Copyright 2008 by The American Law Institute. Reproduced with permission. All rights reserved.
INTELLECTUAL PROPERTY:
PRINCIPLES GOVERNING JURISDICTION, CHOICE OF LAW,
AND JUDGMENTS IN
TRANSNATIONAL DISPUTES
(with Comments and Reporters’ Notes)
Introduction
This is a set of Principles on jurisdiction, recognition of judgments, and applicable law
in transnational intellectual property civil disputes, drafted in a manner that endeavors to
balance civil-law and common-law approaches. The digital networked environment is
increasingly making multiterritorial simultaneous communication of works of authorship,
trade symbols, and other intellectual property a common phenomenon, and large-scale piracy
ever easier to accomplish. In this environment, the practical importance of adjudicating
multiterritorial claims in a single court should be readily apparent. Without a mechanism for
consolidating global claims and recognizing foreign judgments, effective enforcement of
intellectual property rights, and by the same token, effective defenses to those claims, may be
illusory for all but the most wealthy litigants. The following illustrates the nature of the
problem:
E-pod is an online music-delivery service located in Freedonia. Any computer-equipped
member of the public with Internet access anywhere may purchase copies of sound recordings
of musical compositions from the E-pod website. E-pod has not, however, obtained
permissions from the authors, performers, or producers of the works it makes available.
Moreover, the one-click checkout system E-pod’s website employs may infringe patents
registered in various countries. Finally, E-pod has received a cease-and-desist letter from
Apple Inc., which holds worldwide trademark rights in iPod for online music-delivery
services.
The example demonstrates how technological developments have changed the nature of
intellectual property litigation. First, digital media may produce ubiquitous infringements of
intellectual property rights, and thereby create transnational cases that require courts to
interpret foreign law or to adjudicate the effect of foreign activities. Second, the rights at issue
may encompass the range of intellectual property regimes. While transnational copyright and
trademark claims are by now well known, this example shows that patent infringements are
no longer as territorially discrete as was once assumed. Third, the potential impact of the
alleged infringements in every State in the world may make effective enforcement (or
defense) elusive. There may be no single court with full adjudicatory authority over
worldwide copyright, patent, and trademark claims. Even if there were, the choice-of-law
issues may prove excessively complex (or, paradoxically, misleadingly simple, if a court
entertaining all or part of a worldwide dispute yielded to the temptation to apply its own law
to the entire case). In contrast, State-by-State adjudication may make the choice-of-court and
choice-of-law issues appear easier to resolve, but multiple adjudication could produce
uncertainty, inconsistency, delay, and expense. Moreover, multiple suits involving the same
claims and incidents strain judicial dockets.
The Principles alleviate these problems in a variety of ways. They endeavor to enhance
procedural and substantive fairness. They endorse the long-familiar territorial approach to
choice of law for most cases. As a result, those creating, using, and transacting in intellectual
property can predict which laws will apply to their activities. As to jurisdiction, the Principles
recommend bases of authority for transnational disputes that are appropriate for the creative
community as a whole. They protect intellectual property users from being summoned to
unexpected locations and allow producers to select a court capable of rendering a timely
decision. Adoption of the Principles would give the courts and the parties assurance that
judgments will be enforced and recognized in subsequent foreign litigation. The Principles
also create a mechanism for making worldwide adjudication more efficient. They use lis
pendens and forum non conveniens doctrines as organizational devices to coordinate
litigation, either by facilitating cooperation among courts where related actions are pending or
by aggregating worldwide claims into a single court, chosen (in most instances) by the court
first seized, on the basis of the relationship between the chosen court, the parties, and the
dispute. Furthermore, coordination brings the parties together and promotes settlement. For
example, in Japan, the Wakai judicial settlement procedure creates a mechanism to judicially
mediate settlement of multiterritorial patent claims. See Yukio Nagasawa, Settlement
Conferences at Japanese Courts, AIPPI Journal, Jan. 2007, at 3. Cf. Boosey & Hawkes Music
Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481 (2d Cir. 1998) (retaining jurisdiction over
18 foreign copyright infringement actions; the parties then settled all claims).
From the judicial standpoint, although entertaining claims under multiple laws may
appear daunting, multilateral treaties, such as the 1994 TRIPS Agreement, have muted
differences in substantive patent, trademark, and copyright norms. Under the Berne
Convention, copyrights arise simultaneously in all 163 (as of December 2007) member States.
Furthermore, trademark and patent rights holders are increasingly relying on central
prosecution of their applications through the Madrid Protocol, the Patent Cooperation Treaty
(PCT), and the European Patent Convention (EPC). These parallel rights will often present
the courts with substantially the same issues in each State of registration.
This Project is of a piece with other international developments. With the adoption by
the World Trade Organization of the TRIPS Agreement, international approaches to various
aspects of intellectual property law, including piracy and famous marks, are converging. By
the same token, negotiations continue on harmonizing elements of patent law in order to
facilitate consolidated worldwide patent examination. Regional agreements on aspects of
intellectual property protection abound. The private sector is also finding its own global
solutions through mergers among intellectual property holders, the creation of patent pools
and standard-setting organizations, and resort to arbitration as well as choice-of-law and
choice-of-court clauses. The emergence of multijurisdictional law firms greatly facilitates
client representation in this new era.
Other projects at The American Law Institute evince similar interests in developing
modes of international cooperation in dispute settlement. The Transnational Insolvency
Project reflects the need to preserve the value of assets located in NAFTA members with a
mechanism for managing multinational bankruptcy cases; the ALI/UNIDROIT Principles of
Transnational Civil Procedure foster harmonization of the rules for resolving multinational
commercial disputes; and the recently adopted ALI Project on the Recognition and
Enforcement of Foreign Judgments: Analysis and Proposed Federal Statute proposes, as its
name suggests, a new law for enforcing foreign judgments in the United States. See generally
Conrad K. Harper, Foreign and International Law in The American Law Institute, The ALI
Reporter (Fall 2001).
Congruent developments are occurring abroad. The International Law Association
Committee on Civil and Commercial Litigation issued two reports on methods of streamlining
parallel litigation, one on Provisional and Protective Measures in International Litigation
(1996) and the other on Declining and Referring Jurisdiction in International Litigation
(2000). For over a decade, the Hague Conference on Private International Law worked on
problems of jurisdiction and recognition of judgments in multinational cases. In 1999, this
work yielded a Draft Convention on Jurisdiction and Foreign Judgments in Civil and
Commercial Matters (hereinafter Hague Judgments Draft). For commentary on and text of
this proposal, see Peter Nygh & Fausto Pocar, Report of the Special Commission on
Jurisdiction and Foreign Judgments in Civil and Commercial Matters (Aug. 2000), available
at http://www.hcch.net/upload/wop/jdgmpd11.pdf (last visited Jan. 3, 2008). When this Draft
failed to attract broad support, the Conference shifted course, producing an agreement limited
to adjudications based on choice-of-court agreements in business-to-business contracts; see
Hague Convention on Choice of Court Agreements, June 30, 2005, 44 I.L.M. 1294, available
at http://www.hcch.net/index_en.php?act=conventions.text&cid=98 (last visited Jan. 3, 2008)
(hereinafter Hague Convention on Choice of Court Agreements).
Within the intellectual property community, the International Association for the
Protection of Intellectual Property (AIPPI) has recognized the need for a fairer and more
efficient method of resolving so-called “cross-border” cases, and has adopted a Resolution
proposing approaches to jurisdiction, choice of law, and enforcement of judgments that are
generally consistent with these Principles. See AIPPI, Resolution, Question Q174—
Jurisdiction and Applicable Law in the Case of Cross-border Infringement of Intellectual
Property Rights (Oct. 25-28, 2003), available at
http://www.aippi.org/reports/resolutions/Q174_E.pdf (last visited Jan. 3, 2008) (hereinafter
AIPPI, Q174 Resolution). The Max Planck Institutes for Intellectual Property (Munich) and
for Private International Law (Hamburg) are also working on an International Convention on
Jurisdiction and Enforcement of Judgments, which deals with many of the same issues that
are raised here. See European Max-Planck Group for Conflict of Laws in Intellectual
Property, Exclusive Jurisdiction and Cross-Border IP (Patent) Infringement: Suggestions for
Amendment of the Brussels I Regulation, [2007] EIPR 195. For more on the background of
the project, see Rochelle C. Dreyfuss and Jane C. Ginsburg, Draft Convention on Jurisdiction
and Recognition of Judgments in Intellectual Property Matters, 77 Chi-Kent L. Rev. 1065
(2002). For a singularly prescient analysis, see John R. Thomas, Litigation Beyond the
Technological Frontier: Comparative Approaches to Multinational Patent Enforcement, 27
Law & Pol’y Int’l Bus. 277 (1996).
This internationalist perspective informs the Principles. They occasionally depart from
standard expressions found in U.S. law because they are addressed to an audience that
includes lawyers and lawmakers from different analytical traditions who are accustomed to
different nomenclature and categories.
The internationalist perspective also requires the Principles to envision a future in which
coordination among courts evolves from the exceptional to the expected. This
forward focus distinguishes the Principles from some current positive law. For example, two
recent decisions of the European Court of Justice interpret the Brussels Convention on
Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, Sept. 27,
1968, 1972 O.J. (L 299) 32 (now Brussels Regulation on Jurisdiction and Enforcement of
Judgments in Civil and Commercial Matters (EC Regulation No. 44/2001)) to prohibit the
aggregation of parties or the consolidation of multiple patent claims. See Case C-593/03,
Roche Nederland BV v. Primus, [2007] F.S.R. 5; Case C-4/03, Gesellschaft für
Antriebstechnik mbH & Co KG v Lamellen und Kupplungsbau Beteiligungs KG, [2006]
F.S.R. 45. Further, the U.S. Federal Circuit has also refused to permit consolidation of
multiple patent infringement claims. See Voda v. Cordis Corp., 476 F.3d 887 (Fed. Cir.
2007). Similarly, the Hague Convention on Choice of Court Agreements excludes all disputes
involving the validity of registered intellectual property rights. Other developments in the
European Community may also perpetuate an atomized approach to international intellectual
property litigation: Regulation (EC) No. 864/2007 of the European Parliament and of the
Council of 11 July 2007 on the Law Applicable to Non-Contractual Obligations (Rome II),
available at http://eur-
lex.europa.eu/LexUriServ/site/en/oj/2007/l_199/l_19920070731en00400049.pdf (last visited
Jan. 3, 2008), prohibits the parties from choosing the law applicable to an infringement action
involving noncontractual obligations; see id. arts. 8(3), 13.
The incessant pan-national evolution of commerce and communications nonetheless
calls into question the present realities on which those outcomes repose. Indeed, their
territorialist impulse is already in tension with the WTO commitment to a globalized
marketplace in which intellectual goods move freely. The objectives of international trade
may be achieved both through harmonizing substantive intellectual property law and by
facilitating international adjudication. The free movement of goods propels the free
movement of disputes and judgments: emerging conditions call for a mechanism for effective
international coordination and recognition of judgments. The Principles address the related
components of an action, from choice of court to choice of law through to enforcement of
judgments. By ensuring that neither the exercise of judicial power nor the designation of
applicable law is exorbitant, the Principles endeavor to eliminate the problems underlying the
current skepticism regarding discrete proposals to simplify multinational litigation.
This is not to suggest that the Principles, if adopted at all, must be implemented in their
entirety; national authorities may in fact find the approach of particular Sections, such as the
provisions on personal jurisdiction and/or choice of law, distinctly conducive to local
realization, yet hesitate today to embrace every recommendation. While their overarching
conceptualization distinguishes the Principles from earlier attempts to respond to new needs
for international intellectual property adjudication, even piecemeal implementation can
contribute importantly toward efficient and effective international dispute resolution.