Pax_cl_goldenegg

Common law helps you go global with your IP

International standardisation or at least harmonisation of law helps you go global with your intellectual property (IP).

One perspective on this is provided by an English invention - English common law. It has spread across the globe as a preferred legal system. With it intellectual property contracts have more and more adopted common law terms and references. U.S. contracting practices have played a central role here, eg in the preference for detailed provisions rather than a general statement of norms.

This is all noteworthy in an era when the "War on Terror" has put the very heritage of common law onto a butcher's chopping board.

But I have come to praise Caesar, not bury him. The Caesar I speak of is the English common law system and the countries that have nurtured it, most particularly England but also the United States and Australia, among others.

Here is a simple example of the usefulness of common law in business and IP contracting.

Formal legally binding agreements contain what is known as a jurisdiction clause or a governing law clause. They typically appear as the last or almost last clause of such contracts, eg in our Terms of Use and Legal Notice in the footer of this Website page:

Governing Law and Jurisdiction

These Terms of Use must be interpreted and governed by the law of the State of New South Wales and the Commonwealth of Australia as applicable. If a dispute arises in relation to them it must be subject to the exclusive jurisdiction of the courts of New South Wales and the Commonwealth of Australia.

This clause applies the law of the State of New South Wales and Australia - both common law jurisdictions. It also seeks to make local courts the forum for resolution of disputes. Clauses like this are critical to minimise hitting hidden legal reefs as you ship IP nationally or further. One result of using such a clause is that a contracting party takes the position that no other law or forum is to apply for the resolution of disputes under the contract. It is a simple clause, and the result is awesome - it adds clarity, predictability and maybe even certainty for commercial dealings. Confidence results in more trade.

We reached this point through evolution in legal thinking. Legal history sheds light on that evolution. Skip the history if you like, but to make money from IP globally do read the last five paragraphs of this post.

The history of law is the history of civilisation

Anglo-Australian law is remarkably resilient and has an admirable heritage. Anglo-American law, a cousin of Australian law, has been spreading at a great pace globally in recent decades. This is noteworthy. English or American law become the dominant law for global trade many years ago. I don't think that is just because English is the modern (human language) lingua franca.

In recent years many legal commentators have remarked that poor political decisions during the "War on Terror" threaten English common law traditions (eg habeas corpus - relief from unlawful imprisonment) and potentially the economic and global future built on them. If we assume the common law is an English golden goose then it would be useful to keep it alive to lay more golden eggs, eg in places like China, India and Brazil.

It has been said that the history of law is, in a broad sense, the history of human civilisation. Landmarks in this history include Roman civil law, English common law and equity, Islamic Sharia law, and changes in law arising from thinkers who were republican, enlightened, socialist, communist, capitalist, or part of a civil rights movement.

Within this body of law, the doctrine of stare decisis, or precedent by courts, is the major innovation of English common law.

Pax Britannica

English common law spread throughout the former British Empire and Commonwealth over the last five centuries. The common law system rulespax_cl_british_empire_1897 Ireland, United Kingdom, Australia, New Zealand, South Africa, Canada (excluding Quebec), and the United States. Several other former regions of the British Empire have adapted the common law system into a mixed system, eg Pakistan, India and Nigeria. The common law system played a part in bringing about Pax Britannica (ie "the British Peace", modelled after Pax Romana) along with such things as sea power and gunboat diplomacy.

Wikipedia indicates that the phrase "Pax Britannica" was used first in 1897 by the British author James Morris as the title of the middle volume of his trilogy about the rise and fall of the British Empire. The accompanying map is also dated 1897 and shows the British Empire with the dominians in red. If you add the United States, this was roughly the extent of common law at the time. It has since expanded in its global presence or influence.

"Pax Common Law"

For this post I thought I'd coin a phrase - "Pax Common Law". This is because regions beyond the old British Empire have adopted the common law system.  Common law elements extend to other countries. For example, the legal infrastructure of Taiwan reflects influences from its German-based law, the English-based common law of Hong Kong, Soviet-influenced Socialist law, United States-style banking and securities law, and traditional Chinese law.

This English common law heritage is impressive, but no more so than one earlier legal tradition.

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Richard Harris as Marcus Aurelius

The development of Roman law covers more than 1,000 years from the law of the 12 tables (from 449 BC) to the Corpus Juris Civilis of Emperor Justinian I (around 530 AD). The English common law system's history is almost as long. However Roman law wins out when you consider that Roman law preserved in Justinian's codes became the basis of legal practice in the Byzantine Empire and later in continental Europe and even in areas of English common law.

Pax Romana (27 BC - 180 AD) is Latin for "the Roman peace". It refers to the long period from about 27 BC to 180 AD of relative peace experienced in the Roman Empire. The term stems from the fact that Roman rule and its legal system dominated rivalry between areas and peoples within the Empire.

"The Five Good Emperors" who ruled from 96 BC to 180 AD in the Pax Romana period of the Empire's greatest prosperity were Nerva,  Trajan, Hadrian, Antoninus Pius, and Marcus Aurelius (as played by Richard Harris in the film Gladiator). They make me wish for 2007 to be a year for not just the meek but also the mighty to respect the heritage of English common law.

Intellectual property law - national and international arrangements and new trends

At the national level, in Australia intellectual property law is a subset of common law. In such law there is no definitive statement of the categories of intellectual property law. We can only say that usually the categories  include copyright, patent, registered design, trade mark, plant variety right, eligible layout right, goodwill and confidential information. Most of those categories also have applicable Commonwealth legislation, such as the Copyright Act 1968 (Cth), Patents Act 1990 (Cth), Designs Act 2003 (Cth), Trade Marks Act 1995 (Cth), Plant Breeder's Rights Act 1994 (Cth) and Circuit Layouts Act 1989 (Cth). The exception is confidential information law, it is a creature of equity law (originally a separate stream of English law but now fused with common law).

Innovators and thriving businesses at the cutting edge of economic change rely on the above body of national laws to build and keep Australian IP wealth. On the basis of such laws Ken Done, Fosters Group, News Corp, and Cochlear have built protected money-making Australian businesses.

However to go global they have been empowered by international IP law. This is partly because Australia is a party to numerous international intellectual property law treaties. They standardised or at least harmonised IP law creating a global protection system. Appropriately many are administered by the World Intellectual Property Organisation, a specialized agency of the United Nations. But there is inconsistency now, as there was in the past.

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A question is whether the United States is in or out of the global IP order. Its IP treaty-making involves unilateral and bilateral arrangements, as well as multilateral. We see this in the Australia-US Free Trade Agreement, a bilateral agreement, North American Free Trade Agreement and elsewhere.

The country that has the most to gain economically from multilateral arrangements and legal standardisation is the United States. It is the greatest net exporter of intellectual property such as the IP in Post-it Notes and the McDonald's brand.

As recorded in Research Paper 14 for the Australia-US Free Trade Agreement - "In 2002-03 Australia paid royalties and licence fees of A$1.82 billion to the rest of the world and in return it received royalties and licence fees of A$618 million." The highest percentage of those royalties paid go to the United States. This pattern repeats in other places making IP the fastest growing part of U.S. foreign trade.


Further reading - business law theory and frameworks series


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