The team is joined by Guest Kats Rosie Burbidge, Stephen Jones, Mathilde Pavis, and Eibhlin Vardy, and by InternKats Verónica Rodríguez Arguijo, Hayleigh Bosher, Tian Lu and Cecilia Sbrolli.

Saturday, 28 October 2017

IP Federation declares no role for IP disputes in proposed Hague Convention, while INTA takes a different approach

The AmeriKat's face when you try to get
her to enforce any decision that is not solely hers
How much are you wanting to read about recognition and enforcement of foreign judgments on a Saturday afternoon?  A lot?  Great!

To bring readers up to speed, there is new draft legislative instrument to get excited about - the draft Hague Convention on the Recognition and Enforcement of Foreign Judgments.

What is it?

There are ongoing negotiations concerning a new draft Convention that provides for the recognition and enforceability of judgments from contracting states in civil and commercial actions.  This means that extra-jurisdictional IP judgments could become enforceable in the UK (and vice-versa). 

Where did it come from?  

The current draft, from February 2017, can be found here.  The origin story of this draft derives from the March 2016 meeting of Council on General Affairs and Policy at the Hague Conference on Private International Law - see minutes here.  Following a first proposed draft text in November 2015 by the aptly named "Working Group on the Judgments Project of a Proposed Draft Text", the Council decided to establish a Special Commission to prepare a draft Convention.  An Experts Group of the Judgments Project was also established.  As noted at paragraph 14 of the 2016 Minutes, "the Council confirmed that this is a priority project for the Conference."

The Special Commission has already held two meetings - in June 2016 and February 2017.  A third meeting will be held in November (see below). 

Why should I care?

It may (or may not) concern IP.  Article 2(1)(l) of the current draft currently excludes IP rights from its scope, but, that exclusion is in brackets as follows (and has its own square-bracketed exclusion):
"[(l) intellectual property rights[, except for copyright and related rights and registered and unregistered trademarks]]."
Article 5 entitled "base for recognition and enforcement" provides a list of conditions or "jurisdictional filters" where a judgment is eligible for recognition and enforcement (generally if the defendant is established/has a place of business in the contracting state).  For IP, Articles 5(k) -(m) are applicable and, again, all of these provisions are square bracketed. These provisions state that a judgment is eligible for recognition and enforcement where, generally,
  • the judgment ruled on the infringement of a registered IP right (Article 5(k));
  • the judgment ruled on the ownership or subsistence of copyright or related rights or registered IP rights (Article 5(l)); and
  • the judgment ruled on infringement of copyright or related rights or other rights not required to be registered (Article 5(m)).  
Article 6 is a notwithstanding provision.  It provides that irrespective of Article 5, a judgment that rules on the validity of an IP right shall be recognized and enforced  if and only if the State of origin is the State in which the grant or registration has been applied for or taken place (see Article 6(a)).  That is to say, a court cannot rule on the validity of a registered right of another contracting state (which is the position today).  As the EU notes:
"This special rule is necessary because the validity of IP rights required to be granted or registered is subject to the exclusive jurisdiction of the State of registration under practically all national laws and international instruments, and the future Hague Convention aims at ensuring and strengthening this rule. "
Article 7 provides for circumstances where there can be a refusal of recognition/enforcement of a judgment, specifically for IP where the judgment ruled on infringement of an IP right but applied to that right law "other than the law governing that right" (see Article 7(1)(g)).  

Article 12 entitled "non-monetary remedies in intellectual property matters" states:
"[...A judgment granting a remedy other than monetary damages in intellectual property matters shall not be enforced under this Convention.]"
So, there goes your often more valuable relief  - namely injunctive - but still keeping in play judgments concerning validity.  Once the AmeriKat got to Article 12 she thought "well then, what is the point of this?"

What is going on with the square brackets?

As any good drafter knows, square bracketing provisions means that their inclusion is up for grabs.  At the first two meetings, delegations had differing views. Some opposed the inclusion of IP all together.  Some said only copyright and trade marks should be included.  Others thought only licensing litigation should be included, thus excluding validity and infringement.

What is the EU's position?  

In favor of including IP rights, of course!  At paragraph 4 of  the EU's "Discussion Document" on the draft Convention regarding IP rights published last month, it states:
"The EU is in favour of retaining IP within the scope of the Convention. IP rights are an important economic factor, and a secure legal framework for cross-border cases is of the essence. Even though the IP rights as such are territorial (which will in no way be changed or affected by the future Hague Convention), there are many cross-border situations which might require the recognition or enforcement of an IP-related judgment in another country..."
What does industry make of this?

Industry has been actively engaged in talks with EU representatives on this project.  One prominent industry organization, IP Federation, has made its position public with this policy paper.  The IP Federation's  primary position is that all IP should be excluded.

The paper notes that IP rights are a beast of national law, borders and courts.  With limited cross-border harmonization, different courts apply different laws arriving at different outcomes.  As such, IP Federation believes "that, in general, this points to a regime of national recognition and enforcement only".  Once you start recognizing/enforcing decisions of foreign courts that would never have been arrived at in your national court, things start to go wrong. 

The paper also notes the problem with Article 12 referring to financial remedies as "usually only a secondary objective for IP owners, and that such remedies can usually be enforced in the country concerned in any event" and the complexity of the operation of Article 8, when coupled with Articles 5 and 6. The IP Federation provides some worked examples concerning the fictional Ruritania for readers to digest (although, this is not the Ruritania of romance, adventure and intrigue  - but of patent judgment enforcement....)

The IP Federation states that
"..If it is not realistic to exclude IP altogether, we believe that patents alone should be excluded, since patents can be distinguished from other IP rights in certain respects. Most importantly, patent law is a particularly complex area. In jurisdictions that see a lot of patent litigation there are specialist courts to deal with the cases (this is the case in Germany, France, UK and the Netherlands for example). The convention would however allow decisions with multijurisdictional effect to be decided in a way that requires recognition and enforcement, even when the decisions are made by courts that are inexperienced in their own domestic patent law, let alone the application of foreign law. That is not a situation that carries any benefit to EU businesses. "
If IP is included, the IP Federation provides a list of safeguards, including refusal to recognize punitive damages and explicit exclusion for anti-trust issues. 

Has anyone else commented? 

INTA has - see their Board Resolution here.  INTA's view is that they support the inclusion of registered and unregistered trade mark rights in the draft Convention and the ability for trade mark judgments to be recognized and enforced "across borders".  INTA resolves, however, that the final draft
"must contain provisions ensuring the maintenance, protection and respect of the sovereignty of the ruling courts and the principle of territoriality of trademark rights and trademark judgments, particularly with regard to judgments ruling on the validity of trademarks."
INTA's paper refers to an issue flagged by the IP Federation paper in their "secondary position" (i.e inexperienced or otherwise courts).  It states:
"The Subcommittee is aware of and has discussed the fact that judgments may originate from countries with lesser standards of judicial integrity and therefore be obtained under questionable circumstances. However, it is the Subcommittee’s position that the safeguards as provided in the Convention and in general international law statutes allow for sufficient judicial discretion, and that the benefits arising out of the application of this Treaty far outweigh potential risks. The same applies for the possibility that the Convention may be used against brand owners but again, the draft includes provisions which ensure the protection of defendant’s rights.
While details of the application of the Convention to Intellectual Property Rights are still being discussed among the Delegates and INTA will continue to closely monitor the process, the objective of the Convention is to provide an important tool in the fight against globalized trademark infringement which will enable brand owners to follow the infringer’s assets across borders. It is INTA’s position that this general objective is beneficial to our members and should therefore be supported even if some of the specifics still require refining. Advocating for this treaty is an active implementation of INTA’s strategic mission of advancing trademark protection to benefit brand owners. "
What is really driving this?

The AmeriKat ponders whether that, in light of the slow (but upcoming) progress on the IP Enforcement Directive reexamination, the EU is really targeting efforts on this project in order to find a quicker solution for the demand for quicker/cheaper enforcement for online infringement (a key priority for the Commission following the IPRED consultation).  Indeed, one can see echos of this on page 5 of the EU's Discussion Document.  If that is one of the key drivers informing the EU's position, then perhaps there is a middle ground to strike between the position of INTA and the secondary position of IP Federation.  But, for the AmeriKat's part, further work needs to be done to even be sure that the operation of the relevant IP articles is even fit for purpose. 

What is next?

From 13-17 November 2017, there will be a third meeting of the Special Commission on the Recognition and Enforcement of Foreign Judgments.  So if readers have any comments or views on the proposal before then, time to put pen to paper.

5 comments:

Andy said...

Speaking as a resident of a country which presently trying break away from the jurisdiction of a supra-national court (the CJEU), I can't see the attraction of a convention such as this, which would indubitably cede some sovereignty to the courts of other nations. Comity is clearly desirable but such a rigid structure just invites abuse. Forum shopping will become more widespread (cf Eastern District of Texas court for patent litigation), and given the enormous variation in legal standards across the world, how could a signatory country effectively bar the enforcement of the judgments of another signatory even though the latter's legal system was riddled with corruption or state interference? Yes, there are some get-out clauses but why get into a treaty obligation you know you are going regret later?
And I am confused about what the draft is saying concerning default judgments. In Article 5 (e) and (f) it appears to be a pre-requisite that a defendant has fully engaged with the judicial process in the original state, in effect, putting default judgments outside the scope of the convention, yet Article 14 expressly allows them. To my mind a default judgment should never be enforcible elsewhere under a convention such as this.
And Article 13 on Settlements is worrying. The exact wording is "Judicial settlements (transactions judiciaires) which a court of a Contracting State has approved, or which have been concluded in the course of proceedings before a court of a Contracting State, and which are enforceable in the same manner as a judgment in the State of origin, shall be enforced under this Convention in the same manner as a judgment[, provided that such settlement is permissible under the law of the requested State]". All too often settlements are forced on one party in a dispute (usually the defendant) because there is inequality in the financial resources of the parties, rather because of the merits of their respective argument. Effectively giving a tool such as this, which clearly favours large (US?) corporations, an internatioanl reach will only exacerbate the situation.
And finally, what exactly is meant by the equivalence mentioned in Article 9? "A judgment recognised or enforceable under this Convention shall be given the same effect it
has in the State of origin"? If copyright ends up being included within the convention, does this Article imply that a finding of infringement in one state would, in effect, become enforcible in the territory of another signatory state even though the original grounds (say, the EU Dirtective standards) are incompatible with the domestic law (say, Fair Use in the USA) in the requested state?

Pseudonymous said...

Seriously? You don't want UK judgments recognised and enforced elsewhere (this time worldwide) automatically once you fall out of the Brussels Regulation (albeit there is Lugano)? So who will choose UK law and/or courts in future if judgments cannot be enforced elsewhere. I would have thought the UK legal profession would be out there in droves supporting this. Are you aware of how dependent the profession is on the Brussels Regulation? It goes unnoticed -practitioners seem to think that it is the lure of UK law/courts alone. No it is not -the UK is currently part of a great enforcement and recognition framework which it is in the process of extricating itself from. It must find another one.

The reason not as many people choose US law and courts is that the US has traditionally stayed out of these PIL conventions. This has been a boon to the UK legal profession. Now the US is at the table for this treaty (under Obama but wait and see if Trump holds) and you are advocating the UK stays out too even after it drops outs of Brussels!!

So let's apply UK judgments only in the UK and let there be no scope for them to be applied elsehwere. Is that what the future holds as a great outward looking trading nation for you?

Pseudonymous said...

And rumour has it that the secretariat are so in thrall to the US (to finally have them there), that it is only the EU and strangely enough Australia effectively fighting US strong arm tactics. This may yet be another case of the US sitting at the table and forcing a treaty to look like what it wants, or not getting its way and then not ratifying it. These strong arm tactics by the way are getting worse elsewhere such as the WTO, now that the old guard of nice guys is gone.

Anonymous said...

Pseudonymous' comment assumes UK judgments cannot be enforced extraterritoriality without said convention, but of course this is not the case; albeit may very well depend on reciprocity factors and the like, but merely because the convention doesn't exist does not mean UK judgments cannot be enforced in foreign jurisdictions...

Pseudonymous said...

No one doubts that they can be enforced in the very old fashioned way, and at great expense and length of proceedings including on appeal. But not on the basis of reciprocity as such in isolation -so please explain. In most instances, there is a convention which grants reciprocal recognition possibly a bilateral one, if not multilateral. However, IP is small fry here and dispensable and IP lawyers have not had to tackle this much save for a few isolated cases of applicable law pertaining to the right in question (and not judgments as such). The big issue is children, and abduction for which we are also about to jettison the current arrangements.

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