of foreign IP rights? Under Subafilms Ltd v MGM-Pathe Communications Co,96 a United States court could exercise subject matter jurisdiction over a dispute related to the infringement foreign intellectual property rights if there was an act of infringement in the United States but could offer remedies only for any acts of infringement occurring in the United States.97 Under Itar-Tass Russian News Agency v Russian Kurier Inc,98 if an act of infringement has occurred in the United States, the law of the nation with the most substantial relationship to the work in question will be applied to determine ownership of rights and the dimensions of the rights owned. If a contract concerning foreign intellectual property rights was made in the United States, the United States courts could exercise jurisdiction over disputes arising under the contract unless the contract had specified another forum.99

Question 3: Please describe what choice of law principles are applied to initial title, transferability of IP rights. Which law would be applied to contracts for transfer of IP rights in the absence of choice by the parties? Which law would govern the infringement of IP rights? Choice of Law as to Initial Title: Patents The very existence of a patent in the United States depends upon its being examined and granted by the United States Patent Office. In the United States, the initial title to the rights in patents is vested in the inventor.100 Section 311(1) of the Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes101 takes the same position. This may be altered by contract before the invention is made. It is not uncommon for researchers, scientists, engineers and similar employees to be asked to sign employment agreements that transfer the patent rights in any inventions they make as part of their employment to their employer. Section 311(2) of the Principles provides that in this situation the determination of ‘initial title is governed by the law that governs the contract or relationship.’102 Assuming the invention is first invented abroad and the invention is subsequently patented in the United States, the same rules would apply.

96   Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994). See above text at nn 15–17. 97   See above text at nn 15–30. 98   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82 (2d Cir 1998). See above text at nn 28–30. 99  See above n 46 and accompanying text. 100   35 USC § 101 (2006) (‘Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, . . .’). 101   Principles, above n 13, § 311(1). 102   ibid § 311(3).

United States  1117 Choice of Law as to Initial Title: Copyrights Under the United States Copyright Act, ownership of copyright vests initially in the author.103 If there is a joint work, the co-authors will be co-owners of the copyright.104 In the case of a work made for hire, ‘the employer or other person for whom the work was prepared is considered the author.’105 The copyright and the ownership of the copyright exist from the creation of the work and do not depend on registration.106 Ownership of a copyright gives the owner the exclusive rights to do and to authorise others to do the acts listed in section 106 of the Copyright Act: (1) to reproduce the copyrighted work in copies and phonorecords;107 (2) to prepare derivative works based on the copyrighted work;108 (3) to distribute copies or phonorecords of the work to the public;109 (4) to perform the work publicly ‘in the case of literary, musical, dramatic and choreographic works, pantomimes, motion pictures and other audiovisual works’;110 (5) to display the work publicly ‘in the case of literary, musical, dramatic and choreographic works, pantomimes, and pictorial, graphic and sculptural works, including the individual images of a motion picture or other audiovisual work’;111 and (6) in the case of a sound recording, to perform the work publicly by means of a digital audio transmission.112 Copyrights, or any of the exclusive rights encompassed in a copyright, may be voluntarily transferred.113 Choice of Law as to Initial Title: Trade Marks To obtain rights under the United States federal Trademark Act,114 popularly known as the Lanham Act, the owner of a trade mark may apply for registration on the Principal Register of the United States Patent and Trademark Office, which is part of the Department of Commerce. If a trade mark, service mark or designation of geographic origin is granted registration on the Principal Register, the title is initially in the name of registrant. If the registration on the Principal Register is maintained for five years, the registration becomes incontestable.115 As to common law rights, the plaintiff in a trade mark infringement suit would have the burden of proving ownership of the mark. Applicants denied registration on the Principal Register can register on the Supplemental Register, which is not conclusive but simply gives notice that the registrant claims to have trade mark rights in the mark. Normally trade marks and service marks can be transferred as part of the sale of a business. Because trade marks and service marks are used to identify the source or origin of the   17 USC 201(a) (2006).   ibid.   17 USC § 201(b) (2006). 106   17 USC § 102(a) (2006). 107   17 USC § 106(1) (2006). 108   17 USC § 106(2) (2006). See also 7 USC § 101 (2006) (definition of ‘derivative work’). 109   17 USC § 106(3) (2006). 110   17 USC § 106(4) (2006). 111   17 USC § 106(5) (2006). 112   17 USC § 106(6) (2006). 113   17 USC § 204 (2006). For such a transfer to be valid, it must be in writing and signed. ibid. Non-exclusive licences may be oral or written and do not require a signature to be valid. 114   15 USC §§ 1051-1141n (2006). Some cases can be brought under § 43(a) of the Lanham Act for confusion as to the source or origin of the goods or services even without registration. 15 USC § 1125 (2006). 115   15 USC § 1065 (2006). 103 104 105

1118  Howard B Abrams relevant goods or services, however, the transfer may lose the trade mark if it is separated from the transfer of the business providing the relevant goods or services. Choice of Law in Contract Disputes In an international dispute related to a contract concerning intellectual property – assuming there was both subject matter jurisdiction and personal jurisdiction – the United States courts would follow the United States choice of law rules relating to contracts generally. Most of the United States precedents on this issue involve cases between parties who are both within the United States because contract law is a matter of state law and contract cases find their way into federal court only where the parties are residents of different states under the diversity jurisdiction provisions of the United States Constitution116 and the United States Judicial Code.117 On such state law issues as contract law, the federal courts are required to follow state law.118 Probably the most cohesive statement of how the courts will resolve choice of law issues concerning contracts is the Restatement (Second) of Conflict of Laws.119 The basic rule is that the parties can choose the applicable law to govern the contract. 120 If the parties have not specified the governing law of the contract as regards to an issue, then a court following the Restatement will apply the ‘local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties’.121 In determining which state has the most significant relationship, the court must take into account ‘(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicil, residence, nationality, place of incorporation and place of business of the parties.’122

Question 4: Under what conditions would a foreign judgment be recognised and enforced by an American court? Are there any special issues related to recognition and enforcement of foreign judgments in IP disputes? In discussing the recognition of foreign judgments by United States courts, the federal courts have relied on the concept of comity where there is no specific treaty or statute for   US Const Art III § 2.   28 USC § 1332 (2006). 118   Erie R Co v Tompkins 304 US 64 (1938). 119   Restatement (Second) of Conflict of Laws (1971 & 1988 revision). 120   Restatement (Second) of Conflict of Laws §§ 186-87 (1971 & 1988 revision). There are limits on the parties’ freedom of choice of the applicable law. § 187 of the Restatement provides: 116 117

The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one the parties could not have resolved by an explicit provision in their agreement directed to that issue unless either: (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of applicable law in the absence of the effective choice of law by the parties. Ibid § 187(2). 121   Restatement (Second) of Conflict of Laws § 188(1) (1971). The Restatement further provides that ‘[t]hese contacts are to be evaluated according to their relative importance with respect to the particular issue.’ 122   Restatement (Second) of Conflict of Laws § 188(2) (1971).

United States  1119 guidance. This approach was first enunciated by the United States Supreme Court in Hilton v Guyot,123 where the Court stated: [W]e are satisfied that where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect, the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new trial or an appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact.124

There is no federal statute that deals generally with the recognition of foreign judgments, although a number of states have adopted such statutes. Generally speaking, it is fair to say that the federal district courts usually will give force to foreign judgments where there is adequate notice, an impartial tribunal in which the defendant can present a defence and enforcement of the judgment would not violate a law or policy of the United States. There are some definite exceptions. In Bank Melli Iran v Pahlavi,125 a judgment from an Iranian court was denied enforcement on the grounds that the defendant could not have received due process in Iran. Also, it has been held that if enforcing a foreign judgment would violate a significant public policy, then the courts will refuse to enforce such a judgment. For example, in Chromalloy Aeroservices v Arab Republic of Egypt 126 the court refused to enforce a decision of an Egyptian court vacating an arbitration award on the ground that enforcing the Egyptian judgment would violate the United States policy favouring arbitration of commercial disputes. Although it was decided on other grounds, the case of Yahoo! Inc v La Ligue Contre Le Racisme et L’Antisemitisme127 raised the question of whether a French judgment requiring Yahoo, Inc, to filter out all offers of sales of Nazi paraphernalia was unenforceable in the United States because it would violate the First Amendment’s guarantee of freedom of speech.128 Intellectual property rights are treated differently. It is regarded as inherently territorial, so foreign judgments as to infringement are not given effect in the United States. Rather, the courts of the United States must determine whether the rights have been infringed in the United States.129

  159 US 113 (1895).   ibid 202–03. 125   Bank Melli Iran v Pahlavi 58 F3d 1406 (1995). 126   Chromalloy Aeroservices v Arab Republic of Egypt 939 F Supp 907 (DDC 1996). 127   Yahoo! Inc v La Ligue Contre Le Racisme et L’Antisemitisme 169 F Supp 2d 1181 (ND Cal 2001), rev’d and remanded on other grounds (controversy not ripe for adjudication), 433 F3d 1199 (9th Cir 2006) (en banc), cert denied sub nom, La Ligue Contre Le Racisme et, L’Antisemitisme v Yahoo! Inc 547 US 1163 (2006). 128   US Const amend I. 129   Calzaturificio Rangoni SpA v United Shoe Corp 868 F Supp 1414 (SDNY 1994) (trade mark ‘Amalfi’ for shoes; Italian judgment unenforceable in United States); Noone v Banner Talent Associates Inc 398 F Supp 260 (1975 (right to use name of rock band ‘Herman’s Hermits’ denying enforcement of British judgment). See also Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994), discussed at text accompanying nn 15–27 above. 123 124

1120  Howard B Abrams

Part II  Specific Issues Question 1: How would American courts deal with parallel court proceedings in IP disputes which are pending before a foreign court? As indicated in the previous discussions, if the question is whether rights were infringed in the United States, the United States courts will not defer to a foreign proceeding. Where it involves ownership of rights they may defer in their discretion. If it involves the country with ‘the most significant relationship’ to a work claiming copyright, the case of Itar-Tass Russian News Agency v Russian Kurier Inc 130 indicates that they would defer.

Question 2: Could, and if so, under what conditions, American courts consolidate related claims against several parties domiciled in different countries or disputes related to IP rights held in different countries? It is a given that the courts of one nation cannot exercise jurisdiction over the courts of a different nation, but only over the litigants if they have personal jurisdiction over them. Thus a United States court could consolidate related claims to intellectual property rights against several parties domiciled in different countries only if it had both the requisite personal and subject matter jurisdiction. Given appropriate jurisdiction, a United States court could consolidate claims in this situation. This could create a serious problem for the litigants as they might be required to litigate the same issues in the courts of two different nations with the danger of inconsistent results as well as the added burden of greater cost and effort. For this reason, United States courts may, in their discretion, stay their proceedings while an issue is being resolved in a foreign court.

Question 3: Under what circumstances would American courts have jurisdiction to grant provisional measures in IP disputes? Could an American court order a provisional measure with extraterritorial effects? Are there any legal tools for the protection of the defendant (eg, requirement of security, etc)? United States courts can issue preliminary injunctions ordering the parties’ behaviour prior to final resolution of a case. This is so frequently done in infringement suits that it is commonplace. The question of extraterritorial effects is harder to answer. Certainly, as discussed previously, United States courts generally will not determine whether infringement has taken place in a foreign country, but may well adjudicate ownership rights.131 Obviously, the latter 130   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82 (2d Cir 1998). The Itar-Tass case is discussed in the text accompanying nn 28–30. 131   See above text accompanying nn 15–28.

United States  1121 can have serious extra-territorial effects if the courts in the relevant foreign nation enforce the preliminary injunction. If the preliminary injunction is granted, the party seeking it must post a bond to protect the other party if the other party prevails in the final litigation.

Question 4: Would an American court enforce parties’ choice of court agreements in disputes related to foreign IP rights? Would such agreements be enforceable in contractual as well as infringement disputes? In general, a United States court would enforce an agreement by the parties stipulating venue and personal jurisdiction, but not subject matter jurisdiction. If the issue is whether infringement occurred in the United States, I think it is likely the courts would not respect the agreement. In contract disputes, it seems clear that choice of venue will normally be respected.132

Question 5: Could IP rights be used as collateral according to US law? What law would be applied by American courts to the creation, effectiveness against third parties, priority and enforcement of these security rights? Intellectual property rights can be used as collateral under the laws of the United States. This is state statutory law rather than a federal statute. If only the United States is involved, the governing law would be the Article 9 of the Uniform Commercial Code.133 For the security interest to be enforceable against third parties, it must be perfected under the relevant provisions of Article 9.134 Priorities and enforcement are also governed by Article 9. Where the security interest is created in a foreign country, the law of that country would govern the creation of the security interest but its effect on collateral in the United States or its enforceability in the United States would be governed by the principles of comity, discussed earlier.135

Part III  Institutional Framework Question 1: Please describe the existing institutional framework of IP disputes in the US (eg, the competence of courts/specialised agencies to hear IP disputes, the division of federal and state competence in IP matters, etc). It must be noted preliminarily that in all cases where the state courts have jurisdiction, the case can be brought in the federal courts if there is diversity of citizenship or if one of the parties is a foreign citizen.136   See above text accompanying nn 46–47.   UCC Art 9. 134   UCC §§ 9-301 to 9-316. 135   See above text accompanying nn 75–80. 136   See above text accompanying nn 35–37. 132 133

1122  Howard B Abrams Where a case arises under the Patent Act or the Copyright Act, the federal courts have exclusive jurisdiction.137 Where a case arises under the federal Trademark Act, the federal and state courts have concurrent jurisdiction.138 Trade secrets and rights of publicity are matters of state law and thus the state courts would have jurisdiction. For patents and trade marks, issues concerning qualification and registrability may be contested in the Patent and Trademark Office with a right of appeal to the federal courts.

Question 2: Please describe how IP issues are addressed in conflict of laws of in your country (eg, whether special conflict of laws/jurisdiction rules addressing IP matters are provided, etc). There are no special conflict of laws rules specifically concerning intellectual property other than those previously discussed.

  28 USC § 1338(a).   ibid.

137 138

United States HOWARD B ABRAMS*

Contents Introduction:  Sources of Law............................................................................................................ 1103 Part I  General Issues........................................................................................................................... 1105 Part II  Specific issues.......................................................................................................................... 1120 Part III  Institutional Framework...................................................................................................... 1121

Introduction: Sources of Law One preliminary point should be made about United States law of intellectual property. As a result of the federal system and the common law heritage of American law, the law of intellectual property in the United States comes from a variety of sources which can differ depending on which branch of intellectual property is involved. Because the broad term ‘intellectual property’ covers several diverse areas of law – copyrights, patents, neighbouring rights,1 trade marks and service marks, trade secrets, rights of publicity – the sources of law governing intellectual property in the United States include the Constitution, federal and state statutes, treaties and the common law. Each area of intellectual property has its own distinct sources of law, and may include some which are overlapping.

Copyrights and Patents The most obvious starting point is the Copyright-Patent clause of the Constitution: The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.2 *  Professor, University of Detroit Mercy. 1   The United States has no independent law concerning neighbouring rights, as those rights which other nations classify as neighbouring rights are included in the rights of copyright. 17 USC § 106 (2006). 2   US Const Art I, § 8, cl 8.

1104  Howard B Abrams This can be parsed into two parallel provisions: The Congress shall have Power . . . To promote the Progress of Science . . . by securing for limited Times to Authors . . . the exclusive Right to their respective Writings . . . The Congress shall have Power . . . To promote the Progress of . . . useful Arts, by securing for limited Times to . . . Inventors the exclusive Right to their respective . . . Discoveries.

The first of these would apply to copyright and the second would apply to patents. The net effect of the Copyright-Patent Clause is that if state laws (1) grant protection to such ‘Writings’ or ‘Discoveries’ as are included in Copyright and Patent Acts and (2) the rights granted are functionally equivalent to those provided by Copyright and Patent Acts, the state law is pre-empted except to the extent that Congress may have statutorily permitted the states to act.3 Thus copyright and patent rights must be embodied in a federal statute as a condition for their existence. This is also reflected in the fact that litigation arising under the Copyright Act4 and Patent Act5 are matters of exclusive federal jurisdiction.6

Trade Marks and Service Marks Trade marks and service marks had their origins in the common law. In addition there is a federal statute, the Lanham Act,7 enacted by Congress under the Commerce Clause of the Constitution,8 and state statutes.

Trade Secrets The law relating to trade secrets is regulated by either state statutes or state common law. There is no federal act relating to trade secrets.

Rights of Publicity The right of publicity – the right of an individual to control the use of his or her public persona for commercial advantage – was first recognised in the United States by judicial decision in 1953.9 Since then a number of states have recognised this right either judicially or by statute. 3   17 USC § 301 (2006); Bonito Boats Inc v Thunder Craft Boats Inc 499 US 141 (1989); Compco Corp v Day-Brite Lighting Inc 376 US 234 (1964); Sears, Roebuck & Co v Stiffel Co 376 US 225 (1964); but see Goldstein v California 412 US 546 (1973) (permitting states to outlaw unauthorised duplication of sound recordings fixed prior to inclusion of sound recordings as copyrightable works in the Copyright Act on 15 February 1972, on the ground that Congress had left the area ‘unattended’). For a detailed discussion and criticism of the Goldstein opinion, see HB Abrams, ‘Copyright, Misappropriation and Preemption: Constitutional and Statutory Limits on State Power’ (1983) Supreme Court Review 509. 4   17 USC § 101 et seq (2006). 5   35 USC § 1 et seq (2006). 6   28 USC § 1338(a) (2006) 7   15 USC § 1051 et seq. 8   US Const Art I, § 8, cl 3. 9   Haelan Laboratories Inc v Topps Chewing Gum Co 202 F 2d 866 (1953) (Frank J, applying New York law). For a general reference on the right of publicity, see JT McCarthy, Rights of Publicity and Privacy (St Paul, Thomson/ West, 2010) (treatise updated annually).

United States  1105 There is no federal statute providing a right of publicity per se, although section 43(a) of the Lanham Act10 provides some protection for the use of a person’s name or likeness where it is likely to mislead the public as to the source or origin of the goods or services involved. The courts have held that a cause of action for violation of the right of publicity is not preempted by the Copyright Act where it involves a person’s right to be correctly identified or to prevent incorrect identification,11 but not where it is used as a disguise for copying a work within the subject matter of copyright.12 In 2008 the American Law Institute, as part of its Principles of Law series, published the Principles of the Law – Intellectual Property – Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes.13 While this is not governing authority, it was compiled with a careful review of existing United States law and may well be persuasive in future decisions in this area. Finally, it must be remembered that the law may be different or interpreted differently from one jurisdiction to another within the United States. The law of a given state on an issue of intellectual property may differ from that of another given state. In the federal courts, the decision by one United States district court (the basic trial court in the federal system) is not controlling in other districts although it might be persuasive. Similarly, if a United States Court of Appeals (the appellate court in the federal system) makes a decision, that is binding on all district courts within its Circuit, but is not controlling and is only persuasive for other Courts of Appeal or for district courts outside of its Circuit.14

Part I General Issues Question 1: Please briefly describe the general principles of territorial jurisdiction in international IP disputes. How would American courts assume international jurisdiction in IP infringement disputes and disputes related to IP contracts? General Principles of Territorial Jurisdiction In international intellectual property disputes, the United States courts are strict in their application of territorial limits to the exercise of jurisdiction over issues of infringement. However, if the infringement occurs in the United States, then issues such as ownership of the rights and definition of the rights owned may be determined under the law of the country with the most substantial relationship to the works in question.   15 USC § 1125(a) (2006).   Midler v Ford Motor Co 849 F 2d 460 (9th Cir 1988). The opinion in Midler describes the cause of action as involving the appropriation of identity rather than as a right of publicity case, but it clearly fits. 12   Romantics v Activision Publishing Inc 574 F Supp 2d 758 (ED Mich 2008); Motown Record Corp v George A Hormel & Co 657 F Supp 1236 (CD Cal 1987). 13   RC Dreyfuss, JC Ginsburg and F Dessemontet, American Law Institute, Principles of the Law – Intellectual Property – Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (Chestnut, American Law Institute, 2008) (hereinafter ‘Principles’). 14  See below, text accompanying nn 15–17 and 26–27 (discussion of Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994), and Curb v MCA Records Inc 898 F Supp 586 (MD Tenn 1995)). 10 11

1106  Howard B Abrams Jurisdiction in International Intellectual Property Infringement Disputes Generally speaking, questions of infringement of intellectual property rights are to be determined by the law of the nation where the alleged infringement occurred and in the courts of that nation. Patents Before discussing the cases, it should be noted that the United States Court of Appeals for the Federal Circuit has exclusive appellate jurisdiction over all cases involving questions of patent law.15 As a consequence, when a patent issue is involved, the other Circuit Courts of Appeal are irrelevant. Thus all district courts are required to follow the rulings of the Federal Circuit on patent matters regardless of the circuit in which the district court is located. In Voda v Cordis Corp,16 the plaintiff initially sued for infringement of its United States patents in the United States. Subsequently the plaintiff amended its complaint to include infringement of its foreign patents in foreign countries, alleging that the infringing devices were manufactured in the United States and then sold abroad in violation of the patent laws of the foreign nations.17 The plaintiff argued that section 1367 of the Judicial Code provided the court with jurisdiction over the foreign patent claims. In relevant part, section 1367 provides: § 1367. Supplemental Jurisdiction (a) Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution. Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties. (b) . . . (c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if –

(1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.18

The trial court ruled that under the supplemental jurisdiction provisions of section 1367 it could properly hear the claims for infringement of foreign patents in foreign countries.19 The Federal Circuit granted leave to appeal.20   28 USC § 1295(a)(1) (2006).   Voda v Cordis Corp 476 F3d 887 (Fed Cir 2007) (2-1), rehearing and rehearing en banc denied, No 2005-1238, 2007 US App LEXIS 12955 (Fed Cir 14 May 2007). 17   Canada, France, Germany and the United Kingdom were identified as the nations involved. Voda v Cordis Corp 476 F3d 887, 899 (2007). 18   28 USC § 1367 (2006). 19   Voda v Cordis Corp No CIV-03-1512, 2004 WL 3392022 (WD Okla 2 August 2004). 20   Voda v Cordis Corp 122 Fed Appx 515 (Fed Cir 2005). 15 16

United States  1107 On appeal, the Federal Circuit began by noting that that for supplemental jurisdiction to exist, both the requirements for supplemental jurisdiction under section 1367(a) must be satisfied and the exercise of discretion to hear the supplemental claim under section 1367(c) must be proper.21 Although the court gave some consideration and analysis to the requirements of section 1367(a),22 it did not come to a final conclusion of the applicability of the various components section 1367(a) to the case because it found the issue of the trial court’s discretion to hear the foreign patent claims dispositive.23 Turning to the issue of whether the trial court could properly choose to hear the foreign patent claims, the majority opinion began by acknowledging that the exercise of supplemental jurisdiction was in the discretion of the trial court, but that a “district court’s discretion is not unfettered” and would be reviewed under an abuse of discretion standard.24 Relying on subsection 1367(c)(4),25 the Court held that the case presented ‘considerations of comity, judicial economy, convenience, fairness, and other exceptional circumstances [that] constitute compelling reasons to decline jurisdiction under § 1367(c) in this case and therefore hold that the district court abused its discretion by assuming jurisdiction.’26 First, and perhaps most importantly, the Court began with the Constitution’s statement that ‘all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land’,27 and listed the following intellectual property treaties to which the United States was a party: the Paris Convention,28 the Patent Cooperation Treaty 29 and the TRIPS agreement.30 The Court ruled that because these treaties were ‘the “supreme law of the land,” a district court’s exercise of supplemental jurisdiction could undermine the obligations of the United States under such treaties, which therefore constitute an exceptional circumstance to decline jurisdiction.’31 The Court next opined that the principle of comity did not support the district court’s assumption of supplemental jurisdiction.32 The Court articulated four factors33 involved in comity which, to the Court, militated against the exercise of supplemental jurisdiction. First, the plaintiff ‘ha[d] not identified any international duty, and we have found none, that would require our judicial system to adjudicate foreign patent infringement claims’, and that nothing in the international intellectual property treaties previously discussed

21   Voda v Cordis Corp 476 F3d 887, 891 (Fed Cir 2007) (‘A proper exercise of subject matter jurisdiction pursuant to § 1367 requires both the presence of jurisdiction under subsection [1367](a) and an appropriate decision to exercise that jurisdiction under subsection [1367](c).’) 22   ibid 893-97. 23   ibid 896 (‘[B]ecause we hold in infra Part III.A.2 that the district court abused its discretion under §1367(c), we deem it to be the more prudent course not to decide this “common nucleus of operative fact” question in the first instance’); ibid 897 (‘Accordingly, we refrain from deciding whether Voda’s foreign patent infringement claims fall within the scope of the “same case or controversy” requirement of § 1367(a)’). 24   ibid, 897. 25   See above, text accompanying n 3. 26   Voda v Cordis Corp 476 F3d 887, 898 (Fed Cir 2007). 27   US Const Art VI, cl 2. 28   Paris Convention for the Protection of Industrial Property on Sept 5, 1970 Arts 13-30, 21 UST 1583; Paris Convention on Aug 25, 1973 Arts 1–12, 24 UST 2140. 29   Patent Cooperation Treaty on Jan 24, 1978, 28 UST 7645. 30   Agreement on Trade-Related Aspects of Intellectual Property Rights, 1867 UNTS 154 (15 April 1994). 31   Voda v Cordis Corp 476 F3d 887, 900 (Fed Cir 2007). 32   ibid 900-02. 33   The Federal Circuit extracted these four factors from the Supreme Court’s decision in Sociétè Nationale Industrielle Aérospatiale v United States District Court for the Southern District of Iowa 482 US 522 (1987). Voda v Cordis Corp 476 F3d 887, 900-02 (Fed Cir 2007).

1108  Howard B Abrams ‘contemplates or allows one jurisdiction to adjudicate the patents of another.’ 34 Secondly, it would not be more convenient for United States courts to assume supplemental jurisdiction in patent cases.35 Thirdly, the plaintiff ‘ha[d] not shown the foreign courts will inadequately protect his foreign patent rights.’36 Fourthly, ‘assuming jurisdiction over Voda’s foreign patent infringement claims could prejudice the rights of foreign government.’37 Finally, after indicating that it believed the exercise of supplemental jurisdiction was counter-indicated by the factors of judicial economy,38 convenience39 and fairness,40 the majority opinion held ‘that the district court abused its discretion in exercising supplemental jurisdiction.’41 The Federal Circuit had ruled similarly in the earlier case of Mars Inc v Kabushiki-Kaisha Nippon Conlux,42 where a United States plaintiff sued a Japanese company for the infringement of both its United States and Japanese patents, arguing that the court had jurisdiction under both section 133843 and section 136744 of the Judicial Code. Subsection 1338(a) provides the federal courts with exclusive jurisdiction over cases involving patents, plant variety protection and copyrights and with non-exclusive jurisdiction over trade mark cases.45 Subsection 1338(b) provides that the district courts have jurisdiction over a claim of ‘unfair competition . . . when joined with a substantial and related claim under the copyright, patent, plant variety protection or trademark laws.’46 The Federal Circuit held that there was no jurisdiction under subsection 1338(b), as infringement of a foreign patent was not unfair competition within the meaning of that subsection.47 The claim for supplemental jurisdiction under section 1367 was rejected because ‘the foreign patent claim at issue here   Voda v Cordis Corp 476 F3d 887, 901 (Fed Cir 2007).   ibid. In essence, the Federal Circuit argued that (1) the district court did not pass on this issue, ibid 903, and (2) ‘the cost of obtaining and translating evidence, especially experts in foreign patent law pursuant to Fed R Civ P 44.1 (governing determination of foreign law), cuts against exercising supplemental jurisdiction’, ibid 904. 36   ibid 901. The foreign countries involved were Canada, France, Germany and the United Kingdom. 37   ibid. 38   ibid 903 (‘Because of our lack of institutional competence in the foreign patent regimes at issue in this case, more judicial resources could be consumed by the district court than the courts of the foreign patent grants.’). 39   ibid 903-04. See above n 20. 40   ibid 904. The Federal Circuit invoked the act of state doctrine which ‘requires that, in the process of deciding, the acts of foreign sovereigns taken within their own jurisdictions shall be deemed valid.’ Ibid 904 (quoting WS Kirkpatrick & Co v Environmental Tectonics Corp 4893 US 400, 409 (1990)). 41   ibid 904. An examination of the dissent by Judge Newman, ibid 905-17, is beyond the scope of this chapter. 42   Mars Inc v Kabushiki-Kaisha Nippon Conlux 24 F3d 1368 (Fed Cir 1994), aff ’d 825 F Supp 73 (D Del 1993). 43   Section 1338 provides: 34 35

§ 1338. Patents, plant variety protection, copyrights, mask works, designs, trademarks, and unfair competition (a) The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks. Such jurisdiction shall be exclusive of the courts of the states in patent, plant variety protection and copyright cases. (b) The district courts shall have original jurisdiction of any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the copyright, patent, plant variety protection or trademark laws. (c) Subsections (a) and (b) apply to exclusive rights in mask works under chapter 9 of title 17, and to exclusive rights in designs under chapter 13 of title 17, to the same extent as such subsections apply to copyrights. 28 USC § 1338 (2006).   28 USC § 1367 (2006) (quoted in relevant part above text accompanying n 17. 45   28 USC § 1338(a) (quoted above n 43). 46   28 USC § 1338(b) (quoted above n 43). 47   Mars Inc v Kabushiki-Kaisha Nippon Conlux 24 F3d 1368, 1372–74 (Fed Cir 1994). 44

United States  1109 is not so related to the US patent infringement claim that the claims form part of the same case or controversy and would thus ordinarily be expected to be tried in one proceeding.’48 The Mars opinion’s treatment of section 1367 turned on this point and does not have the broader implications that Voda does. In Ideal Instruments Inc v Rivard Instruments Inc,49 the plaintiff sought a declaration that it was not infringing the defendant’s Canadian patent. The district court refused to exercise jurisdiction, based on the holding in Mars.50 The United States Supreme Court also emphasised the notion of territoriality in the patent infringement case of Microsoft Corp v AT&T Corp.51 The case involved the issue of whether the exportation of a master disk containing software that would infringe a United States patent rendered the exporter liable in the United States when copies of the software were installed on computers manufactured abroad.52 AT&T held a patent on an apparatus for digitally encoding and compressing recorded speech. Microsoft’s Windows operating system had the potential to infringe AT&T’s patent because it incorporated software code that, when installed, enabled a computer to process speech in the manner claimed by the patent. Microsoft would send a master disk to foreign computer manufacturers in a foreign country, who would then make the copies which were installed on the computers sold abroad. The Supreme Court phrased the question as ‘Does Microsoft’s liability extend to computers made in another country when loaded with Windows software copied abroad from a master disk or electronic transmission dispatched by Microsoft from the United States?’53 The Court held that the copies of the operating system installed on the computers made abroad were not components made in the United States.54 To buttress its decision, the Court stated: Any doubt that Microsoft’s conduct falls outside of [35 USC] § 271(f)’s compass would be resolved by the presumption against extraterritoriality . . . The presumption that United States law governs domestically but does not rule the world applies with particular force in patent law. The traditional understanding that our patent law ‘operate[s] only domestically and d[oes] not extend to foreign activities,’ is embedded in the Patent Act itself, which provides that a patent confers exclusive rights in an invention within the United States. 35 USC § 154(a)(1) (patentee’s rights over invention 48   ibid 1375. The opinion had analysed the differences between the United States and Japanese patents previously. Ibid 1374–75. 49   Ideal Instruments Inc v Rivard Instruments Inc 434 F Supp 2d 598 (ND Ia 2006). 50   ibid 627–33. 51   Microsoft Corp v AT&T Corp 500 US 437 (2007). 52   The case arose under s 271(f)(1) of the United States Patent Act, which provides:

(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. (2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial non-infringing uses use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer. 35 USC § 271(f)(1)–(2) (2006).   550 US 452.   ibid 452–54.

53 54

1110  Howard B Abrams apply to manufacture, use, or sale ‘throughout the United States’ and to importation ‘into the United States’).55

Copyrights – Infringement In the leading copyright case of Subafilms Ltd v MGM-Pathe Communications Co,56 the defendants, acting in the United States, authorised the making of video cassettes of a film57 in both the United States and foreign nations, when they lacked the authority to do so. The video cassettes were sold in both the United States and foreign countries. Subafilms held that a United States court could grant the plaintiff monetary and injunctive relief only for the infringements which occurred within the United States. The first question posed by Subafilms was whether an act of infringement had been committed in the United States. This required an interpretation of section 106 of the Copyright Act, which provides: § 106. Exclusive rights in copyrighted works Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.58

The Ninth Circuit held that there was no independent ‘authorizing’ right to be found in section 106. The plaintiffs argued that the text of section 106 of the Copyright Act, by which ‘the owner of copyright under this title has the exclusive rights to do and to authorise any of ’59 a number of designated acts, was directly infringed by the defendants’ actions. The Ninth Circuit, however, held that because ‘wholly extraterritorial acts of infringement cannot support a claim under the Copyright Act’, that it was error to conclude ‘that the mere authorization of such acts supports a claim for infringement under the Act.’60 Thus a party could not be held liable as an infringer for authorising a third party to engage in acts in a foreign nation that would have violated the exclusive rights granted to a copyright holder by section 106.61

 ibid 454–55 (internal citations omitted).   Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994). 57   The film was the Beatles’ Yellow Submarine. 58   17 USC § 106 (2006) (emphasis added). 59   ibid. 60   Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088, 1095 (9th Cir 1994). 61   ibid 1090-95. 55 56

United States  1111 The second question posed by Subafilms was whether the United States Copyright Act could be applied to extraterritorial acts. The Ninth Circuit answered this in the negative, on the rationale was that it was for the courts of each sovereign country to determine whether the unauthorised act of manufacturing and distributing video cassettes of the film was an infringement, even though essentially identical acts of infringement occurred in the United States and the authorisations for the infringing foreign manufacture and distribution were given in the United States.62 There are earlier cases which are contrary to Subafilms, but their authority is doubtful after the Subafilms decision.63 It must be pointed out that not every court has followed the Subafilms decision. The holding of the Ninth Circuit in Subafilms was rejected by the Middle District of Tennessee in Curb v MCA Records Inc.64 As in Subafilms, a licensee in the United States issued an unauthorised licence for the reproduction of copyrighted works for distribution in the United States and other countries. The Curb court rejected Subafilms’ ‘peculiar interpretation of the scope and nature of the authorization right’ which by ‘tying the authorization right solely to a claim of justiciable contributory infringement appears contrary both to wellreasoned precedent, statutory text, and legislative history.’65 By contrast, where an act of infringement has been committed in the United States as well as extraterritorially, United States courts have taken account of the foreign infringements in assessing damages. In Sheldon v Metro-Goldwyn Pictures Corp,66 the defendant made a motion picture in the United States which infringed the plaintiff ’s play. A number of copies of the infringing film were made in the United States which were then sent to foreign countries for exhibition. In holding the defendants liable for damages in the foreign exhibitions of the motion picture, the court reasoned that section 1(d) of the then current Copyright Act gave the author the exclusive right to ‘make any transcription or record thereof . . . from which, in whole or in part, it may in any manner . . . be . . . reproduced.’67 The Second Circuit continued: The Culver Company made the negatives in this country, or had them made here, and shipped them abroad, where the positives were produced and exhibited. The negatives were ‘records’ from which the work could be ‘reproduced’, and it was a tort to make them in this country. The plaintiffs acquired an equitable interest in them as soon as they were made, which attached to any profits from their exploitation, whether in the form of money remitted to the United States, or of increase in the value of shares of foreign companies held by the defendants. We need not decide whether the law of those countries where the negatives were exploited, recognized the plaintiffs’ equitable 62   ibid 1095–98. In Robert Stigwood Group Ltd v O’Reilly 530 F2d 1096 (2d Cir 1976), cert denied, 429 US 848 (1976), a similar case arising prior to 1 January 1978, the effective date of the current Copyright Act, a similar ruling was made by the Second Circuit. The defendant had committed infringing performances of the plaintiff ’s musical play Jesus Christ Superstar in both the United States and Canada. The Second Circuit upheld the trial court’s refusal to award damages for the Canadian performances on the grounds that the performances were not copies or records of the play, nor was there any showing that any preparations in the United States for the Canadian performances constituted an act of infringement in the United States. Ibid 1100-01. 63   Peter Starr Production Co v Twin Continental Films Inc 783 F2d 1440 (9th Cir 1986) was expressly overruled by Subafilms. London Film Productions Ltd v Intercontinental Communications Inc 580 F Supp 47 (SDNY 1984) allowed an English plaintiff to proceed against a United States defendant for infringements committed in Chile. Given that this decision was from a trial court, was never appealed and has rarely if ever been cited, its precedential value is doubtful, in the aftermath of Subafilms. 64   Curb v MCA Records Inc 898 F Supp 586 (MD Tenn 1995). 65   ibid 594. 66   Sheldon v Metro-Goldwyn Pictures Corp 106 F2d 45 (2d Cir 1939) (L Hand, J), aff ’d, 309 US 390 (1940). 67   17 USC § 1(d) (quoted in Sheldon v Metro Goldwyn Pictures Corp 106 F2d 45, 52 (1939), aff ’d, 309 US 390 (1940)).

1112  Howard B Abrams interest; we can assume arguendo that it did not, for, as soon as any of the profits so realized took the form of property whose situs was in the United States, our law seized upon them and impressed them with a constructive trust, whatever their form.68

The Second Circuit’s later decision in Update Art Inc v Modiin Publishing Ltd,69 is probably the current leading case on this issue, as it was decided after 1 January 1978, the effective date of the 1976 General Revision of Copyright Act. The plaintiff held a United States copyright on a poster entitled Ronbo, an image of ‘President Reagan’s head superimposed on a bare-chested muscular man’s body wearing dog tags and carrying a machine-gun in a jungle setting.’70 This was reproduced by the defendant, an Israeli newspaper publisher in an unauthorised full-colour reproduction in the weekend edition of the Hebrew language newspaper Maariv, printed and distributed in Israel.71 The Court’s analysis began by stating that there was an exception to the general principle that the United States Copyright Act does not have extraterritorial application when the acts abroad arose from infringing acts in the United States.72 The Second Circuit decided that the poster had been copied in the United States for its later replication in Israel.73 This was sufficient for the Second Circuit to conclude that the plaintiff ’s ‘claim was fully cognizable under American copyright law’74 and ‘[d]amages accruing from the illegal infringement in the Israeli newspapers properly were awarded to Update’.75 Copyrights – Ownership The position of the United States courts on issues of ownership of the rights within a copyright in a work first created abroad, and the dimensions of those rights, is not monolithic. The dominant view is that these questions are to be decided under the law of the foreign nation which has the most significant relationship with the work’s origination, even though the act of infringement occurred in the United States and the law of the United States governed the issues of infringement and remedies. Probably the leading case is Itar-Tass Russian News Agency v Russian Kurier Inc.76 In Itar-Tass, a Russian press agency and various publishers of Russian language newspapers and magazines mainly in Russia and other foreign countries brought suit against the defendant in the United States. The defendant, a weekly Russian language newspaper, reproduced about 500 articles from the plaintiffs’ publications without permission. Relying on the second Restatement of Conflict of Laws,77 the   Sheldon v Metro-Goldwyn Pictures Corp 106 F2d 45, 52 (2d Cir 1939)   Update Art Inc v Modiin Publishing Ltd 843 F.2d 67 (2d Cir 1988). 70  ibid 68. The opinion characterised the poster as ‘intended to mimic the character “Rambo” portrayed by Sylvester Stallone.’ Ibid. Although not mentioned by the opinion, it was intended to satirise President Reagan as well. 71   ibid 68-69. 72   ibid 73. 73   ibid. Although there was no direct proof of this, the Second Circuit concluded from the defendants’ failure to provide any positive evidence or affidavit that the initial copying did not occur in the United States, and from the defendants’ failure to comply with discovery requests and orders for which it had been sanctioned. Indeed the major part of the opinion in Update Art is concerned with enforcing the sanctions. Ibid 69–72. 74   ibid 73. 75   ibid. See also Sheldon v Metro-Goldwyn Pictures Corp 106 F2d 45, 52 (2d Cir 1939) (L Hand, J) (‘the negatives [of the motion picture] were “records” from which the work could be “reproduced,” and it was a tort to make them in this country. The plaintiffs acquired an equitable interest in them as soon as they were made, which attached to any profits from their exploitation’), aff ’d, 309 US 390 (1941). 76   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82 (2d Cir 1998). 77   Restatement (Second) of Conflict of Laws (1971). 68 69

United States  1113 court reasoned that copyright was a form of property and that Russia was the country with ‘the most significant relationship’ to the copyrights, thus Russian law governed the ownership of the works involved and the dimensions of the rights owned.78 It is worth noting that even though Russian law applied to the issues of ownership and the definition of the rights owned, the United States court did not hesitate to determine Russian law and apply it in a United States proceeding. Similarly, section 104A of the Copyright Act, dealing with the restoration of foreign copyrights which were forfeited for lack of compliance with the now repealed formalities of the United States Copyright Act, also provides that the ownership of the restored copyright ‘vests initially in the author or initial rightholder of the work as determined by the law of the source country of the work.’79 The cases that have been decided under this section have applied foreign law to the determination of ownership of the copyrights in question.80 In light of these statutory provisions and judicial precedents, a United States court would exercise jurisdiction over an international intellectual property dispute only if there is an act of infringement in the United States.81 While it is a bit of an extrapolation, it seems fair to say that a United States court would exercise jurisdiction over issues of ownership of rights where the United States was the country with ‘the most significant relationship’ to the rights even where the acts of infringement occurred only outside of the United States but would decline to determine questions of infringement and remedies. Jurisdiction among United States Courts in Intellectual Property Disputes As a general statement, in an international dispute regarding a contract concerning intellectual property, there really are several questions. First, which court has subject matter jurisdiction? Secondly, does the court chosen by the plaintiff for the filing of an action have personal jurisdiction over the defendant? Thirdly, which law applies? Thus several aspects of United States federalism have to be considered. Subject Matter Jurisdiction Subject matter jurisdiction must exist for a court to hear the case and cannot be waived by the parties by contract, consent or otherwise.82 The subject matter jurisdiction of federal courts is limited to that provided in Section 2 of Article III of the Constitution, which provides: The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; to all Cases affecting Ambassadors, other public Ministers and Consuls; – to all Cases of admiralty and maritime Jurisdiction; – to Controversies to which the United States shall be a party; a – to   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82, 90 (2d Cir 1998).   17 USC § 104A(b) (2006).   Alameda Films SA de CV v Authors Rights Restoration Corp 331 F3d 472 (2003), cert denied, 540 US 1048 (2003); Laparade v Ivanova 387 F3d 1099 (9th Cir 2004) (per curiam). 81   What was at issue in Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994), and Curb v MCA Records Inc 898 F Supp 586 (MD Tenn 1995), was whether the unauthorised licensing in the United States of an act of infringement in another country was a direct violation of s 106 of the United States Copyright Act. 82   Louisville & Nashville R Co v Mottley 211 US 149 (1908); La Resolana Architects PA v Clay Realtors Angel Fire 416 F3d 1195, 1198 (10th Cir 2005) (‘It is axiomatic that subject matter jurisdiction, which gives the courts the power to adjudicate cases, cannot be waived.’). 78 79 80

1114  Howard B Abrams Controversies between two or more States; – between a State and Citizens of another State; – between Citizens of different States – between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens, or Subjects. 83

This makes it clear that the federal courts have subject matter jurisdiction over ‘Controversies . . . between a State, or the Citizens thereof, and foreign States, Citizens, or Subjects.’84 Thus most litigation between citizens of the United States and citizens of foreign countries takes place in the federal court system, rather than in the courts of one of the United States.85 The Judicial Code provides that as to cases ‘arising under’ the Copyright Act or the Patent Act, the federal courts have exclusive subject matter jurisdiction.86 Cases involving trade mark disputes can be brought in either state or federal courts.87 Disputes over contract terms involving intellectual property, however, such as whether a contract effectively transferred the ownership of a patent or copyright, are not considered cases ‘arising under’ the Copyright Act or Patent Act and thus are not subject matter for federal jurisdiction88 unless some alternate basis for federal jurisdiction exists such as one of the litigants being a foreign national.89 Thus only a state court would have jurisdiction over a contract dispute involving a contract concerning intellectual property between two United Citizens from the same state. Personal Jurisdiction If a court has subject matter jurisdiction over an issue, personal jurisdiction over a defendant is largely a question of whether the defendant has sufficient contacts with the forum territory of the specific chosen court to be subject to personal jurisdiction for the action without offending due process.90 Objections to personal jurisdiction can be waived and   US Const Art III, § 2.   US Const Art III, § 2. 85   If a case is brought in a state court between a citizen of the United States and a citizen of another country, it can be removed to the federal courts on a timely motion. It is possible, however, for the parties to choose not to remove the case, although this would be rare indeed. 86   28 USC § 1338(a) (2006). 87   ibid. 88  In TB Harms Co v Eliscu 339 F2d 823 (2d Cir 1964), the Second Circuit held that a case presenting the question of whether the ownership of a copyright had been transferred by a contract was not a case ‘arising under’ the copyright laws of the United States and thus was not eligible for federal jurisdiction under s 1338(a) of the United States Judicial Code, which gives the federal courts exclusive jurisdiction over cases arising under the federal Copyright and Patent Acts. 28 USC § 1338(a) (2006). 89   See above text accompanying n 36. 90   In essence, the contacts can be general or specific. An example of general contacts not related to the dispute would be the defendant residing or having a regular place of business in the state where the court sits. A specific contact would be committing the acts of infringement in the district where the court sits. Thus a defendant who resided and conducted business in New York and committed an act of copyright infringement in California but had no contact with the State of Massachusetts, could be sued for the infringement in the United States District Court for the District of California in which the infringement occurred, could be sued in the United States District Court for the District of New York where she or he resided or had his or her regular place of business, but could not be sued in the United States District Court for Michigan. In Yahoo! Inc v La Ligue Contre Le Racisme et, L’Antisemitisme 169 F Supp 2d 1181 (ND Cal 2001), rev’d and remanded on other grounds (controversy not ripe for adjudication), 433 F3d 1199 (9th Cir 2006)(en banc), cert denied sub nom, La Ligue Contre Le Racisme et, L’Antisemitisme v Yahoo! Inc 547 US 1163 (2006), French organisations serving papers on a California corporation, seeking to enforce the judgment of a French court in the United States by having papers served by the United States Marshals, were held to have sufficient specific contacts with California to support the exercise of personal jurisdiction over the defendants in the United States. Anything more than this casual overgeneralisation about personal jurisdiction is beyond the scope of this chapter. 83 84

United States  1115 contract clauses agreeing on the jurisdiction of any disputes between the parties to a contract are normally enforceable. In Burger King Corp v Rudzewicz,91 the United States Supreme Court held that a Michigan franchisee was not denied due process under the Constitution92 by being subjected to jurisdiction in Florida under a franchise agreement which required the franchisee to send payments to the franchisor’s office in Florida and provided that disputes between the parties would be governed by Florida law. Although holding that the facts in the case established sufficient specific contacts with Florida to permit Florida to exercise jurisdiction, the Court included this limitation: The quality and nature of an interstate transaction may sometimes be so random, fortuitous, or attenuated that it cannot fairly be said that the potential defendant should reasonably anticipate being haled into court in another jurisdiction. . . . [A]lso . . . jurisdiction may not be grounded on a contract whose terms have been obtained through fraud, undue influence, or overweening bargaining power and whose application will render litigation so gravely difficult and inconvenient that a party will for all practical purposes be deprived of his day in court.93

Choice of Law As to choice of law, the general position of the United States courts is that the parties are free to specify in their contract which jurisdiction’s law shall govern the interpretation of the contract. This is strongly reinforced by the Restatement of Conflict of Laws, which provides: § 187. Law of the State Chosen by the Parties. (1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue. (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either, (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which . . . would be the state of the applicable law in the absence of an effective choice of law by the parties. (3) In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law.94

In the absence of a contractual agreement as to the law governing a contract, the law applied will be ‘the local law of the state which, with respect to that issue, has the most significant relation to the transaction and the parties.’95

  Burger King Corp v Rudzewicz 471 US 462 (1985).   US Const amend XIV § 2. 93   Burger King Corp v Rudzewicz 471 US 462 485–86 (1985) (internal quotations and citations omitted). 94   Restatement (Second) of Conflict of Laws § 187 (1971). 95   ibid § 188. 91 92

1116  Howard B Abrams

Question 2: Would American courts have subject matter jurisdiction in disputes related to foreign IP rights? How would American courts deal with such issues as existence or validity of foreign IP rights? Under Subafilms Ltd v MGM-Pathe Communications Co,96 a United States court could exercise subject matter jurisdiction over a dispute related to the infringement foreign intellectual property rights if there was an act of infringement in the United States but could offer remedies only for any acts of infringement occurring in the United States.97 Under Itar-Tass Russian News Agency v Russian Kurier Inc,98 if an act of infringement has occurred in the United States, the law of the nation with the most substantial relationship to the work in question will be applied to determine ownership of rights and the dimensions of the rights owned. If a contract concerning foreign intellectual property rights was made in the United States, the United States courts could exercise jurisdiction over disputes arising under the contract unless the contract had specified another forum.99

Question 3: Please describe what choice of law principles are applied to initial title, transferability of IP rights. Which law would be applied to contracts for transfer of IP rights in the absence of choice by the parties? Which law would govern the infringement of IP rights? Choice of Law as to Initial Title: Patents The very existence of a patent in the United States depends upon its being examined and granted by the United States Patent Office. In the United States, the initial title to the rights in patents is vested in the inventor.100 Section 311(1) of the Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes101 takes the same position. This may be altered by contract before the invention is made. It is not uncommon for researchers, scientists, engineers and similar employees to be asked to sign employment agreements that transfer the patent rights in any inventions they make as part of their employment to their employer. Section 311(2) of the Principles provides that in this situation the determination of ‘initial title is governed by the law that governs the contract or relationship.’102 Assuming the invention is first invented abroad and the invention is subsequently patented in the United States, the same rules would apply.

96   Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994). See above text at nn 15–17. 97   See above text at nn 15–30. 98   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82 (2d Cir 1998). See above text at nn 28–30. 99  See above n 46 and accompanying text. 100   35 USC § 101 (2006) (‘Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, . . .’). 101   Principles, above n 13, § 311(1). 102   ibid § 311(3).

United States  1117 Choice of Law as to Initial Title: Copyrights Under the United States Copyright Act, ownership of copyright vests initially in the author.103 If there is a joint work, the co-authors will be co-owners of the copyright.104 In the case of a work made for hire, ‘the employer or other person for whom the work was prepared is considered the author.’105 The copyright and the ownership of the copyright exist from the creation of the work and do not depend on registration.106 Ownership of a copyright gives the owner the exclusive rights to do and to authorise others to do the acts listed in section 106 of the Copyright Act: (1) to reproduce the copyrighted work in copies and phonorecords;107 (2) to prepare derivative works based on the copyrighted work;108 (3) to distribute copies or phonorecords of the work to the public;109 (4) to perform the work publicly ‘in the case of literary, musical, dramatic and choreographic works, pantomimes, motion pictures and other audiovisual works’;110 (5) to display the work publicly ‘in the case of literary, musical, dramatic and choreographic works, pantomimes, and pictorial, graphic and sculptural works, including the individual images of a motion picture or other audiovisual work’;111 and (6) in the case of a sound recording, to perform the work publicly by means of a digital audio transmission.112 Copyrights, or any of the exclusive rights encompassed in a copyright, may be voluntarily transferred.113 Choice of Law as to Initial Title: Trade Marks To obtain rights under the United States federal Trademark Act,114 popularly known as the Lanham Act, the owner of a trade mark may apply for registration on the Principal Register of the United States Patent and Trademark Office, which is part of the Department of Commerce. If a trade mark, service mark or designation of geographic origin is granted registration on the Principal Register, the title is initially in the name of registrant. If the registration on the Principal Register is maintained for five years, the registration becomes incontestable.115 As to common law rights, the plaintiff in a trade mark infringement suit would have the burden of proving ownership of the mark. Applicants denied registration on the Principal Register can register on the Supplemental Register, which is not conclusive but simply gives notice that the registrant claims to have trade mark rights in the mark. Normally trade marks and service marks can be transferred as part of the sale of a business. Because trade marks and service marks are used to identify the source or origin of the   17 USC 201(a) (2006).   ibid.   17 USC § 201(b) (2006). 106   17 USC § 102(a) (2006). 107   17 USC § 106(1) (2006). 108   17 USC § 106(2) (2006). See also 7 USC § 101 (2006) (definition of ‘derivative work’). 109   17 USC § 106(3) (2006). 110   17 USC § 106(4) (2006). 111   17 USC § 106(5) (2006). 112   17 USC § 106(6) (2006). 113   17 USC § 204 (2006). For such a transfer to be valid, it must be in writing and signed. ibid. Non-exclusive licences may be oral or written and do not require a signature to be valid. 114   15 USC §§ 1051-1141n (2006). Some cases can be brought under § 43(a) of the Lanham Act for confusion as to the source or origin of the goods or services even without registration. 15 USC § 1125 (2006). 115   15 USC § 1065 (2006). 103 104 105

1118  Howard B Abrams relevant goods or services, however, the transfer may lose the trade mark if it is separated from the transfer of the business providing the relevant goods or services. Choice of Law in Contract Disputes In an international dispute related to a contract concerning intellectual property – assuming there was both subject matter jurisdiction and personal jurisdiction – the United States courts would follow the United States choice of law rules relating to contracts generally. Most of the United States precedents on this issue involve cases between parties who are both within the United States because contract law is a matter of state law and contract cases find their way into federal court only where the parties are residents of different states under the diversity jurisdiction provisions of the United States Constitution116 and the United States Judicial Code.117 On such state law issues as contract law, the federal courts are required to follow state law.118 Probably the most cohesive statement of how the courts will resolve choice of law issues concerning contracts is the Restatement (Second) of Conflict of Laws.119 The basic rule is that the parties can choose the applicable law to govern the contract. 120 If the parties have not specified the governing law of the contract as regards to an issue, then a court following the Restatement will apply the ‘local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties’.121 In determining which state has the most significant relationship, the court must take into account ‘(a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicil, residence, nationality, place of incorporation and place of business of the parties.’122

Question 4: Under what conditions would a foreign judgment be recognised and enforced by an American court? Are there any special issues related to recognition and enforcement of foreign judgments in IP disputes? In discussing the recognition of foreign judgments by United States courts, the federal courts have relied on the concept of comity where there is no specific treaty or statute for   US Const Art III § 2.   28 USC § 1332 (2006). 118   Erie R Co v Tompkins 304 US 64 (1938). 119   Restatement (Second) of Conflict of Laws (1971 & 1988 revision). 120   Restatement (Second) of Conflict of Laws §§ 186-87 (1971 & 1988 revision). There are limits on the parties’ freedom of choice of the applicable law. § 187 of the Restatement provides: 116 117

The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one the parties could not have resolved by an explicit provision in their agreement directed to that issue unless either: (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties choice, or (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of applicable law in the absence of the effective choice of law by the parties. Ibid § 187(2). 121   Restatement (Second) of Conflict of Laws § 188(1) (1971). The Restatement further provides that ‘[t]hese contacts are to be evaluated according to their relative importance with respect to the particular issue.’ 122   Restatement (Second) of Conflict of Laws § 188(2) (1971).

United States  1119 guidance. This approach was first enunciated by the United States Supreme Court in Hilton v Guyot,123 where the Court stated: [W]e are satisfied that where there has been opportunity for a full and fair trial abroad before a court of competent jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary appearance of the defendant, and under a system of jurisprudence likely to secure an impartial administration of justice between the citizens of its own country and those of other countries, and there is nothing to show either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect, the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new trial or an appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact.124

There is no federal statute that deals generally with the recognition of foreign judgments, although a number of states have adopted such statutes. Generally speaking, it is fair to say that the federal district courts usually will give force to foreign judgments where there is adequate notice, an impartial tribunal in which the defendant can present a defence and enforcement of the judgment would not violate a law or policy of the United States. There are some definite exceptions. In Bank Melli Iran v Pahlavi,125 a judgment from an Iranian court was denied enforcement on the grounds that the defendant could not have received due process in Iran. Also, it has been held that if enforcing a foreign judgment would violate a significant public policy, then the courts will refuse to enforce such a judgment. For example, in Chromalloy Aeroservices v Arab Republic of Egypt 126 the court refused to enforce a decision of an Egyptian court vacating an arbitration award on the ground that enforcing the Egyptian judgment would violate the United States policy favouring arbitration of commercial disputes. Although it was decided on other grounds, the case of Yahoo! Inc v La Ligue Contre Le Racisme et L’Antisemitisme127 raised the question of whether a French judgment requiring Yahoo, Inc, to filter out all offers of sales of Nazi paraphernalia was unenforceable in the United States because it would violate the First Amendment’s guarantee of freedom of speech.128 Intellectual property rights are treated differently. It is regarded as inherently territorial, so foreign judgments as to infringement are not given effect in the United States. Rather, the courts of the United States must determine whether the rights have been infringed in the United States.129

  159 US 113 (1895).   ibid 202–03. 125   Bank Melli Iran v Pahlavi 58 F3d 1406 (1995). 126   Chromalloy Aeroservices v Arab Republic of Egypt 939 F Supp 907 (DDC 1996). 127   Yahoo! Inc v La Ligue Contre Le Racisme et L’Antisemitisme 169 F Supp 2d 1181 (ND Cal 2001), rev’d and remanded on other grounds (controversy not ripe for adjudication), 433 F3d 1199 (9th Cir 2006) (en banc), cert denied sub nom, La Ligue Contre Le Racisme et, L’Antisemitisme v Yahoo! Inc 547 US 1163 (2006). 128   US Const amend I. 129   Calzaturificio Rangoni SpA v United Shoe Corp 868 F Supp 1414 (SDNY 1994) (trade mark ‘Amalfi’ for shoes; Italian judgment unenforceable in United States); Noone v Banner Talent Associates Inc 398 F Supp 260 (1975 (right to use name of rock band ‘Herman’s Hermits’ denying enforcement of British judgment). See also Subafilms Ltd v MGM-Pathe Communications Co 24 F3d 1088 (9th Cir 1994), cert denied sub nom, Subafilms Ltd v United Artists Corp 513 US 1001 (1994), discussed at text accompanying nn 15–27 above. 123 124

1120  Howard B Abrams

Part II  Specific Issues Question 1: How would American courts deal with parallel court proceedings in IP disputes which are pending before a foreign court? As indicated in the previous discussions, if the question is whether rights were infringed in the United States, the United States courts will not defer to a foreign proceeding. Where it involves ownership of rights they may defer in their discretion. If it involves the country with ‘the most significant relationship’ to a work claiming copyright, the case of Itar-Tass Russian News Agency v Russian Kurier Inc 130 indicates that they would defer.

Question 2: Could, and if so, under what conditions, American courts consolidate related claims against several parties domiciled in different countries or disputes related to IP rights held in different countries? It is a given that the courts of one nation cannot exercise jurisdiction over the courts of a different nation, but only over the litigants if they have personal jurisdiction over them. Thus a United States court could consolidate related claims to intellectual property rights against several parties domiciled in different countries only if it had both the requisite personal and subject matter jurisdiction. Given appropriate jurisdiction, a United States court could consolidate claims in this situation. This could create a serious problem for the litigants as they might be required to litigate the same issues in the courts of two different nations with the danger of inconsistent results as well as the added burden of greater cost and effort. For this reason, United States courts may, in their discretion, stay their proceedings while an issue is being resolved in a foreign court.

Question 3: Under what circumstances would American courts have jurisdiction to grant provisional measures in IP disputes? Could an American court order a provisional measure with extraterritorial effects? Are there any legal tools for the protection of the defendant (eg, requirement of security, etc)? United States courts can issue preliminary injunctions ordering the parties’ behaviour prior to final resolution of a case. This is so frequently done in infringement suits that it is commonplace. The question of extraterritorial effects is harder to answer. Certainly, as discussed previously, United States courts generally will not determine whether infringement has taken place in a foreign country, but may well adjudicate ownership rights.131 Obviously, the latter 130   Itar-Tass Russian News Agency v Russian Kurier Inc 153 F3d 82 (2d Cir 1998). The Itar-Tass case is discussed in the text accompanying nn 28–30. 131   See above text accompanying nn 15–28.

United States  1121 can have serious extra-territorial effects if the courts in the relevant foreign nation enforce the preliminary injunction. If the preliminary injunction is granted, the party seeking it must post a bond to protect the other party if the other party prevails in the final litigation.

Question 4: Would an American court enforce parties’ choice of court agreements in disputes related to foreign IP rights? Would such agreements be enforceable in contractual as well as infringement disputes? In general, a United States court would enforce an agreement by the parties stipulating venue and personal jurisdiction, but not subject matter jurisdiction. If the issue is whether infringement occurred in the United States, I think it is likely the courts would not respect the agreement. In contract disputes, it seems clear that choice of venue will normally be respected.132

Question 5: Could IP rights be used as collateral according to US law? What law would be applied by American courts to the creation, effectiveness against third parties, priority and enforcement of these security rights? Intellectual property rights can be used as collateral under the laws of the United States. This is state statutory law rather than a federal statute. If only the United States is involved, the governing law would be the Article 9 of the Uniform Commercial Code.133 For the security interest to be enforceable against third parties, it must be perfected under the relevant provisions of Article 9.134 Priorities and enforcement are also governed by Article 9. Where the security interest is created in a foreign country, the law of that country would govern the creation of the security interest but its effect on collateral in the United States or its enforceability in the United States would be governed by the principles of comity, discussed earlier.135

Part III  Institutional Framework Question 1: Please describe the existing institutional framework of IP disputes in the US (eg, the competence of courts/specialised agencies to hear IP disputes, the division of federal and state competence in IP matters, etc). It must be noted preliminarily that in all cases where the state courts have jurisdiction, the case can be brought in the federal courts if there is diversity of citizenship or if one of the parties is a foreign citizen.136   See above text accompanying nn 46–47.   UCC Art 9. 134   UCC §§ 9-301 to 9-316. 135   See above text accompanying nn 75–80. 136   See above text accompanying nn 35–37. 132 133

1122  Howard B Abrams Where a case arises under the Patent Act or the Copyright Act, the federal courts have exclusive jurisdiction.137 Where a case arises under the federal Trademark Act, the federal and state courts have concurrent jurisdiction.138 Trade secrets and rights of publicity are matters of state law and thus the state courts would have jurisdiction. For patents and trade marks, issues concerning qualification and registrability may be contested in the Patent and Trademark Office with a right of appeal to the federal courts.

Question 2: Please describe how IP issues are addressed in conflict of laws of in your country (eg, whether special conflict of laws/jurisdiction rules addressing IP matters are provided, etc). There are no special conflict of laws rules specifically concerning intellectual property other than those previously discussed.

  28 USC § 1338(a).   ibid.

137 138

Appendix I Case 1: General/Special Grounds of Jurisdiction A is an international pop-music idol who has just released a new single. At a point in time when sales of the new single have increased, B, the publisher of a monthly music journal, inserts a headline article claiming that the new single of A is a mere adaptation of a song released in the 1950s. A files a defamation suit. (1) Would a court of your country have international jurisdiction if the defendant B had its residence in your country? Would the decision regarding international jurisdiction of the court of your country differ if the defendant was a corporation having its main place of business in a third country X, but a branch was located your country? (2) Would a court of your country have international jurisdiction if the copies of the journal were distributed in your country in the language which is officially spoken? Would the decision differ if the journal was printed in your country for distribution in a neighbouring country X (in a language which is not spoken in your country)? (3) Under the law of your country, would residence of the defendant be necessary for a court to have international jurisdiction over A’s claim for the overall damage sustained in all countries where the journal was published? (Please specify if answers to these questions were different in cases where intellectual property rights are at stake.)

Case 2: Subject-Matter Jurisdiction A court of country X is dealing with a dispute between A and B concerning an infringement of a foreign patent issued in country Y. During the course of infringement proceedings, B makes a counter-claim that the patent is invalid. Assuming that a court of your country is the court of country X: (1) Would it have international jurisdiction and would it decide the question of the infringement of foreign intellectual property rights? (2) Would the court have international jurisdiction to decide upon the issues of validity (and registration) of foreign intellectual property rights? If so, what would be the legal effects (inter partes or erga omnes) of such a decision? Would the decision differ with regard to registered and non-registered intellectual property rights? (3) What would be the decision of a court if the question of the validity of a foreign intellectual property right arose as a preliminary question and remained unchallenged by the parties?

1124  Appendix I

Case 3: Consolidation of Proceedings A is a holder of identical patents in countries X, W, Y and Z. B, C and D are competitors of A and are located in countries X, Y and Z respectively. A finds that B, C and D infringe its patents in countries X, Y and Z. A institutes patent infringement proceedings against alleged infringers before the courts of countries X, Y and Z. A’s main place of business is in country W; due to high litigation costs A seeks the consolidation of claims forum of country W. (1) Assuming that the court of country W is a court of your country, would it have jurisdiction to join claims against defendants B, C and D? Would the decision of a court differ if A was a licensor and the claims were raised against licensees B, C and D on the ground of the infringement of a contract? (2) Assuming that B, C and D are members of a group of a corporation and takes identical steps in the infringement of A’s patents, A seeks to consolidate the proceedings before a court of country X where the coordinator of infringing activities has its main place of business. Assuming that the court of country X is a court of your country would (and if so under what conditions) it consolidate the proceedings if it was to decide upon the request of A? Would the decision change if B, C and D raised counterclaims that A’s patents are invalid?

Case 4: Choice of Court A, who holds a bundle of patents in different countries, entered into a non-exclusive licence agreement with B pursuant to which B received a licence to make, use, or offer for sale and otherwise dispose of licensed products. B paid the initial licence fee but later refused to pay other fees arguing, inter alia, that its products do not fall under the scope of the licensed patents. A filed a suit against B seeking patent infringement damages and refers to the choice of forum clause which the parties agreed upon in the license agreement. B objects to the enforcement of such a choice of forum clause, arguing that the issue is related to foreign patents and thus the asserted choice of court clause is not enforceable. Assuming that A and B are not nationals of your country and do not have any place of business in your country: (1) Would such a choice of court clause of the licence agreement be enforceable? Would the decision differ if parties made a (new) choice of court agreement at the time when the dispute arose? (2) Would the court enforce an exclusive choice of court clause if the defendant raised a counter-claim that the patents are invalid? (3) Would the court assert jurisdiction if the choice of court agreement was made in patent infringement proceedings? (4) Would the parties’ arbitration agreement be enforceable under the law of your country? Could the arbitration tribunal decide upon the validity of intellectual property rights? If so, what would be the legal effects of such a decision?

Appendix I  1125

Case 5: Parallel Proceedings A owns two product patents in countries X and Y. B who is located in country Z produces the identical product to that for which A has patents and exports that infringing product to the countries X and Y. Having found out about the infringing activities, A files an infringement suit before the court of country Z. However, before A brings a suit in country Z, B launches actions in countries X and Y seeking declarations that B is not liable for the infringements of patents owned by A. Assuming that the court of country Z is a court of your country: (1) What procedural steps would a court of country Z take having regard pending proceedings in countries X and Y? Would the decision of a court of country Z be different if the dispute was related to intellectual property rights that are not subject to registration? (2) What procedural steps would the court in country Z take if B brought a suit before a court of a third country W challenging the validity of patents in countries X and Y?

Case 6: Principle of Territoriality (Choice of Law) A owns a patent over an engine in country X. B produces separate parts of the patented engine and exports them separately to its customers in countries Y and Z. Customers of B can easily assemble the parts of the patented engine in a very short time. Having found out about B’s activities, A files a suit in country X requesting an injunction and recovery of damages for patent infringement. B argues that the export of separate parts of an invention does not amount to patent infringement and that the patent statute of country X does not extend to activities abroad. (1) Assuming that the court of country X is a court of your country, could it apply the patent statute for allegedly infringing acts occurring in country Z? (2) Assuming, first, that the claim for the infringement of the patent granted in country X is brought before the court of country Z and, secondly, that the court of country Z is a court of your country, could the court apply the patent statute of country X for allegedly infringing acts that occur in country Z?

Case 7: Infringement of Intellectual Property Rights Three IT students, A, B and C, have created a website which facilitates speedy exchange of digital files (music, videos, software, etc) among users from all over the world. After several months when the website becomes very popular, A, B and C introduced an additional paid service which allows the speedy exchange of big capacity digital files. Although A, B and C know that some files that are stored in the server of their website are illegal, they do not take any action to somehow prevent infringement of intellectual property rights. Major international entertainment industry companies file an infringement suit against A, B and C, requesting they be made to close the website and pay damages. Assuming that the court of your country has international jurisdiction in such a case:

1126  Appendix I (1) What law would be applied to determine the liability of A, B, and C for direct infringement acts? Would the parties be allowed to agree on the applicable law (infringement and remedies)? (2) Would the choice of law differ if the claim for damages was brought against the Internet service provider (ISP) as a secondary infringer? Would parties be allowed to agree on the applicable law (infringement and remedies)? (3) Could the court decide on the ubiquitous infringement (where the infringement occurs in multiple places/countries) of intellectual property rights? If so, what would be the applicable law? Would the parties’ choice of law be allowed? How would the court of your country define ubiquitous infringement of intellectual property rights?

Case 8: Applicable Law to Initial Ownership A is a foreign visiting researcher in B’s laboratory. Soon after being employed, A made several significant inventions using the equipment of B’s laboratory. B is now making huge profits by granting licences to a number of companies to use the inventions of A. A files a suit for compensation arguing that he is the initial owner of the inventions and B should not have granted licences without A’s consent. Assuming that A files a claim before a court of your country: (1) What law would the court of your country apply to determine who is the initial owner of the invention? Would the parties’ choice of law clause concerning initial ownership be enforceable in your country? (2) Would the decision differ if A made an invention in joint collaboration with other researchers? (3) Would the applicable law differ in the case of initial authorship or initial title to trademark? (4) What law would the court of your country apply if A raised a claim arguing that B did not pay reasonable compensation for patents obtained by B in a number of foreign countries?

Case 9: Applicable Law to the Transfer of Rights Agreements A is a rising popular music band. After one of the concerts in country X, a representative of foreign recording company B and A orally agreed to release A’s albums in the future. After the release of the debut album, B made some arrangements for the distribution of the debut album in country Y. A files a suit before a court in country X arguing that the moral right of integrity of a work was not transferred and was thus infringed. Assuming that a court of your country is a court of country X: (1) Would the court enforce the parties’ choice of law clause regarding the transfer of economic and moral rights of authors? (2) How will the court deal with the issue of transferability? (3) What would be the applicable law in a case where there is no choice of law made by the parties?

Appendix I  1127

Case 10: Recognition and Enforcement of Foreign Judgments A court of a foreign country X decides a case between the parties A and B, ruling that A is the owner of a patent registered in your country. A refers to a court of your country asking to recognise and enforce the foreign judgment. (1) Could the foreign judgment concerning the ownership be recognised in your country? How would the recognising court assess the international jurisdiction of the rendering court? (2) Would the parties be required to re-litigate the dispute in order to have the ownership decision registered in a registry of a recognising country? (3) Assuming that the judgment is recognised, what procedural steps have to be taken to enforce the judgment in your country? Would the enforcement judgment be necessary or would it suffice to present the original judgment to the enforcing authority?

Case 11: Provisional Measures and Injunctions A owns a world-wide famous accessories trade mark. After finding out that B is selling fake goods which infringe A’s trade mark on an Internet auction, A files an infringement suit also asking the court to issue an injunction to stop infringing activities and seize infringing goods. Assuming that both A and B are resident in your country and the main infringing activities take place there: (1) Would a court of your country have jurisdiction to issue provisional measures/injunction (regarding infringing acts and counterfeited goods located in different countries) which would also have extraterritorial effects? Would the situation change if the court of your country did not have jurisdiction over the main dispute (eg, if B was a resident in country Y and the infringing acts were made in country Y)? (2) Could a court issue an injunction/protective measures if the trade mark for which the protection is sought was registered abroad? (3) Would a court in your country require the person seeking issuance of provisional measures to grant a guarantee? (4) Would a court of your country be pre-empted from issuing an injunction if the parties had submitted the dispute to arbitration proceedings? (5) If the claimant asked to issue an injunction to cease infringing acts, would a court in your country conceive of an injunction to cease as a procedural or substantive measure?

Case 12: Securities in Intellectual Property In order to get a loan from Bank B, A decides to use intellectual property rights and royalties from those intellectual property rights as collateral. A fails to repay the loan. Assuming that A is a national of country X and B is a bank in country Y: (1) Could intellectual property rights be used as collateral pursuant to the law of your country?

1128  Appendix I (2) What law would be applied to such issues as the creation, effectiveness against third parties, priority and the enforcement of these security rights? (3) Would a court of your country apply the same law to registered and non-registered intellectual property rights?

Appendix II Part I  General Issues Question 1:  Please briefly describe the general principles of territorial jurisdiction in international IP disputes. How would the courts of your country assume international jurisdiction in IP infringement disputes and disputes related to IP contracts? Question 2:  Would the courts of your country have subject matter jurisdiction in disputes related to foreign IP rights? How would the courts deal with such issues as existence or validity of foreign IP rights? Question 3:  Please describe what choice of law principles are applied to initial title, transferability of IP rights. Which law would be applied to contracts for transfer of IP rights in the absence of choice by the parties? Which law would govern the infringement of IP rights? Question 4:  Under what conditions would a foreign judgment be recognised and enforced in your country? Are there any special issues related to recognition and enforcement of foreign judgments in IP disputes?

Part II  Specific Issues Question 1:  How would the courts of your country deal with parallel court proceedings in IP disputes which are pending before a foreign court? Question 2:  Could, and if so, under what conditions, the courts of your country consolidate related claims against several parties domiciled in different countries or disputes related to IP rights held in different countries? Question 3:  Under what circumstances would the courts of your country have jurisdiction to grant provisional measures in IP disputes? Could a court order a provisional measure with extraterritorial effects? Are there any legal tools for the protection of the defendant (eg requirement of security, etc)? Question 4:  Would a court enforce parties’ choice of court agreements in disputes related to foreign IP rights? Would such agreements be enforceable in contractual as well as infringement disputes? Question 5:  Could IP rights be used as a collateral according to the law of your country? What law would be applied by the courts of your country to creation, effectiveness against third parties, priority and enforcement of these security rights?

1130  Appendix II

Part III  Institutional Framework Question 1:  Please describe the existing institutional framework of IP disputes in your country (eg, the competence of courts/specialised agencies to hear IP disputes, the division of federal and state competence in IP matters, etc). Question 2:  Please describe how IP issues are addressed in conflict of laws in your country (eg, whether special conflict of laws/jurisdiction rules addressing IP matters are provided, etc).

INDEX

A Altana Pharma v Eurfarma (Belgium), 373 anti-suit injunction, 96, 113, 445, 460, 539, 695, 1065, 1069, 1070, 1087 astreinte, 542 B Benelux Convention on Intellectual Property (‘BCIP’), 10, 352, 359–60, 365, 418–9 C Card Reader case (Japan), 121, 142, 159–62, 763, 771, 782–4, 789 Code of Private International Law (‘CPIL’, Belgium), 17, 139, 349, 356–8, 365, 370, 376–8, 382–3, 385, 387–8, 391, 392, 393–5, 398, 401, 408–14, 416, 417, 420 comity, 52, 73–4, 192–3, 224, 302, 303, 446, 448, 449, 1068, 1078, 1080, 1107, 1118–9, 1121 Coral Sand case (Japan), 44, 774 Court Jurisdiction and Proceedings Transfer Act (‘CJPTA’, Canada), 11, 430–6, 442, 449, 450, 452, 456 D depeçage, 499–500 droit d’auteur, 597–8, 884 droit de suite, 620, 884 ‘double actionability’, 157, 160, 782, 811, 830, 1064, 1065 E ex parte proceedings, 114, 119–20, 203, 210, 385, 506, 703–4, 758, 769, 906–7, 985 F Federal Court Rules (Canada), 432 forum non conveniens, 21, 24, 27, 33, 50, 73, 82, 92–4, 96, 105, 213, 367, 394, 398, 430–31, 434–6, 442, 444, 450–54, 458, 460, 487, 532–3, 892, 909, 919, 1064–5, 1067, 1071–2, 1077, 1086, 1089 forum shopping, 53, 54, 79, 112, 119, 361, 366, 370, 372, 377, 387, 533, 594, 918, 996, 1000, 1005 freezing order, 84, 539, 1072 Freistaat Bayern v Croatiaknjiga doo (Croatia), 494, 503–4, 519 H Hague Conference on Private International Law, 11, 19

Hotel Maritime case (Germany), 593 Huston case (France), 140, 572, 755 I Information Technology Act 2000 (India), 684, 697, 699 Itar-Tass Russian News Agency v Russian Kurier Inc (US), 136, 146, 1112, 1116, 1120 J jurisdiction simpliciter (Canada), 21, 50, 72, 430–31, 433–4, 444, 449–51, 453, 457 K kort geding, 115, 200, 539, 935, 1068 L lex originis, 17, 136, 140, 144, 215, 245, 359, 495, 503, 518, 545, 570, 596, 598, 754, 872, 910, 929 lis pendens, 39, 43, 46, 93, 98–101, 103–4, 106–7, 367, 371, 376, 393, 396, 401–2, 487, 491, 514, 533, 555, 561–3, 713, 826, 838–9, 862–3, 893–4, 903, 923, 1009–11, 1030, 1042 lex rei sitae, 244, 502, 536–7, 569, 578, 579, 896 Lucasfilm Ltd v Ainsworth (UK), 35, 213, 443–4, 723, 1070, 1078–9, 1081, 1083, 1098 M Malaysia Airlines case (Japan), 28, 772 Mareva injunction, 200, 539–40 Moçambique case (UK), 42, 201, 444, 1064, 1067–8, 1071, 1078–9, 1084, 1088, 1098 moral rights: transferability, 281, 414, 468, 560, 572, 612–3, 632, 676, 754–5, 786, 931, 968, 1027, 1046, 1095 Morguard Investments Ltd v De Savoye (Canada), 191, 438–40 N national treatment principle, 15–6, 146, 481, 493, 588, 884, 988 P Patent Act (Austria), 251, 256–7, 263, 272, 278, 299, 309, 312, 319, 344 Pro Swing Inc v Elta Golf Inc (Canada), 211, 447, 448, 469

1132  Index R reciprocity, 105, 133, 192, 199–200, 203, 206, 208–11, 302, 336, 341–5, 492, 506, 514, 614, 658, 691, 702, 769, 889, 910, 957, 970, 990, 991, 1052 renvoi, 222, 245–6, 379, 419, 597, 600, 895, 897, 900 res iudicata, 105–6, 189, 193, 201, 343, 438, 506, 513–5, 624, 634, 757, 956, 969, 971, 1001 révision au fond, 125, 206 Restatement (Second) of Conflict of Laws (US), 11, 165–6, 192, 194, 1112, 1118

torpedo, 43, 46, 100–103, 107, 111, 134, 306, 366, 371, 375–6, 627, 862–3, 923, 964, 1010–11, 1069–70

S ‘spider in the web’, 71, 78, 79–83, 85, 87–9, 317, 396, 606, 777, 858–9, 863, 918, 1004–5, 1084 Sonata of Temptation case (Korea), 32, 61, 811, 815, 818–9, 831 Sten Eric Odman v Adris Grupa dd (Croatia), 156, 495, 497, 503, 517–8 Subafilms Ltd v MGM-Pathe Communications Co (US), 36, 147, 1110–11, 1116

V Voda v Cordis Inc (US), 73, 723–4, 1106, 1108, 1109 Von Dutch case (Korea), 817, 844–5, 849

T targeting, 59, 153, 966

U UNCITRAL Legislative Guide on Secured Transactions, 762 UNCITRAL Model Law on International Commercial Arbitration, 436, 473, 627, 829

Y Yahoo! Inc v La Ligue Contre le Racisme et L’Antisemitisme (US), 1119 W Waterworld case (France), 546–7, 565–7 work-for-hire, 140, 410