New Euro Law Calls For Tough Penalties On Pirates

By adopting last week the European Union's IP Enforcement Directive, the European Parliament in Strasbourg, France is finally providing a framework to protect intellectual property rights.

LONDON--By adopting last week the European Union's IP Enforcement Directive, the European Parliament in Strasbourg, France is finally providing a framework to protect intellectual property rights.

The Parliament vote-330 in favor, 151 against and 39 abstentions-now puts Europe on an equal footing with the United States in terms of IP protection.

According to the EU's procedures, the Parliament's vote clears the way for the Directive to be adopted before the upcoming June European elections by the EU Council of ministers. Member states will then have two years to implement the Directive into their national legislation.

In a joint statement, organisations from the IP sector united in the anti-piracy coalition welcomed the vote. They state that the Enforcement Directive "provides a uniform level of protection in an EU that encompasses 25 Member States."

The bill is expected to have a significant economic impact, as it is estimated that over 5% of Europe's GDP is generated through creative works. Piracy and counterfeiting are costing billion of euros in lost revenues to the IP community.

The bill, presented by French conservative MEP Janelly Fourtou, the wife of Vivendi Universal chairman and CEO Jean-René Fourtou, was a compromise between the EU's Council of Ministers, the Commission and the Parliament.

The parliament fast-tracked the proposed text. Normally, such bills require two readings, but a Parliament rule allows bills to be voted after only a first hearing if they have previously been subject to a compromise.

"They used a procedure that rarely been used but it worked in our favour," says IFPI regional director for Europe Frances Moore.
The Business Software Alliance, which regroups representatives of IP organizations in areas as various as software, toys and music, described the law as "a step in the right direction," but said it falls short of their expectations.

"Rights holders are unhappy about it, but it is an in-between solution we can live with," says Francisco Mingorance, director of public policy for the Business Software Alliance. He adds that "far from being anti-consumer, it is designed to protect individuals from substandard goods."

The bill was opposed by telecom companies and ISPs, which challenged the liability provisions in the bill. Consumer and civil rights groups, some of which demonstrated before the European Parliament on the day the bill was passed, expressed concern that the bill would allow judges to prosecute individuals and charge them with prison sentences.

The Directive stipulates that main enforcement measures are to be applied only for breaches committed 'on a commercial scale." This excludes consumers who can be found "acting in good faith" copying recordings for their own use.

The bill, however, says that pirates and counterfeiters could be fined and have their bank accounts frozen and their financial records seized. Overall, it gives judges and prosecutors far more ranging investigative powers.

However, the House did not including criminal sanctions for infringements of intellectual property rights, preferring civil and administrative sanctions. The issue there, according to legal experts, has as much to do with the competence of the Parliament and the Commission as has to do with political willingness.

The Anti-Piracy Coalition expressed "regret that the Directive does not harmonise criminal penalties, despite support from the Commission and the Parliament for criminal measures in the Directive. Creative industries will continue to press for criminal sanctions at EU level and call on the institutions to address this issue urgently."

Nonetheless, a spokesperson for the Parliament, says, "The Directive will not affect any national provisions in Member States on criminal penalties for IPR infringement, nor will it affect Member States' international obligations, including those relating to criminal procedures and penalties."

IFPI's Moore describes the Directive "a harmonization of the best practices of civil enforcement measures. Many of these measures exist in many states but not all of them in all the states. They are efficient tools to fight piracy."

She points out that pirates are often linked to organized crime and recycle the relatively easy profits from piracy to fund other criminal activity such as arms trafficking and drug dealing.

This Directive, says Moore, levels up national legislations across the EU, including in the 10 new countries that will join the EU in June.

Even if the IFPI is not fully satisfied with the Directive, Moore sees several improvements that will allow copyright owners to take action. The Directive, for example, recognizes that organized groups like the IFPI, will be able to take action on behalf of its members.

On the disappointment front, the Parliament refused the notion of double damages, which would have granted damages of double of the initial prejudice. Instead, the Directive says that damages should "at least" equal the damages suffered.

"It sets a benchmark and member states can then decide if they want to go beyond that," says Moore (see below for the key points in the bill, as commented by the IFPI).

Moore says that the IP community will eagerly wait to see the implementation of the Directive into the national legislation of the EU member states.