The Borders of EU Competences with Regard to the International Regulation of Intellectual Property Rights: Constructing a Dam to Resist a River Bursting Its Banks

• Author: Yole Tanghe
• Position: PhD Candidate and Academic Assistant, Institute for European Law, KU Leuven (Belgium)
• Pages: 27-43

Yole Tanghe, ‘The Borders of EU Competences with Regard to the International

Regulation of Intellectual Property Rights: Constructing a Dam to Resist a River

Bursting Its Banks’ (2016) 32(82) Utrecht Journal of International and European

Law 27, DOI: http://dx.doi.org/10.5334/ujiel.235

UTRECHT JOURNAL OF

INTERN

ATIONAL AND EUROPEAN LA

W

RESEARCH ARTICLE

The Borders of EU Competences with Regard

to the International Regulation of Intellectual

Property Rights: Constructing a Dam to Resist

a River Bursting Its Banks

Yole Tanghe*

In view of the recent negotiations on the highly anticipated Free Trade Agreements to which

the EU shall be party (

e.g.

CETA and TTIP), assessing the extent to which the EU can regulate

intellectual property rights in its external relations seems relevant. Two recent cases of the

Court of Justice of the EU have reversed its landmark decision in Opinion 1/94, in which intel-

lectual property regulation was almost entirely excluded from the EU’s exclusive competence in

trade matters. Firstly, in the

Daiichi Sankyo

case, the Court elaborated upon the EU’s explicit

external competence in the eld of intellectual property. This explicit competence is provided

for by Article 207 TFEU on the common commercial policy, which allows the EU to conclude

agreements concerning the ‘commercial aspects of intellectual property’. In the

Broadcasting

Rights

case, the Court founded its decision on the EU’s implied competence to conclude inter-

national agreements, as provided for by Article 3(2) TFEU. Considering the outcome of these two

judgments, the Court seems to grant the EU a wide scope of action with regard to intellectual

property rights. As a consequence, questions arise with regard to the post-Lisbon era role that

is left for the Member States in the eld of intellectual property. Therefore, the aim of this

article is to outline the scope of the EU’s exclusivity in IP matters and to highlight the borders.

Keywords: Intellectual Property; TRIPS; Common Commercial Policy

I. Introduction

All EU action is bound by the principle of conferral, according to which the Union can only act within the

limits of the competences attributed to it by the Member States through the Treaties. This is limited to

attaining the objectives set out therein.1 It was only since the adoption of the 1994 Agreement on Trade-

Related Aspects of Intellectual Property Rights2 that intellectual property (IP) started to occupy the EU’s

trade agenda. It was not until the adoption of the Amsterdam Treaty in 1997, that the EU legislator started

referring to the area of IP. The possibility for the EU to negotiate and conclude international agreements

concerning ‘IP’ as a part of the Common Commercial Policy (CCP) was introduced by the Amsterdam Treaty

in Article 113 Treaty establishing the European Community.3 The Nice Treaty changed the wording to ‘com-

mercial aspects of IP’ in Article 133 Treaty establishing the European Community.4 Both provisions separated

the field of IP from the other domains of the CCP. Whilst the first paragraph referred to those fields which

belonged exclusively to the EU, the fifth paragraph indicated that a different settlement applied to the field

* PhD Candidate and Academic Assistant, Institute for European Law, KU Leuven (Belgium).

1 Consolidated Version of the Treaty on the European Union [2008] OJ C115/13 (TEU), art 5(2).

2 Marrakesh Agreement Establishing the World Trade Organization (adopted 15 April 1994, entered into force 1 January 1995) 33

ILM 1144, Annex 1C, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

3 Treaty of Amsterdam Amending the Treaty on European Union, the Treaties Establishing the European Community and Certain

Related Acts [1997] OJ C340/3 (Treaty of Amsterdam).

4 Treaty of Nice Amending the Treaty on European Union, the Treaties Establishing the European Community and Certain Related

Acts [2002] OJ C325/33 (Treaty of Nice).

The Borders of EU Competences with Regard to the

International Regulation of Intellectual Property Rights

28

of IP. Hence before the Treaty of Lisbon, the EU’s external competence in the field of IP was a shared com-

petence between the EU and the Member States. This led to the practice of so-called ‘mixity’, involving both

the Member States and the EU in the negotiations and conclusion of international agreements concerning

intellectual property rights (IPRs).5

Since the Lisbon Treaty an era of EU external exclusivity dawned. Article 207(1) Treaty on the Functioning

of the European Union6 not only introduced an exclusive competence for the EU over trade in services and

foreign direct investment, but also over the ‘commercial aspects of IP’ (now included in its first paragraph).

Article 207(1) TFEU now states:

‘The common commercial policy shall be based on uniform principles, particularly with regard to

changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and

services, and the commercial aspects of intellectual property, foreign direct investment, the achieve-

ment of uniformity in measures of liberalisation, export policy and measures to protect trade such

as those to be taken in the event of dumping or subsidies. The common commercial policy shall be

conducted in the context of the principles and objectives of the Union’s external action’.

Article 3(1) TFEU expressly foresees the exclusive competence of the EU with regards to the CCP. Hence, when

negotiating and concluding international agreements in the domains of the CCP, Member State involvement

is not required. However, although the concept of ‘commercial aspects of IP’ has been introduced in the Nice

Treaty in 2001, neither the EU Treaty-drafters, nor the Court of Justice of the EU (CJEU or Court) have ever

clarified the exact meaning of this concept. As a result, there has been legal uncertainty with regard to the

precise scope of the explicit external exclusivity of the EU in the field of IP.

Apart from the explicit external exclusivity, Article 3(2) TFEU also foresees an implicit exclusive compe-

tence for the EU in regard to concluding an international agreement ‘when its conclusion is provided for in

a legislative act of the Union, when this is necessary to enable the Union to exercise its internal competence,

or in so far as its conclusion may affect common rules or alter their scope’. This codification of pre-Lisbon

case law7 enables the EU to exclude Member States participation in its external policy in two main situations.

On the one hand, EU exclusivity is triggered when the internal and external aspects of a particular policy

area can only be exercised effectively together.8 This is called the complementarity principle and applies

even in the absence of prior EU internal legislation.9 On the other hand, the EU will have the power to act

alone when the intended international agreement concerns an area ‘covered to a large extent’ by Union

rules, because the agreement could ‘affect the Union rules’ or ‘alter their scope’.10 This is called the ER TA

principle11 and requires parallelism between the internal and external field because its application depends

upon a degree of prior secondary legislation. While the first situation will not be the subject of further dis-

cussion within this article, the latter situation will be relevant in the section on ‘implied exclusivity following

the Broadcasting Rights judgment’ (see Part II, Section B).

Internally, measures in the field of IPRs have generally been adopted on the basis of the internal market

legal basis.12 Since the Lisbon Treaty, Article 118 TFEU explicitly provides for the competence of the EU, in

the context of the establishment and functioning of the internal market, to create European IPRs, to set up

a uniform protection system, and to create centralised authorisation, coordination and supervision arrange-

ments. This internal competence is a shared competence, allowing Member State action in so far the Union

has not exercised its competence.13

Given the complexities and vagueness of the legal bases available within the field of IP, it is not surprising

that the external competences within the area of IP has repeatedly been the subject of legal discussions.

5 See Christophe Hillion and Panos Koutrakos (eds), Mixed Agreements Revisited-The EU and Its Member States in the World (Hart

Publishing 2010) (for a comprehensive overview of the practice of ‘mixity’).

6 Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ C115/47 (TFEU).

7 See eg Case 22/70 Commission of the European Communities v Council of the European Communities (ERTA) [1971] ECR I 263;

Opinion 1/76 [1977] ECR 741; Case C-476/98 Commission of the European Communities v Federal Republic of Germany (Commis-

sion v Germany) [2002] ECR I-9855.

8 Commission v Germany (n 7) para 83.

9 Geert De Baere, Constitutional Principles of EU External Relations (OUP 2008) 52–58.

10 ibid 43–53.

11 Referring to ER TA (n 7).

12 See eg former Treaty Establishing the European Community (Amsterdam Consolidated Version) art 100; Treaty Establishing the

European Community (Nice Consolidated Version) art 95; and TFEU art 114.

13 TFEU art 2(2).