Source: EURLEX
Language: en
Format: md

**EN**

# **EN EN**

EUROPEAN COMMISSION

Brussels, 22.12.2010
SEC(2010) 1589 final

**COMMISSION STAFF WORKING DOCUMENT**

**Analysis of the application of Directive 2004/48/EC**
**of the European Parliament and the Council of 29 April 2004**
**on the enforcement of intellectual property rights in the Member States**

**Accompanying document to the**

**Report from the Commission to the Council, the European Parliament and the**
**European Social Committee on the application of Directive 2004/48/EC**
**of the European Parliament and the Council of 29 April 2004**
**on the enforcement of intellectual property rights**

**COM(2010) 779 final**

# **EN EN**

## **TABLE OF CONTENTS**

1. Introduction and General remarks................................................................................ 4

2. The transposition of the Directive by the Member States and its application in
practice......................................................................................................................... 4

2.1. Subject Matter and Scope of Application (Articles 1 and 2) ....................................... 5

2.2. General provisions (Articles 3 to 5)............................................................................. 6

2.3. Gathering of Evidence and Measures to Preserve Evidence (Articles 6 and 7)........... 7

2.3.1. Evidence gathering and preservation for all infringements of intellectual property
rights............................................................................................................................. 7

2.3.2. Evidence gathering in the case of infringements committed on a commercial scale... 9

2.3.3. Evidence and protection of confidential information................................................. 10

2.4. Right of Information (Article 8)................................................................................. 10

2.4.1. The impact of the right of information on the legislation and the jurisprudence in the
Member States............................................................................................................ 11

2.4.2. Conflicts between the right of information and the right to privacy.......................... 12

2.5. Injunctive relief (Articles 9 and 11)........................................................................... 13

2.5.1. Interlocutory injunctions (Article 9) .......................................................................... 13

2.5.1.1. General issues............................................................................................................. 13

2.5.1.2. Injunctions against intermediaries.............................................................................. 14

2.5.2. Permanent injunctions (Article 11)............................................................................ 16

2.5.3. Scope of the injunctions............................................................................................. 17

2.5.4. Cross-border injunctions............................................................................................ 17

2.6. Corrective and Alternative Measures (Articles 10 and 12)........................................ 19

2.6.1. Meaning and purpose of "recall and definitive removal of infringing goods from the
channels of commerce" .............................................................................................. 19

2.6.2. Destruction of the goods as a preferred corrective measure ...................................... 20

2.6.3. Secondary use of the goods infringing intellectual property rights ........................... 20

2.6.4. Alternative measures.................................................................................................. 20

2.7. Damages and legal costs (Articles 13 and 14) ........................................................... 21

2.7.1. Calculation of damages.............................................................................................. 21

2.7.2. Wilful and negligent infringements and infringements committed in good faith...... 22

2.7.3. Damages appropriate to the actual prejudice suffered by the rightholder ................. 22

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2.7.3.1. Rightholders' lost profits ............................................................................................ 22

2.7.3.2. Infringers' profits........................................................................................................ 22

2.7.3.3. Moral damages and damages for negative economic consequences ......................... 23

2.7.4. Lump sum damages.................................................................................................... 23

2.7.5. More far-reaching national rules................................................................................ 24

2.7.6. Legal costs and other expenses .................................................................................. 24

2.8. Codes of Conduct....................................................................................................... 24

3. Absence of harmonized protection of intellectual property rights through criminal
law.............................................................................................................................. 25

4. Conclusion.................................................................................................................. 26

Annex 1: The transposition of the Directive by the Member States and Member States'
application reports.................................................................................................................... 27

1. Transposition process................................................................................................. 27

2. Implementation Reports............................................................................................. 27

Annex 2: Methodology for the Analysis.................................................................................. 29

# EN 3 EN

**1.** **I** **NTRODUCTION AND** **G** **ENERAL REMARKS**

Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the
enforcement of intellectual property rights [1] (hereinafter referred to as the "Directive") was to
be transposed by 29 April 2006. Article 18 of the Directive requires Member States to submit
to the Commission a report on the implementation of the Directive three years after that date.

The Commission Report on the application of Directive 2004/48/EC of the European
Parliament and the Council of 29 April 2004 on the enforcement of intellectual property
rights, which is complemented by this Staff Working Document, is provided in application of
Article 18 of the Directive. The report shall include an assessment of the effectiveness of the
measures taken, as well as an evaluation of its impact on innovation and the development of
the information society.

The Report is based on the reports received from the Member States according to Article 18
of the Directive but also on the Commission's own assessment of the situation and on

feedback received from stakeholders and legal practitioners.

Due to the late transposition of the Directive in many Member States and the fact that some
Member State did not provide the application report provided for in the Directive [2] or provided
only some information of a very general nature, the information available on the impact of the
Directive is too limited to allow for a full assessment of its effectiveness at this stage (see
Annex 3 for further detail on the methodology of this report). However, in the context of the
European Observatory on Counterfeiting and Piracy, DG Internal Market and Services works
with experts from the private sector to assess the application of the Directive and to complete
the information received from the Member States. Although this work is still continuing, the
information received so far allows already identifying a certain number of issues related to the
Directive that deserve attention.

This paper (1) chronologically describes the transposition of the different articles of the
Directive by the Member States and their application in practice, problems which have arisen
in the interpretation of some provisions but also sets out other issues that currently are not
explicitly covered by the Directive but have proved to be of importance for an effective
enforcement of intellectual property rights, and (2) draws a number of conclusions as to the
issues that could be addressed in the context of a possible review of the Directive.

**2.** **T** **HE TRANSPOSITION OF THE** **D** **IRECTIVE BY THE** **M** **EMBER** **S** **TATES AND ITS**

**APPLICATION IN PRACTICE**

The Directive's provisions (only) relate to civil law measures to enforce intellectual property
rights. They encompass, in particular, evidence-gathering powers for judicial authorities,
powers to force offenders and any other party commercially involved in an infringement to
provide information on the origin of the infringing goods and of the distribution networks,
provisional and precautionary measures such as interlocutory injunctions or seizures of
suspect goods, corrective measures including permanent injunctions, recall and definitive

1 OJ L 157, 30.04.2004, p. 16.
2 For details on the transposition process and the reports received from the Member States see Annex 1.

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removal of the infringing goods from channels of commerce, powers to force offenders to pay
damages and measures related to the publication of judicial decisions.

**2.1.** **Subject Matter and Scope of Application (Articles 1 and 2)**

The Directive covers all infringements of intellectual property rights [3] without containing any
definition of **intellectual property rights** . The scope is not limited to those rights harmonized
at EU level, but also covers rights protected as intellectual property rights by national law.

This technique used by the Directive has the advantage of providing a high degree of
flexibility as the Directive's scope adapts to changing definitions of intellectual property
rights, both at EU and at national level. However, several questions remain open. Thus, some
uncertainties have arisen as to whether **domain names, trade (business) secrets**, including
know-how, are covered by the Directive, and whether the Directive is applicable to other acts
of **unfair competition** (for example parasitic copying). The status and the form of protection
of trade (business) secrets, including know-how, and the treatment of acts of unfair
competition and of domain names is very different among Member States. It seems to derive
from the wording of the Directive that in cases where they are protected as an intellectual
property right at national level, they should be understood as being covered by the scope of
the Directive. However, in view of the diverging interpretations in the Member States it could
be important to provide some clarification in that respect.

Article 2(1) of the Directive states that Member States may provide for sanctions and
remedies that are more favourable to rightholders. The Directive therefore provides only for
**minimum harmonisation** as far as enforcement measures are concerned. Some Member

States have gone beyond the Directive's provisions and have introduced stricter measures.
From the Commission's observations as well as from the stakeholders' consultation it however

appears, that this was only the case for a few provisions in the Directive. One of the examples
where some Member States have gone beyond the Directive's wording was the right of
information (Article 8) which, according to the Directive, is limited to the activities carried
out on a commercial scale if the request is not directed towards the infringer. A significant
number of Member States (e.g. Denmark, Estonia, Greece, France, Lithuania, Slovak
Republic) have gone beyond the ‘commercial scale’ requirement (of which there is no
definition in the Directive) and introduced this measure for all infringements (for more details
see section 2.3.2). Another example where Member States have gone beyond the Directive's
provisions was damages. As far as damages are concerned, most Member States did not
specifically implement the Directive's provisions as they felt that their national laws already
covered them sufficiently. However, as far as lump sum damages are concerned, some
Member States (e.g. Austria, Belgium, Greece, Czech Republic, Lithuania, Poland, Romania,
Slovenia) have moved beyond the Directive's provisions and introduced multiple damages
awards. Such multiple (mostly double) awards are available for copyright (and rights related
to copyright) infringements or for infringements committed in bad faith.

3 In this paper, the term ‘intellectual property rights’ is deemed to cover all rights set out in the
"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. These include copyright, rights related to copyright, sui generis right of a
database maker, rights of the creator of the topographies of a semiconductor product, trademark rights,
design rights, patent rights (including rights derived from supplementary protection certificates),
geographical indications, utility model rights, plant variety rights and trade names, in so far as they are
protected as exclusive property rights under the national law concerned.

# EN 5 EN

At the same time, several voluntary provisions of the Directive have not been implemented by
the Member States. It has been observed that these cases are more numerous than those where

Member States provided for stricter measures. As an example, many Member States have
opted for non-transposition of the alternative measures provided for in Article 12 of the
Directive (e.g. Austria, Belgium, France, Luxembourg, the Netherlands, and Slovenia).
Likewise, many Member States (e.g. Czech Republic, Greece, Hungary, Malta, and Poland.)
have opted for non-implementation of description orders (Article 7(1)), which are often
available in criminal proceedings only.

**2.2.** **General provisions (Articles 3 to 5)**

As a procedural law, the Directive shall not affect substantive law on intellectual property,
Member States' international obligations (notably the TRIPS Agreement [4] ) including Member
States provisions on criminal law.

Article 3 introduces the **general principle** that Member States shall provide for fair and
equitable measures, procedures and remedies to ensure the enforcement of the intellectual
property rights covered by this Directive. These measures, procedures and remedies shall also
be effective, proportionate and dissuasive and shall be applied in such a manner as to avoid
the creation of barriers to legitimate trade and to provide for safeguards against their abuse.

Articles 4 deals with the **persons entitled to have access to courts in order to seek**
**application of the measures, procedures and remedies** laid down in the Directive. This
group not only includes the right holders but also all other persons authorised to use those
rights, especially licensees, as well as collective rights management bodies and professional
defence bodies. While the former had already been protected by Member States' laws before
the Directive was adopted, a majority of Member States had to amend their legislation to
include professional associations established for the protection of intellectual property rights.

Article 5 governs the **presumption of authorship or ownership** . This provision is based on
the wording of Article 15 of the Berne Convention [5] and, in addition, extends it also to the
owners of related rights. Requiring detailed and complex proof of copyright in the past often
caused substantial delays or proceedings and lead to inefficient judicial proceedings. Article 5
therefore introduced a mechanism providing that, in the absence of proof to the contrary, it is
sufficient for the name of the author to appear on the work "in the usual manner", which is
also applicable to the holders of rights related to copyright with regard to their protected
subject matter.

This tool turned out to be particularly helpful for the various rightholders to fight against
infringers' attempts to delay artificially the proceedings, in some cases without appropriate
evidence, by denying the ownership of copyright holders. It allowed namely phonogram
producers to initiate court proceedings on behalf of various right holders more easily.
Furthermore, some rightholders reported that the presumption has made it easier to obtain
cease-and-desist declarations from infringers, and has therefore had the effect of reducing the
number of court proceedings. A majority of Member States had to adapt their legislation to

4 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.
5 Berne Protection for the Protection of Literary and Artistic Works of 9 September 1886.

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this provision, in particular by stating that the name appearing on the work shall be admissible
as proof of the holder of the right.

**2.3.** **Gathering of Evidence and Measures to Preserve Evidence (Articles 6 and 7)**

Articles 6 and 7 of the Directive set out a number of obligations on Member States with
regard to gathering of evidence and measures to preserve evidence. The aim of these measures
is to produce evidence of the infringement to courts, even where it is not in the possession of
the right holder. This evidence includes information on the infringing products, on the means
of production, the extent of the infringement etc., i.e. all the information that is indispensable
for establishing an infringement of an intellectual property right.

_2.3.1._ _Evidence gathering and preservation for all infringements of intellectual property_
_rights_

Article 6(1) lies down that if the rightholder has presented reasonably accessible evidence
sufficient to support his claims and has, in substantiating those claims, specified evidence
which lies in the control of the opposing party, the competent judicial authority may order that
the opposing party produce evidence under its control. This provision was partly inspired by
Article 43 of the TRIPS Agreement but in addition enables Member States to provide that
courts may consider a sample of copies to constitute sufficient evidence for the entire
infringement (so called ' **sampling'** ). It has to be noted that sampling was already known in
some Member States before the adoption of the Directive [6] but was a novel provision in a large
majority of Member States. [7] In a large number of Member States, stakeholders acknowledged
that the possibility of using sampling led to an improvement in enforcing intellectual property
rights, especially for the protection of copyright. [8]

Article 7 requires that the Member States shall, even before the commencement of
proceedings on the merits of the case, order prompt and effective **provisional measures** **to**
**preserve relevant evidence**, subject to the protection of confidential information. Such
measures may include the detailed **description** (search), with or without the taking of
samples, the physical **seizure** of the infringing goods and, in appropriate cases, of materials
and implements used in the production and/or distribution of these goods and the documents
relating thereto. Where necessary, these measures shall be taken without the other party
having been heard. They shall be revoked or cease to have effect if the applicant does not
initiate, within a period specified by the Directive, proceedings leading to a decision on the
merits of the case before the competent judicial authority. In that case or where the
infringement of the intellectual property right was not established in the judicial proceeding,
the judicial authorities shall have the power to order the applicant to provide the defendant
with an appropriate compensation for any injury caused by those measures.

As far as Articles 6 and 7 are concerned, the Directive goes beyond the TRIPS agreement but
it also follows a Member States' _best practice approach_ in the sense that it was inspired by
those national provisions which proved to be effective for the enforcement of intellectual
property rights. For example, Article 6(2) was based on the so-called 'Mareva injunction' [9] in

6 E.g. France, Hungary.
7 The possibility of using sampling was introduced in Germany for instance only in 2008.
8 Such feedback was received e.g. from stakeholders from Cyprus, Germany, Italy, Lithuania; Poland (for
trademarks), Romania.
9 Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd's Rep 509.

# EN 7 EN

the UK and in Ireland. Similarly, Article 7 was largely inspired by the practices in some
Member States such as the UK ('Anton Pillar order') [10] or France ('saisie-contrefaçon') [11] .

In a number of Members States, the Directive’s rules on the presentation and preservation of
evidence have lead to important changes in their national legislation. [12 ]

Many Member States have, however, not made use of the options provided for by Article 7 of
the Directive. One example are **description (search) orders** (Article 7 (1)) since this measure
is more common in the context of criminal proceedings than for civil ones. Likewise, the
**protection of witnesses' identity** (Article 7(5)) in Member States is often used rather in
criminal than in civil proceedings. For some other Member States, this type of measure was
already part of the general procedural laws and was therefore not transposed specifically with
a view to proceedings on infringements of intellectual property rights. As far as **'sampling'** is
concerned, it appears from information provided by stakeholders that, despite it being a
voluntary provision, it has been implemented in a vast majority of Member States.

In practice, problems concerning evidence gathering and preservation have been observed in a
number of areas. Thus, stakeholders and in particular legal practitioners report that **cross-**
**border collection of evidence** in the context of judicial proceedings remains difficult. There
are different ways to improve the collection of evidence across borders. A first way could be
to improve the rules on jurisdiction of the courts to issue provisional, including protective
measures, so as to ensure that they cover protective orders aiming at obtaining information
and evidence as referred to in Articles 6 and 7 of the Directive. Another way could be to
ensure that when a court is faced with a measure granted by a foreign court which is not
known in its own State, it shall, to the extent possible, adapt the measure to one known under
its own law. Finally, it could be very useful to improve the free circulation of measures
ordered _ex parte_ within the European Union. Necessary steps in this regard are being
undertaken in the context of the upcoming revision of Council Regulation (EC) No 44/2001
on jurisdiction and the recognition and enforcement of judgments in civil and commercial
matters (Brussels I Regulation).

Gathering evidence in relation to the infringements committed via the **Internet** is becoming
another significant problem. The relative anonymity of the Internet makes it often difficult to
pursue the infringers. Infringers (such as sellers or owners of the websites selling/facilitating
the sale of the infringing items) cannot be properly identified. Evidence in a digital form is
hard to preserve and images reflecting the content of a webpage at a certain moment (socalled 'screenshots') are often not accepted by the courts as sufficient evidence. This has led
several Member States to concluding, in their reports addressed to the Commission, that
greater attention needs to be given to the infringements of intellectual property rights on the
Internet and that the Directive does not sufficiently address this constantly growing, serious
problem.

10 Anton Piller KG v Manufacturing Processes Limited [1975] EWCA Civ 12). In Ireland, the so-called
Anton Pillar Order was formalised by law.
11 In France and in Belgium, before the transposition of Directive the well known procedure called "saisiecontrefaçon" was only available for the certain intellectual property rights such as patents, trademarks
and designs. This procedure is now available for all intellectual property rights, including geographical
indications.
12 E.g. Estonia, Lithuania and Slovenia.

# EN 8 EN

Another measure which is not uniformly applied in the Member States relates to Article 6(1)
according to which _"if the rightholder has presented reasonably accessible evidence sufficient_
_to support his claims and has, in substantiating those claims,_ _**specified evidence**_ _which lies in_
_the control of the opposing party_ _the competent judicial authority may order that the opposing_
_party produce evidence_ _**under its control**_ _"._ This provision is interpreted restrictively in some
Member States [13], and rightholders who ask for evidence which lies in the control of the
opposing party, are frequently requested to specify the exact character, location, reference
numbers and contents of the requested documents, sometimes even the page numbers of the
defendant's commercial records. Where rightholders are not able to provide this information
the requests are rejected by the courts as 'vague'. Stakeholders reported about a similar
situation in relation to the right of information (Article 8). This practice of some courts
reduces the effectiveness of Article 6 of the Directive to a considerable extent. Another issue

which has arisen is how broad the term "control" should be interpreted; whether the disclosure
obligation requires the person to disclose only evidence in its _possession_, whether this
obligation extends to all information under its _control_ (a term which is broader than
'possession') and/or whether the person is even required to undertake a _reasonable search_ for
evidence. The practices of the courts vary in this respect but the majority of the courts seem to
limit the extent of the disclosure to the items in the _possession_ of the person(s) who is (are)
required to disclose. It could be useful to give more concrete guidance as to how the term
'control' should be interpreted.

_2.3.2._ _Evidence gathering in the case of infringements committed on a commercial scale_

Under Article 6(2), Member States' judicial authorities shall have the possibility to order the
**communication of banking, financial or commercial documents** which are under the
control of the opposing party, **in case of an infringement committed on a commercial**
**scale** [14], subject to the protection of confidential information. This is a provision that goes
beyond TRIPS, which does not contain any provision on this subject.

The Directive, however, does not contain a definition of the term 'commercial scale'. [15] Several
Member States transposed this article without adding any legal definition of the term
'commercial scale', which is therefore left to the interpretation by the courts. [16] Only in few
Member States the law provides for a definition of this term. [17] The definition is often given by
using the notion of "commercial purpose" and defining it as _"purposes aimed at direct or_
_indirect economic or commercial gain"_ or similar. [18] These definitions are probably directly
inspired by Recital 14 of the Directive according to which _"acts carried out on a commercial_
_scale are those carried out for direct or indirect economic or commercial advantage; this_
_would normally exclude acts carried out by end consumers acting in good faith"_ . Other
Member States have decided not to limit these measures to cases of commercial scale and

13 E.g. Greece.
14 Also Articles 8(1) - right of information (in case the request is not directed towards the infringer) - and
9(2) - seizure of the movable and immovable property, including the blocking of the infringer's bank
account and other assets - are limited to the case of infringements committed on a commercial scale.
15 Recital 14 of the Directive however states that that acts carried out on a commercial scale are "those

carried out for direct or indirect economic or commercial advantage and that this would normally
exclude acts carried out by end-consumers acting in good faith".
16 E.g. Cyprus, Estonia, Hungary.
17 E.g. Germany, Czech Republic, Romania, Slovenia. Italian scholars seem to conclude that "on a
commercial scale" means "in the course of trade".
18 Different e.g. Germany for copyright infringements ("number or severity of infringements").

# EN 9 EN

allow communication of banking, financial or commercial documents for all infringements of
intellectual property rights. [19]

_2.3.3._ _Evidence and protection of confidential information_

According to Article 6(1), Member States shall ensure that, on application by a party which
has presented reasonably available evidence sufficient to support its claims, and has specified
evidence which lies in the control of the opposing party, the competent judicial authorities
may order that such evidence be presented by the opposing party, **subject to the protection**
**of confidential information** . Also, in case an infringement is committed on a commercial
scale, competent judicial authorities shall be in a position to order communication of banking,
financial and commercial documents which are under control of the opposing party, **with the**
**exception of confidential information** (Article 6(2)). Likewise, when ordering provisional
measures, such as description, seizure or an injunction, due regard must be given to the
protection of confidential information (Article 7(1)). Also the right of information shall be
"without prejudice" to the provisions which govern the protection of **confidentiality of**
**information sources** or the processing of personal data (Article 8(3)(e)). It appears that
Member States have not specifically transposed provisions related to the protection of
confidential information claiming that their previous laws contained sufficient safeguards to
protect confidential information.
This restriction has shown to be particularly relevant when commercial (trade) secrets or
know-how are at stake. The burden of proof usually lies with the plaintiff but some evidence
needed to establish the infringement or its scale is controlled exclusively by the (alleged)
infringer. In such cases it appears that the courts often find it difficult to assess and balance
the rightholder's interest in the information and the alleged infringer's interest in protecting
confidential information in order to prevent abuse, in particular when the parties at stake are
competitors. Member States' practice, on the one hand, shows that the protection of
confidential information does not mean that access to confidential information cannot be part
of provisional measures. On the other hand, access to the confidential information through
provisional measures (by a search, seizure or an injunction) appears to be allowed only in
cases where this information is truly necessary and where this information cannot be obtained
by way of other (legal) means. Furthermore, a special procedure (e.g. hearing closed for the
public) is usually applied when such confidential information is to be disclosed including
limitation to use this information only for the purposes of the proceedings. On the basis of the
currently available information, the Commission is not in a position to judge whether this
situation presents an obstacle to an effective enforcement of intellectual property rights.
Therefore, more information on this matter including clarification of the conditions as to
when and how, according to the jurisprudence of the national courts, such confidential
information may be disclosed would appear to be useful.

**2.4.** **Right of Information (Article 8)**

Article 8 of the Directive requires Member States to enable the competent judicial authorities
to order that information be provided by the infringer or another person on the **origin and**
**distribution networks** of the goods which infringe intellectual property rights. The scope of
the group of persons that can be forced to provide the information goes **beyond the infringer** .
It is extended to any other person who was found in possession of the infringing goods on a

19 For instance, in France, Poland and in Denmark this condition has not been implemented and the access
to banking, financial or commercial documents is left to the appreciation of the court without this
limitation. It has to be noted that in France the non-transposition of this condition is, according to the
French Parliament, due to the difficulty to define properly the notion of "commercial scale".

# EN 10 EN

commercial scale, or was found to be using the infringing services on a commercial scale or
was found to be providing on a commercial scale services used in infringing activities or was
indicated as being involved in the production, manufacture or distribution of the goods or
provision of the services. Such information may be requested also from other actors like
**intermediaries**, for example Internet service providers, transporters or online market places.
It is important to note that this provision, due to its limitation to activities carried out on a
commercial scale, does **not apply to consumers** .

The information shall comprise, firstly, the **persons involved in the infringing activitie** s. In
this context, it is essential not only to identify the persons at the end of the distribution chain,
but also to detect those who are "behind the scenes", often as part of complex distribution
networks. Secondly, the provision allows gathering information about the **quantities**
**produced including the price obtained** . This article substantially supplements Article 47 of
the TRIPS Agreement, which gives the TRIPS members only _an option_ to provide that the
judicial authorities are competent to order the infringer to inform the right holder of the
identity of third persons involved in the production and distribution of the infringing goods or
services and of their channels of distribution.

_2.4.1._ _The impact of the right of information on the legislation and the jurisprudence in the_
_Member States_

In some Member States the right of information towards the alleged infringer already existed
before the adoption of the Directive. [20] However, the right to obtain information from third
parties not directly involved in the proceedings seems to have been a novel in most Member
States. Some Member States provide for the right of information only in the context of
judicial proceedings, as foreseen by the Directive, other Member States have gone beyond the
Directive and provide for a right of information even before the formal proceedings, **as a**
**provisional measure** . Some Member States seem to provide for the right of information only
in cases of infringements committed on a **commercial scale.** The other Member States have
moved beyond the Directive and provide for the right of information for all infringements. At
least in one of these Member States, this solution was chosen because the legislator wanted to
avoid the problems related to the interpretation of the commercial scale criterion [21] . In some
Member States [22] (it appears that when the information request is directed towards a third
party, the commercial scale requirement is applied but such requirement is not imposed in
case the information is requested from the alleged infringer.

After the transposition of the Directive, national courts have seen a significant increase in
requests for information. Member States and stakeholders seem to agree that this provision
has improved the ability to trace infringers considerably and has facilitated a better knowledge
of the infringers [23] . Furthermore, this provision has had a significant impact on the possibilities
to establish the "exact quantities of infringing products involved" and therefore on the
accuracy of the calculation of damages. At the same time it appears that some rightholders
find it difficult to establish that the infringer has acted on a commercial scale without having
obtained information from the Internet service provider, in particular on different IP addresses

20 This was the e.g. case in the UK where, in addition to Mareva injunction and the Anton Pillar Order, the
so-called "Norwich Pharmacal order" was in place.
21 In France.
22 E.g. Belgium, Germany, Hungary, Luxemburg, Poland.
23 E.g. Sweden.

# EN 11 EN

used by the same infringer. In general, many requests for information from third parties seem
to be directed towards Internet service providers.

_2.4.2._ _Conflicts between the right of information and the right to privacy_

The right of information has become an important tool for the rightholders to pursue
infringers, and frequent use of this tool by the rightholders proves this. Also the possibility of
intermediaries to share the data with the rightholders would be an important element in this
context. In certain areas, it however appears, that the right of information by the right holders
is limited because of the national provisions on the protection of personal data. In some
Member States (e.g. Spain, Austria) it seems that the disclosure of the relevant information is
practically impossible in both criminal and civil proceedings. [24] This is in particular the case
for IPR infringements committed via the Internet such as illegal file-sharing of protected
works through peer-to-peer protocol where Internet services providers may often not be in a
position to disclose alleged infringers' identities and contact details to rightholders even in the
context of judicial proceedings because of the privacy laws and the protection of personal
data. The situation is even more complicated if the request for information is made before the
start of judicial proceedings.

The question that arises is how to strike the balance between the fundamental right to property
(which includes the protection of intellectual property [25] ) on the one hand and that to privacy [26]
on the other. The **need to balance the various rights** was emphasized by the European Court
of Justice [27] which stated that Community law requires a fair balance to be struck between the
various fundamental rights protected by the Community legal order and that the authorities
and courts of the Member States must not only interpret their national law in a manner
consistent with the directives but also make sure that they do not rely on an interpretation
which would be in conflict with those fundamental rights or with the other general principles
of Community law, such as the principle of proportionality .

In those Member States where privacy laws [28] currently prevail over the right to (intellectual)
property it can be difficult for the rightholders to make effective use of their right of
information. However, the European legal framework on the protection of personal
data/privacy on the one hand and enforcement of intellectual property rights on the other is

24 In Spain, data may only be disclosed for the purposes of prosecution or investigation of serious criminal
offences (infringement of intellectual property rights do not seem to fall within this category), and any
extension would be illegal unless it would be embedded in the law. In Austria, the reform of the
criminal procedure removed the possibility to bring a private criminal action ("Privatanklage") without
knowing the identity of the infringer. The only possibility for rightholders now seems to be to launch a
civil information claim under copyright law, which is not effective in case of temporary IP addresses.
Study on Online Copyright Enforcement and Data Protection in Selected Member States, Hunton &
Williams, November 2009 available at: http://ec.europa.eu/internal_market/iprenforcement/docs/studyonline-enforcement_en.pdf.
25 Article 17(2) of the Charter of Fundamental Rights of the European Union states that intellectual
property shall be protected.
26 Articles 7 and 8 of the Charter of Fundamental Rights of the European Union.
27 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.
28 In particular laws implementing 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.

# EN 12 EN

neutral, in that there is no rule that would imply 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 allowing 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 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
could be considered to remedy the situation and to strike an appropriate balance between the
rights at stake.

Another obstacle faced by the rightholders when requesting information appears to be linked
to the **retention of the relevant data by intermediaries** . Again, this problem seems to be
most relevant in cases of infringements committed via the Internet. Often the data which are
requested (for example from the Internet service providers or Internet platforms) have not
been stored, or by the time the request for information is delivered, the data have already been
erased. Currently, data retention is dealt with at EU level only in the Data Retention
Directive [29] and in the e-privacy Directive [30] .

Finally, the fact that certain types of information (e. g. clinical data) may be subject to
**different confidentiality regimes in different countries** causes additional problems for
rightholders. These differences lead to uncertainties as to whether information legally
obtained in one country may be used in another country where it falls under confidentiality
rules, and vice versa.

**2.5.** **Injunctive relief (Articles 9 and 11)**

_2.5.1._ _Interlocutory injunctions (Article 9)_

2.5.1.1. General issues

Article 9 of the Directive obliges Member States to ensure that rightholders are in a position
to apply for an **injunction against the infringer** aimed at prohibiting the continuation of the
infringement ('interlocutory', 'interim' or 'temporary' injunction). [31] It appears that injunctions
against infringers were not new to Member States' legal systems and seem to have been
widely used in the Member States even before the adoption of the Directive. Non-compliance
with an injunction is sanctioned by a fine to be paid to the plaintiff [32] or to the court [33] or by
criminal sanctions in some cases. The reports received from the Member States suggest that
for most of them experiences with interlocutory injunctions have been rather positive. With
some exceptions, interlocutory injunctions generally seem to be granted rather quickly by the
courts and they often lead to a settlement between the parties so that the proceedings on the

29 Directive 2006/24/EC on the retention of data generated or processed in connection with the provision
of publicly available electronic communications services or of public communications networks and
amending Directive 2002/58/EC, OJ L 105, 13.4.2006, p. 54.
30 Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the
processing of personal data and the protection of privacy in the electronic communications sector
(Directive on privacy and electronic communications), OJ L 201, 31.7.2002, p. 37.
31 This provision was partly inspired by Article 50 of the TRIPS agreement. However, an important
addition to TRIPS is that such injunctions shall also be available against intermediaries whose services
are used by a third party to infringe an intellectual property right.
32 E.g. the Netherlands.
33 Germany, Slovak Republic and the UK.

# EN 13 EN

merits of the case can be avoided. For most stakeholders, due to the length of the judicial
proceedings involving infringements of intellectual property rights and the costs of the
proceedings which are rarely reflected in the damages awarded in the main proceedings,
interlocutory injunctions are the main enforcement remedy.

Despite this general positive assessment of the interlocutory injunctions, the information at
hand suggests that the **level of evidence** required by the courts to grant an injunction differs
significantly between Member States and, in general, is rather high. Whereas in cases of an
infringement of a trade mark, design or copyright the **'obviousness' of the infringement** may
often be assumed, in cases of patent infringements this is rarely the case. Moreover, it appears
that some courts sometimes are reluctant to order an injunction unless an infringement has
actually been proven, as opposed to granting an injunction for preventative reasons. In these
cases, the 'sufficient degree of certainty' that is required by the courts is higher than what
applicants are able to establish in practise. [34] Furthermore, in some cases, the accompanying
costs appear to be rather significant, since such costs often comprise court fees, lawyers’ fees,
bailiff's fee and in many cases also fees of (technical) experts. [35]

2.5.1.2. Injunctions against intermediaries

The **notion of 'intermediary'** is understood broadly by the Directive and includes all persons
"whose services are used _by a third party_ to infringe an intellectual property right". This
implies that even intermediaries who do not have a direct contractual relationship or
connection with the infringer may be subject to these measures provided for in the Directive. [36]

Nevertheless, there are still uncertainties as to which kind of intermediaries, regardless of
their liability, may be subject to a specific measure when contributing to or facilitating an
infringement [37] .

Intermediaries who transport goods suspected of infringing intellectual property rights or
infringing intellectual property rights (such as carriers, freight forwarders, shipping agents or
postal services) may play an important role in controlling the spreading of counterfeit goods.

Internet service providers are also key players in the functioning of the online environment.
They provide, _inter alia,_ access to the Internet and interconnect the underlying networks and
host websites and servers. Internet service providers, being the intermediaries between all the
users of the Internet, on the one hand, and the rightholders, on the other, are often placed in a
compromising position due to the infringing acts of their customers. For this reason, EU law
already contains specific provisions concerning Internet service providers whose services are
used to infringe intellectual property rights. Nevertheless, the current EU legal framework
only harmonises certain limitations of liability in relation to Internet service providers where
certain conditions are satisfied, whilst not affecting the possibility of Member States' courts or

34 In Finland, it seems to be rather difficult for the rightholders to convince the courts of the need for an
interlocutory injunction, except in cases of clear online infringements.
35 Stakeholders indicate that such costs may vary between EUR 3,500 and 25,000, and in patent
infringement cases up to EUR 40,000.
36 Therefore not only intermediaries used (directly) by the infringer are covered by the Directive, but also
intermediaries used by a third party to infringe an intellectual property right.
37 "
E.g. in Sweden the notion of 'intermediaries' is limited to " _anyone who contributes to the infringement_ _._

# EN 14 EN

administrative authorities, in accordance with Member States’ legal systems, to take action in
individual cases [38] .

In the area of the sale of counterfeit goods over the Internet, feedback received from
stakeholders indicates that intermediaries (for example online market places such as online
shopping sites) have realized that the presence and the sale of counterfeit goods via their sites
undermines their efforts to be regarded as a safe place to buy and sell products and that their
reputation is tarnished. In many cases, these intermediaries therefore have adopted
comprehensive policies on the protection of intellectual property rights which are clearly
spelled out on their sites. These policies include sanctions for users which breach the rules, in
particular for the repeat infringers, comprehensive notice and take-down processes and other
tools that allow a timely elimination of illegal offers, the sharing of information with
rightholders and reimbursement schemes for consumers who unintentionally bought
counterfeit goods on their site.

All these measures have been applied without affecting the liability status of the
intermediaries and have significantly contributed towards the elimination of counterfeiting on
the Internet; however, problems remain.

**Injunctions against intermediaries** whose services are used by a third party to infringe
copyright or related rights were already enshrined in Article 8(3) of Directive 2001/29/EC on
the harmonisation of certain aspects of copyright and related rights in the information
society [39] (and subsequently in Article 11 (third sentence) of Directive 2004/48). However, it
became clear after the implementation of Directive 2001/29/EC that some Member States
interpreted this provision rather restrictively, as to only provide injunctive relief against
intermediaries in the context of pending court proceedings or after the decision on the merits
of the case, and not as a provisional measure.

To remedy this restrictive approach, Article 9 of the Directive applies to all intellectual
property rights **as a provisional measure**, i.e. irrespective as to whether the formal court
proceedings on the same case are pending or not but where, nevertheless, an alleged infringer
is concerned. The article therefore introduced a new element which needed to be reflected

through changes in national laws in almost all Member States. It results from Member States'
reports that **injunctions against intermediaries** **are used relatively often** as the infringers
are often unknown. It has been reported by the Member States and legal practitioners that
injunctions against intermediaries often encourage the infringing party to engage in settlement
discussions. Several Member States stressed the importance of interlocutory injunctions in
cases related to the Internet. It was pointed out that one effect of the Directive was that new
measures clarified that intermediaries (e.g. Internet service providers) also have certain
responsibilities (and obligations) and that they cannot rely on "absolute immunity" when
intellectual property rights are infringed. Injunctions have also been successfully used towards
intermediaries in order to block access to the sites which facilitate works protected by
copyright or related right without the consent of the rightholder. [40]

38 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.
39 OJ L 167, 22.6.2001, p. 10.
40 In Denmark, injunction against Tele 2 A/S was granted by the court to block access to a Russian
website. In another case in Denmark, DMT 2 A/S (now Sonofon A/S) was required by the court to
prevent access to a popular website.

# EN 15 EN

However, some Member States [41] report that injunctions against intermediaries have been
more difficult to apply due to difficulties to execute court orders against intermediaries who
have not been parties to the proceedings.

Furthermore, it appears that in some Member States it is not possible to issue injunctions
unless the liability of an intermediary is established. However, neither Article 11 (third
sentence) of the Directive, nor Article 8(3) of Directive 2001/29 link **injunctions with the**
**liability of an intermediary** . Therefore, although Directive 2000/31/EC on certain legal
aspects of information society services, in particular electronic commerce, in the Internal
Market [42] (hereinafter referred to as "the e-commerce Directive") provides certain exemptions
in relation to the liability of intermediaries who provide information society services where
certain conditions are satisfied, such exemptions do not prevent the possibility of granting an
injunction against intermediaries covered by the scope of Articles 12 to 14 of the Directive.
Injunctions against intermediaries are not intended as a penalty against them, but are simply
based on the fact that such intermediaries (e.g. Internet service providers) are in certain cases
in the best position to stop or to prevent an infringement. This interpretation is confirmed by
Articles 12(3), 13(2) and 14(3) and by Recital 45 of the e-commerce Directive [43] and Recital
59 of Directive 2001/29/EC on the harmonization of certain aspects of copyright and related
rights in the information society [44] .

As far as third parties are concerned, these are only addressed indirectly in Article 8(3) of
Directive 2001/29 and Article 11 (third sentence) of Directive 2004/48 where Member States
are required to ensure that rightholders are in a position to apply for an injunction against
intermediaries whose services are used by a third party to infringe a copyright tor related
right. The aim of the respective provisions of each those Directive is that injunctive relief can
be granted against the intermediary irrespective whether there has been a determination of
liability of the intermediary or the third party. Other than these provisions, third party liability
has been left to the legal system of each Member State.

_2.5.2._ _Permanent injunctions (Article 11)_

Article 11 of the Directive requires that where a judicial decision confirming an infringement
of an intellectual property right is taken, judicial authorities may issue an injunction
('permanent' injunction) **against the infringer** aimed at prohibiting the continuation of the
infringement. In the same way as temporary injunctions, permanent injunctions can also be
issued **against intermediaries** and they may be issued against them **irrespective of the**

41 E.g. Czech Republic, Estonia.
42 OJ L 178, 17.7.2000, p. 1.
43 Recital 45 of Directive 2000/31/EC reads: "(45) The limitations of the liability of intermediary service
providers established in this Directive do not affect the possibility of injunctions of different kinds; such
injunctions can in particular consist of orders by courts or administrative authorities requiring the
termination or prevention of any infringement, including the removal of illegal information or the
disabling of access to it.".
44 Recital 59 of Directive 2001/29/EC reads: "(59) In the digital environment, in particular, the services of
intermediaries may increasingly be used by third parties for infringing activities. In many cases such
intermediaries are best placed to bring such infringing activities to an end. Therefore, without prejudice
to any other sanctions and remedies available, rightholders should have the possibility of applying for
an injunction against an intermediary who carries a third party's infringement of a protected work or
other subject-matter in a network. This possibility should be available even where the acts carried out
by the intermediary are exempted under Article 5. The conditions and modalities relating to such
injunctions should be left to the national law of the Member States.".

# EN 16 EN

**intermediaries' (potential) liability** . Since injunctions against the infringers are reported as
having been used by the Member States already prior to the adoption of the Directive, the
Directive seems to have had a limited impact in this respect. Again, **injunctions against**
**intermediaries** were a new element which had to be introduced into the national laws in

almost all Member States.

_2.5.3._ _Scope of the injunctions_

The scope of the injunctions seems to be generally determined by the scope of the rights
and/or the attacked infringement. The dictum of an injunction in the Member States differs in
its degree of detail. Recently, certain problems in relation to the scope of the injunctions (both
interlocutory and permanent) have arisen with a view to infringements committed through the
Internet. In the **music and film sectors**, injunctions often tend to be **'title specific'** .
Rightholders therefore have to provide a full list of titles when asking for an injunction and
the injunction will normally relate only to the indicated titles, while infringements with a view
to titles not contained in the list can continue. Similar problems seem to exist with a view to
the sale of counterfeit goods via online market places.

Diverging opinions on this issue have resulted in two requests for preliminary rulings being
submitted to the Court of Justice of the European Union.

In case **C-324/09 (L'Oréal v eBay)** which concerns the sale of counterfeit goods via an
intermediary who is an online marketplace, the referring UK High Court of Justice asked
whether the injunction as described in Article 11 of the Directive should have been interpreted
as requiring Member States to ensure that the trade mark proprietor could obtain an injunction
against an intermediary to prevent _further infringements_ of the said trade mark, as opposed to the
continuation of _that specific act of infringement_, and if so, what the scope of the injunction would
be.

In another case **C-70/10 (Scarlet v SABAM)** the referring Cour d'appel de Bruxelles asked
the Court of Justice of the European Union whether the national courts may also issue an
injunction against intermediaries whose services are used by a third party to infringe a
copyright or related right, to order an Internet service provider to introduce, for all its
customers, in abstracto and as a preventive measure, exclusively at the cost of that Internet
service provider and for an unlimited period, a system for filtering all electronic
communications, both incoming and outgoing, passing via its services, in particular those
involving the use of peer-to-peer software, in order to identify on its network the sharing of
electronic files containing a musical, cinematographic or audio-visual work in respect of
which the applicant claims to hold rights, and subsequently to block the transfer of such files,
either at the point at which they are requested or at which they are sent. It also asked whether
the principle of proportionality should be applied when deciding on the effectiveness and
dissuasive effect of the measures sought.

Both procedures are currently pending before the Court of Justice of the European Union.

_2.5.4._ _Cross-border injunctions_

Cross-border injunctions pose different problems, depending on the nature of the intellectual
property right that is being infringed.

# EN 17 EN

In cases of infringements of **the Community trade mark** [45], or of a Community **design** [46],
granting of such cross-border injunctions by the European Union trade mark courts (or
European Union design courts) is foreseen by the law as these rights are unitary EU titles.
Stakeholders, however, report that, in practice, cross-border injunctions are generally not
granted by the courts of the Member States even in the case of these rights.

The situation is even more complex for infringements of **patent** rights, in the absence of a
uniform title, i.e. an EU patent. In the late 1990s, some courts began to issue injunctions in
cases of patents infringements which reached beyond the territorial boundaries of the
respective jurisdiction. This “legal innovation” started in the Netherlands and was
subsequently picked up by courts in various other countries. This judicial practice soon
became rather controversial, with some national courts following the Dutch example (e.g. in
Germany) while other courts (e.g. in the UK) refused to assume jurisdiction over foreign
patents. From the perspective of patent-holders, cross-border injunctions were highly
attractive since they lowered the cost of litigation and opened new avenues in terms of
litigation strategy. Subsequently, the European Court of Justice issued rulings in two cases,
which resulted in limiting to an important extend the practice of cross-border injunctions for
patent infringements. [47] The decision of the court in _Roche v. Primus and Goldberg_ effectively
strongly limited the possibility to bring proceedings against several patent infringers even if
patents belong to the same group of companies acting in a coordinated manner in accordance
with a common policy elaborated by one of them. However, a court having jurisdiction on the
basis of the defendant's domicile (Article 2 of the Regulation 44/2001) may still have the
power to issue injunctions with extra-territorial effect.

As regards granting cross-border injunctions in cases of **copyright** infringements, there does
not seem to be an established jurisprudence. It could therefore seem useful to examine under
which conditions such injunctions can be granted. A distinction between the rules of
attributing jurisdiction could be made. While the jurisdiction of a court, when based on the
place where the infringement causes harm, is limited to measures concerning its own territory,
no such limitation exists when jurisdiction is based on the domicile of the defendant. In this
later case, cross-border injunctions are not excluded.

45 Article 103(2) of Council Regulation (EC) No 207/2009 on the Community trade mark reads: "A
Community trade mark court whose jurisdiction is based on Article 97(1), (2), (3) or (4) shall have
jurisdiction to grant provisional and protective measures which, subject to any necessary procedure for
recognition and enforcement pursuant to Title III of Regulation (EC) No 44/2001, are applicable in the
territory of any Member State. No other court shall have such jurisdiction.".
The territorial scope of the measures ordered by a Community trade mark court, which finds that an
infringement has been committed, is currently the subject of a request for preliminary ruling in the case
C-235/09 before the Court of Justice of the European Union.
46 Article 90(3) of the of Council Regulation (EC) No 2002/6 on the Community design reads: “A
Community design court whose jurisdiction is based on Article 82(1), (2), (3) or (4) shall have
jurisdiction to grant provisional measures, including protective measures, which, subject to any
necessary procedure for recognition and enforcement pursuant to Title III of the Convention on
Jurisdiction and Enforcement, are applicable in the territory of any Member State. No other court shall
have such jurisdiction.”.
47 Judgment of 13 July 2006 in the case C-4/03 Gesellschaft für Antriebstechnik mbH & Co. KG v
Lamellen und Kupplungsbau Beteiligungs KG (GAT v LUK); and judgment of 13 July 2006 in the case
C-539/03 Roche Nederland BV and others v Frederick Primus, Milton Goldenberg (Roche v. Primus
and Goldberg).

# EN 18 EN

**2.6.** **Corrective and Alternative Measures (Articles 10 and 12)**

Article 10 of the Directive requires that the competent judicial authorities may order recall
from the channels of commerce of goods which have been found to be infringing an
intellectual property right, and in appropriate cases also materials and implements principally
used in the creation or manufacture of these goods. Furthermore, their definitive removal from
the channels of commerce or their destruction may be ordered. Such measures shall be carried
out at the expense of the infringer.

_2.6.1._ _Meaning and purpose of "recall and definitive removal of infringing goods from the_
_channels of commerce"_

As far as **recall and definitive removal** of infringing goods from the channels of commerce
are concerned, these measures appear to have been new to most Member States' legislation on
intellectual property. Only few Member States seem to have been familiar with this kind of
measures from the legislation on consumer protection. However, rightholders seem to request
these measures not very often. This may be due, to a large extent, to the limited enforceability
of the measures, particularly when an infringer is no longer the owner of the goods which are
to be recalled or definitely removed and therefore has no means to dispose of the goods (for
example when the infringing goods have already reached consumers or, in certain cases,
retailers). It has also been reported that the courts are rather hesitant to order recall or
definitive removal of the infringing goods, in particular in cases where the goods reached the
final consumers.

Furthermore, Member States have been using these measures in different ways. This may be
partly due to the fact that the Directive does not define these two measures and does not
define the difference between them. Most Member States seem to use 'recall' as a temporary
measure, which maybe reversed following a final decision. Thus, recall seems to be used by
the majority of the Member States when the goods are no longer in the possession of the
defendant. The defendant then is usually ordered by the court to claim the goods back from its
customers (wholesalers, distributors, retailers etc.). 'Definitive removal' indicates the finality
of the ordered measure for most Member States, and in some Member States (e.g. France) an
order for definitive removal is often used as a precondition for destruction. In some countries,
recall and definitive removal are used without any distinction (e.g. Greece, Spain, and
Romania). In Sweden a _non-exhaustive_ list of measures, including those mentioned in the
Directive has been introduced with explicit references to other measures, such as _alteration_ or
the _taking into custody for the remainder of the term of protection_ . Finally, there seem to be
different views as to whether these measures may be ordered by the courts only as a result of
the proceedings on the merits of the case or also as a provisional measure. In some Member
States (e.g. in Poland, Denmark), recall may be issued as a preliminary measure, before the
proceedings on the merits are commenced. In Germany it has been reported by the
stakeholders that according to the prevailing case-law, claims for recall or definitive removal
may only be raised in proceedings on the merits and not in preliminary proceedings. [48]

The short time that has passed since the transposition of the Directive, in many Member
States has not allowed to acquire sufficient experience, on the side of the courts, with the

48 Although there are some other opinions saying that recall may be included into injunction claim, in case
the infringers still control the infringing goods.

# EN 19 EN

corrective measures, and especially the recall and definitive removal from the channels of
commerce. This makes it difficult, at this stage, to determine their overall effectiveness.

_2.6.2._ _Destruction of the goods as a preferred corrective measure_

Generally, the **destruction** of infringing goods seems to be the preferred (and most commonly
used) corrective measure. A court decision confirming an infringement normally is the
necessary precondition [49] . The destruction is provided for as a civil sanction, therefore the
injured party must specifically request destruction (whereas in criminal and administrative
proceedings it may be ordered by the competent court/administrative board _ex officio_ ).
However, when the destruction of infringing goods is ordered in civil law proceedings, the
question arises who should bear the costs of the destruction and the related costs of storage.

According to Article 10(2) of the Directive, these costs have to be born by the infringer
(defendant). However, practice shows that these costs often have to be borne by the
rightholders who then are given the right to claim reimbursement from the infringers
(defendants). Moreover, when rightholders subsequently claim these costs from the infringer,
the latter often turns out to be insolvent (in liquidation), which means that these costs cannot
be recovered. In transhipment cases (e.g. external transit, customs warehousing etc.) the
defendant is usually unknown. Good faith intermediaries/service providers are normally not
ordered to pay the costs of the destruction (and related costs of storage), but there seem to be
very few precedents in this respect. In Germany, it has been observed that intermediaries or
service providers become subject to legal claims for destruction only, where they are either
'interferer' ('Störer') or direct contributors to the infringement. It could seem reasonable to
provide that when there is a decision on the merits of the case, the costs of destruction of
infringing goods should be imposed by the court directly on the unsuccessful party.

_2.6.3._ _Secondary use of the goods infringing intellectual property rights_

The so-called **secondary use of goods infringing intellectual property rights** consists e.g.
in the removal of the infringing sign, logo or trade mark from the goods, in its recycling or its
donation to charity.

This issue is not harmonized by the Directive. Consequently, practices in Member States seem
to differ considerably. In some Member States it seems that goods are destroyed only if their
secondary use is not possible (e.g. Italy). In other Member States secondary use appears to be
permitted only in exceptional cases, and there are Member States where secondary use of
goods infringing intellectual property rights does not seem to be permitted at all (e.g. France,
Greece, Slovenia). Additional information is needed in order to judge what role the secondary
use of goods infringing intellectual property rights should play in the context of enforcement
of intellectual property rights and whether further harmonization in this respect would be
useful.

_2.6.4._ _Alternative measures_

From information received it appears that less than half of the Member States have
implemented Article 12 of the Directive which provides for an option for Member States to
introduce **alternative measures** in the form of a pecuniary compensation to the injured party

49 An exception applies in particular for geographical indications where the perishable nature of certain
products requires the possibility to order their rapid destruction.

# EN 20 EN

if the person that infringed the intellectual property right acted unintentionally and without
negligence, if execution of other measures would cause disproportionate harm and if
pecuniary compensation appears reasonably satisfactory. [50] Furthermore, in some of these
Member States [51] the conditions for an 'unintentional infringement without negligence' are
interpreted very narrowly given that the standards to act with due care are set at a relatively
high level.

**2.7.** **Damages and legal costs (Articles 13 and 14)**

Article 13(1) of the Directive requires Member States to enable the competent judicial
authorities to order the infringer who knowingly, or with reasonable grounds to know,
engaged in an infringing activity, to pay the right holder damages appropriate to the actual
prejudice suffered by him as a result of the infringement. Where the infringer acted in good
faith (i.e. without reasonable ground to know), Member States have the possibility to allow
the judicial authorities to order the recovery of profits or the payment of damages, which may
be pre-established (Article 13(2)). Article 14 requires that the reasonable and proportionate
legal costs and other expenses incurred by the successful party shall be borne by the
unsuccessful party, unless equity does not allow it.

Since the pecuniary value of intellectual property may be rather difficult to measure, also due
to its 'abstract' nature, practice has shown that assessing damages for infringements of
intellectual property rights is often complicated. Damages from sales of counterfeit goods
over the Internet are even more difficult to assess, and it often happens that after having been
discovered, infringers quickly re-appear under a different name. This situation has not
changed significantly through the entry into force of the Directive. In most cases only slight
adjustments of national laws governing the calculation and award of damages were needed to
make Member States comply with the Directive. However, due to the relatively low number
and the considerable length of the judicial proceedings, there is **not yet an established case**
**law** on the evaluation and assessment of damages since the transposition of the Directive in
the Member States. At the same time it seems that existing judgements have not been overly
explicit and detailed on how awarded damages have been calculated.

However, most rightholders report to prefer quick provisional measures (e.g. injunctions) and
not damages claims as the main enforcement remedy. The reasons for this are the high costs
of the proceedings which are rarely reflected in the damages awarded and the length of
judicial proceedings involving infringements of intellectual property rights. Therefore
damages awards in intellectual property cases are not requested by rightholders as a matter of

course.

_2.7.1._ _Calculation of damages_

The Directives provides for two possibilities for the judicial authorities to determine the
amount of the damages:

(1) They can base the amount on the **actual prejudice** (e.g. the rightholder's lost profits,
the infringer's unfair profits, moral prejudice and other negative economic
consequences);

50 This article was implemented e.g. by Denmark, Estonia, Germany, Lithuania, Malta, Poland, Romania
and Sweden.
51 E. g. Germany.

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(2) Or they can award **lump sum** **damages** based on at least the _(single)_ amount of
royalties which would have been due if the infringer has requested authorisation to use
the intellectual property right(s) in question (e.g. if an infringer had concluded a
licensing agreement with a right holder).

_2.7.2._ _Wilful and negligent infringements and infringements committed in good faith_

It appears that all Member States provide for damages in cases of **wilful** or **negligent**
infringements of intellectual property rights (Article 13(1)). However, some Member States
also award damages for infringements committed in **'good faith'** (Article 13(2)), and
therefore the mere existence of an infringement is a sufficient justification for the rightholder
to claim damages. Certain specificities seem to exist for copyright infringements and for
infringements of rights related to copyright where often good faith is irrelevant for claiming
damages. This is different from patent infringements, where in some Member States damages
may be claimed only for infringements committed intentionally.

Most Member States seem to award damages regardless of whether the infringement is
committed on a **commercial scale,** and there is generally no overall limitation on damages.

_2.7.3._ _Damages appropriate to the actual prejudice suffered by the rightholder_

2.7.3.1. Rightholders' lost profits

When awarding damages, it appears that all Member States take the **rightholders' lost profits**
into account. Lost profits are usually defined as profits which would have been earned by the
rightholder, in the absence of the infringement, or which could have been justifiably expected
(excluding the infringer's profits). Nevertheless, in some Member States it seems unclear,
whether the price of the original product or the price of a counterfeit/pirated product (which
may be substantially lower in some cases) should be taken into account when assessing the
rightholder's lost profits. Moreover, lost profits can be difficult to prove, in particular where
infringing activities undermine the value of legal sales. Extensive infringing activities often
make the branded goods lose their 'exclusivity' which leads to a decline in consumer demand,
damage to goodwill etc..

2.7.3.2. Infringers' profits

The **profits unlawfully made by the infringer ('unjustified enrichment')** constituted a new
aspect for assessing damages in some Member States and it has been implemented into the
national legislation in very different ways.

Many Member States require a rightholder to prove that profits were made with or as a result
of the infringing products (causal link). Infringers may sometimes make higher profits with
the infringing products than the rightholders with their branded goods. Rightholders appear to
find it very difficult to prove that they would have earned the same profits as the infringers,
particularly where the infringers offer their products under conditions that significantly differ
from those of the legal channels (e.g. lower prices, lower manufacturing costs, absence of
related services etc.). Furthermore, in some Member States [52] it appears that infringers' profits
can only be taken into consideration once, either as a recovery of unfair profits or as damages

52 E.g. Slovak Republic.

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(or part of damages), but not in a cumulative way. In other Member States [53] the transfer of
infringers' profits are awarded as an alternative, when the profits are higher than the
rightholder's calculated damages (e.g. the rightholders' lost profits). Finally, in some Member
States [54], in addition to damages, also the transfer of the infringer's profits may be ordered.

2.7.3.3. Moral damages and damages for negative economic consequences

With respect to **moral damages** (as part of immaterial damages) and damages for **negative**
**economic consequences** (as part of material damages; for example price erosion, tarnishment
of a trademark etc.), rightholders report that they are not requesting them as a matter of
course, and that where such requests have been made they have only occasionally been
successful. They also report that moral damages tend to be rather low. [55]

Therefore, despite the fact that rightholders have the right to claim damages in these cases it
seems that damages for negative economic consequences and moral damages are rarely used
in practice. It appears that one of the main reasons for this is that proving such damages may
be very difficult. However, Member States' laws are too recent and too few precedents exist
as this stage to properly assess the implications of this provision of the Directive in practice.

_2.7.4._ _Lump sum damages_

Member States generally provide for lump sum damages calculated on the basis of the amount
of royalties that would have been due if the infringer had sought an authorisation (licence)
from the rightholder. Where a licence royalty is already fixed and used in the relevant sector,
this amount will be used; if there is not an agreed royalty rate or where it is difficult to
determine precise rates, often an estimated average royalty related to the specific type of
business involved is used.

From information received it seems that there are doubts whether the criteria for the

calculation of damages (damages appropriate to the actual prejudice suffered by the
rightholder and lump sum damages) are **alternative**, and therefore leave a real choice to the
judicial authorities, or whether the lump sum damages only come into play if the damage
cannot be assessed according to the actual prejudice suffered. It appears that Member States'
practice in this respect varies. In some Member States (e.g. Hungary, Latvia, Slovak
Republic) it appears that lump sum damages are available _only if_ damages cannot be
calculated otherwise, for example in cases when the actual prejudice cannot be calculated
precisely. In those cases, the amount of the damage is assessed on the basis of the principle of
equity. In other Member States (e.g. the Netherlands, Poland), it seems that courts or parties
can freely choose according to which criterion they assess the damage.

The wording of the Directive suggests the judicial authorities should be allowed to assess the
damage according to the actual prejudice or to award them as a lump sum, as they consider
more appropriate. It could also be desirable for the rightholders to be able to opt for one or the
other method of calculation, depending on which is for them the most favourable.

53 E.g. Germany and Italy.
54 E.g. Benelux countries in cases of bad faith.
55 In Hungary, there seems to be an "upper" limit of HUF 1 million (approx. EUR 3,500) for moral
damages awards.

# EN 23 EN

_2.7.5._ _More far-reaching national rules_

It should be noted that, in respect of specific infringements (mostly infringements of
copyright and rights related to copyright), a significant number of Member States [56] appear to
have gone beyond the minimum rules set out by the Directive by introducing lump sum
damages set as multiple (mostly double) amounts of royalties (licensing fees) due.
Furthermore, at least one Member State reports to provide for **punitive damages** . [57]

_2.7.6._ _Legal costs and other expenses_

Most Member States did not need to implement this provision specifically as their previous
civil procedural laws already covered the Directive's requirements. In principle, the successful
party can recover costs of proceedings necessary for the effective protection or enforcement
of intellectual property rights. However, the amount to be reimbursed can be reduced or
eliminated in cases where the wins are only partial. Moreover, if the costs incurred are
disproportionate or unnecessary, the courts can order a partial recovery of the costs.

The costs of litigation concerning intellectual property rights are often very high. This is
partly due to the fact that in order to gather proper and reliable evidence, technical expert(s)
(e.g. such as patent agents in patent cases or Internet investigator(s)) must be engaged by the
rightholders. Moreover, the rightholders must sometimes do 'test purchases' in order to
confirm an infringement of their rights or to gather evidence. Translations are often required,
too. Furthermore, given the (often) cross-border nature of the infringing activities, experts
from several jurisdictions may be required to assist. These costs are not always fully taken
into consideration by the courts. In some jurisdictions, only the fees of the experts appointed
by the court are reimbursed.

It appears that rightholders rarely are reimbursed all legal costs and other expenses they
encounter to protect their rights in the proceedings concerning infringements of intellectual
property rights. Stakeholders' consultation revealed the following, very different, experiences
with the reimbursement of the legal costs in a successful litigation: 10-50% in Denmark, 'only
a small percentage' in Greece, 30% in Italy, 10-30% in Luxembourg, 50% in Cyprus, 66%100% in Romania, 'very low' in Spain, about 75% in Sweden, 50-70% in Austria, 80% in
Ireland. The possibility of a 100% reimbursement was reported for Lithuania, Hungary,
Slovakia and Austria for simple cases. Many stakeholders were not able to state the
percentage because of inconsistent experience and disparate case-law (e.g. Latvia). One
respondent (Slovakia) stated that lawyers' fees are substantially limited when the claims
cannot be assessed in monetary terms (e.g. where the rightholder requests termination of the
infringing activities).

To summarise, it seems that the reimbursement of legal costs and other expenses in a
successful litigation usually remains far below the actual legal costs incurred.

**2.8.** **Codes of Conduct**

Article 17 of the Directive obliges the Member States to encourage the development, by trade
or professional organisations, of codes of conduct at Union level that are aimed at
contributing towards the enforcement of intellectual property rights.

56 E.g. Austria, Belgium, Czech Republic, Germany, Greece, Lithuania, Poland, Romania and Slovenia.
57 Slovenia.

# EN 24 EN

In several Member States associations have made use of such a collaborative approach and
have put in place national codes of conducts (voluntary arrangements) to combat
counterfeiting and piracy. [58] In some cases, such voluntary agreements became the basis for
legislation. [59] However, in other Member States such arrangements would seem not to be
possible, mainly due to the restrictions imposed by privacy laws and protection of personal
data, which prevent intermediaries (e.g. Internet service providers) to forward warning notices
to the alleged infringers or to share information about the alleged infringer's identity outside
the scope of judicial proceedings.

**3.** **A** **BSENCE OF HARMONIZED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS**

**THROUGH CRIMINAL LAW**

Counterfeiting and piracy appears to be increasingly linked to organised crime [60] raising
security and safety concerns and is also proven to be spreading over the Internet. Therefore
measures taken against cybercrime at EU level should be seen as relevant and complementary
to the legislative and non legislative measures taken and to be taken in the civil and criminal

area.

Despite the fact that almost all Member States provide for criminal measures to protect
intellectual property rights, the disparities between the national definitions of the kind and
level of penalties for the various infringements of intellectual property rights may make it
difficult to combat these infringements effectively.

The Commission is currently analysing to what extent protection of intellectual property
rights through criminal law via a harmonized directive on criminal measures is necessary to
supplement the enforcement of intellectual property rights through civil law. Absence of
harmonisation in the area of criminal measures to protect intellectual property rights could be
a serious obstacle and hinder cross-border cooperation between the law enforcement agencies.

Following this assessment, the Commission intends to present a new legislative proposal
which would replace the 2006 proposal for a Directive on criminal sanctions [61] .

58 In Estonia, it has been reported that a Memorandum of Understanding was signed between Estonian
Organisation of Copyright Protection and several internet service providers to enable the removal of
material that infringes intellectual property rights. In Denmark, internet service providers together with
the Danish IT Industry Association (ITB) and the Telecommunication Industries in Denmark (TI) have
agreed to collaborate on combating piracy on the internet and a Code of Conduct for internet service
providers concerning the enforcement of intellectual property rights has also been agreed. Similarly in
France, the " _Charte de lutte la contrefaçon sur Internet"_ was signed between the French online market
places and rightholders to advance the fight against the sale of counterfeit goods over the internet.
59 For example "Élysée agreement for the development and protection of creative works and cultural
programmes on the new networks" was a basis of the legislation which was adopted subsequently in
France.

60
See e.g. Europol, 'OCTA 2009          - EU Organised Crime Threat Assessment',
http://www.europol.europa.eu/publications/European_Organised_Crime_Threat_Assessment_(OCTA)/
OCTA2009.pdf.
61 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 (COM(2006) 168 final).

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**4.** **C** **ONCLUSION**

On the basis of the information available at this stage it can be concluded that the Directive
has provided a solid basis for the enforcement of intellectual property rights in the internal
market and led to considerable improvements of the legal frameworks in place in the Member
States.

However, the analysis shows that some of the provisions of the Directive have led to
diverging interpretations by the Member States and by the courts, and some of these
provisions have not fully reached the objectives pursued by the Directive. At the same time,
infringements of intellectual property rights have reached a significant level. The provisions
concerned could therefore be clarified. Clarification could also be necessary in order to
reinforce the dissuasive effect of the Directive and therefore its effectiveness.

# EN 26 EN

**Annex 1: The transposition of the Directive by the Member States**
**and Member States' application reports**

**1.** **Transposition process**

Few Member States transposed the Enforcement Directive on time, i.e. by 26 April 2006: only
5 Member States (Denmark, Hungary, Italy, Slovenia and the UK) complied with the
deadline.

Most of the Member States were late with the implementation. 20 infringements for noncommunications were recorded, namely against Austria, Belgium, Cyprus, Czech Republic,
Estonia, Finland, France, Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta,
the Netherlands, Poland, Portugal, Slovak Republic, Spain and Sweden. Out of these, 15 cases
were closed before reaching the stage of referral to the Court of Justice of the European
Union. A referral was made for Germany, Luxembourg, Sweden, France and Portugal.

Subsequently, the case was withdrawn for France and Portugal. The last Member States to
implement the Directive were Germany (July 2008), Sweden (April 2009) and Luxembourg
(June 2009), after a decision confirming an infringement had been taken by the Court of
Justice. Despite of having notified complete transposition, in the course of the works to draw
up this report it turned out that Greece seems not to have implemented the Directive it its
entirety yet, but only in respect of copyright and related rights.

**2.** **Implementation Reports**

Article 18(1) of the Directive obliges Member States to submit, three years after the expiry of
the deadline for the transposition, a report to the Commission on the implementation of the
Directive.

However, even by autumn 2010, not all national reports have been received by the
Commission. Thus, Bulgaria and Spain did not provide any report. Greece provided an
incomplete report covering only copyright and rights related to copyright. Some reports have
been received by the Commission with a significant delay (e.g. the reports by Belgium and
Sweden which were received in May 2010, Luxemburg and Portugal only sent their report in
October 2010).

Furthermore, the completeness and the quality of these national reports appear to differ
considerably. The late transposition of the Directive was, for some of reports, the main reason
for this difference in quality. The most complete reports are reflecting in depth the national
situation and contain statistical data including jurisprudence. Some Member States have also
provided the Commission with information on stakeholders' perceptions. Such reports have
been received by the Commission for example from Denmark, Estonia, Germany, Hungary,
Ireland, Latvia, Lithuania, Poland and Slovenia.

From the other, less detailed reports, it was not possible to make a clear assessment of the
implications the Directive has had on innovation and the development of the information
society. Cyprus, France, Luxembourg, Malta, the Slovak Republic and the UK have provided
reports with particularly limited information.

# EN 27 EN

As a result, the Commission has not been able to engage in a critical economic analysis of the
effects that this Directive may have had on innovation and the development of the information
society.

# EN 28 EN

**Annex 2: Methodology for the Analysis**

**1.** **Information gathering from the Member States**

The Commission's services have carefully examined the national implementation reports
provided by the Member States and have integrated information contained in these reports
into the text of the Staff Working Paper. Apart from the information contained in these
reports, the Commission did not receive a substantial amount of additional information from
the Member States' authorities, neither during the implementation period, nor after the
transposition of the Directive into the national law. As a result, and because of the reasons
mentioned above, the information received had to be complemented from other sources, in
particular through consultation with rightholders, and in particular through the consultation of
legal experts from the private sector who meet regularly in the legal subgroup that has been
formed in the context of the European Observatory on Counterfeiting and Piracy.

**2.** **Information gathering from the stakeholders**

The legal subgroup formed in the context of the European Observatory on Counterfeiting and
Piracy made an attempt to screen the implementation and the application of the Directive in
all 27 Member States. It concentrated on the national legislation as well as the national court
practices. The work was divided into several sections: damages and legal costs, corrective
measures, evidence and right of information and injunctions, where four detailed
questionnaires have been produced by the subgroup together with the Commission services.
These questionnaires were subsequently forwarded to rightholders and legal practitioners in
all Member States. Detailed responses are available at the website of the European
Commission. [62] The summaries of the responses also contain some conclusions and practical
recommendations for improvement.

A substantial amount of information was gathered through bilateral contacts and consultation
papers issued by the business associations. Commission services have also held a number of
meetings with private sector stakeholders and with individual companies (in particular
rightholders and intermediaries) on the operation of the Directive.

62 http://ec.europa.eu/internal_market/iprenforcement/observatory/index_en.htm

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