Review of IPR Enforcement Directive Implementation
Contribution to Hearing of Legal Affairs Commission
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The question to be answered at the hearing on 2008-06-26 in Brussels was: How has the Directive 2004/48 been implemented in the member states, what effects on opensource software are to be expected and which implementations are less, which more advantageous? |
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Table of Contents
1 Speech DraftI have been invited to voice concerns of the “open source community” with regard to the Enforcement Directive 2004/48/EC and its application in various member states of the European Union. Unlike you, I have not been elected by anybody and I am not sure I can speak on behalf of a whole community. What I can point to is a declaration signed by about 100,000 supporters of the FFII who have declared they trust us to represent their concerns with respect to intellectual property rights before the European legislators. Most of these supporters signed the declaration between 2003 and 2005, when people were very concerned about a pending EU directive on software patents, which was ultimately rejected. It was also the time when the directive 2004/48/EC was being discussed, and we co-organised a mini-conference in the European Parliament on this subject, in which many interested parties and all the rapporteurs and shadow rapporteurs participated. I’m not sure to what extent the endorsement of our 100,000 supporters legitimates me to speak for the Opensource Community. We count among our supporters many people who have very little to do with opensource software. For example there were 3000 heads of software and Internet business that use and develop software under all kinds of licenses, also proprietary ones, for all kinds of operating system, including those of Microsoft. On the other hand, the name FFII stands for “Free Information Infrastructure”, and the statute explains that our aim is to help foster the creation of those digital goods, especially software and standards, that allow a maximum of interoperability and knowledge dissemination. It is clear that free/opensource software tends to fulfill these requirements particularly well. Free software is unrestricted, uncompromised software. Software that has undergone peer review of many people, that has been adapted to the greatest variety of needs, that is being developped by the most convincing project leaders, those who have been able to gather the most effective community around themselves, on a level playing field under conditions of perfect competition. So perfect that conventional wisdom would predict that there is no money to make in free software. However, in reality, many free software projects are connected to money-making businesses, some of them as big as IBM, Sun or Oracle. One could say that such businesses are the most robust ones, the ones that are best adapted to the realities of the digital age. The ones that will never generate any “natural monopolies” or “market failures”, never require intervention of competition authorities, never call for protection by intellectual property laws. This does not mean that we are opposed to what the directive 2004/48 calls intellectual property enforcement. FFII supports the enforcement of copyright. We like to see it when the law puts authors of software in control of the distribution of their work. Opensource authors sometimes sue people for violation of their licenses. Some of our members have initiated such lawsuits. In general, however, authors of free software are not as heavily dependent on legal protection as authors of proprietary software. They aim for really valuable work, rather than for money that is gained by reducing the value of their work. But they also respect those who make other choices. Linus Torvalds is quoted with the saying: “The one who writes the code, gets to determine the license, and the others don’t get to complain”. We don’t complain, neither about the scope of copyright, nor about anybody’s licensing terms, nor about enforcement measures, as long as these don’t inflict any damage on legitimate producers and users of free software. While we do in general not ask for state protection, we do sometimes feel a need to be protected against the protection efforts of the state. For example we need patent protection only in the sense of protection against patents. Unfortunately the IPR enforcement directive does a lot to increase the risks and burdens and very little to protect us from such risks and burdens. It sets a very high minimum standard of protection for the traditional businesses, who find it difficult to compete in the digital age. But it sets absolutely no standard of protection against burdens and risks. Article 2 says explicitely that member states may retain more onerous laws if such laws exist, but they are not allowed to have less onerous ones. Those notions that could provide a minimum level of protections for many developpers and users of free and opensource works are so vague that they are useless in practise. The lawmaker has apparently designed the Enforcement Directive in such a way that they are appropriate for counterfeiting, but then extended them to all intellectual property infringments, although these two areas are only marginally related to each other. The Enforcement Directive is based on the assumption that the infringer is usually mischievous and amply deserves all the harassment that the envisaged procedures provide. There seems to have been very little attention paid to the fact that increased cost risks mean an increased overall burden and in effect also an increase in the breadth of the exclusion rights concerned. This directive seemed to be part of some people call the “copyright war”. The primary purpose of the directive seems to have been to do the utmost for securing rightholder interests, while providing a few safety valves that could allow the courts to limit ensuing damage later. Any use of these safety valves would in turn lead to a flood of inquiries from national courts to the ECJ and thus fulfill a an apparent secondary purpose of the directive, namely to extend and strengthen the role of the EU in a large cross-section of civil and commercial law. The war is currently escalating. In Germany the directive was implemented only two months ago, and since then courts have been flooded with requests to obtain information about alleged copyright infringements of individual users from internet service providers. This is because the German implementation requires that, before an ISP can be obliged to provide personal information about allegedly infringing users, a court must take a decision. The courts are now regularly refusing such requests, but there is heavy pressure from the rightholder interest groups, working through the upper house of parliament, to allow direct flooding of the ISPs instead of the judges. This would erode the more ISP-friendly provisions of the E-Commerce Directive. It should be noted that ISPs of all types (including operators of simple web fora) have in recent years already been flooded by requests from lawyers to take down content that is alleged to be infringing on copyright, privacy or personality right (defamation) law. In order to avoid costs, they have generally adopted an attitude of complying with the requests, thus creating an informal system of censorship measures that go far beyond what the regulator intended (and in fact far beyond what can be accepted in a democratic society), just to be able to sustain their service. Thus, the effective scope of censorship was greatly amplified, just as with the current IPRED1 directive the scope of exclusivity is de facto amplified. One of the most famous scandal cases in this respect involved in questionable copyright claims. The plaintiff, a large royal dutch electronics company, had its lawyers send out hundreds of cost-inflicting cease-and-desist letters against resellers of parallel-imported products who had allegedly used copyrighted photographs of these products when advertising them on the Web. Big and small Internet companies and individuals are loudlly claiming about the cost burdens imposed by rigid law enforcement practises. Many services have been closing down. Useful archives are disappearing from the internet, because it is not reasonably feasible to maintain them in view of the cost risks. But the potential for destruction does not stop here. So far we have compared the abusive extension of the copyright system to conventional warfare. In that context it is perhaps appropriate to compare abusive extensions of the patent system to nuclear warfare. While copyright is used to forbid copying and derivative works, patents are used to forbid independent development. Recently concerns there has been a growing tide of destructive attacks by patent-centered ventures (often called “patent trolls”) on product-centered businesses. This month there was a big article in the German newspaper Süddeutsche Zeitung entitled: “Angriff der Trolle” (attack of the trolls), which warns that the patent system is gradually gaining heat and producing deleterious effects which will be aggravated by the IPRED1 directive. As you know, the European Patent Office has been continuously granting broad and trivial patents on pure software against the letter and spirit of the written law for about 20 years, and many national courts have been following this line. Basically it is nowadays impossible to write software without infringing on patents granted by the European Patent Office. You may remember the “Patented Webshop” poster which shows how nearly every aspect of a modern webshop falls under some granted European Patent. We have now an updated version of this poster. If anyone wants a copy, you can get it from our Brussels office. Last year, one of these patents was actually enforced. It was a really ridiculous patent, with extremely broad claims, so broad that you might think this is just a case for a sensationalist webshop poster, but not something that any patent infringement court would take seriously. Unfortunately this is wrong. The Düsseldorf court, which is the leading patent enforcement court in Europe, very much famed for the quality and competence of its “technical judges”, condemned a medium-size web service company to immediate scrap its core business and compensate the patentee for several years of unpaid license fees, and to reveal its internal business data for all these years. This verdict already followed rules that were similar to those of the IPRED directive, but under the directive it would have become even more onerous. There are cases showing the directive in action, such as the patent infringement lawsuit of a well-known royal dutch electronics company against an Italian compact disc trader. In this case the bank accounts of the Italian trader were frozen in advance, even before a court decision was reached. I do not have more time to report about details of court cases and national implementations, but I have read the implementations of a few countries, including France, Germany, Austria, Spain, Italy, Czechia, Romania and Greece, in the original languages, and brought the texts with me. I have many questions myself and would be happy to exchange views about the details. All I can say now, during my limited speaking time, is that most of the national legislators seem to have been strongly influenced by the mindset of the Commission. The german implementation is the only one I have seen that shows a certain spirit of caution. Most others seem to be trying to outperform the original, e.g. by omitting safeguards that are in the original directive, to the extent that I wonder whether some of these member states are not violating their obligations under the EC Treaty. It is interesting to see read how some of the explanatory memoranda reveal concerns about lack of clarity of the original text. In some cases, e.g. Austria, the legislators decided to literally transpose what they considered to be cryptic wordings, hoping that in the end the courts, particularly the ECJ, will make sense of them. From our experience with the legislative process, one could get the impression that this was actually an intended effect. The IPRED1 directive established community competence in a new field. If it had not been for the IPRED1 directive, we might now have a European Patent Litigation System in place, which would not be subject to any review of the European Parliament. However, also within the EU, possibilities for effective review of established directives seem very limited. I would be most interested to hear from you what kind of chances you still see for improving the directive in the light of recent changes and lessons learned through the implementation process. We could think of some ways of reducing the overall cost risks and burdens and specifically the risks for open source software development, if you think there is room for this. Also, in general, I’m looking for some thoughts to direct our further research and reporting on this subject. 2 Consulted Materials2.1 GeneralThe original directive draft was strongly contested by authoritative scholars and stakeholders in 2003 and then, somewhat unexpectedly, passed the Parliament and Council in a watered-down version in 2004.
2.2 Implementation in GermanyThe copyright enforcers did not achieve what they wanted: use of the measures requires a decision by a judge, and lawcourts are refusing to be inundated with requests. Enforcement of copyright claims against private parties by remedies of civil law has traditionally been so strong in Germany that the directive led to a partial weakening of the instruments: a limit of 100 eur for the fee that a lawyer can charge for pointing out a non-commercial-scale copyright infringment was introduced in the implementing law. Patent enforcement by German courts is already famed for its efficiency and can be expected to become slightly more incisive, especially when it becomes to pre-trial measures, such as securing of proofs and freezing of bank accounts. The implementation came 2 years late, Germany was (one of) the latest countries and fined by the ECJ for this.
2.2.1 Use of copyright against parallel importers in Germany
2.3 Implementation in AustriaThe directive was implemented into two sets of laws by two ministries, one for intellectual and one for industrial property. The drafts of both ministries were very similar to each other. They pointed out flaws in the reasoning of the original directive, such as lack of clarity of several concepts, including “commercial scale”, and proposed to literally include the questionable wordings into the Austrian law, with the aim of letting the ECJ clarify later. The Austrian Chamber of Attorneys (Rechtsanwaltskammer) protested against harshness of the provisions especially with respect to patent infringement and asked for mitigation, but the protest was not heeded. The Parlament passed the law as requested by the ministries.
2.4 Implementation in FranceThe French implementation was late by 1 year. The Parliament discussed about the dangers and damages arising from counterfeiting and then, in that climate, approved a version of the directive that went beyond what was requested by the EP. In particular, the safety valve of “commercial scale” was removed, with the argument that this concept is unclear and that all infringements are equally reprehensible and intolerable. Eloquent argumentation by APRIL.org against this had an impact on one or two speeches in the Parliament but in the end remained unsuccessful. - libre “La guerre des copyrights”, Emmanuel Pierrat, Fayard 2006 - Etude succinte APRIL - version francaise originale - Exposé de Motifs - rapport par M. Philippe GOSSELIN, adopté par le Sénat, enregistré 2007-09-26, PDF - texte sur Journal Officiel
2.5 Implementation in ItalyItaly implemented the directive within the deadline, by means of a very fast procedure of the ending Berlusconi III government, which led to criticism by some organisations. The Italian implementation consists of amendments to a large number of laws, some very old, and is thus difficult to read, however it seems that the implementation is rather harsh, putting more weight on the interests of right-holders and less on the limiting provisions. There is already patent caselaw involving freezing of bank accounts in the pre-trial phase which is explicitely based on this implementation.
2.6 Implementation in RomaniaAdoption in time in a climate of urgency, based on a ministerial draft that lacks certain safeguards. Later a prominent group of judges and lawyers announced formation of a working group designed to propose corrections.
2.7 Implementation in SpainFairly early implementation with extensive discussions in the camp of the governing socialist party.
2.8 Implementation in Czechia
2.9 Legislative Developments at EU level after IPRED12.10 IPRED2: Criminal Measures
2.10.1 ACTA
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