In the face of the rising counterfeiting and piracy across Europe, the Commission is proposing a historical but controversial Directive that would – for the first time ever – force member states to adjust their penal codes and establish harmonised criminal sanctions against IPR-infringers.
Intellectual property infringements – involving anything from pirate music and films to fake handbags or car pieces and counterfeit medicines – have increased dramatically over the past decade, with a 1,600% rise in the volume of counterfeit goods, causing the loss of 125,000 jobs.
Economic losses related to counterfeiting are estimated at around €500 billion per year through lost business opportunities and tax revenues, and some fake products also present a serious health threat.
The protection of intellectual property is governed by various international conventions to which the EU has signed up to, such as
- the Charter of Fundamental Rights, which states that 'intellectual property shall be protected' (article 17.2).
- the Berne, Brussels and Paris Conventions
- the World Intellectual Property Organisation (WIPO) Copyright Treaty,
- the WIPO Performances and Phonograms Treaty,
- and the World Trade Organisation (WTO) with the agreement on trade-related aspects of intellectual property rights (TRIPS).
In order to bring itself into line with these international commitments, the EU adopted the Directive on the Enforcement of Intellectual Property Rights (also labeled the 'IPR enforcement directive'), in March 2004.
This directive sought to consolidate the fragmented body of EU legislation on intellectual property - i.e. disparate measures on copyrights, trade marks, authors' rights, designs, counterfeiting and piracy, computer programmes, etc - to create more clarity and predictability for European businesses.
It also gave national authorities increased powers to pursue infringers and obtain compensation for rights-holders.
However, as the counterfeiting and piracy phenomenon grows, particularly with the rise of China - the largest source of fake goods - the Commission says additional measures are necessary.
- Harmonising national penal codes?
Despite a whole range of rules on the protection of intellectual property, counterfeiting and piracy have continued to grow in the world because offenders have the possibility of making substantial profits without risking any serious legal penalties.
The proposal was redrafted in April 2006, to take into account a judgment by the Court , dating from 13 September 2005, which holds that the EU has powers to harmonise member states' criminal law, if required for the effective implementation of Community law (see Communication COM/2005/0583 final ). If adopted, the Directive would be the first ever to harmonise member states' criminal law.
On 5-6 October 2006, the Justice and Home Affairs Council discussed the Commission's amended proposal, stressing the principle of subsidiarity and adding that the harmonisation of criminal law should be a last resort.
- Getting the punishment right
The double proposal has raised the question of which sanctions are appropriate for infringements of intellectual property rights. The draft Directive mandates that "all intentional infringements of an intellectual property right on a commercial scale, and attempting, aiding or abetting and inciting such infringements, are treated as criminal offences".
The proposal revives measures set out by the Commission in its initial draft for the directive on the enforcement of intellectual property rights, which were scrapped by Parliament when it adopted the directive in 2004.
These include custodial sentences, fines, the destruction or confiscation of fake goods or of products of a corresponding value, the closure establishments used to commit offences, bans on engaging in commercial activities, placing under judicial supervision, bans on access to public assistance or subsidies, and the publication of judicial decisions.
In addition, the draft framework decision provides for extended powers of confiscation and grants holders of intellectual property rights the right to assist the work of joint investigation teams.
The proposals have been criticised by a wide range of industries, including computer and software manufacturers, telecom operators, generic medicines manufacturers and trademark holders, for failing to fence in the Directive's scope on the specific problem of commercial counterfeiting.
Stakeholders said the draft risked criminalising even small-scale infringements for personal use, such as copying the content of a DVD to a computer's hard disk or making a back-up of a copy-protected CD.
A further point of criticism was that the draft would also introduce criminal measures for alleged infringements of unexamined intellectual property rights, such as pending or contested patent applications.
In a first reading vote on 25 April 2007, Parliament took up these concerns and voted to exclude private individuals from the scope of the Directive, so long as they do not generate any profit from the use of the product. Smaller offences will also remain under national civil law.
Furthermore, Parliament also decided to leave patents on inventions out of the Directive on the basis that such breaches are more difficult to verify and that civil law remains the most appropriate instrument for prosecuting this type of infringement.
The scope of the directive would thus be limited to the following intellectual property rights:
- Copyright and related rights;
- sui generis rights of a database maker;
- rights of the creator of a topography of a semi-conductor product;
- trademark rights;
- design rights;
- geographical indications, and;
- trade names.
The Directive will only enter into force if approved by member states. But that could prove somewhat difficult as countries such as the UK and the Netherlands fear that the EU is going too far by harmonising criminal codes – infringing on an area traditionally reserved for member states.
Furthermore, legal experts say the text could be be attacked before the Court for its possible lack of a proper legal foundation (see 'Positions').
Parliament Rapporteur Nicola Zingaretti (PES, IT) said: "We are turning a new page: this is the first directive where criminal law is included. To harmonise criminal codes will be a radical new thing." He explained the amendments made in his report, saying: "It is about punishing mafia-style criminals, not about jailing kids who download music from the internet."
British Conservative MEP Malcolm Harbour said: "The Conservatives are not convinced that there is need for EU legislation here. We believe it would make more sense to establish the effectiveness of the existing legislation before taking further measures."
Austrian Green MEP Legal Affairs Committee Eva Lichtenberger said her group was concerned that the Directive would cause a lot more problems than it solves. "Under the pretence of combating large-scale counterfeiting, the directive proposes criminal sanctions for a potentially far-reaching range of so-called intellectual property infringements. Many of the areas to be covered in the proposed Directive - such as copyright - are already dealt with effectively by national civil laws; so there is no justification for introducing EU-wide criminal penalties for such minor infringements."
However, she welcomed the fact that private individuals would not be covered by the proposed criminal penalties. "Without exempting personal use, something as banal as a music download could be regarded as a criminal act," she said.
Leftist MEP Umberto Guidoni (GUE/NGL) was unhappy that the Directive had not been rejected, saying that it confused counterfeiting with violations of intellectual property and would render the fight against criminal counterfeiting less effective. "It would have been more useful to only limit the application of the directive to violations of copyright and look at the commercial production of counterfeit multimedia products, an area in which organised crime operates intensely," he said, nevertheless adding: "At least we managed to secure some limitations that protect the private not for profit use of P2P and file sharing."
Reto Hilty, Annette Kur, Alexander Peukert of the Max Planck Institute for Intellectual Property Law doubt that the Court's 2005 ruling is a sufficient foundation for the Commission's redrafted proposal: "The question needs to be answered whether the conditions for Community regulation are fulfilled in this particular case. According to the ECJ ruling and with particular respect to penal sanctions, the condition must be met that the latter are absolutely necessary regarding the declared objectives. Indeed, there are grave misgivings as to whether non-harmonisation of national penal sanctions for IPR infringements would hamper the free market in goods and services between member states, as compared to the market within just one member state - after all, intellectual property rights infringements are illegal in all member states. The sole fact that it is possible, in member states, to obtain illegally pirated goods, does not justify EU competency for harmonisation."
- 25 Apr. 2007: The Directive was adopted in the Parliament's plenary session.
- 17 Apr. 2008: Expected examination by member states in Council. If agreed by the Council, it will enter into force immediately following its publication in the Official Journal.
- Member states would then have 18 months to transpose the Directive.
EU official documents
- Legislative Tracker (OEIL):Intellectual property: strengthening the fight against counterfeiting and piracy, criminal measures aimed at ensuring the enforcement of rights
- Greens-EFA:Intellectual property rights: Proposal to criminalise intellectual property infringements causes more problems than it solves(25 April 2007)
- Socialist Group:EU jail terms for video pirates and counterfeiters.(25 April 2007)
- GUE/NGL:Anger at adoption of shoddy intellectual property proposal(25 April 2007) [FR]
- Bardehle Pagenberg Dost Altenburg Geissler:Germany: The Directive on the Enforcement of Intellectual Property Rights and its Implementation Into German Law (25 May 2005)
- Parliament (press release):Intellectual property: pirates and counterfeiters to feel the full weight of criminal law(25 April 2007) [FR] [FR] [DE]
- Parliament:Legislative resolution on the amended proposal for a directive on criminal measures aimed at ensuring the enforcement of intellectual property rights(25 April 2007) [FR] [FR] [DE]
- Parliament (Press release):Intellectual property rights: criminal sanctions to fight piracy and counterfeiting(20 March 2007)
- Council Justice and Home Affairs:Criminal measures aimed at ensuring the enforcement of intellectual property rights(5 - 6 October 2006; see page 23)
- Eur-Lex:Initial proposal for a Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights
- Eur-Lex:Directive 2004/48/EC on the enforcement of intellectual property rights(29 April 2004) [FR] [FR] [DE]
- Commission (press release):Intellectual property: Commission welcomes European Parliament support against counterfeiting and piracy(9 March 2004) [FR] [FR] [DE]
- Commission (memo):Directive on enforcement of intellectual property rights: frequently asked questions(January 2003) [FR] [FR] [DE]
- Eur-Lex:Statement by the Commission - Article 2 of Directive 2004/48/EC of the European Parliament and of the Council on the(13 April 2005)
- Eur-Lex:Intellectual property law(exhaustive list with links) [FR] [FR] [DE]
- Eur-Lex:Directive on the harmonisation of certain aspects of copyright and related rights in the information society (2001/29/EC)(22 May 2001) [FR] [FR] [DE]
- (Press release):Counterfeiting and piracy: the Commission proposes European criminal-law provisions to combat infringements of intellectual property rights
- DG Enterprise:Intellectual property rights helpdesk [FR] [FR] [DE]
- DG Internal Market:Intellectual property [FR] [FR] [DE]
- DG Internal Market:Enforcement of intellectual property rights[ FR FR DE
- DG Internal Market:Community patent[ FR FR DE
- DG Trade:Intellectual property[ FR
- DG Research:Intellectual property and the European Research Area
- DG Information Society:Digital Rights Management
- CORDIS:Intellectual Property Rights, action lines on innovation protection systems within the innovation programmes
- EUR-Lex:Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee -Follow-up to the Green Paper on combating counterfeiting and piracy in the single market, COM(2000)789(15 October 1998) [FR] [FR] [DE]
- Press release:Intellectual property: Com mission proposes Directive to bolster the fight against piracy and counterfeiting[ FR FR DE
- Parliament:Report on measures and procedures to ensure the enforcement of intellectual property rights[ FR FR DE
- European Patent Office:Website[ FR FR DE
- Office for Harmonisation in the Internal Market:Trade Marks and Designs[ FR FR DE
- European Patent Office (EPO):Patent offices in the Member States
- France:Institut National de la Propriété Industrielle
- Germany:Deutsches Patent - und Markenamt
- UK:Intellectual Property government portal
- USA:United States Copyright Office
- G8:Reducing IPR piracy and counterfeiting through more effective enforcement(6-8 July 2005)
- World Intellectual Property Organisation (WIPO):Website[ FR
- World Trade Organisation (WTO):Trade-related aspects of intellectual property rights (TRIPS) [FR]
- World Wide Web Consortium (W3C):Intellectual Property Rights Overview
- Organisation for Economic Cooperation and Development (OECD):Creativity, innovation and economic growth in the 21st century: An affirmative case for intellectual property rights(5 January 2004)
- InterPol:Intellectual Property Crimes (IP crimes)
- European Telecommunications Network Operators' Association (ETNO):Statement regarding the IPR enforcement directive(9 March 2004)
- Anti-Piracy Coalition (European creative industries):Enforcement Directive welcomed as a first step in the fight against piracy and counterfeiting(9 March 2004)
- Campaign for creativity:The IPR enforcement directive, Q and A
- International Chambers of Commerce (ICC):Intellectual property
- Eurochambres, US Chamber of Commerce, AT Consult, AWS, KMU-Forschung:"The Transatlantic IPR Collaboration" project
- European Information and Communication Technologies Association (EICTA):EICTA position paper on digital content distribution and Digital Rights Management (DRM)(21 November 2003)
- European Information and Communication Technologies Association (EICTA):Digital Rights Management
- AmCham EU Committee:Intellectual property committee
- Global Business Dialogue on Electronic commerce (GBDe):Intellectual Property Rights
- European association of craft small and medium-sized enterprises (UEAPME):Intellectual and industrial property rights[ FR
- Business Software Alliance (BSA):Software Piracy
- International Federation of the Phonographic Industry (IFPI):EU Enforcement Directive falls far short of providing urgently needed tools to tackle piracy(30 January 2003)
- International Federation of Reproduction Rights Organisations (IFRRO):Website
- Copyright Licensing Association (CLA):website
- Orgalime (European Engineering Industries Association):The 2005 G8 Commitment to Reducing IPR Piracy and Counterfeiting(18 July 2005)
- Orgalime (European Engineering Industries Association):China and IPR(15 June 2006)
- Foundation for Information Policy Research:The Draft IPR Enforcement Directive - A Threat to Competition and to Liberty
- Foundation for Information Policy Research:The Second IPR Enforcement Directive — A Threat to Competition and to Liberty
- BEUC (European Consumers' Organisation):BEUC statement on the EP vote on enforcement of intellectual property rights[ FR
- BEUC (European Consumers' Organisation):Usually consumers are not criminal![ FR
- BEUC (European Consumers' Organisation):Letter to members of the Legal Affairs Committee[ FR
- European Digital Rights (EDRi):Coalition Urges Rejection of Controversial EU IP Directive(2 March 2004)
- Campaign for an Open Digital Environment (CODE):EU Passes Dangerous IP Law, Despite MEP"s Conflict of Interest(9 March 2004)
- Campaign for an Open Digital Environment (CODE):Protecting the public's rights, innovation and competition against the proposed EU Directive on Intellectual Property Enforcement
- EUCD -Campaign for Digital Rights
- European Bureau of Library, Information and Documentation Associations (EBLIDA):Position on the proposal for a Directive on measures and procedures to ensure the enforcement of intellectual property rights(December 2003)
- ELDIS (gateway to information on development issues):Intellectual Property Rights
- Infonomics:Portal on intellectual property rights in a knowledge-based economy
- Society for Economic Research on Copyright Issues:Website