2005 International Law Update, Volume 11, Number 5 (May)

2005 International Law Update, Volume 11, Number 5 (May)

Legal Analyses published by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com. 

COPYRIGHT

In dispute over restoration of copyrights for foreign authors previously in the public domain, federal district court rules that Uruguay Round Agreements Act (URAA) does not violate U.S. Constitution

The Plaintiffs in the following case (plaintiffs) sued the U.S. Attorney General, the Register of Copyrights, and the U.S. Copyright Office (defendants), challenging the constitutionality of Section 514 of the Uruguay Round Agreements Act, Pub.L. 103-465 (URAA) (17 U.S.C. Section 104A). It restores copyright protection to foreign works which are not in the public domain in their own countries but which had entered the U.S. public domain due to non-compliance with U.S. copyright law. The defendants moved for summary judgment, alleging that the URAA does comply with the U.S. Constitution.

In particular, Section 104A provides that: “(a) Copyright subsists ... in restored works, and vests automatically on the date of restoration. ... (h)(6) The term ‘restored work’ means an original work of authorship that – ... (B) is not in the public domain in its source country through expiration of term of protection; ( C) is in the public domain in the United States due to – (1) non-compliance with formalities imposed at any time by United States copyright law ...”

The U.S. District Court for Colorado denies the motion. First, the Court addresses the issue of whether the U.S. Constitution grants Congress the power to enact Section 514 of the URAA. The plaintiffs claim that the Section improperly removes works from the public domain contrary to the U.S. Constitution, Art. I, Section 8, cl. 8, the so-called Intellectual Property Clause. It provides that “Congress shall have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective writings and Discoveries; ...”

Congress has clearly favored the restoration of intellectual property rights in the past. First, the 1832 Patent Act intended to restore patent protection in cases where the invention had passed into the public domain. With the 1919 and 1941 Copyright Acts, Congress authorized the president to restore copyright protection to foreign authors of certain works published during World Wars I and II. Second, the Court determines whether URAA Section 514 is rationally related to a legitimate Government interest.

The relevant House Reports notes that Congress passed the URAA to make federal copyright and other laws comply with international treaties, including the Berne Convention for the Protection of Literary and Artistic Works. Thus, Congressional action was rationally related to its mandate to promote the progress of science and the useful arts.

In particular, the Senate Judiciary Committee explained that Section 514: “includes language to restore copyright protection to certain foreign works from countries that are members of the Berne Convention or WTO that have fallen into the public domain for reasons other than the expiration of their normal term of protection. The Agreement requires WTO countries to comply with Article 18 of the Berne Convention. ... Article 18 requires that the terms of the convention apply to all works that have fallen into the public domain by reasons other than the expiration of its term of protection.” S.Rep. 103-412 at 225.

The plaintiffs also urged that the burdens of complying with URAA Section 514 infringed their First Amendment rights. In their view, it has brought about the protection of works that were once freely disseminated. They contended that the burden of having to contact each copyright owner of each of these works for permission to use or quote from them is unduly heavy.

The district court rejects these claims. “Though the plaintiffs reasonably relied upon the entry of works at issue into the public domain, any expectations that they had of perpetual rights of exploitation could not reasonably have been settled. ... As established above, Congress has on several occasions throughout its history removed works from the public domain.”

“Any rights that the plaintiffs acquired in these particular works by virtue of their exploitation of them were thus anything but inviolate. It remained at all times within Congress’ authority to rectify the unfairness with which foreign authors were afflicted. ... As the Supreme Court has noted, ‘If every time a man relied on existing law in arranging his affairs, he were made secure against any change in legal rules, the whole body of our law would be ossified forever.’ ...” [Slip op. 51-52]

Citation: Golan v. Gonzalez, 2005 WL 914754 (D.Colo. 2005).

CRIMINAL LAW

Divided U.S. Supreme Court decides that phrase “convicted in any court” in federal statute penalizing gun possession by felons applies only to prior U.S. convictions

In 1994, a Japanese court convicted Gary Small (defendant) of smuggling firearms and ammunition. After serving a five-year sentence there, he returned to the U.S. and bought a gun in Pennsylvania. When the authorities found out about his conviction, they charged him under 18 U.S.C. Section 922(g)(1). It prohibits “any person ... convicted in any court ... of a crime punishable by imprisonment for a term exceeding one year ... to ... possess ... any firearm.” (Emphasis added). Defendant pleaded guilty but reserved his right to appeal the ruling that his foreign conviction fell within the scope of the statute.

The district court and the Third Circuit rejected defendant’s argument. The U.S. Supreme Court then granted certiorari to resolve the split in the Circuit Courts on this important issue. In an opinion by Justice Stephen G. Breyer, joined by Justices Stevens, O’Connor, Souter and Ginsburg, the Court reverses and remands. They hold that Section 922(g)(1)’s words “convicted in any court” refer only to U.S. convictions.

Justice Breyer begins by noting that Congress generally legislates with domestic concerns in mind. In effect, there is a rebuttable “presumption” that Congress probably did not intend a statute to apply extraterritorially.

Furthermore, reading the statute broadly to include foreign convictions could lead to bizarre results because of the “novel” criminal legislation in many foreign legal systems. For example, the Soviet Union once enacted a statute that barred entrepreneurial activities. Some legal systems accept the testimony of one man as equivalent to that of two women. Singapore punishes acts of vandalism much more seriously than the U.S. does.

The Court finds no tangible indication that Congress meant to include foreign convictions. “The statute’s language does not suggest any intent to reach beyond domestic convictions. Neither does it mention foreign convictions nor is its subject matter special, say, immigration or terrorism, where one could argue that foreign convictions would seem especially relevant. ...”

“[...] The statute’s lengthy legislative history confirms the fact that Congress did not consider whether foreign convictions should, or should not, serve as a predicate to liability under the provision here at issue. Congress did consider a Senate bill containing language that would have restricted predicate offenses to domestic offenses. ... And the Conference Committee ultimately rejected this version in favor of [the above] language ...”

“But the history does not suggest that this language change reflected a congressional view on the matter before us. Rather, the enacted version is simpler and it avoids potential difficulties arising out of the fact that States may define the term ‘felony’ differently.... Thus, those who use legislative history to help discern congressional intent will see the history here as silent, hence a neutral factor ...” [Slip op. 12-16]. Thus, there is no reason to believe that Congress intended to include foreign convictions in the statute.

Justice Clarence Thomas dissents, joined by Justices Scalia and Kennedy. The dissenters opine that the plain meaning of the statute does include foreign convictions. In particular, the dissenters take issue with the Court’s application of the presumption against extraterritoriality in this case. Foreign convictions are an indication of a degree of dangerousness and culpability.

“We have, it is true, recognized that the presumption against extraterritorial application of federal statutes is rooted in part in the ‘commonsense notion that Congress generally legislates with domestic concerns in mind.’ ... But my reading of Section 922(g)(1) is entirely true to that notion: Gun possession in this country is surely a ‘domestic concern.’”

“We have also consistently grounded the canon in the risk that extraterritorially applicable laws could conflict with foreign laws, for example, by subjecting individuals to conflicting obligations ... That risk is completely absent in applying Section 922(g)(1) to Small’s conduct.”

“Quite the opposite, Section 922(g)(1) takes foreign law as it finds it. Aside from the extraterritoriality canon, which the Court properly concedes does not apply, I know of no principle of statutory construction justifying the result the Court reaches. Its concession that the canon is inapposite should therefore end this case.”

“Rather than stopping here, the Court introduces its new ‘assumption about the reach of domestically oriented statutes sua sponte, without briefing or argument on the point, and without providing guidance on what constitutes a ‘domestically oriented statute.’ ...”

“The majority suggests that it means all statutes except those dealing with subjects like ‘immigration or terrorism,’ ... apparently reversing our previous rule that the extraterritoriality canon ‘has special force’ in statutes ‘that may involve foreign and military affairs,’ ... The Court’s creation threatens to wreak havoc with the established rules for applying the canon against extraterritoriality.” [Slip op. 27-29].

Citation: Small v. United States, 125 S.Ct. 1752, 73 U.S.L.W. 4298 (2005).

FORUM NON CONVENIENS

Missouri Court of Appeals affirms forum non conveniens dismissal where unfairness of Panamanian judicial system was alleged and notes such factors as place of accrual of claim, location of witnesses, and nexus with lawsuit

In the latter part of the year 2000, more than 100 patients received radiation treatments at the Instituto Oncologico Nacional (“National Oncology Institute”or ION) in Panama City, Panama. Radiation overexposure allegedly injured many patients and several died. Almost all of the victims are Panamanian citizens and residents. Several ION employees lost their licenses to practice, and the local courts convicted two of negligent homicide.

Some 112 victims and survivors brought a state court action in St. Louis, Missouri, against Multidata Systems International Corp., Inc. (MSI), a Delaware company with its principal place of business in St. Louis, and three Canadian companies for their role in exposing plaintiffs to defective therapy equipment. The defendants moved to dismiss based on forum non conveniens, however, arguing that Panama would be the more convenient forum.

At an evidentiary hearing, plaintiffs put on Dr. Julio Elias Berrios Herrara (Dr. Berrios), a professor of international law at the University of Panama. He opined (1) that the Panamanian judicial system was corrupt and on the verge of collapse and (2) that some Panamanian judges would be incapable of handling a complex case such as this one. The trial court nevertheless granted the motion and this appeal ensued.

A Missouri Court of Appeals affirms. It rules that the forum non conveniens doctrine permits a judge to decline the exercise of its jurisdiction (1) if the forum is seriously inconvenient to try the case, and (2) if a more convenient forum is available. The following six factors guide the determination: “(1) the place of accrual of the cause of action; (2) the location of witnesses; (3) the residence of the parties; (4) any nexus with the place of suit; (5) the public factor of the convenience to and burden upon the court; and (6) the availability to the plaintiff of another court with jurisdiction over the cause of action affording a forum for the plaintiff's remedy. [Cite.]”

“However, the ... factors are not an exclusive listing of the facts to be considered in deciding whether to apply the doctrine. ... In addition, neither precedent nor its progeny purport to set the respective weight a trial court must accord to any particular factor.” [Slip op. 15-16].

Here, plaintiffs maintained that the trial court had mistakenly concluded that Panama has a reliable judicial system. The Court disagrees. “Plaintiffs principally rely on the United States Department of State Report, which states that the Panama judiciary ‘was subject to corruption and political manipulation.’ However, while the trial court was entitled to take this report into consideration, ... the trial court also had discretion to review the other evidence presented.”

“Moreover, the trial court was not required to rely on the conclusory statements of Dr. Berrios. ... The trial court did not abuse its discretion in relying instead on ... two practicing attorneys in Panama with connections to the judiciary, who both testified that Panama’s judicial system is not corrupt.”

“Although [one of them] stated that some of the judges are not experienced and may be subject to political influence, the trial court could have given less credit to this testimony in light of his contradictory testimony in affidavits filed in prior United States cases where he stated Panama is an adequate forum as well as Panama’s codified requirements for qualification and process for sanctioning judges who are found to be corrupt. Plaintiffs’ ... point is denied.” [Slip op. 25-26]

The plaintiffs also contended that forum non conveniens should not apply in this case because defendants failed to show that trying the case in Missouri would be substantially more inconvenient than trying the case in Panama. Applying the above six factors, the Court makes two points.

First, under Missouri law, a cause of action accrues when, and originates where, plaintiff had allegedly sustained damages. Here, plaintiffs allege that they had been injured in Panama.

Second, as for the location of witnesses, even if the Missouri court were to bifurcate the suit, its trial would demand the attendance of a number of witness from Panama, including the ION employees. Moreover, the court could not join ION employees as third part defendants because they lack the necessary minimum contacts with Missouri. The inability to implead responsible third parties is an important factor supporting dismissal.

Third, most of the involved parties live in Panama. Only Multidata is located in Missouri. The Missouri Supreme Court has stated that the factor of residence of one defendant in Missouri is not inevitably controlling when there are other non-resident defendants.

Fourth, the Court addresses the nexus between MSI and the place of suit. While MSI is located in Missouri, the trial court did not abuse its discretion when it considered its lone presence not controlling. Fifth, the Court points to the convenience to, and burden upon, the court. Here, the procedural onus on the court below would be heavy. For example, most of those involved speak Spanish, the medical records are in Spanish, and the Court will surely have to apply Panamanian substantive law. Sixth, and finally, there is an adequate and available forum in Panama.

Citation: Chandler v. Multidata Systems Int’l Corp., Inc., No. ED84192 (Ct. App. Mo., May 10, 2005).

INSURANCE

English Court of Appeal (Civil Division) affirms declaration that reinsurers of Coca Cola company’s insurer had duty to defend insurers despite claimant’s failure to notify them of two class actions pending in Georgia federal courts within 72 hours of their knowledge of loss by Coke since no “loss” had yet taken place

The brokers Marsh & McLennan arranged insurance for Coca‑Cola in the form of a Master Subscription Policy with a consortium (led by insurers known as Allianz) which included the claimants in the present proceedings, Royal and Sun Alliance Insurance Plc (RSA). RSA took a line of 21.5 percent. The claimant reinsured all of its part dealing with Coke’s “directors and officers” liability with the consortia who are the defendants in the present litigation.

The re‑insurance slip policy included a Standard Claims Control Clause (SCC). It declared in material part: “Notwithstanding anything herein contained to the contrary, it is a condition precedent to any liability under this policy that: The reinsured shall, upon knowledge of any loss or losses which may give rise to claim under this policy, advice (sic) the Underwriters thereof by cable within 72 hours.”

Investors in Coke stock later brought two similar class actions in the Georgia federal court making substantial claims against Coke and its named directors for inflating the value of its stock. The complaint alleged that defendants had made false statements about Cokes’s business which led investors to buy their shares at spuriously pumped up prices. The claimant here learned about those complaints at the latest by December 12, 2000, and received copies of them 18 days later.

The defendants below argued that within 72 hours of December 15, 2000, claimants should, pursuant to the SCC clause, have notified defendants about the potential losses that may befall Coke and the claimant. The claimant did not, however, convey its awareness of the complaints until January 19, 2001. The defendants submitted that claimant had acted too late and, therefore, that defendants were not liable to the claimant.

Next, the claimant filed proceedings in the English courts seeking a declaratory judgment that the defendants did have a duty to indemnify them with respect to any liability arising out of the Georgia lawsuits. The first instance judge identified the relevant loss under the SCC clause as the losses of the U.S. plaintiffs who had bought Coke shares at artificially inflated prices, rather than losses by Coca Cola in having to compensate the investors for their loss.

His basic reasoning was that the claimants should not have kept the defendants in ignorance once the claimant had found out that the complainants had suffered a loss. He further ruled that the claimant had to be affected by three elements before it had a duty to notify the defendants. First, there had to be an actual loss; second, the type of loss had to be one that might warrant a claim on the reinsurance; and third, the claimant had to have actual knowledge of that loss.

The first instance judge held that those requirements had not come into being before January 19, 2001, the date of the actual notice. At that date, all the claimant had been aware of was that there was a claim. There might have come a time, of course, when the claimant could have been assumed to have known that the American complainants had suffered a loss, but that time had not come by January 19, 2001. The trial judge, therefore, ruled in favor of the claimant. The defendants appealed that declaration. The Court of Appeal (Civil Division) dismisses the appeal.

In the lead opinion, the Court then explains its thinking about upholding the dismissal below. “A reinsurer of a reinsured’s liability to a third party is prima facie liable to the extent of his subscription once it is ascertained that the reinsured is liable to that third party. A condition precedent to the liability of the reinsurer operates as an exemption to that prima facie liability.”

“It is a well‑established and salutary principle that a party who relies on a clause exempting him from liability can only do so if the words of the clause are clear on a fair construction of the clause. [Cites]. In my view the terms of the [SCC] on which the Syndicates rely do not sufficiently clearly exempt them from liability.” [¶ 19]

“[Counsel] pointed out that RSA themselves must have assumed that their obligation was to give notice once they knew that a loss was being alleged since they in fact gave notice to reinsurers shortly after receiving copies of the Complaints on 30th December 2000, albeit more than 72 hours after receipt.”

“To my mind this shows no more than that RSA did not have the terms of their reinsurance policy in mind on 30th December 2000. If they had had them in mind, they would probably have given notice within 72 hours instead of 20 days later. But this consideration cannot affect the true construction of what is, on any view, an ill‑chosen clause. It is, moreover, significant that the Syndicates do not suggest that they have been in any way prejudiced by the late notification.” [¶ 20]

“Once one has concluded that loss means ‘actual’ loss rather than ‘alleged’ or ‘claimed’ loss, it must follow that RSA cannot have had knowledge of any loss. It was not known by anyone in December 2000 or January 2001 that the American claimants had suffered the loss which they claimed or, indeed, any loss. The question whether the claimants have suffered any loss is still in dispute.”

“It is, at this stage, worth pointing out how comparatively unusual the claim is which is brought against the Coca‑Cola directors. It is that their conduct caused the share price to be artificially high at the time when the complainants purchased their shares. ... [T]he complainants say that they have paid more for their Coca‑Cola stock than they should have done. If that were a proved fact, there would then be an ‘actual loss’ which might give rise to an insurance claim. But when RSA received the complaints, it was not a proved fact; it is a possible conclusion which depends on establishing that Coca‑Cola stock would have had a lower value if the financial position of Coca‑Cola had been accurately stated. Until this is ‘known’ to be the case, there can be no ‘knowledge’ of any loss.”

“It might well be different if the claim had been that, as a result of something done by the directors of Coca‑Cola the value of the stock had fallen; particularly if the stock had been rendered valueless. Then it might be clear that there had been a loss and once RSA were notified of a claim for that loss, it could be said that they then had knowledge of a loss which might give rise to a claim under the reinsurance policy.”

“[Counsel] did indeed seek to say that even in the present case there was a loss ‘known’ to RSA because the share price fell from its peak in July 1998 but that cannot of itself be a loss (rather than natural market fluctuation) until it is established that the price was artificially high at the point of purchase.” [¶¶ 22-24]

“If it had mattered, I would have come to the same conclusion on this question as the judge for what I understand to have been the main reason which he gave. This was that, if the loss contemplated was Coca‑Cola’s loss, that was certainly a loss of which RSA could not have ‘knowledge’ at any time before there was a judgment or a settlement to which Coca‑Cola was a party for the simple reason that Coca‑Cola are disputing that they are under any liability at all. On Post Office v. Norwich Union [1967] 2 Q. B. 363 principles, it will only be when it is determined that Coca‑Cola are indeed liable that it can be said that Coca‑Cola have suffered a loss.” [¶ 28]

“This would, indeed, render the second part of the clause otiose in practically every case in which it must be intended that it have some value. The same consequence does not by any means invariably follow if the loss contemplated is that of the third party claimant as I have attempted to show... above. For that reason, if it had been relevant, I would also have agreed with the judge on this aspect of his judgment. But since it is not determinative, I say no more about it.” [¶ 29]

“In conclusion, I would, therefore, dismiss this appeal. The moral of this case is that ‘knowledge’ is (or can be) an elusive concept because in any given case a party to a contract may have difficulty in showing what another party ‘knows’. It would, therefore, be better if ‘knowledge’ were not used as the trigger for any requirement of notification to a liability insurer or reinsurer.” [¶ 30]

Citation: Royal and Sun Alliance Insurance plc v. Dornoch Ltd., [2005] E.W.C.A. CIV. 238, [2005] All E.R. (D) 160 (March 19) (Ct. App. [Civ. Div.]) (Approved judgment).

SUMMARY JUDGMENT

English Court of Queen’s Bench denies summary judgment to Sotheby’s of London in suit brought by descendants of composer Sergei Rachmaninoff to prevent auction of long-lost handwritten manuscript of his Second Symphony

In December 2004, Sotheby’s of London, the first defendant auctioneers, planned to hold a sale they describe as including the long-lost manuscript of Sergei Rachmaninoff’s Second Symphony in E minor, Op. 27 done in the composer’s own hand.

After the premiere, the Moscow publisher had used this autograph manuscript to prepare the first 1908 edition. It then sent the manuscript to Leipzig, where the Roder firm had engraved it. The engraver probably sent the score back to Rachmaninoff, who was still living in Dresden. According to musicologists, the appearance of this manuscript is one of the most remarkable discoveries in modern times and is of huge importance for Rachmaninoff research.

The auction house set a figure ranging from L 300,000 to L 500,000. A British newspaper had published a story about the manuscript’s discovery in late 2004. The plaintiffs here are the composer’s grandson and three of his great‑grandchildren. They filed a suit seeking a declaration that, being heirs to the composer’s estate, they qualified as the rightful owners of the manuscript.

The basic theory of Davenport Lyons (DL), plaintiff’s law firm, was: (1) that the composer had become the owner of the manuscript when he created it; (2) that there was no record (a) of the composer having given it away or (b) of his having sold it during his lifetime, nor (c) of anyone else having acquired lawful title to it; and (3) that it formed part of his estate on his death. The court preliminarily enjoined Sotheby’s from surrendering possession of the manuscript and from putting it up for sale.

Sotheby’s alleged that someone had found the manuscript in a trunk in the basement of a Mr. Laszlo Molnar in Switzerland after Molnar’s death in 2003. So far no one has turned up who knows how Molnar had gotten hold of the manuscript. Sotheby’s refers to source material from which they infer that “it would appear to have left the composer’s possession between 1908 and 1917."

According to a biography of the composer, he left Russia on December 23, 1917, through the sound of gunfire in a grim escape from what became Petrograd and traveled west through Finland, carrying one small suitcase. The case contained a few items of music, but not, so far as is known, the manuscript in question.

Sotheby’s applied for summary judgment. Molnar’s heir joined the proceedings as a second defendant after a Judge gave judgment. The Court of Queen’s Bench, however, set aside this ruling and set the case down for a trial on the merits.

The applicable English procedural law on summary dispositions is Civil Procedure Rule 24.2. It provides that: “The court may give summary judgment against a claimant ... on the whole of a claim ... if ‑‑ (a) it considers that ‑‑ (1) that claimant has no real prospect of succeeding on the claim ...; or (ii) ....; and (b) there is no other reason why the case or issue should be disposed of at a trial.”

The Court stresses at the outset how important it is that a judge in proper cases should make use of the powers contained in Part 24. “In doing so, he or she gives effect to the overriding objectives contained in Part 1. It saves expense; it achieves expedition; it avoids the court’s resources being used up on cases where this serves no purpose, and, I would add, generally, that it is in the interests of justice. If a claimant has a case which is bound to fail, then it is in the claimant’s interests to know as soon as possible that that is the position. Likewise, if a claim is bound to succeed, a claimant should know this as soon as possible ...”

“Useful though the power is under Part 24, it is important that it is kept to its proper role. It is not meant to dispense with the need for a trial where there are issues which should be investigated at the trial. ..., the proper disposal of an issue under Part 24 does not involve the judge conducting a mini trial, that is not the object of the provisions; it is to enable cases, where there is no real prospect of success either way, to be disposed of summarily.” [¶ 22].

“Theft of the manuscript is one possible explanation which is consistent with the Claimants still retaining title to it. But, as appears from the way they have framed their claim, that is not the only, or even the primary, basis for it. It is possible that the manuscript was left in Russia or Germany and came into the possession of Sotheby’s principal through a person who had originally received it for safekeeping and who intended that it should be returned to the composer one day. There is evidence from the composer’s sister in law, in the form of a letter, that the manuscript of the First Symphony was left in his desk in Russia and entrusted to a housekeeper.” [¶ 25]

Some of Sotheby’s showing stems from interviews that Dr. Roe, the Head of their Printed Book and Manuscript Division, had conducted. “However, Dr. Roe is not qualified as a lawyer. Nor is it clear at this stage what sort of legal advice would be needed before a view could be formed as to who owns the manuscript.”

“The states already mentioned, where the document has been seen, include Germany and Switzerland, and there is speculation that it might have gone to Russia. Mr. Molnar came from Budapest, which is no further from Dresden than Dresden is from Switzerland.”

“The laws of Germany and Switzerland, together with English law, and perhaps that of some other states, might possibly be relevant to the question of who now owns the manuscript. And there is little information given by Dr. Roe as to the questions he asked, and the terms of the answers given. In any event, Dr. Roe had little means of challenging any answers he may have been given, and no means of requiring production of documents to support any claims made. A court does have such powers.” [¶ 28]

“... I do not need to address the arguments put before me on time bar points under English and Swiss law. Time bar points can only be sensibly considered by a court that is confident that it has to hand all the relevant factual information as to where and when this manuscript might have been. The complexity of such points in cases of works of art that have gone missing in Central Europe during the twentieth century can be seen from ... what happened in the troubled period 1914 to 1989.”

“Accordingly, ... justice in my judgment requires that the Claimants be allowed to pursue their claim. The justice of the case also requires me to have regard to wider considerations. These include the fact that information as to the identity of an auctioneer’s principal may enable prospective bidders or purchasers to deal directly with the principal before the auction, or, by a lawsuit, to frighten the principals off altogether.” [¶¶ 31-33]

“Another consideration goes the other way. There is a dark side to the confidentiality surrounding the identity of an auctioneer’s principal. The public and the law have increasingly come to recognise the potential for abuse by criminals of works of art, and of those who deal in them (consciously or unconsciously), for money laundering, and for disposing of the proceeds of crime.”

“The less the legal risks involved in committing a work for auction, the more attractive the market in works of art and manuscripts becomes for criminals. The policy of the law, both in this jurisdiction and elsewhere, is to look more sceptically than would have been thought proper in the past upon those who have very valuable property for which they give no provenance.” [¶ 35]

Citation: Rachmaninoff v. Sotheby’s, [2005] E.W.H.C. 258 (QB), [2005] All E.R. (D) 01 (March 10) (Approved judgment).

TRADEMARKS

In answering questions about EU trademark law referred to it by Finland’s Supreme Court, the European Court of Justice also explains that whether defendant’s claim of its razor’s compatibility with Gillette’s blades on its packaging of similar products in Finland runs afoul of EU trademark directive turns on key facts to be determined by Finnish courts

The highest court of Finland has sought a preliminary ruling pursuant to Article 234 of the Rome Treaty on the interpretation of Article 6(1)(c) of the First Council Directive 89/104/EEC dated December 21, 1988 to approximate the laws of the Member States relating to trade marks (OJ 1989 L 40, p. 1). The dispute arose between the Gillette Company and Gillette Group Finland Oy (the Gillette companies or the plaintiffs) and, LALaboratories Ltd. Oy (LAL or defendant), over the latter’s mention of the “Gillette” and “Sensor” marks on the packaging of defendant’s products in Finland.

Directive Article 6 grants the trade mark owner the exclusive rights to the mark, barring others from making use of it in a way that is likely to confuse consumers as to which is which. In dealing with limitations to trade mark protection, it then provides: “1. The trade mark shall not entitle the proprietor to prohibit a third party from using [its trade mark], in the course of trade, ... (c) ... where it is necessary to indicate the intended purpose of a product or service, in particular as accessories or spare parts; provided he uses them in accordance with honest practices in industrial or commercial matters.”

In Finland, the tavaramerkkilaki (Law on Trade Marks) (7/1964) of January 10, 1964, as amended by Law No 39/1993 of January 25, 1993 regulates trade mark rights. Article 4(1) of the tavaramerkkilaki, concerning the content of the exclusive rights of the trade mark owner, provides: “The right under Articles 1 to 3 of this law to affix a distinctive sign on one’s goods means that no one other than the proprietor of the sign may, in the course of trade, use as a sign for his products references which could create confusion, whether on the goods or their packaging, in advertising or business documents or otherwise, including by word of mouth...”

Within Finland, the Gillette Company of the U.S. has registered the trade marks “Gillette” and “Sensor” as Class 8 products within the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks of 15 June 1957, as revised and amended. Class 8 includes hand tools and implements (hand‑operated), cutlery, side arms, and razors.

Gillette Group Finland (GGF) holds the exclusive right to use those marks in Finland; it has been marketing razors in that Member State, including razors composed of a handle and a replaceable blade and such blades sold separately.

LAL also sells razors in Finland consisting of a handle and a replaceable blade and blades sold on their own similar to those marketed by GGF. It sells those blades under the mark “Parason Flexor.” Their packaging, however, features a sticker bearing the words “All Parason Flexor and Gillette Sensor handles are compatible with this blade.” According to the reference order, LAL is not authorized by a trade mark licence or any other contract to use the marks which the Gillette Company owns.

Plaintiffs filed an action before the Helsingin karajaoikeus (Finland) (Court of First Instance of Helsinki) claiming that LAL had infringed the registered marks “Gillette” and “Sensor.” According to them, LAL’s packaging tended (1) to create a link in the mind of consumers between LAL’s products and those of the Gillette companies, or (2) to give the false impression that LAL was authorized, by virtue of a licence or for another reason, to use the “Gillette” and “Sensor” marks.

In its judgment of March 30, 2000, the Helsingin karajaoikeus held that, under Article 4(1) of the tavaramerkkilaki,... mentioning those marks in an eye‑catching manner on the packaging of its products, LAL had infringed that exclusive right. The court ordered LAL (1) to remove and destroy the stickers used in Finland referring to those trade marks, and, (2) to pay the plaintiffs a total of FIM 30,000 in damages for the harm suffered by them.

On LAL’s appeal, the Helsingin hovioikeus (Court of Appeal of Helsinki), annulled the judgment of the lower court and dismissed the plaintiffs’ suit on May 17, 2001. It ruled that the replaceable blades fell within the “spare part” exception to the domestic statute.

It also held that the information on the sticker could be useful to the consumer and that LAL might, therefore, be able to show the need for the sticker to refer to the plaintiffs’ trade marks by name.

Finally, the Court determined that the packaging of razor blades marketed by LAL visibly bore the Parason and Flexor signs, unambiguously showing the true origin of defendant’s product.

The plaintiffs next took the case to the Korkein oikeus (Finnish Supreme Court or FSC). The FSC thought that the case raised questions as to the interpretation of Article 6(1)(c) of Directive 89/104 in several aspects. First are the criteria for determining whether, by its nature, a product is or is not comparable to a “spare part” or an “accessory.”

Secondly, there are questions about the scope of the phrase “honest practices” in industrial or commercial matters. Finally, the interpretation of those provisions also has to take account of Directive 84/450. In those circumstances, the FSC decided to stay the proceedings and refer these questions to the European Court of Justice (ECJ) for a preliminary ruling.

The five members of the ECJ’s Third Chamber came to the following conclusions. “The lawfulness or otherwise of the use of the trade mark under Article 6(1)(c) of the First Council Directive 89/104/EEC of 21 December 1988 ... depends on whether that use is necessary to indicate the intended purpose of a product.”

“Use of the trade mark by a third party who is not its owner is necessary in order to indicate the intended purpose of a product marketed by that third party where such use in practice constitutes the only means of providing the public with comprehensible and complete information on that intended purpose in order to preserve the undistorted system of competition in the market for that product.”

“It is for the national court to determine whether, in the case in the main proceedings, such use is necessary, taking account of the nature of the public for which the product marketed by the third party in question is intended.”

“Since Article 6(1)(c) of Directive 89/104 makes no distinction between the possible intended purposes of products when assessing the lawfulness of the use of the trade mark, the criteria for assessing the lawfulness of the use of the trade mark with accessories or spare parts in particular are thus no different from those applicable to other categories of possible intended purposes for the products.” [Ruling, ¶ 1]

“The condition of ‘honest use’ within the meaning of Article 6(1)(c) of Directive 89/104, constitutes, in substance, the expression of a duty to act fairly in relation to the legitimate interests of the trade mark owner. The use of the trade mark will not be in accordance with honest practices in industrial and commercial matters if, for example: it is done in such a manner as to give the impression that there is a commercial connection between the third party and the trade mark owner; [or] it affects the value of the trade mark by taking unfair advantage of its distinctive character or repute; [or] it entails the discrediting or denigration of that mark; or where the third party presents its product as an imitation or replica of the product bearing the trade mark of which it is not the owner.”[Ruling ¶ 2]

“The fact that a third party uses a trade mark of which it is not the owner in order to indicate the intended purpose of the product which it markets, does not necessarily mean that it is presenting it as being of the same quality as, or having equivalent properties to, those of the product bearing the trade mark. Whether there has been such presentation depends on the facts of the case, and it is for the referring court to determine whether it has taken place by reference to the circumstances.”

“Whether the product marketed by the third party has been presented as being of the same quality as, or having equivalent properties to, the product whose trade mark is being used is a factor which the referring court must take into consideration when it verifies that that use is made in accordance with honest practices in industrial or commercial matters.” [Ruling, id.]

“Where a third party that uses a trade mark ... markets not only a spare part or an accessory but also the product itself with which the spare part or accessory is intended to be used, such use falls within the scope of Article 6(1)(c) of Directive 89/104 in so far as it is necessary to indicate the intended purpose of the product marketed by the latter and is made in accordance with honest practices in industrial and commercial matters.”[Ruling ¶ 3]

Citation: The Gillette Company, v. LA‑Laboratories Ltd Oy, European Court of Justice; Case C‑228/03; Celex No. 603J0228 [2005].

VIENNA CONVENTION

Following ruling of International Court of Justice, divided U.S. Supreme Court decides that it had improvidently granted writ of certiorari in challenge to death sentence of foreign defendant who did not get notice of his right to consular aid under Vienna Convention

Jose Ernesto Medellin, a Mexican citizen, had confessed to have taken part in the 1993 gang rape and murder of two girls. A Texas court sentenced him to death and he eventually filed a habeas corpus petition alleging that Texas had failed to inform him of his rights under the Vienna Convention on Consular Relations (April 24, 1963, 21 U.S.T. 77, 100-101 [1970], T.I.A.S. No. 6820).

The state court rejected the argument, and the Texas Court of Criminal Appeals affirmed. Medellin then proceeded to file the present federal habeas corpus petition based on his Vienna Convention claims.

While the case was pending in the U.S. Court of Appeals for the Fifth Circuit, the International Court of Justice (ICJ) handed down its decision in the Case Concerning Avena and other Mexican Nationals (Mexico v. United States), 2004 I.C.J. No. 128 (March 31). There, Mexico alleged that the U.S. had violated the Vienna Convention with respect to Medellin and other Mexican nationals on death row in the U.S. The ICJ held that the Vienna Convention grants individually enforceable rights which the U.S. had breached. The ICJ ordered the U.S. to provide appropriate reconsideration of the relevant convictions and sentences at issue to find out whether actual prejudice to petitioners had resulted.

The U.S. Supreme Court granted certiorari to consider two main issues. The first is whether the ICJ ruling imposes a duty on the federal courts to reconsider the petitioner’s claim for relief under the Vienna Convention without regard to U.S. procedural default doctrines. The second point is whether a federal court should at least give effect to the ICJ judgment in the interests of “judicial comity” and a uniform interpretation of the Convention.

More than two months after the grant of certiorari, President Bush issued a memorandum declaring that the U.S. would comply by “having State courts give effect to the [ICJ] decision in accordance with the general principles of comity in cases filed by the 51 Mexican nationals addressed in that decision.” George W. Bush, Memorandum for the Attorney General (February 28, 2005).

The Court notes that petitioner had since filed for a writ of habeas corpus in the Texas Court of Criminal Appeals. This proceeding may provide Medellin with the reconsideration of his Vienna Convention claim that he is seeking in the present petition.

In a per curiam opinion, the U.S. Supreme Court concludes that it had improvidently granted the writ in this case and dismisses it.

In doing so, however, the Court points to several threshold matters that could end up barring Medellin from federal habeas relief. “First, even accepting, arguendo, the ICJ’s interpretation of the Vienna Convention’s consular access provisions, a violation of those provisions may not be cognizable in a federal habeas corpus proceeding. In Reed v. Farley, 512 U.S. 339 ... (1994), this Court recognized that a violation of federal statutory rights ranked among the ‘nonconstitutional lapses we have held not cognizable in a postconviction proceeding’ unless they meet the ‘fundamental defect’ test announced in our decision in Hill v. United States, 368 U.S. 424 ... (1962). ... In order for Medellin to obtain federal habeas relief, Medellin must therefore establish that Reed does not bar his treaty claim.”

“Second, with respect to any claim the state court ‘adjudicated on the merits,’ habeas relief in federal court is available only if such adjudication ‘was contrary to, or an unreasonable application of, clearly established Federal law, as determined by the Supreme Court.’ 28 U.S.C. Section 2254(d)(1); see Woodford v. Visciotti, 537 U.S. 19, 22-27 (2002) (per curiam).

The state habeas court, which disposed of the case before the ICJ rendered its judgment in Avena, arguably ‘adjudicated on the merits’ on three claims. It found that the Vienna Convention did not create individual, judicially enforceable rights and that state procedural default rules barred Medellin's consular access claim.”

“Finally, and perhaps most importantly, the state trial court found that Medellin ‘failed to show that he was harmed by any lack of notification to the Mexican consulate concerning his arrest for capital murder; [Medellin] was provided with effective legal representation upon [his] request; and [his] constitutional rights were safeguarded.’ ... Medellin would have to overcome the deferential standard with regard to all of these findings before obtaining federal habeas relief on his Vienna Convention claim.” [Slip op. 6-7]

The dissenters, Justice Sandra Day O’Connor, and Justices Stevens, Souter and Breyer opine that the Court had dismissed the writ based on speculation that Medellin “might” obtain relief in state court. They would remand the Court of Appeals’ decision to deny the Certificate of Appealability and remand for further proceedings.

Justices Breyer and Stevens dissent separately and opine that this Court should have granted Medellin’s motion for a stay or, alternatively, vacate the Fifth Circuit’s judgment and remand the case instead of dismissing the writ as improvidently granted.

Citation: Medellin v. Dretke, 2005 WL 1200824; No. 04-5928 (U.S. May 23, 2005).

EU Commission orders emergency measures to limit importation of U.S. products containing genetically modified maize. In March 2005, the U.S. informed the European Union (EU) that it has been exporting maize (corn) products containing the genetically modified maize Bt10 to the EU presumably since 2001. EU Regulation 1829/2003 bans genetically modified food and feed products unless specifically excepted by that regulation. Here, the likely affected products are corn gluten feed and brewers grains. The EU Commission bars the sale of such products in the EU unless analytical reports show that the genetically modified maize is not a contaminant. Citation: Commission Decision 2005/317/EC, 2005 Official Journal of the European Union (L 101) 14, 21 April 2005; Inter Press Service News Agency, byline by Stephen Leahy, April 20, 2005, available at www.ipsnews.net.

Japanese law to give limited protection to whistleblowers. Japan recently has enacted its first law to shield whistleblowers from workplace retaliation. Going into effect in April 2006, it is reacting to a deluge of scandals which have hit corporate Japan over the last several years. For instance, there’s the cover‑up of automobile defects at Mitsubishi Motors Corp., the improper labeling of meat at Snow Brand Foods Co., and the concealment of bad debts at UFJ Bank. Whistleblowers were behind the revelation of those scandals and others at police departments, hospitals and a nuclear power plant. Many whistleblowers, however pay a heavy price. For a good part of his 30‑year career, for example, Hiroaki Kushioka’s “office” was a room that looked like a closet. A college graduate, he would spend his days tending flowers or shoveling snow. His superiors refused to promote him and pressured him over and over again to resign. His “offense” was being a whistleblower in a nation that so fosters corporate fidelity that employees who report managerial misdeeds (such as price-rigging in Kushioka’s case) are ostracized as traitors. According to attorneys and consumer advocates, however, the statute marks a first step only and lags behind the laws of the U.S. and other industrialized nations. Citation: The Associated Press (online via Findlaw), Tokyo, Monday, May 23, 2005, filed at 17:42:37Z (byline of Yuri Kageyama, AP writer).

EU imposes additional customs duties on U.S. products based on U.S. non-compliance with WTO mandate in Byrd Amendment cases. After the U.S. failed in defending the Byrd Amendment before the World Trade Organization (WTO), the U.S. had until December 27, 2003, to carry out the necessary legal and regulatory changes to comply with the WTO rulings in the two cases involving the Continued Dumping and Subsidy Offset Act of 2000 (Disputes DS217 and DS234). The U.S. measure in essence requires that anti-dumping duties collected from foreign competitors of U.S. companies be distributed to the affected U.S. companies. See 2003 International Law Update 28 & 93. Asserting that the U.S. failed to comply, the EU sought and received WTO authorization to suspend tariff concessions for the U.S. valued at $27.81 million, effective May 1, 2005. Thus, Council Regulation No 673/2005, the EU imposed a 15 percent additional ad valorem duty on specified U.S. products as listed in the Regulation. Citation: Council Regulation No 673/2005, 2005 Official Journal of the European Communities (L 110) 1, 30 April 2005. International Trade Canada provides information on the Canadian retaliatory measures, and contains a variety of related documents. See www.dfait-maeci.gc.ca.

EU renews restrictions on certain persons in Burma/Myanmar. The European Union (EU) has renewed restrictions on certain Burma/Myanmar persons and companies. The Amendments contain lists of restricted persons, including Tay Za, the Managing Director of Htoo Trading Co., and General Aung Thein Lin, Mayor of Yangon, as well as an amended list of competent authorities in the EU Member States for purposes of Burma/Myanmar sanctions. Citation: Commission Regulation No 667/2005, 2005 Official Journal of the European Union (L 108) 35, 29 April 2005.

Britain extradites to U.S. three local bankers charged with wire fraud. On May 24, Britain’s Home Secretary granted a request from the United States government to extradite three former NatWest bankers on wire fraud charges linked to off‑balance‑sheet dealings with the Enron Corporation. The British bankers are among the first to be impacted by a British law enacted in 2003 to fight terrorism. Having entered into force in January 2004, the statute allows the United States to seek extradition of suspects without providing the traditional prima facie evidence of a crime committed within the U.S.. The men in question -- David Bermingham, Giles Darby and Gary Mulgrew -- worked for Greenwich NatWest, now part of the Royal Bank of Scotland. The U.S. has charged them on seven counts of wire fraud. For example, the indictment accuses them of conspiring with Enron executives to defraud their employer of $7.3 million. They have denied wrongdoing. As far back as 2002, prosecutors in Houston had accused them of conspiring with Andrew S. Fastow, the former chief financial officer of Enron, and his assistant, Michael Kopper, to talk Greenwich NatWest into selling a stake in an Enron partnership for $1 million. Since the deal’s true value was a lot higher, the U.S. prosecutors claimed, the three men were able to make money from the difference. Citation: The New York Times Company (online), London, Wednesday, May 25, 2005 (byline of Alan Cowell); The Times Online, May 22, 2005 (see www.timesonline.co.uk).