Documents considered by the Committee on 16 March 2011 - European Scrutiny Committee Contents

1 Enforcement of intellectual property rights



COM(10) 779

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Commission Report on the application of Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights

Commission Staff Working Document: analysis of the application of Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights

Legal base
Document originated22 December 2011
Deposited in Parliament11 January 2011
DepartmentBusiness, Innovation and Skills
Basis of considerationEM of 20 January 2011
Previous Committee ReportNone
To be discussed in CouncilNo date set
Committee's assessmentLegally important
Committee's decisionNot cleared; further information requested


1.1 Directive 2004/48/EC[1] on the enforcement of intellectual property rights was published on 30 April 2004. The Directive was implemented into UK law by the Intellectual Property (Enforcement, etc.) Regulations 2006.[2] The deadline for implementation by Member States was 26 April 2006;[3] many did not comply, with the final implementation (Luxembourg) being in June 2009.

1.2 The Directive sought to address the disparities between the systems of the Member States on the means of enforcing intellectual property (IP) rights under civil law. These disparities were considered prejudicial to the proper functioning of the internal market and meant that IP rights did not enjoy an equivalent level of protection throughout the EU. The Directive applies to all infringements of IP rights protected under European or national law and covers the remedies available through civil law measures. It encompasses, in the main:

—  evidence-gathering powers for judicial authorities, powers to force offenders and any other party commercially involved in an infringement to provide information on the origin of the infringing goods and of the distribution of networks;

—  provisional and precautionary measures such as interlocutory injunctions or seizures of suspect goods, corrective measures including permanent injunctions, recall and definitive removal of the infringing goods from channels of commerce;

—  powers to force offenders to pay damages; and

—  measures related to the publication of judicial decisions.

1.3 The initial proposals for the Directive also included provisions for criminal sanctions; however these measures proved controversial in terms of both content and EU competence, and were omitted from the final legislation. The criminal provisions were then transferred to a separate proposal which was published in July 2005 and a further revised proposal in 2006, neither of which was adopted.

The document

1.4 The report states that owing to late implementation by some Member States and the resultant deficiency in national application reports, it has not been possible to assess fully the effectiveness of the Directive. However, it notes that some studies carried out by international organisations and industry have indicated that IP infringement has reached a significant level with certain goods posing a danger to consumers.[4]

1.5 In order to address the concerns about the protection of IP rights, the report makes reference to the Commission's adoption of two Communications, supported by resolutions in the Council, on an IP rights strategy for Europe and the creation of the European Observatory on Counterfeiting and Piracy. The Observatory's aims are to improve understanding of IP infringement and create a platform for national authorities to exchange best practice, develop joint enforcement strategies, and make recommendations to policy makers. The Commission also recognises that European Parliament resolutions have expressed support for enhanced policies on IP protection, including strong legal frameworks against counterfeiting and piracy. At an international level the Commission has worked to combat IP infringement through bilateral trade agreements, international initiatives and ACTA (the Anti Counterfeiting Trade Agreement).[5]

1.6 The main conclusion drawn by the report is that, although some of the provisions have not fully met their intended objectives, the Directive has had a substantial and positive effect on the protection of IP rights in civil law in the EU. However it has become apparent that the Directive was not designed, and so is unable, to deal with the challenge to the enforcement of IP rights posed by the Internet.

1.7 The other key findings of the report are:

—  infringement of intellectual property rights causes widespread economic harm;

—  proper protection of these rights is needed to stimulate innovation and culture;

—  some studies show that IP infringement has reached a significant level;

—  clarification may be needed to avoid ambiguity on the scope and interpretation of various provisions of the Directive;

—  the right balance needs to be achieved by Member States with regard to the right to information and privacy laws; and

—  the Directive does not have an effectively dissuasive impact — damages awarded in IP rights cases remain relatively low.

1.8 The staff working document accompanying the report notes that the Commission is currently examining to what extent protection of intellectual property rights through criminal law via a harmonized Directive on criminal measures is necessary to supplement the enforcement of IP rights through civil law. The staff working document further states that the absence of harmonisation in the area of criminal measures to protect IP rights could be a serious obstacle, hindering cross-border cooperation between law enforcement agencies. It also notes that, following its assessment, the Commission intends to present a new legislative proposal which would replace its earlier 2005 and 2006 proposals for a Directive on criminal sanctions.

1.9 The report concludes with a request for views from all interested parties, by 31 March 2011, on the issues raised, which will inform the Commission's decisions on any future measures.

The Government's view

1.10 In her Explanatory Memorandum of 20 January, the Parliamentary Under-Secretary of State and Minister for Intellectual Property at the Department for Business, Innovation and Skills (Baroness Wilcox) says that, by calling into question the limitations of the Directive in dealing with the digital environment, the report prepares the ground for the proposal of further legislative measures in the EU. Concern that the scale and scope of infringement is rising could lead, the Minister thinks, to calls by some for harmonisation of criminal sanctions.

1.11 She says that the report indicates the possibility of a revised approach to damages in order to reflect the profits of the infringer as opposed to the loss of the rights holder. UK policy is based on restorative damages and so any change or requirement here could have significant implications for the UK's approach. Both restorative damages and the ability to take account of profits are currently available as remedies in the UK to ensure that there is a disincentive to infringing IP rights. The ability of a rights holder to take only one of these actions could be viewed as reducing the choices available to them.

1.12 The studies of the harm that IP infringement causes quoted in the report should be treated with caution, the Minister says. Other reports such as that from the US Government Accountability Office (April 2010) suggest the evidence base is relatively weak.

1.13 She continues that the report suggests further analysis on how to apply civil law remedies to intermediaries, such as Internet Service Providers. This issue is a subject of debate by many Member States and stakeholders. Any solutions suggested in an EU analysis would still need to be turned into a legislative proposal which would then be debated by Member States.

1.14 Finally, the report suggests further study of several issues such as provisional and precautionary measures and clarification of the meaning of various corrective measures such as costs of destruction; this further study would in and of itself be non-binding. Understanding the changes to consumer and business behaviour enabled by the internet and the possible methods of enforcing rights within this could be a useful exercise to inform future EU and UK thinking on this issue.

1.15 The Commission will use feedback from the consultation to inform its decisions on any future measures that might be envisaged. The Minister says the Government will respond to this consultation and share any papers with the Committee.


1.16 In her Explanatory Memorandum, under the heading of "policy implications", the Minister says "[c]oncern that the scale and scope of infringement is rising could lead to calls by some for harmonisation of criminal sanctions".[6] But this seems inconsistent with the definite, rather than possible, terms in which the Commission states it will propose legislation on criminal sanctions for infringement of IP rights in the EU. We set out here the relevant extract of the Staff Working Document:

"The Commission is currently analysing to what extent protection of intellectual property rights through criminal law via a harmonized directive on criminal measures is necessary to supplement the enforcement of intellectual property rights through civil law. Absence of harmonisation in the area of criminal measures to protect intellectual property rights could be a serious obstacle and hinder cross-border cooperation between the law enforcement agencies.

"Following this assessment, the Commission intends to present a new legislative proposal which would replace the 2006 proposal for a Directive on criminal sanctions."[7]

1.17 The conclusion in the second paragraph appears, worryingly, to pre-empt the findings of the assessment in the first, and we will want to look very closely at the evidence base of any proposals that arise from these two Commission documents, whether in the civil or criminal field.

1.18 We would be grateful for sight of the Government's response, following its own consultation exercise, to the Commission's report on this Directive.

1.19 In the meantime, the report and staff working document remain under scrutiny.

1   OJ L157,30.04.2004p.45Back

2   StatutoryInstrument2006No.1028Back

3   TheUKwasoneofonlyfivecountriestocomplywiththedeadline. Back

4   BASCAP:"TheEconomicImpactofCounterfeitingandPiracy";OECD;2008Back

5   COM(10)779finalp.4Back

6   Para 22 of the Explanatory Memorandum. Back

7   P. 25 of the Staff Working Document. Back

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Prepared 24 March 2011