INTRODUCTION

On 26 January 1999, the European Communities and their member States (hereafter referred to as the European Communities) requested consultations with the United States under Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”) and Article 64.1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS Agreement”) regarding Section 110(5) of the United States Copyright Act as amended by the “Fairness in Music Licensing Act” enacted on 27 October 1998.

The European Communities and the United States held consultations on 2 March 1999, but failed to reach a mutually satisfactory solution. On 15 April 1999, the European Communities requested the establishment of a panel under Article 6 of the DSU and Article 64.1 of the TRIPS Agreement.

At its meeting on 26 May 1999, the Dispute Settlement Body (“DSB”) established a panel in accordance with Article 6 of the DSU with the following standard terms of reference:

Australia, Brazil, Canada, Japan and Switzerland reserved their rights to participate in the panel proceedings as third parties.

On 27 July 1999, the European Communities made a request, with reference to Article 8.7 of the DSU, to the Director-in-charge to determine the composition of the Panel. On 6 August 1999, the Panel was composed as follows:

The Panel met with the parties on 8-9 November 1999 and 7 December 1999. It met with the third parties on 9 November 1999.

On 15 November, the Panel sent a letter to the International Bureau of the World Intellectual Property Organization (WIPO), that is responsible for the administration of the Berne Convention for the Protection of Literary and Artistic Works.