[Hague-jur-commercial-law] Press on The Hague Special Commission Meeting Dec1-9, 2003

[Manon Ress]

Warren's Washington Internet Daily
Wednesday December 10, 2003
Vol. 4, No. 237

[SNIP]

E-Commerce Disputes

Talks on Intellectual Property Issues To Resume Next Year

Intellectual property (IP) issues remained unresolved Tues. as delegates 
at Special Commission of the
Hague Conference on Private International Law meeting scurried to find 
common ground on a treaty aimed
at harmonizing jurisdiction in e-commerce contract disputes. As the 
session ended, the question whether IP
rights other than copyright should be covered by the 
business-to-business, choice of court convention on jurisdiction
and foreign judgments in civil and commercial matters was, with other 
issues, held over until a
later session in March or April. Despite the failure to reach accords on 
IP and other provisions of the draft
treaty, both industry and consumer participants agreed progress was made.

Also left open in the latest draft, which emerged late Tues. afternoon 
in Europe, were such issues as: (1)
Whether a particular country’s court should be able to hear a case 
involving an incidental question related
to a patent or trademark when that country wasn’t where the patent or 
trademark was granted. (2) Disconnection.”

In its current incarnation, the draft excludes proceedings involving the 
validity of patents and trademarks
as well as that of other IP rights whose validity arises from their 
registration, except copyright. However, it
covers cases where those matters arise merely as an incidental question. 
Verizon, part of the trademark
community, isn’t happy about the prospect of having an incidental 
question which hasn’t been defined
adequately heard by a court in a country that didn’t grant the mark, 
said Sarah Deutsch, Verizon vp-assoc.
gen. counsel.

European delegates have pressed for language that would allow the 
Brussels Regulation on jurisdiction to
override any global Hague treaty, IT Policy Solutions Chmn. Marc Pearl 
said. He is an e-commerce expert
for the U.S. delegation. For reasons they have yet to explain fully, 
Pearl said, Europeans want their residents
not to be covered under the provisions of the convention. If a U.K. 
company sues a German business under
a contract which has a choice-of-court clause proposing Belgium, the 
European Union (EU) wants decisions
surrounding choice to be governed by the Brussels Convention, not Hague, 
Pearl said. But what about a
U.S. company with a Portuguese branch office that entered into a 
contract with an Italian company with a
U.S. choice-of-court clause? Pearl asked. Would the EU say that because 
the contract essentially involved
the Portugal office’s operation, the choice of court clause is null and 
void and that the dispute must be heard
in an EU court? The disconnection issue must be dealt with before going 
forward, he said.

The new draft won’t assuage many of the concerns expressed by ISPs and 
e-commerce companies in an
open letter to Hague delegates recently. There, they complained about 
the earlier version of Articles 3 and 6.
Article 3 formerly stated that the form of a choice-of-court agreement 
would be valid if it were entered into.
(1) In writing or by any other means of communications which renders 
information accessible so as to be
usable for subsequent review. (2) Orally and evidenced in writing or by 
any other means of communication
which renders information accessible so as to be usable for subsequent 
reference. (3) In accordance
with a usage which is regularly observed by the parties to the 
agreement. (4) In accordance with a usage
which the parties to the choice of court agreement knew or ought to have 
known and which is regularly observed
by parties to contracts of the same nature in the particular trade or 
commerce concerned.

The groups, which included the Computer & Communications Industry Assn., 
NetCoalition, Internet
Commerce Coalition, U.S. Internet Industry Assn., and U.S. Internet 
Service Provider Assn., told delegates
that Article 3 could be read to subject Internet service providers 
whether traditional ISPs, libraries or
universities to extensive liability in foreign courts under 
choice-of-court agreements they have never seen
and to which they never assented. ISPs routinely transmit, store and 
handle billions of packets of digital information
for 3rd parties, the groups said, some of which could contain provisions 
amounting to a
choice-of-court provision. Although the ISP never sees the agreement and 
never assents to it, they said, it
may well be in a form that is ‘accessible so as to be usable for 
subsequent reference.’

The Tues. draft reads: An exclusive choice-of-court agreement must be 
entered or evidenced (a) in writing;
or (b) by any other means of communications which renders information 
accessible to as to be usable
for subsequent reference. While the worrisome provision about usage the 
parties knew or should have
known about has been stricken, Deutsch said, the phrase any other means 
remains unacceptable to ISPs.
Copyright management information is a form of hidden code ISPs never 
see, much less assent to, she told us.
Moreover, she said, the draft still is silent on what agreement means. 
Parties aren’t bound to a contract until
they agree to it, she said. Simply because information is accessible 
doesn’t mean ISPs have read it,
Deutsch said especially when it’s code buried in packets traveling on a 
network.

ISPs also are bothered by Article 6, which is unchanged in the new 
version. It would allow parties to request,
and courts to grant, provisional and protective measures on an interim 
basis. The point of the convention
is to increase business certainty in cross-border contracts, Deutsch 
said. Allowing parties to seek temporary
help from courts distinct from those specific in a contract encourages 
forum-shopping, she said. As an
example, she said, U.S. courts won’t grant broad injunctions against 
ISPs because injunctive relief is given
only after a 4-part test is met, and because the Digital Millennium 
Copyright Act shields ISPs. But courts in
other countries without such safeguards could impose sweeping orders 
against ISPs, she said, particularly if a
proposed EU directive toughening IP enforcement laws were adopted.

Consumer groups, which worry about a possible imbalance of power between 
large e-commerce companies
and individuals who are forced into shrink-wrap contracts online, 
criticized language that would allow a
court other than the one chosen by agreement to take jurisdiction if 
giving effect to the contract would “lead
to very serious injustice. One thing consumer groups have in common with 
the trademark community, said
Manon Ress, of Essential Information, is thinking that the escape 
clause... is bizarre: refusal [of a court to
honor a choice-of-court clause] is if it leads to a ‘very serious 
injustice... And of course the implication is
that serious injustice or injustice is okay only very serious would count!

Despite delegates’ failure to reach consensus on some of the hotter 
issues, both Ress and Pearl said the
meeting went well. The tenor was excellent, Pearl said, and the work and 
discussion fruitful. The EU, he
said, was showing enormous flexibility while all the member states 
participated in the talks. The U.S. delegation
floated some thoughtful ideas on damages, IP and incidental questions 
that delegates didn’t reject
out of hand, Pearl said. The Russian Federation actively participated 
for the first time.

The dynamic is different from the June 2001 drafting session (which 
produced what some considered a
bloated, controversial document), Ress said. Delegates compromised and 
wanted things done. The European
Commission (E.C.), Japan, Russia and New Zealand joined in a proposal. 
The U.S. did well in many areas,
she said, but it will come down to the disconnection clause with the 
E.C. We won a few battles but not the
war.

The next Special Commission meeting is set for either March 3-9 or April 
20-29, Ress said. There will
be a diplomatic conference on the treaty either Oct. 18-Nov.3 or in Dec. 
2004, she said.

Dugie Standeford

-- 
Manon Anne Ress
Consumer Project on Technology
www.cptech.org
PO Box 19367, Washington, DC 20036
manon.ress@cptech.org, voice: 1.202.387.8030, fax: 1.202.234.5176