Opinion of the European Economic and Social Committee on the Proposal for a European Parliament and Council Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights COM(2005) 276 final — 2005/0127 (COD)
Date: 2007-07-12
Institutions: European Economic and Social Committee
Subjects: application of EU law, criminal law, industrial counterfeiting, industrial property, intellectual property

27.10.2007

EN

Official Journal of the European Union

C 256/3

III

(Preparatory Acts)

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

437th PLENARY SESSION HELD ON 11 AND 12 JULY 2007

Opinion of the European Economic and Social Committee on the ‘Proposal for a European
Parliament and Council Directive on criminal measures aimed at ensuring the enforcement of
intellectual property rights’

COM(2005) 276 final — 2005/0127 (COD)

(2007/C 256/02)

On 21 September 2005, the Council decided to consult the European Economic and Social Committee,
under Article 95 of the Treaty establishing the European Community, on the abovementioned 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 4 June 2007. The rapporteur was Mr Retureau.

At its 437th plenary session, held on 11 and 12 July 2007 (meeting of 12 July), the European Economic
and Social Committee adopted the following opinion by 76 votes to three.

1. Conclusions

result, invention patents, which are the most important area for
European industry, should not be excluded.

1.1
The Committee will continue to monitor the coordinated
implementation of the 2004 Directive, the amended proposal
for a Directive under consideration, and the relevant supple-
menting Framework Decisions in order to assess the long-term
effectiveness of the fight against counterfeiting and its interna-
tional repercussions, also outside the Community.

1.4
The EESC notes that certain legal concepts are unclear,
such as ‘on a commercial scale’ or ‘commercial activities’ in rela-
tion to the criminal practices referred to in the proposal for a
Directive, which conflicts with the basic principles of criminal
law that require a clear and precisely defined, objective substan-
tiation of a crime. The EESC also criticises the way in which
crimes covered by Article 2 of the proposal are defined, since it
believes that only one general framework should be provided
for criminal sanctions (imprisonment or financial penalties and
responsibility for defining the punishments
fines),
remains exclusively within the national jurisdictions.

so that

1.2
Although the Committee supports the general approach
adopted in the proposed provisions, it nevertheless calls on the
Commission to consider the comments made in this opinion,
which recommends placing the main emphasis on judicial and
customs cooperation and efforts to combat large-scale counter-
feiting and counterfeiting by criminal organisations or where
the offence involves risk to people's health or safety.

2. Introduction

1.3
In particular, the Committee believes that the Directive
should cover industrial property rights as a whole, and that, as a

In MEMO/05/437 of 23 November 2005 summarising
2.1
its Communication of
the Commission
welcomed the Court of Justice judgment recognising the compe-
tences of the Community to adopt dissuasive and proportionate
criminal law measures to ensure the application of TEC provi-
sions on Community policies.

same date,

the

C 256/4

EN

Official Journal of the European Union

27.10.2007

2.2
In its communication, the Commission sets out its inter-
pretation of the judgment of 13 September 2005 by which the
Court of Justice annulled a Framework Decision on the protec-
tion of the environment through criminal law. In the Commis-
sion's opinion, the Court held that the Community had sole
competence to take the criminal law measures needed to ensure
the effectiveness of Community law. The scope of this judgment
exceeds by far the field of the environment, taking in the whole
range of Community policies and the fundamental freedoms
recognised by the Treaty. The insertion of criminal penalties in
Community law must be based on a duly justified need and
respect the overall consistency of the construction of the crim-
inal law of the Union.

2.3
This broad interpretation of a judgement concerning the
environment was not unanimously endorsed by Member States
and legal doctrine. Several believe that criminal charges and the
corresponding level of criminal penalties are essentially subject
to subsidiarity and that their possible harmonisation at EU level
should be achieved through judicial cooperation between States,
as provided for in the TEU.

It

this

should be noted that

interpretation is very
2.4
widely shared by the European Parliament since the areas liable
to be covered by Community criminal
law measures are no
longer exclusively subject to the unanimity of Member States in
Council, but to a qualified majority and co-decision procedures
involving the European Parliament, whose competences as co-
legislator are thus extended (1).

However,

inter alia, delay the adoption of

law measures, or subsequently restrict

2.5
this constitutes a substantial broadening of
Community competences, resulting from a court decision, and
the risk of divergences of interpretation among the institutions
could,
legislation entailing
their scope
criminal
through, for instance, further court cases or compromises. In
the case of this proposal for a Directive, the question of whether
or not to protect invention patents under criminal law remains
open since the European Parliament considers
that only
Community law is affected by the court judgement, whereas the
Commission's
legislation, be it
Community or national, on intellectual property rights.

to include all

intention is

3. Commission proposals

The amended proposal for a Directive (COM(2006) 168
3.1
final), seeks to establish a harmonised, horizontal criminal-law
framework to ensure the enforcement of industrial, literary and
artistic property rights and other similar incorporeal rights
It
(grouped under

the term ‘intellectual property rights’).

concerns the internal market and was prompted by the clear
need for European-level action in this field, in accordance with
the principles of subsidiarity and proportionality. The legal basis
for these measures is Article 95 TEC.

It sets out a general criminal-law framework defining
3.2
protected intellectual property rights (IPR),
infringements of
these rights and maximum criminal penalties to ensure the
uniform application throughout the internal market of measures
to combat the counterfeiting of material goods, services and
intellectual and artistic property protected under substantive
European and national law as well as the relevant international
Conventions including the TRIPS Agreement (2), signed in 1994
under the auspices of the WTO, which sets out the provisions
for criminal procedures (3) to be applied in cases of infringe-
ment of specific protected rights.

3.3
A Directive adopted in 2004 already provides a frame-
work for safeguarding against reproduction, piracy or counter-
feiting for commercial purposes (4). A detailed list of rights
protected under Article 2 of this Directive is set out in a State-
ment by the Commission (5). These rights apply to industrial
property (invention patents and supplementary protection certi-
ficates, utility certificates, trademarks, designations of origin,
designs and models, and plant varieties) and copyright and
related rights, as well as the sui generis rights established under
Community law to cover integrated circuit topographies and
databases. They are exclusive rights, considered by the law as
incorporeal property rights. Some of these rights are included in
the acquis communautaire, or even covered by specific forms of
Community protection (designs and models, trade marks, plant
varieties) (6). Others, such as patents, remain entirely subject to
national law, pending the European patent so much awaited by
all industrial sectors. Thus, the term ‘intellectual property’ actu-
ally covers a very heterogeneous field of incorporeal rights with
widely differing characteristics and legal statuses.

3.4 Member States are subject to the terms of the TRIPS
Agreement, which requires the implementation of appropriate
domestic legislation on criminal procedures and penalties for
counterfeiting for commercial purposes. However, States are
granted some leeway for
interpretation. Furthermore, some
States have not yet adopted proportionate criminal measures for
IPR infringements occurring within their jurisdiction, and this
includes EU Member States. The 2004 Directive enables the
such infringements to obtain compensation by
victims of
compelling the Member States to investigate, initiate procedures,
confiscate (7) and compensate, with a view to bringing the

(2) Agreement on Trade-Related Aspects of Intellectual Property Rights.
(3) TRIPS Agreement, Article 61.
(4) Directive 2004/48/EC on the enforcement of intellectual property

rights.

(5) Statement by the Commission concerning Article 2 of the abovemen-

tioned Directive 2004/48/EC (2005/295/EC).

(6) With the significant exception of the Community Patent, which is still

in limbo (NdA).

(1) The UK and Irish opt-ins and the Danish exemption would no longer
prevail against the legislation, as is the case for relevant actions under
the third pillar.

(7) Council Framework Decision 2005/212/JHA on Confiscation of
Crime-Related Proceeds, Instrumentalities and Property (counterfeiting,
piracy) OJ L 68, 15.3.2005.

27.10.2007

EN

Official Journal of the European Union

C 256/5

applicable law into line in the fight against organised crime (8), a
context where counterfeiting is rife. However, the Directive only
covers civil, commercial and administrative procedures and
penalties that consist primarily in obtaining damages for owners
of rights who have instituted anti-counterfeiting proceedings.
Moreover, some Member States have yet
to transpose the
Directive.

3.5
The protection of intellectual property rights is enshrined
in the Universal Declaration of Human Rights as well as the
EU Charter of Fundamental Rights, a solemn declaration
adopted in Nice in December 2000. International protection is
also provided and safeguarded by Conventions concluded under
the auspices of the relevant United Nations specialised agencies
(Munich Convention
(WIPO, UNESCO) or at regional
(1973)
and the
establishing the European Patent Office
European patent). So far, only the TRIPS Agreement makes
provision for minimum criminal penalties. The Commission
proposal seeks to achieve a degree of uniformity at EU level by
obliging Member States to include criminal penalties in their
domestic laws and define offences and a common standard for
penalties.

level

3.6
The amended proposal for a Directive therefore aims to
approximate the level of penalties for IPR infringements such as
imprisonment, criminal fines and confiscation. It seeks to estab-
lish jurisdiction rules to centralise legal proceedings in a single
Member State, wherever possible, if the offence concerns several
further
Member States, and to facilitate investigations.
proposes involving the victims or their legal representatives in
the investigations.

It

The main amendment vis-à-vis the previous proposals
3.7
consists in setting the level and nature of penalties applicable to
persons convicted of any infringement of intellectual property
rights, also defined in the proposal.

3.8
Natural persons convicted of the offences referred to in
Article 3 of the Directive will be liable to a maximum sentence
of at least four years' imprisonment when they are acting under
the aegis of a criminal organisation or when the offence carries
a health or safety risk. (Article 2(1)).

Natural or legal persons convicted of offences under
3.9
Article 3 of the Directive will be liable to effective, propor-
including criminal and non
tionate and dissuasive penalties,
criminal
least EUR 100 000
(EUR 300 000 for the serious cases referred to in Article 2(1),
without prejudice to the application of more serious sentences
in the case of risk of death or infirmity).

to a maximum of at

fines

Domestic law should provide for the confiscation of
3.10
crime-related counterfeit goods, property and instrumentalities,
at least in serious cases (organised crime, health or safety risks)
(Article 3).

(8) Proposal for a Council Framework Decision on the fight against orga-
nised crime. Counterfeiting can also contribute to financing terrorist
networks; money laundering and counterfeiting are also criminal acts
that should be rigorously combated.

3.11
more stringent provisions.

The amended proposal permits Member States to apply

Following the withdrawal of the proposal for a Council
3.12
Framework Decision accompanying the initial proposal,
the
Commission intends to apply a horizontal approach to the
criminal procedures adopted on 23.12.2005, which are aimed
at supporting mutual judicial assistance and aligning the levels
of penalties in different countries in order to be able to involve
Eurojust (9).

3.13 Member States are responsible for initiating investiga-
tions and proceedings, which should not depend solely on a
complaint by a victim.

4. The Committee's general comments

The Committee notes the growing use of an ambiguous
4.1
term:
legal
intellectual property. The term merges distinct
concepts and diverse methods of protection and use. Neverthe-
less, the term has gained currency in European and international
law. The nature, duration and scope of each of the relevant
incorporeal rights vary considerably. Each has its own specific
legal framework, different territorial validity and specific institu-
tions for the registration and protection of patents. Moreover,
the interpretation of infringements of these rights may vary
from one country to another and is changing rapidly in some
cases.

4.2
The analysis of the composition of medicines (without
using or publishing the results), or the inverse engineering of
software or electronic components for the purpose of interoper-
ability or exercising a legitimate right such as the right
to
private copying by circumventing a protection tool (generally
quite weak) could constitute counterfeiting or illicit copying in
several Member States, where the penalties might also be very
high, even in the absence of commercial or criminal intent.

4.2.1
The Committee has already argued in favour of Com-
munity-level coordination to combat all forms of commercial
counterfeiting affecting the European economy and to clamp
down on crimes against industrial property rights and copy-
right (10) that do serious damage to the European economy.
Large-scale counterfeiting is often carried out by criminal orga-
nisations or organised gangs and may endanger health, safety or
life. The latter instances should be treated as aggravating circum-
stances in determining criminal penalties. The proposal for a
Directive should set out the principle of increased penalties in
all aggravating circumstances.

(9) COM(2005) 696 final.
(10) See Mr Malosse's opinion (OJ C 221, 7.8.2001).

C 256/6

EN

Official Journal of the European Union

27.10.2007

that

financial

the fact

in significant

for instance, by relating it

As in the case of the 2004 Directive, the Committee
4.2.2
approves of
the proposed harmonisation is
restricted to infringements committed on a commercial scale
and therefore liable to impact substantially on the single market.
It would also be useful to define the term ‘commercial’ more
clearly,
to counterfeit goods or
services which are intended to be sold in quantities large
enough to result
loss or which are
dangerous irrespective of the quantities sold, or in any case
where those committing such offences do so with a view to
obtaining an unlawful economic gain. The application of crim-
inal penalties presupposes a clear threat to law and order, the
intensity and gravity of which might vary. The offence and the
penalty must be proportionate to the risk. However, one may
question whether the distinctions between ‘infringements of an
intellectual property right on a commercial scale’ and ‘serious
offences’ are clear and whether the severity of the penalties
to
corresponds to the principle of proportionality inherent
criminal law. Furthermore, private file sharing on the Internet or
reproduction (or music remixes), or the representation of mate-
rial or intellectual works amongst family members or private
individuals for educational or experimental purposes are impli-
citly excluded from the proposed Directive's scope of applica-
tion. It would be appropriate to spell out this exclusion.

4.2.3
The Committee would emphasise that the incorporeal
rights affected by counterfeiting are not absolute rights. Each
right has its own specificities and, in principle, grants exclusivity
and a temporary monopoly on commercial use, which vary in
duration and geographical validity. In other words, it constitutes
a temporary protectionist measure (in exchange for the publica-
tion of inventions in the case of patents, and intellectual works
in the case of copyright). Nevertheless, the licence holders and
authorised or bona fide users of products and services or intellec-
tual works also have rights, which are sometimes very extensive
in the case of some licences (11). Several domestic systems of
law contain inconsistencies and place the rights of producers,
distributors and industries before consumers' rights. The inten-
tion of incorporating heavy criminal penalties into domestic law
would appear to contribute further to this bias in many coun-
tries. This leads to a paradox whereby the maximum penalty for
a commercial-scale infringement set out in the proposal for a
Directive could prove to be equal or lighter than the maximum
penalty for a single infringement.

4.2.4
The Committee would like the Commission to initiate,
perhaps by conducting an in-depth comparative study following
transposition into domestic law, a thorough overhaul of
domestic criminal law in the light of Community criminal law,
in order to ensure genuine harmonisation throughout the EU.
This is particularly important
in the case of copyright and
related rights, where ever more stringent lawmaking sometimes
results in scales of sanctions and penalties that are dispropor-
tionate and serve no genuine purpose since the commercial
models for the distribution of works are still in full develop-
ment, with the projected elimination of DRM (protection against
copying) in the short-term, and since, in some cases, the tax on

(11) Creative Commons Licence, General Public Licence, BSD Licence, BBC
Creative Archive Licence (free access to audiovisual material) etc.

support
tools
unauthorised copying.

largely compensates

the

right holders

for

4.3 Specific comments

4.3.1
The Committee would like the question of the nature
of the offence of inciting acts of counterfeiting of products or
services of intellectual property to be better clarified. A criminal
offence must include an element of intent on the part of the
perpetrator or his accomplices. The TRIPS Agreement refers to
‘wilful
trademark counterfeiting’ and the Directive uses the
words ‘wilful’, ‘intentional’ and ‘deliberate’. There must also be a
material element to the offence, i.e. commission of the offence
or, at least, an attempt tantamount to initiation of the offence.
These two elements are cumulative; mere intention does not
constitute an offence (unless we set up a thought police). In
general, incitement to commit a crime can only be established if
the inciter supplies the tools (generally illicit) for the specific
purpose of committing the crime. Furthermore, the Committee
believes that the mere provision of widely used materials or
software, or access to the Internet, cannot be equated with
complicity or criminal incitement (generally present in only a
limited number of criminal
to
prove) if counterfeiters use these means. The concept of compli-
city should be sufficient in Community law since shared respon-
sibility is regulated in detail by domestic law. Otherwise, this
could result
intent, which
in convictions in the absence of
would create great legal uncertainty for many equipment and
service providers.

law situations, and difficult

4.3.2
The unlawful reproduction of works, models, proce-
dures or inventions protected by a temporary monopoly consti-
tutes the offence of counterfeiting. It is advisable to stick to this
definition, without extending it to include piracy (which gener-
ally involves gaining fraudulent access to IT systems in order to
gain control of them and steal data or use the bandwidth, gener-
ally for illegal ends). Piracy differs from counterfeiting in the
strict sense and strict definitions should continue to apply to
criminal offences. The unauthorised hacking into IT systems,
data or bandwidth theft, and attacks on privacy should unques-
tionably be subject to appropriate criminal proceedings, but
they do not directly constitute counterfeiting. Combating
IT piracy should be addressed specifically, even if the terms are
applied inaccurately in a number of policy declarations, which
tend to use them interchangeably and cause a degree of confu-
sion. IT piracy is used by terrorist organisations and should be
the focus of special attention and appropriate international
cooperation.

4.3.3
The term ‘organised gangs’ should be added to the
terms ‘criminal organisation’ and ‘organised crime’ used in the
explanatory memorandum, because the term already exists as an
law systems.
in some
aggravating circumstance
Commercial counterfeiting committed by organised gangs or
criminal organisations should constitute an aggravating circum-
stance justifying heavier penalties or fines.

criminal

27.10.2007

EN

Official Journal of the European Union

C 256/7

4.3.4
The Commission states that Member States are free to
adopt more severe penalties or to penalise other acts. This could
be interpreted as encouragement to criminalise non-commercial
acts or even extend the definition of criminal counterfeiting to
acts that do not, strictly speaking, constitute the reproduction
or copying of a product, procedure or intellectual work.

4.3.5
The Committee has reservations about the fact that
Community law and certain other systems of national law are
effectively equating copying software for circumventing or deac-
tivating DRM systems (12) (copy-protection systems, equipment
or software, often ineffective and non-encrypted) with the coun-
terfeiting of DRM systems, whereas what is being defined as
‘counterfeiting’ does not constitute copying or reproducing the
original system. Furthermore, DRM systems are not standard.
They differ according to their platform or provider, and file
formats may be proprietary, which impedes interoperability or
is intended to create a captive market by eliminating competi-
tion. The creation and use of copying methods to enable consu-
mers or companies holding software licences to exercise their
rights (copying for personal use, backup copy for use on
different equipment) should not be penalised per se in the
absence of criminal intent and active commission of a criminal
act on a commercial scale.

4.3.6
The Committee supports the principle of making the
initiation of criminal proceedings independent of any civil
action or criminal charges brought by the victim. Indeed, where
mafia-type criminal organisations are involved, the victim might
be reluctant to initiate proceedings to protect his rights. More-
over, commercial counterfeiting, especially when carried out by
organised criminal gangs or criminal organisations, not
to
mention terrorists, affects the economy and social welfare. For
this reason, it is the State's responsibility to clamp down on it.

Brussels, 12 July 2007.

that

effective

The Committee hopes

counterfeiting networks

4.3.7
cooperation
between Member States will make it possible to combat interna-
tional
especially those
connected with criminal organisations and money laundering
activities. In this context, we should bear in mind that many of
these networks operate from third countries, and that it is vital
to extend action beyond the EU's borders through the resources
offered by international law.

effectively,

4.3.8
At Community level, the Committee believes that joint
police investigation teams should work together with customs
teams as well as with the victims of counterfeiting and their
appointed experts. The EESC welcomes the fact that victims are
to be involved in investigations but recommends limiting their
role purely to providing information to the public authorities. It
would be inappropriate for a company, following an accusation
to be involved in monitoring
of commercial counterfeiting,
activities or confiscating the property of a competitor, who is
presumed innocent until proved otherwise in Court. The
Committee feels strongly that it is important to resist tendencies
towards private justice or interference or intrusion in criminal
proceedings by persons holding no public authority.

4.3.9
Finally, the Committee is concerned about the growing
tendency for Internet networks to be taken over for commercial
purposes and by calls for the extension of criminal law penalties
provided under the TRIPS Agreement to this area, as clearly
called for in the United States Department of Commerce's 2006
Special 301 and Super 301 Report (13),
in application of the
WIPO treaties on intellectual property on the Internet, which is
a free instrument in the public domain and a common universal
good.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS

(12) Digital Rights Management (a euphemism for copy protection).

(13) 2006 SPECIAL 301 REPORT USA.