Toward Supranational Copyright Law? The WTO Panel Decision and the Three-Step Test for Copyright Exceptions

A dispute resolution panel of the World Trade Organization in June 2000 held the United States in contravention of its obligation under art. 13 of the TRIPs accord to confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder. In the dispute resolution proceeding, initiated by the European Union at the behest of the Irish performing rights organization, the contested exception, enacted in the 1998 Digital Millennium Copyright Act, exempted a broad range of retail and restaurant establishments from liability for the public performance of musical works by means of communication of radio and television transmissions. The WTO panel decision marks the first time an international adjudicative body has interpreted either art. 13 of TRIPs, or art. 9.2 of the Berne Convention, the text TRIPs incorporates, and generalizes from the Berne Convention reproduction right to all TRIPs and Berne rights under copyright. Berne art. 9.2/TRIPs art. 13 impose the three-step test to evaluate the legitimacy of exceptions and limitations on copyright; the panel\u27s decision extensively analyzes each of the steps. As other multilateral instruments, such as the 1996 WIPO Copyright Treaty (art. 10) and WIPO Performers and Phonograms Treaty (art. 16.2), as well as the pending European Union Information Society Directive (art. 5.4), increasingly adopt the three-step test, the WTO Panel decision may significantly advance the development of a truly supra national law of copyright. This article will analyze the Panel\u27s interpretation of the test\u27s three steps, and their application to the U.S.-law exemption. The article will also compare the Panel\u27s treatment of the three-step test with the prior analyses proposed by several Berne Convention commentators, in order to reflect on what the Panel\u27s analysis might mean for copyright exceptions more broadly. It is important to recognize, however, that the decision\u27s actual impact on international copyright law will also depend on other considerations that will not be addressed here, including: Member State compliance with Panel decisions; the precedential effect of one Panel decision on later dispute resolution panels; and the willingness of national courts to look to WTO Panel decisions for guidance in evaluating local exceptions