BG-95-15 June 12, 1995
by Laurence R. Hefter and Robert D. Litowitz
Fact Sheet: First in IPR Series
(Laurence R. Hefter and Robert D. Litowitz are partners in the Washington, DC, firm of Finnegan, Henderson, Farabow, Garrett & Dunner. This is one of the largest intellectual property law firms in the United States. Its attorneys specialize in litigation, counseling and licensing in all areas of intellectual property including patents, trademark, copyright, trade secrets and unfair competition.)
Countries with innovative local industries almost
invariably have laws to foster innovation by regulating the copying of inventions,
identifying symbols and creative expressions. These laws encompass four separate and
distinct types of intangible property, namely, patents, trademarks, copyrights and trade
secrets, collectively referred to as "intellectual property."
Intellectual property shares many of the same characteristics associated with real and
personal property. For example, intellectual property is an asset and as such it can be
bought, sold, licensed, exchanged or gratuitously given away like any other form of
property. Further, the intellectual property owner has the right to prevent the
unauthorized use or sale of the property. The most noticeable difference between
intellectual property and other forms of property, however, is that intellectual property
is intangible, i.e., it cannot be defined or identified by its own physical parameters. It
must be expressed in some discernible way to be protectable. Each of the four types of
intellectual property are discussed below.
Patent systems are designed to encourage the disclosure of
information to the public by rewarding inventors for their endeavors. One might say that a
patent is a contract between society as a whole and the individual inventor. Under the
terms of this social contract, the inventor is given the exclusive right to prevent others
from making, using and selling the patented invention for a fixed period of time in return
for the inventor disclosing the details of the invention to the public.
Although the word "patent" finds its origins from documents issued by the
Sovereign of England in the Middle Ages for granting a privilege, today the word patent is
synonymously linked with this exclusive right granted to inventors. The duration of patent
exclusivity varies from country to country. However, under all patent systems, once this
period has expired, people are free to use the invention as they wish.
The benefits of an effective patent system can be partially illustrated as follows:
A patent rewards the investment of time, money and effort associated with research; it
stimulates further research as competitors invent alternatives to patented inventions; and
it encourages innovation and investment in patented inventions by permitting companies to
recover their research and development costs during the period of exclusive rights.
The limited term of a patent also furthers the public interest by encouraging quick
commercialization of inventions, therefore making them available to the public sooner
rather than later. Patents also allow for more latitude in the exchange of information
between research groups, help avoid duplicative research, and most importantly, increase
the general pool of public knowledge.
A comparison of the number of inventions developed in countries with adequate patent
protection with the number in countries without it demonstrates that patent systems
stimulate investment in research and development. A look at the pharmaceutical industry in
Italy before and after patent protection for pharmaceuticals became available in that
country provides a good illustration. Prior to granting protection, there was
significantly less capital invested in Italian pharmaceutical research and development
when compared to the amount of money invested in the research and development of other
technologies. Following Italy's enactment of patent laws protecting pharmaceuticals, the
relative investment in the pharmaceutical industry in Italy rose significantly.
As stated before, the right conferred by a patent is a right to exclude others from
making, using or selling the patented invention during the term of the patent. It is
important to understand that a patent does not necessarily give the patent owner the right
to make, use or sell the invention himself. For example, the owner of a patent for an
improved method of producing a chemical compound would not be free to sell the compound
made using the patented method if the compound is itself patented by someone else.
Patents are granted under national laws and, therefore, the rights are also national in
scope. Thus, a United States patent can be asserted only against infringing conduct in the
United States. In most countries these rights are enforceable by civil, rather than
criminal, proceedings. Accordingly, enforcement falls solely to the patent owner. In
general, any act of making, using or selling the patented invention without permission
infringes that patent, whether it be by the state, a corporation or an individual. Any
such infringing act will give rise to liability, regardless of the infringer's intent or
lack of knowledge of the patent.
Remedies for patent infringement can include injunctions, orders to deliver up or destroy
infringing articles, and compensation for damages suffered by the patentee or profits made
by the infringer.
An issued patent remains open to attack for invalidity, and it is a common defense for an
alleged infringer to assert that the patent is invalid. Typically, patents are challenged
on the ground that the claimed invention was invented by someone other then the named
inventor, or that the invention would have been obvious to persons skilled in the relevant
technology.
Trademarks and service marks are primarily intended to
indicate the source of goods and services and to distinguish those goods and services from
those of others. They also symbolize the quality of the goods or services with which they
are used. Most trademarks and service marks (called "marks") are words, but they
can be almost anything that can distinguish one product or service from another, such as
symbols, logos, sounds, designs or even distinctive nonfunctional product configurations.
While virtually all countries recognize and offer protection for trademarks, many but not
all countries recognize and protect service marks. In some countries, protection for a
mark is acquired by using the mark on goods or services. In other countries, the owner
must register the mark with the national trademark office before protection in that
country is granted.
The duration of protection afforded a mark varies greatly from country to country.
Registrations are issued for finite periods of time. However, because of the fundamental
purposes of these marks--namely avoiding public confusion, encouraging competition and
protecting the owners' goodwill--registrations may be renewed and thus extend indefinitely
as long as the marks are used.
The owner of a mark may preclude others from using a similar mark if such use is likely to
cause confusion in the minds of purchasers. Determining whether two marks are so similar
as to be confusing usually involves a multi-factor analysis that compares the parties'
marks, their goods or services, their advertising and trade channels, the defendant's
intent in choosing its mark, and the presence or absence of actual confusion.
A copyright is an exclusive right to reproduce an original
work of authorship fixed in any tangible medium of expression; to prepare derivative works
based upon the original work; and to perform or display the work in the case of musical,
dramatic, choreographic and sculptural works. Copyright protection does not extend to any
idea, procedure, process, system, method of operation, concept, principle or discovery,
regardless of the form in which it is described, explained or embodied. Rather, copyright
protection is limited only to an author's particular expression of the idea, process,
concept, etc. in a tangible medium.
Copyright protection automatically subsists in all works of authorship from the moment of
creation. The duration of copyright protection varies from country to country and can be
dependent on such factors as the subject matter of the work, whether the work was made for
hire, and whether the work is published. For instance, in the United States, the copyright
for a work of an individual author lasts for his or her lifetime plus 50 years. However,
if the work is made for hire, the copyright lasts for 100 years from the time of creation
or 75 years from first publication.
The exclusive rights granted to the copyright owner do not include the right to prevent
others from making fair use of the owner's work. Such fair use may include use of the work
for purposes of criticism, comment, news reporting, teaching or education, scholarship or
research. The nature of the work, the extent of the work copied, and the impact of copying
on the work's commercial value are all considered in determining whether an unauthorized
use is a "fair use."
The trade secret is information that is secret or not generally known in the relevant industry and that gives its owner an advantage over competitors. Trade secret protection exists as long as the information is kept secret or confidential by its owner and is not lawfully and independently obtained by others. Examples of trade secrets include formulas, patterns, methods, programs, techniques, processes or compilations of information that provide one's business with a competitive advantage. The owner of a trade secret may recover damages resulting from the improper disclosure or use of its trade secret by another.
A product may be protected by one or more of the four types of intellectual property protection discussed above. A common example is a household lamp with a sculptured base. The functional electric components of the lamp and the light bulb may be protected by a patent. The label on the lamp may contain a trademark identifying the source of the lamp that distinguishes it from other manufacturers' lamps. The sculptured lamp base may be considered a work of art and therefore be subject to copyright protection. Finally, the manufacturer may have compiled a list of customers who are known to buy such lamps or a list of preferred parts suppliers. If these lists have been kept confidential and secret, they may be trade secrets.
Countries that provide for the protection of intellectual
property benefit in many ways. In addition to increasing the general pool of information
and knowledge, adequate legal protection fosters investment and trade. When looking for
new markets or countries in which to expand manufacturing or distribution facilities,
companies often look to countries that will protect their intellectual property. Companies
that are active internationally often will not allow certain technologies or other
intellectual property to be sold in countries that will not protect the property owner's
rights. Where the owner's rights are not protected, third parties may use the property
and, therefore, unfairly reap the rewards of the owner's investment in developing and
marketing the property. Thus, inadequate legal protection for intellectual property acts
as a trade barrier.
Companies benefit from the protection of intellectual property through the exclusive
rights granted by such protection. Companies therefore often build extensive portfolios of
patents, marks, copyrights and trade secrets. Such portfolios are important for both the
"offensive" and "defensive" goals of the company.
Patents, marks, copyrights and trade secrets have an independent value as a business
asset. This value may be actively exploited for commercial gain. Because an owner of
intellectual property has exclusive rights in that property, the owner may allow others to
use the property for a fee. Such licensing arrangements are quite common and lucrative.
Cross-licensing is another technique used by companies to benefit from their intellectual
property portfolios. When one company desires to use the intellectual property of another
company, the companies may "exchange," or cross-license, the right to use
certain intellectual properties owned by the respective companies. A large portfolio of
intellectual property will aid a company in negotiating a cross-license with another
company. Finally, because intellectual property has independent value, the property may be
used to secure financing in some cuntries.
As noted, intellectual property is protected on a national basis. Thus the specific scope of protection and the requirements for obtaining protection will vary from country to country. There are, however, similarities among national legal arrangements. Moreover, the current worldwide trend is toward harmonizing the national laws. The following discussion of the requirements and obstacles in obtaining protection will therefore speak in generalities. The case studies in this paper will highlight the laws of certain individual regions or countries.
Even though patentability is governed by national laws,
most countries have adopted similar requirements. In general, to be patentable, an
invention must be novel, useful and nonobvious.
It is a prerequisite to patentability that the invention be capable of some practical
application. This emphasizes the importance the patent system puts on usefulness. Although
this principle remains constant, the phraseology used within the legislation of particular
countries varies, e.g., in the United States patentable subject matter must be
"useful," whereas in the United Kingdom it must be capable of "industrial
application."
The invention must be new, that is to say, that the subject matter of the invention is not
or cannot be inferred to be part of what is already known. This is commonly referred to as
the "novelty" requirement. New or novel in this context means "new to the
public." Therefore, something that has previously been used or known but has not been
made available to the public (for instance, if it has been kept a secret) is not a bar to
patentability.
The invention must also be nonobvious. This prevents someone from taking advantage of the
patent system and obtaining protection for something that is a mere extension or trivial
variation of what is known. Generally the test for inventiveness or
"nonobviousness" is based on what a reasonable person skilled in the field to
which the invention pertains, at the time the invention was made, would consider to be
nonobvious.
For reasons of public policy some countries do not allow the patenting of chemical
compounds, but instead, allow only the patenting of the processes for preparing them.
It is particularly difficult to enforce a process patent as the burden of proof is on the
patent owner to show that the patent has been infringed, i.e., "copied." The
patent owner must prove that a particular manufacturing process (i.e., that covered by the
patent) was used to manufacture the particular chemical. This can be very difficult to
show where there are many possible process variants and where access to the potential
infringer's facility is not available. In practice, this is done by looking for trace
impurities that are characteristic of the manufacturing process.
One can imagine how complex the issues can become if, for instance, a patent protects a
pharmaceutical and the pharmaceutical is made in Turkey, where there is no protection for
pharmaceuticals, and exported to Finland, which provides protection only for manufacturing
processes.
Over the past 15 years, many countries have changed from "process" to
"product" patenting, and this trend is continuing with more countries expected
to upgrade their patent laws within the next few years.
Not only are the utilitarian aspects of new and useful inventions patentable, but many
countries also extend patent protection to novel, ornamental industrial designs. In the
United States, this form of protection is known as a Design Patent, while in many European
countries, the property right in an industrial design is referred to as a Design Model.
In addition to the usual subjects of patent protection such as devices, chemical
compositions and processes, some countries provide patent protection for living matter.
For example, asexually reproduced varieties of plants, excluding bacteria, uncultured
plants and tuber propagated plants can be protected as can sexually reproduced plants (by
seed) excluding bacterial, fungi and first generation hybrids.
As with all intellectual property, trademark and service
mark laws are national in origin. Some countries grant rights to the first person to use
the mark in the course of business, while other countries grant rights to the first person
to obtain a registration in that country. In "first-to-use" countries, rights
may subsist without registering the mark with the national trademark office. However,
registration is still desirable because it is presumptive evidence of the validity of the
mark and the owner's right to use that mark. It also appears on the national register of
marks providing notice to the world of the owner's use and claim of ownership. Some
countries require that the mark be used in commerce prior to the issuance of a
registration while other countries permit registration based on the intent of the
applicant to use the mark in the future. Following the use or registration of a trademark,
the owner must use the mark or it may become subject to attack by others on the ground
that the owner has abandoned it.
At a minimum, most countries require that a mark be distinctive, i.e., capable of
distinguishing the goods or services of the owner of the mark from the goods or services
of others. To determine whether a mark meets this test, one must determine the
"strength" of the mark.
A mark's strength is usually measured across a spectrum. This spectrum includes, from
weakest to strongest, terms that are generic, descriptive, suggestive, arbitrary and
fanciful. At the weakest end of the spectrum lie words, symbols or devices that are not
capable of distinguishing goods because they are common terms used to identify the goods
themselves, e.g., book, table, chair. Such terms are called generic terms and are not
protectable as trademarks.
The next category is comprised of descriptive terms. A mark is descriptive if it describes
the intended purpose, function, physical characteristic, laudatory quality or end use of
the product. Examples of descriptive marks include SAVMOTOR for an engine oil additive
intended to prolong the life of an automobile engine, MICRO for wheel weights that are
very small, and SUPREME for wine allegedly of superior quality. Because they are not
inherently distinctive, a descriptive term cannot be protectable as a mark until, through
extensive sales and advertising, the term has come to identify the source of the goods
bearing the mark. In the United States, when a descriptive mark achieves this level of
distinctiveness, it is said to have acquired a "secondary meaning."
In contrast to descriptive marks, suggestive marks do not immediately describe the goods
with which the mark is used, but rather require thought, imagination or perception to
reach a conclusion about the nature of the goods. Suggestive marks are considered
inherently distinctive and protectable without first acquiring secondary meaning. Examples
of suggestive marks may include HERO for fire extinguishers or GREYHOUND for bus
transportation services.
Arbitrary marks are words, symbols, and devices that are in common use but, when used on
the goods of the trademark owner, neither describe nor suggest the quality of those goods.
Examples of arbitrary marks include ARROW for liqueurs, APPLE for computers, and CAMEL for
cigarettes. Like suggestive marks, arbitrary marks are inherently distinctive and
secondary meaning need not be proven.
The most distinctive marks are fanciful marks. A fanciful mark is a "coined"
word or symbol invented or selected for the sole purpose of functioning as a mark.
Examples of fanciful marks include EXXON for gasoline, KODAK for photographic supplies,
XEROX for photocopying equipment, and CLOROX for bleach. Fanciful marks are traditionally
afforded the greatest scope of protection.
To secure copyright protection, the work in question must
be an "original" work of authorship fixed in a tangible medium of expression.
Works of authorship that fall within this definition may include:
-- literary works (including computer programs);
-- musical works and accompanying lyrics;
-- dramatic works and dialogue;
-- pantomimes and choreographic works;
-- pictorial, graphic and sculptural works;
-- motion pictures and other audiovisual works; and
-- sound recordings.
It is important to note that the laws of many countries do not limit the type or form of
work because authors are continuing to invent new ways of expressing themselves.
The test for the originality of a work is usually two-pronged. First, the work of
authorship must originate from the author, in the sense that it must have actually been
independently created by the author and not copied from other works. Secondly, the work
must contain a sufficient amount of originality so as to be more than a trivial variation
over preexisting works.
To be copyrightable, a work must be "fixed in a tangible medium of expression."
A work is "fixed" when its embodiment in a tangible medium is sufficiently
permanent or stable as to permit it to be perceived, reproduced or otherwise communicated
for a period of time that is not transitory. The means, manner or medium of fixation is
irrelevant.
Copyright registration in most countries is relatively straightforward and inexpensive.
Although copyright protection subsists from the moment the work is fixed in a tangible
expression, copyright registration confers additional important benefits in some
countries. In those countries with a registration system, registration may be a
prerequisite to initiating legal action to stop others from infringing a copyright, and/or
for recouping the costs, including attorney's fees, of enforcing those rights. In
addition, in some countries, a copyright registration constitutes prima facie evidence of
the validity and ownership of the copyright.
Trade secrets are not registered like other forms of
intellectual property, and are not creatures of statutes. Instead, the judicial systems of
each country determine the requirements for obtaining trade secret protection. Some of the
factors commonly considered include:
-- the extent to which the information is known outside of the business,
-- the extent to which the information is known by employees and others involved in the
trade secret owner's business,
-- the extent of the measures taken to guard the trade secrets,
-- the value of the information to the owner and his competitors,
-- the amount of money or effort expended by the trade secret owner in developing the
secret, and
-- the effort required by others to acquire or duplicate (through reverse engineering) the
information.
The "secrecy" of an alleged trade secret is the most important factor to be
considered. If the information claimed to be a trade secret is available through any
legitimate means and is obtained in this way, then the information is no longer
"secret" and may become ineligible for protection. However, if the owner has
taken reasonable steps to protect the information, but the trade "secret"
information nonetheless is publicly disclosed, the courts in many countries may still
grant protection. Such "reasonable" steps may include requiring those persons
who encounter the information as the result of normal business ventures to sign
confidentiality and nondisclosure agreements.
As with all business related activities, economics play a
large role in the determination of whether to protect intellectual property. Companies
must weigh the potential value of an intellectual property right against both the
probability of realizing that value and the costs of securing, enforcing and maintaining
that right.
There are no hard and fast rules that determine the potential value of a given
intellectual property right. What is valuable to one individual or company may be
worthless to another. There are certain obvious factors that contribute to the potential
value of the intellectual property, including the potential value of exclusive or other
rights, assignments or licenses, cross-licenses, enforcement against infringers, and as
collateral for securing financing.
A trademark or service mark may be a very valuable asset. For example, it is widely
believed the German automobile manufacturer "BMW" recently purchased the British
automobile manufacturer "Rover" primarily to obtain its portfolio of desirable
trademarks including "Land Rover," "Range Rover," "Triumph,"
"Austin," and "MGB." On the other hand, a trademark may be virtually
worthless if consumers associate it with poor quality.
Countries that protect intellectual property --
copyrights, patents, trademarks and other forms of intangible property -- provide an
incentive for capital investment in research and may aid the ability to develop new
products. Adequate legal protection also fosters investment and trade. Companies looking
for new markets or for locations for manufacturing or distribution facilities often look
to countries that will protect their intellectual property.
Yet where the owner's rights are not protected, third parties may use the property and
unfairly reap the rewards. The damage resulting from such unauthorized use includes lost
domestic and export sales and royalties, other financial losses, and harm to producers'
reputations.
Many countries have national laws aimed at protecting intellectual property, but little
international law exists in this area. Several multinational treaties and conventions have
been negotiated that oblige member countries to provide some minimum standard of
intellectual property protection to foreign nationals. The most recent of these, the TRIPS
agreement, was achieved as part of the Uruguay Round accord of December 1993. The United
States was one of the staunchest supporters of this agreement in negotiations.
The United States encourages all countries to eliminate
trade barriers that affect U.S. exports of goods and services and direct investment by
U.S. citizens (including corporations) in other countries. According to U.S. policy, the
inadequate protection of intellectual property rights is a significant trade barrier.
An annual report on significant foreign trade barriers is prepared by the United States
Trade Representative (USTR) and is submitted to the president, the Senate Finance
Committee and appropriate committees in the House of Representatives. If warranted, the
United States will impose trade barriers against particular countries under what is known
as a "Special 301" or "Super 301" action.
Section 301, a provision of the U.S. Tariff Act of 1974, gives the United States the
authority to negotiate to eliminate a large range of foreign trade practices. Action
requires a finding that a foreign government has denied U.S. rights under a trade
agreement, or has taken action that is inconsistent with, or otherwise denies benefits to,
the United States under a trade agreement; or has engaged in an act, policy or practice
that is unjustifiable, unreasonable or discriminatory and that burdens or restricts U.S.
commerce.
Super 301 is a provision of U.S. trade law that requires the U.S. trade representative to
identify in 1994 and 1995 "priority foreign country practices" -- the
elimination of which would have the greatest potential for the expansion of U.S. exports.
Identification triggers a Section 301 investigation.
In contrast, "Special 301" authority is aimed at enhancing the United States'
ability to negotiate improvements in foreign intellectual property regimes through
bilateral or multilateral initiatives. The statute requires annual identification of those
countries which deny adequate and effective protection of intellectual property rights or
fair and equitable market access for U.S. citizens relying on intellectual property
protection.
The most egregious cases among these are then identified and may be investigated. A
"Special 301" action involves a six-month investigation, with a possible 90 day
extension, at the end of which trade sanctions can be imposed. Due to the economic power
of the United States, the action has been applied with some success against some
countries.
The recent 1994 USTR report criticizes 33 jurisdictions for inadequate intellectual
property protection, namely: Argentina, Australia, Brazil, Canada, Chile, People's
Republic of China, Colombia, Dominican Republic, Egypt, El Salvador, European Union,
Guatemala, Gulf Cooperation Council, Honduras, Hungary, India, Indonesia, Japan, Republic
of Korea, Malaysia, Mexico, New Zealand, Pakistan, Peru, Philippines, Poland, Russia,
Singapore, South Africa, Taiwan, Thailand, Turkey, and Venezuela.
There is very little international law governing intellectual property. However, there is a remarkable amount of transnational uniformity, which results from treaties and international conventions. These treaties and conventions usually oblige member countries to provide minimum norms of intellectual property protection and to extend the protection for the benefit of foreign nationals. Several of the more important treaties and conventions are discussed below.
The International Convention for the Protection of
Intellectual Property is probably the single most important multilateral treaty on
intellectual property, and is better known as the "Paris Convention." Most
industrialized nations and many developing countries are parties to this convention and
are referred to collectively as the Paris Union. To date, 56 countries have ratified the
latest revision of the text, which covers a wide range of intellectual property rights
including patents, industrial designs, trademarks, trade names, service marks, collective
marks and unfair competition. The Paris Convention grants foreign nationals the same
protection and benefits accorded to nationals of any other member country, without
discrimination.
One of the most important provisions of the Paris Convention relates to "Convention
Priority." An applicant's priority date is the date on which an application is first
filed in the applicant's home country. The convention allows the applicant to claim this
date as the effective date on which an application for the same patent, industrial design,
utility mark or trademark was filed in any other member country, provided that the
application is filed within 12 months (for patents and utility marks) or six months (for
industrial design and trademarks) from the claimed priority date. This removes the need
and cost to file all the separate country applications at the same time to obtain
effective protection. Under the convention priority filing system, intervening third party
applications cannot act as bars to the owner's application if the owner files within the
prescribed time.
The Berne Convention, established in 1886, is the
principal transnational convention relating purely to copyright protection. The Berne
Convention is based on national treatment, and imposes minimum norms of copyright
protection. Like the Paris Convention, the Berne Convention grants foreign nationals the
same protection and advantages as those granted to nationals of any member country,
without discrimination. The membership of the Berne Convention has increased from an
initial membership of 10 to over 90 countries including nearly all leading economic
countries.
Under the Berne Convention, and its six subsequent amendments, copyright protection is
automatic throughout all member countries without the need to comply with any formalities.
There is currently no single way to obtain truly international protection of intellectual property. The closest current approaches to such international protection are those provided by the following conventions establishing international application filing systems.
The EPC created the European Patent Office ("EPO"), which is based in Germany. The convention currently applies to most European Economic Community member states and to several other European countries. The EPC provides for a single application in English, German or French, on which a central search and examination is carried out. Once the patent is accepted for grant, and the appropriate fees and translations are submitted, the single application is converted into a bundle of individual national patents. The system also allows an opposition to the grant to be lodged at the EPO within nine months from patent grant. Subsequent issues of validity, however, must be dealt with on a country by country basis by individual national courts.
This system, which includes many countries in addition to European countries, similarly provides for the filing of a single application designating the member countries from which patents are desired. Although the single filing takes place under the auspice of the World Intellectual Property Organization ("WIPO"), a specialized agency of the United Nations system that seeks to promote international cooperation in the protection of international property, the actual filing is made either in the United States or the EPO. The single application is searched, and it is possible to request a nonbinding opinion on patentability. After the payment of the appropriate fees and the filing of appropriate translations, the application is converted into a bundle of individual national applications, which are then subject to examination by individual national patent offices.
The Madrid Agreement concerns the international filing of
registration applications for trademarks. It enables registration of a trademark in WIPO's
International Bureau in Geneva, in much the same way as the PCT provides for international
filing of patent applications. WIPO acts as the administering agency for actions taken
under the Paris Convention.
Once registered with WIPO, a trademark is protected in each member country. Therefore, the
protection obtained is governed by the national laws of the individual member countries
and is limited by national laws.
Signatories to the Madrid Agreement and other countries are negotiating a new agreement referred to as the Madrid Protocol. The Madrid Protocol aims to obtain protection for trademarks through international recognition, and is to be policed by the WIPO, which will maintain records of all applications. It is proposed that each registration will be effective for 10 years, although this period would be indefinitely extendable on request for additional 10 year terms.
The North American Free Trade Agreement (NAFTA) is a
general trade agreement between Canada, Mexico and the United States that imposes general
requirements for both the domestic and international treatment and enforcement of
intellectual property rights.
NAFTA significantly advances protection of intellectual property in Mexico. However, it
also requires that the United States and Canada make certain changes. The agreement
recognizes the need, at a minimum, to accede and give effect to the main international
conventions relating to intellectual property, i.e., the Paris Convention (intellectual
property), the Berne Convention (copyrights), the Geneva Convention (protects phonograms
or audio works), and the Union for the Protection of New Varieties of Plants (UPOV).
Under the UPOV, protection is given to plant varieties that: -- belong to one of the
botanical species on the national list; -- are distinct from commonly known varieties; --
are sufficiently homogeneous; and -- are stable.
In essence, NAFTA requires each member country to extend protection to foreign nationals
equivalent to the protection granted to domestic right holders.
The Uruguay Round of international trade negotiations,
launched under the auspices of the General Agreement on Tariffs and Trade (GATT) in Punta
del Este, Uruguay, in December 1986, came to a conclusion six years later on December 15,
1993. The result of the negotiations was a comprehensive set of agreements, including one
on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
The TRIPS agreement is considered to be among the most important parts of the world trade
pact. In essence, the agreement requires member countries to adopt a certain minimum
standard of international property protection. For example, in the area of trademarks, the
agreement defines which types of marks are eligible for protection, and states that
internationally well-known marks shall enjoy additional protection. In the area of
patents, it expands protection such that offers for sale of the patented invention without
permission -- as well as actual sales -- constitute infringement.
Under the TRIPS agreement, member countries are obliged to rewrite national laws to make
them conform to internationally agreed norms for the protection of patents, trademarks,
copyrights, industrial designs, trade secrets, and integrated circuits (semi-conductor
chip mask works). It also broadens the areas of protection to include technological areas
-- such as pharmaceutical products, computer software, and inventions and works arising
from new technologies -- that are not currently protected in many countries.
The TRIPS agreement also attempts to prevent any use of geographical terms that may
mislead consumers as to the origin of goods. Some aspects of the agreement relating to the
use of such geographical terms have not been completely resolved, but the TRIPS agreement
does provide for future negotiations on unresolved issues. For example, during the
GATT/TRIPS negotiations the United States and others argued that the term
"champagne" had become a generic term for a certain type of beverage; the
European Union argued the contrary view. Ultimately, the United States passed GATT
legislation requiring the Patent and Trademark Office to treat all false geographical
indications for wines and spirits (e.g., BORDEAUX wine originating from anywhere other
than the Bordeaux region of France) as unregisterable.
In the area of copyrights, the agreement requires compliance with the latest (1971) rules
of the Berne Convention.
Under the TRIPS agreement, countries will amend their national legislation and practices
to conform with the agreement's provisions according to the following timetable: developed
countries over one year; former Soviet block and developing countries over five years; and
less developed countries over 11 years.
The TRIPS accord includes enforcement provisions which provide for the use of improved
international dispute settlement procedures under the World Trade Organization (WTO) for
disputes between countries. The accord also permits cross-sectoral retaliation for a
violation of TRIPS obligations; if a country fails to protect patents, for example, it
could face retaliation in an unrelated sector.
The European Union is currently considering certain
agreements, which, if implemented, would create "Community Patents" and
"Community Trademarks."
The Community Patent Convention (CPC) proposes the creation of a Community Patent that
would cover the entire European Union and be subject to common legislation on validity,
enforcement, etc. The convention will most likely require that disputes be litigated in
national courts at first instance. Final appeal, however, would be to the proposed
Community Patent Appeal Court.
The current feeling of interested parties is that the Convention will not be implemented
within the foreseeable future, because the legal framework for its implementation has not
yet been completely settled and the great success of the EPO has reduced the CPC's
attractiveness.
Similarly, the Community Trademark Convention proposes the creation of a Community
Trademark, which would cover all European Union member states.
The patent system in the United States differs in several
ways from what may be considered to be the worldwide "norm," if such a
"norm" really exists.
Currently, a U.S. patent has a term of 17 years from grant, which is to say that the
patent term does not begin while the application is pending; it begins only when the
patent is actually granted. It can be a matter of years before a patent is granted from
the time the patent application is first filed.
In compliance with the GATT, after June 8, 1995, a U.S. patent will have a term of 20
years from the date of the first filing of the application. Most other patent systems
already have patent terms that run for a fixed term from the date the patent application
was first filed. For instance, the United Kingdom, Germany, France, Japan, Canada and many
other countries have patent terms of 20 years from first filing of the patent application.
The United States is unique in its approach to the allocation of patent rights. This is
unchanged by the upcoming lengthening of the U.S. patent term. In the United States,
patent rights are granted to the "first to invent" rather than the universally
accepted approach of the "first to file." Consequently the United States has a
unique "Interference System," which it uses to determine which party was the
first to invent.
The basic principles of novelty, utility and nonobviousness apply as prerequisites to
patentability in the United States. However, with regard to the determination of both
novelty and nonobviousness, what constitutes prior use or public knowledge, i.e.
"prior art," differs considerably from standards commonly adopted elsewhere.
Although subject matter described in a printed publication or patent will constitute prior
art, whether or not it is published or patented in the United States, the same is not true
of subject matter in public use or known to the public. In these latter cases, only use or
knowledge within the United States or its territories constitutes prior art. Many
countries determine the applicability of prior art without geographic limitations.
The United States grants a one-year grace period from the time that an invention is
disclosed to the public to the time that the patent application must be filed. In other
words, as long as an application for a patent is filed not more than one year from the
date the subject matter is publicly disclosed, the applicant may obtain a patent.
Elsewhere, the patent application must be filed before any disclosure is made to the
public. Thus, in other countries, the inventors' freedom of use and publication of their
inventions is greatly restricted. Some countries seek an intermediate level of freedom.
For example, Indonesia grants a six-month grace period for use or public display, but only
where the use is found to be experimental and the public display is at an exhibition.
The United States requires that the best mode for working the invention be disclosed as
part of the patent application. The majority of countries impose no such requirement, and
therefore an inventor may possibly "hide" the best way of using or making the
patented product or process. However, this practice is antithetical to the underlying
purpose of a patent system because it hinders disclosures of technological innovations.
In the United States, patent applications are not published or indexed until after they
are granted. Thus, third parties may not oppose the grant of a patent nor even know an
application has been filed. Other countries publish the patent applications and have
procedures for third parties to object to the granting of a patent. The European Patent
Office, for example, has such a procedure.
Finally, the United States requires maintenance fees to be paid at three-and-a-half years,
seven-and-a-half years and eleven-and-a- half years after the original grant of a patent,
while other countries require annual maintenance fees.
Indonesia has been on the "watch list" of the
U.S. Trade Representative since 1989 as a result of inadequate protection of patents,
trademarks and copyrights. However, Indonesia recently began to modernize its intellectual
property laws to bring them into conformity with established norms. One area where
Indonesia has been active is trademark law.
A new trademark law, which was passed July 23, 1992, came into force April 1, 1993. The
protection awarded to trademark owners under this new legislation is substantial,
providing both civil and criminal liability for trademark infringement, unfair competition
and counterfeiting.
In addition, it is now possible to register service marks and collective marks as well as
trademarks. This gives the public added assurance as to the source and quality of services
and goods.
The new law also provides for the publication of applications within six months of the
initial filing of the application and allows third parties to object to the registration
of the mark. This acts as a further safeguard to prevent the granting of marks that would
lead to public confusion regarding the origin of goods and services.
The government has created a special Board of Appeal that will have final authority to
decide cases involving trademarks. This procedure, it is hoped, will lead to greater
certainty and finality.
It is now possible to assign a mark without also assigning the goodwill of the business
that the mark represents. It is also possible to license (exclusive and nonexclusive)
marks for both goods and services. However, it is not possible to limit the license to
specific geographic regions within Indonesia. These changes give marks greater value as
assets.
The new law grants protection under a first-to-file system as opposed to a first-to-use
system. Under the new law, marks must be used in Indonesia within three years from
registration, otherwise the registration may be revoked. Third parties may request the
nullification of a registered mark within five years from registration through an
application to the Central-Jakarta District Court. These safeguards are designed to
encourage the use of marks within the country and to prevent "pirates" from
using the system for the sole purpose of stopping third parties from using particular
marks in Indonesia. It is yet to be seen how well the system will work in this regard.
Finally, under the new law, a mark will be protected through registration for 10 years.
However, protection may be extended indefinitely for 10-year periods.
The doctrine of trade secret protection in the United
States is based on the legal principles of both contracts and torts. The contract issues
include situations where an agreement is made between two or more parties to protect trade
secrets or where a confidential relationship exists, i.e., an officer of a company is
under a duty not to disclose trade secrets. The tort issues arise under principles of
unfair competition. Further, in many states it is a criminal offense for an employee to
steal trade secrets from a company.
Generally, the protection of trade secrets in Europe, with the noted exception of France,
is based solely on contractual principles. Although contractual obligations make it
possible to enforce nondisclosure agreements and the like, it is not possible to prevent
theft, industrial espionage, subversion of employees or other misappropriation by
competitors who have no contractual relationship with the trade secret owner.
However, in some European countries legislation regarding unfair competition may afford
the trade secret owner greater protection than that afforded under contract law. For
example, Hungary has implemented unfair competition legislation that prohibits the
misappropriation of "business secrets." Business secrets are broadly defined as
any fact, information, solution or data linked to economic activities that the owner
reasonably expects to remain confidential.
An owner of a trade secret may also be able to use the criminal laws of European countries
to enforce trade secrets. Most have criminal laws that cover theft and industrial
espionage. In fact, in Denmark, the majority of the law regarding trade secret protection
is in the form of criminal legislation, and it covers the invasion of privacy, electronic
espionage, theft and handling stolen goods. A noted exception, however, is the United
Kingdom where the appropriation of a trade secret, in itself, does not constitute theft.
Although protection of trade secrets in Europe is considered relatively adequate, it is
not as strong as the protection afforded under the laws of the United States.
Signed/Effective: September 6, 1952.
Revised: Paris 1971.
Membership: Over 80 countries worldwide.
Concept: "National treatment".
The concept of national treatment means that each member state is required to confer the
same copyright protection to foreign works eligible under the Convention as is granted to
its own nationals.
Legal Obligations: Member states must have laws that effect the following:
Article I: Provision of adequate and effective protection of the rights of authors and
other copyright proprietors in literary, scientific, and artistic works, including
writings, musical, dramatic and cinematographic works, and paintings, engraving and
sculpture.
Article II: Nationals of other contracting states receive the same protection as received
by the nationals of the contracting state (published and unpublished).
Article III paragraph 1: All formalities that can be required by a member state are
satisfied if copies of the work bear the symbol accompanied by the copyright proprietors
name and the year of first publication placed in such a manner and located as to give
reasonable notice of claim of copyright.
Article IV: Provision of a minimum copyright term of 25 years from publication, or life of
the author plus 25 years.
"Berne Safeguard Clause": Article XVII prohibits a Berne Convention country from
denouncing Berne and relying on the U.C.C. in its relations with other members of the
Berne Convention.
Paris Revision 1971: Notwithstanding the terms of the U.C.C., developing countries may
disregard the "Berne Safeguard Clause," under certain circumstances and may
obtain compulsory licenses to translate copyrighted works for teaching, scholarship and
research purposes, and may reproduce copyrighted works for use in systematic instructional
activities.
BIBLIOGRAPHY:
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"Examination of I.P. Provisions of North America Free Trade Agreement." BNA's
World Intellectual Property Report, 6, no. 12 (December 1992): 344-346.
"GATT Negotiators Hail TRIPS Pact as Success." BNA's Patent, Trademark &
Copyright Journal, 47, no. 1162 (January 13, 1994): 222-223.
Leffert, Deborah. "Special 301 Checklist: Which Countries Fail to Protect
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MacLaren, Terrence F., ed. Worldwide Trade Secrets Law. New York: Clark Boardman
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Manual for the Handling of Applications for Patents, Designs and Trade Marks Throughout
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Cliffs, New Jersey: Prentice Hall Law & Business, 1991.
Beier, F. K. "The European Patent System." Vanderbilt Journal of Transnational
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States Trademark Association Executive Newsletter. 1983.
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Safran, D. A. "Protection of Inventions in the Multinational Market Place: Problems
and Pitfalls in Obtaining and Using Patents." North Carolina Journal of International
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Samuels, Jeffrey M. Basic Facts About Trademarks. Washington, D.C.: U.S. Department of
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White, T. A. Blanco. Patents for Inventions and the Protection of Industrial Designs. 5th
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