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LAWS 90094: INTERNATIONAL IP DISPUTE SETTLEMENT: PRINCIPLES AND PRACTICE

TAKE-HOME EXAMINATION

Semester 2, 2018

PLEASE ANSWER TWO QUESTIONS ONLY.

You are expected to answer Question 1, which is compulsory.You are expected to answer either Question 2 or Question 3

The questions are of equal value.

QUESTION 1 (compulsory)

QUESTION 2

(answer either question 2 or question 3)

The           Comprehensive           and Progressive  Agreement  for  Trans-Pacific    Partnership    (CPTPP)   was concluded    by    11    Asia    Pacific nations    in    Santiago,    Chile,    on 8th  March, 2018.  Chapter 18 of the CPTPP     is     headed     ‘Intellectual Property’ .  Chapter 28 of the CPTPP establishes     a     distinct     dispute settlement   mechanism   which,   in the case of Chapter 18, applies:

(a) with respect to the avoidance or settlement of all disputes between the Parties regarding the interpretation or application of this Agreement; [or]

(b) when a Party considers that an actual or proposed measure of another Party is or would be inconsistent with an obligation of this Agreement or that another Party has otherwise failed to carry out an obligation under this Agreement … . [Article 28.3]

Chapter  18 of the CPTPP  includes the following  provisions  concerning  intellectual property:

Article 18.4: Understandings in Respect of this Chapter

Having regard to the underlying public policy objectives of national systems, the Parties recognise the need to:

(a)        promote innovation and creativity;

(b)        facilitate the diffusion of information, knowledge, technology, culture

and the arts; and

(c)        foster competition and open and efficient markets,

through their respective intellectual property systems, while respecting the principles  of  transparency  and  due  process,  and  taking  into  account  the interests of relevant stakeholders, including right holders, service providers, users and the public.

Article 18.65: Limitations and Exceptions

1.  With  respect  to  this  Section,  each  Party  shall  confine  limitations  or exceptions to exclusive rights to certain special cases that do not conflict with a normal exploitation of the work, performance or phonogram, and do not unreasonably prejudice the legitimate interests of the right holder.

2. This Article does  not  reduce or extend the scope of applicability of the limitations  and  exceptions  permitted  by  the  TRIPS  Agreement,  the  Berne Convention, the WCT or the WPPT.

QUESTION 3

(answer either question 2 or question 3)

Cyberia is a middle-income developing country Member of the WTO.  Cyberia’s Trademark Act of 2001, generally considered to  be compatible with  its obligations  under the TRIPS Agreement, provides for two sets of remedies against trademark infringement and unfair competition respectively

Section 37 (Trademark infringement)

The owner of a registered trademark shall have the exclusive right to prevent all third parties not having the owner’s consent from using in the course of trade identical or similar signs for goods or services which are identical or similar to those in respect of which the trademark is registered where such

use would result in a likelihood of confusion.

Section 43 (Unfair competition):

Any interested party shall have the right to prevent:

(i) all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor;

(ii) false allegations in the course of trade of such a nature as to discredit the establishment,  the  goods,  or  the  industrial  or  commercial  activities,  of  a competitor;

(iii) indications or allegations the use of which in the course of trade is liable to  mislead  the  public  as  to  the  nature,  the  manufacturing  process,  the characteristics, the suitability for their purpose, or the quantity, of the goods.

Parliamentary records make clear that these provisions are directly intended to give effect to Cyberia’s obligations respectively under Article 16.1 of the TRIPS Agreement and under Article 10bis of the Paris Convention ‘as incorporated into the TRIPS Agreement.’

Cyberia  has  a  large,  well-educated  younger  generation  but  very  high levels  of  youth  unemployment.    The  Ministry  for  the  Economy  has launched  a  Cyberia  On-Line  Development  (COLD)  Strategy,  aimed  at encouraging start-up enterprises in the digital environment and reducing barriers to entry to the on-line market.

One   obstacle   encountered   by   small  app   developers   has   been   an aggressive  trademark  litigation  strategy  by   major  technology  firms, notably Pomum Inc., which maintains a widely used platform for selling and distributing software applications (‘apps’) .   A small Cyberia startup firm, Pomegranate, developed a series of apps, and was considered an example of the kind of local enterprise that could thrive in the digital economy. It marketed its products as being ‘fully compatible’ with the Pomum  platform,  and  an ‘improved, more  secure  replacement’  for Pomum  software.    In  a  leading  case  in  the  Cyberia  Supreme  Court, Pomum Inc vs Pomegranate Ltd, Pomegranate  was  found  to  have breached  both  Sections  37  and  43  through  marketing  its  apps  with reference to Pomum trademarks.  This high profile case was considered sound law, but provoked considerable  public debate as the defendant was forced out of business as a consequence.

The Cyberia COLD Strategy sought to redress the perceived injustice of this case by creating two exceptions to the Trademark Act.

Section 37 bis               Digital interoperability exception

Notwithstanding  s37,  it  shall  not  be  an  infringement  for  any  use  of a  registered trademark to describe a good or service as being suitable for use or interoperability with an application or digital platforms made available to the public by the owner of the trademark registered in respect of that application or platform .

Section 43 bis               Fair digital competition

Notwithstanding  s43,  it  shall  not  be  considered  an  act  of  unfair  competition  to present a  product as  being equivalent to, an improvement to, or suitable for  use with an application or digital platforms made available to the public by the owner of a trademark registered in respect of that application or platform .

Article 17 (‘Exceptions’) of the TRIPS Agreement provides:

Members may provide  limited exceptions to the  rights conferred  by a trademark, such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties.

Calefacia is an industrialised economy, a member of the WTO, and the corporate seat of Pomum Inc.  Cyberia  is  seen  by  trade  policy  circles  in  Calefacia  as  a  competitive  threat, perceived as posing an unfair challenge to a key economic interest.

You are engaged by the Government of Calefacia to advise on a possible dispute against Cyberia to be pursued through the WTO Dispute Settlement Mechanism.

Prepare a brief for the Government of Calefacia covering these three elements:

1. Possible grounds for complaint under the TRIPS Agreement concerning the digital interoperability exception (DIE) and the fair digital competition (FDC) provisions under the COLD strategy.

2. Possible defences that Cyberia could advance in support of the compatibility of IE and CE with the TRIPS Agreement.

3. Proposals to be put to Cyberia in the course of consultations to minimise the perceived impact on Calefacian business interests.