Opinion of the Economic and Social Committee on "Counterfeiting"
Date: 2001-05-30
Institutions: European Economic and Social Committee
Subjects: dissemination of EU information, industrial counterfeiting, public awareness campaign, single market

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7.12.
The network of associations that help and advise
SMEs in the manufacturing, commerce, tourism and general
services sectors should be encouraged and supported in their
work, with a view to furthering the dissemination of good
practice among small companies and boosting their economic,
commercial and social performance.

7.14. Measures for small companies should be monitored
and coordinated in order to prevent overlaps and increase
their impact.

7.15.
Community legislation on public contracts must be
brought more into line with the pattern set by the United
States and adopted by the Senate of the French Republic, i.e.
setting aside a share of public contracts for small companies
and craft firms.

7.13.
In a sector which employs 66 % of the working
population, it is particularly necessary to involve the social
partners and to actively develop employee participation by
encouraging business-owners to promote guaranteed social
standards, for instance in the retail sector and in subcontracting
firms in the industrial and building sector.

7.15.1.
The methodological route taken in the early 1990s
must be pursued, gleaning more information about the nature
and scale of small companies and craft firms in Europe, in
order to gain a clearer idea of their qualitative and quantitative
contribution, and to design increasingly effective and well-
targeted measures.

Brussels, 30 May 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

Opinion of the Economic and Social Committee on ‘Counterfeiting’

(2001/C 221/02)

On 19 December 2000, the Economic and Social Committee, acting under Rule 23(2) of its Rules of
Procedure, decided to draw up an additional opinion on ‘Counterfeiting’.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 16 May 2001. The rapporteur was Mr
Malosse.

At its 382nd plenary session held on 30 and 31 May 2001 (meeting of 30 May) the Economic and Social
Committee adopted the following opinion by 112 votes to one.

1.

Introduction

1.1.
The Economic and Social Committee, at its 361st ple-
nary session (meeting of 24 February 1999) adopted an
opinion (1)
in response to consultation by the European
Commission, in accordance with Article 198 of the Treaty
establishing the European Communities, on the Green Paper
on combating counterfeiting and piracy in the single market.

1.2.
On 30 November 2000, the Commission submitted a
Communication to the Council (2), the European Parliament

and the Economic and Social Committee on the follow-up to
be given to its Green Paper. The Committee Bureau decided at
its meeting on 19 December 2000 to issue an additional
opinion in order to send out a political signal
to the
Commission, the Council and the European Parliament and to
European civil society, in view of the considerable impact this
problem has within the Community.

(1) OJ C 116, 28.4.1999, p. 35.
(2) COM(2000) 789 final of 30.11.2000.

The Committee opinion adopted on 24 February 1999
1.3.
was the result of in-depth work; this had given rise to a hearing
which brought together more than 30 economic and social

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organisations throughout Europe, all of which one way or
another — were facing problems caused by counterfeiting and
piracy. The recommendations of that opinion are set out in
the appendix to this draft.

The Committee has closely followed the ideas and
1.4.
discussions surrounding this topic since the Green Paper was
published. In particular, it took part in a hearing organised by
the European Commission jointly with the Germany presi-
dency of the Council in Munich on 2 and 3 March 1999 and
in a European forum on combating counterfeiting and piracy
organised by the French Council presidency in Paris on 20 and
21 November 2000.

1.5.
This additional opinion is part of a series of initiatives
taken by the Committee for promoting intellectual and
industrial property rights in Europe. Thus, the own-initiative
opinion on ‘The exhaustion of registered trade marks rights’ (1),
adopted on 24 January 2001, stresses the dangers of a flood
of counterfeit products if there were to be a switch away from
the Community exhaustion regime.

2. General comments on the Commission proposal

2.1. Approval of the Commission’s general approach

supports

The Committee

2.1.1.
the European Com-
mission’s intention to submit a proposal for a Directive in the
near future aimed at boosting the resources for ensuring that
intellectual property rights are complied with and defining
a general framework for exchanging information and for
administrative cooperation. In view of the alarming recent
upsurge in counterfeiting and piracy activities, the Committee
would underline the urgency of issuing this proposed directive
as quickly as possible. Most of the European organisations
concerned, just like the ESC in its opinion on the Green Paper,
had already stressed the need for this. In this connection the
Committee underlines the right of economic and social
organisations,
including consumers organisations, to go to
court to request the closure of establishments where acts of
counterfeiting and piracy have been committed, as well as to
request application of the procedure for recalling goods, the
costs of which should be jointly borne by those responsible
for producing and marketing the counterfeit or pirated goods.
Lastly it stresses the importance of establishing counterfeiting
and piracy as crimes with minimum penalties which have a
sufficiently deterrent effect, including penalties for distributors
and private individuals when large quantities of counterfeit

goods are involved; acquired with full knowledge of the
facts. These penalties should include closure of production
establishments with social support measures for staff whose
situation has been abused. The Committee would wish this
principle to be included at this stage in the draft directive,
though more precise provisions may be included in initiatives
undertaken as part of the creation of a European judicial area.

2.1.2.
The Committee particularly welcomes the fact that
the Commission is intending to introduce a right to infor-
mation. In order to clamp down effectively on these crimes,
the first condition is often that the holder of the rights has full
information about the origin of the counterfeiting and the
distribution networks. To do this, it is necessary for the right
to information to be independent of the offence and therefore
not subject to any conditions. The Committee thus would
stress the need for right holders to be kept adequately informed
so that they do actually contact the customs services with
requests for action, all the more so since counterfeiting and
piracy are otherwise difficult to detect.

2.2. The need for consistency between internal and external actions:

‘Everything but counterfeiting and piracy’

The Committee regrets the fact that this Communication does
not adopt a global approach in tackling counterfeiting and
piracy — particularly the aspects of these activities which
occur outside the EU — since a large quantity of pirated and
counterfeited products circulating within the EU comes from
third countries. Recently the European Commission proposed
an initiative entitled ‘Everything but Arms’ designed to allow 48
of the poorest countries in the world to export all their
‘without
products except for arms to the European Union,
quotas, without tariffs, and without exception’. Note that while
arms generally come from developed countries, the same is
not true of counterfeit and pirated products; incidentally, these
follow the same route as drugs and illegal immigration and
represent a real threat, undermining genuine development
opportunities by stifling legal economic expansion. The Com-
mittee thus recommends using Article 9 of the regulation on
generalised preferences to exert pressure on those countries
which turn a blind eye to such practices. At the same time, as
well as clamping down on offenders, it would also be up to
the European Union to promote awareness — raising cam-
paigns and training in its cooperation programmes with those
countries most affected by this phenomenon.

2.3. A crucial

issue for enlargement but also vital for current

Member States

(1) OJ C 123, 25.4.2001.

The Committee fully supports the determination that the
Commission has demonstrated in ensuring that the fight

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against counterfeiting and piracy is a priority issue in the
negotiations with the applicant countries, particularly those
which are heavily involved in this problem. To this end,
consistency must be secured between this Communication and
the one recently presented by the Commission (1) analysing the
major problems facing the customs services, especially after
enlargement. However, the Committee urges the European
the obligations placed on the
Union to make sure that
applicant countries and the practices asked of them are no
greater than those applying to each of the current Member
States. Otherwise the Community’s position seems to us quite
shaky. How,
in fact, can drastic measures be imposed on
applicant countries while some current Member States con-
tinue to be quite lax in their approach?

2.4. The Committee proposes a formal political act

So as to propel matters forward and endow the Union’s efforts
with a global dimension, the Committee advocates holding a
‘jumbo’ Council, bringing together ministers responsible for
justice and internal affairs, the single market, trade and foreign
affairs. At this meeting, coordinated national and Community
measures should be taken to combat counterfeiting and piracy,
to step up sanctions against offenders, to bolster customs
action against those countries turning a blind eye to these
practices and to coordinate measures and instruments for
In
protecting industrial and intellectual property rights.
addition, it would be appropriate to use such an occasion to
issue a formal Council Declaration highlighting the economic
and social harm caused by such practices, the dangers for
personal health and safety, and the link with large-scale
organised crime.

3.

Specific proposals on training and awareness-raising

3.1. Awareness-raising and public information

The Committee had also called for awareness-raising and
public information campaigns and it welcomes the fact that
these are included in the urgent measures proposed by the
European Commission. It is nevertheless concerned by the
absence of detail on this point and the lack of resources
released for this purpose. It stresses the key role played by civil
society organisations: consumers, professional associations,
the commercial sector, writers and artists associations and

(1) COM(2001) 51 final, of 24.1.2001, Communication from the
Commission to the Council, the European Parliament and the
Economic and Social Committee concerning a strategy for the
Customs Union.

other representative bodies. It suggests that specific instru-
ments be put in place for providing information: a Europe-
wide campaign involving posters in ports and airports, and the
immediate creation of a website accessible in particular to
business organisations, distributors and consumers’ organis-
ations through whom information about court decisions
would be relayed (this latter suggestion is only mentioned as a
‘medium-term action’ in the Commission’s plan).

3.2. The key role played by the courts

The Committee regrets the fact the Commission makes no
mention of the need for training and coordination measures
to boost the effectiveness and resources of police and judicial
bodies: most of the organisations and businesses concerned
have stressed how urgent this is.
In this connection the
Committee suggests that Member States and the Commission
put forward proposals soon for measures to be implemented
in the framework of the European judicial area, for:

— strengthening and specialisation of EUROPOL units;

— putting in place training and exchange programmes for

policemen and magistrates;

— developing a network of courts with the necessary
qualifications for handling these cases, with back-up from
a specialised European chamber dealing with the adoption
of the Community patent;

— organising the exchange of

information through the

European network for mutual legal assistance.

To make the wheels of justice turn more quickly, the Com-
mittee would even suggest that when the draft European
enforcement order is being prepared, the possibility be dis-
cussed of including the handling of counterfeiting and piracy
cases.

3.3.

Information for businesses

The Communication omits to broach the crucial
issue of
informing businesses about their rights and duties in the face
of the increase in this criminal activity. The Commission
merely points out that ‘responsibility relies primarily with
holders of intellectual property rights, who must be on their
guard’, and seems to forget that more often than not this
concerns small and medium-sized firms, tradesmen, craftsmen,
freelance writers and researchers who do not have the resources
to monitor the situation in this way and are often unaware of
their rights. The Committee therefore calls for awareness-
raising campaigns funded by the Union to be mounted in
conjunction with professional bodies. Such projects are already
in place in some member states and it would be appropriate to
introduce these throughout Europe, adopting a transnational

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approach. Moreover, the Committee again stresses the value
of providing businesses with specialised information tools
such as data bases on designs and a European counterfeiting
observatory in the form of an information network for
businesses via the Euro-Info centres. More generally,
the
Committee feels bound to stress how urgent it is for effective
Community instruments to be adopted for protecting property,
such as the Community Patent and the Regulation on Com-
munity Design.

3.4. The central role to be played by European civil society in the

new forms of regulation

3.4.1.
The Committee also points out that the Communi-
cation does not directly tackle the central role which European
civil society organisations could play straight away in what is
known as ‘self-regulation and co-regulation’. This involves
amongst other things codes of good conduct for the distri-
bution sector and the industry, as well as quality labels. Along
the same lines, the ‘free-rider’ approach, consisting of making
blatant imitations (look-alikes), must also be blacklisted insofar
as these unfair practices are damaging to the spirit of creativity
and inventiveness.

3.4.2.
The Committee suggests to the Commission that a
working seminar on these subjects be held with all the major
economic and social organisations, at which good practices
for civil society operators would be presented and proposals

Brussels, 30 May 2001.

worked out for these practices to be brought into widespread
use.

4. Conclusion

4.1.
The Committee underlines how urgent it is to adopt a
coordinated global policy for combating the scourge of
counterfeiting and piracy. Over and above the economic and
social harm which is caused, the very health and safety of the
general public is under threat while the spirit of invention and
creativity is treated with disdain.

4.2.
Any delay in providing the European Union with
instruments for protecting creativity and invention (the Com-
munity patent and the regulation on Community design) and
for fighting against counterfeiting and piracy (the draft directive
announced by the European Commission) would be interpret-
ed as a sign of weakness. Today,
inventors, businessmen,
designers and artists run the risk of seeing their work copied,
and consumers and distributors are in danger of being cheated.
It is important to turn the tables and ensure that it is the
counterfeiters of innovation and the pirates of creativity who
run the risks.

In this struggle, the Union’s strongest allies will not
4.3.
only be the forces of order (police and the courts), but also
civil society organisations. In fact, pressure from society can
be a very effective weapon in terms of staying on guard,
sounding the alert, educating the public, and upholding moral
standards.

The President

of the Economic and Social Committee

Göke FRERICHS

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APPENDIX

to the opinion of the Economic and Social Committee

Summary of the recommendations contained in the Economic and Social Committee’s opinion on the
Green Paper on Combating counterfeiting and piracy in the single market

All forms of counterfeiting, piracy and other parasitic acts cause severe damage to European firms and

1.1.
creative people.

1.2.

Such acts deceive the customer and the consumer, and may involve serious risks to their safety and health.

1.3.

They have a negative impact on employment and creativity in Europe.

Very often, illicit counterfeiting and piracy are tied up with undeclared work, tax avoidance, disregard for

1.4.
social and labour law and organised crime.

2.1.
In view of all this, the ESC recommends that the EU adopt an overall approach to the phenomenon that takes
account of the external and internal political aspects and introduces appropriate measures for preventing and
stamping out all forms of counterfeiting, piracy and other parasitic acts.

2.2.
Bearing in mind the importance of prevention, the ESC notes the importance of having a single set of laws
containing uniform protection, at reasonable cost, for all forms of intellectual property, proper information for
creative people and entrepreneurs about their rights, and campaigns to warn consumers and appeal to their sense of
civic duty.

2.3.
The ESC would stress the need to launch information campaigns for the general public, coordinated at
European level and involving consumers’ organisations, trade unions and the professional organisations concerned,
including those in the distribution sector.

2.4.
The ESC recommends the setting-up of a ‘European observatory to combat counterfeiting, piracy and other
parasitic acts’, operating in a network with all the organisations and associations concerned; it suggests pilot schemes
to encourage projects on a European scale aimed at alerting and informing the public and training the authorities
concerned.

2.5.
The ESC stresses the urgent need to strengthen legal and police cooperation, in liaison with the organisations
and associations concerned. It considers that to combat organised large-scale counterfeiting and piracy effectively,
the proper way, together with prevention, is to apply the law very strictly with the support of effective cooperation
at European level.

The ESC thinks it would be wise to allow the organisations and associations concerned to sue on behalf of

2.6.
wronged firms, inventors or consumers.

2.7.
The ESC feels that justice must be encouraged to apply the laws strictly, especially in the event of repeated
offences and organised crime, and that complainants should not have to bear the cost of destroying illegally-
manufactured goods. Appropriate ways for achieving this would be to provide specialist training for judges, set up
special courts and extend the provisions concerning the Community trade mark to cover other areas of intellectual
and industrial property.

2.8.
The ESC recommends that the combating of counterfeiting, piracy and other forms of parasitism should be
closely linked to the combating of undeclared work, tax avoidance and organised crime. Cooperation between
authorities should be extended and strengthened through European training programmes involving and mobilising
all the types of authority concerned.