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7. Cross-Border Exploitation

Producer Multimedia has found out that his product is being marketed illegally and via a digital network by a competitor whose place of business lies in a foreign country. How can he stop this activity and demand compensation for the damage he has suffered? To which court should he turn? May he rely on German law? And, should he win the case. what should he do to enforce the judgement against the infringer whose place of business lies in a foreign country? What use is the best protection in legislation if in the end Multimedia is not able to take successful action against foreign infringers?

One of the main characteristics of digital exploitation of works and achievements is that is not limited to one single national territory, but in the majority of cases crosses borders. Yet traditional copyright law proceeds from the concept of equal validity of national copyright laws side-by-side - hence proceeding from a cumulation of national provisions in the case of cross-border exploitation. [Fn.64: The so-called principle of territoriality.]

Consequently, the first question to be addressed is which specific law is applicable to a case of cross-frontier exploitation [Fn.65: Here again, the legal provisions that determine which national law is applicable (so-called private international law; rules on conflict of law) have a national character themselves and may therefore vary from country to country.] and whether its provisions are also appropriate

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in the digital environment (7.1); subsequently the issue of jurisdiction in case of infringement is discussed (7.2) and, finally, the problems involved in executing national court judgements in foreign countries (7.3) .

7.1 Applicable Law

First of all, the act of reproduction is governed by the law of the country in which the reproduction takes place. [Fn.66: This derives from the principles of territoriality and country of protection, according to which the content and scope of protection is determined according to the law of the country which protection is sought. This is not necessarily the country in which a suit is filed; where the defendant is domiciled in a country other than that in which he committed an infringement, and where the injured party files suit in the defendant's country of domicile, according to the principle of country of protection the court in such country (on its jurisdiction see point 7.2) will apply the law of the state in which the infringement took place.] This applies to the production of CD ROMs, to the input of a work into a computer and hence to storage of a work on a server.

Apart from this, a distinction must be made between making available of a work in digital form off-line and making available on-line:

  • in the case of cross-border distribution of off-line media (e.g. CD ROM), the laws of each country in which copies of the protected work are distributed are applicable. Legally and economically, cross-frontier distribution of off-line media is not distinguished from distribution of traditional analogue copies of works (e.g. books, records, etc.) . Here as well production and distribution rights may be assigned individually for different countries; within the EU the first putting into circulation of the products leads to so-called Community-wide exhaustion of the distribution right, meaning that the products may circulate freely within the Community

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    once they have been put into circulation. In this respect, there is no need to take action as regards digital products.

  • The legal scenario is less clear as regards cross-frontier making available of protected works in digital networks. In this context dispute already exists as to which right is applicable in case of a traditional, cross-frontier communication of the work to the public by means of radio broadcasting. According to one opinion, the law of the broadcasting country should apply, whilst the laws of all receiving countries remain unimportant (theory of country of emission); according to another opinion, the entire process of a cross-frontier broadcast should satisfy the copyright law not only of the broadcasting state but also the copyright laws of all receiving countries (so-called country-of-reception theory). The objective is to protect rights holders against their works being broadcast from a state without or with a very low level of protection, who would thus be deprived of the fruits of their creative efforts. The country-of-reception theory means that a broadcasting company wishing to broadcast works on a cross-border basis must acquire the rights for each individual country of reception; this poses problems where the rights in the individual countries are no longer held by the author or by one and the same rights holder.

In the field of traditional television and radio broadcasting the EU introduced the principle of the country of emission. [Fn.67: Directive No. 93/83/EC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ EC No. L 248 of October 6, 1993, at 15.] However, this was only possible on condition that a certain minimum level of protection was introduced throughout the Community, as regards the rights of authors and related rights holders involved. Moreover, certain particularities of transactions concerning film rights and music rights facilitated the decision in favour of the principle of the country of emission.

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These reasons render it questionable whether in the near future the principle of the country of emission can be transferred to making available and transmission of protected works and subject matter in digital networks. In the end, this would require globally harmonised - and in a digital environment global means global - and uniformly effectively enforceable copyright protection, something that does not seem likely in the medium term, despite the conclusion of the TRIPS Agreement. [Fn.68: Agreement on Trade-Related Aspects of Intellectual Property Rights concluded on April 15, 1994.]

Hence, the solution will presumably lie in a system of subsidiary points of attachment, starting from the person who inputs information and proceeding progressively to other participants in the communication and their active locations. Yet another problem arises in that it is almost impossible to locate works unequivocally in digital networks, owing to their ubiquity. This is the point at which any kind of legal control - even control restricted to an approach bound to the country of emission - reaches its boundaries. Once again, technology itself can provide assistance, inasfar as in future it will be possible to trace the journey of a certain protected material through the network and, where necessary, to halt the progress of certain individual works. [Fn.69: In this respect it is expected that the same technological solutions can be found as are necessary for effective enforcement of rights at the national level, see point 4.7.]

Nevertheless, the issue of which law is applicable in case of. cross-border on-line transmission merits particular attention.

7.2 Jurisdiction

An additional problem arises in cases of cross-frontier infringement in finding a court which accepts international jurisdiction to take on the case and, possibly, to hand down a corresponding judgement. Even where a national court has

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jurisdiction under the applicable national procedural law, in many cases this court will not render a judgement on the entire cross-frontier case but only on the relevant national part thereof.

Basically speaking, in the majority of countries the rule applies that the courts of the state in which the defendant is domiciled or has his place of business have jurisdiction. In case of torts, which category includes copyright infringements, the courts of those countries in which the effects of the infringement occur also have jurisdiction. As regards copyright infringement by reproduction this means the state in which the copies of the work were made (but only as regards the reproduction right), as well as those states in which they were distributed (as regards the relevant national distribution right). In contrast, in states in which the copies of the work were merely in transit, as a rule it is not possible to obtain a court judgement, although evidently infringing copies are involved. According to the above-mentioned principles, as regards copyright infringements by means of dissemination of works via digital networks, the courts of those states have jurisdiction in which under national substantive law the right of public communication has been infringed; hence, the uncertainty as to the law applicable to on-line dissemination discussed under point 7.1 also affects international jurisdiction.

Where a national court accepts jurisdiction, as a rule it will only award the injured party damages for the entire infringement if it has accepted jurisdiction on the basis of the defendant's domicile, i.e. if the infringer is domiciled or has his place of business within national territory. In all other cases the national court will probably only compensate the injured party for that part of the damage incurred within the national territory of the court. This principle applies under the majority of national procedural codes and under the European Convention on Jurisdiction and Enforcement (which applies among EU Member States) and under the parallel, so-called Lugano Convention (which applies among EU and EFTA States) . Where the injured party cannot or does not wish to file suit at the infringer's place of domicile, then his only option is to file suit for each and every national part of the

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damage separately. This is particularly awkward and uneconomic where the infringement is absolutely clear and obvious and does not give rise to complicated and/or disputed legal questions in the countries involved. Corresponding considerations apply as regards injunction orders; here again the rights holder is only able to enjoin the infringer from international distribution through a court in the latter's native country, otherwise a specific injunction order is required in each country of distribution. An exception in this context is the procedural law of the Netherlands, under which at least in the case of obvious patent infringements a number of injunction orders enforceable in foreign countries has been issued, even in "kort geding" proceedings. [Fn.70: However, such a decision does require previous recognition before it can be enforced in a foreign country; see point 7.3.]

Consequently, it is recommended to expand the international jurisdiction of national courts to the effect that, in cases of obvious infringement, the courts of those states in which the defendant is not domiciled and does not have a place of business, are also entitled to issue a cross-border injunction order and award compensation for the entire damage caused by an infringement that took place in several countries. These amendments should be laid down in national procedural codes, in the European Convention on Jurisdiction and Enforcement and in the Lugano Convention.

7.3 Enforcement of Rights in Foreign Countries

Where the infringer is neither domiciled nor has his place of business or property within national territory, the rights holder has no choice but to enforce a judgement obtained within national territory in a foreign country. There are proceedings for recognition of foreign judgements, but they are sometimes rather tedious and time-consuming. Even within the framework of the European Convention on Jurisdiction and Enforcement of Judgements and the Lugano Convention, which were concluded specifically in order to facilitate the enforcement of

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national judgements, at least within the EU and the EFTA, in practice it is frequently simpler and faster to obtain a foreign judgement directly, instead of seeking recognition of a national judgement in a foreign country; these considerations apply in particular to proceedings for provisional protection.

Consequently, steps should be taken towards creating an international convention for the recognition of foreign judgements, applicable throughout the world. At the same time, within the context of the existing Conventions, it should be ensured that in practice it is faster and simpler to seek recognition of foreign decisions than to obtain a specific national decision.

© Friedrich Ebert Stiftung | technical support | net edition fes-library | Juli 1999

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