RESTRICTED
WORLD TRADE IP/C/W/90
14November 1997
ORGANIZATION(97-5003)
Original: English Council forTrade-Related Aspects
ofIntellectual Property Rights
REVIEW OFLEGISLATION ONENFORCEMENT
Replies from theUnited States toquestions from theEuropean Communities
andtheirMember States1,Hong Kong China2andJapan3
Thefollowing communication, dated 6November 1997, hasbeenreceived from theUnited States.
_______________
I. REPLIESTOQUESTIONSPOSEDBYTHEEUROPEANCOMMUNITIESANDTHEIR
MEMBER STATES
1. TheUnited States 'response toitemeightintheChecklist ofIssues onEnforcement states that
"theUnited States Government isnotinaposition toprovide dataontheactual duration orcostof
proceedings concerned withtheenforcement ofintellectual property rights". Publicly available data,
however, indicates thatanenforcement action intheUnited States federal courts typically requires
several years toreach afinaljudgement andthatthecosts ofsuchactions, including attorneys ’fees,
oftenreach US$1million ormore. Inlightofthisinformation, please explain howtheUnited States
Government ensures compliance withtherequirements ofArticle 41.2oftheTRIPS Agreement.
Itisnotcleartowhat“publicly available data”theEuropean Communities referinasserting
thatenforcement actions inFederal courts "typically" require several years toreach afinaljudgment
andthatcosts, including attorneys ’fees,"often" reach US$1 million ormore. Bynotproviding citations
toorcopies ofthe"publicly available data" referred to,theEuropean Communities preclude theUnited
States Government from considering thesource andthematerial andresponding.
With regard toinformation onaverage costs andduration oflegalactions, itshould benoted
that, under theUnited States judicial system, USdistrict courts have original jurisdiction over
enforcement actions regarding copyrights, patents, plant variety protection, trademarks and
integrated-circuitlayoutdesigns.Jurisdictionoverenforcementactionsinvolvinggeographicalindications
andtradesecrets isshared between theFederal district courts andthestatecourts depending onavariety
offactors. TheAdministrative Office oftheUnited States Courts (theAdministrative Office), which
compiles statistics onactivities ofFederal courts, provides statistical information onlyonthenumber
ofcases filedannually involving patents, copyrights andtrademarks (seetable1below) andthenumber
ofcases terminated inagiven yearinvolving those same topics (seetable2below), indicating atwhat
stage oftheprocess thecasewasterminated. Thefigures intable1below indicate, however, thatright
holders make frequent useoftemporary restraining orders, preliminary injunctions, exparte seizures
1IP/C/W/80.
2IP/C/W/81.
3IP/C/W/82.IP/C/W/90
Page2
andother provisional remedies incases enforcing intellectual property rights, sothatonlyasmall
percentage ofcases filedproceeds tofinaljudgment. Tracking individual intellectual property cases
fromfiling totermination inorder todetermine theaverage timerequired toreach finaljudgment would
beverycostly. Inaddition, theduration ofcases isaffected significantly bytheparties themselves
andthere would benomeans fordetermining whatperiods wereattributable tothecourts andwhat
periods were thefaultoftheparties.
TheAdministrative Office doesnotkeeparecord ofthecostoflitigation. Parties donotprovide
information onattorneys ’fees,costofexperts, etc.totheAdministrative Office, andwould notlikely
dosoifasked, because suchinformation isgenerally regarded asconfidential, except when costs are
being claimed. Feescharged byattorneys arenotsetbygovernment nordoesthegovernment place
anyarbitrary limits onthenumber ofpractising attorneys. Feesvaryfromlocation tolocation, firm
tofirm, attorney toattorney, andtasktotaskandareoften subject tonegotiation. Under these
circumstances, evenestimates ofthecosts oflitigation would beunreliable.
Forallofthese reasons, itisnotpossible toprovide dataontheaverage duration orcostof
proceedings concerned withtheenforcement ofintellectual property rights intheUnited States. The
dataregarding termination ofcases fortheyearending 30June1997, however, would indicate that
amajority ofcases areresolved during thediscovery phase (before pre-trial), sincediscovery provides
eachsidewithinformation allowing ittoevaluate itsposition andthelikelihood ofsuccess onthemerits
ofthecase. Many others areresolved before action begins asaresult ofnegotiations.
Table 1
Cases filed:
1993 1994 1995 1996 1997
Copyright 2,370 2,891 2,598 2,250 2,246
Patent 1,476 1,695 1,682 1,763 2,090
Trademark 2,356 2,465 2,710 2,787 3,175
Table 2
Cases terminated inthetwelve months ending 30June 1997:
Total
terminatedNocourt
actionTotal after
action
begunBefore
pretrialDuring
remaining
fortrialTotal
remaining
fortrialNon-
juryjury
Copyright 2,207 509 1,698 1,430 218 50 35 15
Patent 1,842 437 1,405 1,092 217 96 46 50
Trademark 2,944 760 2,184 1,835 280 69 44 25IP/C/W/90
Page3
2. Under theAmerican Rule, theclaimant anddefendant inaproceeding toenforce intellectual
property rights generally mustbeartheirownattorneys ’fees.Inmany cases, attorneys ’feescanexceed
thepotential damages forinfringement. Asaresult, theAmerican Ruleactsasadeterrent against
pursuing acivilenforcement action, except incases involving significant damages. Please explain
howtheUnited States complies withtherequirement ofArticle 41.1oftheTRIPS Agreement that
"Members shallensure thatenforcement procedures asspecified inthisPartareavailable under their
lawsoastopermit effective action against anyactofinfringement ofintellectual property rights covered
bythisAgreement".
TheUnited States isinfullcompliance withArticle 41.1. Enforcement procedures asspecified
inPartIIIoftheTRIPs Agreement areavailable soastopermit effective action against anyactof
infringement. Article 45requires thatdamages beauthorized onlyinsituations where theinfringer
knew, orhadreasonable grounds toknow, hisactivity wasinfringing. Judges inFederal courts have
suchauthority (forcopyright, see17U.S.C. §504;fortrademarks, including certification marks, see
15U.S.C. §1117; forpatents andindustrial designs, see35U.S.C. §284;forintegrated circuit layout
designs, see17U.S.C. §911;andfortrade secrets, refertotheappropriate statelaws). USjudges
havetheauthority, required byArticle 44,toenjoin infringement forthelifeoftherelevant intellectual
property right(forcopyright, see17U.S.C. §502;fortrademarks, see15U.S.C. §1116; forpatents
andindustrial designs, see35U.S.C. §283;forintegrated circuit layout designs, see17U.S.C. §
911;andfortrade secrets, seerelevant statelaws), and,inallbutveryrarecases, dosowhen
infringement isfound toexist. Most intellectual property owners bring legalactions soonafterthey
become aware ofaninfringement, notseeking primarily toobtain damages forinfringement thathas
already occurred, buttoenjoin further infringement. Finally, USjudges havetheauthority toaward
costs, including attorneys ’feesinappropriate circumstances, asrequired byArticle 45.2.
WenotethattheECquestion, likeothers ithassubmitted, isbased uponunsupported assertions
-first, that"inmany cases, attorneys ’feescanexceed thepotential damages forinfringement" and
second, thatthefirstunsupported assertion deters rightholders frompursuing civilenforcement actions.
TheUnited States believes thatthedataprovided inthetables inourresponse toquestion 1,giving
thenumber ofcases filedannually, indicate thatrightholders arenotdeterred from enforcing their
rights.
3. Given thefactthatthequality oftheUnited States Patent andTrademark Office ’sexamination
procedures iscompromised byscarce resources andlarge volumes ofpatent applications, andthat
thereisnoprovision forindependent re-examination ofapatent, aUnited States patent mayissuewithout
undergoing arigorous examination toensure validity. Nevertheless, anypatent issued bythePatent
Office isentitled toapresumption ofvalidity inanysubsequent enforcement action, andinvalidity must
beshown by"clear andconvincing" evidence. Please explain howapplying thepresumption ofvalidity
andahighevidentiary standard inthese circumstances complies withtherequirement ofArticle 41.2
oftheTRIPS Agreement thatprocedures concerning theenforcement ofintellectual property rights
shall be"fairandequitable".
TheEuropean Communities 'question isagain based notupon facts, butupon unsupported
assertions. AllUnited States patents aresubjected toarigorous, comprehensive examination prior
toissuance. There isnobasis forthesuggestion thatpatents intheUnited States arenotentitled to
thepresumption ofvalidity provided by35U.S.C. 282.
Thelegal presumption ofvalidity ofpatents hasbeen partofUSpatent statute since
1January 1953, when thepreceding judicial doctrine wascodified. Thepurpose ofthepresumption
ofvalidity istoplace theburden ofproof ontheparty asserting invalidity ofapatent, rather than
requiring patentees toprovide evidence demonstrating thevalidity oftheirpatents inevery enforcement
action, which isdifficult, time-consuming andunnecessary. Thepresumption ofvalidity isasensibleIP/C/W/90
Page4
approachsharedbymanycountriesthatprovidesforsubstantiveexaminationofpatents.Thepresumption
alsoensures thatapatentee hasnotice ofadefendant 'sintention tochallenge thepatent, prior totrial.
Itshould gowithout saying thatproviding alegalpresumption ofvalidity forpatents canonlyserve
tolessen thecomplexity ofpatent litigation.
Theconcern expressed bythedelegation oftheEuropean Communities overthe"clear and
convincing evidence" standard islikewise misplaced. Thisstandard liesbetween thelegalstandards
of"preponderance oftheevidence" and"beyond areasonable doubt." Itrecognizes thatthepatent
hasalready beensubjected toarigorous search andexamination before theUSPatent andTrademark
Office. While higher thanthe"preponderance oftheevidence" standard, thestandard doesnotprejudice
theaccused infringer. Once aprima faciecaseofinvalidity ispresented bytheparty challenging a
patent 'svalidity, thepatent owner mustcome forward withevidence tocounter thatshowing. Ifthe
fact-finder concludes thattheprima faciecaseisestablished andnotovercome bythepatent owner,
thepatent, ortheparticular claims challenged, willbedeclared invalid bythecourt.
Finally, while patents arebylawpresumed valid, courts given evidence challenging validity
never findthatapatent is"valid". They findeither thatthepatent is"invalid", or"notinvalid". The
latter finding allows subsequent defendants tocontest thevalidity ofthepatent. Ontheother hand,
onceacourt holds apatent (ormore properly, specific claims inthepatent) tobeinvalid, those claims
cannot thereafter serve asthebasis ofachallenge against other parties. Webelieve thatthisbalance
ofrights between patentee andpotential defendants isfullyconsistent withArticle 41.2oftheTRIPS
Agreement.
4. Pursuant to19U.S.C. §1526, United States courts havetheauthority toorder seizure, forfeiture
anddestruction ofimported goods bearing acounterfeit American trademark owned byanAmerican
entity. Thestatute doesnotprovide similar authority forgoods bearing acounterfeit trademark owned
byaforeign citizen orcorporation.
Please explain howthisprovision complies withArticle 46oftheTRIPS Agreement, which
requires thatjudicial authorities havetheauthority toorder disposition ordestruction ofinfringing
goods. Inaddition, please explain howthisprovision complies withArticle 3oftheTRIPS Agreement.
Section 526oftheTariff Actof1930 authorizes theSecretary oftheTreasury toseizegoods
bearing atrademark owned byacitizen of,orbyacorporation orassociation created ororganized
within, theUnited States. Section 1124oftitle15oftheUnited States Code provides similar authority
withrespect totrademarks ofanymanufacturer ortrader located inanyforeign country which, by
treaty, convention, orlaw,affords similar privileges tocitizens oftheUnited States. TheTRIPS
Agreement would qualify assuchaconvention. TheUSCustoms Service hasasingle setofregulations
implementing thetwosections oflaw. Because authority toseize goods infringing UStrademarks
registered byforeign entities already existed, itwasnotfeltnecessary toamend Section 526when
implementing theobligations oftheTRIPS Agreement.
Asexplained inthepreceding paragraph, Section 526oftheTariff Actof1930authorizes the
SecretaryoftheTreasury,notUScourts,toseizegoodsthatbearunauthorizedtrademarks.Section1118
oftitle15,United States Code, gives judges authority toorder disposition ordestruction ofgoods
thatinfringe trademarks.IP/C/W/90
Page5
5. TheUnited States 'response toitem16oftheChecklist ofIssues onEnforcement states that
United States Customs regulations "have beenamended toprovide adhocapplication contemplated
inArticle 51". Thecited United States regulations, however, provide forexofficio action bythe
United States Customs Service based onrecordation ofacopyright ortrademark. There isnoexpress
provision foranapplication bytherightholder tosuspend imports ofspecific counterfeit trademark
orpirated copyright goods asrequired byArticle 51oftheTRIPS Agreement. Inaddition, please explain
thestatus ofUnited States 'plans toadopt theregulations referenced intheresponse toitem16and
explain howtheresulting procedures willcomply withtherequirements ofArticles 52to60.
Theamendments toCustoms regulations providing foradhocapplication procedures mentioned
intheUSresponse toitem16oftheChecklist ofIssues onEnforcement4arebeing reviewed prior
toapproval. Notwithstanding thestatus oftheamendments, theUSCustoms Service, asamatter of
policy andbased ontheauthority provided in18U.S.C. §§2318 and2320, doesintervene ona
case-by-case basisattherequest ofarightholder. Theamendments willclarify Customs ’policy and
practice.
6. Please explain howtheprocedures forExOfficio Action inrelation toborder measures comply
withtherequirements ofArticle 55oftheTRIPS Agreement, which areincorporated byreference in
Article 58.
Section 1499 oftitle19,United States Code, requires theUSCustoms Service todetermine
within fivedays(excluding weekends andholidays) whether merchandise presented forexamination
willbereleased ordetained. Customs mustissue anotice ofdetention nolaterthan5daysafterthe
decision todetain merchandise. Customs must make afinaldetermination ontheadmissibility of
detainedmerchandisewithin30daysofthedateonwhichthemerchandisewaspresentedforexamination.
Failure todecide within thatperiod istreated asadecision toexclude themerchandise, against which
theimporter mayfileaprotest.
7. Withregard tocases thatinvolve theinfringement ofintellectual property, could theGovernment
oftheUnited States provide dataonthenumber of:
- lawsuitsthathavebeenfiledincluding theirrespective outcome andtheaverage length
fromthefiling ofacomplaint untilthefinaljudgement;
Seetable1intheresponse toquestion 1forthenumber oflawsuitsthathavebeenfiledannually
inconnection withcopyrights, patents andtrademarks since 1993. Asnoted inresponse toquestion
1,cases arenottracked individually andsoitisnotpossible todetermine theaverage length from
filing tofinaljudgment.
- injunctions thathavebeenissued (asdefined inArticle 44oftheTRIPS Agreement)
andexplain howsuchinjunctions arebeing enforced;
Statisticsonthenumberofinjunctionsissuedarenotcompiledseparatelyforintellectualproperty
cases. Injunctions canbeenforced byFederal marshals pursuant to28U.S.C. §566.
- provisional measures (asdefined inArticle 50oftheTRIPS Agreement) thathavebeen
granted andtheaverage length toobtain suchmeasures (from therequest);
4IP/N/6/USA/1.IP/C/W/90
Page6
Seethereply toquestion 1.Asnoted inreply toquestion 2,thefigures intable2inthereply
toquestion 1indicate thatrightholders make frequent useoftemporary restraining orders, preliminary
injunctions, exparteseizures andotherprovisional remedies inintellectual property enforcement cases,
sothatonlyasmall percentage ofcases filedproceeds tofinaljudgment.
- suspensionsattheborderofcounterfeittrademark/piratedcopyrightgoodsorinrelation
togoods where other intellectual property rights areinfringed;
Year No.Seizures Domestic Value US$
1992 549 28,155,943
1993 2,068 45,823,917
1994 2,203 37,319,667
1995 2,091 46,457,345
1996 2,237 46,781,089
Source countries forthelargest totaldomestic value overtheperiod include thefollowing
countries:
Country Total Domestic Value US$
China 46,579,079
Republic ofKorea 23,164,558
Hong Kong 20,209,308
Taiwan 16,462,691
India 3,116,905
Germany 2,957,713
Thailand 2,872,442
Mexico 2,659,970
Morocco 2,217,912
Italy 2,198,001
Indonesia 2,078,010
Netherlands 1,976,344
Japan 1,712,593
United Kingdom 1,622,249
Philippines 1,441,342
Pakistan 1,411,016
Canada 1,377,557
Switzerland 1,281,916
Panama 1,193,598
Malaysia 1,165,904
- criminal cases including thesentences thathavebeenapplied; whether theyhavebeen
executed; andplease alsoexplain whatkindofinfringement ofanintellectual property
right would beregarded asaviolation ofcriminal law;
Tobesupplied atalaterdate.
- seizures and/or destruction ofcounterfeit trademark andpirated copyright goods.
Tobesupplied atalaterdate.IP/C/W/90
Page7
Furthermore, could theGovernment oftheUnited States explain andgivepractical examples
of:
- howthecompensation fordamages oftheinfringement ofintellectual property rights
iscalculated (Article 45.1oftheTRIPS Agreement);
Forcopyright, see17U.S.C. §504;fortrademarks including certification marks, see15U.S.C.
§1117; forpatents andindustrial designs, see35U.S.C. §284;forintegrated circuit layout
designs, see17U.S.C. §911;fortrade secrets, reference would bemade totheappropriate
statelaw. Calculation ofdamages isbased ontheevidence provided bytheparties.
- whatwould beregarded as"expenses oftherightholder" which havetobereimbursed
pursuant toArticle 45.2, firsthalfofthefirstsentence, oftheTRIPS Agreement and
howtheywould becalculated;
Forcopyright,see17U.S.C.§505;fortrademarks,includingcertificationmarks,see15U.S.C.
§1117; forpatents andindustrial designs, see35U.S.C. §285;forintegrated circuit layout-
designs, see17U.S.C. §911;andfortrade secrets, refer totheappropriate statelaw. As
withdamages, calculations arebased upon theevidence presented bytheparties.
- whether attorney ’sfeescanbereimbursed andhowsuchfeeswould becalculated;
Attorneys ’feescanbereimbursed inaccordance withthesections oflawcitedabove. Fees
would becalculated based upon theevidence presented bytheparties.
- whether Article 45.2, second sentence, oftheTRIPS Agreement hasbeenimplemented
intheUnited States andhowsuch"damages" would becalculated?
Inconnection withsome forms ofintellectual property, judicial authorities havesuchauthority
andwithotherssuchauthorityislimited.Seeabove-referencedprovisionsoflaw.Suchdamages
would becalculated based upon theevidence presented bytheparties.
8. Section 337oftheUnited States Tariff Act,asamended, gives United States 'rightholders the
possibilitytorequesttheUnitedStatesInternationalTradeCommissiontodeclareunlawful,undercertain
conditions, theimportation orsaleofarticles thatinfringe valid United States 'patents, registered
trademarks, registered copyrights orregistered mask works ofasemiconductor chipproduct. Please
explain whythisprocedure islimited toforeign goods andnotextended todomestic products. Against
thisbackground, please alsoexplain howsuchlegislation complies withtheUnited States 'obligations
under therelevant WTO Agreements.
TheUnited States amended Section 337oftheTariff Actof1930, 19U.S.C. 1337, aspart
ofourimplementation oftheUruguay Round results. Asstated inthe"Statement ofAdministrative
Action" accompanying theUruguay Round Agreements Act,those amendments bring U.S.procedures
intoconformity withnational treatment obligations under GATT 1994, while providing foreffective
enforcementofintellectualpropertyrightsattheborder.Moreover,theproceduresappliedunderSection
337fullycomply withArticle 49oftheTRIPS Agreement inthatthey"conform toprinciples equivalent
insubstance tothose setforth" inSection 2oftheTRIPS Agreement. Forexample, eachelement
ofArticles 41and42oftheTRIPS Agreement aremetinthecontext ofaSection 337proceeding.IP/C/W/90
Page8
TheTRIPS Agreement, negotiated afterapanel report wasissued finding thatcertain aspects
ofSection 337wereinconsistent withArticle IIIofGATT 1947, recognizes thatitmaybenecessary
totreatdomestic andimported products differently toenforce intellectual property rights effectively
inrespect ofimported goods. The1994 amendments toSection 337made thefollowing changes
toUSITC procedures toimplement thepanel’srecommendations:
- Elimination oftherequirement thattheUSITC issue afinaldetermination within a
fixed period oftime. Instead, theamendment provides thattheITCmust complete
itsinvestigation "attheearliest practicable time". Topromote rapid adjudication, the
USITC mustestablish a"target date" forcompletion ofaninvestigation within 45days
afteritisinitiated. These requirements parallel theprocedures setoutinrecently revised
Rule16oftheFederal Rules ofCivil Procedure providing district courts withvarious
mechanisms forexpediting litigation. Theyarealsoconsistent withdistrict courtefforts
toavoid delay, suchasbyestablishing target datesforthecompletion ofvarious stages
oflitigation;
- Means toprevent infringement proceedings being brought against imported goods in
twoforums atthesametime. Adistrict court hearing aninfringement caseisrequired
tostayitsproceedings, attherequest ofarespondent inaSection 337proceeding,
inrespect ofanyclaim thatinvolves thesame issues asthose pending before theITC.
Suchissues would include questions ofpatent validity, infringement, andanydefenses
thatmight beraised inbothproceedings. Thedistrict court mayuseitsdiscretionary
authority tostayanyother claims inthecase.
II. REPLIES TOQUESTIONS POSED BYHONG KONG, CHINA
Replies toquestions addressed toseveral Members, including theUnited States
Civil andAdministrative Procedures andRemedies
1. Isitcorrect tosaythatintellectual property infringement cases often endintheinterim
interlocutory stage? Ifyes,whatseem tobethereasons? Isthisdesirable intheinterest ofjustice?
ThefollowingtableindicatesthestagesatwhichcasesinUSFederalcourtsinvolvingcopyrights,
patents, andtrademarks were terminated forthetwelve months ending 30June1997.
Total
terminatedNocourt
actionTotal after
action
begunBefore
pretrialDuring or
after
pretrialTotal
remaining
fortrialNon-
juryJury
Copyright 2,207 509 1,698 1,430 218 50 35 15
Patent 1,842 437 1,405 1,092 217 96 46 50
Trademark 2,944 760 2,184 1,835 280 69 44 25
Thedataindicate thatthevastmajority ofcases areresolved through settlement before
action begins orduring thediscovery phase. Discovery provides eachsidewithinformation allowing
ittoevaluate itsposition andthelikelihood ofsuccess ifitpursues action onthemerits ofthecase.
Resolution inthismanner isdesirable and,since itcomes about asaresult ofdecisions ofthe
parties themselves, justice isserved.IP/C/W/90
Page9
2. Incivilproceedings, arethere anyproof facilitation provisions which could create legal
presumptions ofintellectual property subsistence andownership andthuscould excuse therightowner
fromappearing incourt andtotestify these issues? Ifnot,why?
There isnoabsolute obligation forarightowner toappear incourt andtestify todemonstrate
theexistence ofaparticular formofintellectual property orofitsownership. Other evidence, including
documents,affidavits,thetestimonyofotherpartiesetc.,canoftenbesubstitutedforpersonalappearances
bytherightowner. USlawdoescontain some "proof facilitation provisions". Copyrights: See17
U.S.C. §410under which acopyright certificate ofregistration made before orwithin fiveyears after
firstpublication constitutes prima facieevidence ofthevalidity ofthecopyright andofthefactsstated
inthecertificate, including thename ofthecopyright claimant. Trademarks: See15U.S.C. §1057(b)
under which atrademark certificate ofregistration ontheprincipal register serves asprima facieevidence
ofvalidity oftheregistered markandoftheregistrant ’sownership ofthemark. Patents: See35U.S.C.
§282under which patents arepresumed tobevalid. Integrated Circuit Layout Designs: See17U.S.C.
§908(f) under which thecertificate ofregistration ofamask work constitutes prima facieevidence
ofthefactsstated inthecertificate, including thename oftheclaimant. Trade Secrets: There isno
presumption inrelation totrade secrets since theexistence ofatrade secret isamatter ofproof.
Criminal Procedures
3. Does anyintellectual property enforcement agency havethelegal power toseize andforfeit
suspected infringing articles, whether ornotacharge hasbeenlaid? Ifnot,why?
Itisnotcompletely clear what ismeant by"acharge" being laid. Weinterpret ittomean
acriminal charge orindictment hasbeenmade against theperson whose property isbeing seized.
Section 509oftheCopyright Act,17U.S.C. §509,provides fortheseizure andforfeiture ofinfringing
copies andarticles ofinfringement usedincriminal copyright infringement. Theseizures areperformed
byagents,officialsorpersonsauthorizedbytheUSAttorneyGeneral.Theseprocedurescanbeinstituted
uponthegovernment ’sshowing ofprobable cause; acriminal indictment orcriminal conviction isnot
required.
4. Isthere aspecialized criminal intellectual property enforcement agency? Ifnot,whatisthe
rationale?
TheUSDepartment ofJustice enforces thecriminal provisions ofUSintellectual property laws.
Itdeals withallenforcement offederal criminal laws, notjustthose dealing withintellectual property,
butitdoeshavespecialistswithintheDepartmentwhodealwithviolationsinvolvingintellectualproperty.
5. Incriminal proceedings, arethere anyproof facilitation provisions which could create legal
presumptions ofintellectual property subsistence andownership andthuscould excuse therightowner
fromappearing incourt andtotestify these issues? Ifnot,why?
Seereply toquestion 2above.IP/C/W/90
Page10
Replies toquestions addressed totheUnited States only
1. Arethere anystatutory minimum damages forintentional ornegligent intellectual property
infringements? Ifyes,isthejudiciary content thatitsjudicial discretion hasbeencurtailed?
Inthecaseofcopyrights, 17U.S.C. §504(c) provides statutory damages, which acopyright
owner mayelectinstead ofactual damages. Foreachwork infringed, theminimum amount thatcan
beawarded under thesection, based onthecircumstances, isUS$200 andthemaximum isUS$100,000.
Asapparent from theamounts, judges haveconsiderable discretion indetermining theactual amount
awarded and,therefore, would notlikely consider theirdiscretion unreasonably curtailed. Inthecase
ofpatents, damages maynotbelessthanareasonable royalty fortheusemade oftheinvention by
theinfringer iftheinfringer hadnotice thattheinvention inquestion waspatented. Asubstantial amount
ofdiscretion isinvolved indetermining whatwould bea"reasonable royalty". See35U.S.C. §§284
and287.
2. Isparallelimportofarticlesinfringingintellectualpropertyrights(especiallycopyright)acriminal
offence? Ifyes,please quote therelevant legislation orhallmark cases.
Inthecaseofcopyright, yes.Section 506(a) defines criminal copyright infringement asfollows:
(a) Criminal infringement -Anyperson whoinfringes acopyright wilfully andforpurposes
ofcommercial advantage orprivate financial gainshallbepunished asprovided in
section 2319 oftitle18.
Section501(a)definesan"infringerofacopyright"as"Anyonewhoviolatesanyoftheexclusive
rights ofthecopyright owner asprovided bysections 106through 118,...,orwhoimports copies
orphonorecords intotheUnited States inviolation ofsection 602,...". Therelevant partofSection
602states that"Importation intotheUnited States, without theauthority oftheowner ofcopyright
under thistitle,ofcopies orphonorecords ofawork thathavebeenacquired outside theUnited States
isaninfringementoftheexclusiverighttodistributecopiesorphonorecordsundersection106,actionable
under section 501,...".Penalties forcriminal copyright infringement aresetforthin18U.S.C. §2319.5
518U.S.C. §2319 Criminal infringement ofacopyright
(a) Whoever violates section 506(a) (relating tocriminal offenses) oftitle17shallbepunished asprovided
insubsection (b)ofthissection andsuchpenalties shall beinaddition toanyother provisions oftitle
17oranyother law.
(b) Anyperson whocommits anoffense under subsection (a)ofthissection:
(1) shallbeimprisoned notmore than5years, orfined intheamount setforth inthistitle,orboth,
iftheoffense consists ofthereproduction ordistribution, during any180-day period, ofatleast
10copies orphonorecords, of1ormore copyrighted works, witharetail value ofmore than
$2,500;
(2) shall beimprisoned notmore than10years, orfined intheamount setforth inthistitle,or
both, iftheoffense isasecond orsubsequent offense under paragraph (1);and
(3) shallbeimprisoned notmore than1year, orfined intheamount setforth inthistitle,orboth,
inanyother case.
(c) Asused inthissection:
(continued...)IP/C/W/90
Page11
III. REPLIES TOQUESTIONS POSED BYJAPAN
1. Please explain whether “proceedings leading toadecision onthemerits ofthecase”stipulated
inArticle 55oftheTRIPS Agreement, arejudicial oradministrative.
Under U.S. law,“proceedings leading toadecision onthemerits ofacase”referred toin
Article55oftheTRIPsAgreementarecustomarilyadministrative,butpartiesalsocanproceedjudicially,
either initially oraftertheyhaveexhausted administrative remedies.
2. Arethere anyways other thantheapplication stipulate inArticles 51and52oftheTRIPS
Agreement (hereafter referred toas“theApplication ”)which enable aright holder torequest the
competent authorities tosuspend therelease ofthegoods which infringe IPRsorwhich aresuspected
toinfringe IPRs?
Therightholder canobtain protection fortrademarks andcopyrights foraperiod oftenyears,
renewable fortheduration oftheunderlying right, byfollowing theCustoms ’recordation process set
outin§§133.01 to133.15 (regarding trademarks) and133.31 to133.37 (regarding copyrights) of
title19oftheCode ofFederal Regulations (C.F.R.).
3. Please explain what termyourcountry regards as“areasonable period within which the
competent authorities shall inform theapplicant whether ornottheyhaveaccepted theApplication ”
stipulated inArticle 52oftheTRIPS Agreement.
Theperiod willbesetoutinamendments totheCustoms Service ’sregulations thatarecurrently
under review andpending approval.
4. Please indicate provisions oflawsandordinances which prescribe the“proceedings leading
toadecision onthemerits ofthecase”stipulated inArticle 55oftheTRIPS Agreement. Andplease
summarize theircontents.
Regulations governing suchproceedings arefound at19C.F.R. §§133.21 through 133.23a,
which govern limitations ontheimportation ofarticles bearing recorded trademarks, notice totheparties,
anddetention andseizure ofthearticles. Proceedings governing articles thatinfringe copyrights are
found at19C.F.R. §133.43, which provides fornotice toimporter andthecopyright owner andfor
anopportunity forthem toexchange written materials stating theirviews onthequestion ofpiracy
andrebutting theviews oftheother party before thearticles aresubmitted toCustoms headquarters
foradecision .
5. Please explain thespecific procedure, ifany,tobeapplied tothegoods which arenotevident
whether ornottheyinfringe IPRs, inArticle 55oftheTRIPS Agreement.
Weassume thatthequestion refers toprocedures involving infringement ofrights other than
trademarks andcopyrights, since these procedures arethebasis forearlier questions. Customs does
nothaveindependent authority todetain goods thatinfringe patents, industrial designs, ortradesecrets.
5(...continued)
(1) theterms "phonorecord" and"copies" have, respectively, themeanings setforth insection 101
(relating todefinitions) oftitle17;and
(2) theterms "reproduction" and"distribution" refer totheexclusive rights ofacopyright owner
under clause (1)and(3)respectively ofsection 106(relating toexclusive rights incopyrighted
works), aslimited bysections 107through 120, oftitle17.IP/C/W/90
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TheU.S.International Trade Commission hasauthority under section 337oftheTariff Actof1930
toorder theCustoms Service todenyentry togoods theUSITC determines areinfringing suchrights.
6. Please explain theresponsibility thatthecompetent authorities andother related authorities
taketotherightholders whentheyfailtosuspend therelease intofreecirculation ofgoods which infringe
IPRswithregard tothesuspension based ontheApplication ortheExOfficio Action stipulated inArticle
58oftheTRIPS Agreement.
Customs officials areresponsible formaking theirdecisions ingood faithinaccordance with
theauthority granted tothem bystatute. Decisions oftheCustoms Service arereviewable incourt
under Chapter 7oftitle5oftheUnited States Code. Areviewing court candecide allrelevant questions
oflaw,interpret constitutional andstatutory provisions, anddetermine themeaning orapplicability
oftheterms ofanagency action. Section 706(1) authorizes thecourt tocompel action thatitdetermines
hasbeenunlawfully withheld.
7. Please explain theresponsibility thatthecompetent authorities andother related authorities
taketotherightholders when theyexamine goods which infringe IPRsandnevertheless release them
intofreecirculation withregard tothesuspension based ontheApplication ortheExOfficio Action
stipulated inArticle 58oftheTRIPS Agreement.
Seetheresponse toquestion 6.Also, Customs candemand redelivery ofgoods violating
trademarks orcopyrights ifappropriate, under 19C.F.R. §§133.24 and133.46 respectively.
8. Please explain theresponsibility thatthecompetent authorities andother related authorities
taketotheimporters when theysuspend therelease intofreecirculation ofgoods which donotinfringe
IPRswithregard tothesuspension based ontheApplication ortheExOfficio action stipulated inArticle
58oftheTRIPS Agreement.
Decisions oftheCustoms Service arereviewable incourtunder Chapter 7oftitle5oftheUnited
States Code. Thereviewing court candecide allrelevant questions oflaw,interpret constitutional and
statutory provisions, anddetermine themeaning orapplicability oftheterms ofanagency action.
Section706(2)authorizedthecourttoholdunlawfulandsetasideagencyaction,findings,andconclusions
found tobe“(C)inexcess ofstatutory jurisdiction, authority, orlimitations, orshortofstatutory right;”
“(E)unsupported bysubstantial evidence inacasesubject tosections 556and557ofthistitleor
otherwise reviewed ontherecord ofanagency hearing provided bystatute; or(F)unwarranted by
thefactstotheextent thatthefactsaresubject totrialdenovo bythereviewing court. ”
9. Istherightholder informed ofidentities oftheimporters andconsignors when thecompetent
authorities “suspend ”thegoods which infringe onIPRsorwhich aresuspected toinfringe IPRs, as
wellasthecasewhere therightholder isinformed ofidentities oftheimporters andconsignors stipulated
inArticle 57oftheTRIPS Agreement?
Currently, under 19C.F.R. §133.23a(c), notice isgiven tothetrademark owner ofthequantity
ofarticles seized. Theamendments totheregulations nowbeing reviewed andpending approval, will
provide forthedisclosure ofadditional information. Under 19C.F.R. §133.43, notice isgiven to
copyright owners thatdelivery ofsuspected infringing copies orphonorecords isbeing withheld asample
oftheimported article isprovided.IP/C/W/90
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10. Please explain themeasures toprotect confidential information inthecourse oftheinspection
stipulated inArticle 57oftheTRIPS Agreement. Andplease indicate provisions oflawsandordinances
which prescribe suchmeasures.
Customs regulations governing thetreatment ofconfidential information arecontained inPart
103oftitle19oftheCode ofFederal Regulations. Customs employees canbesubject todisciplinary
action within theService orheldliable fortheimproper disclosure ofconfidential information under
18U.S.C. §1905(theTrade Secrets Act), 40U.S.C. §759(theComputer Security Actof1987, and
5U.S.C. §552a(thePrivacy Act).
11. Please explain theprocedures ofdetentions andseizures tobeordered bythecompetent
authorities based onArticles 51and55oftheTRIPS Agreement.
Procedures governing seizures anddetentions aredescribed in19C.F.R. §§133.21 through
133.24 fortrademarks and19C.F.R. §§133.42 through 133.47 forcopyrights. Thefinalprovisions
regarding forfeiture andassessment ofliquidated damages inconnection withbothtrademarks and
copyrights arecontained in19C.F.R. §§133.51 through 133.53.
12. Please explain theprocedures toappeal against anydecisions ordered bythecompetent
authorities based onArticles 51and55oftheTRIPS Agreement.
Decisions made byfieldoffices aresubject toreview byCustoms ’headquarters. Decisions
oftheCustoms ’headquarters arereviewable inthecourts pursuant to5U.S.C. §701etseq.
13. Please explain thebasisforcalculating thesecurity orequivalent assurance stipulated inArticle
53oftheTRIPS Agreement thatthecompetent authorities mayrequire anapplicant when theysuspend
therelease intofreecirculation.
Section 113.11 oftitle19oftheCode ofFederal Regulations authorizes portdirectors todetermine
theappropriate typeofbond andtheamount. Theamount ofthebond isbased upon consideration
offactors setoutin19C.F.R. §133.13.
14. Please explain whoshallpaythecostofdetentions based onArticle 51oftheTRIPS Agreement
ordestruction stipulated inArticle 59oftheTRIPS Agreement.
Theimporter paysthecostofdetention inaccordance with19C.F.R. §§24.12 and24.17(a)(9).
15. Please explain whatkindofcases areregarded as“theexceptional circumstances ”inwhich
thecompetent authorities mayallow re-exportation ofcounterfeit trademark goods stipulated inArticle
59oftheTRIPS Agreement.
Counterfeit trademarked goods maynotbereexported. TheAnti-counterfeiting Consumer
Protection Actof1996amended 17U.S.C. 603(c) toprevent re-export ofcopyright-infringing goods.
16. Please explain kinds andcontents ofdocuments which shall beprovided bytheapplicant to
lodge theApplication.
Therequirements willbesetoutinamendments topreviously cited regulations. These
amendments arecurrently under review andpending approval.
17. Please explain whatmaterials theU.S.regard as“adequate evidence tosatisfy thecompetent
authorities thatthere isprima facieaninfringement oftheright holder ’sIPRs”stipulated inArticleIP/C/W/90
Page14
52oftheTRIPS Agreement. Forexample, asforpatent rights, isawritten opinion statement prepared
byalawyer regarded as“adequate evidence ”,andcantherightholders request theITCtocommence
aprocedure toidentify whether ornotthegoods infringe theright based onthestatement?
Seetheresponse toquestion 16.
18. Please explain whether thediscovery procedure under theFederal Rules ofCivilProcedure
maycosttheparty concerned alotofburden ortime, because thescope ofdisclosure isextensive and
theprocedure usually lastslong. Please explain whether thediscovery isconsistent withArticle 41.2
oftheTRIPS Agreement, which requires thattheprocedures concerning theenforcement ofintellectual
property rights notbeunnecessarily complicated orcostly.
Thediscovery procedure governed bytheFederal Rules ofCivilProcedure (theRules) isfully
consistent withtheobligations ofArticle 41.2. Thediscovery procedure enables eachparty toanaction
forenforcement ofintellectual property rights toobtain information related toanyclaim ordefense
inthataction. TheRules authorize thejudge inanyenforcement action tolimitdiscovery requests
which areunreasonably cumulative orduplicative; iftheinformation isobtainable from some other
source thatismore convenient, lessburdensome, orlessexpensive; iftheparty seeking discovery has
hadample opportunity bydiscovery intheaction toobtain theinformation sought; oriftheburden
orexpense oftheproposed discovery outweighs itslikely benefit, taking intoaccount theneeds ofthe
case, theamount incontroversy, theparties 'resources, theimportance oftheissues atstake inthe
litigation, andtheimportance oftheproposed discovery inresolving theissues. SeeRule26.The
judge inanyenforcement action alsoisrequired toissue ascheduling order that,among other things,
limits thetimeforcompletion ofdiscovery. SeeRule16(b).
19. Section 337oftheTariff Actof1930 provides thatAdministrative LawJudge andUSITC
determine atarget date. Please explain howmany target dates have been determined since
1January 1996. Insuchcases, please explain whether thetarget dates areconsistent withArticle
41.2oftheTRIPS Agreement, which requires thattheprocedures concerning theenforcement of
intellectual property rights notentail unreasonable time-limits orunwarranted delays.
Section 337isfullyconsistent withArticle 41.2. Bystatute, Section 337investigations must
becompleted attheearliest practicable time. Target dates forthecompletion oftheinvestigation are
setbytheAdministrative LawJudge early intheinvestigation. These requirements parallel the
procedures setoutinrecently revised Rule16oftheFederal Rules ofCivilProcedure providing district
courts withvarious mechanisms forexpediting litigation. These target datestypically callforcompletion
oftheinvestigation inoneyear, although complex investigations maytakeabout eighteen months to
complete. TheCommission hastheflexibility toensure thatthetarget datesetisnotunreasonable
anddoesnotallow unwarranted delays.
20. According toSection 337oftheTariff Actof1930 asrecently amended, those accused are
about tofilecounterclaim intheUSITC proceedings, though those counterclaims aretransferred to
afederal court inactual cases. Inthiscontext, please explain whether therecent amendment ofSection
337oftheTariff Actof1930 hassolved theprior problem inwhich those accused wereonlyableto
filecounterclaim inafederal court.
Theamendments toSection 337resolved theproblem thatthepanel identified initsreport.
Namely, arespondent inasection 337action mayfilewiththeUSITC anycounterclaim thatmaybe
filedwithafederal court. Iftheclaim isoftheform ofadefense tothealleged violation ofsection
337,theUSITC willconsider thematter. Iftheparty raising thecounterclaim seeks aremedy such
asdamages, theamendments nowmake thatremedy available. Moreover, theamendments ensure
thattheparty raising thecounterclaim isnotprejudiced byanydelay orpayment offees.IP/C/W/90
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21. According torecent amendments ofSection 337oftheTariff Actof1930, producers orimporters
ofchallenged products ofaforeign origin maynotnecessarily havetodefend theirproducts bothbefore
theUSITC andafederal court inasense thatboththeUSITC andafederal court procedures never
proceed atthesame time. Please explain whether therecent amendment ofSection 337oftheTariff
Actof1930 hassolved theprior problem inwhich producers orimporters ofchallenged products of
foreign origin wereforced todefend indouble fora.
Theamendments tosection 337provided themeans toprevent infringement proceedings being
brought against imported goods intwoforums atthesametime. Adistrict courthearing aninfringement
caseisrequired tostayitsproceedings, attherequest ofarespondent inasection 337proceeding,
inrespect ofanyclaim thatinvolves thesame issues asthose pending before theITC. Such issues
would include questions ofpatent validity, infringement, andanydefenses thatmight beraised inboth
proceedings. Thedistrict court mayuseitsdiscretionary authority tostayanyother claims inthecase.