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Intellectual Property Provisions of GATT

A GATT Overview

The recently enacted agreement on the Uruguay Round of negotiations to revise the General Agreement on Tariffs and Trade (GATT) provides a new framework within which to operate, namely, the World Trade Organization (WTO), which has its headquarters in Geneva, Switzerland. The first director general is Renato Rugiero, a former Italian trade minister.

Organizationally, the most important change from the old GATT organization is the establishment of a binding dispute settlement procedure. It may be recalled that under the old version of GATT disputes were referred to a panel and the GATT Council could accept or reject the decision of the panel and on occasion member countries could delay or prevent the panel's findings from being presented to the Council. Under the new procedures a Dispute Settlement Body is to be established comprising both panels to make initial determinations on a case and an Appellate Body. Panels will normally be three person panels and appeals will normally also be heard by a three-person panel. Panels investigating a complaint will have the right to seek information or technical advice from anyone they deem appropriate. Findings and recommendations reached by the Dispute Settlement Body can include authorizing a country that has been aggrieved by failure of another to comply with its obligations under the agreement to take reprisals against the erring party. Substantively, the Uruguay Round brought new topics under the GATT umbrella, including intellectual property.

Intellectual Property Provisions of GATT

The general provisions of GATT's Agreement on Trade Related Intellectual Property Issues (TRIPS) follow those of the Paris, Berne, Rome and Semiconductor Chip Conventions providing for national treatment and most favored nation treatment, subject, however, to the exceptions to these principles that already exist in these Conventions. That is to say, member states must not discriminate in favor of their own citizens against the patent, trademark and copyright rights of foreigners who are citizens of other GATT member countries nor favor the rights of citizens of one member country over the rights of citizens of another.

So far as Patents are concerned, the major provisions include the following:

 

1) Patents shall be available and enjoyable without discrimination as to the place of invention, the field of technology or whether the product is imported or produced locally.

 

2) The only types of inventions that countries can exclude from patentability are those whose exploitation would prejudice public order or morality, those involving diagnostic, therapeutic or surgical methods for the treatment of humans or animals, and inventions of plants and animals or essentially biological processes for their production. Countries taking advantage of this provision to preclude the grant of patents for new plants must, however, provide some alternative means of protection for such plants. Significant leeway is, however, permitted in the implementation of these provisions and countries that at present do not grant patents for certain classes of subject matter covered by the agreement are granted periods, depending on their economic status, of up to ten years before they must start granting patents for inventions in these categories. If a country takes advantage of this provision to delay granting patents for inventions in these categories, it must start accepting applications in these categories from the date on which the new version of GATT becomes applicable to it (i.e. January 1, 1995 or the date on which the country deposits its instrument of ratification if this occurs after January 1, 1995). Any applications filed under this provision will remain unexamined in a "black box" until the date on which the relevant category of subject matter becomes patentable in the country. Additionally, non-patent exclusive marketing periods must, subject to certain conditions, be awarded to those who have filed such "black box" applications even before a patent is granted.

 

3) Compulsory licenses or other "official licenses" are only to be permitted after consideration of the individual situation in which such a license is requested and, except in cases of national emergency, the grant of a compulsory license is subject to a number of conditions, including the following:

 

a) The party requesting the license must have used its best efforts to obtain a voluntary license on reasonable commercial terms;

 

b) The compulsory license must be terminated if the circumstances leading to its grant have ceased and are unlikely to recur;

 

c) The holder of the compulsory license must pay adequate compensation for the right to use the invention;

 

d) The determination of the amount of adequate compensation must be subject to independent review;

 

e) Where such a license is granted in order to enable use of a subsequent patented invention, a license shall only be granted if the later invention is an "important technical advance of considerable economic significance" relative to the dominant patent and the owner of the dominant patent is entitled to a cross license under the secured patent.

 

4) The minimum duration of a utility patent must be 20 years from its filing date (which term should apply to any patent still in force on the date on which the TRIPS Agreement comes into effect in the country, subject to limiting the remedies available for infringement in certain cases during the extended period to protect those who had already made substantial investment preparatory to use).

 

5) In patent infringement trials involving patents granted for processes there must be a presumption that a product that could have been made by the process was made by the patented process if either a) the product itself is new or b) there is a substantial likelihood that the product was made by the patented process and after reasonable attempts the patentee has been unable to ascertain exactly what process was used. Since few countries outside the U.S. have discovery proceedings similar to those available to parties in U.S. litigation and obtaining proof of infringement of a process patent is often very difficult in foreign countries, this provision should help to increase the value of process patents in such countries.

Major provisions of GATT relating to Trademarks are:

1) Any visually perceptible sign (including those consisting of letters, numerals and colors) that is capable of distinguishing goods or services of one party from goods of another shall be regarded as being capable of functioning as a trademark and registrable as such. Member states are, however, free to refuse registration of signs that lack inherent distinctiveness, unless those signs have acquired distinctiveness through use.

 

2) Registration may be conditioned on the mark being used. However, actual use must not be a prerequisite for filing an application for registration. Nor shall an application be refused simply because an intended use has not commenced within three years of the application date.

 

3) The Paris Convention provisions relating to protection of well-known marks must apply to marks used in respect of services as well as goods.

 

4) Countries that provide for cancellation of registrations on the ground of nonuse must allow a period of nonuse of at least 3 years before such provisions may be invoked. Furthermore, third party use under the control of the owner of the mark shall inure to the benefit of the owner of the mark.

 

5) Encumbrances on the use of a trademark (such as requirements that its use must be linked with some other mark) are barred.

 

6) Although member countries may impose conditions on the terms under which trademarks may be licensed, compulsory licensing of trademarks is banned as are prohibitions on the right of a trademark owner to assign a trademark without transfer of the business to which the mark belongs.

The major provisions of GATT in the field of Copyright protection include the following:

1) An obligation to comply with the provisions of the Berne Convention;

 

2) A requirement to treat computer programs as literary works for copyright protection purposes and to provide protection for databases if their selection or arrangement "constitute intellectual creations";

 

3) A requirement to give to authors of computer programs and cinematographic works and producers of phonograms the rights in certain circumstances to control commercial rental of the originals or copies of their works;

 

4) An obligation that in respect of works other than photographs and works of applied art, the normal duration of copyright protection shall be at least fifty years from the death of the author;

 

5) Fair use provisions and similar limitations on the exercise of copyright shall be limited to "certain special cases which do not conflict with normal exploitation of a work and do not unreasonably prejudice the legitimate interests of the right holder;" and

 

6) Obligations to afford certain minimum rights for the protection of performers, producers of phonogram, and broadcasting organizations.

In other areas it is required that parties to the GATT Agreement:

1) Provide protection for industrial designs for a period of at least 10 years, and not unreasonably impair the ability to obtain protection for textile designs, although such protection may be by way of copyright rather than industrial design protection if a country so chooses;

 

2) Provide improved protection for geographical indications of origin;

 

3) Provide protection for "undisclosed information". Such protection must be for information that is secret (i.e. is not "as a body or in the precise configuration of its components generally known or readily accessible to persons within the circles that normally deal with the kind of information in question"), has commercial value because it is secret and has been the subject of reasonable steps by its owner to keep it secret. Qualifying information must be protected against use by others without the consent of the owner if this use is contrary to honest commercial practices, including use by third parties if they knew or were grossly negligent in not knowing that the information in question had been obtained dishonestly. Member states must also take adequate steps to protect the confidentiality of data about new chemical entities submitted to government authorities in pursuit of an application to market pharmaceutical or agrochemical products;

 

4) Grant protection for semiconductor chip design for a period of at least 10 years from filing an application for protection or from first commercial exploitation, whichever first occurs.

Procedural Changes under GATT

Perhaps more striking than the substantive law provisions are those that deal with procedural issues. For example, the Agreement requires member states to provide means whereby under appropriate circumstances a judicial tribunal can order production of evidence (something that is virtually impossible in Germany or Japan at present). The Agreement further provides for the availability of provisional remedies. These specifically provide that judicial authorities must have the authority to act promptly to prevent infringement from occurring and/or for preservation of evidence and in appropriate circumstances to act even without giving the alleged infringer the right to be heard. In such cases it is, however, necessary that the unheard party be given an early opportunity to challenge any remedy that has been ordered. Such remedies may be subject to the right holder having to indemnify any party who has been wrongfully enjoined or restrained. The Agreement specifically provides that damages awarded for infringement of an intellectual property right must be "adequate to compensate for the injury" suffered and that the judicial authorities must have the right to award attorney fees to an intellectual property rights holder who proves that his or her rights have been infringed.

In addition to the civil remedies set out above, countries are also required to provide for criminal procedures and penalties for "at least" willful trademark infringement and copyright piracy on a commercial scale.

Additionally, member states are required to establish procedures to facilitate interception of "counterfeit" trademark or "pirated copyright goods" by customs authorities at national boundaries. To be entitled to take advantage of these provisions, the right holder will have to satisfy the competent authorities that prima facie rights exist and give a sufficiently detailed description of the goods as to make them "readily recognizable" by the customs authorities. Implementation of such procedures may be made subject to the right holder having to provide a security or equivalent assurance sufficient to protect the importer and the authorities in case of import of legitimate goods being impeded and "to prevent abuse". In cases where an interception has occurred, the goods will normally only have to be held for a ten day period unless proceedings are commenced within that period for an action on the merits to determine whether the goods are in fact infringements of intellectual property rights. If no such action is commenced, the goods will be released.

Industrialized countries are required to implement most provisions of the TRIPS within one year of the WTO Agreement taking effect. Less developed countries are given a five or ten year period to comply with most provisions depending on their state of economic development.