It was first applied to the exclusive right of reproduction by Article 9(2) of the Berne Convention for the Protection of Literary and Artistic Works in 1967. Since then, it has been transplanted and extended into the TRIPs Agreement, the WIPO Copyright Treaty, the EU Copyright Directive and the WIPO Performances and Phonograms Treaty.
The most important version of the test is that included in Article 13 of TRIPs. It reads:
Members shall confine limitations and 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 rights holder.
(the three steps have been underlined for emphasis)
The technical legal reasoning which has been applied to suggest how this wording should be interpreted is arcane (see the references below). To date, only one case (before a WTO dispute settlement panel, involving U.S. copyright exemptions allowing restaurants, bars and shops to play radio and TV broadcasts without paying licensing fees, passed in 1998 as a rider to the Sonny Bono Copyright Term Extension Act) has actually required an interpretation of the test.
The three-step test may prove to be extremely important if any nations attempt to reduce the scope of copyright law, because unless the WTO decides that their modifications comply with the test, such states are likely to face trade sanctions.
TRIPs Article 30, covering limitations and exemptions to patent law, is also derived from the three-step test.