Friday, November 17, 2006

Criminal Enforcement Directive - A Review of the Rapporteur's Report - Too Late to Lock the Stable Door?

The European Parliament's Committee on Legal Affairs is due to discuss at Monday's meeting the Rapporteur's draft report on the proposed Criminal Enforcement Directive.

Having just reviewed the English translation of the Rapporteur's Report, I would suggest that it narrows significantly the scope of the proposed Directive, but it remains a Trojan Horse for first pillar powers.

Definition for Intellectual Property - Whither a Patent?
In particular, the Rapporteur proposes a definition for intellectual property which excludes patents. The attempt to define intellectual property proved to be very controversial in the passage of the earlier Enforcement Directive, 2004/48/EC. This discord eventually led the Commission to propose its own list of intellectual property rights, 2005/295/EC. One of the reasons patents are excluded in the current report, according to the Rapporteur, is the European Parliament's rejection of the Directive on the Patentability of Computer-Implemented Inventions (Software Directive). The Rapporteur concludes that the Parliament considered it inappropriate to legislate on patents. Accordingly, he suggests that criminalising patent infringement would be "a dangerous foray into a very complex area."

The Rapporteur's report also proposes that the Directive be limited to intellectual property rights which are harmonised at the Community level, and does not include other national "intellectual property rights."

Other Definitions

The Rapporteur's report also proposes definitions for other key phrases, including that of infringement on a commercial scale. The idea of "commercial scale" previously proved problematic during the negotiation of the Enforcement Directive. In the Enforcement Directive, the problems of definition were to some extent remedied by Recital 14. However, the definition proposed in the current Rapporteur's Report on the proposed Criminal Enforcement Directive seems considerably broader.

Does the Punishment fit the "Crime"?
The Criminal Enforcement Directive is presented on the basis of being a response to serious organised crime, the potential threat to public safety, and to the "serious threat to national economies and governments." The Rapporteur also acknowledges that "serious" intellectual property crimes can be committed outside organised crime, and therefore extends high levels of punishment to all serious crimes, rather than limiting such punitive measures to those actions committed by large criminal organisations.

On a number of occasions, the Rapporteur points out the fact that there are domestic provisions on criminal infringement in the domestic laws of many Member States, and he discusses harmonisation in this context. One intriguing point which seems to be overlooked is that the sentence of a minimum maximum of 4 years imprisonment proposed by the Criminal Enforcement Directive ignores the various sentencing rules across the Member States. In the UK, for example, the practical effect of a 4 year sentence is that the person will be eligible for release after 2 years. Therefore, it is unclear how the Commission can rely on terms like 4 years imprisonment, in the context of a harmonised approach, when it is presumed that the time served may mean quite different things for different Member States.

Competence - Win the Horse or Lose the Saddle
Finally, on the issue of competence (see the earlier post, A Trojan Horse?), the Rapporteur's report indicates that the proposal falls within the Commission's "broad interpretation" (my emphasis) of its powers under the first pillar. The Commission has relied upon Case C176/03, Commission v Council (environmental law), to use first pillar powers to impose criminal sanctions. The Commission issued a Communication on the implications of that judgment on criminal law provisions under the first pillar. After that, there was a Resolution on 14 June 2006, where the European Parliament welcomed the ECJ's judgment, although had reservations about the Commission extending it further.

The Rapporteur takes the view that applying criminal penalties to patent rights does not seem particularly appropriate in itself, and does not follow previous actions of the European Parliament. He also concludes that there is no urgent need to intervene on criminal penalties for patent infringement. What is problematic about his position is that he doesn't come to any opinion on whether the Commission's position on broad interpretation is correct. But he does believe that the scope of the proposed Directive seems to be too broad.

It's unlikely that many Member States will find much solace on the competence issue within the Report of the Legal Affairs Committee. Although, in terms of the Directive as a whole, it provides many sensible limitations. But one can still question the necessity of the Directive at all.


Jonas Maebe said...

Also note that the draft report of the co-responsible ITRE (Industry) Committee and amendments tabled ITRE members are available already.

We (the FFII) have also published an analysis of most ITRE amendments. We'll do the same for LIBE once their amendments are also available (the draft report is already there, but quite meager), and also for JURI.

As far as the JURI draft report is concerned, I think it's quite bad. Yes, it does exclude patents, but adds jail sentences for undefined "serious offences", the "commercial scale" definition talks about "indirect economic disadvantage", ... Most of the "limitations" are not sensible at all I think, but hollow phrases.

Moreover, all the talk about "threats to public safety" is silly: one can just as easily threaten public safety without infringing any IPRs, and that should be equally punishable (i.e., advertise saccharose pills as antibiotics or so). In fact, in most cases such acts are already criminal offences.

So the whole "keep the public safe" rationale is just a sham. The only case where there might be some connection is in case of trademark counterfeiting (people not getting the goods/quality they think they are getting), but even that is already criminally prosecutable under the national implementations of TRIPs.

So yes, as you conclude, "one can still question the necessity of the Directive at all"

Jonas Maebe said...

FWIW, our analysis of Mr Zingaretti's amendments to the articles is now also available.

Filemot said...

The International Trademark Association are now encouraging their members to write to MEPS supporting a rather vague amendment to limit the scope of the Directive to anti-couterfeitung and piracy and thereby to exclude intentional trademark infringement by big (US) corporations of the SME marks of European business. It wont work in the opposite direction because the US would not introduce such sanctions. Sometimes it might be easier to have a business focus on the significance of trademark infringment if there were criminal sanctions. All too often intentional infringment is made to sound OK by cloaking it in the guise of a commercial risk decision. Intentional is a strong word. It may be enough.
The Directive does seem to have practical issues over how criminal penalties can be harmonised and the reporter does not seem concerned about that. INTA believe the directive is still on the agenda for the 20 December 2006 Legal Affairs Committe but there is no public agenda yet. It hardly seems like a subject for clearing up just before Christmas