2005 International Law Update, Volume 11, Number 6 (June)

2005 International Law Update, Volume 11, Number 6 (June)

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

ALIEN TORT CLAIMS ACT

In suit by Nigerian citizens against former dictator, Seventh Circuit rules that Foreign Sovereign Immunities Act does not apply to individuals and that Torture Victim Protection Act precludes plaintiffs’ Alien Tort Claims Act claims

The plaintiffs in this case are surviving Nigerian victims of the military junta that oppressed Nigeria from November 1993 until May 1999. They allege that officially sanctioned government crimes took place ranging from torture to murder.

The Illinois federal court rejected General Abdulsalami Abubakar’s (defendant’s) claim that he was immune from suit under the Foreign Sovereign Immunities Act of 1976 (28 U.S.C. Section 1605) for official conduct taken while he was a Nigerian public official. Defendant filed this interlocutory appeal. In a divided vote, the U.S. Court of Appeals for the Seventh Circuit affirms and remands.

The Court first notes that “‘[t]he FSIA defines a foreign state to include a political subdivision, agency or instrumentality of a foreign state but makes no mention of heads of state.’ ... We noted that the FSIA did not seem to subscribe to Louis XIV’s not-so-modest view that ‘L’etat, c’est moi.’” [Slip op. 9] Under 28 U.S.C. Section 1603(a), a “foreign state” includes “a political subdivision of a foreign state or an agency or instrumentality of a foreign state.”

In turn, an “agency or instrumentality of a foreign state” includes a “separate legal person, corporate or otherwise.” 28 U.S.C. Section 1603(b). Spurning defendant’s argument that “separate legal person” must include an individual, the Court declares: “[I]f it was [sic] a natural person Congress intended to refer to, it is hard to see why the phrase ‘separate legal person’ would be used, having as it does the ring of the familiar legal concept that corporations are persons.” [Slip op. 10-11]

Acknowledging a conflict with the Ninth Circuit on this point, the Seventh Circuit writes, “We are troubled by this approach – that is, by saying Congress did not exclude individuals; therefore they are included. Not only does it seem upside down as a matter of logic, but it ignores the traditional burden of proof on immunity issues under the FSIA.

“The party claiming FSIA immunity bears the initial burden of proof of establishing a prima facie case that it satisfies the FSIA’s definition of a foreign state.” [Slip op. 12] The Court does concede, however, that some courts have applied the FSIA to individuals when they are acting in their official capacity.

While the Seventh Circuit’s interpretation of the FSIA as not affording immunity to defendant favors the plaintiffs here, the Court’s conclusions about the relationship between the Alien Tort Claims Act (ATCA) [28 U.S.C. Section 1350] and the TVPA has the opposite effect. The majority holds that the 1991 Torture Victim Protection Act (TVPA) [Pub.L. No. 102-256, 106 Stat. 72, 28 U.S.C. Section 1350 note] precludes the bringing of torture claims under the ATCA.

Congress intended the TVPA to occupy the field of civil remedies against torture and extrajudicial killing. “If it did not, it would be meaningless. No one would plead a cause of action under the Act and subject himself to its requirements if he could simply plead under international law.” [Slip op. 20]

The majority also finds some support in Sosa v. Alvarez-Machain, 124 S. Ct. 2739 (2004), See 2004 International Law Update 98. The Circuit Court writes: “[w]hile there is no explicit statement to this effect in Sosa, the implications are that the cause of action Congress provided in the Torture Victim Protection Act is the one which plaintiffs alleging torture or extrajudicial killing must plead.” [Slip op. 20]

Noting the Supreme Court’s emphasis that courts should exercise “great caution” when asked to adapt international law to private rights of action, the Seventh Circuit reasons that “[i]t is hard to imagine that the Sosa Court would approve of common law claims based on torture and extrajudicial killing when Congress has specifically provided a cause of action for those violations and has set out how those claims must proceed.” [Slip op. 22]

The Court’s reading of Sosa specifically weakens the plaintiffs’ case because, unlike the ATCA, the TVPA, contains a preliminary procedural demand that the claimant has to have “[exhausted] adequate and available remedies in the place in which the conduct giving rise to the claim occurred.” 28 U.S.C. Section 2(b).

This might be problematic here because the Nigerian government had persecuted the plaintiffs or their relatives as political enemies, arguably impeding their access to justice. The Seventh Circuit remands the case to the district court to determine whether it should let the plaintiffs file an amended complaint under the TVPA, and if so, whether they have exhausted “all adequate and available remedies” within Nigeria.

Citation: Enahoro v. Abubakar, 2005 WL 1243178; No. 03-3089 (7th Cir. May 23, 2005); news report by Laolu Akande “Abubakar floored at U.S. Appeal Court: Judges Say Human Rights Case Against Ex Ruler Can Proceed,” available at www.africanews.com.

AMERICANS WITH DISABILITIES ACT

In class action by disabled U.S. citizens against Norwegian Cruise Line, Ltd., majority of U.S. Supreme Court narrowly construes “clear statement rule” as to applicability of Americans with Disabilities Act to foreign ships that ply U.S. ports so that main principles of Act may apply subject to its own internal limitations and exceptions as well as to demands of international law

The respondent (defendant below) is the Norwegian Cruise Line Ltd. (NCL), a Bermuda Corporation with its principal place of business in Miami, Florida. It operates cruise ships that regularly set sail for foreign ports from, and return to, U.S. ports. Basically sea-going resorts, the ships supply passengers with staterooms or cabins, food, and entertainment. Most of NCL’s passengers are U.S. residents. As stated on the tickets, U.S. law applies to any controversies arising between passengers and NCL. NCL also depends upon far-reaching advertising in the U.S. to publicize its cruises and to enlarge its revenues.

Despite these close ties to the U.S., NCL registers almost all of its cruise ships in other countries, flying so‑called “flags of convenience.” The respondent, for instance, has registered the two NCL cruise ships involved in the present litigation, the Norwegian Sea (Sea) and the Norwegian Star (Star), in the Bahamas.

The petitioners are disabled individuals and their companions who bought tickets in 1998 or 1999 for round‑trip cruises on the Sea or the Star, operating out of Houston, Texas. Naming NCL as the defendant, the petitioners filed a class action in a Texas federal court on behalf of all persons similarly situated. They asked for declaratory and injunctive relief under Title III of the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. Section 12181 et seq.

The petitioners alleged that cruise ships come within both Title III’s ban on discrimination in places of “public accommodation,” Section 12182(a), and its bar to discrimination in “specified public transportation services,” Section 12184(a). Both sections demand that covered entities (1) make “reasonable modifications in policies, practices, or procedures” adaptable to disabled individuals, and (2) remove “architectural barriers, and communication barriers that are structural in nature” where such removal is “readily achievable.”

Though the district court found Title III generally applicable, it concluded that the petitioners’ claims dealing with physical barriers to access could not go forward because the federal departments that develop ADA architectural and structural guidelines had not done so for cruise ships. The court dismissed the barrier‑removal claims, but denied NCL’s motion to dismiss the petitioners’ other claims.

The Fifth Circuit held that Title III does not apply to foreign‑flag cruise ships in U.S. waters. The presumption is that, absent clear indications of congressional intent to the contrary, generally-worded regulatory statutes do not apply to foreign‑flag ships. Stressing that Title III contains no specific provision mandating its application to such vessels, the Circuit Court upheld the dismissal of the petitioners’ barrier‑removal claims and reversed on their remaining claims.

The Fifth and Eleventh Circuits having reached conflicting results as to the applicability of Title III to foreign cruise ships operating in U.S. waters, the U.S. Supreme Court granted certiorari to resolve the issue. In a set of conflicting and concurring opinions on various issues and subissues, a bare majority of the Court reverses and remands.

Justice Kennedy announced the Court’s judgment and delivered the opinion of the Court with respect to Part I (the history of the litigation as summarized above); Part II‑A‑1, and Part II‑B‑2, in which Justices Stevens, Souter, Ginsburg, and Breyer joined.

The majority opinion first points out that Title III of the ADA bars discrimination against the disabled in the full and equal enjoyment of “public accommodations,” 42 U.S.C. Section 12182(a), and in “public transportation services,” Section 12184(a). Various, more specific requirements supplement the general prohibitions.

Thus, entities that provide public accommodations or public transportation: (1) may not impose “eligibility criteria” that tend to screen out disabled individuals; (2) must make “reasonable modifications in policies, practices, or procedures, when such modifications are necessary” to provide disabled individuals full and equal enjoyment; (3) must provide auxiliary aids and services to disabled individuals; and (4) must remove architectural and structural barriers, or if barrier removal is not readily achievable, must ensure equal access for the disabled through alternative methods.

The majority in Part II-A-1, notes that important exceptions and limitations do modify the above statutory criteria. “Eligibility criteria that screen out disabled individuals are permitted when ‘necessary for the provision’ of the services or facilities being offered.[Cite]. Policies, practices, and procedures need not be modified, and auxiliary aids need not be provided, if doing so would ‘fundamentally alter’ the services or accommodations being offered. [Cite]. Auxiliary aids are also unnecessary when they would ‘result in an undue burden.’ [Cite].”

“Additionally, Title III does not impose nondiscrimination or accommodation requirements if, as a result, disabled individuals would pose ‘a significant risk to the health or safety of others that cannot be eliminated by a modification of policies, practices, or procedures or by the provision of auxiliary aids or services.[Cite].”

“Although the statutory definitions ... do not expressly mention cruise ships, there can be no serious doubt that the NCL cruise ships in question fall within both definitions under conventional principles of interpretation. [Cite] The ... Fifth Circuit, nevertheless, held that Title III does not apply to foreign‑flag cruise ships in United States waters because the statute has no clear statement or explicit text mandating coverage for these ships.”

“This Court’s cases do hold, ... in some circumstances, that a general statute will not apply to certain aspects of the internal operations of foreign vessels temporarily in United States waters, absent a clear statement. The broad clear statement rule (CSR) adopted by the Court of Appeals, however, would apply to every facet of the business and operations of foreign‑flag ships. That formulation is inconsistent with the Court’s case law and with sound principles of statutory interpretation.” [2176-77]

In Part II-B-2, Justice Kennedy’s majority opinion also points to Title III as demanding barrier removal only if it is “readily achievable”. [Cite] The statute defines that term as “easily accomplishable and able to be carried out without much difficulty or expense”.[Cite]. Moreover, Title III directs that the “readily achievable” determination take into account “the impact ... upon the operation of the facility”. [Cite]

The opinion then continues. “Surely a barrier removal requirement under Title III that would bring a vessel into noncompliance with the International Convention for the Safety of Life at Sea (SOLAS), Nov. 1, 1974, [1979‑1980], [32 U.S.T. 47, T.I.A.S. No. 9700], or any other international legal obligation, would create serious difficulties for the vessel and would have a substantial impact on its operation, and thus would not be ‘readily achievable.’ This understanding of the statute, urged by the United States, is eminently reasonable.”

“If, moreover, Title III’s ‘readily achievable’ exemption were not to take conflicts with international law into account, it would lead to the anomalous result that American cruise ships are obligated to comply with Title III even if doing so brings them into noncompliance with SOLAS, whereas foreign ships ‑‑ which unlike American ships have the benefit of the internal affairs [CSR]‑‑ would not be so obligated. Congress could not have intended this result.”

“It is logical and proper to conclude, moreover, that whether a barrier modification is ‘readily achievable’ under Title III must take into consideration the modification’s effect on shipboard safety. ... This reference is to a safety threat posed by a disabled individual, whereas here the question would be whether the structural modification itself may pose the safety threat.”

“It would be incongruous, nevertheless, to attribute to Congress an intent to require modifications that threaten safety to others simply because the threat comes not from the disabled person but from the accommodation itself. The anomaly is avoided by concluding that a structural modification is not readily achievable within the meaning of Section 12181(9) if it would pose a direct threat to the health or safety of others.” [2180-81]

[In a plurality opinion approving the language in Part III-A, Justices Stevens, Souter, and Thomas join Justice Kennedy. This plurality concludes that, if Title III set up a demand that disrupted a foreign‑flag cruise ship’s internal affairs, the CSR would come into play. The result would be that the requirement would continue to apply to U.S. flag ships. Moreover, Title III requirements having nothing to do with internal affairs would continue to govern domestic and foreign ships alike. This application‑by‑application approach squares with how the federal courts have traditionally dealt with the CSR.]

“If the Court has held that the [CSR] restricts some NLRA applications to foreign ships (e.g., labor relations with foreign crews), but not others (e.g., labor relations with American longshoremen), it follows that Title III of the ADA also demands its case‑by‑case application. The CSR, if it is invoked, would restrain some applications of Title III to foreign ships (e.g., certain structural barrier modification requirements), but not others (e.g., the statute’s ban on discriminatory ticket pricing).”

“The [CSR] acts as an implied limitation on a statute’s otherwise unambiguous general terms. It operates much like other implied limitation rules; they eschew applications of otherwise unambiguous statutes that would trespass on sensitive terrain in a way that Congress is unlikely to have intended had it thought about the matter. See, e.g., EEOC v. Arabian American Oil Co., 499 U.S. 244, 260 (1991). An all‑or‑nothing approach would convert the [CSR] from a principle of interpretive caution into a trap for an unwary Congress. It might also lead to nullification of the entire statute, or of some arbitrary set of applications larger than the domain the rule protects.” [2181‑2182]

Citation: Spector v. Norwegian Cruise Lines, Ltd., 125 S. Ct. 2169 (U.S.S.C. 2005).

ENVIRONMENTAL LAW

In dispute over duty of U.S. to carry out environmental clean-up of its abandoned U.S. bases in Philippines, Ninth Circuit holds that CERCLA generally does not apply outside U.S. territory

During 1992, the United States vacated the Clark Air Force Base and the Subic Naval Base in the Philippines. Eight years later, the present plaintiffs unsuccessfully petitioned the U.S. Air Force and Navy to conduct an environmental assessment of the bases. The plaintiffs then filed this lawsuit against these branches, contending that they have been exposed, or are likely to be exposed to, environmental contamination at the abandoned military bases.

Plaintiffs alleged that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. Section 9601 required that the U.S. investigate and possibly clean up its former military bases. CERCLA (42 U.S.C. Section 9605(d)) provides that “[a]ny person who is, or may be, affected ... may petition the President to conduct a preliminary assessment of the hazards to public health and the environment which are associated ... If the President has not previously conducted a preliminary assessment of such release, the President shall ... complete such assessment ...”

The District Court for the Northern District of California dismissed the complaint for failure to state a CERCLA claim. The court relied on the canon of statutory interpretation that legislation of Congress is presumed to apply only within the territorial jurisdiction of the U.S., unless Congress has indicated otherwise. The U.S. Court of Appeals for the Ninth Circuit affirms.

The CERCLA does not generally provide for extraterritorial application. It does, however, authorize a very limited class of foreign claimants to sue where U.S. vessels or facilities have released hazardous substances into the navigable waters, territorial sea or shoreline of the claimants’ country. 42 U.S.C. Section 9611(l). This, of course, does not help the plaintiffs here.

The Court then points out that CERCLA Section 9605(d) is silent as to the locations it covers and who may petition for a preliminary assessment. The plaintiffs, however, argued that Congress clearly intended to have CERCLA apply to former military bases. CERCLA’s definition of the “United States” includes “the several States ... and any other territory or possession over which the United States has jurisdiction ...” 42 U.S.C. Section 9601(27). The Government contended that “possession” refers to U.S. property that is not within the territory of another sovereign nation.

Since the plaintiffs still have to show that they could state a substantive claim at the time of filing their action, however, the Court does not have to decide the issue of scope. “The [plaintiffs] cannot state a claim under CERCLA due to the ... presumption against extraterritoriality. The Supreme Court and this court have adhered to the longstanding principle of American law that legislation is presumed to apply only within the territorial jurisdiction of the United States unless the contrary affirmative intention of Congress is clearly expressed. ... Courts must assume that Congress legislates with knowledge of the presumption that a statute ‘is primarily concerned with domestic conditions.’ ...” [...]

“Applying the presumption against extraterritoriality to the case at bar, we can find no evidence that Congress expressly (or implicitly) intended to authorize suits under CERCLA by foreign claimants allegedly affected by contamination occurring on a U.S. military base located in a foreign country. ...”

“Even if we were to accept that the language in CERCLA cited by the appellants may be interpreted as bringing such sites within the geographic reach of the statute, this would not overcome the statutory presumption against extra-territoriality, which applies with force and counsels against interpreting CERCLA to provide a cause of action to foreign claimants such as the appellants. ...” [Slip op. 12-14]

Furthermore, the plaintiffs did not state a claim that existed when they filed their lawsuit. After all, the military bases had been under Philippine control for ten years. Having surrendered possession of the bases, the U.S. no longer has the authority to do an environmental assessment or clean-up.

Finally, the plaintiffs contended that the Court should interpret CERCLA to apply extraterritorially to make it conform to international law. “Perhaps recognizing the tenuous nature of their claims under domestic law, the [plaintiffs] suggest that we should interpret CERCLA to apply extraterritorially so as not to run afoul of international law. The [plaintiffs] rely on international principles espousing the view that activities within a country’s jurisdiction or control should not cause significant injury to the environment of another country. The Restatement ... appears to support this view. ... RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES Sections 601-602 (1987).”

“Even if we were to accept the [plaintiff’s] gloss on international law -- that one nation should not injure another nation’s environment -- it does not follow that denying the [plaintiffs] a cause of action as of 2002 violates international law. The [plaintiffs] offer no authority for the proposition that international law recognizes a current claim for a preliminary assessment or cleanup of Philippine territory based on actions taken over a decade ago.”

“Furthermore, assuming that the United States ‘injured’ the Philippines during its operation of Clark and Subic, compensation presumably was, or should have been, negotiated between the two nations when the United States turned the bases over to the Philippines. Thus, we do not find that the [plaintiffs] have presented an actual conflict between domestic and international law.” [Slip op. 25-27]

Citation: ARC Ecology v. U.S. Department of Air Force, 2005 WL 1398736; No. 04-15031 (9th Cir. June 15, 2005); background on this case is available on website of ARC Ecology at www.arcecology.org.

EXECUTIVE AGREEMENTS

In dispute over attorneys’ fees in Holocaust litigation, Ninth Circuit reverses lower court’s finding that plaintiffs were not “prevailing parties” while it discusses, without deciding, whether executive agreements with Germany, Austria and France created judicially enforceable private rights within meaning of 42 U.S.C. Section 1983

The plaintiffs are insurance carriers in California that sought injunctive relief in a California federal court against John Garamendi, the state insurance commissioner, to prevent him from enforcing California’s Holocaust Victim Insurance Relief Act of 1999 (HVIRA) [Cal. Ins. Code Ann. Sections 13800‑13807 (West Cum. Supp. 2003)]. It required insurance companies, inter alia, to disclose information about insurance policies pending in Europe at the time of the Holocaust. Ultimately, the U.S. Supreme Court held that Executive Branch authority over foreign policy preempted HVIRA. See American Insurance Association v. Garamendi, 123 S.Ct.2374, 71 U.S.L.W. 4524 (U.S.S.C. June 23, 2003), 2003 International Law Update 98.

Later, the plaintiffs, deeming themselves victorious, sought attorney’s fees under 42 U.S.C. Section 1983. The Ninth Circuit remanded the issue of attorney’s fees to the District Court and it turned down the request. The Court held that the foreign affairs powers of the executive branch did not create a right or privilege to obtain attorney’s fees under a 42 U.S.C. Section 1983 claim. The plaintiffs then appealed.

The U.S. Court of Appeals for the Ninth Circuit reverses. It holds that the district court had read 42 U.S.C.Section 1988 [Fees in proceedings in vindication of civil rights] too narrowly as depriving it of discretion to award plaintiff insurance companies reasonable attorneys’ fees.

“The district court concluded that the foreign affairs power did not ‘implicate a right, privilege or immunity secured by the Constitution or laws of the United States’ and therefore did not constitute a 42 U.S.C. Section 1983 claim. That conclusion may have been correct as an abstract proposition, but it did not support the further conclusion that plaintiffs were not prevailing parties. Because we reverse the district court on the prevailing party point, we need not reach the question whether the foreign affairs power independently confers private rights. The fact that plaintiffs’ Due Process Clause and Commerce Clause claims are properly cognizable claims under Section 1983 satisfies our inquiry and should result in a fee award to plaintiffs. [810-811]

A concurring opinion, however, does address this issue. It declares that: “[t]he claim of preemption by the foreign affairs power is not a fee-generating claim, for the reasons ably explained by the district court. In short, the foreign affairs power, like the Supremacy Clause, creates no individual rights enforceable under 28 U.S.C. Section 1983. Cf. Golden State Transit Corp. v. City of Los Angeles, 493 U.S. 103, 107 ... (1989) (‘[T]he Supremacy Clause, of its own force, does not create rights enforceable under Section 1983.’).” [811]

Citation: Gerling Global Reinsurance Corp. of America el al. v. Garamendi, 400 F.3d 803 (9th Cir. 2005).

PATENTS

In patent action by U.S. drug company, Supreme Court of Canada decides whether to allow appeal of Canadian drug company from order issued under recent patent regulations (which sought to conform to Agreement on Trade‑Related Aspects of Intellectual Property Rights and North American Free Trade Agreement) imposing freeze period on defendant’s new drug based mainly on presence of same public domain substance in both plaintiff’s and defendant’s anticancer drugs

During the 1970s, the National Cancer Institute, a U.S. government‑funded organization learned that the bark of the Pacific yew (taxus brevifolia) contained paclitaxel, an anticarcinogenic substance, and put this data into the public domain. Since the yew bushes died when stripped of their bark, however, doubts arose on whether drug companies could turn out enough quantities for pharmaceutical production.

The respondents here include Bristol-Meyers Squibb headquartered in New York City plus its Canadian subsidiary (collectively BMS). In the following decade, BMS produced a drug containing paclitaxel, later marketed as Taxol. In the course of that work, it secured several Canadian patents which involved new formulations and new methods of administering the medicine. None of these patents applied to paclitaxel as such.

Working independently of BMS, the appellant, Biolyse Pharma Corporation (BPC) found out that it could extract paclitaxel from a different species of yew (taxus canadensis) without killing the trees. It applied to the Minister of Health for a notice of compliance (NOC) in order to put its product on the market. The Minister required BPC to submit a New Drug Submission (NDS) rather than an Abbreviated New Drug Submission (ANDS), contending that its different botanical source and its claims for new and different uses for the medicine prevented any reliance on BMS’s Taxol as a Canadian reference product.

BPC then submitted independent clinical studies. The Minister approved the safety and efficacy of the BPC product as a new drug and issued it an NOC in 2001. BMS sought to quash this NOC, however, claiming that its issuance had turned on a finding of bioequivalence to the BMS product.

In a reversal of policy, Parliament in 1993 repealed the compulsory licence provisions of the Patent Act and canceled all compulsory licences issued on or after December 20, 1991. In part, these changes flowed from international duties accepted by Canada under the Agreement on Trade‑Related Aspects of Intellectual Property Rights, 1869 W.N.T.S. 299 (TRIPS). Some may have thought that Canada’s compulsory licensing system might also clash with Canada’s obligations under the North American Free Trade Agreement, Can. T.S. 1994/02, in particular Art. 1709(10), signed at the end of 1992.

The new statute abrogated the usual regulatory lag of two years before a generic manufacturer could obtain an NOC. To prevent the generic companies from abusing these “early working” and “stockpiling” exceptions, however, the government also laid down the Patented Medicines (Notice of Compliance) Regulations (PMR). These allowed a patent owner to submit a patent list of any drug that includes a “medicine.”

If another manufacturer later asks for a NOC for the same drug this “second person” may serve a Notice of Allegation (NOA) that the “first person’s” patent list is not a proper bar. It may contend, for instance, that the first person is not in fact the owner or exclusive licensee in Canada of the drug, or that the patent(s) have expired, or are invalid, or that the applicant would not infringe any claim for the medicine itself and no claim for the use of the medicine.

After being served with an NOA, the innovator may ask for an order barring the Minister from issuing a NOC until all of the listed patents have expired. This application activates a 24‑month statutory freeze on the issuance of a NOC.

On an application for judicial review, the motions judge found that BPC had neither applied for, nor obtained, regulatory approval on the basis of bioequivalence. He ruled that, even though neither BMS nor BPC had any patent claim to paclitaxel, Section 5(1.1) of the NOC Regulations caught BPC because paclitaxel was present in both the BPC and the BMS products. The motions judge quashed the NOC and the Federal Court of Appeal upheld that decision. In a six-to-three decision, the Supreme Court of Canada allows BPC’s appeal.

In the majority’s view, the Minister was entitled to issue the NOC to BPC on the basis of its NDS without making it subject to the statutory freeze. Reading the NOC Regulations to grant BMS a monopoly merely by showing the presence of a public domain medicine like paclitaxel in its product would provide no value to the public in return for the monopoly BMS seeks. When we interpret the NOC Regulations in their proper context, and especially in light of the wording of the statutory power that authorized them, the NOC Regulations do not have the broad effects claimed by BMS.

Parliament enacted the reform legislation in question to protect the rights of patentees to the extent of barring generic manufacturers from marketing “copy‑cat drugs” until the expiry of all relevant patents. Under the NOC Regulations, the court hearing the prohibition application has no discretion to lift the stay even if it thinks the innovator’s case for interim relief is weak. Nor does the court have a discretion to leave the contending parties to their remedies under the Patent Act. The “second person’s” application for a NOC simply goes into a “deep‑freeze” until the statutory procedures have played themselves out.

Moreover, Section 5(1.1) of the NOC Regulations does not apply to innovative drugs. The courts should limit it to applications for generic copies of patented drugs in the circumstances had in mind by the regulator.

Furthermore, since Biolyse did not rely on bioequivalence, its product did not fall within the scope of Section 5(1) of the NOC Regulations either. The product was properly treated as an innovator drug, rather than a “copy‑cat drug,” and neither Sections 5(1) nor 5(1.1) had any application.

Applying the modern approach to statutory interpretation, a court cannot take the word “submission” in Section 5(1.1) out of this context. It also has to look to the scope of the regulation-making power in Section 55.2(4) of the Patent Act; it permits a generic manufacturer to work the patented invention within the 20‑year period (“the early working exception”) to the extent necessary to obtain a NOC at the time the patent(s) expired and to “stockpile” generic product towards the end of the 20‑year period to await lawful market entry. Thus, the judge must consider the grammatical and ordinary sense of the words and give the precise scope of the word “submission” in Section 5(1.1) a purposive interpretation within this context.

Secondly, in analyzing the more specific schemes of the Patent Act and the Minister’s regulation‑making power, it is apparent that the NOC Regulations are directed to persons who are making use of the “patented invention” which is not necessarily co‑extensive with the patented drug or the patented claims. BMS has no patent on paclitaxel and the mere fact that paclitaxel is found in the Biolyse product does not mean that Biolyse took advantage of BMS inventions for the purpose of “early working” a generic copy or “stockpiling” looking toward the expiration of the BMS patents.

Moreover, the limiting words of Section 55.2(4) do not disturb the usual requirement that regulations must fall within the regulation making power. The “plain meaning” adopted by the Federal Court of Appeal in this case would suggest that Section 5(1.1) is ultra vires the very specific authority granted by Section 55.2(4).

Finally, the internal structure of the NOC Regulations supports a narrower interpretation. The word “submission” also appears in Section 4(1), which provides the template upon which the drafters modeled Section 5(1.1).

Moreover, the courts have ruled that Section 4(1) does not apply to all submissions. Any other interpretation of Section 4(1) would allow innovator companies to sidestep the time limits applicable to patent lists by simply making corporate or technical changes to their filing by way of a supplementary NDS. In this context, the courts have found that an unqualified and unrestricted interpretation of the word “submission” would be destructive of regulatory intent.

The majority further explains. “The broad interpretation urged by BMS would lead to an absurd result. The ‘medicine’ in the drug to which the patent list relates need not itself be patented, or indeed owe anything to the ingenuity of the ‘first’ person. It could be a ‘medicine’ whose usefulness was discovered by somebody else (as in the case of paclitaxel) or something in the public domain as common as penicillin.”

“So long as such ‘medicine’ shows up as a component, however minor, in the chemical composition of the drug to which the patent list relates, the ‘second person’ (including an innovator who is seeking to manufacture a new and useful drug) is barred from proceeding to market by the automatic statutory freeze, and this ‘bar’ will continue for so long as the patent list holder can ‘evergreen’ its product by resorting to patentable improvements or other components or additions, be they ever so minor. This would stifle competition and innovation in the pharmaceutical industry and produce a result at odds with what the regulator was trying to achieve.” [¶ 66]

“In my view, Section 5(1.1) does not apply to innovative drugs. It should be confined to applications for generic copies of patented drugs in the circumstances contemplated by the regulator, i.e., where a manufacturer makes a submission for a NOC for a drug which contains a medicine that it purports to copy from another generic but in fact copies from the innovator company that has filed the patent list.”

“That is not this case. Where an applicant relies on bioequivalence, it will be caught by Section 5(1). On the facts here, neither Section 5(1) nor Section 5(1.1) applies. Accordingly, I conclude that the Minister was entitled to issue the NOC to the appellant Biolyse on the basis of its NDS without subjecting Biolyse to the statutory freeze.” [¶ 69]

“If BMS believes that the Biolyse product infringes its patent(s), it has recourse to the usual remedies under the Patent Act. The NOC ought not to have been quashed, and the appeal should be allowed. [¶¶ 70-71]

Citation: Bristol‑Myers Squibb Co. v. Canada, 2005 S.C.C. 26; [2005] S.C.J. No. 26 (Sup. Ct. Canada, May 19).

TERRITORIAL WATERS

U.S. Supreme Court rejects State of Alaska’s claim of title to certain submerged lands underlying waters located in southeastern Alaska finding insufficient evidence to support historic inland waters status

Invoking the U.S. Supreme Court’s original jurisdiction, the State of Alaska sued the United States in 2000 over title to certain submerged lands located in southeastern Alaska. One of the submerged lands consists of pockets and enclaves underlying waters between the southeastern Alaska islands known as the Alexander Archipelago.

All points within the pockets and enclaves are more than three sea miles from the mainland and from any individual island of the Archipelago. Alaska alleged that the waters of the Alexander Archipelago are “historical inland waters,” and therefore U.S. territory.

The Court holds that the waters at issue were not historically inland waters. Where a U.S. State wishes to claim submerged lands based on an area’s status as historic inland waters, it has to show that the U.S. : (1) exercises authority over the area; (2) has done so continuously; and (3) has done so with the acquiescence of foreign nations. The U.S. must somehow have asserted the right to exclude innocent passage of vessels, even if it has never actually exercised the right. See 1958 Convention on the Territorial Sea and Contiguous Zone, Art. 14, subds. 1,4.[15 U.S.T. 1606; T.I.A.S. 5639; 516 U.N.T.S. 205].

As it often does in original suits, the Court appointed a Special Master to develop the facts. After making a thorough examination, the Master recommended that the Court grant summary judgment to the U.S. The Master found that Alaska had at best presented “questionable evidence” that the U.S. has exercised the kind of authority over the waters needed to prove an historic waters claim.

Challenging the Master’s recommendation, Alaska identified four historical events as supporting its position that the Alexander Archipelago’s waters qualify as historic inland waters. The State first pointed to incidents during the period of Russian sovereignty.

“In 1824, the United States and Russia entered into a treaty that, inter alia, granted United States vessels the right, over the next 10 years, to ‘frequent, without any hindrance whatever, the interior seas, gulphs, harbours, and creeks [of the Alexander Archipelago], for the purpose of fishing and trading with the natives of the country.’” [2146] (see Convention Between the United States of America and Russia, Art. 4, 8 Stat. 304 (1825). In Alaska’s view, the Treaty shows that the Russian claim had extended to the entire Archipelago.

The Court, however, is unpersuaded. “The principal problem with Alaska’s assertion is that the 1824 Treaty by its terms did not address navigation for the purpose of innocent passage.’[¼] Yet evidence of the assertion of this right -- not a lesser right -- must be provided to support an historic inland waters claim.” [2146-2147]

The Treaty of 1824 also provided for Russia to station a brig [two-masted sailing ship], the Chichagoff, at the southern border of Russian America. Alaska urged that this provision implied that Russia’s purpose in stationing the brig there was to keep any foreign vessels from entering the Alexander Archipelago’s waters. The Court rejects this reading holding that “the Chichagoff reminded American mariners that they were no longer free to trade with the natives, or to approach within cannon shot of the Russian lands ‘without any hindrance whatever.’” See 1824 Treaty, Art. 4, (8 Stat. 304). [2147]

The second historical event cited by Alaska is the period of early U.S. sovereignty between 1867 and 1903. However, “Alaska cites not a single incident demonstrating that the United States acted in a manner consistent with an understanding that the Alexander Archipelago waters were inland.” Id. at 21-22.

In an 1886 letter from then Secretary of State Thomas F. Bayard to the Secretary of the Treasury, Bayard declared that the U.S. did not claim the Archipelago as U.S. territory. Alaska, however, posited that Secretary Bayard’s letter was merely internal correspondence and did not announce to any foreign nation that the U.S. had abandoned a claim to the Archipelago.

“It may be true that no foreign nation ever became aware of Secretary Bayard’s letter [...] Regardless, Secretary Bayard’s letter still provides strong evidence that the United States, as of 1886, did not claim a right to exclude all foreign vessels from Alexander Archipelago waters and had no intention of doing so. We do not need to parse the letter to see whether it ‘announced to any foreign nation that the United States had abandoned a claim to the Archipelago,’ for Alaska can muster no proof that the United States as of 1886 had made any such claim in the first place.” [2148-2149]

The third historical event is a litigating position taken by the U.S. during a 1903 arbitration proceeding. Before the Alaska Boundary Tribunal, the U.S. had stated that the “political coast” of Alaska consisted of all of the Alexander Archipelago waters. Before the Special Master, the U.S. sought to discount its century-old submissions “as mere hypothetical statements”. [2149]

“The Special Master rejected this view and instead agreed with Alaska that in its submissions to the tribunal the United States ‘was expressing a considered analysis of the [Alexander Archipelago] area.’ Ultimately, however, the Special Master still concluded that the United States’ submissions to the tribunal were ‘not an adequate assertion of authority over the waters of the Alexander Archipelago.’”

“The Special Master noted that the issue before the 1903 tribunal was not ‘[t]he status of the water of the Alexander Archipelago,’ but rather the land boundary between southeast Alaska and Canada [...]. [I]t would be unrealistic to conclude that counsel’s assertions at the tribunal should have made them (sic) foreign nations (other than Britain) aware that the United States was asserting a right to exclude them.” [2149]

The fourth historical event is the 1924 seizure by the U.S. Coast Guard of the Canadian vessel Marguerite pursuant to the 1906 Alien Fishing Act, which barred foreign commercial fishing in Alaskan waters. In the Court’s view, however, “[even were the seizure of the Marguerite taken as evidence of a right asserted by the United States, the official correspondence cited by the Special Master establishes that by 1934 the United States had reverted to the position taken in Secretary Bayard’s 1886 letter.” [2150]

Citation: State of Alaska v. United States, 125 S. Ct. 2137 (U.S.S.C. June 6, 2005).

TRADEMARKS

Under Cuba trade embargo provisions, Cuban cigar maker did not acquire U.S. trademark protection because it had failed to register it in U.S. and because it could not rely on “famous marks” doctrine under applicable statutes and treaties

In 1963, the United States imposed an embargo on trade with Cuba. The Cuban Asset Control Regulations (CAR)), 31 C.F.R. Section 515.201 etc. based on Section 5(b) of the Trading with the Enemy Act of 1917, codified as amended at 12 U.S.C. Section 95a (2000), set forth the ban. Thirty-three years later, Congress codified the Regulations in the Cuban Liberty and Democratic Solidarity Act of 1996 (LIBERTAD Act), codified at 22 U.S.C. Section 6032(h)). The Secretary of the Treasury has delegated its administration to the Office of Foreign Assets Control (OFAC).

The Embargo Regulations ban Cuban companies such as Empresa Cubana del Tabaco, d.b.a. Cubatabaco (plaintiff) from marketing cigars in the U.S. Plaintiff nevertheless claims that it owns the U.S. COHIBA mark and that the sale by Culbro Corp., and General Cigar Co. (defendants), U.S. companies, of COHIBA cigars in the U.S. unlawfully infringes its mark.

In 1969, plaintiff registered the COHIBA mark within Cuba. By January 1978, plaintiff set about to register the COHIBA mark in seventeen nations, including most Western European countries, but not the U.S. In 1983, plaintiff thought about registering its COHIBA mark in the U.S. until it found out that defendant had already secured the U.S. registration.

In February 1985, plaintiff applied to the U.S. Patent and Trademark Office (PTO) to register its BEHIQUE mark with the same trade dress that it was using on its COHIBA cigars elsewhere. Two years later, plaintiff pondered challenging defendant’s 1981 COHIBA registration, but decided against it.

Defendant first discovered the name “Cohiba” in the late 1970s. After seeing reports that plaintiff was intending to sell its COHIBA cigars outside of Cuba, defendant applied to register the COHIBA mark with the PTO in March 1978, with a claimed first use date of February 13, 1978. Defendant obtained the unopposed registration in February 1981. Defendant concedes that the Cuban COHIBA was already well known to U.S. cigar consumers when defendant was selling COHIBA cigars in the U.S. from 1978 until late 1987. In early 1997, defendant launched a new cigar under the COHIBA name.

Plaintiff sued defendant in a New York federal court in November 1997. The first six claims alleged violations of various treaty provisions and asserted that plaintiff was entitled to relief under Sections 44(b) and 44(h) of the Lanham Act, 15 U.S.C. Section 1126(b), (h). Specifically, of the claims actually passed on by the lower Court, plaintiff claimed, inter alia, that defendant had violated: (1) the protection under Article 6bis of the Paris Convention for the Protection of Industrial Property, Mar. 20, 1883, as revised at Stockholm, July 14, 1967, 21 U.S.T. 1583, 828 U.N.T.S. 305 (‘Paris Convention’), for famous marks; (2) Section 10bis of the Paris Convention’s ban on unfair competition; (3) Articles 7 and 8 of the General Inter‑American Convention for Trade Mark and Commercial Protection, Feb. 20, 1929, 46 Stat. 2907 (IAC) by using and registering COHIBA for cigars knowing about plaintiff’s use of the mark on cigars; (4) Articles 20 and 21 of the IAC’s prohibition against unfair competition.

In November 2001, defendant moved for summary judgment based on estoppel, acquiescence, and laches, due to plaintiff’s alleged delay in objecting to defendant’s use of the COHIBA mark. On January 29, 2002, plaintiff moved to dismiss defendant’s affirmative defenses. Plaintiff also moved for partial summary judgment on its claim that defendant had abandoned its 1981 registration, as well as its claims that defendant violated Articles 7 and 8 of the IAC, Article 6bis of the Paris Convention, New York common law, and the Federal Trademark Dilution Act (FTDA), 15 U.S.C. Section 1125(c).

In June 2002, the District Court granted plaintiff a partial summary judgment on its claim that defendant had abandoned the COHIBA mark during its period of non‑use from 1987 to 1992. The court also dismissed defendant’s affirmative defenses of acquiescence, estoppel, and laches.

On May 6, 2004, the District Court entered an order, judgment, and permanent injunction. The court inter alia: (1) granted plaintiff a judgment against the defendant on its claim for infringement of plaintiff’s COHIBA mark pursuant to 15 U.S.C. Section 1125(a) and granted judgment to plaintiff on its claim that, prior to November 1992, defendant had abandoned the COHIBA mark. The court also canceled defendant’s trademark registration for the COHIBA mark, and permanently enjoined defendant from using it; and (3) ordered defendant to deliver to plaintiff all goods and labels bearing the COHIBA mark, and to recall from retail customers and distributors products bearing the mark.

The U.S. Court of Appeals for the Second Circuit affirms in part, reverses in part, and remands. It reverses the District Court’s grant of judgment to Cubatabaco on its claim of trademark infringement under Section 43(a) of the Lanham Act and affirms the lower court’s dismissal of all other claims brought by Cubatabaco.

“[A]bsent a general or specific license, [Regulation] Section 515.201(b)(1) prohibits transfers of trademarks to Cuban entities by persons subject to the jurisdiction of the U.S.

The District Court’s holding that plaintiff’s mark was sufficiently famous in 1992 for property rights to attach could be viewed as a transfer of [such] property rights to plaintiff. “[W]e need not resolve it because plaintiff’s acquisition of the mark through the famous marks doctrine is plainly barred by Section 515.201(b)(2).”

“Indeed, plaintiff does not appear to be arguing that Section 515.527(a)(1) permits acquisition through the famous marks doctrine. Instead, plaintiff argues that (1) its acquisition of the mark is not prohibited by Section 515.201(b) because that section does not cover transfers by operation of law and (2) its acquisition of the mark is in any event permitted by the special license granted to it by the OFAC.” [473]

The Court rejects the applicability of a general license and sees no merit in the special license argument. “...[The special license issued by OFAC to Cubatabaco, which allows Cubatabaco to ‘pursue ... judicial remedies with respect to claims to the COHIBA trademark,’ does not permit acquisition of the mark via the famous marks doctrine. This license allows Cubatabaco to seek relief in U.S. courts, but does not authorize transfers of property barred by the Regulations.” [Id. at note 4]

The government argued, the Court notes, that pursuant to Section 43(a), the Embargo Regulations do not stand in the way of the lower court’s orders. “Section 43(a) also ‘goes beyond trademark protection’ in the sense that the provision can be used to protect trade dress or to protect against other forms of product infringement.”

“But this is not a case about trade dress. ... This is, rather, a case about which entity owns the COHIBA trademark in the U.S., and ‑- principally because we hold that the Regulations prohibit transfer of any property right in the COHIBA mark to plaintiff ‑- we hold today that defendant, and not plaintiff, owns the COHIBA trademark in the U.S. .”[478, note 9]

“[A noted scholar] asserts that claims for protection of ‘famous’ marks should be brought under Section 43(a). [That Section] gives a foreign national without a federal registration of its mark standing to sue in a federal court, [to] invoke the well‑known marks doctrine of the Paris Convention Article 6bis, and [to] prevail if its mark is so well‑known in the U.S. that confusion is likely. To the extent that a foreign entity attempts to utilize the famous marks doctrine as basis for its right to a U.S. trademark and seeks to prevent another entity from using the mark in the U.S., the claim should be brought under Section 43(a).”

“Article 23 of the IAC, which appears under Chapter V of the IAC entitled ‘Repression of False Indications of Geographical Origin or Sources,’ provides: ‘Every indication of geographical origin or source which does not actually correspond to the place in which the article, product or merchandise was fabricated, manufactured, produced or harvested, shall be considered fraudulent and illegal, and therefore prohibited.’ IAC, Article 23, 46 Stat. at 2934.”

“Article 20 of the IAC provides that ‘[e]very act or deed contrary to commercial good faith or to the normal and honorable development of industrial or business activities shall be considered as unfair competition and, therefore, unjust and prohibited.’ IAC, Art. 20, 46 Stat. at 2930‑32.” [484 at note 12]

“Cubatabaco does not claim that Article 21 prohibits a broader range of conduct than Section 43(a) of the Lanham Act. Therefore, Cubatabaco cannot bring a claim under Article 21 of the IAC pursuant to Sections 44(b) and (h). To the extent Cubatabaco is attempting to raise claims under IAC Article 20, that provision does not provide a separate basis for relief because it is implemented through Section 43(a) of the Lanham Act.” [484]

Citation: Empresa Cubana del Tabaco v. Culbro Corp., 399 F.3d 462 (2nd Cir. 2005).

Argentine Supreme Court strikes down its amnesty laws. On June 14, 2005, the Argentine Supreme Court struck down the laws of “final point” and “due obedience,” which granted amnesty to members of the military dictatorship (1976-1983) from prosecution for human rights violations. The Court finds that the statutes [Laws 23.492 and 23.52] violated directly applicable treaties such as the International Covenant on Civil and Political Rights [December 19, 1966, 999 U.N.T.S. 171] as well as customary international law. While the Court acknowledges Congress’ constitutional power to grant amnesties, it cites articles from the Inter-American Convention on Forced Disappearance of Persons and the U.N. Convention Against Torture and Other Forms of Cruel, Inhuman or Degrading Treatment or Punishment (G.A. Res. 39/46, 39 U.N. GAOR Supp. No. 51 at 197, U.N. Doc. A/RES/39/708 (1984)) to hold that such amnesty powers are not absolute. The decision opens the door to prosecution of nearly 1500 military officers – of which 10% remain on active duty – for disappearances, torture, and other crimes against humanity. Finally, citing the Convention on the Non-Applicability of Statutory Limitations to War Crimes and Crimes Against Humanity, as well as other similar treaties, the Supreme Court affirms that prosecution of military officers for their actions during the 1976-1983 dictatorship could proceed. Citation: Supreme Court of Argentina, Simon, Julio Hector y otros s/ privacion ilegitima de la libertad, etc., causa No. 17.768, S. C. S. 1767; L. XXXVIII (June 14, 2005); St. Louis Post-Dispatch, Buenos Aires, Wednesday, June 15, 2005, section A, page 12 (byline of Mayra Pertossi, AP staff reporter).