The EU Commission lacks basic reading skills

May 1, 2011
By Ante

In January 2011, prominent European academics issued an “Opinion of European Academics on Anti-Counterfeiting Trade Agreement” (ACTA). The academics invite the European institutions, in particular the European Parliament, and the national legislators and governments to withhold consent of ACTA, “…as long as significant deviations from the EU acquis or serious concerns on fundamental rights, data protection, and a fair balance of interests are not properly addressed”.

In April 2011, the European Commission’s services put on-line comments to the European Academics’ Opinion on ACTA. The Commission denies ACTA is incompatible with EU law.

The Commission fails to make its point in a convincing way. The Commission shows a lack of basic reading skills, does not address points raised by the academics and fails to reason in a logical way. Regarding the border measures, the Commission actually agrees with the academics. The Parliament should ask the European Court of Justice an opinion on ACTA.

It is too much work to address all the flaws in the Commission’s notes. I will give some examples.

ACTA’s damages are higher than EU law’s damages

The academics wrote: “Some of the factors mentioned at the end of the provision are not provided for in art. 13.1 Directive 2004/48. These factors should not be adopted in European law since they are not appropriate to measure the damage. “The value of the infringed good or service, measured by the market price, [or] the suggested retail price”, as indicated in art. 9.1 ACTA, does not reflect the economic loss suffered by the right holder.”

The Commission states: “There is no conflict between article 9 of ACTA and article 13 of Directive 2004/48/EC. Both provisions refer to ways in which courts can come to the determination of fair damages for the injured party.”

Damages in EU law are based on economic loss suffered by the right holder. The academics show that ACTA goes beyond that. The Commission just calls them both “fair”, and sees no difference. This is like saying: “big cars and small cars are both nice cars, so there is no difference.” But with cars and with damages, it is not only important both are cars or damages, the size is relevant as well. ACTA exceeds the level of damages in EU law. The Commission does not address the size aspect raised by the academics.

Bringing different things under the same category does not make them the same. Fines and death penalty are both deterrent, they are not the same.

Going beyond economic loss suffered by the right holder is not “fair”. It disproportionally hurts for instance startup companies in conflict with major patent holders. The Commission and ACTA advocate seeing damages based on retail price as “fair”. Unbalanced enforcement measures may heighten market entrance risks for innovators. Startup companies are often confronted with patent minefields. Even a mere allegation of infringement may easily lead to market exclusion. Startup companies often do not have enough resources to litigate. ACTA is biased against startup companies, the heightened damages hurt innovation.

The Commission states: “The examples given in article 9.1 of ACTA and highlighted by the authors of the Opinion are not mandatory for the ACTA Parties (cf. the provision says “may include”).”

But this “may” in article 9.1, is permissive towards the rights holders, it refers to “any legitimate measure of value the right holder submits”.  Article 9.1 is not permissive towards the ACTA parties: “Each Party shall provide that” and “a Party’s judicial authorities shall have the authority to consider”. The Commission shows a lack of basic reading skills.

ACTA article 9.1: “Each Party shall provide that, in civil judicial proceedings concerning the enforcement of intellectual property rights, its judicial authorities have the authority to order the infringer who, knowingly or with reasonable grounds to know, engaged in infringing activity to pay the right holder damages adequate to compensate for the injury the right holder has suffered as a result of the infringement. 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.

Border measures

The academics wrote: “ACTA’s provision on the scope of the border measures section contains an ambiguity giving rise to potential misuse. Whereas art. 2.1(a) Border Measures Regulation 1383/2003/EC (BMR) specifically narrows the scope of application of border measures for trademark infringements to “counterfeit goods” only, art. 13 ACTA instead allows border measures in the case of “intellectual property rights” in general and thus applies to all kinds of trademark infringements. IP rights are defined in art. 5 (h) ACTA as all categories of IP covered by TRIPS. This suggests an interpretation of art. 13 ACTA that includes not only cases of counterfeiting, but also all other forms of trademark infringements based on mere similarity of signs, risk of confusion and even the protection for well-known trademarks against dilution. This is not only a clear extension of the EU acquis, but presents a particular problem for international trade in generic medicines which could be seized based on allegations of ‘ordinary’ trademark infringements. For all these reasons, art. 13 ACTA requires rewording or, at least, a narrow interpretation and implementation.”

The Commission states: “During the ACTA negotiations, the Commission services insisted on a broad definition of trademark infringements in Section 3 on Border Measures, in order to keep the necessary flexibility in view of  the on-going review of the applicable EU legislation∗ (Regulation 1383/2003).”

This is idiotic. If the EU wants flexibility, ACTA should have a narrow definition of trademark infringements, not a broad one. With a narrow ACTA definition, the EU can choose between narrow and broad. With a broad ACTA definition, the EU can only have a broad one too – will have to change its narrow definition to a broad one.

The academics state ACTA goes beyond EU legislation, the Commission affirms it insisted on that. The Commission actually agrees with the academics.

The Commission states: “the example mentioned in the Opinion appears to imply that the practice of using infringing trademarks (with mere “ordinary” infringements) is generalised among the industries producing generics. As far as we are aware, this is not the case: legitimate generic producers use their own trademarks, and have no reason or interest whatsoever to engage in trademark infringement.”

The Commission overlooks the scandalous seizures of essential medicines destined for developing countries. At least one of the seizures was based on supposed trademark infringement. In September, the Dutch minister of Economic Affairs admitted the definition is problematic for access to medicines.

The Commission states: “In any event, defining and determining whether a trademark infringement exists on the basis of similarity to protected trademarks or other reasons, is a matter of the substantive protection of a trademark in each ACTA party and of assessing this in accordance with the respective legal orders of the Parties. These matters are neither addressed nor modified by ACTA.”

Idiotic again. In EU law, similarity is an infringement, and the EU will not change this. For this reason, the EU needs to exclude similarity from border enforcement. And ACTA makes that impossible.

In this section, the Commission also makes a remark on civil remedies: “ACTA leaves it optional for signatories to apply the civil remedies section to patents (« ..may.. »).”

That is not precise enough. Footnote 2 says: “A Party may exclude patents and protection of undisclosed information from the scope of this Section”. The Commission already indicated that it will not use this opt out. The Commission will seek the European Parliament consent for ACTA including the civil measures against patent infringements. The problems the civil measures against patent infringements may cause, must be regarded, not disregarded.

Criminal measures

Commission: “However, the Criminal Enforcement provisions of ACTA do not require additional legislation at EU level. A similar situation arises from the TRIPS Agreement, which has been in force since 1996. The TRIPS Agreement also contains criminal enforcement provisions that bind EU Member States which had to comply, in their national laws, with TRIPS. In that case, no EU legislation was necessary to implement these aspects of the TRIPS Agreement concerning criminal sanctions.”

The Commission has been informed earlier of something it should know itself anyway: The Community did not sign TRIPS criminal measures, since it was not competent to do so. It is incredible that the Commission’s services are not aware of this. The Commission does not even know the European Court of Justice case law on Community / EU competence. What a total disregard for the legal reality.

The EU is not competent to sign ACTA’s criminal measures either, but does intend to sign them anyway. One of the reasons the Parliament should ask the European Court of Justice an opinion on ACTA.

Commission: “Furthermore, Directive 2004/48/EC stipulates in its recital (14) that “Acts carried out on a commercial scale are those carried out for direct or indirect economic or commercial advantage…”. This definition is rather close to the definition used in ACTA, which focuses on commercial activities for an economic or commercial advantage, which is the opposite of a personal activity by a private user without profit motivations. Indeed, said recital also clarifies that “…this would normally  exclude acts carried out by end-consumers acting in good faith.”.

There is a gap between “for profit” and “advantage”. ACTA can be used to criminalise newspapers revealing a document, office workers forwarding a file and private downloaders; whistle blowers and weblog authors revealing documents in the public interest and remixers and others sharing a file if there is an advantage. This advantage may be indirect, a concept we believe to be too unclear to incorporate in criminal law. ACTA’s definition violates the proportionality principle.

Commission: “The criminal enforcement provisions of ACTA only apply to counterfeiting and piracy activities (the so-called “fake” goods, as opposed to goods lawfully marketed in the exporting country). Illegal parallel trade consists of the unauthorised import of legitimate goods, not of counterfeit or pirated ones. An express exclusion was therefore redundant. Therefore, parallel imports will not be hindered by ACTA.”

In civil law, parallel import is an infringement. The “unauthorised import” leads to “bearing without authorization a trademark”, which is used in ACTA’s definition of counterfeit goods. It rather seems ACTA does criminalise parallel import.

12 Responses to The EU Commission lacks basic reading skills

  1. Andy on May 1, 2011 at 10:48 am

    The Commission services didn’t honestly believe they could fake it?

    Time to ask the ECJ to put the kibosh on the anarchism of DG Trade.

  2. Frits Rincker on May 2, 2011 at 8:51 am

    There is no need to go into arguments about damages, ACTA is a scam to monetize something that is ephimeral, music and style, there is nothing produced or sold with real economic value so it should not even be considered to be put into law. It is an outright crime.

  3. teapartydoc on May 2, 2011 at 7:56 pm

    The entire regime of intellectual property needs to be re-evaluated in the context of digital media.Entire populations of people cannot be held hostage by a few individuals, creative or not, who stand to profit or gain a legal stranglehold on others who may or may not have made use of something these folks may or may not have created. How long will it be until we discover that a plagiarist has successfully destroyed the career of the original producer of something by utilizing a draconian law?

  4. Myron Kuziak on May 4, 2011 at 12:54 am

    This controversy, highlighted by courageous, honest commentators, illustrates, once again, the stupidity, ignorance, and, dare I say it, villainy of governmental agencies when dealing with the power of wealth. Humans are infinitely interesting and resourceful, but also infinitely gullible, lazy and wilfully ignorant. The institutions of government, especially governments and their minions who believe in their own inherent wisdom, maqnanimity and unassailble righteousness, such as those dominated by social democrats and socialists, are also the most difficult to fight, since vast hordes of their citizens believe the myths they perpetuate. This is what the authors of this critique of the European Commission are confronting, as well as the evil Satan of US media capitalism.

  5. [...] Föga förvånande håller inte EU-Kommissionen med. I ett svar som publicerades förra veckan avfärdar Kommissionen forskarnas oro och kritik mot ACTA. Man erkänner de undertecknade forskarnas expertis, men efter att ha ”tittat noga” på deras skrivelse hävdar Kommissionen att skrivelsen inte på ett övertygande sätt kan visa att ACTA inte skulle vara i linje med existerande EU-rätt eller för den skull innebära något som helst hot mot medborgerliga rättigheter. I stället hävdar Kommissionen, i punkt efter punkt, att ACTA visst är fullständigt förenligt med nuvarande EU-lagstiftning. Det är en argumentation som knappast lär övertyga skeptikerna. [...]

  6. [...] Föga förvånande håller inte EU-Kommissionen med. I ett svar som publicerades förra veckan avfärdar Kommissionen forskarnas oro och kritik mot ACTA. Man erkänner de undertecknade forskarnas expertis, men efter att ha ”tittat noga” på deras skrivelse hävdar Kommissionen att skrivelsen inte på ett övertygande sätt kan visa att ACTA inte skulle vara i linje med existerande EU-rätt eller för den skull innebära något som helst hot mot medborgerliga rättigheter. I stället hävdar Kommissionen, i punkt efter punkt, att ACTA visst är fullständigt förenligt med nuvarande EU-lagstiftning. Det är en argumentation som knappast lär övertyga skeptikerna. [...]

  7. [...] values. So thanks to you, a constitutional crisis in Hungary seems to be minor, and the fact that the Commission can’t even read it’s own laws is just worth a mild smile from our [...]

  8. [...] The EU Commission lacks basic reading skills [...]

  9. Legal questions about ACTA | ACTA on June 20, 2011 at 6:20 pm

    [...] In April 2011, the European Commission’s services put on-line comments to the European Academics’ Opinion on ACTA. The Commission denies that ACTA is incompatible with EU law. The Commission’s services’ comments met criticism (IP-Watch / FFII) [...]

  10. [...] the Commission’s reply and discovered that after correcting the mistakes they made, they actually confirm the opinion they were trying to refute. The Commission primarily appears to suffer from a lack of reading [...]

  11. Shannon on August 1, 2011 at 12:03 am

    Andy. Do you really think though they could fake it?

  12. [...] FFII: The EU Commission lacks basic reading skills http://acta.ffii.org/wordpress/?p=598 [...]