EU IP Enforcement Directive Questioned On Procedure

By Monika Ermert for Intellectual Property Watch

Procedural questions could kill a proposed European Union directive aimed at fighting theft of products, patents and copyrights, after the Dutch Parliament raised jurisdictional objections last week.

At issue is the planned EU directive on criminal measures aimed at ensuring the enforcement of intellectual property rights [COM(2006) 168 final]. The directive has provoked concerns among digital civil rights advocates, and now has hit a procedural snag.

The Dutch parliament last week wrote to Franco Frattini, EU Commissioner for Freedom, Security and Justice, that both the Senate and House of Representatives “consider that the present proposal falls outside the powers of the community” and “does not comply with the principle of subsidiarity and proportionality.” Subsidiarity is a fundamental principle of EU law asking that the EU acts only if actions of individual member states are insufficient.

“Both houses would appreciate receiving a reasoned response from the European Commission to the objections formulated by them in this letter,” wrote Senate President Yvonne Timmerman-Buck and the president of the House of Representatives, Frans Weisglas.

The draft directive is a follow-up to the much-debated directive [2004/48/EC] on the enforcement of intellectual property rights, called IPRED 1. The need for an IPRED 2 was announced by then-Internal Market Commissioner Frits Bolkestein on the same day as IPRED 1 was approved by the EU Parliament. Bolkestein said criminal sanctions that were cut out were essential in the fight against counterfeiting and piracy.

With IPRED 2, the Commission tabled again what had been previously voted down as incompatible with European Community law because so-called EU first pillar decisions (covering economic, social and environmental policies of the Community) could not address criminal sanctions.

European Commission Claims Competence

A spokesperson from Frattini’s cabinet told Intellectual Property Watch that “there is a competence to introduce criminal sanctions in a directive according to a recent ruling of the European Court of Justice on environmental law.” Although, as a general rule, neither criminal law nor rules of criminal law fall within the Community’s competence, that does not prevent Community legislature from taking measures that relate to criminal law if it is essential for combating serious environmental offences, the Commission wrote after this ruling. But the court also ruled that the respective criminal law measures had to be effective, proportionate and “dissuasive.”

The Dutch chambers wrote that they had “concluded that the proposal in question does not comply with the principles of subsidiarity and proportionality” and were expecting answers from the Commission.

Hester Meninga, spokesperson from the European Office of the Dutch Senate, said, “The proposal is out of reach if you look at the goals that need to be realised: harmonisation of criminal law measures on the EU level is not as vital and essential nor advisable and wishful as presented by the European Commission in [its] proposal.”

Meninga listed three major points that resulted in this conclusion: First, it had not been established in the proposal “that effective measures to combat piracy demand the expansion of the existing range of measures and sanctions under procedural law.” Second, there was “no factual justification in the proposal of the European Commission that in the event of a major difference in penalties between the member states, the pirates or counterfeiters could operate from the country with the lowest maximum sentences and that this would seriously hinder effective protection of intellectual property.”

The third point was that the implementation of IPRED 1 was just considered by the House of Representatives of the States-General and provisions were made to include separate procedural provisions for intellectual property cases in the Code of Civil Procedure.

Other EU Members May Join Opposition

“If more of the national EU parliaments make their objections known to Mister Frattini there will be a ‘political momentum’ and it will be difficult for the EC to just surpass the objections of the parliaments. Therefore, we have also send our letter to all the EU national parliaments in the hope for support”, said Meninga.

“The Dutch parliament’s letter will be answered by the Commission,” said the Commission spokesman, adding that if no consensus was been found, each member state could go to court. So far, he said, no other member country has raised concerns.

In a recently filed case against the EU directive on data retention, Ireland alleged that the wrong legal mechanism was chosen because again the first pillar was not on criminal law. But this did not affect the enforcement case, said the spokesperson.

But the Dutch chambers wrote: “Both houses have serious doubts about the European Commission’s broad interpretation of the judgement.” The power to introduce criminal sanctions was “limited to criminal sanctions in the case of offences against European environmental policy,” they said.

This view is supported also by Reto Hilty, managing director of the Max Planck Institute for Intellectual Property, Competition and Tax Law, and a professor of law. In January, Hilty argued at a Commission hearing that “the indispensability to harmonisation of, for example, environmental criminal law does not permit automatic conclusions with regard to other areas of law. What needs to be examined in each individual case is whether a lack of harmonisation results in a distortion of competition.” Hilty had also warned against negative effects for the market from a possible broadening of IP criminal law. So far, according to Hilty, IP criminal law enacted in many countries like Germany only play a subordinate role in actual practice.

Civil and consumer rights organisations organized under the umbrella of European Digital Rights (EDRi) are much more concerned with this latter kind of effects. Maurice Wessling, spokesperson for the Dutch consumer rights organisation Bits of Freedom, said: “The most important points are that IPRED 2 would introduce higher sentences than we have at the moment in the Netherlands and it would more deeply involve industry representatives into policy investigations.”

At the moment, said Wessling, “the Dutch Public Prosecution Service prefers to solve IP cases through civil law. Criminal law is only used in very large and severe cases.” A possible criminalization of individual file sharers, for example, was what brought about the heated debates during the IPRED 1 debates and resulted in the trimming of criminal sanctions. “The need for this European ‘harmonisation’ is very questionable and disturbs a complex system of national legislation,” Wessling said.