Transnational Research Associates


GATT: Patents, Trademarks, Copyrights and the Industrial Engineer


Arthur F. Madsen, M.Ed.



 

 

 

Table of Contents

 

I.                   A Concise Historical Overview of GATT’s Progressive Evolution

 

·        The Impact of World War II

·        The Kennedy Round of Trade Talks

·        The Tokyo Round in the Late 1970s

·        The First Bush Administration’s Influence on GATT Proceedings

·        The Advent of Arthur Dunkel and a New Thrust toward Reform

·        The Uruguay Round: Changes, New Emphases and Global Acceptance

 

II.        Patent Law as Modified under GATT at Recent Proceedings

 

·        Patent Law Reform and the Industrial Engineer’s Role

·        The Most Prominent GATT Modifications of Patent Law

·        Provisional Patents

·        Finality and Non-Finality of Patent Rejection

·        Interaction of the Industrial Engineer with Patent Law

·        Developed and Developing Countries’ Patent Laws

 

III.             Infringement of Trademarks and Trade Secrets under GATT

and the Ethics of Global Competition for Industrial Engineers

 

·        Legal Provisions and Procedural Issues affecting Trademark Use

·        Main Concepts Associated with Trademarks

·        Trademarks and Trade Secrets: The Industrial Engineer’s Role

 

IV.              The Industrial Engineer and Copyright Regulations:

The Third Prong of Intellectual Property

 

·        Major Copyright Considerations

·        Clarification of the Fair Use Test

·        Recent Changes of Copyright Law under GATT

·        A Brief Case Analysis: Post-GATT Copyright Law in India

·        A Significant Third Prong of IPR

 

V.        Concluding Observations: A Note of Optimism

 

VI.       References

 



I.          A Concise Historical Overview of GATT’s Progressive Evolution

 

Without the insight of major research organizations, universities, and institutions, a meaningful discussion of the General Agreement on Tariffs and Trade (GATT), as it has evolved into the 21st Century, would not be possible.  When reviewing the well documented material produced by the Brookings Institute (Collins, 1994), Columbia University (Bhagwati, 1998), and Georgetown University, for example, it becomes obvious that a tremendous amount of analytical thought has been devoted to the many crucial parameters of the most recent major GATT proceedings.  These include the series of conferences known as the Uruguay Round, under the leadership of Arthur Dunkel, culminating in the most progress realized in decades on matters of international trade in the textile, agricultural, and service sectors, as well as in intellectual property law.  Around the world, other meetings and conferences have been held, notably in Geneva where new theoretical paradigms are being perfected and significant thinking is still emerging today, taking for inspiration the monumental progress made since the revocation, in the United States, of the Smoot-Hawley Tariff Act of the 1930s. 

When Franklin Roosevelt realized that protectionist tariffs were harming economic development, and his Administration began to reduce them by some 30%, the beginning of a new era in international trade had begun (Hudec, 1975; Hody, 1996).  Nations turned outward toward each other, reaching across oceans and continents in primitive ways by today’s standards, but nonetheless turned outward to both purchase and market their products.  This led to new industrialization in Europe, the United States and in Asia, even prior to World War II. 

The improvement of the standard of living for the citizens of all Western Nations, in these early stages, was a major objective in the rolling-back of protectionist measures that had been stunting growth (Altschiller, 1988).  With removal of obstacles to free-trade, the Great Depression, many economists feel, was brought to an end.  While industrial efforts began to turn toward military production as large nations geared up to wage war, the platform making this possible – for better or for worse – had been the resurgence, as early as 1932 and into the 1939 timeframe, of a gradually evolving, more liberal system of world trade. 

The Impact of World War II

 

The Second World War, in fact, provided the impetus needed to jolt the American Congress out of its protectionist frame of reference. Attitudes evolved during and after the War that were favorable to the expansion of international trade in most industrialized countries.  Tariffs were lowered and free flow of goods and services, in general, was possible during the 1950s. This occurred in spite of the Cold War, but the scale of trading patterns was limited by certain archaic restrictions and by inability to enforce violations of Law. But, even in 1952, there was a “panel on complaints” set up by GATT which, itself, had been in existence for only four years. The General Secretariat of GATT, under the direction of Eric Wyndham-White, was empowered to establish the agenda for all GATT proceedings.  Wyndham-White’s Deputy Secretary actually drafted many of the long-lasting concepts that were used by GATT up until the Uruguay Round in 1993; his concepts endured well beyond that decisive conference. (Hudec in Bhagwati et al., 1998)

                In 1957, prior to the Kennedy Round, it was generally acknowledged by Germany and other major trading nations that “ if governments themselves decided which of GATT’s obligations were sensible to obey”, then the Agreement would simply disintegrate  (Hudec, 1975, 243).

The Kennedy Round of Trade Talks

The Kennedy Round was more successful in the reduction of tariffs on most goods than any negotiations that had occurred since 1947 (Hody, 1996).  It is fair to state, within the context of the Kennedy Round, that in the 1960s, GATT’s membership tripled, creating an imbalance between the relatively few westernized democracies and the third world. 

Therefore, during this timeframe, 30 to 40 years ago, the legal apparatus of GATT suffered deterioration, because the Western Powers refused to recognize the authority of the majority of members, mostly developing nations whose trading and commercial interests differed radically from those of the West. There was what Hudec (1998) calls an atmosphere of anti-legalism that developed, undercutting, and rendering powerless, the original legal basis for international trade laws.  To a lesser degree, even after the Uruguay Round in 1993, this dichotomous division among rich and poor nations is still occurring within GATT and, more recently, within the World Trade Organization (WTO), causing tremendous friction between nations that are industrially powerful and those that are not.  The implications of this anti-legalistic atmosphere for trademarks, copyrights, and patents were vast, because the fulcrum around which power was focused became the point, in the 1960s, where favoritism and influence were brought to bear in crucial decision-making situations.

The Tokyo Round in the Late 1970s

At the end of the 1970s, the Tokyo Round focused on changing the anti-legalism of the 60s.  A dispute mechanism had to be put in place, one that was respected and honored by all nations, because protectionism was growing and various barriers (other than tariffs) were being erected to prevent growth of trade in certain directions and sectors.  Issues such as government subsidies of manufacturers (to improve competitive position) were also at the center of arguments during this time period. 

There were problems, however, in the General Secretariat of Legal Affairs by the early 1980s and it became obvious that changes had to be made.  With the installation of  Arthur Dunkel as Director General of GATT in 1980, many improvements came about in the legal settlement of disputes and in the structured mechanisms by which these arguments were settled.  Many world governments began to demonstrate, in spite of prior weaknesses in the system, renewed confidence in the GATT system during this timeframe.  The United States was instrumental, as a major industrial power, in further strengthening the reforms made during the 1980s under Presidents Reagan and Bush.

The First Bush Administration’s Influence on GATT Proceedings

The trade policies of former President George Bush were externally oriented, specifically toward a policy favoring expansion of world trade. Bush believed, according to Ingwerson (1992), that strengthening the U.S. foreign trade position in relation to both the developed world and the less developed countries was tantamount to improving America's overall security. In fact, former President Bush left a lasting impression in the sector of trade and foreign relations. He influenced GATT in favorable ways, and much of his legacy is still present in today’s policies.

The 1992 Ingwerson analysis is especially useful for a serious discussion on the effects of international trade on the distribution of income, a critical concern of GATT’s purpose, because it centers on the U.S./Japan trading relationship, where a dichotomous balance sheet between these two primary trade-partners influences distribution patterns measurably, and does so around the world.  The Bush Administration of the 1980s, according to Ingwerson, emphasized the merits of developing strong multilateral commercial ties, enabling the U.S. to take advantage of other nations' efficiency and productivity, thus building its own economic base. Self-serving as this may seem, it was also a strategy that benefited other countries in the medium and long term. It may be interesting to note that, following the first Bush Administration, President Clinton’s approach was tempered by his ties to Great Britain and embodied a far more humanitarian ideology than did his predecessor’s US-focused strategy.

The 1980s ushered in the era of globalization, as confirmed, not only by the events themselves, but by hundreds of noteworthy business theorists and economists (Levitt, 1983) . There are, and were in 1983, growing indications that the global consumer -- driving global markets -- will, in fact, continue to globalize the nature of business, and this is the central thrust of Levitt's, and others’, predictions. Indeed, Levitt seems to have been one of the first theorists to structure his perceptions of international trade patterns in this sense, and may well have been in the forefront of 'coining' or recognizing the entire notion of the global corporation driven by international demand for standardized products leading to, as he says, "alleviation of life's burdens and expansion of discretionary time and spending power." Thus, the globalization concept, because of its usefulness to all of mankind, became the watch-word of most entrepreneurial institutions, wherever they were headquartered.  In spite of some opposition to the removal of trade barriers for domestic economic reasons expressed by authors such as Bierma (2001), to varying degrees, GATT’s evolution essentially reflected these ‘globalized’ changes in business patterns.

The Advent of Arthur Dunkel and a New Thrust toward Reform

Nonetheless, as early as 1981, Arthur Dunkel, newly appointed to his post as GATT Director-General, realized that all was not well with this tenuous global system of relationships that relied on economically predicated ‘fear and terror’, rather than on gentlemanly business dealings. He noted that there were massive monetary imbalances, reflected in third world indebtedness.  These imbalances had, even in the early 80s, become quite apparent in worldwide economic circles. Further, this indebtedness was not about to be easily ‘forgiven’ by European and North American bankers.  Indeed, tension was growing even among major trading partners such as the U.S. and Japan over trade imbalances and the impenetrability of certain markets due to nationalistic protectionism and other factors.  Dunkel was confronted with a world trading system that required reform, but reform that would be acceptable to all parties.  This was a colossal task that, ultimately in 1993 and 1994, he resolved to the satisfaction of most nations (Bhagwati, et al, 1998).

            What seems most interesting is that, under Dunkel, the issue of regional trading agreements was addressed.  This was a contentious matter since, if only a few countries engaged in trading, others would be unfairly excluded, in spite of their productivity and eagerness to participate. 

The United States was not a popular nation among most of the world’s trading community during the 1980s and early 1990s.  America, in fact, used its power and influence to engage in bilateralism, in order to increase its own strategic position, and systematically excluded many nations from participation in the global pie. It had also become apparent that the U.S. had used border rules and exchange rates to dominate and manipulate many markets; hence, GATT proceedings at the Uruguay Round focused on these issues and culminated in improved integration of trading patterns. Ruggiero in Bhagwati (1998) offers an excellent discussion of these negotiations and settlements. Several of these changes inevitably affected copyright, trademark, and patent laws, in many respects.

The Uruguay Round: Changes, New Emphases and Global Acceptance

            As will be discussed more fully when trademark regulations and copyright laws are considered in more detail, the Uruguay Round of negotiations was instrumental in revising procedures in Agriculture, Textile, Services, and Intellectual Property legislation.  Many countries particularly appreciated the new emphasis on Services since this sector had been only lightly addressed under earlier gatherings such as the Kennedy Round.  Prior to Uruguay Round accomplishments, products, not services had been given priority. There was an estimated 140 to 260 Billion Dollar increase in “real global GDP” subsequent to these negotiations which redesigned patterns and rules for the free flow of goods among nations (Collins, 1994).                     

            These impressive increases in productivity and re-circulation of wealth had dynamic effects on the development of theretofore neglected nations such as the former Iron Curtain countries of Hungary and Czechoslovakia.  Wealth was distributed somewhat more equitably, but still remained primarily in the hands of the “G-7 (+1)”, as G.W. Bush currently refers to the world’s most prominent economies, notably the USA, Canada, Japan, France, Great Britain, Germany, Italy -- plus the New Russia, somewhat in a class by itself, as it painstakingly readjusts to Post-Soviet realities.

            Because the Uruguay Round was instrumental in revising prior GATT legislation in a number of critical economic fields of activity, it will be helpful to graphically display, on Table I, the accomplishments of the Uruguay Round, as assessed by the Brookings Institute (Collins et al, 1994), after adjournment of the proceedings.

TABLE I

Economic Sector

Nature of Change & Extent of Impact
Services

New Discipline similar to Products

Intellectual Property

Legislation for International Protection

Agricultural Trade

First time GATT controls this sector

Textiles

Restructuring of Pre-Existing Rules

Developing

Nations

Inclusion of these countries under certain provisions for the first time.
Multi-Sector Market Access

Tariff and other barriers were reduced

Government Subsidies

New Codification of Regulations
Dispute Resolution

New Procedures

Institutional Structure

New GATT mechanism for enforcement

Source: Adapted from Jackson, J. in Collins and Bosworth , Brookings Institute, 1994,  63-64.

Primary Accomplishments of the Uruguay Round

The distinction made between products and services at the Uruguay Round was especially significant since many of the world’s developing and developed nations were, and still are, embarking on national economic programs featuring ‘services’, notably in the realm of intangible software, intellectual property, and tourism.  New discipline had to be established to control and regulate these industries and this need was finally recognized in the Uruguay Round, the well-known and extensive GATT talks held at Punta del Este (Uruguay) beginning in 1986 and culminating, seven years later, in 1993.

Because foreign imports have been proliferating within the U.S. economy, the trade policies of the United States, which, along with the EEC and Japan, represents the world’s largest economic engine, have had to shift over the last three decades.  These new policies accommodate this influx of goods and guarantee at least the theoretical basis for a reasonably well-structured balance of trade.  With the globalization of markets, due to this phenomenon and to a desire on the part of most of the world’s nations to participate in world trade patterns, all aspects of trade have assumed new dimensions.   New GATT provisions have allowed for these recent trends and developments.

 

II.                  Patent Law as Modified by GATT at Recent International Proceedings

 

One area of trade that has been modified under the 1993 Uruguay Round dealt with patent law. It is important to clarify that trade and patents are interrelated because products, goods, and inventions that cross international borders must “belong” in the judicial sense to their rightful owners or inventors.  Obviously, goods marketed within national borders must also be properly patented and registered to their lawful owners, whether or not they are ultimately shipped internationally (Carbaugh, 2000; Darby, 1995).

Patents can be registered under U.S. Law and, under GATT provisions, be considered valid elsewhere.  Similarly, foreign patents are granted reciprocal rights under U.S. Law, as well.

 

Patent Law Reform, the Industrial Engineer’s Role

and Implications of Changes Enacted

 

Several of the changes related to Patent Law that were made under GATT have favorable implications for trade and commerce among all nations (Greenlief, 1995).  They must also be taken into account by industrial engineers and other technical personnel when designing, evaluating and planning the export of certain types of merchandise. Under these circumstances, the initial stages of product or process development must be carefully developed by the Industrial Engineer in tandem with R&D personnel and corporate administration.

If the Engineer is well aware of the most recent modifications, he or she can adapt the innovation process or the research and development effort in directions that will prove most economical and least likely to result in litigation or conflict on any scale.

The Most Prominent GATT Modifications of Patent Law

A major innovation has been approved under the GATT Agreement.  It includes what some inventors may consider a controversial premise.  In effect, patent ownership has been changed from “first to invent” to “first to file” (O.T.T., 2000).  There are, however, several advantages to this new rule – even if a legitimate inventor may be deprived of his rights under certain circumstances.

The new “first to file” rule, according to the Office of Technology Transfer at University of Texas:

·        Tends to encourage rapid disclosure by the inventor;

·        Generally eliminates “submarine” patent claims;

 

·        Expedites arrival of technology onto the market; and,

·        Places the filing incentive on the inventor.

 

A case can be made, of course, that the new rules provide openings for fraudulent filing and purloining of an inventor’s creation. Nonetheless, in the hard and fast world of competition, it is incumbent upon creative individuals, including industrial engineers, to protect their technological advances or product innovations under the Law.

Another major modification of the Law involves the length of the Patent term. It has been lengthened from 17 years after patent awarded to 20 years from patent application. It is important to note the “starting point” of this new term, which is the date of application, not of approval or award. The benefits obtained under the new formula include, among other advantages to which allusion will be made, the following:

·        This provision encourages rapid development of technology

·        It prevents patent continuation during development

·        And it places economic incentive on the inventor and developer

 

There is also a new Provisional Patent Application, as mentioned below, that  allows one year to market the product or new technology, but the application must be completed within that year.  If the application is not completed, complications arise in the sale and export of the merchandise or product in question.

            As part of these innovations, there is now, as mentioned, a new rule pertaining to the term of a patent that is the result of the transition from the old term (17 years after granting) to the recently negotiated term prescribed by GATT (20 years after filing). It applies to all patents still in force as of June 1995.  These important new provisions should be seen as falling within the context of recent patent law changes under GATT regulations, and not as an outgrowth of other proceedings in Geneva or New York (USPTO, 2001).

Provisional Patents

In reference to the brief point made above, as a consequence of the U.S. being signatory of GATT, it became possible in 1995 to file what is called a Provisional Patent Application with the U.S. Patent and Trademark Office. Other signatory nations also adhere to this new policy. The Provisional Patent Application is intended to be a relatively economical way of postponing the cost and effort of drafting and filing a full patent application. This new provision is, many observers feel, an excellent way of ensuring access to patents by inventors and intellectual property holders who do not have massive resources to protect their rights under previously existing U.S. and International Patent Law. The probable impact of these developments will be noted further on in this report.  But one such impact deals with the rightful employment of industrial engineers and inventors by even small firms that might not have otherwise been protected by the new GATT provision now ensuring entitlement to their property.

Finality and Non-Finality of Patent Rejections

Under GATT, if the rejected application was filed prior to June 8, 1995, it is not advisable to file a continuation application since the result may be a shorter patent term. One alternative, if the filing date of the rejected application is before June 8, 1993, is to use a rule under GATT in which the applicant pays a fee to have the “finality” of the rejection cancelled. Even though this innovation applies to a narrow range of patents falling within specific dates, this ‘escape route’ could have implications for certain industries wherein technology was developed within these timeframes. Other critically important points that have been modified under new GATT regulations as they pertain to intellectual property rights and patents are also applicable under certain circumstances.

Interaction of Industrial Engineer with Patent Law

The interrelationship involving Industrial Engineering and Patent Law is also important to analyze and review within the context of GATT modifications. Because patents are closely related to the entire sub-field of intellectual property rights (IPR) in ways far more profound than trademarks seem to be, it is critical for the Industrial Engineer to be aware of the restraints initially imposed, and then liberalized, under the Uruguay Round.  For example, the TRIPS and TRIMS provisions of GATT, respectively Trade Related Intellectual Property Rights and Trade Related Investment Measures, are critical in the sense that they control the nature, type and quantity of internal components, drive assemblies and other technical parts used in manufactured products destined ultimately for export.  These measures also control the proportion of parts in final products that can be imported, then transformed and finally exported with value added. (Mendoza, et al., 1999)  

TRIMS is a concept useful to understand for stock holders, as well, since pricing of products is controlled by these measures and bottom-line profits can be affected by changes in these laws. Within this context, Stires (2001) speaks of Mark Yockey’s (favorable) experience in investing in a Dutch Publishing Firm, Wolters Kluwer, possibly affected by TRIMS guidelines since some of their labor and binding materials may originate in countries other than Holland.

An Industrial Engineer when designing plant assembly lines, processes and methods, must be aware of the implications involved under GATT.  This also applies to the actual development or innovation stage of the engineer’s efforts.  Knowing what restrictions may be imposed under TRIM rules could save the industrial engineer’s firm hundreds of thousands, even millions of dollars.

The TRIM measures currently in force, in this post-Uruguay timeframe, are primarily local content and trade-balance requirements.  For example, if Canada wishes to export cars made in Ontario to China, the Canadians may be obligated to purchase automotive components from China for use in the finished vehicle.  Conversely, Canada would also be permitted to use a certain percentage of local content materials under these measures.  Because of the large amounts of capital required for the automotive, heavy equipment and aviation industries, TRIM stipulations tend to apply mostly to these types of heavy operations.  A more typical example, however, might involve two third world countries currently embarking on automotive assembly technology, such as Mexico (Ford-Mazda Plant in Hermosillo) and Malaysia where, in Kuala Lumpur, some attention is being devoted to this sector.

These observations concerning TRIM also have implications for Middle Eastern oil-producing nations such as Qatar.  There is a system of checks and balances in place in the State of Qatar that results in an approximate balance of components imported from and exported to trading partner nations.  In particular, there is a large Qatari natural gas processing facility located at Northfield, operated by Qatar Gas, currently falling under certain TRIM provisions.  However, since these provisions may be waived in the near future, they will have little or no impact on the overall long-term balance of trade picture.    

   Interestingly, industrial engineers should be informed periodically of changes that are about to occur in nations that have notified the WTO (charged essentially with administering GATT) of their intent to dismantle, with authorization, the TRIM regulations in their countries.  Many nations have already withdrawn and the elimination of TRIP rules in these areas – and eventually globally – will promote a more balanced, even neutral, playing field when trading operations are transacted.  Because resources in the form of raw materials are becoming increasingly scarce, it is important to allocate them judiciously and efficiently.  Industrial engineers, therefore, in all fields must be aware of the macro-trends affecting trade – as they relate to intellectual property, inclusive of patents, and manufacturing processes in general.

With the discernable tendency toward relaxation of prior constraints and a resurgence of free trade activity, inclusive of ‘dumping’, a widely denounced practice that lowers price structures worldwide, industrial engineers should remain aware of the implications of continued movement in this direction (Wares, 1977). Schmitz (1996) identifies three sources of concern for all intellectual property holders, as he describes global trading patterns in general:

·        Firstly, as free trade expands globally and hundreds of countries exchange goods, the chances of infringement of patent rights increase exponentially;

·        Secondly, government subsidization of industry also threatens the individual patent holder who may not be able to defend his or her rights against well-financed state owned giants.

·        Thirdly, trading blocs may present threats as massive exchange of goods occurs perhaps usurping the rights of the original inventor.

The third scenario mentioned above is actually occurring and is currently destabilizing certain protective provisions under GATT.  Pharmaceutical firms in India are manufacturing patented anti-AIDS medications.  They are doing so on a  generic basis, but this is still considered an infringement of the American pharmaceutical inventor’s rights.  The Indian company intends to ship these cut-rate medications to other Third World nations for profit.  Trading blocs of such nations are inter-linked and thus seriously compound the violations under GATT provisions.  In this case, Botswana, South Africa, and Tanzania, for example, are trading heavily with India and have been purchasing these and other medications.  There is, however, a humanitarian clause permitting this to occur, but it is being seriously challenged by the United States.  Being aware, therefore, of these types of dynamics is critical for the industrial engineer who must plan production processes and must design operational systems, doing so economically and competitively.

            Naturally, the Industrial Engineer must not infringe the rights of other designers or inventors under current Intellectual Property Right (IPR) provisions.  In order not to do so, he or she must be aware of these provisions in all of their permutations, inclusive of patent laws. Further, the engineer must be cognizant of these rights as they specifically apply to his or her area of specialization, and should implement procedures internally to guard against intentional or unintentional misuse of intellectual property.  Interestingly, a US Industrial Engineer is bound by the same laws and restrictions, insofar as IPR is concerned, as his counterpart in, for example, the People’s Republic of China where licensing laws are now being implemented more stringently than in the recent past (Luo, 2001).

 

 

Developed and Developing Countries’ Laws: Two Distinct Stories

            Preeg (1998) describes the present state of IPR rules under GATT/WTO with some degree of precision.  He notes, in particular, that developing countries have not honored IPR regulations as scrupulously as most developed nations and that they are implementing them far more slowly than industrialized countries (see Note No. 4, Essay 2, Preeg, 1998).  This reality may be of special interest to Industrial Engineers who, under certain circumstances, might be compelled to “infringe”, by Western standards but not by Third World standards, on rights in a Third World setting as an answer to a technical or financial dilemma.  No ethical violation would necessarily be committed by engaging in such a solution, inasmuch as GATT is presently allowing Third World nations to adapt to “developed” standards more gradually.  Conceivably, patents would also be legally infringed under such circumstances in developing countries.   However, it is appropriate to acknowledge that this all falls into a gray area from both an ethical and juridical perspective.

            Perhaps an in depth discussion of how trademarks are being violated and what GATT has attempted to do to prevent this infringement would be useful for current and prospective industrial engineers who must remain aware of ever-evolving events and new legislation in this area.

III.        Infringement of Trademarks and Trade Secrets under GATT and the Ethics of Global Competition for Industrial Engineers

 

When infringement of trademarks occurs, GATT has established a well structured procedure for dealing with the offender.  Many of these disciplinary provisions are quite strict and involve both civil lawsuits and criminal proceedings.  It is amply clear that  Uruguay and Post-Uruguay participants treated trademark violations extremely seriously.

In addition to court proceedings, there are also procedural measures that are foreseen by GATT in case of trademark violations.  Surprisingly, the literature seems to indicate that violations occur frequently, particularly in the Third World. Once again, however, Third World nations benefit from special consideration and have been granted a longer period of time to adjust to GATT trademark and trade secret rules, just as they have for patent and general intellectual property regulations.

            The Industrial Engineer will often be confronted with moral dilemmas related to trademark registration, violation or possible infringement.  This is particularly so in foreign countries where rules differ.  For this reason, it is crucial that he or she be prepared to defend a position that may have been forced upon him or her by the constraints of doing business or by ill-informed corporate policy.  It is best for the Engineer to protect himself against possible litigation or dismissal by documenting the nature and extent of whatever pressure may be placed upon him to infringe trade secrets or trademark regulations in the performance of his duties. The larger question is: Will the engineer’s company protect him from personal liability? Or will he be subjected personally to civil or criminal action in the country where the violation occurs?  What seems to be occurring in reality is that company personnel who become involved in an overseas lawsuit are usually “physically removed” from the scene and issues are smoothed over in his or her absence, usually through payment of fines.  This is particularly the case in Third World settings where lawsuits of a serious nature never seem to “get very far”…for a variety of reasons.

Legal Provisions and Procedural Issues affecting Trademark Use

More striking than actual legal provisions are those that deal with procedural issues. For instance, GATT requires member nations to provide a method empowering, when necessary, a judicial tribunal to actually order production of evidence. Interestingly, the legal systems of Japan and Germany do not even allow for this possibility at the current time (Ladas, 2001).  GATT has also allowed temporary, or “provisional”, solutions to trademark violation problems.  These solutions clearly state that judicial authorities must possess the power to intervene rapidly in order to prevent violations from occurring.  Sometimes the courts in member nations can act under GATT without even giving the alleged violator the right to present his or her case.

Beyond civil suits and solutions, countries are also required to provide under GATT for severe criminal penalties for willful trademark infringement and copyright piracy when it escalates to a commercial scale. Furthermore, according to GATT protective trademark clauses, member countries are required to establish procedures to prevent entry of "counterfeit" trademark or "pirated copyright goods" by customs authorities at all national border.

There seems little doubt, under GATT as it presently stands, that trademarks and trade secrets are among the most strictly controlled features of international trade.

Main Concepts Associated with Trademarks

First, however, it is important, from an industrial engineering standpoint, to examine some of the main concepts and accords associated with trademarks, generally speaking.  Table II, below, adapted from Trademark and Patent Counselors of America (Peroff, 2001), summarizes salient points of which Industrial Engineers, because this is part and parcel of Intellectual Property Law, should be aware.  These points will, of course, be further clarified and described within the context of GATT’s effect on them. Most of these agreements pre-dated recent GATT innovations in trademark law, but still stand.

TABLE II

Basic Principles Governing Trademarks

Use, not Registration, is an Operative Concept in the United States

 

The Notion of Territoriality

The Supra-National Trademark System

The Madrid Union & Madrid Protocol

The Paris Convention

Source: Adapted from T& P Counselors of America, (Peroff, 2001).

The majority of the world’s countries agree that trademark rights are acquired by registration, not simply by using them.  However, the United States differs in this respect.  The first entity to actually utilize its trademark will generally enjoy priority rights. This fact makes it important to register early in other countries where there is intent to use a mark, or where there might be a probability of counterfeiting.

Legal specialists feel that obtaining a judgment against a party who is infringing a trademark that is used but not registered is possible. But it is much more complicated and expensive to proceed against a violator when the party bringing suit does not hold a trademark registration in advance of the legal action.  Industrial engineers must be aware of these laws, particularly overseas if any portion of merchandise or business-dealings is to be conducted abroad.  

The second point on Table II, above, indicates that territoriality is an operative principle in establishing, using and protecting trademarks. This concept stipulates that a trademark has a specific legal existence under each nation’s laws. Therefore, a business must obtain protection for its trademarks for each country where the trademark is to be used.

A supra-national trademark registration system, meaning that a trans-border system has been established, became operational in 1996 for the fifteen countries that comprise the EEC. While it is still possible to register trademarks in each European nation in the EEC, the trademark applicant can now submit a single form known as the “Community-wide Trademark Application”. There may be large cost savings and enhanced enforcement by obtaining a Community trademark registration, but there are many aspects of this new EEC system that have not been worked out to everyone’s satisfaction at this early stage.  Authors such as Label (2001) are, incidentally, discussing the ‘hemispheric’ semi-globalization of trade quite seriously.

Also on Table II appear the Madrid Union, the Madrid Protocol and the Paris Convention.  Each of these agreements governs certain features of trademark protection.  The Paris Convention, for example, protects international property, and requires that each member nation of the Convention (the U.S. is a signatory) grant identical rights to citizens of all member nations that are made available to its own citizens. Also, to discourage trademark piracy, a special right of priority has been established under the Paris Convention.

 

 

Trademark and Trade Secret Protection: The Industrial Engineer’s Role

It is important for the industrial engineer who may be inventing, registering and attempting to protect his product design under GATT laws to be aware of the implications of these new laws, not only as they pertain to patents and copyrights, but to trademarks, as well.  With this in mind, a discussion of the specific trademark changes enacted under GATT will prove useful.

Interestingly, to protect those who may not be using their trademarks for quite a while, GATT now requires that the non-use period be extended to three years before the registrant loses his or her trademark rights.   GATT’s Trademark Act has recently been modified to reflect that change. The amendment took effect on January 1, 1996. It is therefore harder to lose one’s trademark rights through simple abandonment.

Obviously, the new provision will make it more difficult than it was previously to cancel a mark that was not in use between the second and third year of nonuse. This will be to the disadvantage of a future applicant who wishes to register a mark, because it may be still blocked by a predecessor’s registration. On the other hand, the new provision operates to increase an advantage already available to non U.S. applicants: Ordinarily, all applicants must provide proof of use of a trademark in the United States before a mark can be registered, according to Darby & Darby (2001).  As implied earlier, a foreign applicant, however, can obtain registration under the Paris Convention and under the Lanham Act, part of the U.S. Civil Code, without proof of use, but only if it is based on a registration of the same mark in the applicant's homeland.

The GATT Act thus extends from two to three years the time during which a non U.S. company may be able to maintain registration for a trademark it has never used in the U.S.  Under this provision, an engineer may wish to invent and use his product in France, for example, and protect its trademark name there, as well as in the United States, but without the product being used in the U.S.

The other major GATT approved change to U.S. trademark law relates to the registration of marks for wine and alcohol that contain mislabeled geographical indications. According to GATT lawyers and advisors such as Trademark and Patent Counselors of America (Peroff, 2001), the new GATT Act amends Section 2 (a) of the Trademark Act to clearly prohibit registration of such marks. The change will only apply to marks that are first used on or after January 1, 1996, which was the date of enactment of the new provision.

This paper has briefly referred above to the Lanham Act, used to bring trademark law into alignment with NAFTA.  It was amended on December 8, 1993, via the NAFTA Implementation Act, to prohibit the registration of what it called "primarily geographically deceptively misdescriptive" marks for any type of goods or services. See Ladas and Perry in this regard (1995). 

It appears that U.S. trademark law already prevented the registration of a new trademark if the mark identifies a geographic location that is not the place of origin of the product.  This mainly applies to liquor, but other products may be affected, as well. Regardless of whether this prohibition is a material change above and beyond NAFTA or prior GATT amendments, it was made necessary by political considerations due to the sensitivity of Europe’s manufacturing nations and their influence.

Finally, although GATT has resulted in only minor changes to U.S. trademark law, other countries will be required to change their laws to implement GATT provisions and protections that are already available under U.S. law. Specifically, GATT requires that each member country must:

·        allow for the registration of service-type marks;

·        enhance protection for internationally well-known marks;

·        prohibit the mandatory “linking” of trademarks; and 

·        prohibit the compulsory licensing of marks.

These concepts, all of which are important for the professional engineer to understand, are further discussed in informative and analytical post-Uruguay texts such as Mendoza et al. (1999), Collins, (1994) and Preeg (1995, 1998).

 

IV.       THE INDUSTRIAL ENGINEER AND COPYRIGHT REGULATIONS:THE THIRD PRONG OF INTELLECTUAL PROPERTY

 

 

Copyright law in many other countries differs in details from the law in the U.S.A. Therefore, copying that is legal in the U.S.A. might be a violation of the author's rights in another country, something of concern given the international nature of the Internet. One important example is that the Law in the U.S.A. does not recognize moral rights of authors, although such rights for all authors are clearly specified in The Berne Convention for the Protection of Literary and Artistic Works.  However, the United States claims that it complies with the Berne Convention. This conflict between International Law and American law also spills over into the industrial sector, affecting technical documents, designs, and scientific manuscripts.  The Industrial Engineer must be fully aware of the parameters of the international litigation currently underway and of possible costs of copyright infringement for his company.

It is interesting to note, in passing, that the United States has often used its military and industrial strength to reject and renounce the preferred trading or environmental policies of large blocs of nations who may be economic (if not political) rivals of America. This type of posturing by the United States also affects its stance, as mentioned within the context of the Berne Convention, on Copyright Law.

Major Copyright Considerations

In any event, many of the major considerations that should be addressed when considering either protection of one’s work or avoiding possible infringement of another’s work are presented on the informal Table below.

TABLE III

 

Information Features

 

àCopyright Notice: A concept that should be grasped by the Industrial Engineer.

How to build your own copyright notice, and what it all means.

 

 

àFair Use: A Doctrine that has a number of permutations

When can you infringe a copyright and get away with it?  Take the Fair Use Test!

 

àPublic Domain: What are the time-limits on copyrights and what happens to them ultimately? Where copyrights go “to die”.

  

Copyright Registration Features

 

àWhy? Why should you register a copyright for your work?  Good reasons are provided in the text below.

 

àWhat? So what can you register for copyright protection?  Lots of things, but watch out for what you can't register.

 

àHow? How exactly do you register a copyright?  Like a lot of things in life, its sort of easy, but sort of hard; this process is described briefly in the text below.

 

 

Source: Adapted from O’Mahoney, B., 2001

 

The registration of a copyright in the U.S. is a complex procedure that varies

depending on precisely what is to be registered. The U.S. Copyright Office outlines this process for a number of intellectual property types.  Their instructions can be accessed easily by the Industrial Engineer or Administrators of his or her firm at this URL: http://www.loc.gov/copyright/reg.html. 

            Technical manuals or process design specifications, usually the types of documents generated by engineers, can be copyrighted under existing laws in the United States.  However, overseas regulations differ.  GATT affected this process during its debate on regionalism when issues of uniformity of treatment among all nations were raised (Mendoza, et al, 1999).

Clarification of The Fair Use Test

Most copyright lawyers have considered the Fair Use test a difficult standard of measure. There are yardsticks, however, that have been utilized with success to determine if copyrights have been infringed.  GATT further clarified some of these standards.

Classically, there have been three factors involved in determining whether technical or academic material is being misused without permission.

       The first factor simply looks at the new work and determines whether it was created primarily as a for profit venture or was created for a non-profit educational purpose.  This fair use test factor indicates that preference will be granted to works that were created for non-profit educational purposes, such as this Report.

       The second factor in the fair use test looks to see if the new work is for one of the purposes that are mentioned in the beginning portions of the US Copyright Office’s Fair Use Provision. It should be noted that this list is not complete; other items can be added to it. However, the burden of showing fair use is somewhat easier if the work is for one of the officially listed purposes that are clearly defined in the USCO’s periodically updated publications.
       The third factor looks at the degree of transformation accomplished by the new work. In other words, this factor attempts to determine “whether the new work merely replaces the original, or whether it adds something new, with a further purpose or a different character, giving new expression, meaning or message to the content.” Standler (1997)

Recent Changes in Copyright Law under GATT

Let us examine several of the major changes implemented by GATT proceedings in recent years, as they pertain to Copyright Law.  The Industrial Engineer should be able to locate details of these changes in current publications dealing with trade and international commerce.  The following itemization, partial in nature, has been summarized and reworded from Brinkman and Gentin (1997).

·        New Powers: GATT, as of 1995, possesses new authorization to investigate and issue compensation against unfair methods of competition and unfair acts in the importation and/or sale of imported articles, inclusive of articles that violate or infringe copyright laws of member nations.

·        Elimination of Time Limits on Investigations: there had been a 12 month period of limitation on investigations of violations. Now the provisions read:  "at the earliest practicable time after the date of publication of notice of such investigation." This wording leaves an investigation almost open-ended.

·        Counterclaims are now possible, whereas in the past they were not.

 

·        Simultaneous Litigation: The new GATT legislation offers some protection from the possibility of simultaneous litigation, that is to say being sued for several violations at once.

·        New Exclusion Orders permit the United States, or other GATT member nations, to bar importation of goods that violate copyright or trademark law.

 

The net effect of these changes seems to streamline the enforcement of copyright violations, thus protecting authors, engineers and those creating intellectual property, whether for profit or not for profit. 

The Industrial Engineer becomes involved particularly if he or she represents a highly visible corporation and infringes a well-known or prominently situated product falling under copyright or trademark law.  Such an error could open the Engineer’s company to massive lawsuits.  Penalties, in the US and internationally quite high, seem not to have been reduced by GATT proceedings.

A Brief Case Analysis: Post-GATT Copyright Law in India

By examining even a third-world country like India where industrial designs and intellectual property are protected under GATT and local legislation, the nature and degree of trademark and copyright infringement can be truly appreciated.  If engineers in India can be prosecuted for violation of copyright, it takes little imagination to suspect what might happen to them in France or the United States.

In India, as elsewhere, Intellectual Property Rights (IPR), inclusive of copyrights, is critically important for the success of business and industry. IPR helps in planning, marketing strategies, R&D, technical cooperation, and export of products as well as of manufactured goods. As emphasized previously, some major aspects that are related to the IPR are copyrights, trademarks, patents and, most definitely, industrial design. All such aspects are important for the industrial engineer (Raizada, 2001).

As a case in point, Indian Law covers intellectual property rights for computer software and does so specifically under Copyright Law. Almost all aspects of modern laws related to telecommunication, computer software, hardware are included in the Copyright Law. This Law specifies the rights of the copyright owner, the one who has originally designed the product or software and developed it. It contains clear-cut provisions dealing with punishment and fines that can be imposed for violation of rules.

In accordance with recent legislation, reflective of GATT provisions, Indian IPR Law states that anyone who infringes the copyright law can be tried and punished in both civil as well as criminal court. Those involved in piracy of software or those who violate patent laws can be sentenced even to a jail term (Raizada, 2001). This is also the case in the United States where criminal penalties are becoming more frequent whenever “intentionality” can be established.

A Significant Third Prong of IPR

As can be seen, Copyright Regulations represent an important and decisive third prong of Intellectual Property Rights and have been carefully spelled out in GATT documents, as well as in various international bodies of Law, such as in India. The Uruguay Round of GATT modified many of the prior copyright provisions. In the area of copyrights, the rights of many foreign authors that would have been lost under previous agreements have been restored under GATT. Copyright protections now exist without any geographic barriers so long as only GATT countries are involved. A brief discussion of how these newly modified ‘GATT-revised’ copyright laws affect the professional industrial engineer in the implementation of his or her duties, here or abroad, was forthcoming in earlier sections of this Report.

V.                    CONCLUDING OBSERVATIONS: A NOTE OF OPTIMISM

Prior to the arrival of the new millennium, the intellectual and technical communities in both developed and developing countries did not uniformly adhere to the international intellectual property rights system, known so well by its acronym IPR. Standards of adherence and enforcement differed substantially between North and South. There are still widespread misperceptions among scientists and engineers in the entire global industrial community about IPR, and its principal sub-components discussed in this Report, namely Patent Law, Copyright Protection and Trademark Registration.

With respect to patents, many industrial engineers consider that the international patent system ‘belongs’ essentially to the legal community. If an invention involves advanced technology, they recognize that drafting of a patent is a complicated and expensive process, although, under GATT provisions, innovative new allowances have been made to facilitate patent filing.

Many industrial engineers, both in the Third World and in Industrialized Nations are eager to produce scientific and engineering articles, concepts or designs, but a large percentage of them do not even remotely consider the possibility of patenting their research work. Since scientific publications and technical designs are protected under copyright law, and this work is usually automatically protected without the need to formally register, most engineers and scientists do not look into the implications of IPR regulations. They are satisfied with research publications and hope others will convert their research into something useful for industry.

.           With the implementation of the TRIPs and TRIMs Agreements, all part of GATT, the industrial engineering community should gradually become aware of the entire IPR regime, and of its impact on industrial design and in-plant processes.  Hopefully, reports such as the present effort will further the interest of Industrial Engineers in the significance that GATT, IPR, and International Trade Legislation, in general, can have on their companies’ success and profitability, and, hence, on their personal careers and professional success.  



VI.  References

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Bhagwati, J and Hirsch, M. The Uruguay Round and Beyond: Essays in Honor of Arthur Dunkel, The University of Michigan Press, Ann Arbor, 1998.

 

Bierma, P. “Free Trade at What Cost?”, Safety and Health, July 2001, 24-29.

 

Brinkman, D and Gentin, J., “Changes to U.S. Copyright Under GATT”, Smart Pros, Irvine, California, 2001. http://legal.smartpros.com/x11513.xml

 

Carbaugh, R. International Economics, South-Western College Publishing, Cincinnati, 2000.

 

Collins, S. and Bosworth, B., The New GATT: Implications for the United States, The Brookings Institution, Washington, D.C., 1994.

 

Darby and Darby Law Firm, A Professional Corporation, New York City, Los Angeles, 1995, http://darbylaw.com/gatt.html

 

Greenlief, M., “GATT Uruguay Patent Law Changes”, March 1995. http://www.uspto.gov/web/offices/com/doc/uruguay/SUMMARY.html

 

Hody, C. The Politics of Trade: American Political Development and Foreign Economic Policy, Dartmouth College, Hanover, N.H., 1996.

 

Hudec, R. The GATT Legal System and World Trade Diplomacy, Praeger Publishers, New York, N.Y., 1975.

 

Ingwerson, M. "International Trade, A Bush Legacy", Christian Science Monitor Boston, April 13, 1992.

 

Label, W. “Free Trade in the Americas: Is One Hemispheric Accord Possible?” Journal of Global Business, Spring 2001, 19-30.

 

Ladas and Parry Law Firm, New York, N.Y., 2001.  http://www.ladas.com/gatt.html#GATTTM

 

Levitt, T., “The Globalization of Markets”, Harvard Business Review, Cambridge, May/June 1983.

 

Luo, J.  China Licensing: Intellectual Property Law, Beijing, PRC, July 1, 2001. http://www.china-licensing.com/main.html

 

Mendoza, M. Low, P, Kotschwar, B. “Trade Rules in the Making: Challenges in Regional and Multinational Negotiations”, Organization of American States, Brookings Institution Press, Washington, DC, 1999.

 

Office of Technology Transfer, University of Texas at Arlington, http://www.uta.edu/tto/gatt-pat.htm

 

O’Mahoney, B. “Copyright Website”, 2001. http://www.benedict.com/info/info.asp

 

Peroff, M. “Trademark, Patent and Copyright Information:Overview of Internatinal Trademarks”, Trademark and Patent Counselors of America, P.C., New York, New York, 2001. http://www.tmcounselors.com/profiles/index.htm

 

Preeg, E. “From Here to Free Trade: Essays in Post-Uruguay Round Trade Strategy”, Center for Strategic and International Studies, University of Chicago Press, 1998

 

Preeg, E. Traders in a Brave New World: The Uruguay Round and the Future of the International Trading System, University of Chicago Press, Chicago, 1995.

 

Raizada, S. “Combating Piracy through IPR”, The Tribune, March 19, 2001. http://www.tribuneindia.com/20010319/login/main3.htm

 

Schmitz, A., Coffin, G. Rosaasen, K. Regulation and Protectionism under GATT: Case Studies in North American Agriculture, Westview Press, Boulder, 1996.

Standler, R. “Some Observations on Copyright Law”, 1997 http://www.rbs2.com/copyr.htm

 

Stires, D. “Simple Science”, Fortune, June 25, 2001, 171-172.

 

Wares, W. The Theory of Dumping and American Commercial Policy, D.C. Heath & Company, Lexington, May 1977.

 

…………………, Copyright Registration Procedures, United States Copyright Office, Washington DC, 2001. http://www.loc.gov/copyright/reg.html