RYU KOJIMA/RYO SHIMANAMI/MARI NAGATA
I. Introduction ... 181
II. Applicable Law to Infringement of Intellectual Property Rights ... 181
1. General Remarks ... 181
2. Applicable Law in Intellectual Property Infringement ... 182
a) Current Situation... 182
(1) Japanese Law ... 182
(a) Patent Infringement ... 182
(b) Copyright Infringement... 184
(2) Other Countries ... 184
(a) Patent Infringement ... 184
(b) Copyright Infringement... 185
b) Comments on the Transparency Proposal... 185
(1) Introduction... 185
(2) Applicable Law in Patent Infringement ... 188
(a) Understanding of “Territoriality Principle”... 188
(b) What Is a “Result of Exploitation”? ... 189
(c) Extraterritorial Application and Applicable Law ... 191
(d) Some Considerations... 192
(3) Applicable Law in Copyright Infringement ... 192
(a) The Meaning of Berne Convention Articles. 5(2) and 6bis(3) ... 192
(b) “Place Where the Results Occur or Are to Occur” in Copyright Infringement... 193
(c) Treatment of Moral Rights ... 194
(4) Provisional Conclusion ... 195
(5) Other Issues in Intellectual Property Infringement ... 195
(a) Infringement between Parties Having a Contractual Relationship... 195
(b) Liability of the “Intermediaries” ... 196
III. Applicable Law in Ubiquitous Infringement... 198
1. Current Situation ... 198
2. Comments on the Transparency Proposal ... 198
a) Characteristics of “Ubiquitous Infringement” ... 198
b) Considerations ... 199
IV. Applicable Law in Unfair Competition ... 201
1. Current Situation ... 201
a) Japanese Law ... 201
b) Other Countries... 201
2. Comments on the Transparency Proposal ... 202
a) Introduction ... 202
b) Considerations ... 202
V. Change of Applicable Law by the Parties ... 203
1. Current Situation ... 203
a) Japanese Law ... 203
b) Other Countries... 204
2. Comments on the Transparency Proposal ... 204
a) Introduction ... 204
b) Scope of Changes by the Parties... 205
VI. Existence, Primary Ownership, Transferability, and Effects of Intellectual Property Rights... 205
1. Introduction ... 205
2. Current Situation ... 206
a) The Current State of Law in Japan ... 206
(1) The Act ... 206
(2) Supreme Court Precedents in Japan ... 206
(a) Supreme Court Judgment in the Card Reader Case... 207
(b) Supreme Court Decision in the Hitachi Case... 208
b) Other Countries... 209
(1) The ALI Principles... 209
(2) The Waseda Project Proposal... 210
3. Comments on the Transparency Proposal ... 212
a) Rationale ... 212
b) Coverage... 212
4. Further Considerations ... 213
a) Defense of Invalidity ... 213
b) Where the Applicable Law Will Be Fragmented... 214
VII. Applicable Law to Contracts for the Transfer or Licensing of Intellectual Property Rights... 215
1. Introduction ... 215
2. The Current State of Japanese Law Concerning the Applicable Law to Contracts... 215
3. Court Cases and Doctrines Concerning the Applicable Law to IP Contracts in Japan... 218
4. ALI Principles, CLIP Principles, and Theories in EU ... 221
a) Overview of the Current Discussion about the Applicable Law to Contracts Concerning Intellectual Property Rights in EU ... 221
b) ALI Principles... 222
c) CLIP Principles... 222
d) Waseda Project Proposal ... 222
5. Comment on the Transparency Proposal ... 224
VIII. Security Interests to Intellectual Property Rights ... 225
IX. Concluding Remarks ... 226
Appendix ... 227
I. Introduction
Applicable law to various aspects of cross-border exploitation of intellec-tual property rights has been at the center of recent discussions among pri-vate international law and intellectual property law scholars. This article aims to provide a more detailed account of the Transparency Proposal made by the Transparency Working Group (hereinafter referred to as,
“Transparency Proposal”). In particular, applicable law to intellectual property infringements; legal problems related to so-called “ubiquitous infringements”; acts of unfair competition; contracts related to intellectual property rights; and existence, initial title, transferability and effects will be analyzed in the following sections.
II. Applicable Law to Infringement of Intellectual Property Rights
1. General Remarks
In this paper we would like to argue the issues of applicable law in cases of intellectual property infringement.1 The underlying problems can be sum-marized as follows.
The first question is whether we can consistently conceptualize the applicable law to infringements of intellectual property rights in both industrial property rights with registration and other intellectual property rights without registration. For example, although § 301 of the American Law Institute’s Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (hereinafter referred to as the “ALI Principles”) locates the applicable laws of indus-trial property and other intellectual property rights differently,2 Article 8 of the Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obliga-tions (Rome II) (hereinafter referred to as “Rome II Regulation”) stipulates the applicable law of intellectual property infringement in a comprehensive manner (i.e., without making any distinction between registered and non-registered intellectual property rights) as the “law of the country for which protection is sought.”
1 See Article 301 of the Transparency Proposal, Annex II infra.
2 ALI Principles § 301 stipulates applicable law to infringements of intellectual prop-erty rights as follows: (a) for registered rights, the law of each state of registration; (b) for other intellectual property rights, the law of each state for which protection is sought would be. See The American Law Institute, Intellectual Property: Principles Governing Jurisdiction, Choice of Law, and Judgments in Transnational Disputes (2008), p. 122.
The second question is how the applicable law should be determined in cases of “right-granting statutes” (e.g., for patent and copyright infringe-ments) and “act-regulating statutes” (namely, for acts that are prohibited by unfair competition law). Hence the question arises whether a single choice-of-law rule could be established for both kinds of infringements, or should these two areas of infringing acts be subject to different choice-of-law provisions? In this regard, it should be mentioned that the ALI Prin-ciples and the Rome II Regulation provide for different choice-of law rules pertaining to infringements of intellectual property rights and acts that are prohibited by unfair competition statutes. However, it is still possible to deliberate whether both kinds of infringing acts should not be subjected to the same choice-of-law provision.3
We also have to analyze the relationship between the notion of “territo-riality,” “the country of protection,” and their implications to the determi-nation of applicable law. These issues have been discussed in interdetermi-national intellectual property law for a long time. Insofar as “an act of exploitation”
and “result arising therefrom” are completed within one jurisdiction, it does not cause a huge problem. However, whether domestic law should govern extraterritorial exploitation of intellectual property brings about the question which of the following rules should be preferred: “lex protec-tionis,” “lex loci protecprotec-tionis,” “market impact rule,”4 or “tort liability at a distance.”
2. Applicable Law in Intellectual Property Infringement a) Current Situation
(1) Japanese Law (a) Patent Infringement
In Japan, there are no specific provisions for intellectual property infringe-ment in “Act on the General Rules for Application of Laws” (hereinafter, the “Act”).5 Therefore, discussion will be based primarily upon the case law.
3 In the area of “law on mark,” the situation is a bit different. In both trademark law and passing off, the concept “use” of mark is widely recognized, and the result can be captured in a parallel manner.
4 See Annette Kur, Applicable Law: An Alternative Proposal for International Regu-lation – The Max-Planck Project on International Jurisdiction and Choice of Law, 30 Brooklyn J. Intl. L. p. 951 (2005).
5 The situation was the same under the old Hôrei.
Regarding patent infringement, we should take a look at the Supreme Court judgment in the Card Reader case.6,7 The Supreme Court separated applicable laws of injunctive relief and damages, and applied “law of the country of registration” for injunctive relief and “law of the country of the place where a fact constituting a cause occurred” for damages. The reason why the Supreme Court relied on different applicable laws stems from the fact that injunctive relief is not granted under the general tort liability in Article 709 of the Civil Code; it is regarded as a special remedy given by Article 100 of the Patent Act.
The Card Reader case has been severely criticized for several reasons.
First, it is very difficult to interpret whether the Supreme Court relied on the choice-of-law rules in private international law or “territorial applica-tion” in public international law.8 Second, the judgment acknowledged that the “principle of territoriality” should be adopted in patent infringement;
however, the Court in the end rejected the result of application based upon the strict territoriality principle. In the Card Reader case, applicability of Article 271(b) of the U.S. Patent Act (inducement) was in question.9 The Supreme Court mentioned as follows:
The principle of territoriality in relation to patent rights means that a patent right regis-tered with each country is to be governed by the laws of the relevant country with regard to issuance, transfer, validity and the like thereof and such patent right can come into force only within the territory of the relevant country.
The Supreme Court concluded that “extraterritorial application” of the foreign patent is against “public order” of Japan.
The remedy of damages was characterized as tort liability in the Card Reader case. Before the enactment of the Act, there was a provision of
“double actionability” (Art. 11(2) of the former “Law Application
6 Judgment of the Supreme Court of 26 September, 2002, Minshû Vol. 56, No.7, p. 1551, abbreviated English translation is available at <www.courts.go.jp/english/
judgments/text/2002.9.26-2000.-Ju-.No..580.html> (last visited on 3 May 2009). Also, see Toshiyuki Kono, Recent Judgments in Japan on Intellectual Property Rights, Conflict of Laws and International Jurisdiction, in: Josef Drexl/Annette Kur (eds.), Intellectual Property and Private International Law (Hart Publishing 2005), p. 229 and 232.
7 This is a case before the enactment of the Act.
8 Yoshihisa Hayakawa, Kokusai chiteki zaisanhô no kaishakuronteki kiban [Inter-pretational Basis in International Intellectual Property Law], Rikkyo Hôgaku [Rikkyo Law Review], No. 58 (2001), p. 188.
9 35 U.S.C. 271: Infringement of Patent
(a) Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefore, infringes the patent.
(b) Whoever actively induces infringement of a patent shall be liable as an infringer.
ciples Act”).10 Based on this principle, the Supreme Court also precluded the result of the application of the judgment.
(b) Copyright Infringement
Concerning applicable law in copyright infringement, we have had no Supreme Court judgment so far. However, regarding injunctive relief, several lower courts relied on Article 5(2) of the Berne Convention.11 For damages, courts characterized it as tort liability.12 Like patent infringe-ment, damages is characterized as tort liability; therefore, we should rely on Article 17 of the Act.
(2) Other Countries (a) Patent Infringement
Because obtaining patents requires application, examination, and regis-tration of the patent office of each country, applicable law related to patent was once understood as closer to the nature of public law, and it was con-ceived that no problem of private international law arises. However, patent right is a “proprietary” right; therefore, the necessity of the choice-of-law issue in transnational disputes has been gradually acknowledged.
The ALI Principles provide the law of the country of registration as an applicable law in patent infringement. We might be able to see the residue of traditional argument in this formula.
In Europe, the Rome II Regulation adopted the law of the country for which protection is claimed (lex loci protectionis). In the earlier draft, applicable law was conceptualized as tort liability, and it was changed into the current formula because of criticisms of the public comments. For example, the Max Planck Institute was against the previous version because of the ambiguity of the characterization of tort liability, and they did not want to allow the change of applicable law by the parties.13
10 The doctrine of “double actionability” was adopted in U.K. laws long ago. See James J. Fawcett/Paul Torremans, Intellectual Property Law and Private International Law (Oxford University Press, 1998), at p. 607.
11 The representative case is Judgment of the Intellectual Property High Court on 24 December 2008, available at <www.courts.go.jp/hanrei/pdf/20090109155751.pdf> (in Japanese) and <www.courts.go.jp/hanrei/pdf/20090109151003.pdf> (in Japanese) (North Korean Copyrighted Works case) (last visited on 26 September 2009).
12 The North Korean Copyrighted Works case was decided in the same way.
13 Josef Drexel, The Proposed Rome II Regulation: European Choice of Law in the Field of Intellectual Property, in: Drexel/Kur (supra note 6) p. 154-155.
(b) Copyright Infringement14
It has been argued whether any international treaties provide for a choice-of-laws rule for copyright infringements. Some commentators assert that Article 5(2) of the Berne Convention is a choice-of-law rule. However, the formula of the law of the country where protection is claimed (lex protec-tionis) can be misconceptualized as lex fori. To avoid causing the above-mentioned problem, this provision has been understood as the law of the country for which protection is claimed, namely lex loci protectionis.15
Recently, the formulas of patent infringement and copyright infringe-ment have been closer irrespective of the existence of registration. Lex loci protectionis is widely accepted in various legislations and proposals, such as Article 110 Section 1 of Swiss Private International Law,16 § 301 of the ALI principles, Article 8 of the Rome II Regulation, and Article 3:601of the Second Preliminary Draft of Principles for Conflict of Laws in Intellectual Property, prepared by CLIP (European Max Planck Group on Conflict of Laws in Intellectual Property) (hereinafter, “CLIP Prin-ciples”).17 In the commentary of the Rome II Regulation, this formula is described as a “universally acknowledged principle.”
b) Comments on the Transparency Proposal (1) Introduction
In the Transparency Proposal, we adopt a traditional rule of “objective connection” as often deployed in private international law. In the course of the discussions, the possibility of the law of the country which plaintiff claims was extensively analyzed.18 However, we gave up this direction
14 See Paul Edward Geller, Conflicts of Laws in Copyright Cases: Infringement and Ownership Issues, 51 J. Copyright Soc’y U.S.A., p. 315 (2004).
15 Eugen Ulmer, Intellectual Property Rights and the Conflict of Laws, (Kluwer Law International and the Commission of the European Communities, 1978), p. 10; Fawcett/
Torremans (supra note 10) p. 467. See Reporter’s Notes in The American Law Institute (supra note 2) p. 127.
16 Article 110(1) of Swiss Private International Law provides as follows: “Intellectual property rights shall be governed by the law of a country for which protection of intel-lectual property is sought”.
17 European Max Planck Group on Conflict of Laws in Intellectual Property, Prin-ciples for Conflict of Laws in Intellectual Property (Second Preliminary Draft), available at <www.ip.mpg.de/shared/data/pdf/draft-clip-principles-06-06-2009.pdf>, p. 18 (last visited on 26 September 2009).
18 Similar argument can be seen in Richard Fentiman, Choice of Law and Intellectual Property, in: Drexl/Kur (supra note 6) p. 129, 137. This problem also relates to the interpretation of “law of the country for which protection is sought” (hereinafter lex loci protectionis). Even if the court is not completely subject to the defendant’s claim, the
because the “subjective connection” (such as the applicable law in contracts, for example) is very limited in private international law and we would need to elaborate a further theoretical justification. Therefore, we decided to adopt a more traditional approach.
However, we do not employ the law of the country where protection is sought (lex protectionis) or the law of the country for which protection is sought (lex loci protectionis) approach. As to the former, there is already criticism that it cannot be distinguished from lex fori. Concerning the latter, it has been widely adopted, such as in the ALI Principles or the Rome II Regulation. This view, however, seems to be only a fine line with a subjective connection (namely the formula of the law of the country which the plaintiff claims) and many theoretical points should be clarified in order to crystallize the argument. In this regard, this paper is situated as a “gedankenexperiment” to take the understanding of the traditional argu-ment one step further.
In Japan, we have an Act as the choice-of-law rules, and this paper characterizes intellectual property infringement as tort liability. Several issues need to be clarified here. First, we should decide whether remedies of injunctive relief and damages should be distinguished for the purposes of an applicable law rule. Although the Supreme Court judgment in the Card Reader case19 concluded that the effect of injunctive relief derives from a patent right itself and damages can be characterized as tortious, it is questionable whether one should differentiate the applicable laws for those two remedies. In the Transparency Proposal, remedies are bracketed together and the connecting factor is the place where the results of the exploitation of intellectual property occur or are to occur.
The Transparency Proposal deals with the issue of applicable law of intellectual property infringement and unfair competition, where “the place where the results” of intellectual property infringement or unfair compe-tition “occur or are to occur” will be the connecting factor. In principle, the place where the results occur or are to occur presupposes the marketplace in each country, and this basic principle applies both to intellectual property infringement and unfair competition.20 The term “result” refers to
formula of lex loci protectionis does not exclude the possibility of specifying the country of protection guided by the claims by the defendant. See Kur (supra note 4) at p. 963.
19 See supra note 6.
20 The term “result” does not include indirect damages. It is in line with the majority view toward the Act (see Masato Dogauchi, Kokusai shihô nyûmon [Introduction to Private International Law] (6th ed., Yûhikaku, 2006), p. 238; Naoshi Takasugi, Dai 7 shô:
fuhôkôi/jimu kanri/futô ritoku [Chapter 7: Torts, Management without Mandate & Unjust Enrichment], in: Hiroshi Matsuoka (ed.), Kokusai kankei shihô nyûmon [Introduction to Internationally Related Private Law] (2nd ed., Yûhikaku, 2009), p. 121; § 301 of the ALI Principles and Rome II Regulation follow the same idea.
the economic loss in the market, whose concept should be determined not to be affected by substantive law, but solely from a conflict-of-laws perspective.21,22 In this regard, this proposal adopts a market impact rule.
However, there are several underlying problems to be discussed, and this paper will analyze those issues relying on a series of hypothetical case studies.
Second, we are required to decide whether or not to exclude certain provisions of the Act when we consider the proposed legislation in a Japa-nese context. For example, Article 21 of the Act acknowledges “change of applicable law by the parties” very broadly, so whether the same rule should apply to intellectual property infringement should be decided.
While ALI Principle § 302 admits the same rule broadly, the Rome II Regulation takes a negative view toward it. We would like to discuss the latter. Also, we have to consider whether we should follow the basic prin-ciple of the place where result of the infringement occurred, or rely on the law of the contract in the situation of intellectual property infringement between the parties already having a contractual relationship.
Third, we have to decide on the necessity of creating a special rule con-cerning the so-called “ubiquitous infringement.” If we conceptualize ubiq-uitous infringement as just an accumulation of infringement in multiple
In intellectual property law, the result of infringement in country A which leads to damages to property or reputation in country B should also be taken into account (a situation such as an act of commercial disparagement in country A bringing damages to commercial reputation in country B). In ALI Principle § 301, it is reduced as an interpretation of “direct and substantial”.
21 Suppose multinational company X has its headquarters in country A, and the
“result” of the unauthorized exploitation of the intellectual property occurs in country B.
In this case, it might be possible to interpret the “result” as occurring in country A since the final outcome reflected in the balance sheet of company X materializes in country A.
However, the Transparency Proposal does not take this view because intellectual property law of country B guarantees the monopoly profit in the market of country B.
22 Although the provision is different from ours, the market impact rule was adopted
22 Although the provision is different from ours, the market impact rule was adopted