Table of Contents
A. Introduction
The long-standing battle between economic nationalism and globalism has again taken center stage in geopolitics. In broad strokes, the two camps can be characterized as follows: the globalist worldview conceives of globalization as a positive-sum game, whereas economic nationalists consider international trade a zero-sum game in which a gain in trade by one nation must be accompanied by a corresponding loss for another nation.Footnote 1 Accordingly, efforts to create and consolidate a unified world economyFootnote 2 clash with protectionist policies that discriminate in favor of the local economy.Footnote 3 In the area of international law, the antagonism plays out in the dispute between supporters of global multilateral treaties and organizations, on the one hand, and proponents of equal sovereignty to be used in pursuit of national interests on the other.Footnote 4 In the course of these debates, the globalist worldview tends to refer to humankind as the primary polity and to global welfare as the ultimate end of politics.Footnote 5 Nationalists, in contrast, champion self-determination and independence as ends in themselves and strive to promote an idealized unity, identity, and autonomy of a distinct community.Footnote 6 In International Relations theory, the two opposite worldviews are associated with liberalism and realism, respectively, and their underlying assumptions about human nature. The one is more optimistic and idealistic – and thus progressive in terms of greater cooperation; the other is rather pessimistic in view of seemingly unavoidable conflicts.Footnote 7
In this article, I apply the above distinctions to the law and policy of international intellectual property (IP). The prevailing view sees this field as a prime example of globalization. The Paris IP Union and Berne IP Union of 1883 and 1886, respectively, were among the first permanent multilateral organizations to react to ever-increasing global communication and commerce.Footnote 8 Over the past 140 years, the international IP system has consistently expanded in territorial and regulatory scope. Today, it provides for a practically worldwide level playing field for IP producers and users in all major areas of innovation and branding.Footnote 9 Economists embrace this status quo because it avoids non-cooperative bilateralism and trade diversion and thereby expands world welfare.Footnote 10 Leading international IP scholars observe “progress,”Footnote 11 which ought to continue via the ever “unfinished business”Footnote 12 of negotiating new IP treaties, preferably at the multilateral fora of WIPO and the WTO.Footnote 13 From this perspective, the current stalemate of multilateralism, events like Brexit, and other efforts to (re-)instate the national interest as the guiding principle of economic policy are perceived as a challenge; they indicate a pendulum that is swinging back from a relatively long phase of globalization.Footnote 14
This article challenges that widespread view on several levels. In a nutshell, it claims that economic nationalist concerns about domestic industries and economic development lie at the root of the global IP system.Footnote 15 To support this argument, I summarize and categorize various IP policies adopted by Germany, selected other European countries, the European Union,Footnote 16 and the USA. Section B presents three types of inbound IP policies that aim to foster local economic development and innovation. Section C adds three versions of outbound IP policies that, in contrast, target foreign countries and markets. In the area of IP, inward-looking policies have typically been pursued by IP importers and the outward-looking policy by IP exporters. The significance of the distinction between inbound-import and outbound-export is acknowledged both in the economic literature and most recently in the preamble of the IP chapter in the 2020 US–China Economic & Trade Agreement, according to which “China recognizes the importance of establishing and implementing a comprehensive legal system of IP protection and enforcement as it transforms from a major IP consumer to a major IP producer.”Footnote 17
The overview demonstrates that the dialectic of nationalist motives producing global regulatory structures has been at work throughout the history of modern IP, and that the past five years (2017–2022) are no exception.Footnote 18 I furthermore show that current EU and US international IP policies very much resemble each other, casting doubt on the two players’ seemingly opposing attitudes toward globalization.Footnote 19 The article thus provides a much more nuanced description than the simplistic nationalist–globalist dichotomy presented in the beginning.Footnote 20
The concluding Section D draws the previous findings together. It first explains the dialectic virtuous circle of economic nationalist motives and global legal structures. Second, it identifies the basic function and legal structure of IP as the reason for the resilience and even dominance of economic nationalist motives in international IP politics. Intellectual property concerns exclusive private rights that are territorially limited creatures of (supra-)national statutes. These elements make up the economic nationalist “DNA” of IP.
B. Inbound IP Policies
Inbound IP policies aim at fostering innovation and economic growth within an IP jurisdiction. This regulatory perspective is prone to nationalist motives and measures.
I. IP First Movers
When globalization gained momentum, economic policies logically mainly looked inward – that is, they were aimed at fostering domestic growth. The history of IP teaches that this general assumption also holds true for first movers in IP, namely Venice and England. Interestingly, both jurisdictions were very active and even dominant in international trade when they first adopted IP laws.Footnote 21 By the time the city of Venice enacted, in 1474, what is considered to be the first patent Act in history,Footnote 22 Venice had – over the course of several centuries – achieved the status of being the “cradle of dawning capitalism,”Footnote 23 the “chief trading city in the West,”Footnote 24 and a manufacturing hub.Footnote 25 When the Statute of Monopolies of 1624 established the basis for the British patent system,Footnote 26 the commercial center of gravity in Europe has already shifted from the Mediterranean to the ports facing the Atlantic, in particular to Amsterdam and London as the dominant cities.Footnote 27 Before the seventeenth-century civil war, England had experienced 150 years of significant annual output growth in agriculture, industry, and services, as well as population growth,Footnote 28 and the country was about to become the greatest naval and economic power on earth.Footnote 29 England would later also adopt the first modern copyright Act.Footnote 30
Ranking high among the many reasons for the rise of Venice and England before the era of modern IP are policies that were specifically aimed at introducing foreign technologies through the immigration of skilled artisans.Footnote 31 One important regulatory tool to attract and establish certain high-tech industries of the time was the privilege awarded to people who introduced a new manufacture to the jurisdiction.Footnote 32 The first IP statutes were derivatives of these early modern privileges, both in terms of their legal-doctrinal structureFootnote 33 and regarding their purpose. Just like the privilege regime, the new patent and copyright laws implemented an inward-looking economic policy. The Venice Patent Act expressly refers to the “utility and benefit to our State” of granting exclusive rights to “men in this city, and also … other persons … from different places” in their “ingenious contrivances.”Footnote 34 The Statute of Monopolies was intended to further the interests of industry “within this Realme,” without, however, unjustifiably raising prices of commodities “at home.”Footnote 35 And the Statute of Anne was meant to encourage learned men to compose and write useful books for the British public.Footnote 36 Although Venice and England operated within a highly internationalized trade context, none of their early IP statutes specifically targeted foreign markets and the export of new contrivances, manufactures, and books. Their main – if not sole – purpose was to foster domestic growth and innovation.Footnote 37
II. Discrimination against Foreigners
This inbound perspective becomes even more apparent in the practice of many jurisdictions until the late nineteenth century to grant IP protection only to local people. Examples are numerous and well documented. They were observed in particular in middle-income countries that, at a given point in time, had established a certain level of industrialization and the capacity to absorb new technologies but still lagged behind the economic and technological leading countries.Footnote 38
One of these purposefully discriminatory measures was the granting of privileges or patents for the introduction – that is, the first domestic practice – of inventions that were made and implemented abroad. What would today be considered an unfair incentive for piracy was long-standing practice in many European countries, such as in Renaissance “Italy,” during the late French Ancien Regime, and even as late as the early nineteenth century in Prussia and Wuerttemberg.Footnote 39 Another way to foster local industry was to declare that only citizens or residents of the respective state were eligible for IP protection. This strict discrimination against foreigners was applied by, for example, the 1815 Prussian Patent ActFootnote 40 and the US patent and copyright laws from their first enactment until 1836 and 1891, respectively.Footnote 41 Even when foreigners were in principle granted access to the local IP regime, they had to fulfill additional requirements such as paying significantly higher patent fees than did locals.Footnote 42 Local working requirements like the famous manufacturing clause in US copyright law had the purpose of promoting the national publishing and paper industries.Footnote 43
The effect of discriminating against foreign inventors and authors was that foreign patenting and copyrighting remained infrequent. Nations that imported IP thereby prevented IP-export nations from taking advantage of the protection available in their territories. In this way they avoided paying license fees, which would have increased the costs of absorbing knowledge and burdened the balance of trade.
The first prominent renunciation of this inbound nationalist IP policy was a French law of 1852, which for “reasons of universal justice” also granted protection to authors of works published abroadFootnote 44 – and at the same time targeted unauthorized foreign copying; this new law thus adopted an outbound perspective.Footnote 45 Whether that law was an expression of a genuinely globalist attitude or was still driven by the nationalist motive to improve the legal position of French right holders is considered below.Footnote 46
The formerly popular strategy of discriminating against foreign right holders in order to allow domestic industries to free-ride on foreign innovations – and at the same time, protect their own – is nowadays prohibited for most IP markets, on the ground of national treatment obligations under the global IP acquis. In particular, it is not permissible to wholly exclude foreigners or certain areas of technology, such as pharmaceuticals, from industrial property protection or to provide that formalities must be fulfilled in order to secure a copyright.Footnote 47 In practice, patent offices and courts may favor domestic inventors and litigants,Footnote 48 but such practices must not become official policy. The globalization of IP law thus limits the leeway for economic nationalist approaches significantly and thereby complements the deep integration of national economies in intercontinental value chains.
Discriminatory measures have not, however, vanished completely. An interesting example is the “press publishers right” in the 2019 EU Directive on copyright and related rights in the Digital Single Market (DSMD).Footnote 49 According to Art. 15 DSMD, EU Member States must provide publishers of press publications with the exclusive rights of reproduction and making available “for the online use of their press publications by information society service providers,” in particular by news aggregators like Google News. This two-year related right in press publications is independent of any rights in respect of works and other subject matter incorporated in a press publication. Whereas this content is already subject to international copyright treaties,Footnote 50 its “publication” is not.Footnote 51 There is thus no applicable national treatment obligation.
The German press publishers’ right of 2013, which served as a model for the DSMD, had not addressed the status of non-German, non-EU, and non-European Economic Area press publishers explicitly.Footnote 52 The DSMD, however, is clear on the issue. Art. 15(1) DSMD only applies to – and thus benefits – press publishers “established in a Member State,” that is, those legal persons that have their registered office, central administration, or principal place of business within the Union.Footnote 53 There is no reference to applicable international treaties (which do not exist anyhow) or to other exceptional avenues to protection, such as via simultaneous first publication in the European Union or reciprocal protection of EU publishers in the third country. The DSMD thus completely excludes the publishers of Neue Zürcher Zeitung, The New York Times, and all other third-country journalistic publications from the press publishers’ right, despite the fact that many of those websites are indexed by news aggregators for a significant EU readership.Footnote 54
In the past, such strict discrimination against foreigners had the purpose of fostering economic catch-up through cheap access to foreign works and lawful free-riding on foreign innovations. This, however, is not what the press publishers’ right is meant to achieve. Its purpose is to ensure the sustainability of EU news publishers and news agencies by providing them with additional licensing revenues. The respective royalties are to be paid by news aggregators and similar online services, for whom the reuse of press publications is said to constitute an important part of their business models and a source of revenue.Footnote 55 In line with this telos, the German and Spanish precursor laws had indeed been asserted by local mainstream press publishers against Google.Footnote 56 The new IP right is thus not meant to foster dynamic catch-up and innovation but to support media companies that were established in analog times during their transition to digital journalism.Footnote 57 It nevertheless represents an inward-looking protectionist measure that discriminates in favor of the local economy.
III. Weak IP Catch-up Policies
Since early modern times, the economic and technological ranking of countries has corresponded to a pyramidal form. Few countries take a leading position, some follow as emerging economies, and most belong to the bottom group – with low levels of specialization, innovation, and export orientation. Although this structure is surprisingly stable, individual countries have moved up and (less frequently) down the ladder.Footnote 58 Countries like Germany, Switzerland, and the USA, whose economies nowadays are among the most technologically advanced and export-oriented, lagged behind the UK economy throughout most of the nineteenth century. In so far as those follower countries adopted IP during the nineteenth century at all, they pursued – well into the twentieth century – a weak IP catch-up strategy. They either forewent patents and copyrights altogether or limited these rights in a way that allowed local enterprises to copy or imitate on a massive scale, in full compliance with applicable local laws, in order to absorb foreign innovation and establish a highly industrialized formal economy.
Again, examples are plentiful and well documented.Footnote 59 In the area of copyright law, until the late nineteenth century there existed several European “copying hubs” that did not provide any protection to authors or publishers; among them is again the German state of Wuerttemberg.Footnote 60 In patent law, the Prussian patent office rejected up to 90 percent of patent applications and thus strictly controlled and effectively minimized the practical relevance of the patent system.Footnote 61 The German Patent Act of 1877 exempted precisely those two branches from patent protection – medicines and chemical products – in which German companies were particularly active and successful.Footnote 62
Switzerland introduced a Patent Act only in 1888, under massive international pressure, but granted no protection for methods or for chemical products until 1907. This allowed the Swiss chemical and pharmaceutical industries to copy products that were patented in France and other places without hindrance; at the same time, the late nineteenth and early twentieth century are seen as the golden age of the Swiss pharmaceutical and chemical industry. In 1869, the Netherlands completely revoked their patent law, which up until that point had been used predominantly by foreign registrants, and did not reinstate it until 1912. In the meantime, the Lever Brothers (Unilever) were able to lawfully produce margarine in disregard of the patent protection that existed in several European countries, and Philips manufactured light bulbs without paying license fees to Edison. Again, that period marked the high point of industrialization in the Netherlands.Footnote 63
India pursued a similar strategy in doing away with product patents in the pharmaceutical and food sectors in 1972. This gap in protection, which under the maximum transition period for TRIPS was valid until 2005, is said to have contributed to the creation of the Indian generic sector.Footnote 64 Japan, to name one last example, has had a patent law since as far back as 1885. But until the late 1990s, the scope of protection of a patent was construed so narrowly that Japanese companies had an easy time in circumventing this protection by means of slight changes in the drafting of the claims.Footnote 65
All these policies purposefully discriminated against foreign right holders, to the benefit of local industries. They can therefore be characterized as economic nationalist strategies of IP importers. This weak IP catch-up strategy is still considered to be an effective strategy in developing countries in order to adapt to, replicate, and distribute innovations along the international productive chain, with the long-term aim of inducing domestic economic complexity and productivity.Footnote 66 As with the discrimination of foreigners, however, weak IP catch-up policies are largely ruled out by international IP treaties, in this case by obligatory minimum levels of protection.Footnote 67 The remaining room to maneuver concerns some “residual policy space” allowing for “IP calibration.”Footnote 68
It is doubtful whether this remaining leeway is sufficient to account for the vastly different levels of absorptive capacity and innovativeness among national economies. The most prominent test case is China, which the United Nations still counts among the developing economiesFootnote 69 but which has risen to become the second-largest economy in the world in terms of gross domestic product.Footnote 70 In 2019, the patent office of China received nearly half of all patent applications in the world and had the second highest number of international patent applications via the Patent Cooperation Treaty, just behind US-based applicants.Footnote 71 Being bound to the TRIPS Agreement since 2001 has apparently not hampered but potentially fostered this impressive performance of the Chinese economy.
The seemingly happy relationship between strong IP and Chinese economic development has been tarnished, however, by long-standing complaints of the USA and the European Union about insufficient IP enforcement, and, more recently, about so-called forced technology transfers.Footnote 72 Both practices support the local acquisition of knowledge and the building of innovative capacity and thus, eventually, technological and economic catch-up. The significance of these informal, weak IP policies is confirmed by the fact that the 2020 US–China Economic and Trade Agreement specifically addresses these issues; it obliges China firstly to stop the manufacture and block the distribution of pirated and counterfeit products, and secondly to not require or pressure persons of the other party to transfer technology to its persons in relation to acquisitions, joint ventures, or other investment transactions.Footnote 73 The agreement thus documents and at the same time aims to contain a conflict between Chinese inbound and US outbound nationalist IP policies.
Like the USA, the European Union generally also pursues an outward-looking, pro-IP policy.Footnote 74 In the already mentioned 2019 DSMD, the EU legislature has, however, adopted yet another version of an inward-looking IP regulation. As explained, Art. 15 DSMD strengthens IP to the benefit of EU press publishers. Art. 8 DSMD, in contrast, weakens EU copyright by permitting the non-commercial mass digitization of out-of-commerce works. It also reverses the discrimination. Whereas Art. 15 DSMD discriminates against third-country press publishers, Art. 8 DSMD discriminates against EU right holders and leaves exclusive rights in third-country out-of-commerce works intact. Under Art. 8 DSMD, only out-of-commerce-works of EU origin may be digitized and made available online.Footnote 75 Recital 39 DSMD explains this discrimination against EU works and right holders with “reasons of international comity.” And indeed, this rarely adopted measure eliminates any concerns that the limitation of copyrights in out-of-commerce works might go too far and run afoul of the international acquis of minimum copyrights, which does not apply to the internal copyright regulations of a country for works of that origin.Footnote 76 It thus seems that Art. 8 DSMD expresses a concern for foreign right holders and international law. The European Union’s globalist attitude is so strong that the Union is even prepared to discriminate against its own citizens.
From an historical perspective, however, Art. 8 DSMD appears in a very different light. According to this view, Art. 8 DSMD is a late reaction to events that took place in the USA between 2004 and 2015, namely the Google Books Project, the Google Books Settlement, and the Second Circuit Court decision – which eventually held that Google’s unauthorized digitizing of more than twelve million copyright-protected works, the creation of a search functionality, and the display of snippets from those works were non-infringing fair uses under US copyright law.Footnote 77 Many non-US copyright holders, as well as the German and French governments, had actively intervened in these developments. They successfully argued that a settlement reached between Google and certain US authors and publishers would violate international copyright law, although the settlement only covered works of US, Canadian, UK, and Australian origin plus foreign works registered with the US copyright office.Footnote 78 In Germany and other European countries, the Google Books Project and settlement were portrayed as an impertinent global misappropriation of the rights of European authors and publishers by the same US internet giant that, by the way, is the primary target of the new press publishers’ right.Footnote 79
At the same time, the unavailability of millions of orphan and out-of-commerce works in the digital age was generally acknowledged to pose a real problem. The first response in line with European copyright values, the 2012 EU Orphan Works Directive, unfortunately proved unfit for the purpose because of its requirement of a prior diligent search in every single case.Footnote 80 In 2016, a French effort to allow for the mass digitization of out-of-commerce works was struck down by the Court of Justice of the European Union because of its incompatibility with the EU copyright acquis.Footnote 81 In order to finally allow for mass digitization projects, Art. 8 DSMD now adopts the “digitize first and opt out later” mechanism that had infuriated European right holders and governments against the Google Book settlement ten years earlier. The EU legislature therefore took great pains to avoid international law-related complaints by US or other third-country right holders.
It is finally worth noting that not only US works are beyond the scope of Art. 8 DSMD. Google and other private internet companies also cannot rely on the provision, which only permits non-commercial digitization projects. In sum, Art. 8 DSMD is not only an inward-looking but also a hermetical EU measure: it benefits EU cultural heritage institutions in their taxpayer-funded efforts to preserve and make available their collections of EU works, for future generations of EU citizens.Footnote 82 With this cultural, etatist focus, and considering its historical background, the provision represents a (supra-)nationalist approach to IP. Together with the new press publishers’ right, it forms part of the overall EU digital policy that strives for a European version of digital sovereignty, independent from and often opposed to US and Chinese approaches.Footnote 83
C. Outbound IP Policies
The growth of global trade during the long nineteenth century concerned high-tech products, books, and trademarked goods, which increasingly enjoyed IP protection in their country of origin. The more important cross-border exchange became for original producers, the more they became interested in IP protection abroad.Footnote 84 And along with the significance of these IP industries grew the readiness of governments to switch from inbound to outbound IP policies.
In view of today’s levels of global economic and legal integration, no country can afford to ignore the international consequences of its IP policies. Even self-contained measures like Arts. 8 and 15 DSMD are embedded in, and reflect upon, the international economic context. Economic globalization has thus clearly induced a change of perspective from local to global markets. It has not, however, eliminated the focus on the interests of domestic industries and thus the essentially economic nationalist motive of IP-export countries’ policies.
I. Sanction Foreign Pirates
An interesting example in IP history is the already mentioned French International Copyright Act of 1852.Footnote 85 That law did not merely extend the French droit d’auteur to works published abroad and thus, in practice, to foreign authors for “reasons of universal justice.” It also made counterfeiting and piracy within France a criminal offense – in fact, this is the only substantive content of the law.Footnote 86 The immediate purpose of this criminalization was to curb the influx of cheap copies of works by French authors from Belgium and the Netherlands, where this activity was perfectly legal.Footnote 87 The indirect effect was that after the “pirates” lost their biggest market, their governments were more inclined to enter into bilateral treaties with France – and finally to protect French authors in Belgium and the Netherlands.Footnote 88 Thus, a law that according to its preamble pursued a noble universalist aim turns out to be an outbound nationalist policy move.
The US trade policy in the late twentieth century provides a more straightforward example of efforts to fight unauthorized foreign copying and imitation. The US Trade and Tariff Act of 1984 made the adequate and effective protection of foreign IP a principal US negotiating objective, and it declared inadequate or ineffective protection of IP in third countries a trade practice that could lead to trade retaliation by the USA.Footnote 89 The Reagan Administration used this tool intensively, for example vis-à-vis South Korea and Brazil.Footnote 90 In 1988, the US Congress amended the Trade Act “to provide for the development of an overall strategy to ensure adequate and effective protection of intellectual property rights and fair and equitable market access for US persons that rely on protection of intellectual property rights.”Footnote 91 As part of this overall strategy, the Office of the US Trade Representative has since then published an annual “Special 301 Report” in which it identifies foreign countries where IP protection and enforcement have deteriorated or remained at “inadequate” levels, which may result in actions under US trade law or in dispute settlement proceedings pursuant to WTO or other trade agreements.Footnote 92 More than thirty countries find themselves on the 2020 watch and priority watch lists, among them well-known targets like China, but also Canada and Romania.Footnote 93
Some thirty years after the USA, the European Union adopted very similar measures. As part of a comprehensive “[s]trategy for the protection and enforcement of intellectual property rights in third countries,”Footnote 94 the European Commission has since 2006 carried out biannual surveys among EU stakeholders and Member States in order to identify third countries in which the state of IPR protection and enforcement gives rise to concern, so that the Commission can focus its efforts and resources on those countries. The most recent report lists twenty countries in four priority categories, with China as the only country in Category One, and, somewhat ironically, the USA listed among the problem countries in Category Three.Footnote 95
On an abstract level, one can thus observe a convergence of EU and US policy aims and measures. In practice, however, the two actors apparently regard each other with suspicion. Each tries to extract as much revenue from foreign IP markets as possible.
II. Unilateral Reciprocity Requirements
Another way to induce other countries to adopt or strengthen their IP laws is to demand some form of reciprocity. It was common practice in nineteenth-century Europe for governments to make eligibility for their IPRs dependent on a corresponding treatment of their own citizens in the other country.Footnote 96 Reciprocity is a particularly promising tool if the domestic market is of a significant size and there is some corresponding demand for international protection. Accordingly, the 1838 UK International Copyright Act made the protection within Her Majesty’s vast dominions of literary works that were published abroad conditional upon the reciprocal protection of British books in those foreign countries.Footnote 97 Within a few years, this carrot-and-stick strategy had led to copyright treaties with German states in 1846 and 1847 and with France in 1851.Footnote 98
Whereas France initially adopted, as explained, a different tactic to internationalize copyright law, it successfully implemented reciprocity in trademark law. The decisive move here was the law of 1857, according to which protection of foreign trademarks in France was not simply dependent upon reciprocal protection but also upon a diplomatic agreement with the home country of the foreign trademark owner. Countries that sought protection for their citizens’ marks in France therefore had to negotiate and usually to legislate. Within a few years, France concluded several treaties on the matter, starting with its great rival, Britain.Footnote 99 Thus, the targeting of foreign pirates and the discrimination of foreign right holders contributed to the emergence of international IP treaties, first in the form of numerous bilateralFootnote 100 and eventually in the form of the permanent multilateral IP Unions of the 1880s, with their guarantee of automatic national treatment.Footnote 101
Beyond this emerging international IP acquis, however, reciprocity requirements have remained an attractive tool for export-oriented countries. One example concerns layout designs (topographies) of integrated circuits. The 1984 US Semiconductor Chip Protection Act only applies to nationals and domiciliaries of the USA and of countries with which the USA has concluded a respective IP treaty.Footnote 102 The 1986 European Economic Community Directive on the legal protection of topographies of semiconductor products is equally restricted to nationals and residents of a Member State, with a proviso that Member States may conclude agreements with third countries concerning that subject matter.Footnote 103 Whereas such bilaterals did not occur, and the 1989 WIPO Washington Treaty on Intellectual Property in Respect of Integrated Circuits remained dead letter law,Footnote 104 Arts. 35–38 TRIPS eventually made this new form of IP obligatory for all WTO Members.
The protection of geographical indications (GIs) by the European Union provides an example of where the use of reciprocity to globalize new types of IPR partially failed. The original 1992 Regulation made GI protection for agricultural products and foodstuffs coming from a third country dependent upon equivalent GI protection for EU products in that country, “without prejudice to international agreements.”Footnote 105 Arts. 22–24 TRIPS indeed address this issue but only set out very limited obligatory GI protection levels. Also within WIPO, the European Union has thus far failed to establish its preferred high standard as the global norm, mainly because of US opposition.Footnote 106 The inclusion of GI protection in the TRIPS Agreement even backfired when in 2005 a WTO panel found that excluding WTO nationals from the EU system for GIs violates the national treatment obligation owed to them.Footnote 107 As a result, the European Union has to accept third-country GIs within its market, but only a handful of other countries have committed to offer EU GI producers comparable levels of protection.Footnote 108
Just like the discrimination against foreigners, unilateral reciprocity requirements have also largely been ruled out and replaced by mutual national treatment provisions in IP treaties. Nowadays, reciprocity is thus useful only beyond the international acquis. At these edges of the international IP system, however, reciprocity is still popular – and it has retained its purpose, namely, to provide a country’s own nationals or residents with protection abroad.
The first example concerns German copyright law vis-à-vis “non-ressortissants,” that is, nationals of non-members of the international copyright system. In a move that somewhat contradicts the rhetoric of purportedly universal authors’ rights (Urheberrecht),Footnote 109 generally only nationals of Germany, the European Union, and the European Economic Area are eligible for exploitation rights in works, performances, and other subject matter.Footnote 110 Third-country (“foreign”) nationals qualify for German copyright protection only according to international treaties, because of first publication in Germany, or on condition of reciprocity.Footnote 111 In a case that went all the way up to the German Federal Constitutional Court in the 1980s, Bob Dylan fell prey to these restrictions. The civil courts dismissed his claim for an injunction against the distribution of an Italian bootleg in Germany based on his rights as a performer because of his US nationality and the lack of applicable international treaties. The Federal Constitutional Court also denied a violation of the principle of equality before the law, because Dylan’s exclusion from property protection was justified by the purpose of inducing the USA either to join the Rome ConventionFootnote 112 or to enter into a bilateral treaty with Germany.Footnote 113 In the former alternative, reciprocity helps to expand the international IP system and thus the level global playing field in IP. But the latter alternative, a reciprocal bilateral treaty, still situates reciprocity in a nationalist setting of individual countries that pursue separate interests. In any case, the ultimate purpose is to guarantee German performers reciprocal protection in the USA and that remains an outbound nationalist policy aim.
The second recent example of IP reciprocity concerns the protection of non-original databases, for which no multilateral treaties exist.Footnote 114 Consequently, states are generally free to decide whether and under which conditions foreign producers of such databases are eligible for protection. In the case of the EU sui generis right in databases, only those persons qualify who are nationals of a Member State or have their habitual residence, central administration, principal place of business – or at least their actively operating, registered office – in the European Union.Footnote 115 In contrast to Art. 15 DSMD, the Database Directive refers to the possibility that the EU Council may extend the sui generis right to third-country database producers on the basis of an international agreement.Footnote 116 Reciprocity is not expressly mentioned in this context, but it was discussed in the course of the legislative proceedings and is not ruled out under the terms of the directive.Footnote 117 In any case, the sui generis right in databases has not been an export hit. There is neither clear evidence for an investment stimulus,Footnote 118 nor has the European Union concluded treaties on reciprocal database protection with third countries. An endeavor to globalize the Database Directive via a WIPO treaty equally failed.Footnote 119 If that was a cooperative effort to advance a global public good (that is, more databases), then why did the European Union not adopt a universal approach in the first place? It is therefore more plausible to again interpret these moves as attempts to provide EU database makers with the benefit of transplanting the EU acquis to foreign markets – an instance of outbound IP (supra-)nationalism.Footnote 120
III. International IP Treaties
1. General Function of IP Treaties
Since the mid-nineteenth century, international IP policy has mostly taken the form of treaty negotiations among states with the aim of guaranteeing all nationals or residents of the contracting parties a minimum level of protection. At first sight, it seems odd to interpret these treaties as expressions of economic nationalism. Indeed, bilateral IP treaties and even more so the permanent multilateral IP Unions and later WIPO all establish a certain and ever more comprehensive level playing field for the global exchange of IP-protected goods and services. One of WIPO’s aims is “to contribute to better understanding and co-operation among States for their mutual benefit on the basis of respect for their sovereignty and equality.”Footnote 121 That intention is, on the one hand, precisely what characterizes globalist rather than self-interested or conflict-oriented nationalist attitudes and policies.
On the other hand, it is crucial to distinguish between the structural effects of the international IP system and its distributive consequences and underlying dynamics. What emerged in the nineteenth century indeed grew into a regulatory cornerstone of the global knowledge economy. It is difficult to imagine the numerous global IP-intensive industries of today without at least some basic form of protection in most markets. I accept, in other words, that the international IP system is a result of – and at the same time, a driver of – globalization.
But that observation does not respond to the realist concern raised by Alexander Hamilton and Friedrich List as the two classical proponents of economic nationalism, namely: Who pushed for and benefits from these treaties?Footnote 122 If one only looks at the largely homogenous interests of IP proponents, one tends to interpret the history of the global IP system as a kind of logical, linear, and largely apolitical development (“progress”).Footnote 123 From the outset, such an analysis cannot account for the power struggles that also define the history of international IP.Footnote 124
If one takes, instead, a more realist approach and focuses on the conflicts surrounding the globalization of IP, international treaties in this area turn out to be essentially economic nationalist policy tools of net IP exporters.Footnote 125 These countries gain protection for their domestic IP industries in foreign markets, and they can expect the private beneficiaries’ and their own total revenues to more than offset the royalties they have to send to the foreign companies or countries to whom they accord national treatment.Footnote 126 Silke von Lewinski consequently calls copyright provisions in trade agreements “money making machines” for major exporters of copyright-protected products.Footnote 127 In addition, multinational firms have proven to be more responsive to treaty-induced increases in patent protection in developing countries than firms established there. Whereas foreign applications in developing countries grew significantly after their accession to the WTO, the number of domestic patents increased much less, if at all.Footnote 128
No-one seriously disputes that the benefits of international IP treaties come with a cost, namely increased prices for access to innovation, innovative products, and follow-on innovation.Footnote 129 These costs are particularly problematic for net IP-import states because they impede their economic catch-up.Footnote 130 Not surprisingly, therefore, low-income developing states have repeatedly criticized and opposed the globalization of IP. Until now, however, IP proponents and exporters have successfully overcome any resistance.
2. The Berne and Paris IP Unions
The establishment of the Berne and Paris Unions did not cause much trouble. It occurred among a coalition of the willing, among them all major colonial powers. Beginning in the early nineteenth century, these European states had already extended their national IP laws internally to their dependent territories.Footnote 131 When they created the IP Unions to establish a world IP market, it was only logical to incorporate the colonial markets. To this end, Art. 19 Berne Convention 1886 provided that “[c]ountries acceding to the present Convention shall also have the right to accede thereto at any time for their Colonies or foreign possessions.” A functional equivalent rule was added to the Paris Convention in 1911.Footnote 132 All colonial powers made extensive use of this option, ensuring that, at the dawn of the twentieth century, the scope of application of the IP conventions covered practically the entire planet.Footnote 133
And yet this was only true in geographical terms, for the sole purpose of including the colonies was to protect the citizens of the colonial powers, for instance book publishers based in London or Paris. They were to enjoy the same protection of their rights in the conquered territories as in the home metropole.Footnote 134 The colonized peoples, on the other hand, were barred from obtaining copyrights or patents, whether de jure – as in the case of “natives” in the German colonial law – or de facto, through requirements such as first publication in the UK or restrictions on access to the courts.Footnote 135 If the age of IP colonialism was about progress, then it was only with regard to the metropoles and the enterprises established there.
3. Decolonization
This finding is confirmed by the coinciding of the collapse of colonial empires and the first true crisis of the international IP system in the 1950s and 60s. When colonies became independent states and “developing countries,” they finally gained a voice in treaty negotiations. This triggered the fear within the BIRPI,Footnote 136 the predecessor of WIPO, of an exodus of newly independent states and consequently a drastic shrinking of the global IP territory.Footnote 137 In the 1960s, India in fact raised the claim that the Berne Convention’s high level of protection stood in opposition to the developing countries’ primary interest in gaining access to available knowledge in order to promote education and technological progress.Footnote 138
And yet the system did not implode. The reasons for this resilience are complex but are again rooted in post-colonial, asymmetric power relations between economically and technologically advanced IP exporters in the Global North and low-income IP importers in the Global South. In particular, the lower the IP capacity of a country, the more vulnerable it is to a pro-IP agenda running against its interests as a knowledge importer.Footnote 139 Furthermore, accession to the key conventions, of which both the Western and the Eastern blocs were a part, held out the promise of international recognition. After all, this was the only way to ensure that the citizens of the developing countries would be granted legal protection in the former metropoles.Footnote 140
4. The TRIPS Agreement
Specific private and state interests finally also spurred the last apex of the international IP system, namely the TRIPS Agreement, which achieved an “unprecedented level of substantive harmonization of IP law.”Footnote 141 On the face of it, this treaty too is the result of globalist motives and aims. According to its preamble, WTO Members desire to reduce distortions and impediments to international trade; recognize the need for a multilateral framework of principles, rules, and disciplines; and emphasize the importance of reducing tensions through multilateral procedures. All of this resonates well with the ideological mainstream after the fall of the Eastern bloc, when the Washington Consensus propagated a universally valid version of the open market economy in tandem with unequivocally defined and effectively protected titles of property.Footnote 142
Yet the well documented history of the TRIPS Agreement again supports a realist interpretation of the agreement.Footnote 143 According to Adrian Otten, then Director of the Intellectual Property Division of WTO and thus a neutral representative of the multilateral forum,
[t]he driver behind the inclusion of IP in the Uruguay Round was the United States. The background was that, in the years following the end of the Tokyo Round, large parts of US industry as well as the US Government became increasingly of the view that what they saw as inadequate or ineffective protection of US IP abroad was unfairly undermining the competiveness of US industry and damaging US trade interests. These concerns went beyond the issue of border controls to prevent the importation of counterfeit goods, to the substantive standards of IP protection in other countries and the effectiveness of means for their enforcement, internally as well as at the border. This, in turn, was part of a wider perception of many in the United States that the GATT system, while doing quite a good job in regard to standard technology manufactured goods where the United States was losing international competitiveness, was doing a bad job, or none at all, in the areas of agriculture, services and IP[,] where US competitiveness increasingly lay. It should also be remembered that this was a period when the international value of the US dollar increased enormously, almost doubling between its low point in 1978 and high point in 1985 according to the DXY index (US dollar relative to a basket of foreign currencies); this greatly exacerbated concerns in the United States about the country’s international competitiveness.Footnote 144
The change in the IP policy of the USA from an inward- to an outward-looking perspective went hand-in-hand with the move from a net IP-import to a net IP-export economy and becoming a global superpower after World War II.Footnote 145 This shift in perspective, however, left the concern for the interests of US industries unaffected. Worried about foreign counterfeits and piracy, the USA, supported by the European Community, in 1978 put forward a proposal for a respective GATT agreement, but to no avail.Footnote 146 After corresponding efforts to close two major loopholes in the international IP system (concerning the patentability of pharmaceutical products and copyright protection for computer programs) had failed in WIPO because of opposition by developing countries,Footnote 147 the USA shifted the forum back to the GATT, where “trade preferences were now used as a bargaining chip for higher levels of IP protection.”Footnote 148 The main push for that move came from a group composed of twelve top executives from the US pharmaceutical, software, and entertainment industries.Footnote 149
In June 1988, European, Japanese, and US business communities joined lobbying forces and published a “Basic Framework of GATT Provisions on Intellectual Property,” which significantly influenced the positions of their respective home governments.Footnote 150 As early as 1991, the main content of TRIPS was settled.Footnote 151 Inter alia, the agreement obliges all WTO Member States to protect computer programs as literary works under the Berne Convention (Art. 10(1)) and to grant patents for any inventions, whether products or processes, in all fields of technology (Art. 27(1)). It thus satisfied the core demands of IP demandeurs.
5. IP Treaty Making in the Twenty-First Century
Multilateralism lost traction as early as the turn of the millennium. The Washington Consensus in general and the TRIPS Agreement in particular became the target of heavy criticism for their perceived failure to foster global development and innovation.Footnote 152 This backlash has, however, not brought IP treaty making to a standstill. On all levels, IP exporters continue to push for their outbound IP (supra-)nationalist policy aim to strengthen IP across the globe, and successfully so.Footnote 153
This also includes already widely adopted multilateral treaties, namely the 2006 Singapore Treaty on the Law of Trademarks, which further harmonizes administrative trademark registration procedures,Footnote 154 and the 2012 Beijing Treaty on Audiovisual Performances, which closes loopholes in the international copyright acquis.Footnote 155 The USA and the European Union furthermore actively rely upon the WTO dispute settlement procedure to enforce TRIPS obligations. On March 23, 2018, the USA requested consultations with China concerning certain measures that the USA claims to be inconsistent with Art. 3 (national treatment) and Art. 28 (rights conferred by a patent), which the European Union requested to join.Footnote 156 On June 1, 2018, the European Union initiated its own WTO procedure against China, referring to the very same Arts. 3 and 28 TRIPS, which the USA requested to join in turn.Footnote 157
Bilateral and plurilateral treaty negotiations complement these efforts. This flexible, multilevel, forum-shifting approach also appears to be the norm rather than the exception. Bilateral pressure by IP exporters prepared the ground for the IP Unions in the late nineteenth century and the TRIPS Agreement in the late twentieth century.Footnote 158 That acquis then served as a platform for the Berne, Paris, and TRIPS-plus bilateral treaties after multilateralism in WIPO and the WTO had largely come to a halt.Footnote 159 Although the European Union and the USA act independently, their IP bilaterals even support each other in that the industries of both IP exporters benefit from the IP provisions in all TRIPS-plus free trade agreements (FTAs) via the most-favored-nation treatment of Art. 4 TRIPS.Footnote 160
At present, the European Union is actively negotiating FTAs that include comprehensive IP chapters with numerous countries.Footnote 161 In its early days, the Trump Administration withdrew from the Trans-Pacific Partnership (TPP) and thereby surrendered significant IP benefits for various US industries, including longer patent terms for drugs, additional protections for biological medicines, and longer copyright protection.Footnote 162 It would, however, come as a surprise if “Trump had turned away from innovation nationalism.”Footnote 163 And indeed, the agreements the USA concluded in late 2019 and early 2020 with Mexico, Canada, and China prove the contrary. Chapter 20 of the United-States–Mexico–Canada Agreement (USMCA) is “virtually identical to the TPP” in terms of the IP provisions negotiated by the Obama Administration.Footnote 164 China has committed itself to very precise measures to improve IP protection and enforcement to the benefit of US pharmaceutical and tech companies that are active in China, whereas the USA mostly only “affirms that existing US measures afford treatment equivalent to that provided for” in the agreement.Footnote 165
6. Art. 31bis TRIPS and the Marrakesh VIP Treaty
In my view, only two twenty-first century IP treaties truly live up to the narrative of cooperation for the global public good, namely Art. 31bis TRIPS, which entered into force in 2017,Footnote 166 and the 2013 Marrakesh VIP Treaty.Footnote 167 Neither of these multilateral agreements establishes private exclusive rights, but they do facilitate access to and use of knowledge primarily for humanitarian and social developmental reasons.
Moreover, the beneficiaries of the access rules are located partially if not exclusively outside of the territories in which the patents or copyrights concerned are in force. The only formal amendment of WTO law provides the legal basis for WTO Members to grant special compulsory licenses exclusively for the production and export of affordable generic medicines to other members that cannot domestically produce the needed medicines in sufficient quantities for their patients.Footnote 168 Similarly, the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled permits the exchange of these works across borders by organizations that serve those beneficiaries.Footnote 169 Thus, and in contrast to the rest of the international IP acquis, these agreements specifically tackle and partially overcome the territorial fragmentation of IP markets, to the benefit of foreign IP users. It must be noted, however, that Art. 31bis TRIPS and the Marrakesh VIP Treaty address very specific access problems of marginal economic significance. They do not disturb the functioning of the global IP money-making machine.
D. Conclusion
I. A Dialectic Virtuous Circle
This article has demonstrated the complex and indeed dialectic relationship between economic nationalism and globalism in the area of IP. On the one hand, outward-looking policy perspectives have largely taken precedence over inbound IP nationalism. Even self-contained measures like Arts. 8 and 15 of the EU DSMD are embedded in and reflect upon the deep levels of global economic integration. Moreover, today’s international IP acquis establishes an effectively global and substantively comprehensive level playing field for IP producers and users alike. The leeway for inbound IP nationalist catch-up policies, whether in the form of no or weak IP or as discrimination against foreigners, has shrunk considerably – and in certain core areas of patent, copyright, and trademark law has shrunk to effectively being nothing at all. In those regards, IP nationalism has clearly lost ground.
On the other hand, the overview of past and present IP policies confirms that economic nationalist motives were, and remain, the main driver of international IP policy and law.Footnote 170 This is also true as regards the international IP treaty acquis. This poster-child of universal cooperation is indeed merely a side effect of outbound IP nationalist policies of powerful net IP exporters. These players adopt unilateral, bilateral, plurilateral, and multilateral measures as functional equivalents to pursue one and the same immediate goal, namely, to support domestic industries in an interconnected world market.
At this point, a dialectic virtuous circle emerges. The more that private parties depend upon foreign sales, the more they lobby their home governments for IP protection abroad. The deeper global economic integration, the greater the demand for global IP. Global economic integration thus turns selfish or nationalist short-term aims and benefits into drivers of an ever more comprehensive body of international IP law. This is the realist answer to the question of why IPRs and IP laws have continuously grown in number and expanded in scope, territorial reach, and duration – while at the same time having been contested far more than other branches of property law.Footnote 171
II. The Economic Nationalist DNA of IP
The resilience and dynamic of this virtuous circle vest in two universally accepted basic legal structures of IP. First, IPRs are private rights.Footnote 172 They are granted to private parties who acquire and enforce them at their will.Footnote 173 While it is true that these property rights have to serve the public good,Footnote 174 their immediate benefit is private. Accordingly, the political economy of IP differs greatly from branches of international law and policy that directly aim at global public goods, such as biological diversity. Whereas the latter require a global perspective of all stakeholders involved and equally global solutions, international IP protection is demanded by individual private parties who have strong vested interests. If governments respond to their demands, they can easily present themselves as putting local industries first and thus boost their domestic legitimacy.Footnote 175
Secondly, the private IP privilege is “territorial in nature.”Footnote 176 The principle of territoriality has been accepted by all states ever since the early call by France for universal cross-border protection was defeated by the pragmatic demands of greater national control during the negotiations of the Paris and Berne Conventions in the 1880s.Footnote 177 Global trade and communication are still not governed by one world IPR but by a mosaic of more than 190 national IP territories or jurisdictions.Footnote 178 In other words, fragmentation and particularism are the only truly universal aspects of IP. It is the nation state that ultimately guarantees IP protection. And those states that call for increasing levels of IP protection do so in the vested private interest of their local IP constituency.
The ensuing system could be considered universal only if it provided for a full harmonization or even unification of all existing national IP laws, which would logically rule out any IP nationalism. Such a level of integration has, however, not been achieved within the European Union, and it remains utopian on a global level.Footnote 179 Even if a global IP code were adopted,Footnote 180 it would not be normatively neutral, and jurisdictions on a lower regulatory level might, in addition, still pursue self-serving aims by turning their attention to non-IP mechanisms – such as prizes, grants, tax credits, or in-house government research – to foster local innovation.Footnote 181 In other words, the end of history and politics has not yet arrived.Footnote 182 And it requires strong visionary skills to imagine its realization.Footnote 183
In conclusion, I want to stress the descriptive character of this analysis. It demonstrates how, in which forms, and why economic nationalism manifests itself so strongly in IP. The more important IP becomes, the more likely it is that its nationalist DNA will impact other policy areas. Such tendencies can only be successfully counteracted if “scholars … speak the same nationalistic language that the government understands.”Footnote 184
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