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A Look at the WTO Panel Report in ‘Saudi Arabia- Measures Concerning the Protection of Intellectual Property Rights’


Photo of Jay Manoj SanklechaFootball fans may be aware of the joint statement last year by various sports bodies including Fifa, LaLiga, Premier League, and others, against the Saudi Arabia based beoutQ broadcaster for their unauthorized streaming of content on a commercial scale, as well as their (i.e., the copyright holders) inability to obtain legal counsel in Saudi Arabia in this matter, among other issues. In the meanwhile, Qatar had taken this matter to the WTO, and on 16th June 2020, the WTO Panel issued its report on the matter. We’re very pleased to bring you a guest post by Jay Manoj Sanklecha examining this report. Jay is an LL.M in international law (summa cum laude) from IHEID, Geneva and B.A/LL.B (hons.) from NUJS, Kolkata.

A look at the WTO Panel report in ‘Saudi Arabia- Measures concerning the protection of Intellectual Property Rights’

Jay Manoj Sanklecha

The report of the WTO panel in Saudi Arabia- Measures concerning the protection of Intellectual Property Rights is significant for a number of reasons. Apart from its significance for international intellectual property law, insofar as it recognises that the TRIPS Agreement imposes disciplines on members that actively allow widespread piracy of copyrighted works; the decision has implications far beyond intellectual property law. The decision marks the first instance, in the 73 year history of multilateral trading system, that a panel has rejected a country’s invocation of the national security exception. With countries increasingly resorting to the national security exception, traditionally viewed as not being subject to legal adjudication, this decision following the panel report in Russia-Traffic in Transit (Russia-Transit) is an important step in re-establishing the rule of international trade law.

Background

This particular dispute arose within the larger context of fraying relations between Qatar and its neighbours, culminating in the June 2017 decision of Qatar’s neighbours, including Saudi Arabia, to sever all diplomatic and consular relations, including closure of all land, sea and air ports, with Qatar. The decision, as per Saudi Arabia, was necessitated in order to protect its “essential security interests” in view of Qatar’s alleged support for terrorist organisations. Following the decision to sever relations, Saudi regulators, blocked access and denied license to, a Qatari based sports and entertainment company (“beIn Media”), which had exclusive rights to broadcast prime sporting events in the region, including in Saudi Arabia. In August, 2017, a Saudi based entity, named, “beoutQ” began unauthorisedly streaming and distributing, without facing any sanction, media content created or licensed to “beIn media” on commercial scale throughout the territory of Saudi Arabia.

In October 2018, Qatar brought a dispute to the WTO, claiming that Saudi Arabia through its actions and omissions had inter alia prevented Qatari nationals from being able to protect their intellectual property rights. More specifically, Qatar claimed that by inter alia (i) prohibiting the distribution of beIn media content against the threat of loss of intellectual property rights; (ii) launching anti-sympathy measures subjecting Saudi lawyers to jeopardy if they supported Qatar nationals ;(iii) imposing travel restrictions on Qatar nationals; (iv) requiring ministerial approval for decisions taken by the copyright committee on violations of copyright law; and (v) failing to apply criminal penalties against ‘beoutQ’ despite evidence  of its widespread violations, Saudi Arabia violated its obligations under the TRIPS Agreement. For its part Saudi Arabia refused to engage on the facts and arguments presented by Qatar and limited its engagement to submitting arguments on the application of the national security exception under Article 73 (b) (iii) of the TRIPS Agreement.

Prima Facie Violations

Since Saudi Arabia limited its engagement to the security exception, the WTO Panel sought to, first, satisfy itself that Qatar’s claims are well founded in fact/law, and established a prima facie case. The Panel found, after examining evidence submitted by Qatar, that prima facie (i) Saudi Arabia had taken general “anti-sympathy measures“that had the result of preventing BeIn media from obtaining legal counsel to enforce its intellectual property rights through civil enforcement procedures before Saudi Courts and (ii) that beoutQ was operated by individuals or entities subject to the criminal jurisdiction of Saudi Arabia. However, in respect of (i) the circular prohibiting distribution of beIn media; (ii) travel restrictions and (iii) ministerial approval requirement, the Panel found that Qatar had failed to discharge its burden of proof that either individually or collectively such measures had been applied to BeIn Media to prevent it from accessing civil enforcement procedures.

Since the claims fell more squarely under the enforcement obligations under Part III of the TRIPS Agreement, the Panel proceeded to consider Qatar’s claims thereunder. The Panel found that by the anti-sympathy measures, BeIn Media, as a “right holder”, has been prevented from obtaining legal counsel to enforce its intellectual property rights before Saudi Courts, in specific violation of the mandate of third sentence of Article 42 of the TRIPS Agreement that “Parties shall be allowed to be represented by independent legal counsel”. Having found a violation of Article 42, as per the Panel, this gave rise to a consequential violation of the obligation under Article 41.1 of the TRIPS Agreement to “ensure that enforcement procedures as specified in this Part are available under law”.

The Panel then considered whether Saudi Arabia through its omissions violated the first sentence of Article 61 of the TRIPS Agreement which enjoins that “members shall provide for criminal procedures and penalties to be applied at least in cases of wilful…copyright piracy on a commercial scale”. The Panel took note of an earlier report in China – Measures affecting the protection and enforcement of Intellectual Property Rights (China- Intellectual Property), where another Panel had made certain findings on the first sentence of Article 61 of the TRIPS Agreement. However that Panel’s findings regarding the first sentence had been confined to the issue of what acts of infringement should be criminalised and not those which ought to be prosecuted. The Panel was nonetheless guided by the findings of the Panel in China-Intellectual Property in interpreting the meaning of the expressions “on a commercial scale” and “wilful” appearing in the first sentence of Article 61 of the TRIPS Agreement. However the Panel noted that the meaning of the expression “to be applied” had not been addressed by the earlier Panel and would need to be interpreted in this case. Here the Panel, adopted a purposive interpretation of the words “to be applied” holding that the obligation under the first sentence, is not automatically discharged through the creation of a formal written law that provides for criminalisation of commercial scale piracy without regard to how the written law is applied. In other words as per the Panel, there is an “obligation upon members to put such criminal procedures and penalties into practical operation”. On facts, the Panel found (i) that the scale of operations of BeoutQ was typical of a commercial venture; and (ii) that since BeoutQ sole operation consisted of providing pirated content, its conduct could be properly characterised as “wilful”. As regards, whether Saudi Arabia had “provided for criminal procedures and penalties to be applied” the Panel noted that Saudi Arabia had been unable to identify any such action despite right holders sending detailed information about such piracy and extensive evidentiary basis that BeoutQ was operated by individuals or entities subject to Saudi criminal jurisdiction. Accordingly as per the panel Saudi Arabia had violated Article 61 of the TRIPS Agreement.

Having found violations of Articles 41.1, 42 and 61, the panel exercised judicial economy, and found it unnecessary to make findings in relation to the claims under Part I and II of the TRIPS Agreement.

Security Exception

As stated earlier, Saudi Arabia relied on Article 73(b)(iii) of the TRIPS Agreement which provides “Nothing in this Agreement shall be construed…(b) to prevent a member from taking any action which it considers necessary for the protection of its essential security interests… (iii) taken in time of war or other emergency in international relations”, to justify their refusal to engage with Qatar at all, including in relation to its claims, as such engagement would undermine their essential security interest

 Article 73(b) (iii) of the TRIPS Agreement, is identical to Article XXI (b) (iii) of GATT, 1994 which had been interpreted by the Panel in Russia- Transit and both Qatar and Saudi Arabia agreed to interpret Article 73(b)(iii), with reference to, and consistently with the panel report in Russia- Transit.

The Panel in Russian Transit had found that the security exception was justiciable and accordingly capable of legal adjudication. It held that the provision was not entirely self-judging, since the words “which it considers” in the chapeau did not qualify the circumstances in paragraph (iii). Accordingly the Panel had to objectively determine whether the actions “were taken in times of war or other emergency in international relations”. The Panel understood “emergency in international relations” as reference “to a situation of armed conflict, latent armed conflict, or of heightened tension or crisis, or general instability engulfing or surrounding a state, which give rise to defence, or military interest, or maintenance of law and public order interests”. The requirement of “taken in time of” was understood to require a “chronological concurrence” between the actions and the emergency. Finally the panel in Russia-Transit found that although the words “which it considers” qualified both the requirement of necessity and protection of essential security interest, members were not absolutely free to determine the same at their discretion and that the obligation of “good faith” under international law applied both to the members articulation of an essential security interest as well as the connection between the measures at issue and those interests. Specifically, it was incumbent on the member to articulate an essential security interest said to arise from emergency in international relations sufficiently enough to demonstrate their veracity and demonstrate that the measure at issue meets a requirement of plausibility in relation to the proffered security interests.

On facts, taking note of the severance of all diplomatic and economic ties and a situation of heightened tension and crisis between the countries amidst accusations of supporting terrorism, the Panel found that there existed an “emergency in international relations”. The panel also found that since BeoutQ did not commence operations until August 2017 the measures at issue were “taken in the time of” an “emergency in international relations” which was in existence since at least June 2017

The Panel also found that Saudia Arabia’s articulation of essential security interest i.e. protecting itself from the “dangers of terrorism and extremism” was sufficiently precise and related to the “quintessential functions of the state”. The panel clarified that articulation of security was subject to “limited review” and served primarily as a benchmark to examine whether the challenged measures was “plausibly connected” to the protection of such articulated security interests. In this next analytical step, the panel examined Qatar’s claims’ separately. In relation to the “anti sympathy” measures aimed at denying Qatari nationals access to civil remedies, the Panel found that it may be viewed as an aspect of Saudi Arabia’s umbrella policy of ending any form of interaction with Qatari nationals. Accordingly the panel found that the anti-sympathy measures met the minimum requirement of plausibility in relation to the proffered essential security interests. However in relation to the non-application of criminal procedures and penalties to BeoutQ, the Panel noted that it was unable to discern “any basis for concluding that the application of criminal penalties to BeoutQ would require any engagement or interaction with BeIn or any other Qatari national”. Accordingly the Panel held that the security exception was validly invoked by Saudi Arabia in relation to the inconsistency with Articles 41.1 and 42, but not Article 61 of the TRIPS agreement

Conclusion

The report is significant to intellectual property law, in view of its purposive interpretation of Article 61. This is the first instance where a State has been found to have not complied with its obligation under Article 61. Under the interpretation advanced, there appears to be an obligation on States’ to proactively apply criminal penalties and prosecutions to widespread commercial scale piracy. It is a ruling that could have ramifications for States that are traditionally soft on piracy.  More, pertinently, the report remains relevant to the interpretation of the national security exception. It reiterates the “justiciable” nature of the exception, while at the same time, highlights the wide latitude available to members to protect their security interests, as borne out by successful invocation of the exception in relation to anti-sympathy measures.  It also underlines the importance of “good faith” to treaty interpretation and adds an important gloss to the report in Russia-Transit by using the plausibility standard, developed therein, to invalidate a defence premised on the security exception. It therefore also operates as an important caution to members that would wish to justify their actions/omissions on the basis of the national security exception.

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