Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Directive on the legal protection of services based on, or consisting of, conditional access` () (98/C 129/04)

On 20 October 1997, the Council decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 6 February 1998. The rapporteur was Mr Hernández Bataller.

At its 352nd plenary session held on 25 and 26 February 1998 (meeting of 25 February), the Economic and Social Committee adopted the following opinion by 120 votes for, with no votes against and two abstentions.

1. Introduction

1.1. This proposal for a directive on the legal protection of services based on, or consisting of, conditional access, which the Commission has referred to the Committee for an opinion, is a direct outcome of discussions arising from the debate on the Green Paper on the legal protection of encrypted services in the internal market ().

1.2. The Committee adopted an opinion on this green paper on 25 September 1996 ().

1.3. The need to ensure legal protection of encrypted services against illicit receipt had already been established in the strategic programme for the internal market () and in the relevant green paper announced in the Commission communication 'Europe's way to the information society: an action plan` of 19 June 1994 ().

1.4. More recently, the Commission communication 'A European initiative in electronic commerce` () notes in paragraph 55 that: 'A secure distribution of services will require adequate legal protection of conditional access services across the Single Market. Many services will use some form of encryption or other conditional access system to ensure proper remuneration. Service providers will need to be protected against the piracy of their services by illicit decoders, smart cards or other piracy devices.`

1.5. An opinion on this communication has already been adopted (CES 1191/97) ().

1.6. In its opinion on the green paper () the Committee drew the following conclusions:

1.6.1. In general it is absolutely essential to encrypt messages in order to prevent any unauthorized person from gaining access to them or changing them.

1.6.2. Effective protective measures must be provided for in all Member States, and this objective can be effectively achieved only on the basis of Community harmonization.

1.6.3. The appropriate legal instrument for this harmonization is a Council regulation.

1.6.4. Its scope should be extended to cover all encrypted services.

1.6.5. The scope of the harmonization instrument should include the fully informed possession by private individuals of unauthorized decoding devices.

1.6.6. This legal instrument should permit claims for damages, establish preventive or precautionary civil measures against specific preparatory activities that facilitate pirating, and provide for sanctions in the case of illicit receipt and redistribution of encrypted services.

1.6.7. The Committee also asked the Commission to address this question and all its implications at international level, particularly in the framework of bilateral agreements and of WTO activities, and to establish the right conditions for technical standardization of decoding devices.

2. Evaluation of the Commission's proposal

2.1. Legal instrument

2.1.1. The first thing that is apparent from the Commission's proposal is that it has opted for a directive rather than a regulation.

2.1.1.1. The Commission considers this option to ensure an 'equivalent level of protection` in different Member States, leaving to their discretion the 'means to achieve such objectives`. Thus the Member States have been left responsibility for:

a) defining the measures necessary to prohibit on their territory activities that the proposal for a directive considers illicit;

b) the sanctions to be imposed on the infringing party, which must be:

- effective,

- deterrent,

- and proportional to the potential impact of the infringing activity.

2.2. Scope

2.2.1. The Directive is limited in scope to services protected by conditional access, insofar as the purpose of authorization for access to services is to ensure payment for the following services:

- 'television broadcasting`, as defined in Article 1 (a) of Directive 89/552/EEC (),

- 'radio broadcasting`, which includes not just sound signals but also data signals transmitted via the same channel.

Neither definition covers the provision of services on individual demand.

- 'Information Society services`, defined as 'any service provided at a distance, by electronic means and on the individual request of a service receiver`.

2.3. Purpose of the proposal for a directive

2.3.1. The purpose of the proposal for a directive is to prohibit the following activities in the territory of the European Union:

a) the manufacture, import, sale or possession for commercial purposes of illicit devices.

b) the installation, maintenance or replacement for commercial purposes of an illicit device.

The term 'illicit device` denotes any IT program or equipment designed or adapted to allow unauthorized access to a protected service.

c) the use of commercial communications to promote illicit devices.

2.3.1.1. 'Commercial communication` denotes any type of communication whose aim is to promote the services, products or image of a company or organization with end-users or distributors.

2.3.1.2. However, 'commercial communication` is not defined in Article 1.

2.3.2. The Commission's proposal focuses on the manufacture and sale of illicit decoders.

2.3.2.1. The scope of the proposal does not include:

a) matters relating to unauthorized receipt of any of the services referred to, or the private possession or acquisition of any illicit device, unless for commercial ends;

b) rights relating to the content of information transmitted via illicit devices;

c) industrial property rights relating to decoders, which will be covered by another proposal that is in preparation;

d) finally, matters relating to the protection of privacy rights and security of commercial transactions, unless they are based on payment for an encrypted communication service.

3. General comments

3.1. The Committee welcomes the Commission's proposal for a directive, which takes account of its opinion on the green paper.

3.2. The Committee nevertheless feels that given the current omissions and the distortion of competition that such omissions produce, the appropriate legal instrument should be a regulation rather than a directive, since this would:

- ensure more effective harmonization, since provisions would be directly applicable in the Member States;

- avoid a long process of transposing the proposed measures into national law.

3.3. The scope of the proposed directive should be extended to include the provision of professional services, such as telemedicine.

3.4. The purpose of Article 2 is to ensure free circulation of protected services, associated services and conditional access devices; however, paragraph 2 may prove to be superfluous, since it merely reiterates generally applicable and self-evident principles of the Treaty.

3.5. With respect to infringing activities, it would make sense to add 'associated services` to Article 3 (c), since these include the installation, maintenance and replacement of conditional access devices, as well as the provision of commercial communication services associated with protected services or devices, or other associated services.

3.6. Paragraph 1 of Article 4 could be replaced by a provision establishing the illicit nature of the activities described in Article 3.

3.7. Paragraph 2 of Article 4 should widen the right to institute proceedings, so that anybody who can prove a 'direct interest` is able to bring an action for damages or apply to the courts for an injunction.

3.8. Article 5 should include an obligation on the Member States to inform the Commission of the sanction provisions applicable, since these cannot be incorporated into the legal transposition texts.

4. Specific comments

4.1. The Committee feels that better protection should be provided for consumers who take out contracts for conditional access services, especially when it comes to dealing with: complaints and any compensation requests; quality of the service and proof thereof; aspects of payment and possible payment arrangements not covered by Directive 97/7/EC of 20 May 1997 on the protection of consumers in respect of distance contracts.

4.2. The Committee considers that the introduction of conditional access services in society must in all cases be accompanied by protection of citizens' privacy and confidentiality.

4.3. Complementary sanctions should be adopted for customs, similar to those contained in Regulation (EC) 3295/94 of 22 December 1994, which lays down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods.

4.3.1. If sanctions are adopted for customs, it would make sense to set up a committee in the Commission similar to the committee provided for in Regulation (EC) 3295/94 of 22 December 1994.

Brussels, 25 February 1998.

The President of the Economic and Social Committee

Tom JENKINS

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