October 8, 2010

Copyright Criminal measures in ACTA

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Summary

(Update: 3 January 2011)

The negotiating parties published the final ACTA text.

The Anti-Counterfeiting Trade Agreement (ACTA)’s criminal measures criminalise ordinary companies and individuals. ACTA can be used to criminalise newspapers revealing a document, office workers forwarding a file and private downloaders. A whistle blower or weblog author revealing a document in the public interest, may easily be prosecutable, for instance if the webpage contains advertisements. Remixers and others sharing a file are included if there is an advantage. This advantage may be “indirect”, an element too unclear to incorporate in criminal law: it may be fulfilled by others. ACTA does not contain exceptions. ACTA is not limited to large scale activity, as claimed earlier by the Commission. There is no de minimis exception either.

The Presidency of the Council, representing the Member States, negotiated the criminal measures. It is uncertain whether the Presidency is competent to do that. If the measures are essential, the Commission should have negotiated them. If they are not, the EU Commission and Parliament cannot give consent to ACTA including criminal measures.

ACTA’s criminal measures fail to meet the EU principle of proportionality. And they go beyond the European Parliament 2007 vote on the IPRED 2 proposal.

An opinion of the Court of Justice as to whether ACTA is compatible with the Treaties should be obtained.

ACTA’s Criminal measures

ACTA 23.1: “Each Party shall provide for criminal procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright or related rights piracy on a commercial scale. [ACTA footnote 9]

For the purposes of this section, acts carried out on a commercial scale include at least those carried out as commercial activities for direct or indirect economic or commercial advantage.”

On July 13, Commissioner De Gucht said ACTA will not have a definition of commercial scale. The second sentence of article 23.1 is a definition of commercial scale, De Gucht misinformed the European Parliament.

The definition is extremely broad, “commercial activities for direct or indirect economic or commercial advantage”. This is hardly a threshold at all. For example an advertisement on a web page gives a commercial advantage. When someone downloads a song from the Internet without authorization, that person could be seen as having gained a commercial advantage by not paying for it.

ACTA’s criminal measures criminalise ordinary companies and individuals. ACTA can be used to criminalise newspapers revealing a document, office workers forwarding a file and private downloaders. A whistle blower or weblog author revealing a document in the public interest, may easily be prosecutable, for instance if the webpage contains advertisements. Remixers and others sharing a file are included if there is an advantage. This advantage may be “indirect”.

What could be indirect economic or commercial advantage? Say you have a nice cd, make a copy for a friend. He then buys a cd and gives it to you. The non-infringing act of someone else fulfills the indirect advantage element, and makes you a criminal. This creates major legal uncertainty.  You are already in the danger zone without advantage, since that condition may be fulfilled by someone else. Indirect advantages should never be an element of the crime, they are too unclear to incorporate in criminal law. It is a basic misconception to use a civil law definition for criminal law.

ACTA is not limited to unauthorised distribution. ACTA also includes unauthorised use of copyrighted works. At the WTO Council for TRIPS (October 2010), the US Trade Representative made clear ACTA also includes companies using unauthorised software.

ACTA’s criminal measures do not contain exceptions. ACTA removes the scale element from the definition of the crime. While in public the Commission mentions large scale criminal activities, in a secret document the Commission actually makes clear that the ACTA definition overturns the decision of the WTO dispute settlement panel in the recent China-Enforcement case.

There is no de minimis exception either.

ACTA footnote 9: “Each Party shall treat willful importation or exportation of counterfeit trademark goods or pirated copyright goods on a commercial scale as unlawful activities subject to criminal penalties under this Article. A Party may comply with its obligation relating to exportation and importation of pirated copyright or counterfeit trademark goods by providing for distribution, sale or offer for sale of counterfeit trademark goods or pirated copyright goods on a commercial scale as unlawful activities subject to criminal penalties.”

Importation may refer to downloading or taking home a dvd after holiday or taking home a laptop containing files after holiday or business trip. The alternative measures include distribution, problematic for newspapers, whistle blowers, office workers, remixers, weblog authors and filesharers. While ACTA’s border measures contain a de minimis exception, the criminal measures do not, opening up the possibility of laptop and iPod searches just after border control.

Art 23.4 “With respect to the offences specified in this Section, each Party shall ensure that criminal liability for aiding and abetting is available under its law.”

The criminalisation is so broad, that the threshold for being guilty of aiding and abetting may easily be passed.

The criminal measures are intrusive, Parties limit their domestic policy space beyond proportion, foreclosing future legislative improvements in response to changes in technology or policy. ACTA countries account for a predominant percentage of world trade, there is a clear threat that these norms will carry into the World Trade Organization and become global norms. For generations to come, there may be no way back.

The other articles relate to Trade Marks and legal persons.

Competence

The Presidency of the Council, representing the Member States, negotiated the criminal measures. It is uncertain whether the Presidency is competent to do that. The EU can only harmonise criminal measures if approximation of criminal laws and regulations of its Member States proves essential to ensure the effective implementation of a Union policy. The same is true for harmonisation by way of trade agreement. The Treaties demand proof that these measures are essential.

The EU power to negotiate criminal measures in trade agreements is not unlimited. The criminal measures in trade agreements are limited by the same rules that limit the power to make internal EU legislation. Art 207.6 TFEU: “The exercise of the competences conferred by this Article in the field of the common commercial policy shall not affect the delimitation of competences between the Union and the Member States, and shall not lead to harmonisation of legislative or regulatory provisions of the Member States in so far as the Treaties exclude such harmonisation.”

The Treaty of Lisbon entered into force on 1 December 2009. The EU is competent to make criminal law. Criminal IP measures have to be based on art 83.2 TFEU: “If the approximation of criminal laws and regulations of the Member States proves essential to ensure the effective implementation of a Union policy in an area which has been subject to harmonisation measures, directives may establish minimum rules with regard to the definition of criminal offences and sanctions in the area concerned. Such directives shall be adopted by the same ordinary or special legislative procedure as was followed for the adoption of the harmonisation measures in question, without prejudice to Article 76.”

If the measures are essential, the Commission should have negotiated them. If they are not, the EU Commission and Parliament can not give consent to ACTA including criminal measures.

Measures have to be “essential”. This has been discussed earlier. The competence and subsidiarity issues pointed out by the Dutch Parliament and others like the Max Planck Institute are still valid. Based on ECJ C-176/03, the European Commission proposed IPRED2, the IP criminal measures directive proposal 2005/0127/COD, in 2005. Both Chambers of Dutch Parliament unanimously deemed these measures not essential, the Community not competent. The Dutch Parliament, the Staten-Generaal, sent a letter to Commissioner Frattini, with English and French translations.

At the end of September 2007, the Commission launched a questionnaire addressed to the Member States in order to conduct a study on the situation of the intellectual property legislation in the Member States. The answers to the questionnaire will provide insight whether the measures are essential. The Commission should publish the answers to the questionnaire and the study.

The criminal measures have to comply with the Treaties, measures have to be “essential” and comply with the principle of proportionality (see below).

Proportionality

We can assess the appropriateness of ACTA according to the EU principle of proportionality. As a consequence of that principle, the qualification characteristics of the elements of a crime must be defined as clearly and narrowly as possible. The Max Planck Institute concluded in its statement on the IPRED 2 proposal, that harmonisation of criminal law in the field of IP, if admissible at all, must remain confined to cases of clear piracy and counterfeiting.

Max Planck Institute:
“14. Restricting the application of the directive to infringements carried out “on a commercial scale” fails to provide for an appropriate and sufficiently precise definition of the elements of a crime, all the more as it would practically only exclude acts undertaken in good faith by consumers. An example of a more precise definition of what constitutes counterfeiting and piracy can be found in Regulation 1383/2003.8

15. Indeed, when proper account is taken of the proportionality principle (see above, 6), harmonisation of criminal penalties can only be justified in relation to acts fulfilling the following elements cumulatively:
– Identity with the infringed object of protection (the infringing item emulates the characteristic elements of a protected product or distinctive sign in an unmodified fashion [construction, assembly, etc.]).
– Commercial activity with an intention to earn a profit.
– Intent or contingent intent (dolus eventualis) with regard to the existence of the infringed right.”

When we compare the broad definition of commercial scale in ACTA with “Commercial activity with an intention to earn a profit”, we see that ACTA’s criminal measures fail to meet the EU principle of proportionality.

An opinion of the Court of Justice as to whether ACTA is compatible with the Treaties should be obtained.

European Parliament

On 25 April 2007 the European Parliament (EP) concluded its first reading of the IPRED 2 proposal, which was later withdrawn. FFII/EFF/EBLIDA/BEUC published a coalition report on the proposal as amended in Strasbourg by the European Parliament at its first reading.

The European Parliament adopted the following definition of commercial scale: “infringements on a commercial scale” means any infringement of an intellectual property right committed to obtain a commercial advantage; this excludes acts carried out by private users for personal and not-for-profit purposes;”.

Note that the EP definition fails to meet the requirements formulated above by the Max Planck Institute, violates the principle of proportionality.

Including indirect economic and commercial advantages, the ACTA definition goes further than the EU Parliament definition. Compared with the EP definition, “this excludes acts carried out by private users for personal and not-for-profit purposes” is missing.

Furthermore, the European Parliament adopted some exceptions and safeguards, which are missing in ACTA:

Amendment 16: “Member States shall ensure that the fair use of a protected work, including such use by reproduction in copies or audio or by any other means, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship or research, does not constitute a criminal offence.”

Amendment 24: “Member States shall ensure that, through criminal, civil and procedural measures, the misuse of threats of criminal sanctions is prohibited and made subject to penalties. Member States shall prohibit procedural misuse, especially where criminal measures are employed for the enforcement of the requirements of civil law.”

Amendment 15: “Criminal sanctions shall not be applied in cases of parallel importation of original goods which have been marketed with the agreement of the right-holder in a country outside the European Union.”

(The last amendment refers to Trade Marks.)

The Presidency of the Council, representing the Member States, negotiated the criminal measures. Neither art 207 nor art 218 TFEU gives the Council an independent role in negotiations. The Council violated art 13 TEU by letting its Presidency negotiate. The EU has exclusive competence, negotiations should have been conducted by the Commission. Since harmonisation is not essential, the EU is not competent either.