On 9th March 2004 the EU Parliament voted 330 to 151 in favour of the controversial Intellectual Property Rights Enforcement Directive ('The Directive'), which seeks to harmonise and strengthen national remedies and penalties against those engaged in counterfeiting and piracy.
Based on "best practice" of Member States, the Directive provides for a number of stringent remedies against IPR infringement, including destruction, recall or permanent removal of illegal goods, together with financial compensation, injunctions and damages.
The Directive has now been passed to the Council of Ministers, who stated in their meeting of 11th March 2003 that final approval will be granted in the next few weeks. Thereafter EU Member States will have two years to implement its terms.
The European Union first commissioned a Green Paper on the impact of counterfeiting and piracy on the Internal Market in 15 October 1998. Thereafter, the EU Commission became convinced that it was necessary to harmonise Member States' legislation on enforcement measures, in order to ensure an equivalent level of intellectual property right protection across the internal market. It is estimated that the cost of counterfeiting and piracy to EU business turnover for 2003 was 45-60 billion euros, whilst legitimate businesses incur increasing legal fees attempting to protect their rights. The EU has already legislated to harmonise the various substantive intellectual property rights (including trade marks, designs, patents for bio-technological inventions and certain aspects of copyright), but it is now necessary to harmonise the means of enforcement in order to uphold those IP rights equally across the EU.
Remedies available to right-holders will include the destruction, recall or permanent removal from the market of illegal goods, as well as financial compensation, injunctions and damages, with the aim of removing all the economic benefits of the infringement from the infringing party. In terms of procedural law, the IPR directive legislates that parties may be obliged to produce evidence including banking, financial and commercial documents. Judges will also have the right to order guilty parties to produce information on the origin of the goods/service that infringe and to reveal names/addresses of those responsible for distribution. Further, judges will have the power to use interlocutory injunctions to prevent impending infringement, including seizure of both fixed and non-fixed assets (including bank accounts) of the suspected offender.
It is the extent of these new powers that have made the Directive controversial, with fears that it may be used like America's Digital Millennium Copyright Act, under which teenage down-loaders have been prosecuted. However, the Directive also contains limits: as well as the general obligation for proportionality, fairness and equity, there are specific safeguards to protect potentially innocent offenders. Further, the Directive applies to any infringement of EU or national law protecting intellectual property, but only where it is for a commercial purpose and only when substantial harm has been caused to the right-holder.
Going forward, the Directive has now been passed to the Council of Ministers, who stated in their meeting of 11 March 2003 that official approval will likely be granted in the next few weeks. Member States will then have two years in which to pass the necessary enabling legislation to bring the various remedies and penalties into force. As the Directive includes only civil sanctions, it is anticipated that further measures will be implemented to introduce criminal penalties for serious IPR infringement. For now though, Member States are free to apply criminal sanctions should they consider it appropriate, whilst the EU Commission has sent out a strong message that counterfeiting and piracy will no longer be an easy option within the EU.
For further information on this Directive please contact: Nick Beckett
CMS Cameron McKenna
+44 (0) 20 7367 2490
[email protected]
Lucy Kilshaw
CMS Cameron McKenna
+44 (0) 20 7367 2044
[email protected]
Stephen Whybrow
CMS Cameron McKenna
+44 (0) 20 7367 2175
[email protected]
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