If the national legislators fail to ensure compliance with the test, then such an exception
may be subject to a challenge from other countries in a WTO dispute settlement proceeding.
This was the case in WTO Panel decision WT/DS106, where an Irish collecting society filed an
objection to the European Commission directed against the exceptions in Section 110(5) of the
US Copyright Act.8
After commencing a comprehensive investigation of the legal situation in
the United States, the Commission filed WTO dispute settlement proceedings against the United
States for breach of the Berne Convention and the TRIPS Agreement on behalf of their Member
States. The Commission contended that two exceptions under Section 110(5) of the US
Copyright Act, which permit the playing of radio and television music in public places without the payment of a royalty fee under certain conditions, were inconsistent with US obligations
under the Berne Convention and TRIPS. In the WTO dispute settlement proceedings, the Panel
examined whether the ‘home-style’ exception in subparagraph (a) and the ‘business’ exception
in subparagraph (b) of Section 110(5) of the US Copyright Act satisfied the three-step test.9
It
found that the ‘home-style’ exception met the requirements of the test, but the ‘business’
exception, which allows the amplification of music broadcasts without an authorization and a
payment of a royalty fee by food service and drinking establishments and by retail
establishments, did not. Therefore, the Panel recommended that the United States bring its law
into conformity with the three-step test.