Abstract
The paper explores the potential of unfair competition rules contained in Article 10bis of the Paris Convention on the Protection of Industrial Property (Paris Convention) as incorporated in the Agreement on Trade-Related Aspects of Intellectual Property Rights of the WTO (TRIPS Agreement). It is submitted that these provisions offer implicit disciplines on private standards and conduct. Today, commitments made by multinational companies (MNCs) under corporate social responsibility (CSR) are at best considered to be part of soft law, short of mandatory compliance. Strategies have largely depended upon voluntary compliance, reporting, naming and shaming and public pressure. We submit that while formally soft law, CSR instruments may develop binding effects in terms of unilateral promises to consumers which render companies liable under rules of unfair competition law. In other words, States and MNCs are bound by the principle of good faith and the protection of legitimate expectations upon which unfair competition rules and the emerging law on labelling rely. These disciplines form part of WTO law and provide the basis for enforcing appropriate rules on CSR vis-à-vis Members of the Organization.
The authors are indebted to Paula Custer, MLaw and her research undertaken for her master thesis quoted in this paper, to Franziska Humbert for valuable references, to Frauke Henning-Bodewig for comments and to Susan Kaplan for a careful review of the text and edits.
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Notes
- 1.
For a definition of CSR see among others Communication from the Commission to the European Parliament/the Council/The European Economic and Social Committee/Committee of the Regions, A renewed EU strategy 2011–14 for Corporate Social Responsibility, COM (2011) 681 final, 6.
- 2.
For a history on the evolution of CSR see Keller, Codes of Conduct and their Implementation: the Question of Legitimacy, in: Wolfrum/Röben (eds.), Legitimacy in International Law, 2008, 219 ff.
- 3.
See Van de Ven/Jeruissen, Competing Responsibly, (2005) 15 Business Ethics Quarterly 2, 299 (306 ff.).
- 4.
See generally Conrad, Processes and Production Methods (PPMs) in WTO Law: Interfacing Trade and Social Goals, 2011; see also Cottier/Oesch, International Trade Regulation: Law and Policy in the WTO, the European Union, and Switzerland, Cases, Materials and Comments, 2005.
- 5.
See Cottier/Joost/Bürgi (eds.), Human Rights and International Trade, 2005; see generally Petersmann, Human Rights and the Law of the World Trade Organization, (2003) 37 Journal of World Trade 241; Cottier/Delimatsis (eds.), The Prospects of International Trade Regulation: From Fragmentation to Coherence, 2011.
- 6.
See Custer, Disciplining Private Food Standards Through WTO Law? An Attempt to go Beyond the SPS and TBT Agreement Debate, NCCR Working Paper No. 2013/45, November 2013.
- 7.
Art. 2 (1) TRIPS Agreement.
- 8.
See European Commission, An Analysis of Policy References made by large EU Companies to Internationally Recognised CSR Guidelines and Principles, March 2013, 6, available at: http://ec.europa.eu/enterprise/policies/sustainable-business/files/csr/csr-guide-princ-2013_en.pdf (last accessed on 28 November 2013.
- 9.
See Cottier/Jevtic, The Protection against Unfair Competition in WTO Law: Status, Potential and Prospects, in: Drexl et al. (eds.), Technology and competition – Technologie et concurrence. Contributions in honour of Hans Ullrich – Mélanges en l’honneur de Hans Ullrich, 2009, 669 (692).
- 10.
On unilateral promise in international law see IJC, Nuclear Tests (Australia v. France) (Merits) [1974] ICJ Rep 253, and Nuclear Tests (New Zealand v. France) [1974] ICJ Rep. 457.
- 11.
See Cottier/Nadakavukaren Schefer, Good Faith and the Protection of Legitimate Expectations in the WTO, in: Bronckers/Quick (eds.), New Directions in International Economic Law: Essays in Honour of John H. Jackson, 2000, 47 (also in (2005) 12 Journal of International Economic Law 3, 180).
- 12.
See Müller, Vertrauensschutz im Völkerrecht, 1971; Zoller, La bonne foi en droit international public, 1977; Müller/Wildhaber, Praxis des Völkerrechts, 3rd ed., 2001, 40; for further references on the principle see Panizzon, Good Faith in the Jurisprudence of the WTO: The Protection of Legitimate Expectations, Good Faith Interpretation and Fair Dispute Settlement, Studies in International Trade Law, 2006.
- 13.
Cottier/Müller, Estoppel, in: Wolfrum (ed.), Encyclopedia of Public International Law, available at: http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-9780199231690-e1401?rskey=m77Eoy&result=1&q=estoppel&prd=EPIL (last accessed on 28 November 2013).
- 14.
See fn. 9.
- 15.
See Cottier/Nadakavukaren Schefer, Non-Violation Complaints in WTO/GATT Dispute Settlement: Past, Present, and Future, in: Petersmann (ed.), (2007) 11 International Trade Law and GATT/WTO Dispute Settlement System, Studies in Transnational Economic Law, 145; see also Mitchell, Good Faith in WTO Dispute Settlement, (2006) 7 Melbourne Journal of International Law, available at: http://www.law.unimelb.edu.au/files/dmfile/downloadb3081.pdf (last accessed on 28 November 2013); see generally Kim, Non-Violation Complaints in WTO Law: Theory and Practice, Studies in Global Economic Law Volume 9, 2006.
- 16.
See Panizzon (fn. 12); Diebold, Non-discrimination in International Trade Law in Services, 2010.
- 17.
See generally Henning-Bodewig (ed.), International Handbook on Unfair Competition, 2013; Reger, Der internationale Schutz gegen unlauteren Wettbewerb und das Trips-Übereinkommen, 1999, 17–24; Pflüger, Der internationale Schutz gegen unlauteren Wettbewerb, Henning-Bodewig, International Protection Against Unfair Competition – Art. 10bis Paris Convention, TRIPS and WIPO Model Provisions, (1999) 30 IIC 166.
- 18.
For an excellent survey, from which the following is drawn, see Custer (fn. 6).
- 19.
Kasky v. Nike, Inc., California Supreme Court, 45 P 3d 243 (Cal. 2002) and Kasky v. Nike, Inc., US Supreme Court, 539 U.S. 654 (2003); for further information see Cottier/Jevtic (fn. 9); see also Cherry/Sneirson, Beyond Profit: Rethinking Corporate Social Responsibility and Greenwashing After the BP Oil Disaster, (2011) 85 Tulane Law Review 983, 1028–1030; and Besmer, The Legal Character of Private Codes of Conduct: More Than Just a Pseudo-Formal Gloss on Corporate Social Responsibility, (2006) 2 Hastings Business Law Journal 1, 279.
- 20.
Consumer Protection Agency Hamburg v. Lidl, filed at the Heilbronn District Court on 6 April 2010 and supported by an initiative of the European Center for Constitutional and Human Rights (ECCHR) and the Clean Clothes Campaign (CCC). The case was decided only 10 days later through a declaration by Lidl that it would refrain from allegedly misleading advertising. For the indictment see http://www.vzhh.de/recht/30332/Lidl_Klage.pdf (in German) (last accessed on 28 November 2013).
- 21.
Lidl stated in a standard response to consumer enquiries that “Lidl is aware of its responsibility with respect to the manufacturing of its products. In recent years and through intensive efforts and various commitments, Lidl has taken on a leading role within the food retail industry in improving social standards in production countries. In contrast to other retail businesses, Lidl actively incorporates ‘Compliance with Social Standards’ within its purchasing agreement. […] Like all BSCI members, Lidl is committed to enforcing uniform minimum social standards in supplier firms, and oversees compliance with these standards through a corresponding system of controls and checks. In order to reach this goal, Lidl has developed its own code of practice that corresponds with BSCI guidelines. Suppliers who work with Lidl are obligated to follow this code. Compliance with these social standards is verified by independent, accredited regulators.” In 2009, Lidl stated via the Business and Human Rights Resource Centre that “In contrast to other supermarkets Lidl insist that its suppliers comply with fundamental social standards.” Moreover, Lidl wrote in its 2010 advertising brochure: “Lidl campaigns worldwide for fair working conditions […] We at Lidl only award non-food contracts to selected producers and suppliers who have already proved they have actively incorporated social responsibility.”
- 22.
See Müller-Hoff/Saage-Maass, Fair Competition! Complaint Filed by Consumers in Germany in Defense of Worker’s Rights in South East Asia, European Center for Constitutional and Human Rights, 1–5, available at: http://www.ecchr.de (last accessed on 28 November 2013).
- 23.
Blauer Engel, German Supreme Court, BGH – I ZR 219/87, decision from 20 October 1988, Citation BGHZ 105, 277.
- 24.
See Custer (fn. 6).
- 25.
See generally Weatherill/Bernitz (eds.), The Regulation of Unfair Commercial Practices under EC Directive 2005/29: New Rules and New Techniques, 2nd ed. 2007 and Henning-Bodewig, Die Richtlinie 2005/29/EG über unlautere Geschäftspraktiken, GRUR Int. 2005, 629.
- 26.
Fore a detailed account see See Handig, The Unfair Commercial Practices Directive – A Milestone in the European Unfair Competition Law?, (2005) 16 European Business Law Review 1117.
- 27.
For a detailed account see Henning-Bodewig (fn. 17).
- 28.
For a detailed account of the potential of direct effect of unfair competition rules see Riffel, The Protection Against Unfair Competition in World Trade Law, PhD submitted to the University of Bern 2013 (forthcoming); Custer (fn. 6); for foundations and implications in the EU context see Cottier, International Trade Law: The Impact of Justiciability and Separations of Powers in EC, (2009) 5 European Constitutional Law Rev 307; Cottier, The Judge in International Economic Relations, in: Monti et al. (eds.), FS für Carl Baudenbacher, 2007, 99.
- 29.
See generally Cottier/Germann, Teaching IP, Unfair Competition and Anti-Trust Law, in: Takagi/Allmann/Sinjela (eds.), Teaching of Intellectual Property: Principles and Methods, World Intellectual Property Organization 2008, 130 (141–164).
- 30.
The German doctrine usually held unfair competition law and intellectual property law as mutually exclusive. See hereto Heinemann, Immaterialgüterschutz in der Wettbewerbsordnung: Eine grundlagenorientierte Untersuchung zum Kartellrecht des geistigen Eigentums, Jus Privatum, Bd. 65, 2002; This view is now being reversed as a result of a ruling by the German Supreme Court dated 15 August 2013 – BGH, I ZR 188/11 ( Hard Rock Café). The court ruled that that trade mark law and unfair competition law are not mutually exclusive but apply in parallel and are mutually supportive.
- 31.
See Henning-Bodewig, International Unfair Competition Law, in: Hilty/Henning-Bodewig (eds.), Law Against Unfair Competition. Towards a New paradigm in Europe?, 2007, 53 (59 ff.); see also Reger (fn. 17), 176, 253–255, 291–295.
- 32.
For the Panel Report see http://www.wto.org/english/tratop_e/dispu_e/176r_e.pdf (last accessed on 28 November 2013).
- 33.
For a comprehensive analysis see Riffel (fn. 28).
- 34.
See Cottier/Jevtic (fn. 9), 691.
- 35.
See fn. 30.
- 36.
For literature on the WTO Dispute Settlement System see Cottier, The WTO Dispute Settlement System: New Horizons, in: The American Society of International Law (ed.), The Challenge of Non-State Actors. Proceedings of the 92nd Annual Meeting, April 1–4, 1998, 1998, 86–91; Cottier, The Impact of the TRIPs Agreement on Private Practice and Litigation, in: Cameron/Campbell (eds.), Dispute Resolution in the World Trade Organisation, 1998, 111–127 (also in A.I.115, 265 ff.); Cottier, Dispute Settlement in the World Trade Organization: Characteristics and Structural Implications for the European Union, (1998) 35 Common Market Law Review 2, 325; Cottier/Abbott, Dispute Prevention and Dispute Settlement in the Field of Intellectual Property Rights and Electronic Commerce: US-Section 211 Omnibus Appropriations Act 1998 (‘Havana Club’)’, in: Petersmann/Pollack (eds.), Transatlantic Economic Disputes: The EU, the US, and the WTO, 2003, 429–447 (also in A.I.115, 285–308); Cottier/Oesch (fn. 4); Oesch, Standards of Review in WTO Dispute Resolution, 2003 and 2005; Oesch, Das Streitbeilegungsverfahren der WTO, (2004) recht 192; Van den Bossche/Zdouc, The Law and Policy of the World Trade Organization, 3rd ed. 2013, 156; Van den Bossche, From Afterthought to Centrepiece: The WTO Appellate Body and its Rise to Prominence in the World Trading System, in: Sacerdoti/Yanovich/Bohanes (eds.), The WTO at Ten, 2006, 289; Van den Bossche, The Law and Policy of the World Trade Organization: Text, Cases and Materials, 2008, 169.
- 37.
See Cottier/Jevtic (fn. 9), 671 ff., 692.
- 38.
On commercial and free speech see Hertig Randall, Commercial Speech under the European Convention on Human Rights: Subordinate or Equal?, (2006) 6 Human Rights Law Review 1, 53; see also Cottier/Sangeeta, The Hertel case and the Distinction between Commercial and Non-Commercial Speech, in: Cottier/Joost/Bürgi (eds.), Human Rights and International Trade, 2005, 273–278.
- 39.
See Cottier/Jevtic (fn. 9), 679; see also Custer, (fn. 6), 34 ff.
- 40.
See Cottier/Oesch (fn. 4), 209–227.
- 41.
See Hermès International (a partnership limited by shares) v. FHT Marketing Choice BV, CJEU 16 June 1998 (case C-53/96), allowing for direct effect by MS. Available at: http://oami.europa.eu/en/mark/aspects/pdf/JJ960053.pdf (last accessed on 28 November 2013).
- 42.
See Cottier/Jevtic (fn. 9), 671.
- 43.
See generally http://www.wto.org/english/docs_e/legal_e/29-tprm_e.htm; see also http://www.ecipe.org/media/publication_pdfs/the-wto2019s-trade-policy-review-mechanism-how-to-create-political-will-for-liberalization-1.pdf (last accessed on 28 November 2013).
- 44.
See ECHR, Judgement of 25 August 1998, Case of Hertel v. Switzerland, Application no. 25181/94; and Cottier/Sangeeta (fn. 38).
- 45.
See Cottier/Jevtic (fn. 9), 671.
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Cottier, T., Wermelinger, G. (2014). Implementing and Enforcing Corporate Social Responsibility: The Potential of Unfair Competition Rules in International Law. In: Hilty, R., Henning-Bodewig, F. (eds) Corporate Social Responsibility. MPI Studies on Intellectual Property and Competition Law, vol 21. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54005-9_7
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