Editor’s note: JosÃ© Cortina is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A.On March 9, 2004, the Parliament of the European Union passed the Directive on Enforcement of Intellectual Property Rights. Organizations such as the Business Software Alliance and the International Federation of the Phonographic Industry lobbied for the Directive, which was guided through Parliament by MEP Janelly Fourtou, the wife of the CEO of the media company Vivendi Universal, in what many argued to be a substantial conflict of interest.
There have been a number of articles written about the dire consequences that will result from this Directive, but for now all such consequences are speculative, and the speculation as to them may evidence a lack of understanding of the Directive itself.
What is the Directive?
A Directive of the Parliament of the European Union is not legislation as we normally understand it in the United States, but rather an instruction or direction to the Member States of the European Union to undertake certain actions or to pass national legislation, in a manner determined appropriate by each Member State, so as to reach a specified goal. The thrust of this Directive is to require Member States to create processes to allow quick action to be taken against large commercial operations to stop piracy and counterfeiting of items protected by intellectual property rights. The Directive is not intended to affect substantive laws related to intellectual property, but rather to require that enforcement mechanisms be put into place to provide swift remedies to those injured by pirates and counterfeiters, ending the current situation of long delays when enforcement is sought through the judicial systems of the respective Member States.
The Directive seeks to achieve this goal by providing broad guidelines to be met by the member countries in implementing such measures, as each country, deems necessary and appropriate to enable competent judicial authorities to fashion such remedies. What legislation and processes will result are currently unknown, because each member country will implement the Directive in its own way, and completion of the implementation by all the countries is still up to two years away. In fact, if the EU Directive on anti-spam legislation passed in 2002 is any example, it will be far longer.
The deadline for incorporating that Directive into national law was
October 31, 2003, but as of that date only six member countries had taken all necessary measures; as of today there are still eight countries that have not taken action.
Who is most affected?
The Directive is targeted at commercial operations, and intended to affect intentional infringers as well as anyone who is: (a) found to be in possession of infringing goods on a commercial scale; (b) found to be using infringing services on a commercial scale; (c) found to be providing services used in infringing activities on a commercial scale; or (d) involved in the production, manufacture or distribution of the infringing goods or provision of the infringing services.
While the intent of the Directive is clearly to stop the most egregious actors, within the board guidelines there is room for significantly differing interpretations and what some commentators suggest may become abuse. Consider the following example: A legitimate software company creates a product containing clipart without obtaining a license for that use, believing that the clipart is in the public domain. Under certain potential implementations of the guidelines, the distribution of that product containing the clipart and of which the clipart is a small and inconsequential part, could be stopped during the time period that the determination is being made as to whether the clipart is in the “public domain.” Even if a large bond is posted and later forfeited to the alleged infringer, this may be little consolation to the business whose presence in the market has been interrupted for a significant period of time.
The Directive requires that provisional measures be provided which allow for the immediate termination of alleged infringement, without waiting for a decision on the substance of the case. Further, the legislation must include implementation of “evidence-protection” measures, i.e., various ways to quickly obtain and then to preserve, and protect evidence. This would include, for example, the collection of all infringing copies of a work. In addition, it may allow for collection of potentially sensitive banking and financial information about an accused infringer, although such information may be subject to confidentiality protections.
Persons entitled to request the Directive be used in enforcement of intellectual property rights include the rights holders, as well as any persons who have a direct interest and legal standing in connection with the rights. In the case of a copyright, for example, the Directive establishes the presumption that the author of a literary or artistic work is the author (and thus rights holder) if the author’s name appears on the work.
The Directive is focused primarily on large-scale commercial counterfeiting and pirating operations. Legislation passed under the Directive would allow companies to obtain a judicial order and then work with governmental enforcement officers to conduct raids, seize and destroy property and freeze bank accounts–all without any final determination as to the merits of the claim. In appropriate cases, such as when any delay would cause irreparable prejudice to the rights holder, such steps may be taken even without a defendant being first heard.
In formation of the Directive, proponents also urged inclusion of criminal penalties. Criminal penalties were excluded, however, in response to critics who compared the Directive to the U.S. Digital Millennium Copyright Act (DCMA), and to what these same critics believe are abuses by the Recording Industry Association of America that has been bringing lawsuits under the DCMA against individual file swappers. Consequently, given the sheer size of the civil remedy and the lack of any criminal penalty, it is unlikely that, for example (and has been conjectured in other articles or news reports), consumers acting in good faith downloading music would be affected.
One real potential area for abuse arising out of the Directive is the allowance for the gathering of financial and banking information of an accused infringer. While the information gathered may be subject to confidentiality provisions, this won’t help if the claimant who obtains the information is a competitor. Further, there is the potential for release of the information to the public, in some cases potentially sensitive information, which the accused infringer would not want released.
On the other hand, evidence–protection measures may be revoked (seized property or information returned to the alleged infringer) if the claimant does not institute certain additional legal proceedings within a specified period of time after collection of the evidence. Thus, the claimant cannot just seize the alleged infringing goods and then do nothing further. Also, the continuance of the evidence-protection measures may be subject to payment of adequate security by the claimant, presumably what is known in the U.S. as a bond sufficient to protect the accused infringer from the damages that have resulted if it is later determined that the seizure or other actions have been improper.
This is presumably a deterrent to the filing of frivolous complaints, particularly if the security to be posted ends up being a large amount–but of course just as in the United States, this can prevent the very remedy it is designed to allow if the claimant cannot post the security. However, it is still largely unknown how each of the Member States will deal with the posting of security.
A definitive official adoption of the Directive is likely to take place in April. Once adopted, Member States will have two years to implement the Directive. Although criminal sanctions were excluded from the Directive, nothing precludes any Member State from deciding to impose criminal sanctions as part of its implementation of the Directive. Since it is not clear what the ultimate effect of the Directive will be, it is important that those doing business in Europe monitor developments, and as appropriate, lobby in the respective Member States as the Directive becomes implemented to ensure that appropriate safeguards are put in place to prevent abuses.
A. JosÃ© Cortina is a registered patent attorney with the law firm of Daniels, Daniels & Verdonik. He focuses his practice on the intellectual property needs of small to large technology companies, including providing patent, trademark, copyright, licensing, conflict resolution and transactional services. He is experienced in a broad range of technologies, including electronics, communications, computer hardware and software, biomedical, materials, and selected chemical and chemical engineering technologies. Comments or questions can be sent to email@example.com.