European Parliament sparks criticism with IP changes

Proposed law has narrow definition of IP infringement that would threaten software and Internet companies with fines and jail time

The European Parliament made changes to a controversial proposal for a law criminalizing intellectual-property (IP) infringements Wednesday, sparking criticism from all sides in the debate.

If the version adopted by the Parliament Wednesday becomes law it would cause mass confusion about the scope of the law, and would threaten legitimate software and Internet companies, as well as ISPs (Internet service providers) with sanctions including fines of up to €300,000 ($409,670) and jail time of up to four years.

The Parliament’s version of the law would apply to all IP infringements of a commercial scale as long as the infringement was done in order to obtain commercial advantage.

Rights holders, including the record industry, slammed the narrow definition. “The European Parliament has taken the wrong road in trying to define what constitutes 'commercial scale' and 'intentional' intellectual-property infringements,” said Frances Moore, regional director for Europe for the International Federation of the Phonographic Industry, a recording industry lobbying group.

On the opposite side of the lobby, the Foundation for a Free Information Infrastructure (FFII) said the wording of the Parliament’s draft on the scope of the law is “weak.”

“It doesn’t clearly protect consumers and the young generation,” said the group in a statement released Wednesday.

The Business Software Alliance, a lobbying group representing some of the largest technology companies in the world including Microsoft and Apple, wasn’t immediately available to comment on the vote, but its European affairs expert Francisco Mingorance said the narrow definition of the law’s scope “is a serious step backwards for the European Union.”

The U.S. and the E.U. are trying to persuade China to revise its IP laws, which only sanction criminal liability where the infringer makes substantial profit from the infringement. “The fact that the Parliament has opted for this narrow scope sends a bad signal to China, and could encourage that country to continue abusing foreign firms’ intellectual property,” he said.

Separately, the text approved by the Parliament also muddied the water regarding a clause on inciting, aiding and abetting an IP infringement. ISPs could be found criminally liable if their networks are used to breach someone else’s intellectual property, the FFII said.

In addition, the Parliament’s version of the law would apply criminal sanctions to protect unexamined database and design rights as well as trade names and copyright. Patents and utility models were excluded, to the relief of many in the technology industry and the scientific community.

"Terrorists illegally copying and selling phone directories will probably not sleep very well tonight. Neither will spare parts makers who, according to Parliament, should risk criminal penalties if they infringe on a part's design right. It is very strange that the rapporteur insisted on having these unexamined database and design rights included in the scope", said Jonas Maebe, an FFII analyst.

The draft law must be debated by the 27 national governments of the E.U. next, but they appear in no hurry to tackle the topic.

“I expect this dossier will sit for years on a shelf in the Council, until there is clearer case law from the European Court of Justice that confirms the E.U.’s authority in criminal matters,” said Joe McNamee, a European affairs analyst with the consultancy Political Intelligence.