Proposal for a Directive of the European Parliament and of the Council on measures and procedures to ensure the enforcement of intellectual property rights
Date: 2003-01-30
Institutions: European Commission
Subjects: administrative cooperation, approximation of laws, criminal law, intellectual property, judicial proceedings, single market

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 30.1.2003
COM(2003) 46 final

2003/0024 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on measures and procedures to ensure the enforcement of intellectual property rights

(presented by the Commission)

EXPLANATORY MEMORANDUM

INTRODUCTION

A.

B.

Objective of the Community initiative

Basis for the initiative: consultation by the Commission

PART ONE: ACHIEVING  THE  INTERNAL  MARKET  IN  THE  FIELD  OF  INTELLECTUAL

PROPERTY

A.

B.

C.

Enforcing the substantive law of intellectual property

Promoting  freedom  of  movement  and  ensuring  fair  and  equal  competition  in  the
Internal Market

Supplementing the measures at the external frontier and vis-à-vis third countries

PART TWO: MEETING THE NEEDS OF A MODERN ECONOMY AND PROTECTING SOCIETY

A.

B.

C.

D.

E.

Promoting innovation and business competitiveness

Promoting the preservation and development of the cultural sector

Preserving employment in Europe

Preventing tax losses and market destabilisation

Ensuring consumer protection

PART THREE: DETAILS AND CHARACTERISTICS OF THE MEASURES PROPOSED

A.

B.

C.

D.

E.

The limits of the TRIPS Agreement

The  acquis  communautaire  with  regard  to  the  enforcement  of  intellectual  property
rights

The legal situation in the Member States

The need for harmonisation of national legislation

Legal basis

PART FOUR: EXAMINATION OF THE PROVISIONS

2

A.

Objective of the Community initiative

INTRODUCTION

Counterfeiting  and  piracy,  and  infringements  of  intellectual  property  in  general,  are  a
constantly growing phenomenon which nowadays have an international dimension, since they
are a serious threat to national economies and governments. In the European Internal Market,
this  phenomenon  takes  particular  advantage  of  the  national  disparities  in  the  means  of
enforcing intellectual property rights. These disparities seem to influence the choice of where
counterfeiting and piracy activities within the Community are carried out, and this means that
the counterfeited and pirated products  are more likely  to be  manufactured  and  sold in those
countries  which  are  less  effective  than  others  in  combating  counterfeiting  and  piracy.  They
therefore have direct repercussions on trade between the Member States and a direct impact
on  the  conditions  governing  competition  in  the  Internal  Market.  This  situation  leads  to
diversions of trade, distorts competition and creates disturbances on the market.

The  disparities  between  the  national  systems  of  penalties,  apart  from  hampering  the  proper
functioning  of  the  Internal  Market,  make  it  difficult  to  combat  counterfeiting  and  piracy
effectively. This leads to a loss in confidence in economic circles in the Internal Market, and
hence  to  a  reduction  in  investment.  In  addition  to  the  resultant  economic  and  social
consequences,  counterfeiting  and  piracy  also  pose  problems  for  consumer  protection,
particularly when public health and safety are at stake. Increasing use of the Internet enables
pirated  products  to  be  distributed  instantly  around  the  globe.  Finally,  this  phenomenon
appears to be increasingly linked to organised crime. Combating the phenomenon is  thus of
vital importance for the Community especially when these illegal activities are carried out on
for commercial purposes or cause significant harm to the right holder.

The aim of this Directive is to tackle this situation by harmonising national legislation on the
enforcement of intellectual property rights.

B.

Basis for the initiative: consultation by the Commission

On  15  October  1998,  the  Commission  presented  a  Green  Paper  on  the  fight  against
counterfeiting and piracy in the Single Market1 in order to launch a debate on this subject with
all  interested  parties.  The  areas  of  intervention  suggested  in  the  Green  Paper  related  in
particular  to  action  by  the  private  sector,  the  effectiveness  of  technical  security  provisions,
penalties and other means of ensuring compliance with intellectual property rights, as well as
administrative co-operation between the national authorities.

1

COM(98) 569 final.

3

                                                
The  Commission  received  a  large  number  of  contributions  which  became  the  subject  of  a
published  summary  report2.  Together  with  the  German  Presidency  of  the  Council  of  the
Union,  the  Commission  organised  in  Munich  on  2  and  3  March  1999  a  hearing  open  to  all
interested  circles3,  as  well  as  a  meeting  of  experts  from  the  Member  States  on
3 November 1999.  The European Economic  and  Social Committee submitted  its  opinion  on
the Green Paper on 24 February 19994. The European Parliament adopted a Resolution on this
subject on 4 May 20005.

This  consultation  exercise  confirmed,  in  particular,  that  the  disparities  between  the  national
systems of penalties for intellectual property rights were having a harmful effect on the proper
functioning  of  the  Internal  Market.  The  interested  parties  expressed  the  desire  for  this
question to be tackled energetically and for far-reaching measures to be taken at the level of
the European Union.

Subsequent to this consultation exercise, the Commission presented on 30 November 2000 a
follow-up Communication to the Green Paper containing an ambitious action plan to improve
and strengthen the fight against counterfeiting and piracy in the Internal Market6. Among the
measures proposed in that action plan, the Commission announced that it would be presenting
a proposal for a Directive aimed at harmonising the legislative, regulatory and administrative
provisions of the Member States on the means of enforcing intellectual property rights, and at
ensuring  that  the  rights  available  enjoy  an  equivalent  level  of  protection  in  the  Internal
Market. That is the aim of this proposal.

The  Commission  Communication,  and  in  particular  the  announcement  of  a  proposal  for  a
Directive  on  the  enforcement  of  intellectual  property  rights,  was  welcomed  by  interested
circles.  In  its  supplementary  opinion  of  30  May  20017,  the  European  Economic  and  Social
Committee  approved  the  intention  of  the  European  Commission  to  present  a  proposal  for  a
Directive on this subject in the near future.

PART ONE:

ACHIEVING THE INTERNAL MARKET IN THE FIELD OF INTELLECTUAL PROPERTY

A.

Enforcing the substantive law of intellectual property

Up  till  now,  the  action  taken  by  the  Community  in  the  field  of  intellectual  property  has
focused mainly on the harmonisation of national substantive law or the creation of a unitary
right at Community level. Certain national intellectual property rights, for instance, have been
harmonised,  such  as  trade  marks8,  designs9,  patents  for  biotechnological  inventions10,  and

2

3

4

5

6

7

8

9

10

http://europa.eu.int/comm/internal_market/en/indprop/piracyen.pdf.
http://europa.eu.int/comm/internal_market/en/indprop/piracy/munchen.htm.
OJ C 116, 28.4.1999, p. 35.
OJ C 41, 7.2.2001, p. 56.
COM(2000) 789 final.
OJ C 221, 7.8.2001, p. 20.
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.
Directive  98/71/EC  of  the  European  Parliament  and  of  the  Council  of  13  October  1998  on  the  legal
protection of designs, OJ L 289, 28.10.1998, p. 28.
Directive  98/44/EC  of  the  European  Parliament  and  of  the  Council  of  6  July  1998  on  the  legal
protection of biotechnological inventions, OJ L 213, 30.7.1998, p. 13.

4

                                                
certain  aspects  of  copyright  and  related  rights11.  The  recent  adoption  of  the  Directive  on  a
resale right for the benefit of the authors of original works of art12, and the Directive on the
harmonisation of certain aspects of copyright and related  rights in the information society13,
are in this respect a major step forward in the process of harmonising  copyright and related
rights.  This  last  Directive  will  make  it  possible  to  adapt  the  protection  of  right  holders  to
technological  developments,  in  particular  in  the  digital  field.  The  Community  has  also
intervened  to  extend  the  duration  of  patent  protection  for  medicinal  products  and  plant
protection products14, as well as to lay down common rules for geographical indications and
designations of origin15. The Commission has also made proposals for harmonisation with a
view  to  clarifying  the  legal  situation  regarding  the  patentability  of  computer-implemented
inventions16.

The  Community  has  also  taken  action  to  create  unitary  rights  at  Community  level,
immediately valid throughout the EC, such as the Community trade mark17, the Community
system of protection for plant varieties18 and, more recently, Community designs19. It should
also  be  noted  that  legislative  proposals  are  currently  under  discussion  at  the  level  of  the
Council of the EU for the creation of a Community patent20.

11

12

13

14

15

16

17

18

19

20

Council  Directive  91/250/EEC  of  14  May  1991  on  the  legal  protection  of  computer  programs,
OJ L 122,  17.5.1991,  p. 42;  Council  Directive  92/100/EEC  of  19  November  1992  on  rental  right  and
lending right and on certain rights related to copyright in the field of intellectual property, OJ L 346,
27.11.1992, p. 61; Council Directive 93/83/EEC of 27 September 1993 on the co-ordination of certain
rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable
retransmission,  OJ  L  248,  6.10.1993,  p.  15;  Council  Directive  93/98/EEC  of  29  October  1993
harmonising the term of protection of copyright and certain related rights, OJ L 290, 24.11.1993, p. 9;
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.
Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on resale
rights for the benefit of the authors of original works of art, OJ L 272, 13.10.2001, p. 32.
Directive  2001/29/EC  of  the  European  Parliament  and  of  the  Council  of  22  May  2001  on  the
harmonisation of certain aspects of copyright and related rights in the information society, OJ L  167,
22.6.2001, p. 10.
Council  Regulation  (EEC)  No  1768/92  of  18  June  1992  concerning  the  creation  of  a  supplementary
protection certificate for medicinal products, OJ L 182, 2.7.1992, p. 1; Regulation (EEC) No 1610/96 of
the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary
protection certificate for plant protection products, OJ L 198, 8.8.1996, p. 30.
Council Regulation (EEC)  No  2081/92 of  14  July  1992  on  the  protection  of  geographical  indications
and designations of origin for agricultural products and foodstuffs, as last modified by Regulation (EC)
No 1068/97, OJ L 156, 13.6.1997, p. 10.
Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  the  patentability  of
computer-implemented inventions, COM(2002) 92 final of 20.2.2002.
Council  Regulation  (EC)  No  40/94  of  20  December  1993  on  the  Community  trade  mark,  OJ  L  11,
14.1.1994, p. 1.
Council Regulation (EC) No  2100/94 of  27  July  1994  on  Community  plant  variety  rights,  OJ  L  227,
1.9.1994, p. 1.
Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs, OJ L 3, 5.01.2002,
p. 1.
Proposal for a Council Regulation on the Community patent, OJ C 337 E, 28.11.2000, p. 278.

5

                                                
The  powers  of  the  Community  in  the  field  of  the  substantive  law  on  intellectual  property,
which  appears  more  and  more  to  be  a  field  for  priority  intervention  for  the  Community  in
order  to  ensure  the  success  of  the  Internal  Market,  are  today  fully  recognised21.  It  is  thus  a
logical extension that the Community should take an interest in the effective enforcement of
the intellectual property rights which it has harmonised or created at Community level. At the
level  of  principles,  the  fact  that  the  enforcement  of  intellectual  property  rights,  which  are
today governed essentially by Community law, should be ensured according to systems which
sometimes vary widely from one Member State to the other appears difficult to reconcile with
the  objective  of  guaranteeing  right  holders  an  equivalent  level  of  protection  in  the  Internal
Market.

B.

Promoting freedom of movement and ensuring fair and equal competition in the
Internal Market

Article  3(1)(c)  of  the  EC  Treaty  lays  down  that  the  activities  of  the  Community  include  an
internal market characterised by the abolition, as between Member States, of obstacles to the
free movement of goods and services. In addition, Article 14(2) of the EC Treaty lays down
that  the  internal  market  comprises  an  area  without  internal  frontiers  in  which  the  free
movement of, in particular, goods and services is ensured.

While  the  gradual  harmonisation  of  substantive  law  on  intellectual  property  rights  has
promoted  the  free  movement  of  goods  between  the  Member  States  and  has  made  the  rules
applicable more transparent, the means of enforcing intellectual property rights have not yet
been  subject  to  any  harmonisation.  Moreover,  even  when  the  national  legislation  provides
right  holders  with  effective  means  of  enforcing  their  rights,  it  sometimes  happens  that  the
practical implementation of those means is not ensured. As pointed out by interested circles
during the consultation on the Green Paper, these loopholes have naturally been exploited by
counterfeiters and pirates,  who have taken  advantage of  national differences  to  market  their
products, thereby causing diversions of trade and market disturbances. Harmonisation of the
national  provisions  governing  the  enforcement  of  intellectual  property  rights  will  ensure
better movement within the Internal Market, greater transparency in the systems of penalties
and improved application of the means made available to right holders.

Furthermore,  the  creation of fair  and  equal  conditions  of  competition  between  all  economic
operators in the field of intellectual property is essential in order to allow these operators to
make effective use of the fundamental freedoms set out in the EC Treaty. The conditions for
fair and equal competition are weakened or nullified by differing national rules on enforcing
intellectual  property  rights.  Under  certain  circumstances,  the  results  are  distortions  of
competition which jeopardise the free movement of goods and services in the Internal Market.

Distortions of competition in the Internal Market may come not only from differences in the
scope  and  extent  of  intellectual  property  rights  by  virtue  of  national  law,  but  also  from
differences  in  the  systems  of  penalties  applied  to  protect  those  rights  against  counterfeiters
and pirates. From the point of view of the latter, the strictness of the local system of penalties
can be taken into account in the production costs of illegal products. These costs will depend

21

It  took  a  judgment  of  the  Court  of  Justice  in  1995,  handed  down  in  relation  to  Regulation  (EEC)
No 1768/92  concerning  the  creation  of  a  supplementary  protection  certificate  for  medicinal  products,
for  it  to  be  fully  recognised  that  patents  are  not  a  field  reserved  for  the  Member  States,  and  that  the
Community  may  adopt  harmonisation  measures 
in
Spain v. Council, Case C-350/92, ECR 1995, p. I-1985).

that  field  (judgment  of  13.7.1995 

in 

6

                                                
on the penalties applied in the event of proceedings (seizure of the illegal goods, payment of
fines, need to pay workers more to offset the risk of retaliation measures).

The  result  is  that,  in  the  absence  of  legislation  to  harmonise  the  systems  of  penalties  for
intellectual  property  rights  in  the  Internal  Market,  there  will  continue  to  be  a  situation  of
differences in terms of the risks and, hence, of the costs for the operators of counterfeit and
pirated products. Since such counterfeit and pirated goods are, by definition, substitutes in the
economic  sense  for  the  lawfully  marketed  goods  which  they  imitate,  the  divergences  in  the
cost base in the Internal Market for illegal operators will also  give rise  to differences in the
conditions of competition for the lawful operators. It can be considered that, in those parts of
the Internal Market where the system of penalties is relatively ineffective, the market share for
counterfeit and pirated products is likely to be higher, and the prices of both legal and illegal
goods lower, than in countries which have stricter penalties for intellectual property rights.

This means that divergences in the systems of penalties are likely to lead to distortions in the
conditions of  competition  and  to  diversions  of  the  natural  trade  flows  of  legal  goods  which
would take place if the penalties for intellectual property rights were harmonised throughout
the Internal Market.

Counterfeiting  and  piracy  are  a  phenomenon  which  spreads  by  exploiting  the  differences
between national legislations. Moreover, in those countries in which this phenomenon arises,
businesses have to face the competition from counterfeit and pirated products on the markets
in  which  they  are  developing,  which  leads  to  losses  in  market  share  and  disorganisation  in
their distribution networks. When the market is flooded with counterfeit and pirated products
which  are  easier  to  sell  than  the  genuine  articles,  retailers  are  sometimes  loath  to  order  the
genuine  articles.  They  may  even  be  tempted  to  sell  copies,  if  necessary  alongside  genuine
articles. This situation is not such as to ensure the transparency and equality of the conditions
of competition in the Internal Market. Only the harmonisation of national legislation will be
able to eliminate distortions of competition arising from this phenomenon.

Having said that, in sectors in which competition is particularly fierce, such as the market for
spare  car  parts,  the  fight  against  counterfeiting  and  piracy  must  not  be  used  to  try  to  keep
unwelcome competitors  out  of the market  or  to  hamper  legitimate  competition.  Such  action
would risk not only causing serious damage to the businesses concerned, but also - and above
all - doing a disservice to the objective pursued, which is to prevent the marketing of products
which  infringe  intellectual  property  rights  and  in  many  cases  involve  risks  to  the  health  or
safety of consumers22.

C.

Supplementing  the  measures  at  the  external  frontier  and  vis-à-vis  third
countries

This  proposal  for  a  Directive  is  also  intended  to  supplement,  for  the  needs  of  the  Internal
Market,  the  measures  already  taken  on  the  basis  of  Regulation  (EC)  No  3295/94,  as
amended23, on checks for counterfeit and pirated products at the external frontier of the EU.
These  rules  apply  only  to  movements  of  suspected  counterfeit  and  pirated  goods  between
third countries and the Community. They do not enable the monitoring of movements within

22

23

Regulation (EC) No 1400/2002, OJ L 203, 1.8.2002, p. 30.
Council Regulation (EC) No 3295/94 of 22 December 1994 laying down certain measures to prohibit
the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and
pirated goods (OJ L 341, 30.12.1994, p. 8), as amended by  Council Regulation (EC) No 241/1999 of
25 January 1999, OJ L 27, 2.2.1999, p. 1.

7

                                                
the Community. Moreover, given that the checks at the frontier are carried out by all Member
States on the basis of a selective approach in order to maintain a fair balance between the free
flow of international trade and the fight against fraud, it cannot be excluded that counterfeit or
pirated  products  may  enter  the  territory  of  the  Community  illegally  to  be  subsequently
marketed  there.  There  is  therefore  a  need  for  a  means  of  fighting  counterfeiting  and  piracy
specific  to  the  requirements  of  the  Internal  Market.  This  Directive  will  thus  provide  right
holders with a number of measures and procedures for enforcing their rights against all illegal
goods, including those intercepted by customs authorities under Regulation (EC) No 3295/94,
as amended.

Another  objective  of  the  Directive  is  to  supplement  the  measures  taken  to  combat
counterfeiting and piracy in the context of the Community's relations with third countries and
the multilateral agreements to which it is party. This applies, in particular, to the Agreement
on Trade-Related  Aspects  of  Intellectual  Property  Rights  (TRIPS  Agreement),  concluded  in
the  framework  of  the  World  Trade  Organisation24,  to  which  all  the  Member  States  of  the
European  Union  are  parties,  as  well  as  the  Community  as  regards  matters  within  its
competence25, and which lays down minimum provisions as regards the means of enforcing
intellectual property rights.

PART TWO:

MEETING THE NEEDS OF A MODERN ECONOMY AND PROTECTING SOCIETY

While the principal objective of this measure is to achieve the Internal Market in the field of
intellectual  property  by  ensuring  that  the  acquis  communautaire  in  the  substantive  law  of
intellectual  property  is  applied  correctly  in  the  European  Union,  other  major  objectives  are
worthy of emphasis.

A.

Promoting innovation and business competitiveness

Innovation  has  become  one  of  the  most  important  vectors  of  sustainable  growth  for
businesses,  and  of  economic  prosperity  for  society  as  a  whole.  Businesses  must  constantly
improve  or  renew  their  products  if  they  wish  to  keep  or  capture  market  shares.  Sustained
inventive  and  innovatory  activity,  leading  to  the  development  of  new  products  or  services,
puts  businesses  at  an  advantage  in  technological  terms  and  is  a  major  factor  in  their
competitiveness.

If businesses, universities, research organisations26 and the cultural sector27 are to be able to
innovate and be creative under good conditions, it should be ensured that creators, researchers
and inventors in the Community benefit from an environment favourable to the development
of their activities, including as regards the new information and communication technologies.
In  this  context,  the  free  movement  of  information  should  also  be  ensured  and  access  to  the
Internet  not  made  more  difficult  or  costly  by,  for  instance,  imposing  excessively  heavy
obligations on Internet intermediaries.

24

25

26

27

Council  Decision  94/800/EC  of  22  December  1994  concerning  the  conclusion  on  behalf  of  the
European  Community,  as  regards  matters  within  its  competence,  of  the  agreements  reached  in  the
Uruguay Round multilateral negotiations (1986-1994), OJ L 336, 23.12.1994, p. 1.
In  its  Opinion  1/94  of  15  November  1994,  the  Court  of  Justice  declared  that  the  competence  for
concluding  the  TRIPS  Agreements  was  shared  between  the  Community  and  its  Member  States
(ECR 1994, p. I-5267).
Title XVIII of the EC Treaty stresses the importance of research and technological development.
The importance of the cultural sector is explicitly highlighted in Article 151(4) of the EC Treaty.

8

                                                
Businesses,  which  often  invest  large  amounts  of  money  in  research  and  development,
marketing and publicity,  must be in a  position to recoup their investments.  Appropriate  and
effective  protection  of  intellectual  property  helps  to  establish  the  confidence  of  businesses,
inventors and creators in the Internal Market and is a powerful incentive for investment, and
hence for economic progress.

The phenomenon of counterfeiting and piracy leads to businesses losing turnover and market
shares  (loss  of  direct  sales)  which  they  have  sometimes  had  difficulty  acquiring,  not  to
mention the intangible losses and the moral prejudice they suffer because of the loss in terms
of  brand  image  with  their  customers  (loss  of  future  sales).  The  spread  of  counterfeit  and
pirated products in fact leads to a prejudicial downgrading of the reputation and originality of
the genuine products particularly when businesses gear their publicity to the quality and rarity
of  their  products.  This  phenomenon  also  involves  additional  costs  for  businesses  (costs  of
protection, investigations, expert opinions and disputes) and in certain cases may even lead to
tort actions against the de facto right holder of the products marketed by the counterfeiter or
pirate where the proof of good faith cannot be brought.

In the light of the responses which the Commission received to its Green Paper on the fight
against counterfeiting and piracy in the Internal Market, it transpires that, within the European
Union, counterfeit and pirated goods account for 5 to 10% of vehicle spare parts sales, 10% of
sales of CDs and MCs, 16% of film (video  and DVD) sales and 22% of those of shoes and
clothing28.

According  to  a  survey  carried  out  in  France  in  1998  by  KPMG,  Sofres  and  the  Union  des
Fabricants29, the average loss to the businesses which replied to the survey, and which were
able to estimate the turnover lost through counterfeiting, was put at 6.4% of turnover. A study
carried  out  in  June  2000  by  the  Centre  for  Economics  and  Business  Research  (CEBR)  on
behalf  of  the  Global  Anti-Counterfeiting  Group  (GACG)30  shows  that  the  average  annual
reduction  in  profits  in  the  sectors  considered  is  considerable:  EUR  1 266  million  in  the
clothing  and  footwear  sector;  EUR  555  million  in  the  perfumes  and  cosmetics  sector;
EUR 627  million  in  the  toys  and  sports  articles  sector;  EUR  292  million  in  the
pharmaceuticals  sector.  In  the  field  of  software,  a  study  carried  out  by  the  International
Planning  and  Research  Corporation  (IPR),  on  behalf  of  the  Business  Software  Alliance
(BSA)31,  showed  that,  in  western  Europe  (EU  +  Norway  +  Switzerland),  the  losses  due  to
piracy in 2000 amounted to more than USD 3 billion.

If  counterfeiting  and  piracy  are  not  punished  effectively,  they  lead  to  a  loss  of  confidence
amongst  operators  in  the  Internal  Market  as  an  area  for  developing  their  activities  and
protecting their rights. The effect of this situation is to discourage creators and inventors and
to endanger innovation and creativity in the Community.

B.

Promoting the preservation and development of the cultural sector

Intellectual property rights hold particular  relevance  for the cultural sector,  especially  in the
audiovisual  sphere.  A  lack  of  adequate  protection  would  not  only  severely  trammel  the
development of a major economic sector  but would, above all, pose a threat to  our  heritage
and cultural diversity.

28

29

30

31

http://europa.eu.int/comm/internal_market/en/indprop/piracy/piracyen.pdf, pp. 14-15
“Votre entreprise et la contrefaçon”, KPMG, Sofres, Union des Fabricants, 1998.
“Economic Impact of Counterfeiting in Europe”, Global Anti-Counterfeiting Group, June 2000.
Sixth Annual BSA Global Software.

9

                                                
What  marks  this  sector  out  from  others  is  the  fact  that  it  constitutes  a  key  element  of  our
society, so that it is essential not only to preserve it but especially to promote its development.
Yet  it  is  particularly  under  threat  from  piracy.  The  cultural  sphere  (including  the  music
publishing and audiovisual sectors) puts its losses through counterfeiting and piracy at more
than 4.5 billion euro annually. On the audiovisual side, for example, piracy of works that meet
with a certain degree of success not only deprives the authors of their rights but also makes it
impossible  to  maintain  plurality.  This  applies  in  particular  to  works  published  in  a  limited
quantity,  often  stemming  from  the  cultures  of  smaller  Member  States  where  there  are  no
economies of scale. Moreover, the replacement of analogue by digital media has considerably
exacerbated the problem.

C.

Preserving employment in Europe

In  social  terms,  the  damage  suffered  by  businesses  because  of  counterfeiting  and  piracy  is
reflected  ultimately  in  the  volume  of  employment  they  offer.  However,  the  effect  of
counterfeiting and piracy on employment in industry is difficult to measure precisely.

According to the study carried out in June 2000 by the CEBR on behalf of the GACG32, more
than  17 000  jobs  were  said  to  have  been  lost  per  year  in  the  European  Union  because  of
counterfeiting and piracy activities. According to the survey carried out in France in 1998 by
KPMG,  Sofres  and  the  Union  des  Fabricants33,  the  number  of  jobs  lost  in  France  through
counterfeiting  is  about  38 000.  In  a  study  carried  out  in  the  United  Kingdom  in  1999  by
CEBR  for  the  Anti-Counterfeiting  Group  (ACG),  a  British  association  for  combating
counterfeiting,  the  number  of  jobs  lost  each  year  in  that  country  is  said  to  be  more  than
4 00034.  Finally,  according  to  a  study  undertaken  in  1998  by  PricewaterhouseCoopers  on
behalf of the BSA35, a 10% reduction in the pirating of software, i.e. to the level in the United
States, would create more than 250 000 jobs in Europe by 2001.

D.

Preventing tax losses and market destabilisation

Counterfeiting  and  piracy  also  do  a  great  deal  of  damage  to  national  economies  and
particularly those of the industrialised countries. This phenomenon results in a loss of revenue
for  the  government  or  for  the  Community  (customs  duties,  VAT)  and  may  give  rise  to
multiple  infringements  of,  for  instance,  labour  legislation  when  the  counterfeit  or  pirated
products are manufactured in clandestine workshops by unregistered workers or sold on the
street by clandestine workers.

Tax losses caused by counterfeiting and piracy are considerable. In the phonographic sector,
for example, VAT losses incurred by EU governments as a result of counterfeiting and piracy
are said to amount to EUR 100 million36. The study conducted in June 2000 by the CEBR on
behalf of the GACG37 shows that counterfeiting in the EU leads to a high average loss of tax
revenue  in  the  sectors  considered:  EUR  7 581  million  in  the  clothing  and  footwear  sector;
EUR 3 017 million in the perfumes and cosmetics sector; EUR 3 731 million in the toys and
sports  articles  sector;  EUR  1 554  million  in  the  pharmaceuticals  sector.  According  to  the

32

33

34

35

36

37

Cf. footnote 30.
Cf. footnote 29.
"The economic impact of counterfeiting", Anti-Counterfeiting Group, juin 1999.
"The  contribution  of  the  packaged  software  industry  to  the  western  European  economies",  Business
Software Alliance, May 1998.
http://europa.int/comm/internal_market/en/indprop/piracy/piracyen.pdf, page 16, para. 7.2.1.
Cf. footnote 30.

10

                                                
survey  carried  out  in  the  United  Kingdom  in  1999  by  the  CEBR  on  behalf  of  the  ACG38,
counterfeiting was said to lead to a reduction in GNP of GBP 143 million per year and to a
GBP 77 million increase in government borrowing.

This phenomenon is a genuine threat to the economic equilibrium of society since it can also
lead to a destabilisation of the — sometimes very fragile — markets, such  as that of  textile
products39, which it attacks. In the multimedia products industry, counterfeiting and piracy via
the Internet are steadily increasing and, despite the relatively recent development of the web,
already represent considerable losses.

E.

Ensuring consumer protection

Consumer  protection  is  a  major  concern  in  Europe.  Striving  for  a  high  level  of  consumer
protection,  particularly  as  regards  their  health  and  safety,  is  an  essential  element  of
Community  action.  Counterfeiting  and  piracy,  and  infringements  of  intellectual  property  in
general, frequently have pernicious consequences for consumers.

Although this phenomenon has sometimes developed with the complicity of the consumer, it
comes  about  mostly  against  his  will  and  in  any  event  is  always  to  his  disadvantage.
Counterfeiting and piracy are generally accompanied by deliberate cheating of the consumer
as to the quality he is entitled to expect from a product bearing, for instance, a famous brand
name,  since  counterfeit  or  pirated  products  are  produced  without  the  checks  made  by  the
competent authorities and do not comply with the minimum quality standards. When he buys
counterfeit or pirated products, the consumer does not in principle benefit from a guarantee,
after-sales service or effective remedy in the event of damage. Apart from these drawbacks,
the phenomenon may pose a real threat to the health of the consumer (counterfeit medicines,
adulterated alcohol) or to his safety (counterfeit toys or parts for cars or aircraft)40.

Harmonisation  of  national  legislation  on  the  means  of  enforcing  intellectual  property  rights
will contribute to consumer protection and will be a useful addition to the existing legislative
arsenal  in  the  this  field  at  Community  level,  and  in  particular  the  European  directives  on
product liability41 and general product safety42.

F.

Ensuring the maintenance of public order

Counterfeiting and piracy are a genuine threat to public order. Apart from the economic and
social  consequences,  this  phenomenon  infringes  labour  legislation  (clandestine  labour),  tax
legislation  (loss  of  government  revenue),  health  legislation  and  the  legislation  on  product
safety. Moreover, it has already been established that counterfeiting and piracy are activities

38

39

40

41

42

Cf. footnote 34.
In the context of the WTO agreement on textiles and clothing (ATC), a process of gradual liberalisation
was set in motion which will lead to the abolition of quantitative restrictions between WTO members
by 1 January 2005.
Other  examples  were  cited  in  the  consultation:  defective  medical  material,  detergents  with  caustic
substances,  adulterated  antibiotics,  carcinogenic  substances  in  clothing,  low-quality  motor  oil,  toxic
alcoholic  beverages,  defective  household  electric  goods,  ineffective  anti-rabies  vaccines,  defective
filters for diesel engines, etc.
Council  Directive  85/374/EECl  of  25  July  1985  on  the  approximation  of  the  laws,  regulations  and
administrative provisions of the Member States concerning liability  for defective products, OJ L 210,
7.8.1985, p. 29.
Council Directive 92/59/EEC of 29 June 1992 on general product safety, OJ L 228, 11.8.1992, p. 24,
currently being revised (COM(2000) 139).

11

                                                
which to a certain extent go hand-in-hand with organised crime, which finds in these activities
a  low-risk  means  of  recycling  and  laundering  earnings  from  other  illicit  trafficking  (arms,
drugs).  Counterfeiting  and  piracy,  which  were  once  craft  activities,  have  become  almost
industrial-scale activities. They offer criminals the prospect of large economic profit without
excessive  risk.  In  the  context  of  the  Internet,  the  rapidity  of  illegal  operations  and  the
difficulty of tracking the  operations  further  reduce  the  risks  for  the  criminal.  Counterfeiting
and piracy  carried  out  on  a  commercial  scale  are  even  said  to  have  become  more  attractive
nowadays than drug trafficking, since high potential profits can be obtained without the risk
of  major  legal  penalties.  Counterfeiting  and  piracy  thus  appear  to  be  a  factor  in  promoting
crime,  including  terrorism.  For  the  rest,  the  consultation  of  interested  circles  launched  with
the  1998  Green  Paper  confirmed,  with  the  support  of  examples  in  the  field  of  music  and
software, the links between counterfeiting and piracy and organised crime.

Harmonisation at Community level of the means of enforcing intellectual property rights will
therefore help Member States preserve public order.

Strengthening and improving the fight against counterfeiting and piracy in the Internal Market
stand alongside the horizontal measures taken in the field of justice and internal affairs, and in
particular  the  strategy  of  the  European  Union  aimed  at  preventing  and  monitoring  crime  in
line  with  the  provisions  of  the  Treaty  of  Amsterdam,  the  conclusions  of  the  Tampere
European  Council  of  15  and  16  October  199943,  and  the  measures  proposed  by  the
Commission in its Communication on the prevention of crime and the work of the European
Forum for the prevention of organised and economic crime44. Finally, this initiative is in line
with the Commission's overall strategic approach to combating fraud45 and the measures taken
to protect Community interests.

PART THREE:

DETAILS AND CHARACTERISTICS OF THE MEASURES PROPOSED

A.

The limits of the TRIPS Agreement

The  measures  and  procedures  for  enforcing  intellectual  property  rights  were  the  subject  of
de facto harmonisation with the entry into force of the  TRIPS Agreement, which lays down
minimum  provisions  for  the  means  of  enforcing  trade-related  intellectual  property  rights.
These means comprise:

– 

– 

43

44

45

the  general  obligation  to  put  in  place  effective  measures  for  enforcing  intellectual
property  rights,  including  measures  for  provisional  protection  and  remedies  which
have a deterrent effect;

fundamental  aspects  of  civil  and  administrative  procedure:  fair  and  equitable
procedures, rules applicable to the production of evidence;

OJ C 124, 3.5.2000, p. 1.
The European Forum  for  the  prevention  of  organised  and  economic  crime  is  a  Commission  initiative
aimed  at  organising  work  on  crime  prevention  at  European  level.  It  is  a  framework  for  networking
experts and launching initiatives.
Point  1.4.2  of  the  Commission  Communication  entitled  “Protection  of  the  Communities'  financial
interests – The fight against fraud: For an overall strategic approach”, COM(2000) 358 final.

12

                                                
– 

– 

– 

the  establishment  of  certain  civil  (or  administrative)  remedies  such  as  injunctions,
damages, seizure and  destruction of infringing  goods and,  on an optional  basis, the
right of information;

minimum requirements  to be met  by the provisional measures for  the protection  of
intellectual property rights;

the implementation of criminal procedures and criminal sanctions in certain cases.

However, certain means of enforcing rights are not provided for in the TRIPS Agreement (for
example, recall, at the counterfeiter's expense, of counterfeited goods placed on the market),
while others  are  provided  for  only  on  an  optional  basis  (for  example,  right  of  information).
Finally,  the  rules  for  applying  the  measures  and  procedures  laid  down  by  the  TRIPS
Agreement may thus vary considerably from one country to another. In the Community, this
is the case with the rules for applying provisional measures, which are used in particular for
safeguarding  evidence,  the  calculation  of  damages  and  with  the  rules  for  applying  the
procedures when the counterfeiting or piracy activities have ceased.

B.

The  acquis  communautaire  with  regard  to  the  enforcement  of  intellectual
property rights

At Community level, the measures to enforce intellectual property rights have focused above
all  on  protecting  the  external  frontier  of  the  Community46.  As  regards  the  Internal  Market,
some  sectoral  instruments  contain  specific  provisions  on  enforcing  intellectual  property
rights47. However, no detailed horizontal instrument has yet been adopted at Community level
in this field.

C.

The legal situation in the Member States

Despite  the  implementation  of  the  TRIPS  Agreement,  the  legal  situation  in  the  Community
shows  major  disparities  which  do  not  allow  the  holders  of  intellectual  property  rights  to
benefit  from  an  equivalent  level  of  protection  throughout  the  Community.  For  instance,  the
procedures  for  stopping  counterfeiting  or  piracy  activities  (injunctions),  the  provisional
measures used in particular to safeguard evidence, the calculation of damages and the level of
civil  and  criminal  penalties  vary  widely  from  one  Member  State  to  another.  In  certain
Member States, measures and procedures such as the right of information and the recall, at the
counterfeiter's expense, of the counterfeited goods placed on the market are not available.

With regard to injunctions, there are differences in the rules of application, for example in the
account  taken  of  the  interests  of  third  parties,  the  different  methods  of  eliminating  the
counterfeit  goods,  or  the  conditions  under  which  the  removal  of  equipment  used  to
manufacture the counterfeit goods may be ordered. In  Greece, in principle, the penalty does

46

47

Cf. footnote 19.
For  example,  in  the  field  of  copyright:  Article  7  (special  measures  of  protection)  of  Directive
91/250/EEC  on  the  legal  protection  of  computer  programs  (cf.  footnote  11);  Article  12  (remedies)  of
Directive  96/9/EC  on  the  legal  protection  of  databases  (cf.  footnote  11);  Articles  6  (technological
measures), 7 (rights-management information) and 8 (sanctions and remedies) of Directive 2001/29/EC
on the harmonisation  of  certain  aspects  of  copyright  and  related  rights  in  the  information  society  (cf.
footnote  13).  In  the  field  of  industrial  property:  Articles  98  (sanctions)  and  99  (provisional  and
protective measures) of Regulation No 40/94 on the Community trade mark; Articles 89 (sanctions in
actions  for  infringement)  and  90  (provisional  and  protective  measures)  of  Regulation  No  6/2002  on
Community designs.

13

                                                
not necessarily imply guilt and can thus be imposed on a bona fide infringer. In Sweden and
Finland,  the  penalty  does  not  apply  to  a  person  acting  in  good  faith,  whereas  in  Denmark,
Spain  and  Italy  the  penalty  does  not  apply  to  a  person  who  makes  only  private  use  of  the
goods in question. In the Netherlands (copyright), seizure and  destruction  are not  ordered if
the person was not himself involved in the infringement, is not professionally concerned with
the  articles  in  question  and  acquired  them  purely  for  personal  purposes.  In  the  United
Kingdom, the instruments used for the manufacture of pirated copies can be destroyed only if
the  person  holding  them  knew  or  had  reason  to  know  that  they  were  to  be  used  for  that
purpose. In Germany (copyright), the instruments used (exclusively or almost exclusively) to
produce  the  pirated  copies  can  be  seized  and  destroyed  only  if  they  are  the  property  of  the
pirate,  whereas  there  is  no  corresponding  restriction  in  the  case  of  trade  marks.  In  the
Netherlands, judicial practice48 has established the principle that the infringer may be obliged
to recall  the  counterfeit products already distributed  on  the  market.  The  infringer  must  bear
the costs of that operation and pay compensation to the purchaser. This type of measure does
not exist in the law of the other Member States.

With  regard  to  evidence,  the  measure  known  in  the  United  Kingdom  as  the  Anton  Piller
order49  is  very  important  in  practice,  but  is  regarded  by  many  as  too  burdensome  and
complicated. On an order  from the High Court, and without the other party being heard ,  it
allows for the inspection and global seizure of the evidence on the premises of the presumed
infringer.  The  so-called  Doorstep  order50  (simplified  Anton  Piller  order),  by  which  requests
for documents and objects may be presented without the right to enter premises, is considered
effective. Another measure, known as a freezing injunction51 (or Mareva injunction52) is used
to block the bank accounts and other assets of the defendant pending the examination of the
substance of the case by the Court. In France, the law53 also provides a highly effective tool
for obtaining evidence. The right holder may submit a request for seizure for counterfeiting to
the President of the Tribunal de grande instance (Regional Court). The measure may take the
form  of  a  detailed  descriptive  record  or  the  physical  seizure  of  the  products  in  question.  In
Italy, the seizure and  description of the  articles  in question are  also provided  for by  law.  In
Germany, the legal possibilities for acquiring evidence are not very strong. They are limited
to  obtaining  evidence  from  the  statements  of  witnesses,  from  the  evidence  of  experts  and
inspections, and do not extend to documents and the hearing of the parties. Unlike the other
Member States, search warrants issued without the other party being heard are not available in
civil procedure in Austria, Denmark and Sweden.

In  the  case  of  the  provisional  measures,  there  are  major  differences  in  the  rules  of  the
procedure and the frequency with which these remedies are used, although these differences
are  essentially  the  result  of  the  traditions  and  approaches  adopted  by  the  courts.  In  the
Netherlands, the simplified procedure of kort geding54 is very often used and is even regarded
as having to a certain extent replaced the ordinary procedures in the event of an infringement
of  intellectual  property  rights.  In  the  United  Kingdom,  preliminary  injunctions  are  fairly
frequent in practice, the deciding  factor  in  evaluating  the  injunction  being  the  ability  of  the

48

49

50

51

52

53

54

HR 23.2.1990, NJ 1990, 464m. nt. DWFV (Hameco) and following decisions.
Anton Piller KG v. Manufacturing Processes Ltd. [1976] 1 Ch. 55, [1976] R.P.C. 719.
Universal City Studios Inc. v. Mukhtar & Sons [1976] F.S.R. 252.
Art. 25(1) of the British rules of civil procedure.
Mareva Compania Naviera SA v. International Bulk Carriers SA [1975] 2 Lloyd’s Rep. 509.
Articles L-332-1, L-521-1, L-615-5 and L-716-7 of the code of intellectual property.
Art. 289 of the code of civil procedure. The Court of Justice has had occasion to confirm the nature of
this  procedure  as  a  provisional  measure  within  the  meaning  of  Article  50  of  the  TRIPS  Agreement
(Hermès judgment of 16 June 1998, Case C-53/96, ECR 1998, p. I-3603).

14

                                                
defendant  to  pay  sufficient  compensation  to  cover  the  applicant's  losses  in  the  event  of  the
latter being successful in his action. In Germany, the attitude towards preliminary injunctions
is  fairly  restrictive,  and  these  are  granted  principally  for  trade  marks  in  flagrant  cases  of
counterfeiting. In France, it is possible to apply for an interim injunction after the start of the
examination  of the  substance  of  a  case,  but  this  remains  relatively  rare  because,  on  the  one
hand, it is possible to submit a request for  a  description or seizure of the objects held to be
counterfeited and, on the other, the provisional measures do not allow damages to be claimed.

As  regards  the  calculation  of  damages,  there  are  three  scenarios  in  the  Member  States:
compensation for the actual losses suffered; a request for the handing over of the profits made
by the infringer; and payment of the royalties which would have been due if the infringer had
requested  authorisation  to  use  the  right.  In  most  countries,  the  applicant  may  choose  from
these  three  procedures  (or  at  least  between  the  first  and  the  third)  without  cumulating  or
combining them. In addition, the practical details of each of these methods of calculation vary
widely from one Member State to another. In Germany, for example, in the case of a request
for  the  profits  to  be  handed  over,  the  provisions  of  the  civil  code  on  the  return  of  profits
unjustly acquired through "diversion of business" serve as the basis for  the request55. In  the
United Kingdom, handing over the profits is considered not as damages but as an "equitable
corrective measure".  In Portugal (copyright), on the other  hand, the infringer's income must
be taken into account when calculating the damages. In Austria (copyright), damages can be
calculated on the  basis of the infringer's  profits  regardless  of the degree  of  guilt.  In  Finland
(trade  marks),  the  request  for  the  infringer's  profits  may  be  justified  even  in  the  case  of  a
bona fide  infringement.  In  the  Benelux  countries,  handing  over  the  infringer's  profits  is
possible in the case of aggravating circumstances (bad faith). In France, the damaged party is
in principle entitled to no less but no more in damages than the real losses suffered56.

The  right  of  information,  which  can  be  directed  against  any  person  involved  in  an
infringement, obliges the defendant to provide information on the origin of the counterfeited
products, the distribution channels and the identity of third parties involved in the production
and distribution of the goods. Up till now, a right of information has been introduced into the
legal  system  of  only  a  few  Member  States,  viz.  in  Germany  in  the  laws  on  intellectual
property57 and in the Benelux law on trade marks58.

For  right  holders,  these  disparities  between  the  national  systems  of  enforcing  intellectual
property rights have a major impact, in particular on the effectiveness and costs of procedures,
time scales and the amount of damages granted.

Finally,  as  regards  the  criminal  penalties,  there  are  considerable  differences  not  only  in  the
level of punishment laid down by national legislation, but also  in the method  of  calculating
fines. Pursuant to the TRIPS Agreement (and national legal tradition), all the Member States
have civil redress  and  criminal penalties  going  as far  as imprisonment.  The  maximum fines
range from several thousand euro (Italy, Luxembourg) to nearly EUR 500 000 (Belgium), and
to more than EUR 750 000 (for legal persons in France). In the United Kingdom there is no
maximum fine laid down by law. Certain countries do not lay down a maximum fine, since

55

56

57

58

In this context, the recent trend in German case law towards setting more dissuasive damages should be
noted.  Called  upon  to  judge  a  case  involving  the  counterfeiting  of  designs,  the  Bundesgerichtshof
(BGH), in a judgment of 2.11.2000, considered that the overheads could no longer be deducted from the
profits made by the counterfeiter, thereby overturning case law dating from 1962 (I ZR 246/98).
Art. 1382 of the civil code.
See in particular paragraph 19 of the German trade mark law.
Art. 13 bis, paragraph 4, of the Benelux law on trade marks.

15

                                                
the  amount  is  calculated  according  to  the  income  of  the  infringer  (for  example,  the  Nordic
countries, Austria and  Germany). The  prison sentences range from several  days  to  10  years
(Greece, United Kingdom).

Although  this  Directive  does  not  aim  to  harmonise  criminal  penalties  as  such,  the  effective
application  of  genuinely  deterrent  sanctions  in  all  Member  States  would  help  greatly  in
combating counterfeiting and piracy.

D.

The need for harmonisation of national legislation

There is a need for right holders to have means of enforcing intellectual property rights which
are equally effective in all Member States. Moreover, this need fits in with the Commission's
policy  of  promoting  the  development  of  innovatory  and  creative  activity  in  Europe,  in
particular through the  coherent  and  effective protection of  intellectual  property  rights  in  the
Internal Market. This need cannot be met by action taken solely at the level of each Member
State. National legislation sometimes provides right holders with effective means of enforcing
their rights, but the practical implementation of these means is not fully assured. As most of
the interested circles in the consultation launched by the Green Paper stressed, only action at
Community level will allow the same effectiveness in enforcing intellectual property rights.

Nor would the establishment of rules at Community level  directly  applicable in  all Member
States  resolve  the  situation  satisfactorily.  Account  must  be  taken  of  the  legal  traditions  and
situation of each Member State. The question is to ensure that intellectual property rights are
enforced in an equivalent fashion throughout the Community but within the existing national
frameworks.  That  is  why  harmonisation  of  the  national  legislation  of  the  Member  States  at
Community  level  regarding  the  means  of  enforcing  intellectual  property  rights  appears
necessary in order to achieve the desired objective. To be genuinely effective, harmonisation
must be sought on the basis of the national provisions which seem the most suited to satisfy
the  needs  of  parties  infringed  against  whilst  taking  into  account  the  legitimate  rights  of
defence. This will make it possible to enforce intellectual property rights in a homogeneous
and  effective  fashion  throughout  the  Community,  to  introduce  greater  transparency  into  the
systems of penalties, and to ensure the effective  application of  the means  made  available to
right holders.

By virtue of the principle of proportionality set out in Article 5 of the EC Treaty, the measures
proposed  must  be  proportionate  with  regard  to  the  principal  objective  pursued,  which  is  to
improve  and  increase  the  transparency  of  the  functioning  of  the  Internal  Market.
Harmonisation  of  national  legislation  should  therefore  not  cover  all  aspects  of  national
legislation relating to the means of enforcing intellectual property rights, but should be limited
to approximating the essential provisions with the most direct impact on the functioning of the
Internal Market.

E.

Legal basis

As pointed out above in Part I. B, maintaining differing national legal systems for enforcing
intellectual  property  rights,  which  are  nowadays  largely  harmonised  at  Community  level,  is
likely  to  hamper  the  free  movement  of  goods  and  services,  to  create  market  disturbances
within  the  Internal  Market,  in  particular  through  distortions  in  lawful  trade  flows,  and  thus
falsify the conditions of competition. Approximating the essential national rules governing the
means of enforcing intellectual property rights will make it possible to improve and increase
the transparency of the functioning of the Internal Market, encourage business innovation and
competitiveness and promote employment and investment in the EC.

16

The  European  Court  of  Justice59  considers  that  a  practice  involving  a  risk  of  considerably
influencing trade flows between Member States may be likely to hamper the achievement of
the objectives of the Common Market as set out in Article 95(1) of the EC Treaty. A Member
State introducing and implementing such measures which are less binding than others would
create a distortion of trade flows. Lawful  business circles would tend to avoid that Member
State because of the market share held by pirated or counterfeit products and the difficulty of
competing in such a distorted market.

Hence, and given that the objective of the measure is the achievement of the Internal Market
through  harmonisation  of  the  legislative,  regulatory  and  administrative  provisions  of  the
Member States relating to the means of enforcing intellectual property rights, the Commission
proposes that Article 95 of the EC Treaty be chosen as the legal basis of the harmonisation.
That legal basis was chosen in the case of other Directives approximating national legislation
in the field of intellectual property60. Moreover, the justification for this legal basis has been
confirmed  by  the  Court  of  Justice  on  several  occasions61,  and  in  particular  as  regards
Directive  98/44/EC  in  a  recent  judgement  of  the  Court  of  Justice  in  which  the  legal  basis
chosen was closely scrutinised62.

The  same  legal  basis  (Article  95)  has  already  allowed  harmonisation  of  a  large  part  of
intellectual  property  law  in  the  Internal  Market.  The  effectiveness  of  these  measures
harmonising intellectual property rights might not be ensured if the actual implementation of
those rights were not itself ensured. The measures and procedures set out in this Directive will
make it possible to ensure the correct application of the acquis communautaire relating to the
substantive law of intellectual property; it is thus legitimate for Article 95 also to be the legal
basis  of  a  Directive  ensuring  harmonisation  of  the  enforcement  of  those  rights,  thereby
allowing the relevant acquis communautaire to become fully effective.

Bearing the above in mind, and with a view to ensuring the proper functioning of the Internal
Market  and  the  full  effectiveness  of  the  acquis  communautaire  relating  to  intellectual
property, this Directive is intended to impose on the Member States the obligation to provide

59

60

61

62

Judgment Javico v. Yves Saint Laurent of 28 April 1998, Case C-306/96 (ECR, p. I-1983 §25).
Cf. the Directives cited in footnotes 8 to 12.
Opinion 1/94, Powers of the  Community to conclude international agreements in the  field of services
and the protection of intellectual property, 15.11.1994, ECR p. I-5267, and Case C-350-92, Kingdom of
Spain v. Council, 13.7.1995, ECR p. I-1985.
Judgment  in  Netherlands  v.  Parliament  and  Council  of  9  October  2001,  Case  C-377/98.  The  Court
concluded that:
"15. … it must be borne in mind that recourse to Article 100a as a legal basis is possible if the aim is to
prevent the emergence of future obstacles to trade resulting from multifarious development of national
laws provided that the emergence of such obstacles is likely and the measure in question is designed to
prevent them.
16.  ...even  if  the  relevant  national  provisions  predating  the  Directive  are  most  often  taken  from  the
Convention on the Grant of European Patents, ...the differing interpretations to which those provisions
are  open  as  regards  the  patentability  of  biotechnological  inventions  are  liable  to  give  rise  to
divergences of practice and case-law prejudicial to the proper operation of the internal market.
20. …The purpose of harmonisation is to reduce the obstacles, whatever their origin, to the operation of
the  internal  market  which  differences  between  the  situations  in  the  Member  States  represent.  If
divergences are the result of an interpretation which is contrary, or may prove contrary, to the terms of
international legal instruments to which the Member States are parties, there is nothing in principle to
prevent  recourse  to  adoption  of a  Directive  as  a  means  of  ensuring  a  uniform  interpretation  of  such
terms by the Member States."

17

                                                
for  effective,  proportionate  and  deterrent  penalties63,  including  criminal  penalties64  in
appropriate  cases.  This  is  also  in  line  with  the  commitments  entered  into  by  both  the
Community and each Member State under the TRIPS Agreement, and in particular Article 61
of  that  Agreement.  The  Directive  is  also  intended  to  ensure  that  all  those  involved  in  the
infringement are pronounced responsible according to the internal law of the Member States.

Finally,  this  Directive  is  not  intended  to  harmonise  the  rules  applicable  to  judicial
co-operation,  judicial  powers,  the  recognition  and  enforcement  of  decisions  in  civil  and
commercial  matters,  nor  to  set  out  the  applicable  law.  There  are  Community  instruments
which  govern  such  matters  in  general  terms  and  are  thus  also  applicable  to  intellectual
property65.

PART FOUR:

EXAMINATION OF THE PROVISIONS

The  provisions  set  out  in  this  proposal  are  the  outcome  of  a  wide-ranging  consultation  of
interested circles, the Member States and the other institutions of the European Union. In the
following provisions, all possible account has thus been taken of the  concerns expressed  by
interested circles and Member States. The suggestions made by the European Parliament and
the European Economic and Social Committee have also been taken into account. In certain
cases,  the  provisions  in  force  in  one  or  more  Member  States,  and  which  have  proved  their
effectiveness, were a useful source of inspiration in drawing up this proposal.

Article 1

Objective

This Article sets out the objective of the Directive, specifying that it relates to the measures
needed to ensure the enforcement of intellectual property rights.

63

64

65

See  in  particular  the  judgments  of  the  ECJ  in  Nunes  and  de  Matos  of  8  July  1999,  Case  C-186/98
(ECR 1999, p. I-4883), Hansen of 10 July 1990, Case C-326/88 (ECR 1990, p. I-2911) and Commission
v. Greece of 21 September 1989, Case 68/88 (ECR 1989, p. 2965).
See in particular the Unilever judgment of the ECJ handed down on 28 January 1999 in Case C-77/97
(ECR 1999, p. I-431), in which the Court stated, with regard to Directive 76/768/EEC, as amended, on
the approximation of the laws of the Member States relating to cosmetic products, that "the measures
which the Member States are required to take under Article 6(3) of Directive 76/768 in order to prevent
advertisements  which  attribute  to  cosmetic  products  characteristics  which  those  products  lack  must
provide  that  such  advertisements  constitute  a  breach  of  the  law  and,  in  particular,  a  criminal  offence
punishable by penalties having a deterrent effect."
Council Regulation (EC) No 1348/2000 of 29 May 2000 on the service in the Member States of judicial
and extrajudicial documents in civil or commercial  matters (OJ L 160 of 30/06/2000, p.  37);  Council
Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement
of  judgments  in  civil  and  commercial  matters  (OJ  L  12,  16.1.2001,  p.  1);  Council  Regulation  (EC)
No 1206/2001 of 28 May 2001 on co-operation between the courts of the Member States in the taking
of evidence in civil or commercial matters (OJ L 174, 27.6.2001, p. 1); Council Decision 2001/470/EC
of 28 May 2001 establishing a European Judicial Network in civil and commercial matters (OJ L 174,
27.6.2001, p. 25).

18

                                                
Article 2

Scope

Article 2(1) sets out the scope of the Directive: the means of enforcing the rights covered by
the Directive apply to any infringement of the rights deriving from Community and European
provisions on the protection of intellectual property, as set out in the Annex to the Directive,
and  the  provisions  adopted  by  the  Member  States  in  order  to  comply  with  those  provisions
when the infringement  is carried out  for  commercial  purposes  or causes  significant  harm  to
the right holder. The Member States may lay down that the competent authorities may order
other measures adapted to the circumstances such as to put an end to the infringement of the
intellectual property right or to prevent further infringements, as well as any other appropriate
measures.  Paragraph  2  of  this  Article  lays  down  that  the  provisions  of  this  Directive  are
without  prejudice  to  provisions  for  enforcement  in  Community  legal  instruments  in  the
domain of copyright and related rights and notably Article 8 of Directive 2001/29/EC on the
harmonisation  of  certain  aspects  of  copyright  and  related  rights  in  the  information  society.
Paragraph 3(a) of this Article leaves intact, and does not modify, the Community provisions
governing  the  substantive  law  on  intellectual  property,  Directive  2000/31/EC  on  electronic
commerce, Directive 1999/93/EC on a Community framework for  electronic signatures, and
Directive 95/46/EC on the protection of individuals with regard to the processing of personal
data and on the free movement of such data. In other words, the aim is to make it clear that
the Directive bears not on the substance, but only on the enforcement, of the rights, and that
its implementation by the Member States cannot lead to conflicts with the Directives referred
to above. Paragraph 3(b) of this Article lays down that the provisions of this Directive do not
affect  Member  States’  international  obligations  and  notably  those  found  in  the  TRIPS
Agreement.

Article 3

General obligation

This Article imposes on the Member States the general obligation to provide for proportionate
measures and procedures needed for enforcing intellectual property  rights. It lays down  that
these measures and procedures must be such as to deprive those responsible of the economic
benefits of the infringement in question. It is modelled on the provisions of Article 41(2) of
the TRIPS Agreement, which lays down that the measures and procedures in question must be
fair  and  equitable,  that  they  must  not  be  unnecessarily  complicated  or  costly,  and  that  they
must not entail unreasonable time-limits or unwarranted delays.

Article 4

Penalties

This  Article  stipulates  that  the  Member  States  must  lay  down  that  any  infringement  of  an
intellectual  property  right  shall  be  punishable  by  penalties  which  must  be  effective,
proportionate  and  deterrent.  It  is  fully  in  line  with  the  Commission  Communication  on  the
role  of  penalties  in  implementing  Community  internal  market  legislation  (COM(95)  162
final).

19

Article 5

Persons entitled to apply for application of the measures and procedures

This  Article  sets  out  the  persons  entitled  to  apply  for  application  of  the  measures  and
procedures.  Paragraph  1  lays  down  that  the  persons  entitled  to  apply  for  application  of  the
measures and procedures are first and foremost the right holders, the persons authorised to use
those  rights  and  their  representatives.  Paragraph  2  lays  down  that  Member  States  must
provide for rights management or professional defence bodies, as legitimate representatives of
the right holder, to be entitled to apply for the application of the measures and procedures and
to initiate legal proceedings for the defence of those rights or of the collective or individual
interests for which they are legally responsible. This provision is based on existing provisions
in  the  legislation  of  certain  Member  States  (Article  98  of  the  Belgian  law  of  1991  on
consumer  protection;  Article  L-421  of 
the  French  consumer  protection  code;
Article L-331-1(2) of the French intellectual property code). This paragraph stipulates, finally,
that the Member States must take the necessary steps to ensure that the rights management or
professional  defence  bodies  of  another  Member  State  may  apply  for  application  of  the
measures and procedures and initiate legal proceedings on the same conditions as a national
body.  This  provision  is  in  application  of  the  principle  of  non-discrimination  and  is  without
prejudice to applicable rules on representation in court.

Article 6

Presumption of copyright

This Article reflects the implementation of presumptions in the field of copyright provided for
explicitly by the Berne Convention (Article 15) and indirectly by the TRIPS Agreement. The
Berne Convention states as follows: “In order that the author of a literary or artistic work ...
shall  ...  be  regarded  as  such,  and  consequently  be  entitled  to  institute  infringement
proceedings in the countries of the Union, it shall be sufficient for his name to appear on the
work  in  the  usual  manner”.  Provisions  to  this  effect  are  contained  in  the  legislations  of  the
Member States.

Article 7

Evidence

Article 7 sets out a number of obligations on Member States with regard to evidence, which is
of  paramount  importance  in  cases  of  infringement  of  an  intellectual  property  right.
Paragraph 1 lays down that the parties may be ordered, under certain conditions, to produce
evidence  under  their  control,  provided  that  the  protection  of  confidential  information  is
ensured.  It  too  is  modelled  on  the  provisions  of  Article  43  of  the  TRIPS  Agreement.
Paragraph 2 states that Member States shall take such measures as are necessary to enable the
judicial  authorities  to  order  the  communication  or  seizure  of  bank,  financial  or  commercial
documents.

Article 8

Evidence protection measures

Paragraph 1 of this Article provides in favour of the right holder, even before the examination
of the merits of a case has started, for a procedure involving descriptive or physical seizure if
there  is  a  demonstrable  risk  that  the  evidence  may  be  destroyed.  By  order  issued  on

20

application, and if necessary without the other party being heard, the right holder, in the event
of an infringement  or  if the circumstances point to  an  impending infringement,  may  initiate
either a detailed description, with or without the taking of samples, or the physical seizure of
the infringing goods. Where the order has been issued without the defendant being heard, the
latter  shall  subsequently  have  the  right  to  request  a  review  of  the  order  and  the  right  to  be
heard at this review. Paragraph 2 lays down that physical seizure may be made subject to the
lodging of a guarantee adequate to ensure compensation for the defendant in the event of an
unjustified application. Paragraph 3 lays down that the applicant then has 31 calendar days to
institute substantive proceedings before the court, failing which the seizure is null and void,
without prejudice to the damages which may be claimed from him. This measure supplements
the  provisions  of  Article  43  of  the  TRIPS  Agreement  and  is  modelled  on  provisions  which
have demonstrated their effectiveness in certain Member States such as the United Kingdom
(Anton Piller order, Doorstep order) and France (saisie-contrefaçon ). Finally, this paragraph
lays down, following the example of Article 50(7) of the TRIPS Agreement, a mechanism for
the compensation  of  the  defendant  in  certain  situations  where  they  have  suffered  harm  as  a
result of the evidence protection measures set out in this Article.

Article 9

Right of information

This Article supplements Article 47 of the TRIPS Agreement on the right of information. It is
modelled  on  the  relevant  existing  provisions  in  certain  legislations  (Benelux,  Germany).  It
takes over a provision which had been introduced at the request of the European Parliament
into the amended proposal for a Directive on the legal protection of designs (Article 16(a) of
the text in document COM(96) 66 final), and which was then withdrawn at the request of the
Council,  which  considered  that  the  Directive  on  designs  was  not  a  suitable  instrument  for
combating counterfeiting, and that the problems arising in this field should be the subject of
specific  measures.  This  measure  received  the  unanimous  support  of  interested  circles,  the
European  Parliament  and  the  Economic  and  Social  Committee.  Paragraph  1  lays  down  that
the competent authorities must order, at the request of the right holder and unless particular
reasons  are  invoked  for  not  doing  so,  any  person  involved  in  the  infringement  under  the
circumstances set out in points (a), (b) or (c) of that paragraph to provide the right holder with
information on the origin of the infringing goods and services and on the networks for their
distribution or provision, respectively. Paragraph 2 sets out the nature of the information to be
provided.  Paragraph  3  lays  down  that  the  right  of  information  applies  without  prejudice  to
other  provisions  set  out  on  a  restrictive  basis  and  relating  to  the  communication  of
information. Finally, paragraph 4 lays down, on the other hand, that the competent authorities
(for example, police, customs) in possession of information of the same nature may so inform
the right holder, provided the latter is known, while complying with the rules  governing the
protection  of  confidential  information,  in  order  to  allow  him  to  institute  substantive
proceedings before the competent court or to obtain provisional or precautionary measures.

Article 10

Provisional measures

Article 10 lays down a number of provisions with regard to provisional measures which the
Member  States  must  make  available  to  the  competent  authorities.  These  provisions
supplement  those  of  Article  50  of  the  TRIPS  Agreement.  The  provisional  measures  are  of
paramount importance in the event of an infringement of intellectual property rights, since in
almost  all  cases  it  is  in  the  interest  of  the  right  holder  to  take  rapid  action.  Paragraph  1

21

provides  for  the  granting  of  an  injunction,  on  a  provisional  basis  and  subject  to  a  financial
penalty, intended to prevent any impending infringement, or to forbid the continuation of the
infringement, or to make such continuation subject to the lodging of a guarantee intended to
ensure  that  the  right  holder  is  compensated.  This  same  paragraph  provides  that  the  judicial
authorities  shall  have  the  authority  to  require  the  applicant  to  provide  any  reasonably
available evidence in order to satisfy themselves with a sufficient degree of certainty that the
applicant  is  the  right  holder  and  that  the  applicant’s  right  is  being  infringed  or,  that  such
infringement  is  imminent.  Pursuant  to  paragraph  2,  such  provisional  measures  may  in
appropriate cases be taken without the other party being heard, in particular when any delay
would be such as to cause irreparable prejudice to the right holder. The party concerned must
be so informed without delay after the execution of the measures. In addition, at the request of
the defendant, these measures may be reviewed, including the right to be heard. Paragraph 3
lays  down  that  the  application  for  an  injunction  is  admissible  only  if  the  proceedings  were
instituted within 31 calendar days at the most from the day on which the right holder became
aware of the infringement. Pursuant to paragraph 4, the prohibition may be made subject to
the  lodging  by  the  applicant  of  a  guarantee  intended  to  ensure  any  compensation  of  the
damage  suffered  in  the  event  of  an  unjustified  application.  Finally,  paragraph  5  lays  down,
following  the  example  of  Article  50(7)  of  the  TRIPS  Agreement,  a  mechanism  for  the
compensation of the defendant in certain situations where they have suffered harm as a result
of the provisional measures set out in this Article.

Article 11

Precautionary measures

Article  11(1)  provides  that,  in  appropriate  cases,  and  in  particular  if  the  prejudiced  party
demonstrates  circumstances  likely  to  threaten  the  recovery  of  damages,  and  if  necessary
without the other party being heard, the precautionary seizure of the movable and immovable
property of the infringer, including the blocking of his bank accounts and other assets, may be
ordered.  This  measure  is  modelled  on  the  provision  in  British  law  known  as  the  freezing
injunction  or  Mareva  injunction.  The  communication  or  seizure  of  bank,  financial  or
commercial  documents  may  also  be  ordered  so  as  to  identify  and  prosecute  the  real
beneficiaries  of  the  infringement.  Finally,  paragraphs  2  and  3  lay  down  a  guarantee  and
subsequent compensation mechanism in the same way as Articles 8 and 10.

Article 12

Recall of goods

This Article provides for the recall, at the infringer's expense, of infringing goods placed on
the market, without prejudice to the damages due to the right holder. This measure has been
developed by Dutch case law.

Article 13

Removal from the channels of commerce

The Article lays down that goods which have infringed an intellectual property right, as well
the  materials  and  implements  used  for  the  purpose  of  such  infringement,  must  be  removed
from  the  channels  of  commerce  without  compensation  of  any  kind.  This  also  involves  the
confiscation of such  items, as  provided for in Article 87(2)  of the  Belgian  copyright  law  of
30 June 1994. This provision also lays down the scope of Article 46 of the TRIPS Agreement.

22

Article 14

Destruction of goods

Article  14  provides  for  the  destruction  of  the  infringing  goods  where  their  presence  on  the
market is detrimental to the holder of the intellectual property right. This Article is based on
Article 46 of the TRIPS Agreement.

Article 15

Preventive measures

Article 15 lays down that, where there has been a previous court decision, the Member States
must provide that the competent authorities may impose on the infringer an injunction aimed
at  preventing  new  infringements,  non-compliance  with  an  injunction  being  punishable  by  a
fine accompanied, where applicable, by a financial penalty. This provision sets out the scope
and  the  penalty  of  the  prohibitory  injunction  provided  for  by  Article  44(1)  of  the  TRIPS
Agreement. Paragraph 2 lays down that the Member States must ensure that right holders are
in a  position to apply  for  an  injunction  to  be  imposed  on  intermediaries  whose  services  are
used by third parties to infringe an intellectual property right.

Article 16

Alternative measures

Article 16 lays down that a person committing an infringement without fault or negligence on
his  part  may  make  a  pecuniary  reparation  to  the  prejudiced  party  if  the  execution  of  the
measures  in  question  would  cause  him  disproportionate  damage  and  where  the  prejudiced
party can reasonably be satisfied with pecuniary compensation. This provision is modelled on
Article 101(1) of the German copyright law. To protect the interests of a defending party who
has  acted  without  fault  of  negligence,  this  provision  permits  reparation  in  the  form  of  a
fixed-rate  remuneration  instead  of  the  application  of  the  penalties  referred  to  in  the  same
section.

Article 17

Damages

Article  17  on  damages  supplements  the  provisions  of  Article  45  of  the  TRIPS  Agreement.
Paragraph  1  confirms  the  principle  that  the  damages  are  intended  to  compensate  for  the
prejudice  suffered  because  of  an  infringement  committed  intentionally  or  by  mistake.
Paragraph  1  accordingly  lays  down  that  the  prejudiced  party  is  entitled  either  to  fixed-rate
damages equal to double the amount of the royalties or fees which would have been due if the
infringer had requested authorisation (the aim being to provide for full compensation for the
prejudice  suffered,  which  is  sometimes  difficult  for  the  right  holder  to  determine.  This
provision does not constitute punitive damages; rather, it allows for compensation based on an
objective criterion  while  taking  account of the  expense  incurred  by  the  right  holder  such  as
administrative expenses incurred in identifying the infringement and researching its origin) or
to compensatory damages (corresponding to the losses suffered by the right holder, including
loss  of  earnings).  It  is  further  laid  down  that  elements  other  than  economic  factors  may  be
taken into account in calculating the damages, such as the moral prejudice caused to the right
holder by the infringement. Paragraph 2 provides that, in appropriate cases, profits made by
the infringer which are not taken into account in calculating the compensatory damages may

23

be  added.  The  idea  is  to  provide  a  deterrent  against,  for  example,  intentional  infringements
perpetrated on a commercial scale. For calculating the aforementioned profits, the right holder
is bound to provide evidence only with regard to the amount of the gross income achieved by
the infringer, with the latter being bound to provide evidence of his deductible expenses and
profits attributable to factors alien to the infringement.

Article 18

Legal costs

Article 18 provides for the legal costs, lawyer's fees and any other expenses incurred by the
successful  party  (for  example,  investigation  costs,  costs  for  expert  opinions)  to  be  borne  in
full  by  the  other  party,  unless  equity  or  the  economic  situation  of  the  other  party  does  not
allow this. This possibility is partly provided for by Article 45(2) of the TRIPS Agreement.

Article 19

Publication of judicial decisions

Article  19  concerns  the  publication  of  judicial  decisions,  which  is  generally  considered  an
effective  measure  for  informing  the  public  and  a  deterrent  against  infringements  of
intellectual  property  rights.  Paragraph  1  lays  down  that  Member  States  must  take  the
necessary  measures  to  ensure  that,  in  the  event  of  legal  proceedings  instituted  for
infringements of intellectual property rights, the judicial authorities can order that the decision
be posted and published in full or in part, at the request of the right holder and the expense of
the infringer, in the newspapers designated by the former. Such publication must comply with
the rules on the protection of natural persons with regard to the processing of personal data.
Paragraph  2  lays  down  that  Member  States  may  also  provide  for  other  measures  which  are
appropriate in the particular circumstances (for example, informing customers by mail).

Article 20

Provisions under criminal law

This  Article  is  intended  to  ensure  that  all  serious  infringements,  as  well  as  attempts  at,
participation  in  and  instigation  of  serious  infringements  of  an  intellectual  property  right  are
punishable  by  effective,  proportionate  and  deterrent  criminal  penalties.  For  the  purposes  of
this  Article,  an  infringement  is  considered  serious  if  it  is  committed  intentionally  and  for
commercial purposes. This provision reflects the undertakings entered into under the TRIPS
Agreement, in particular Article 61, in extending the obligation set out by this Article to all
the intellectual property rights covered by Article 2(1) of this directive.  In paragraph 2, it is
also laid down that, for natural persons, such penalties may include imprisonment. For natural
and legal persons, paragraph 3 provides for fines, the confiscation of the infringing goods and
of the materials, implements or media used predominantly for the manufacture or distribution
of the goods in question. This provision is modelled on Article 46 of the TRIPS Agreement.
The same paragraph provides for the destruction of the infringing goods where their presence
on the market causes prejudice to the holder of the intellectual property right. This paragraph
also provides — in appropriate cases (for example, repeat offences) — for the total or partial,
definitive  or  temporary  closure  of  the  establishment  or  shop  used  predominantly  to  commit
the  infringement.  Provision  is  also  made  for  a  permanent  or  temporary  ban  on  engaging  in
commercial activities, placement under judicial supervision or judicial winding-up, and a ban
on  access  to  public  assistance  or  subsidies.  Since  counterfeiting  and  piracy  are  nowadays

24

carried out by industrial undertakings operating on a large scale, such measures are a powerful
weapon for combating the manufacture and sale of counterfeit or pirated products and reflect
in part the corresponding provisions of Spanish (Articles 271 and 276 of the Criminal Code)
and  French  (Articles  L-335-5,  L-521-4  and  L-716-11-1  of  the  intellectual  property  code)
legislation. Also provided for, finally, is the publication of judicial decisions as an additional
deterrent. This can also serve  as  a  channel  of information both for right holders and  for  the
public at large. The final paragraph defines, for the purposes of this Article, what is meant by
the term "legal person".

Article 21

Legal protection of technical devices

Article 21 establishes legal protection for technical devices in the field of industrial property.
Technical devices are used to protect and authenticate products or services. They are designed
for the manufacture of authentic goods and the incorporation therein of overt elements which
are  identifiable  by  customers  and  consumers  and  make  it  easier  to  recognise  the  goods  as
being  authentic.  These  elements  can  take  many  forms:  security  holograms,  optical  devices,
smart  cards,  magnetic  systems,  special  inks,  microscopic  labels,  etc.  Similar  protection
already  exists  in  certain  domains  (Article  6  of  Directive  2001/29/EC  of  the  European
Parliament and of the Council on the harmonisation of certain aspects of copyright and related
rights in the information society; Article 4 of Directive 98/84/EC of the European Parliament
and of the Council on the legal protection of services based on, or consisting of, conditional
access). Paragraph  1 lays down  that, without  prejudice  to  existing  provisions  in  the  field  of
copyright, the Member States must forbid certain acts (manufacture, import, distribution, use)
relating  to  illegal  technical  devices.  Paragraph  2  lays  down  what  is  meant  by  "technical
device" and "illegal technical device" for the purposes of applying this Article.

Article 22

Codes of conduct

Paragraph  1  of  this  Article  lays  down  that  the  Member  States  and  the  Commission  must
encourage the establishment  of codes of  conduct designed  to  assist with the enforcement of
intellectual  property  rights.  Paragraph  1(b)  concerns  the  monitoring  of  the  manufacture  of
optical  discs  (CD,  CD-ROM,  DVD),  in  particular  by  means  of  an  embedded  source  code
which makes it possible to identify the origin of their manufacture. Paragraph  1(c)  provides
for  the  communication  to  the  Member  States  and  the  Commission  of  the  codes  of  conduct
established and any assessments of their application. Formulation of the  codes of conduct is
based,  in  particular,  on  the  provisions  of  Article  16  of  Directive  2000/31/EC  on  electronic
commerce.  Paragraph  2  confirms  that  any  such  codes  of  conduct  must  be  compatible  with
Community law.

Article 23

Assessment

This Article provides for an assessment of the functioning of the Directive, as set out in other
Community  acts  (for  example,  Article  16  of  Directive  98/44/EC  on  the  legal  protection  of
biotechnological  inventions;  Article  18  of  Directive  98/71/EC  on  the  legal  protection  of
designs;  Article  15  of  Regulation  (EC)  No  3295/94,  as  amended,  laying  down  certain
measures  concerning  the  introduction  into  the  Community  and  the  export  and  re-export

25

outside the Community of  goods infringing certain intellectual property rights). Paragraph 1
lays  down  that,  three  years  after  transposition  of  the  Directive,  each  Member  State  must
submit to the Commission a report informing it of the situation with regard to implementation
of this Directive. On the basis of these national reports, the Commission will draw up a report
on  the  application  of  the  Directive,  including  an  assessment  of  the  effectiveness  of  the
measures taken by the various competent bodies and instances, , as well as an evaluation of its
impact on innovation and the development of the information society. This report will then be
transmitted to the European Parliament, the Council and the European Economic and Social
Committee.  It  will  be  accompanied,  if  necessary,  by  proposals  for  amendments  to  the
Directive in order to bring it into line with the developments observed in the Internal Market.
Paragraph 2 lays down that the Member States must provide the Commission with all the aid
and assistance it may need when drawing up that report.

Article 24

Correspondents

Article  24  provides  for  the  establishment  of  a  network  of  correspondents  in  the  Member
States.  Paragraph  1  lays  down  that  each  Member  State  must  designate  one  or  more
correspondents  for  any  question  relating  to  the  implementation  of  the  means  of  enforcing
intellectual  property  rights  in  the  Internal  Market,  including  the  means  set  out  in  this
Directive.  The  details  of  these  correspondents  must  be  communicated  to  the  other  Member
States  and  the  Commission.  Paragraph  2  lays  down  that,  in  order  to  ensure  the  proper
application of the Directive, the Member States must co-operate with the other Member States
and with the Commission via their correspondents and provide the assistance and information
requested as rapidly as possible, including by electronic means.

Article 25

Implementation

This Article concerns the measures for transposing the Directive into the internal law of the
Member  States.  Paragraph  1  lays  down  that  the  Member  States  must  implement  the
legislative, regulatory and administrative provisions necessary to comply with this Directive
no later than eighteen months after the date of adoption of this Directive and must inform the
Commission  immediately  thereof.  This  deadline  of  eighteen  months  is  modelled  on  the
provisions of other Directives. The national transposing provisions  must contain a  reference
to  this  Directive  or  be  accompanied  by  such  a  reference  on  their  official  publication,  the
details of that reference being decided by the Member States. Paragraph 2 lays down that the
Member States must communicate to the Commission  the  text  of  the  provisions  of  national
law adopted in the field of the Directive.

Article 26

Entry into force

This Article lays down that the Directive enters into force on the twentieth day following its
publication  in  the  Official  Journal  of  the  European  Union,  pursuant  to  the  provisions  of
Article 254(1) of the EC Treaty.

26

Article 27

Addressees

This Article lays down that this Directive is addressed to the Member States.

27

2003/0024 (COD)

Proposal for a

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

on measures and procedures to ensure the enforcement of intellectual property rights

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular
Article 95 thereof,

Having regard to the proposal from the Commission1,

Having regard to the opinion of the European Economic and Social Committee2,

Having regard to the opinion of the Committee of the Regions3,

Acting in accordance with the procedure laid down in Article 251 of the Treaty4,

Whereas:

(1)

(2)

(3)

The achievement of the Internal Market entails eliminating restrictions on freedom of
movement and distortions of competition, while creating an environment conducive to
innovation and investment. In this context, the protection of intellectual property is an
essential element for the success of the Internal Market. The protection of intellectual
property  is  important  not  only  for  promoting  innovation  and  creativity,  but  also  for
developing employment and improving competitiveness.

The protection of intellectual  property  must  allow the  inventor or creator to  derive a
legitimate profit from his invention or creation. It must also allow the widest possible
dissemination of works, ideas and new know-how. At the same time, the protection of
intellectual property must not hamper freedom of expression or the free movement of
information, or the protection of personal data, including on the Internet.

However,  without  effective  means  of  enforcing  intellectual  property,  innovation  and
creativity  are  discouraged  and  investment  diminished.  It  is  therefore  necessary  to
ensure that the substantive law on intellectual property, which is nowadays largely part
of the acquis communautaire, is applied effectively in the Community. In this respect,
the means of enforcing intellectual property rights are of paramount importance for the
success of the single market.

1

2

3

4

OJ C […], […] , p.[…].
OJ C […], […] , p.[…].
OJ C […], […] , p.[…].
OJ C […], […] , p.[…].

28

                                                
(4)

(5)

(6)

(7)

(8)

(9)

At international level, all Member States, as well as the Community itself  as regards
matters within its competence, are bound by the Agreement on Trade-Related Aspects
of Intellectual Property (the "TRIPS Agreement"), approved, as part of the multilateral
negotiations of the Uruguay Round, by Council Decision 94/800/EC5 concluded in the
framework of the World Trade Organisation.

The  TRIPS  Agreement  contains,  in  particular,  provisions  on  the  means  of  enforcing
intellectual  property  rights  which  are  common  standards  applicable  at  international
level and implemented in all Member States. The provisions of this Directive should
not affect Member States’ international obligations, including those under the TRIPS
Agreement.

There  are  also  international  conventions  to  which  all  Member  States  are  parties  and
which also contain  provisions  on  the means  of enforcing  intellectual  property  rights.
These  include,  in  particular,  the  Paris  Convention  for  the  Protection  of  Industrial
Property, the Berne Convention for the Protection of Literary and Artistic Works, and
the Rome Convention for the Protection of Performers, Producers of Phonograms and
Broadcasting Organisations.

It emerges from the consultations held by the Commission on this question that, in the
Member  States,  and  despite  the  provisions  of  the  TRIPS  Agreement,  there  are  still
major  disparities  as  regards  the  means  of  enforcing  intellectual  property  rights.  For
instance,  the  arrangements  for  applying  provisional  measures,  which  are  used  in
particular to safeguard evidence, the calculation of damages, or the arrangements  for
applying injunctions, vary widely from one Member State to another. In some Member
States, there are no measures and procedures such as the right of information and the
recall, and the infringer's expense, of the infringing goods placed on the market.

The  disparities  between  the  systems  of  the  Member  States  for  enforcing  intellectual
property  rights  are  prejudicial  to  the  proper  functioning  of  the  Internal  Market  and
make it impossible to ensure that intellectual property rights enjoy an equivalent level
of  protection  throughout  the  Community.  This  situation  does  not  promote  free
movement within the Internal Market nor create an environment conducive to healthy
competition. .

The current disparities also lead to a weakening of the substantive law on intellectual
property and to a fragmentation of the Internal Market in this field. This causes a loss
of confidence in the Internal Market in business circles, with a consequent reduction in
investment in innovation and creation. Infringements appear to be increasingly linked
to  organised  crime.  Increasing  use  of  the  Internet  enables  pirated  products  to  be
distributed instantly around the globe. Effective enforcement of the substantive law on
intellectual  property,  which  is  nowadays  largely  part  of  the  acquis  communautaire,
must  be  ensured  by  specific  action  at  Community  level.  Approximation  of  the
legislation of the Member States in this field is therefore an essential prerequisite for
the implementation of the Internal Market.

(10)

The objective of this Directive is to approximate legislative systems so as to ensure a
high,  equivalent  and  homogeneous  level  of  protection  in  the  Internal  Market.  This
protection is essential against infringements carried out on for commercial purposes or

5

OJ L 336, 23.12.1994, p. 1.

29

                                                
which  cause  significant  harm  to  the  right  holder,  apart  from  minor  and  isolated
infringements.

This  Directive  does  not  aim  to  establish  harmonised  rules  for  judicial  cooperation,
jurisdiction,  the  recognition  and  enforcement  of  decisions  in  civil  and  commercial
matters,  nor  to  deal  with  applicable  law.  There  are  Community  instruments  which
govern  such  matters  in  general  terms  and  are,  in  principle,  equally  applicable  to
intellectual property.

This  Directive  shall  not  affect  the  application  of  the  rules  of  competition,  and  in
particular Articles 81 and 82 of the Treaty.

It is necessary to  define the scope  of  this Directive  as widely  as possible in order to
encompass all the intellectual property rights covered by Community provisions in this
field and by the resulting national provisions, while excluding certain activities which
do not involve intellectual property in the strict sense. Nevertheless, that requirement
does not affect the possibility, on the part of those Member States which so wish, to
extend, for internal purposes, the provisions of this Directive to include acts involving
unfair competition or similar activities.

law  on 

This  Directive  shall  not  affect  substantive 
intellectual  property,
Directive 95/46/EC of 24 October 1995 of the European Parliament and of the Council
on the protection of individuals with regard to the processing of personal data and on
the  free  movement  of  such  data6,  Directive  1999/93/EC  of  the  European  Parliament
and of the Council of 13 December 1999 on  a Community framework for  electronic
signatures7 and Directive 2000/31/EC of the European Parliament and of the Council
of 8 June  2000  on  certain  legal  aspects  of  information  society  services,  in  particular
electronic commerce, in the Internal Market8.

The provisions of this Directive are without prejudice to the particular provisions for
the  enforcement  of  rights  in  the  domain  of  copyright  and  related  rights  set  out  in
Community  instruments  and  notably  Article  8  of  Directive  2001/29/EC  of  the
European  Parliament  and  of  the  Council  of  22  May  2001  on  the  harmonisation  of
certain aspects of copyright and related rights in the information society9.

The measures and procedures designed to enforce intellectual property rights must be
effective and place the right holder in the situation in which he would have been were
it not for the infringement in question.

In  order  to  improve  and  extend  access  to  justice,  the  persons  entitled  to  request
application of these measures and procedures should be not only the right holders but
also the professional organisations in charge of the management of those rights or for
the defence of the collective and individual interests for which they are responsible.

It  is  appropriate  to  adopt  the  rule  in  Article  15  of  the  Berne  Convention,  which
establishes  the  presumption  whereby  the  author  of  a  literary  or  artistic  work  is
regarded  as  such  if  his  name  appears  on  the  work.  Moreover,  as  copyright  exists  as

(11)

(12)

(13)

(14)

(15)

(16)

(17)

(18)

6

7

8

9

OJ L 281, 23.11.1995, p. 31.
OJ L 13, 19.1.2000, p. 12.
OJ L 178, 17.7.2000, p. 1.
OJ L 167, 22.6.2001, p. 10.

30

                                                
from the creation of a work and does not require formal registration as in the case of
an industrial property right, it is useful to recall the principle that a work is considered
to  be  sufficiently  creative  enjoy  copyright  protection  until  proven  otherwise.  This
principle  is  of  particular  importance  when  an  author  seeks  to  defend  his  rights  in  a
legal  dispute  and  represents  largely  current  practice  in  Member  States’  national
jurisdictions.

(19) Given  that  evidence  is  an  element  of  paramount  importance  for  establishing  the
infringement of intellectual property, it is appropriate to ensure that effective means of
presenting and obtaining evidence is available to all parties.

(20)

If there is a duly established danger that evidence may be destroyed, an effective and
inexpensive  procedure  must  be  made  available  to  the  parties  which  allows  for  the
detailed description, with or without the taking of samples, or the physical seizure of
the infringing goods and, in appropriate cases, of the documents relating thereto. The
procedure  must  have  regard  to  the  rights  of  the  defence  and  must  provide  the
necessary guarantees.

(21) Other measures designed to ensure a high level of protection exist in certain countries
and must be made available in all the Member States. This is the case with the right of
information,  which  allows  precise  information  to  be  obtained  on  the  origin  of  the
infringing goods, the distribution channels and the identity of the third parties involved
in the infringement, as well as the publication of judicial decisions on infringements of
intellectual  property,  which  makes  it  possible  to  inform  the  public  and  deter  third
parties from committing such infringements.

(22)

It  is  also  essential  to  provide  for  provisional  measures  allowing  for  the  immediate
termination  of  the  infringement  without  awaiting  a  decision  on  the  substance  of  the
case,  while  observing  the  rights  of  the  defence,  ensuring  the  proportionality  of  the
provisional measures as appropriate to the characteristics  of the  case  in  question and
providing  the  guarantees  needed  to  cover  the  costs  and  the  injury  caused  to  the
defendant by an unjustified request. Such measures are particularly justified when any
delay would cause irreparable prejudice to the holder of an intellectual property right.

(23) Depending on the particular case, and if justified by circumstances, the measures and
procedures to be provided for must include prohibitory measures aimed at preventing
further  infringements  of  intellectual  property,  as  well  as  preventive  and  corrective
measures,  such  as  the  confiscation  of  the  infringing  goods  and  other  objects  used
predominantly for illegal purposes, removal from the channels of commerce, possible
destruction  and  the  recall,  at  the  infringer's  expense  where  appropriate,  of  the
infringing goods placed on the market.

(24) With a view to compensating for the prejudice suffered as a result of an infringement
committed by an infringer who has engaged in an activity in the knowledge, or  with
reasonable grounds for knowing, that  it  would  give  rise to such an infringement,  the
amount  of  damages  awarded  to  the  right  holder  should  be  set  either  at  a  fixed  rate
equal to double the royalties or fees which would have been due if  the  infringer had
requested authorisation to use the intellectual property right in question (the aim being
to allow for compensation based on an objective criterion while taking account of the
expenses incurred by the right holder, such as the costs of identification and research),
or according to the actual prejudice (including loss of  earnings) suffered by the right
holder  (compensatory  damages),  to  which  must  be  added  the  profits  made  by  the

31

(25)

(26)

(27)

(28)

(29)

infringer, which are not taken into account in calculating the compensatory damages.
It  must  also  be  possible  to  take  into  account  other  elements,  such  as  the  moral
prejudice caused to the right holder.

In  order  to  ensure  the  proper  functioning  of  the  Internal  Market,  and  in  accordance
with  the  undertakings  entered  into  under  the  TRIPS  Agreement,  and  in  particular
Article  61  thereof,  Member  States  are  required  to  punish  serious  infringements  of
intellectual property in an effective, proportionate and deterrent fashion under criminal
law. To this end, “serious infringement” means acts which are carried out intentionally
and for commercial purposes. All or some of those participating in the infringement or
attempted  infringement,  should  be  declared  responsible,  according  to  the  particular
country's internal law, as accomplices or instigators.

Protection  measures  make  a  major  contribution  towards  combating  infringements  of
intellectual  property.  Appropriate  legal  protection  of  security  and  authentification
devices  which  protect  against  copying,  manipulation  or  neutralisation  is  therefore
necessary  in  the  field  of  industrial  property,  and  already  exists  in  the  field  of
copyright.  Moreover,  these  protection  measures  targeting  the  abuse  of  technical
devices  to  infringe  intellectual  property  rights  are  in  line  with  Article  6  of  the
Convention  on  Cybercrime  adopted  by  the  Council  of  Europe  in  Budapest  on
23 November 2001.

Industry  must  take  an  active  part  in  the  fight  against  piracy  and  counterfeiting.  The
development  of  codes  of  conduct  in  the  circles  directly  affected  is  a  supplementary
means  of  bolstering  the  regulatory  framework.  The  Member  States,  in  collaboration
with  the  Commission,  should  encourage  the  development  of  codes  of  conduct  in
general.  Monitoring  of  the  manufacture  of  optical  discs,  particularly  by  means  of  an
identification  code  embedded  in  discs  produced  on  the  territory  of  the  Community,
helps to limit infringements of intellectual property in  this  sector which  suffers  from
piracy  on  a  large  scale.  However,  these  technical  protection  measures  must  not  be
misused with a view to protecting markets and preventing parallel imports.

In order to facilitate the uniform application of the provisions set out in this Directive,
it is appropriate to provide for systems of cooperation and mutual assistance between
Member States, on the one hand, and between the Member States and the Commission
on the other, in particular by creating a network of correspondents designated by the
Member  States.  Within  this  framework,  a  Contact  Committee  made  up  of  national
correspondents could also be set up within the Commission.

Since the objectives of this Directive cannot be sufficiently achieved by the Member
States  for  the  reasons  already  described,  and  can  therefore  be  better  achieved  at
Community  level,  the  Community  may  adopt  measures,  in  accordance  with  the
principle of subsidiarity as set  out in Article 5  of  the  Treaty.  In accordance  with  the
principle of proportionality as set out in that Article, this Directive does not go beyond
what is necessary in order to achieve its objectives.

(30)

This Directive respects the fundamental rights and observes the principles recognised
in  particular  by  the  Charter  of  Fundamental  Rights  of  the  European  Union.  In
particular,  this  Directive  seeks  to  ensure  full  respect  for  intellectual  property
(Article 17(2) of the Charter of Fundamental Rights of the European Union),

32

HAVE ADOPTED THIS DIRECTIVE:

CHAPTER I

OBJECTIVE AND SCOPE

Article 1

Subject-matter

This  Directive  concerns  the  measures  necessary  to  ensure  the  enforcement  of  intellectual
property rights.

Article 2

Scope

1.

2.

3.

Without prejudice to the means which are or may be provided for in Community or
national  legislation,  in  so  far  as  those  means  may  be  more  favourable  for  right
holders, the measures provided for by this Directive shall apply to any infringement
of  the  rights  deriving  from  Community  and  European  acts  on  the  protection  of
intellectual property, as listed in the Annex, and from the provisions adopted by the
Member  States  in  order  to  comply  with  those  acts  when  the  infringement  is
committed for commercial purposes or causes significant harm to the right holder.

This  Directive  shall  be  without  prejudice  to  the  particular  provisions  on  the
enforcement of rights contained in Community legislation concerning copyright and
notably those found in Directive 2001/29/EC.

This Directive shall not affect :

a)

the  Community  provisions  governing  the  substantive  law  on  intellectual
property, Directive 95/46/EC, Directive 1999/93/EC or Directive 2000/31/EC;

b) Member  States’  international  obligations  and  notably  the  Agreement  on
(the  “TRIPS

Intellectual  Property  Rights 

Trade-Related  Aspects  of 
Agreement”).

33

CHAPTER II

MEASURES AND PROCEDURES

SECTION 1

GENERAL PROVISIONS

Article 3

General obligation

Member States shall provide for the proportionate measures and procedures needed to ensure
the enforcement of the intellectual property rights covered by this Directive.

These  measures  and  procedures  shall  be  such  as  to  remove  from  those  responsible  for  an
infringement  of  an  intellectual-property  right  the  economic  benefits  of  that  infringement.
They  shall  be  fair  and  equitable,  and  shall  not  be  unnecessarily  complicated  or  costly,  nor
entail unreasonable time-limits or unwarranted delays.

These measures and procedures shall be applied in such a manner as to avoid the creation of
barriers to legitimate trade.

Article 4

Penalties

Member States shall ensure that any infringement of an intellectual property right covered by
Article  2  is  punishable  by  penalties.  These  penalties  must  be  effective,  proportionate  and
deterrent.

Article 5

Persons entitled to apply for the application of the measures and procedures

1.

2.

Member  States  shall  recognise  as  persons  entitled  to  apply  for  application  of  the
measures referred to in this Chapter the holders of intellectual property rights, as well
as all other persons authorised to use those rights in accordance with the applicable
law, or their representatives.

Member States shall confer upon rights management or professional defence bodies,
wherever  they  represent  intellectual  property  right  holders  or  other  persons
authorised to use these rights according to the applicable law, an entitlement to seek
application of the measures and procedures referred to in this Chapter, including the
authority  to  initiate  legal  proceedings  for  the  defence  of  those  rights  or  of  the
collective or individual interests for which they are responsible.

34

Such  entitlement  shall  be  accorded  to  any  properly  constituted  rights  management
body  or  professional  defence  body,  regardless  of  the  Member  State  in  which  it  is
established

The first and second subparagraphs shall be without prejudice to the applicable rules
on the representation of parties in court proceedings.

Article 6

Presumption of copyright tenure

Until  proved  otherwise,  authorship  of  a  work  shall  be  presumed  to  be  vested  in  the  person
whose name, presented as being that of the author, is featured on copies of the work, or whose
authorship is referred to on a copy of the work by way of a statement, label or other mark.

SECTION 2

EVIDENCE

Article 7

Evidence

1.

2.

1.

Member  States  shall  lay  down  that,  where  a  party  has  presented  reasonably
accessible evidence sufficient to support its  claims,  and has, in substantiating  those
claims, cited evidence which is to be found under the control of the opposing party,
the  judicial  authorities  may  order  that  such  evidence  be  produced  by  the  opposing
party, subject to the protection of confidential information.

In order to identify and prosecute the real beneficiaries of the infringement, Member
States shall take such measures as are necessary to enable the responsible authorities
to  order  the  communication  or  seizure  of  banking,  financial  or  commercial
documents, subject to the protection of confidential information.

Article 8

Measures for protecting evidence

Member States shall lay down that, where there is a demonstrable risk that evidence
may be destroyed even before the commencement of proceedings on the merits of the
case, the judicial authorities may, in the event of an actual or imminent infringement
of an intellectual property right, authorise in any place either the detailed description,
with or without the taking of samples, or the physical seizure of the infringing goods,
and,  in  appropriate  cases,  the  documents  relating  thereto.  These  measures  shall  be
taken by order issued on application, if necessary without the other party having been
heard.

35

2.

3.

1.

Where  evidence-protection  measures  have  been  adopted  without  the  other  party
having  been  heard,  the  affected  parties  shall  be  given  notice  immediately  after  the
execution of the measures at the latest. A review, including a right to be heard, shall
take  place  upon  request  of  the  affected  parties  with  a  view  to  deciding,  within  a
reasonable period after the notification of the measures, whether the measures shall
be modified, revoked or confirmed.

Member States shall lay down that physical seizure may be subject to the applicant’s
lodging of an adequate guarantee intended to ensure compensation for any prejudice
suffered by the defendant if the proceedings instituted against him are subsequently
judged to be unfounded..

Member  States  shall  lay  down  that,  if  the  applicant  has  not  instituted  legal
proceedings leading to a decision on the merits of the case within 31 calendar days of
the  seizure,  the  seizure  shall  be  null  and  void,  without  prejudice  to  the  damages
which may be claimed.

Where  the  evidence  protection  measures  have  been  revoked,  or  where  they  lapse
owing to any act or omission by the applicant, or where it is subsequently found that
there  has  been  no  infringement  of  any  intellectual  property  right,  the  judicial
authorities  shall  have  be  empowered  to  order  the  applicant,  at  the  defendant’s
request, to provide the defendant with adequate compensation for any injury caused
by the measures.

SECTION 3

RIGHT OF INFORMATION

Article 9

Right of information

Member  States  shall  lay  down  that,  in  order  to  deal  with  proceedings  involving  an
infringement  of  an  intellectual  property  right,  or  in  response  to  a  request  for
provisional  or  precautionary  measures,  the  judicial  authorities  shall  order,  at  the
request of the right holder, unless particular reasons are invoked for not doing so, any
person  to  provide  information  on  the  origin  of  the  goods  or  services  which  are
thought  to  infringe  an  intellectual  property  right  and  on  the  networks  for  their
distribution or provision, respectively, if that person:

(a) was found in possession, for commercial purposes, of the infringing goods;

(b) was found to be using the infringing services for commercial purposes; or

(c) was indicated by the person referred to in point (a) or (b) as being at the origin
of the goods or services or as being a link in the network for distributing those
goods or providing those services.

2.

The information referred to in paragraph 1 shall comprise:

36

(a)

the  names  and  addresses  of  the  producers,  distributors,  suppliers  and  other
previous holders of the product or service, as well as the intended wholesalers
and retailers;

(b)

information on the quantities produced, delivered, received or ordered, as well
as the price obtained for the goods or services in question.

3.

Paragraphs 1 and 2 shall apply without prejudice to other provisions which:

(a)

grant the right holder rights to receive fuller information;

(b)

govern 
communicated pursuant to this Article;

the  use 

in  civil  or  criminal  proceedings  of 

the 

information

4.

1.

2.

(c)

govern responsibility for misuse of the right of information; or

(d)

afford  an  opportunity  for  refusing  to  provide  information  which  would  force
the  person  referred  to  in  paragraph  1  to  admit  to  the  existence  of  an
infringement of an intellectual property right.

Apart from the cases referred to in paragraph 1, Member States shall lay down that,
when  the  responsible  authorities  are  in  possession  of  the  information  referred  to  in
paragraph 2, they may so inform the right holder, provided the latter is known, while
complying  with  the  rules  on  the  protection  of  confidential  information,  in  order  to
allow the right holder to institute proceedings leading to a decision on the merits of
the case or to obtain provisional or precautionary measures.

SECTION 4

PROVISIONAL AND PRECAUTIONARY MEASURES

Article 10

Provisional measures

Member  States  shall  lay  down  that  the  judicial  authorities  may  serve  the  alleged
infringer,  or  the  intermediary  whose  services  are  being  used  by  a  third  party  to
infringe a right, with an interlocutory injunction intended to prevent any impending
infringement of an intellectual property right, or to forbid, on a provisional basis and
subject  to  a  recurrent  fine,  the  continuation  of  the  alleged  infringements  of  an
intellectual  property  right,  or  to  make  such  continuation  subject  to  the  lodging  of
guarantees intended to ensure the compensation of the right holder.

The judicial  authorities shall  be empowered to require the applicant to provide  any
reasonably available evidence in order to satisfy themselves with a sufficient degree
of certainty that the applicant is the right holder and that the applicant’s right is being
infringed or, that such infringement is imminent.

Member  States  shall  lay  down  that  the  provisional  measures  referred  to  in
paragraph 1  may  in  appropriate  cases  be  taken  without  the  defendant  having  been
heard,  in  particular  when  any  delay  would  cause  irreparable  prejudice  to  the  right

37

holder.  In  the  event  of  this  happening,  the  defendant  shall  be  so  informed  without
delay after the execution of the measures.

A  review,  including  the  right  to  be  heard,  shall  take  place  at  the  request  of  the
defendant  in  order  to  decide,  within  a  reasonable  time  after  notification  of  the
measures, whether they are to be amended, revoked or confirmed.

Member  States  shall  lay  down  that  a  prohibitory  measure  shall  be  revoked  if  the
applicant  does  not  institute  proceedings  leading  to  a  decision  on  the  merits  of  the
case within thirty-one calendar days from the day on which the right holder became
aware of the facts on which it is based.

The  judicial  authorities  may  make  the  prohibition  subject  to  the  lodging  by  the
applicant  of  adequate  guarantees  intended  to  ensure  any  compensation  of  the
prejudice suffered by the defendant if the proceedings on the merits are subsequently
judged to be unfounded.

Where the provisional measures have been revoked or where they lapse due  to any
act  or  omission  by  the  applicant,  or  where  it  is  subsequently  found  that  there  has
been no infringement or thereat of infringement of an intellectual property right, the
judicial authorities shall have be empowered to order the applicant, at the request of
the defendant, to provide the defendant adequate compensation for any injury caused
by these measures.

Article 11

Precautionary measures

The Member States shall lay down that, in appropriate cases, and in particular if the
injured party demonstrates circumstances likely to threaten the recovery of damages,
and  if  necessary  without  the  other  party  having  been  heard,  the  judicial  authorities
may  authorise  the  precautionary  seizure  of  the  fixed  and  non-fixed  assets  of  the
infringer, including the blocking of his bank accounts and other assets.

In order to ensure the implementation of the provisions set out in the first paragraph,
Member States shall also take the necessary steps to allow the judicial authorities to
order the communication or seizure of bank, financial or commercial documents

The judicial authorities may make the measures provided for in paragraph 1 subject
to  the  lodging  by  the  applicant  of  guarantees  adequate  to  ensure  possible
compensation for the prejudice  suffered  by  the  defendant  if  the  proceedings  on  the
merits are subsequently judged to be unfounded.

Where the precautionary measures are revoked, or where they lapse due to any act or
omission by the applicant, or where it is subsequently found that there has been no
infringement  of  an intellectual  property  right,  the  judicial  authorities  shall  have  the
authority  to  order  the  applicant,  upon  request  of  the  defendant,  to  provide  the
defendant adequate compensation for any injury caused by these measures.

3.

4.

5.

1.

2

3.

38

SECTION 5

MEASURES RESULTING FROM A DECISION ON THE MERITS OF THE CASE

Article 12

Recall of goods

Without  prejudice  to  the  damages  due  to  the  right  holder  by  reason  of  the  infringement,
Member  States  shall  lay  down  that  the  judicial  authorities  may  order  the  recall,  at  the
infringer's expense  in  appropriate  cases, of  the  goods which have been  found  to  infringe  an
intellectual property right

Article 13

Disposal outside the channels of commerce

Member  States  shall  lay  down  that  the  judicial  authorities  may  order  that  the  goods  which
have  been  found  to  infringe  an  intellectual  property  right,  as  well  as  the  materials  and
implements  used  primarily  for  the  creation  or  the  manufacture  of  the  goods  in  question,  be
disposed of outside the channels of commerce, without any compensation being due.

Article 14

Destruction of goods

Member  States  shall  lay  down  that  the  judicial  authorities  may  order  the  destruction  of  the
goods  which  have  been  found  to  infringe  an  intellectual  property  right,  without  there  being
any entitlement to compensation.

Article 15

Preventive measures

1.

2.

Member States shall lay down that, when a judicial decision has been taken finding
an  infringement  of  an  intellectual  property  right,  the  judicial  authorities  may  serve
the  infringer  with  an  injunction  aimed  at  prohibiting  the  continuation  of  the
infringement.  Non-compliance  with  an  injunction  shall  be  punishable  by  a  fine
accompanied,  where  applicable,  by  a  recurring  fine,  with  a  view  to  ensuring
compliance.

Member States shall ensure that right holders are able to apply for an injunction to be
addressed  to  intermediaries  whose  services  are  used  by  third  parties  to  infringe  an
intellectual property right.

39

Article 16

Alternative measures

In appropriate cases, Member States shall lay down that, if the person liable to be subjected to
the  measures  provided  for  in  this  Section  has  acted  without  fault  or  negligence  but  has
nevertheless caused injury to the applicant, that person may, if execution of the measures in
question would cause him disproportionate harm and if the injured party could reasonably be
satisfied  with  pecuniary  compensation,  compensate  that  party  in  cash,  with  the  latter’s
agreement.

SECTION 6

DAMAGES AND LEGAL COSTS

Article 17

Damages

1.

Member States shall lay down that the judicial authorities shall order an infringer to
pay  the  right  holder adequate damages  in reparation of the damage incurred by  the
latter as a result of his intellectual property right being infringed through the infringer
having  engaged  in  an  activity  in  the  knowledge,  or  with  reasonable  grounds  for
knowing, that it would give rise to such an infringement.

To  this  end,  the  competent  authorities  shall  award,  at  the  request  of  the  prejudiced
party:

(a)

either damages set at double the royalties or fees which would have been due if
the infringer had requested authorisation to use the intellectual property right in
question;

(b)

or compensatory damages corresponding to the actual prejudice (including lost
profits) suffered by the right holder as a result of the infringement.

In  appropriate cases,  Member  States  shall  lay  down  that  the  prejudice  suffered  can
also be deemed to include elements other than economic factors,  such as the moral
prejudice caused to the right holder by the infringement.

2.

In the case provided for in paragraph 1, point (b), Member States may provide for the
recovery, for the benefit of the right holder, of all the profits made by the infringer
which  are  attributable  to  that  infringement  and  which  are  not  taken  into  account
when calculating the compensatory damages.

For  calculating  the  amount  of  the  profits  made  by  the  infringer,  the  right  holder  is
bound  to  provide  evidence  only  with  regard  to  the  amount  of  the  gross  income
achieved  by  the  infringer,  with  the  latter  being  bound  to  provide  evidence  of  his
deductible expenses and profits attributable to factors other than the protected object.

40

Article 18

Legal costs

Member  States  shall  lay  down  that  the  legal  costs,  lawyer's  fees  and  any  other  expenses
incurred  by  the  successful  party  shall  be  borne  by  the  other  party,  unless  equity  or  the
economic  situation  of  the  other  party  does  not  allow  this.  The  responsible  authorities  shall
determine the sum to be paid.

1.

2.

1.

2.

3.

SECTION 7

PUBLICITY MEASURES

Article 19

Publication of judicial decisions

Member States shall lay down that, in  legal proceedings instituted  for infringement
of an intellectual property right, the judicial authorities may order, at the request of
the right holder and at the expense of the infringer, that the decision be displayed and
published in full or in part in the newspapers designated by the right holder.

Member States may also provide for other publicity measures which are appropriate
to the particular circumstances.

CHAPTER III

CRIMINAL LAW PROVISIONS

Article 20

Criminal law provisions

Member States shall ensure that all serious infringements of an intellectual property
right,  as  well  as  attempts  at,  participation  in  and  instigation  of  such  infringements,
are  treated  as  a  criminal  offence,.  An  infringement  is  considered  serious  if  it  is
intentional and committed for commercial purposes.

Where  natural  persons  are  concerned,  Member  States  shall  provide  for  criminal
sanctions, including imprisonment.

As  regards  natural  and  legal  persons,  the  Member  States  shall  provide  for  the
following sanctions:

(a)

fines;

41

(b)

confiscation of thegoods, instruments and products stemming from the offences
referred  to  in  paragraph  1,  or  of  goods  whose  value  corresponds  to  those
products.

In appropriate cases, Member States shall also provide for the following sanctions:

(a)

destruction of the goods infringing an intellectual property right;

(b)

total  or  partial  permanent  or  temporary  closure  of  the  establishment  used
primarily to commit the infringement;

(c)

a permanent or temporary ban on engaging in commercial activities;

(d)

placing under judicial supervision;

(e)

judicial winding-up;

(f)

a ban on access to public assistance or subsidies;

(g)

publication of judicial decisions.

For the purposes of this Chapter, the term “legal person” shall be understood to mean
any  legal  entity  having  such  status  under  the  applicable  national  law,  except  for
States or any other public bodies acting in the exercise of their prerogative of public
power, as well as public international organisations.

CHAPTER IV

TECHNICAL MEASURES

Article 21

Legal protection of technical devices

Without prejudice to particular provisions applicable in the field of copyright, related
rights  and  the  sui  generis  right  of  the  creator  of  a  database,  Member  States  shall
provide for appropriate legal protection against the manufacture, import, distribution
and use of illegal technical devices.

4.

1.

2.

For the purposes of this Chapter,

(a)

“technical device” means  any technology, device or  component  which,  in  the
normal course of its functioning, is designed for the manufacture of  authentic
goods  and  the  incorporation  therein  of  elements  which  are  manifestly
identifiable by customers and consumers and which make it easier to recognise
the goods as being authentic.

(b)

“illegal  technical  device”  means  any  technical  device  which  is  designed  to
circumvent  a  technical  device  which.  permits  the  manufacture  of  goods

42

infringing 
identifiable elements described in point (a).

industrial  property  rights  and 

incorporating 

the  manifestly

Article 22

Codes of conduct

1.

Member States shall encourage:

(a)

(b)

the development by trade or professional associations or organisations of codes
of conduct at Community level aimed at contributing towards the enforcement
of the intellectual property rights referred to in Article 2;

the  establishment,  by  optical  disc  manufacturers  and  the  professional
organisations concerned, of  codes  of  conduct  aimed  at  helping  manufacturers
to combat infringements of intellectual property, particularly by recommending
the  use  on  optical  discs  of  a  source  code  enabling  the  identification  of  the
origin of their manufacture;

(c)

the  submission  to  the  Commission  of  draft  codes  of  conduct  at  national  and
Community  level  and  of  any  evaluations  of  the  application  of  these  codes  of
conduct.

2.

The codes of  conduct must be in accordance  with  Community  law  and  notably  the
rules on competition and protection of personal data.

CHAPTER V

ADMINISTRATIVE COOPERATION

Article 23

Assessment

1.

2.

Three years after the date laid down in Article 26(1), each Member State shall submit
to  the  Commission  a  report  informing  it  of  the  situation  with  regard  to
implementation of this Directive.

On  the  basis  of  those  reports,  the  Commission  shall  draw  up  a  report  on  the
application  of  this  Directive,  including  an  assessment  of  the  effectiveness  of  the
measures  taken  by  the  various  competent  bodies  and  instances,  as  well  as  an
evaluation  of  its  impact  on  innovation  and  the  development  of  the  information
society. That report shall then be transmitted to the European Parliament, the Council
and  the  European  Economic  and  Social  Committee.  It  shall  be  accompanied,  if
necessary, by proposals for amendments to this Directive.

Member States shall provide the Commission with all the aid and assistance it may
need  when  drawing  up  the  report  referred  to  in  the  second  subparagraph  of
paragraph 1.

43

Article 24

Correspondents

Each  Member  State  shall  designate  one  or  more  correspondents  (referred  to
hereinafter  as  “the  national  correspondents”)  for  any  question  relating  to  the
implementation of the measures provided for by this Directive. It shall communicate
the  details  of  the  correspondent(s)  to  the  other  Member  States  and  to  the
Commission.

For the purposes of applying this Directive, the Member States shall co-operate with
the other Member States and with the Commission via the national correspondents.
They  shall  provide  the  assistance  and  information  requested  by  the  other  Member
States or the Commission as rapidly as possible, including by appropriate electronic
means.

CHAPTER VI

FINAL PROVISIONS

Article 25

Implementation

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative
provisions  necessary  to  comply  with  this  Directive  not  later  than  eighteen  months
after  the  date  of  its  adoption.  They  shall  immediately  inform  the  Commission
thereof.

When Member States adopt these provisions, these shall contain a reference to this
Directive  or  shall  be  accompanied  by  such  reference  at  the  time  of  their  official
publication. The procedure for such reference shall be adopted by Member States.

Member States shall communicate to the Commission the texts of the provisions of
national law which they adopt in the field governed by this Directive.

1.

2.

1.

2.

Article 26

Entry into force

This  Directive  shall  enter  into  force  on  the  twentieth  day  following  its  publication  in  the
Official Journal of the European Union.

44

Article 27

Addressees

This Directive is addressed to the Member States.

Done at Brussels, […]

For the European Parliament
The President
[…]

For the Council
The President
[…]

45

ANNEX

List of provisions of Community and European law relating to the protection of
intellectual property, referred to in Article 1(3)

Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of
semiconductor products1.

First  Council  Directive  89/104/EEC  of  21  December  1988  to  approximate  the  laws  of  the
Member States relating to trade marks2.

Council  Regulation  (EEC)  No  1576/89  of  29  May  1989  laying  down  general  rules  on  the
definition, description and presentation of spirit drinks3.

Commission  Regulation  (EEC)  No  1014/90  of  24  April  1990  laying  down  detailed
implementing rules on the definition, description and presentation of spirit drinks4.

Council  Directive  91/250/EEC  of  14  May  1991  on  the  legal  protection  of  computer
programs5.

Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on
certain rights related to copyright in the field of intellectual property6.

Council  Directive  93/83/EEC  of  27  November  1993  on  the  coordination  of  certain  rules
concerning copyright and rights relating to copyright applicable to satellite broadcasting and
cable retransmission7.

Council  Directive  93/98/EEC  of  29  October  1993  harmonising  the  term  of  protection  of
copyright and certain related rights8.

Directive 96/9/EC of the European Parliament and of the Council of 11 March  1996  on  the
legal protection of databases9.

Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the
legal protection of designs10.

Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the legal
protection of biotechnological inventions11.

Council  Regulation  (EC)  No  1493/99  of  17  May  1999  on  the  common  organisation  of  the
market in wine12.

1

2

3

4

5

6

7

8

9

10

11

OJ L 24, 27.1.1987, p. 36.
OJ L 40, 11.2.1989, p. 1.
OJ L 160, 12.6.1989, p. 1.
OJ L 105, 25.4.1990, p. 9.
OJ L122, 17.5.1991, p. 42.
OJ L 346, 27.11.1992, p. 61.
OJ L 248, 6.10.1993, p. 15.
OJ L 290, 24.11.1993, p. 9.
OJ L 77, 27.3.1996, p. 20.
OJ L 289, 28.10.1998, p. 28.
OJ L 213, 30.7.1998, p. 13.

46

                                                
Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the
harmonisation of certain aspects of copyright and related rights in the information society13.

Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001
on the resale right for the benefit of the author of an original work of art14.

Council  Regulation  (EEC)  No  1768/92  of  18  June  1992  concerning  the  creation  of  a
supplementary protection certificate for medicinal products15.

Regulation (EC) No 1610/96 of the European Parliament and of the Council of 23 July 1996
concerning  the  creation  of  a  supplementary  protection  certificate  for  plant  protection
products16.

Council  Regulation  (EEC)  No  2081/92  of  14  July  1992  on  the  protection  of  geographical
indications  and  designations  of  origin  for  agricultural  products  and  foodstuffs,  as  last
amended by Regulation (EC) No 1068/9717.

Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark18.

Council Regulation (EC) No 2100/94 of 27 July 1994 on Community plant variety rights19.

Council Regulation (EC) No 6/2002 of 12 December 2001 on Community designs20.

Convention  on  the  Grant  of  European  Patents  (Convention  on  the  European  Patent)  of
5 October 1973.

12

13

14

15

16

17

18

19

20

OJ L 179, 14.7.1999, p. 1.
OJ L 167, 22.6.2001, p. 10.
OJ L 272, 13.10.2001, p. 32.
OJ L 182, 2.7.1992, p. 1.
OJ L 198, 8.8.1996, p. 30.
OJ L 156, 13.6.1997, p. 10.
OJ L 11, 14.1.1994, p. 1.
OJ L 227, 1.9.1994, p. 1.
OJ L 3, 5.1.2002, p. 1.

47

                                                                                                                                                        
FINANCIAL STATEMENT

1.

TITLE OF OPERATION

Proposal for a Directive of the European Parliament and of the Council on measures
and procedures to ensure the enforcement of intellectual property rights.

2.

BUDGETARY HEADING INVOLVED

A0-7030.

3.

LEGAL BASIS

Article 95 of the EC Treaty.

4.

DESCRIPTION OF OPERATION

4.1 General objective

The objective of the operation is to harmonise the legislation of the Member States
on the means of enforcing intellectual property  rights in the  Internal  Market  and to
establish  a  general  framework  for  the  exchange  of  information  and  administrative
cooperation.

4.2 Period covered and arrangements for renewal

Indefinite period.

5.

CLASSIFICATION OF EXPENDITURE/REVENUE

5.1. NCE (non-compulsory expenditure)

5.2. DA (differentiated appropriation)

5.3. Type of revenue involved: (none)

TYPE DE OF EXPENDITURE/REVENUE

FINANCIAL IMPACT (PART B)

FRAUD PREVENTION MEASURES

ELEMENTS OF COST-EFFECTIVENESS ANALYSIS

9.1 Specific and quantified objectives; target population

48

6.

7.

8.

9.

9.2 Grounds for the operation

The proposal for a Directive is intended to harmonise the national legislation on the
means  of  enforcing  intellectual  property  rights.  There  are  major  disparities  in  the
Member States' systems of penalties in this field. This situation is prejudicial to the
proper functioning of the Internal Market.

Proper application of the Directive involves setting up a Contact Committee made up
of correspondents designated by the Member States and chaired by a representative
of the Commission. The expenditure involved in the operation of this Committee will
be borne by the Community budget.

9.3 Monitoring and evaluation of the operation

Pursuant to Article 23 of the proposal for a Directive, the Commission will publish a
report  on  the  implementation  of  the  Directive  three  years  after  its  transposition  by
Member States.

10.

ADMINISTRATIVE  EXPENDITURE  (PART  A  OF  SECTION  III  OF  THE
GENERAL BUDGET)

10.1 Effect on the number of posts

Type of post

Staff to be assigned to managing
the operation

Source

Duration

Permanent
posts

Temporary
posts

Additional
resources

Existing
resources in
the DG or
department
concerned

A
B
C

Officials or
temporary staff

Other resources

Total

49

10.2 Overall financial impact of human resources (in EUR)

Amounts

Permanent posts

Officials or temporary
staff

A

B

C

Other resources (give
budget heading)

Total

-

-

10.3 Increase  in  other  administrative  expenditure  as  a  result  of  the  operation,
especially  costs  relating  to  meetings  of  committees  and  groups  of  experts
(in EUR)

Budget heading
(number and heading)

Amounts

Method of calculation

(Basis: 2 meetings a year)

A0-7030

EUR 9 100

14 x EUR 650 (travel expenses of national correspondents)

x 2

x 2

Total

EUR 18 200

The amounts indicate the total cost of the additional posts for fixed-length operations and the
cost over 12 months for operations the duration of which is not fixed.

The requirements in terms of human and administrative resources will be encompassed by the
amount allocated to DG MARKT under the annual allocation procedure.

If the Commission decides to create a Contact Committee, the latter's remit will be to develop
cooperation,  to  foster  the  exchange  of  information,  to  supervise  the  functioning  of  this
Directive  and  to  examine,  at  the  request  of  the  Commission  or  of  a  representative  of  a
Member  State,  all  questions  relating  to  the  implementation  of  the  means  of  enforcing
intellectual  property  rights  in  the  Internal  Market.  It  will  also  assist  the  Commission  in
drawing up the assessment report.

This  Committee  will  not  be  governed  by  the  comitology  procedure  set  out  in  Council
Decision  1999/468/EC.  The  only  annual  costs  of  this  Committee  will  be  the  travelling
expenses of the national correspondents.

50

IMPACT ASSESSMENT FORM

THE IMPACT OF THE PROPOSAL ON BUSINESS, WITH SPECIAL REFERENCE
TO SMALL AND MEDIUM-SIZED ENTERPRISES (SMEs)

TITLE OF PROPOSAL

Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  on  measures  and
procedures to ensure the enforcement of intellectual property rights.

REFERENCE NO

COM(2003) 46 final

THE PROPOSAL

1.

Taking  account  of  the  principle  of  subsidiarity,  why  is  Community  legislation
necessary in this area and what are its main aims?

Businesses have expressed the need to have means of enforcing intellectual property
rights which are equally effective in all Member States. This need is also in line with
the  objectives  of  the  Commission's  policy  aimed  at  fostering  the  development  of
innovation and  creativity, in particular through coherent and  effective  protection  of
intellectual property in the Internal Market. However, it is clear that this need cannot
be  met  by  action  taken  by  each  Member  State  individually.  That  is  why
harmonisation  at  Community  level  of  the  legislation  of  the  Member  States  on  the
means  of  enforcing  intellectual  property  rights  is  necessary.  To  be  genuinely
effective, harmonisation must be sought on the basis of the national provisions which
seem  the  most  suited  to  satisfy  the  needs  of  parties  infringed  against  whilst  taking
into account the  legitimate rights of defence.. This will make it possible to enforce
intellectual property rights in a way which is equivalent and effective throughout the
Community.

THE IMPACT ON BUSINESS

2.

Who will be affected by the proposal?

–  Which sectors of business?

In principle, all sectors are affected by compliance with intellectual property.

–  Which sizes of business (what is the concentration of small and medium-sized

firms)?

The  means  of  enforcing  intellectual  property  concern  both  large  and  small
businesses,  in  particular  those  active  in  the  field  of  creation  and  innovation.  SMEs
are especially vulnerable to counterfeit and pirated products. Their limited financial
resources frequently do not allow them to incur high legal costs.

51

– 

Are  there  particular  geographical  areas  of  the  Community  where  these
businesses are found?

The entire territory of the Community is concerned.

3.

What will business have to do to comply with the proposal?

The  means  of  enforcing  intellectual  property  rights  must  be  made  available  to
businesses  by  the  Member  States.  Businesses  will  be  able  to  invoke  those  means
when defending the intellectual property rights of which they are the holders.

4.

What economic effects is the proposal likely to have:

– 

on employment?

It is accepted that, in the final analysis, the damage suffered by businesses because of
infringements  of  intellectual  property  affects  the  number  of  jobs  they  provide,
although  the  precise  effect  of  those  infringements  on  employment  in  industry  is
difficult to measure. According to a study conducted in the European Union in June
2000, more than 17 000 jobs were said to be lost each year because of counterfeiting
and piracy. According to a survey carried out in France in 1998, the number of jobs
lost through counterfeiting was put at some 38 000 for France. Harmonisation on the
basis of those national provisions shown to be most effective will make it possible to
improve and step up the fight against counterfeiting and piracy,  and hence improve
the employment situation in the Community.

– 

on investment and the creation of new businesses?

Harmonisation of national legislation on the means of enforcing intellectual property
rights  will  allow  businesses  to  benefit  from  an  equivalent  level  of  protection
throughout  the  Community.  This  favourable  environment  will  boost  business
confidence  in  the  Internal  Market  when  developing  their  creative  and  innovatory
activities.  This  situation  will  ensure  that  they  obtain  an  equitable  return  on  their
investment in research and development and will encourage them to invest.

– 

on the competitive position of businesses?

Innovation is of paramount importance  for the competitiveness of businesses. They
constantly  have  to  improve  or  renew  their  products  if  they  wish  to  maintain  or
conquer market shares. Sustained innovative  activity  leading to the  development of
new  products  or  services  places  businesses  at  an  advantage  on  the  market  and  is  a
major  factor  in  their  competitiveness.  For  them  to  be  able  to  innovate  under  good
conditions, businesses must benefit  from  an  environment  conducive  to  the  exercise
of  their  activities,  with  particular  regard  to  the  protection  of  intellectual  property.
Harmonisation of national legislation on the means of enforcing intellectual property
rights will help to ensure the development of the innovatory activity of businesses in
the Internal Market, and hence their competitiveness.

5.

Does the proposal contain measures to take account of the specific situation of small
and medium-sized firms (reduced or different requirements, etc.)?

The proposal does not contain specific measures for small and medium-sized firms.
Nevertheless,  the  harmonisation  proposed  should  also  benefit  SMEs  by  providing

52

them with effective means of enforcing their intellectual property rights and making
it  easier  for  them  to  access  the  judicial  decisions  published  in  the  Member  States
relating  to  intellectual  property.  This  will  also  make  it  possible  to  lower  the  costs
involved in enforcing the intellectual property rights held by SMEs.

CONSULTATION

6.

List the organisations which have been consulted about the proposal and outline their
main views.

The  proposal  itself  was  not  distributed  to  interested  circles,  since  it  still  has  to  be
adopted by the Commission. However, the need for Commission action in this field
was identified during a prior consultation process. In October 1998 the Commission
published a Green Paper on the fight against counterfeiting and piracy in the Single
Market (COM(98) 569 final)1. It received nearly 145 written  contributions  from  all
the  interested  circles.  These  were  the  subject  of  a  summary  report  which  was
published2. The European Parliament3 and the Economic and Social Committee4 also
had  occasion  to  comment  on  the  Green  Paper.  In  addition,  the  Commission
organised, jointly with the German Presidency of the Council of the European Union,
a hearing open to all interested circles on 2 and 3 March 1999 in Munich5, as well as
a  meeting  of  experts 
the  Community  on
3 November 1999, with  a  view  to  gathering  their  views  on  the  subject.  Finally,  the
Commission  presented  a  follow-up  Communication  to  the  Green  Paper  on
30 November  2000,  in  which  it  announced,  in  the  form  of  an  action  plan,  a  whole
series of  measures  intended to step  up  and  improve  the  fight  against  counterfeiting
(COM(2000) 789 final)6, including a proposal for a Directive intended to strengthen
the means of enforcing intellectual property rights.

the  Member  States  of 

from 

During the consultation, the participants were unanimous in underlining the lack of
deterrent effect of the present means and reported the same weaknesses, i.e. that the
damages awarded, the fines and other penalties handed down were too little and not
enough to deter. The disparities between the national systems of penalties were also
raised  as  an  obstacle  to  effectively  combating  counterfeiting  and  piracy  in  the
Internal  Market.  The  interested  circles  expressed  the  desire  for  the  penalties  and
other  means  of  enforcing  intellectual  property  rights  to  be  equally  effective  in  all
Member  States,  in  particular  with  regard  to  searching,  seizure  and  evidence.
Attention was also drawn to the length and uncertain nature of the national measures
and  procedures.  Most  of  the  comments  called  for  legislative,  judicial  and
administrative  action,  strengthened  and  harmonised  at  the  level  of  the  EU  and  its
Member States, to be taken rapidly in this field.

1

2

3

4

5

6

Cf. footnote 1.
Cf. footnote 2.
Cf. footnote 5.
Cf. footnote 4.
Cf. footnote 3.
Cf. footnote 6.

53

                                                
The Commission's follow-up Communication, and in particular the announcement of
a  proposal  for  a  Directive  on  the  enforcement  of  intellectual  property  rights,  was
welcomed by  interested  circles.  In its  supplementary  opinion of 30 May 20017, the
Economic  and  Social  Committee  approved 
the  European
Commission to present a proposal for a Directive on this subject in the near future.

intention  of 

the 

7

Cf. footnote 7.

54