Proposal for an Enforcement Directive
Follow up comments to the DTI
5 February 2004
We are deeply concerned that the UK Government intends to take a position in the European Council discussions on the proposal for an Enforcement Directive that would seriously dilute the purpose of the intended legislation, thus paving the way for infringers to continue their illegal practices. We are members of the Alliance Against Counterfeiting and Piracy (AACP) a unique coalition of British trade associations and industry enforcement organisations affected by piracy (film, music, software, games, goods and brands) with a combined turnover of over £250 billion, and we support the points they recently put forward. We believe the UK Government falls well short in their ambition to promote the UK creative industries, specifically in relation to:
We have already covered many points of practical and legal relevance in our submission of 12th January 2004, and were originally hoping to be able to participate in further discussions in the DTI Focus Group; we are disappointed that the group failed to convene at a crucial stage. The interests of directly concerned Intellectual Property right holders have thus been disadvantaged. Most of them are small businesses and key contributors to the Government's vision of a creative entrepreneurial economy. As the Prime Minister acknowledged in the recent DTI Innovation Report (December 2003):
"The creativity and inventiveness of our people is our country's greatest asset and has always underpinned the UK's economic success."
The views of right holders are essential to UK creativity, and we urge the UK Government to consult on the details of the proposal as a matter of priority.
I. Criminal Sanctions
We understand the uncertainties of member states about the competence of the European Union to provide criminal sanctions under an Internal Market instrument. However, an express exclusion of criminal sanctions by changing and deleting Article 20 and other consequential changes to the wording will significantly undermine the strength and purpose of the Directive. Government acknowledged the significance of criminal sanctions for the anti-piracy activities of right holders at the DTI Hearing on 3rd November 2003. However the express exclusion of criminal sanctions with mere reference to procedural uncertainties is wholly inappropriate. Moreover, by expressly deleting criminal sanctions, the Enforcement Proposal provides a lesser standard than that already available under Article 61 of the TRIPS Agreement. This sends out the message that UK Government is hesitant to clamp down on the activities of pirates. At the very least, the wording as proposed by the Legal Affairs Committee adopted in November 2003 should be used.
Current discussions on the draft framework decision on criminal law penalties applicable to acts of counterfeiting and piracy at European level will not reconcile any shortcomings of the Enforcement Proposal in view of (1) the uncertainty of the date of its adoption and (2) its limited scope.
II. Removal of intermediaries
We are perplexed why at this late stage intermediaries were put outside the scope of the Enforcement Proposal. The liability of intermediaries has been extensively dealt with in the area of copyright under Article 5 (1) of the Copyright Directive and more generally in Articles 12 to 14 of the e-Commerce Directive. Importantly, any changes to Articles 10 and 15 of the Enforcement Proposal will endanger the balanced compromise of the Copyright Directive between the interests of intermediaries and right holders, i.e. the exemption for intermediaries in Article 5 (1) and the possibility for right holders to apply for an injunction in Article 8 (3).
III. Changes to damages, Article 17
We are very concerned about some of the suggested changes to the system of damages:
- Introduction of a "knowledge test" in the area of civil damages, and
- Confusing wording on the scope of damages
We understand that the Council suggested introducing a mens rea test in Article 17 (1) as a precondition for the right holder to obtain damages. This is a new concept for UK law where damages for primary infringement are not depending on a state of mind, and are wholly inappropriate here.
If damages were limited to a set amount of the normal licence fee or the loss suffered by the right holder, this will enable a potential infringer to calculate damages as part of a business model. Again, this constitutes a considerable disincentive to follow honest business practices, and will take away from the right holders the ultimate decision as to whether to licence or not, effectively establishing a de facto statutory licence for pirates. In this complicated area we encourage Government to consult with stakeholders who have the relevant practical experience.
IV. Additional points of concern:
- We are concerned should the introduction of a commercial purpose test be considered in some provisions such as the search orders or the right of information (Articles 8 and 9) as quid pro quo for the deletion of the commercial purpose test in Article 2. This would establish a circular problem since right holders need the search order/ information to establish whether the infringement is committed for commercial purposes at the first instance, but are then excluded from applying for a search order/ information if it is not.
- In our view, Article 18 on legal costs should also encompass the considerable costs for private investigations to inquire about the infringer.
For further information contact: florian.koempel@bmr.org