IP Rights: The Latest EC Directive

April 30, 1998

As postponed from the original planned vote on 26th February, the European Parliament on 9th March voted in favour of the IP Rights Enforcement Directive. The Directive is expected to be adopted definitively at its first reading which is likely to happen in April 2004. Once adopted member states will then have two years to implement it.

The new Directive is designed to bring national legislation on sanctions and remedies closer into line across the EU. It is also designed to signal to member states certain measures (such as the development of professional codes of conduct) that will contribute to the fight against counterfeiting and piracy.

Most alarmingly the original drafts of the Directive proposed criminal sanctions which were limited to infringement of IP Rights which take place for commercial purposes. However, and following lobbying from the film, music and software industries, the text of the Directive has recently been amended by the European Parliament Legal Affairs Committee. The amendment has removed that condition.

Although it is believed that the European Commission has (until recently) strenuously resisting signing up to the tougher legislation, and was likely to insist on unanimity amongst EU member states in order to pass the law, member states do have a right to apply other appropriate sanctions in any case where intellectual property rights have been infringed. The Commission has stated that it will examine the possibility of proposing further measures providing for criminal sanctions in this field and in fact, the Directive does not prevent member states from imposing criminal sanctions if they wish to do so now.

Alarmingly the Directive as passed by the European Parliament and which was unchanged from its February 2004 draft, includes none of the amendments proposed by certain civil liberties and consumer rights groups. It is clear that a European version of the US Digital Millennium Copyright Act, is on its way.

Of concern to individuals is the fact that the full force of the Directive “need not be” applied to individuals copying music files for their own use. Although this sounds promising, in practice it means that file-sharers remain the same in the eyes of this law as large-scale commercial pirates. We may well therefore be not far away from the US style situation of the concerted pursuit of individual teenage Internet file-sharers.

Pressure groups such as The Foundation for Free Information Infrastructure (FFII) are concerned not only at the scope of the legislation, which has been widened, but also the weapons of enforcement law that are now available, in some cases to member states who had never previously had access to powers like injunctions, search and seizure orders, far-reaching powers to demand disclosure and also the admissibility of evidence from anonymous witnesses.

Organised counterfeiting and piracy is one thing, says the FFII, individual file-sharing or Internet song-swapping on a private basis, is something else. File-sharers who occasionally copy music for personal use remain as vulnerable as commercial infringers to enforcement action. The Directive contains an interesting recital that acts committed on a commercial scale “would normally exclude acts done by any consumers acting in good faith”. There is considerable uncertainty as to what is meant by or what can be considered to be “good faith” in the context of the downloading of music from the Internet.

The concern is that the ambit of the Directive is wide and the power that it invests in member states is far reaching.

Whilst there is no denying the European Parliament statement that this Directive will be a useful weapon in the arsenal being employed to combat counterfeiting and piracy in the single market, particularly where it affects software, toys, CDs and even pharmaceuticals, the concern is that European civil liberties and consumer rights have also been severely dented. It is all very well the European Parliament indicating that the emphasis is on “the big fish” rather than “the tiddlers”. The concern is however that in enforcement action elsewhere, particularly in the US, file-sharers of all shapes and sizes have been subject to often Draconian and certainly punitive action.

The other concerns are that, in addition to endangering consumers’ privacy and exposing them to potentially Draconian remedies, following what may be unintentional and non-commercial infringement, technological innovation will be stifled. Consumer choice could be reduced. Competition may well be impaired. In addition ISPs may well bear the brunt of this. It will certainly impose significant extra cost burdens on them and on other network operators. That would ultimately increase costs for end-users.

Whilst copyright owners and businesses lobbied for the legislation to be as tough as possible and civil rights groups and smaller firms stressed that punitive legislation would restrict innovation and impede SMEs, the Directive as passed and as likely to be adopted by member states is certainly not good news for small innovative businesses. Whilst the manner of adoption of the Directive in each of the relevant member states will be an interesting chart to follow, the concern is that the EU in its fight against piracy has adopted an overly strong and intrusive stance, that could stifle rather than encourage competition.

Chris Scroggs is an Associate Partner in the National Dispute Resolution Group of Laytons