[A2k] IP-Watch, Change To EU Enforcement Directive Could Criminalise Parallel Imports

[Pravir Palayathan]

http://ip-watch.org/subscribers/subscribers_20070803.php?res=1024_ff&print=0

Change To EU Enforcement Directive Could Criminalise Parallel Imports

By Monika Ermert for Intellectual Property Watch

The European Parliament has voted against criminalising parallel imports of
goods in the proposed European Union directive on criminal measures aimed at
ensuring the enforcement of intellectual property rights (IPRED2). Yet these
re-imports of products marketed by rights holders in other countries may be
criminalised if Parliament does not change a "cleaned-up" draft text of the
directive that has quietly emerged, sources say.

The directive is a follow-up to the IP Enforcement Directive (2004/48/EC,
IPRED1) passed by the EU in 2004 and will add criminal sanctions against
piracy and counterfeiting of a commercial scale. Both IPRED1 and IPRED2
brought about fierce debates about how far protection of intellectual
property should go in Europe.

Two contradictory amendments are the cause of the trouble. In Amendment 15
tabled at the first reading, parallel imports are removed from sanctions.
"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," it states.

On the other hand, the last part of Amendment 38 states that the directive
should not apply to any infringement of an intellectual property right
related to "parallel importation of original goods from a third country
which have been allowed by the right holder."

A reading of the amendments might be that while 15 would not criminalise
parallel importation for original goods, 38 would make it criminal if the
right holder had not said yes to it. And now 15 appears to have gone
missing, and the legislation on a fast-track to passage.

Both amendments were carried in a vote in April (IPW, European Policy, 26
April 2007) despite the fact that they are mutually exclusive.

"There a huge difference between both amendments," said an assistant of
Hans-Peter Mayer. Mayer has been JURI shadow rapporteur for the EPP/ED, the
Conservative Party group in the Parliament, to help to find compromises
between Parliament and Commission. "The lawyer-linguists had to adapt both
amendments," she said. The lawyer-linguists check and revise legislative
acts of the Union before publication.

Lead rapporteur Nicola Zingaretti was consulted and himself also consulted
the shadow rapporteur and the secretariat of the Parliament, the assistant
said. The changes, according to her, were routine and from the standpoint of
content "logical."

Now, in the consolidated text available on the EU website the exclusion of
parallel imports from criminal sanctions has been eliminated. The text that
is the basis for discussions between EU Parliament, Council and Commission
according to the co-decision procedures in Article 1 that describes
"objective and scope" excludes from criminalisation only parallel
importation allowed by right holders. And it confirms in Article 3 on
"offences" that: "criminal sanctions shall not be applied in cases of
parallel importation of original goods from a third country which have been
allowed by the right holder."

Alarm Over Missing Amendment

Amendment 15 is missing in the consolidated text, and ?the text does not
represent the plenary vote," concluded activists from two nongovernmental
organisations, the Foundation for a Free Infrastructure (FFII) and the
Electronic Frontier Foundation (EFF). The activists were alarmed about
ever-tighter restrictions for consumers, and users contacted the respective
rapporteurs and EU services. The three parliamentary committees involved in
the preparation of the text for the first reading (Legal Committee [JURI],
Committee on Civil Liberties, Justice and Home Affairs [LIBE] and the
Committee on Industry, Research and Energy [ITRE]) all agreed on the
exclusion of parallel imports from penalties.

Yet according to Erik Josefsson of the EFF in Europe, nothing has happened
to solve the problem. Josefsson said he was afraid that the changes would
just be carried through the so-called trilog procedure without further
consultation of the plenary of the parliament where a considerable number of
members (MEPs) were not happy with the language in the draft text adopted
during the first reading to begin with. The trilog allows a fast track
procedure without second reading in the Parliament - it was used to speed up
the predecessor IPRED1 four years ago.

FFII has posted an analysis of the errors it found in the draft legislation.

Parliament was always interested in a second reading, said an assistant of
Rainer Wieland, rapporteur for IPRED in the LIBE Committee. A second reading
would give MEPs the possibility to address the original inconsistency. But
according to his information there might be no second reading, the assistant
said. Zingaretti, who according to the shadow rapporteur's office was fine
with the changes, could not be reached for a comment.

The criminalisation of the parallel imports now appearing in the document
constitutes a turnaround, said Professor Annette Kur, Research Fellow at the
Max Planck Institute for Intellectual Property, Competition and Tax Law. The
institute had filed a statement on IPRED2 earlier in the process
recommending not to criminalise parallel importation.

"In my opinion this is a change of considerable weight," said Kur. Parallel
imports of products marketed by EU companies outside the union for lower
prices were a much seen phenomenon. While civil right sanctions are in
place, criminal law sanctions would be wrong, according to Kur.

"People who engage in parallel imports are not criminals," said Kur, adding
that in the end, what these people would sell were originals and not
counterfeited or pirated goods. Kur said there is a long, ongoing debate
about whether parallel importing was a violation of trademark law at all.
The EU Trademark Directive demanded a change of an well-established German
law principle that "originals always were originals," she said. Even the
World Trade Organization Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS) did not go so far as to ask for sanctions for
parallel imports. The mere mention of intellectual property today results in
knee-jerk reactions for tighter regulation, warned Kur, who asked for more
caution.

How the Parliament will react to the change of IPRED has still to be seen.
According to the magazine Eu Reporter a complaint has filed by one MEP. Yet
neither the offices of the shadow rapporteur or the LIBE rapporteur could
confirm at press time. Federico de Girolamo, spokesperson of the Parliament,
said he had no news about a complaint. Most MEPs and officials of the EU
services are away from Brussels during summer. Nothing will happen at the
moment, said one observer, especially as the member states in the European
Council did not have their first reading. How the national governments will
react remains to be seen.

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