Chapter 12:FUNDAMENTALS IN COUNTRY LEGAL SYSTEMS: GENERALITIES

CHAPTER 12

Fundamentals in Country Legal Systems: Generalities

BEFORE YOU CREATE OR ACQUIRE IP RIGHTS , you should become generally familiar with the legal systems and laws of other countries where you might desire protection for those rights. You should also have some awareness of the similarities and distinctions between the legal system of your own country and those of other countries. It is not necessary for you to become an expert on these laws—you can leave that to your attorney. But you need some awareness to make certain that you are asking the right questions and gaining satisfactory protection. Fortunately, in the realm of IP, many of the distinctions tend to blend across country borders because most countries have recently developed or amended their IP laws and regulations to conform to international agreements, such as TRIPS. Nevertheless, an understanding of country legal systems is important for two reasons. First, an awareness of legal systems will be useful in a general context when considering your business and marketing plans. If you know which countries have tended to follow common law versus socialist law, you can anticipate the treatment of your IP and the receptivity of the markets, and you can make advance modifications to secure your IP rights and to ensure popular acceptance. Second, if you are aware of how local laws have developed within the context of different legal systems, you will be better prepared when facing the specific requirements of a particular country. For example, if you understand the basic tenets of Germanic civil law and you are protecting your IP rights in Japan, you can make some assumptions as to what to expect because Japan’s IP law was developed from Germanic civil law.

Legal Systems Worldwide

There are four major types of legal systems in the world: common law, civil law, Islamic (Shari’ah) law, and communist or socialist law. Many countries have adopted a combination of these legal systems, and in addition have retained some influences from various cultures that have crossed the borders in the past. For example, Japan looked to Germany when developing its modern laws, and therefore it follows the civil law system. The United States took much of its legal system from England, and therefore it follows common law. Malaysian law is a combination of common law, Islamic law, and Malay principles, and it is also influenced by Chinese and Muslim cultures. In Egypt, the civil law system combines French Civil Law with Islamic principles and some common law rules, reflecting lingering British and French influences. In Asia, Africa, and South America, and various island chains, many of the legal systems have been built on the foundations of former colonial masters—Brazil applies civil law reflecting its Portuguese history, while Singapore applies common law on account of its English heritage.

Common Law

Courts in England began creating and applying common law before statutes were adopted for that country. By the time statutes were drafted, the courts were well entrenched and a tremendous body of law, the common law, had already been established. The statutes served to confirm, codify (put into Code), limit, and supplement the common law of the courts. As a result, its distinguishing feature is its reliance on precedence established by judges in earlier cases. In other words, the courts in common law countries will apply and interpret statutes by following the principles developed in earlier judicial decisions. This does not mean that common law is static, that is, always the same from court decision to court decision. Quite the contrary, common law is ever expanding because the courts often extrapolate new principles from the old ones to apply in new factual situations, and sometimes they even reverse or limit their prior stance in the light of new circumstances. Also, court decisions must be made within the boundaries established by statutes, and therefore as legislative enactments change the statutes, court decisions will reflect the amendments made.

Countries that operate under a common law system are those that were at some time under the power of the British Commonwealth. These include England, the United States, Australia, Singapore, the Hong Kong S.A.R., and India. In these countries, IP rights can be established without registration of the IP, although the standards of proof tend to be more burdensome and the remedies less remunerative if the IP has not been registered pursuant to the statutes. Trials are typically before one judge. To insure a fair trial, complex rules and procedures have been developed, and an appeal process is available.

IP RIGHTS The concept of IP rights was first developed in the common law system. Rights granted by statute and protected by court decisions vary from country to country, largely depending on the extent to which a country’s laws are influenced by other systems of law and culture. The trend in adopting new IP laws is to be expansive rather than restrictive, with the result that more and more IP rights are being recognized and protected. The courts take an essential role in this progressive attitude by applying precedential case law and interpreting statutory law to cover

IP rights that are on the fringes. Through the common law, protection for IP rights can sometimes be attained while the lawmakers are still making the laws. Countries with common law systems usually offer satisfactory means of enforcing IP rights. Enforcement may be effected through court actions, although the bureaucracy in the courts can be a stumbling block in some places because of lengthy backlogs in setting trials. There are often alternative remedies available through custom agencies (national customs services) or through a registry of IP rights. Arbitration and mediation are commonly used, and even criminal proceedings can be brought to bear on an infringer.

Civil Law

Most countries that do not apply common law have civil law systems. Civil law is characterized by comprehensive and systematic compilations of statutes, known as Codes of Law, which govern most aspects of human endeavor. These countries have developed their Codes first and then their courts. Therefore judicial decisions are based on the legal principles set forth in the Codes.

Civil law systems use non-jury trials, except in criminal cases, and the courts are typically composed of a panel of judges. In comparison to common law systems, there are few well-defined rules of evidence, and minimal oral testimony or argument is permitted before the court. Most evidence and arguments are presented to the court in writing.

Legal decisions are generally based on one-time interpretations of the codified laws with minimal reference to preceding cases, although in some countries prior case decisions are recognized after the same decision has been made a certain number of times. As a result, the decision in any particular lawsuit is less predictable than it would be in a common law court, which will rely on precedential case law.

Examples of common law countries include Germany, France, and Japan.

IP RIGHTS Most countries that have adopted civil law have selected to follow either the

French or the Germanic systems. French civil law somewhat mirrors the common law philosophy that the recognition of IP rights forms a contract between the creator and society, that IP rights are a form of monopoly and should be limited, and that a person charged with infringement is a protector of society’s right to free, uninhibited trade. In contrast, German civil law views IP rights as grants made by the state in its power as protector over its nationals. An infringer is considered to have taken away the right granted by the state, and the infringer has therefore acted against the state. For this reason, the fact that the grant might have been invalid is not in itself a defense to infringement. In the context of IP rights, the primary difference between civil law jurisdictions and other legal systems is in matters of procedure. The judges in a civil law country typically are appointed shortly after graduating with a law degree, and they work their way up through the levels of the court system as they become more experienced. Heavy reliance is placed on the submission of written materials to the courts, there are minimal pre-trial procedures for the collection of evidence, and minimal evidentiary rules at trial. It is a frequent practice for the judge to take a role as a fact-finder, and even to question the parties and their attorneys. Issues that might be brought in a single action—such as the validity of an IP registration and the infringement of IP rights—often must be raised in separate actions and before different judges. Some countries have established specialist courts for hearing commercial and IP cases, and these courts have no jurisdiction to determine more general issues.

Islamic (Shari’ah) Law

In criminal, family, and personal injury matters, Moslem or Islamic countries apply the Law of Islam, originally derived from the Koran and the Sunna. The Koran is believed by its adherents to contain revelations of Allah to the Prophet Mohammed, and the Sunna is a recording of the Prophet’s later teachings and actions. These sacred volumes do not contain detailed codes, but rather principles and precepts of the Muslim religion. Muslims do not modify these laws, because of their belief that after the Prophet’s death the direct revelations of God ceased, and the words of God are immutable. With some exceptions, most Muslim countries no longer adhere to the strict traditional form of Shari’ah Law. Today, its application tends to be limited to family and estate succession law. Even these laws have been codified, so reference to the traditional texts is rarely made except when existing statutes and codes fail to cover a specific situation.

IP RIGHTS Traditional Shari’ah law did not specifically deal with intangible property. For many years, IP rights were not recognized in these jurisdictions. To accommodate changes in modern societies and international business practices, most Muslim countries have adopted modified codes based on European legal models, particularly French or Napoleonic Code. A separate division of commercial courts or administrative tribunals usually handles matters involving IP rights in accordance with civil law concepts. Case decisions are based on the law; case precedents are not binding on later cases.

Communist and Socialist Law

A form of communism or socialism is used in the People’s Republic of China, Cuba, the Democratic People’s Republic of [North] Korea, Laos, and Vietnam. It originated from the Communist manifesto of Karl Marx and Friedrich Engels. The Manifesto is a philosophical mandate under which individual rights were subsumed for the good of all society on the assumption that the rights of each citizen inhere in the goals of the state. A code of laws was gradually developed from the Manifesto for the purpose of transforming society into a socialist and then a communist order, at which time the laws were supposed to cease because the new society would function smoothly without the need for rules and regulations. In fact, most countries operating under this type of government today are socialist, never having attained the ideal communist order.

Private individuals and entities rarely resort to the court system in a socialist state. The laws, rules, and practices tend to have strong ideological content that is unsuitable for interpreting commercial relationships. Court proceedings are open, direct, and heavily reliant on oral testimony and examination. Rules of evidence are minimal, and prior case decisions carry little weight. The court will consider all evidence presented, decide the relative value and importance of facts, and make a determination based on general legal principles and communist ideology.

Socialist nations are rapidly changing. Most are in the process of modernizing their economies and have found that they need to conform their commercial practices to

the international business world. When doing business with traders of these nations, you must recognize that the unpredictable state of government bureaucracies makes business arrangements inherently unreliable. You will probably need to develop personal trust in your relationships and to educate your business partners with respect to the value of your IP rights. You should be certain that they understand the scope of their rights within your business relationship, and that they assist you in making and keeping your IP rights valuable within that country.

IP RIGHTS In the socialist system, commercial and foreign trade is primarily operated by the state and individual property rights are given up to the community. Individual rights in IP have slowly developed in these countries, primarily because of pressure from traders who have begun operating internationally, and global companies that have demanded protection for their IP before doing business in a particular country. Trademarks, patents, and copyrights can be registered under the local laws of all of the socialist nations. Most of these nations are members of at least one of the international treaties and conventions protecting IP rights, and therefore their local

IP laws at least partially conform with international standards. These rights are being protected through adoption of laws and regulations based primarily on civil law models. However, their laws are conservative in recognizing IP rights and the process for amending them is cumbersome and lengthy. For this reason, registration may not be available for IP rights covering the newest types of technologies and creations, and no body of court law is available to encourage extension of the laws. In practice, IP laws in socialist countries are applied through government policies that place the right of society as a whole above individual rights. As a result, the application and enforcement of laws related to individual IP rights is somewhat unpredictable and can depend on sudden shifts in state ideology. The enforcement of IP rights in a communist nation is difficult at best. One must first collect sufficient evidence of the infringement, which is a cumbersome process made trickier by the inherent lack of recognition of individual property rights. Violations of trademarks are usually more easily detected than violations of patents or copyrights, and any investigation can be quite expensive. Reliance on governmental authorities is usually not the most pragmatic means of enforcement. Administrative remedies are highly bureaucratic, subject to government policy shifts, and subject to substantial time delays. If criminal remedies are available, the penalties are often too harsh (even sometimes death for severe infringement) in comparison to the negative publicity that often flows from such actions (big, bad foreigner taking tiny local person to task). The best means for enforcing IP rights tends to be through informal and creative ways, which means that as a trader in these countries, you take on some of the responsibility for increasing the level of IP recognition. This may take the form of using local representatives and publicity to educate the local populace about the significance of IP rights and the means for recognizing the real article. Local representatives can also be hired to approach and obtain informal cooperation of local government authorities to pressure infringers into changing their activities into legitimate operations. Diplomatic contacts can also be used to increase awareness and educate officials about the needs for respect and recognition of IP rights and for a means of immediate and satisfactory enforcement.