World Intellectual Property Organization

IP Infringements on the Internet – Some Legal Considerations

January 2007

Some 14 percent of counterfeit and piracy investigations now involve transactions carried out over the Internet, according to the Gieschen Consultancy’s 2006 Mid-Year Report, based on statistics compiled by the Business Action to Stop Counterfeiting and Piracy (BASCAP).

The absence of territorial limits on the Internet, along with the scope it offers for anonymity, has opened the door to infringements of intellectual property (IP) rights that are new in both nature and scale. Tangible counterfeit or pirated goods of almost every category are traded or exploited online, be it through legitimate business platforms such as online auction-houses, or through websites which trumpet their illicit character. Massive amounts of copyright-protected content in digital form, including software, music, films, electronic games and text, are also distributed online without the copyright owners’ consent via dedicated websites or file-sharing networks.

The enforcement of IP rights with regard to such activities raises a number of legal questions. From an international perspective, the most comprehensive set of rules relating to the enforcement of IP rights is contained in the 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). While a number of standards set out by this instrument apply equally to the offline and the online dimension of IP enforcement, infringements carried out over the Internet pose some very specific obstacles to effective enforcement which are not addressed in the TRIPS Agreement or in any other global treaty. The remarks below highlight a few such questions.

Whom to sue? – Identifying the infringer

The level of anonymity which the Internet affords to its users creates an immediate enforcement problem for IP rights holders, since identifying the infringer has to be the first step in any enforcement action.

The information required to identify an online infringer can often only be obtained from the respective Internet Service Provider (ISP), which is able to match the relevant Internet Protocol address of a computer used on a network with the individual subscriber. But there are no harmonized rules at the international level as to whether or not an ISP is obliged to disclose a subscriber’s identity or other related information. The TRIPS Agreement (Article 47) includes an optional provision which addresses the right of information in connection with civil proceedings. This, however, is limited to information which the infringer himself must disclose, and does not extend to disclosure by third parties. Meanwhile, national laws differ in their approach.

Efforts have been made in different ways - in the context of new legislation and in a large number of court decisions - to balance such a right of information with conflicting interests, such as protecting the confidentiality of information sources or personal data. A European Union Directive (2004/48/EC of April 29, 2004) on the enforcement of IP rights may also help to harmonize the situation among EU countries, by establishing in principle this kind of right of information against certain third parties.

Where to sue? – Private international law issues

Suing for online infringement of IP protected material often involves cross-territorial action. This raises questions as to jurisdictional competence, the applicable law and the eventual enforcement of a judgment in another country. Such questions all touch upon complex issues of private international law and procedure.

These issues are not entirely new. Private international law doctrines have long been developing around the globe, and it is not necessary to unravel all these principles. Nevertheless, there is a difference in both degree and nature when these concepts are applied to disputes in a global Internet environment. Would, for instance, the fact that allegedly infringing content was accessible online in a certain country be deemed sufficient to establish jurisdiction of a court in that country? Would such jurisdiction extend to determining compensation for the entire damage suffered - potentially in a large number of other countries? If redress can be sought in multiple courts, how can "forum shopping" practices be dealt with, i.e. which allow a plaintiff to file his motion in the jurisdiction which would be most favorable? Case law has in recent years developed some standards for the application of private international law principles in the online environment. But different national or regional private international laws systems continue to coexist.

In the field of contractual business-to-business disputes, the work of the Hague Conference on Private International Law is worthy of note. In June 2005, after over a decade of negotiations, its Member States adopted the Convention on Choice of Court Agreements. This aims to give effect to party agreements designating a court to adjudicate exclusively upon an existing or future dispute. With some exceptions, disputes involving IP matters are covered by the scope of the Convention.

The risk of being sued abroad

For businesses involved in e-commerce, compliance with the IP laws of the countries in which a company operates may no longer be sufficient to ensure the reliable management of legal risks. A company may diligently comply with the standards governing the use of IP-protected content on its own territory. Yet the moment that the content is used on/via the Internet, it becomes accessible in numerous places across the globe, in some of which its use may not be legitimate.

For instance, because of the territoriality of trademark rights, identical trademarks can legitimately be held in different countries by unrelated owners. Such coexistence, long-established in the physical world, is more problematic on the Internet where a trademark is potentially visible from anywhere in the world. To operate entirely safely in such an environment, a company would have to comply with the highest standards of protection available on a global scale - hardly a practicable solution. The risks have been highlighted as a major concern for e-commerce business in, for example, the 2004 Global Internet Jurisdiction survey, published by the International Chamber of Commerce and the American Bar Association. In practice, companies often refrain from interacting with jurisdictions which they consider to be "risk" jurisdictions by, for instance, trying to identify the physical location of a user through user-registration, or by tailoring their online presence to particular jurisdictions.

The WIPO Joint Recommendation Concerning Provisions on the Protection of Marks, and Other Industrial Property Rights in Signs, on the Internet proposes a possible way to alleviate the concerns regarding trademarks’ conflicting with existing rights in other forums. The provisions address three main questions: When can use of a sign on the Internet be considered to have taken place in a particular country? Can those who own conflicting rights in identical or similar signs make use of these signs online, and if so, under which circumstances? And how can courts take account of the territorial basis of trademark rights when determining remedies?

The effective enforcement of IP rights on the Internet remains a complex affair. Developments at various levels are seeking to adapt existing enforcement mechanisms to the specific features of online infringements. But as yet, the often diverse national approaches may make it difficult for rights holders to assess the risks and advantages related to a specific enforcement action. This continues to create uncertainty for businesses operating online, as well as for consumers.

Case study: Hotel Maritime

A hotel owner in Denmark, who held a registered trademark "Hotel Maritime" in Denmark, was using this sign on his hotel’s webpage, as well as in the respective domain www.hotelmaritime.dk. Meanwhile a German company was operating some 40 hotels in Germany under the name "Hotel MARITIM", and had registered this trademark in Germany. In a dispute, decided by the Federal Supreme Court of Germany in 2004, the German plaintiff argued that the Danish hotel owner was infringing his trademark rights by, inter alia, using the sign on the hotel webpage.

The court, much in line with the elements of the WIPO Joint Recommendation, reasoned that not each and every use of a sign on the Internet should be treated as taking place in a given country, even if it was accessible to Internet users based there. Only where the use of the trademark had a "commercial effect" in a particular country, could it be treated as having taken place in that country, and thus be possibly relevant for an infringement claim. On this basis, the court found for the Danish defendant, arguing that the hotel services he offered did not have sufficient commercial effect on the business activities of the plaintiff in Germany.

 

By Heike Wollgast, WIPO Enforcement and Special Projects Division

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