U.S. Government Email on Proposed EU Directive on Measures and Procedures to Ensure Enforcement of Intellectual Property Rights

[Forwarded to IP Justice from MEP, details of US Government source under investigation, possibly USPTO]

February 2003 [sic – 2004]

The effective enforcement of intellectual property rights is a challenge faced by all of our governments.  The increase in both the quality and quantity of counterfeits and pirated copies combined with increasing involvement of organized criminal syndicates presents a threat to rights holders and society.  Given the importance of this issue, the United States Government is pleased to have the opportunity to provide comments on the European Parliament report on the proposal for a directive of the European Parliament and of the Council on measures and procedures to ensure the enforcement of intellectual property rights.

The European Community is a Member of the WTO and, thus, is already required to meet the enforcement obligations set forth in the TRIPS Agreement.  The member states of the Community have been harmonized in this area for some time. Therefore, we note that the Parliament and Council are taking on the challenging task of further harmonizing at the community level member state legislation impacting the enforcement of intellectual property rights and resolving disparities in national legislation.

We have identified several provisions of the proposed enforcement directive that elaborate on the protection provided for under the TRIPS Agreement.  The addition of new Article 7(2)(b) to permit that evidence may be established on the basis of a reasonable sampling of copies or objects provides rights owners and courts with an efficient and cost effective system for establishing evidence of a violation.  The amendment of the evidence protection measures in new Article 8(1) to apply to equipment and materials used in the production and/or distribution of the infringing goods in addition to the infringing goods and all documents relating thereto is another positive development that will benefit U.S. and European rights holders.  Also useful is the explicit provision of civil ex parte search and seizure measures. The lack of clarity in the EU in this area has been a concern in the past for the U.S. Government and for the U.S. rights holders.

The right of information provisions contained in Article 9 of the proposed directive require judicial authorities at the request of a right holder to order certain persons to provide information on the origin of suspect goods or services and networks for distribution, unless particular reasons are invoked for not doing so.  It is important that this provision requires courts to act.  We note that Article 9(4) contains a valuable transparency provision in that member states shall provide that where the responsible authorities are in possession of certain information, they may inform the right holder of such information.

Article 11(1) of the proposed directive provides that where the injured party demonstrates circumstances likely to threaten the recovery of damages, the courts shall have the authority to order the precautionary seizure of fixed and non-fixed assets of the infringer. This article is balanced by providing in proposed Articles 11(2) and (3) precautionary safeguards for alleged infringers for any prejudices suffered by unfounded complaints.

With regard to the recent changes contained in the Parliament report of 5 December 2003, that the scope of the proposed directive is no longer limited to instances when the infringement is committed for commercial purposes or causes significant harm to the right holder will strengthen EU Member efforts to address piracy and counterfeiting. The addition of Article 10a providing for the Commission to examine whether measures should be adopted regarding confusingly similar marks and design-protected products also is a favorable development.

As the 5 December report notes, “for the directive to succeed the measures must have a clearly deterrent effect on counterfeiters and pirates.”  The TRIPS Agreement requires enforcement measures that have a deterrent effect, with respect to both civil and criminal enforcement.  We, therefore, commend the amendments to new Article 3 which more explicitly recognize this important fact.  With respect to the proposed Article 17 on damages calculation, the addition of the possibility of “pre-established” damages – sometimes called “statutory” damages or “in lieu” damages — should strengthen the enforcement regimes of EU Member states. The TRIPS Agreement Art. 45(2) anticipates WTO Members’ giving their courts the power to award pre-established damages, even where the infringer had no actual or constructive knowledge that he was engaging in infringing activity.   We are very pleased to see that amendments to new Article 14 now recognize the importance of providing judicial authorities with authority to destroy goods and equipment.  When the equipment and materials used to produce infringing goods are left in the hands of the infringers, they simply continue their illegal conduct.  By permitting the confiscation and destruction of the illegal goods, and the equipment and materials (or implements) used to make them, the court puts an end to the infringer’s illegal activities.

The addition of new Article 19a will assist Member States in establishing awareness campaigns with a view to educating the public on the risks and problems associated with piracy and counterfeiting, as well as on the rights and obligations linked to online content usage and infringement.  We know other countries have found these kinds of awareness campaigns to be very effective.

New Article 22a requiring inclusion of identification codes for optical discs is a welcome addition that will be an especially valuable enforcement measure in the EU accession countries.  This addition is essential if such codes are to become an effective tool against piracy.  This measure would involve no costs to governments and imposes minimal costs on business.

Although we note a number of favorable provisions in the proposed, we have some concern with regard to provisions that appear to offer a level of protection that is weaker than that required under the TRIPS Agreement.  Article 10(2) of the proposed directive provides for provisional measures inaudita altera parte when any delay would cause irreparable prejudice to the right holder.  Under TRIPS Article 50(2), such relief should be available where any delay is likely to cause irreparable harm to the right holder, or where there is a demonstrable risk of evidence being destroyed.  The threshold for action under the Proposed directive appears to be higher than that under the TRIPS Agreement.

Another concern relates to Article 21.  Unfortunately the revisions reflected in the 5 December text do not provide the necessary clarity as to how this Article is to work with the EU Copyright Directive.  It will be important to understand the interplay between this Directive and the Copyright Directive.

Finally, regarding the issue of Internet Service Provider (ISP) liability, the U.S. Government recognizes that the proposed Directive “creates no other liability for information society services and intermediaries than is provided for in Directive 2000/31/EC.”  We are pleased to know there will be no duplicative language in the proposed Directive and Directive 2000/31/EC to create confusion in this complicated area.  U.S. law in this area recognizes the importance of Internet service providers and copyright owners working together to remedy infringements.

The U.S. Government hopes these comments will be helpful in finalizing the proposed Directive. We look forward to working with the Commission on intellectual property enforcement issues in the future. For example, in March 2003, the United States Patent and Trademark Office (USPTO), at the request of the pre-accession advisor to Poland, participated in an enforcement conference near Warsaw for judges and prosecutors.  The U.S. Government was pleased to participate in that program and we strongly support the efforts of the Commission in providing technical assistance relating to the enforcement of intellectual property rights to relevant EU accession countries. The USPTO and other U.S. Government agencies would be interested in exploring additional opportunities in the future to participate in enforcement programs for EU accession countries.