International Intellectual Property Prof. Manheim Spring, 2007 Exclusive Rights & Exceptions Copyright © 2007

Spring, 2007Int'l IP2 Exclusive Economic Rights of ©  Berne  Translation [Art. 8]Art. 8  Reproduction [Art. 9]Art. 9  Performance & Communication (display) [Art. 11]Art. 11  Broadcast [Art. 11bis]Art. 11bis  Recitation [Art. 11ter]Art. 11ter  Adaptation [Art. 12]Art. 12  Resale (droit de suite) [Art. 14ter]Art. 14ter  Cinemagraphic Works [Art. 14]Art. 14  Adaptation, Reproduction, Distribution, Performance

Spring, 2007Int'l IP3 Exclusive Economic Rights of ©  TRIPs  Art. 9 incorporates Berne Arts Art. 9  Commercial Rental Rights [Art. 11]Art. 11  US [17 USC §106]17 USC §106  Reproduction  Derivation (incl. adaptations)  Distribution of phonorecords (incl. rental)  Performance  Display  Digital Audio Transmission

Spring, 2007Int'l IP4 Exceptions to Exclusive Rights  Common Exceptions  Fair Use  Theory: balance of property & social interests  Especially: 1st Amendment (US Constitution)  Limited Reproduction for Educational Use  First Sale  Theory: © holder’s rights exhausted upon sale  Compulsory Licenses  Theory: social cost of exclusive right exceeds fair value to © owner; avoidance of monopoly power

Spring, 2007Int'l IP5 Exceptions to Exclusive Rights  Berne [Art. 9(2)]Art. 9(2)  It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.  TRIPs [Art. 13]Art. 13  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.

Spring, 2007Int'l IP6 Problem 2-17  Does US Fair Use Exception violate TRIPs?  [17 USC §107] … The fair use of a copyrighted work … for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, is not an infringement of ©. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include:17 USC §107  (1) the purpose and character of the use, including [if for] commercial … or nonprofit educational purposes  (2) the nature of the copyrighted work  (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and  (4) the effect of the use upon the potential market for or value of the copyrighted work.

Spring, 2007Int'l IP7 20th Century v. Aiken (SCt 1975)  Listening to © works on single TV or Radio  Does not infringe exclusive right of ©  Letting others listen to single TV or Radio  Formal infringement of display rights  SCt carves out an exception to this right  Codified in Fairness in Music Licensing Act  (A) “homestyle” (Aiken) exception to ©  Permits performance of work in public  (B) Business exception - Certain extablishments can play nondramatic musical works in public

Spring, 2007Int'l IP8 EU v. US (WTO 2000)  Procedure  Commencement of Dispute Resolution Process (DSP ~ complaint) in WTO by EU against US  Exemption of certain performances [§110(5)]§110(5) (A) “ communication of a trans- mission embodying a perform- ance or display of a work by the public reception of the trans-mission on a single receiving apparatus of a kind commonly used in private homes ” is “ not an infringement of ©”

Spring, 2007Int'l IP9 EU v. US (WTO 2000)  (B) “ communication by an es- tablishment of a transmission … embodying a performance or display of a nondramatic musical work intended to be received by the general public, originated by a radio or tele- vision broadcast [or] by a cable system or satellite carrier, if [less than 2,000 sq. ft or 3,750 sq ft for bars & restaurants]

Spring, 2007Int'l IP10 WTO Panel Report (2000)  Exception allowed by TRIPs Art. 13  Members shall confine limitations or exceptions to exclusive rights to 1. certain special cases which 2. do not conflict with a normal exploitation of the work and 3. do not unreasonably prejudice the legitimate interests of the right holder.  These are read in conjunctive (all must apply)

Spring, 2007Int'l IP11 Certain Special Cases  1) Limited to “Certain” cases  Is the US exception “clearly defined” to a “sufficient degree of legal certainty”?  Business exception is defined with specificity  Limited to “Special” cases  Is 110(5) limited in its application or purpose?  Not purpose of the law itself, but its application  NB: this is in addition to the clarity requirement  > 65.2% of restaurants & 71.8% of bars qualify  Holding: (B) does not qualify as special case

Spring, 2007Int'l IP12 Conflict w/ Normal Exploitation  2) Normal exploitation rights of © holders  Doesn’t include all exclusive rights, or ability to make exceptions become meaningless  Rights normally used to extract economic value from the ©  Not in conflict  Uses that don’t compete economically w/ ©  Public, educational, and cultural uses  Where © holders don’t have a way to extract value  Musak?

Spring, 2007Int'l IP13 Prejudice Interests of © Holder  3) What degree of prejudice is acceptable  How much compromise to © holders’ economic interests is “reasonable”?  Numerator: amount of derogation (loss)  Denominator: value of exclusive rights in ©  How much income loss tolerated?  Panel finds numerator (loss) to be too small here to be treated as “unreasonable”

Spring, 2007Int'l IP14 WTO Case & Fair Use Exception  Apply WTO §110 Case to Fair Use (§107)  1) Is the exception “clearly defined”?  Or does it require a case-by-case analysis?  1) Is the exception limited to “special cases”?  Any limit on fair use instances, or works covered?  Is it narrowed by relative portion of work used?  2) Does “fair use” conflict w/ © expectancies?  Does a means exist to collect for these uses?  3) Does “fair use” unduly prejudice legitimate (economic) interests of ©?

Spring, 2007Int'l IP15 TRIPs Violations  Effect of WTO Panel Decision:  Cannot directly affect member state’s law  Can authorize retaliation or  Arbitration under WTO Art. 25  In EU v. US, arbitrator award > $1M / yr  US has paid the fine rather than amend law  Why?