Opinion of the European Economic and Social Committee on the "Proposal for a Directive of the European Parliament and of the Council on measures and procedures to ensure the enforcement of intellectual property rights" (COM(2003) 46 final — 2003/0024 (COD))
Date: 2003-10-29
Institutions: European Economic and Social Committee
Subjects: ESC opinion, administrative cooperation, approximation of laws, criminal law, intellectual property, judicial proceedings, single market

5.2.2004

EN

Official Journal of the European Union

C 32/15

Opinion of the European Economic and Social Committee on the ‘Proposal for a Directive of the
European Parliament and of the Council on measures and procedures to ensure the enforcement
of intellectual property rights’

(COM(2003) 46 final — 2003/0024 (COD))

(2004/C 32/02)

On 4 March 2003 the Council decided to consult the European Economic and Social Committee, under
Article 95 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 7 October 2003. The rapporteur was
Mr Retureau.

At its 403rd plenary session of 29 and 30 October 2003 (meeting of 29 October), the European
Economic and Social Committee adopted the following opinion by 115 votes to one with four
abstentions.

I. Presentation and summary

1. Objectives

initial

(and still

Following a series of

1.1.
incomplete)
vertical texts, including current and draft legislation on indus-
trial property (patents, Community trade mark, trade marks
and designs, trade names — referred to henceforth as IP) and
literary and artistic property (copyright and related rights, ad-
hoc rights, resale rights, artists’ and publishers’ rights — referred
to henceforth as LAP), the Commission is now presenting a
horizontal project concerning civil proceedings and certain
aspects of criminal procedures and sanctions for piracy and
counterfeiting within the internal market.

2. Grounds

According to the proposal’s explanatory memor-
2.1.
andum, the provisions of Article 41 of the WTO TRIPS (Trade-
Related Aspects of Intellectual Property Rights) Agreement to
protect IP-LAP rights in international trade are insufficient;
disparities between national laws in terms of procedures and
sanctions also affect the single market by creating distortions
in the field of civil and criminal legal means of combating
piracy and counterfeiting.

2.1.1.
Organised crime is moving into all these illegal
activities on a dangerous scale. Moreover, the high-speed
Internet network makes it easier to pirate software and
other intellectual works, such as music. For these reasons,

prosecution procedures, protection under civil
law of the
rights of IP-LAP right holders and certain criminal sanctions
applicable to pirates and counterfeiters should be harmonised
across the internal market.

3.

Summary of the opinion

The Committee supports the objective pursued and
3.1.
the principle of horizontal harmonisation of
endorses
measures to combat piracy and counterfeiting, which is on the
rise in both third countries and Member States, and is
damaging to the legitimate interests of consumers, companies
and individual authors; as Community law currently stands,
the Committee considers the form of a horizontal directive, as
proposed, to be appropriate. It would however make a number
of comments and suggestions regarding the text referred to it
for an opinion.

3.2.
The Committee would like to see a draft directive which
clearly proposes measures to protect bona fide consumers
and, more generally, consumer education and information
measures on IP-LAP rights, focusing especially on young
people.

3.3.
In the digital and Internet field, the EESC urges that no
backing be given to measures, even in guideline form, which
would affect the legitimate rights or privacy of consumers and
users, would impose an excessive burden on internet-access
providers, or could even drive those publishers who offer
alternative solutions — especially open source software and
formats (which can be freely used and reproduced) or private
copying software and hardware — off the market.

C 32/16

EN

Official Journal of the European Union

5.2.2004

IP-LAP rights, which confer exclusive rights upon
3.4.
holders, amount to temporary, legally constituted monopolies;
they are only allowed for specified periods of time, and without
prejudice to the greater public interest, are not unlimited and
must not hamper the free dissemination and transfer of
theoretical and scientific knowledge and technologies, such as
those relating to Internet, on which a competitive knowledge-
based economy depends — and which does not yet exist in
Europe.

The above comments by the Committee are in keeping
3.5.
with the TRIPS objectives (Article 7) and their underlying
principles (Article 8(2)) (1): these should be included in the
recitals of the directive, since the possible penalties cannot be
entirely dissociated from substantive law, and possible abuses
of IP-LAP rights by right holders must not be overlooked.

3.6. Where counterfeit products which put users or their
property at risk are concerned, specific sanctions with sufficient
deterrent effect must be provided, together with adequate
compensation in the event of accidents involving injury or
damage. Market withdrawal, confiscation and destruction
measures, at the infringer’s cost, are absolutely necessary in
such cases. Consumers and consumer organisations must
enjoy adequate means under law to seek compensation for
losses incurred and to punish infringers.

3.7.
Lastly, the EESC calls upon the Commission to commit
itself to in-depth independent sectoral studies employing a
transparent methodology. These should seek in particular to
encourage convergent legislation and a global strategy for
developing closer judicial, police and customs cooperation,
including studies and regular reports and other appropriate
initiatives. The purpose would be to effectively combat pirating
and counterfeiting from the manufacturing stage onwards,
primarily targeting criminal networks together with those
who habitually trade in pirated or counterfeited tangible or
intangible goods. The Committee also calls upon the Member

(1) Article 7. Objectives. The protection and enforcement of intellec-
tual property rights should contribute to the promotion of
technological innovation and to the transfer and dissemination of
technology, to the mutual advantage of producers and users of
technological knowledge and in a manner conducive to social and
economic welfare, and to a balance of rights and obligations.
Article 8. Principles (...) 2. Appropriate measures, provided that
they are consistent with the provisions of this Agreement, may be
needed to prevent the abuse of intellectual property rights by
right holders or the resort to practices which unreasonably
restrain trade or adversely affect the international transfer of
technology www.wto.org.

States to give urgent consideration to all opportunities for
cooperation between themselves and with the Community to
this end.

II. Analysis of the proposal and comments

4. General comments

The explanatory memorandum mentions the Green
4.1.
Paper on the fight against counterfeiting and piracy, in respect
of which the EESC would refer to its earlier opinion (2). The
Committee would also refer to its other opinions mentioned
by the Commission, and to its opinion on the patentability of
computer-implemented inventions (3).

The Committee endorses the overall object of the draft
4.2.
directive. It notes, however, that European patents issued by a
certain number of countries (which vary depending on where
they are filed) adhering to the 1973 Munich Convention have
been included within the scope of the directive. In principle
Community jurisdiction does not extend to the convention in
either substantive or territorial terms, unless the Community
joins it. The situation will differ with the future Community
patent, which will be valid in all Member States and over
which the Community will have jurisdiction. However, it is
the Committee’s view that the WTO TRIPS Agreement requires
the Community to protect all existing IP-LAP rights throughout
its territory and, moreover, that such protection lies within
the Community’s powers concerning the internal market
(Article 95 of the Treaty establishing the European Com-
munity). This article is the legal basis for the directive and sets
out
to remove distortions of competition as a result of
disparities between national rights, procedures and practices.

4.3.
It should also be pointed out that effective measures
against European or international criminal networks, or against
large-scale counterfeiting and pirating, would require a com-
prehensive, coordinated and coherent approach, covering
cooperation under the second pillar between courts, police
forces and customs services, reinforcement of the customs
law, measures against organised crime and
code, criminal
money laundering, as well as Europol and Interpol functions,
since counterfeited objects or pirated works often originate in
third countries.

(2) OJ C 116, 28.4.1999.
(3) OJ C 61, 14.3.2003.

5.2.2004

EN

Official Journal of the European Union

C 32/17

The Committee cannot fail to take note of the mis-
4.4.
match between the objectives set out in the introduction and
the content of the draft directive itself. It represents only a first
step which does not yet come close to meeting the enormous
economic and social challenges posed by industrial counter-
feiting and piracy which affect employment, competitiveness
and businesses, chiefly SME-SMIs, who are least able to identify
those infringing their intangible rights and to uphold these
rights in foreign national courts.

Harmonisation is becoming all the more urgent since
4.5.
with enlargement, bringing in more Member States, legislative
and procedural differences will multiply, entailing a risk of
distortion of the internal market. The long overdue advent of
the European patent makes such harmonisation even more
essential.

4.6.
The Committee would prefer a combination of national
rights which offer effective protection to right holders and
consumers in keeping with the different legal systems and the
general principles of law applied by them (in particular the
presumption of innocence and protection of privacy). This
might be done in conjunction with a relatively early review.
Excessive obligations should not be imposed on certain
businesses (including Internet-access providers and manufac-
turers of blank media), and neither should the rights of
legitimate users be restricted or all consumers taxed indiscrimi-
nately (tax on blank media for the benefit of certain right
holders but not all). The aim should be harmonisation which
is more than just the sum of those provisions offering the
greatest protection to right holders only, taken out of their
national context, and should also allow legislation, parts of
legislation, or procedures to be strengthened in those countries
where they are insufficiently developed.

In view of the diversity of national situations and the
4.7.
huge numbers of counterfeit goods, regular evaluation of the
impact of the directive, and of any adjustments made in line
with changing circumstances, would be essential. If necessary,
measures to protect specific sectors could then be envisaged.

introduce real protection and effective deterrent and punitive
measures against pirating and counterfeiting for commercial
ends or by criminal gangs. It should also be noted that the
directive would impose radical changes on some national legal
systems even though they provide effective solutions.

4.9.
The Committee considers the personal scope of the
proposal to be sufficiently broad. Although directives such as
those on software or copyright and related rights acknowledge
the rights of users and consumers, such as the right to back-
up copying, private use or for demonstration or educational
purposes, but such rights and their scope vary from country
to country: whether or not they are implemented is left to the
workings of subsidiarity. In this respect, the Committee regrets
the emerging trend in a number of countries to further curtail
or abolish users’ rights.

4.10.
The Commission’s competence in criminal affairs is
the subject of a dispute between the Council and the Com-
mission currently before the Court of the Justice, and the
Committee cannot prejudge the issue which will become res
judicata in the future. However, in earlier opinions the Com-
mittee has generally accepted that, inter alia by means of a
framework directive, the Commission could propose harmon-
isation of the criminal sanctions needed to enforce first pillar
provisions, and would only alter its approach in the light of a
relevant judgement of the CJEC.

4.11.
Turning to practical steps to halt pirating and counter-
feiting and compensation for businesses incurring losses,
national judges should retain their powers of discretion in
concreto concerning economic losses and infringement of non-
pecuniary rights or brand image. Judges, sometimes assisted
by experts, are empowered to set the amount of civil damages
incurred and fines or other applicable criminal sanctions
according to national law, although in some countries these
sanctions should be revised and put into effective practice to
give them real deterrent effect.

In this spirit, the Committee for the present approves
4.8.
the option for a directive which should provide for coherent
means of protection and a form of harmonisation which
reflect the spirit of the various legal systems, rather than a
regulation which could severely disrupt existing laws which
are successfully performing their functions. In the longer term,
movement towards a regulation may be possible regarding the
Community patent and trade mark. In spite of the differences
in procedure or national legislation, it would for the moment
suffice for each Member State and candidate country to

4.12.
The Committee believes that independent, rigorous
sectoral studies should be carried out in advance to provide an
objective evaluation of factors which vary widely in scale and
their actual effect on sectors, particularly in their impact
on the economy and employment, on SMEs-SMIs and on
consumers. This applies in particular to products which may
affect health, safety or the guarantees which users may
legitimately expect (spare parts, toys, electrical equipment,
etc.). Such an important issue as protection of consumers
against counterfeit products merits far greater attention as a
part of anti-counterfeiting strategy.

C 32/18

EN

Official Journal of the European Union

5.2.2004

The proposed harmonisation must be balanced and
4.13.
in proportion to the objectives set. Implementing measures
and sanctions are dependent upon substantive law, and should
also be designed to be as favourable as possible to consumers,
their protection and the effectiveness of their legitimate rights
as users. Consumers or their representatives should be able to
participate as civil parties to actions brought by right holders
against pirates and counterfeiters, in cases where users, acting
in good faith, have incurred loss as a result of pirated or
counterfeit products.

4.14.
Bona fide users should not be implicated in any
enquiries by police, judicial or customs authorities, who alone
are authorised to carry out investigations, into the origin of
objects or programmes in their possession.

4.15.
The Committee believes that future measures must
primarily target those European and international networks
which present the greatest danger to consumer safety and
Investigations, cross-border and inter-
business interests.
national cooperation, protection of evidence and deterrent
penalties are necessary. Proportionate deterrent measures
could be applied to users acting in bad faith, within the
framework of the existing national laws, bearing in mind that
future major efforts must primarily focus on achieving tangible
results for the European economy, consumer safety and
employment.

Lastly, the need to make IP-LAP compatible with the
4.16.
knowledge and information society is only mentioned in
passing, and compatibility with public interest requirements is
not mentioned at all. These are however major issues, and the
harmonisation of means of protecting research and production
investments must involve more than blanket reinforcement of
civil and penal sanctions and greater judicial and material
resources for legal investigations and proceedings.

unacceptable in the light of the general principle of interpreting
criminal offences in as restrictive a way as possible.

5.

Specific comments

5.1.
The preliminary general considerations of the proposal
appear rather confused, taking an equally condemnatory view
of criminal gangs, individuals who wittingly or unwittingly
acquire counterfeit products and teenagers swapping music
through the web. Some of the considerations do not match
the scope of the draft directive: they should be removed from
what is an otherwise relevant and balanced proposal.

5.2.
In the Committee’s view, the steps to be taken should
be diverse and tailored to each clearly identified and defined
category of rights and economic sector. It must be ensured
that legitimate measures of protection do not become an
intimidating arsenal of civil and criminal law which could, in
some cases, paralyse innovation on the part of SMEs-SMIs
under constant threat of counterfeit proceedings by certain
monopolies or oligopolies.

All

5.3.
‘options’ affecting web surfers’ private lives or
preventing users from fully exercising their rights (right to
private copying, right to play CDs-DVDs on different types of
machine, right to choose one’s computer operating system
without having to pay for a preloaded system and programmes
the price of which is kept secret, right to non-zoned DVD
players, etc.) represent improper restrictions, possibly forced
purchase, or sale of products with truncated functions, and are
unacceptable to the Committee, since they are dispro-
portionate to their stated — and in any case, often unfair —
aims.

5.4.
The arrangements for taxing blank writable media are
even more unjust if such media or systems are protected
against copying by built-in hardware or software devices.

4.17.
Neither should harmonisation block the dissemi-
nation of knowledge and its use in teaching, which requires
publication of inventions, innovations, new procedures and
computer programme sources for the purposes of interop-
erability, at least for application interfaces and file formats. In
any case, reverse engineering should not be considered to
constitute counterfeiting. Similarly, independent programmes
enabling files, including protected ones, to be read or their
format to be changed cannot be judged to infringe copyright
since an independent creation is involved, and unlimited
extension of the legal scope of the copyright concept is

5.5.
It would be better for companies in the sector to
concentrate their innovative efforts on viable commercial
models in the digital communications age in order to harness
a huge potential market, rather than viewing all consumers as
potential pirates or seeking perpetual unearned income by
taxing blank media or imposing disabling technical restrictions
on reading tools or media. Many viable software manufacturers
market their products on-line at reasonable prices. The first
Internet pay-distribution companies in the music sector show
that a market which respects the rights of music publishers
and artists can still be created and developed.

5.2.2004

EN

Official Journal of the European Union

C 32/19

The Committee does however fully endorse the volun-
5.6.
tary system for identifying the origin of blank writable media,
which should help combat
industrial-scale counterfeiting.
Codes of conduct for public and private enterprises on the
proper management of intangible property rights should also
be encouraged, and have already provided real results in
Europe: the number of ‘code-compliant’ companies is growing,
and this trend will certainly be confirmed if licence prices are
not set at an abusive level and if competition can effectively be
brought to bear (e.g. monopolies or oligopolies in several
sectors). In this context, excluding from the scope of the
directive all institutions and undertakings acting in the exercise
of their prerogative of public power is difficult to justify with
regard to codes of conduct. Neither Community or national
institutions, nor public enterprises may be exempted from
compliance with IP-LAP rights.

Lastly, the Committee wishes to comment in detail on

6.
certain articles of the draft directive:

— Damages: the provisions here are extremely, sometimes
excessively, precise, such as the requirement for the
complainant to provide evidence of the profits made by
the defendant, and in support of which the defendant
must provide accounts for illegal or criminal activity ...

— European and national organisations defending con-
sumers’ rights must be recognised as being qualified to
take part
interest actions or actions for
injunctions, provided they are legally constituted and
representative.

in general

— In purely civil proceedings, damages are justified by the
serious prejudice incurred by the complainant, not by the
intentional character of the infringement of rights; in
contrast,
the civil proceedings are subordinate to
criminal proceedings, then the intentional nature of the
prejudice must be established.

if

Brussels, 29 October 2003.

— Provisional and precautionary measures: although on the
grounds of urgency a court may not initially be required
to hear the defendant, principally in order to prevent
destruction or removal of evidence, the defendant must
in all cases then be heard with equal urgency; seizure of
goods or freezing of bank accounts may cripple a
wrongly-accused company or even drive it completely off
the market. Respect for the rights of the defence is an
inalienable principle of Community law.

— Evidence: the appropriate criminal courts alone may
order the seizure of bank,
financial or commercial
documents and their forwarding to a civil jurisdiction; in
the context of on-going criminal proceedings,
is
generally the courts which are competent.

it

— Penalties: in addition to destruction of goods, seizure of
pirating or counterfeiting equipment might also be
envisaged. Any criminal penalties applicable to legal
law of each country.
persons depend on the internal
These penalties should be brought into line with the legal
systems of the individual Member States.

— Publication of judgments: the proposed wording places
no restrictions on publication: the judge lays down either
an overall sum to be used for this purpose, or the titles of
publications and the form that the statement should take
(summary of the judgment or in extenso report).

— Technical measures: whether or not a technical device or
copying or counterfeiting software is unlawful often
depends not on their nature but on the purposes for
which they are used. The same means may be used for
legitimate ends (individual back-up copying, for example).
In consequence, circumventing an improper technical
device in order to exercise a consumer’s right cannot be
regarded as unlawful.

— Codes of conduct: these should also set out consumers’

rights and guarantees, in keeping with Community law.

The President

of the European Economic and Social Committee

Roger BRIESCH