Strengthening protection against abuse of intellectual property rights

Project outputs

Book in which this paper was publishedThe main output of this project was a research paper Consumer Protection and IP Abuse Prevention Under the WTO Framework by Dr George Tian, published in March 2012.

This paper examines the likely effects of the WTO framework and the TRIPS Agreement on consumer protection in the IP and technological market. It first examines whether provisions to limit IP enforcement measures on consumer protection grounds are permissible under the IP abuse provision of the TRIPS Agreement. It then uses China, Australia and Brazil as examples to examine how non-competition law approach, particularly consumer laws, can be used to prevent various forms of IP abuse, particularly unfair terms in End Users Licensing Agreements. Some recent cases on IP abuse prevention in high technology market are discussed by referring to consumer protection laws in Australia and Brazil, such as Sony PSN case, Google and Amazon cloud computing cases. Finally, it provides some practical advice for individual countries, particularly IP net importing countries, to use consumer law to prevent IP abuse. It is imperative that each country, particularly developing countries, should adopt more flexible approaches at both international and domestic levels to address the IP abuse issues and to protect legitimate rights of their citizens in using new technology products and services. This is not only important for protecting consumers but also important for encouraging competition and supporting innovation.

Background

Because intellectual property rights provide a legal monopoly to the creator, there is a great incentive to abuse them. Consumers International is engaged in research about legal strategies for combatting such abuse. Strategies under consideration as part of this research may be classed under two headings:

1. TRIPS and consumer protection law

The TRIPS agreement, in Article 8(2), explicitly allows WTO members to include provisions to prevent the abuse of intellectual property rights in their local law. Pursuant to this provision, a number of jurisdictions do regulate the abuse of intellectual property rights through competition law, such as where a rights holder refuses to negotiate a licence with a third party with the intention and effect of stifling the emergence of a new market.

However there has been next to no consideration given to the use of consumer protection law to limit intellectual property rights abuses. If it were found that consumer law could also legally constrain the TRIPS terms under Article 8(2), a whole new range of effective limitations would be available.  For example, a rights holder might be precluded from using DRM to protect its works if this could prevent consumers from accessing those works once technology changes, particularly if they had not been informed of that risk.

We therefore intend to carry out a research-based campaign on whether provisions to limit IP enforcement measures on consumer protection grounds are also permissible under TRIPS. Such laws could prevent the misuse of IP in ways that harm consumers by reducing a product's functionality, its safety, or information on its use and accessibility.  If it is found that such laws are permissible under TRIPS, it will become easier to advocate for law reform to limit the use of IPR enforcement measures that harm consumers.

2. Consumer protection law and unfair contract terms

We are also conducting research into whether – independent of the TRIPS provision considered above – consumer protection laws could prevent IP owners from misusing contracts with consumers to derogate from statutory copyright flexibilities.  There are two ways in which this could work: first, when rights holders claim to be prohibiting practices that the copyright law explicitly allows, this may breach consumer protection laws that prohibit misleading or deceptive practices.  Second, even if copyright law does not prohibit a rights holder from contractually derogating from copyright flexibilities, consumer protection law may do so.

Companies have rarely been challenged for including provisions in contracts with their consumers that prohibit consumers from exercising rights that the law allows them.  For example in some jurisdictions, it is permissible to make backup copies of computer software, to format-shift music, or to publicly perform copyright works to a limited public.  It is also typically legal to take clips from dramatic and musical works for educational purposes, and to quote from literary and artistic works.  Yet is is common that the rights holders will seek to prohibit those practices, through software licence agreements, copyright notices on Web sites and DVDs, and the like.  In the interest of consumers, this practice needs to be curtailed.

Using the results of this research, a campaign will be undertaken to effect change in the unfair or misleading contractual terms of companies that market copyright works to consumers.  The results of the research would also support a legal test case, brought against one or more companies committing such misuses, for which separate funding would later need to be raised.  A list of candidate companies for such a test case will be prepared as one of the outputs of this activity.  This list may form the basis for a future round of CI's annual “Bad Companies Awards”.

 

Creative Commons license icon
This work is licensed under a Attribution Share Alike Creative Commons license