AIPPI CONGRESS
Workshop V
Extraterritorial Jurisdiction
and other issues arising out of q 153
Chair:
Prof. Willem Hoyng (NE)
Speakers:
Prof. Sam Ricketson (AU)
Mr Don Martens (US)
Prof. Constant van Nispen (NE)
Dr David Bennett, Q.C. (AU)
introduction
Prof. Dr. Constant van Nispen (NL)
Firstly, I would like to introduce to you – in brief terms – the subject of extraterritorial jurisdiction. I shall do this on a neutral basis. Hereafter Don Martens and Prof. Sam Ricketson will argue respectively, against and in favour of extraterritorial jurisdiction.
Secondly, I shall deal with the draft for a Convention on jurisdiction and the recognition and enforcement of foreign judgements in civil and commercial matters. This draft includes a specific provision for IP cases in Article 12, and AIPPI has set itself the task of advising on this provision especially.
Special Committee Q 153, which I have the honour to chair, has sent a questionnaire to the National Groups and based upon the national reports it has prepared an international report. Further, Special Committee Q 153 proposes to adopt a resolution and this will be voted upon tomorrow morning in the Executive Committee.
Extraterritorial jurisdiction
In my home country, the Netherlands, the question of extraterritorial jurisdiction was raised before our Supreme Court twelve years ago in a trademark case, Interlas/Lincoln. An injunction had been granted against Interlas, which injunction not only pertained to the Netherlands but also to Belgium and Luxembourg. I acted on behalf of Interlas and objected to the cross-border effect of the injunction. However, I could not convince the Supreme Court.
The Court formulated a sweeping statement: the judicial power to grant injunctions encompasses the power to grant injunctions with respect to duties and obligations – eventually according to foreign law – which have to be performed outside the Netherlands.
The Court gave just one reason: the opposite view would lead to a result that would be practically undesirable in this era of increasing international contacts, i.e. the result that in cases of tortuous acts with an international character – such as infringements upon intellectual property rights and unfair competition in several countries or cross-border environmental pollution – a Dutch victim could be compelled to address the judges in all countries involved.
This is the main argument pro extraterritorial jurisdiction. You find it back for instance in the national report of the Swiss Group (p. 5). The arguments con are more diverse.
There is the argument that the judge, being a state organ, should respect the boundaries of national sovereignty. In the UK – and nowhere else - they especially stress the monopoly argument worded by (now) Lord Justice Aldous as follows:
"Although patent actions appear on their face to be disputes between two parties, in reality they also concern the public. A finding of infringement is a finding that a monopoly granted by the state is to be enforced. The result is invariably that the public have to pay higher prices than if the monopoly did not exist. If that be the proper result, then that result should come about from a decision of a court situated in the state where the public have to pay the higher prices. One only has to imagine a decision of this court that the German public, should pay to a British company substantial sums of money to realise the difficulties that might arise."
Further arguments can refer to the difficulty of a court in one country properly interpreting and applying the laws of another country; the differences in procedural rules around the world – rules on discovery, court appointed experts, etc. – and the likelihood of different acts being asserted as the basis for infringement; the risk of forum shopping practices etc.
It is my impression that generally speaking law practitioners are more sensitive to the cons than the users of the system, the patent holders, trade mark owners, etc. I do not want to suggest that this may be explained by a difference in commercial interests. I think that law practitioners are driven by an inclination to perfectionism. Users tend to be more interested in dispute solutions which are relatively quick and not expensive.
During the nineties it has been recognised throughout the European Union that Article 2 of the Brussels Convention within the 15 Member States is a proper basis for extraterritorial jurisdiction. The decision of the European Court of Justice of 7 March 1995 in Shevill v. Presse Alliance - a press libel case – has played a pivotal role in this recognition. Even the English courts have accepted since 1997 that they do have jurisdiction to try infringement of an intellectual property right existing in another Member State to the Brussels Convention. The first case was a copyright case, Pearce v. Ove Arup.
However, in patent and trade mark cases the extraterritorial jurisdiction based upon Article 2 of the Brussels Convention clashed with the exclusivity rule of Article 16 (4) in the same Convention:
"The following courts shall have exclusive jurisdiction, irrespective of domicile: (...)
4. In proceedings concerned with the registration and validity of patents, trademarks, designs or other industrial models or designs, and other similar rights required to be deposited or registered: the courts of the Contracting State where the deposit or registration has been applied for, has taken place or is under the terms of an international convention deemed to have taken place."
In patent (and – to a lesser degree – trademark) cases the defence that the patent is invalid is a very common defence, quite often intermingled with the non-infringement defence.
On 1 February 1994 the Dusseldorf District Court handed down a decision concerning a British patent for a conveyer comprising a track which had allegedly been violated by a German company. When the alleged infringer raised the defence of invalidity, the Dusseldorf court held that it was competent to try the defence as an incidental matter, as that was possible according to British law. The patent was found invalid inter partes, and the claim was dismissed. (This first instance decision was not appealed).
This German decision implies a rather restrictive interpretation of the exclusivity rule in Article 16 (4) of the Brussels Convention.
Three years later, the English judge took the opposite view: the moment the defendant places the validity of the right in issue the infringement court will cease to have jurisdiction. The English judge will not take jurisdiction in relation to foreign patents when the validity of those rights is called into question. Justice Laddie in Coin Controls v. Suzo (1997); approved by the Court of Appeal in Fort Dodge v. Akzo Nobel (1998).
At the end of the day, the European Court of Justice in Luxembourg will have to give the right interpretation of the Brussels Convention in this respect. Nowadays, there is, however, as far as I know no case pending there with respect to Article 16 (4).
Now turning to the Draft Convention of the Hague Conference on Private International Law.
The Hague Conference is a permanent intergovernmental organisation with today 48 (Peru has just entered) Member States, including many European countries, the United States, Canada, some Latin American countries, Australia, China, Japan and Korea.
One of the ambitions of the Hague Conference now is to draft a multilateral, global convention on jurisdiction and the recognition and enforcement of foreign judgements. By the end of the eighties, especially the United States felt the need for such a global convention. Perhaps the Americans were inspired by the success of the Brussels Convention. The Hague Conference was approached to see whether a convention could be drafted within its organisation. The Hague Conference did a tremendous lot of work and the result of that work so far, the present draft Convention, was adopted on 30 October 1999 by a committee of the international experts. It is noticed in this respect that originally the Brussels Convention stood as a model for the present Draft Convention.
Although a lot of progress has been made, a couple of stubborn bottlenecks are still there, including the rule on industrial property in Article 12 similar to Article 16 of the Brussels Convention. The Diplomatic Conference of the Hague Conference, on which the final text of the Convention is to be adopted, shall be convened in two sessions, the first session in June this year and the second session in the first half of next year.
AIPPI intends to present its Resolution in Q 153 to the Hague Conference before the first session of its Diplomatic Conference in June next.
Before turning to the specific IP provision in the Draft Convention, I would like to make two general remarks. The first being that there is an important practical difference between the Draft Convention and its model, the Brussels Convention. Disputes arising around the correct interpretation of the Brussels Convention can finally be solved by the European Court of Justice. The Draft Convention, however, does not provide for a central judicial body for interpreting its provisions. It will be up to the judges of each of the Member States who will ratify, to construe the Convention.
My second remark is that for IP lawyers not only the specific IP provision is of interest. For instance: Article 3 of the Draft Convention says that a defendant may be sued in the Court of the State where he is habitually resident; if we interpret this provision in the same way as its model, Article 2 of the Brussels Convention, then the principle of extraterritorial jurisdiction for the defendant's court is implied in Article 3. Extraterritoriality is world-wide.
For instance: if an American company would allegedly infringe a U.S., European and Japanese patent and the American judge would infer from Article 3 regarding extraterritorial jurisdiction, that the "global" case might be brought - at the discretion of the patent holder - before an American court, and probably all patents should have to be interpreted by an American jury.
Then, of course, it is crucial to know to which extent the jurisdiction of the American court would be affected by an invalidity defence from the defendant's side. In its original wording Article 12 (4) proposes a solution which gives a narrow scope to the exclusivity rule. The English text is not totally clear, but the French text is.
The Special Committee on Q 153 started in October 1999 with the ambition to offer a solution. However, this appeared to be an illusion. In the IP field there are very diverging ideas about (extra)territoriality. People who are dealing with trademark and copyright infringements on the internet seem much more inclined to accept one-shop-stop solutions than patent practitioners.
Patent practitioners are also divided, but a vast majority seems to stick to the territoriality principle certainly as far as the validity is concerned. Only a small minority (e.g. the Swiss and Brazilian Groups) argue that national courts should have jurisdiction to judge, as an incidental question, on the validity of foreign industrial property rights. As to the infringement jurisdiction, there is a more diverse picture on whether or not the territoriality principle should be upheld.
Special Committee Q 153 concludes that at this moment there is no consensus within AIPPI (or elsewhere) on the fundamental issue concerning the scope of the exclusive jurisdiction and that, in view of the present lack of consensus, intellectual property matters should be excluded from the substantive scope of the Draft Convention. However, it is an important and complex matter that deserves a regulation. Therefore, the committee also suggests that the Hague Conference elaborates a specific protocol on intellectual property to be added to the Convention in due time. This gives us – and the Hague Conference – time to carefully examine the matter and to elaborate, if possible, a more well-thought set regulations on IP. You will find this in the Draft Resolution proposed by Special Committee Q 153.
Thank you for your attention.
Dr David Bennett QC
Solicitor General of Australia
The Solicitor General is like the Holy Roman Empire which you remember was not holy, was not Roman and was not an empire. I am not a solicitor and I am not a general. I appear for the government in constitutional cases and I represent Australia by leading the team at the Hague Conference.
I was reminded this morning how competitive intellectual property lawyers are. I am told that at one of the pre conference tours of the Northern Territory two intellectual property lawyers were in a tent and when they opened the flap in the morning, there outside was a very large, very ferocious and very hungry looking crocodile and the first intellectual property lawyer started putting on his running shoes. The second one said “Why are you putting on your running shoes? There’s no way you can outrun a full grown crocodile.” And I told you they were competitors. “I don’t have to,” he said, “I only have to outrun you!”
I’m going to talk a little bit about the Hague Convention generally, secondly about the intellectual property aspect of it, and thirdly I’m going to mix in to the debate I heard this morning and put in some views on it.
The Hague Convention is what is, on judgements, the biggest job The Hague has attempted for many years. It’s been going for eight years and it’s almost finished. It is going to revolutionise a number of aspects of jurisdictions and the enforcement of judgements. It is important to realise that it is to be what is described as a “mixed convention”. I’ll just explain that term. A single convention on foreign judgements is one which says “these are the bases of jurisdiction which will be recognised by other countries for the enforcement of foreign judgements.” A double convention says “these are the bases on which you can assume jurisdiction and they will be recognised and you agree not to claim the jurisdiction on any other basis.” A mixed convention, which is what we have, is one which divides bases of jurisdiction into three; into black, white and grey. There’s the white ones: if you claim jurisdiction on a white basis then everyone else has to enforce your judgements. There’s the black ones which you agree you will not apply even in your home jurisdiction, to claim jurisdiction. And then there’s the grey which is everything else where you can exercise jurisdiction or not and other people can enforce it or not as they wish.