2005-10-3 15:24
ghost158@chinalawedu.com
[推荐]PARALLEL IMPORT OF COPYRIGHTED GOODS
PARALLEL IMPORT OF COPYRIGHTED GOODS (I)
Yanping LU
Candidate LLM of PKU Law School
INTRODUCTION
Paralled import, also called grey market of imported goods, is an intellectual property issue relevant to international trade. Parallel import occurs in such condition that an unauthorized importer purchases the goods abroard and imports them for resale in the importing country without the permission of the owner of intellectual property right. The appearance of parallel import is owing to the characteristic of territoriality of intellectual property. At present, cases of parallel import in China are fewer than those in developed countries. The cases of parallel import will increase greatly along with China’s entry into WTO, the development of international economics and trade, and the increase of trade between China and other countries in the world. Parallel import of trademarked goods and patented goods are both studied more than that of copyrighted goods, so I will analyse parallel import of copyrighted goods with comparative method in this article, and place an emphasis on the usage for reference to China.
CAUSES OF PARALLEL IMPORT OF COPYRIGHTED GOODS
Causes of parallel import
Parallel import has two first causes, namely, economics and law. Economics is the immediate cause, maybe it can be divided into several aspects.
First, the prices of the same product with the same label are different in different countries.
Second, intellectual property law provides for the more favorable protection of intellectual property in the importing country than in other countries.
Third, the owner of intellectual property in the importing country will probably engage in sales promotion and provide after-sale service for the customers in order to sell goods, which can increase the costs of goods; On the contrary, the unauthorized importer will not propagate the goods, so the cost and price of goods he sells are lower in the importing country. The unauthorized importer often makes use of the good faith and propagation of the owner of intellectual property to sell goods.
Fourth, an unauthorized importer can obtain the information of commodity price throughout the world quickly and low-costly along with the development of modern dissemination technology.
The principle of territoriality in intellectual property law is the legal cause of parallel import. The difference between intellectual property right and general civil rights is the territoriality principle. In general, intellectual property right is effective in the territory of acquisition and has no extraterritorial effect. Other countries do not bear any responsibility for the protection of intellectual property which is protected by the country of origin, unless the international conventions or bipartite agreements signed by them have such provisions. Along with the globalization of world economy and development of e-business, the principle of territoriality will probably be abandoned gradually; but now in the conditions of global economic development and the protection of sovereignty, the territoriality principle will be in existence for a long time.
Parallel import of copyrighted goods is also caused by the above. Because of the particularities of copyright in comparison with patent and trademark right, it is easier for parallel import of copyrighted goods to happen.
Special causes of parallel import of copyrighted goods
I. the principle of automatic protection
It is a requirement of various international conventions and laws on copyright that copyright should be automatic with no need to register. That is different from patent and trademark right. As long as an author has created a work that qualifies for copyright protection, that is, it falls into one of the categories of material protected by copyright, then the author will have copyright protection without having to do anything to establish it. There are no forms to fill in and no fees to pay to get a copyright protection, which is contrary to get a patent or trademark protection. Copyright law of the people’s republic of China has adopted the principle of automatic protection, and it stipulates in article 2 that “Works of Chinese citizens, legal entities or entities without legal personality, whether published or not, shall enjoy copyright in accordance with this Law. Works of foreigners first published in the territory of the People's Republic of China shall enjoy copyright in accordance with this Law. ”
Berne Convention for the Protection of Literary and Artistic Works stipulates in article 5(3) that “Protection in the country of origin is governed by domestic law. However, when the author is not a national of the country of origin of the work for which he is protected under this Convention, he shall enjoy in that country the same rights as national authors.”
Universal Copyright Convention requires all the copies of the work published with the authority of the author or other copyright proprietor to bear the symbol accompanied by the name of the copyright proprietor and the year of first publication placed in such manner and location as to give reasonable notice of claim of copyright from the time of the first publication in order that the author can have the copyright protection. Now many Latin American states adopt a system of registered copyright, but some of them have acceded to the Universal Copyright Convention, they must abide by the requirements of the convention rather than adopt the system of registered copyright when a foreign author wants to have the copyright protection. In recent years, the principle of automatic protection have gradually become an international principle. The copyright protection is acquired more easily than the trademark and patent protection, so the cases of parallel import of copyrighted goods are more than those of parallel import of trademarked and patented goods.
II. the principle of national treatment
The principle of national treatment is a fundermental principle in international copyright protection. Copyright law of the People’s Republic of China stipulates in article two that “Works of foreigners first published in the territory of the People's Republic of China shall enjoy copyright in accordance with this Law.” The Berne Convention, Universal Copyright Convention and other relevant bilateral and multilateral agreements confirmed the principle of national treatment as a fundermental principle.
According to the provisions of the Berne Convention and Universal Copyright Convention, if a national of a country of the Union creates a work, he can enjoy the same copyright in all the countries of the Union; if an author is not a national of one of the countries of the Union, he can also enjoy the same copyright in the country of origin as in all the countries of the Union as long as his work is first published in one of the countries of the Union; if an author who is not a national of one of the countries of the Union has his habitual residence in one of them, he can enjoy the same copyright in the country of origin as in all the countries of the Union; if an author who is not a national of one of the countries of the Union publishes his works in another country outside the Union, he may have the same copyright in the two countries outside the Union according to the laws in the country of publication and agreement between the two countries. In a word, an author can have the same copyright in many countries easily, so the cases of parallel import of copyrighted goods are easier to appear.
DISPUTES ON THE PRINCIPLES OF PARALLEL IMPORT
In the field of intellectual property, not only of copyright, there are disputes on the legality of parallel import. The most fundermental dispute is the dispute between the exhaustion and the universality principle.
The exhaustion principle holds that once copyrighted goods (or patented goods, trademarked goods) have been released in the stream of commerce, the owner of intellectual property may not prohibit the resale and use of the goods. After the first sale of the goods, the intellectual property right is deemed to be exhausted. So the exhaustion principle is also called the first sale doctrine.
The purpose of the exhaustion principle is to ensure the consumers’ rights to consume goods and the powers of sale of distributors to sell goods, in order that the goods protected by the intellectual property rights may circulate freely in different areas.
The exhaustion principle is generally accepted in domestic market by many countries all over the world in order to ensure the free circulation of goods protected by intellectual property rights, that is to say, the principle of national exhaustion is generally accepted. But in international market, it is a controversial issue on the adoption of the exhaustion principle. If the exhaustion principle is adopted in international market, parallel import shall be considered to be with the law. It is a controversial issue on the legality of the principle of international exhaustion in the countries throughout the world.
The principle of territoriality holds that intellectual property right is acquired according to the laws of the country of origin on intellectual property, and has no force in other countries outside the country of origin. If an unauthorized importer bought the goods protected by intellectual property right and sold them in the importing country, the owner of intellectual property right shall prohibit the importation according to the right of importation. The principle of territoriality is one of the main reasons to negate the legality of parallel import.
1、See Ying SUN, “Conflicts between Parallel Import and Protection of intellectual property, and Regulations and Controls by law”, “Forum of Politics and Law” 1999.3.
2、See Peking University Law School, “Charm of Law”, Peking University Press, the 1st edition, 2001.6.
3、See Chengsi ZHENG, “Intellectual Property”, Law Press, 1998.
4、See Min LI, “Intellectual Property of Copyrighted Goods”, “International Trade”, 1996.9.
5、See Chengsi ZHENG, “Intellectual Property and International Trade”, The People’s Press, 1995.
6、See Changbai CHEN, “International Intellectual Property Trade”, Southeast University Press, 1994; Also see Ming FANG, “Intellectual Property in Copyright Trade and Trade of Goods”, “Sea of Studies”, 1998.4.
7、See Jingchun SHAO, “Law on Intellectual Property ”, “Five-Four Academic Symposia of Peking Unversity Law School in 2000”.
2005-10-3 15:28
ghost158@chinalawedu.com
PARALLEL IMPORT OF COPYRIGHTED GOODS (I)
Yanping LU
Candidate LLM of PKU Law School
ATTITUDES OF SOME COUNTRIES AND INTERNATIONAL CONVENTIONS
Attitudes of some countries and districts
I. In USA
Although it is not explicit whether or not the USA shall prohibit the parallel import of patented or trademarked goods, it is explicit for the USA to prohibit the parallel import of copyrighted goods. The United States is a large country to publish books, softwares and audiovisual products in the world, and the published books, softwares and audiovisual products are all protected by the copyright law.
Section 602 of copyright act in USA prohibits the unauthorized importation of copyrighted materials, but provides that, with three exceptions, such as (1) importation of copies or phonorecords under the authority or for the use of the Government of the United States or of any State or political subdivision of a State, but not including copies or phonorecords for use in schools, or copies of any audiovisual work imported for purposes other than archival use; (2) importation, for the private use of the importer and not for distribution, by any person with respect to no more than one copy or phonorecord of any one work at any one time, or by any person arriving from outside the United States with respect to copies or phonorecords forming part of such person's personal baggage; or (3) importation by or for an organization operated for scholarly, educational, or religious purposes and not for private gain, with respect to no more than one copy of an audiovisual work solely for its archival purposes, and no more than five copies or phonorecords of any other work for its library lending or archival purposes, unless the importation of such copies or phonorecords is part of an activity consisting of systematic reproduction or distribution, engaged in by such organization in violation of the provisions of section 108(g)(2).
But in 1998, the Supreme Court unanimously ruled that the first sale doctrine applies to copyrighted goods produced in the United States and sold in foreign markets in the case of “Quality king distributors, inc. V. L’anza research international, inc.”, that is to say, the parallel import of copyrighted goods shall not violate the copyright law of the United States.
On March 9, 1998, the Supreme Court of the United States unanimously upheld that the first sale doctrine prevents copyright owners from controlling the importation of copyrighted goods sold outside the United States. In the case of “Quality king distributors, inc. V. L’anza research international, inc.”, Respondent L’anza, a California manufacturer, sells its hair care products in this country exclusively to distributors who have agreed to resell within limited geographic areas and only to authorized retailers. L’anza promotes its domestic sales with extensive advertising and special retailer training. In foreign markets, however, it does not engage in comparable advertising or promotion; its foreign prices are substantially lower than its domestic prices. It appears that after L’anza’s United Kingdom distributor arranged for the sale of several tons of L’anza products, affixed with copyrighted labels, to a distributor in Malta, that distributor sold the goods to petitioner, which imported them back into this country without L’anza’s permission and then resold them at discounted prices to unauthorized retailers. L’anza filed suit, alleging that petitioner’s actions violated L’anza’s exclusive rights under the Copyright Act of 1976 (Act), 17 U.S.C. § 106 501, and 602, to reproduce and distribute the copyrighted material in the United States. The District Court rejected petitioner’s “first sale” defense under §109(a) and entered summary judgment for L’anza. Concluding that §602(a), which gives copyright owners the right to prohibit the unauthorized importation of copies, would be “meaningless” if §109(a) provided a defense, the Ninth Circuit affirmed.
Because the decision on the interpretation of scope of Section 602(a) made by the Ninth Circuit conflicted with the decision by the Third Circuit of Appeal in the case of Sebastian International, Inc. v. Consumer Contacts, Ltd., 847 F.2d 1093 (3d Cir. 1988), the Supreme Court reviewed the case. The Supreme Court held that the exclusive right of copyright owners to sell copyrighted works only applied to the first sale of a copyrighted work, that is to say, once a copyright owner sells a copy of his work to another, the copyright owner relinquishes all further rights to sell or otherwise dispose of that copy. So the importation and subsequent distribution of those products bearing copyrighted labels by Quality king distributors did not violate L’anza’s exclusive rights under 17 U.S.C. § 106 501 and 602 to reproduce and distribute the copyrighted material in the United States.
The decision made by the Supreme Court prevents domestic manufacturers of copyrighted goods from using their copyright monopolies to block competition from Gray Market competitors. Lots of experts regarded the decision made by the Supreme Court as a great change on parallel import of copyrighted goods. Since the case, parallel import of copyrighted goods will be regarded as lawful.
II. Taiwan Province, China
Whether or not the parallel import of copyrighted products such as foreign books, tapes and CDs violates the copyright law of Taiwan is controversial. Before 1993, Article 87.3 provided that if an importer has distributed and imported the copyrighted goods which infringed the copyright of the copyright owner, the deed can be regarded as an infringement of copyright. That provision was considered to be hard to understand, and different scholars had different understandings.
In the course of negotiation on intellectual property with America in 1993, Taiwan promised to amend the copyright law and grant the right of importation to copyright owners under the pressure of Special Section 301 of USA. Article 87.3 in amended copyright law stipulates that an importation of the unauthorised copies can be regarded as an infrigement of copyright, that is a provision on pirate products. Article 87.4 stipulates that an importer imports the original products or copies without the authorization of copyright owners, the importation infringes the copyright of copyright owners, that is a provision on products of parallel import. In order to prevent the adverse effects to cultural education and information circulation, the copyright law also stipulates several exceptions to prohibit the parallel import.
Attitudes of International Conventions
I. Berne Convention and Universal Copyright Convention
Article 5.2 of the Berne Convention stipulates that the enjoyment and the exercise of these rights shall not be subject to any formality; such enjoyment and such exercise shall be independent of the existence of protection in the country of origin of the work. Consequently, apart from the provisions of this Convention, the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed. What’s more, the Convention also enumerate seven economic rights enjoyed by an author, namely, right of translation, right of reproduction, right of public performance, right of communication to the public of a performance, broadcasting and related rights, right of adaptation, arrangement and other alteration, and right of renewal.
Univeral Copyright Convention stipulates four economic rights had by an author, namely, right of reproduction, right of performance, right of broadcasting and right of translation.
Both the two conventions don’t explicitly provide for the right of importation, so the issue of parallel import of copyrighted goods is not involved.
II. Agreement on TradeRelated Aspects of Intellectual Property Rights (Trips)
Article 6 of Trips stipulates that “for the purposes of dispute settlement under this Agreement, subject to the provisions of Articles 3 and 4 nothing in this Agreement shall be used to address the issue of the exhaustion of intellectual property rights”. Articles 3 and 4 provide for national treatment and most-favored-nation treatment respectively. It is obvious that the issue of parallel import is left to be settled by the laws and other international conventions on parallel import according to Trips.
PRESENT SITUATION OF LEGISLATION AND SUGGESTIONS
Present Situation of Legislation
According to the revised copyright law on Oct 27, 2001, we can find that Article 20 stipulates the scope of copyright enjoyed by copyright owners but does not stipulate the right of importation, Article 46 enumerates the eleven conditions in which the infringer must bear civil liabilities for his infringing acts but does not include the issue of importation of works without the permission of copyright owners, and Article 47 enumerates eight infringing acts for which the infringer must bear civil liabilities, but does not refer to the issue of importation of works without the permission of copyright owners. So in accordance with the provisions of copyright law, there is no explicit provision on parallel import.
Suggestions on Legislation
At present, there is scarcely a case of parallel import of copyrighted goods in practice. But along with China’s entry into WTO and the development of world economy, more and more cases of parallel import will appear, not only of copyrighted goods, but also of trademarked and patented goods. So it is in urgent need of uniting the policies of different legislative organs on parallel import of copyrighted goods.
First, we should choose the legislative basis on parallel import, that is to say,, which principle we should adopt, the exhaustion principle or territoriality principle. From the point of legal protection, territoriality is one of the characteristics of intellectual property (including copyright). It makes known that intellectual property right acquired by intellectual property owners is independent in different countries. By far, intellectual property right can only be acquired in accordance with the law of a certain country and be effective in a certain territory of acquisition besides the situations of European Community and some African countries speaking French. The principle of exhaustion is not one of the characteristics of intellectual property. The creation of the principle is to prevent the owners of intellectual property from abusing the right to block free circulation of goods and maintain the public interests. And it is generally accepted by the countries all over the world. I think we should adopt the principle of territoriality in the legislative basis in order to protect the copyright of copyright owners.
Second, we should think over if we stipulate explicitly the clause of prohibiting parallel import in copyright law. Because the copyright law was just revised on Oct 27, 2001, it shall not often be revised. Law should keep constant over a long period of time. I propose that the customs department should issue regulations to prohibit the parallel import of copyrighted goods. Certainly, we can make explict provisions for the prohibition of parallel import in copyright law in appropriate circumstances of revising the copyright law again.
In conclusion, we should consider the connection of law and the world in the long run. Now USA has adopted the first sale doctrine or the principle of international exhaustion. That is a trend, and a trend of free trade and economic globalization. If the countries throughout the world generally adopt the principle of international exhaustion in future, China should make relevant amendment in legislation in order to adapt the need of development of world economy.
1、See Christopher A. Miller, Staff Writer : Supreme Court Upholds the First Sale Doctrine in Gray Market Cases, 1998 B.C. Intell. Prop. & Tech. F. 040801, from http://supct.law.cornell.edu/supct/html/96-1470.ZS.html.
2、See Shaojie LU, “The Territoriality Principle of Exhaustion of Rights and Intellectual Property in International Copyright Protection ”, “Intellectual Property”, 1998.2.
3、See Guangxian CHEN, “International Intellectual Property and Technology Trade”, Engineering Industry Press, 1996.
4、See Chengsi ZHENG, “WTO and Intellectual Property Related to Trade”, China People’s University Press, 1996.