Learning from Intellectual Property: Operationalizing Multilateral Agreements Domestically to Protect the Environment, Part III
By Utsav Gupta, Staff Contributor
The world has witnessed an unprecedented growth in an international intellectual property regime. However, we have yet to see similar growth in an international environmental regime. In this 3-part series, GIELR Online takes lessons from the harmonization of the international intellectual property regime and proposes applying them to the environmental context. In doing so, it performs a comparative analysis and discusses challenges. Part I discussed changes in our climate and the immediate need to develop enforcement mechanisms for environmental protection. Part II explored the history of the intellectual property regime and its link to free trade. Part III, below, discusses the application of the lessons learned from intellectual property and linking free trade to environmental law, using Mexico and the North American Free Trade Agreement (NAFTA) as case examples.
Lessons from the Development of Harmony in Intellectual Property and Applications to Environmental Protection
Lesson 1: Harmonization Is Not the Demise of Territoriality
Despite the level of harmonization evident in the international intellectual property law regime, “protection of intellectual property in foreign countries is granted essentially by registration in those countries.”1 For example, the Court of Appeals for the Second Circuit has refused to view national treatment as a conflicts rule, and rather views it as a requirement “that the country in which protection is claimed must treat foreign and domestic authors alike.”2 Most national courts apply the “lex loci protectionis” rule – “the law of the country for which protection is sought applied in intellectual property cases, is seen as implementation of the principle of territoriality.”3
Research has shown that even monist countries act like dualist counties when it comes to enforcing international environmental law.4 Courts, regardless of the constitutional system, are hesitant to apply international environmental law domestically.5 Therefore, the primary responsibility for operationalizing international environment law rests with the legislative and executive branches.
Indeed, there is a growing consensus that there that there is a need to view international environmental law as a part of domestic environmental law rather than a separate source.6 Most environmental treaties are not considered self-executing, and thus international environmental law is not applied and enforced directly by US Courts.7
Patent law also follows a dualist regime. It relies on the domestic implementation of international agreements. What is unique about patent law, however, is that is has largely been harmonized through the use of trade treaties, and enforcement of the international regime occurs through the WTO.
Even today, to obtain relief for intellectual property infringement, the plaintiff must bring suit in every country containing the alleged act of infringement.8 This principle of “independence of rights” is “formally enshrined in the Paris and Berne Conventions.”9 Therefore, the domestic operationalization of international patent law is key to the judicial enforcement of the contracted obligations.
Lesson 2: Free Trade Is an Effective Carrot and Stick
Patent law generally has little to do with trade. It is focused on the protection of a domestic public interest – to incentivize innovation. Those interests are propagated largely from countries with a large innovative capacity, like the United States, to those countries with smaller innovative capacities, like the developing world.
However, “WTO’s intellectual property … law has followed an arc similar to that now recommended by advocates for WTO incorporation of … environmental obligations.”10 An objective in establishing the WTO was to link trade to other areas of the economic activity.11 And the result thus far has been fruitful.
We can see a clear example of how trade retaliation can prove to be an effective stick, or compliance measure, from the failed pre-WTO attempt of the Netherlands and Switzerland to defect from an informal patent law norm.12 Even the threat of bilateral and multilateral retaliation via amendment of the Paris Convention forced the acquiescence of the two countries.13
Lesson 3: Minimum Standards of Harmony Should be Calibrated
“The WTO makes international policy through reciprocal exchanges between countries.”14 For example, high tariffs would be traded for compliance with a non-tariff measure.15 This works especially well for developed countries, like the United States, that have larger bargaining power in the context of trade. Developing countries see the increased wealth that comes from the reduced tariff and choose to comply with the non-tariff measure. Presumably the developing country has done the calculus that shows it will gain more from entering into the agreement than it loses. TRIPS is such an exchange.
TRIPS also struck another important balance:
“In exchange for the pledge of under-developed countries to commence harmonization of their patent laws, those countries were given additional time in which to comply with TRIPs. This compromise reassured the developed nations of GATT that all signatories would be required to protect their lawfully held patents over time, while under-developed members were assured that their economic development would not be suppressed.”16
The linkage between intellectual property and free trade did not run contrary to the economic goals of developing parties. In fact, for the agreement to have been struck, it required concessions from the developed world, lest the developing parties refuse to sign an agreement contrary to their interests under the wealth calculus described above. From this result, we can see that free trade is only an effective carrot and stick in so much as the developing world sees a net benefit from their compliance.
Indeed, “each state’s legal obligation or minimum standards … should depend in a finely calibrated manner upon their level of development.”17
Perceived Challenges to the Application of Intellectual Property Lessons to Environmental Law
Challenge 1: Tensions Exist Between Free Trade and Environmental Protection
There exists an inherent tension between free trade and environmental protection. Trade liberalization has led to the “externalization of pollution and environmental degradation.”18 By minimizing trade barriers, businesses can relocate their manufacturing activities to developing countries and exploit weak environmental standards to take competitive advantage.19 “In other words, global trade allows consumers in one part of the world to enjoy the benefits of goods produced elsewhere without bearing the associated negative consequences of pollution.”20
In 1994, there were at least seventeen environmental treaties that involved limitations on trade that environmentalists feared could be “rendered toothless” by GATT proceedings.21 Indeed, the WTO has been used as a forum for challenging environmental laws in the United States.22 Panel decisions show that GATT may: “(1) frustrate United States efforts to improve global environmental quality; and, (2) frustrate efforts to improve or maintain domestic environmental quality.”23
The WTO includes a Dispute Settlement Body (“DSB”) that “adjudicates trade disputes between the member countries.”24 The decisions are binding.25 The United States has lost a number of cases before the DSB concerning environmental protection, including “a case challenging clean air regulations issued by the [EPA], a case challenging … limits on shrimp imports designed to protect sea turtles, and a case challenging … tax treatment of foreign sales corporations.”26 Congress or the President must implement DSB decision before they are domestically enforceable.27
Two organizations – the International Chamber of Commerce (“ICC”) and the Organization for Economic Cooperation and Development (“OECD”) have developed proposals to reduce this conflict.28 The ICC proposal outlines eight guidelines for developing environmental policy without having a large impact on free trade, and include:
- “harmonization of national standards;
- transparency of environmental policies and regulations to ensure they do not become non-tariff barriers;
- enforcement of standards and regulation in a non-discriminatory fashion, in accordance with GATT MFN and national treatment obligations; … [and,]
- incorporation into international environmental agreements methods for measuring compliance and enforcement.”29
TRIPS executes several of these guidelines in developing a global regime for intellectual property rights. “[I]t is a major step toward global harmonization of intellectual property laws.”30 In addition, the treaties are transparent and enforcement is predicated on national treatment, avoiding discrimination. And finally, the DSB in the WTO provides a method for measuring compliance and enforcement. This is coupled with the domestic operationalization of the laws, where private parties can bring actions in state judiciaries to ensure compliance with the provisions.31
In addition, Professor Chang of the University of Southern California proposes a three-part test to separate environmental from protectionist trade restrictions and sanctions. A trade restriction is protectionist if:
“(1) the environmental protection in question applies to a stock of a natural resource within the foreign country, in the absence of physical spill-overs; (2) the foreign producers to be regulated compete with a domestic industry subject to similar regulations to protect a stock of the same resource in the importing country; and (3) use value is an important consideration that supports the regulation of the domestic stock, but not the foreign stock.”32
By implementing this test in future multilateral arrangements, conflicts between the goals of free trade and environmental protection can be minimized.
Challenge 2: The Same Incentives Do Not Exist in Environmental Law
TRIPS required large investments of “time, resources, and leadership,” which developed countries made after weighing the “long-term benefits of world-wide harmonization.”33 And “[i]n the international arena, countries … seek to advance their national welfare, usually in the form of wealth.”34 However, nations may not want to make the same investment to link environmental policy to trade.35 Additionally, patent law benefits from “a strong political constituency in favor of harmonization.”36
However, “[e]nvironmental standards can affect trade flows by affecting production costs for goods and services.”37 In fact, the WTO Committee on Trade and Environment has studied “whether environmental regulations impose costs on production that tend to increase prices and thereby decrease trade volume.”38
And as the externalities and costs of poor environmental regulation grow, it is likely that domestic political support for harmonization will grow. Strong support for harmonization is already shown through the prevalence of transnational NGOs dedicated to the protection of the environment.
Mexico and NAFTA: A Case Example of this Approach
Bringing Mexico into NAFTA provides a strong case example of the use of free trade agreements to set forth stronger intellectual property rights without disturbing domestic laws protecting the environment. The example additionally shows a framework on the use of the use of free trade as a carrot and a stick to create harmonization of the intellectual property regime through the domestic operationalization of the agreement, especially in how the law is enforced domestically in the member states instead of through a central dispute resolution mechanism.
One of the objectives of NAFTA is to “to provide adequate and effective protection and enforcement of intellectual property in each party’s territory.”39 The agreement relies on “enforcement of the … laws of each party rather than on a central or uniform system of dispute resolution.”40 Only if a party is “denied effective access to relief by the agencies or courts of another party in violation of the national treatment standard,” can they then pursue dispute resolution.41
Mexico, which is a party to NAFTA, had a “chronic shortcoming” in its protection of intellectual property rights.44 To compensate, NAFTA included several “voluntary and mandatory measures” to help the country gradually improve, even given its “administrative and judicial machinery.”45
While NAFTA liberalized trade, it did so by balancing environmental concerns. “[C]oncerns about potential competitive downward pressures on environmental standards in the United States resulted in Mexico enacting significant reforms in its environmental regulatory system.”46 Mexico created a special attorney general for the environment.47 In addition, the North American Agreement on Environmental Cooperation was drafted.48
NAFTA also had the side benefit of harmonizing environmental protection between the United States and Mexico. Concerns about the environment underlying free trade and the distribution of externalities generally led to consideration of the issue and implementation of a side-agreement. The implementation of NAFTA by Mexico, a developing country, shows clearly how the approach in harmonizing intellectual property via free trade can be used to also harmonize environmental law. What protects intellectual property can also be used to protect the environment.
The international harmonization of environmental protection is possible through the domestic operationalization of agreed upon standards. Free trade can be used as a carrot and stick to engage developing countries and promote compliance. Lessons can be taken from the growth of international intellectual property law. The case of Mexico and NAFTA shows how harmony of international intellectual property law can be achieved by developing countries in the context of a multilateral framework. It also shows how the interests of free trade need not run counter to those of environmental protection.
1 Id. at 16.
2 Graeme B. Dinwoodie, Developing A Private International Intellectual Property Law: The Demise of Territoriality?, 51 Wm. & Mary L. Rev. 711, 716-17 (2009)
3 Id. at 729.
4 Carl Bruch, Is International Environmental Law Really “Law”?: An Analysis of Application in Domestic Courts, 23 Pace Envtl. L. Rev. 423, 428 (2006)
5 Id. at 455.
6 A. Dan Tarlock, The Influence of International Environmental Law on United States Pollution Control Law, 21 Vt. L. Rev. 759, 763 (1997)
7 Id. at 766.
8 See id. at 733.
9 Id. at 734.
10 Thomas, supra note 3, at 391-392.
12 See Stack, supra note 22, at 127.
14 Peter M. Gerhart, The Tragedy of Trips, 2007 Mich. St. L. Rev. 143, 167 (2007).
15 Cf. id. (“One country gives up a policy (say high tariffs) that is detrimental to a second country, and the second country gives up a policy (its high tariffs) that is detrimental to the first country. This exchange model works reasonably well when dealing with tariff and non-tariff barriers.”).
16 Adam Isaac Hasson, Domestic Implementation of International Obligations: The Quest for World Patent Law Harmonization, 25 B.C. Int’l & Comp. L. Rev. 373, 385 (2002) (footnotes removed).
17 Stack, supra note 22, at 131.
18 Yang & Percival, supra note 12, at 641.
20 Id. at 641-42.
21 Glenn M. Stoddard, Implications of the North American Free Trade Agreement for U.S. Environmental Law and Policy, 13 Wis. Int’l L.J. 317, 330 (1994).
22 Tarlock, supra note 78, at 778-79.
23 Id. at 780.
24 Curtis A. Bradley, International Law in the U.S. Legal System 113 (2013).
28 Fletcher, supra note 2, at 359.
29 Id. at 359-60.
30 Id. at 362.
31 For example, registration is prosecuted nationally and adjudicated by the domestic judiciary.
32 Tarlock, supra note 78, at 783.
33 Fletcher, supra note 2, at 362.
34 Gerhart, supra note 86, at 155.
35 Fletcher, supra note 2, at 362-63.
36 Stack, supra note 22, at 160.
37 Thomas, supra note 3, at 393.
38 Id. at 396.
39 Nafziger, supra note 30, at 819.
40 Id. at 824-25.
41 Id. at 825.
42 Id. at 827.
44 Id. at 821-22.
46 Yang & Percival, supra note 12, at 643.