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).”
Marietje Schaake’s Parliamentary question to Commissioner de Gucht on ACTA provisions in EU-Singapore FTA text
I’m not convinced by the commission’s answer. The commission writes that the overall principle is adequate damages, and “paragraph 2 of Article 11.44 of the EU-Singapore FTA only illustrates a wide range of optional methods”. Yes, but these optional methods are in my opinion above adequate, as I show above. When you give examples of adequate which are above adequate, you distort legal thinking, you mess with definitions.
Then, the article continues (see above) with “judicial authorities have the authority to order the infringer to pay the right holder the infringer’s profits that are attributable to the infringement, (…) in addition to (…) the damages.”
So this is in addition to the damages. Does the end result still have to be adequate, or can it go above that, as the text says “in addition”?
If the end result has to be adequate, just adequate without any addition would have been best. The FTA text is confusing, seems meant to create an upward trend.
The FTA exports EU law (Intellectual Property Rights Enforcement Directive (IPRED): inaudita altera parte, injunctions, etc). I’m not happy with that, as it takes away policy space needed for reform. Last year we had a consultation on reform of IPRED, the FFII argued that the EU has to bring IPRED in line with the ICESCR.
FFII, 2013, EU law and the International Covenant on Economic, Social and Cultural,
Exporting IPRED makes that harder, and makes reform vulnerable for both state-to-state and investor-to-state dispute settlement (if the latter makes it to the agreement, there are plans to add it at some point).
Regarding Glyn’s question below, which I had overlooked (apologies): Yes, like ACTA the council and parliament will have to ratify it.
And then? Possibly the commission will propose to update IPRED, oh, it is not a change, just bring language up to date… And so the IP ratchet goes on.