International Conference on Dispute Resolution in Electronic Commerce

International Conference on
Dispute Resolution in Electronic Commerce

organized by the WIPO Arbitration and Mediation Center

Geneva, November 6 and 7, 2000

Conflicts of Laws for Intellectual Property in Cyberspace

François Dessemontet,
Professor, Universities of Lausanne and Fribourg

The rules on conflicts of laws aim at solving the conflicts between territorial laws, so-called municipal laws. However, there are no longer separate national territories in the cyberspace (Footnote 1). There remains territoriality in the organization of the courts (with a few exceptions, such as the Panels adjudicating domain names disputes under the ICANN Policy or the WTO Dispute Resolution Body) (Footnote 2). Therefore, in most areas of intellectual property, the conflicts of jurisdictions remain as a significant issue. That difficulty leads towards the creation of a sole Patent Tribunal for all Europe. But beyond jurisdictional questions, the harmonization of all areas of intellectual property law is not a current endeavor. The TRIPs Agreement embodies only a minimum consensus. The WIPO Treaties of 1996 regulate only copyright and neighboring rights. Many national peculiarities remain in the trade mark and trade name law, design law, patent law, licensing law, unfair competition law, trade secrets law, right of publicity and TV rights, to name some areas of paramount importance on the Net.

In our view, the time of restatement of the rules of conflicts in intellectual property law has therefore come. In Europe, the Convention on the Law Applicable to Extra-Contractual Obligations (so-called Rome II) could have spurred the process of codification, but the occasion was missed (Footnote 3). It is therefore for another forum to take up that task, e.g. The Hague Conference on Private International Law.

The harmonization of rules on the conflicts of law is necessary because the present network of international Conventions does not give a full set of solutions to the issues of applicable law, as we shall see in a first Part below. Then, a second Part will be devoted to the private international law of Internet in the field of intellectual property.

I. International Conventions and Territoriality

A. Scope of International Conventions on Intellectual Property

1) Areas Regulated by International Conventions

The existing Treaties regulate nine types of exclusive rights: patents, trade marks and geographic denominations, trade names, designs and models, semi-conductor chips, copyright, neighboring rights, plant variety and trade secrets (Art. 39 TRIPS). Further, States Members of the Paris Union for the Protection of Industrial Property have to provide for a sufficient protection against unfair competition (Art. 10 bis Paris Convention).

2) Minimum Rights

The multilateral Conventions provide for a minimum coverage of the IP Rights holders, which may be claimed in all convention countries regardless of the national legislation.

3) National Treatment

Nationals of other States Members shall not be subject to discrimination, nor are expatriates or refugees. Therefore, any IP right owner who is entitled to claim the benefit of the Convention will enjoy in all States the same protection as the national of those States. Combined with the minimum rights, the assimilation of the foreigners to the nationals of the lex fori suppresses most conflicts of laws. However, as soon as the national law deviates from the international standards, the question of private international law arises. If the deviation under the TRIPs is justiciable before the WTO Dispute Resolution Body, there are no other mechanisms of international jurisdiction to ensure that the legislation of Member States do conform to the minimum rights. The acceleration of technical progress has elicited various responses from the national legislation. These conflicts of laws are less infrequent now, especially because the main Conventions have not been revised since three decades.

Does the system of the international Conventions provide a set of rules for solving conflicts of laws ? This question will be examined under the Berne Convention, but it is certain that the other main international Treaties in the area of intellectual property have the same bearing on international law.

4) Article 5 (2) Berne Convention

Article 5 (2) of the Berne Convention first provides for the independence of the rights conferred upon the authors by the legislation of each country. "Consequently, apart from the provision of this Convention, the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed by the laws of the country where protection is claimed."

The first reading of that provision could lead one to believe that a rule of conflict is embedded in the Convention. However, under closer scrutiny, it rather states that the foreigners may not be discriminated because of some technicalities of their home law. The "independence" of copyright means e.g. that no confiscation of intellectual property rights by a domestic legislation will be recognized in the other Member States (Footnote 4). It also means that there can be no centralized attack against the validity of copyrights in a given work or subject matter, unlike what happens to so-called "international trade marks" under the Madrid Arrangement of 1891 (not under the 1989 Protocol). Finally, it means that no reciprocity requirement can be imposed on foreigners seeking the protection of the local courts, contrary to what was then the prevailing conception in the XIXth Century (Footnote 5). Even the Berne Convention could not eliminate altogether some formal reciprocity requirements in the areas that were disputed, such as the duration of copyright (see Art. 7 (8)), the "droit de suite" (right to an interest in resales) (see Art. 14 ter (2)) or the protection of applied arts (Art. 2 (7)).

Being a rule on the treatment of foreigners, Article 5 (2) of the Berne Convention is not a rule on conflicts of laws. However, the Berne Convention is based on the idea that the protection under the lex originis of a work, whatever the definition of the country of origin, does not follow that work all over the world (Footnote 6), contrary to the Montevideo Convention of 1889. The main difficulty appeared to be that some works could originate in more than one country (Footnote 7).

Between the difficulties arising out of such an exceptional case and the difficulties arising out of the necessity for the copyright owner to introduce multiple actions under as many laws as there are countries for which protection is required, the States Members of the Berne Union chose the latter ones, because at that time multiple litigations could obviously not be avoided. Thus, Article 5 (2) Berne Convention further provides for the law of the country for which protection is sought to be applicable. The extra-territorial effect of a court decision (such as under The Hague District Court's former practices (Footnote 8)) still appear, a century later, something of a novelty, especially in the United Kingdom (Footnote 9). However, some other countries had accepted such an effect (Footnote 10), before the Brussels and Lugano Convention (see Art. 24 and especially the ECJ interpretation (Footnote 11)) changed the rules of the game in Europe. As the solution under those Conventions is not really adapted to the needs of an interwoven economy, the creation of a Sole Patent Court for Europe is the next task on the Agenda of the revision of the Munich Convention.

The sole jurisdiction to be shall of course apply an unified law. On Internet, there already are 4 main jurisdictions to adjudicate cyber-squatting under ICANN Policy, and online e-arbitration of e-commerce starts developing. Therefore, the fragmented approach of applying the lex loci protectionis will have to recede.

Even now, some legislatures of Berne Countries apparently acted on the premise that Article 5 (2) Berne Convention is not a rule of conflicts of laws (Footnote 12). The courts of various countries have applied the lex originis on issues other than the extent of the protection of copyright, for example on the title to the copyrights and the characterization of the work (Footnote 13).

B. Territoriality of Intellectual Property Laws

1) First Sale Doctrine Between Nations

Internet is going to undo the national barriers to importation of brand articles, copyrighted works and patented products. On the Net proper, international exhaustion is the rule for e-commerce; everything which is downloaded from a computer obeys only international exhaustion rules. However, even for items that are sent by courier or mail after an order has been lodged on the Net, real enforcement of territorial IP Rights at the border is scant. In fact, we witness international exhaustion. Our belief is that the national courts cannot on the long run enforce a national system for the exhaustion of the rights in the traditional distribution channels while the e-commerce is based on international exhaustion.

Some avant-garde countries already accept international exhaustion, such as Japan (Footnote 14), Switzerland (but for patents) (Footnote 15) and the United States (at least for reimportation) (Footnote 16). In such a system, the territorial approach to conflicts of laws is of no avail, because the forum has to characterize the first marketing abroad: was it lawfully made and with the consent of the IP Rights holder ? There is therefore a clear extra-territorial effect of the forum's law. However, the lex fori has usually no contact with the facts of the first marketing, with the exception of some reimportation cases of course. Consequently, the court will often turn to the law of the contract enabling the retailer who put the product on the market for the first time, in order to characterize this first sale as lawful or not, and made with the consent of the IP right owner or not. Interestingly, the law of the country of marketing as such shall be disregarded in the event that such a law does not afford protection to the items in issue, e.g. if that law does not protect entirely patents on drugs; outside the TRIPs States, such a solution is still conceivable, as it is a matter of paramount importance for national health services. In both cases (application of the lex fori or the lex contractus), "territoriality" of IP rights does no longer appear as the governing principle.

2) Territoriality and National Policies

If the international Conventions do not impose absolute territoriality, the sovereignty of States on their public health, economic development and cultural policies may entail that the lex fori would exclusively apply to intellectual property rights that are deemed to play and important role in those policies. It is noteworthy that the only field for which the Swiss Federal Tribunal does not accept international exhaustion is patent law, and this on the basis of the economic consideration that an adequate return on investment is not guaranteed for patent holders when international exhaustion prevails, because many countries would not allow patent owners to set sufficient prices (Footnote 17).

Likewise, in the United States, Professor William Patry has maintained that every work has to live up to the standards of originality of the U.S. Copyright Act, because of Article I (8) of the U.S. Constitution (Footnote 18). However, Judge Kaplan of the Southern District of New York has replied that the acknowledgment as such, "tels quels", of the works protected under the lex originis derives from the Treaty Power of the US Congress, which ratified Copyright Conventions, allowing some degree of reference to the country of origin.

There is a further consideration which did not yet entered the debate in the United States. By virtue of the Treaty Power, the Congress of the United States has also ratified international declarations on human rights, most notably the International Covenant on Economics, Social and Cultural Rights Art. 15 para. 1 of which provides for the protection of intellectual property (Footnote 19). The United States and other parties to the Pact cannot oppose their municipal law against their international obligation to respect this Treaty. The French courts have rightly derived from the Universal Declaration of Human Rights the right for Charlie Chaplin to obtain protection of cinematographic works in France although he was not entitled to the benefit of the Berne Convention (Footnote 20). The prevalence of international obligations under the human right doctrine – universal in essence - negates a territorialistic approach to IP Rights. Those rights are no longer the affluent of national economic or cultural policies. Therefore they are no longer subject to whimsical enactments of the sovereign in the forum. This also makes obsolete the U.S. approach for solving conflicts of laws through poising the various national policies against each other and selecting the law of the country whose policy appears to be more important (Footnote 21). Besides, this method is not in keeping with the most recent doctrine on conflicts of laws, as we shall now see.

II. Private International Law and IP Rights on Internet

A. The Tools of Private International Law

1) Points of Contact for Each Category of Rights or Contract

Private international law started from the status doctrine. When foreigners appeared on market places, which was their status ? Personal status ruled many questions. Later, as is well-known Friedrich Karl von Savigny developed a system of contacts, whereby for each important category of rights or contracts the law of a given country is to be declared applicable because it is the center of gravity of the legal relationship. Only the United States still resist this methodology.

Finally, the last step appears to be national or regional codification of private international law, with more than 60 Acts governing conflicts of law in countries located outside Europe (Footnote 22), and 17 Codes on Conflicts at least (Footnote 23).

The combination of the Savigny's methodology and the codification movement leads to propose detailed rules for IR rights on the Net, as shall be done in the end of the present article (Footnote 24). They are concrete application of the idea of the closest connection between a given right or contract and a national law. The closest connection is not meant as a link with a territory but a link with a set of rules identified by their origin in a given legislature.

The closest connection is conducive to various tests, the first and foremost one leading to the rules of law governing the characteristic performance (Footnote 25), the second one leading to the rules of law applicable where any damage is actually felt (Footnote 26), the third one to the set of legal rules usually applying to the respondent's activities (Footnote 27). There is a clear subsidiarity in those rules, as shall be seen later. But they all are subject to various exceptions.

2. Exceptions to the Points of Contact by Category

The guiding principle of the closest connection and some other important policies lead to three exceptions at least:

a) The General Provision allowing the Court to apply a law other than the one which is declared applicable by the relevant provision, when the facts of the case show that the matter is properly within the ambit of another legislature (Footnote 28).

b) The laws of direct application of a third country, which may be applied because public or private interests require it. Antitrust laws or other long-arm statutes may prevail upon the rules otherwise applicable.

c) The renvoi exists in two forms, remission or transmission. There is a remission when the lex fori which was willing to let the law of another jurisdiction apply is empowered again, because the private international law of that other jurisdiction declares the lex fori to be applicable. There is a transmission when the private international law of the other jurisdiction declares the law of some other State to be applicable.

Although the Rome Convention I and (draft) II exclude renvoi, we believe that where those texts or similar ones are not applicable, remission or transmission can be intelligently used in conflicts of law arising out of Internet for the right of publicity, for libel cases and droit moral of authors (Footnote 29). Let us take the case of the misappropriation of the name of a well-known actress (Isabelle Adjani) as domain name (Footnote 30). If the case were pleaded in Switzerland, the Swiss rule of conflict would refer to the Swiss law as law of the State where Mrs Adjani (of French nationality) usually resides if the wrongdoer could expect a damage to be felt in Switzerland, or to the law of the wrongdoer's usual residence or place of business (Footnote 31), at the choice of the actress. If the private international law of the wrongdoer's country refer the matter to the Swiss law, there is remission. If it refers the case to the law of the nationality of the injured actress (French law in our example), there is transmission. If the court finds that both the law of the wronged party and the law of the wrongdoer have the same substantive solution, as the WIPO panel did in the case of Mrs Adjani, then there is no renvoi, because there is no conflict of law. The renvoi could lead to a law which is more developed on Internet issues than the lex fori, if the forum is a country where Internet litigation has been scarce. If on the contrary the forum's case law is already full-fledged, such as appears to be the case in the United States, then the remission offers a simple way to submit the case to known standards rather than to a foreign blank law. Every technique that favors the application of a developed law is in itself conducive to harmonization of the judicial practice throughout the world.

3) Bilateral Rules

A general observation on the techniques of contemporary private international law should underline the bilateralism of the rules of conflicts: the same test is applied to determine i.e. whether the law of country A or of country B is applicable, notwithstanding the fact that country A is the forum's country. Bilateralism does not favor the forum's law.

4) Neutrality of Contacts

A last requirement of the rules on conflicts derives from the strict neutrality of those rules, which do not purport to lead to the law affording a higher level of protection for IP Rights rather than to the law securing a lower level of protection. On the long run, however, one might expect a system which is based on the law of the characteristic performance to be conducive of a concentration towards the law of the North countries as they are the main producers of protected intangibles, at least as long as traditional medicine and folklore will not be strongly protected. This may or may not be seen as piece of evidence for the contention that a high level of IP protection contributes to the creativity of a geographic area. However, is the higher rate of investment spurred by the legal regime of IP Rights, or by some other factors ? Internet may also change the name of the game, if it helps developing countries to assert their own creativity on the Net – or as has been seen for the movies industry, globalization may lead to concentration of power. The uncertainties as the true macro-economic phenomena are such that the rules on conflicts of laws have to be neutral.

This being said for the general methodology of conflicts laws rules, we shall now turn to the points of contact on Internet.

5) Contact on Internet

Let us take an example. A producer who is established in a country A commissions a poster from an artist who usually resides in a country B. He reserves the right to modify the poster, since at the same time two hundred other posters are commissioned in various countries to support an advertising campaign.

When the poster is ready, a gentle hacker living in a country C steals it from the PC of the artist. The hacker posts the poster in a modified format on his homepage, which is hosted by a server in a country D. From there the poster is downloaded against a fee in a hundred of countries (E₁ to E₁₀₀).

Criminal law of the countries B and C apply to the electronic theft, but private international law will rule the conflicts concerning the droit moral of the artist, the interpretation of the commissioning contract, and the rights of the producer vis-à-vis third parties having downloaded the poster.

This exemplifies that the simplest international case makes necessary to study three types of relationship:

1) contractual relationship;

2) extra-contractual relationship (arising out of the infringement of IP Rights);

3) quasi-contractual relationship (for the accounting of profits, if any).

There is no doubt that contractual relationships will be the key element in the application of technical measures to safeguard copyrighted contents on the Net (Footnote 32). A network of interrelated contractual agreements allows the smooth collaboration of all businesses active on the Net, and enables the other businesses or consumers fully to benefit from the e-facilities. Liability for tortuous conduct and the ensuing accounting for profits are nonetheless necessary. Those three aspects shall now be examined under the viewpoint of conflicts of laws.

B. Contractual Relationships

1) General Rule

According to Article 4 para. 2 of the Rome Convention of 1980, the law applicable to a contract entered into on the Net or for the use of an IP Right on the Net is the law of the country where the provider of the characteristic performance has his domicile or its establishment.

This rule applies to all IP Rights licensing or transfer (Footnote 33). The practice is fleeting, mentioning "transfer of rights" where the word "licensing" might be technically correct (Footnote 34). Therefore, no difference should be made for determining the applicable law between an outright transfer and a sheer license. Further, the so-called "license" authorizing the use of a software or other intangible embodied in a CD-Rom or another physical copy is probably ancillary to the sale of the copy and should be subject to the same applicable law as the sale itself.

Thus, both the sale and the license of intangibles are submitted to the law of the licensor or that of the seller, absent a different choice of law by the parties. The rules on the protection of consumers are reserved (Footnote 35). Besides, some other limitations can be mentioned.

2) Transnational Law

When the laws possibly applicable in a given case do not diverge on the points in issue, there is no conflict of laws. This is usually the case where a superior authority provided for some degree of harmonization, as it is the case in Europe. Harmonization, however, can also result from the non-interference of State law with the practice.

a) Licence Law

This second situation precisely arises on the Net, in the absence of applicable State law (Footnote 36). Especially where merchants have recourse to arbitration rather than to the State courts, a transnational law may emerge, the basis of which is hotly disputed between supporters of the Lex Mercatoria and sovereignists. Whatever the merits of Lex Mercatoria, the licensing practices are identical worldwide and the municipal laws are mostly silent on details. Thus, the ideal conditions are met for a transnational body of law to grow. Here are two examples:

1) the standing of the exclusive licensee to sue for infringement is now recognized in most jurisdictions, albeit it was still uncertain two decades ago (Footnote 37). Canada even allows the beneficiary of a non-exclusive license to sue the infringer (Footnote 38), but it appears to be a pioneering move not yet universally followed.

2) The privileged position of the truly exclusive licensee correlates with the duty for him to work the invention, trademark, design, model or copyrighted work. Consequently, the licensor who promises to refrain from working the invention is certain to receive some remuneration. However, the transnational law is less clear in the case of "sole licensees" (who have to accept the competition by the licensor but no other licensee) or "semi-exclusive licensees" (who enjoy the status of an exclusive licensee in some countries or for some applications of the IP Rights, and the status of a sole licensee in other areas). In our view, French, German and Swiss law now converge on a solution identical to the one which is widely accepted for truly exclusive licensees. On the other hand, if French law admits of an obligation to work the IP Rights even for licenses devoid of any exclusivity (Footnote 39), this solution cannot be said to be part of the transnational law of licensing. Where solutions are transnational, no conflict of law arises on the Net.

b) Competition Law

For competition law as well, Internet is subject to similar or identical solutions. When the time came to develop a world system for the assignment of domain names, the common understanding of the U.S. and European authorities on antitrust issues helped persuade America to yield its monopoly in this regard (together with the opening of proceedings by the E.U. competition authorities, that were closed later without much ado). The next revision of the European block exemption regulations could likewise take into account the present state of the U.S. law on antitrust and licensing.

3) Consumer Protection

In the United States, the valiant endeavor by Professor Raymond Nimmer to compile the licensing law in a full-fledged Article 2B Uniform Commercial Code finally led to a Model Act to Protect Consumers (Uniform Computer Information Transactions Act – UCITA), the introduction of which is pending before several State legislatures (Footnote 40). As the unique restatement of the modern law of licensing, the UCITA is going to be an inspiring model in many countries (Footnote 41).

It is symptomatic that the UCITA rules on conflicts of laws are protective of the consumers, but with subtlety: the parties may choose the applicable law. However, the choice is not enforceable in a consumer contract, to the extent it would vary a rule that may not be varied by the agreement under the law of the jurisdiction whose law would apply under the UCITA (Footnote 42). To some extent, European laws also purport to help the consumers by having their own law apply in all its mandatory provisions (Footnote 43). It is somehow bizarre that the law of the country of the consumer be deemed in advance to be more favorable to him or to her than the seller's law – which logically cannot be true in all cases since both sellers and vendors are more or less active in the same developed countries (Footnote 44). Nonetheless, the idea of applying the consumer’s law is to help prevent any surprise to him or to her. Therefore, it is expedient to let the law of the consumer's country prevail, in order to further the development of e-commerce, especially in those European countries where there is some reluctance to embark on e-commerce on a grand scale (Footnote 45).

Where only the order is lodged on the Net, the goods being delivered later by courier or mail, the legal situation is not different from ordinary distance selling. However, when intangibles are downloaded, one should distinguish between contents that are not protected by IP Rights and protected contents. If no IP Right is involved, the consumer may be protected by his or her own law. On the contrary, where copyright, design or model law, or a sui generis right on the extraction of data apply, the law of the licensor should be applicable rather than the consumer law, since provisions on the law applicable to licensing agreements are a lex specialis in regard of the consumer's protection rules, and are better adapted to the licensing transactions. A more formal argumentation could also be derived from the text of the Article 5 (1) of the Rome Convention; licenses are not contracts for the supply of goods or services (Footnote 46).

Finally, a balancing act is necessary for licensing, because the stronger the legal protection is in a country, the more important it is to apply along with it the exceptions that are provided under that very country's law. For example, Anglo-American Copyright Law has a rather low threshold for originality but know a sweeping exemption of protection for so called "fair use" (U.S.) or "fair dealing" (U.K.). If the licensor is in the U.S., the fair use exemption might be applied by the European consumer's forum even if its municipal law does not provide for

it; and even if the fair use in itself is rather a provision of substantive copyright law than of contract law.

4) Exceptional Application of the Licensee's Law

The solution which has been sketched above leads to the licensor's law to be applicable save for consumer protection or competition law considerations. It is necessary to note that other exceptional circumstances could entail the application of the law of the country of the licensee. Three cases are worth mentioning in this regard.

a) Copyright off-shores locations

The general provision for diverging contacts (Footnote 47) or the test of the closest connection (Footnote 48) could allow for the application of the licensee's law whenever the provider of intangibles on the Net is a e-firm without real contact with the territory of any State. Some Panama or Dutch Antilles companies might e.g. be said to fall within that category. Such firms, it is feare (Footnote 49)d, may well pilfer the intellectual property of serious right holders and make it available throughout the Internet world. Their interest may consist in outright remuneration by the Internet users, or by advertising revenues, or by the income which is at times generated by the sheer accumulation of checked e-addresses.

In such a case, the courts will depart from the basic tenet that the characteristic performance of the licensor determines the applicable law. The piracy of the IP Rights is illegal in the 160 countries members of the Paris Union, the 147 countries members of the Berne Union, and 134 countries having ratified the TRIPs. It may safely be assumed that in those countries, the contract providing for the transfer of such pirated intangibles will be deemed null and void and in the remaining countries as being contra bonos mores (Footnote 50). Then, an illicit or immoral obligation cannot be the characteristic one within the meaning of the Rome Convention.

If one could not accept that application of the closest connection test for this first reason, a second reason might appear more in line with the law and economics thinking.

b) Meritless IP Rights Holders

When the licensor did not acquire the IP Right through its own investments, efforts or creativity, nor against due consideration or by inheritance or merger, the licensor did nothing characteristic before the establishment of the licensing relationship. IP laws aim at protecting the investment in intangibles (Footnote 51). The piracy is not considered to be an investment deserving of protection. Besides, the e-firm that thrives on pilfering other people's intangibles does not usually own assets that are to be seized in order to pay its creditors in case of default. However, the correlation between the country of the principal place of business and the country in which bankruptcy proceedings or enforcement measures are to be taken if the debtor of the characteristic performance does not discharge his or her obligations is the fundamental justification of the doctrine of characteristic performance (Footnote 52).

The unity between the law applicable to the performance of the contract and the law applicable to the enforcement procedures is the cornerstone of that system. When, however, the e-firm has no real assets in the real world, its off-shore environment will be disregarded in favor of the licensee's legal environment.

c) Dishonest Practices

Finally, when the licensee is victimized by the dishonest practices of the licensor, an exception to the licensor's law might be proper if there are loopholes in that law. Such could be the case of a self-destructible software which would damage the data stored in the licensee's computers, or of a licensor spying out licensees’ connections through cookies. Further, an extra-contractual liability might arise. Then, the law applicable to that liability or the forum's law will characterize the practices.

C. Extra-Contractual Liability

1) Scope of the Extra-Contractual Liability

The cases are frequent of IP Rights violations outside any valid contractual relationship between the parties. It may happen that the parties appear to have executed an agreement but the resulting contract is not valid, e.g. because of a form requirement which is not met. Then, Article 8 of the Rome Convention declares applicable the law which could be applied if the contract were valid. Hereafter, we deal however only with infringing acts (Footnote 53) and unfair competition.

A first distinction could be drawn between patent law on the one hand, and copyright or trade name and trademark law on the other hand. Patent law is considerably more territorial, because it is tightly linked to the economic policies of the nations. Thus a set of contacts shall be proposed for each of the main categories of IP (see below (3)). However, for some reason, the commentators have hitherto more thoroughly discussed copyright and conflicts of laws. Therefore, we shall start our enquiry with copyrights and neighboring rights (hereafter (2)).

2) Copyrights and Neighboring Rights

a) Characterization of the country of "origin"

The "country of origin" is a basic notion of the Berne Convention. This point of contact allows to make the work eligible for protection in the other Member States (alternatively with the nationality of the author). Further it helps distinguish "domestic" works, i.e. works that are of the same origin as the forum and do not benefit from the Berne minimum standards of protection, and "foreign" works. Finally, it plays an important role for the reciprocity requirement remaining in the Convention, e.g. for the duration of protection and for works of applied acts (but not for a "droit de suite").

In our view, the "country of origin" is a Convention notion that cannot be twisted into a new and different notion for the purposes of the Convention, that is the subject matters for which the Convention takes it as a test. On the other hand, when conflicts of laws are concerned, the criterion may be freely chosen or construed by States, since the Convention does not provide for rules on conflict of laws, – at least in this author's view (Footnote 54). Modern codifications of private international law have acknowledged that the ordinary residence or domicile of a person is more significant as a contact then his or her nationality. It is natural that the author's residence gives the main contact for title to copyright, and perhaps to know whether there is a protectible subject matter.

b) Place of acting

The infringement of intellectual property rights is subject to the same difficulties to determine a contact for conflicts of laws than the more traditional tortuous behaviors. When the infringing acts and the resulting damages all happen within the same territory, the law of that State will apply. However, on the Net, it is likely at times that an infringing act occurs somewhere and the damaging results are felt some other place. Therefore, some authors choose as main contact the State in which the last infringing act takes place (Footnote 55). To some extent, this is the solution which is generally admitted for tortuous conduct, with the choice of the State of the damage being open by most European legislation.

Here, the Swiss codification on private international law offers a better pattern. Assuredly, for IP Rights generally, Article 110 (2) PIL maintains the principle of territoriality, with the reservation that parties may ex post facto opt for the lex fori. We have seen, however, that the principle of territoriality is often not practical on the Net.

Therefore, we may turn to the array of the rules bearing on the protection of personality, the unfair competition and wrongful conduct generally (Footnote 56), especially since transborder data flows are regulated under Art. 139 para. 4 PIL. The common feature of those rules is to provide for two or more contacts in a successive order. For torts generally, the parties have their domicile, ordinary residence or business establishment in the same State, its law shall apply. Otherwise, the law of the place where the tortuous conduct took place is applicable, or rather the law of the State where the damage resulted if it was foreseeable that damage would result there. The lex loci delicti commissi applies only when the parties have a common country or when the damage was foreseeable, which is a rather uncommon occurrence in most Internet cases.

In our view, it should be admitted that when the injured party is an enterprise, the damage takes place where the main establishment of the firm is located. A financial damage is a difference in the amount of assets, as they are in fact after the wrongful conduct and as they would have been without that conduct. The only significant geographical contact for a financial damage is therefore where the accounts are approved and sometimes published.

Therefore, the true meaning of the alternative points of contact under Article 133 PIL is as follows:

1° Common country of the parties

2° Country of the injured party's main business establishment

3° Law of the country where the tort was committed

c) Law of the country of receipt

Some of the most trustworthy commentators (Footnote 57) incline in favor of the law of the country of receipt of an infringing intangible on the Net. It is the test of the place of the last ingredient of the tort. This of course might lead to the application of as many laws as there are countries in the world.

The country of the receipt can certainly impose its law in many matters, such as criminal law (Footnote 58), public law (Footnote 59), or cyber-casino (Footnote 60). All those laws are of direct application. But are IP Acts laws of direct application ? Are their policies as essential to the welfare of a nation that it wishes to impose its own law with the risk of disrupting the free flow of ideas, information and merchandises over the Net ?

Further, the general application for IP litigation of the law of the country of receipt is ruinous. For the IP Rights owner, it entails that litigations have to be sustained in several countries under different laws. For the defendant, there is a high likelihood of contradictory judgments, putting at stake its own marketing policies in several States without any foreseeability.

The law of the country of receipt can nonetheless define the procedural means of enforcement: contempt of court or other measures of enforcement cannot be dictated by a foreign law, nor would be punitive damages, etc. (Footnote 61)

d) Law of the place of harm

In two recent cases (Footnote 62), the French Cour de cassation declined to follow the thrust of the newer French commentary, which prefers the place of harm to the place of acting (Footnote 63). On the long run however, a unique contact should be preferred for torts that play in two or more countries, especially for Internet torts. For the same reasons as are exposed above (Footnote 64), it should be recognized that the place where the harm occurs is at the victim's domicile or main business establishment. The incorporation is less decisive than the true and effective place of management (Footnote 65). The place where the books are held is irrelevant. Only the place where the accounts are approved, and possibly published, is a relevant contact to correct the harm that has been inflicted upon a given company.

e) Negotiorum gestio and the law of the habitual residence of the injured party

In Germanic countries and in Switzerland, the most accessible form of pecuniary relief for infringement of IP Rights is accounting for profits (Footnote 66). Such accounting is quasi-delictual rather than quasi-contractual, e.g. as concerns the time bar (Footnote 67). It is not conditioned on the fault of the defendant. Now, Article 7 (4) of the Expert's Draft Rome Convention makes applicable the law of the ordinary residence of the person to whom accounts must be rendered. Therefore, the Expert's solution and our proposals above allow for a sole law to apply to all monetary remedies, be it given under the heading of accounting for profits or under the more traditional theory of indemnification for the damages that the Claimant suffered. Having only one law applicable to the two-pronged claims in monetary relief is a decisive advantage, since at the onset of a litigation, the claimant is not always certain to prove the amount of his or her own damages and the other party's fault necessary to get damages, but not necessary to obtain accounting for profits, at least in some jurisdictions such as Switzerland.

If the draft Convention and our proposals were to be followed for Internet, the law of the infringer's country would not apply to damages. Here, the test of the characteristic performance has to be carefully distinguished. Of course, this test has not been devised for liability in tort or quasi-delictual liability. Therefore, it would be erroneous to believe that the infringer is performing the "characteristic performance", so that his or her law should apply (Footnote 68). Nonetheless, it is important to see that the basis of the test of the country in which the debtor of the characteristic performance has his residence or its business establishment is the idea that this debtor organized his enterprise and his activities taking into account a given legal environment, which provides for its first market and regulates his liability. The reasoning is usually valid for the e-enterprise as well, which is organized in function of the e-market of one or several nations, or the globe. This e-enterprise can be subject to the consumer's law for the contracts with the consumers if it is mandatory, or in some exceptional circumstances (Footnote 69). It may also adopt, e.g. for business-to-business dealing, the law of a neutral State or the law of its home market, if the buyers accept it. If no choice is made, the seller's law shall apply under the test of the characteristic performance.

On the other hand, for tortuous or quasi-delictual liability (such as the one deriving from the infringement of IP Rights) no choice of law beforehand is thinkable. Parties may later opt for a given law, under the draft Rome II Convention as under Article 133 PIL, for example. In the absence of an agreement to that effect, the relevant contacts can be determined thorough the method which inspired the characteristic performance test: the IP Rights holder's law naturally applies to them, as it does to his or her liability for the defective goods or services.

In this regard, it will be noted that the countries having the most developed intellectual property systems also enjoy the strictest set of rules for the producer's liability (U.S., U.E, Switzerland for example). It is consistent with the doctrine of the characteristic performance to give to the real world enterprise the benefit of a sole law to regulate rights and liability, which are structurally interlinked, since the high profits made through an elevated protection of IP Rights will enable the enterprise to gather enough assets to guarantee the payment of debts incurred by reason of the producer's liability.

On the Net as well, where by the way it is mainly real world firm that tend to dominate the market, an enterprise needs the protection of its intangible assets, domain name, trademarks, trade secrets for the safety of electronic payment, patents sometimes, design most often. Since they rely on IP Rights as are afforded by the place of their main business establishment (Footnote 70), it is understandable that this law should regulate the protection of their rights. Of course, it is not the server's place which is relevant, but the place of the effective management of the e-company.

If we were to follow for e-commerce the territoriality doctrine, we should have to dismantle the assets of the business in as many countries as there are markets, or we might try and determine a few important ones to decide on the issue of applicable law. Such limitation is difficult at the outset of a litigation for e-counterfeiting.

Further, the e-enterprise has first to respect the IP Rights of the other publishers, authors and providers of contents at the place where its organization is established. Therefore, the e-enterprise can also claim the protection of its own IP Rights under that law.

Finally, the main tenet of the doctrine of characteristic performance is the nexus between benefit and liability. What really matters under principles of justice, equity and good conscience is the tight relationship between the benefits that are derived from a business activity resulting in contracts and the liability that such contracts entail. Those benefits and liability can not equitably be subjected to two different legal orders.

Of course, only lawful activities of the authors, publishers or other IP Rights holders are relevant. Unlike regular business, unlawful activities are not seen as risks that a given law circumscribes and apportions, but as wrongs that have to be corrected either according to the law of the place where they are committed, or according to the law of the place where injured third parties feel the financial damage.

In this regard, the points of contact which we propose for IP Rights on the Net leads to one and the name legal order being applicable under three different view points:

(1) time: the person or legal entity which is entitled to use the IP Rights receives monies for the working of those rights at the same time as it comes under the spell of a contractual or legal liability for its products or services, e.g. under the strict liability principles of the U.S. laws or the responsibility for risks of Article 1382 French Civil Code.

(2) geographical: the place where a complex wrongful behavior causes a financial harm is supposed to be the place where the victim has its financial center of gravity, i.e. its main business establishment. This very place is also the location where it detains the title to its intellectual property rights, that are not, like chattels, scattered in various countries giving entitlement to them.

(3) civil actions: under the proposal, a sole legal order will apply to the action for damages (the success of which is often uncertain because the proof for lost sales at a high price is not easy) and also to the action for accounting of the defendant’s profits (which an audit may more easily prove).

3) Other IP Rights

As we dealt with some details with the law applicable to copyrights and neighboring rights, it may turn more expedient now to sum up our proposals for other IP Rights with some conciseness.

(1) Non registered rights

(A) Non registered semi-conductor chips

(1) Same solutions as copyrights when chips are not registered

(2) Same solutions as patents when chips are registered

(B) Non registered geographical denominations

(1) Ownership, originality: Country of origin

(2) Homonymy exceptions: Country of protection

(C) Trade Secrets

(1) Ownership: Country of the owner or Country of the employment relationship

(2) Criminal protection: Country of protection

(3) Civil protection: Law of the contract or Law of the affected market (if patrimonial harm: law of the owner’s country)

(D) Unfair competition

Intellectual property rights (commercial credit, inducement to breach a contract, misappropriation, distinctive signs):

Country of the owner

Protected consumers (misleading, or erroneous comparative advertising, aggressive sales methods):

Country of the market mainly affected

(E) Personnality protection, right of publicity, right of privacy

(1) Ownership: Country of residence of the owner

Rights, exceptions, remedies:

Country of the media

(2) Registered rights

(A) Patents

(1) Ownership: Country of the residence of the inventor or country of the employment contract

(2) Validity, rights, exceptions, remedies:

Country for which the protection is sought

(B) Trade Marks

(2) Ownership in case of prior conflicts in the common country of the parties: Country of origin

(3) Ownership in case of conflicts in the country for which protection is sought: Country of protection

(1) Validity, rights, exceptions, remedies:

Country of protection

(C) Commercial Names

(1) Ownership and validity: Country of origin

(2) Protection of third parties without

any prior relationships: Country of protection

(3) Unfair competition,« common law trade mark »: Country of origin or country of protection (as for registered trade marks)

(D) Models and designs

(1) Ownership: Country of origin

(2) Validity, rights, exceptions, remedies: Country of protection

(E) Plant Variety

1. Denominations: Country of origin
2. Validity: Harmonised law (UPOV)
3. Rights, exceptions, remedies: Country of protection

4) Competition Law

Both competition law and unfair practice law (such as measures against dumping) call for the law applicable to be the law of the market which is concerned. However, some aspects of the unfair competition law proper are more akin to IP Rights. Therefore it has been proposed above to apply a different test to IP Rights related matters and to the other areas of unfair competition.

Thus, under the Swiss codification of private international law, two tests are mentioned by Article 136 PIL:

(1) The law of the country where the plaintiff is located.

(2) The law of the market where the harm results, whenever it is not a definite competitor who is affected but consumers or all operators.

One of the drafts of the Rome II Convention also admits the market test (Footnote 71). It has not been adopted in the Commission draft.

In unfair competition cases on the Net, the business that is injured will feel the financial loss in the country of its corporate headquarters (Footnote 72). Let us take the example of a advertising slogan which is used as the distinctive line under the name of an insurance Internet company ("your insurance in a few clicks"). If this ad is pirated by another business, the harm is felt at the headquarters of the web insurance company. That law shall determine whether the sentence is distinctive enough to be protected and whether there is some passing-off, as well as the quantification of damages or the accounting for profits. A centralized adjudication of these claims is much to be preferred over a piecemeal, country-by-country litigation.

CONCLUSION

To outline proposals for the law applicable to Internet infringements on IP Rights is only the beginning. One simple test cannot lead to correct results in all instances. The closest connection is often to be found through the use of two or more tests one after the other.

The reader may refer to former publications developing reasons for our set of tests (Footnote 73).

Those tests, that have been approved by some authors (Footnote 74), are not based mainly on the application of the law of the country of receipt. The policy is to favor under private law a workable offer for goods and services and an overseeable use of IP Rights.

The subsidiary application of the law of the country of receipt is not excluded altogether. It may be applied when a different contact indicates the same law, e.g. because it is a country common to both parties, or because the damage is clearly felt there and only there.

The law of the country of uploading may also offer a very subsidiary test, at least when there is no dissemination through a napster type of relays all over the world, or an uploading effected through a mobile phone or other mobile device in a different country.

Finally, in very exceptional circumstances, defendant’s law shall apply as the law of last recourse.

Public policies of the forum shall be preserved under any test, as may be some overreaching foreign policies in antitrust areas for example.

The freedom of information, the freedom of research and the freedom of expression, but also droit moral and protection of intangible business assets will offer enough conflicts in the years to come for the rules on conflicts of law to thrive; the Lex Americana will not stifle their developments.

Footnotes:

1. See C. Cass., Com., 7 March 2000, D.2000 (No 20), pp. 251-252 and CA de Paris, 1 March 2000, D.2000 (No 20), pp. 251-252 and for French Private International Law, TGI de Paris, 3 May 2000, Chambre Nationale des Commissaires-priseurs c/ Nart SAS & Nart Inc., in www.legalis.net, Ordonnance de référé TGI de Paris, 22 May 2000 and of 20 November 2000, UEJF & LICRA c/ Yahoo ! Inc & Yahoo France, in www.legalis.net. See M. R. Burnstein, Conflicts on the Net: Choice of Law in Transnational Cyberspace, 29 Vanderbilt Journal of Transnational Law (1996) p. 82; P.E. Geller, International Intellectual Property, Conflicts of Laws and Internet Remedies, EIPR 2000.125 and L. Lessig, Code and Other Laws of Cyberspace, Cambridge 1999, spéc. pp. 42 à 60.
2. As to ICANN see: Uniform Domain Names Disputes Resolutions Policy, in www.icann.org/udrp/udrp-policy-24oct99.htm and Supplemental Rules for Uniform Domain Names Disputes Resolutions Policy, in arbiter.wipo.int/domains/rules/supplemental.html. As to WTO see: Understanding on Rules and Procedures governing the Settlement of Disputes, see in www.wto.org/english/docs_e/legal_e/28-dsu.pdf.
3. It will be noted that the preparatory works for the Convention of Rome I (1980) did include a thorough study by Prof. E. Ulmer, Intellectual Property Rights and the Conflict of Laws: a Study Carried out for the Commission of the European Communities, Luxembourg 1978, with formulated proposals pp. 103 through 112. Nevertheless, Rome I regulates only contractual obligations; no word was lost in intellectual property on the final text, although it is applicable to licensing agreements, even on the Net.
4. See S.M. Stewart, International Copyright and Neighboring Rights, 1993 2d ed. London, pp. 38-39, n° 3.17. For trade mark law, see e.g. ATF 91 II 117, ATF 82 I 196, ATF 83 II 312 and ATF 312 I 148.
5. S.M. Stewart, n° 3.15.
6. See e.g. F. Curchod, La Convention de Berne et la loi fédérale sur le droit d'auteur, Lausanne 1969, p. 212; J. Cavalli, La genèse de la Convention de Berne pour la protection des œuvres littéraires et artistiques du 9 septembre 1886, Lausanne 1986, p. 174.
7. S.M. Stewart, n° 3.14 for the remaining provisions on material reciprocity.
8. Cf. J.J. Brinkhof, Could the President of the District Court of The Hague Take Measures Concerning the Infringement of Foreign Patents ?, EIPR 1994.360 and seq.
9. Deff Lep Music v. Stuart Brown, (1986) R.P.C. 273 & Tyburn Productions v. Doyle, (1990) R.P.C. 185; on the contrary for the competence of the English courts for a copyright infringement abroad on the basis of the Brussels Convention, see Pearce v. Ove Aruo Partnership Limited and Others, High Court, 7 March 1997, IIC 1998.833; but not for a patent infringement, see Coin Controls Limited v. Suzo International Limited and Others, High Court, 26 March 1997, IIC 1998.809.
10. See e.g. High Court Lucerne, Revue de la Société des Juristes Bernois, 1959.75; decisions of Landgericht Düsseldorf in GRUR Int 1958.430 & Oberlandesgericht Düsseldorf in GRUR Int 1968.100 quoted by E. Ulmer, Die Immaterialgüterrechte im internationalen Privatrecht, Munich 1975 and also the decisions of the Landgericht of Düsseldorf 1st February 1994 and 16 January 1996, not published but analyzed in Perret (F.), Territorialité des droits de propriété industrielle et compétence « extra-contractuelle » du juge de la contrefaçon, Mélanges en l'honneur de Jean-François Poudret, Lausanne 1999, p. 129 & von Rospatt (P.), Decisions of German Courts in Patent Infringement Cases with Cross-Border Effect, IIC 1998.504.
11. Duijnstee c. Goderbauer, CJCE 15 novembre 1983, C.-288/82, 1983 E.C.R. 3663.
12. Article 67 of the Greek Copyright Law of 1993 sets out the principle that "copyright in published works shall be governed by the law of the State in which the work has been lawfully made accessible to the public for the first time" and stipulates that the law thus applicable governs "the definition of the owner of the right, its subject matter, its content, its term and the restrictions relating to it." See G. Koumantos, Greece, in International Copyright Law and Practice, GRE-26 & A. Lucas, Private International Law Aspects of The Protection of Works and Objects Related Rights Transmitted Through Digital Networks, OMPI CGPIC/1 1998, n° 46.

    Article 104A of the Copyright Act of United States stipulates:

    "2) b) ownership of restored work. A restored work vests initially in the author or initial rightholder of the work as determined by the law of the source country of the work." See: J.C. Ginsburg, Private International Law Aspects of The Protection of Works and Objects Related Rights Transmitted Through Digital Networks, OMPI GCPIC/2 1998, p. 34.

    As to Swiss law, under the Article 44 of the former copyright Swiss law of 1922, the judge could integrate for the evaluation of the damage events realized abroad.

13. CA Paris, 4ème Chambre, 14 march 1991, JCP éd. G 1992.II.21780, commentary J.C. Ginsburg; CA Paris, 4ème Chambre, 9 February 1995, 166 RIDA (1995) p. 310; Sté Paneck c/ Sté IBM Corp, TGI Paris, 16 May 1997, 77 Rev. Droit de prop. Industrielle (1997) p. 46 (applying English law to hold on the originality of a work); Itar-Tass News Agency v. Russian Kurier, Inc., 153 F. 3d 82 (2d Cir. 1998) and Bridgeman Art Library, Ltd. v. Corel Corp., 25 F. Supp.2d 421 (SDNY 1998) and 36 F. Supp.2d 191 (SDNY 1999). See also the interesting decision on the book of Soljenitsyne, August 1914: Bodley Head, Ltd v. Flagon, [1972] I W.L.R. 680, esp. p. 688, applying Swiss law (and not Russian or English law). It could be the same in Netherlands, cf. A. Lucas, Droit d'auteur et numérique, Paris 1998, pp. 328-329. In Swiss trade mark law, the Swiss Federal Tribunal applied the principle of universality for a long time (until the decisions ATF 78 II 164 (trade mark law) and ATF 79 II 305 (trade name law)), although Switzerland was a member to the Paris Convention.
14. Japanese Supreme Court, 1 July 1997, IIC 1998.331.
15. See in favor of the international exhaustion for copyright ATF 124 III 321 and for trade mark ATF 122 II 469; but in favor of national exhaustion for patent ATF 126 III 97.
16. Quality King Distributors, Inc. v. L'Anza Research International, Inc., 523 US 135
17. Which contention has to be seen in relation with the pharmaceutical industry's interests in Switzerland and elsewhere.
18. 36 F. Supp.2d 193-195.
19. Article 15. 1:

    "The States Parties to the present Covenant recognize the right of everyone:

    (a) to take part in cultural life;

    (b) to enjoy the benefits of scientific progress and its applications;

    (c) to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author."

20. Société Roy Export Co. Int. et Charlie Chaplin c/ Société Les films Roger Richebé, CA de Paris, 29 April 1959, D. 1959.402, commentary G. Lyon-Caen; RC 1959.484, commentary Y. Loussouarn.
21. Art. 3515 (1) Civil Code of Louisiana: "Except as otherwise provided in this Book, an issue in a case having contacts with other States is governed by the law of the State whose policies would be most seriously impaired if its law were not applied to that issue".
22. Kropholler, Kriger, Riering, Samtleben, Siehr (eds), Aussereuropäische IPR-Gesetze, Hamburg, Wurzburg, 1999.
23. A.E. von Overbeck, De quelques règles générales de conflits de lois dans les codifications récentes, in Liber Amicorum Kurt Siehr, The Hague 2000, p. 546
24. See below n° 47.
25. See below n° 20.
26. See below n° 37.
27. See below n° 45.
28. Article 15 (Exception clause) of the Swiss Private International Law Statute (hereafter PIL):

    "1. As an exception, any law referred to by this Act is not applicable if, considering all the circumstances, it is apparent that the case has only a very loose connection with such law and that the case has a much closer connection with another law.

    2. This provision does not apply where a choice of law has been made."

29. See however J.C. Ginsburg, The Private International Law of Copyright in an Era of Technological Change, RCADI 1998, p. 322 mentioning that the renvoi could constitute a violation of the national treatment.
30. See WIPO case D 2000-0867, to be found at arbiter.wipo.int/domains/cases/.
31. Art. 139 para. 1 [a] and [b] PIL. The third letter [c] does not lead to a law other than the letter [a], unless the damage is felt mainly in France.
32. See European Commission Follow-up to the Green Paper on Copyright and Related Rights in the Information Society, COM (96) 568, p. 19 especially on the paramount importance of the contractual law on Internet.
33. See Art. 122 PIL.
34. F. Dessemontet, Les contrats individuels des auteurs et des artistes interprètes, Sic! 1998/2, p. 242 & in Actes du XLIe Congrès de l'ALAI, 14-18 September 1997, Montebello (G. Roussel, éd.), Cowansville 1998, p. 47.
35. Article 5 Rome Convention and Art. 120 LDIP: see below footnote n° 43.
36. E. Caprioli/R. Sorieul, Le commerce international électronique: vers l'émergence de règles juridiques transnationales, JDI 1997, pp. 323 ss.
37. See for a few comparative observations: François Dessemontet, Transfer of Technology under UNCTAD and EEC Draft Codifications: a European View on Choice of Law in Licensing, 12 Journal of International Law and Economics (1977) p. 38.
38. Signalisation de Montréal inc. v. Les Services de Bétons Universels Ltée, Fed. App. Ct. Dec. 21, 1992, WIPR 7 [1993] 60-61.
39. See CA de Paris, 2 June 1988, D. 1988, IR, 202.
40. Maryland, Virginia, Delaware, District of Columbia, Hawaï, Illinois, Iowa, New Jersey & Oklahoma. For updates see www.ucitaonline.com/whathap.html.
41. F. Dessemontet, Contracting and Licensing on the Net, Festskrift Gunnar Karnell, 1999, p. 119.
42. See UCITA, Section 109) (a):

    "The parties in their agreement may choose the applicable law. However, the choice is not enforceable in a consumer contract to the extent it would vary a rule that may not be varied by the agreement under the law of the jurisdiction whose law would apply under subsection (b) and (c) in the absence of an agreement."

43. Rome Convention. Article 5 Certain consumer contracts:

    "1. This Article applies to a contract the object of which is the supply of goods or services to a person ('the consumer') for a purpose which can be regarded as being outside his trade or profession, or a contract for the provision of credit for that object.

    2. Notwithstanding the provisions of Article 3, a choice of law made by the parties shall not have the result of depriving the consumer of the protection afforded to him by the mandatory rules of the law of the country in which he has his habitual residence:

    - if in that country the conclusion of the contract was preceded by a specific invitation addressed to him or by advertising, and he had taken in that country all the steps necessary on his part for the conclusion of the contract, or

    - if the other party or his agent received the consumer's order in that country, or

    - if the contract is for the sale of goods and the consumer travelled from that country to another country and there gave his order, provided that the consumer's journey was arranged by the seller for the purpose of inducing the consumer to buy.

    3. Notwithstanding the provisions of Article 4, a contract to which this Article applies shall, in the absence of choice in accordance with Article 3, be governed by the law of the country in which the consumer has his habitual residence if it is entered into in the circumstances described in paragraph 2 of this Article.

    4. This Article shall not apply to:

    (a) a contract of carriage;

    (b) a contract for the supply of services where the services are to be supplied to the consumer exclusively in a country other than that in which he has his habitual residence.

    5. Notwithstanding the provisions of paragraph 4, this Article shall apply to a contract which, for an inclusive price, provides for a combination of travel and accommodation."

    Swiss Federal Law on Private International Law. Article 120 Consumer contracts:

    "1. Contracts pertaining to goods or services for ordinary consumption intended for a consumer's personal or family use, provided such use is not connected with the professional or business activity, are governed by the law of the State of the consumer's habitual residence:

    a. if the supplier received the order in that State;

    b. if the contract was entered into after an offer or advertising in that State and if the consumer performed in that State the acts required to enter into contract; or

    c. if the consumer was induced by the supplier to go to a foreign State for the purpose of delivering the order.

    2. No choice of law is allowed."

44. See R. Nimmer n. 39 in Comment 4 to Sec. 2B-106 U.C.C. (draft of May 5, 1997 as cited by M. Jaccard, Securing Copyright in Transnational Cyberspace, 35 Columbia Journal of Transnational Law (1997) p. 656, n° 19).
45. The principle of country of origin is a fundamental one for the European Union, since the case "Cassis de Dijon" (C.-120/78, Rewe-Zentral-AG/Bundesmonopolverwaltung für Branntwein v. Cass is de Dijon, 1979 E.C.R. 649, 662) and the adoption of the directives on the corporations. Nevertheless, many think that consumer confidence towards e-commerce can be enhanced only if the consumer's own courts are competent and his or her own law is applicable. See OECD report about jurisdiction for electronic commerce in www.oecd.org.

    See also Jim Murray, The Proposed E-commerce Directive and the Consumer, Journal Advertising & Marketing Policy and Practice in the European Community (1998); Council Resolution of 19 January 1999 on the Consumer Dimension of the Information Society, especially whereas n° 10.

46. Contra: J.J Fawcett/P. Torremans, Intellectual Property and Private International Law, Oxford 1998, pp. 578-579.
47. Art. 15 PIL.
48. Art. 4 (1) Rome Convention.
49. A. Lucas, Private International Law Aspects of The Protection of Works and Objects Related Rights Transmitted Through Digital Networks, OMPI CGPIC/1 1998, n° 85; P. Schonning, Applicable law in Transfrontier On-Line Transmissions, 170 RIDA (1996) p. 21; Internet and the Applicable Copyright Law: A Scandinavian Perspective, EIPR 1999.44. See also F. Dessemontet, Internet, le droit d'auteur et le droit international privé, 92 Revue suisse de jurisprudence (SJZ) (1996) p. 291, n° 15.
50. As are e.g. contracts for helping contraband goods cross the borders. See 64 Revue suisse de jurisprudence (SJZ) (1968) p. 354, n° 182.
51. See e.g. F. Dessemontet, Le droit d'auteur, Lausanne 1999, n° 18 and seq.
52. F. Dessemontet, Les contrats de licences en droit international privé, Mélanges Guy Flattet, Lausanne 1985, p. 444 & L'harmonisation du droit applicable aux contrats de licences, Mélanges Alfred E. von Overbeck, Fribourg 1990, p. 744.
53. Under Article 10)1)e) of the Rome Convention, the lex contractus, i.e. the law of the debtor of the characteristic performance, governs the consequences of avoidance or nullity of the contract. Therefore, the restitution following the avoidance or nullity of a contract, which relates to unjust enrichment, will be governed by such law. This solution is coherent to the draft of the Convention Rome II which Article 5 (of the Proposal for European Convention on the law applicable to non-contractual obligations, draft by the European Group for Private International Law, see XLV Netherlands International Law Review (1998) p. 465) submits the unjust enrichment to the law of the country in which such an enrichment occurred, apart form a pre-existing relation relationship between the parties. For restitutions following the avoidance or nullity of a contract, the contract will constitute this pre-existing relation relationship. Therefore, the lex contractus should also be applicable under Rome II.
54. See above n° 5.
55. J.C. Ginsburg, Private International Law Aspects of The Protection of Works and Objects Related Rights Transmitted Through Digital Networks, OMPI GCPIC/2 1998, p. 52; A.P. Reindl, Choosing Law in Cyberspace: Copyright Conflicts on Global, 19 Michigan Journal of International Law (1998) p. 799.
56. Swiss Federal Law of Private International Law.

    Article 133 Failing a choice of law:

    "1. When the tortfeasor and the injured party have their habitual residence in the same State, claims in tort are governed by the law of such State.

    2. When the tortfeasor and the injured party do not nave an habitual residence in the same State, these claims are governed by the law of the State in which the tort was committed. However, if the result occurred in another State, the law of such State applies if the tortfeasor should have foreseen that the result would occur there.

    3. Notwithstanding the above, when a tort breaches a legal relationship existing between the tortfeasor and the injured party, claims based on such tort are governed by the law applicable to such legal relationship."

    Article 136 Unfair Competition

    "1. Claims based on a tort of unfair competition are governed by the law of the State in whose market the result occurred.

    2. If the tort injures exclusively the business interest of a specific competitor, the applicable law is that of the injured firm's registered office,

    3. The above provisions dot not affect Article 133(3)."

    Article 139 Infringement of the personal rights

    "1. Claims based on the infringement of personal rights by the media, including press, radio, television or any other public information medium, are governed at the option of the injured party:

    a. by the law of the State in which the injured party has its habitual residence, provided the tortfeasor should have expected that the result would occur in that State;

    b. by the law of the State in which the tortfeasor has its place of business or habitual residence; or

    c. by the law of the State in which the result of the infringement occurs, provided the tortfeasor should have expected that the result would occur in that State.

    2.

    The right of reply to media having a periodical character is exclusively governed by the law of the State in which the publication appeared or the program was broadcasted."

57. P.Y. Gautier, Du droit applicable dans le "village planétaire" au titre de l'usage immatériel des œuvres, D. 1996, Chr., p. 131; Rapport sur la France, in Le Droit d'auteur en Cyberspace, ALAI 1996.292; Les aspects internationaux de l'Internet, TCDIP 1997-1998, p. 241; M. Vivant, Cybermonde: Droit et droits des réseaux, JCP 1996.I.3969; contra: A. Lucas, Private International Law Aspects of The Protection of Works and Objects Related Rights Transmitted Through Digital Networks, OMPI CGPIC/1 1998, n° 87; seeking to criticize the potential application of all the laws of the world, the author proposes the application of the law of the habitual residence of the injured party; P.E. Geller, from Patchwork to Network: Strategies for International Intellectual Property in Flux, 31 Vanderbilt Journal of Transnational Law (1998) p. 553; Conflicts of Laws in Cyberspace: International Copyright in a Digitally Networked World, The Future of Copyright in a Digital Environment, The Hague 1996, p. 26; International Intellectual Property, Conflicts of Laws and Internet Remedies, EIPR 2000.125; in Essays in Honour of Herman Cohen Jehoram, The Hague 1998, p. 29.
58. Ordonnance de référé TGI de Paris, 22 May 2000 et du 20 November 2000, UEJF & LICRA c/ Yahoo ! Inc & Yahoo France, in www.legalis.net; United States v. Thomas, 74 F. 3d 701 (6th Cir. 1996).
59. TGI de Paris, 3 May 2000, Chambre Nationale des Commissaires-priseurs c/ Nart SAS & Nart Inc., in www.legalis.net.
60. Humphrey v. Granite Gate, 568 N.W2d 715 (Minn. Ct. App. 1997).
61. For Swiss law, see: ATF 122 II 463 = JdT 1997 I 250.
62. C. Cass., 1ère Civ., 14 January 1997, Soc. Gordon and Breach Science Publishers et autres c/ Association The American Institute of Physics et autres, RCDIP 1997.504, commentary J.M. Bischoff; D. 1997.J.177, commentary M. Santa-Croce; JCP 1997.II.22903, commentary H. Muir-Watt; C. Cass , 1ère Civ., 11 May 1999, Mobil North Sea Ltd et autres c/ Compagnie française d'entreprises métalliques et autres, RCDIP 2000.199 commentary J.M. Bischoff; JCP 1999.II.10183, commentary H. Muir-Watt.
63. H. Batiffol/P. Lagarde, Droit international privé, T.2, Paris 1983, n° 561; Y. Loussouarn/P. Bourel, Droit international privé, Paris 1999, n° 401; P. Mayer, Droit international privé, Paris 1998, n° 685; B. Audit, Droit international privé, Paris 1997, n° 777; D. Holleaux/J. Foyer/G. de Geouffre de la Pradelle, Droit international privé, Paris 1986, n° 1418 with reserve on such a choice.
64. See n° 41.
65. Contrary of the Article 154 of the Swiss PIL. See Article 4 (2) of the Rome Convention:

    "Subject to the provisions of paragraph 5 of this Article, it shall be presumed that the contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration. However, if the contract is entered into in the course of that party's trade or profession, that country shall be the country in which the principal place of business is situated or, where under the terms of the contract the performance is to be effected through a place of business other than the principal place of business, the country in which that other place of business is situated."

66. For Swiss law, see: Article 423 CO para. 1 et F. Dessemontet, L'enrichissement illégitime dans la propriété intellectuelle, in Recht und Wirtschaft heute, Festgabe für Professor D. Max Kummer, Berne, pp. 191-214.
67. See ATF 126 III 382.
68. See however: A. Lucas/H.J. Lucas, Propriété littéraire et artistique, Paris 1994, n° 976 à 980.
69. Voir ci-dessus n° 26.
70. Unless for some tax reason their IP Rights are farmed out to a holding company in a tax haven, which may be disregarded under the doctrine of the characteristic performance.
71. Article 4)2)b) of the Proposal for a European Convention on the law applicable to non-contractual obligations (European Group for Private International Law):

    "in case of unfair competition or restrictive trade practices, with the country in which the damage or injury occured or is likely to occur."

72. The Federal Tribunal holds correctly ATF 95 III 83, esp. p. 90, that the place of the result is where the assets of the injured party decrease due to the tort. See Trib. sup., Zurich, 10 April 1996, BlZR 1997, No 99 (the damage of a bank drawed for unpayment of a check payed without reason is located at the principal place of administration in Germany and nor at the administration of the subsidiary of the Italian bank at Lugano which paid neither at the principal place of administration of the Italian society). This decision is approved by K. Siehr, Le point sur le droit international privé suisse, 94 Revue suisse de jurisprudence (SJZ) (1998) p. 86. Apparently in the same sense, see an unpublished decision of the Federal Tribunal, 20 April 1982, which is quoted by Trib. sup., Bâle, 16 June 1987, RSPI 1987, p. 273, esp. p. 278, holding that the place of the result is located in Switzerland where the plaintiff has his professional activity. See also F. Dessemontet, Internet, le droit d'auteur et le droit international privé, 92 Revue suisse de jurisprudence (SJZ) (1996) p. 292; common proposal along with J.C. Ginsburg, p. 294, Art. 3 as to the applicable law. On the contrary, as to applicable jurisdiction, the E.C.J. holds according to Brussels Convention that the main place of jurisdiction is the place of business of the plaintiff, the jurisdiction due to the diffusion being limited as to the damage realized in this place. See Fiona Shevill c. Presse Alliance SA, C.-68/93, 7 March 1995, 1995 E.C.R. I-415 ss; Antonio Marinari c. Lloyd's Bank plc et Zubaidi Trading Co., C.-364/93, 19 September 1995, 1995 E.C.R. I-2719 ss. Voir F. Dessemontet, Internet, les droits de la personnalité et le droit international privé, Medialex 2/1997, pp. 77 ss. See in the same sense ATF 76 II 112 (circular sent in Switzerland, habitual residence of the injured party: Swiss law applicable). Against our proposal, the Tribunal Federal holds in a decision Physikerzeitschriften of the 1st November 1996, sic ! 1997, p. 600, that in unfair competition, the place of the result is not the place of the potential patrimonial consequences, for example in the accounts of a holding society located at Zurich, but the place where the market is affected (in casu United States). [This decision is coherent with ATF 95 III 83, because a contrario the place of the result in Switzerland should have justified the Switzerland competence, although neither the torts, nor the parties were linked with Switzerland.] See also ATF 125 III 103 commented by B. Dutoit, Compétence législative et compétence judiciaire en cas d'actes illicites commis sur Internet en droit international privé suisse, Mélanges Rusconi, Lausanne 2000, p. 148.
73. F. Dessemontet, Internet, la propriété intellectuelle et le droit international privé, Internet - Which Court Decides? Which Law Applies? The Hague/London/Boston 1998, pp. 47-64, proposing for the patrimonial rights as main point of contact the law of the habitual residence of the injured party. The point of contact for the moral right is the same but as the place in which the author is known. Therefore, an American author living in Switzerland but unknowm in this country will have his patrimonial rights governed by the Swiss law, although the moral right will be governed by the American law. See also a common proposal along with Jane C. Ginsburg favoring the law of the habitual residence of the injured party, and if such law is not predictable for the tortfeasor the law of uploading, and finally if neither the law of uploading, nor the law of habitual residence of the injured party is applicable, favoring the law of the habitual residence of the tortfeasor; see F. Dessemontet, Internet, le droit d'auteur et le droit international privé, 92 Revue suisse de jurisprudence (SJZ) (1996) p. 292.
74. A. Strowel/J.P. Triaille, Le droit d'auteur, du logiciel au multimédia, CRID, Brussels 1997, p. 386 & A. Lucas, Private International Law Aspects of The Protection of Works and Objects Related Rights Transmitted Through Digital Networks, OMPI CGPIC/1 1998, n° 96-97; B. Dutoit, Compétence législative et compétence judiciaire en cas d'actes illicites commis sur Internet en droit international privé suisse, Mélanges Rusconi, Lausanne 2000, pp. 151-152.