Amended proposal for a Directive of the European Parliament and of the Council on criminal measures aimed at ensuring the enforcement of intellectual property rights
Date: 2006-04-26
Institutions: European Commission
Subjects: TRIPS, application of EU law, criminal law, industrial counterfeiting, industrial property, intellectual property

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.4.2006 
COM(2006) 168 final 

2005/0127 (COD) 

Amended proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on criminal measures aimed at ensuring the enforcement of intellectual property rights 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

JUSTIFICATION FOR THE PROPOSAL 

This proposal for a Directive amends the proposal for a Parliament and Council Directive on 
criminal  measures  aimed  at  ensuring  the  enforcement  of  intellectual  property  rights 
(2005/0127 COD).  It  puts  into  effect  the  Communication  from  the  Commission  of 
23 November  2005  (COM(2005)  583  final)  on  the  implications  of  the  Court’s  judgment  of 
13 September 2005 (Case C 176/03 Commission v Council). It was held in that judgment that 
provisions of criminal law required for the effective implementation of Community law come 
under  the  EC  Treaty.  The  Commission  states  in  its  Communication  that  it  will  make  the 
necessary  changes  to  pending  proposals  as  and  when  required.  It  specifically  mentions  the 
proposal for a Parliament and Council Directive on criminal measures aimed at ensuring the 
enforcement  of  intellectual  property  rights  and  the  proposal  for  a  Council  Framework 
Decision  to  strengthen  the  criminal  law  framework  to  combat  intellectual  property  offences 
(COM(2005)  276  final).  Consequently,  the  proposal  for  a  Framework  Decision  has  been 
withdrawn  and  a  proposal  drawn  up  amending  the  proposal  for  a  Directive  on  criminal 
measures. 

The provisions in the proposal for a Framework Decision relating to penalties and extended 
powers of confiscation have now been incorporated in the new proposal for a Directive. 

The  only  provisions  that  have  not  been  taken  over  are  those  relating  to  jurisdiction  and  the 
coordination of proceedings, contained in Article 5 of the proposal for a Framework Decision. 
The Commission plans to take a horizontal approach to this subject under its Green Paper on 
conflicts of jurisdiction and the principle of ne bis in idem in criminal proceedings, adopted 
on 23 December 20051. It does not consider it essential to lay down specific arrangements for 
the protection of intellectual property. 

Counterfeiting  and  piracy,  and  infringements  of  intellectual  property  in  general,  are  a 
constantly growing phenomenon which nowadays has an international dimension, since they 
are  a  serious  threat  to  national  economies  and  governments.  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.  In  addition  to  the 
economic  and  social  consequences,  counterfeiting  and  piracy  also  pose  problems  for 
consumer  protection,  particularly  when  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  this 
phenomenon is therefore of vital importance for the Community. Counterfeiting and pirating 
have become lucrative activities in the same way as other large-scale criminal activities such 
as drug trafficking. There are high potential profits to be made without risk of serious legal 
penalties. Additional provisions to strengthen and improve the fight against counterfeiting and 
piracy are therefore necessary to supplement Directive 2004/48/EC of 29 April 2004 on the 
enforcement  of  intellectual  property  rights.  In  addition  to  the  civil  and  administrative 

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COM(2005) 696 final. 

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measures, procedures and remedies provided for in Directive 2004/48/EC, criminal penalties 
also constitute, in appropriate cases, a means of enforcing intellectual property rights2. 

A start was made on harmonisation with the entry into force of the TRIPS agreement which 
lays  down  minimum  provisions  on  means  of  enforcing  trade-related  intellectual  property 
rights.  These  include  the  implementation  of  criminal  procedures  and  criminal  penalties,  but 
there are still major disparities in the legal situation in the Community which do not allow the 
holders  of  intellectual  property  rights  to  benefit  from  an  equivalent  level  of  protection 
throughout the Community. As regards criminal penalties, there are considerable differences, 
particularly as regards the level of punishment laid down by national legislation. 

As regards impact on fundamental rights, it should be emphasised that the direct objective of 
this initiative is to implement Article 17(2) of the Charter of Fundamental Rights which states 
that  “Intellectual  property  shall  be  protected”;  it  does  this  by  approximation  of  legislation 
while  respecting  the  different  legal  traditions  and  systems  of  the  Member  States  as  well  as 
other fundamental rights and principles recognised by the Charter. The level of sentences has 
been  chosen  pursuant  to  the  seriousness  of  the  different  forms  of  wrongful  conduct,  in 
accordance  with  Article  49(3)  of  the  Charter  to  the  effect  that  sentences  should  not  be 
disproportionate to the offence. 

Since  this  objective  may  be  better  achieved  at  Community  level,  the  Community  may  take 
measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. 

CONTENT OF THE PROPOSAL 

Article 1 

This  Article  sets  out  the  subject-matter  and  scope  of  the  Directive,  which  concerns  the 
measures necessary to ensure the enforcement of intellectual property rights. As in Directive 
2004/48/EC  on  the  enforcement  of  intellectual  property  rights,  the  expression  “intellectual 
property  rights"  encompasses  all  intellectual  property  rights.  Just  like  Article 17(2)  of  the 
Charter  of  Fundamental  Rights  of  the  European  Union,  which  provides  that  “intellectual 
property shall be protected”, this is a horizontal measure. 

The Directive is to apply to any infringement of intellectual property rights as provided for by 
Community  law  and/or  by  the  national  law  of  the  Member  States,  in  the  same  way  as 
Directive  2004/48/EC.  Commission 
statement  2005/295/EC  on  Article  2  of 
Directive 2004/48/EC  lists  these  rights,  with  the  aim  of  providing  greater  legal  certainty 
regarding  the  scope  of  the  Directive3.  The  Directive  is  to  apply  without  prejudice  to  more 
stringent provisions in the Member States. 

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Recital  28  to  Directive  2004/48/EC  of  29  April  2004  states  that  "in  addition  to  the  civil  and 
administrative measures, procedures and remedies provided for under this Directive, criminal sanctions 
also  constitute,  in  appropriate  cases,  a  means  of  ensuring  the  enforcement  of  intellectual  property 
rights." 
OJ L 94, 13.4.2005, p. 37. 

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Article 2 

This Article defines the concept of a legal person for the purposes of the Directive. 

Article 3 

This Article obliges Member States to consider all intentional infringements of an intellectual 
property right on a commercial scale as a criminal offence. It also covers attempting, aiding or 
abetting  and  inciting  such  offences.  The  “commercial  scale”  criterion  is  borrowed  from 
Article 61 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS 
Agreement), concluded on 15 April 1994 and signed by all the members of the World Trade 
Organisation. Article 61 obliges Members to “provide for criminal procedures and penalties to 
be  applied  at  least  in  cases  of  wilful  trademark  counterfeiting  or  copyright  piracy  on  a 
commercial  scale.  Remedies  available  shall  include  imprisonment  and/or  monetary  fines 
sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a 
corresponding  gravity.  In  appropriate  cases,  remedies  available  shall  also  include  the  seizure, 
forfeiture  and  destruction  of  the  infringing  goods  and  of  any  materials  and  implements  the 
predominant use of which has been in the commission of the offence. Members may provide for 
criminal  procedures  and  penalties  to  be  applied  in  other  cases  of  infringement  of  intellectual 
property rights, in particular where they are committed wilfully and on a commercial scale.” 

The infringement must be intentional, that is to say that the act must be deliberate, whether it 
is an actual infringement, an attempt at infringement, or aiding and abetting or inciting such 
an  offence.  This  does  not  affect  specific  liability  systems  such  as  the  system  laid  down  for 
Internet  service  providers  in  Articles  12  to  15  of  Directive  2000/31/EC  on  electronic 
commerce4. 

Article 4 

This  article  concerns  the  nature  of  penalties:  besides  imprisonment  for  natural  persons,  the 
Directive lays down a range of penalties to be imposed on both natural and legal persons, such 
as fines and the seizure of goods belonging to the offender, including the infringing goods and 
the materials, implements or media used predominantly for the manufacture or distribution of 
the  goods  in  question.  Other  penalties  are  provided  for  specific  cases:  destruction  of 
infringing goods and goods principally used in the manufacture of the goods in question, total 
or  partial  closure,  on  either  a  permanent  or  a  temporary  basis,  of  the  establishment  or  shop 
primarily  used  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.  Finally,  the 
publication of judicial decisions is provided for. This can serve as a means of dissuasion and 
as a channel of information both for right holders and for the public at large. 

Article 5 

This article concerns the level of criminal penalties: offences must incur a maximum term of 
at  least  four  years'  imprisonment  when  they  are  committed  under  the  aegis  of  a  criminal 
organisation. The same applies where the offences carry a health or safety risk. The threshold 
of four years' imprisonment was chosen because it broadly corresponds to the criterion used to 
identify a serious offence. It is the threshold selected in Joint Action 98/733/JHA and in the 
proposal  for  a  Council  Framework  Decision  on  the  fight  against  organised  crime 
(COM(2005) 6 final) and in the United Nations Convention against Organised Transnational 

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OJ L 178, 17.7.2000, p. 1. 

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Crime. For natural persons or legal entities who commit the offences listed in Article 3, the 
penalties include criminal and non-criminal fines to a maximum of at least EUR 100 000 for 
cases  other  than  the  most  serious  cases  and  to  a  maximum  of  at  least  EUR  300 000  for 
offences  carried  out  under  the  aegis  of  a  criminal  organisation  or  which  carry  a  health  or 
safety  risk.  It  must  be  possible  for  this  factor  to  be  taken  into  account  where  the  risk  is 
deemed to be present, even where the dangerous product has not yet caused any damage. 

A risk to personal health or safety exists where the counterfeit product placed on the market 
directly exposes people to a risk of illness or accident. 

Article 6 

This  article  provides  for  the  full  or  partial  confiscation  of  goods  belonging  to  persons 
convicted  of  offences  committed  in  the  circumstances  set  out  in  Article  5.  It  refers  to  the 
provisions  of  Article  3  of  Council  Framework  Decision  2005/212/JHA  of  24 February 2005 
on Confiscation of Crime-Related Proceeds, Instrumentalities and Property5. 

Article 7 

The  Framework  Decision  of  13  June  2002  provides  the  structure  needed  to  set  up  joint 
investigation  teams.  To  facilitate  criminal  investigations  into  intellectual  property  offences, 
the Member States must allow the holders of intellectual property rights concerned, or their 
representatives, and experts to assist the investigations carried out by these teams. It is very 
difficult  to  carry  out  investigations  in  this  area  and  it  is  often  essential  to  have  the  active 
participation of the victims, of representatives of the holder of the intellectual property rights 
or  of  experts  in  order to reach  conclusions,  and  in particular to establish that  products have 
been counterfeited. In the event of doubt, the victims or their representatives will thus be able 
to  confirm  rapidly  whether  the  products  discovered  in  an  investigation  have  indeed  been 
counterfeited.  This  will  facilitate  the  search  by  joint  investigation  teams  for  evidence  of 
intellectual property offences. Member States have a good deal of latitude in this regard. 

Article 8 

The  purpose  of  this  article  is  to  ensure  that  investigations  into,  or  prosecution  of, 
counterfeiting  and  piracy  offences  are  not  dependent  on  a  report  or  accusation  made  by  a 
person  subjected  to  the  offence,  at  least  if  the  acts  were  committed  in  the  territory  of  the 
Member State. Such a measure is necessary to ensure that the conditions are right for carrying 
out  investigations  into  intellectual  property  offences.  It  is  often  the  case  that  stocks  of 
suspected counterfeit products are discovered, but it is sometimes difficult to contact or even 
identify quickly the holder of the rights in the internal market. The victims of counterfeiting 
may  be  located  in  any  part  of  the  Community  territory  and  may  be  small  or  medium-sized 
enterprises and not just large enterprises selling well-known products. Investigations would be 
hampered if a prior complaint by the victim were required. Intellectual property offences are 
often  committed  without  the  knowledge  of  the  holder  of  the  rights,  and  the  absence  of  a 
complaint does not amount to negligence on the victim’s part. 

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OJ L 68, 15.3.2005, p. 49. 

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Article 9 

This Article concerns the measures for transposing the Directive into the internal law of the 
Member  States.  The  deadline  of  eighteen  months  is  modelled  on  the  provisions  of  other 
Directives.  

Article 10 

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

Article 11 

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

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2005/0127 (COD) 

Amended proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on criminal measures aimed at ensuring 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 Commission6, 

Having regard to the opinion of the European Economic and Social Committee7, 

Having regard to the opinion of the Committee of the Regions8, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty9, 

(1) 

The  Green  Paper  on  the  fight  against  counterfeiting  and  piracy  in  the  Single 
Market  presented  by  the  Commission  on  15  October  1998  noted  that 
counterfeiting  and  piracy  had  grown  into  an  international  phenomenon  with 
major  repercussions  at  economic  and  social  level  and  in  terms  of  consumer 
protection,  especially  as  regards  public  health  and  safety.  An  action  plan  was 
drawn  up  as  part  of  the  follow-up  to  the  Green  Paper  and  was  included  in  a 
communication  on  the  same  subject  from  the  Commission  to  the  Council,  the 
European  Parliament  and 
the  Economic  and  Social  Committee  on 
30 November 2000. 

(2) 

In  its  conclusions,  the  Brussels  European  Council  of  20  and  21  March  2003 
invited  the  Commission  and  the  Member  States  to  improve  exploitation  of 
intellectual  property  rights  by  taking  forward  measures  against  counterfeiting 
and piracy. 

(3)(1)  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"), concluded in the framework of the 
World  Trade  Organisation  and  approved  by  Council  Decision  94/800/EC10.  The 
TRIPS  Agreement  contains,  in  particular,  provisions  on  criminal  matters  which  are 

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OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ L 336, 23.12.1994, p. 1. 

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common  standards  applicable  at  international  level,  but  the  disparities  between 
Member  States  are  still  too  great,  and  they  do  not  permit  effective  combating  of 
intellectual property offences, particularly the most serious ones. This causes a loss of 
confidence in the Internal Market in business circles, with a consequent reduction in 
investment in innovation and creation. 

(4) 

The Commission also adopted in November 2004, an Intellectual Property Rights 
Enforcement Strategy towards third countries. 

(5)(2)  Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 
on  the  enforcement  of  intellectual  property  rights11  lays  down  measures,  procedures 
and  civil  and  administrative  remedies.  A  sufficiently  dissuasive  set  of  penalties 
applicable throughout the Community is needed to make the provisions laid down in 
this Directive complete. Certain criminal provisions need to be harmonised so that 
counterfeiting and piracy in the internal market can be combated effectively. The 
Community legislator has the power to take the criminal-law measures that are 
necessary  to  guarantee  the  full  effectiveness  of  the  rules  it  lays  down  on  the 
protection of intellectual property. 

(6) 

(7) 

(8) 

(9) 

Building  on  the  Commission  Communication  on  a  customs  response  to 
counterfeiting and piracy adopted in October 200512, the Council has adopted a 
Resolution  on  13  March  2006,  whereby  it  underlines  that  the  Lisbon  Strategy 
objectives "can only be achieved through a well-functioning internal market with 
adequate  measures  to  encourage  investment  in  the  knowledge-based  economy 
and  recognises  the  threat  posed  by  the  serious  growth  in  counterfeiting  and 
piracy to the Union's knowledge-based economy and in particular to health and 
safety (…)". 

The  level  of  sentencing  for  natural  and  legal  persons  who  have  committed  such 
offences  must  be  harmonised.  In  particular,  the  rules  on  prison  sentences,  fines 
and confiscation must be harmonised. 

Provisions  must  be 
investigations.  The 
laid  down  to  facilitate  criminal 
Member States  must  ensure  that  the  holders  of  intellectual  property  rights 
concerned,  or  their  representatives,  and  experts  are  allowed  to  assist  the 
investigations carried out by joint investigation teams. 

To  facilitate  investigations  or  criminal  proceedings  concerning  intellectual 
property offences, these may not be dependent on a report or accusation made by 
a person subjected to the offence. 

(10)(3)This  Directive  does  not  affect  specific  liability  systems  such  as  that  laid  down  for 
Internet service providers in Articles 12 to 15 of Directive 2000/31/EC on electronic 
commerce13. 

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OJ L 195, 2.6.2004, p. 16. 
COM(2005) 479 final of 11.10.2005 
OJ L 178, 17.7.2000, p. 1. 

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(11)(4) As the objective of this Directive cannot be achieved adequately by the Member States 
acting  alone  and  could  better  be  achieved  by  action  at  Community  level,  the 
Community  may  take  measures  in  accordance  with  the  principle  of  subsidiarity  as 
declared  by  Article  5  of  the  Treaty  establishing  the  European  Community.  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 that objective. 

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

HAVE ADOPTED THIS DIRECTIVE: 

Article 1 
Objective and scope 

This  Directive  lays  down  the  criminal  measures  necessary  to  ensure  the  enforcement  of 
intellectual property rights. 

These  measures  shall  apply  to  intellectual  property  rights  provided  for  in  Community 
legislation and/or national legislation in the Member States. 

Article 2 
Definition 

For the purposes of this Directive, “legal person” means 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. 

Article 3 
Offences 

Member States shall ensure that all intentional infringements of an intellectual property right 
on a commercial scale, and attempting, aiding or abetting and inciting such infringements, are 
treated as criminal offences. 

Article 4 
Nature of penalties 

1. 

For  the  offences  referred  to  in  Article  3,  the  Member  States  shall  provide  for  the 
following penalties: 

a) for natural persons: custodial sentences; 

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b) for natural and legal persons: 

i) 

fines;  

ii) 

confiscation of the object, instruments and products stemming from 
infringements  or  of  goods  whose  value  corresponds  to  those 
products.   

2. 

For  the  offences  referred  to  in  Article  3,  the  Member  States  shall  provide  that  the 
following penalties are also available in appropriate cases: 

(a) 

destruction of the goods infringing an intellectual property right; 

(b) 

total  or  partial  closure,  on  a  permanent  or  temporary  basis,  of  the 
establishment used primarily to commit the offence; 

(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. 

Article 5 
Level of penalties 

1. 

2. 

Each  Member  State  shall  take  the  necessary  measures  to  ensure  that,  when 
committed  by  natural  persons,  the  offences  referred  to  in  Article  3  are 
punishable by a maximum sentence of at least four years' imprisonment when 
committed  under  the  aegis  of  a  criminal  organisation  within  the  meaning  of 
Framework  Decision  ….  on  the  fight  against  organised  crime,  or  where  they 
carry a health or safety risk. 

Member  States  shall  take  the  necessary  measures  to  ensure  that,  when 
committed  by  natural  persons  or  legal  entities,  the  offences  referred  to  in 
Article 3  are  punishable  by  effective,  proportionate  and  dissuasive  penalties. 
These penalties shall include criminal and non-criminal fines: 

(a) 

(b) 

to  a  maximum  of  at  least  EUR  100  000  for  cases  other  than  the  most 
serious cases;  

to  a  maximum  of  at  least  EUR  300  000  for  cases  referred  to  in 
paragraph 1. 

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Article 6 
Extended powers of confiscation 

The  Member  States  shall  take  the  necessary  measures  to  allow  the  total  or  partial 
confiscation of goods belonging to convicted natural or legal persons in accordance with 
Article 3 of Framework Decision 2005/212/JHA of 24 February 2005 on Confiscation of 
Crime-Related Proceeds, Instrumentalities and Property, at least where the offences are 
committed under the aegis of a criminal organisation, within the meaning of Framework 
Decision …. on the fight against organised crime, or where they carry a health or safety 
risk.  

Article 7 
Joint investigation teams 

The  Member  States  must  ensure  that  the  holders  of  intellectual  property  rights 
concerned, or their representatives, and experts, are allowed to assist the investigations 
carried out by joint investigation teams into the offences referred to in Article 3. 

Article 8  
Initiation of criminal proceedings 

Member  States  shall  ensure  that  the  possibility  of  initiating  investigations  into,  or 
prosecution of, offences covered by Article 3 are not dependent on a report or accusation 
made  by  a  person  subjected  to  the  offence,  at  least  if  the  acts  were  committed  in  the 
territory of the Member State. 

Article 59 
Transposal 

1. 

Member  States  shall  bring  into  force  the  provisions  necessary  to  comply  with  this 
Directive by ……. at the latest [eighteen months after the date of its adoption]. They 
shall  forthwith  communicate  to  the  Commission  the  text  of  those  provisions  and  a 
this  Directive. 
correlation 

provisions 

between 

those 

table 

and 

When  Member  States  adopt  these  provisions,  they  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. 

2. 

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

Article 610 
Entry into force 

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

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This Directive is addressed to the Member States. 

Article 711 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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