TCS Daily

Pirates of the European

By Waldemar Ingdahl - March 12, 2004 12:00 AM

Intellectual property issues are among those most important to our information society, but since they involve a complicated mix of technology, economics and politics, they are not easy to explain or to resolve. Thus they seldom receive coverage in the press, apart from trade papers. However, one pressing EU issue deserves special mention. This week's vote by the European Parliament in favor of stronger enforcement measures for intellectual property rights is a good first step to protecting copyrights and boosting innovation. But more needs to be done.

In 2001, the EU Copyright Directive set out the legal framework for copyright and related rights in member states. The Intellectual Property Rights Directive of 2003 aims to harmonize the legislation of EU member states with regard to the enforcement of intellectual property rights, and to establish a framework for the exchange of information and administrative cooperation among the member states.

Still, after having introduced these laws, significant differences remain among the laws of various member states in terms of enforcement mechanisms. To just name two examples, there are discrepancies in how member nations calculate the amount of damages awarded to property holders in infringement cases, and in what kind of penalties are imposed on the infringers. The differences could, according to the European Commission, threaten the substance of all intellectual property protection in Europe and thus require harmonization.

Enforcement procedures that the proposed Directive will introduce union-wide are, for instance: the ability to seize suspected counterfeit goods, even before a finding on the merits, if there is a risk that the evidence of the infringement may be destroyed; and the precautionary seizure of pirates' property (including bank accounts) if there is a risk that they will dissipate their assets before an award of damages.

Groups representing intellectual property rights holders have called for stronger measures to protect their interests. Civil liberties groups, however, feel that the measures proposed by the Commission go too far in protecting the interests of rights-holders. They argue that the proposed Directive, which is similar to the US Digital Millennium Copyright Act, will seriously harm consumers and small businesses, while benefiting large intellectual property rights holders. This is because technical protection measures can be attached to all digital content and circumvention in all cases is illegal -- there are no exceptions.

The terms of the proposal are not specifically aimed at pirates and counterfeiters, but cover any infringement of copyright by anyone, including small-scale non-commercial activities. European citizens will be liable for all infringing activities, however insignificant or innocuous, and are faced with civil sanctions and penalties. This would greatly affect the free software movement and the growing use of open source software, since its proponents would be legally vulnerable to claims of copyright infringement. ISPs could also be ordered to disclose customer names, block content or undertake surveillance. There are also concerns about the role of intermediaries such as ISPs and universities having to monitor traffic and content.

The European Commission contends that the draft legislation aims to represent "best practice" legislation, rather than adopting the strongest anti-piracy measures of the individual member states. According to the Commission, without the Directive, piracy of products protected by intellectual property rights will ultimately endanger innovation and creativity in the EU furthermore; counterfeiting represents a threat to employment and consumer protection within the EU.

The debate has recently flared up since the release of a paper from the Commission, by the European Digital Rights (EDRi), an international coalition dedicated to defending "civil rights in the information society". In this paper the members states' proposal differs from European Parliament's version by calling for penalties to be imposed on all types of intellectual property infringements, the coalition said. A parliamentary committee in the fall instead approved calling for "appropriate sanctions."

Before it came up for a vote in the plenary, MEPs were subject to intensive lobbying from both sides. The fundamental cultural differences between the legally oriented content owners and the more technologically oriented digital rights activists are unlikely to promote constructive dialogue. While the former have a better understanding of the political, economical and legal system, the latter have a cultural and technological impetus as well as appeal to politicians looking for cost-cuts and lessening American software dominance. If approved by member states in its current form, the Directive will represent an important boost for intellectual property rights holders in the EU, but there is also the risk that it could potentially stifle competition from smaller companies that rely on reverse engineering or open source to compete with the market leaders. The Directive may not just be a choice of what road the EU will take in the intellectual property debate but also what kinds of software industry to promote.

Intellectual property is necessary for the continued development of not just software technology but anything based on information -- just about everything in the knowledge economy. At the same time striking the balance between protecting it and protecting civil liberties is hard as long as they are viewed as fundamentally opposed. But there is no reason they should be opposed; what remains is to find a workable form. The EU directive may be the first step towards this, but it is likely not the end.

Waldemar Ingdahl recently wrote for TCS about "Swedish Meatballs."


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