Green Paper - Combating counterfeiting and piracy in the single market
Date: 1998-10-15
Institutions: European Commission
Subjects: administrative cooperation, domestic market, fraud, industrial counterfeiting, intellectual property

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15/10/98 
COM(98)569  final 

GREEN PAPER 

Combating  Counterfeiting  and Piracy  in the Single  Market 

(presented by the Commission) 

Summary 

Counterfeiting  and piracy  have grown  into an international  phenomenon  accounting  for  between 
5%  and  7%  of  world  trade.  The  phenomenon  is affecting  the  proper  functioning  of the  Single 
Market as, in addition  to the deflections  of trade and distortions  of competition  to which  it  gives 
rise,  it  is  leading  to  a  loss  of  confidence  among  business  circles  in the  Single  Market  and  to  a 
reduction  in  investment.  It  has  major  repercussions  not  only  at  an  economic  and  social  level 
(100 000  jobs  lost  each  year  in  the  Community)  but  also  in  terms  of  consumer  protection, 
especially as regards public health and safety. It is important, therefore,  that measures be taken  to 
combat  the  phenomenon  in  order  that  the  transparency  and  equality  of  the  conditions  of 
competition  in the Single Market might in particular be  safeguarded. 

Mindful  of  the  importance  of  the  fight  against  counterfeiting  and  piracy,  the  European 
Community  has  adopted  specific  rules  aimed  at  policing external  frontiers  so  as  to  keep  out 
counterfeit  and  pirated  goods.  At  Single  Market  level,  it  has  also  begun  to  take  appropriate 
action but the steps taken so far concern only a limited number of specific  sectors. 

Under  the  circumstances,  action  by  the  Community  may  prove  necessary  in  order  to  deal 
comprehensively  with  the  phenomenon  in the  Single Market.  Such  action  would  be  in  keeping 
with  the  Commission's  Action  Plan  for  the  Single  Market  as  far  as  the coordinated,  effective 
implementation  of legislation  is concerned, and with the Commission's  1998-99 work  programme 
for  the  fight  against  fraud.  It would  also  be  consistent  with  the  aims  of the  Commission's  First 
Action Plan for  Innovation. 

The  lines of approach  explored  in this Green Paper  concern  four  areas  in which  the measures  to 
combat the phenomenon  in the Single Market may be improved  upon: 

•  monitoring by the private  sector; 

• 

the use of technical devices; 

•  sanctions and other means of enforcing  intellectual property rights; and 

•  administrative cooperation  between the competent  authorities. 

The  purpose  of this  Green  Paper  is to  enable the  Commission  to  assess the  economic  impact  of 
counterfeiting  and piracy in the Single Market, evaluate the effectiveness  of the legislation  in this 
sphere and decide whether new initiatives are called for at Community level.  If they are, the kind 
of action to be taken might be based on the above lines of approach.  The measures that might be 
taken  do not have to be first and foremost  of a legislative nature but may consist  in  transparency 
exercises or in measures to improve collaboration between firms and the authorities.  These  lines 
of  approach  are  only  a  starting  point  for  the  forthcoming  debate  and  may  be  supplemented  by 
other means to the same end. 

Contents 

1. 

INTRODUCTION 

1.1.  Background 

1.2. 

The impact on the Single Market 

1.3.  Community initiatives 

1.4. 

Scope of the Green Paper 

1.5.  Object of the Green Paper 

2. 

NATURE  AND CHARACTERISTICS OF THE PHENOMENON 

4 

4 

5 

5 

6 

7 

8 

3. 

ECONOMIC ANALYSIS : SCALE AND CONSEQUENCES OF THE PHENOMENON. 10 

4. 

LEGAL ANALYSIS 

5. 

POSSIBLE SOLUTIONS 

5.1.  Monitoring by the private sector 

5.2. 

The use of technical devices 

11 

13 

13 

16 

5.3. 

Sanctions  and  other  means  of  enforcing  intellectual  property 
18 
rights 

5.4.  Administrative cooperation between the competent authorities.. .25 

1. 

INTRODUCTION 

1.1. 

Background 

Since the  early  1980s  counterfeiting  and  piracy  have  grown  considerably  to  a point  where  they 
have  now  become  a widespread  phenomenon  with  a global  impact.  The  phenomenon  has  gone 
hand  in  hand  with  the  economic  and  political  developments  that  have  occurred  during  the  past 
two  decades,  such  as  the  steady  growth  of  international  trade,  the  internationalisation  of  the 
economy, the expansion  of means of communication  and the collapse  of the  political  systems  in 
central and  eastern Europe and  in the former  Soviet Union, where new, highly active markets  for 
the production  and  consumption  of counterfeit  and pirated  goods  have  sprung  up.  It  has fed  on 
the  growth  of  the  information  society  and  on  the  emergence  of  modern,  sophisticated 
technologies  which  are  easy  to  use  for  the  purpose  of  copying  products.  To  a  large  extent,  the 
phenomenon  comes under the heading of organised crime.1 

According  to  the  Counterfeiting  Intelligence  Bureau  set  up  by  the  International  Chamber  of 
Commerce (ICC) counterfeiting  accounts for between 5% and 7% of world trade in value terms.2 
In  France,  one  out  of  every  five  firms  with  50  or  more  employees  admits  to  having  been  the 
victim  of  counterfeiting  and  piracy.  The  US  copyright  industry  puts  its  losses  due  to  piracy  at 
between  USD  12 billion and USD  15 billion a year.  According to the International  Federation  of 
the Phonographic  Industry (IFPI) sales of illegal compact discs  increased  by nearly 20% in  1996 
and  account  for  14% of  the  relevant  market  at  world  level.  The  number  of jobs  lost  through 
counterfeiting  may  be put  at  100 000  a year for  the  Community  (120 000 for  the  United  States) 
over the past ten years.  Of the industries hardest hit at world  level, mention  may be made of the 
data  processing  industry  (35%),  the  audio-visual  industry  (25%),  the  toy  industry  (12%),  the 
perfume  industry  (10%), the  pharmaceutical  industry  (6%), the  clock  and  watch  industry  (5%), 
the  phonographic  industry  and  the  motor  industry.  In  the  software  sector,  the  piracy  rate  has 
reached 46% at world level. 

Owing to  its scale, the phenomenon  of counterfeiting  and  piracy  has a damaging  effect  not  only 
on  businesses,  national  economies  and  consumers,  but  on  society  as  a whole.  It  is  much  more 
than a blight on the economic and social order as it also affects  public health and public  security. 
The  international  community  has not remained  inactive  in the  face  of this threat,  but  for  various 
reasons the measures taken so far have not succeeded  in stunting the phenomenon's  growth. 

The  Action  Plan  to  combat  organised  crime  approved  by  the  Amsterdam  European  Council  on 
16 June  1997 calls upon the Council  and the Commission  to  "put  in place common  provisions  to 
the  fields  of  economic  and  commercial  counterfeiting".3 
combat  organised  crime 
Counterfeiting  is  also  considered  a  matter  that  should  receive  priority  in the  Resolution  laying 
down the work programme  for cooperation  in the field of justice  and home affairs  for  the  period 
from  1  January  1998 to the date of entry into force of the Treaty of Amsterdam.4  The question  of 
the  falsification  and  counterfeiting  of  means  of  payment  forms  the  subject-matter  of  separate 
Commission  initiatives.5 

in 

1  Cf.  Action  Plan  to  combat  organised  crime  adopted  by the  Council  on  28 April  1997  (OJ  C  251, 

15.8.1997, p. 1). 

2  Countering Counterfeiting.  A  guide  to  protecting  &  enforcing  intellectual property  rights, 

Counterfeiting Intelligence Bureau, International Chamber of Commerce, 1997. 

3  OJC251,  15.8.1997, p. 15. 
4  OJC11,  15.1.1998, p. 1. 
5 

In  the  area  of  the  fight  against  fraud  and  the  counterfeiting  of  non-cash  means  of  payment,  on 
1 July 1998 the Commission adopted a communication comprising a draft Joint Action and an outline 
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1.2. 

The impact on the Single Market 

Counterfeiting  and  piracy  are  detrimental  to the  proper  functioning  of the  Single  Market.  They 
give  rise  to  deflections  of  trade  and  distortions  of  competition,  especially  where  they  exploit 
national  disparities.  This  state  of  affairs  is  not  such  as  to  ensure  transparency  and  equality  of 
conditions of competition  in the Single Market. 

The result  is a loss of confidence  among business circles in the single market.  It is important  for 
the  success  of  the  Single  Market,  however,  that  firms,  inventors  and  artists  should  have 
confidence  in  the  ability  of  Community  legislation  to  help  them  expand  and  to  safeguard  their 
rights  effectively. 

This  loss  of  confidence  in  the  Single  Market  is  leading  to  less  investment  and  outlay  on 
innovation  and  creativity  by  firms  which  frequently  inject  substantial  amounts  into  research, 
marketing  and  advertising  for  their  products  or  services.  Dwindling  investment  has  a  direct 
impact both economically and socially, for example in the number of jobs offered  by firms. 

The  counterfeiting  and  piracy  phenomenon  also  has  implications  in  terms  of  the  protection  of 
consumers who are the victims of deliberate deception  as to the quality they are entitled to expect 
from  a product  bearing,  say,  a well  known  brand  name.  It  may  even  have  much  more  serious 
consequences where products are involved which endanger the health or safety  of consumers. 

1.3. 

Community  initiatives 

With  a view to establishing the  Single Market, the European  Community  has taken  action  in the 
intellectual  property field mainly to harmonise existing national  laws" or to create new rights.  A 
number of current Community  initiatives  should shortly be adopted  in this  field.  The  difficulties 
stemming  from  the  differences  between  the  arrangements  for  protecting  intellectual  property 
rights in the single market should therefore  gradually  disappear. 

The  response  in  terms  of  means  of  combating  the  phenomenon  at  Community  level  must  take 
account  of the fact  that counterfeiting  and piracy may originate  either  outside the Community  or 
within the Community itself. 

So far,  Community  initiatives have concentrated  on protecting external  frontiers.  Tightening  the 
provisions  in place  since  1986,7 on 22 December  1994 the Council  adopted  Regulation  (EC) No 
3295/94  laying  down  measures  to  prohibit  the  release  for  free  circulation,  export,  re-export  or 

of a global strategy for ensuring the security of non-cash transactions (COM(98)395).  The issue of the 
falsification  and  counterfeiting  of  euro  banknotes  and  coins  is  being  addressed  separately  (cf. 
Commission communication to the Council, the European Parliament and the European Central Bank 
- Protection of the euro - Combating counterfeiting, COM(98)474 of 22 July 1998). 
In relation  to trade marks, there  is a Directive  approximating  Member States' trade mark  laws.  In 
relation  to  copyright  and  related  rights,  several  Directives  have  sought  to  harmonise  rightholders' 
rights, thereby  affording  them  material protection  and  enabling them  to monitor the exploitation  of 
works and other objects throughout the Community.  These Directives formed part of the follow-up to 
a Commission  initiative which, among other things, set out in general terms the means of combating 
piracy  in the Community  (cf.  Green Paper on copyright and the challenge of technology, COM(88) 
172). 
Council  Regulation  (EEC) No 3842/86  of  1  December 1986 laying  down  measures  to  prohibit  the 
release for free circulation of counterfeit goods, OJ L 357, 18.12.1986, p. 1. 

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entry  for  a  suspensive  procedure  of  counterfeit  and  pirated  goods.°  The  Regulation  is  being 
amended with a view to tightening the substantive provisions."  These rules cover, however,  only 
movements  of counterfeit  and  pirated  goods between third  countries  and  the Community  and  do 
not deal with movements within the Community.  Inasmuch as frontier  controls are carried out by 
all  Member States  on  the  basis  of  a  selective  approach  in  order  to  strike  a  balance  between 
facilitating  international  trade  and  combating  fraud,  it  is  entirely  feasible  that  counterfeit  or 
pirated  goods  may  evade  them  and  enter  the  Community  fraudulently  with  a  view  to  their 
subsequent sale. 

Within  the  Single  Market,  the  measures  taken  so  far  to  ensure  respect  of  intellectual  property 
rights  apply  to  specific  sectors  and  are  limited  in  scope.  Mention  may  be  made  here  of  the 
proposal for a Directive on the harmonisation of certain aspects of copyright and related  rights in 
the  Information  Society,^  which  contains  provisions  on  obligations  relating  to  technical 
measures  and  on  sanctions  and  remedies. 
In  this  proposal,  the  provisions  on  sanctions  and 
remedies  are  couched  in  very  general  terms.  This  being  so,  a  Community  initiative,  possibly 
applying across the board, may be necessary to strengthen the means of ensuring that  intellectual 
property rights are respected  in the Single Market. 

Such  an  initiative  was  already  included  in  the  Green  Paper  on  Innovation H  and  again  in  the 
Commission's  First Action Plan  for  Innovation  in Europe,^  where  anti-counterfeiting  measures 
feature  among  the  actions  to  be  taken  to  protect  intellectual  property.  It  would  be  in  keeping, 
moreover,  with  the Commission's  Action  Plan  for the  Single Market,^  one of the chief  aims  of 
which is to make legislation more effective,  notably by ensuring that it is properly complied with. 

the  fight  against  fraud, 14  which  expressly  refers 

Community  action  in  this  area  would  also  be  consistent  with  the  Commission's  1998-99  work 
programme  for 
to  the  fight  against 
counterfeiting  and  piracy  as  an  area  of  action  envisaged  for  strengthening  the  fight  against 
economic crime.  It is stated  in the work programme that the Commission will, on the basis of an 
assessment  of  legislation  in  the  fields  concerned,  propose  legal  instruments  in  order  to 
strengthen,  with 
information  and  cooperation  between 
Member States' specialised  departments. 

its  help,  mutual  provision  of 

1.4. 

Scope of the Green Paper 

Inasmuch  as  the  terms  "counterfeiting"  and  "piracy"  often  cover  situations  which  differ 
considerably  not  only  from  one  Member State to another  but  also  in  some  cases  within  one  and 
the  same  country,  depending  on  the  persons  concerned,  the  meaning  of  these  concepts  for  the 
purposes  of  this  Green  Paper  must  be  clarified.  The  definitions  given  in  Regulation (EC) No 
3295/9415  and  in  the  TRIPs  Agreement^  are  a  starting  point,  but  they  do  not  suffice  as  they 
relate only to goods and certain  intellectual property rights. 

8  OJ L 341, 30.12.1994, p. 8.  On 16 June 1995 the Commission adopted provisions implementing this 

Regulation (Regulation (EC) No 1367/95, OJ L 133, 17.6.1995, p. 2). 

9  COM(98)25 of 28 January 1998, OJ C 108, 7.4.1998, p. 63. 
10  COM(97)628 of 10 December 1997, OJ C 108, 7.4.1998, p. 6. 
1'  COM(95)688 of 20 December 1995. 
12  COM(96)589 of 20 November 1996. 
13  CSE(97)lof4 June 1997. 
14  COM(98)278 of 6 May 1998. 
15  Cf. Article 1(2) of the Council Regulation (EC) No 3295/94 of 22 December  1994, referred to above. 

The Regulation is being amended (OJ C 108, 7.4.1998, p. 63). 

16  Cf. note to Article 51 of the Agreement, OJ L 336, 23.12.1994, p 213. 

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the  concepts  of 
In  order  that  the  phenomenon  might  be  dealt  with  comprehensively, 
counterfeiting  and  piracy  as  used  in  the  Green  Paper  will  cover  all  products,  processes  and 
services which are the subject-matter  or result of an infringement  of an intellectual  property  right 
(trade  mark  or  trade  name,  industrial  design  or  model,  patent,  utility  model  and  geographical 
indication),  of  a  copyright  or  neighbouring  right  (the  rights  of  performing  artists,  the  rights  of 
producers of sound recordings, the rights of the producers of the first  fixations  of films, the rights 
of  broadcasting  organisations),  or  of the  "sui generis"  right  of the  maker  of  a database.17  This 
wide  scope  will  make  it  possible  to  cover  not  only  the  case  of  products  which  are  copied 
fraudulently  ("fakes"),  but also the case of products which  are  identical to the original  but  which 
are made  in the Community without the rightholder's consent, such as products resulting from  an 
exceeding  of the production  run authorised  by the rightholder.  Piracy  in the services  sphere  will 
cover  mainly  broadcast  services  and  services  linked  to  the  development  of  the  information 
society. 

The concepts  do not,  however,  cover  acts which may  sometimes  be equated  by the  layman  with 
counterfeiting  or  piracy,  such  as  acts  coming  solely  under  the  heading  of  unfair  competition  or 
parasitism  which  do  not  directly  affect  an  intellectual  property  right  (e.g.  look-alike  products). 
Acts which  do not constitute  infringements  of an intellectual  property  right, such as acts  covered 
by the  principle  of the  Community  exhaustion  of rights,  likewise  do not  fall  within  the  scope  of 
this Green  Paper. 

Where  they  do  come  within  the  above-mentioned  scope,  the  activities  covered  by  this  Green 
Paper may encompass highly diverse situations such as the manufacture,  distribution, holding  for 
commercial  purposes  and  importation  into  the  Community  or  exportation  to  third  countries  of 
counterfeit  or pirated goods, or the pirating of services and the supply of pirated  services. 

1.5. 

Object  of the Green  Paper 

The object of this Green Paper is to: 

assess the economic impact of counterfeiting  and piracy in the Single Market; 
review the existing  legislation  in this field, while at the  same time  identifying  the  problems 
and the improvements to be made on the legal front;  and 
examine  the  need  for  Community  action  in this  sphere  in the  light  of the  objectives  of  the 
Single Market. 

Various lines of approach  involving the four specific  areas of monitoring  by the private  sector, 
the use  of  technical  devices,  sanctions  and  other  means  of  enforcing  intellectual  property 
rights,  and  administrative  cooperation  between  competent  authorities  will  be  explored. 
These  lines  of  approach  could be translated  into practice  by the Commission  in the exercise of 
its  powers  and  with  due  regard  for  the  principle  of  proportionality,  on  the  basis  of  comments 
received from  interested parties. 

The  questions  put  in  this  Green  Paper  are  intended  to  enable  the  Commission  to  form  as 
comprehensive  a view  as  possible  of the  situation  and  to  clarify  it through  such  measures  as  it 
may take at the end of the consultation  exercise. 

The  Commission  invites  interested  parties  to  play  an  active  part  in  the  consultation  process, 
which  will  be  wide  ranging,  and  to  answer  the  questions  put  in  this  Green  Paper.  Any 

17  Cf.  Articles 7  et  seq.  of  Directive  96/9/EC  of  the  European  Parliament  and  of  the  Council  of 

11 March  1996 on the legal protection of databases, OJ L 77, 27.3.1996, p. 20. 

contributions  sent  to  the  Commission  will  be  treated  in  confidence  and  will  not  be  published 
without the author's explicit  agreement. 

2. 

NATURE  AND CHARACTERISTICS  OF THE  PHENOMENON 

Counterfeiting  and  piracy  in the  Single Market  are a phenomenon  the  nature  and  characteristics 
of which  are  little  understood,  although  the  feedback  from rightholders  and  the  seizures  carried 
out by the authorities do provide valuable background  data especially on the channels used.  The 
information  currently  available  is  too  incomplete  to  give  an  overall  picture  of  the  nature  and 
characteristics  of the phenomenon  in the  Single Market.  A comprehensive,  accurate  assessment 
is therefore  a sine qua non for any Community action tailored to providing a suitable response. 

The first point needing  clarification  concerns  acts  in the  Single Market  which  may  be  described 
as  acts  of  counterfeiting  and  piracy.  Such  acts  may  take  many  forms.  They  may  consist,  for 
example,  in  affixing  a  trade  mark  to  a  fraudulently  manufactured  product  bearing  little 
resemblance to the genuine article, or in reproducing a product perfectly  without  therightholder's 
consent.  Different  sorts  of  counterfeiting  and  piracy  may  call  for  different  responses.  What  is 
more,  some  acts  of  counterfeiting  and  piracy  may  be  committed  outside  the  territorial  limits  of 
the  single  market.  Account  must  therefore  be  taken  of  acts  committed  in  non-Community 
countries  and  of  the  weapons  at  the  Community's  disposal,  such  acts  being  considered  acts  of 
Community counterfeiting  or piracy where the epicentre of the phenomenon - as characterised  by 
the effect  on intellectual property law - is located in the single market. 

As  regards  the  sectors  hit  by  the  phenomenon,  infringers  are  no  longer  targeting  only  luxury 
goods with  a prestigious  reputation  (perfumes,  watches, leather goods and  other accessories)  but 
a  wide  range  of  sectors.  Illegal  activities  are  also  common  in the  copyright  field,  especially  in 
relation  to  sound  and video recordings, and,  in recent years, in the  information  technology  field. 
Customs  operations  have  revealed  that  the  phenomenon  may  also  affect  such  highly  diverse 
sectors  and  goods  as  spectacles,  fountain  pens,  garden  gnomes, garden  furniture,  playing  cards, 

biscuits, circuit  breakers  and  even  saucepans. *°  Counterfeiting  is also rife  in  sectors  involving 
products  which  are  highly  sensitive  from  the  point  of view  of public  health  and  safety,  such  as 
medicinal  products,  medical  equipment,  toys,  and  spare  parts  for  cars'"  and  aeroplanes.  It  is 
important, therefore, to know exactly which sectors are affected  by the phenomenon  in the  single 
market as products may be involved which are attended by risks from  the point of view of public 
health and safety where technical and safety  standards are not met. 

A  further  factor  to  be  taken  into  account  is  the  activities  and  conduct  through  which  the 
phenomenon  manifests  itself  in the  Single  Market.  It may  take  the  form  of the  manufacture  of 
goods  in  infringement  of  an  intellectual  property  right;  the  marketing,  distribution,  import  and 
export of those goods; the provision  of services; or the use or affixing  of a trade mark without  its 
proprietor's consent.  Here too, the response to the phenomenon  will depend to a large  extent  on 
such  information.  As regards the Member States concerned, there  are at present no precise  data 
indicating that  such and  such a Member State  is more badly hit than the others by  counterfeiting 
or piracy.  It  is entirely  conceivable  that infringers  may avail themselves  of differences  between 
national  laws.  Precise  information  is needed  in order  to  discover  the  patterns  of  counterfeiting 
and piracy  and hence the weak  points  in the  Single Market.  In the case of counterfeit  or  pirated 
goods  and  services  coming  in  particular  from  non-member  countries,  it  may  be  interesting  to 

18  Commission  report  on  the  implementation  of  Regulation  (EC)  No  3295/94,  COM(98)25  of 

28 January 1998. 

19  In  the  motor  vehicle  sector  counterfeiting  concerns  both  body  parts  (panels)  and  mechanical 

components (brake pads; engine, steering and suspension components; tyres). 

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8 

know the country of provenance or origin of the goods or services  in question  so as to be able to 
take preventive measures. 

In view of the diversity of intellectual property rights, it is essential to know which of those  rights 
are infringed  most frequently.  A description  of the conditions under which  acts of  counterfeiting 
and  piracy  are  committed  (distribution  channels,  permanent  or  seasonal  nature  of  the 
phenomenon,  etc.)  would  also  make  it possible  to modulate  the  response  to  the  phenomenon  in 
the  Single  Market.  It  would  appear  from  the  information  already  available  that  there  are  two 
channels  for  counterfeiting  and  piracy:  clandestine  channels  and  normal  commercial  channels. 
The clandestine  channels  are  by  definition  organised  outside the  regular  market  (black  market), 
i.e.  in  the  street,  in  markets,  by  correspondence  or  via  the  Internet.  There  are  also  normal 
commercial  channels,  as, for  example,  in the motor  industry.  Despite  being  tightly  regulated  at 
Community  level, the market  in medicinal products is also a victim of the phenomenon,  affecting 
In  some  respects,  counterfeiting  and  piracy  are  already 
mainly  exports  to  third  countries. 

considered activities falling  under the heading of organised crime,^" which uses them  as a means 
of recycling and laundering the proceeds of other unlawful  activities (arms, drugs, etc.). 

Questions: 

1.  Do you  agree with  the approach  concerning the  scope of this  Green  Paper  or do you  think 

that other acts should also be covered and, if so, which? 

In  which  sectors  or  sub-sectors  of  industry  do  counterfeiting  and  piracy  manifest 
themselves? 

What, in your opinion, are the causes of the phenomenon? 

2.  Do you encounter the phenomenon: 

-  at the manufacturing  stage? 

-  at the distribution  stage? 

-  at the time of intra-Community trade in goods  imported  beforehand  into the  Community 
in an irregular manner from  a third  country? 

- 

in connection with the provision of services? 

-  or at some other stage (please  specify)? 

3.  Can  you  indicate,  for  each  of the  stages  in  question,  in  which  Member State(s)  or,  where 
appropriate,  in  which  region  of  a  Member State  of  the  European  Community  the 
phenomenon  manifests  itself? 

Can you name the country of provenance or origin of the goods or services in question? 

20  Cf.  Action  plan  to  combat  organised  crime  adopted  by  the  Council  on  28 April 1997  (OJ  C 251, 

15.8.1997, p. 1), referred to above. 

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9 

4.  Can  you  specify,  in  each  case,  the  rights  that  are  affected  (trade  mark,  design  or  model, 
patent, copyright or neighbouring right, "sui generis" right of the maker of a database, etc.)? 
For each category of rights, specify,  if appropriate, the right concerned. 

5.  Can you  describe  briefly  the conditions  under which  such acts of counterfeiting  and  piracy 

are committed  (distribution  channels, permanent or seasonal nature, etc.)? 

As far  as you  are aware, are there any  links between  such  acts and  other  forms  of  criminal 
activity, including organised  crime? 

3. 

ECONOMIC ANALYSIS:  SCALE AND CONSEQUENCES  OF THE PHENOMENON 

Whereas  data  exist  at world  level, the  scale  of the  counterfeiting  and  piracy  phenomenon  in the 
Single  Market  is  not  easy  to  determine.  Numerous  professional  organisations  at  national, 
European  and  international  level draw up estimates  of the phenomenon  on a fairly  regular  basis. 
While  they  afford  a  better  insight  into  the  phenomenon,  these  estimates  give  no  more  than  a 
general  idea  of  the  scale  of  the  problem.  Similarly,  although  police  and  customs  actions  and 
seizures  show  only  part  of  the  picture, they  seem  to  indicate  that  counterfeiting  and  piracy  are 
very much on the increase, both within the Community and elsewhere.  It is therefore  essential  to 
have more precise information  about the scale of the phenomenon  in the Single Market  compared 
with legitimate trade before  contemplating any Community action in this area. 

The position  with regard to the consequences of counterfeiting  and piracy in the  Single Market  is 
likewise  unclear,  such  consequences  being  difficult  to  quantify.  From  the  point  of  view  of  the 
economic  and  social  consequences, the  counterfeiting  and  piracy  phenomenon  leads  in the  case 
of  firms,  many  of  which  invest  considerable  sums  in  research,  marketing  and  advertising,  to  a 
reduction  in  turnover  and  the  loss  of  often  hard-won  market  share,  not  to  mention  the 
non-material  losses  and  moral  prejudice  which  they  suffer  as  a  result  of  the  damage  to  their 
reputation.  Clearly,  if  firms  cannot  earn  a  sufficient  return  on  their  investment  in  R&D  etc., 
creativity  and  innovation  will  suffer  in the  Community.  The  consequences  in the  compact  disc 
sectoral  and  in the  medicinal  products  sector^  are  revealing.  From  a social  point  of view, the 
damage suffered  by firms is reflected  in the last analysis in the number of people they employ.23 

The  phenomenon  also  has  major  economic  and  social  consequences  for  national  economies.  It 
results  in a loss of revenue to the  State or to the Community (customs duties, VAT) and can  give 
rise  to  numerous  infringements  of  labour  legislation  where  the  counterfeit  or  pirated  goods  are 

21 

22 

In  the  compact  disc  sector,  pirates  incur  no  recording  expenses,  pay  no  licence  fees  or  royalties  to 
artists and do not have to purchase any reproduction  rights.  Nor do they incur any promotion  costs or 
any  costs  connected  with  producing  the  accompanying  literature  or  the  packaging  material,  these 
being paid  for  by the record  company.  Because  the  cost  of  distribution  is much  lower  in the  case  of 
pirated products, the unit cost to the pirate is some 60% less than to the lawful  distributor.  And pirates 
bear no commercial risk as they usually concentrate on best-sellers. 
In  the  medicinal  products  sector,  a  counterfeiter  who  manages  to  discover  a  product's  composition 
saves  on the  cost of research, which  is particularly  high  in this  sector.  He can therefore  manufacture 
and  sell  the  product  at  very  competitive  prices.  He  can  cut  his  costs  still  further  by  reducing  the 
product's  strength  or  in  some  cases  even  by  replacing  the  constituents  with  something  entirely 
ineffective.  As a result of modern printing technology, packaging and labelling costs are fairly  low. 
23  According to  a recent  survey  by KPMG, Union  des Fabricants  and  Sofres,  the  number  of jobs  lost in 
France  through  counterfeiting  comes to  about  38 000  (Les Echos,  28 January  1998).  According  to  a 
study  by  Price  Waterhouse,  a  10%  reduction  in  piracy  in  the  software  sector,  i.e.  the  level  in  the 
United  States,  would  create  more  than  250 000 jobs  in  Europe  by  2001  (Blick durch  die  Wirtschaft, 
28 May  1998). 

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made in sweatshops by undeclared  workers.  The phenomenon  is a serious threat to economies in 
general as it may destabilise the markets, including such fragile  markets as that  in textiles, which 
it attacks. 

Counterfeiting  and piracy  likewise have damaging consequences  for consumers.  They  generally 
involve  deliberately  deceiving  the  consumer  about  the  quality  he  is  entitled  to  expect  from  a 
product  bearing,  for  example,  a well-known  trade  mark.  When  he  buys  counterfeit  or  pirated 
goods outside the legitimate trade, the consumer does not as a rule receive any after-sales  service 
or enjoy  any effective  recourse  in the event of damage or injury.  In addition  to the harm  it does 
to the economy, the phenomenon  is a veritable  danger to  society  as a whole  inasmuch  as  it  may 
affect  public  health  (counterfeiting  of  medicinal  products,  adulterated  alcoholic  beverages)  and 
safety  (counterfeiting  of toys or of car or aircraft  components). 

Questions: 

6.  Do you have any accurate data on the scale of the counterfeiting  and piracy phenomenon  in 

the sectors concerned  and, if so, which? 

Compared  with the  legitimate  trade, for  what  proportion  of all trade  does the  phenomenon 
account? 

7.  Can  you  furnish  any  accurate  data  on  the  economic  and  social  consequences  of  the 

phenomenon  in the sectors concerned: 

-  for firms (job losses, reduction  in turnover, etc.)? 

-  for national economies (clandestine work, loss of tax revenue, etc.)? 

Can you furnish  any accurate data on the phenomenon's consequences  in terms of consumer 
protection  (health, safety, etc.)? 

Where counterfeiting  and piracy also give rise to other unlawful  activities (in the social and 
tax  sphere,  etc.), can  you  quantify  the  share  of  these  other  activities  accounted  for  by  the 
phenomenon? 

4. 

LEGAL  ANALYSIS 

The  substantive  legislation  on  intellectual  property  stems,  at  the  international  level,  from  the 
work  of the World  Intellectual  Property  Organisation  (WIPO) and  from  that  of the  World  Trade 
Organization  (WTO),  within  which  the  TRIPs  Agreement  was  drawn  up.  For  its  part,  the 
Community  has  taken  steps  to  harmonise  national  laws  and  to  create  new  rights,  not  only  to 
comply with  international  requirements, but also to bring about  a fully  integrated  Single  Market. 
Member States have had to adapt their  legislation  in this sphere but there still remain,  for  certain 
aspects of intellectual  property  law, differences  between  laws as a result of their  having  evolved 
in the legal environment peculiar to each Member State. 

A  preliminary  response  to  counterfeiting  and  piracy  consists  in  improving  the  substantive 
provisions  on  intellectual  property.  Besides harmonising  intellectual  property  laws, the  creation 
of  unitary  rights  in  the  intellectual  property  field,  as  has  already  happened  in  the  case  of  the 
Community  trade  mark,24  is  likely  to  reduce  to  some  extent  the  risks  of  counterfeiting  and 

24  Council  Regulation  (EC) No 40/94  of 20 December 1993 on the Community  trade mark,  OJ L  11, 

14.1.1994, p. 1. 

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piracy.  Unitary  rights  enjoy  uniform  protection  and  take  effect  throughout  the  Community. 
They thus make for  greater transparency  and make markets more homogenous  and  easier for  the 
holders  of  unitary  rights  to  monitor.  Thanks  to  a  unitary  system,  the  difficulties  due  to  the 
differences  between  national  protection  arrangements  disappear.  Continuation  of  the  work  on 
creating unitary rights is, therefore,  one of the possible responses to the counterfeiting  and  piracy 
phenomenon  in  the  Single  Market.  The  response  in  relation  to  substantive  issues  is  not 
necessarily uniform  and may vary according to the intellectual  property rights concerned.  It may 
be limited and consist  in some cases  in extending the harmonisation with a view, for  example, to 
clarifying  certain  aspects  which  have  formed  the  subject-matter  of  divergent  interpretations  by 
the courts. 

Another way of dealing with counterfeiting  and piracy would be to take action with  regard  to the 
measures  and procedures  for  enforcing  intellectual  property  rights.  From  this point  of view, the 
TRIPs  Agreement  contains  a number  of  minimum  provisions  which  every  WTO  member  must 
take  into  account.  So  far,  the  measures  taken  by  the  Community  under  the  Agreement  have 
concerned  controls  at  the  Community's  external  frontiers.  A  degree  of  de  facto  harmonisation 
has taken  place  between  Member States'  laws  as  far  as  the  other  aspects  covered  by the TRIPs 
Agreement  are concerned.  As to those aspects which  are not covered  by the TRIPs  Agreement, 
each Member State regulates the control and prevention  of the phenomenon  itself, with the result 
that the  position  varies,  sometimes  substantially,  from  one  country  to  another.  The  activities  of 
counterfeiting  and piracy, which are transnational  in nature and which  are becoming more highly 
organised  and  more  professional  by  the  day,  cannot,  however,  be  dealt  with  effectively  at  the 
level  of  a  single  country.  It  is  important,  therefore,  that  the  effectiveness  - both  practical  and 
otherwise - of  existing  measures  and  procedures  be  assessed  and  that  thought  be  given  to 
improving  them.  In  this  context,  certain  specific  national  provisions  which  have  proved  their 
worth  should  be taken  into account.  In  some  sectors where fashion  plays a role and where  most 
sales  are  made  during  a  relatively  short  period,  it  is  questionable  whether  the  measures  and 
procedures for combating counterfeiting  and piracy are effective  enough to permit speedy action. 

Although  the  situation  is not  covered  by the  Community  rules  on  the  control  of  counterfeit  and 
pirated  goods at the  external  frontier,^  it  is appropriate  as part  of this  Green  Paper  exercise  to 
assess  the  means  at  the  disposal  of  the  rightholder  in  the  single  market  of  enforcing  his 
intellectual  property right in the case of goods manufactured  lawfully  outside the Community  but 
imported  into the Community without his consent ("parallel  imports").  This assessment  is not, of 
course, intended to call  into question the principle of the Community  exhaustion  of rights, which 
has  been  clearly  established  by  the  Court  of  Justice  of  the  European  Communities^  and 

integrated  into  Community  law.2'  It  must  also  take  account  of  the  situation  peculiar  to  each 
intellectual property right. 

Questions: 

8. 

In general, what  in your experience  is the main problem  encountered with the existing  legal 
arsenal for fighting  counterfeiting  and piracy? 

25  Cf. Article 1 (4) of Council Regulation (EC) No 3295/94 of 22 December 1994, referred to above. 
26  Cf. Case 187/80 Merck v Stephar [1981] ECR 2063. 
27  Cf.  Article 7(1) of the first Council Directive  89/104/EEC of 21 December 1988 to approximate the 

laws of the Member States relating to trade marks, OJ L 40, 11.2.1989, p. 1. 

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12 

9. 

In  your  view,  is  the  national,  Community  and  international  substantive  legislation  on 
intellectual  property  up  to  the  task  of  preventing  counterfeiting  and  piracy  in  the  Single 
Market?  Please  distinguish,  if  necessary,  between  the  intellectual  property  rights  in 
question. 

If the answer is in the negative, what improvements should,  in your opinion, be made? 

In  particular,  do  you  think  that  certain  national  and  international  substantive  provisions 
need  supplementing  at  Community  level?  If  so,  which?  Please  distinguish  once  more 
between the intellectual  property rights concerned. 

Are  there,  in  your  view,  any  aspects  needing  clarification  in  the  light  of  the  case-law  of 
domestic courts? 

10.  Are,  in  your  opinion,  the  national,  Community  and  international  provisions  concerning 
measures  and  procedures  for  enforcing  intellectual  property  rights  up  to  the  task  of 
preventing and punishing  infringements  in the Single Market? 

If not, what improvements  should be made? 

Do  you  think  that  certain  measures  and  procedures  existing  at  national  and  international 
level  need  supplementing  at  Community  level?  If  so, which?  Please  distinguish  between 
the intellectual property rights concerned. 

11.  Are the measures and procedures applied effective  from  a practical point of view? 

If  not,  what  corrections  and  changes  should  be  made?  Please  distinguish  between  the 
intellectual property rights concerned. 

In  sectors  where  fashion  plays  a role, are  in your  experience  the  measures  and  procedures 
for combating counterfeiting  and piracy effective  enough to permit speedy action? 

12. 

In  the  case  of  goods  manufactured  lawfully  outside  the  Community  but  imported  into  the 
Community  without  the  consent  of the rightholder  in the  Community  ("parallel  imports"), 
are the means at the latter's disposal of enforcing  his intellectual property right  in your view 
sufficient? 

If not, what improvements might in your view be made? 

13. 

In  your  area  of  activity,  if you  have  the  choice  between  a number  of  intellectual  property 
rights  in  judicial  proceedings,  which  in  your  experience  affords  the  most  effective 
protection?  Please distinguish, if necessary, between the countries  concerned. 

5. 

POSSIBLE  SOLUTIONS 

In order to combat  counterfeiting  and  piracy effectively,  horizontal  measures  may be  envisaged. 
These  may  centre  on  four  areas: monitoring  by  the  private  sector,  the  use  of technical  devices, 
sanctions  and  other  means  of  enforcing 
intellectual  property  rights,  and  administrative 
cooperation between the competent authorities. 

5.1.  Monitoring by the private sector 

Most  monitoring  is  carried  out  privately  by  national,  European  or  international  professional 
associations  or  organisations,  such  as  manufacturers'  associations,  trade  mark  proprietors' 

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13 

associations  and  collecting  societies.  It  generally  consists  in  observing  market  trends,  advising 
and  supporting  the  industries  concerned,  collaborating  with  the  authorities  (customs,  police,  the 
courts,  etc.),  monitoring  suspect  activities  and  detecting  acts  of  counterfeiting  and  piracy, 
keeping  the  public  informed  and,  where  necessary,  convincing  the  government  of  the  need  to 
amend  the  law.  This  is  often  highly  effective  when  it  comes  to  combating  counterfeiting  and 
piracy.  The  monitoring  done  by  the  private  sector  must,  however,  comply  with  Community 
competition  rules.  These rules  are  of decisive  importance  to the  establishment  of  a  competitive 
single market, which includes the goods and services covered by intellectual property rights.  The 
Commission  will intervene with determination  in case of any suspicion that these rules have been 
infringed.  The proposals which follow must accordingly be read subject to this reservation. 

Market  monitoring 

Market  monitoring  is  an  important  means  of  detecting  acts  of  counterfeiting  and  piracy  and  of 
taking  suitable  countermeasures  in  terms  of  prevention  and  punishment.  The  effectiveness  of 
such  monitoring  depends, of course, to a large  extent  on the  size  of the  relevant  market  and  the 
number  of players  in the market.  If the  number  of players  is small, the  market will  be easier  to 
monitor. 
In  the  CD  sector,  for  instance,  a  system  for  identifying  CDs  has  been  introduced, 
making  it possible  to  detect  the  source  of the  piracy.  The  effectiveness  of  existing  monitoring 
systems must therefore  be assessed at single market level, and where there is no such system  in a 
given sector the need for  introducing one must be evaluated. 

Questions: 

14. 

In  your  area  of  activity,  is  there  a  market  monitoring  system  for  detecting  cases  of 
counterfeiting  and piracy? 

If so, does it function  satisfactorily? 

If  not,  what  improvements  should  in your  view  be  made?  Should  these  improvements  be 
sought at Community  level?  If so, why? 

If there is no market monitoring  system  in your sector, do you think that the introduction  of 
such  a system  would  contribute  effectively  to the fight against  counterfeiting  and  piracy  in 
the Single Market?  If so, should the system be introduced at Community  level, and why? 

Strengthening  of cooperation 

The  activities  engaged  in  by  these  organisations  with  a  view  to  combating  the  phenomenon, 
particularly  that  of  collecting  information,  could  be  supported  at  either  national  or  Community 
level and encouraged.  This could take the form  of,  say, help from  the authorities  responsible  for 
combating  counterfeiting  and piracy in supplying data for the existing databases managed  by the 
organisations  or  of the  setting-up  of  a central  database  to which data  could  be  supplied  both  by 
the organisations  and  by the  above-mentioned  authorities.  In both  cases, care would  have to be 
taken to ensure that the rules on confidentiality  and the protection  of personal  data are  complied 
with.  The  creation  of  such  organisations  might  be promoted  where  there  are  none  and  support 
might be given to efforts  to bring or group them together. 

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14 

The  exchanging  of  experience  between  professional  organisations  and  the  departments 
responsible  for  combating  counterfeiting  and  piracy28  might  also  be  encouraged,  as  might  the 
introduction  by the  authorities,  in  conjunction  with  those  organisations,  of  training  modules  for 
the  staff  of  the  departments  responsible  for  combating  the  phenomenon.  The  FALCONE 
programme29  might  back  up  such  actions  by  providing  financial  support  for  Europe-wide 
projects.  Support  might  also  be  provided  for  public  awareness  and  information  campaigns,  as 
these play a major  preventive role. 

The cooperation  between the authorities and this type of organisation, notably for the  exchanging 
of  information,  might  be  placed  on  a more  formal  footing  and  take  the  form  of  memoranda  of 
understanding.  The  organisations  would  thus  undertake  to  communicate  to  the  authorities  any 
information  they  obtained  either  directly  or  through  their  members  concerning  cases  of 
counterfeiting  or piracy, while the authorities would supply, subject to the rules of  confidentiality 
and  to  the  extent  allowed  by  law,  information  on  any  cases  of  counterfeiting  or  piracy  that  are 
discovered  in  order  to  enable  the  organisations  or  their  members  to  take  speedy  action,  if 
necessary through the courts. 

Questions: 

15.  Do  you  think  that  promoting  the  activities  of  professional  organisations,  such  as  public 
awareness  campaigns  or  the  gathering  and  dissemination  of  information,  is  likely  to 
improve the fight  against counterfeiting  and piracy in the Single Market? 

Would a Community  initiative in this sphere be appropriate? 

In this connection, what do you think, for example, of the setting-up of a central database or 
a strengthening of existing databases, subject to the rules on protection? 

Are you  of the opinion that any Community  initiatives  aimed  at encouraging  the  formation 
or  amalgamation  of  such  organisations  would  be  likely  to  improve  the  fight  against  the 
phenomenon? 

16.  How,  in your opinion,  might  reciprocal cooperation  and  information  exchange  between  the 

authorities and professional  organisations be strengthened? 

For example,  is in your experience the conclusion  of memoranda of understanding  between 
the  authorities  and  professional  organisations  in  these  areas  likely  to  make  a  useful 
contribution to the fight against the phenomenon? 

Improvement  of  the  legal 

framework 

Such organisations  often  carry out monitoring  and  survey work on behalf of their members.  An 
extension  of the  powers vested  in  organisations  involved  in the  fight  against  counterfeiting  and 
piracy  might  also  be  considered  in  order  to  enable  them  to  institute  legal  proceedings  in  the 
defence  of the  collective  interests  for  which  they  are  responsible.  On  a more  general  level,  the 
establishment  of  a  legal  framework  for  the  actions  which  anti-counterfeiting  and  piracy 
organisations  may have occasion  to take might be considered.  This could result  in organisations' 

28  Depending  on  the  country,  either  the  customs  authorities  transmit,  in  the  event  of  the  discovery  of 
counterfeit  or pirated  goods, the file to the police,  who then  conduct  an  enquiry,  or  else  the  customs 
themselves have investigatory powers (United Kingdom, Germany). 
Joint  Action  of  19 March  1998 adopted  by the  Council,  on  the  basis  of  Article K.3  of the  Treaty  on 
European  Union,  establishing  a  programme  of  exchanges,  training  and  cooperation  for  persons 
responsible for action to combat organised crime, OJ L 99, 31.3.1998, p.8. 

29 

• * - 

15 

operations  being  redefined  inter  alia  along  the  lines  of  an  ad  hoc  involvement  in  supervisory 
authorities' monitoring operations. 

Questions: 

17. 

In  your  experience,  is  the  scope  for  action  in  the  field  by  professional  organisations 
involved  in  the  fight  against  counterfeiting  and  piracy  sufficient  for  them  to  combat  the 
phenomenon  effectively? 

If  not,  do  you  think  that  the  establishment  of  a  legal  framework  for  those  organisations' 
actions,  in  order,  for  example,  to  involve  them  more  closely  in  the  work  of  national 
authorities,  would  make  it  possible  to  render  the  fight  against  the  phenomenon  more 
effective? 

If so, how should this be achieved? 

18. 

In  your  opinion,  do  such  professional  organisations  play  a  big  enough  role  in  legal 
proceedings? 

Do  you  think,  for  example,  that  an  extension  of  their  powers  to  enable  them  to  institute 
legal proceedings  in the defence  of the collective  interests for which they are responsible  is 
likely to improve the fight against the phenomenon  in the Single Market? 

If so, what requirements ought to be satisfied  (ability to show an interest in acting, etc.)? 

19. 

In  your  experience,  which  national  or  international  bodies  or  which  professional 
organisations are the most effective  in combating counterfeiting  and piracy? 

5.2. 

The use of technical devices 

One  of  the  means  of  combating  counterfeiting  and  piracy  at  the  disposal  of  the  holders  of 
intellectual  property  rights  is  the  use  of  technical  devices  to  protect  and  authenticate  their 
products  or  services.  Technical  devices  may  take  many  forms:  security  holograms,  optical 
devices,  chip  cards,  magnetic  systems,  biometric  codes,  special  inks,  microscopic  labels,  etc. 
These  technical  devices  facilitate  the  prosecution  and  punishment  of  counterfeiting  and  piracy. 
Through  them, unlawful  uses of works, products or services can easily be traced  back to  source, 
so that  infringers  can  be  found  and  prosecuted  more  effectively.  However,  although  technical 
devices  act  as  a  filter  for  the  most  obvious  counterfeit  or  pirated  goods,  they  do  not  as  a  rule 
defeat  the  most  highly  organised  infringers,  who  succeed  in  turn  in  reproducing  the  devices. 
Such devices must therefore  enjoy  suitable legal protection to prevent them  from  being  infringed, 
manipulated  or neutralised. 

There  are  international  obligations  in  the  field  of  copyright  and  neighbouring/related  rights-^ 
concerning  legal  protection  against  the  neutralisation  of  technical  measures  which  may  be 
invoked  by rightholders  in the exercise of their  intellectual property rights and which  restrain  the 
performance  of  acts  not  authorised  by the rightholder  or allowed  by  law.  At  Community  level, 

30  Cf.  Article  11  of  the  WIPO  Copyright  Treaty  and  Article  18  of  the  WIPO  Performances  and 
Phonograms  Treaty.  Both treaties  were adopted  by the Diplomatic  Conference  on Certain  Copyright 
and  Neighbouring  Rights  Questions, which  was convened  under the  auspices  of  WIPO  in  Geneva  on 
20 December  1996. 

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16 

the Commission has taken steps in the intellectual property fielcF 1  to ensure that certain  unlawful 
activities  involving technical devices are prohibited in Member States. 

Effectiveness  of technical devices 

If  current  Community  initiatives  in  relation  to  intellectual  property  are  to  be  discussed  in  the 
appropriate  fora,  one  question  that  will  need  to  be  addressed  is  whether  the  technical  devices 
used  in the  industrial property field  are adequately protected  or whether their protection  needs  to 
be ensured  or strengthened,  for  example through  a Community  initiative  aimed  at prohibiting  in 
technical  devices 
the  Member  States  certain  commercial  activities  relating  to  unlawful 
(manufacture, 
installation,  maintenance, 
replacement, advertising, etc.). 

the  Community,  sale,  possession, 

import 

into 

On  the  other  hand,  technical  devices  for  authenticating  or  otherwise  protecting  goods  and 
services  must  not  be  misused  for  the  purpose  of  partitioning  markets  and  controlling  parallel 
imports.  The  Commission  will  not  tolerate  any  infringement  of  Community  law,  and  in 
particular of the rules on the Single Market or on competition, which might result from  the use of 
such technical devices. 

Questions: 

20.  Do  you  have  recourse  to  specific  technical  devices  to  protect  your  industrial  property 

rights?  If so, which? 

Do  the  devices  afford  effective  protection?  If  not,  what  problems  arise?  How  much  do 
they cost? 

21. 

In your view, is the legal protection of these devices sufficient  to prevent activities  enabling 
or facilitating  the unauthorised  infringement,  manipulation  or neutralisation  of the devices? 

Is  such  protection  afforded  at  the  level  of  each  firm,  of  the  industry  itself  or  by  law  and 
regulation? 

22.  As  far  as  the  role  of  the  authorities  is  concerned,  do you  think  that  standardisation  of  the 
rules  for  the  protection  of  technical  devices  would  be  an  adequate  response  to  unlawful 
activities? 

If not, what alternative would you suggest? 

Without  prejudice  to  the  initiatives  that  are  being  considered  at  Community  level  in  the 
intellectual  property  field,  would  you be  in favour  of an  initiative  at European  Union  level 
in  the  industrial  property  field  aimed  at  prohibiting  in  general  in  the  Member  States 
activities  such  as  the  manufacture,  import  into  the  Community  and  sale  of  unlawful 
technical  devices? 

Contribution made by research and development programmes 

The Commission's research and development programmes may help to come up with  solutions to 
the  problem  of  the  use  of  technical  devices.  It  would  be  useful,  therefore,  to  have  at  one's 
disposal  information,  in  particular  on  the  nature  (role,  functions)  of  the  technical  devices 
considered  desirable  by the  circles  concerned,  making  it possible  to  define  more  closely  certain 

31  Cf. Article 6 of the proposal for a Directive on the harmonisation  of certain aspects of copyright and 

related rights in the Information Society (referred to above). 

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17 

R&D actions of the Fifth  Framework  Programme, notably Key Action 2 of the specific  research, 
information 
technological  development  and  demonstration  programme  in  the  "User-friendly 
society"  (1998-2002)  field.32  This  information  could  thus  be  taken  into  account  in  planning 
specific  R&D actions. 

Questions: 

23.  To  the  extent  that  you  think  that  the  use  of  technical  devices  might  help  protect  your 

intellectual  property rights: 

-  What,  in  your  opinion,  should  be  the  ideal  nature  and  functions  of  a  technical  device 
capable of meeting your needs? (Your reply need not necessarily  reflect  the current  state of 
the available technologies, but may simply list the desired  functions). 

-  Could  you  describe  the  ideal  scenario  in which  a technical  device  meeting  your  needs 
might be used? 

-  Do you consider  it desirable that technical protection  devices  should  be standardised?  If 
so, at what level?  If not, why not? 

5.3. 

Sanctions  and  other means  of enforcing  intellectual  property  rights 

Besides  promoting  monitoring  activities  by  the  private  sector  and  the  protection  of  technical 
devices,  it  is  also  necessary  to  assess  the  need  for  and  feasibility  of  Community  initiatives  in 
relation  to  sanctions  and  other  means  of enforcing  intellectual  property  rights.  It must  be  asked 
whether  measures  and  procedures  over and  above those  laid  down  in the TRIPs Agreement  for 
enforcing  intellectual  property  rights,"  which  measures and procedures  form  the basis  common 
to all EC Member States  in this sphere, must be envisaged  in order to improve and  strengthen  the 
fight  against counterfeiting  and  piracy  in the Single Market.  In this connection, account must  be 
taken  of  certain  domestic-law  provisions  which  have  stood  the  test  of  time.  It  goes  without 
saying  that  any  sanctions  and  other  means  of enforcing  intellectual  property  rights  envisaged  at 
Community  level  will  have  to  accord  with  the  general  principles  of  law  such  as,  for  example, 
proportionality and respect for  privacy. 

Criminal proceedings  and penalties 

All  Member  States  provide  by  law  that  counterfeiters  and  pirates  are  in  principle  liable  to 
criminal  penalties,  but  the  level  and  severity  of  the  penalties  vary  considerably  from  one 
Member State to another.  For certain  types  of right, no criminal  penalty  is provided  for.  Some 
Member States  have,  however,  been  tightening  up the  criminal  law  in  respect  of  counterfeiting 
and  piracy  in  recent  years.  Criminal  proceedings  have  certain  advantages  over  civil  actions 
(greater  dissuasive  effect,  more  effective  gathering  of  evidence,  etc.).  The  effectiveness  of 
existing  preventive  measures  and  punishments  in the  Single Market  and  possible  improvements 
thereto therefore  needs looking  into.  In so far  as both counterfeiting  and piracy give rise  in most 
instances to a chain  of successive operations, it is important to know whether all the  links  in that 
chain, from  the manufacturer  through the middleman to the reseller, are caught by the  applicable 
legislation.  Another 
is  whether  the  disparities  that  exist  between 
Member States  can  have  an  impact  on the  localisation  of  counterfeiting  and  piracy  activities  in 
the Single Market. 

important  question 

32  Proposal  for  a Council  Decision presented by the Commission  on  10 June  1998, OJ C 260,  18.8.1998, 

p.  16. 

33  Cf.  Articles 41 to 61 of the TRIPs Agreement. 

18 

The Community,  for  its part,  must  see to  it that  Community  legislation  is properly  implemented 
and  hence  cannot  but  take  a  hands-on  approach  to  the  prevention  and  punishment  of 
infringements  of Community  law.  The Commission  has already had occasion  to demonstrate  the 
need for taking measures, in particular  in the form  of penalties, to ensure the smooth operation  of 
the  Single Market, inter alia  in the field of the protection  of  industrial  and commercial  property, 
in  its  1995  communication.-^  Following  that  communication,  on  29 June  1995  the  Council 
adopted  a resolution35  calling on Member States to punish  breaches  of Community  law with  the 
same severity  as non-compliance with national  law and encouraging the Commission  to  continue 
studying these matters and to present proposals  if necessary.  Standard  clauses on penalties  have 
since been  included  in regulations and  directives proposed  by the Commission  in the  intellectual 

properly  field.-'" 

Other  law  enforcement  means  may  also  be  contemplated.  Some  national  laws  contain,  for 
example, special provisions  laying down stronger criminal penalties.  These measures  seem to be 
highly  effective  in  combating  counterfeiting  and  piracy.  They  include  the  partial  or  complete 
closure  for  a  certain  period  of  the  shop  or  other  establishment  where  the  unlawful  act  was 
committed.  One solution might be to extend such measures to the whole Community. 

Questions: 

24.  Given  that  the  TRIPs  Agreement,  which  has  been  implemented  in  the  Member States, 
provides  for  the  introduction  of  criminal  procedures  and  penalties  to  be  applied  in  certain 
cases,  do  you  think  that  further  improvements  are  needed  to  ensure  compliance  with 
intellectual  property rights in the Single Market? 

If so, which? 

Is the law as it stands capable of dealing with the various  links in a counterfeiting  or piracy 
chain?  If not, what provisions  should  in your view be introduced  in order to catch the  real 
culprits? 

In your opinion,  do the disparities that exist between  Member States have an  impact  on the 
localisation of counterfeiting  and piracy activities in the Single Market? 

25. 

In the interests of uniform  application  of the law in the single market, does the  introduction, 
on  top  of  national  penalties,  of  penalties  at  Community  level  strike  you  as  an  effective 
means of combating counterfeiting  and piracy in the Single Market? 

26. 

If not, what other means could be employed? 

For  example,  do  you  think  that  closure  of  the  shop  or  other  establishment  where  the 
unlawful  act was committed  is an appropriate, effective  measure? 

34  Communication  on  the  role  of  penalties  in  implementing  Community  internal  market  legislation, 

COM(95)  162 of 3 May 1995. 

35  Council  resolution  on  the  effective  uniform  application  of  Community  law  and  on  the  penalties 

applicable for breaches of Community  law in the internal market, OJ C  188, 22.7.1995, p. 1. 

36  Cf.,  for  example, Article 8 of the proposal  for  a Directive  on the harmonisation  of  certain  aspects  of 

copyright and related rights in the Information  Society (COM(97)628), referred  to above. 

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Civil proceedings  and remedies 

To enforce  their  intellectual  property rights, rightholders have at their disposal  at national  level a 
number  of  legal  measures  and  procedures,  of both  a provisional  and  a permanent  nature,  which 
they  can  resort  to  in  case  of  infringement.  Although  these  measures  and  procedures  pursue 
similar objectives  in all Member States, bound as they are by theTRIPs Agreement, the practical 
arrangements  sometimes differ  substantially from  one Member State to another. 

Being  more  speedy  and  effective  than  the  measures  available  once  the  case  comes  to  court, 
provisional  measures make it possible (a) to prevent an act of counterfeiting  or piracy from  being 
committed  or  continued  and  (b)  to  safeguard  the  evidence.37  They  are  normally  without 
prejudice  to  the  outcome  of  the  main  proceedings.  Provisional  measures,  including,  where 
appropriate, 
in  all 
Member States.38  Nevertheless, owing to the different  traditions  and approaches  followed  in the 
Member States,  there  are  major  differences  between  national  systems  in  terms  of  procedural 
arrangements and frequency  of use of these legal remedies. 

in  non-contentious  proceedings,  exist 

in  principle 

taken 

those 

The  acquisition  and  safeguarding  of  evidence  is  an  important  factor  in  the  fight  against 
counterfeiting  and  piracy.  From  this  point  of view, the  procedure  known  in English  law  under 
the name of  "Anton Piller  order" and the French procedure  of saisie-contrefacon  may  constitute 
highly  effective  means  of  obtaining  and  preserving  evidence.  Such  measures,  intended  as  they 
are  to  preserve  evidence  both  before  and  after  a case  comes  to  court,  unquestionably  make  an 
effective  contribution to the fight against counterfeiting  and piracy. 

The  various  measures  that  may  be  sought  in  main  proceedings  or  interim  proceedings  concern 
inter alia the cessation of the infringement  while it is being committed or the prevention  of  future 
infringements,  injunctions  and damages.  Applications  for the cessation  of infringements  and the 
prevention  of new  infringements  may be lodged in all Member States.  They oblige the infringer 
to  cease  any continued  interference  due  to the  counterfeiting.  The  interference  that  must  cease 
relates  both  to  the  goods  themselves  and  to  the  means  of  their  production.  Although  the 
underlying  principles  are  identical, there are  differences  in the rules  of  application,  for  example 
as regards the taking  into account of the  interests of third  parties, the way  in which  the  goods  at 
issue  are  to  be  eliminated  (destruction,  reexportation,  etc.)  or  the  conditions  under  which  the 
elimination  of  the  means  used  to  produce  the  goods  may  be  ordered.  The  Dutch  courts,  for 
example,  have  developed  an  interesting  approach  consisting  of  requiring  the infringer  to  recall 
the goods at his own expense. 

Injunctions  are  the  instrument  most  widely  used  in  the  Member States  to  prohibit  an infringer 
from  repeatedly  infringing  an  intellectual property  right.  Failure to comply with  an  injunction  is 
punishable  by  specific  penalties,  usually  a  fine  payable  either  to  the  State  or  to  the  person 
seeking the injunction.  The infringer  may be required to pay damages to the rightholder to make 
good  the  loss  or  damage  caused  by  the  infringement  of  the  intellectual  property  right.  The 
amount  of  damages,  which  are  generally  awarded  even  in  the  absence  of  fault,  is  often 
considered  by  practitioners  to  be  too  small  to  compensate  properly  for  the  loss  or  damage 
suffered. 

37  According to the definition  given by the Court of Justice of the European Communities, provisional or 
protective measures within the meaning of Article 24 of the Brussels Convention must be understood 
as being "measures which,  in matters within the scope  of the Convention,  are intended to preserve  a 
factual or legal situation so as to safeguard rights the recognition of which  is sought elsewhere from 
the court having jurisdiction as to the substance of the matter"  (Case C-261/90 Reichert [1992] ECR 
1-2149). 

38  Cf., for example, the kort geding procedure in the Netherlands and the procedure en refere in France. 

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2 

While  these  measures  and  procedures  are  common  to  all  Member States,  the  details  obviously 
differ  from  one  Member State  to  another.  There  is  therefore  a  need  for  evaluating  their 
effectiveness  in  the  Single  Market  and  considering  what  improvements  may  be  made,  for 
instance  by  extending  those  of  these  measures  and  procedures  which  have  proved  effective  in 
some Member  States. 

Questions: 

27.  Given  that  the  TRIPs  Agreement,  as  implemented  in  the  Member States,  provides  for  the 
introduction  of  effective,  dissuasive  measures  and  procedures,  do  you  think  that  further 
improvements  should  be made to ensure that intellectual  property rights are respected  in the 
Single Market? 

If so, what  improvements? 

Of  the  existing  legal  measures  and  procedures,  which  in  your  experience  are  the  most 
effective? 

On the issue of what to do with goods held to be counterfeit  or pirated, what do you think to 
the  idea  of  giving  them  to  charity  rather  than  systematically  destroying  them?  On  what 
terms should this be done? 

28.  What do you think of the idea of extending in the European  Community,  in order to combat 
counterfeiting  and  piracy, 
in  certain 
Member  States  or  even  at  Community  level  in  specific  areas  and  which  are  known  to  be 
effective? 

legal  measures  and  procedures  which  exist 

For  example, do you think  that  (1) the  recalling  at the infringer's  expense  of  goods  placed 
on the market  or (2) the possibility for the rightholder  to obtain  on request,  before  bringing 
an  action  on  the  substance  of  the  matter,  an  order  for  the  seizure  of  the  goods,  as  is 
provided  for  in French  law (saisie-contrefacori)  or  in English  law (Anton Piller  order),  are 
measures which  should be applied  in every Member State? 

Other measures 

There  are  other,  apparently  effective  measures  for  combating  counterfeiting  and  piracy.  These 
measures may generally  be applied  in both civil and criminal  proceedings.  Thus, the publication 
of  judgments,  which  is often  used  in France  and Italy,  is considered  to  be an  additional  penalty 
imposed  by the courts in cases involving counterfeiting  or piracy. 

Another measure consists  in the right of  information.  This measure, which  is optional  under the 
TRIPs  Agreement,  is  unrelated  to  the  application  for  damages  and  is  directed  against  any 
infringer,  who may be ordered,  at the  risk of a penalty, to reveal  information  about the origin  of 
the  goods  at  issue, the  distribution  channels  and  the  identity  of  any third  parties  involved  in  the 
production  and  distribution  of the  goods.  This  measure,  which  has  already  proved  its  worth  in 
the  fight  against  drugs,  is highly  effective  as  it  makes  it  possible  to  pinpoint  the  source  of  the 
infringement  and  close  down  the  distribution  channels.  The  introduction  of  a  right  of 
information  would,  of  course,  have  to  be  coupled  with  effective  safeguards  to  ensure  the 
confidentiality  of  the  information  furnished.  To  date,  the  right  of  information  has  been 

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21 

successfully  introduced  into the  laws  of  only  a few  Member States,  namely  the  German  law on 
intellectual  property and the Benelux law on trade marks.3" 

The effectiveness  of such measures  should therefore  be assessed  and the conditions  under  which 
they may be implemented  should be examined. 

Questions: 

29. 

Is  in  your  opinion  the  publication  of  judgments  a  suitable,  effective  means  of  combating 
counterfeiting  and piracy? 

If so, in what manner should such publication take place? 

30. 

Is  in  your  opinion  the  requirement  that  the  infringer  furnish  certain  information  (right  of 
information)  an appropriate weapon in the fight  against counterfeiting  and piracy? 

If so, under what conditions should the requirement be  enforced? 

Court having jurisdiction  and law applicable 

The  free  movement  of  goods  and  services  within  the  Single  Market  also  raises  the  issue  of  the 
law  applicable  and  the  court  having jurisdiction  in  cases  of  counterfeiting  and  piracy  involving 
more than one Member State. 

In  cases  of  counterfeiting  or  piracy  committed  or  having  effects  in  more  than  one  country,  the 
question  may  arise  as to what  law must  be applied,  bearing  in mind  the territorial  dimension  of 
protection  under most intellectual  property  laws.  It should be pointed  out  in this connection  that 
the Rome Convention  on the  law applicable, which was concluded  on  19 June  1980 between  the 
Member  States,40  applies  only  to  contractual  obligations,  but  preliminary  work  is  being  carried 
out  in  the  Commission  and  the  Council  with  a  view  to  adopting  an  instrument  on  the  law 
applicable to non-contractual  obligations ("Rome II"). 

It may be a good thing for  the rightholder  to be able to  lodge an application  for  an  injunction  or 
damages with  a single court, which  is then  able to order  corrective  measures  from  start to  finish 
of  the  proceedings.  In  that  event,  the  rules  on  the  recognition  and  enforcement  of judgments 
would, of course, have to be observed. 

In civil  and  commercial  matters, the rules  of the Brussels  Conventional  should  make  it possible 
to resolve  any difficulties  in determining which  court has jurisdiction.  The Convention  does not 
affect  the application  of provisions which,  in relation to particular  matters, govern jurisdiction  or 
the  recognition  or  enforcement  of judgments  and  which  are  or  will  be  contained  in  acts  of  the 
institutions  of the  European  Communities  or  in  national  laws  harmonised  in  implementation  of 
such  acts  (Article 57(3)).  Particular  provisions  have  thus  been  inserted  in  the  Community 
legislation  already adopted  or in the process of being adopted  on the Community trade mark  and 

39  At the  European  Parliament's  request,  the  right  to  information  was  included  in the  proposal  for  a 
Directive  on  designs  in  1996,  but  was  deleted  in  1997,  the  Council  being  of  the  opinion  that  a 
provision  of this kind  did  not come within  the  scope of the Directive,  which  merely  approximates 
those national provisions which have the most direct impact on the functioning of the single market. 

40  OJ L 266, 9.10.1980, p. 1. 
41  Convention  of  27 September 1968  on jurisdiction  and  the  enforcement  of judgments  in  civil  and 

commercial matters (consolidated version), OJ C 27, 26.1.1998, referred to above. 

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•  - 

A* 6 

the  Community  design.42  There  are,  on  the  other  hand,  no  provisions  of  this  type  governing 
infringements  of national  intellectual property rights. 

• 

The Brussels  Convention  comprises  a sizeable  body  of  rules  on the jurisdiction  of  courts  in  the 
single market.  The Convention  contains not only rules on jurisdiction  in a given  matter, but also 
on,  for  example,  cases  involving  more  than  one  defendant,  related  actions  and  provisional 
measures.  If the defendant  is not domiciled  in a Contracting  State, jurisdiction  is determined  by 
the  national  law  of  each  Contracting  State.  The  detailed  nature  of  this  legislation  is  due  to  the 
Convention's  final  objective,  namely  the  recognition  and  enforcement  of judgments  in  other 
Contracting States. 

Article 5(3)  of  the  Convention  contains  a  special  rule  on  matters  relating  to  tort, delict  or 
quasi-delict.  Under  this  rule,  "the courts  for  the place  where the  harmful  event  occurred"  have 
jurisdiction.  This provision,  like the Convention  as a whole, must be construed  in the  light of the 
case-law  of the  Court  of  Justice.^-*  The  rule  is an  alternative  option  for  the  plaintiff,  who  may 
also, in accordance  with the  general  rule  in Article 2 of the Convention,  sue the defendant  in the 
courts of the Contracting  State in which the latter is domiciled. 

As  regards  provisional  and  protective  measures,  Article 24  of  the  Convention  lays  down  that 
such measures may be sought in a Contracting  State provided they are available under the  law of 
that  State, even  if the courts of another  Contracting  State have jurisdiction  as to the  substance  of 
the matter.  The Brussels  Convention  also permits, under  certain  conditions,  notably  observance 
of  the  adversarial  nature  of  proceedings,  the  recognition  and  enforcement  of  such  measures  in 
other Member  States. 

On 26 November  1997 the  Commission  presented  a proposal  for  the  amendment  of these  rules. 
It  is  proposed  among  other  things  that  the  scope  of  Article 5(3)  of  the  Brussels  Convention 
should  be  extended  and  that  the  existing  Article 24  of  the  Convention  should  be  replaced  by  a 
new Article  18a.44 

Where  products  are  made  in  one  Member State  and  must  cross  the  territory  of  another 
Member State  before  being  placed  on the market  for  the  first  time  in the  Community,  problems 
may  arise  if  the  products  infringe  an  intellectual  property  right  in  the  Member State  of  transit. 
The courts for  their part  have the  greatest  difficulty  quantifying  in practice  the  damage  incurred 
by a rightholder  where the counterfeit  or pirated  goods are bound  for  another  Member  State and 
are in fact  only passing through the State where the court is seised.  It would appear that,  in some 

42  Cf.  Article 93(2) of Regulation  (EC) No 40/94 on the Community trade mark  and Article 86(2) of the 

proposal for a Regulation on Community design. 

43  Cf.  inter alia the judgments  of the Court  in Case 21/76  Mines de potasse  a"Alsace [1976] ECR  1735 
and  Case C-68/93  Shevill  [1995] ECR 1-415.  In the first judgment, the Court held  that the  defendant 
could  be  sued,  at  the  option  of  the  plaintiff,  either  in  the  courts  for  the  place  where  the  damage 
occurred  or  in the  courts  for  the  place  of the  event  which  gave  rise  to  and  was  at  the  origin  of  that 
damage.  In the second judgment, which concerned a case of libel by a newspaper article distributed  in 
several Contracting States, the Court held that the victim could bring an action for  damages against the 
publisher  either  before  the  courts  of  the  Contracting  State  of  the  place  where  the  publisher  of  the 
defamatory  publication  was  established,  which  had jurisdiction  to  award  damages  for  all  the  harm 
caused  by the defamation,  or before  the courts of each Contracting  State in which the publication  was 
distributed  and  where  the  victim  claimed  to  have  suffered  injury  to  his  reputation,  which  had 
jurisdiction to rule solely in respect of the harm caused in the State of the court seised. 

44  Proposal  for  a  Council  Act  establishing  the  Convention  on  Jurisdiction  and  the  Recognition  and 
Enforcement  of  Judgments  in  Civil  and  Commercial  Matters  in  the  Member States  of  the  European 
Union, OJ C 33, 31.1.1998, p. 20. 

23 

cases, the courts are obliged to consider that no damage has occurred  in the national territory and 
that it takes place only in the State of entry for consumption or destination  of the goods. 

In  criminal  cases,  the  principle  of  the  territoriality  of  criminal  law,  according  to  which  the 
criminal  law  of  a  country  applies  to  acts  committed  in  that  country's  territory,  may,  where  it 
exists,  sometimes  prove  ill-suited  to dealing with  certain  situations.  The  possibility  for  national 
law to  cover  certain  acts  of counterfeiting  and  piracy  committed  in other  countries, where  those 
acts  infringe  a right  protected  in the  Member State  in  question,  might  be  an  effective  means  of 
combating the phenomenon. 

It needs to be established, therefore,  whether the practice  gives rise to difficulties  in  determining 
the  court  having  jurisdiction  or  the  law  applicable  where  the  counterfeiting  or  piracy  are 
transnational  in nature. 

Questions: 

31.  What  experience  have  you  had  of  court  proceedings  aimed  at  putting  an  end  to 
infringements  and  seeking  redress  for  the  damage  suffered,  where  the  acts  in  issue  in  the 
single market were committed  or have effects  in one or more other Member  States? 

Have  you  encountered  any  difficulties  when  it  comes  to  determining  the  court  having 
jurisdiction or the law applicable? 

If so, how in your opinion might these difficulties  be resolved? 

In case of conflict  as to the law applicable, what in your opinion  is the most suitable rule  for 
resolving  the  conflict  bearing  in  mind  the  significant  approximation  of  substantive  law  in 
the intellectual  property field at Community  level? 

Have  you  encountered  any  difficulties 
measures,  delivered  in  your  favour  enforced? 
difficulties  be resolved? 

in  having  judgments,  including  provisional 
If  so,  how  in  your  opinion  could  those 

32.  Have  you  encountered  any  practical  problems  with  products  made  in  a  Member  State 
which,  before  being  placed  on the market  for  the  first  time  in the  Community,  crossed  the 
territory of another Member State where they infringed  an intellectual  property right?  If so, 
In  your  opinion,  could  the  problems  have  been  resolved  by  a 
please  give  details. 
clarification  of the law applicable? 

As  regards  the  assessment  of the  damage,  have  you  experienced  difficulties  in  practice  in 
getting  a  court  to  assess  the  damage  suffered  because,  for  example,  the  counterfeit  or 
pirated  goods were bound  for  another Member State and were  simply crossing the  territory 
of  the  State  in  which  the  court  was  seised? 
If  so,  how  in  your  opinion  could  those 
difficulties  be resolved? 

33. 

In criminal  matters, do you  think that national  law protects you  sufficiently  against  acts  of 
counterfeiting  and piracy committed  in another country? 

If not, what improvements should in your view be made? 

Do  you  think,  for  example,  that  the  possibility  of  making  national  law  applicable  to  acts 
in  the 
committed 
Member  State  in question  would  be  likely to  improve the  effectiveness  of the  fight  against 
the phenomenon? 

in  another  country  where  those  acts  infringe  a  right  protected 

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24 

5.4. 

Administrative cooperation between the competent  authorities 

One of the priority objectives  of the Action Plan for the Single Market^  is the need to ensure the 
consistent,  effective  implementation  of  the  single  market  legislation.  To  attain  this  objective, 
cooperation  between  Member States'  authorities  and  with  the  Commission  is  essential.  Such 
cooperation  is  designed  mainly  to  ensure  that  the  legislation  is  correctly  implemented  by  the 
Member States.  In the  intellectual  property field, however, cooperation  is also needed  to  ensure 
that  the  law  is  correctly  applied  by  individuals  and  businesses.  The  introduction  of  genuine 
administrative  cooperation  between  the  departments  responsible  for  fighting  counterfeiting  and 
piracy  may  be  an  effective  means  of  dealing  with  the  phenomenon  at  Community  level. 
in  other  areas  such  as  customs  and 
Administrative  cooperation  has  proved  effective 

agriculture.^"  The aim  is to strengthen cooperation  between  the national  authorities  responsible 
in  the  Single  Market  for  combating  counterfeiting  and  piracy  by  providing  them  with  an 
appropriate  legal  framework  within  which  to  carry  out  a  number  of  actions.47  Under  these 
conditions, machinery  equivalent  to that  already used  by the customs  authorities  for  monitoring 
the Community's  external  frontiers  (cf.  Regulation  (EC) No 515/97) should be introduced  for the 
benefit  of  the  authorities  responsible  for  combating  counterfeiting  and  piracy  in  the  Single 
Market. 

The  administrative  cooperation  to  be  introduced  for  the  Single  Market  must  be  distinguished 
from  the international cooperation  provided for  in the TRIPs Agreement  (Article 69) with a view 
to  eliminating  international  trade  in  goods  infringing  intellectual  property  rights, inter  alia  by 
establishing  contact  points  in  the  administrations  of  each  WTO  member  and  by  exchanging 
information.  That  international  cooperation  is  aimed  in  particular  at  the  customs  authorities 
responsible  for  controlling  international  movements  of  goods  and  does  not  make  it  possible  to 
take fully  into account the specific needs arising from  the Single Market. 

Contact points 

Member States  should  establish  in advance a single contact point  for  all questions to do with  the 
fight  against  counterfeiting  and  piracy  in  the  Single  Market  to  act  as  an  interface  with  the 
departments responsible for prevention and punishment  in these areas in the other Member  States 
and with business professionals.  The creation of a network of contact points at Community  level 
would  help  to  facilitate  the  exchange  of  information. 
In  order  to  evaluate  the  practical 
functioning  of the cooperation  and, if necessary, to formulate  recommendations  for  improving  it, 
a  coordination  group  composed  of  national  contact  persons  and  Commission  representatives 
could be set up. 

45  CSE(97)1 of 4 June  1997. 
46  Council  Regulation  (EC)  No  515/97  of  13 March  1997  on  mutual  assistance  between 

the 
administrative  authorities  of  the  Member States  and  cooperation  between  the  latter  and  the 
Commission  to ensure the correct application of the law on customs and agricultural matters, OJ L 82, 
22.3.1997, p. 1. 

47  The administrative  cooperation  referred  to in this Green  Paper must  be distinguished  from  the  police 
cooperation  which,  if the Council, acting unanimously,  so decides, may be devolved on Europol in the 
field  of the counterfeiting  and piracy of products, cf.  Council Act of 26 July  1995 on the  establishment 
of aEuropean  Police Office  (Europol Convention), OJ C 316, 27.11.1995, p. 1. 

«• 

25 

Questions: 

34.  Do you  consider  that  the  establishment  of a single  contact  point  in each  Member State  for 
all  questions  to  do  with  the  fight  against  counterfeiting  and  piracy  in  the  Single  Market, 
which  would  act  as  an  interface  with  business  professionals  and  with  the  departments 
responsible  for  prevention  and  punishment  in the  other  Member States, would  be  likely  to 
facilitate  the exchange of information  in this field? 

Do  you  think  that  the  setting-up  of  a  coordination  group  composed  of  national  contact 
persons and Commission  representatives, the main  task  of which  would  be to consider  any 
questions to do with the fight against counterfeiting  and piracy  in the  Single Market,  would 
be likely to improve the fight against the phenomenon? 

Definition  of a suitable legal framework 

Of  the  operational  measures  for  combating  counterfeiting  and  piracy  that  may  be  envisaged, 
mention  may  be  made  of the  exchange  of  information,  including  sensitive  information  (e.g.  on 
proven  or  suspected  cases  of counterfeiting  or piracy), whether  on request  or  spontaneous,  such 
exchanges being perhaps effected  by means of a system of protected electronic mail to be created 
or established  on the basis of an existing system.  The creation  of an operational  database  might 
also  be  envisaged  to  facilitate  the  work  of  the  departments  responsible  for  prevention  and 
punishment.  Another  measure  might  be  to  provide  for  the  possibility  for  the  staff  of  these 
specialised  departments  working  for  one  or  more  Member States  to  take  part  in  inspections  or 
inquiries  in  another  Member State  (joint  inspections  or  inquiries).  Lastly,  the  possibility  of 
carrying  out,  either  spontaneously  or  at  the  request  of  another  Member State,  surveillance 
operations  concerning  movements  of suspect  goods might  also be envisaged.  The  Commission, 
for  its  part,  could  coordinate  actions  carried  out  in  Member States  in  cases  with  a  Community 
dimension, that is to say where at least two Member States are involved. 

It became apparent when this Green Paper was being prepared that the quality of the  information 
that  is available  on  counterfeiting  and  piracy  is very  variable,  not to  say  lacking  in many  cases, 
depending  on  the  sector  concerned.  With  a  view  to  improving  the  means  of  action  on  the 
strength  of  a  reliable  diagnosis,  a  systematic  approach  should  be  adopted  to  collecting  the 
necessary  information.  The  information  available  might  be periodically  inventoried  or  analysed 
with  a view  to  improving  the  means  of  combating  counterfeiting  and  piracy,  along  the  lines  of 
the report on the operation  of the system  of checks at the Community's external  frontier  provided 
for  in  Article  15  of  Regulation (EC) No 3295/94.  The  Commission  could  thus  draw  up,  at 
three-yearly  intervals, a report  on the  situation  in the  single  market  and  on  the  effectiveness  of 
the  measures  taken  by the various  bodies  and  authorities  to  combat  counterfeiting  and  piracy  in 
that market.  The report  could  be transmitted  to the European  Parliament  and the Council  with  a 
view to assessing its impact. 

Another  question  concerns  the  production  in  administrative  or judicial  proceedings  of  evidence 
obtained  lawfully  in another  Member State.  Such a possibility offers  considerable  advantages  in 
counterfeiting  or  piracy  cases  involving  more  than  one  Member State  as  the  evidence  is  rarely 
available  in  only  one  Member State.  Cooperation  between  judicial  authorities  in  obtaining 
evidence 
is  governed  by  the  Hague  Convention  of 
18 March  1970,  which  has  been  ratified  by  most  EU  Member States.48  It  would  be  useful  to 
know whether the  implementation  of the Convention  has given rise to any difficulties  in  practice 
and  what  positive  measures  might  be  taken,  if  necessary,  to  resolve  them.  If  the  Convention 
were  to  prove  incapable  of  resolving  all  difficulties,  another  possibility  would  be  to  adopt  a 

in  civil  and  commercial  matters 

48  Except Belgium, Denmark, Germany, Greece and Ireland. 

^ 

O £* 

specific  provision  in the area of the fight against counterfeiting  and  piracy authorising  the use in 
judicial or administrative proceedings of evidence gathered  lawfully  by the authorities of  another 
Member State. 

Questions: 

35.  Does  such  cooperation  as  already  exists  between  the  national  authorities  responsible  for 

combating counterfeiting  and piracy in the Single Market function  satisfactorily? 

If not, what  improvements  ought  in your  opinion  to  be  made?  For  example,  do you  think 
that  a  Community  initiative  defining  the  legal  framework  for  specific  administrative 
cooperation  between  the  authorities  responsible  for  combating  counterfeiting  and  piracy  in 
the Single Market would help to improve the fight  against the phenomenon? 

In  particular,  what  do  you  think,  in  this  context,  of  the  possibility  of  enabling  those 
authorities: 

-  to exchange and, if necessary, store in an existing or new database  information,  including 
operational  information,  due regard being had to the rules on the protection  of data? 
-  to conduct joint  inquiries or  inspections? 
-  or  to  monitor,  at the  request  of the  authorities  of  another  Member State,  movements  of 
suspect goods or services? 

36.  What role might the Commission play in the functioning  of such  cooperation? 

Ought  it  not  to  do  more  than  merely  provide  assistance  to  Member States  and coordinate 
cases with a Community dimension, and play, say, a more operational  role, notably  in terms 
of  inquiries? 

Do you  think  it would  be useful  if the  Commission  were  to  draw  up  a  report  every  three 
years  to  assess  the  situation  and  the  effectiveness  of  the  measures  taken  by  the  various 
bodies and authorities to combat counterfeiting  and piracy in the Single Market? 

37.  Have  you  encountered  any  obstacles  to  the  production  in  administrative  or  judicial 
proceedings  of evidence  obtained  lawfully  in another  Member State?  If  so, did the  Hague 
Convention  on the taking of evidence abroad  in civil or commercial  matters help  overcome 
those difficulties?  If not, how in your opinion could the difficulties  have been  resolved? 

Where  it  proves  impossible  to  resolve  difficulties  under  the  Hague  Convention,  do  you 
think  that,  within  the  framework  of  the  administrative  cooperation  between  competent 
national  authorities,  the  fact  of  being  able  to  produce  as  evidence  before  a  court  in  a 
Member State  information  obtained  lawfully  in another  Member State  by the  authorities  of 
that  State  would  be  an  appropriate  means  of  combating  counterfeiting  and  piracy  in  the 
Single Market? 

38.  What  other  measures  might,  in  your  opinion,  be  envisaged  with  a  view  to  strengthening 

administrative cooperation to combat the phenomenon  in the Single Market? 

Training 

Emphasis  should  also  be  placed  on  training  the  staff  entrusted  with  the  task  of  combating 
counterfeiting  and  piracy,  including  the  exchanging  of  personnel,  for  example  under  the 

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27 

KAROLUS programme^ or a specific  programme still to be set up, so as to promote the exchange 
of  experience  and  working  methods  in  this  field  with  a  view  to  promoting  the  best  practices 
there.  In  order to facilitate  cooperation between the  departments  responsible  for  prevention  and 
punishment  and  thus  improve  the  fight  against  the  phenomenon,  a  practical  operational  guide 
intended  for  national  authorities,  drawing  on the  considerable  fund  of  knowledge  and  expertise 
that is available, might be produced and regularly updated at Community  level. 

Questions: 

39.  Would  in  your  opinion  the  introduction  by  the  authorities,  in  conjunction  with  the 
professional  bodies  concerned,  of training  modules  for  the  staff  entrusted  with  the  task  of 
combating  counterfeiting  and  piracy  in the  Single Market  help to  improve  the  fight  against 
the  phenomenon? 

If so, at whom  should  it be targeted  in particular and how? 

40.  More generally,  is in your view the enhancing of the training of the officials  responsible  for 
combating  counterfeiting  and  piracy  in  the  Single  Market,  including  the  exchanging  of 
personnel  between  Member States,  likely  to  improve  the  fight  against  counterfeiting  and 
piracy in the Single Market? 

41.  Do you think that the production  and updating of a practical  guide for national  authorities  is 

likely to improve the fight against the phenomenon? 

49  Council Decision  92/481/EEC of 22 September 1992, OJ L 286,  1.10.1992,  p. 65.  The Decision is 

currently being amended, OJ C 274, 10.09.1997, p. 9. 

6 

ISSN 0254-1475 

COM(98) 569 final 

DOCUMENTS 

EN 

09  10  06  08 

Catalogue number  :  CB-CO-98-575-EN-C 

ISBN  92-78-39728-8 

Office  for  Official  Publications of the European Communities 

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