The EU and Singapore initialed and published the text of the EU-Singapore Free Trade Agreement (EUSFTA). The text contains the much criticized retail price damages, known from the Anti-Counterfeiting Trade Agreement (ACTA), the treaty the European Parliament rejected last year. On top of the retail price damages the judicial authorities have the authority to order the infringer to pay the right holder the infringer’s profits. This heightens the already very high damages.
Retail price damages in EUSFTA
Article 11.44.2 EUSFTA: “In determining the amount of damages for infringement of intellectual property rights, a Party’s judicial authorities shall have the authority to consider, inter alia, any legitimate measure of value the right holder submits, which may include lost profits, the value of the infringed goods or services measured by the market price, or the suggested retail price.” [fn 35] (pdf)
Infringer’s profits in EUSFTA
The article continues: “At least in cases of copyright or related rights infringement and trademark counterfeiting, each Party shall provide that its judicial authorities have the authority to order the infringer to pay the right holder the infringer’s profits that are attributable to the infringement, whether as an alternative to or in addition to or as part of the damages.” (emphasis added)
One of the options here is: in addition to the damages. That is above the ACTA damages.
Very high damages
Retail price damages can turn out very high. To give an example, a two terabyte hard disk can contain 540.000 songs. Imagine someone copies a hard disk full of songs. The rights holder can claim 540.000 euro, based on a retail price of 1 euro per song.
A judge may not award such damages, but the claim has a terrifying chilling effect. Who wouldn’t settle for one percent, 5400 euro? Otherwise, an infringer runs the risk of having to sell his or her house for copying a hard disk.
The threat of excessive damages payments will also have a chilling effect on Internet service providers, and so on the right to freedom of expression.
Their enabler to the right to participate in cultural life may sell 100 illegal copies of a CD for 2 euro, the enabler then has a gross revenue of 200 euro. With damages based on retail price, the enabler may have to pay 2000 euro damages (100 x 20), ten times his gross revenue. And to add insult to injury, he may have to turn in his meager profits and may have his computer destroyed.
The secret negotiations led to ACTA-plus damages which will have a terrifying chilling effect and which will harm the right to freedom of expression, the right to participate in culture and the right to access to knowledge.
fn 35 reads: “In the case of the Union, this would also include, in appropriate cases, elements other than economic factors such as the moral prejudice caused to the right holder by the infringement.”
fn 33 reads: “A Party may exclude patents from the scope of Section C (Civil Enforcement of Intellectual Property Rights).”
Update: Marietje Schaake’s Parliamentary question to Commissioner de Gucht on ACTA provisions in EU-Singapore FTA text
Update: Commission answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2013-012147&language=EN