IBT – Problem 9.2 Intellectual Property Piracy Victor H. Bouganim WCL, American University

IBT – Problem 9.2 IBT – Problem 9.2 Intellectual Property PiracyIntellectual Property Piracy

Victor H. Bouganim

WCL, American University

Victor H. Bouganim, WCL, American University, Spring 2001

Intellectual Property PiracyIntellectual Property Piracy Problem 9.2, Textbook p.801Problem 9.2, Textbook p.801

The Rockers are a world famous music group– DACCA is their recording label

New York corporation Owns several European subsidiaries

– Licensed to produce DACCA CDs and tapes– Assumed by DACCA of New York that these sales would take place in

Europe Hold copyrights for their sound recordingscopyrights for their sound recordings wherever

national law permits protection Sales of the Rockers’ most popular recordings are in

decline in the U.S. – Competition from piracy and ‘gray markets’


CopyrightCopyright

Economic rights

Moral rights

A bundle of exclusive rights attached to protected works

©


Copyright Conventions - WIPOCopyright Conventions - WIPO Berne Convention for the Protection of Literary and Artistic

Works, 1896 revised in the Paris Act 1971, as amended in 1979

Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, 1961– Joint administration of UNESCO

WIPO Copyright Treaty (WCT), 1996 WIPO Performances and Phonograms

Treaty, 1996


Copyright Conventions - OthersCopyright Conventions - Others TRIPS, Art. 9-14 Universal Copyright Convention (UCC), 1952, revised

in Paris, 1971– Administered by UNESCO

Regional Conventions– NAFTA, 1993, Art. 1701-7– Pan-American

Mexico City Convention, 1902 Buenos Aires Convention, 1911

– EU Directives - Copyright Harmonization


TRIPS Copyright RegimeTRIPS Copyright Regime

Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.

[TRIPS, Article 9.1]

Berne Convention, Article 6bis – Moral Rights:– to claim authorship– to object to certain

modifications and other derogatory actions

Rationale for exclusion– not a trade-related issue– possible barrier for full

exploitation by a licensee– not recognized in some

countries. E.g., USA.


TRIPS Copyright RulesTRIPS Copyright Rules

Copyright scope and exceptions

Digital Copyright– Computer programs– Databases

Rental Right Enforcement Dispute Settlement

Related Rights– Performers

– Producers of Phonograms

– Broadcasters


Scope of Copyright ProtectionScope of Copyright Protection

Copyright protection shall extend to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.

[TRIS, Article 9.2]

Copyright protection extends to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.

[WCP, Article 2]


Copyright Works - USACopyright Works - USACopyright Act 1976Copyright Act 1976

Literary works compilations computer

programs Musical works Dramatic works Pantomimes and

choreographic works

Pictorial, graphic, and sculptural works

Motion pictures and other audiovisual works

Sound recordings Architectural works


Copyright - Exclusive RightsCopyright - Exclusive Rights

Economic RightsReproduction

PublicationAdaptation

Public PerformanceCommunication

Distribution

Rental right


Rental RightRental Right

In respect of at least computer programs and cinematographic works, a Member shall provide authors and their successors in title the right to authorize or to prohibit the commercial rental to the public of originals or copies of their copyright works.

[TRIPS, Article 11] Phonograms – Art. 14.4. WCT, Article 7.

In respect of computer programs, this obligation does not apply to rentals where the program itself is not the essential object of the rental.


Limitations and ExceptionsLimitations and Exceptions

Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.

[TRIPS, Article 13]


TRIPS – Enforcement MeasuresTRIPS – Enforcement Measures

Provided enforcement and measures for protection against intellectual property infringement– Article 41

guarantee of enforcement under members’ national laws

– Article 51 Suspension release by Customs Authorities

– Article 60 De Minimis Imports

– Article 61 Criminal Procedures


IP Enforcement - Obligations IP Enforcement - Obligations TRIPS – Article 41TRIPS – Article 41

Members shall ensure that enforcement procedures as specified in TRIPS are available under their law – Including expeditious remedies designed to prevent

further infringements “These procedures shall be applied in such a

manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse.”

Enforcement procedures shall be fair, equitable and not unnecessarily complicated or costly


Suspension by CustomsSuspension by Customs TRIPS - Article 51TRIPS - Article 51

Right-holders may– lodge an application in writing with competent authorities,

administrative or judicial, for the suspension by the customs authorities of the release into free circulation of infringing goods

Members may – enable such an application to be made in respect of goods

which involve other infringements of intellectual property rights.

– provide for corresponding procedures concerning the suspension by the customs authorities of the release of infringing goods destined for exportation from their territories.


De Minimis Imports De Minimis Imports TRIPS – Article 60TRIPS – Article 60

Members may exclude from the application of the above provisions small quantities of goods of a non-commercial nature contained in travelers' personal luggage or sent in small consignments.


Criminal Procedures - ICriminal Procedures - ITRIPS – Article 61TRIPS – Article 61

Members shall – provide for criminal

procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright piracy on a commercial scale.

Members may– provide for criminal

procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed willfully and on a commercial scale.


Criminal Procedures - IICriminal Procedures - IITRIPS – Article 61TRIPS – Article 61

Remedies available shall include – imprisonment and/or

– monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity.

the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offense


PiracyPiracy

“The unauthorized and illegal reproduction or distribution of materials protected by copyright, patent or trademark law”

“The test of piracy is not whether the identical language, the same words are used, but whether the substance of the production is unlawfully appropriated.”

Source: Black’s Law Dictionary, seventh edition

Unlicensed manufactures have lower production costs because they don’t pay royalties

Piracy occurs in developed countries as well in developing ones

In countries where enforcement is weak - piracy flourishes


Parallel Import - Gray MarketParallel Import - Gray Market

Parallel Import Where products

manufactured by the trademark (or other IP rights) owner or his licensees for sale in other countries are imported into the U.S.

Gray Market Goods lawfully

bearing patents, trademarks or copyrights which originate abroad and which compete without permission in domestic markets


CounterfeitingCounterfeiting Counterfeit

– an imitation intended to pass for an original and is therefore false

Counterfeit Mark– A mark which is identical

or substantially identical to the registered trademark


Counterfeiting ProductsCounterfeiting Products

™ ®

©

Products which are identical to the genuine products, but were produced without the authorization of the IP rights owners.

Perfect imitation including all IP symbols.


Intellectual Property PiracyIntellectual Property Piracy Problem 9.2, Textbook p.801Problem 9.2, Textbook p.801

The Rockers are a world famous music group– DACCA is their recording label

New York corporation Owns several European subsidiaries

– Licensed to produce DACCA CDs and tapes– Assumed by DACCA of New York that these sales would take place in

Europe Hold copyrights for their sound recordingscopyrights for their sound recordings wherever

national law permits protection Sales of the Rockers’ most popular recordings are in

decline in the U.S. – Competition from piracy and ‘gray markets’


Intellectual Property PiracyIntellectual Property Piracy Problem 9.2: The SettingProblem 9.2: The Setting

Sales of the ROCKERS’ most popular recordings are in decline in the U.S.– Competition from DACCA European

subsidiaries capitalizing on currency differences

European wholesalers selling CDs to K-Market in the U.S.

K-market sells the ROCKERS’ recordings for less than the U.S. produced recordings


Class DiscussionClass Discussion

Will Part III of the TRIPS Agreement assist in combating international piracy?

What must the ROCKERS and DACCA do to benefit from TRIPS?

What are the legal remedies available to DACCA in combating piracy?

Can DACCA stop the parallel importation and the ‘gray market’ in the ROCKERS recordings?


Infringing ImportationInfringing ImportationCopyright Act § 602Copyright Act § 602

Importation into the US without the authority of the owner of copyright of copies or phonorecords of a work that have been acquired outside the US is an infringement of the exclusive right to distribute copies or phonorecords…

In a case where the making of the copies or phonorecords would have constituted an infringement of copyright their importation is prohibited.

In a case where the copies or phonorecords were lawfully made, the United States Customs Service has no authority to prevent their importation ...


The Scope of Piracy The Scope of Piracy Apple ROM-less ComputersApple ROM-less Computers

In their Effort to stop pirated copies of Apple computer systems entering the U.S., Apple attempted to stop importation of computers, which did not include chips with the Apple copyrighted materials (“ROM-less” computers).

The Copyright Act (Sec. 602) is operative against importation of protected ROMs.

“Pirated copies” are actual copies of a copyrighted work without the right-holder authorization.

Importation of ROM-less Computers Not Banned Under the Copyright Act.


Combating CounterfeitingCombating Counterfeiting Trademark Counterfeiting

Act 1984– Established counterfeiting

as a crime– Damages and/or profits and

attorney’s fees may be recovered in a civil action

– Ex parte seizure orders may be issued by federal courts

– Gray market goods, parallel goods are expressly excluded from coverage

The Anti-counterfeiting Consumer Protection Act 1996– Trafficking in counterfeit goods is an

offense under the Act– Importers must disclose the identity

of any trademark on imported merchandise

– Ex parte seizure of counterfeit goods are largely authorized

– Damages and penalties were increased

– Custom’s officials no longer have the authority to return goods to their source


Tariff Act 1930, Sec. 526Tariff Act 1930, Sec. 526Materials, p. 501Materials, p. 501

Prohibit the importation of any merchandise bearing valid US trademarks, unless written consent of such marks is produced at the time of making entry.

Prohibited merchandise shall be subject to seizure and forfeiture.

Civil actions may be brought by the trademark owners for injunctions and damages.

Exemption: Articles accompanying any person arriving in the US, when such articles are for personal use and not for sale and are within set limits.


A.T. Cross Co. v Sunil Trading Co.A.T. Cross Co. v Sunil Trading Co.Dist. SD NY, 1979Dist. SD NY, 1979

This case involves a scheme in which bogus Cross pens, manufactured in a foreign country were passed through the U.S. by means of New York’s foreign trade zone for shipment to another foreign country where the pens were sold as authentic Cross pens.

Plaintiffs Alleged trademark infringement, unfair competition and false designation or origin under the Lanham Act, 15 U.S.C. §§ 1051

Result: Lanham Act’s jurisdictional parameters reach within the foreign trade zone

Documents

IBT – Problem 9.2 Intellectual Property Piracy Victor H. Bouganim WCL, American University