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This year the TRIPS Agreement – the centerpiece of a global effort to promote enforcement of intellectual property laws – is going out into the world on its own. As of Jan. 1, developing country members of the World Trade Organization must meet almost all obligations of the TRIPS Agreement (TRIPS stands for Trade-Related Aspects of Intellectual Property Rights), just as developed country members have been required to do for the past five years. TRIPS sets minimum standards for the content and enforcement of intellectual property law. Extending its reach is critical to the future of the agreement. In some jurisdictions, TRIPS will require more than revising the substantive law of copyright, trademark, patent, and other forms of IP protection – a big enough task, but one that a number of countries have already undertaken. It will also mean meeting the requirements for “effective” enforcement of IP laws on the civil and criminal sides of the docket, including procedural standards in areas like search-and-seizure law and performance standards that demand actual deterrence and adequate compensation. This emphasis on effective enforcement is one of the most remarkable features of TRIPS. It gives the treaty better and sharper “teeth” than the World Intellectual Property Organization (WIPO) agreements that formed the core of international IP law before TRIPS first came into force in 1995. (TRIPS arose out of the same Uruguay Round Agreements that launched the WTO.) Partly because the TRIPS provisions are novel and untested, achieving effective IP enforcement will be among the toughest challenges facing the WTO in the next several years. The issue has only been skirted thus far in dispute resolution cases brought under TRIPS, most notably in a pending complaint in which the United States alleges that Greek authorities have failed to enforce copyright laws to stop unauthorized broadcast of foreign films on Greek television. Now that developing countries with historically poor IP enforcement are entering the picture, such disputes should soon move to center stage. According to estimates by various industry groups, piracy levels in developing countries routinely exceed 50 percent and frequently rise above 75 percent of the market for IP products (books, music, software, movies, etc.) In other words, lawful trade in IP products is still the exception rather than the rule in much of the developing world, and current levels of enforcement are not having a deterrent effect. SEATTLE STALEMATE With the developing countries’ deadline looming, several delegations came to the WTO Ministerial Conference in Seattle late last year seeking a blanket extension. IP exporting nations, having already given a five-year grace period, offered to consider extenuating circumstances on a case-by-case basis. But they gave no ground on the overall deadline. The debate has since continued at WTO headquarters in Geneva. A few members also disagreed over the finer points of pleading TRIPS disputes. Led by Canada and France, some countries want to extend an existing provision that prevents countries from bringing “nonviolation” nullification and impairment claims under TRIPS. Those claims, which allege indirect harm (something like a “frustration of purpose” argument), originated as a way to prevent countries from using nontrade regulations (taxes, for example) to negate the benefits of reduced tariffs. The French and the Canadians may be worried that their cultural protection laws, which usually favor domestic products (music, for example) over imports, could be vulnerable in a nonviolation case. This is only speculation, however – no country has actually moved to initiate such a dispute. Without more compelling reasons, IP industries are understandably reluctant to open the door to changing TRIPS’s basic provisions. It looked as if negotiators in Seattle were willing to explore some kind of understanding – probably short of amendments to the treaty itself – on both of these questions. But if there was a compromise in the works, it fell victim to WTO members’ inability to agree on other issues. That roadblock is unlikely to go away this year. Reluctance to extend the developing countries’ deadline stems in part from the fact that the issues cited in favor of delay – like lack of infrastructure – do not apply equally to all developing countries or, for that matter, to all TRIPS obligations. Where it is simply a matter of revising rules, developed countries argue, five years is more than enough. And in many instances, there is little evidence that countries are even trying to improve enforcement. Cases where officials turn a blind eye to IP violations suggest that the problem is as much attitude as resources. Developed countries seem ready now to draw the line between hardship and foot-dragging by using the WTO dispute resolution process. UNRESOLVED Over the past five years, fewer than 20 discrete WTO dispute settlement matters have charged significant violations of TRIPS. Most of these matters alleged de jure violations resulting from failure to enact or modify domestic legislation. (The “failure to enforce” allegations in the Greek television case are a prominent exception.) All but a handful have been brought against developed countries. The few cases brought against developing countries have focused on a small set of issues that were not subject to the five-year deferment. Even most of the enforcement issues in these early cases have really been questions of enacting the procedural legislation that TRIPS requires to facilitate IP enforcement. For example, the United States initiated a WTO dispute in 1997 alleging that Swedish law did not provide for ex parte searches as required under Article 50 of TRIPS. Sweden amended the law in 1998, and the case was dropped. Parallel complaints remain pending against Ireland and Denmark, where legislative reforms are also under consideration. Trade officials elsewhere are reviewing similar allegations against Finland, the Philippines, and the Czech Republic, among others. The obligations to provide civil discovery procedures and ex parte searches in TRIPS Articles 43 and 50 should continue to produce fairly straightforward cases – either you have the required procedures or you don’t, and examination of the country’s civil and criminal codes will usually provide the answer. The same is true of the Article 61 obligation to make commercial-scale piracy a crime, rather than merely a civil offense. A second type of case promises to raise more subtle questions of on-the-street, de facto compliance. Whether or not a country is meeting its Article 41 obligations to provide legal proceedings that do not entail unwarranted delays or unnecessary costs, remedies that actually deter future violations, and enforcement procedures that “permit effective action against any act of infringement” cannot be determined simply by looking up statutory provisions. Nonetheless, de facto compliance cases are vital to achieving the ultimate purpose of TRIPS. WTO members have expressly committed themselves to meaningful, result-oriented improvement of IP enforcement. WTO dispute resolution panelists will have to give these broader obligations full effect. BEING ‘EFFECTIVE’ Fortunately, a series of analytical tools are available to help WTO panels resolve complex issues like effectiveness and adequate deterrence. At the broadest level, panels can look at overall piracy rates as the foundation for a prima facie case of nonenforcement or underenforcement. Where there is strong evidence that sales of pirated copies of protected works like films, music, software, and books are pervasive, IP enforcement is obviously not “effective” or exercising deterrence by any measure. To identify more discrete failures, WTO panels will almost certainly employ some kind of comparative approach. For example, if a particular country is alleged to use procedures that cause “unwarranted delays,” panels could allow evidence of the shorter time to litigate in peer nations (those with similar judicial systems and development challenges) to raise a presumption that the delays are unwarranted, subject to whatever evidence the defendant can offer in rebuttal. Analysis of overall piracy rates and comparative analysis will help panels in the short term to identify the most egregious IP enforcement violations. Over the long term, however, the WTO will need to develop a TRIPS jurisprudence that gives effect to the drafters’ intention to promote better IP enforcement worldwide, rather than one exclusively fitted to stopping the worst violators. The WTO’s ability to do so depends on two factors. First is the skill with which complaining nations build a factual basis for assessments of effectiveness and the like. To have value in a dispute resolution proceeding, such assessments should rest on factors like time to litigate, referrals made, arrests, indictments, raids, verdicts, penalties, and damages handed down. Industries that want to raise the bar for IP protection must start laying a strong foundation for future arguments by building reliable databases recording these key statistics. Second is the ability of the WTO, WIPO, and other public and private international groups to establish standards based on “best practices” and other aspirational models. Such work will counteract any tendency on the part of developing nations to institutionalize lower standards of protection and thereby hamper their ability to attract investment and establish IP-intensive industries. The “lowest common denominator” must not become the standard of TRIPS interpretation. DOWN THE ROAD While TRIPS is in many respects a revolutionary treaty, there remains room for further improvement. One possible step would be incorporation of the 1996 WIPO treaties – the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty – into the enforceable TRIPS framework. The WIPO treaties provide standards that complement TRIPS, as well as rules for works in digital form that are vital to the future of e-commerce. Another key area will be education of the relevant government and business officials about TRIPS requirements. As developing countries keep pointing out, effective enforcement requires training and resources, some of which developed countries and industry can help to provide under the technical assistance provisions of the agreement. Already, some strong programs are in place. Developed countries have reported a wide range of assistance efforts tailored toward TRIPS compliance, including direct, industry-supported programs designed to teach customs and police officials the basics of IP investigation and enforcement. But more can and should be done. While developing countries’ laws are likely to be a growing target for TRIPS dispute resolution this year and over the next several years, developed countries’ practices will not escape scrutiny either. TRIPS cases thus far have targeted the United States, Canada, the European Union, and Japan, among others. The way in which such countries have implemented TRIPS is due for further review this year. It would not be surprising if actions against developed countries continue to be brought in parallel with new actions against developing countries. Ultimately, this means that we are not looking at a shift in the focus of TRIPS so much as an overall increase in its importance, particularly in the area of enforcement. In addition to the cases against developed countries that have necessarily dominated dispute resolution so far, we will see a new agenda of cases applying the same agreement in much different factual circumstances. As the TRIPS Agreement approaches maturity, the challenge will be ensuring that it provides a truly global standard to protect rightholders worldwide. Christopher Roberts is senior trade analyst in the London office of Covington & Burling. From 1987 to 1997, he served as director-general of trade policy for the United Kingdom. Stanford K. McCoy is an associate in the international trade group at Covington & Burling. He divides his time between the firm’s D.C. and Brussels offices. The authors’ firm actively represents clients committed to full implementation of the TRIPS Agreement.

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