Table of Contents
A. Introduction: Rationalising the Treaty Origins of International IP Law 122
B. Difficulties in Identifying Custom in International IP Law 128
C. The State’s Right to Regulate as a Rule of Customary International Law 131
D. Should International IP Treaties Recognise an Inherent Right to Regulate? 139
E. Conclusions 154
A. Introduction: Rationalising the Treaty Origins of International IP Law
Based on the principal notion of territoriality, the protection of intellectual property (IP) rights is effected by – and hence in the end remains a matter of – domestic law. Usually, the relevant law is that of the country for whose territory protection is sought. In order to ensure protection for their domestic IP owners abroad, states have essentially relied on an increasingly dense network of international agreements that commit the contracting parties to, for example, treat foreign IP owners no less favourably than domestic parties and to provide defined minimum standards of protection and enforcement of IP rights. In that sense, international IP protection is an area of international law that is primarily governed by treaties, which are agreements between states. Other sources of international law, set out in Article 38 of the Statute of the International Court of JusticeFootnote 1 – in particular, ‘international custom, as evidence of a general practice accepted as law’ and ‘the general principles of law recognised by civilized nations’ – have received little attention in the context of protecting IP rights beyond borders.
In their treatise, Abbott et al. observe that sources other than treaty law ‘have been of much less importance to the international IPRs system than to the classical domains of international law’ – to an extent that ‘the link between international IP law and the full body of international law has not been fully established’.Footnote 2 Retracing the history of early international agreements on IP protection, Dinwoodie et al. remark that ‘in the milieu of the nineteenth century international system, positive international law gained its readiest expression in the form of treaties between nation states’.Footnote 3
The focus on treaties as a clear and positive expression of law between states thus seems an obvious one for IP. The principal rationale was to achieve concrete commitments to protect, usually in defined ways by means of exclusive rights operating between private parties for specific types of intangible assets abroad. Arguing for the existence of an unwritten custom that requires such protection, derived from general state practice that had been accepted as law, appears difficult to sustain even todayFootnote 4 and would have been much less convincing in the nineteenth century. In light of the significantly diverging national laws on IP protection (with several countries not granting key rights such as patents at all),Footnote 5 one would have been unable to offer evidence for sufficiently general state practice in the protection of different types of IP rights – let alone being able to show that any such practice of protection was undertaken on the basis of a sense of legal obligation, under international law, to do so. Similarly, basing one’s demands for concrete and effective forms of protection (such as the notion of priority rights, a cornerstone of the Paris Convention of 1883)Footnote 6 on general principles of law recognised among states would have equally been a futile exercise.
It was this demand from IP owners for concrete and specific forms of protection for their intangible assets – such as inventions, indicators of origin, industrial designs and literary and artistic works – that required international agreements, which were the only feasible tool for fast and precise law creation on the international plane. And once IP protection beyond borders had been designed as a treaty-based system from inception, its ‘highly specialised and contained’ nature and the lack of interest from general international lawyers were argued to be contributing factors for the widespread disregard for other (usually more generalist) sources of law within the domain of international IP law.Footnote 7 In addition, the private law origins of IP protection on the domestic plane made engagement with broader public international law doctrines and principles much less inevitable than in related fields, such as international investment law.Footnote 8 At the domestic level, distinct from the protection of the property of aliens against state interferences, IP law essentially operates in the form of private rights, applicable primarily between private parties.
While therefore the origins of international IP protection are essentially (if not solely) treaty-based, this growing field over time has coincided with other areas of international law, including those based on custom. In particular, with the integration of IP as one of the three pillars of trade regulation in the World Trade Organization (WTO) and by subjecting IP to WTO dispute settlement, questions of treaty interpretation, dispute settlement and compliance began to receive an increasing amount of attention from experts in IP, trade and public international law.Footnote 9 Based on the invitation in Article 3(2) of the WTO Dispute Settlement Understanding (DSU), WTO adjudicators and commentators have explored how the ‘customary rules of treaty interpretation of public international law’ operate in relation to the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement and the prior conventions it incorporates by reference.Footnote 10 However, this debate has not ended with an engagement with custom, as codified in Articles 31–33 of the Vienna Convention on the Law of Treaties (VCLT).Footnote 11 Due to the WTO rules on dispute settlement, compliance and cross-retaliation, questions of state responsibility and in particular countermeasures Footnote 12 – for example, via attempts by several countries to suspend their TRIPS obligations to ‘enforce’ favourable WTO rulings – have become part of international IP law. Of course, in the WTO context, and generally also in relation to free trade agreements (FTAs) if they contain an IP Chapter and subject its obligations to dispute settlement, these questions are primarily addressed via treaty law, namely the DSU (and FTA dispute settlement provisions). However, WTO Panels and the Appellate Body have resorted to the underlying customary international law rules on state responsibility in order to clarify and interpret WTO treaty law where necessary.Footnote 13 And where treaty-based dispute settlement systems are not available, Sam Ricketson has rightly pointed to customary international law on countermeasures against a material breach as the potential basis for member states of the Paris or Berne Union to react to instances of non-compliance with commitments under the conventions.Footnote 14
An initial analysis therefore suggests that while the international law – which contains the principal commitments to protect the inventions, indicators of origins, industrial designs or literary and artistic works – is treaty law, the interpretation, application and enforcement of that law has been informed by other areas of public international law. Such areas include those governed by custom (whether predominantly or to a lesser extent). Many of these interfaces remain to be explored more fully,Footnote 15 but this chapter does not offer the space for a comprehensive review of all aspects of customary international law relevant for IP protection beyond borders.
The following sections focus on the customary right to regulate and its interface with treaty commitments to protect IP rights. However, first, an additional example of a well-known customary rule and its reception in the IP context shall suffice to show the complex interplay of treaty and customary rules that is likely at play in the context of international IP law. Even though set out in Article 26 VCLT, the principle of pacta sunt servanda emanates from custom.Footnote 16 In the TRIPS Agreement, it has found general expression in the very first sentence of its first Article: ‘Members shall give effect to the provisions of this Agreement.’ Article 1(1) 3rd sentence qualifies this by leaving members ‘free to determine the appropriate method of implementing [TRIPS] within their own legal system and practice.’ This interplay of custom and its reception – as well as qualification – in IP treaties can also be found in Part III of TRIPS on IP enforcement. Here, Article 41(5) TRIPS adds further clarification on what is not owed by members (including in terms of specific IP courts, law enforcement in general and the distribution of resources for IP enforcement). Article 41(1) otherwise reiterates the pacta sunt servanda rule by demanding that ‘Members shall ensure that enforcement procedures … are available under their law so as to permit effective action against any act of infringement’ of IP rights covered by TRIPS.Footnote 17
Altogether, this example reveals a complex interplay between general and specific treaty rules, underpinned by general principles emanating from customary international law – a scenario where the latter is not necessarily completely superseded by treaty law, but where custom may well serve an important role in informing the proper interpretation of the individual treaty provisions. As the following discussion on the right to regulate shows, one can derive important conceptual, systemic and normative insights from contextualising IP treaty law within its relevant broader international law environment, including customary law.
With these initial considerations on the role of custom and its relation to treaties in the context of international IP law in mind, this chapter proceeds as follows. Section B looks at the difficulties in identifying customary international law, in particular in relation to (primary) commitments on the protection of IP rights beyond borders – while pointing to the sometimes neglected but important role of custom in relation to the (secondary) principles and rules about the interpretation and enforcement of, as well as general public interest defences relating to, IP protection commitments.
Using the customary ‘right to regulate’ as an example, Section C then explores the contours and limits of this right in the context of international investment law. Section D considers whether – and if so, how – this right applies to treaty commitments in relation to the protection of IP rights. It does so by reviewing the potential operational scope of such a customary right the context of international IP law (subsection I); by then asking the question as to whether states have contracted out of this customary right when entering into IP treaties (subsection II); and by identifying the contours of this right in the specific context of the WTO–TRIPS Agreement (subsection III). Section E concludes with some broader observations on the role of customary international law for IP protection beyond borders and the politics and consequences of not properly accounting for custom.
B. Difficulties in Identifying Custom in International IP Law
Custom derives its status as law from a common practice among states, backed by their volition – or at least cognition – regarding the legal (rather than ethical, moral, political or courteous) nature of that practice.Footnote 18 The essence of custom brings with it inherent difficulties. Any serious analysis on customary international law needs to begin with a careful scrutiny as to whether a particular rule, set of rules or principle of custom actually exists and what exactly its content is. Discussing a possible role for custom in international IP law therefore faces the foremost challenge of identifying custom – which essentially involves an empirical exercise of establishing a general practice of states, undertaken with a sense of legal right or obligation.Footnote 19 This methodological ‘two element approach’ – which applies uniformly to all areas of international law – requires one to assess (1) whether there is general practice between states and (2) whether that practice is accepted as law.Footnote 20
The 2018 Draft conclusions of the International Law Commission (ILC) offer instructive guidance on this assessment: for example, that state practice can take many forms, involving all types of state organs; and it must be general, in the sense of being ‘sufficiently widespread and representative, as well as consistent’.Footnote 21 If that is the case, no specific duration is required, and the assessment is relative – that is to say, the required spread and consistency depend on the specific context.Footnote 22 Under the second constituting element, the state practice so identified must be accepted as law (opinio juris), meaning that ‘the practice in question must be undertaken with a sense of legal right or obligation’.Footnote 23 Therefore, general practice must be accompanied by a conviction among states ‘that it is permitted, required or prohibited by customary international law’ – which must be shown in relation to states engaging in the relevant practice as well as those in a position to react to it.Footnote 24
Finally, the ILC Conclusions 11 and 12 offer important guidance on the role of treaties and resolutions of international organisations or intergovernmental conferences in providing evidence for determining the existence and content of custom. As the discussion in this chapter will come back to this topic in greater detail, it suffices to say here that a rule set out in a treaty can serve as evidence for its customary international law status (in terms of codifying, crystalising or giving rise to custom), in particular when that rule is reflected in various agreements between states.Footnote 25 In order to distinguish appropriately between custom and treaty law, it is essential to show that states not only act in accordance with the rule because of the pacta sunt servanda principle but also because they feel that it represents a rule of custom.Footnote 26 (Here, of course, ‘states’ crucially includes those non-parties to the treaty.) Similarly, a provision in a resolution can reflect customary international law, but it cannot, in itself, create custom without being backed by general state practice and opinio juris.Footnote 27
Considering the ILC guidance for our question of custom and IP protection beyond borders, one might usefully pick up the distinction made above between (1) the (primary) norms concerning the protection of IP rights, and (2) the (secondary) principles and rules related to the interpretation and enforcement of IP protection commitments. On (1), the question is then whether it is possible to identify customary rules that oblige countries to protect an IP right in a particular way. In other words, have certain minimum standards of IP protection gained the status of customary rules in international law? On the one hand, one might think of some of the core principles of the international IP system, such as the obligation to offer foreign right holders national treatment. While this question is not examined in full detail here, several arguments speak against a customary national treatment rule: first of all, state practice in relation to newly evolving IP rights that are not covered by an IP treaty (such as a right for database makers or press publishers) shows no widespread, let alone consistent, approach to granting such rights to foreigners.Footnote 28 And while of course almost all countries offer national treatment in relation to copyright, trademarks, patents, industrial designs and other IP rights that are internationally common, there is no evidence that this protection against discrimination is not solely because of the respective treaty commitments in the Paris and Berne Conventions as well as TRIPS. In fact, recent FTAs which add to the national treatment clauses in those IP treaties by clarifying that, for example, legal protection for technological protection measures (TPMs) and digital rights management (DRM) systems falls within the notion of ‘protection’ of copyright, and hence within the scope of the national treatment principle, show that states still consider treaty rules in this area to be necessary.Footnote 29 A further argument against considering national treatment as part of custom follows from the fact that protection of foreign investors and their proprietary assets against discrimination is commonly seen as a treaty standard and not part of custom in international investment law.Footnote 30
In light of the arguments above, identifying a rule of custom to protect IP rights will face a steep uphill battle of showing evidence of general practice that is accepted as law. For the time being, the flurry of new treaties’ rules on IP protection (primarily set out in IP Chapters of FTAs) is not likely to change this situation. While one might see some degree of convergence of IP protection standards in FTAs (for example in relation to test date exclusivity rules, the protection of TPMs and DRMs, or TRIPS-plus border measures or criminal sanctions in IP enforcement), such convergence at best indicates the future prospect for consolidation of these standards on the multilateral treaty level. There is no evidence that those states who are willing to commit to these IP protections in FTAs are doing so because they deem providing such protection to foreign IP owners to be something owed in the absence of the treaty rule.
An example from the China – IPRs dispute shows that a WTO Panel was not even willing to consider various FTA provisions concerning criminal sanctions for IP infringements on a ‘commercial scale’ as subsequent interpretative practice under Article 31(3)(b) VCLT, which would – akin to custom – establish an agreement of the parties, here regarding the interpretation of Article 61 TRIPS.Footnote 31 If common provisions in an FTA do not, in the view of the Panel, meet the standard of a ‘common, consistent, discernible pattern of acts or pronouncements’ among WTO members,Footnote 32 they certainly cannot be considered custom among all states.
In sum, showing the emergence – let alone existence – of a customary international law rule with regard to an obligation to protect IP rights of foreigners in a particular way is not likely to be a very successful undertaking. The following analysis thus focuses on point (2) of the distinction made above, namely to identify custom in relation to the (secondary) principles and rules related to the interpretation and enforcement of IP protection commitments. As already explained, this is straightforward for the ‘customary rules of interpretation of public international law’ which Article 3(2) DSU instructs WTO adjudicators to rely on in clarifying the provisions in WTO Agreements, including TRIPS.Footnote 33 And with regard to customary rules relating to dispute settlement and compliance, especially those on state responsibility deserve further scrutiny for their role relating to IP protection beyond borders.Footnote 34 However, perhaps the most relevant aspect of custom concerns the justifications or defences that a state may rely upon to limit the protection of IP rights in the public interest. It is this question about a customary right to regulate and its application in the context of international IP law to which this chapter now turns.
C. The State’s Right to Regulate as a Rule of Customary International Law
A useful starting point for appreciating a state’s customary right to act in the public interest is the protection of aliens (especially against injuries to their property) as part of customary international law. Initially in the form of general international law on all forms of protection available to foreign legal and natural persons in the host state, the so-called international ‘minimum standard of treatment’ (MST) has developed as the core substantive protection for foreign investors based on custom.Footnote 35 While ambiguity and controversies over the contours of the MST led especially capital-exporting states to demand treaty-based protection via international investment agreements (IIAs), the often expansive protections afforded under these treaties by investor-state dispute settlement (ISDS) tribunals have resulted in a push-back by states, including by means of more concrete and narrow determinations of protection standards – including the MST.Footnote 36
Another expression of the ‘return of the state’Footnote 37 comes in the form of explicit recognition and concretisations, in IIAs as well as in ISDS awards, of a state’s right to regulate in the public interest, also referred to as ‘police powers’.Footnote 38 That right is thus not about customary protection of aliens and their property but the limits commonly accepted to such protection, based on the underlying notion of state sovereignty.Footnote 39 As the discussion below further indicates, this foundation of the right to regulate makes it particularly apt to limit not only customary but also treaty-based protections of investors and their assets.
Within its principal operational context of international investment law, the right to regulate (or ‘police powers’ doctrine)Footnote 40 has been accepted as forming part of custom.Footnote 41 Various forms of state practice, often backed by express opinio juris, are commonly cited in support of this proposition,Footnote 42 such as the provisions on expropriation in Annex B to the US Model BIT (2012), which are meant to mirror custom. The annex begins by emphasising that the parties understand that the substantive rules of BIT on expropriation are ‘intended to reflect customary international law concerning the obligation of States with respect to expropriation’; it then clarifies that ‘[e]xcept in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations’.Footnote 43 Essentially identical text on the type of regulatory measures excluded from the notion of expropriation can be found in Annex 9-B on Expropriation in the CPTPP, and very similar formulations exist, for example, in the Canadian Model BIT,Footnote 44 the CETA,Footnote 45 the Indian Model BIT,Footnote 46 and Article 5(3) of the China – Turkey BITFootnote 47 and Article 20(8) of the COMESA Investment AgreementFootnote 48. As early as 1961, the Harvard Draft Convention on the International Responsibility of States for Injury to Aliens excluded from wrongfulness ‘[a]n uncompensated taking of property of an alien or a deprivation of the use or enjoyment of property of an alien which results from … the action of the competent authorities of the State in the maintenance of public order, health, or morality’. This was subject to further conditions, such as non-discrimination, due process and non-arbitrariness.Footnote 49
Recent agreements such as CETA also show that the right to regulate is not limited to the expropriation standard.Footnote 50 And outside the specific investment law context, one can point to Article 1 of the 1st Protocol to the ECHR, which emphasises that the human rights’ protection of property ‘shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.’ While not all of these treaty provisions on the right to regulate make express reference to customary international law, they generally appear to reflect widespread and representative state practice. That remains true even if one might question whether this (treaty) practice is sufficiently consistent with regard to all contours of the right and can always be considered as being undertaken with a sense of a legal right beyond the treaty in question.Footnote 51
A significant number of ISDS awards have also referred to the right to regulate and have frequently based its existence on customary international law, even where the applicable IIA does not contain a reference to that right. As this chapter cannot engage in a full review of ISDS cases on this topic, it is appropriate to focus on the main IP-related investment dispute where the right to regulate was invoked.
In Philip Morris v. Uruguay, the tribunal had to rule on claims that the host state’s regulations, which in various ways limited the use of brands on tobacco packaging, constituted a breach of expropriation and fair and equitable treatment (FET) provisions in the Uruguay–Switzerland BIT.Footnote 52 Uruguay countered that its measures had been designed to protect the public health of its citizens. The tribunal recognised that while the Philip Morris (PM) trademarks constitute a protected investment, neither under domestic law nor under applicable international (IP) treaties does the investor ‘enjoy an absolute right of use, free of regulation – but only an exclusive right to exclude third parties from the market so that only the trademark holder has the possibility to use the trademark in commerce, subject to the State’s regulatory power’.Footnote 53
On the expropriation claim, the tribunal held that not only had PM failed to show that there was a substantial deprivation of its protected investment (as there was no significant economic loss suffered in consequence of the tobacco packaging measures), but importantly also that ‘the adoption of the challenged Measures by Uruguay was a valid exercise of the State’s police powers, with the consequence of defeating the claim for expropriation under Article 5(1) of the BIT.’Footnote 54 Explaining that ‘[p]rotecting public health has since long been recognized as an essential manifestation of the State’s police power’,Footnote 55 the tribunal then systemically integrated the customary right to regulate into the investment protection provisions of the BIT. Even though these treaty provisions are not explicitly subject to the state’s police powers, an interpretation based on Article 31(3)c) VCLT allows for importing such powers from customary international law.Footnote 56 Those powers include a right to protect public health as a specific expression of a general right to regulate, which allows states to protect the public interest if the measures are ‘bona fide actions for the purpose of public welfare’. In other words, they cannot be ‘arbitrary and unnecessary’ but must be ‘directed to the [public welfare] end’ and ‘capable of contributing to its achievement’.Footnote 57 The tribunal found Uruguay’s tobacco packaging measures to meet these requirements and, as elaborated further in relation to the FET claim, highlighted the ‘margin of appreciation’ which regulatory authorities of the host state enjoy when making public policy determinations.Footnote 58 The tribunal continued that, as a matter of principle,
[t]he responsibility for public health measures rests with the government[,] and investment tribunals should pay great deference to governmental judgments of national needs in matters such as the protection of public health. In such cases respect is due to the discretionary exercise of sovereign power, not made irrationally and not exercised in bad faith … involving many complex factors.Footnote 59
In its analysis, the tribunal refers to a range of further ISDS decisions which have, in various ways, recognised the right to regulate. For example, the tribunal in Saluka v. Czech Republic stated:
It is now established in international law that States are not liable to pay compensation to a foreign investor when, in the normal exercise of their regulatory powers, they adopt in a non-discriminatory manner bona fide regulations that are aimed to the general welfare. … [T]he principle that the State adopts general regulations that are ‘commonly accepted as within the police power of States’ forms part of customary international law today.Footnote 60
In Tecmed v. Mexico, the tribunal went as far as claiming that ‘[t]he principle that the State’s exercise of its sovereign power within the framework of its police power may cause economic damage to those subject to its powers as administrator without entitling them to any compensation whatsoever is undisputable.’Footnote 61 And a tribunal established under North American Free Trade Agreement (NAFTA) Chapter 11 confirmed that ‘as a matter of general international law, a non-discriminatory regulation for a public purpose, which is enacted in accordance with due process and, which affects, inter alios, a foreign investor or investment is not deemed expropriatory’.Footnote 62
However, while other tribunals have taken a similar position,Footnote 63 there is also case law finding an expropriation, despite the measure being in support of a public welfare purpose. These cases often focus primarily on the detrimental effect of the measure on the investor’s assets.Footnote 64 Yet others have emphasised the limits of the right to regulate, in particular those which follow from specific obligations that states agreed to in an investment treaty.Footnote 65 In balancing the right to regulate with specific treaty commitments to protect foreign investors, some tribunals have adopted proportionality tests, at times informed by the approach of the ECHR,Footnote 66 which demand some reasonable relationship of proportionality between the means employed and the aim to be realised.Footnote 67 In El Paso v. Argentina, the tribunal’s balancing exercise considered whether ‘the interference with private rights of the investors is disproportionate to the public interest’Footnote 68 – thereby adopting an approach that is more closely aligned with the deferential test in PMI v. Uruguay, which leaves room for a ‘discretionary exercise of sovereign power’ and only reviews whether a decision taken in the public interest is ‘not made irrationally and not exercised in bad faith’.Footnote 69 Similar deferential approaches, at times specifically linked again to the notion of margin of appreciation adopted by the ECHR, have been adopted in relation to FET claims or other aspects of balancing international investment protection and the sovereign power of the state to regulate.Footnote 70
Retracing the nuanced differences in the case law, academic commentators refer to three lines of authority with regard to the method to draw a line between non-compensatory regulation and regulatory expropriation.Footnote 71 While there seems to be some convergence on the basic proposition that ‘[i]t is an accepted principle of customary international law that where economic injury results from a bona fide non-discriminatory regulation within the police power of the State, compensation is not required’,Footnote 72 various differences on the exact (and potentially additional) conditions as well as on scope of the right to regulate remain.Footnote 73 Different views also exist on the interpretative methods used to import the right to regulate as a customary principle (in whatever exact form) into the specific treaty context. A particular question here is whether references to public welfare and non-discrimination as requirements for the legality of (compensatory) expropriation in the treaty bar an interpretative integration of police powers in order to exclude certain public welfare-oriented and non-discriminatory measures from the notion of (indirect) expropriation altogether.Footnote 74 And while authors have generally recognised an increased tendency to resort to the concept of police powers, Titi for example cautions – in the words of the Tribunal in Saluka v. Czech Republic – that ‘international law has yet to identify in a comprehensive and definitive fashion precisely what regulations are considered “permissible” and “commonly accepted” as falling within the police or regulatory power of States and, thus, non-compensable’.Footnote 75
The overall picture that emerges from this necessarily brief review of state practice and opinio juris in recent investment treaties, the ISDS case law applying those treaties in light of what tribunals consider to constitute custom, and academic commentary hence is a somewhat blurry image of a right to regulate, the exact contours of which remain ambiguous. While its basic idea seems to receive increasing support from all sides, the scope and requirements of the right remain particularly elusive. Issues related to scope are: what type of public interests are covered and against which type of claims does the right apply? Issues related to the requirements include: subject to meeting which conditions exactly can the right be invoked? If the conditions include some sort of proportionality test, who decides on the balancing, and with what degree of deference to policy choices made by the host state? The answers remain unclear and are likely to differ depending on the specific (treaty) context. With this rather open assessment, the following section considers how this right might be invoked in the context of international IP treaties.
D. Should International IP Treaties Recognise an Inherent Right to Regulate?
Based on the proposition that – despite its ambiguous contours – the right to regulate ‘reflect[s] the position under general international law’,Footnote 76 the remainder of this chapter considers the role of the right for international IP law – in particular, whether it can operate as an (implicit) limitation to obligations to protect IPRs under international IP treaties such as the TRIPS Agreement. This, in turn, requires addressing at least the following questions: (1) with regard to international obligations of protecting IP, what is the scope of a right to regulate? This is not so much the open question on the exact conditions under which the right can be exercised (as that arguably depends on the individual treaty context) – but concerns, as discussed below, conceptual differences between investment and IP protection in international law. Depending on the so determined scope of the right, a key further question is (2) whether states bound by international commitments to protect IP have contracted out of the right to regulate by agreeing to international IP treaties, in particular TRIPS.
And finally, one needs to consider, in case the right to regulate has not been waived in full by entering into a specific IP treaty, (3) what actually is its (residual) content? In particular, if the conditions under which it is meant to be exercised involve the balancing of different interest (for example under some sort of a proportionality test), can this be decided by international adjudicators? Or does the implementing state retain some degree of discretion or margin of appreciation to which adjudicators have to defer? Since answering most of the above questions will depend on the specific IP treaty context, the following discussion simply sketches the broader analytical parameters within which the questions can be addressed. And since – at the time of writing – the principal forum for adjudicating disputes over international IP commitments is (still) the WTO dispute settlement system, the discussion uses TRIPS as the main example.Footnote 77
I. What Is the Operational Scope of a Right to Regulate in the Context of International IP Protection?
When considering how (if at all) the right to regulate applies in the context of international IP law, one needs to keep key conceptual distinctions between IP and investment protection obligations in mind. As I have discussed in more detail elsewhere, international investment law operates primarily a form of protection against a state interfering with the protected assets of foreign investors (in form of taking property, or treating its owner unfairly).Footnote 78 On the other hand, international IP law essentially obligates states to protect, by means of private rights, various forms of ‘creations of the mind’ as a specific type of intangible asset against unauthorised exploitation and use by third (usually private) parties.Footnote 79 In short: investment protection primarily operates within the vertical relations between a state and a foreign private party, whereas IP law regulates the horizontal relations between private parties. While the discussion below shows that this characterisation of the modes of protection in international investment and IP law is not absolute, the principal question that emerges from it is whether the right to regulate solely applies to measures where the state directly interferes with a protected asset. Or can it also be applied to the regulation of private rights between private parties?
As a basic proposition, one may argue that if the internationally recognised objective of IP rights and their protection is to promote public welfare aims,Footnote 80 then, as a matter of principle, the power of the state to regulate in the public interest continues to apply to at least the same extent – if not more – as when the state directly interferes with private property. Regardless of the endless debates about the purpose of IP protection, within the context of TRIPS, IP rights – even as private rights – are not an end in themselves (and hence not primarily for the benefit of IP owners) but serve as tools to balance the incentive to innovate with the need to maximise access to intangibles with a public good character.Footnote 81
Against this background, there is no argument of principle whereby the regulation of private party relations should be outside the scope of the state’s power to act in the public interest. The intangible nature of what domestic IP laws define as works, inventions, signs or other protectable subject matter inherently entails the need to make policy choices about the availability, conditions, scope and limits of IP protection. And the overarching utilitarian objectives for such protection in the TRIPS Agreement necessarily include the basic idea that the state designs and tailors the legal framework for IP subject matter in the public interest. A right to regulate is therefore not only very much possible for the regulation of private rights in private law relations but is arguably inherent in the very nature of IP. In the context of regulating intangible creations of the mind, such a right hence goes beyond the ability of the state to – for example – expropriate assets in the public interest. While the contours of the right of course need to be properly construed in light of the treaty commitments to protect the IP of foreign right holders, there is no reason why the right to regulate would not also operate within the typical domain of IP protection.
A comparative look back in time at international investment (and human right to property) protection confirms the basic proposition above. Whereas the protection of property assets under international law is primarily conceived as protection against state interference, when that expands to cover a duty to protect property then there is no convincing reason that such a duty is not equally, or more, subject to the state’s right to regulate. The generally rather limited scope of a duty to protect (in contrast to a duty not to interfere) in itself is an expression of sovereignty and the right to regulate. Such a duty is usually construed narrowly in terms of what states actually have to do to protect against third-party interferences with property, and this narrow scope in itself leaves sufficient policy space for the state to regulate.Footnote 82 But even where a duty to act exists, there is no principal reason why the right to regulate should not be generally available for the state to act, while taking the interests of the public and other specific groups into consideration.Footnote 83 Again, much will depend on the specific treaty commitments undertaken and the extent to which they can be construed as exhaustive lex specialis, whereby states have contracted out of their police powers. The next section considers this point in more detail.
Finally, the international IP system also addresses situations where the state might want to directly interfere with property. Generally, the idea that IP rights are merely negative rights to exclude third parties from utilising protected subject matter without authorisation (rather than rights which entail a claim against the state for its undistorted exploitation or use) will often make state interference (in a mere negative right) dispensable.Footnote 84 That is because owning a copyright in a cinematographic work with sexual explicit content, for example, does not entail a right to object to state restrictions on how the work can be distributed, shown in cinemas or otherwise made available to the public; similarly, a patent for a medicine does not prevent state regulatory approval requirements (for example to show the safety and efficacy of the patented medicine). The international IP system acknowledges this core limit of IP rights as merely negative rights in various forms – for example in defining the scope of exclusivity (e.g. in Articles 14, 16 and 28 TRIPS), or in the express recognition of the state’s right to ‘censor’ and otherwise restrict the utilisation of copyrighted works in Article 17 BC.Footnote 85 However, in particular for trademarks, the idea that protected signs are in principle meant to be used in commerce to indicate the (commercial) origin of goods or services requires that the negative rights character is not absolute. Again, the international IP system accounts for this – not in the form of a ‘right to use’ but via a limited protection against trademark use restrictions which are ‘unjustifiable’.Footnote 86
In sum then, the analysis shows that international commitments to protect IP rights are subject to the basic concept of a right to regulate, both with regard to regulating private law relations and by addressing direct state interferences with property. The key question that hence arises is whether this right has been exhaustively addressed in the relevant IP treaties, or whether those treaties leave room for the basic recognition of this right under customary international law.
II. Have States Contracted Out of Their Police Powers by Agreeing to International IP Treaties?
The debates in international investment law about the exact contours of a right to regulate – which, in its basic conception, receives widespread recognition and acceptance – show that the perhaps most important question concerns the relation between a state’s customary police powers and the specific treaty commitments the state has entered into.Footnote 87 When considering this question in the context of international IP law, our focus on TRIPS as part of the WTO legal order means that the analysis has to address: (1) the role that customary international law in general can play within WTO law, and (2) the role a customary right to regulate can play with regard to TRIPS in particular.
In an area that sometimes has been referred to as a ‘self-contained regime’ where rules are essentially derived from the WTO’s own ‘covered agreements’, custom might be argued to play little, if any, role. A default assumption may be to consider a treaty rule to supersede an equivalent rule of custom. But general international law practice and scholarship tell us that unless there is clear evidence (usually in form of an express treaty rule) that the state parties wished to contract out of custom, customary international law principles and rules apply – at least as a source of guiding treaty interpretation. For example, on the applicability of the local remedies rule, the ICJ stated that it ‘finds itself unable to accept that an important principle of customary international law could be held to have been tacitly dispensed with, in the absence of any words making clear the intention to do so.’Footnote 88 The ILC explains the continued role of custom in a world dominated by treaties in similar terms in its report on fragmentation: ‘It is in the nature of “general law to apply generally” – namely inasmuch as it has not been specifically excluded. It cannot plausibly be claimed that these parts of the law – “important principles” as the [ICJ] put it – have validity only as they have been “incorporated” into the relevant regime.’Footnote 89
The basic starting point therefore is that rules of custom (or general international law, as these terms are sometimes used interchangeably) apply – unless there is clear evidence that states, for example by including specific terms in a treaty, wished to contract out of these rules. One then needs to positively identify state intent to exclude a rule of custom – rather than an intention to retain that rule as soon as related treaty rules exist.
What do these insights from general international law mean for WTO law and in particular the IP treaties incorporated into the WTO legal order? In the words of the ILC, there is ‘little reason of principle’Footnote 90 to depart from the above-described principle when applying and interpreting the rules of TRIPS and the IP treaties it incorporates. While WTO dispute settlement is no forum of universal jurisdiction, the Appellate Body has, even in its very first decision, confirmed that WTO law does not operate in ‘clinical isolation’Footnote 91 from other rules of international law. When Panels and the Appellate Body consider claims under the covered agreements (rather than based on non-WTO rules), they must construe the rights and obligations flowing from WTO rules ‘within the overall context of general international law’.Footnote 92 In several decisions, WTO adjudicators have accepted and applied this approach.Footnote 93 In as much as WTO law therefore does not constitute a self-contained regime per se, the same must be true for other WIPO-administered treaties and indeed the (internal and external) conduct of international organisations that deal with IP, such as the European Patent Office (EPO). While one can for example point to the WIPO Global Challenges Division as evidence of engagement with the outer (international law) environment,Footnote 94 such evidence is not required for relying on custom and other generally applicable rules of international law. As the default rule is continued relevance, one would need to show that for example by agreeing to the Patent Cooperation Treaty or by setting up the EPO, contracting states wanted to create self-contained regimes.
Specifically on the WTO members’ police powers, WTO Panels and the Appellate Body have generally recognised a ‘sovereign right to regulate’,Footnote 95 but have underscored that this right needs to be exercised in accordance with the state’s international obligations. With regard to services trade, the Panel in US – Gambling held that ‘[m]embers maintain the sovereign right to regulate within the parameters of Article VI of the GATS. Members’ regulatory sovereignty is an essential pillar of the progressive liberalization of trade in services, but this sovereignty ends whenever rights of other Members under the GATS are impaired.’Footnote 96 On trade in goods, the Appellate Body stated that ‘the object and purpose of the TBT Agreement is to strike a balance between, on the one hand, the objective of trade liberalization and, on the other hand, Members’ right to regulate’.Footnote 97 In terms of how such a balance is to be struck by means of appropriately construing WTO commitments, the Panel in China – Rare Earths
agree[d] with China that an interpretation of the covered agreements that resulted in sovereign States being legally prevented from taking measures that are necessary to protect the environment or human, animal or plant life or health would likely be inconsistent with the object and purpose of the WTO Agreement. In the Panel’s view, such a result could even rise to the level of being “manifestly absurd or unreasonable”.Footnote 98
The conclusion then is that as part of custom, WTO members generally retain their police powers unless there is clear evidence that it has been specifically contracted out in a WTO Agreement. Hence one needs to positively identify states’ intent to exclude the right to regulate, rather than an intention to retain their police powers as soon as relevant treaty rules exists. In the context of WTO dispute settlement, where the competence of adjudicators is limited to deciding claims about consistency with ‘the covered [WTO] Agreements’,Footnote 99 even relatively conservative views allow the importation of custom via treaty interpretation, including on the basis of Article 31:3 c) VCLT.
The analysis in Section I suggests that there is no reason of principle for the right to regulate not also to apply to international IP protection – although the specific IP treaty commitments are of course essential in determining the extent to which the WTO members’ police power has been contracted out. In China – IPRs, China highlighted ‘the right of governments to take the necessary steps to maintain public order’, as reflected in Article 17 BC, and which arguably was ‘not affected by the [author’s] rights given by the Convention’.Footnote 100 The Panel generally agreed with this interpretation, explaining that:
[a] government’s right to permit, to control, or to prohibit the circulation, presentation, or exhibition of a work may interfere with the exercise of certain rights with respect to a protected work by the copyright owner or a third party authorized by the copyright owner. However, there is no reason to suppose that censorship will eliminate those rights entirely with respect to a particular work.Footnote 101
In EC – GIs, responding to the European Community’s argument that since TRIPS lacked a general exception clause akin to Article XX GATT it should be allowed to import and rely on Article XX GATT as defence against a TRIPS violation, the Panel countered as follows:
the TRIPS Agreement does not generally provide for the grant of positive rights to exploit or use certain subject matter, but rather provides for the grant of negative rights to prevent certain acts. This fundamental feature of intellectual property protection inherently grants Members freedom to pursue legitimate public policy objectives since many measures to attain those public policy objectives lie outside the scope of intellectual property rights and do not require an exception under the TRIPS Agreement.Footnote 102
These Panel findings in China – IPRs and EC – GIs confirm the analysis in Section I that the negative rights nature of IP protection under TRIPS is a reflection of the right to regulate.Footnote 103 And where TRIPS does offer some protection against state interferences with IP owners’ ability to use protected subject matter, the Panel and Appellate Body in Australia – Plain Packaging construed the relevant TRIPS commitments in a way that aligns with WTO members’ customary police powers.Footnote 104
The discussion so far shows that WTO adjudication in general and with regard to TRIPS in particular has applied and interpreted relevant treaty commitments to protect IP in light of a right to regulate – even if the adjudicators have not always referred to the customary international law status of the right. With regard to situations where state measures interfere with IP assets (in that the utilisation of IP-protected subject matter is restricted), WTO members therefore have not contracted out of their police powers. However, what about a right to regulate IP rights as ‘private rights’ and how they operate in private law relations? Do treaty commitments to grant and protect these rights (for defined subject matter and subject to certain requirements as well as with certain allowed exceptions, limitation and duration) offer sufficient evidence that WTO members have contracted out of the right to regulate IP in its principal private law domain? Section I showed that, based on the intangible character of IP subject matter and the utilitarian aims of IP protection, a right to regulate follows from the very nature of IP. And as I have argued elsewhere, for state measures which delineate the scope of protection of private rights vis-à-vis the rights of others and the general public to use IP-protected subject matter (such as patented drugs), the negative rights character of IP rights is not sufficient to secure a WTO member’s police powers.Footnote 105 The long-standing debates on access to medicines show that the protection of public health will often require limiting IP protection in order to facilitate the access to essential goods (such as medicines and other health related technologies) via subject matter exclusions, exceptions and limitations, compulsory licences and so on.
Of course, with Articles 27, 30 and 31 for example, the TRIPS Agreement contains a range of provisions allowing WTO members to adopt access-enhancing measures. But there is no indication that their mere existence exhaustively covers the right to regulate – in other words, that WTO members intended to contract out of their customary police powers by signing up to TRIPS. That follows first of all from recognising the appropriate point of departure for this analysis: as discussed above, the general position in international law is that one needs to positively identify state intent to exclude a rule of custom – rather than an intention to retain that rule as soon as related treaty rules exist.Footnote 106 Second, and arguably more importantly, the relevant treaty provisions and their application by WTO members strongly support a continued role for the right to regulate. In the specific TRIPS context, most of the treaty provisions addressing access-enhancing measures contain key terms that are broad, open and undefined – which in turn have commonly been understood and implemented to include policy space for WTO members to protect public interests, including (for example) access to medicines.Footnote 107
The most widespread, representative and consistent state practice recognising this policy space is reflected in the Doha Declaration on TRIPS and Public Health, adopted at the Doha Ministerial Conference in November 2001. Here, all WTO members ‘reaffirm[ed] the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose.’Footnote 108 In the terms of the ILC Conclusions, the Doha Declaration constitutes a resolution adopted at an intergovernmental conference that provides evidence for determining the existence and content of a rule of custom.Footnote 109 Since the Declaration was adopted by consensus of all WTO members and is not intended to amend TRIPS,Footnote 110 it also includes evidence of states’ opinio juris for a customary right to regulate within TRIPS. That is to say, the Declaration reflects a sense of all WTO members of a legal right to adopt measures in the public interest – even though they have committed to TRIPS and its obligations to protect IP. In para. 4 of the Declaration, all WTO members
agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.Footnote 111
The negotiation history of the Declaration offers further support for states’ opinio juris that TRIPS does not prevent domestic measures to protect public interests.Footnote 112
Subsequent IP treaty commitments – in particular IP Chapters in FTAs – as well as resolutions of international organisations have frequently referred to and reiterated the importance of the Doha Declaration. As I have discussed in detail elsewhere, FTA contracting parties are, for example, ‘recognising the principles set out in’, ‘affirm their commitment to’, or ‘recognise the importance of’ the Doha Declaration.Footnote 113 Parties have also agreed that in interpreting and implementing their FTA IP rules, they ‘shall ensure consistency’ with the Doha Declaration.Footnote 114 And some FTAs contain language identical or at least equivalent to the right to protect public health referenced in paragraph 4 of DohaFootnote 115 – in the round indicating that the right to regulate as affirmed in the Declaration continues to apply, despite generally more extensive commitments to protect IP under FTAs.
Furthermore, in the United Nations, the General Assembly adopted a resolution on ‘Global health and foreign policy’ in 2016, ‘[r]eaffirming the right to use, to the fullest extent, the provisions contained in the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), the Doha Declaration on the TRIPS Agreement and Public Health … which provide flexibilities for the protection of public health, and in particular to promote access to medicines for all.’Footnote 116
More recently, the COVID-19 pandemic has placed global access to medical technology, not only vaccines but also personal protective equipment and ventilators, among others, at the centre of attention. As one of many responses, in the ‘Rome Declaration’ by the G20 countries adopted in May 2021, signatory states agreed to facilitate the global distribution of medical technologies, not least by ‘working consistently within the TRIPS agreement and the 2001 Doha Declaration’.Footnote 117
Overall, while individual invocations of Doha vary, all share the basic idea of using the Declaration as a central reference point for how WTO members can protect public interests such as health in a manner that is consistent with TRIPS (and FTA). And most refer to a ‘right’ of states to protect health within the framework of TRIPS. Applying the ILC Conclusions, these references in treaties subsequent to TRIPS further support the argument of a rule of custom that is ‘codified’ (in the form of Doha references) in a treaty rule (namely, those FTA provision referring to Doha).Footnote 118 The references in the United Nations’ and other resolutions of international organisations offer additional evidence for the existence and content of customary police powers remaining, in spite of treaty commitments to protect IP. With these constant recognitions of the right to regulate in mind, the final section below considers the residual scope of this right in the context of TRIPS.
III. The Contours of WTO Members’ Police Powers in Light of TRIPS
The discussion in Section C on the role of a customary right to regulate and its exact contours in international investment law has shown that much depends on the specific treaty commitments undertaken by the state invoking the right. Attempting to offer some parameters for addressing the same issues in the context of TRIPS hence should start with the relevant obligations to protect IP under the WTO framework. Very much hence depends on the individual TRIPS (or other IP treaty) commitment and the extent to which this already implements a WTO member’s police powers – that is, how far the specific treaty rules at issue offer evidence of the contracting parties’ intent to contract out of custom. Such an individual assessment cannot be undertaken here. The principal approach, however, has been confirmed by WTO members in the Doha Declaration. After affirming that TRIPS ‘can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health’ and that all TRIPS flexibilities should be used for this purpose, WTO members highlight these flexibilities to include, first and foremost, that ‘[i]n applying the customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles.’Footnote 119 The WTO members then go on to highlight specific interpretative flexibilities regarding compulsory licensing and exhaustion. Furthermore, under the so-called ‘paragraph six mechanism’, they eventually negotiated a waiver to a TRIPS provision whose operation stood in the way of an effective use of compulsory licensing for public health.Footnote 120
The main mechanism for realising a right to regulate within TRIPS is thus by means of an interpretation and implementation of its provisions which afford sufficient policy space for WTO members to protect public interests such as health. This in turn should be achieved by the full use of TRIPS flexibilities, especially those listed in paragraph 5(a)–(d) of the Doha Declaration. As I have discussed in detail elsewhere, because of its horizontal operational effect, the most important flexibility here is interpreting and implementing TRIPS commitments in light of the agreement’s object and purpose, set out in its ‘Objectives’ in Article 7 and ‘Principles’ in Article 8(1).Footnote 121
In short, that flexibility follows from (1) the interpretative relevance that Article 31(1) VCLT (reflecting customary international law principles of treaty interpretation) affords to these provisions as expression of treaty object and purpose of TRIPS; and from (2) the substance of Articles 7 and 8. The interpretative role of Articles 7 and 8 has to be appreciated relative to other factors informing the interpretation exercise, especially ordinary meaning and context. The more ambiguous and multilayered a provision’s common understanding in relation to the treaty is, the more it needs further determination and concretisation by the treaty’s objective – so that policy space via treaty interpretation depends significantly on the terms at issue.Footnote 122 The substance of Article 7 and especially 8(1) TRIPS then further determines the contours of a right to regulate and reflects the two basic rationales for invoking police powers in relation to IP protection, as discussed in Section I: namely, a state (1) interfering with IP rights to protect the public interest (reflected in the public interest principles of Article 8(1)); and (2) regulating the scope of protection as well as its limits in relations between private parties (as set out in the balancing objectives of Article 7).Footnote 123
The basic concept that emerges is one of a right to regulate which has to be actioned via treaty interpretation, with an important role for the TRIPS object and purpose as set out in Articles 7 and 8 – relative to other interpretative elements. The public interest principles in Article 8(1) confirm the customary police powers of WTO members and crystalise their contours: members may take measures ‘necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development’. Since those measures also must be ‘consistent with the provisions of [TRIPS]’, the policy space to adopt them lies within the interpretative flexibilities provided by individual TRIPS commitments, construed in light of the TRIPS object and purpose. The balancing objectives in Article 7 in turn call for IP protection and enforcement to ‘contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare’.
Broad and open concepts (such as ‘invention’, ‘novelty’ in Article 27, ‘distinctiveness’ in Article 15, or ‘expressions’ – in contrast to ideas – in Article 9) that are commonly used in TRIPS leave it for WTO members to determine their specific meaning and to align the associated interests of IP owners, users and society; hence, the balancing that Article 7 calls for primarily occurs on the level of domestic implementation.Footnote 124 From a right-to-regulate perspective, WTO members have retained sovereignty to ‘customise’ IP protection and to balance all affected interests – unless individual TRIPS provisions entail concrete commitments where no (or few) interpretative flexibilities remain.
Finally, this policy space for tailoring IP protection in line with competing interests and different stakeholders on the domestic level is reinforced by the basic notion of territoriality. The fact that despite almost 150 years of international harmonisation of IP protection, the competence to grant rights over intangible assets remains with the individual nation state is in itself a strong indicator of the right to regulate on the domestic level, not only via norm-setting that builds on the interpretative policy space left by often broad concepts in treaty commitments but also by the principal competence of domestic agencies and courts to apply and adjudicate these norms. While of course territoriality has been (partially) done away with in the case of significantly enhanced socio-economic integration (as in the European Union),Footnote 125 its continued existence within TRIPS and TRIPS-plus frameworks confirms the police and regulatory powers of the state granting, delineating and limiting IP rights.
In sum, the reference to both Article 7 and 8 in Doha’s emphasis on the TRIPS object and purpose highlights the two related but distinct aspects of the right to regulate IP protection. Adopting public interest measures within the contours of Article 8; and shaping IP protection to facilitate socio-economic welfare aims via Article 7. Crystalising the scope and content of a WTO member’s regulatory powers then should be a matter of characterising a domestic measure as primarily within the ambit of Article 7 or 8 TRIPS. A measure that is predominantly delineating or balancing the interests of IP owners, competitors or users falls rather under Article 7; and it is that provision’s terms which serve as principal interpretative guides for construing individual TRIPS commitments that may be implicated by the measure at issue.Footnote 126 Article 8 on the other hand concerns measures taken to protect general public interests such as health or the environment.
Here, one should further differentiate between two types of TRIPS provisions implicated by the measure: (1) a TRIPS provision that has an ‘internal’ public interest test – such as ‘unjustifiable’ in case of trademark use restrictions under Article 20, in contrast to (2) a TRIPS provision which lacks such a test or equivalent internal mechanism. Interpreting the proper meaning of the latter in light of Article 8(1) then requires importing the necessity test inherent in Article 8(1),Footnote 127 whereas construing a provision with an internalised (and hence lex specialis) public interest test usually will lead to that test’s ordinary meaning and context to dominate over the object and purpose reflected in Article 8(1) TRIPS. As confirmed in the Plain Packaging litigation by both Panel and Appellate Body, a specific test in an individual TRIPS commitment replaces the general one in Article 8(1).Footnote 128 The contours of the right to regulate in the context of international IP law hence are framed by three key parameters:
(1) Within TRIPS, the pre-existing IP treaties it incorporates and the subsequent FTAs which refer to it, the customary right continues to exist. It is to be effected by means of a flexible interpretation and domestic implementation of individual treaty commitments to protect IP rights.
(2) That policy space is determined by the interpretative role of the TRIPS object and purpose – relative to the importance of the ordinary meaning and context of the treaty rules at issue. The more open and broad the key terms in these treaty commitments are, the more room remains for the individual WTO member’s police powers.
(3) Because Articles 7 and 8 TRIPS address different aspects of these powers to regulate, a domestic measure should be characterised as to which aspect of the TRIPS object and purpose the measure primarily reflects. Broadly speaking, the TRIPS compliance of measures undertaken to protect a general public interest such as health or the environment (and curtailing IP rights accordingly) should be construed in light of Article 8(1) and especially its necessity test – unless the relevant individual TRIPS commitment offers a more specific public interest test. By contrast, the TRIPS consistency of measures balancing the interests of IP owners, competitors or users (and delineating the content and limits of IP rights accordingly) needs to be determined first and foremost under Article 7.
E. Conclusions
As an area where norm-setting seems prima facie driven primarily by treaties, international IP law appears to leave little room for custom or general principles of law. But if one looks beyond the primary rules that define the protection of IP rights beyond borders, there is ample space for other sources of law – for example with regard to treaty interpretation and state responsibility. In the broader context of treaty rules interacting with custom and general principles, this chapter has reviewed the role that remains for a customary right of states to adopt measures protecting public interests once those states have agreed to protect the IP rights of foreigners. The chapter has shown that the principal difficulty in identifying custom to protect foreign IP via state practice and opinio juris does not apply to this right to regulate, which emanates from basic concepts of sovereignty. The right to regulate has received widespread recognition in other areas of international economic law, even though its exact contours remain somewhat blurry and in turn have to rely heavily on further determination in reference to the specific commitments to protect the assets of foreigners.
Considering how a state’s customary police powers apply in the specific IP treaty context (in particular, the TRIPS Agreement), an important insight from general international law is the continued relevance of custom – unless there is clear evidence that contracting states intended to contract out of custom. This point not only has specific implications for appreciating the contours of a right to regulate in light of relevant IP treaty rules, which are considered above in detail. On a more fundamental level, it reminds us of the continued relevance and ‘background functionality’ of the general – even where detailed rules have been set, usually in favour of the specific interests of IP owners.
The raison d’être to coordinate IP protection beyond borders essentially relies on treaties as a specific legal tool to achieve its principal purpose of protecting IP owners abroad. However, in doing so, this legal protection necessarily becomes a segment of a wider universe. Therefore, appreciating international IP law, as a whole, means viewing the field contextually – that is, as part of a broader operating system, epistemic community or project (depending on how one prefers to characterise international law). Without this contextual perspective, international IP protection will necessarily appear self-contained, and one misses those elements that exist simply because coordinating protection beyond borders relies on the functionality of international law. For our specific question about the role of customary international law, this means that disregarding custom implies not fully accounting for the broader contextual framework within which international IP treaties operate – which in turn leads to further self-isolation and containment of the international IP system.
For a state’s residual police powers to protect public interests, despite specific treaty commitments, this broader view ensures that the default position is not contracting out and self-containment but continued relevance. Custom can therefore retain its role and – in the specific WTO–TRIPS context – serve an interpretative function, unless there is clear evidence that the treaty rules under interpretation exhaustively cover a WTO member’s right to regulate. The Doha Declaration as well as Articles 7 and 8 TRIPS confirm this point and offer further guidance on the contours of the right.
The amount of policy space to (1) interfere with IP rights to protect public interests recognised under Article 8, and (2) balance the interests of various stakeholders in line with Article 7 then is driven by the interpretative role of the TRIPS object and purpose, as well as the degree of openness and ambiguity in the treaty terms under interpretation. Given that the key concepts set out in TRIPS remain undefined and have been implemented in diverse ways for decades (if not centuries), WTO members retain quite some flexibility. And while FTAs tend to include more concrete and detailed commitments to protect foreign IP, their frequent references to Doha and/or Articles 7 and 8 suggest that the same principles apply.
However, practically, perhaps the most important point concerns actually utilising the right to regulate, on the ground. Whether it is about access to patented medicines, regulating the use of (tobacco) brands on products, or setting ‘safe harbours’ from copyright liability, it is within the domestic IP system that measures are adopted and where they can have an impact. This of course follows primarily from the notion of territoriality (which in itself secures significant policy space to regulate). In addition, it also follows from the optional character of most provisions that allow to limit IP rights. Since the raison d’être has generally been to coordinate protection (rather than its limits) beyond borders, contracting states are usually not obliged (under the IP system) to exercise their police or regulatory powers.
Again, however, a broader contextual view can shift the perspective: taking account of other legal orders within international law might point to (treaty or customary) rules or general principles which demand state action. The duty to respect, protect and fulfil the right to health under Article 12 of the International Covenant on Economic Social and Cultural Rights,Footnote 129 for example, then appears as the flipside of the recognition in the Doha Declaration of a ‘right to protect public health’. No matter how much recognition to these ‘external’ norms may be given on the international level, it will be domestic implementation and the effect given at that level that eventually count. With this in mind, the international dimension of a right to regulate – be it based on custom or explicitly set out in treaty terms – is only the prerequisite for actual and concrete action on the domestic level, where intangible ‘creations of the mind’ are turned into legally recognised assets with a concrete scope, limits and duration.
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