Electronic Frontier Finland criticizes EU on patents

["Sylvain Perchaud" <sylvain@europe-shareware.org>]

<http://www.effi.org/julkaisut/lausunnot/ipr_enforcement_lausunto.en.html>

EFFI: STATEMENT ON THE PROPOSED IPR ENFORCEMENT DIRECTIVE

Abstract:
The EU Commission proposes a new directive that would increase the
monitoring of copyrights and patents. The proposed directive is based
quite unilaterally on studies made for the media industry. For
example, the proposal compares piracy to drug trade and terrorism,
punitive damages are proposed and it is proposed that defendants
should pay the publication of judgements in the newspapers. Electronic
Frontier Finland ry (EFFI) has submitted a statement on the proposed
directive.

**********

[Translated to English on 27th May 2003.]

To the Ministry of Transport and Communications

Statement on the proposed IPR enforcement directive

Electronic Frontier Finland - EFFI ry

General remarks

    EFFI considers the proposed directive mainly unnecessary since the
    current legislation on intellectual property rights requires already
    that sufficiently efficient judicial protection is incorporated into
    national legislations (e.g. TRIPS). However, because it seems apparent
    that the directive is really attempted to be made into force we want
    to comment some parts of it.

    We are especially concerned of digital products, which the directive
    compares to e.g. medicines, alcohol, toys and car parts. We naturally
    wish that piracy and counterfeits are efficiently weeded out when it
    is a matter of safety and the health of individuals. However, we
    cannot agree with the assumption that the same rules should apply also
    to digital products.

    Notably the "studies" behind the proposed directive are not about
    safety or health but of digital products. The most used source seems
    to be the statistics of the Business Software Alliance (BSA) regarding
    the possible markets and employing effects of computer software.
    Generally speaking, using material produced by various interest groups
    indicates bad administrative practice. EFFI thinks the commission
    should have first conducted politically neutral background studies
    with impartial research institutions.

    The BSA statistics have among other things severe methodological
    problems. For example, the alleged loss figures of software and media
    industries are based on assumptions that one pirated copy would
    correspond to one purchased copy and that these imaginary profits
    would be used to hire new employees. In reality the media industry
    also benefits significantly from piracy in Eastern Europe e.g. because
    of network effects and brand dispersion. On the other hand, the media
    industry does not really employ directly others than administrative
    people and lawyers lobbying new laws like this one. Moreover,
    alternative business models for digital products that are not based on
    license fees (e.g. open source computer software, various marketing
    strategies) have not been taken into account when calculating the
    alleged losses.

Law making cannot be word play

    The language used in the proposed directive is especially worrying.
    The official documents are widely referenced and they should therefore
    be written using appropriate language and claims should be supported
    with references to neutral studies. If the only available statistics
    and studies are from various interest groups (for example because of
    monopoly situation) one should be especially careful with the source
    critique.

    This directive does not fulfill these minimum requirements. The
    strangest thought in this proposal is connecting piracy to organized
    crime and terrorism. A word play like this is nothing new to the media
    industry interest groups. The proposed directive claims without any
    reference (p. 12) that e.g. "piracy - - goes hand-in-hand with
    organized crime", "...laundering earnings", "...are even said to have
    become more attractive nowadays than drug trafficing" and "...factor
    in promoting crime, including terrorism". These allegiations have not
    been accounted for in any way. We can only wonder the courage of the
    drafters of the proposed directive to rely so strongly on the
    political rhetorics of only one party.

    To exaggerate a bit, we could argue that one should have more severe
    penalties for travelling without a valid ticket in public transports
    since the current small penalties for free riding encourages crime.
    Let us also remember that drug trade and terrorism are crimes and see:
    travelling without a ticket is connected to terrorism and drugs! With
    this kind of reasoning it is of course easier to gain political
    support for the legislative initiative. Of course, it was not
    mentioned that if the price of the ticket is too high and if the
    penalties are unreasonable a part of the passengers will walk or cycle
    - which might have beneficial health effects for the society as a
    whole.

    The choice of words create impressions and impressions become in time
    "truths" unless they are questioned. Even though the language of the
    directive is in some parts quite humorous it is still a serious and
    far reaching matter. Therefore EFFI thinks that Finland should point
    out the language and at least suggest that the flagrancies in pages
    12-13 are written anew.

Detailed comments

Punitive damages (article 17)

    Finland and other EU countries have so called full compensation
    principle. The occured damage is compensated fully, no more and no
    less, unless there are special reasons to settle down the
    compensation. For example in copyright violations the starting point
    has been the normal licenced price of the product and the damages have
    been settled down if the compensation would have been unreasonably
    high (e.g. piracy BBS cases). It is also important to remember that
    the copyright holder benefits more from compensation than license
    sales since in the case of compensation there has been no need to pay
    the production costs or taxes.

    The proposed directive diverges from this principle significantly.
    According to article 17 the basis for compensation should be two times
    the regular licensing fee. There is no mentioning of any settling
    principles. Alternatively the article proposes a compensation that
    would be based in addition to the licensing fees to the incomes that
    would possibly have been earned without the copyright violation. A
    proposal like this would lead to the strange situation that opposing
    piracy could become a profitable business. In this form article 17
    would "legalize" the calculations of BSA that could apparently be used
    as such for the basis of compensation in legal judgements.

    The idea of punitive damages is therefore not only unreasonable but
    also possibly against the principles of the criminal law. EFFI
    proposes the article to be written totally anew.

Publication of judgements paid by defendant (article 19)

    Article 19 introduces a questionable punitive method: the one who
    infringes intellectual property rights should pay for the publication
    of the judgement in a newspaper selected by the rights owner. As a
    punitive method this conviction of shame is most likely against the
    principles set in human rights treaties. The proposed article does not
    define how severe the infringement must be and how expensive the
    publication may be. Obviously the rights owner has the power to decide
    these details. This can not be said to be neither fair nor according
    to the principles of criminal law (it must be clear what kind of
    penalty follows from particular crimes)

Patented technical protection measures (article 21)

    Article 21 would create without sufficient justification one more
    legal protection layer to digital products. We don't see any category
    of digital works which would need this new protection layer. At the
    moment copyright, technical measures (as in copyright directive) and
    patents cover digital products and computer programs. With the
    proposed article 21 the circumvention of technical protection systems
    could be intrepreted once again as criminal activity without any
    defense options left to those who circumvent.

    Obviously the legislator does not understand what technical protection
    measures are. In practise e.g. different file formats (Microsoft
    Office) and security algorithms (DVD and CD copy protections) include
    a number of patents. There is a lively and ongoing EU-wide debate on
    e.g. when a private person may circumvent technical protection if
    legal use of a work is not possible. Copyright directive and national
    legislation has currently defenses to hackers though the legislator
    tried a same kind of trick: it is allowed to circumvent DVD- and
    CD-protections if it is not possible to play the record legally in e.g
    cars and portable devices. It is also legal to decompile a file format
    if the aim of decompilation is for example interoperability. What
    happens to these important exemptions if the proposed article 21 is
    accepted?

    In essence, does article 21 mean that DVD- and CD-copy protections may
    not be hacked just because they include patents? In that case article
    21 would be in conflict with the basic principle that this directive
    would have nothing to do with the contents of patent and copyright
    laws. EFFI thinks that Finland should first and foremost demand the
    dropping of article 21. Second, and at the minimum, Finland should
    require the clarification of the criteria for circumvention of
    patented technical protection for legal purposes. In addition, we can
    only understand that particular uses of hacking devices may be in some
    circumstances illegal but the possession and manufacturing should be
    always allowed since they have also legal uses (compare to guns and
    regarding copyright photocopying machines, videos and peer-to-peer
    networks).

Summary

    Finally, we stress that the directive proposal is extremely political
    instead of its technical harmonizing goals. Its implications are not
    limited to "industry" but it also affects individuals, small and
    medium size firms and all kinds of hobby activity.

    It is hardly a coincidence that the directive proposal comes out just
    before EU enlargement to Eastern Europe is completed. The requirements
    set in this directive concern mostly the new member states, which have
    not been negotiating on the contents of the directive. To compare, the
    beneficiaries of the proposed directive are mostly multinational
    companies whose domicile is either within the current EU or North
    America.

    In the EU parliament the directive is unfortunately on the table of
    only the committees of industrial and legal affairs. The draft by
    Janelly Fourtou, chairman of the legal affairs committee, reflects
    quite to the point where the directive aims at. Fourtou repeats media
    industry arguments and concludes in her draft that the proposal would
    be "too soft to some forms of piracy". EFFI's stand is exactly the
    opposite: the directive proposal is first of all too strict and too
    inaccurate. Therefore it should be dismissed. At the minimum we
    require that a substantial part of the proposal is written anew
    without promoting any particular interest group.

    Helsinki 9th May 2003

    Mikko Välimäki
    Chairman
    Electronic Frontier Finland - EFFI ry
    phone +358 50 598 0498
    mikko.valimaki@effi.org
    fax. +358 9 694 9768

    Ville Oksanen
    Vice-chairman
    phone +358 40 536 8583
    ville.oksanen@effi.org

    Electronic Frontier Finland - EFFI ry was founded in 2001 to defend
    active users and citizens of the Finnish society in the electronic
    frontier. EFFI influences legislative proposals concerning e.g.
    personal privacy, freedom of speech and fair use in copyright law. We
    make statements, press releases and participate actively in actual
    public policy and legal discussions. EFFI has been featured in the
    national media including TV, radio and leading newspapers. EFFI also
    works in close cooperation with organizations sharing the same goals
    and values in the Europe, United States and elsewhere. EFFI is a
    founding member of the European Digital Rights and a member of Global
    Internet Liberty Campaign. More information from EFFI's home pages:
    http://www.effi.org/


--
Sylvain Perchaud
Tel : +33 (0) 674 758 551
http://www.europe-shareware.org