Annexes to COM(2014)392 - Towards a renewed consensus on the enforcement of Intellectual Property Rights: An EU Action Plan

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dossier COM(2014)392 - Towards a renewed consensus on the enforcement of Intellectual Property Rights: An EU Action Plan.
document COM(2014)392 EN
date July  1, 2014
Agreements between rights-holders and the business partners on whom they rely to source, promote, distribute and sell their products are important to meet the dual goals of rapid detection and interruption of commercial scale IP-infringing activities. Any such memorandum should have well-embedded mechanisms for the protection of fundamental rights and a competitive environment, focusing in particular on preventing potential abuses. Such agreements when applied are a rapid response mechanism to the IP infringement problem. Stakeholder Dialogues leading to such agreements involve meetings between a representative group of relevant stakeholders focusing on concrete problems and seeking practical solutions that are realistic, balanced, proportionate and fair for all concerned. They have been initiated by the Commission and seek to facilitate the development of Memoranda of Understanding (MoUs) that establish the principles that signatories can apply in bilateral contractual agreements. The goal is to deprive IP infringers of their revenue streams. The first dialogue, on limiting the sale of counterfeit items via online platforms, resulted in a MoU in 2011[14]. An evaluation report in April 2013[15] concluded that it could usefully be extended to include new parties. Taking account of all relevant developments, the Commission will establish new Stakeholder Dialogues in 2014 and 2015, comprising advertising service providers, payment services and shippers, with the objective of achieving in the course of 2015 further Memoranda of Understanding that will help keep IP-infringing products off the Internet. In parallel, the Observatory will carry out a comparative analysis on existing collaborative practices between right holders and business partners established in Member States and third countries.

Action 3: The Commission will facilitate the development of further voluntary Memoranda of Understanding to reduce the profits of commercial scale IP infringements in the online environment, following Stakeholder Dialogues involving advertising service providers, payment services and shippers.

2.4. Assisting SMEs to enforce their IP rights

The EU provides for harmonised rules on civil IP redress systems through the 2004 Directive on the enforcement of intellectual property rights[16]. Following a Communication in 2010[17], an extensive public consultation process has been undertaken by the Commission to assess whether this text is fit for purpose for the numerous challenges facing IP enforcement. In late 2012, the Commission issued a questionnaire to stakeholders to gather information on whether existing cross-border IP civil redress for infringements was accessible to all rightholders, notably SMEs. It also explored whether the courts system in Member States was fast enough and endowed with sufficient specialisation. The results of this survey were published in July 2013[18]. Building on this, the Commission will consider whether further action is needed to improve civil redress procedures, such as low value claims , for SMEs. The high costs and complexity of litigation often dissuade innovative SMEs from enforcing their IP rights, including those stemming from standard essential patents (SEPs), and may lead to market abuse by larger competitors. At Union level, several instruments in the area of civil procedure already exist. Most recently, the Commission proposed[19] to strengthen and improve the current European small claims procedure, which is a uniform procedure available across Member States (Regulation (EC) No 861/2007). This action adds to the initiatives by the Commission to assist Member States in improving the effectiveness of their national justice systems such as the EU Justice Scoreboard[20].

Action 4: The Commission intends to analyse and report on existing national initiatives seeking to improve IP civil enforcement procedures for SMEs, in particular in respect of low value claims and consider possible action in this field.

The high costs and complexity of litigation can often dissuade innovative SMEs from enforcing their IP rights. As a consequence, SMEs’ returns on innovative investments are not optimised and they fail to expand their research and development activities. In some Member States, national schemes and funds seek to redress this situation, e.g. through improved litigation insurance possibilities. In 2015, with the assistance of the Observatory, the Commission will, if appropriate, review the effectiveness of such national schemes, as well as schemes of third countries. On this basis, the Commission will consult on the results of this review by means of a Green Paper, and leading, if appropriate, to a policy initiative.

Action 5: The Commission will issue a Green Paper to consult stakeholders on the need for future EU action based on the best practice found in nationally financed schemes assisting SMEs to enforce their IP rights.

The Observatory could usefully take into account in its various activities the specificities of SMEs, including their resource constraints, when it comes to SMEs enforcing their IP rights. As rightholders, SMEs often need information to adjust their marketing or distribution strategies and they may also lack skills and expertise to effectively protect their intellectual property. Thus, the Commission puts efforts in developing a system of support[21] that includes enforcement issues: by strengthening and coordinating national support through the IPorta project; and by advice on IP in transnational business activities through the European IPR helpdesk and the IPR SME Helpdesks in third countries[22]. This system cooperates closely with general business support, with national IP support and with the Observatory's actions.

2.5. Chargeback systems: a tool for consumers

Certain credit and debit card providers offer chargeback schemes where, up to a certain value, consumers can contest and not pay for a service or product that they would not have wished to purchase had they already known it was not genuine. In certain Member States these schemes are required by law. Such schemes obviously mitigate against fraud but can also help ensure that those consumers who unwittingly receive IP-infringing goods and services either do not end up having to pay for them or can subsequently seek compensation. These schemes can play a role in limiting IP-infringing operators of their ill-gotten gains. In 2014, the Commission will launch a consultation exercise on chargeback schemes and other payment confirmation schemes that would reduce the flow of money going into commercial scale IP-infringing activities. This public consultation exercise will explore the scope for taking action in this field.

Action 6: The Commission will issue a Green paper to consult stakeholders on the impact of chargeback and related schemes to tackle commercial scale IP infringements. On this basis, it will explore the need and scope for taking concrete action in this field.

3. Public authorities working together 3.1. Cooperation between national authorities

In a Europe without internal frontiers, given the transnational nature of organised crime’s involvement in IP-infringing activities, there is a need to enhance cooperation between national authorities, EU institutions, the EU Justice and Home Affairs agencies, relevant third countries and other partners. In this context, the Justice and Home Affairs Council[23] - notably based on Europol's Serious and Organised Crime Threat Assessment - decided in June 2013 that disruption of organised crime groups involved in the production and distribution of counterfeit goods violating health, safety and food regulations and those producing sub-standard goods should be a priority for the period 2014-2017.

To deliver on the various priorities of these Council Conclusions on the fight against serious and organised crime, annual operational action plans are developed by Member States with the support of the Council Secretariat, the Commission, Eurojust, Europol and other relevant EU agencies[24]. The implementation of these actions will be monitored regularly. The Commission is willing to support Member States through possible co-financing of such actions.

The EU Customs Action Plan to combat IP infringements for the years 2013-2017[25] sets out the framework for joint action by the 28 customs administrations in order to better fight IP infringements at the EU external borders. It foresees the development of tailor-made approaches to address the delivery of IP-infringing goods bought on the internet via courier and postal parcels. Further cross-border and cross-authority cooperation is required. The Commission will hold a conference in 2015 with customs, police and judicial authorities' representatives to determine how such enhanced cooperation can be achieved.

The challenge of how to monitor better the evolving trends in IP enforcement outside the EU is being addressed in parallel in a Commission Communication updating the 2004 "Strategy for the enforcement of intellectual property rights in third countries"[26]. In the context of negotiations on free trade agreements, the EU aims to obtain substantial commitments from third country governments to reach a high level of IPR enforcement to thereby facilitate trade in IPR-intensive products. Deeper cooperation should also be developed between customs authorities in the EU and in third countries with respect to trade of IP-infringing goods, as foreseen in the EU Customs Action Plan[27].

Some Member States have established within their jurisdictions IP crime units to avoid duplication in IP enforcement strategies across the relevant authorities within these Member States. There are shortcoming and similar risks of duplication in cooperation between Member States. Authorities often have difficulty in tracking IP-infringing activities across borders within the Union, and they can thus rarely plan and execute cross-border investigations and operations within the Single Market.

Without prejudice to the activities underway[28], the Commission considers that co-operation between all national authorities having a role in protecting IP could be enhanced through the setting up of an Expert Group for all relevant Member State authorities[29]. This forum, which would allow for both the sharing of best practice and discussions on IP policy orientations, could thereby contribute to increasing the efficiency of IP enforcement by the EU[30].

Action 7: The Commission will establish a Member State Expert Group on IP Enforcement, where Member States could share best practice on the work within the EU of all their concerned authorities and be informed on the delivery of this Action Plan.

3.2. Training for national authorities in the Single Market

Training of national authorities to address trends and business models associated with IP-infringing activities and also to share best practice on identification techniques largely takes place at national level. Moreover, where cross-border training and knowledge building exists, it is often by type of enforcement authority and not across authorities. In the context of the Single Market, there is therefore a need to develop cross-border IP enforcement authority training programmes. In 2012 and 2013, the Observatory held knowledge building seminars for enforcement officers on counterfeit pesticides and pharma crime. Building on this, training sessions should now be envisaged for national officials involved on the ground in IP enforcement. Meanwhile, the Community Plant Variety Office (CPVO) held an enforcement seminar in May 2013 on plant variety rights for all categories of IP practitioners specialised in this field. In 2014, the Observatory will continue to develop a comprehensive set of sectoral IP enforcement training programmes for Member State authorities. These programmes are coordinated with Europol, Eurojust, the European Police College (CEPOL) and the CPVO.

Meanwhile, the development of training for legal practitioners on EU IP legislation can also lead to improvements in effective enforcement of IPRs and award of redress.

To this end, the Commission will promote training of legal practitioners on EU IP legislation, notably by making full use of the European e-Justice Portal[31] via the dissemination of existing training material.

Action 8: The Commission will support the Observatory in the development of a comprehensive set of sectoral IP enforcement related training programmes for Member State authorities in the context of the Single Market.

3.3. Public contractors’ responsibility to screen public procurement for IP-infringing products

Public procurement contracts within the Union can result in public sector services being infiltrated with IP-infringing products. In a first step, in 2014, the Commission shall foster better exchange between Member State public authorities on these issues, and will organise a consultation to this end in the Member State Expert Group on Public Procurement. Thematic workshops, organised by the Observatory, will also allow public authorities from different Member States to discuss the problems they have encountered and to exchange best practice. In addition, the Commission will undertake a first sectoral pilot exercise by screening public purchases in the medical sector to assess the scale of the problem in that field. On the basis of these activities the Commission shall publish and promote a guide on methodologies to assist public authorities in detecting and preventing counterfeit products from entering into public services.

Action 9: The Commission intends to develop, promote and publish a guide on best practice for public authorities to avoid purchasing counterfeit products.

4. Better monitoring and targetting of IP Enforcement policy  4.1. Analysing trends in IP and in IP-infringing activities

From a public interest perspective, IP enforcement policies should be targeted at those IP-commercial scale infringing activities that are most likely to harm investment in innovation and creativity and do greatest damage to consumer welfare and economic growth. In this context, those IPR-intensive sectors that suffer most significant harm from IP-infringing activities need to be identified objectively and then systematically monitored to ensure that the policy tools set out in this Communication as well as legislative redress systems work. In September 2013, the European Patent Office (EPO) and the OHIM published a study to provide an initial assessment of IPR-intensive sectors within the EU[32]. A second phase of the OHIM/EPO report of the IP intensive sectors will be published in Autumn 2014[33].

Once IPR-intensive sectors are identified, the application of reliable estimation methodologies to gauge the scale of commercial scale IP infringements in these sectors is required[34]. Together with the Observatory, the Commission will come forward by 2015 with transparent and pragmatic models to estimate the trends of IP-infringing activities in IPR-intensive sectors.

For IPR-intensive sectors that supply their products online and face the offer of "free" illicit IP-infringing products, the Commission is undertaking a study to evaluate the displacement effects of infringing products on licit products. This will be completed by the end of 2014. With the Observatory, the Commission will also launch a study on infringements of creative commons licences by infringers seeking to appropriate public domain works. In addition, the Observatory will undertake research into the behaviour and attitudes of the younger generation in respect of consumption patterns of products to which IP rights apply.

In the context of its work in the field of customs policy, the Commission will continue to collect and make available data on customs detentions at the EU external borders. This information will be completed by the information on IP infringements registered on the Single Market[35]. In parallel, the Observatory, with the support of the relevant national authorities, is working on the development of a case law database for IP infringements.

To ensure that these data sets are used to good effect in ensuring that IP enforcement policy is based on transparent economic foundations, starting in 2014, the Commission intends to provide economic reports in this field. These will serve as the monitoring tool for the Commission’s policies against commercial scale IP infringement activities.

Action 10: The Commission shall publish a biennial report on the economic impact of the EU's IP policy that could serve as a more effective monitoring tool for the EU's new IP enforcement policy as set out in this Communication.

[1]               European Council Conclusions 20-21.03.2014, p.5. and p. 6.

[2]               Intellectual Property Rights intensive industries: contribution to economic performance and employment in Europe. See: oami.europa.eu.

[3]               See: ec.europa.eu/internal_market/intellectual-property.

[4]              In 2012, RAND Europe, completed a report: Measuring IPR infringements in the internal market. This report discusses industry financed studies evaluating this issue and their associated limitations:

                http://ec.europa.eu/internal_market/iprenforcement/docs/ipr_infringment-report_en.pdf

[5]               See: kroll.com.

[6]               See: ec.europa.eu/taxation_customs.

[7]               https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/246390/horr73.pdf. Cybercrime is excluded from the estimate.

[8]               The proposed actions do not have any budgetary impact over and above of what is already foreseen for the years to come in the official programming of the Commission.

[9]               Regulation (EU) No 386/2012 of 19.4.2012 entrusts OHIM with various tasks aimed at facilitating and supporting the activities of national authorities, the private sector and EU institutions in the fight against IPR infringements. These tasks do not extend to participation in individual operations or investigations carried out by national authorities, nor to matters covered by Title V of Part III of the Treaty on the Functioning of the European Union (e.g. criminal and police cooperation).

[10]             See: oami.europa.eu.

[11]             It recently took an initiative drawing attention to the negative economic effects on citizens of both the lost jobs and the lost public revenue that result from IPR infringmements against legal products, especially in certain sectors:Too good to be true: The real price of fake goods’, for more information: http://ec.europa.eu/commission_2010-2014/tajani/stop-fakes/index_en.htm

[12]             Regulation (EU) No 995/2010 of 20.10.2010 lays down due diligence obligations on operators who place timber products on the market.

[13]             See: ec.europa.eu/dgs/jrc.

[14]             See: ec.europa.eu/internal_market/iprenforcement.

[15]             COM(2013)209 of 18.4.2013.

[16]             Directive 2004/48/EC of 29.4.2004.

[17]             COM (2010)779 of 22.12.2010.

[18]             See: ec.europa.eu/internal_market/consultations.

[19]             COM(2013)794 final

[20]             http://ec.europa.eu/justice/effective-justice/files/justice_scoreboard_communication_en.pdf

[21]             http://ec.europa.eu/enterprise/initiatives/ipr/what-are-iprs/index_en.htm

[22]             [For more details, see the Commission's Communication “Trade, growth and intellectual property - for the protection and enforcement of intellectual property rights in third countries COM (2014) [… ],]

[23]             Council Conclusions of 7.6.2013 setting priorities for the fight against serious and organised crime.

[24]             These actions aim notably to improve information and intelligence for the purposes of strategic and operational analysis, prioritise and target prominent organised crime groups, develop financial investigation and asset recovery tools, promote multidisciplinary cooperation within the EU and improve cooperation with key source and transit countries and relevant partners.

[25]             Council Resolution of 10.12.2012.

[26]             OJ, C 129 of 26.5.2005, p. 3.

[27]             Ibid

[28]             Notably in the framework of the Customs Action Plan or the EU’s fight against serious and organised crime, see OJ, C 80 of 19.3.2013, p. 1.

[29]             This could also oversee the use of common tools such as the Enforcement Database and ACIST developed by the Observatory.

[30]             The scope and mandate of this Expert Group will be set out in a Commission Decision in 2014.

[31]             See: e-justice.europa.eu.

[32]             Intellectual Property Rights intensive industries, op. cit.

[33]             By mining company level data, this will identify IPR-intensive sectors at national level and quantify their contribution to the economy of each Member State, as well as assess the reliance of SMEs on IPR.

[34]             In 2012, RAND Europe completed a report for the Commission (Measuring IPR infringements in the internal market, cited above.) which reviewed some 200 existing studies and highlighted their methodological/data strengths and weaknesses. On this basis, it proposed a peer-reviewed methodology which could be used to estimate the levels of IP-infringing activity in the economy.

[35]             The data will be stored in the Anti-Counterfeiting Intelligence Support Tool (ACIST) developed by the OHIM with Europol: https://www.tmdn.org/enforcementintelligence-webapp/