REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Application of Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights
Date: 2010-12-22
Institutions: European Commission
Subjects: TRIPS, application of EU law, approximation of laws, digital technology, industrial property, intellectual property

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EUROPEAN COMMISSION 

Brussels, 22.12.2010 
COM(2010) 779 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE 
COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

Application of Directive 2004/48/EC 
of the European Parliament and the Council of 29 April 2004 
on the enforcement of intellectual property rights  

SEC(2010) 1589 final 

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REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE 
COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE 
COMMITTEE OF THE REGIONS 

Application of Directive 2004/48/EC 
of the European Parliament and the Council of 29 April 2004 
on the enforcement of intellectual property rights  

EXECUTIVE SUMMARY 

Effective  means  of  enforcing  intellectual  property  rights  are  essential  for  promoting 
innovation  and  creativity.  Directive  2004/48/EC  on  the  enforcement  of  intellectual  property 
rights  harmonises  the  minimum  means  available  to  right  holders  and  public  authorities  for 
fighting infringements of intellectual property rights. It also establishes a general framework 
for exchanging information and administrative co-operation between national authorities and 
with the Commission. 

A  first  evaluation  of  the  impact  of  the  Directive  shows  that  noteworthy  progress  has  been 
made since it was adopted and implemented in the Member States. The Directive created high 
European legal standards to enforce different types of rights that are protected by independent 
legal  regimes  (such  as  copyright,  patents,  trademarks  and  designs,  but  also  geographical 
indications and plant breeders' rights). 

However, despite an overall improvement of enforcement procedures, the sheer volume and 
financial  value  of  intellectual  property  rights  infringements  are  alarming.  One  reason  is  the 
unprecedented increase in opportunities to infringe intellectual property rights offered by the 
Internet. The Directive was not designed with this challenge in mind. 

Other  issues  that  could  need  special  attention  are  the  use  of  provisional  and  precautionary 
measures  such  as  injunctions,  procedures  to  gather  and  preserve  evidence  (including  the 
relationship  between  the  right  of  information  and  protection  of  privacy),  clarification  of  the 
meaning of various corrective measures, including the costs of destruction, and calculation of 
damages. 

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TABLE OF CONTENTS 

EXECUTIVE SUMMARY........................................................................................................ 2 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

3.6. 

3.7. 

4. 

Introduction .................................................................................................................. 3 

The objectives of the Enforcement Directive............................................................... 5 

Clarifications required for more effective protection of intellectual property rights 
and a better functioning internal market ...................................................................... 5 

Addressing the specific challenges of the digital environment.................................... 5 

Clarifying the scope of the Directive ........................................................................... 6 

Clarifying the concept of intermediaries and improving the workability of injunctions
...................................................................................................................................... 6 

Striking the right balance between the right of information and privacy laws ............ 7 

Making sure that damages have a compensatory and dissuasive effect....................... 8 

Clarifying the different corrective measures................................................................ 8 

Other issues .................................................................................................................. 8 

Conclusion.................................................................................................................... 9 

1. 

INTRODUCTION 

It  is  essential  to  find  effective  means  of  enforcing  intellectual  property  rights  to  promote 
innovation and creativity. This Report provides the first assessment of the implementation and 
impact  of  Directive  2004/48/EC  on  the  enforcement  of  intellectual  property  rights1  ('the 
Directive'). This assessment is required by Article 18 of the Directive and is based both on the 
Commission's appraisal of developments and on feedback received from Member States via 
national  reports,  which,  in  turn,  reflect  views  expressed  by  industry,  legal  practitioners, 
consumers' associations and other interested parties. 

The information received points to the conclusion that the Directive has had a substantial and 
positive  effect  on  protecting  intellectual  property  rights  under  civil  law  in  Europe.  The 
Directive  created  a  straightforward  framework  for  enforcing  intellectual  property  rights 
which,  broadly,  provides  comparable  protection  across  national  borders.  In  particular  the 
presumption  of  authorship  or  ownership  (Article  5),  the  possibility  of  "sampling"  in  the 
context  of  information  gathering  (Article  6),  provisional  measures  to  preserve  evidence 
(Article  7)  and  the  possibility  of  injunctions  against  intermediaries  (Articles 9  and  11)  have 
helped render the enforcement of intellectual property rights in the EU more effective. 

1 

OJ L157, 30.04.2004, p, 16. 

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However, due to late transposition of the Directive in many Member States (the transposition 
process  was  not  completed  until  2009)2  experience  in  applying  the  Directive  is  limited  and 
only  few  court  cases  have  been  reported.  Therefore,  the  Commission  has  not  been  able  to 
conduct  a  critical  economic  analysis  of  the  impact  that  the  Directive  has  had  on  innovation 
and on development of the information society, as provided for in Article 18 of the Directive. 

Despite these limitations, this initial evaluation of the effectiveness of the Directive comes at 
the  right  time.  Several  studies  carried  out  by  international  organisations  and  industry  have 
shown that infringements of intellectual property rights have reached a significant level, with 
certain of these goods posing a danger to consumers' health and safety3. In response, over the 
last two years, the Commission has adopted two Communications4. The second one, inter alia, 
set up a European Observatory on Counterfeiting and Piracy to improve the understanding on 
IPR  infringements  and  create  a  platform  for  representatives  from  national  authorities  and 
stakeholders  to  exchange  ideas  and  expertise  on  best  practices,  develop  joint  enforcement 
strategies and make recommendations to policy-makers. These were followed by two Council 
Resolutions5  that  supported  the  Commission’s  policy.  The  report  adopted  by  the  European 
Parliament also expressed support for an enhanced policy, including a strong legal framework 
to combat counterfeiting and piracy6. Infringements of intellectual property rights taking place 
outside of the EU also constitute a major source of concern. The Commission is addressing 
them in different ways, for instance by including ambitious chapters on intellectual property 
rights in bilateral trade agreements and through participation in international initiatives, such 
as the on-going negotiation of the ACTA agreement7. 

The  analysis  shows  that  certain  provisions  of  the  Directive  including  the  relationship  with 
other  Directives  are  understood  in  different  ways  in  the  different  Member  States  and  have 
given rise to different interpretations and application in practice. These provisions could 
warrant further clarifications to make the Directive fully effective. 

The  Internet  and  digital  technologies  have  added  an  extra,  challenging  dimension  to 
enforcing  intellectual  property  rights.  On  the  one  hand,  the  Internet  has  allowed  creators, 
inventors  and  their  commercial  partners  to  find  new  ways  to  market  their  products.  On  the 
other hand, it has also opened the door to new forms of infringements, some of which have 
proved difficult to combat. 

This  Report  sets  out  a  series  of  concrete  issues  where  clarification  may  be  needed,  in 
particular to adapt the Directive to the new challenges inherent in a modern Digital Society. It 

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7 

for 

example 

http://www.iccwbo.org/uploadedFiles/BASCAP/Pages/OECD-FullReport.pdf; 

The  deadline  for  the  implementation  of  the  Directive,  for  the  then  25  Member  States,  expired  on 
29 April  2006.  For  details  on  the  transposition  process  see  Annex  1  to  the  Staff  Working  Paper  that 
accompanies this Report. 
See 
http://www.iccwbo.org/uploadedFiles/BASCAP/Pages/Building%20a%20Digital%20Economy%20-
%20TERA(1).pdf. 
Commission  Communication  of  16  July  2008:  'An  industrial  property  rights  strategy  for  Europe', 
COM(2008)465  final;  Commission  Communication:  'Enhancing  the  enforcement  of  intellectual 
property rights in the internal market', COM(2009) 467 final. 
Council Resolution of 25 September 2008 on a comprehensive European anti-counterfeiting and anti-
piracy  plan,  OJ  C  253,  4.10.2008,  p.1;  Council  Resolution  of  1  March  2010  on  the  enforcement  of 
intellectual rights in the internal market, OJ C 56, 6.3.2010, p.1. 
European Parliament, Resolution of 22 September 2010 on enforcement of intellectual property rights 
in the internal market (2009/2178(INI)), A7-0175/2010. 
For details see 
 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2005:129:0003:0016:EN:PDF. 

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is  complemented  by  a  Commission  Staff  Working  Document  which  provides  additional 
information and background on its findings. 

2. 

THE OBJECTIVES OF THE ENFORCEMENT DIRECTIVE 

Disparities  between  the  Member  States'  systems  for  enforcing  intellectual  property  rights 
undermine the proper functioning of the internal market and weaken the enforcement of the 
substantive  law  on  such  rights.  This  leads  to  barriers  to  cross-border  activities,  loss  of 
confidence  in  the  internal  market  and  lower  investment  in  innovation  and  creation.  The 
Directive draws national legislative systems closer together to give rightholders and Member 
States'  authorities  a  minimum  but  standard  toolbox  to  combat  infringements  of  intellectual 
property rights. 

The Directive incorporates civil law measures under the TRIPS Agreement8 into the EU legal 
framework.  It  goes  beyond  the  minimum  provisions  laid  down  in  that  Agreement  as  it  also 
covers, for example, damages, corrective measures and evidence. In addition, the Directive is 
based  on  the  practices  enshrined  in  the  legislation  of  the  Member  States  that  proved  to  be 
most effective before the Directive was adopted (the 'best practices approach'). Member States 
may also add sanctions and remedies that are more favourable to rightholders9. The Directive 
therefore provides a minimum but flexible legal framework for enforcing intellectual property 
rights. 

3. 

CLARIFICATIONS  MAY  BE  REQUIRED  FOR  MORE  EFFECTIVE  PROTECTION  OF 
INTELLECTUAL  PROPERTY  RIGHTS  AND  A  BETTER  FUNCTIONING  INTERNAL 
MARKET 

The  analysis  of  the  implementation  of  the  Directive  in  the  Member  States  shows  that  the 
Directive  lays  a  solid  foundation  for  enforcing  intellectual  property  rights  in  the  internal 
market,  but  that  certain  clarification  may  be  needed  to  avoid  any  ambiguities  and  adapt  the 
Directive to the new challenges posed in particular by today's digital environment. 

3.1. 

Specific challenges of the digital environment 

The  multi-purpose  nature  of  the  Internet  makes  it  easy  to  commit  a  wide  variety  of 
infringements of intellectual property rights. Goods infringing intellectual property rights are 
offered for sale on the Internet. Search engines often enable fraudsters to attract Internet users 
to  their  unlawful  offers  available  for  sale  or  download.  File-sharing  of  copyright-protected 
content  has  become  ubiquitous,  partly  because  the  development  of  legal  offers  of  digital 
content has not been able to keep up with demand, especially on a cross-border basis, and has 
led  many  law-abiding  citizens  to  commit  massive  infringements  of  copyright  and  related 
rights in the form of illegal up-loading and disseminating protected content. Many online sites 
are either hosting or facilitating the online distribution of protected works without the consent 
of the right holders. In this context, the limitations of the existing legal framework may need 
to be clearly assessed. 

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Agreement  on  Trade-Related  Aspects  of  Intellectual  Property  Rights  (TRIPS  Agreement)  of  1994; 
Council  Decision  (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) (94/800/EC), OJ L 336, p.1. 
See Article 2(1) of the Directive. 

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3.2. 

The scope of the Directive 

The  Directive  applies  to  all  infringements  of  intellectual  property  rights  protected  under 
European  or  national  law  and  contains  no  definitions  of  the  intellectual  property  rights  it 
covers. Although this flexible approach offers several advantages, different interpretations of 
the  concept  of  'intellectual  property  right',  led  Member  States  to  ask  the  Commission  to 
publish a minimum list of the intellectual property rights which it considers are covered by the 
Directive10. 

Even after the Commission published this clarification, uncertainties still remain as to whether 
some rights protected  under  national  law are covered. This mainly concerns domain names, 
national  rights  on  matters  such  as  trade  secrets  (including  know-how)  and  other  acts 
frequently covered by national unfair competition law such as parasitic copies and other forms 
of 'competing on the edge of the law'. These forms of commercial misbehaviour seem to be on 
the rise, too. They often have damaging effects on the rightholders, undermine innovation and 
bring only short-term benefits to consumers. It could be useful to further assess this negative 
phenomenon  and  the  need  to  include,  in  the  Directive,  a  minimum  list  of  the  intellectual 
property rights covered. 

3.3. 

The concept of intermediaries and the workability of injunctions 

The  Directive  makes  a  broad  interpretation  of  the  concept  of  'intermediaries'  to  include  all 
intermediaries  'whose  services  are  used  by  a  third  party  to  infringe  an  intellectual  property 
right'.  This  implies  that  even  intermediaries  with  no  direct  contractual  relationship  or 
connection with the infringer are subject to these measures provided for in the Directive. 

Nevertheless, the level of evidence required by the courts in the Member States is generally 
rather high. Furthermore, uncertainties remain over intermediaries and the specific measures 
to which they are subject by contributing to or facilitating an infringement, regardless of their 
liability. 

Intermediaries who transport goods suspected of infringing intellectual property rights (such 
as carriers, freight forwarders, or shipping agents) can play a leading role in controlling the 
distribution  of  goods  that  infringe  intellectual  property  rights.  Internet  platforms  such  as 
online market places or search engines can also play an important role in reducing the number 
of  the  infringements,  in  particular  through  preventive  measures  and  ‘notice  and  take-down’ 
policies. 

Internet service providers are also key to the way the online environment works. They provide 
access to the Internet and interconnect the underlying networks, host websites and servers. As 
intermediaries between all users of the Internet and the rightholders, they are often placed in a 
compromising  position  by  unlawful  acts  committed  by  their  customers.  For  this  reason,  EU 
law  already  contains  specific  provisions  limiting  the  liability  of  Internet  service  providers 
whose services are used to infringe intellectual property rights11. 

10 

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Statement  by  the  Commission  concerning  Article  2  of  Directive  2004/48/EC  of  the  European 
Parliament  and  of  the  Council  on  the  enforcement  of  intellectual  property  rights  (2005/295/EC), 
OJ L94, 13.04.2005, p. 37. 
Directive  2000/31/EC  of  8  June  2000  on  certain  legal  aspects  of  information  society  services,  in 
particular electronic commerce, in the Internal Market (Directive on electronic commerce), OJ L 178, 
17.7.2000, p.1.  

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Measures  to  be  taken  against  intermediaries  concern,  in  particular,  the  right  of  information, 
provisional  and  precautionary  measures  (e.g.  interlocutory  injunctions),  or  permanent 
injunctions. 

The  Directive  leaves  it  to  Member  States  to  determine  when  and  how  an  injunction  can  be 
issued against an intermediary. For this to work efficiently, it could be useful to clarify that 
injunctions should not depend on the liability of the intermediary. Furthermore, the findings 
reported in the Staff Working Paper that accompanies this Report indicate that the currently 
available legislative and non-legislative instruments are not powerful enough to combat online 
infringements  of  intellectual  property  rights  effectively.  Given  intermediaries'  favourable 
position  to  contribute  to  the  prevention  and  termination  of  online  infringements,  the 
Commission could explore how to involve them more closely. 

3.4. 

The question of the right balance between the right of information and privacy 
laws 

The right of information obliges the infringer or another person to provide to the rightholder 
information  on  the  origin  and  distribution  networks  of  the  goods  which  infringe  intellectual 
property  rights.  The  main  challenge  regarding  this  right  is  the  need  to  respect  privacy  laws 
and the protection of personal data. 

In  some  Member  States  the  right  of  information  provided  for  in  the  Directive  seems  to  be 
granted  very  restrictively,  mainly  due  to  national  laws  on  the  protection  and  retention  of 
personal data12. This issue could deserve special attention. National laws must also allow the 
courts to apply EU law on enforcement of intellectual property rights. According to the Court 
of Justice of the European Union a fair balance must be struck between the various rights at 
stake (such as the right to data protection and the right to property, which includes intellectual 
property  rights)13  given  that  both  data  protection/privacy  and  the  protection  of  intellectual 
property  are  recognised  as  fundamental  rights  by  the  Charter  of  Fundamental  Rights  of  the 
European Union14. 

The  European  legal  framework  on  the  protection  of  personal  data15  on  the  one  hand  and 
enforcement  of  intellectual  property  rights  on  the  other  is  neutral,  in  that  there  is  no  rule 
implying that the right to privacy should generally take precedence over the right to property 
or vice versa. National laws implementing the various directives must therefore be construed 
in  a  way  that  allows  a  balance  to  be  struck  between  these  rights  in  each  case  in  order  to 
guarantee that the provision on the right of information can protect the rightholders effectively 
without  compromising  rights  relating  to  the  protection  of  personal  data.  Further  evaluations 

12 

13 

14 

15 

& 

States 

Member 

Williams, 

Examples are, according to the 2009 Study on Online Copyright Enforcement and Data Protection in 
Brussels, 
(Hunton 
Selected 
http://ec.europa.eu/internal_market/iprenforcement/docs/study-online-enforcement_en.pdf), Austria and 
Spain. 
Judgment of 29 January 2008 in the case C-275/06 Productores de Música de España (Promusicae) v 
Telefónica de España SAU; judgment of 19 February 2009 in the case C-557/07 LSG-Gesellschaft zur 
Wahrnehmung von Leistungschutzrechten GMBH v Tele2 Telecommunication GMBH. 
Articles  7,  8  and  17(2),  Charter  of  Fundamental  Rights  of  the  European  Union  (2000/C  364/01), 
OJ C364, 18.12.2000, p. 1. 
In  particular  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,  OJ  L  281,  23.11.1995,  p.  31,  and 
Directive 2002/58/EC on the processing of personal data and the protection of privacy in the electronic 
communications sector, OJ L 201, 31.7.2002, p. 37. 

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could be needed on the extent to which Member States' laws and the way they are applied are 
consistent with these requirements. If necessary, means to remedy the situation and strike an 
appropriate balance between the rights at stake could also be considered. 

3.5. 

The compensatory and dissuasive effect of damages 

Measures,  procedures  and  remedies  provided  for  by  the  Directive  must  be  effective, 
proportionate  and  dissuasive.  At  present,  damages  awarded  in  intellectual  property  rights 
cases remain comparatively low. Only a few Member States have reported an increase in the 
damages awarded, as a result of implementing the Directive. 

According to information received from rightholders, damages awards do not currently appear 
to  effectively  dissuade  potential  infringers  from  engaging  in  illegal  activities.  This  is 
particularly so where damages awarded by the courts fail to match the level of profit made by 
the infringers. 

The main aim of awarding damages is to place the rightholders in the same situation as they 
would  have  been  in,  in  the  absence  of  the  infringement.  Nowadays,  however,  infringers' 
profits  (unjust  enrichment)  often  appear  to  be  substantially  higher  than  the  actual  damage 
incurred by  the rightholder.  In such  cases, it  could  be considered whether the courts should 
have the power to grant damages commensurate with the infringer's unjust enrichment, even if 
they exceed the actual damage incurred by the rightholder. Equally, there could be a case for 
making greater use of the possibility to award damages for other economic consequences and 
moral damages. 

In  cases  where  the  infringer  is  a  legal  person  and  the  rightholder  fails  to  obtain  damages 
because the infringer has no assets, has been liquidated or is in any other way insolvent, an 
assessment  could  be  made  as  to  whether  the  rightholder  is  able  to  claim  damages  from  the 
company's managing director(s) under national law, and if so under what conditions. 

3.6. 

Corrective measures 

As set out in more detail in the Commission Staff Working Document, further clarification of 
the definition of 'corrective measures' might be needed. In particular, the distinction between 
'recall' and the 'definitive removal' of goods found to infringe intellectual property right from 
channels  of  commerce  is  not  clear-cut  under  most  national  legislation.  Another  point  which 
could be clarified is how to apply these measures if the goods are no longer in the possession 
of the infringer.  

Lastly, as to the costs of the destruction of the infringing goods, consideration could be given 
to  how  to  ensure  that  these  costs  can  be  imposed  by  the  court  directly  on  the  unsuccessful 
party. 

3.7. 

Other issues 

A number of other issues emerge from the analysis of the implementation of the Directive by 
the Member States which could deserve further discussion at EU level.  

Firstly,  it  seems  that  Member  States  have  rarely  taken  up  the  optional  provisions  of  the 
Directive  (e.g.  concerning  description  orders  that  provide  for  a  court  clerk  to  enter  the 
premises  of  the  alleged  infringer  and  examine  the  situation.  This  optional  provision  of  the 
Directive  has  not  been  implemented  by  some  Member  States  for  civil  proceedings  and 

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therefore this kind of measure is available only in the context of criminal proceedings). The 
cases where Member States, in accordance with Article 2(1), have adopted rules that are more 
favourable to right holders than those of the Directive are even more rare. The reasons for this 
could be examined in more detail. The link between the 'commercial scale' requirement (i.e. 
the  requirement  that  the  infringing  act  is  carried  out  for  direct  or  indirect  economic  or 
commercial  advantage)  and  the  right  of  information  in  Member  States'  rules  could  also  be 
explored further. 

Secondly,  the  options  available  to  address  problems  in  collecting  evidence  in  cross-border 
cases could be assessed, as well as the need to define more precisely when information can be 
considered to be "under the control" of a party to a judicial proceeding (Article 6(1)). Whether 
the  current  rules  on  collecting  evidence  in  cases  involving  confidential  information  create 
problems in practice, in particular in the context of provisional measures and in cases where 
different  national  concepts  of  confidentiality  come  into  play,  might  also  warrant  further 
evaluation. 

Lastly,  the  usefulness  of  harmonising  the  secondary  use  of  goods  infringing  intellectual 
property rights and possible problems related to such harmonisation could be explored. 

4. 

CONCLUSION 

Infringements of intellectual property rights cause widespread economic harm. A significant 
number of products infringing intellectual property rights now pose a real threat to consumer 
health and safety. Proper protection of intellectual property rights is fundamental to stimulate 
innovation  and  culture  in  a  competitive,  wealth-generating,  knowledge-based  economy. 
Different interests have to be carefully balanced. To this end, the Commission will continue to 
be actively engaged with all stakeholders. 

The main conclusion drawn from this first evaluation of the Directive is that the Directive has 
had a substantial and positive effect on the protection of intellectual property rights by civil 
law in Europe. However, it has become apparent that the Directive was not designed with the 
challenge posed by the Internet to the enforcement of intellectual property rights in mind. In 
addition, several issues could deserve further attention. Among them, one could mention the 
use of provisional and precautionary measures such as injunctions, procedures to gather and 
preserve evidence (including the relationship between the right of information and protection 
of privacy), clarification of the meaning of various corrective measures, including the costs of 
destruction, and calculation of damages. 

With  a  view  to  informing  the  Commission's  decisions  on  any  future  measure  that  might  be 
envisaged and to feed the thorough impact assessment work that the Commission is launching 
as  concerns  the  issues  mentioned  in  this  Report,  the  Commission  welcomes  any  feedback 
from  the  European  Parliament,  the  Council  of  Ministers,  Member  States,  the  European 
Economic  and  Social  Committee  and  all  other  interested  parties  on  this  Report  by 
31 March 2011. 

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