3 1. INTRODUCTION

322-2

1. INTRODUCTION

A. INDUSTRIAL PROPERTY

i. Industrial property - Definition. - Theterms "industrial property" and "intellectualproperty" (copyrights) cover the same areas oflaw in all countries. In the following, we shalluse "industrial property" as the general term.

The sphere of industrial property covers in-tangible products of the mind (inventions,trademarks, designs, models, works ofliterature

and art, computer programs, topographies ofsemiconductor products (chips)). They differfrom movables and immovables by the absenceof any corporeal qualities and from other legal-ly protected incorporeal interests (reputation,sphere of personal secrecy) inasmuch as theyare not connected with a particular person,once they have been created (except for trade-marks). A corporeal object exists only in oneplace, while intangibles, which are the objectof industrial property, are ubiquitous. and are

able to feature at various places at the same

time.Industrial property also includes the right to

the name of a firm or business, the rights of the,producers of phonograms and of performers ofservices in the field of communications (broad-casters and others). Finally reference must bemade to intangibles embodying exclusive rightsde facto which are not protected by special legis-lation, such as manufacturing or business

secrets, know-how and others. Some of theseinterests enjoy a limited protection by copy-right, some by the rules against unfair competi-tion and some by special legislation.

Unfair competition and the protection oftrade names are being discussed.elsewhere (infrach. 34) since they fall within the sphere of tortand do not involve rights erga omnes in respect

of intangibles.

i Vlmer, E., General Questions - The Internation-

al Conventions: this Encyclopedia vol. XIV ch. i(1987); Keller and Siehr 80 ss.; if infra n. 142 See Keller and Siehr 84ss.; Magnus, ,Das UN-Kaufrecht tritt in Kraft: RabelsZ. 5 i (1987) 123 - 129;

Idot, Le rapprochement des législations en matière depropriété intellectuelle. Bilan proviso ire des travaux:Dr.prat.com.int. 15 (1989) 272-290. For the EEC, see

also First Council Directive to Approximate the Lawsof the Member States Relating to Trademarks of 21Dec. 1988, 0J EC 1989 L 4ÒP. i.

3 jessurun dOliveira, Codification et unification

Both national legal systems and multilateralinternational conventions treat industrial prop-erty as a special branch of the law. The fact ofthis uniform international classification facili-tates the comparative treatment in private inter-national law. The question as to whether a mat_ter of industrial property is involved can usuallybe answered without difficulty, at least whentraditional legal interests (patents, trademarks,designs and models, works of art) are involved;the answer is more difficult where modern in-terests are in issue (computer programs, neigh-bouring rights).

2. The scope of industrial property. - The func-tion of industrial property lies primarily in thesphere of business, trade and industry (whetherconcerned with economic or artistic activities).After the Second World War those activitieswhich straddle national boundaries have devel-oped enormously, and every economic activity(in the broadest sense) can now view the wholeworld as its target. Modern electronic meansof communication make it possible to ex-change, transfer or to place interests representedby symbols (signs, lines, colours or musicalnotations) with great speed across the world.

Thishas made the international trade inintangi-bles and in the rights protecting them mucheasier.

While it was hoped at one time that in virtueof international conventions i national laws

might be rendered uniform or might be super-seded by supranational law,2 thereby eliminat-ing the need for choice-of-Iawrules, it was real-ized later on that all attempts at harmonizationactually call for conflicts rules.3 Although thechoice~of-Iaw rules for industrial property wereonly discussed by a few specialists in the fiftiesand sixties of this century,

4 it is not surprisingthat more recently the conflict of laws in this

du droit international privé. Problèmes de coexis-tence: Unification and Comparative Law in Theoryand Practice. Liber Amicorum Sauveplanne (Deven-ter 1984) 117- 130 at 123: "L'unification n'enlève pas le

besoin de codification, elle l appelle."4 Deutsch; Plaisant, M. 5; Rutz, Die Schuldwäh-

rung der Ansprüche aus Immaterialgüterrechtsver-letzungen (Fribourg, SwItz. 1962); Troller, A., IPR;idem, Internationale Zwangsverwertung und Expro-priation von Immaterialgütern (Basel 1955) ; idem,Völkerrechtliche Verträge; Troller, K.; Vida, Con..trats 218.

22-3 Industrial and Intellectual Property 4

matter has attracted much interest and has led tonumerous publications.5

3. Industrial property - Litigation. - Litigationconcerning intangibles arises if one or severalpersons seek to exclude others from exploitingthem, while the latter claim a right to exclusiveuse or to a non-exclusive right of participation.Possible legal disputes therefore centre on oneof these rights which forms the object of theconflcting interests. Whatever reasons are putforward by either party, they all relate to theintangible asset in dispute or to the creative act

(of the author or inventor) underlying it.As long as the nature of this legal asset is not

clear, it is impossible to choose the law govern-ing it. In order to provide an answer whichguarantees justice and legal certainty and fitsinto the legal system to the question which lawapplies to international situations involving

protected intangibles, it is necessary first of allto analyse their essential characteristics.

B. ESSENTIAL CHARACTERISTICS OFINTANGIBLE ASSETS

4. The subject matter - Products of the mind. -Inventions and utility models, trademarks, de-signs and models, works of literature and art aswell as computer programs and the structure ofmicrochips are products of the mind.

An invention is an instruction which showshow natural forces are to be applied in order toreach a -technical result (construction of a ma-chine, manufacture of a product, treatment ofan object, etc.). This instruction is communicat-ed by words or by drawings, formulas (and inthe case of micro-organisms by a deposit). The

5 Ballreich, Enthält das GATT den Weg aus demDilemma der steckengebliebenen PVÜ-Revision?:GRUR Int. 1987, 747-758; Batiffol and Lagarde 11198 ss.; Beier, Schricker and Ulmer I04; Brem 53-65;Cabanellas 39 ss.; Dessemontet, Contrat de licence 435;Diener; Keller, Schluep, Troller a.o.; Lagarde, Les con-trats dans le projet suisse de codification du droitinternational privé: Schw.jb.Int.R. 35 (1979) 72-79,72; Martiny 218 ss.; Meessen 67; Modiano 121-147; Neuhaus, Drobnig, von Hoffmann and Martiny;Plaisant, R.; Schack, Verletzung 523; Schapira 5;Sandrock 507; Troller, A., Diskussion II25 ss.; idem,Immaterialgüterrecht 134 ss., 860 ss.; Ulmer, E., IPR;Vischer, IPR-Gesetzentwurf 670; Englert, Das Imma-terialgüterrecht im IPRG: Schweizerische Vereinigung

für Internationales Recht (ed.), Das neue Bundesgesetz

latter are means of communication which canbe perceived bodily, but the' instruction is amatter of the mind. As a product of the mind itis an intangible.

By their nature, utility models are inventionsand designs are applied works of art. Althoughdifferent, they wil be comprised henceforth bythe terms inventions or works of literature andart, respectively.

A trademark combines a distinctive mark(word, picture, sound, form or a combinationof two or more elements) with specific cate-

gories of goods. The unity of the sign and of aspecific product or enterprise, which only inthis combination constitutes the trademark,. isrendered discernible by the physical juxtaposi-tion of the sign and the product or the enter-prise: the sign is attached to the product or thepackage, or the sign and the product are men-tioned in an advertisement, or on business pa-

pers, etc. However, the true unity of the signand the product occurs in the human mind.Thus a sequence of words describing an inven-tion becomes an instruction only by the processof mental assimilation, and the trademark as asymbol representing the product or the enter-prise becomes reality only in the mind. Theyare products of the mind.

Works of literature and art as well as modelsare perceived physically through words, musi-cal notes, . tunes, lines or two- or three-dimen-sional surfaces. The means of information arecopies of the works (but also transmissiòns orperformances).6

Computer programs are developed from abase element, an algorithm, are loaded into acomputer and have the effect that the latterreceives data, analyses them and produces a re-sult. To this extent, they can be regarded as

über das Internationale Privatrecht in der praktischenAnwendung (Schweizer Studien zum lnternationalenRecht no. 67) (Zürich 1990) 61 -70; Locher, Das In-

ternationale Privat- und Zivilprozessrecht der Imma-terialgüterrechte aus urheberrechtlicher Sicht (nachschweizerischem IPRG, unter Berücksichtigung derBerner Übereinkunft) (Zürich 1993); Celli, Der in-ternationale Handelsname (Zürich 1993) 183-235;Vischer, Das internationale Vertragsrecht nach demneuen schweizerischen IPR-Gesetz: Schweizerische

Vereinigungfür Internationales Recht (ed.) (supra) 9- 34,33.

6 For a survey of the development of copyright, aswell as its comparison, see Strömholm, this Encyclope-dia vol. xiv ch. 2 and 3 (1990).

5 Introduction 22~6

equivalent to inventions 7 by treating them ei-ther as procedures for operating and using acomputer or as part of the computer, becausewithout the inserted program it is a machineincapable of functioning. As produced physical-ly, both the programs which an expert can readdirectly (primary or source programs) as wellas coded specific programs, i.e. primary pro-grams translated into machine decipherable lan-guage, writings, or pictures are now protectedin a rapidly increasing number of countries asworks subject to copyright.8

Microchips are micro-electronic productswhich contain a three-dimensional scheme

(called topography). The mental achievementconsists in the specification of the product, i.e.in the determination of the function to be ful-filed by the chip and in the selection of theoperational scheme which defines the three-di-mensional shape of the topography. For the

purpose of the industrial production of thechips, the topography is determined figurative-ly (composite drawings) or in digital form (database tape); these are made into discs each ufwhich reproduces a layer of the three-dimen-sional topography.

The specifications for the production and thetopography are laid down in writing or as adrawing. Insofar as it is original, copyright pro-tection may be available. Topographies whichare fully developed could be treated as inven-tions. However, they have been given specialprotection in many countries (infra s. 14).

5. Unlimited ubiquity of intangible assets. -Corporeal assets, even if movable, are situatedat a particular place of the world and thereforewithin the territory of a particular country.

Intangibles have no geographical basis. Theyare present wherever a human being who hasperceived them is present or where the objectsrepresenting them exist (published patent speci-

7 See Troller, A., Der urheberrechtliche Schutz

von Inhalt und Form der Computerprogramme:Computer und Recht 1987, 213-218, 278-284, 280and 352-358; Barbey, Les contrats informatiques:Sem.jud. 1987, 289-320. Computer programs arenot instructions addressed to the human mind; thelatter are processed by the mind while a computeronly becomes a useful and usable instrui:ent through

a program. A computer does not "process" the infor-mation provided by the program; the program influ-ences directly and automatically the operations of thecomputer.

8 See Troller, A. (preceding note) 352. Depending

on whether a computer program is intended to pro-tect a technical rule as such or its realization by aninstrument of information it wil be protected by the

fications, deposited micro-organisms, goodsand services covered by trademarks, books,

musical scores, pictures, sculptures, photo-graphs, musical records, other objects of dailyuse of an artistic or aesthetic nature, computerprograms).

In theory products of the mind can thereforeexist contemporaneously at an unlimited num-ber of places in the world. In fact, successful

inventions, trademarks, designs and models,

works of literature and art as well as computerprograms and microchips are indeed to befound in countless places at the same time. Thesame intangible asset figures in all these places,but the number of carriers of the informationequals. the number of places where it material-izes; they are corporeal objects (patented goods,trademarks, goods, models, books, musical

records, discs, chips, etc.) which display theproduct of the mind everywhere.

The fact that intangible assets must be regis-tered does not affect their ubiquity. The recog-nition of exclusive rights in inventions is madeto depend everywhere on the grant of a patent,and in the case of trademarks, models, designs,and microchips on their delosit. On the otherhand, rights in worksofliterature and art and incomputer programs arise in most countrieswithout any deposit or entry in a register. Beingan administrative act, an entry in a register af-fects the existence and the substance of therights. However, it does not localize the intan-gible which, being a product of the mind, existsindependently of any legal sanction.9

C. CONFLICTS OF INTERESTS IN INTAN-GIBLE ASSETS

6. Interests in intangible assets as such. - Intan-gibles, being products of the mind can be the

provisions of patent law or copyright law. Patent lawoffers a broader protection, principally if an al-gorithm as such is protected. Then the sources-pro-grams and the subject matter programs wil also becovered. However, practically all systems have optedfor protection by copyright law (as e.g. the new swissLaw on copyright and related protective rights of9 Oct. 1992, which entered into force on 1 July 1993,BBL. 1992 VI 74; see infra n. 26).

9 In this respect the PERUVIAN legislation on private

international law fails to appreciate the nature ofintangibles by relying on the place of registration ofthe rights as a subsidiary connecting factor for thepurpose of determining the applicable law; see PERU-

VIAN CC (1984) art. I093 (RabelsZ 49 (1985) 537).


object of direct conflicts of interest. Inventions,models and designs, works ofliterature and art,computer programs and microchips are createdby individuals in a particular country. So longas they are known only to their authors andthus are secret, these secret intangible assets

are under the exclusive control of that, individu-al and therefore located where he happens tobe. During this period no legal disputes canarise.

When third parties acquire knowledge ofsome intangible assets, they obtain a kind ofpossession thereof. Thus, the way is opened forit to spread and to be present as a product ofthe mind in any part of the world. Therefore,the owner of the intangible asset must count onthe existence of an uncertain number of oppos-ing claimants in an uncertain number of places,once the intangible asset has left his intimatepersonal sphere and has been put into circula-tion. The situåtion differs from that where thelegal dispute involves corporeal goods or con-tracts where the facts are connected with justone or a few geographical locations only.

Litigation restricted to an intangible as suchinvolves questions of ownership, of creative ac-tivity, of possession, of exploitation of the in-tangible or of its use.

7. Interests concerning protected rigths in intangi-

ble assets. - In view of the ubiquity of an intan-gible, the person entitled to it can acquire amultiplicity of protected rights. Thus an inven-tor or his successor can acquire in a variety ofcountries one or several patents, and the manu-

facturer of a product sold under a trademarkcan secure its protection in many countries. Theauthor of a copyright work justifying protec-tion can enjoy protection automatically in near-ly all countries. These rights can be acquired bydifferent parties, independently of each other.

As a result, disputes may arise not only in agreat number of geographical localities, but alsoat the same time between different owners of anintangible asset, or between owners of intangi-ble assets the similarity of which causes confu-sion, or between the owner of an intangible andan unlimited number of third parties who seekto obtain rights to it or who assert such a right.

8. Interests in the exploitation of intangible assets

or of protected rights in them. - The creator of anintangible, be he an inventor, poet, composer,artist, creator of a model or a design, computerprogrammer, designer of chips or the initialuser of a trademark usually aims to exploit hisinterests in as many countries as possible, eitherpersonally or together with another person, orto grant its exploitation to the latter!. This is alsothe purpose of any assignment of the intangibleor of a right to it as well as of licensing agree-

ments.Since contracts involving the transfer or the

use of intangibles are usually complicated legali.nstruments, conflicts of interpretation often

arise between the parties. If a third party claims.a better right to the intangible, or if a right is orbecomes void and a contract to assign it or togrant a licence therefore loses its basis, this maygive rise to a claim for damages.

I

7 22-10

H. THE LAW APPLICABLE TO THE PROTECTION OF INTANGIBLES

A. INTERNATIONAL ECONOMIC AREAS ANDNATION AL LEGAL SYSTEMS

9. Throughout the realm of the internationalexchange of goods, international economic ar-eas are confronted by national jurisdictions.This is particularly evident in the law of intan-gibles.

Relations between parties located in differentcountries result in the transfer from one countryto another of goods connected with intangiblerights or in services related thereto to be per-formed across frontiers. These trading activitiesinvolve persons established in different places.Goods are moved from one country to another,services are performed across frontiers. Thus,the goods or services change their respectivesitus.

As products of the mind are intangible aridtherefore ubiquitous, they are international perse. They acquire an international character asthe result of acts or decisions of persons in dif-ferent countries who establish contacts witheach other. Since, as a rule, the purpose of anintangible is to be exploited and used as far aspossible throughout the world, its creationopens up a potentially unlimited internationaleconomic area. In contrast with contractual re-

10 For this effect in space and distance and for theterritorial independence from the act creating theright and its effect see Troller, A., IPR 35-42; idem,Immaterialgüterrecht 136 ss.; idem, Diskussion

028 ss.; Neuhaus, Drobnig, von Hoffmann and Martiny214; Fikentscher and Lamb, Zur Anerkennung vonGrundsätzen des gewerblichen Rechtsschutzes, U rhe-berrechts und Wettbewerbsrechts im Rahmen einerneuen Weltwirtschaftsordnung: GRUR Int. 1987,758-763,762; Ulmer, E., IPR 7.

Not all intangibles are protected, however, partlyfor the express reason of withholding legal protec-tion, such as know-how (which is only mentionedas a special object of protection in a few countries, e.g.in HUNGARY) and business secrets, partly because theyare stil too recent, as e.g. services based upon tech-niques of communications: see Grewlich, Wirt-

schaftsvölkerrecht kommunikationstechnisch ge-stützter Dienstleistungen: RIW 1988, 694-700;

II See Troller, A., Diskussion li26ss. This is the

generally accepted meaning of the principle of terri..toriality. See e.g. GERMANY: BVerfG 23 Jan. 1990,BVerfGE 82, 208 (223), IPRspr. 1990 no. 149; BGH16 April 1975, NJW 1975, 1220 (1222), IPRspr. 1975no. lI8; but see BGH27 Jan. 1981, BGHZ 80, 101,IPRspr. 1981 no. 132. ITALY: Cass. 29 JulY 1958

no. 2754, Riv.dir.int. 1959,333 note Gubino; FRANCE:

Cass.civ. 15 March 1966, Clunet 1966, 622,

lations which are bipolar and therefore linear,intangibles are multipolar and therefore coveran area. io

B. THE PRINCIPLE OF TERRITORIALITY

10. The law of the protecting country as centre ofgravity. - The term territoriality expresses theprinciple that there exists a link between theintangible and the law of the country of its situs.The creation, existence, extent and extinction ofrights in an intangible are determined exclusive-ly by the rules on intangibles of the country

where protection is sought (country of protec-tion). Alois Troller expressed the principle ofterritoriality with admirable clarity when hesaid: II

"The principle of territoriality is recognized by themost important multilateral international Conven-tions (such as the Paris Convention for the ProtectionofIndustrial Property, the Berne Convention for theProtection of Literary and Artistic Works and theUniversal Copyright Convention) and by most na-tionallaws dealing with rights in intangibles. The lawof each country in respect of the territory of whichprotection is sought for a patented invention, a regis-tered trademark, a deposited design or model or fora work of literature or art determines on its own in

Rev.crit.d.i.p. 1967,147; Cour Douai 20 March 1967,Clunet 1968, 84, .Rey.crit.d.i.p. 1968,691; Cour Paris25 June 1958, Clunet 1959, I098. See also the ENGLISHcase of Tyburn Productions Ltd. v. Conan Doyle, (1991)Ch. 75 (Ch.D.). . '(

See also Troller, A., Immaterialgüterrecht i34ss.;Vischer, IPR-Gesetzentwurf 670, 677 ss.; Brem 57;Cel/í (supra n. 5) 186, 193; Beier, Schricker and Ulmer10); Martiny 230; Plaisant, R. 268; Ulmer, E., IPR12 ss.; Schack, Verletzung 523; Dessemontet, Contratde licence 441; Beitzke, Neues österreichischesKollsionsrecht: RabelsZ 43 (1975) 245-276, 268;Tiedemann, Neue Kollisionsnormen in El Salvador:RabelsZ 51 (1987) 120-123.

The European Patent Convention of 5 Oct. 1973

(Ind.Prop. 1974, 51, Zweigert and Kropholler (ed.) Il-A no. E 360, F 360, G 360) to take an example, relieson the principle of territoriality in an auxiliary capac-ity. Art. 74 states:

"In the absence of another provision of this Con-vention, the registration of a European patent, as apatrimonial object, is subject in each Member Stateand with effect for this State to the law which appliesin that State to the national registration of a patent."

The principle of territoriality is also embodied inthe Lusaka Convention (infra n. 15) and the article byMils 202 (infra n. 39).

22- I I Industrial and Intellectual Property 8

What circumstances a right in such an intangible arisesand expires within its territory. The same law alsodetermines what types of dispositions may be madeof such a right, what acts constitute violations of itand what are the consequences. With few exceptionsno problems have arisen over the subjection of a rightto an intangible to the law of the country of protec-. "tion.

The law of the country of protection also

determines exclusively whether certain factsconstitute an intangible that can be protectedand to which category of intangibles it belongs(e.g. whether software falls under copyright oris to be considered as an invention; whether ashape is to be protected as a trademark or as amodel or as a work of applied art).

The courts of the country of protection alsoentertain most of the disputes concerning the

validity and the violation of rights in intangi-bles. The law applied by these courts thereforeis almost always the lex fori. But even whencourts outside the country of protection are

seized of such disp~tes, the problem of charac-terization does not cause any difficulty. The testwhether something is an intangible is uniforminternationally. Similarly, the criteria as to

whether a factual situation falls within the areaof technical rules (invention qualifying for

patenting), trademarks, works of literature orart, computer programs or microchips are gen-erally the same worldwide.I2

The creator of an intangible asset normallyenjoys protection in several countries because

the laws of the country of protection usually

make the acquisition of the right depend uponthe relationship existing between the claimantand the intangible asset (inventor, author, pro-grammer, first user of a trademark), althoughoften registration is necessary in addition. Thefactual situation on which the acquisition of theright is based is therefore the same (althoughrepeated in each country), but the rights derivedfrom it in the various countries are indt1pendentof each other.

Furthermore, in each country the factual sit-uation is legally relevant only insofar as the law

12 See Troller, A., La propriété intellectuelle,catalyseur et stabilisateur de la coopération

économique internationale: Prop.ind. 1987, 485-489, and the other studies of this author who has setout in a series of articles the guiding principles oflawin general and of the law relating to intangibles inparticular which permeate all societies worldwide(whether Asiatic, Marxist or other).13 Trol/er, A., Diskussion lI26 ss.; Ulmer, E., IPR

3 i ss. Schack, Verletzung 523 - 524 opposes the accep-tance of the principle of territoriality for the law of

of the particular country attributes effects to it.Thus, e.g. an invention made in one country isevaluated according to the law of every other

country as to whether it is patentable there, al-though the invention itself is the same. For thelegal evaluation, facts which have occurred inother countries may be taken into considera-

tion; if e.g. an invention or a trademark has beenused previously in one country, this may affectits novelty in other countries.

An exclusive right in an intangible assetac-quired in one country wil also be recognized in

another with respect to the first country. Butthis does not mean that the holder of the rightwil also be recognized as being entitled to thesame right of protection in the other country. ASwiss citizen who has obtained a swiss patentfor an invention wil also be recognized in GER-

MANY as the owner of the swiss patent, butthis does not mean that he can also obtain aGERMAN patent. It is quite possible that he wilbe granted an exclusive right to the invention inGERMANY (unless somebody else has precededhim), but this right is independent of that inSWITZERLAND.

The acquisition of a right to an invention,trademark, model or design requires the sub-missiori of a patent application, the registrationof a trademark or the deposit of a model or adesign and involves considerable expenses.

Consequently, a person frequently seeks protec-tion in one or in a few states only with the resultthat the same intangible asset can either be free-ly used by others or even be made the object ofan exclusive right of its own. In the case of acopyright such a free use is not possible since acopyright arises without formalities in mostcountries by the mere fact of its creation.

I I. Other connecting factors - critical discussion.

- The application of the law of the country ofprotection follows from the ubiquitous natureof intangibles. To apply another law, such asthat of the nationality of the author or of thecountry in which the intangible was created,would resùlt in solutions creating unjustifiedlegal uncertainty. 13

copyright and suggests: "It is the task of private:inter-national law to develop as far as possible a uniformchoice-of-Iaw rule for the law of copyright whichrelies, as for all other rights, (also for the period beforeany infringement occurs) on a single legal system.This can only be the law of the country of origin."

The new POLISH Trademark Law of 31 Jan. 1985(Dz.U. no. 5 poz. 17) permits an alien to register atrademark without any previous registration in thecountry of origin; see Niedzielska and Skubisz, La

nouvelle loi polonaise sur les marques de fabrique

9 The Law Applicable to the Protection of Intangibles 22-12

In every country of protection, the owner ofthe intangible is confronted by a number ofpersons, unlimited in theory, who would like tomake use in some way of the intangible. Suchthird parties cannot be expected to carry outenquiries in the foreign country of origin in

order to ascertain whether or not they are torespect the alleged exclusive right in. their owncountry. Moreover, there is no reason why therelationship between the inhabitants of the pro-tecting country and the intangible should besubject to the idiosyncracies of a foreign legal

system, the application of which would dependupon the fortuitous circumstance of the intangi-ble's place of creation or the nationality of itsauthor or holder. The problem is not one of arelationship touching the person of the claimantbut one of a relationship touching an intangiblewhich is an ubiquitous object. This distinguishesthe relationship clearly from one arising out ofthe law of contract or out of family law.

On the other hand, similarities exist with dis-putes concerning movables. However, unlike inthe case of movables, an acquisition abroad doesnot serve as a title in the country of protection- with good reason because the conditions foracquiring intangibles or rights in them diffèrconsiderably from country to country. In fact,they provide the most frequent object of dis-pute (e.g. whether an invention or trademarkqualifies for protection). It would be unjust ifthe right to protection of e.g. an invention wereto be decided differently in the same country of

de 1985: Prop.ind. 1987,75-86. The same seems tohave applied in the SOVIET UNION, see Grygoryev,

L'enregistrement des marques et la protection desdroits des titulaires de marques en Union Soviétique:Prop.ind. 1987, 448 -459, 449, 456.

14 These treaties are:

(i) Paris Convention for the Protection ofIndustri-al Property of 20 March 1883 art. 2, revised Brussels14 Dec. 1900, Washington 2 June i9li, The Hague 6Nov. 1925, London 2 June 1934, Lisbon 3 i Oct. 1958,and Stockholm 14 July 1967 (828 UNTS 305).

(2) Berne Convention for the Protection of Lit er-ary and Artistic Works of 9 Sept. 1886 art. 4, 5, 6,reviSed Berlin 13 Nov. 1908, completed Bern 20March 1914, revised Rome 2 June 1928, Brussels 26June 1948, Stockholm 14 July 1967 and Paris 24 July1971 (943 UNTS 178).

(3) Universal Copyright Convention of 6 Sept.1952, revised Paris 24 July 1974 (943 UNTS 178)art. Il.

(4) Treaty of Montevideo for the Protection ofLiterary and Artistic Property of Ii Jan. 1889 (171

CTS 453) art. 2 which has lost much of its relevancehaving regard to Universal Copyright Convention

protection, depending on the origin of the in-ventor.

The reason for this result is to be found in thenumerus clausus of protected rights in intangi-

bles. This principle implies that a right of pro-tection may only be acquired in specific types ofproducts of the mind, while title to movables isrecognized without restrictions.

If the principle of territoriality were replacedby that relying on the law of the country oforigin, intangibles in one country would beprotected according to different rules. Thus e.g.it would be sufficient for an invention createdin France to be recognized in SWITZERLAND, that

it was new, whereas the same invention, had itbeen created in Germany, would have to fulfilin addition the requirement of an inventive

step.Furthermore, a work could have several

countries of origin if in the course of complet-ing it its author had changed his residence. Fre-quently, it would only be possible to ascertainthe country of origin of an invention or trade-mark after extensive enquiries.

12. The principle of territoriality undermined. -Originally, the international conventions in

matters of industrial property contained largelyprovisions dealing with the legal position of

aliens inasmuch as they ensured them equaltreatment with citizens. They continue to be ofgreat importance in international relations per-taining to intangibles.

14 These treaty provisions,

however, do not even state expressly that a

art. XVII and xix, followed by the CopyrightConvention (Mexico City) of 27 Jan. 1902 (190 CTS391) art. II par. 2; Convention respecting Artisticand Literary Property (Buenos Aires) OflI Aug. 19IO(2lI CTS 374) art. 6; Convention on the Protectionof Literary and Artistic Copyright (Havana) of 18Feb. 1928 art. i, superseded by the Inter-AmericanCopyright Convention of 22 June 1946 (PAULTS19).

(5) Inter-American Convention for the Protectionof Patents and Designs (Buenos Aires) of 20 Aug.I9IO (212 CTS i) art. 2 and the Convention for theProtection of Trademarks (Buenos Aires) of 20 Aug.1910 (212 CTS 29) art: ix, replacing the Pan-Ameri..can Patents and Trade Marks Treaty (Mexico City) of27 Jan. 1902, ratified by the UNITED STATES and 13

CENTRAL and .SOUTH AMERICAN countries.

(6) The Inter-American Convention for the Pro-tection of Trademarks, of Commerce, Agricultureand Business Names (Santiago) of 28 April 1923art. I, replaced by the Convention for the Protectionof Trademarks and Commercial Marks (Washington)of 20 Feb. 1929 (124 LNTS 357) art. I, 2, 29. Art. 2of the latter even provides that every mark which has


claimant may rely on the domestic law of thecountry where protection is sought. These lawsdetermine according to their own rules the legalposition of persons who claim or contest rightsto intangibles and do not refer to their personallaws. It follows without doubt that the courtseized of a dispute applies its own law or, interms of choice oflaw, that the domestic law ofthe country of protection applies.

15

The extremely rapid growth of internationaleconomic contacts and connections during thelast 25 years has led also to the legal integrationof the international economic area. As a conse-quence, the importance of the principle of terri-toriality was diminished. A certain number ofmeasures oflegal unification soon led to unionsbased on economic policy (Benelux, EuropeanEconomic Community, European Free TradeAssociation) designed in the end to lead to uni-ficationof the laws of industrial property. Ex-amples are the system of trademarks, designs

and models of the Benelux countries, the Eu-ropean Patent Convention and, perhaps one

day, a Community Trademark.It is the essence of the EUROPEAN ECONOMIC

COMMUNITY to promote a free market; the con-

been properly registered is also to be treated as regis-tered in all the other states subject, however, to theproviso" apart from the rights of third parties and thedomestic legislation of each country." This Conven-tion was ratified by the UNITED STATES and 14 CENTRAL

and SOUTH AMER~CAN countries.

(7) The Central American Treaty for the Protec-tion of Industrial Property (Trademarks, Business

Names, etc.) of i June 1968 (991 UNTS 3) art. 3 inforce in five CENTRAL AMERICAN states; see also the

Central American Treaty for the Protection of Liter-ary, Industrial and Artistic Property of 17 June 1897(185 CTS 250) art. 4.

(8) Vienna Convention for the Protection of TypeFaces and their International Deposit of 12 June (3 IDec.) 1973 (Ind.Prop. 1973, 263, Copyright 1973,

132) art. 5 par. 2 which permits the waiver or simpli-fication of the requirements of formalities.

(9) International Convention for the Protection ofNew Varieties of Plants of 2 Dec. 1961 (815 UNTS89) art. 3, revised Geneva IQ Nuv. 1972 (I April 1973)(Ind.Pröp. 1972,351) and 23 Oct. 1978 (1980 UKTSno. 79).

(ro) World Intellectual Property Organization,Treaty on Intellectual Property in respect ofIntegrat-ed Circuits (Washington) of 26 May 1989 (28Int.Leg.Mat. 1477 (1989)).

The texts of most conventions can be found also inZweigert and Kropholler (ed.) vol. II and Il-A.

15 Keller and Siehr 139. Cf also Fikentscher and

Lamb (supra n. IQ) 759 who hold that the principles of

ditions for participating in this market must bethe same for all parties involved. Since the polit-ical boundaries are not to be abolished, nationallaws wil also continue to exist - but their har-monization and unification wil reduce the roleof the principle of territoriality to serve purpos-es of national economic policy only.

The European Patent Convention was agreat success, for all the 12 EC countries andfive other countries have joined it.i6 It must beadmitted that the grant of a EUROPEAN patent

only results in a bundle of national patents, butthey are in almost all circumstances granted incommon form on the basis of the same legalrequirements. A unitary EUROPEAN patent will

only exist (in the countries of the EUROPEAN

ECONOMIC COMMUNITY) when the Luxembourg

Convention concerning a Community Patent1975, revised 1985/1989 wil have come intoforce. However, even under this Convention,every person wishing to apply for a patent wilremain free to apply for national patents ratherthan for a COMMUNITY patent.I7

The national independence of intangiblerights is also restricted by the economic unionsthemselves. Thus, while lip service is paid to the

industrial property are based on public internationallaw within the framework of a new world economicorder. See also the Convention on the Creation of anAfrican and Malagasy Office ofIntellectual Property(OAPI) of 13 Sept. 1962 (Ind.Prop. 1963,67, Zweigertand Kropholler (ed.) II no. E 351, F 351, G35I), re-

vised Bangui 2 March 1977 (WiPO, Industrial Lawsand Treaties. Multilateral Treaties 1-005 (EngL.),

Zweigert and Kropholler (supra) Il-A no. F 351

(French)) to which 12 CENTRAL AFRICAN states areparties. This provides expressly in art. 2:

"Rights concerning Intellectual Property as set outin the Annexes to the present Convention shall beindependent national rights subject to the legislationof that Member State where they apply."

See also Convention on the Creation of an Indus-trial Property Organization for English-Speaking

Africa (ESARIPO) (Lusaka) oh Dec. 1976 (WIPO,Industrial Property Laws and Treaties. MultilateralTreaties 1-002, Zweigert and Krophol/er (ed.) Il-A

no. E 353) with Protocol of IQ Dec. 1982 (Ha rare) -

now known as African Regional Industrial PropertyOrganization (ARIPO), amended 12 Dec. 1986.

16 The non-EC countries are: LIECHTENSTEIN, AUS-

TRIA, SWEDEN, SWITZERLAND and MONACO.17 Krieger, Das Luxemburger Uebereinkommen

über das Gemeinschaftspatent: GRUR Int. 1987,729-736, 735. See for the text of the CommunityPatent Convention of 15 Dec. 1975, OJ EC 1976 L 17p. I, 15 Int.Leg.Mat. 5 (1976), replaced 15 Dec. 1989

(OJ EC 1989 L 401 p. I).

II The Law Applicable to the Protection of Intangibles 22-14

integrity of industrial property rights, never-theless their exercise is severely restricted.i8 Ifprotected, intangibles should enable the holderto exploit them as a monopoly. What use, how-ever, is a monopoly which cannot be exploited?

However, notwithstanding the above effortsand results of unification, much time wil haveto pass before uniform laws for intangibles wilhave been created, if not on a worldwide thenat least on a regional basis.I9 Until then, prob-lems of choice of law wil retain their impor-tance in the international exchange of intangi-bles.

C. THE PRINCIPLE OF TERRITORIALITY -EXCEPTIONS

1. Country of Origin of the Work

13. The Copyright Conventions of Mon-tevideo, Caracas and Havana lay down thatprotection is to be granted in accordance withthe law of the country of first publication. Sincethe area where these treaties apply is small, thisexception is of little importance today.20

ii. The Requirement of Reciprocity

14. Foreign law assumes importance in thelaw of intangibles when provisions on reciproc-ity come into play. In a number of cases aliensare only accorded protection if, and in certain

18 See Ulmer, E., IPR 26 ss.; Plaisant, R. 267. Such

restrictions were first adopted in the UNITED STATES

and GERMANY. In the Course of applying the EEC-

Treaty, more extensive and sophisticated restrictionswere developed.

19 Ballreich (supra n. 5) 752-753 and n. 2; Meessen

68: "If territoriality is the real problem of intellectualproperty rights in international trade, universality

suggests the right answer."20 Troller, A., IPR 29; idem, Völkerrechtliche

Verträge 164, 169.21 The FRENCH Patent Law no. 68-1 of 2 Jan. 1968

003 Jan. p. 13, revised in 1978, 1984 and 1990) art. 5makes protection of aliens who are neither resident inFrance nor have a branch of their business there de-

pendent upon reciprocity by their home country.The same principle applies in THAILAND (Patent Lawof i I March 1979 (Lois et traités de propriété indus-trielle. Thailand-Texte 1-001) art. 14; see Sobhak-Vi-chitr, La loi sur les brevets de la Thaïlande: Prop.ind.1980, 156-161, 158), in the DOMINICAN REPUBLIC

(Copyright Law of 4 JulY 1986 (GO 15 JulY 1986)art. 8 lit. c) as well as in some EASTERN EUROPEAN

countries such as BULGARIA, HUNGARY (see Vida, Im-materialgüterrecht 213 ss.), RUMANIA and the former

cases only to the extent that their national lawor the law where the invention was first patent-ed, the trademark was first registered or a workwas first published grant equal rights to thenationals of the country of protection.2I

At this stage it is only necessary to mentionthe principle of reciprocity which refers to for-eign law in order to decide a preliminary ques-tion.

The extent to which it may be essential, in theprocess of introducing new types of legal pro-tection, partially to abandon the principle ofterritoriality by requiring reciprocity, i.e. thegranting of protection in the country of origin,is shown by the example of the development ofthe law on topographies of semiconductors andon computer programs.

In 1984, at the urging of industry, the UNITED

STATES were the first to enact a law for the pro-

tection of microchips (Semiconductor Chip

Protection Act). It grants the producer of asemiconductor product the exclusive right toexploit his product for ten years. It is to benoted that in principle only chips produced byAmerican enterprises are protected. Those pro-duced abroad are only protected by the Act ifthey were first exploited in the United States.Otherwise, their use is open to all, unless thehome state of the foreign producer grantsAmerican manufacturers of chips equivalentprotection.22 These provisions are supplement-ed by transitional ones which permit the exten-sion of the protection of the Semiconductor

YUGOSLAVIA.

Other countries, as members of the Paris Conven-tion on the Protection òf Industrial Property (supra

n. 14), require reciprocity only in relation to non-member countries, such as SPAIN (Patent Law of 20March 1986 (BOE 26 March) art. 2 par. 2; see Mon-tero-R(os, La loi espagnole sur les brevets du 20 mars1986: Prop.ind. 1986,432-450,435; see also Law onintellectual property of I I Nov. 1987 (BOE 17 Nov.)art. 147 par. 2), POLAND (Trademark Law of 3I Jan.1985, supra n. 13; see Niedzielska and Skubisz, ibidem85), MOROCCO, EGYPT, IRAN, JAPAN and the PEOPLE'S

REPUBLIC OF CHINA (see Huang Kungi, infra n. 34, 168).

On the other hand, aliens are treated on an equalbasis with nationals without any restrictions in for-mer CZECHOSLOVAKIA (see Belohlávek, L'activité in-

ventive et la protection de la propriété industrielle enTchécoslovaquie: Prop.ind. 1984,33-49,36-48); al-

so EL SALVADOR (Decree-Law no. 299 on aliens of 18

Feb. 1986 (DO 20 Feb.) art. 12; see Tiedemann (supran. li) I20SS.; also Tro/ler, A., IPR 17, 27, 71, ro8,139-141,154-157, 160).

22 See Semiconductor Chip Protection Act 1984,17 US.c. § 902 (a) (2) (1993).


Chip Protection Act 1984 to foreign microchip

products during a limited period. It is a condi-tion that the applicant state takes serious steps to

enact legislation which protects the Americanowners of semiconductor chips to an extentequivalent to that accorded by the AMERICAN

statute.23The United States were one of the leading

countries of the world in manufacturing andexporting semiconductor products. At the sametime, they were one of the biggest purchasers ofsuch products. In virtue of their dominant posi-tion they achieved that most industrial coun-tries, among them in particular the countries ofthe EUROPEAN COMMUNITY as well as of the

EUROPEAN FREE TRADE ASSOCIATION and JAPAN,have enacted laws on the same pattern. In par-ticular, the protection of aliens is made to de-pend upon the grant of reciprocity in most cas-es.24 The same tendency can be observed inrecent legislation concerning computer pro-grams.25 Thereby an iinbalance is created in re-lation to those countries which protect software.in accordance with their copyright laws and

have waived the need for reciprocity in thisrespect.26

23 Semiconductor Chip Protection Act 1984 (pre-ceding note) § 914 (a).

24 The JAPANESE Law concerning the circuit layout

of a semico~ductor integrated circuit of 3 i May 1985(Law no. 43 of 1985, Kitagawa (ed.), Doing Businessin Japan. Statute Volume (New York and Oakland1992) App. 9A) does not require reciprocity; similar-ly the DANISH Law on the protection of topographies

of semiconductor products no. 778 of 9 Dec. 1987,

Lovtidende 1987 A 2849.

In FRANCE, Law no. 87-890 on the protection of

topographies of semiconductor products ... of 4

Nov. 1987 00 5 Nov. p. 12920) art. 5 par. I offersits protection to all nationals of the EEC, and art. 5par. 2 to all others if their home state provides re-ciprocity. GERMANY has adopted the saine course in

the Law on the protection of semiconductors of 22Oct. 1987 (BGBL. I 2294) § 2 par. 3 and 6 and

SWITZERLAND in the Law on the protection of to-

pographies of semiconductor products of 9 Oct. 1992

which entered into force I July 1993 (BBL. 1992 VI

97) art. 2 par. 2. In GREAT BRITAIN, the Copyright,Designs and Patent Act 1988 (c. 48) s. 154, 159 and theCopyright (Application to Other Countries) (no. 2)Order 1989 (S.l. 1989 no. 1293) protect only theirown nationals and nationals of the EEC and follow-ing a mutual declaration of reciprocity, nationals ofthe United States. The SWEDISH Law on the protec-tion of semiconductor products of 18 Dec. 1986 (SFS

,1986 no. 1425) art. I I requites reciprocity generally,

iii. Exceptions for Trademarks

a. Reference to Registration Abroad

15. Telle quelle trademark. - The Paris Con-vention art. 6 quinquies lays down that if a trade-mark has been registered in one member state,registration in other member states cannot berefused on formal grounds, e.g. on account ofthe form of the mark, such as its three-dimen-sional character, provided that the mark is iden-tical with that registered in the country of orig-in. To this extent, the law of the country oforigin is to be given effect in the country ofprotection, but the latter determines the validityof its acquisition and the extent of the right orof the protection granted. However, the protec-tion of the trademark depends upon registrationin the country of origin. In its absence, it cannotbe protected in other countries on the basis ofart. 6 quinquies, but it may be granted protec-tion under national law.

16. The so-called international trademark. - Inthe member states of the Madrid Conventionon Trademarks, the international registration ofa trademark previously registered in a countryof origin replaces the registration in each co un-

while in the NETHERLANDS, the Law on the protection

of topographies of semiconductor products of 28

Oct. 1987 (Stb. no. 484) art. 16 lit. a protects all na-tionals of the EEC as well as nationals of other statesif a special agreement has been concluded or if theEEC Council has passed a resolution to this effect, seeart. 26 lit. b.

25 SPANISH Law on intellectual property (supran. 21) art. 147 par. 2.

26 The SPANISH Law on intellectual property (supra

n. 21) title VII devotes a special part to computerprograms; the same applies to HUNGARY: see Vida,

Zum Urheberrechtsschutz von Rechenprogrammenin Ungarn: GRUR Int. 1987, 769-774. In GREAT

BRITAIN, the supplementary Law of 1988 (supra n. 24)Sched. I no. 4 and 25 has extended the Copyright Act1956 (4 & 5 Eliz. 2, c.74) to computer programs aswell as the Order of 1989 (ibidem) Sched. 5 which

extends the protection to all member states of theBerne Convention and the Universal CopyrightConvention (both supra n. 14).

The new SWISS law on copyright of 1993 (supran. 8) reserves the application of the international con-ventions (art. I par. 2); however, the legislator hasmodified previous drafts and has abandoned the re-quirement of reciprocity (see Botschaft zu einemBundesgesetz über das Urheberrecht vom 29. Aug.1984 (BBL. 1984 II 173 (201) und vom 19. Juni 1989(BB!. 1989 II 477 (520)).

13 The Lalf Applicable to the Protection of Intangibles 22-20

try. Registration with the International Officein Geneva takes the place of many national regi-strations. In this instance, a national administra-tive act is replaced by an international one invirtue of the Convention. Apart from its cre-ation, the international trademark depends inevery respect on the national trademark law,e.g. with respect to validity, scope of protection,etc.

b. Reference to Situations Governedby Foreign Law

17. Well-known trademarks. - A trademark

which is well known in one country to be themark of a certain enterprise or person belongingto a member state of the Paris Union may notbe claimed by another person or enterprise inanother country, either in the same form or ina form which might cause confusion, for attach-ment to the same or similar goods. Registrationmust be denied, or, if the second trademark hasalready been registered, it must be declared in-valid.27 The fact that the right to the mark hasbeen acquired abroad is given full effect.28

18. Collective marks. - The question as towhether associations which are holders of col-lective trademarks are validly created is to beanswered with reference to the law governingthe association.29

iv. Descriptions of Origin

19. Contrary to trademarks, descriptions oforigin are not acquired by deposit or by grant of

27 Paris Convention (supra n. 14) art. 6 bis.28 Pérot-Morel, La protection internationale des

marques notoires: Clunet 1980, 269-285; Riv.dir.ind. 1981 11 34- 50. The new swiss Trademark Lawwhich entered into force on i April 1993 (AS 1993,

274) makes an express reservation in favour of thewell-known mark (art. 3 par. 2 lit. b).

29 Paris Convention (supra n. 14) art. 7 bis.30 Zweigert and Kropholler (ed.) II no. E 326,

F 326, G 326.31 As a result of the Union priority introduced by

the Paris Convention (supra n. 14) art. 4, introducto-ry patents have lost their importance in practice. Ref-erences to such patents in member states of the ParisConvention are now only to be found in the patent

an authority. No one has an exclusive right tothem. They indicate a relationship between thegoods they individualize and the geographicalindication used for the goods (source of goods,or typical techniques, or typical properties of

goods). The protection does not depend on thewil of a legislator, but on the factual relation-ship between the goods and the designation.The Madrid Convention concerning the Re-pression of False or Deceptive Indications ofSource on Goods of i89I, as revised, 30 leaves itto the courts of each country to decide whethera description which refers to the origin of goodshas become a description of a category ofgoods, except where products of viniculture areinvolved (art. 4).

v. Introductory Patents

20. The so-called introductory patent con-stitutes another exception from the principle ofterritoriality. As understood here, it is a patentwhich, in the country where protection issought, depends upon one or several patentswhich were previously either applied for orgranted abroad.

Before admitting an introductory patent thecourt must ascertain whether the foreign patentis valid according to the patent law of the coun-try where it was first registered. Therefore, thevalidity of the local right depends on a situationgoverned by a foreign law; this constitutes agap in the principle of territorialityY

laws of ARGENTINA, BELGIUM, IRAN, SPAIN and TURKEY

(see Wieczorek, Die Unionsprioritat im Patentrecht

(Munich 1973) 61 ss.).A reservation in favour of introductory patents

was also contained in the proposal prepared by theBIRPI (Bureau International pour la révision de la prop ri-été industrielle) for a model law for the use of DEVELOP-ING countries for the protection of inventions but it

did not meet with much success. However, it wasinserted in the ALGERIAN Patent Law no. 66- 54 of 3March 1966 (65 Pat. &T.M.Rev. 87-IQO, 126-128(1967)) art. 71 ss. As a result, patents which had beengranted abroad before I Jan. 1966 could also be pro-tected in ALGERIA for a period of ten years.

22-21 14

111. THE LAW APPLICABLE TO CONTRACTS CONCERNINGINTANGIBLES

A. THE PROBLEM DEFINED

21. Characterization of contracts. - Contractsconcerning intangibles have as their object ei-ther the transfer of title in an intangible asset orits exploitation. Since these contracts involve anintangible, they can be easily distinguished fromother types of contracts.

22. International transfer of technology. - In

modern times the transfer of technology withinthe context of economic cooperation betweencountries of the industrialized world, Eastern

European countries and countries of the ThirdWorld is much discussed. A transfer of technol-ogy often deals with intangibles - mostly of atechnical kind, patented and non:-patented (i.e.prótected, secret know-how) or unprotectedtechnical knowledge, and, less frequently,trademarks or models.

A transfer of technology is not restricted to atransfer of legal rights, i.e. the provision ofrights of ownership or exploitation. It is an in-strument of economic policy of Third Worldand, until lately, Eastern European countries,the purpose of which is to introduce new tech-nologies and industries by entering into part-nership-like relations with private and publicenterprises of the so-called capitalist world.32

These relations can be of many differenttypes, such as investments by the provider ofthe technology, technical assistance in buildingplants, the instruction of local staff, the sale ofplants or machinery as well as the granting oflicences. The receiving state exercises a supervi-sory function either by means of investmentlegislation 33 or by subjecting any relevant con-tracts to governmental approval, especially

32 See Schapira 5 ss.; Modiano, Les contrats detransfert de technologie: Dr.prat.com.ìnt. 1983,553-591; Cabanellas 39 ss.; Diener

226 ss.33 Legislation to this effect is to be found inter alia.

in ALGERIA, IVORY COAST, NIGERIA, PHILIPPINES, PORTU-

GAL, SPAIN, former YUGOSLAVIA and in all SOUTH

AMERICAN states, as well as in the countries of the

former COMECON; see janiszewski, Joint Venture Lawin Poland Shows Results: Les Nouvelles 1988, 132'-134.

34 This requirement of approval exists in manyTHIRD WORLD countries. See Schapira 28 ss. ; Dessemon-tet, Contrat de licence 445 ss.; Boggiano, InternationalContracts in Argentina: RabelsZ 47 (1983) 432-477;466; Ren Zhonglin, L'administration des marques enChine: Prop.ind. 1986, 451-454; Huang-Kunyi,

with regard to the obligation to pay licensing

fees or other fees for technical assistance.34

Since such transfer of technology can takemany legal forms, such as sales, contracts ofservice, undertakings to carry out work (man-dates) or licensing agreements, the question asto which law applies cannot be answered a prioriin the abstract. It is certain, though, that thestate which receives the technology wishes toreserve the principal role to its own law. Somestates even prohibit the application of foreign

law to transfers of technology.35

It is not the object of the present study toestablish the law applicable to transfers of tech-nology. The only question to be examined iswhich law applies to protected intangibleswhen they contain an international element.

B. CHOICE OF LAW AND MANDATORYRULES

23. In determining which law applies tocontracts involving intangibles, the distinctionbetween form and substance must be observed.Since the object of a contract of transfer is theright in the intangible, which itself depends onthe law of the country of protection, in order toachieve an economically appropriate choice oflaw, it may be useful to distinguish between

that aspect of the contract which refers to theintangible asset and that which relates to otherterms of the contract. Moreover, we wil distin-guish between an outright transfer of the intan-gible and a licence to exploit it.

Having regard to all these considerations, weshall attempt to find a choice-of-law rule which

N aissance de la première loi sur les brevets de la Ré-publique Populaire de Chine: ibidem 1984, 166-173;Stuber, Transfer of Technology Agreements in Brazil:Int.Bus. Lawyer, 1988, 370-373; Grisanti, M. v., AGuideline for Licensing in Venezuela: Les N ouvelles

1988, 127- 128.35 See Cabanellas 43 ss.; Lipowschek, Das neue

jugoslawische internationale Privat- und Prozessrechtim Bereich des Vermögensrechts: RabelsZ 49 (1985)426-466, 439 ss.; Vischer, IPR-Gesetzentwurf 68 I ss.;see also the critical attitude of the SOUTH AMERICAN

states towards the restrictions imposed by the ParisConvention (supra n. 14) in Aracama-Zorraquin, LaConvention de Paris et les pays de l Amérique latine:Prop.ìnd. 1975.92-100.

15 The Law Applicable to Contracts Concerning Intangibles 22-25

corresponds to the nature of the intangible andis satisfactory from the point of view of eco-nomic and legal policy.

i. Form of Contracts

24. The form of the contracts Ís not affectedby the specific character of intangibles. Howev-er, very frequently, the laws on industrial prop-erty prescribe certain formalities, mainly thatthe contract is to be in writing 36 or to be regis-

tered.37 The obligation to register and othermeasures (infra s. 26) may also form part of gen-erallegislation embodying economic policy.

Apart from this, the general rules of privateinternational law apply sanctioning freedom ofchoice and the principle locus regit actumY

ii. Essential Validity

25. The autonomy of the parties in formu-lating the substance of their contract is restrict-

36 See e.g. the European Patent Convention (Mu-nich) of 5 Oct. 1973 (Ind.Prop. 1974,51, Zweigert andKropholler (ed.) Il-A E 360,F 360, G 360, 13Int.Leg.Mat. 270 (1974)) art. 72 which states: "Anassignment of a European Patent application shall bemade in writing and shall require the signature of theparties to the contract." ; or the swiss Trademark Lawof 1993 (supra n. 28) art. 17 par. 2. Many patent laws(including those of FRANCE, GERMANY and CHINA - see

Huang Kunyi (supra n. 34 at 170)) require a licensingagreement to be in writing. See Modiano 55; also

Montero-Ríos (supra n. 21) 444. The new swiss Copy-right Law (supra n. 8) requires no formality for thetransfer of copyrights.

37 Most THIRD WORLD countries and EASTERN EU-

ROPEAN states require the registration of contracts for

the transfer of rights in an intangible and for the grantof a licence. it is generally indispensable for the sub-stantive validity of the contracts, but often the dutyto register does not amount simply to a procedure ofnotification. Instead, the registering authority con-trols the terms of the agreement and retains a right ofco-decision. It is therefore essential for the transferorof a patent or the grantor of a licence in an industrialcountry to ascertain in advance the condition for thegrant of a valid licence in the country of the grantee(see infra s. 25 and the footnotes). In some INDUSTRIALcountries also a duty to register exists, although onlyfor statistical purposes, e.g. in FRANCE where licensingagreements must be registered with the Institut Na-tional de la Propriété Intellectuelle and in SPAIN.

Some countries require registration for the purpos-es of exchange control, others of taxation; see Desse-

montet, Contrat de licence 447; also the Bangui Con-vention (supra n. 15) Annex I (Patents) art. 27, 3 I(also infra n. 39). It is also relevant whether the trans-feree resides in a Third World country or in an East-ern European state. In the former SOVIET UNION, the

validity of the contract depended upon the registra-tion of a trademark licence; see Crygoryev (supra

ed, insofar as intangibles are involved, by therelevant law governing them. The particularcharacter of the object of the contract is deter-mined by the law of the country of protectionand cannot be altered by the parties. This lawdetermines whether any protected right existsand what protection it enjoys. It also determineswhether and to what extent protected rightscan be transferred and whether the transferormust take additional steps in order to give legaleffect to the transfer (e.g. a transfer of the

business in the case of an assignment of a trade-mark). Those provisions of the contract whichdeal with the intangible asset are therefore

governed by the law of the country of protec-tion, i.e. principally by its laws on industrialproperty and the relevant provisions concern-ing registration and economic policy, e.g. cartellaws.39

n. 13) 457.

38 See Troller, A., Immaterialgüterrecht 860 ss.;idem, IPR 175-181; Ulmer, E., IPR 84SS., 91 ss. witha comparison of the laws of EUROPEAN countries. This

rule is also confirmed by the recent GUATEMALAN De-cree-Law no. 22-86 on migration and aliens of 10Jan. 1986 (DO no. 92 of 13 Jan.) art. 57, in conjunc-tion with Law no. 1762 on the constitution of thecourts of 2 July 1968 (DO no. 14 of 26 July) art. 19;see Samtleben, Zur Entwickhing des internationalenPrivatrechts in Guatemala: RabelsZ 51 (1987) lii-

120. For the problem of choice of law, see also Heini,

Die Rechtswahl im Vertragsrecht und das neue IPR-Gesetz: Beiträge zum neuen ¡PR des Sachen-,Schuld- und Gesellschaftsrechts. Festschrift R. Moser(Zürich 1987) 67-78.

39 In EUROPE, this includes, as regards exclusive

licences, EEC-Treaty art. 85 - 86 and the relevant reg-ulations for granting exemptions for patent andknow-how licences, for franchises and other contractsconcerning intangible goods, e.g. Commission Regu-lation (EEC) no. 2349/84 of 23 July 1984 on the appli-cation of Article 85 (3) of the Treaty to certaincate-gories of patent licensing agreements (OJ EC 1984 L219 p. 15); Commission Regulation (EEC) no. 556/89 of 30 Nov. 1988 on the application of Article 85 (3)of the Treaty to certain categories. of know-how li-censing agreements (OJ EC 1989 L 61 p. i); Commis-sion Regulation (EEC) no. 417/85 of 19 Dec. 1984 onthe application of Article 85 (3) of the Treaty to cate-gories of specialization agreements (OJ EC 1985 L 53p. i); Commission Regulation (EEC) no. 418/85 of19 Dec. 1984 on the application of Article 85 (3) of theTreaty to categories of research and developmentagreements (OJ EC 1985 L 53 p. 5); CommissionRegulation (EEC) no; 4087/88 of 30 Nov. 1988 on theapplication of Article 85 (3) of the Treaty to categoriesof franchise agreements (OJ EC 1988 L 359 p. 46).

The Convention on the Creation of an African andMalagasy Office of Industrial Property, revised in

22-26 Industrial and Intcllectual Property 16

Statutory provisions of this kind must be ap-plied separately for each country of protectionaccording to the principle of territoriality,while a single legal system applies to the con-tract itself.

The same holds good if a licence is granted inrespect of a work ofliterature or art. In this case,the substance of the contract may conflict withthe rules protecting the author's moral rights(droit moral).40 This may occur if the copyrightlaw of a country states e.g. that the right of theauthor to be named or the power to resist anymodification of the work cannot be renouncedwhile the contract gives an unrestricted freehand to the licensee. The law of each country ofprotection must be respected with regard to thelimits of the power of disposal over the object ofthe contractY

Bangui 1977 (supra n. 15), contains a similar provi-sion. This Convention, which applies in BENIN,

BURKINA-FASO, CAMEROON, the CENTRAL AFRICANREPUBLIC, CHAD, CONGO, GABON, IVORY COAST, MALI,MAURITANIA, NIGER, SENEGAL and TOGO, seeks to createan African Organization for Intellectual Property andensures the observation of the most important inter-national conventions. Annex I (Patents) art. 30 states:

"(I) Clauses in licensing agreements or relating tothem are null and void if they impose upon the li-censee restrictions pertaining to business or com-merce which do not flow from the rights granted bythe patent or which are not necessary for the mainte-nance of these rights.

(2) The following are not to be regarded as restric-tions in the meaning of the preceding paragraph:

(i) Restrictions concerning the extent, the area andthe duration of the exploitation of the patented in-

vention;(ii) The obligation of the licensee to refrain from

any activity which is apt to affect the validity of thepatent. "

These provisions were clearly inspired by the cor-responding EEC rules.

Concerning the Bangui Convention see Cazenave,L'organisation africaine de la propriété intellectuelle(OAPI) de Librevile à Bangui: Prop.Ind. 1989, 3 I 1-327; see furthermore idem, L'OAPL. De Librevile àBangui: Rev.int.prop.ind.art. 1988, 85 - 104, togeth-

er with the French text of the Convention: ibidem

105.It must be assumed that in due course the parties to

the Lusaka Convention of 1976 (supra n. 15) wiladopt the same principles. Members of the Conven-tion are: GAMBIA, GHANA, KENYA, MALAWI, SIERRA

LEONE, SOMALIA, SUDAN, TANZANIA, UGANDA, ZAMBIAand ZIMBABWE. Eight other countries are regarded aspotential members; see Mí/s, Les premières années de

l'ESARIPO: Prop.ind. 1984, 197 - 204.40 See Strömholm (supra n. 6) ch. 3 s. 87 - II i.41 The European Patent Convention (supra n. 36)

iii. Additional Contractual Stipulations

26. The parties are free from or little affect-ed by the legislation on intangibles in respect ofthose aspects of the contract which do not con-cern the intangibles directly. Many countries,however, limit the freedom of the parties to fix

the amount of licence fees 42 or to couple thegrant of a licence with an obligation to take

delivery of goods or to buy raw materials.43

Some also restrict the period during which feesare payable, coupled with the obligation upontheir cessation to permit the exploitation gratu-itously.44 These provisions have the character ofmandatory (public) laws, and the parties cannotevade them by choosing another legal system togovern their contract at any rate if one of themresides in the country of protection or if the

art. 74 provides: "Law applicable - Unless otherwisespecified in this Convention, the European patentapplication as an object of property shall, in eachdesignated Contracting State and with effect for suchState, be subject to the law applicable in that State tonational patent applications."

See also the swiss Federal Law on private interna-tional law of 18 Dec. 1987 (AS 1988, 1776,Rev.crit.d.i.p. 1988, 409, 37 Am.j.Comp.L. 193(1989)) art. IIO which provides: "Rights in intangi-bles are governed by the law of the state where theirprotection is sought."42 ARGENTINA: Decree no. 580 of 1981 (BO

no. 24638 of 30 March) 5 per cent; Boggiano (supra

n.34) 467. BRAZIL: Ministerial Directive no. 436 of

1958 (Gnocchi, Licenças & Roialtes no Brasil (São

Paulo 1960) 249) 1-5 per cent for patent or know-how licences: for basic industries, 5 per cent; for themanufacture of necessary objects, chemical, pharma-ceuticals, clothing, etc., 4 per cent or 2 per cent; forprocessing, I per cent. The latter figure is also themaximum for trademark licences; see Stuber, supran.34.

43 See the Bangui Convention, supra n. 15. In theformer YUGOSLAVIA, the Law concerning long-term

cooperation in production of 1983 (RabelsZ 49 (1985)

576) compelled the foreign contracting parties to sup-ply the necessary raw or auxiliary materials at com-petitive prices without forcing the Yugoslavian part-ner to purchase them.

44 MEXICO: Law for the development and protec-

tion of industrial property of 26 June 1991 (DO 27June) art. 23, 20 years, for pharmaceuticals 23 years;VENEZUELA: Decree no. 2.442 of8 Nov. 1977 (GO 15

Nov. no. 2100 ext.) art. 65 (e), five years with thepossibility of extension to 15 years for models; seeStuber, supra n. 34. Many countries provide for com-pulsory licences if the patent holder fails to exploit thepatent; for this problem see the extensive compara-tive study by Salamolard, La licence obligatoire en

matière de brevets d'invention (Geneva 1978).


performance of the contract requires the coop-eration of the authorities of that country (e.g.import licences, exchange control permits).

Provided that no such mandatory laws re-strict the parties, they are at liberty to exercise afree choice of law. 45

C.. CRITERIA FOR DETERMINING THE APPLI-CABLE LA W

27. If the parties have not exercised their

right to choose the applicable law, it is necessaryto establish the objective criteria for ascertainingthe governing law. Applying the general rulesof the conflct oflaws, this wil be the law of theplace where the characteristic performance isdue or with which the contract is most closelyconnected.46 In this respect, due regard must be

. had to the particular character of contracts con-cerning intangibles. For this purpose, it is desir-able to distinguish between contracts for thetransfer of rights in intangibles, licensing agree-ments, compulsory licensing agreements, pub-lishing contracts and employee inventions.

1. Contracts for the Transfer of Rights in Intangibles

a. With Effect in One Country Only

28. Where the contract for the transfer ofrights in intangible assets is concentrated in onecountry only, the interest of the parties is limit-ed to the situation in that country, which is the

45 The swiss Law on private international law of18 Dec..I987 (supra n. 41) art. 122 par. 2 affirms theprinciple of free choice oflaw. The AUSTRIAN Law onprivate international law of 15 June 1978 (BGBL.no. 304/1978, 28 Am.jComp.L. 223 (1980), RabelsZ43 (1979) 275) § 35 also gives first place to partyautonomy.

46 See Troller, A., lmmaterialgüterrecht 863 ss.;Vischer, IPR-Gesetzentwurf 680 ss.; Ulmer, E., IPR.Diener 234 ss. discusses in detail how the various ele-ments which should be considered in determining thelaw applicable are to be weighed. He advocates (at249 ss.) reliance upon the pre-eminent interest of oneof the parties in the first place; in its absence, the

principles which determine the lex mercatoria are toapply (at 255 ss.).

47 This rule is in accordance with the principle ofterritoriality (supra s. io - li). See also the AUSTRIAN

Law on private international law (supra n. 45) § 43which provides that in the absence of a choice by theparties, the following rules apply to contracts con-cerning intangibles:

(i) "Contracts concerning intangibles are gov-

country of protection. The transferor must see

to it that the right passes to the transferee in sucha manner that the latter wil be recognized asentitled to it in that state (also supra s. 25). Bothparties must comply with the mandatory provi-sions of the country of protection in matters ofform and of economic policy (supras. 24, 26),for the economic success depends on exploita-tion in the country of protection.

It follows that where a contract for the trans-fer of rights in intangibles is limited to onecountry only, the law of that country as thecountry of protection applies.47

b. With Effect in Several Countries

29. The problem explained. - If the holder of

rights in an intangible transfers them with effectfor several countries, he transfers a collection ofrights spread over several legal systems. This

means that he transfers a right to acquire theright of exclusivity (right in an invention and toa patent; priority rights for a trademark) or theexclusive right as such, in respect of each coun-try of protection as an independent right. Theeconomic interest in achieving optimal successin all of the countries concerned is uniform, butits realization is dependent upon the particularlegal system involved. For instance, the acquirerwil usually intend to exploit the intangible assetaccording to a uniform plan. National frontiersand the fact that the laws differ may render auniform execution difficult, but they do notmake it impossible. The transferor and the ac-

erned by the law of the state in respect of which theright in the intangible is transferred or created. If thecOntract extends to several states, the law of that stateapplies where the acquirer (licensee) has his habitualresidence (establishment, § 36 sent. 2).

(2) Contracts concerning rights in intangibleswhich are connected with the activity of an employeearising out of his employment are governed by thechoice-of-Iaw rule which applies to the contract ofemployment (§ 44)."

It must be noted that as regards contracts concern-ing intangibles, it is almost always possible to detecta clear choice of law in the meaning of § 35 men-tioned before (supra n. 45).

The swiss Law on private international law (supran. 4I) art. 122 says the same, despite a seeming dis-crepancy; art. 122 must be read in conjunction withart. IIQ (quoted at n. 41) and art. 19. The latter re-quires the respect of foreign mandatory laws, if cer-tain conditions are fulfiled which are advantageousfor the Swiss party; see Vischer, IPR-Gesetzentwurf680 ss.

22-3° Industrial and Intellectual Property 18

quirer envisage the right to exclusive exploita-

tion in the entire area covered by the contractand not in separate sectors.

The characteristic performance, which is tomake the exclusive exploitation possible, is notconfined by the fact that the exclusive right tothe exploitation exists separately for each coun-try, but only by the economic area consisting ofall the countries to which the contract applies.The contract has an equally close connectionwith each of the countries of protection, for theperformance is to take place in a unitary eco-nomic area and not in separate regions. If any ofthe rights which are to be transferred do notexist in one or another of the states involved,

this reduced effect of the contract has to beassessed within the range of the contract as a

whole.Therefore, the contract cannot be split into

several contracts on the ground that one generalagreement includes as many individual con.:tracts as it affects individual countries of protec-tion. The intention is to have one contract witheffect in the entire area to which it extends. Allprovisions of such a contract are balanced

against each other; e.g. reduced effects in onecountry wil be set off against greater effectselsewhere. If the contract were to be split upwith reference to its effects upon the individualprotected rights, or if the effect of these individ-ual protected rights upon the individual con-tracts were to be questioned, the difficultywould be that one common legal system wouldhave to be applied to defects of consent and

other facts which affect the formation and thevalidity of the contract.

The failure to carry out the promised perfor-mance in one country (e.g. because the localpatent is void) has repercussions not only therebut also upon the contract as a whole. This legalassessment is only possible according to a singlelegal system and not with reference to all thelaws of the countries of protection involved.

48 This conflicts rule is adopted by the recent swissLaw on private international law (supra n. 41) art. 122par. i. Some writers approve this rule; see Dessemon-

tet, Contrat de licence 440; Vischer, IPR-Gesetz-

entwurf 680 speaks only of applying the law govern-ing the contract, but appears to be referring to thechoice-of-Iaw rule sanctioned by the swiss Law. Seealso Pedrazzini, Patent- und Lizenzvertragsrecht

(Bern 1983) i29ss.The application of the law at the domicile of the

Although it is easy to ascertain the area withwhich the contracUs most closely connected inview of the typical performance (it covers allcountries of protection), it is not possible to useit as a connecting factor in order to determinethe applicable law, since several legal systems

(inside this area) of equal rank compete witheach other, none of which can claim priority.

Since the country of protection cannot serve

as a connecting factor, although logically itwould follow from the principle of territoriali-ty, it is necessary to look for other connectingfactors which reflect the interests of the con-tracting parties.

30. The domicile of the parties. - First of all,the domiciles of the parties to the contract mustbe considered. If both parties are domiciled inthe same country, the question as to which lawis to govern the contract with regard to thoseclauses that are not subject to the mandatoryrules of the country of protection can be an-swered easily (both as to form and substance,

possibly only to part of the latter).More difficult is the answer to the question

of which law is to apply if the parties are domi-ciled in different countries. Should the law atthe domicile of the transferor of the right in theintangible apply or that of the intangible itself

~or that at the domicile of its acquirer? No clearanswer can be given out of hand.

The application of the law at the domicile ofthe transferor is supported by the considerationthat he is the person responsible for giving ef-fect to the contract inasmuch as it is his duty tomake sure that the intangible assets or rightswhich he transfers exist in fact and that they arecapable of being transferred to the acquirer. Thetransferor must normally also carry out the nec-essary act of implementation.48

The application of the law at the domicile ofthe acquirer of the intangible or of the right toit can be supported on the ground that he isobliged to exploit the asset or the right to it and

transferor is also justified for contracts transferring acopyright (agreeing: Locher (supra n. 5) 36). If e.g. apublisher, a producer of videos or a manufacturer ofaudio-reproductions disposes of his rights in a film orhis rights of reproduction or translation in favour ofanother enterprise, a sale is involved (frequently therights are transferred together with the business to besold) and the law of the seller applies since his is thetypical performance; see Ulmer, E., IPR 54.


to provide valuable consideration for it (in formof a substantive or of an intellectual contribu-tion, e.g. by publicizing or promoting the book,trademark or patented object).49

3 i . The proper law of the contract. - Neither ofthese criteria supports clearly the choice of theone or the other conflicts rule considered in thepreceding section. Rather, the centre of the con-tractual relationship must be ascertained in eachindividual case taking into consideration all thefacts. '

If a Swiss industrialist sells in Zurich to anItalian industrialist a picture of a Swiss painter,then the centre of the contract is to be estab-lished under aspects different from those appli-cable when that same Swiss industrialist con-cludes in Zurich a contract with the same partyfor the sale of an invention, or the patents to it,to be exploited in Italy, France and Germany,and the Italian undertakes to build a plant inItaly for the production of the patented objectsand to sell them from there throughout the Eu-ropean Economic Community. In the first case,the application of swiss law would be appropri-ate, in the second of ITALIAN law.

It is not much use to attempt to determine inthe abstract the law governing those relation-ships.

50 The proper law of the contract must be

ascertained in each individual case and it wouldnot be unreasonable to consider the applicationof different systems oflaw ifin a contract intan-gibles are sold together with movable goods.

51

ii. Licensing Agreements

32. By a licensing agreement, the licensorgrants the right to use an intangible (patented

49 This application of the law was envisaged in thedraft of the new swiss Law on private internationallaw. It was changed to the law of the transferor by thetwo chambers of Parliament in the course of the de-bates on the bil, probably in order to offer betterprotection for Swiss licensors. But Troller, A., Imma-terialgüterrecht 864, also seems to advocate the appli-cation of the law of the acquirer.

50 The dominant modern literature supports sucha differentiating approach, see Brem 65; Vischer,IPR-Gesetzentwurf 680; Ulmer, E., IPR IOO ss. and Englert(supra n. 5) 65.

51 Such an application of two laws is provided e.g.by the Rome Convention on the Law Applicable toContractual Obligations (OJ EC 1980 L 266 p. i)

invention, know-how and other secrets, trade-mark, design or model, work of literature orart, computer program, chip) either for exploi-tation by one party only (exclusive licence) orby several parties (simple licence).

It is often said that rights of exploitation arebeing granted. However, this legal interpreta-tion only reflects the position in GERMANY, ITA-

LY and AUSTRIA if an exclusive licence is granted,

for it is held in these countries that the holder ofan exclusive licence acquires a proprietary right

in the intangible. 52 In all other countries it is

assumed that the licensor has only permitted itsexploitation, an assumption shared by the threecountries mentioned above, if the licence is asimple one.

According to this latter view, the licensorpromises the licensee not to invoke against himhis own proprietary exclusive right. However,this promise can only be fulfilled if such a rightexists. Therefore, in order to establish the centreof the obligation and the proper law of the li-censing agreement, the same considerations ap-ply as in the case of a transfer of a right in anintangible.

53

In practice the main responsibility for ensur-ing the success of the venture lies with the li-censee. If need be, he must keep protected rightsalive (by paying the fees) or defend them innullity proceedings and initiate proceedings, ifthey are violated or, in the event that the laws

of his' country do not enable him to do so, invitethe owner of the right to start proceedings. Heis under a duty to exercise the protected rightsand, in particular, to make intensive use of themin order to procure the highest possible profitfor the licensor. If the licensing agreement is

art. 4 par. i; see also Diener 41 ss.

52 See Ulmer, E., IPR 87.53 Dessemontet, Contrat de licence 450 advocates

the application of the law of the licensor by attribut-ing to him the characteristic performance on the

grounds (i) that he has created the intangible (which,however, need not be, and often is not the case, e.g.where employees' inventions or companies for theexploitation of patents are concerned), (2) that thelicensor also supplies the necessary technical and busi-ness expertise for exploiting the intangible and (3)

that in the case e.g. of a trademark licence, he controlsthe quality of the products. The swiss Law on privateinternational law (supra n. 41) has adopted this solu-tion (art. 122 par. i); see also Vischer (supra n. 5) 33.


reStricted to one country of protection only,the law of that state should apply.

54 If it covers

several countries, the law of the business estab-

lishment or of the residence of the licensor gov-erns in the absence of a choice of law by theparties.

55

As in the case of contracts for the transfer ofintangibles or of rights in them, licensing agree-ments are also often coupled with other con-tracts. Big enterprises and those engaged in con-struction grant licences involving theirproduction techniques while undertaking at thesame time to build the installation as generalcontractor or to supply parts of the installationor plans for its construction or assembly. De-pending on the nature of these promised perfor-mances, a contract for work, a mandate or acontract of sale is involved. However, a singleresult is being sought; the installation is only themeans for exploiting the intangible asset whichis the object of the licensing agreement.

The rights and obligations arising from thegrant of a licence are often accommodated in aseparate agreement. The principle expressed inconnection with the transfer of rights in intan-gibles applies here as well: if the contractual

intention is the same in both contracts, thesame law applies to both; but if the objects ofthe two contracts differ from each other, differ-ent laws may apply to them. If e.g. a licence forusing a process granted for several countries

during the life of the patent is coupled with theobligation to buy a special machine in order touse the process and the warranty for the latter '-.expires after one year, no overriding argumentsexist for applying the same law to both con-tracts.

54 The application of that law is also reasonable

having regard to the mandatory provisions on whichthe validity of licence agreements depends in manycountries of protection. Most EASTERN EUROPEAN

countries require the contract to be in writing;

FRANCE also (supra n. 36-37).If the licensee wishes to be able to rely on the

licensing agreement in his relations with third partyacquirers of the intangible he must in nearly all coun-tries register the contract (see also supra ri. 37). See e.g.

for trademark licences in GREAT BRITAIN, Trade Marks

Act, 1938 (I & 2 Geo.6, c. 22) s. 28; for SWITZERLAND,

Trademark Law (supra n. 28) art. I 8 par. 2; for AUS-TRALIA, CANADA and INDIA, see Paifgen, Die neuereEntwicklung des Rechts der Markenlizenzen im

Vereinigten Königreich: GRUR Int. 1988,631-650,647 ss. On the other hand, in GERMANY , ITALY and the

iil. Compulsory Licences - Rights of Joint orPreferential Exploitation

33. Compulsory licences and rights of jointor preferential exploitation are governed by thelaw of the country of protection which imposesthem upon the owner of the right in the intan-gible asset. They are limited in their effect to thecountry which imposes them. They are subjectto the principle of territoriality because they aregoverned by the rules of law which restrict theexclusivity of the owner's right.

These rules are mentioned here for the solepurpose of avoiding any confusion with con-tractual user rights.

iv. Publishing Contracts

34. Under Swiss law, the publishing con-tract constitutes a special type of contract. Un-like in the case of a transfer of rights, the authorof a work ofliterature or art does not transfer tothe publisher any partial rights or powers. Onthe other hand, he does not grant the publisher

the sole use of the work, as is the case where alicence of a copyright is granted. The publisheracquires by virtue of the rules on publishing

contracts and not by virtue of copyright law anexclusive right of exploitation which is of a pro-prietary nature and also effective against theauthor as grantor of the right. Like the grant ofa pledge or a usufruct, the publishing contracthas a constitutive effect inasmuch as it createsthe publisher's exclusive right. This effect isachieved either when the contract is concludedor upon the performance of some act, e.g. thedelivery of the manuscript.

UNITED STATES, trademark licences are not registered.

55 This conflicts rule is supported by the great ma-jority of writers; see Trol/er, A., Immaterialgüter-recht 863; Ulmer, E., IPR IQ3, if the licensee is obligedto exploit the licence, which is probably the normalcase; Modiano 138: ". . . la prestation caractéristique est le

fait du licencié, dans la majeure partie des cas (in mostcases, the characteristic performance is that of thelicensee)"; Neuhaus, Drobnig, von Hoffmann and Mar-tiny 214, limited however, to non-exclusive licences;exclusive licences to be governed by the law of thelicensor on the ground that the licensee is not obligedto exploit them. This statement is contrary to practicesince most exclusive licences make the continuationof exclusivity dependent upon the exploitation of thelicensed right.


The legal structure of the publishing contractand its systematic location has no bearing onthe appropriate conflicts rule. What is decisiveis the result which is achieved. The author con-fers upon the publisher the right to the exclusiveexploitation of the work in one or several or inall countries where the author enjoys the exclu-sive right to that type of exploitation which isthe object of the publishing contract (to printa book, musical scores or art reproductions).To this extent the transaction is similar to thetransfer of a right or the grant of a licence. Thepublishing contract is similar to certain licensingagreements inasmuch as the publisher does notonly acquire the right to the exploitation and

undertakes to pay a licence fee, but also thathe is liable to promote the work and to advertiseit.

Since the desired success depends upon theactivity of the publisher, the centre of the pub-lishing contract is to be found mostly at theplace of his business and therefore the law ofthat place applies.56 As in the case of licensing

agreement it is impossible to formulate a gen-eral rule which covers all eventualities. In eachcase it is necessary to ascertain where the centre

56 This view is expressed by Ulmer, E., IPR 55;jehoram, Copyright Contracts (Amsterdam 1977)

224; Schönenberger and Gauch(- Troller), Kommentarzum S.chweizerischen Zivilgesetzbuch. Das Obliga-tionenrecht V/3 a (ed.3 Zürich 1976) Introd.rem.

no. 44 to art. 380-393.57 See Godenhielm, Employee Inventions: this En-

cyclopedia vol. XIV ch. 7 (1975).58 Brem 65; Troller, A., Immaterialgüterrecht

639 ss.; Ulmer, E., IPR 80. The recent swiss Law onprivate international law (supra n. 41) art. 122 par. 3also expresses this principle.

59 Troller, A., Die Arbeitnehmererfindung im in-ternationalen Privatrecht: Schw.Mitt.GRUR 1957,4 1- 6 i; Birk, Der Angestellte im Kollsionsrecht:UFlTA ro8 (1988) rol-lI5.

A direct acquisition of the employee's invention bythe employer is envisaged by the following laws:DENMARK: Law on employee inventions no. 142 of 29April 1955 (Lovtidende 1955 A 460) § 4; FRANCE:

Patent Law of 1968 (supra n. 21) art. i; see also Institutde recherche en propriété intellectuelle (IRPI) (ed.), La

Commission nation ale des inventions des salariés(Paris 1984). HUNGARY: Law on private internationallaw (M.K. no. 33/1979) § 51 par. i; see also Vida,Immaterialgüterrecht 215; but Hungarian employeesare governed by HUNGARIAN law even if employed

abroad (§ 52 par. 2). ITALY: Patent Law of 29 June

of the interest related to the agreement is sit-uated.

v. Employee Inventions 57

35. Contracts by which the rights to an in-vention made by an employee are transferred tothe employer are governed by the law whichapplies to the contract of employment. 58 How-ever, in several countries laws exist concerninginventions made by employees who work inthe country concerned. In such cases, the law ofthat country applies in which the employeemakes an invention during his stay there.

If the patent law of a country vests the rightsto an invention made by an employee directlyin the employer, this is not a question of con-tract law but of patent law and therefore theprinciple of territoriality prevails. 59 In such cas-

es, the employer acquires the rights to the in-vention only in the country concerned. He

must obtain the rights in other countries bymeans of contractual arrangements, unless lawson employee inventions regulate the matter inthose countries.

(Written in 1988, partly updated June 1993)

1939 no. lI27 (GU 14 Aug. no. 189), as last amendedby Law of 14 Feb. 1987 no. 60 (GU 5 March no. 53)art. 23; NETHERLANDS: Patent Law of 7 Nov. I9ro

(Stb. no. 313) art. IQ; SPAIN: Patent Law of 1986(supra n. 2 i) art. 15; swiss CO art. 332; THAILAND:Patent Law of 1979 (supra n. 21) art. lI; see also Sob-hak-Vichitr (ibidem) 158. See also Godenhielm (supra

n. 57) s. 47-64 and 67.The WlPO Model Clauses for the Protection of

Computer Software of 1977 (Geneva) § 2 no. I pro-vides for a direct acquisition by the employer of therights in the software. Practically all laws concerningthe protection of semiconductors and topographies

which have been enacted in the last five years alsoenvisage direct acquisition, e.g. the JAPANESE Law of1985 (supra n. 24) art. 5 and the swiss Law on to-pographies of 1993 (ibidem) art. 3.

The new swiss Law on copyright of 1993 (supran. 8) does not foresee a per se acquisition by the em-ployer of the copyright on works created by em-ployees. The employee retains all the rights unless hehas disposed thereof in his employment contract. Anexception is stipulated in favour of the employer forcomputer programs created by employees - the em-ployees remain the owners, but the employer is enti-tled per se to exploit the computer programs exclu-sively (art. 17).

22 22

LIST OF PRINCIPAL WORKS

i. INTERNATIONAL AGREEMENTS: Françon, Propriété

littéraire et artistique. Conventions lnternationales:j.C1.Dr.nt. (Paris, loose-leaf) Fasc. 563-B (2,1977 (1)-(37)); Plaisant, M., Traité de droit conven-tionnel international concernant la propriété indus-trielle (Paris 1949); Troller, A., Die mehrseitigenvölkerrechtlichen Vertrage im internationalen ge-werblichen Rechtsschutz und Urheberrecht (Studienzum Immaterialgüterrecht vol. VI) (Basel 1965), cit-ed Völkerrechtliche Vertrage; Zweigert and Kropholler

(ed.), Sources ofInternational Uniform Law/Sourcesdu droit uniforme international/Quellen des interna-tionalen Einheitsrechts II (Leyden 1973) and Il-A(Alphen a.d.R. and Germantown, Md. 1979).

2. EUROPEAN COMMUNITES: joliet, La licence de

marque et le droit européen de la concurrence:

Rev. trim.dr.eur. 1984, 1- 59; Mello, Territorialitédes droits de marque et réglementation ,europé-

enne de la concurrence: Gaz.Pal. 1969.I.2IO-222;Plaisant, R., La propriété intellectuelle et le traité deC.E.E. art. 85: Brügger (ed.), Homo Creator.Festschrift A. Troller (Basel and Stuttgart 1976) 267-283; Samwer, Auswirkungen der Territorialitat desPatentrechts im EWG-Bereich: GRUR Int. 1969, 1-14.

3. COMPARATIVE LAW: Cabanellas, Applicable Lawunder International Transfer of Technology Regula-tions: 15 Int.Rev.Ind.Prop.Cop. 39-67 (1984);

Kunz, La propriété industrielle dans le droit interna-tional privé des pays socialistes: Rec.des Cours 200(1986 V) 13 -91; Siehr, Das Urheberrecht in neuenIPR-Kodifikationen: UFITA ro8 (1988) 9-25;Troller, K., Das internationale Privatrecht des un-lauteren Wettbewerbs (Arbeiten aus demJuristischenSeminar der Universitat Freiburg/Schweiz no. 22)(Fribourg 1962); Ulmer, E., Die Immaterialgüter-rechte im Internationalen Privatrecht. Rechtsver-gleichende Untersuchung mit Vorschlagen fur dieVereinheitlichung in der Europaischen Wirtschafts-gemeinschaft (Schriftenreihe zum gewerblichen

Rechtsschutz no. 38) (Cologne, Berlin a.o. 1975), cit-ed IPR; Vida, Les contrats de licence en droit interna-tional privé: Rev.crit.d.i.p. 1964, 209-233, citedContrats.

4. BRAZIL: Stuber, Transfer of Technology Agree-ments in Brazil: Int.Bus.Lawyer 1988, 370-373.

5. FRANCE: Batiffol and Lagarde, Droit international

privé 11 (ed.7 Paris 1943) no. 528-534; Blaise and

Stenger, Propriété industrielle: j.CL.Dr.nt. (Paris,loose-leaf) Fasc. 563-A (9,1981 (1)-(18)); Boytha, Ledroit international privé et la protection des droits

dauteur - Analyse de certains points spécifiques:Dr.aut. 1988, 422-438, cited Droit dauteur; idem,

Some Private International Law Aspects of the Pro-tection of Authors' Rights: Copyright 26 (1990) 214-220, cited Law Aspects; Diener, Contrats intern a-tionaux de propriété industrielle (Bordeaux 1986);

Raynard, Droit dauteur et conflits de lois. Essai sur lanature juridique du droit dauteur (Paris 1990);

(i)Schapira, Les contrats internationaux de transporttechnologique: Clunet 1978, 3~37.

6. GERMANY: Von Bar, lnternationales Privat-recht 11 (Munich 1991), cited IPR; idem, Kollisions-recht, Fremdenrecht und Sachrecht fur internatio-nale Sachverhalte im Internationalen U rheberrecht:UFITA ro8 (1988) 27-49, cited Urheberrecht; Beier,Das auf Markenlizenzvertrage anwendbare Recht:

GRUR Int. 1981, 299-308, cited Markenlizenz-vert rag ; idem, Die internationalprivatrechtlicheBeurteilung von Vertragen über gewerblicheSchutzrechte: Holl and Klinke (ed.), InternationalesPrivatrecht, internationales Wirtschaftsrecht (Refe-rate eines Symposiums der Alexander von Hum-boldt-Stiftung vom 26. bis 30. September 1987 in

Ludwigsburg) (Cologne, Berlin a.o. 1985) 2'87-303,cited Gewerbliche Schutzrechte; Beier, Schricker andUlmer, Stellungnahme des Max-Planck-lnstituts furausländisches und internationales Patent-, Urheber-und Wettbewerbsrecht zum Entwurf eines Gesetzeszur Erganzung des Internationalen Privatrechts(außervertragliche Schuldverhaltnisse und Sachen):GRUR Int. 1985, I04-ro8; Deutsch, Wettbewerbs-tatbestande und Auslandsbeziehung (Abhand-lungen aus dem gesamten Bürgerlichen Recht,Handelsrecht und Wirtschaftsrecht no. 26) (Stuttgart1962); Kleine, Urheberrechtsvertrage im Interna-tionalen Privatrecht (Europaische Hochschul-schriften Reihe 2 no. 525) (Frankfurt a.M., Bern a.o.1986); Martiny, Verletzung von Immaterialgüter-

re ch ten im Internationalen Privatrecht: RabelsZ 40(i 976) 2 i 8 - 232; Meessen, Intellectual PropertyRights in International Trade: 21 j.W.T.L. 67-74(1987); Neuhaus, Drobnig, von Hoffmann and Martiny,Die Immaterialgüterrechte im künftigen Inter-nationalen Privatrecht der Europaischen Gemein-schaften: RabelsZ 40 (1976) 188-232; Röttger,Das Territorialitatsprinzip im Warenzeichenrecht:GRUR Int. 1964, 125 - 132; Sandrock, Das Kollisions-recht des unlauteren Wettbewerbs zwischen dem in-ternationalen Immaterialgüterrecht und dem interna-tionalen Kartellrecht: GRUR 1nt. 1985, 507-522;Schack, Zur Anknüpfung des Urheberrechts im Inter-nationalen Privatrecht (Schriften zum Interna-tionalen Recht no. 16) (Berlin 1979), cited An-knüpfung; idem, Urheberrechtsverletzung im Inter-nationalen Privatrecht - aus der Sicht des Kollisions-

rechts: GRUR lnt. 1985, 523-525, cited Verletzung;Ulmer, E., Gewerbliche Schutzrechte und Urheber-rechte im Internationalen Privatrecht: RabelsZ 41(1977) 479-514, cited Gewerbliche Schutzrechte;idem, Fremdenrecht und Internationales Privatrechtim gewerblichen Rechtsschutz und Urheberrecht:Holl and Klinke (ed.) (supra ad Beier) 257 - 268, citedFremdenrecht.

7. GREECE: Koumantos, Sur le droit internationalprivé du droit dauteur: Dr.aut. 1979,616-637, citedDroit dauteur; idem, Private International Law andthe Berne Convention: 24 Copyright 415-428

23 List of Principal Works 22.

(1988) and Dr.aut. 1988, 439-453 (French), citedBerne Convention.

8. HUNGARY: Vida, Das Immaterialgüterrecht imungarischen Gesetz über das internationale Privat-recht: GRUR Int. 1980, 213-216, cited Immateri-algüterrecht.

9. ITALY: Luzzatto, Problemi internazionalpri-vatistici del diritto di autore: Riv.dir.int.priv.proc.

1989, 273 - 292 and L'unificazione del diritto inter-nazionale privato e processuale. Studi in memoria diM. Giuliano (Studi e pubblicazioni della Rivista didiritto internazionale privato e processuale no. 30)

(Padua 1989) 589-613. _lO. SWEDEN: Strömholm, U rheberrechtsvertrage

und Internationales Privatrecht: Hol/ and Klinke (ed.)(supra sub 6 ad Beier) 269-278, cited Urheber-rechtsvertrage; idem, Droit intellectuel et droit inter-national privé: Ing.Conseil 1987, 123-133, citedDroits intellectuels.

i I. SWITZERLAND: Brem, Das Immaterialgüterrecht

im zukünftigen IPR-Gesetz: Beitrage zum neuen IPRdes Sachen-, Schuld- und GeselIschaftsrechts. Fest-,schrift R. Moser (Schweizer Studien zum interna-tionalen Recht no. 51) (Zürich 1987) 53-65; Desse-

montet, Les contrats de licence en droit international

privé: Mélanges Flattet (Lausanne 1985) 435-453,cited Contrat de licence; idem, L'harmonisation dudroit applicable aux contrats de licence: Conflcts andHarmonization. Mélanges von Overbeck (Fribourg

Von Bar 6; Batiffol 5; Beier 6; Blaise 5; Boytha 5; Bremi i.

Cabanellas 3.Dessemontet i i; Deutsch 6; Diener 5; Drobnig 6.

Françon i.von Hoffmann 6.joliet 2.

Keller i i; Kleine 6; Koumantos 7; Kropholler i; Kunz3.

Lagarde '5; Luzzatto 9.Martiny6; Meessen 6; Mello 2; Modiano II.

1990) 725-746, cited Droit applicable; Keller andSiehr, Allgemeine Lehren des internationalen Privat-rechts (Zürich 1986); Keller, Schluep, Troller a.o., DieRechtsprechung des Bunde'sgerichts im Internatio-nalen Privatrecht: lmmaterialgüterrecht II (Zürich1982); Modiano, Les contrats de licence de brevet(Geneva 1979); Troller, A., Immaterialgüterrecht.Patentrecht, Markenrecht, Muster- und ModelIrecht,Urheberrecht, Wettbewerbsrecht (compL.rev. ed. 3Basel and Frankfurt a.M. 1983-1985), cited lmmate-rialgüterrecht; idem, Das internationale Privat- undZivilprozessrecht im gewerblichen Rechtsschutz undUrheberrecht (Basel 1952), cited IPR; idem, Neubelebte Diskussion über das Internationale Privat-recht im Bereich des Immaterialgüterrechts: Pro-

blemi attuali del diritto industriale (Studi celebratividel anno XXV dell a Rivista di diritto industriale)

(Milan 1977) li25-li36, cited Diskussion; Vischer,Das Internationale Privatrecht des Immaterial-güterrechts nach dem schweizerischen IPR-Gesetz-

entwurf: GRUR Int. 1987, 670-682, cited IPR-Ge-setzentwurf; idem, Das lnternationale Privatrecht desfmmaterialgüterrechts (unter besonderer Berücksich-tigung des Patentrechts): Institut fir Gcwerblichen

Rechtsschutz (INGRES) (ed.), Kernprobleme desPatentrechts (Schriften zum Medien- und Immateri-algüterrecht no. 25) (Bern 1988) 363 - 3 85, cited Im-materialgüterrecht.

(2)

Neuhaus 6.Plaisant, M. i; Plaisant, R. 2.Raynard 5; Röttgër 6.Samwer 2; Sandrock 6; Schack 6; Schapira 5; Schluep

li; Schricker 6; Siehr 3, li; Stenger 5; Strömholm lO;Stuber 4.

Troller, A. I, II; Troller, K. 3.

Ulmer, E. 3, 6.Vida 3, 8; Vischer I I.'Zweigert i.

22 24

DETAILED TABLE OF CONTENTS

section page section page

1-8 1. INTRODUCTION J 21-35 IlL. THE LAW ApPLICABLE

1-3 A. Industrial Property 3TO CONTRACTS

4-5 B. Essential Char~cteristics of CONCERNINGIntangible Assets 4 INTANGIBLES 14

6-8 C. Conflcts of Interests inIntangible Assets 5

21-22 A. The Problem Defined 1423 - 26 B. Choice of Law and Manda-

9-20 II. THE LAW ApPLICABLE tory Rules 14

TO THE PROTECTION OF24 i. Form of Contracts 15

25 11. Essential Validity 15INTANGIBLES 7 26 11. Additional Contractu~l

9 A. International Economic Areas Stipulations 16

and National Legal Systems 7 27-35 C. Criteria for Determining the10- 12 B. The Principle of Territori- Applicable Law 17

ality 7 28 - 3 i i. Contracts for the Transfr of

13-20 C. The Principle of Territori- Rights in Intangibles 17

ality - Exceptions II 28 a. With Effect in One13 i. Country of Origin of the Country Only 17

Work II 29- 3 i b. With Effect in Several14 ii. The Requirement of Countries 17

Reciprocity II 32 11. Licensing Agreements 19

15-18 iii. Exceptions for Trademarks 12 3J 11. Compulsory Licences - Rights of

15-16 a. Reference to Registration joint or Prefrential Exploitation 20'Abroad 12 34 iv. Publishing Contracts 20

17-18 b. Reference to Situations 35 v. Employee Inventions 21

Governed by Foreign Law 13

19 iv. Descriptions of Origin 13

20 v. Introductory Patents 13 LIST OF PRINCIPAL WORKS 22

Section

1-8

9-20

21-35

Section

1- 18

19- 59

60 -74

75-83

Survey of Contents

Cha pter 22

INDUSTRIAL AND INTELLECTUAL PROPERTY(K. Troller)

Page

i. Introduction 3

n. The Law Applicable to the Protection of Intangibles 7

Il. The Law Applicable to Contracts Concerning Intangibles 14

List of Principal Works 22

Detailed Table of Contents 24

Chapter 23

TRUSTS(K. Lipstein)

Page

i. The Anglo-American Trust and its Derivatives 3

n. Foreign Trusts in the Conflict of Laws 10

nI. The Hague Convention of 1985 27

iv. Powers of Appointment 32

List of Principal Works 38

Detailed Table of Contents 42

(Q 1994 J. C. B. MOHR (PAUL SIEBECK)' TÜBINGEN ' AND MARTINUS NIlHOFF PUBLISHERS'DORDRECHT' BOSTON' LANCASTER

THIS CONTRIBUTION HAS BEEN FINANCIALLY SPONSORED BY THEFRITZ THYSSEN STIFTUNG IN COLOGNE (GERMANY)

3 1. INTRODUCTION

Documents

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