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These are the 2005 proposals, which were retracted. See our analysis of the new proposals.

Intellectual Property Rights Enforcement Directive 2

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Proposal for a EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE on criminal measures aimed at ensuring the enforcement of intellectual property rights

Proposal for a COUNCIL FRAMEWORK DECISION to strengthen the criminal law framework to combat intellectual property offences

COM(2005)276 final

2005/0127(COD)

2005/0128(CNS)

Conclusion Ipred.org

For the sake of protection of carefully balanced national procedural law systems, subsidiarity and legal security,

in order to keep Europe's software developers out of jail,

in order to reach a balanced and well thought-out solution for internet file sharing,

we ask you to reject these superfluous and detrimental proposals.

In order to fight piracy, IPRED 2 makes all commercial violations of “intellectual property rights" a crime. All commercial violations. But not all intentional commercial violations of these rights are piracy. Trademark and patent infringements are always commercial infringements, but by no means always piracy. This criminalisation of acts by commercial organisations that are not pirates is very serious. The principal issue is that IPRED 2 confuses piracy and commercial infringement. IPRED 2 criminalises companies that are not pirates.

• Take copyright. The question whether a work is an “independent recreation” or a “violation of copyright” is a subtle question. Questions like these should be handled in civil courts, not in criminal courts. For reasons of human rights, criminal laws require precise definitions. And criminal law should be the ultimum remedium. Severe sanctions on copyright violations may endanger freedom of speech.

• Take Patent law. Patent law definitions are unclear and drifting. In some sectors, like the software industry, it is impossible not to violate patents. Microsoft has been violating many patents, and had to pay huge damages. But do we really want to see Bill Gates in prison? He can go to jail, together with Europe's software developers, since IPRED 2 criminalises companies that are not pirates.

Trade mark counterfeiting and copyright piracy are already forbidden in European countries. On a world-wide scale, the TRIPS treaty sees to that. Furthermore, IPRED 1 is being implemented right now. At the moment no assessment can be made whether an instrument is missing. Yet prison sentences go up more than a 100 times in some cases. IPRED 2 is excessive and distorts carefully balanced national procedural law systems.

Internet file sharing of copyrighted material is a new issue, that requires a balanced and well thought-out solution. The question may be asked whether a society that reacts to new developments with an everything-is-a-crime approach is a viable society. In our opinion we are witnessing an overreaction that will cause more damage than good.

Not all commercial violations are piracy

Not all intentional commercial violations of “intellectual property rights" are piracy. Trademark and patent infringements are always commercial infringements (if not deemed commercial they are not infringements), but by no means always piracy. The principal issue with IPRED 2 is that it is confusing piracy and commercial infringement. IPRED 2 criminalises companies that are not pirates.

All commercial activities are intentional

“Member States shall ensure that all intentional infringements...” All commercial activities are intentional in the normal sense of criminal law in many countries. The question may arise whether indeed in the case of patent law “intent” must be interpreted more restrictively, requiring what is called in Dutch “boos opzet”. But the IPRED text only says “intentional”, not “criminal intention”.

But even if prior knowledge is needed that, for instance, a patent is violated, it will not help. In the software field, it is impossible not to violate patents. And patents are often invalid, but you will only find out in court. A letter with: “You are violating our patent, stop with it otherwise we will call the police.” is a big threat, even if it is clear the patent is trivial and will never survive in court.

Counterfeiting and piracy are already forbidden

Trade mark counterfeiting and copyright piracy are already forbidden in European countries. On a world-wide scale, the TRIPS treaty sees to that. TRIPS compliance can be forced by WTO. Trade mark counterfeiting and copyright piracy are the two main problems.

“Art. 61: Members shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity. In appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence. Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed wilfully and on a commercial scale.”

Commercial scale

The "commercial scale" requirement is not clear enough. Some right holders claim a possible loss of income is enough - an interpretation contrary to TRIPS. Depending on interpretation by courts, not for profit activities will be a crime, or organised crime or not.

We even see a call to remove "commercial scale" from the directive. This would for instance make file sharing by adolescents a crime, or organised crime, with very severe sanctions.

The call to remove "commercial scale" from the directive was motivated by the remark that courts could interpret "commercial scale" differently. This is not an argument, since the ECJ will have the final say. More importantly, removing or undermining "commercial scale" will have enormous consequenses.

Do we want not for profit file sharing to be organised crime?

As seen above, not for profit file sharing may become organised crime. We could see adolescents' actions countered with means suited for fighting organised crime. We should be very clear about whether we want this. It should not be an "accidental" byproduct of this directive.

Many countries have levies on writeable CDs and DVDs, etc. Public and companies are already paying, even if they store only their own material.

We are about to lower our standard of what is crime and organised crime. We are about to make many in our societies criminals and criminalise many commercial organisations that are not pirates. We may cross the line. If our youngsters are criminals already, what would they care about other crimes? If companies are criminalised, shouldn't they go underground or leave Europe?

Internet file sharing of copyrighted material is a new issue, that requires a balanced and well thought-out solution. The above mentioned levies are an indication that there are more possible ways to follow. And first it should be clear too in how far file sharing actually stimulates buying.

The question may be asked whether a society that reacts to new developments with an everything-is-a-crime approach is a viable society. The reaction is panic-stricken, not wise.

In our opinion we are witnessing an overreaction that will cause more damage than good.

Criminal law should be the ultimum remedium

Private law:

Criminal law:

Questions like whether something is an “independent recreation” or a “violation of copyright” is a subtle question. Questions like these should be handled in civil courts, not in criminal courts. For reasons of human rights, criminal laws require precise definitions. And criminal law should be the ultimum remedium.

Unlike in criminal law, the usual point of tort law is to get disagreeing parties to come to some sort of an agreement and then settle out of court. And this is a very good thing, because the courts are all very busy as it is.

But nobody will settle for their own imprisonment. Or being branded a criminal. What is worse, the side that is winning may not want to quit with a big pile of cash, but instead insist that proceedings continue “because I want to see that bastard in jail”.

We can say: "Fact X is a crime". This rule has to be written down in a law in advance. Before the act. Criminal laws are strict. They have to be, it is a protection against arbitrary power. People are entitled to know what is a crime in advance.

Civil law is less strict. In a copyright case a Dutch court decided a smell can be “a work” in the sense of the copyright law. The scope of the copyright law became broader. In criminal law this would be a violation of the legitimacy principle. People could not know it is a crime to violate a smell.

If you add or increase sanctions to a law that is enforced in a civil way, definitions have to be interpreted in a more strict way. The scope of the law will become more narrow.

No harmonisation

In many cases, minor offences become criminal offences. Fines go up. Maximum custodial sentences go up, in the case of Dutch trade name violations more than a 100 times. Violations that do not have criminal sanctions now are criminalised. For instance patents have criminal sanctions in only 10 EU countries, while in the Netherlands the government proposed to remove the criminal sanctions. IPRED 2 also covers attempting, aiding or abetting and inciting such offences, it is not clear in which countries this is already the case.

Extra measures are the seizure of goods belonging to the offender, including the infringing goods and the materials, implements or media used predominantly for the manufacture or distribution of the goods in question. Other penalties are provided for specific cases: destruction of infringing the seizure of goods belonging to the offender, including the infringing goods and the materials, implements or media used predominantly for the manufacture or distribution of the goods in question. These extra measures and penalties may or may not exist in member states.

There is no overview of all the changes, but they are many.

Violation of subsidiarity principle

The Commission made no assessment of the current situation. Are there any real problems today due to unintended legal limitations? How would the directive work out in various criminal law systems?

In 2004 the Council and European Parliament adopted the Intellectual Property Rights Enforcement Directive (IPRED). It is being implemented at the moment. Effects are not clear yet, it is unknown whether further measures are needed. Why would we rush IPRED2?

The European Constitution disaster shows that European citizens get more critical. This directive is a fine example of symbolic and useless EU legislation. Don't accept this directive and show that “Brussels” respects subsidiarity and knows when to say NO to nonsense!

Patents unfit for criminal sanctions

Criminal provisions are hardly ever used, even by SMEs. Commercial parties prefer settlement, not punishment.

The “As such” exclusions (software as such, business methods as such, etc) are unclear and drifting. We have a major quality problem at hand. It is impossible to know all patents, you cannot even get a guaranteed search. Patents are often hard to read, and the scope is broad.

Especially in the software field, problems are huge. There are countless software developers around the world, who often keep their source code secret. There is no prior art database, it is not known what has already been done. It is not known what is new, and if you do not know what is new, it is impossible to know what is inventive.

More than 30.000 software patents have been granted, it is impossible to know them all. It is impossible to write software without violating patents. “Independent (re)discovery” occurs daily. A whole industry will be criminalised. With IPRED 2, just doing your job may get you 4 years in prison. Microsoft has been violating many patents, and had to pay huge damages. But do we really want to see Bill Gates in prison? He can go to jail, together with Europe's software developers, since IPRED 2 criminalises companies that are not pirates. A lot of software patents are dubious and could be used for frightening weaker competitors with the thread of IPRED2.

Patents can be invalidated in court. In civil court cases, there is almost always a counterclaim for invalidity. It may take weeks to establish whether the patent should have been granted or not. Counterclaims are often granted. Patents are fundamentally unstable. Fact X can be a crime or not a crime. There is no legitimacy at all. No protection against arbitrary power. Legal minefield, with criminal sanctions added!

There are more sectors with much incremental development which may face the same problems.

Criminal sanctions and community patent do not go together. People are entitled to read the rules they can violate in their own language.

Patents are totally unfit for criminal sanctions!

Copyright may look straightforward. Yet in copyright, parodies, independent recreations and citations are free. Parody, independent recreation and citation are defined well enough for civil law, not for criminal law. The definition of "work" is not straighforward either.

Authors may actually benefit from “unauthorised” copying.

Freedom of speech may suffer. With IPRED 2, a journalist could be prosecuted that uses a citation that is too long, not considered a citation any more. People revealing documents could be prosecuted for violation of copyright. Artists may be prosecuted if their work is not considered a parody. Software developers and others could be prosecuted if their work is not considered an independent recreation.

Criminal laws should be limited to what is clearly wrong.

Trade marks cases complicated and subtle

In trade marks, currently typically only counterfeiting is a crime, e.g. art. 337 Dutch Criminal Code. Trademark infringement in general is very complicated and subtle (“confusion” criterion after Puma/Sabel). IPRED 2 creates a risk of reverse hijacking, prosecuting legitimate owners under false pretexts, for instance with domain names in particular.

Trade marks have to be defended rigorously, otherwise they are lost. Trade marks are unstable. Except for counterfeiting, trade marks are not suited for criminal sanctions.

Distortion of carefully balanced procedural law systems

In the Netherlands in trade name cases, on first offence the civil servant can propose measures to take to stop the offence. Then there will be no punishment. Violating a trade name is a minor offence in the Netherlands, the fine is 2250 euro. On second offence the fine is the same or two weeks of prison.

With IPRED 2 violating trade names is a criminal offence, the sanctions for a first offence are 100.000 or 300.000 euro, depending on the circumstances, or 4 years of prison.

The prison sentence is more than 100 times as severe for a first offense as it is now in the Netherlands for a second offence. In the Netherlands, there have not been cases for the last 50 years. Clearly, there is a total lack of necessity. And the sanctions are disproportionate to the offense, which is a violation of article 49(3) of the Charter of Fundamental Rights.

National laws make distinctions between minor and criminal offences, between lower and higher sanctions. They may offer other solutions than sanctions. All these subtleties are destroyed with the directive's all-is-a-crime approach. The question may be asked whether this approach is legal nihilism. Carefully balanced national procedural law systems are distorted.

11 “Intellectual property” rights

We took a look at four “intellectual property” rights. IPRED 2 covers 11 “intellectual property” rights. We have trade mark counterfeiting and copyright piracy. The other 9 “intellectual property” rights shouldn't be in IPRED 2.

This is the list of the IP-rights concerned: copyright, rights related to copyright, sui generis right of a database maker, rights of the creator of the topographies of a semiconductor product, trademark rights, design rights patent rights, including rights derived from supplementary protection certificates, geographical indications, utility model rights, plant variety rights, trade names, in so far as these are protected as exclusive property rights in the national law concerned.

These IP-rights are very different from each other. Possible issues with them have not been investigated by the Commission. The justification is just one A4 page long, 463 words.

Severe sanctions pose a threat, and will provoke false threats. A US study of a sample of nearly 900 take down notices collected by the Chilling Effects project revealed that a third of them demanded removal when the target had a clear legal defense.

Take down notices often result in online materials being pulled from the Internet, generally without notice to the target.

http://lawweb.usc.edu/news/releases/2005/legalFlaws.html

Privatise the police

Right-holders may assist the police with the investigation, help to draw conclusions (framework art 4, see also the explanatory memorandum on this article). This threatens the neutrality of police investigation.

Abuse

A criminal procedure may help to obtain information from the alleged infringer which is not as easily available in a civil procedure. An acknowledged problem in "intellectual property" is the conduct of mala fide (would-be) rights owners to obtain information from competitors under the pretext of false infringement claims. Civil procedural law contains some safeguards against such behaviour - that may not be matched by a corresponding level of "subtlety" in criminal law. Prosecuting authorities (police etc.) have a reputation of regularly breaking the law in their eagerness to prove crimes (we had some dreadful examples of such behaviour recently in NL). The courts eventually are supposed to correct such mistakes (e.g. by reducing sanctions or even by deciding not to be admissable at all) - but a broken secret can hardly be compensated for.

2005 (last edited 2009-05-30 23:30:40 by localhost)