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European IP Bulletin, Issue 22, May - Hot Topics

Hot Topics

1. Annual Report by the US Trade Representative on Foreign IP Protection

The US Trade Representative (USTR) “Special 301” report is issued annually and is based on section 301 as amended of the US Trade Act of 1974. Section 301 empowers the USTR to identify countries where trade barriers exist on the following priority basis: 1) Priority Foreign Country (worst); 2) Priority Watch List; 3) Watch List. Countries in the Priority Foreign Country list may face investigation and sanctions. On 29 April, the 2005 Special 301 report was issued.

Ukraine remains a Priority Foreign Country and faces a $75M sanction because of inadequate Intellectual Property Rights (IPR) protection combined with failure to enter “good faith negotiations”.

Fourteen countries have been placed in the second, Priority Watch List category. These countries are Russia, Argentina, Brazil, Egypt, India, Indonesia, Israel, Kuwait, Lebanon, Pakistan, the Philippines, Turkey Venezuela and China. China was elevated to this group after a special ‘out of cycle’ review (OCR) reported on the implementation of the bilateral agreements of 1992 and 1995 with the US. The USTR found levels of piracy and counterfeiting remained high, the result of an inadequate deterrence regime. The USTR has committed itself to tough action against China both in the WTO and in bilateral forums.

The aggressive stance of the USTR, whilst apparently to the benefit of IPR owners, is targeted even at TRIPS territories that are compliant with the World Trade Organisations Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) such as the EU. Russia remained on the list due to insufficient IPR enforcement and lack of data protection. The USTR identified primary concerns with its ‘bilateral commitments’ rather than TRIPS compliance. Russia will be subject to an OCR. 

Thirty-six countries are on the Watch List including the European Union and Canada along with Azerbaijan, Belarus, Bulgaria, Kazakhstan, Mexico, Vietnam and others. The EU and Canada will also face OCRs.

The USTR said, “Strong intellectual property rights, protections and enforcement at home and abroad are critical for the success of America's innovative economy and are top priorities for this Administration...We are committed to vigilantly enforcing US intellectual property laws and procedures and to working with our trading partners around the world to effectively protect the ideas, brands and inventions of our businesses and entrepreneurs”.

2.     UK Labour Party’s Intellectual Property Manifesto For the Digital Age   

“We will modernise copyright and other forms of protection of intellectual property rights so that they are appropriate for the digital age.  We will use our presidency of the EU to look at how to ensure content creators can protect their innovations in a digital age.  Piracy is a growing threat and we will work with industry to protect against it.”

So states the UK Labour Party’s election manifesto published in advance of their victory in the general election on 5 May 2005.  The UK will hold the EU presidency from July to December 2005.

This reflects the recent direction taken by the UK government to promote awareness of intellectual property rights, which include the announcement of a pan-European “Creative Economy” to take place in London in October 2005 and which will be endorsed by the Department for Culture Media and Sport as well as the Department of Trade and Industry.

It is not yet clear what steps are proposed, although it appears likely that the UK’s presidency of the European Union will promote debate in relation to copyright reform in Europe over the next few months.

3. Spanish Authorities to Fight Piracy: Criminal Code Reform and Successes of Police Actions

The avowed commitment by Spanish authorities to combat counterfeiting is finally beginning to show its first results, after complaints from the music industry about the serious challenge of piracy.

According to the International Federation of the Phonographic Industry (IFPI), Spain has traditionally been a country with high levels of piracy via several large-scale organisations illegally reproducing and distributing CDs and DVDs.

Recently, the Spanish authorities proclaimed a number of initiatives in order to provide the Spanish police with effective means to counter the problem.

The core project has been a reform of the criminal code. The current resulting legal amendment removes the obstacle of the previous Article 287 of the criminal code, which restricted the permitted locus standi required to start a legal action. The new law also increases the sanctions for pirates belonging to organisations established with the aim of infringing IP rights, and it imposes severe sanctions in cases where minors are used to commit such criminal offences.

Like other Member States, such as Italy, Spain has widened the definition of “distribution for profit”. Jurisprudence now interprets the “for profit” provision (Article 270(1) of the Spanish criminal code) to extend to all economic benefits apart from the personal benefit of the holder of a legal copy. This could lead to the imposition of criminal sanctions to users of peer-to-peer networks.

In terms of digital rights management, Article 270(3) was amended to include, in the category of criminal offences, the production, distribution and possession of any instruments specifically designed to eliminate or deactivate technical means for the protection of IP digital contents.

Finally, the new Article 270(2) establishes that the importation of material protected by intellectual property rights without prior authorisation from the rightholders also constitutes a criminal offence.

It is clear that a legal reform alone is not sufficient to reduce the level of piracy. The Spanish government is currently acting in cooperation with the Guardia Civil and other institutions for the protection of intellectual property, especially in the entertainment markets such as the SGAE (the collecting society representing authors and publishers of musical and audiovisual works). This body has invested in activities to improve public awareness on the broad range of criminal activities sanctioned under the new rules. SGAE commends the numerous initiatives by the police and, in February 2005, issued a press release underlining the importance of large-scale police operations, which recently seized €909.550 worth of illegal copies of CDs and DVDs, colour photocopiers and blank digital devices. SGAE has reiterated that criminal organisations are damaging the industry and the labour market.

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