IP Criminal Enforcement Directive moves to next step

On April 25 2007 the European Parliament adopted a proposal of the EU Commission for a Directive on criminal measures aimed at ensuring the enforcement of IP rights.

A green paper presented by the commission in 1998 highlighted counterfeiting and piracy as an international phenomenon with major economic and social repercussions, and this proposal (from which patents are excluded - see IP criminal enforcement directive ready to move to vote) seeks to remove the disparities between member states which prevent the effective combating of IP offences. It prescribes the minimum levels of criminal sanction which member states must implement to dissuade certain intentional IP infringements, as well as the aiding or abetting and inciting of infringements, where these are carried out for commercial advantage. The sanctions include:

• maximum custodial sentences of at least four years;
  
  
• maximum fines of at least €300,000;
  
  
• the destruction of the equipment used to infringe;
  
  
• the permanent closure of the establishment used to commit the offence;
  
  
• permanent bans on engaging in commercial activities; and
  
  
• a ban on access to public assistance or subsidies.

Under the proposal, member states must also allow rights holders to assist joint investigation teams and law enforcement authorities must make evidence of infringement available for use in civil proceedings brought against the alleged infringer by the rights holder.

This proposal marks a significant point in the development of the European Union: if the commission's proposal becomes a valid and binding directive, then the qualified majority voting procedure found under the EU Treaty will have been used to force member states to legislate on criminal matters. While it has been understood previously that such measures are only effective if implemented via the unanimous voting procedure found under the EU Treaty, the commission believes that the European Court of Justice's (ECJ) ruling in Commission v Council (Case C-176/03) allows the European Union to adopt criminal measures where these are 'essential' for combating offences, and where the EU legislature considers them to be necessary to ensure that EU rules are fully effective. A large number of member states disagree - for instance, the United Kingdom's European Scrutiny Committee says that "the proposal exceeds what is permissible by some margin" - and hope that the scope of the ECJ's ruling in Case C-176/03 will be clarified by the Ship Source Pollution decision (Case C-440/05). That ruling is not expected until the end of 2007.

Council discussions on the commission's proposal will continue at expert level after May 2007. The UK Intellectual Property Office will forward any comments it will receive on the proposal to the UK Ministry of Justice (formerly known as the Home Office), which will lead the discussions for the United Kingdom at this next level.

Gareth Dickson, Ashurst, London