European law plays a major role in the enforcement of intellectual property rights. The innovative rules and practices developed by the EU in this area provide a wide range of enforcement tools and introduce a European system of enforcement principles. In this post, the sixth in RENFORCE Blog’s special series on the enforcement of EU law, Peter Blok explains that intellectual property law is therefore a rich source for the study and further development of European law enforcement in general and private law enforcement in particular.
The most Europeanised area of private law
Intellectual property law is the most Europeanised area of private law. Nearly all intellectual property rights, such as trademarks, designs and copyrights, are harmonised by European directives or are based on European regulations. European judges are also heavily involved in this area of law. The annual report of the Court shows that intellectual property has been one of the top three subjects the Court of Justice has had to deal with for years, and that at the General Court no less than one third of all cases concern intellectual property.
Brussels’ concern with enforcement
Given the solid European basis of intellectual property law, it is not surprising that the enforcement of intellectual property rights enjoys particular attention from Brussels. Every few years, the European Commission publishes a green paper, report or action plan in which it describes – in alarming terms – the extent of violations of intellectual property rights, their impact on the economic and social order and the lack of enforcement. The most recent contribution is the IP Action Plan, presented by the European Commission in December 2020. The IP Action Plan emphasises, once again, the huge scale of the phenomenon (6.8% of EU imports are counterfeit or pirated goods) and its impact (EUR 50 billion) and notes, once again, ‘a clear need to step up efforts’.
The EU enters the field of civil procedural law
The efforts of the EU to increase the effectiveness of IPR enforcement in recent decades have not been without result. The most impressive achievement is the adoption of the IPR Enforcement Directive in 2004. This directive introduces far-reaching harmonisation of civil law enforcement of intellectual property rights. It was the first time that the European legislator interfered so drastically in the civil procedural law of the member states. Until then, procedural law was seen as a bulwark over which the national legislator was still sovereign (cross-border issues excepted, such as international jurisdiction and cooperation between Courts in taking evidence). After that taboo was broken in intellectual property law, other areas of law followed. We now also have special rules of European civil procedural law for the enforcement of competition law, the protection of trade secrets and data protection law.
The ultimate arsenal
The IPR Enforcement Directive is a European dream team composed of national top players. From France, the EU adopted the saisie-contrefaçon, the power to seize evidence. From Dutch practice, the European legislator derived the recall, a court order to remove infringing goods from circulation. From Germany came the ‘nuclear option’ under the enforcement measures: a procedure to obtain a court order without hearing the other party.
For many Member States, the directive introduced a considerable expansion of the enforcement arsenal for rights-holders. Moreover, well-established concepts of national procedural law were suddenly given a European interpretation. For example, many Member States did already have the rule that the winning party in proceedings is entitled to remuneration of reasonable and proportionate costs. After the costs order was given a basis in the IPR Enforcement Directive, the fees in a number of Member States went up considerably. European reasonableness appeared to differ by a factor of ten to a hundred from Dutch reasonableness. Whereas the winning party in the Netherlands used to receive a few thousand euros at the most, legal costs of tens or even hundreds of thousands of euros are now standard in Dutch IP caselaw. In a high-profile patent case between Nikon and ASML, for instance, the Court of The Hague awarded a cost order of no less than € 950.000,-. Whether such high compensation of legal costs encourages or hinders the enforcement of rights in court is the subject of extensive debate.
Towards European principles of civil law enforcement
In addition to specific measures, the IPR Enforcement Directive introduced general principles of European law for civil enforcement. The directive explicitly stipulates that measures shall be fair and equitable and shall not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. The measures also must be effective, proportionate and dissuasive and there is a general obligation on Member States that the measures shall be applied in such a manner as to avoid the creation of barriers to legitimate trade and to provide for safeguards against their abuse. The case law of the Court of Justice on these general obligations and the interpretation the Court gives to them on the basis of fundamental rights from the Charter are developing into a system of European principles of civil law enforcement.
The involvement of service providers in enforcement
Another interesting aspect of the European approach to enforcement of intellectual property rights is the involvement of third parties, i.e. private actors other than the rightsholder. The IPR Enforcement Directive provides for various measures against intermediaries and service providers, such as hosting providers and warehouses. Judges must have the power to impose orders on these parties, at the request of rightsholders, to prohibit infringements and to provide information about infringements.
This approach was not self-evident at the time the directive was drafted. At the beginning of the millennium, the prevailing idea was that Internet service providers should not be held accountable for the behaviour of their users. The Electronic Commerce Directive of 2000, for instance, created an exemption from liability for hosting providers. Meanwhile, the tide has turned and the EU is imposing more and more obligations on online platforms to act against rights-infringing or otherwise harmful content, most recently with the proposal for a Digital Services Act.
The primacy of private enforcement
Compared to the far-reaching European involvement in private enforcement, the European regulation of the public enforcement of intellectual property rights lags behind. Although there is an EU regulation for the monitoring of the external borders by customs authorities, in the internal market, the European Union has not yet come much further than the establishment of an information centre: the European Observatory on Infringements of Intellectual Property Rights.
This European preference for private enforcement over public enforcement is a peculiarity of intellectual property law, which originates from the enforcement practice of the Member States. The Dutch government, for instance, explicitly gives primacy to civil enforcement. The other Member States also rarely prosecute intellectual property rights violations, although intentional violations are criminal offences in most Member States. In general, criminal action is reserved for cases of threats to public health and large-scale counterfeiting and piracy. The Polish police for instance seized hundreds of thousands of counterfeit medicinal products a few months ago and Sweden prosecuted the founders of the torrent tracking platform The Pirate Bay for promoting copyright infringements.
The failed proposal for criminal enforcement
In the past, the European Commission did try to harmonise the criminal enforcement of intellectual property protection. On the day that the aforementioned civil enforcement directive was adopted, the Commission presented a proposal for a directive on criminal measures. The proposal included the obligation to classify intentional infringements of intellectual property rights on a commercial scale as criminal offences, to provide for penalties in the form of the confiscation of infringing goods and the closure of companies, and to establish joint investigation teams. The proposal was not adopted, inter alia because some Member States felt that criminal enforcement was contrary to the European law principles of proportionality and subsidiarity.
A double verticalization of enforcement
In its recently published IP Action Plan, the European Commission reintroduced the plans for public enforcement and decided to take it to the next level. Instead of aiming for harmonisation of criminal enforcement by the member states, the European Commission is taking public enforcement into its own hands. It plans to broaden the Commission’s mandate in this respect and to assign it to the European Anti-Fraud Office (OLAF), so that the latter can act against illicit goods within the EU.
If the European Commission gets these plans realised, a double verticalization of the enforcement of intellectual property rights awaits us: not only a further shift of enforcement to the European level, but also a shift from private enforcement to enforcement by a public body. In that case, intellectual property law will undoubtedly provide innovative enforcement tools, practices and caselaw in the area of public enforcement as well.