8 Criminal measures to enforce intellectual
property rights
| (a)
(26729)
11245/05
COM(05) 276
(b)
(27460)
8866/06
COM (06) 168
|
Draft Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights
Draft Framework Decision to strengthen the criminal law framework to combat intellectual property offences
Amended Draft Directive on criminal measures aimed at ensuring the enforcement of intellectual property rights
|
| Legal base | (a) Directive: Article 95 EC; codecision; QMV
Framework Decision: Articles 31 and 34(2)(b)EU; consultation; unanimity
(b) Article 95 EC; codecision; QMV
|
| Department | Home Office |
| Basis of consideration | (b) EM of 16 May 2006
|
| Previous Committee Report | (a) HC 34-xiii (2005-06), para 7 (14 December 2005), HC 34-viii (2005-06), para 8 (2 November 2005) and see (24313) HC 63-xxii (2002-03), para 6 (21 May 2003) and (25394) HC 42-xii (2003-04), para 15 (10 March 2004)
(b) None
|
| To be discussed in Council | No date set
|
| Committee's assessment | Legally and politically important
|
| Committee's decision | (a) Cleared
(b) Not cleared; further information requested
|
Background
8.1 A number of instruments have been proposed or adopted at Community
level relating to the substantive law on intellectual property,
including measures on patents,[25]
trade marks[26] and copyright.[27]
The European Parliament and the Council adopted a Directive (Directive
2004/48/EC) on the enforcement of intellectual property rights
in 2004.[28] This Directive
was concerned to harmonise the measures, procedures and remedies
under the law of Member States in relation to intellectual property
rights, but it did not require criminal measures to be adopted.
8.2 On 2 November and 14 December 2005 we considered
a draft Directive containing provisions on criminal penalties
and proposed by the Commission under Article 95 EC (document (a)).
We noted that the proposal would require Member States to ensure
that "all intentional infringements of an intellectual property
right on a commercial scale, and attempting, aiding or abetting
and inciting such infringements" were treated as criminal
offences, and obliged Member States to provide for sentences of
imprisonment, with fines and confiscation of the infringing goods
also applying to both natural and legal persons. We viewed with
grave concern the possibility that Member States could be forced,
under the codecision procedure provided for in the EC Treaty (as
opposed to the unanimity required under the EU Treaty), to introduce
new criminal offences into their national laws without the prior
consent of the national parliament.
8.3 The draft Framework Decision (document (a)) supplementing
the draft Directive required Member States to provide for a sentence
of at least four years' imprisonment where an intellectual property
offence was committed "under the aegis of a criminal organisation"
or where such offences "carry a health or safety risk".
The proposal also obliged Member States to ensure that holders
of intellectual property rights, or their representatives, and
experts, were allowed to assist the investigations carried out
by joint investigation teams. The draft Framework Decision also
contained rules on criminal jurisdiction.
8.4 We shared the Minister's concerns over the use
of Article 34 EU to adopt a Framework Decision going beyond promoting
co-operation between the authorities of the Member States, and
viewed with particular concern the provisions of Article 4 of
the Framework Decision (which obliged Member States to allow private
persons to become involved in the conduct of police investigations).
We asked the Minister if she considered it contrary to the principles
of Article 33 EU to make such detailed rules as to how police
investigations were conducted in the Member States.
The amended proposal for a Directive
8.5 Following the decision of the Court of Justice
of the European Communities (ECJ) in Case C-176/03 Commission
and European Parliament v. Council of 13 September 2005, the
Commission has submitted an amended proposal for a Directive under
Article 95 EC making provision requiring the imposition of criminal
penalties. In its decision of 13 September 2005 the ECJ indicated
that the Community could adopt criminal measures in relation to
environmental policy under Articles 174 to 176 EC where these
were "essential" for combating serious environmental
offences and where the Community legislature considers such measures
to be necessary to ensure that the Community rules on environmental
protection were fully effective.
8.6 A communication of 24 November 2005 from the
Commission on the implications of this ruling[29]
refers to the draft Framework Decision as a proposal which is
"potentially affected" by the ECJ decision and which,
in the Commission's view, requires amendment. In its explanatory
memorandum to the amended proposal for a Directive (document (b)),
the Commission explains that it has withdrawn its proposal for
a Framework Decision, and has transferred its provisions on penalties
and powers of confiscation to the Directive. The Commission also
explains that the provisions on jurisdiction and the coordination
of proceedings have not been included in the amended Directive.
8.7 Article 1 defines the objective and scope of
the Directive. It describes the Directive as laying down the criminal
measures which are "necessary" to ensure the enforcement
of intellectual property rights and provides that the measures
are to apply to intellectual property rights under both Community
and national law. Article 2 defines "legal person" as
any legal entity having such status under the applicable national
law, except for States "or any other public bodies acting
in the exercise of their prerogative of public power, as well
as public international organisations".
8.8 Article 3 requires Member States to ensure that
"all intentional infringements of an intellectual property
right on a commercial scale" including attempts, aiding and
abetting and incitement are treated as criminal offences.
8.9 Article 4 requires Member States to provide for
the imprisonment of natural persons for offences under Article
3 and for fines and confiscation for legal and natural persons.
Member States are also required to provide for the destruction
of infringing copies, for closure of the establishment used to
commit the offence and a ban on engaging in commercial activities,
and for the possibility of being made subject to judicial supervision
or winding-up.
8.10 Article 5(1) obliges Member States to provide
for a sentence of imprisonment of at least four years where the
offence under Article 3 is committed by a natural person "under
the aegis of a criminal organisation" (as defined in the
proposed Framework Decision on the fight against organised crime)
or where the offences "carry a health or safety risk".
Where the offence is committed by a natural or legal person, Article
5(2) obliges the Member States to provide for "effective,
proportionate and dissuasive penalties". Such penalties must
include "criminal and non-criminal fines" of a maximum
of €100,000 and €300,000 in the cases referred to in
Article 5(1).[30]
8.11 Article 6 requires Member States to provide
for the confiscation of goods belonging to a convicted person
in accordance with Framework Decision 2005/212/JHA of 24 February
2005 on Confiscation of Crime-related Proceeds, Instrumentalities
and Property, "at least" where the offence is committed
in the circumstances referred to in Article 5(1).
8.12 Article 7 requires Member States to ensure that
the holders of intellectual property rights, or their representatives,
and experts are "allowed to assist the investigations carried
out by joint investigation teams".
8.13 Article 8 requires Member States to ensure that
investigations or prosecutions of offences under Article 3 are
not dependent "on a report or accusation made by a person
subjected to the offence", at least where the acts were committed
in the territory of the Member State.
The Government's view
8.14 In his Explanatory Memorandum of 16 May 2006
the Parliamentary Under-Secretary of State at the Home Office
(Mr Gerry Sutcliffe) draws our attention to the fact that the
proposal for a Directive is the first instrument to be considered
since the judgment of the ECJ in Case C-176/03 Commission and
European Parliament v. Council. The Minister points out that
the draft Directive contains provision for extended powers of
confiscation, joint investigation teams and the initiation of
criminal proceedings in addition to that dealing with offences
and penalties, and that these provisions apply to both Community
and national law.
8.15 The Minister further informs us that at the
first Council working party following the submission of the new
text:
" a very clear and broad consensus against
such a wide interpretation of the judgment [in case C-176/03]
emerged with Member States, including the UK, stating that as
a matter of principle obligations can be created in relation to
Community law only. Moreover, Article 4 was drafted in too much
detail and Articles 5, 6, 7 and 8 were outside the scope of First
Pillar competence. It was clear that no further progress can be
made without guidance at the political level, pending the outcome
of the recently mounted Commission challenge to the Ship-source
pollution Framework Decision (Council Framework Decision 2005/667/JHA
of 12 July 2005 to strengthen the criminal-law framework for the
enforcement of the law against ship-source pollution), which will
take at least another year".
8.16 The Minister recalls that the Directive 2004/48/EC
initially contained provisions setting out criminal sanctions
but that these "were dropped at the insistence of Member
States who disputed the competence to include such provisions".
The Minister explains that in the Government's view the judgment
of the ECJ in Case C-176/03 should be interpreted restrictively
and that any obligations created must be limited to Community
law. Even if a competence in relation to offences and some basic
provision on penalties were to be accepted, the Government is
not convinced that further approximation is necessary, noting
that the date for implementation of Directive 2004/48/EC expired
as recently as April 2006 so that insufficient time has passed
in order properly to assess the need for any further action.
8.17 The Minister makes a number of detailed comments
on the proposal, emphasising that these are subject to the Government's
views on First Pillar competence and the need for any further
approximation of law in this area. In relation to Article 1, the
Minister points out that the reference to "intellectual property
rights provided for in Community and/or national legislation"
follows the scope of Directive 2004/48/EC, but that the definition
of intellectual property rights on that occasion proved too difficult
so that no definition was adopted. The Minister states that the
Government's view, based on consultation with interested parties,
is that the scope of the Directive should be limited to counterfeiting
and piracy (i.e. trade make and copyright infringement). The Minister
points out that the requirement in Article 61 of the TRIPS Agreement[31]
for the imposition of criminal procedures is limited to wilful
trademark counterfeiting or copyright piracy. The Minister adds
that in the UK's view there is no evidence to justify any extension
of the scope of criminal remedies as defined under TRIPS, that
the Government strongly believes that patent rights should not
be included within the scope of the proposal and that "the
validation of patent rights and the resolution of disputes relating
to alleged infringements is a particularly complex area of the
law which does not … lend itself to the certainty required
of good criminal law. We will be looking at this very closely."
8.18 In relation to Article 3 the Minister draws
attention to the lack of clarity in the reference to infringements
"on a commercial scale" and to the concern by prosecuting
authorities about the risk of confusion if such terms are not
clearly defined. In relation to the provisions of penalties in
Article 4, the Minister explains that the Government has been
seeking to ensure that these provisions, in particular those in
Article 4(2) are indicative rather than mandatory and are not
so detailed as to impinge on the principle of subsidiarity.
8.19 The Minister notes that Article 7, on joint
investigation teams, provides for the holders of intellectual
property rights to assist in the investigations carried out by
joint investigation teams (JITs). The Minister states that, although
the Government supports the use of JITs in EU law enforcement
and co-operation, it will resist this particular Article because
its approach has always been that provisions of this kind should
be in "over-arching all-crime instruments" such as the
2000 Convention on mutual legal assistance. The Minister adds
that there is no reason to single out intellectual property theft
as a unique form of crime requiring exceptional provision in relation
to joint investigation teams, and that there are also practical
concerns about the utility, for prosecution purposes, about having
holders of intellectual property rights participating in joint
investigation teams.
Conclusion
8.20 We thank the Minister for his helpful Explanatory
Memorandum. We agree with the points the Minister makes, both
on the general issue of using the EC Treaty to make detailed provisions
of criminal law, and in relation to the particular proposal. In
our view, the proposal exceeds what is permissible by a wide margin.
8.21 In our previous consideration of the proposal,
when it was in the form of a Framework Decision, we drew attention
to the likelihood of an infringement of the principles of Article
33 EU by seeking to make such detailed rules on the conduct of
police investigations. For such provisions to appear in an EC
instrument seems to us clearly to involve a breach of the principles
of subsidiarity and proportionality. We wholly endorse the comments
the Minister has made about the provisions giving right holders
a privileged position in relation to joint investigations. We
consider these to be entirely unjustified and likely to be conducive
to infringements of Article 6 ECHR in relation to the fairness
of trials, especially in cases where a criminal investigation
is followed by civil proceedings by the right holders.
8.22 The Minister has drawn attention to the vagueness
of drafting of a number of key concepts under the proposal, and
we would draw attention to the serious risks of confusion arising
from the import into domestic criminal law of such concepts as
"commercial scale", "under the aegis of a criminal
organisation" or offences which "carry a health or safety
risk", each of which would be given a Community meaning as
a result of ECJ case law. We consider it most undesirable that
the criminal law should have to cope with such uncertainty.
8.23 We infer from the Minister's remarks that
no further progress is expected on this proposal until the outcome
is known of further proceedings brought by the Commission against
the ship-source pollution Framework Decision. We therefore ask
the Minister to keep us informed of any resumption of negotiations
on this proposal. We clear document (a) on the grounds that the
draft Directive has been superseded and the draft Framework Decision
withdrawn, but we shall hold document (b) under scrutiny.
25 A Community Patent Regulation has been proposed,
but has not been adopted. Back
26
Council Regulation (EC) 40/94 on the Community trade mark, OJ
No. L11, 14.1.1994, p.1. Back
27
See Council Directive 91/250/EEC of 14 May 1991 on the legal protection
of computer programs OJ No. L122, 17.5.1991, p.42 and Directive
2001/29/EC of 22 May 2001 on the harmonisation of certain aspects
of copyright and related rights in the information society OJ
No. L167, 22.6.2001, p.10. Back
28
OJ No L195, 2.6.2004, p.16. Back
29
(27117) 1544/1/05; See HC 34-xvi (2005-06), para 4 (25 January
2006). The report was debated in European Standing Committee on
28 March 2006. Back
30
There is a drafting problem with the text, since Article 5(1),
to which reference is made, does not apply to legal persons. Back
31
The WTO Agreement on Trade-Related Aspects of Intellectual Property
Rights. Back
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