[Hague-jur-commercial-law] Washington Internet Daily: Intellectual Property Issues Continue to Roil Treaty Talks

[Thiru Balasubramaniam]

<SNIP>

E-Commerce Off Front-Burner

Intellectual Property Issues Continue to Roil Treaty Talks

Intellectual property (IP) issues continue to irk, as delegates begin 
pushing to complete a draft Hague Conference
treaty aimed at harmonizing jurisdiction over and enforcement of 
judgments in cross-border civil cases.
With a diplomatic conference set for June 14-30 in the Hague, the U.S. 
Secy. of State’s Advisory Committee on
Private International Law has set a March 29 meeting to seek feedback 
from industry, trade associations, bar associations
and nongovernmental organizations on the draft’s IP provisions. European 
Union member states are consulting
one another on IP and other aspects of the treaty.

Though the draft treaty has been narrowed to cover only 
business-to-business choice-of-law contracts, IP
issues remain “pretty complex,” a source close to the negotiations said 
last week. The latest version covers copyright
and related rights as well as infringement proceedings. A controversial 
passage addresses otherwise-excluded
IP rights if raised incidentally. An example would be when, in 
litigation over royalty payments under a license, a
defendant claims the licensed IP right was invalid, the source said. 
“Getting everyone to agree in principle and to
accept the drafting is hard in the extreme,” the source said.

A key issue still unresolved for consumer groups is the draft’s 
treatment of the “first sale doctrine,” said
Manon Ress of the Consumer Project on Technology (CPT). The first sale 
doctrine is essential for library lending
rights, rental rights in video stores and 2nd-hand sale of books, she 
said. Large corporations often try to use contracts
to curb resale of goods; over time, national policies vary on such 
provisions’ enforceability. The Hague proposal
generally would make exclusive choice-of-court provisions mandatory; 
consumers want to ensure that it
doesn’t change global policy on the first sale doctrine, Ress said.

The treaty would be “a big help for forum shopping,” Ress said. By 
separating some aspects of IP disputes,
the treaty would make sure litigation over the validity of all 
noncopyright-registered rights -- such as patents --
would always take place in the country in which those rights are 
registered, unless they were “incidental” to the
main litigation. But lawsuits over infringements, the scope of a 
particular claim or the fairness of a contract would
be in foreign courts, with stiff enforcement measures for foreign judgments.

E-commerce issues “are not on the front burner anymore” since 
negotiators limited the treaty’s scope, but
there remains some sensitivity about take-it-or-leave it contracts -- 
such as shrinkwrap agreements for software, an
issue that heightens interest in the grounds under which a choice of 
court clause can be enforced or not -- said a
source close to the negotiations.

In Europe, there’s enthusiasm for keeping online click-through and 
shrink-wrap contracts in the treaty, a
European Commission (EC) official responsible for the treaty file told 
us. A larger question is how to guarantee
that such contracts treat both parties fairly, an outcome negotiators 
have tried to assure via provisions dealing with
whether an agreement is legally valid, the official said.
European consumer groups smart at including shrinkwrap and other 
agreements in the treaty but can live
with it, since the revamped treaty specifically excludes 
business-to-consumer contracts, the official said. However,
he said, problems remain with the convention’s definition of “consumer.” 
Consumer groups want the same definition
as European instruments use, to ensure that a definitional gap doesn’t 
set up agreements made by consumers to
come under the treaty, the official said.

Following a Jan. 31 public hearing on the proposed convention, the EC 
began “coordination meetings” with
member states. One took place March 3; another set for the 17th will be 
the final formal powwow before the diplomatic
conference. The EC is “gauging the views of member states” as it crafts 
a position on the treaty, the official
MONDAY, MARCH 14, 2005 WASHINGTON INTERNET DAILY—5
said, but has its own mandate on how to