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XXXVI. Article 35 and Incorporated Provisions of the IPIC Treaty  

A. Text of Article 35

Article 35: Relation to the IPIC Treaty

    Members agree to provide protection to the layout-designs (topographies) of integrated circuits (referred to in this Agreement as “layout-designs? in accordance with Articles 2 through 7 (other than paragraph 3 of Article 6), Article 12 and paragraph 3 of Article 16 of the Treaty on Intellectual Property in Respect of Integrated Circuits and, in addition, to comply with the following provisions.

 

The text of Articles 2 through 7 (other than Article 6.3) and Articles 12 and 16.3 of the IPIC Treaty appears in Section LXXVII below.

B. Interpretation and Application of Article 35 and Incorporated Provisions of the IPIC Treaty

No jurisprudence or decision of a competent WTO body.

 

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XXXVII. Article 36  

A. Text of Article 36

Article 36: Scope of the Protection

    Subject to the provisions of paragraph 1 of Article 37, Members shall consider unlawful the following acts if performed without the authorization of the right holder:(9) importing, selling, or otherwise distributing for commercial purposes a protected layout-design, an integrated circuit in which a protected layout-design is incorporated, ?or an article incorporating such an integrated circuit only in so far as it continues to contain an unlawfully reproduced layout-design.

 

(footnote original) 9 The term “right holder?in this Section shall be understood as having the same meaning as the term “holder of the right?in the IPIC Treaty.

B. Interpretation and Application of Article 36

No jurisprudence or decision of a competent WTO body.

 

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XXXVIII. Article 37  

A. Text of Article 37

Article 37: Acts Not Requiring the Authorization of the Right Holder

1.   Notwithstanding Article 36, no Member shall consider unlawful the performance of any of the acts referred to in that Article in respect of an integrated circuit incorporating an unlawfully reproduced layout-design or any article incorporating such an integrated circuit where the person performing or ordering such acts did not know and had no reasonable ground to know, when acquiring the integrated circuit or article incorporating such an integrated circuit, that it incorporated an unlawfully ?reproduced layout-design. Members shall provide that, after the time that such person has received sufficient notice that the layout-design was unlawfully reproduced, that person may perform any of the acts with respect to the stock on hand or ordered before such time, but shall be liable to pay to the right holder a sum equivalent to a reasonable royalty such as would be payable under a freely negotiated licence in respect of such a layout-design.

 

2.   The conditions set out in subparagraphs (a) through (k) of Article 31 shall apply mutatis mutandis in the event of any non-voluntary licensing of a layout-design or of its use by or for the government without the authorization of the right holder.

B. Interpretation and Application of Article 37

No jurisprudence or decision of a competent WTO body.

 

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XXXIX. Article 38  

A. Text of Article 38

Article 38: Term of Protection

1.   In Members requiring registration as a condition of protection, the term of protection of layout-designs shall not end before the expiration of a period of 10 years counted from the date of filing an application for registration or from the first commercial exploitation wherever in the world it occurs.

 

2.   In Members not requiring registration as a condition for protection, layout-designs shall be protected for a term of no less than 10 years from the date of the first commercial exploitation wherever in the world it occurs.

 

3.   Notwithstanding paragraphs 1 and 2, a Member may provide that protection shall lapse 15 years after the creation of the layout-design.

B. Interpretation and Application of Article 38

No jurisprudence or decision of a competent WTO body.

 

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XL. Article 39  

A. Text of Article 39

Article 39

1.   In the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention (1967), Members shall protect undisclosed information in accordance with paragraph 2 and data submitted to governments or governmental agencies in accordance with paragraph 3.

 

2.   Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices(10) so long as such information:

 

(footnote original) 10 For the purpose of this provision, “a manner contrary to honest commercial practices?shall mean at least practices such as breach of contract, breach of confidence and inducement to breach, and includes the acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to know, that such practices were involved in the acquisition.

 

(a)   is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

 

(b)   has commercial value because it is secret; and

 

(c)   has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

 

3.   Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.

B. Interpretation and Application of Article 39

No jurisprudence or decision of a competent WTO body.

 

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XLI. Article 40  

A. Text of Article 40

Article 40

1.   Members agree that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology.

 

2.   Nothing in this Agreement shall prevent Members from specifying in their legislation licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market. As provided above, a Member may adopt, consistently with the other provisions of this Agreement, appropriate measures to prevent or control such practices, which may include for example exclusive grantback conditions, conditions preventing challenges to validity and coercive package licensing, in the light of the relevant laws and regulations of that Member.

 

3.   Each Member shall enter, upon request, into consultations with any other Member which has cause to believe that an intellectual property right owner that is a national or domiciliary of the Member to which the request for consultations has been addressed is undertaking practices in violation of the requesting Member’s laws and regulations on the subject matter of this Section, and which wishes to secure compliance with such legislation, without prejudice to any action under the law and to the full freedom of an ultimate decision of either Member. The Member addressed shall accord full and sympathetic consideration to, and shall afford adequate opportunity for, consultations with the requesting Member, and shall cooperate through supply of publicly available non-confidential information of relevance to the matter in question and of other information available to the Member, subject to domestic law and to the conclusion of mutually satisfactory agreements concerning the safeguarding of its confidentiality by the requesting Member.

 

4.   A Member whose nationals or domiciliaries are subject to proceedings in another Member concerning alleged violation of that other Member’s laws and regulations on the subject matter of this Section shall, upon request, be granted an opportunity for consultations by the other Member under the same conditions as those foreseen in paragraph 3.

B. Interpretation and Application of Article 40

No jurisprudence or decision of a competent WTO body.

 

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XLII. Article 41  

A. Text of Article 41

Article 41

1.   Members shall ensure that enforcement procedures as specified in this Part are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. These procedures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.

 

2.   Procedures concerning the enforcement of intellectual property rights shall be fair and equitable. They shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays.

 

3.   Decisions on the merits of a case shall preferably be in writing and reasoned. They shall be made available at least to the parties to the proceeding without undue delay. Decisions on the merits of a case shall be based only on evidence in respect of which parties were offered the opportunity to be heard.

 

4.   Parties to a proceeding shall have an opportunity for review by a judicial authority of final administrative decisions and, subject to jurisdictional provisions in a Member’s law concerning the importance of a case, of at least the legal aspects of initial judicial decisions on the merits of a case. However, there shall be no obligation to provide an opportunity for review of acquittals in criminal cases.

 

5.   It is understood that this Part does not create any obligation to put in place a judicial system for the enforcement of intellectual property rights distinct from that for the enforcement of law in general, nor does it affect the capacity of Members to enforce their law in general. Nothing in this Part creates any obligation with respect to the distribution of resources as between enforcement of intellectual property rights and the enforcement of law in general.

B. Interpretation and Application of Article 41

1. General

216.   In EC ?Trademarks and Geographical Indications (US) the Panel referred to the definition of “intellectual property?in Article 1.2 where that term is used in Part III:

“These claims are made under the obligations with respect to enforcement procedures found in Part III of the TRIPS Agreement. The obligations in Part III are applicable to acts of infringement of geographical indications by virtue of the use of the term “intellectual property?in Part III and the definition of “intellectual property?in Article 1.2.?sup id="fntext-217">(217)

2. Article 41.1

217.   In China ?Intellectual Property Rights, the Panel made the following statement with respect to certain “acts of infringement? covered by Article 41.1:

“The subject of Section 1 of Part II is ‘Copyright and Related Rights? Within Section 1, Article 9.1 incorporates Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto, with the exception of rights conferred under, or derived from, Article 6bis. Those provisions provide for the grant of various rights to authors in respect of their literary and artistic works. Any act falling within the scope of those rights carried out with respect to protected works without the authorization of the right holder or outside the scope of an applicable exception is a priori an act of infringement. Accordingly, an act of infringement of copyright in a literary or artistic work, as provided for in those provisions of the Berne Convention (1971) that are incorporated by Article 9.1 of the TRIPS Agreement, is an ‘act of infringement of intellectual property rights covered by this Agreement?within the meaning of the first sentence of Article 41.1 of the TRIPS Agreement.?sup id="fntext-218">(218),⁽²¹⁹⁾

3. Article 41.2

218.   In Canada ?Patent Term, the Panel rejected Canada’s argument that, in light of a certain amount of delay in granting patent rights, the term of protection at issue met with the requirements under Article 33.⁽²²⁰⁾ In the course of its analysis, the Panel referred to Article 41.2 as it is applied to acquisition procedures by Article 62.4:

“In our view, requiring applicants to resort to delays such as abandonment, reinstatement, non-payment of fees and non-response to a patent examiner’s report would be inconsistent with the general principle that procedures not be unnecessarily complicated as expressed in Article 41.2 and applied to acquisition procedures by Article 62.4. By their very nature, the delays, which are not tied to any valid reason related to the examination and grant process, would be inconsistent with the general principle that procedures not entail ‘unwarranted delays?as expressed in Article 41.2 and applied to acquisition procedures by Article 62.4.

 

We noted in paragraphs 6.107 and 6.108 above that the Commissioner’s powers to reinstate and restore applications under Section 30(2) and Section 73 were discretionary at all material times and not available as a matter of right to patent applicants. Canada argued, however, that despite the use of the word ‘may?in Section 73, the payment of the necessary fee enabled the applicant to obtain reinstatement of his patent application as a matter of right. In other words, had the Commissioner exercised his discretion to refuse an application for reinstatement, an applicant would have been required to pay an additional fee and pursue legal proceedings against the Commissioner in a court of law in order for a term of protection expiring 20 years from the date of filing the application to be available. We find potential requirements that an applicant commence proceedings for a writ of mandamus and pay additional fees to be in breach of the general principle that procedures not be ‘unnecessarily complicated or costly?as expressed in Article 41.2 and applied to acquisition procedures by Article 62.4.?sup id="fntext-221">(221)

219.   In EC ?Trademarks and Geographical Indications (Australia) the Panel rejected claims under Articles 41.1, 41.2, 41.3 and 42 concerning objections to GI registration because the claims concerned inter partes procedures related to the acquisition of intellectual property rights rather than enforcement procedures. Article 41.2 was applicable to such procedures by virtue of Article 62.4:

“Australia’s claims concern an inter partes procedure permitting objections which is related to the acquisition of intellectual property rights under the Regulation. As such, it is covered by Part IV of the TRIPS Agreement, not Part III. The general principles in Article 41.2 and 41.3 apply to such inter partes procedures, where a Member’s law provides for them, by virtue of Article 62.4 of the TRIPS Agreement. However, Article 62.4 is outside the Panel’s terms of reference. Accordingly, the Panel rejects these claims.?sup id="fntext-222">(222)

4. Article 41.3

220.   For the applicability of Article 41.3 to inter partes procedures related to the acquisition of intellectual property rights, see para. 219 above.

5. Relationship between Article 41 and other Articles of the TRIPS Agreement and the Berne Convention

221.   In China ?Intellectual Property Rights, the Panel reached the following conclusion with respect to a claim of violation of Article 41.1:

“The Panel recalls its conclusion ?that the Copyright Law, specifically the first sentence of Article 4, is inconsistent with China’s obligations (with respect to the rights specially granted by the Berne Convention) under Article 5(1) of that Convention, as incorporated by Article 9.1 of the TRIPS Agreement. In the absence of protection of the rights specially granted by the Berne Convention, there can be no enforcement procedures against any act of infringement of such rights with respect to the relevant works.?sup id="fntext-223">(223)

 

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XLIII. Article 42  

A. Text of Article 42

Article 42: Fair and Equitable Procedures

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

 

(footnote original) 11 For the purpose of this Part, the term “right holder?includes federations and associations having legal standing to assert such rights.

B. Interpretation and Application of Article 42

1. “right holders?/p>

222.   In US ?Section 211 Appropriations Act, the Appellate Body considered that the term “right holders?included not only persons who had been established as owners of rights but also persons who claimed to have legal standing to assert rights:

“We agree with the Panel that the term ‘right holders?as used in Article 42 is not limited to persons who have been established as owners of trademarks. Where the TRIPS Agreement confers rights exclusively on ‘owners? of a right, it does so in express terms, such as in Article 16.1, which refers to the ‘owner of a registered trademark? By contrast, the term ‘right holders?within the meaning of Article 42 also includes persons who claim to have legal standing to assert rights. This interpretation is also borne out by the fourth sentence of Article 42, which refers to ‘parties? Civil judicial procedures would not be fair and equitable if access to courts were not given to both complainants and defendants who purport to be owners of an intellectual property right.?sup id="fntext-224">(224)

2. Rights covered by Article 42

223.   In US ?Section 211 Appropriations Act, the Appellate Body considered the nature of the rights covered by Article 42:

“From all this, we understand that the rights which Article 42 obliges Members to make available to right holders are procedural in nature. These procedural rights guarantee an international minimum standard for nationals of other Members within the meaning of Article 1.3 of the TRIPS Agreement.?/p>

224.   In US ?Section 211 Appropriations Act, the Appellate Body considered the situation in which a requirement of substantive law made it impossible for a court to rule in favour of a claim to a trademark right and found:

“There is nothing in the procedural obligations of Article 42 that prevents a Member, in such a situation, from legislating whether or not its courts must examine each and every requirement of substantive law at issue before making a ruling.?sup id="fntext-225">(225)

225.   In US ?Section 211 Appropriations Act, the Appellate Body applied its findings in respect of Article 42 of the TRIPS Agreement with regard to holders of rights in trademarks and holders of rights in trade names as well.⁽²²⁶⁾

 

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XLIV. Article 43  

A. Text of Article 43

Article 43: Evidence

1.   The judicial authorities shall have the authority, where a party has presented reasonably available evidence sufficient to support its claims and has specified evidence relevant to substantiation of its claims which lies in the control of the opposing party, to order that this evidence be produced by the opposing party, subject in appropriate cases to conditions which ensure the protection of confidential information.

 

2.   In cases in which a party to a proceeding voluntarily and without good reason refuses access to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes a procedure relating to an enforcement action, a Member may accord judicial authorities the authority to make preliminary and final determinations, affirmative or negative, on the basis of the information presented to them, including the complaint or the allegation presented by the party adversely affected by the denial of access to information, subject to providing the parties an opportunity to be heard on the allegations or evidence.

B. Interpretation and Application of Article 43

226.   In India ?Patents (EC), the European Communities claimed ? similarly to the United States?claim in the earlier case India ? Patents (US) ?that India had failed to provide an exclusive marketing system pursuant to its obligation under Article 70.9 of the TRIPS Agreement. India argued that a generally available system was not required under Article 70.9; as support for its claim, India pointed to the provisions of Articles 42 [sic] to 48 of the TRIPS Agreement, where the judicial authorities of Members “shall have authority?to order certain actions and contrasted this wording with that of Article 70.9, which provides that marketing rights “shall be granted? when certain conditions are met. The Panel rejected this argument by India:

“We do not share India’s view that it can be deduced from the use of these words in those Articles that a system of general availability is not called for under Article 70.9. To infer this, one would have to hold that the omission of the words ‘shall have the authority?in Articles 42?a href="#article48">48 [sic] (so that a court was required to act in a certain way when prescribed conditions were met, rather than merely having the authority to do so) would mean that a Member would not be expected to give its judicial authorities in advance the authority to act in this way, for example to award an injunction, but could legislate to this effect when a specific occasion arose. Such an inference would obviously be absurd. Rather the function of the words ‘shall have the authority?is to address the issue of judicial discretion, not that of general availability.?sup id="fntext-227">(227)

 

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XLV. Article 44  

A. Text of Article 44

Article 44: Injunctions

1.   The judicial authorities shall have the authority to order a party to desist from an infringement, inter alia to prevent the entry into the channels of commerce in their jurisdiction of imported goods that involve the infringement of an intellectual property right, immediately after customs clearance of such goods. Members are not obliged to accord such authority in respect of protected subject matter acquired or ordered by a person prior to knowing or having reasonable grounds to know that dealing in such subject matter would entail the infringement of an intellectual property right.

 

2.   Notwithstanding the other provisions of this Part and provided that the provisions of Part II specifically addressing use by governments, or by third parties authorized by a government, without the authorization of the right holder are complied with, Members may limit the remedies available against such use to payment of remuneration in accordance with subparagraph (h) of Article 31. In other cases, the remedies under this Part shall apply or, where these remedies are inconsistent with a Member’s law, declaratory judgments and adequate compensation shall be available.

B. Interpretation and Application of Article 44

227.   With respect to the meaning of the words “shall have the authority? as used in Articles 43?a href="#article48">48, see paragraph 226 above.

 

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XLVI. Article 45  

A. Text of Article 45

Article 45: Damages

1.   The judicial authorities shall have the authority to order the infringer to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of an infringement of that person’s intellectual property right by an infringer who knowingly, or with reasonable grounds to know, engaged in infringing activity.

 

2.   The judicial authorities shall also have the authority to order the infringer to pay the right holder expenses, which may include appropriate attorney’s fees. In appropriate cases, Members may authorize the judicial authorities to order recovery of profits and/or payment of pre-established damages even where the infringer did not knowingly, or with reasonable grounds to know, engage in infringing activity.

B. Interpretation and Application of Article 45

228.   With respect to the meaning of the words “shall have the authority? as used in Articles 43?a href="#article48">48, see paragraph 226 above.

 

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XLVII. Article 46  

A. Text of Article 46

Article 46: Other Remedies

   In order to create an effective deterrent to infringement, the judicial authorities shall have the authority to order that goods that they have found to be infringing be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to avoid any harm caused to the right holder, or, unless this would be contrary to existing constitutional requirements, destroyed. The judicial authorities shall also have the authority to order that materials and implements the predominant use of which has been in the creation of the infringing goods be, without compensation of any sort, disposed of outside the channels of commerce in such a manner as to minimize the risks of further infringements. In considering such requests, the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account. In regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce.

B. Interpretation and Application of Article 46

1. General

229.   In China ?Intellectual Property Rights, the Panel resolved the ambiguity of meanings of the term “such requests?in the third sentence of Article 46 by examining the records of the negotiation of the TRIPS Agreement:

“The third sentence of Article 46 refers to “such requests?although the previous sentences do not refer expressly to any requests. The content of the third sentence clearly relates to materials and implements as addressed in the second sentence but it could equally relate to infringing goods as addressed in the first sentence. The text is ambiguous on this point. This ambiguity can be resolved by reference to the records of the negotiation of the TRIPS Agreement.⁽²²⁸⁾

?/p>

Accordingly, the records of the negotiation of the TRIPS Agreement clarify that the terms of Article 46 in the third sentence refer inter alia to the consideration of requests for orders that infringing goods be disposed of outside the channels of commerce or destroyed.?sup id="fntext-229">(229)

230.   In China ?Intellectual Property Rights, the Panel made the following considerations with respect to the scope of the fourth sentence of Article 46, which only applies to remedies with respect to a specific category of infringing goods, i.e. counterfeit trademark goods:

“The fourth sentence refers to a category of infringing goods, i.e. counterfeit trademark goods. It does not refer expressly to authority to order destruction or disposal outside the channels of commerce. However, the context shows that the principle of proportionality in the previous sentence guides the competent authorities?choice between the remedies specified in the first sentence and any alternative remedies. Similarly, the fourth sentence of Article 46 sets out a consideration that the authorities must take into account when choosing between the required remedies, namely those specified in the first sentence, and release into the channels of commerce, if such an order is available. The fourth sentence attaches to the scope of authority to choose between destruction or disposal outside the channels of commerce and release into the channels of commerce, if that remedy is available. Therefore, the fourth sentence of Article 46 seems pertinent to Article 59.?sup id="fntext-230">(230)

231.   In China ?Intellectual Property Rights, the Panel considered that the remedies set out in the first sentence of Article 46 are not exhaustive:

“The first sentence of Article 46 provides, basically, that authorities shall have the authority to order that goods be disposed of outside the channels of commerce or destroyed. At the same time, the fourth sentence of Article 46 relates to release into the channels of commerce which does not correspond to either of the remedies required by the first sentence. This is an express recognition that the remedies set out in the first sentence of Article 46 are not exhaustive.?sup id="fntext-231">(231)

 

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XLVIII. Article 47  

A. Text of Article 47

Article 47: Right of Information

   Members may provide that the judicial authorities shall have the authority, unless this would be out of proportion to the seriousness of the infringement, to order the infringer to inform the right holder of the identity of third persons involved in the production and distribution of the infringing goods or services and of their channels of distribution.

B. Interpretation and Application of Article 47

232.   With respect to the meaning of the words “shall have the authority? as used in Articles 43?a href="#article48">48, see paragraph 226 above.

 

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XLIX. Article 48  

A. Text of Article 48

Article 48: Indemnification of the Defendant

1.   The judicial authorities shall have the authority to order a party at whose request measures were taken and who has abused enforcement procedures to provide to a party wrongfully enjoined or restrained adequate compensation for the injury suffered because of such abuse. The judicial authorities shall also have the authority to order the applicant to pay the defendant expenses, which may include appropriate attorney’s fees.

 

2.   In respect of the administration of any law pertaining to the protection or enforcement of intellectual property rights, Members shall only exempt both public authorities and officials from liability to appropriate remedial measures where actions are taken or intended in good faith in the course of the administration of that law.

B. Interpretation and Application of Article 48

233.   With respect to the meaning of the words “shall have the authority? as used in Articles 43?a href="#article48">48, see paragraph 226 above.

 

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L. Article 49  

A. Text of Article 49

Article 49: Administrative Procedures

   To the extent that any civil remedy can be ordered as a result of administrative procedures on the merits of a case, such procedures shall conform to principles equivalent in substance to those set forth in this Section.

B. Interpretation and Application of Article 49

No jurisprudence or decision of a competent WTO body.

 

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LI. Article 50  

A. Text of Article 50

Article 50

1.   The judicial authorities shall have the authority to order prompt and effective provisional measures:

 

(a)   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;

 

(b)   to preserve relevant evidence in regard to the alleged infringement.

 

2.   The judicial authorities shall have 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, or where there is a demonstrable risk of evidence being destroyed.

 

3.   The judicial authorities shall have the authority to require the applicant to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant is the right holder and that the applicant’s right is being infringed or that such infringement is imminent, and to order the applicant to provide a security or equivalent assurance sufficient to protect the defendant and to prevent abuse.

 

4.   Where provisional measures have been adopted inaudita altera parte, the parties affected shall be given notice, without delay after the execution of the measures at the latest. A review, including a right to be heard, shall take place upon request of the defendant with a view to deciding, within a reasonable period after the notification of the measures, whether these measures shall be modified, revoked or confirmed.

 

5.   The applicant may be required to supply other information necessary for the identification of the goods concerned by the authority that will execute the provisional measures.

 

6.   Without prejudice to paragraph 4, provisional measures taken on the basis of paragraphs 1 and 2 shall, upon request by the defendant, be revoked or otherwise cease to have effect, if proceedings leading to a decision on the merits of the case are not initiated within a reasonable period, to be determined by the judicial authority ordering the measures where a Member’s law so permits or, in the absence of such a determination, not to exceed 20 working days or 31 calendar days, whichever is the longer.

 

7.   Where the provisional measures are revoked or where they lapse due to any act or omission by the applicant, or where it is subsequently found that there has been no infringement or threat of infringement of an intellectual property right, the judicial authorities shall have the authority to order the applicant, upon request of the defendant, to provide the defendant appropriate compensation for any injury caused by these measures.

 

8.   To the extent that any provisional measure can be ordered as a result of administrative procedures, such procedures shall conform to principles equivalent in substance to those set forth in this Section.

B. Interpretation and Application of Article 50

No jurisprudence or decision of a competent WTO body.

 

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LII. Article 51  

A. Text of Article 51

Article 51: Suspension of Release by Customs Authorities

   Members shall, in conformity with the provisions set out below, adopt procedures(13) to enable a right holder, who has valid grounds for suspecting that the importation of counterfeit trademark or pirated copyright goods(14) may take place, to lodge an application in writing with competent authorities, administrative or judicial, for the suspension by the customs authorities of the release into free circulation of such goods. Members may enable such an application to be made in respect of goods which involve other infringements of intellectual property rights, provided that the requirements of this Section are met. Members may also provide for corresponding procedures concerning the suspension by the customs authorities of the release of infringing goods destined for exportation from their territories.

 

(footnote original) 13 It is understood that there shall be no obligation to apply such procedures to imports of goods put on the market in another country by or with the consent of the right holder, or to goods in transit.

 

(footnote original) 14 For the purposes of this Agreement:

 

(a)   “counterfeit trademark goods?shall mean any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation;

 

(b)   “pirated copyright goods?shall mean any goods which are copies made without the consent of the right holder or person duly authorized by the right holder in the country of production and which are made directly or indirectly from an article where the making of that copy would have constituted an infringement of a copyright or a related right under the law of the country of importation.

B. Interpretation and Application of Article 51

1. General

234.   In China ?Intellectual Property Rights, the Panel clarified that the phrase “the provisions set out below?in the first sentence of Article 51 include the whole of Section 4:

“The description of the procedure as one for an “application?for “suspension?does not appear to exclude related aspects of the procedure in the provisions set out below, such as the provisions on ex officio action in Article 58 or the remedies as a result of application and/or suspension set out in Article 59. Rather, the procedures in Section 4 form a set that must be read together. This is reflected in the second sentence of Article 51 (with respect to other goods, set out below) that refers to “such an application?(i.e. an application such as that referred to in the first sentence) being subject to “the requirements of this Section? This tends to confirm that the “provisions set out below? Article 51 include the whole of Section 4.?sup id="fntext-232">(232)

2. Scope

235.   In China ?Intellectual Property Rights the Panel clarified that “the first sentence of Article 51 provides for the relevant procedures to apply, as a minimum, to ‘the importation?of counterfeit trademark or pirated copyright goods?⁽²³³⁾ The Panel further clarified that the second and third sentences of Article 51 expressly allow Members, as an option, to provide for procedures at the border for other infringing goods as well.

“Both these sentences use the word “may? indicating that they are optional provisions. The second sentence provides for an optional extension to “other infringements of intellectual property rights? This is a reference both to goods that infringe trademarks and copyright without constituting counterfeit trademark goods or pirated copyright goods, as well as to goods that infringe other categories of intellectual property rights, such as patents. The second sentence includes an express condition that applies where Members provide border measures for other infringements of intellectual property rights, namely “provided that the requirements of this Section are met?⁽²³⁴⁾

 

The third sentence of Article 51 provides for an optional extension to “infringing goods destined for exportation?from a Member’s territory. The terms of the third sentence do not attach any express condition to this option. An option with respect to “corresponding procedures?is not, on its face, an obligation that procedures shall correspond. The omission of any express condition in the third sentence stands in contrast to the proviso in the second sentence, which also serves the purpose of providing for an optional extension of the border measures. Whilst it would not have been appropriate to include an identical condition to that found in the second sentence, as the requirements of Section 4 refer to importation, the third sentence could nevertheless have included an express condition that the procedures with respect to infringing goods destined for exportation shall correspond to those set out in the Section, or shall comply with the principles thereof.⁽²³⁵⁾ However, it does not. Read in context, this omission is not ambiguous.?sup id="fntext-236">(236)

 

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LIII. Article 52  

A. Text of Article 52

Article 52: Application

   Any right holder initiating the procedures under Article 51 shall be required to provide adequate evidence to satisfy the competent authorities that, under the laws of the country of importation, there is prima facie an infringement of the right holder’s intellectual property right and to supply a sufficiently detailed description of the goods to make them readily recognizable by the customs authorities. The competent authorities shall inform the applicant within a reasonable period whether they have accepted the application and, where determined by the competent authorities, the period for which the customs authorities will take action.

B. Interpretation and Application of Article 52

No jurisprudence or decision of a competent WTO body.

 

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LIV. Article 53  

A. Text of Article 53

Article 53: Security or Equivalent Assurance

1.   The competent authorities shall have the authority to require an applicant to provide a security or equivalent assurance sufficient to protect the defendant and the competent authorities and to prevent abuse. Such security or equivalent assurance shall not unreasonably deter recourse to these procedures.

 

2.   Where pursuant to an application under this Section the release of goods involving industrial designs, patents, layout-designs or undisclosed information into free circulation has been suspended by customs authorities on the basis of a decision other than by a judicial or other independent authority, and the period provided for in Article 55 has expired without the granting of provisional relief by the duly empowered authority, and provided that all other conditions for importation have been complied with, the owner, importer, or consignee of such goods shall be entitled to their release on the posting of a security in an amount sufficient to protect the right holder for any infringement. Payment of such security shall not prejudice any other remedy available to the right holder, it being understood that the security shall be released if the right holder fails to pursue the right of action within a reasonable period of time.

B. Interpretation and Application of Article 53

No jurisprudence or decision of a competent WTO body.

 

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LV. Article 54  

A. Text of Article 54

Article 54: Notice of Suspension

   The importer and the applicant shall be promptly notified of the suspension of the release of goods according to Article 51.

B. Interpretation and Application of Article 54

No jurisprudence or decision of a competent WTO body.

 

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LVI. Article 55  

A. Text of Article 55

Article 55: Duration of Suspension

   If, within a period not exceeding 10 working days after the applicant has been served notice of the suspension, the customs authorities have not been informed that proceedings leading to a decision on the merits of the case have been initiated by a party other than the defendant, or that the duly empowered authority has taken provisional measures prolonging the suspension of the release of the goods, the goods shall be released, provided that all other conditions for importation or exportation have been complied with; in appropriate cases, this time-limit may be extended by another 10 working days. If proceedings leading to a decision on the merits of the case have been initiated, a review, including a right to be heard, shall take place upon request of the defendant with a view to deciding, within a reasonable period, whether these measures shall be modified, revoked or confirmed. Notwithstanding the above, where the suspension of the release of goods is carried out or continued in accordance with a provisional judicial measure, the provisions of paragraph 6 of Article 50 shall apply.

B. Interpretation and Application of Article 55

No jurisprudence or decision of a competent WTO body.

 

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LVII. Article 56  

A. Text of Article 56

Article 56: Indemnification of the Importer and of the Owner of the Goods

   Relevant authorities shall have the authority to order the applicant to pay the importer, the consignee and the owner of the goods appropriate compensation for any injury caused to them through the wrongful detention of goods or through the detention of goods released pursuant to Article 55.

B. Interpretation and Application of Article 56

No jurisprudence or decision of a competent WTO body.

 

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LVIII. Article 57  

A. Text of Article 57

Article 57: Right of Inspection and Information

   Without prejudice to the protection of confidential information, Members shall provide the competent authorities the authority to give the right holder sufficient opportunity to have any goods detained by the customs authorities inspected in order to substantiate the right holder’s claims. The competent authorities shall also have authority to give the importer an equivalent opportunity to have any such goods inspected. Where a positive determination has been made on the merits of a case, Members may provide the competent authorities the authority to inform the right holder of the names and addresses of the consignor, the importer and the consignee and of the quantity of the goods in question.

B. Interpretation and Application of Article 57

No jurisprudence or decision of a competent WTO body.

 

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LIX. Article 58  

A. Text of Article 58

Article 58: Ex Officio Action

   Where Members require competent authorities to act upon their own initiative and to suspend the release of goods in respect of which they have acquired prima facie evidence that an intellectual property right is being infringed:

 

(a)   the competent authorities may at any time seek from the right holder any information that may assist them to exercise these powers;

 

(b)   the importer and the right holder shall be promptly notified of the suspension. Where the importer has lodged an appeal against the suspension with the competent authorities, the suspension shall be subject to the conditions, mutatis mutandis, set out at Article 55;

 

(c)   Members shall only exempt both public authorities and officials from liability to appropriate remedial measures where actions are taken or intended in good faith.

B. Interpretation and Application of Article 58

No jurisprudence or decision of a competent WTO body.

 

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LX. Article 59  

A. Text of Article 59

Article 59: Remedies

   Without prejudice to other rights of action open to the right holder and subject to the right of the defendant to seek review by a judicial authority, competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles set out in Article 46. In regard to counterfeit trademark goods, the authorities shall not allow the re-exportation of the infringing goods in an unaltered state or subject them to a different customs procedure, other than in exceptional circumstances.

B. Interpretation and Application of Article 59

1. “infringing goods?/p>

236.   In China ?Intellectual Property Rights, the Panel clarified that, when read in context with Article 51, the infringing goods covered by the first sentence of Article 59 are those covered, as a minimum, under Article 51, i.e. imported “counterfeit trademark or pirated copyright goods?

“The first sentence of Article 59 applies to “infringing goods? The ordinary meaning of these words is not limited to goods that infringe any specific rights. However, read in context, there are certain limitations. The first sentence of Article 51 provides for the relevant procedures to apply, as a minimum, to “the importation?of “counterfeit trademark or pirated copyright goods? This applies to Article 59 for the reasons set out ?above.?sup id="fntext-237">(237)

237.   In China ?Intellectual Property Rights, the Panel also clarified that Article 59, when understood in context with Article 51, expressly allows Members, as an option, to provide for procedures at the border for other infringing goods:

“The second sentence provides for an optional extension to “other infringements of intellectual property rights? This is a reference both to goods that infringe trademarks and copyright without constituting counterfeit trademark goods or pirated copyright goods, as well as to goods that infringe other categories of intellectual property rights, such as patents. The second sentence includes an express condition that applies where Members provide border measures for other infringements of intellectual property rights, namely “provided that the requirements of this Section are met?⁽²³⁸⁾ The requirements of that ‘Section?include those found in Article 59. Therefore, to the extent that a Member provides for such an application to be made in respect of goods involving other infringements of intellectual property rights, such as patents, the obligation in Article 59 applies.?sup id="fntext-239">(239)

238.   The Panel in China ?Intellectual Property Rights further clarified that Article 59, when understood in context with Article 51, contains an option, but not an obligation, to provide for its application to goods destined for exportation:

“The third sentence of Article 51 provides for an optional extension to “infringing goods destined for exportation?from a Member’s territory. The terms of the third sentence do not attach any express condition to this option. An option with respect to “corresponding procedures?is not, on its face, an obligation that procedures shall correspond. The omission of any express condition in the third sentence stands in contrast to the proviso in the second sentence, which also serves the purpose of providing for an optional extension of the border measures. Whilst it would not have been appropriate to include an identical condition to that found in the second sentence, as the requirements of Section 4 refer to importation, the third sentence could nevertheless have included an express condition that the procedures with respect to infringing goods destined for exportation shall correspond to those set out in the Section, or shall comply with the principles thereof.⁽²⁴⁰⁾ However, it does not. Read in context, this omission is not ambiguous. Therefore, the Panel finds that there is no obligation to apply the requirements of Article 59 to goods destined for exportation.?sup id="fntext-241">(241),⁽²⁴²⁾

2. “shall have the authority?/p>

239.   In China ?Intellectual Property Rights, the Panel considered that, under Article 59, the obligation that the authorities “shall have the authority?to make certain orders applies from the time that competent authorities find that goods subject to suspension at the border are infringing, right until the time a remedy is ordered:

“The obligation in the first sentence of Article 59 is that competent authorities ”shall have the authority?to order certain types of remedies with respect to infringing goods. It is clear from the context within Section 4 that the obligations in Article 59 apply where customs authorities have suspended the release into free circulation of goods suspected of infringing intellectual property rights. The fact that Article 59 applies to “infringing goods?indicates that the obligations in this Article are triggered when competent authorities find that the goods subject to the suspension are infringing. The fact that Article 59 addresses the authority to order remedies implies that the obligations continue until the time that a remedy has been ordered. The text of the Article does not indicate any other limitation on the temporal scope of the obligations. Therefore, the obligation that competent authorities “shall have the authority?to make certain orders applies from the time that competent authorities find that goods subject to suspension at the border are infringing, right up until the time that a remedy is ordered.?sup id="fntext-243">(243)

240.   In China ?Intellectual Property Rights, the Panel also considered that the phrase “shall have the authority?does not mean, unless otherwise specified, any obligation that a competent authority shall exercise its authority in a particular way:

“The Panel notes that the word “authority? can be defined as “power or right to enforce obedience; moral or legal supremacy; right to command or give a final decision.?sup id="fntext-244">(244) The obligation is to “have?authority not an obligation to “exercise? authority.⁽²⁴⁵⁾ The phrase “shall have the authority?is used throughout the enforcement obligations in Sections 2, 3 and 4 of Part III of the TRIPS Agreement, specifically, in Articles 43.1, 44.1, 45.1, 45.2, 46, 48.1, 50.1, 50.2, 50.3, 50.7, 53.1, 56 and 57.⁽²⁴⁶⁾ It can be contrasted with terminology used in the minimum standards of protection in Part II of the TRIPS Agreement, such as “Members shall provide?protection, or that certain material “shall be? protected. The obligation in Article 46 that certain authorities “shall have the authority?to make certain orders reflects inter alia that orders with respect to specific infringements are left to enforcement authorities?discretion.⁽²⁴⁷⁾

?/p>

Therefore, the obligation that competent authorities “shall have the authority?to make certain orders is not an obligation that competent authorities shall exercise that authority in a particular way, unless otherwise specified.?sup id="fntext-248">(248)

241.   In China ?Intellectual Property Rights, the Panel further considered that the obligation to have authority to order certain remedies under Article 59 does not mean that these are the only remedies a Member can allow its competent authorities to order. Interpreting Article 59 in context with Article 41, the Panel stated:

“Moreover, the obligation to have the authority to order certain types of remedies is not an obligation to have the authority to order those remedies only. Both parties to the dispute, and certain third parties, expressly recognize that the obligation that competent authorities “shall have the authority?to order certain types of remedies leaves Members free to provide that competent authorities may have authority to order other remedies not required to be within their authority by Article 59 of the TRIPS Agreement.

 

The Panel agrees. The terms of Article 59 do not indicate that the authority to order the specified types of remedies must be exclusive. This interpretation is confirmed by Article 46, which forms part of the context of Article 59, as Article 59 incorporates the principles of Article 46, and both Articles are phrased as obligations that authorities “shall have the authority?to order certain types of remedies. The first sentence of Article 46 provides, basically, that authorities shall have the authority to order that goods be disposed of outside the channels of commerce or destroyed. At the same time, the fourth sentence of Article 46 relates to release into the channels of commerce which does not correspond to either of the remedies required by the first sentence. This is an express recognition that the remedies set out in the first sentence of Article 46 are not exhaustive. The same position applies under Article 59.?sup id="fntext-249">(249)

242.   The Panel in China ?Intellectual Property Rights cautioned however that the fact that Members can provide other remedies besides those provided under Article 59 can sometimes be WTO-inconsistent:

“Whilst authority to order a disposition method not required by Article 59 does not, in itself, lead to WTO-inconsistent action, to the extent that such authority mandates a disposition method in any given circumstance it may preclude authority that is required by Article 59. The preclusion of such authority may be WTO-inconsistent. For that reason, the Panel will examine whether certain aspects of the Customs measures are mandatory.?sup id="fntext-250">(250)

243.   In China ?Intellectual Property Rights the parties disagreed as to the circumstances in which competent authorities may be considered to have “authority?in accordance with Article 59, in particular, the extent to which the availability of authority may be subject to conditions. In this respect, the Panel first observed that the obligation under the first sentence of Article 59 would be satisfied even if a competent authority has authority to order only one of the two remedies under that Article:

“The Panel observes that the reference to alternatives in Article 59 of the TRIPS Agreement implies a particular type of condition. Article 59 requires authority to order “destruction or disposal? (emphasis added). It is not disputed that where competent authorities have authority in any given situation within the scope of Article 59 to order either destruction or disposal (in accordance with applicable principles), this is sufficient to implement the obligation in the first sentence of Article 59. Therefore, a condition that precludes the authority to order one remedy (e.g. destruction) could be consistent with Article 59 as long as competent authorities still had the authority to order the other remedy (in this example, disposal).?sup id="fntext-251">(251)

244.   The Panel in China ?Intellectual Property Rights then observed that the phrase “shall have the authority?does not require Members to take any action in the absence of an application or request:

“The Panel also observes that a common feature of Sections 2, 3 and 4 of Part III of the TRIPS Agreement is that the initiation of procedures under these Sections is generally the responsibility of private right holders. This is reflected in the first sentence of Article 42 and the first sentence of Article 51, the reference to an “applicant?in Article 50.3 and 50.5, the reference to “request[s]? in Articles 46 and 48.1, and the option (not obligation) to make ex officio action available under Article 58. Viewed in context, the phrase “shall have the authority?does not require Members to take any action in the absence of an application or request. Therefore, a condition that authority shall only be available upon application or request seems to be assumed in much of Sections 2, 3 and 4 of Part III. This is consistent with the nature of intellectual property rights as private rights, as recognized in the fourth recital of the preamble of the TRIPS Agreement. Acquisition procedures for substantive rights and civil enforcement procedures generally have to be initiated by the right holder and not ex officio.?sup id="fntext-252">(252)

3. “disposal?/p>

245.   The Panel in China ?Intellectual Property Rights observed that the “authority?required by Article 59 concerns two types of remedies, namely “destruction or disposal? The Panel considered that the meaning of “destruction?was not a controversial one. As for “disposal? the Panel considered that it meant disposal “outside the channels of commerce?

“[T]he Panel notes that the English text of Article 59 does not qualify this word so that it could, in accordance with its ordinary meaning, refer both to disposal outside the channels of commerce as well as to release into the channels of commerce. However, read in context, the word “disposal?could be a reference to an order that goods be “disposed of?outside the channels of commerce as set out in Article 46. This ambiguity is resolved by reference to the French and Spanish texts, which are equally authentic. The French text of Article 59 refers to authority to order “la mise hors circuit?which is a reference to the authority to order that infringing goods be “écartées des circuits commerciaux?in Article 46. The Spanish text of Article 59 refers to authority to order “eliminación?which, read in its context as an alternative to “destrucción? is evidently a reference to the authority to order that infringing goods be “apartadas de los circuitos comerciales?in Article 46. Accordingly, the correct interpretation of the term “disposal?in the first sentence of Article 59 is disposal “outside the channels of commerce??sup id="fntext-253">(253)

4. “the principles set out in Article 46?/p>

(a) General

246.   In China ?Intellectual Property Rights, the Panel first noted that the principles set out in Article 46 attach to the obligation in Article 59 to provide for the “authority to order the destruction or disposal of infringing goods?and that Article 59 does not include the authority to the disposition of materials and implements:

“The first sentence of Article 59 provides that competent authorities shall have the authority to order the destruction or disposal of infringing goods “in accordance with the principles set out in Article 46? The phrase referencing the principles set out in Article 46 attaches to “the authority to order the destruction or disposal of infringing goods? This directs the treaty interpreter to those principles in Article 46 that attach to such authority.⁽²⁵⁴⁾

 

The Panel makes the following observations. First, Article 59 refers to “authority? Second, Article 59 incorporates principles that attach to authority to order “destruction or disposal?(outside the channels of commerce ?. Third, Article 59 relates to the authority to order destruction or disposal of “infringing goods?but not principles applicable to the disposition of materials and implements.?sup id="fntext-255">(255)

247.   In China ?Intellectual Property Rights, the Panel then considered that the principles set out in Article 46 incorporated in the first sentence of Article 59 were those contained in the third and fourth sentences of Article 46. The Panel first made the following general considerations with respect to these principles:

?a href="#article59">Article 59 refers to the “principles?set out in Article 46. Therefore, it is necessary to determine what precisely that refers to in the first, third and fourth sentences of Article 46. The word “principles?can be defined as “a general law or rule adopted or professed as a guide to action.?Each of these sentences of Article 46 contains language that is a guide to action by authorities and none dictate the precise terms of orders in specific cases.

 

The Panel does not consider that the choice of the word “principles?was intended to reflect a hierarchy of provisions within Article 46 that would include only the most general concepts and exclude the less general. There is a strong similarity in the language and purpose of the two provisions that both provide for authority to order destruction or disposal with respect to goods that have been found to infringe intellectual property rights at the conclusion of an enforcement procedure. However, there are also differences in the government agencies to which they relate (“competent authorities?to order remedies in border measures under Article 59 but “judicial authorities?under Article 46) and also in the scope of property to which the remedies apply (“infringing goods?under Article 59 and “infringing goods as well as materials and implements the predominant use of which has been in the creation of the infringing goods?under Article 46). These differences made it inappropriate simply to provide that the obligation in Article 59 applied “in accordance with Article 46?or otherwise incorporate the whole of Article 46. Instead, the cross-reference to “principles?avoided the duplication of a relatively large amount of text. Therefore, in the Panel’s view, the reference to “principles?is a reference to language that is a guide to action by authorities with respect to orders for the destruction or disposal of infringing goods.?sup id="fntext-256">(256)

248.   The Panel in China ?Intellectual Property Rights then listed the following principles contained in the first, third and fourth sentences of Article 46 that serve as guide to action by authorities with respect to orders for the destruction or disposal of infringing goods:

“Accordingly, for the purposes of Article 59, the Panel considers that the first sentence of Article 46 sets out the following “principles?

 

(a)   authorities shall have the authority to order disposal or destruction in accordance with the first sentence “without compensation of any sort? and

 

(b)   authorities shall have the authority to order disposal “outside the channels of commerce in such a manner as to avoid any harm caused to the right holder? or

 

(c)   authorities shall have the authority to order destruction “unless this would be contrary to existing constitutional requirements?

 

The third sentence sets out the following principle that applies inter alia to the authority to order disposal or destruction of infringing goods under the first sentence:

 

(d)   in considering such requests “the need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account?

 

The fourth sentence sets out the following principle that attaches to the authority to order destruction or disposal of infringing goods under the first sentence:

 

(e)   in regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce.

 

The interpretation of all these principles is informed by the common objective set out at the beginning of Article 46, i.e. “to create an effective deterrent to infringement?which is, in itself, also a guide to action with respect to orders for the destruction or disposal of infringing goods and, hence, a principle set out in Article 46.?sup id="fntext-257">(257)

249.   The Panel in China ?Intellectual Property Rights rejected the argument that, in effect, the second sentence of Article 59 constitutes a lex specialis that would exclude the incorporation of the fourth sentence of Article 46 into Article 59. In rejecting this argument, the Panel made the following observations with respect to the language of the fourth sentence of Article 46 and the second sentence of Article 59:

“Like the fourth sentence of Article 46, this sentence begins with the words “[i]n regard to counterfeit trademark goods?and includes the words “other than in exceptional?circumstances (as opposed to cases). There is also a similarity in that the second sentence of Article 59 applies to goods “in an unaltered state?whilst the fourth sentence of Article 46 applies to “the simple removal of the trademark unlawfully affixed?which is a means of altering the state of counterfeit trademark goods. Both sentences are found in Articles that provide for remedies after particular enforcement procedures.

 

However, Article 59 applies to procedures at the border with respect to goods destined for importation whilst Article 46 applies to civil judicial procedures within Members?territories. The second sentence of Article 59 refers to re-export or release into a different customs procedure (for example, into transit) which is specific to the enforcement procedure in Section 4. Article 46 refers to release into the channels of commerce which can be applicable to importation and domestic sale in both Sections 2 and 4. The second sentence of Article 59 and the fourth sentence of Article 46 apply in different circumstances and neither is in fact more specific than the other.?sup id="fntext-258">(258)

(b)   Principle in the first sentence of Article 46: “outside the channels of commerce in such a manner as to avoid any harm caused to the right holder?/p>

250.   In China ?Intellectual Property Rights the parties disagreed as to the meaning of the principle set out in the first sentence of Article 46 that refers to disposal “outside the channels of commerce in such a manner as to avoid any harm caused to the right holder? The Panel addressed the meaning of this principle and a concern raised by one of the parties concerning the harm that donations may cause to right holders and the possibility that the donated goods may later be sold by the social welfare bodies:

“The Panel notes that this principle, by its terms, relates to disposal of goods “outside?the channels of commerce, and not into the channels of commerce. It is not disputed that this principle is applicable to donations (i.e. gifts) to social welfare bodies for their own use or for charitable distribution. However, if the social welfare bodies later sell goods donated to them by Customs for charitable distribution, even to raise money for charitable aims, the goods are not in fact disposed of outside the channels of commerce but into the channels of commerce. If the social welfare bodies charitably distribute goods donated to them by Customs but the goods later find their way back into the channels of commerce, this does not alter the fact that the goods were disposed of outside the channels of commerce, in the ordinary sense of “disposal? Instead, the later sale of the distributed goods is relevant to the assessment of whether the disposal outside the channels of commerce was “in such a manner so as to avoid any harm caused to the right holder? Therefore, the Panel will consider the interpretation of that part of the principle in further detail.

 

This principle, by its terms, provides that authorities shall have the authority to order that the goods “be disposed of? in the passive voice. There is no obligation that the relevant authorities carry out the disposal themselves but rather they may entrust the actual disposal to another body. The carrying out of disposal “outside the channels of commerce? recognizes the opportunity for involvement of other bodies, such as charities, or noncommercial use by government. The principle attaches to the “manner?in which infringing goods are disposed of, not to the actual disposal. Authorities are not held responsible for acts of the bodies carrying out the disposal that is beyond the authorized manner. Further, the principle is that the manner shall be “so as to?avoid harm. This is phrased in terms of purpose, not result. The responsibility of the authorities is to ensure that the manner in which the goods are disposed of outside the channels of commerce is designed in such a way that it will comply with the principle.?sup id="fntext-259">(259)

251.   The Panel in China ?Intellectual Property Rights addressed the specific requirement within this principle that the manner of disposal shall “avoid?harm:

“The principle is that the manner of disposal shall “avoid?harm. China argues that this is an obligation to “pay due regard to? However, the Panel notes that the ordinary meaning of “avoid?can be defined as “keep off, prevent; obviate? Further, the principle is that the manner shall avoid “any? harm caused to the right holder, not just “harm?or “some?harm. Therefore, the manner of disposal must be designed in such a way as to prevent any harm occurring to the right holder.

 

It must be recalled that disposal of infringing goods outside the channels of commerce, in context, is an alternative to destruction of the goods. In the Panel’s view, this implies that any inherent risk of harm due simply to the fact that the goods have not been completely destroyed is insufficient to disqualify a disposal method, as it would nullify the choice between disposal and destruction. However, more specific concerns linked to harm caused to the right holder by a particular manner of disposal are relevant in assessing conformity with the principle that disposal outside the channels of commerce be “in such a manner as to avoid any harm caused to the right holder?

 

The Panel finds confirmation of this interpretation within Article 46. The fourth sentence of Article 46 expressly provides that simple removal of the trademark unlawfully affixed is not sufficient to permit release of counterfeit trademark goods into the channels of commerce other than in exceptional cases. In contrast, the first sentence of Article 46 contains a more general requirement that the requisite authority to order disposal of goods outside the channels of commerce shall be “in such a manner as to avoid any harm caused to the right holder? Whilst this reflects, in part, the fact that the first sentence does not only apply to counterfeit trademark goods, it also demonstrates that when goods are disposed of outside the channels of commerce it is not assumed that the removal of the trademark is required (or insufficient).

 

It remains possible that the trademark unlawfully affixed may cause confusion, depending on the circumstances in which goods are disposed of outside the channels of commerce. Practical requirements, such as removal of the trademark, affixation of a charitable endorsement or controls over the use of goods or distribution methods, may avoid confusion. The cooperation of the right holder would be valuable in this regard but the terms of the Article do not indicate that that is a requirement. However, the issue of harm to the right holder, whether to its reputation or through lost sales, through disposal of goods outside the channels of commerce without removal of the trademark unlawfully affixed depends on the circumstances. Otherwise, any disposal outside the channels of commerce where persons could simply observe a counterfeit trademark would be presumed to cause harm to the right holder. This result is not contemplated by the terms of Article 46, as the possibility of observing the counterfeit trademark is incidental to the requisite authority not to destroy the goods.?sup id="fntext-260">(260)

252.   The Panel in China ?Intellectual Property Rights examined a claim with respect to customs measures from China that contained certain optional disposition methods of infringing goods besides destruction (i.e. donation to social welfare bodies, sale to the right holder and auction). The claim was that, under such measures, competent authorities lacked authority to order disposal of such infringing goods in accordance with the principles of the first sentence of Article 46 as incorporated in Article 59. With respect to these three optional disposition methods, the Panel concluded, respectively, that the complainant had not established that Chinese Customs lacked such authority in accordance with the principles of Article 46.⁽²⁶¹⁾

253.   With respect to auction, the Panel in China ?Intellectual Property Rights was confronted with the complainant’s claim that, under the measures at issue, this deposition method was mandatory, in effect precluding the authority to order destruction of the infringing goods in violation of the principles set out in the first sentence of Article 46. The Panel began with the following considerations:

“The Panel will now consider Customs?authority to order that infringing goods be auctioned. Auction is the third disposal method set out in the measures at issue. Auction is not a form of destruction, and it is undisputed that auction is not a form of disposal outside the channels of commerce. Accordingly, this disposal method is clearly not required by Article 59. However, the Panel recalls its finding ?that the remedies specified in Article 59 are not exhaustive. Therefore, the fact that authority to order auction of infringing goods is not required is not in itself inconsistent with Article 59.

 

The United States claims that, because the auction method is allegedly mandatory, it deprives Customs of the authority to order destruction of infringing goods at a certain point within the purview of Article 59. It does not allege that Customs has authority to order donation to social welfare bodies (or sale to the right holder) in circumstances where Customs is considering auction. In these circumstances, it is assumed that Customs has already decided against those other methods. The issue is only whether the authority to order auction precludes authority to order destruction of infringing goods.?sup id="fntext-262">(262)

254.   Then, after reviewing the language of the measures before it, the Panel first found that the complainant had not “established that the Customs measures on their face oblige Customs to order the auction of infringing goods.?sup id="fntext-263">(263) The Panel then turned to the evidence before it in order to confirm such finding:

“It is apparent that the number of shipments destroyed far exceeds the number of shipments auctioned, and that in three years Customs has only decided to auction goods twelve times. In fact, no infringing goods destined for importation have ever been auctioned under the measures at issue during the period for which statistics are available. Customs evidently has little, if any, difficulty in choosing to destroy goods, which is consistent with the view that it has wide authority to do so.

 

The Panel notes that there is a small number of cases where Customs has ordered the auction of goods. However, the small number of cases of auction does not indicate whether this was pursuant to a choice not to destroy the goods, or whether Customs considered that it lacked the authority to destroy the goods. The Panel reiterates that the pertinent issue is whether Customs was permitted by law to order destruction in those cases. The United States agrees that a Member may choose between destruction and auction in its discretion provided that it has unconditional power to order destruction in all circumstances.

 

The very low rate of auctions is consistent with the view that auctions are not mandatory. It could be consistent with the view that the auction method is mandatory if there were some indication that the infringing features cannot be eradicated from an exceedingly large number and proportion of goods confiscated by Customs. However, in the absence of such evidence, and in light of the other evidence discussed above, the Panel does not accept that view.?sup id="fntext-264">(264)

255.   Finally, with the above considerations in mind, the Panel found that the complainant had not “established that the authority to order auction of infringing goods under the Customs measures precludes authority to order destruction of infringing goods in accordance with the principles set out in the first sentence of Article 46.?sup id="fntext-265">(265)

(c) Principle in the fourth sentence of Article 46: “simple removal of the trademark unlawfully affixed?/p>

256.   In China ?Intellectual Property Rights, the Panel examined a claim with respect to the authority given by the measures at issue to release infringing goods into the channels of commerce by auctioning them. The claim was that such authority did not comply with the principle in the fourth sentence of Article 46, as incorporated in Article 59, which states:

“In regard to counterfeit trademark goods, the simple removal of the trademark unlawfully affixed shall not be sufficient, other than in exceptional cases, to permit release of the goods into the channels of commerce.?/p>

257.   The Panel first considered that even if under the measures auction was not a mandatory disposition method, and even if auction has never been used in practice with respect to imports, it could still be scrutinized, “as such? under the principle in the fourth sentence of Article 46:

“The Panel recalls its finding ?that the obligation in Article 59 applies both to mandatory and discretionary measures as the obligation that Members?competent authorities “shall have the authority?to make particular orders attaches to what the authorities are permitted by law to order, not only to what they must order. This finding applies a fortiori to the principle in the fourth sentence of Article 46 as only discretionary authority to order release of goods into the channels of commerce will not preclude the authority required by the first sentence of Article 46 at some point. The principle in the fourth sentence of Article 46 regarding authority to order the release of goods into the channels of commerce, as an alternative to destruction or disposal outside the channels of commerce, could be redundant if it did not apply to discretionary measures.⁽²⁶⁶⁾ Therefore, the fact that authority to release goods into the channels of commerce is not mandatory does not shield such a disposition method from a Panel’s assessment of its conformity “as such?with Article 59 of the TRIPS Agreement, as it incorporates the principle in the fourth sentence of Article 46.

 

This particular case also presents a specific set of circumstances. The nature of the measures at issue is such that, even if they do not mandate auction (and do not preclude authority to order destruction) the elimination of the infringing features is mandatory in every case where Customs chooses to auction infringing goods (as discussed below). If the elimination of the infringing features constitutes simple removal of the trademark, it will be inconsistent with the principle in the fourth sentence of Article 46, as incorporated by Article 59, in all cases where Customs orders auction of infringing goods. Although Customs has never auctioned goods destined for importation, this may be due only to the smaller volume of infringing goods destined for importation rather than exportation. China does not assert that Customs might auction goods destined for importation in future but defends its auction method based on its own good faith interpretation of the requirements of Article 59 of the TRIPS Agreement and of the fourth sentence of Article 46. Indeed, China advises the Panel that auction, whether of exports or imports, is a “preferred?disposition method in certain circumstances and it vigorously defends its right to use it, albeit sparingly. Therefore, the Panel’s rulings on the applicability of the fourth sentence of Article 46, as incorporated in Article 59, of the TRIPS Agreement and the conformity of China’s auction method with that provision will, to the extent that the obligation is applicable, prevent China ex ante from engaging in certain conduct inconsistent with its obligations under a covered agreement, which is precisely the purpose of an “as such? claim.?sup id="fntext-267">(267)

258.   The Panel then observed that, under the measures, the only action taken before the auction was the removal of the trademark from infringing goods. The Panel found that because such action constituted a “simple removal of a trademark?it was not consistent with the principle of the first sentence of Article 46.

“The Panel notes that the word “simple? can be defined as “with nothing added; unqualified; neither more nor less than; mere, pure? A situation in which a trademark is removed from a good and no other action is taken will constitute “simple? removal of the trademark. Therefore, the Panel’s preliminary view is that eradication of the infringing features under the measures at issue constitutes “simple?removal of the trademark as contemplated by the fourth sentence of Article 46, as incorporated by Article 59.?sup id="fntext-268">(268)

259.   In the Panel’s view the fact that the measures provide for the right holders to be consulted and that the confiscated goods are subject to “reserved prices?are irrelevant to its finding that the measures provide for a simple removal of the trademark:

“Turning to the measures at issue, the Panel observes that the procedure for seeking comment by right holders does not affect the state of the goods, nor is there any obligation to take right holder’s comments into account. Therefore, it is irrelevant to the question whether the measures at issue provide for “simple removal of the trademark unlawfully affixed?

 

China alleges that auctions of goods confiscated by Customs are subject to a reserve price that ensures that infringers do not have the opportunity to purchase the seized goods at an unreasonably low cost and reaffix counterfeit marks.

 

The Panel does not agree. As China itself stated in its rebuttal submission, “the very principle of trademark protection is that a trademark distinguishes a good and allows for a significant market premium? The Panel points out that a counterfeit trademark is designed to obtain some or all of that economic premium. When the counterfeit trademark is removed, the value of the good is diminished and is less than its market value if it is resold with a counterfeit trademark reaffixed. In other words, it remains economically viable for the importer or a third party to purchase the goods at auction and reaffix the trademarks in order to infringe again, with the heightened risk of this occurring discussed ?above. In any case, there is no evidence that the prices established by the method used by China Customs are so high that it is no longer economically viable to purchase the goods and reaffix the trademarks.?sup id="fntext-269">(269)

260.   In making the above findings, the Panel also made various observations on the meaning and objective of the term “simple removal of the trademark?

“Viewed in light of the objective, the “simple?removal of the trademark is principally a reference to the fact that the state of the goods is not altered in any other way so that the absence of the trademark is not an effective deterrent to further infringement. Removal of the trademark is not “simple?if the state of the goods is altered sufficiently to deter further infringement.

?/p>

The Panel notes that the fourth sentence of Article 46, by its specific terms, is not limited to an action to render goods non-infringing, which the simple removal of the trademark would achieve. Rather, the fourth sentence of Article 46 imposes an additional requirement beyond rendering the goods non-infringing in order to deter further acts of infringement with those goods. Therefore, it is insufficient, other than in exceptional cases, to show that goods that have already been found to be counterfeit are later unmarked. The release into the channels of commerce of such goods, while they may no longer infringe upon the exclusive rights in Article 16 of the TRIPS Agreement, will not comply with the requirement in the fourth sentence of Article 46, as incorporated by Article 59.?sup id="fntext-270">(270)

261.   Finally, the Panel considered that the “simple?removal of trademark under the measures at issue did not fall under the category of “exceptional cases?of simple removals permitted under the fourth sentence of Article 46, as incorporated in Article 59. As to the scope of this exception, the Panel stated:

“The Panel notes that the phrase “other than in exceptional cases? read in context, refers to a subset of the cases covered by the fourth sentence of Article 46, as incorporated by Article 59, namely, those cases in which a Member’s competent border authorities permit the release of goods that have been found to be counterfeit trademark goods into the channels of commerce.?sup id="fntext-271">(271)

262.   The Panel then considered the question of how to determine when any such case may be considered “exceptional?

“The Panel considers that the phrase “other than in exceptional cases? like the rest of the principle set out in the fourth sentence of Article 46, must be interpreted in light of the objective of that Article, namely, “to create an effective deterrent to infringement? There may well be cases in which the simple removal of the trademark prior to release of the goods into the channels of commerce would not lead to further infringement. For example, an innocent importer who has been deceived into buying a shipment of counterfeit goods, who has no means of recourse against the exporter and who has no means of reaffixing counterfeit trademarks to the goods, might constitute such a case. However, such cases must be narrowly circumscribed in order to satisfy the description of “exceptional? Even when narrowly circumscribed, application of the relevant provision must be rare, lest the so-called exception become the rule, or at least ordinary.

 

The Panel does not consider that “exceptional cases?for the purposes of the fourth sentence of Article 46 may simply be demonstrated by a low rate of cases in which simple removal of the trademark is treated as sufficient to permit release of goods into the channels of commerce. Firstly, “exceptional cases? within the meaning of the fourth sentence of Article 46, as incorporated in Article 59, is not assessed in terms of a proportion of all cases of infringing goods seized at the border. Secondly, such an approach to goods that have already been found to be counterfeit trademark goods would amount to a margin of tolerance of further infringement that is not consistent with the objective of Article 46 of creating an effective deterrent.?sup id="fntext-272">(272)

 

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LXI. Article 60  

A. Text of Article 60

Article 60: De Minimis Imports

   Members may exclude from the application of the above provisions small quantities of goods of a noncommercial nature contained in travellers?personal luggage or sent in small consignments.

 
B. Interpretation and Application of Article 60

1. Relationship with other articles

263.   With respect to the relationship with Article 61, see the excerpt of the panel report referenced in paragraph 275 below.

 

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LXII. Article 61  

A. Text of Article 61

Article 61

   Members shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. Remedies available shall include imprisonment and/ or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity. In appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence. Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed wilfully and on a commercial scale.

B. Interpretation and Application of Article 61

1. General

264.   In China ?Intellectual Property Rights, the Panel considered the overall nature and scope the provisions under Article 61. As to the nature of these provisions the Panel stated:

“In the Panel’s view, the general obligation in Article 41.1 confirms that Article 61 contains obligations, as one of the specific provisions on enforcement procedures in Part III.?sup id="fntext-273">(273)

265.   The Panel in China ?Intellectual Property Rights, then made the following general statement with respect to the scope of Article 61:

“Therefore, the standard of compliance with Article 61 is the minimum internationally agreed standard set out in that Article. The minimum standard in Article 61 does not defer to China’s domestic practice on the definition of criminal liability and sanctions for other wrongful acts in areas not subject to international obligations under the TRIPS Agreement, unless it so states. For example, the second sentence refers to “crimes of a corresponding gravity?which might refer to domestic practice in other areas. However, the first sentence of Article 61 does not make any such reference.

?/p>

Part III of the TRIPS Agreement distinguishes between the treatment of wilful trademark counterfeiting and copyright piracy on a commercial scale, on the one hand, and all other infringements of intellectual property rights, on the other hand, in that only the former are subject to an obligation regarding criminal procedures and penalties. This indicates the shared view of the negotiators that the former are the most blatant and egregious acts of infringement. This view must inform the interpretation of Article 61.?sup id="fntext-274">(274)

266.   The Panel in China ?Intellectual Property Rights also clarified that Article 61 does not address issues of “evidence?or “proceedings?

“In any event, the Panel considers that the United States?allegation regarding physical evidence relates to the evidence sufficient to initiate a criminal prosecution more than to the definition of the crime itself. Article 61 of the TRIPS Agreement does not address evidence. The first sentence of Article 61 addresses the infringing activity in respect of which the minimum standards must apply. Evidence, including in criminal procedures, is mentioned in Article 41.3, but that provision has no bearing on this claim.

 

Section 5 of Part III of the TRIPS Agreement, on criminal procedures, can be contrasted with Section 2, on civil and administrative procedures and remedies, which makes mention of evidence in Article 42 and contains a dedicated provision addressing certain specific issues regarding evidence in Article 43. Even Article 43 does not address the detailed issue of sufficiency of evidence. Rather, Section 2 leaves such questions to the judicial authorities who weigh that issue in the exercise of their authority to order the remedies set out in Articles 44 to 46. Given the brevity of Section 5, which devotes two sentences to acts of infringement and two sentences to remedies (or penalties), it would be surprising if it was intended to create a broader obligation addressing issues of evidence and procedure. The terms used in Article 61 do not suggest that it was so intended. The different phrasing of the obligation to ‘provide ?to be applied?in the first sentence does not have a bearing on this issue.?sup id="fntext-275">(275)

2. The first sentence of Article 61

(a) General

267. The Panel in China ?Intellectual Property Rights made various clarifications with respect to the scope of the first sentence of Article 61. The Panel first made the following general statement:

“The terms of the obligation in the first sentence of Article 61 of the TRIPS Agreement are that Members shall “provide for criminal procedures and penalties to be applied? That obligation applies to “wilful trademark counterfeiting or copyright piracy on a commercial scale? Within that scope, there are no exceptions. The obligation applies to all acts of wilful trademark counterfeiting or copyright piracy on a commercial scale.?sup id="fntext-276">(276)

268.   The Panel in China ?Intellectual Property Rights then clarified that the first sentence of Article 61 contains no fewer than four limitations on the obligation that it sets forth and that these limitations define the scope of the relevant obligation and are not exceptions:⁽²⁷⁷⁾

“The first limitation is that the obligation applies to trademarks and copyright rather than to all intellectual property rights covered by the TRIPS Agreement. The fourth sentence of Article 61 gives Members the option to criminalize other infringements of intellectual property rights, in particular where they are committed wilfully and on a commercial scale. Despite the potential gravity of such infringements, Article 61 creates no obligation to criminalize them?.

 

The second limitation in the first sentence of Article 61, which is related to the first, is that it applies to counterfeiting and piracy rather than to all infringements of trademarks and copyright?. This limitation, like the first, indicates an intention to reduce the scope of the obligation?.

?/p>

The third limitation in the first sentence of Article 61 is indicated by the word “wilful?that precedes the words “trademark counterfeiting or copyright piracy? This word functions as a qualifier indicating that trademark counterfeiting or copyright piracy is not subject to the obligation in the first sentence of Article 61 unless it is “wilful? This word, focussing on the infringer’s intent, reflects the criminal nature of the enforcement procedures at issue. It is absent from Section 4 of Part III, even though that Section is similarly limited, as a minimum, to counterfeit trademark goods and pirated copyright goods. The penalties for criminal acts, such as imprisonment, fines and forfeiture of property, are relatively grave, as reflected in the second sentence of Article 61. There is no obligation to make such penalties available with respect to acts of infringement committed without the requisite intent.

 

The fourth limitation in the first sentence of Article 61 is indicated by the phrase “on a commercial scale?that follows the words “trademark counterfeiting or copyright piracy? This phrase, like the word “wilful? appears to qualify both “trademark counterfeiting?and “copyright piracy? The limitation to cases on a commercial scale, like the limitation to cases of wilfulness, stands in contrast to all other specific obligations on enforcement in Part III of the TRIPS Agreement.?sup id="fntext-278">(278)

269.   Bearing the above limitations in mind, the Panel in China ? Intellectual Property Rights reached the following conclusions with respect to the scope of the phrase “wilful trademark counterfeiting or copyright piracy on a commercial scale?

“The principal interpretative point in dispute is the meaning of the phrase “on a commercial scale? This phrase functions in context as a qualifier, indicating that wilful trademark counterfeiting or copyright piracy is included in the scope of the obligation provided that it also satisfies the condition of being “on a commercial scale? Accordingly, certain acts of wilful trademark counterfeiting or copyright piracy are excluded from the scope of the first sentence of Article 61.

 

Despite the fact that trademark counterfeiting and copyright piracy infringe the rights of right holders, and despite the fact that they can be grave, the two qualifications of wilfulness and “on a commercial scale?indicate that Article 61 does not require Members to provide for criminal procedures and penalties to be applied to such counterfeiting and piracy per se unless they satisfy certain additional criteria. This is highlighted by the fourth sentence of Article 61, which allows Members to provide for criminal procedures and penalties to be applied in other cases of infringement, ‘in particular?where they are committed wilfully and on a commercial scale. This indicates that the negotiators considered cases of wilful infringement on a commercial scale to represent a subset of cases of infringement, comprising the graver cases. This is useful context for interpreting the first sentence of Article 61, even though it does not refer to “infringement?in general, because the first sentence refers to both “counterfeiting?and “piracy? and wilfulness and commercial scale, evidently to limit the cases of infringement in different ways. Therefore, the text of Article 61 indicates that it must not be assumed that the nature of counterfeiting and piracy per se is such that Members are obliged to provide for the application of criminal procedures and penalties.?sup id="fntext-279">(279)

(b) “trademark counterfeiting or copyright piracy?/p>

270.   The Panel in China ?Intellectual Property Rights clarified the meaning of the terms “trademark counterfeiting?and “copyright piracy?in Article 61 by comparing them with the similar terms “counterfeit trademark goods? and “pirated copyright goods?which are defined in footnote 14 to Article 51:

“The terms “trademark counterfeiting?and “copyright piracy?are not defined in the TRIPS Agreement. They are distinct from the concepts of “trademark infringement?and “copyright infringement? They are similar to the terms “counterfeit trademark goods?and “pirated copyright goods?which are defined for the purposes of the TRIPS Agreement⁽²⁸⁰⁾ in footnote 14 ?/p>

?/p>

The terms used in the first sentence of Article 61 denote classes of acts or activity whilst the terms used in footnote 14 denote classes of goods only. This reflects the fact that Article 61 provides for criminal enforcement against infringing acts whilst Section 4 of Part III (in which the terms defined in footnote 14 are used) provides for enforcement at the border against infringing goods. The definitions in footnote 14 also refer to the law of the country of ‘importation? whilst Article 61 relates to the law of the Member to which the obligation applies ?generally speaking, the law of the Member where the infringing act occurs. Subject to these observations, the Panel considers that the definitions in footnote 14 are relevant in understanding the terms used in Article 61.?sup id="fntext-281">(281)

(c) “on a commercial scale?/p>

271.   In China ?Intellectual Property Rights, based on the evidence of presented to it, the Panel clarified the meaning of the term “on a commercial scale?in Article 51 as follows:

“[A] “commercial scale?is the magnitude or extent of typical or usual commercial activity. Therefore, counterfeiting or piracy “on a commercial scale?refers to counterfeiting or piracy carried on at the magnitude or extent of typical or usual commercial activity with respect to a given product in a given market. The magnitude or extent of typical or usual commercial activity with respect to a given product in a given market forms a benchmark by which to assess the obligation in the first sentence of Article 61. It follows that what constitutes a commercial scale for counterfeiting or piracy of a particular product in a particular market will depend on the magnitude or extent that is typical or usual with respect to such a product in such a market, which may be small or large. The magnitude or extent of typical or usual commercial activity relates, in the longer term, to profitability.⁽²⁸²⁾

 

The Panel observes that what is typical or usual in commerce is a flexible concept. The immediate context in the second sentence of Article 61, which is closely related to the first, refers to the similarly flexible concepts of “deterrent?and “corresponding gravity? Neither these terms nor “commercial scale?are precise but all depend on circumstances, which vary according to the differing forms of commerce and of counterfeiting and piracy to which these obligations apply.?sup id="fntext-283">(283)

272.   The Panel in China ?Intellectual Property Rights stated that the terms in first sentence of Article 61, in particular the term “commercial?within “on a commercial scale? is “technology-neutral?and it hence applies to various forms of commerce and means of infringement:

“The Panel emphasizes that the terms used in the first sentence of Article 61, in particular ‘commercial? are technology-neutral. A “commercial scale?can apply to various forms of commerce and, hence, various means of infringement. The specific forms of commerce are not static but adapt to changing forms of competition due to technological development and the evolution of marketing practices. The Panel sees no reason why those forms of commerce should be limited to the forms of commerce that existed at the time of negotiation of the TRIPS Agreement. Accordingly, the application of the term ‘commercial scale?can adjust to different situations, and refer to a different relative magnitude or extent, degree or proportion, depending on the facts.⁽²⁸⁴⁾ However, subsequent technological developments do not alter the considerations relevant to the interpretation of the terms used in Article 61.?sup id="fntext-285">(285)

273.   The Panel in China ?Intellectual Property Rights made the following clarifications with respect to the burden of proving that the method used by a Member to implement the provision of “on a commercial scale?is not consistent with Article 61:

“The Panel notes that it is the standard in the treaty obligation that varies as applied to different fact situations, and not necessarily the means by which Members choose to implement that standard?.

 

[The third sentence of Article 1.1 of the TRIPS Agreement] confirms that the TRIPS Agreement does not mandate specific forms of legislation. The Panel may not simply assume that a Member must give its authorities wide discretion to determine what is on a commercial scale in any given case, and may not simply assume that thresholds, including numerical tests, are inconsistent with the relative benchmark in the first sentence of Article 61 of the TRIPS Agreement. As long as a Member in fact provides for criminal procedures and penalties to be applied in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale, it will comply with this obligation. If it is alleged that a Member’s method of implementation does not so provide in such cases, that allegation must be proven with evidence. Therefore, the Panel will assess whether the evidence shows that China fails to provide for criminal procedures and penalties to be applied in any such cases.?sup id="fntext-286">(286)

274.   The Panel in China ?Intellectual Property Rights also clarified that the assessment of whether a measure conforms with the relative standard of Article 61 has to be made in respect to the market of the Member whose measure is being assessed:

“The Panel needs to consider the specific conditions applying in China’s marketplace in assessing whether the measures in question, which exclude certain acts of infringement from particular liability, conform to the relative standard in Article 61. This applies a fortiori as the relative standard is set in terms of what is “on a commercial scale? which varies not only by market but also by product within the same market.?sup id="fntext-287">(287)

3. Relationship with other Articles

275.   The Panel in China ?Intellectual Property Rights addressed the language of Article 60 to reject the view that “on a commercial scale?in Article 61 is a de minimis provision:

“As to the view that “on a commercial scale? is basically a de minimis provision, the Panel need look no further than the preceding provision, Article 60, to see how the negotiators addressed that issue. Article 60 forms part of Section 4 on special requirements related to border measures and serves an analogous purpose to the phrase “on a commercial scale?in Article 61 in that both define the lower end of infringement at which a particular type of enforcement procedure must be available. However, the terms of each are quite different: Article 60 defines de minimis infringement in terms of volume (“small quantities?, nature (“of a non-commercial nature? and circumstances (“in travellers?personal luggage or sent in small consignments?. Had the negotiators wanted to exclude only de minimis infringement from the minimum standard of Article 61, they had a model in Article 60, or they could have used words such as ‘except for minor or personal use? However, they did not. Instead, Article 61 refers to size (“scale? qualified only by the word “commercial? This indicates that the negotiators intended something different from de minimis. Article 60 also indicates that the negotiators did not equate small with noncommercial, confirming that a “commercial?scale is not necessarily small-scale nor large-scale.?sup id="fntext-288">(288)

 

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LXIII. Article 62  

A. Text of Article 62

Article 62

1.   Members may require, as a condition of the acquisition or maintenance of the intellectual property rights provided for under Sections 2 through 6 of Part II, compliance with reasonable procedures and formalities. Such procedures and formalities shall be consistent with the provisions of this Agreement.

 

2.   Where the acquisition of an intellectual property right is subject to the right being granted or registered, Members shall ensure that the procedures for grant or registration, subject to compliance with the substantive conditions for acquisition of the right, permit the granting or registration of the right within a reasonable period of time so as to avoid unwarranted curtailment of the period of protection.

 

3.   Article 4 of the Paris Convention (1967) shall apply mutatis mutandis to service marks.

 

4.   Procedures concerning the acquisition or maintenance of intellectual property rights and, where a Member’s law provides for such procedures, administrative revocation and inter partes procedures such as opposition, revocation and cancellation, shall be governed by the general principles set out in paragraphs 2 and 3 of Article 41.

 

5.   Final administrative decisions in any of the procedures referred to under paragraph 4 shall be subject to review by a judicial or quasi-judicial authority. However, there shall be no obligation to provide an opportunity for such review of decisions in cases of unsuccessful opposition or administrative revocation, provided that the grounds for such procedures can be the subject of invalidation procedures.

B. Interpretation and Application of Article 62

1. Article 62.2

276.   In Canada ?Patent Term, Canada argued that Article 33, a provision calling for a minimum patent protection period, must be read in conjunction with Article 62.2, which recognizes the fact that the length of the patent-granting process invariably involves some curtailment of the period of protection. From the interplay of these two provisions, Canada argued that Article 33 embodies a notion of “effective?protection and that Article 33 can be complied with by making available a nominally shorter period of protection, while taking into consideration “effective?protection during the period of the patent approval proceedings.⁽²⁸⁹⁾ The Appellate Body upheld the Panel’s rejection of this argument:

?a href="#article62A2">Article 62.2 deals with procedures relating to the acquisition of intellectual property rights. Article 62.2 does not deal with the duration of those rights once they are acquired. Article 62.2 is of no relevance to this case. This purely procedural Article cannot be used to modify the clear and substantive standard set out in Article 33 so as to conjecture a new standard of ‘effective?protection. Each Member of the WTO may well have its own subjective judgement about what constitutes a ‘reasonable period of time?not only for granting patents in general, but also for granting patents in specific sectors or fields of complexity. If Canada’s arguments were accepted, each and every Member of the WTO would be free to adopt a term of ‘effective? protection for patents that, in its judgement, meets the criteria of ‘reasonable period of time?and ‘unwarranted curtailment of the period of protection? and to claim that its term of protection is substantively ‘equivalent?to the term of protection envisaged by Article 33. Obviously, this cannot be what the Members of the WTO envisaged in concluding the TRIPS Agreement. Our task is to interpret the covered agreements harmoniously. A harmonious interpretation of Article 33 and Article 62.2 must regard these two treaty provisions as distinct and separate Articles containing obligations that must be fulfilled distinctly and separately.?sup id="fntext-290">(290)

277.   With respect to the relationship of Article 62.2 with Articles 1.1 and 33, see paragraph 8 above.

2. Article 62.4

278.   In EC ?Trademarks and Geographical Indications (Australia) the Panel rejected claims concerning procedures for objections to GI registration because the claims had been brought under provisions in Part III rather than Article 62.4:

“Australia’s claims concern an inter partes procedure permitting objections which is related to the acquisition of intellectual property rights under the Regulation. As such, it is covered by Part IV of the TRIPS Agreement, not Part III. The general principles in Article 41.2 and 41.3 apply to such inter partes procedures, where a Member’s law provides for them, by virtue of Article 62.4 of the TRIPS Agreement. However, Article 62.4 is outside the Panel’s terms of reference. Accordingly, the Panel rejects these claims.?sup id="fntext-291">(291)

 

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LXIV. Article 63  

A. Text of Article 63

Article 63: Transparency

1.   Laws and regulations, and final judicial decisions and administrative rulings of general application, made effective by a Member pertaining to the subject matter of this Agreement (the availability, scope, acquisition, enforcement and prevention of the abuse of intellectual property rights) shall be published, or where such publication is not practicable made publicly available, in a national language, in such a manner as to enable governments and right holders to become acquainted with them. Agreements concerning the subject matter of this Agreement which are in force between the government or a governmental agency of a Member and the government or a governmental agency of another Member shall also be published.

 

2.   Members shall notify the laws and regulations referred to in paragraph 1 to the Council for TRIPS in order to assist that Council in its review of the operation of this Agreement. The Council shall attempt to minimize the burden on Members in carrying out this obligation and may decide to waive the obligation to notify such laws and regulations directly to the Council if consultations with WIPO on the establishment of a common register containing these laws and regulations are successful. The Council shall also consider in this connection any action required regarding notifications pursuant to the obligations under this Agreement stemming from the provisions of Article 6ter of the Paris Convention (1967).

 

3.   Each Member shall be prepared to supply, in response to a written request from another Member, information of the sort referred to in paragraph 1. A Member, having reason to believe that a specific judicial decision or administrative ruling or bilateral agreement in the area of intellectual property rights affects its rights under this Agreement, may also request in writing to be given access to or be informed in sufficient detail of such specific judicial decisions or administrative rulings or bilateral agreements.

 

4.   Nothing in paragraphs 1, 2 and 3 shall require Members to disclose confidential information which would impede law enforcement or otherwise be contrary to the public interest or would prejudice the legitimate commercial interests of particular enterprises, public or private.

B. Interpretation and Application of Article 63

1. Article 63.2

(a) Notification requirements

279.   At its meeting of 21 November 1995, the Council for TRIPS adopted Decisions on the rules of procedure for notification under Article 63.2,⁽²⁹²⁾ including a possible format for listing of “Other Laws and Regulations?sup id="fntext-293">(293) and a Checklist of Issues on Enforcement.⁽²⁹⁴⁾

280.   Article 2 of the Agreement between the World Intellectual Property Organization and the World Trade Organization contains provisions relevant to notifications and translation of laws and regulations under Article 63.2.⁽²⁹⁵⁾

 

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LXV. Article 64  

A. Text of Article 64

Article 64: Dispute Settlement

1.   The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding shall apply to consultations and the settlement of disputes under this Agreement except as otherwise specifically provided herein.

 

2.   Subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 shall not apply to the settlement of disputes under this Agreement for a period of five years from the date of entry into force of the WTO Agreement.

 

3.   During the time period referred to in paragraph 2, the Council for TRIPS shall examine the scope and modalities for complaints of the type provided for under subparagraphs 1 (b) and 1(c) of Article XXIII of GATT 1994 made pursuant to this Agreement, and submit its recommendations to the Ministerial Conference for approval. Any decision of the Ministerial Conference to approve such recommendations or to extend the period in paragraph 2 shall be made only by consensus, and approved recommendations shall be effective for all Members without further formal acceptance process.

B. Interpretation and Application of Article 64

1. Articles of the TRIPS Agreement invoked in panel and Appellate Body proceedings

281.   For a table of disputes under the TRIPS Agreement, see the table of “Articles of the Covered Agreements Invoked in Panel and Appellate Body Proceedings?in the Chapter on the DSU.

2. Article 64.2 and 64.3

282.   On 14 November 2001, the Ministerial Conference adopted a Decision on Implementation-Related Issues and Concerns, which includes a moratorium for so-called “non-violation?and “situation?complaints under the TRIPS Agreement. Paragraph 11.1 of the Decision reads as follows:

“The TRIPS Council is directed to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to the Fifth Session of the Ministerial Conference. It is agreed that, in the meantime, Members will not initiate such complaints under the TRIPS Agreement.?sup id="fntext-296">(296)

283.   On 1 August 2004, the General Council adopted a decision on “Doha Work Programme? Its paragraph 1. h on “Other elements of the Work Programme?provides inter alia that “the moratori[um] covered by paragraph 11.1 of the Doha Ministerial Decision on Implementation-related Issues and Concerns ?[is] extended up to the Sixth Ministerial Conference?⁽²⁹⁷⁾

284.   On 18 December 2005, the Ministerial Conference adopted a Ministerial Declaration on the “Doha Work Programme? Paragraph 45 of the Declaration, entitled “TRIPS non-violation and situation complaints? reads as follows:

“We take note of the work done by the Council for Trade-Related Aspects of Intellectual Property Rights pursuant to paragraph 11.1 of the Doha Decision on Implementation-Related Issues and Concerns and paragraph 1.h of the Decision adopted by the General Council on 1 August 2004, and direct it to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to our next Session. It is agreed that, in the meantime, Members will not initiate such complaints under the TRIPS Agreement.?sup id="fntext-298">(298)

285.   Paragraph 10 of the General Council decision on “Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health? adopted on 30 August 2003, provides that “Members shall not challenge any measures taken in conformity with the provisions of the waivers contained in this Decision under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994? On 6 December 2005, the General Council adopted a decision on “Amendment of the TRIPS Agreement? Paragraph 4 of a new Article 31bis to be inserted into the TRIPS Agreement provides that “Members shall not challenge any measures taken in conformity with the provisions of this Article and the Annex to this Agreement under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994? For more information on these decisions, please see paragraphs 192?a href="trips_02_e.htm#195">195 above.⁽²⁹⁹⁾

286.   In a Decision of 2 December 2009, the Ministerial Conference extended the moratorium to its next meeting (to be held in December 2011):

“We take note of the work done by the Council for Trade-Related Aspects of Intellectual Property Rights pursuant to paragraph 11.1 of the Doha Decision on Implementation-Related Issues and Concerns and paragraph 45 of the Hong Kong Ministerial Declaration, and direct it to continue its examination of the scope and modalities for complaints of the types provided for under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994 and make recommendations to our next Session, which we have decided to hold in 2011. It is agreed that, in the meantime, Members will not initiate such complaints under the TRIPS Agreement.?sup id="fntext-300">(300)

 

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LXVI. Article 65  

A. Text of Article 65

Article 65: Transitional Arrangements

1.   Subject to the provisions of paragraphs 2, 3 and 4, no Member shall be obliged to apply the provisions of this Agreement before the expiry of a general period of one year following the date of entry into force of the WTO Agreement.

 

2.   A developing country Member is entitled to delay for a further period of four years the date of application, as defined in paragraph 1, of the provisions of this Agreement other than Articles 3, 4 and 5.

 

3.   Any other Member which is in the process of transformation from a centrally-planned into a market, free-enterprise economy and which is undertaking structural reform of its intellectual property system and facing special problems in the preparation and implementation of intellectual property laws and regulations, may also benefit from a period of delay as foreseen in paragraph 2.

 

4.   To the extent that a developing country Member is obliged by this Agreement to extend product patent protection to areas of technology not so protectable in its territory on the general date of application of this Agreement for that Member, as defined in paragraph 2, it may delay the application of the provisions on product patents of Section 5 of Part II to such areas of technology for an additional period of five years.

 

5.   A Member availing itself of a transitional period under paragraphs 1, 2, 3 or 4 shall ensure that any changes in its laws, regulations and practice made during that period do not result in a lesser degree of consistency with the provisions of this Agreement.

B. Interpretation and Application of Article 65

1. General

287.   In Canada ?Patent Term, after upholding the Panel’s finding that a term of protection available under the Canadian patent law was shorter than required under Article 33, the Appellate Body distinguished the content of TRIPS obligations from their temporal effect:

“In conclusion, we wish to point out that our findings in this appeal have no effect whatsoever on the transitional arrangements found in Part VI of the TRIPS Agreement. The provisions in Part VI establish when obligations of the TRIPS Agreement are to be applied by a WTO Member and not what those obligations are. The issues raised in this appeal relate to what the obligations are, not to when they apply.?sup id="fntext-301">(301)

2. Article 65.4

(a) “an additional period of five years?/p>

288.   In India ?Patents (US), the Panel linked Articles 27 and 65:

?a href="trips_02_e.htm#article27">Article 27 requires that patents be made available in all fields of technology, subject to certain narrow exceptions. Article 65 provides for transitional periods for developing countries: in general five years from the entry into force of the WTO Agreement, i.e. 1 January 2000, and an additional five years to provide for product patents in areas of technology not so patentable as of 1 January 2000. Thus, in such areas of technology, developing countries are not required to provide product patent protection until 1 January 2005.?sup id="fntext-302">(302)

289.   In India ?Patents (EC), the Panel emphasized that its findings on the substance of the TRIPS obligations do not relate in any way to the transition period:

“Since the matter has been addressed by India in its arguments and caused some confusion in the previous case, we would like to underline that the Panel’s findings do not in any way foreshorten the transition period of until, at the latest, 1 January 2005 that India has for meeting its obligations under Articles 65.4 and 70.8(b) and (c).?sup id="fntext-303">(303)

3. Article 65.5

(a) “changes ?do not result in a lesser degree of consistency?/p>

290.   In Indonesia ?Autos, the Panel examined the claim of the United States that “Indonesia is in violation of its obligations under Article 65.5 of the TRIPS Agreement because provisions of the National Car Programme which were introduced by Indonesia during its transition period under the TRIPS Agreement put special requirements on nationals of other WTO Members in respect of the use of their trademarks which are inconsistent with the provisions of Article 20 of the TRIPS Agreement?

“The arguments put forward by the United States in support of its claim [under Article 65.5] are essentially the same as those that have been considered in paragraphs 14.277 and 14.278 above [in relation to Article 3, in conjunction with Article 20 on use of trademarks]. For the reasons set out in those paragraphs above, [that these are not ‘requirements?in the sense of Article 20] we find that the United States has not demonstrated that measures have been taken that reduce the degree of consistency with the provisions of Article 20 and which would therefore be in violation of Indonesia’s obligations under Article 65.5 of the TRIPS Agreement.?sup id="fntext-304">(304)

4. Relationship with other Articles

291.   In Indonesia ?Autos, the Panel noted that the transition period under Article 65.2 does not apply to Article 3:

“[W]e note that Indonesia has been under an obligation to apply the provisions of Article 3 since 1 January 1996, Article 3 not benefiting from the additional four years of transition generally provided by Article 65.2 to developing country Members.?sup id="fntext-305">(305)

292.   The Panel in India ?Patents (US) made clear that Article 70.8 is also one of the provisions of the TRIPS Agreement to which the transition period of Article 65 does not apply:

“However, these transitional provisions [in Article 65] are not applicable to Article 70.8, which ensures that, if product patent protection is not already available for pharmaceutical and agricultural chemical product inventions, a means must be in place as of 1 January 1995 which allows for the entitlement to file patent applications for such inventions and the allocation of filing and priority dates to them so that the novelty of the inventions in question and the priority of the applications claiming their protection can be preserved for the purposes of determining their eligibility for protection by a patent at the time that product patent protection will be available for these inventions, i.e. at the latest after the expiry of the transitional period.?⁽³⁰⁶⁾

293.   Certain provisions of the TRIPS Agreement contain obligations contingent upon the applicability of Article 65 (and 66). The Panel in India ?Patents (US) held with respect to Article 70.9:

“As is the case with Article 70.8(a), the granting of exclusive marketing rights is a special obligation linked with the enjoyment by Members of the transitional arrangements under Articles 65 and 66 of the Agreement.?sup id="fntext-307">(307)

 

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LXVII. Article 66  

A. Text of Article 66

Article 66: Least-Developed Country Members

1.   In view of the special needs and requirements of least-developed country Members, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base, such Members shall not be required to apply the provisions of this Agreement, other than Articles 3, 4 and 5, for a period of 10 years from the date of application as defined under paragraph 1 of Article 65. The Council for TRIPS shall, upon duly motivated request by a least-developed country Member, accord extensions of this period.

 

2.   Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.

B. Interpretation and Application of Article 66

1. Article 66.1

(a) Extension of transition period

294.   On 27 June 2002, the Council for TRIPS adopted a decision extending the transition period under Article 66.1 for least-developed country Members for certain obligations with respect to pharmaceutical products, in the following terms:

?.   Least-developed country Members will not be obliged, with respect to pharmaceutical products, to implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement or to enforce rights provided for under these Sections until 1 January 2016.

 

2.   This decision is made without prejudice to the right of least-developed country Members to seek other extensions of the period provided for in paragraph 1 of Article 66 of the TRIPS Agreement.?sup id="fntext-308">(308)

295.   On 15 June 2005, the Council for TRIPS adopted a decision extending the Maldives?transition period under Article 66.1. The terms of the decision provide that “the Maldives shall not be required to apply the provisions of the TRIPS Agreement, other than Articles 3, 4 and 5, until 20 December 2007?⁽³⁰⁹⁾

296.   On 29 November 2005, the Council for TRIPS adopted a decision extending the transition period under Article 66.1 for least-developed country Members. The terms of the decision include inter alia the following:

?.   Least-developed country Members shall not be required to apply the provisions of the Agreement, other than Articles 3, 4 and 5, until 1 July 2013, or until such a date on which they cease to be a least-developed country Member, whichever date is earlier.

?/p>

5.   Least-developed country Members will ensure that any changes in their laws, regulations and practice made during the additional transitional period do not result in a lesser degree of consistency with the provisions of the TRIPS Agreement.

 

6.   This Decision is without prejudice to the Decision of the Council for TRIPS of 27 June 2002 on “Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for Least-Developed Country Members for Certain Obligations with respect to Pharmaceutical Products? (IP/C/25), and to the right of least-developed country Members to seek further extensions of the period provided for in paragraph 1 of Article 66 of the Agreement.?sup id="fntext-310">(310)

(b) Relationship with other Articles

297.   With respect to the relationship of Article 66.1 with Article 70.8(a) and 70.9, see paragraphs 292?a href="#293">293 above.

2. Article 66.2

298.   On 19 February 2003, the Council for TRIPS adopted a decision establishing arrangements for the submission by developed country Members of annual reports on their implementation of Article 66.2 and their annual review by the Council for TRIPS.⁽³¹¹⁾

 

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LXVIII. Article 67  

A. Text of Article 67

Article 67: Technical Cooperation

   In order to facilitate the implementation of this Agreement, developed country Members shall provide, on request and on mutually agreed terms and conditions, technical and financial cooperation in favour of developing and least-developed country Members. Such cooperation shall include assistance in the preparation of laws and regulations on the protection and enforcement of intellectual property rights as well as on the prevention of their abuse, and shall include support regarding the establishment or reinforcement of domestic offices and agencies relevant to these matters, including the training of personnel.

B. Interpretation and Application of Article 67

299.   In order to ensure that information on available assistance is readily accessible and to facilitate the monitoring of compliance with the obligation of Article 67, developed country Members have agreed to present descriptions of their relevant technical and financial cooperation programmes and to update this annually. For the sake of transparency, intergovernmental organizations have also presented, on the invitation of the Council, information on their activities.⁽³¹²⁾

300.   At its meeting in July 1996, the TRIPS Council agreed that each developed country Member should notify a contact point for technical cooperation on TRIPS, in particular for the exchange of information between donors and recipients of technical assistance.⁽³¹³⁾

301.   Article 4 of the Agreement between the World Intellectual Property Organization and World Trade Organization contains provisions on legal-technical assistance and technical cooperation.⁽³¹⁴⁾

 

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LXIX. Article 68  

A. Text of Article 68

Article 68: Council for Trade-Related Aspects of Intellectual Property Rights

   The Council for TRIPS shall monitor the operation of this Agreement and, in particular, Members?compliance with their obligations hereunder, and shall afford Members the opportunity of consulting on matters relating to the trade-related aspects of intellectual property rights. It shall carry out such other responsibilities as assigned to it by the Members, and it shall, in particular, provide any assistance requested by them in the context of dispute settlement procedures. In carrying out its functions, the Council for TRIPS may consult with and seek information from any source it deems appropriate. In consultation with WIPO, the Council shall seek to establish, within one year of its first meeting, appropriate arrangements for cooperation with bodies of that Organization.

B. Interpretation and Application of Article 68

1. Rules of procedure of the Council for TRIPS

302.   At its meetings of 24 May 1995 and 21 September 1995, the Council for TRIPS adopted its rules of procedure. At its meeting on 15 November 1995, the General Council approved those rules of procedure.⁽³¹⁵⁾

2. Observer status

303.   With respect to the entities that have been granted observer status in the Council for TRIPS, see below.

(a) Organizations granted observer status

• Food and Agricultural Organization (FAO)
   
• International Monetary Fund (IMF)
   
• International Union for the Protection of New Varieties of Plants (UPOV) ?br> 
• Organization for Economic Cooperation and Development (OECD)
   
• United Nations (UN)
   
• United Nations Conference on Trade and Development (UNCTAD)
   
• World Bank
   
• World Customs Organization (WCO)
   
• World Intellectual Property Organization (WIPO)

(b) Organizations having ad hoc observer status

• World Health Organization (WHO)

3. Cooperation with WIPO

304.   At its meeting of 11 December 1995, the Council for TRIPS approved the text of a proposed agreement between the World Intellectual Property Organization and the World Trade Organization, and agreed to submit it to the General Council for its approval. At its meeting on 13 December 1995, the General Council approved the proposed agreement.⁽³¹⁶⁾ The Agreement was signed on behalf of the organizations on 22 December 1995 and entered into force on 1 January 1996.

305.   On 29 November 2005, the Council for TRIPS adopted a decision extending the transition period under Article 66.1 for least-developed country Members. Paragraphs 2? of the decision concern enhanced technical cooperation for least-developed country Members. Paragraph 4 reads as follows:

“In order to assist least-developed country Members to draw up the information to be presented in accordance with paragraph 2, and with a view to making technical assistance and capacity building as effective and operational as possible, the WTO shall seek to enhance its cooperation with the World Intellectual Property Organization and with other relevant international organizations.?sup id="fntext-317">(317)

 

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LXX. Article 69  

A. Text of Article 69

Article 69: International Cooperation

   Members agree to cooperate with each other with a view to eliminating international trade in goods infringing intellectual property rights. For this purpose, they shall establish and notify contact points in their administrations and be ready to exchange information on trade in infringing goods. They shall, in particular, promote the exchange of information and cooperation between customs authorities with regard to trade in counterfeit trademark goods and pirated copyright goods.

B. Interpretation and Application of Article 69

1. Notification requirements

306.   At its meeting of 21 September 1995, the Council for TRIPS adopted a common procedure for the notification of contact points that Members had established for the purposes of Article 69.⁽³¹⁸⁾

 

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LXXI. Article 70  

A. Text of Article 70

Article 70: Protection of Existing Subject Matter

1.   This Agreement does not give rise to obligations in respect of acts which occurred before the date of application of the Agreement for the Member in question.

 

2.   Except as otherwise provided for in this Agreement, this Agreement gives rise to obligations in respect of all subject matter existing at the date of application of this Agreement for the Member in question, and which is protected in that Member on the said date, or which meets or comes subsequently to meet the criteria for protection under the terms of this Agreement. In respect of this paragraph and paragraphs 3 and 4, copyright obligations with respect to existing works shall be solely determined under Article 18 of the Berne Convention (1971), and obligations with respect to the rights of producers of phonograms and performers in existing phonograms shall be determined solely under Article 18 of the Berne Convention (1971) as made applicable under paragraph 6 of Article 14 of this Agreement.

 

3.   There shall be no obligation to restore protection to subject matter which on the date of application of this Agreement for the Member in question has fallen into the public domain.

 

4.   In respect of any acts in respect of specific objects embodying protected subject matter which become infringing under the terms of legislation in conformity with this Agreement, and which were commenced, or in respect of which a significant investment was made, before the date of acceptance of the WTO Agreement by that Member, any Member may provide for a limitation of the remedies available to the right holder as to the continued performance of such acts after the date of application of this Agreement for that Member. In such cases the Member shall, however, at least provide for the payment of equitable remuneration.

 

5.   A Member is not obliged to apply the provisions of Article 11 and of paragraph 4 of Article 14 with respect to originals or copies purchased prior to the date of application of this Agreement for that Member.

 

6.   Members shall not be required to apply Article 31, or the requirement in paragraph 1 of Article 27 that patent rights shall be enjoyable without discrimination as to the field of technology, to use without the authorization of the right holder where authorization for such use was granted by the government before the date this Agreement became known.

 

7.   In the case of intellectual property rights for which protection is conditional upon registration, applications for protection which are pending on the date of application of this Agreement for the Member in question shall be permitted to be amended to claim any enhanced protection provided under the provisions of this Agreement. Such amendments shall not include new matter.

 

8.   Where a Member does not make available as of the date of entry into force of the WTO Agreement patent protection for pharmaceutical and agricultural chemical products commensurate with its obligations under Article 27, that Member shall:

 

(a)   notwithstanding the provisions of Part VI, provide as from the date of entry into force of the WTO Agreement a means by which applications for patents for such inventions can be filed;

 

(b)   apply to these applications, as of the date of application of this Agreement, the criteria for patentability as laid down in this Agreement as if those criteria were being applied on the date of filing in that Member or, where priority is available and claimed, the priority date of the application; and

 

(c)   provide patent protection in accordance with this Agreement as from the grant of the patent and for the remainder of the patent term, counted from the filing date in accordance with Article 33 of this Agreement, for those of these applications that meet the criteria for protection referred to in subparagraph (b).

 

9.   Where a product is the subject of a patent application in a Member in accordance with paragraph 8(a), exclusive marketing rights shall be granted, notwithstanding the provisions of Part VI, for a period of five years after obtaining marketing approval in that Member or until a product patent is granted or rejected in that Member, whichever period is shorter, provided that, subsequent to the entry into force of the WTO Agreement, a patent application has been filed and a patent granted for that product in another Member and marketing approval obtained in such other Member.

B. Interpretation and Application of Article 70

1. General

(a) Relationship between Article 70.1 and 70.2

307.   In Canada ?Patent Term, Canada argued that the grant of a patent term is an integral part of the act granting the patent in question. As such, Canada considered that the length of the patent terms falls within the scope of the term “act?contained in Article 70.1. From this, Canada concluded that the grant of the patent term is part of an act which occurred before the entry into force of the TRIPS Agreement, with the result that Article 33 did not apply. With respect to the relationship between Article 70.1 and 70.2, Canada argued that the phrase “except as otherwise provided for in this Agreement?demonstrates that Article 70.2 does not apply in this instance and that Article 70.1 takes precedence over Article 70.2. The Appellate Body rejected this argument:

“Like the Panel, we see Articles 70.1 and 70.2 as dealing with two distinct and separate matters. The former deals with past ‘acts? while the latter deals with ‘subject-matter?existing on the applicable date of the TRIPS Agreement. Article 70.1 of the TRIPS Agreement operates only to exclude obligations in respect of ‘acts which occurred?before the date of application of the TRIPS Agreement, but does not exclude rights and obligations in respect of continuing situations. On the contrary, ‘subject matter existing ?which is protected?is clearly a continuing situation, whether viewed as protected inventions, or as the patent rights attached to them. ‘Subject matter existing ?which is protected?is not within the scope of Article 70.1, and, therefore, the ‘[e]xcept as otherwise provided for?clause in Article 70.2 can have no application to it. Thus, for the sake of argument, even if there is a relationship between Article 70.1 and the opening proviso in Article 70.2, Canada’s argument with respect to Old Act patents fails nonetheless, as we have concluded that the continuing rights relating to Old Act patents do not fall within the scope of Article 70.1.

 

We wish to point out that our interpretation of Article 70 does not lead to a ‘retroactive?application of the TRIPS Agreement. Article 70.1 alone addresses ‘retroactive?circumstances, and it excludes them generally from the scope of the Agreement. The application of Article 33 to inventions protected under Old Act patents is justified under Article 70.2, not Article 70.1. A treaty applies to existing rights, even when those rights result from ‘acts which occurred?before the treaty entered into force.?sup id="fntext-319">(319)

2. Article 70.1

(a) “acts which occurred before the date of application of the Agreement?/p>

308.   In Canada ?Patent Term, in the context of juxtaposing the term “acts?under Article 70.1 and the term “subject-matter?under Article 70.2, the Appellate Body held with respect to the former:

“Our main task is to give meaning to the phrase ‘acts which occurred before the date of application?and to interpret Article 70.1 harmoniously with the rest of the provisions of Article 70. We are of the view that the term ‘acts?has been used in Article 70.1 in its normal or ordinary sense of ‘things done? ‘deeds? ‘actions? or ‘operations? In the context of ‘acts?falling within the domain of intellectual property rights, the term ‘acts?in Article 70.1 may, therefore, encompass the ‘acts?of public authorities (that is, governments as well as their regulatory and administrative authorities) as well as the ‘acts?of private or third parties. Examples of the ‘acts?of public authorities may include, in the field of patents, the examination of patent applications, the grant or rejection of a patent, the revocation or forfeiture of a patent, the grant of a compulsory licence, the impounding by customs authorities of goods alleged to infringe the intellectual property rights of a holder, and the like. Examples of ‘acts?of private or third parties may include ‘acts?such as the filing of a patent application, infringement or other unauthorized use of a patent, unfair competition, or abuse of patent rights.?sup id="fntext-320">(320)

309.   The Appellate Body then reached a conclusion on the scope of application of Article 70.1:

“We conclude, therefore, that Article 70.1 of the TRIPS Agreement cannot be interpreted to exclude existing rights, such as patent rights, even if such rights arose through acts which occurred before the date of application of the TRIPS Agreement for a Member. We, therefore, confirm the finding of the Panel that Article 70.1 does not exclude from the scope of the TRIPS Agreement Old Act patents [i.e. Canadian patents granted on the basis of patent applications filed before 1 October 1989] that existed on the date of application of the TRIPS Agreement for Canada.?sup id="fntext-321">(321)

310.   In reaching the previous conclusion, the Appellate Body relied both on the wording of Article 70.1, as well as on the object and purpose of the TRIPS Agreement:

“The ordinary meaning of the term ‘acts? suggests that the answer to this question must be no. An ‘act?is something that is ‘done? and the use of the phrase ‘acts which occurred?suggests that what was done is now complete or ended. This excludes situations, including existing rights and obligations, that have not ended. Indeed, the title of Article 70, ‘Protection of Existing Subject Matter? confirms contextually that the focus of Article 70 is on bringing within the scope of the TRIPS Agreement ‘subject matter?which, on the date of the application of the Agreement for a Member, is existing and which meets the relevant criteria for protection under the Agreement.

 

A contrary interpretation would seriously erode the scope of the other provisions of Article 70, especially the explicit provisions of Article 70.2. Almost any existing situation or right can be said to have arisen from one or more past ‘acts? For example, virtually all contractual and property rights could be said to arise from ‘acts which occurred?in the past. If the phrase ‘acts which occurred? were interpreted to cover all continuing situations involving patents which were granted before the date of application of the TRIPS Agreement for a Member, including such rights as those under Old Act patents, then Article 70.1 would preclude the application of virtually the whole of the TRIPS Agreement to rights conferred by the patents arising from such ‘acts? This is not consistent with the object and purpose of the TRIPS Agreement, as reflected in the Preamble of the Agreement.?sup id="fntext-322">(322)

3. Article 70.2

(a) “subject matter existing at the date of application of this Agreement?/p>

311.   In Canada ?Patent Term, the Appellate Body distinguished clearly between the term “acts?within Article 70.1. and the term “subject-matter?under Article 70.2. With respect to the latter term, the Appellate Body relied, inter alia, on the use of the term in other provisions of the TRIPS Agreement:

“We agree with the Panel’s reasoning that ‘subject matter?in Article 70.2 refers, in the case of patents, to inventions. The ordinary meaning of the term ‘subject-matter?is a ‘topic dealt with or the subject represented in a debate, exposition, or work of art? Useful context is provided by the qualification of the term ‘subject matter? in the same sentence of Article 70.2, by the word ‘protected? as well as by the phrase ‘meet the criteria for protection under the terms of this Agreement?appearing later in the same sentence. As noted earlier, the title to Article 70 also uses the words ‘Protection of Existing Subject Matter? We can deduce, therefore, that the ‘subject matter? for purposes of Article 70.2, is that which is ‘protected? or ‘meets the criteria for protection? under the terms of the TRIPS Agreement. As, in the present case, patents are the means of protection, then whatever patents protect must be the ‘subject matter?to which Article 70.2 refers.

 

Articles 27, 28, 31 and 34 of the TRIPS Agreement also use the words ‘subject-matter?with respect to patents and provide an equally useful context for interpretation. Article 27, entitled ‘Patentable Subject-matter? states: ‘patents shall be available for any inventions?/i>?. This Article identifies the criteria that an invention must fulfill in order to be eligible to receive a patent, and it also identifies the types of inventions that may be excluded from patentability even if they meet those criteria. On the other hand, in Articles 28, 31 and 34, the words ‘subject-matter?relate to patents that are granted pursuant to the criteria in Article 27; that is to say, these Articles relate to inventions that are protected by patents granted, as distinguished from the ‘patentable? inventions to which Article 27 refers. These Articles confirm the conclusion that inventions are the relevant ‘subject-matter?in the case of patents, and that the ‘subject-matter?in Article 70.2 means, in the case of patents, patentable or patented inventions. Article 70.2 thus gives rise to obligations in respect of all such inventions existing on the date of application of the TRIPS Agreement for a Member. In the appeal before us, where the measure in dispute is Section 45 of Canada’s Patent Act, which applies to Old Act patents, the word ‘subject-matter? means the inventions that were protected by those patents. We, therefore, confirm the conclusion of the Panel in this regard.?sup id="fntext-323">(323)

4. Article 70.8

(a) “a means by which applications for patents for such inventions can be filed?/p>

312.   In India ?Patents (US), in reviewing the Panel’s finding that the patent law of India was inconsistent with Article 70.8, the Appellate Body considered the meaning of the term “means? within the phrase ?a means by which applications for patents for such inventions can be filed?

?a href="#article708a">Article 70.8(a) imposes an obligation on Members to provide ‘a means?by which mailbox applications can be filed ‘from the date of entry into force of the WTO Agreement? Thus, this obligation has been in force since 1 January 1995. The issue before us in this appeal is not whether this obligation exists or whether this obligation is now in force. Clearly, it exists, and, equally clearly, it is in force now. The issue before us in this appeal is: what precisely is the ‘means?for filing mailbox applications that is contemplated and required by Article 70.8(a)?

?/p>

We believe the Panel was correct in finding that the ‘means?that the Member concerned is obliged to provide under Article 70.8(a) must allow for ‘the entitlement to file mailbox applications and the allocation of filing and priority dates to them? Furthermore, the Panel was correct in finding that the ‘means?established under Article 70.8(a) must also provide ‘a sound legal basis to preserve novelty and priority as of those dates? These findings flow inescapably from the necessary operation of paragraphs (b) and (c) of Article 70.8.?sup id="fntext-324">(324)

313.   While the term “means?was held to include the notion of a “sound legal basis? the Appellate Body also found that such a “sound legal basis?did not have to provide for complete legal certainty with respect to the future grant of the relevant patent:

“However, we do not agree with the Panel that Article 70.8 (a) requires a Member to establish a means ‘so as to eliminate any reasonable doubts regarding whether mailbox applications and eventual patents based on them could be rejected or invalidated because, at the filing or priority date, the matter for which protection was sought was unpatentable in the country in question? India is entitled, by the ‘transitional arrangements?in paragraphs 1, 2 and 4 of Article 65, to delay application of Article 27 for patents for pharmaceutical and agricultural chemical products until 1 January 2005. In our view, India is obliged, by Article 70.8(a), to provide a legal mechanism for the filing of mailbox applications that provides a sound legal basis to preserve both the novelty of the inventions and the priority of the applications as of the relevant filing and priority dates. No more.?sup id="fntext-325">(325)

5. Article 70.9

(a) “exclusive marketing rights?/p>

314.   In India ?Patents (US), reviewing the Panel’s finding that the patent law of India was inconsistent with Article 70.9, the Appellate Body addressed the relationship between Article 70.8(a) and 70.9:

“By its terms, Article 70.9 applies only in situations where a product patent application is filed under Article 70.8(a). Like Article 70.8(a), Article 70.9 applies ‘notwithstanding the provisions of Part VI? Article 70.9 specifically refers to Article 70.8(a), and they operate in tandem to provide a package of rights and obligations that apply during the transitional periods contemplated in Article 65. It is obvious, therefore, that both Article 70.8(a) and Article 70.9 are intended to apply as from the date of entry into force of the WTO Agreement.?sup id="fntext-326">(326)

315.   In India ?Patents (EC), examining the EC claim under Article 70.9, the Panel addressed the argument by India that Article 70.9, by referring only to the grant of “exclusive marketing rights?should be distinguished from e.g. the phrase “patents shall be available?under Article 27:

“India essentially repeats its arguments in the previous case that the obligations under Article 70.9 should be distinguished from those under other provisions of the TRIPS Agreement because it uses the term ‘exclusive marketing rights shall be granted …’. According to India, there is a material difference between this expression and such other expressions as ‘patents shall be available …’ in Article 27. We disagree. The Panel report in dispute WT/DS50 [India ? Patents (US)] points out that the term ‘right?connotes an entitlement to which a person has a just claim and that, as such, it implies general, non-discretionary availability in the case of those eligible to exercise it. It was held that an exclusive marketing right could not be ‘granted?in a specific case unless it was ‘available? in the first place. The Panel’s view was upheld by the Appellate Body, and we do not see any reason to adopt a different position in the present case. In this connection, we would also note that India considers that exclusive marketing rights are to be granted in response to requests from those who are eligible. In our view, a request-based system of rights cannot operate effectively unless there is a mechanism in place that establishes general availability and enables such requests to be made.?sup id="fntext-327">(327)

(b) Least-developed country Members

316.   On 8 July 2002 the General Council adopted a waiver of the obligations of least-developed country Members under paragraph 9 of Article 70 with respect to pharmaceutical products until 1 January 2016.⁽³²⁸⁾

6. Relationship with other Articles

(a) Relationship between Section 5 of Part II and Article 70.2

317.   In Canada ?Patent Term, the Appellate Body addressed the relationship between Section 5 and Article 70.2:

? Article 70.2 applies the obligations of the TRIPS Agreement to ‘all subject matter existing ?and which is protected?on the date of application of the TRIPS Agreement for a Member. A Member is required, as from that date, to implement all obligations under the TRIPS Agreement in respect of such existing subject matter. This includes the obligation in Article 33. We see no basis in the text for isolating or insulating the obligation in Article 33 relating to the duration of a patent term from the other obligations relating to patents that are also found in Section 5 of the TRIPS Agreement. There is nothing whatsoever in Section 5 to indicate that the obligation relating to patent term in Article 33 differs in application in any respect from the other obligations in Section 5. An obligation that relates to duration must necessarily have a beginning and an end date. On that ground alone, it cannot be argued that the obligation is attached to, and arises uniquely from, certain ‘acts? Although Canada has not done so, it could just as easily be argued that the exclusive rights under Article 28 are also an ‘integral part?of the ‘act?of granting a patent, as those rights also can arise only from the grant and consequent existence of a patent.?sup id="fntext-329">(329)

(b) Relationships between Articles 65 and 66 and Article 70.8 and 70.9

318.   With respect to the relationship between Article 65 and Article 70.8, see paragraph 292 above. With respect to the relationship between Articles 65 and 66 and Article 70.9, see paragraph 293 above.

 

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LXXII. Article 71  

A. Text of Article 71

Article 71: Review and Amendment

1.   The Council for TRIPS shall review the implementation of this Agreement after the expiration of the transitional period referred to in paragraph 2 of Article 65. The Council shall, having regard to the experience gained in its implementation, review it two years after that date, and at identical intervals thereafter. The Council may also undertake reviews in the light of any relevant new developments which might warrant modification or amendment of this Agreement.

 

2.   Amendments merely serving the purpose of adjusting to higher levels of protection of intellectual property rights achieved, and in force, in other multilateral agreements and accepted under those agreements by all Members of the WTO may be referred to the Ministerial Conference for action in accordance with paragraph 6 of Article X of the WTO Agreement on the basis of a consensus proposal from the Council for TRIPS.

B. Interpretation and Application of Article 71

319.   The Council for TRIPS took up the issue of the review of implementation of the TRIPS Agreement under Article 71.1 at its meeting in March 2000.⁽³³⁰⁾

320.   In paragraph 19 of the Doha Ministerial Declaration, adopted on 14 November 2001, Ministers “instruct[ed] the Council for TRIPS, in pursuing its work programme including under the review of Article 27.3(b), the review of the implementation of the TRIPS Agreement under Article 71.1 and the work foreseen pursuant to paragraph 12 of this Declaration, to examine, inter alia, the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by Members pursuant to Article 71.1.?sup id="fntext-331">(331) In paragraph 44 of the Hong Kong Ministerial Declaration, Ministers “[took] note of the work undertaken by the Council for TRIPS pursuant to paragraph 19 of the Doha Ministerial Declaration and agree[d] that this work shall continue on the basis of paragraph 19 of the Doha Ministerial Declaration and the progress made in the Council for TRIPS to date? They instructed the General Council to report on its work in this regard to their next Session.?sup id="fntext-332">(332)

 

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LXXIII. Article 72  

A. Text of Article 72

Article 72: Reservations

   Reservations may not be entered in respect of any of the provisions of this Agreement without the consent of the other Members.

B. Interpretation and Application of Article 72

No jurisprudence or decision of a competent WTO body.

 

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LXXIV. Article 73  

A. Text of Article 73

Article 73: Security Exceptions

Nothing in this Agreement shall be construed:

 

(a)   to require a Member to furnish any information the disclosure of which it considers contrary to its essential security interests; or

 

(b)   to prevent a Member from taking any action which it considers necessary for the protection of its essential security interests;

 

(i)   relating to fissionable materials or the materials from which they are derived;

 

(ii)   relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment;

 

(iii)   taken in time of war or other emergency in international relations; or

 

(c)   to prevent a Member from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

B. Interpretation and Application of Article 73

No jurisprudence or decision of a competent WTO body.