Analysis Anti-Counterfeiting Trade Agreement

Executive Summary

Behind closed doors, the EU, US, Japan and other countries are negotiating ACTA. No drafts are published. The negotiating parties use a too broad definition of piracy. In an obfuscated way, the definition comes down to "willful large scale infringements". As a result, bona fide entrepreneurs and civilians are criminalized, and excessive civil and administrative measures can be invoked against them. The following examples may be infringements. If they are, they would fall within the definition:

• a newspaper, whistle blower or weblogger revealing a document,
• ambiguous cases of trademark confusion,
• parallel importation (buying and selling of genuine products),
• making a product or medicine (in many sectors, there are so many patents, with unclear scope and validity, it is impossible to tell whether one violates a patent),
• the production of spare parts (may violate an unexamined design right, with unclear scope and validity),
• an office worker emailing a copy of a market research report to his colleague at work,
• emailing a list of people (may violate an unexamined database right, with unclear scope and validity),
• a library, in order to preserve digital sound recordings for posterity, unlawfully breaking the technical protection measure wrapping the digital recording each time it lawfully receives a sound recording either by purchase or by legal deposit,
• and possibly: youngsters enthusiastically sharing their favorite music with friends.

In all these cases, the rights holder can go to a civil court for damages. But harsh anti-piracy measures, meant to fight criminal organizations, are excessive. A too broad definition may have far reaching consequences on legal certainty, innovation, competitiveness, freedom of speech, privacy and access to medicines, software and the Internet. ACTA could become a dangerous tool for abusive strategies.

It is essential the public and parliaments can scrutinize ACTA. It is unclear whether they will be able to do that. It is unclear whether the final draft will be published prior to Political Agreement in the EU Council. ACTA may pass silently during Parliamentary recess.

In the EU decisions are normally taken as openly as possible and as closely as possible to the citizen. Preparatory legal texts are published. If full disclosure is not possible, parts are published. Translations are made prior to adoption in the Council. With ACTA, no drafts or translations are published. In a Resolution, the European Parliament called for disclosure of ACTA preparatory drafts, including progress reports, and of the Commission's negotiating mandate. The Council did not release documents.

In the case of trade agreements, both the EU Member States and the European Parliament have vetoes on aspects of the trade agreement. The following vetoes apply to ACTA:

• in so far as ACTA will relate to trade in cultural, audiovisual and educational services, the Member States have a veto,
• in so far as ACTA will relate to non commercial acts, the Member States have a veto,
• the Member States have a veto on criminal measures in ACTA,
• the European Parliament has vetoes if ACTA entails amending an act adopted under the procedure referred to in Article 251 or if a specific institutional framework is established by instituting cooperation procedures,
• furthermore, the Community is not competent to take disproportional measures.

ACTA's secrecy makes it impossible to assess whether the vetoes apply and should be used. In order to safeguard transparency and parliamentary legislative power, we call upon the parliaments of Europe, both the national as the European Parliament, to set parliamentary scrutiny reservations. If ACTA's final draft indeed combines a too broad definition of piracy with harsh measures, we call upon the parliaments to exercise vetoes against ACTA.

See also FFII ACTA page

Harmful effects

Overheated protection attracts trolls

The broad and abstract nature of software patents makes infringement unavoidable, and most software systems unavoidably infringe on multiple patents. All companies ignore software patents to some extent, simply because every single useful program you write infringes on several patents.

The IPRED (1) Directive gave patent litigants great powers to harass software producers, seize documents and freeze assets. Harsh measures which are justified against commercial piracy enterprises, not against legitimate entrepreneurs. One could say that the Directive enhances legal security for right owners by introducing new legal insecurity for competitors.

Software entrepreneurs may well be careful in using these measures, the competitors could retaliate. But there is no way to retaliate against patent trolls. These companies do not produce anything, acquire patents at low cost for instance by buying bankrupted companies. Their patents tend to have broad claims on trivial methods so that infringement is unavoidable. While the Directive is meant to fight piracy, it gives trolls the means to extortionate entrepreneurs. Patents should never be under the scope of anti-piracy measures.

The provisions mentioned in the ACTA document resemble the IPRED (1) Directive. While "exporting" an adopted Directive may seem uncontroversial, in this case it is not, since IPRED (1) is disproportional. The fact the Community made a mistake before does not make it legitimate to export this Directive – the Community's actions have to be proportional.

Assault on the internet and privacy

A document released by the Canadian government shows controversial issues are discussed, such as termination of internet access without court order. A "three strikes and you are out" approach will ban people from the internet, exclude them from essential information and communication. They will be excluded from part of society just on allegations of infringement, without judicial review.

According to a leaked ACTA Discussion paper, non-commercial and non-intentional acts may be included in ACTA, which goes beyond the weak 'commercial scale' limitations of IPRED1. The leaked draft indeed includes such infringements. The drawbacks of such an approach are dreadful. Citizens may be branded as counterfeiters. Media companies may like to chase every kid on the block that shares a music or movie fragment. But this approach crimininalizes journalists that reveal a document as well.

A non-commercial publication of a document on the Internet would fall under ACTA. This is a threat to the freedom of speech. If an office worker emails a copy of a market research report to his colleague at work, he may be considered to have infringed copyright. Harsh anti-piracy measures can be invoked against journalists, whistle blowers, office workers, companies and citizens. It will create an unprecedented scope of secondary liability for ISPs. They may be excluded from liability, but only if they immediately comply with all rights-holders wishes - even the disproportional ones.

Treating private copies as piracy will be in conflict with EU Directive 2001/29/EC. Under this Directive member states are allowed to allow private copies. People pay levies, but what are they entitled to do for their money? Make a mistake while exercising your rights and end up in jail? If one would like to stop private copies, that can only be done by invading peoples homes.

More dreadful measures are proposed by certain stakeholders, like an obligation for ISPs to install network-level filtering, block certain websites and protocols. This will be the end of the "net-neutrality" principle. It would be like the postal services would be forced to look into all letters and parcels. Filtering is inevitably over inclusive, limiting permitted speech (e.g., parody and other fair uses) and other protected activities (educational uses, lawful conversions of content for the disabled, using the Internet to transfer personal copies between home/office/car/vacation, using the Internet as cloud storage, The costs of filtering are immense. The beneficiaries are unwilling to pay the costs, which shows that any potential benefits are outweighed by the costs. Encryption will render filtering useless.

Such measures are disproportional and will harm innovation and legal security. They can only be executed at the price of privacy and the freedom of speech.

ACTA may cripple our innovative companies from the start

Ed Black is president and CEO of the Computer & Communications Industry Association. He wrote an article for the Mercury News: "Third, the type of IP provisions we are forcing on our trading partners might actually harm the most innovative sectors of our economy. U.S. law includes important exceptions, such as "fair use" and limitations on secondary liability. These have been critical to the success of companies, including Internet pioneers. Many foreign countries, however, don't have these exceptions. As a result, foreign courts now threaten U.S. companies. They have penalized Google and eBay for conduct that's legal in the United States. (...) Hollywood should direct movies — not trade policy."

Europe does not have fair use provisions. European companies are even threatened in their home markets, our innovative companies may be crippled from the start.

Competence

Vetoes

• ACTA will relate to trade in cultural and audiovisual services and educational services. This falls within the shared competence of the Community and its Member States. Consequently, the negotiation of ACTA shall require the common accord of the Member States as well. ACTA has to be concluded jointly by the Community and the Member States. (TEC 133.6) Alternatively, these services may be excluded from ACTA.

• the intention expressed in the leaked discussion paper to address non-commercial acts by civilians does not fall within TITLE IX Common Commercial Policy. The Community lacks competence. If it would fall within TITLE IX, it does not fall within "commercial aspects of intellectual property" (TEC133.5), unanimity in the Council is needed and Parliament has to be consulted (TEC 133.7)

• if a specific institutional framework by organising cooperation procedures is established assent of the European Parliament has to be obtained. (TEC 300.3) The same is true if ACTA goes further than existing EU rules, making amendments necessary. (TEC 300.3)

• The Community did not adopt criminal measures yet in the field of "intellectual property" rights, unanimity in the Council is needed to add criminal measures to ACTA. (TEC 133.5)

Transparency

• ACTA will provide legal framework. By adding legal framework to a trade agreement the Protocol on the role of the national parliaments in the European Union's transparency requirements for Community legislation apply. Secrecy can not be allowed, the Protocols transparency requirements have to be respected.

• In the Turco case the ECJ has stressed the importance of access to documents, including preparatory ones, especially in the case of legislation: ""Openness in that respect contributes to strengthening democracy by allowing citizens to scrutinize all the information which has formed the basis of a legislative act. The possibility for citizens to find out the considerations underpinning legislative action is a precondition for the effective exercise of their democratic rights."

More competence issues

• The agreement has to be compatible with internal Community policies and rules. (TEC 133.3) To leave room to amend internal rules after assessment, an agreement has to be more conservative than adopted rules, e.g. IPRED 1.

• Community action has to be proportional (TEC 5), it is essential to define the qualification characteristics of the elements of piracy as clearly and narrowly as possible. At the bare minimum, "infringing item", "commercial scale" and "intentional infringement" have to be clearly defined. Proportionality is more important in a trade agreement than in internal rules, since a trade agreement can not easily be changed and has no evaluation moments.

• ACTA can not be concluded before the study on whether criminal measures are essential, is ready, and the criminal measures proven essential. (TEC 133.6, ECJ C-176/03)

• the Community can not impose criminal measures if the policy field is not harmonised. (TEC 133.6, ECJ C-176/03) ACTA can only go so far as policy fields are harmonised.
• the Community can not impose precise sanctions. (TEC 133.6, ECJ C-176/03, ECJ C-440/05) Nor can ACTA.
• national legal systems have their own general methods for dealing with recognized criminal offences like "attempting, aiding or abetting". The Community does not have the authority to harmonise these systems, not even after decision C-176/03.
• the European Parliament, the Council, the Commission or a Member State may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the provisions of the Treaty. (TEC 300.6)

For details see Attachment 1: Relevant articles TEC

Criminal measures: Legal means are already available

The Commission is conducting a study on whether criminal measures are essential. The Commission was forced to do so, since the Dutch Parliament and others, commenting on IPRED 2, had made clear that the legal means to combat piracy are already available. In fact, existing remedies are preferable to those outlined in the IPRED 2 Directive because they have been drafted to work in cooperation with existing national laws. Therefore Community measures are not necessary in order to ensure the effectiveness of Community law. A review of the existing available measures and the policy justifications offered for the new directive makes this clear:

1. The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is binding on the Member States and the EU. Article 61 of TRIPS already requires criminal sanctions for wilful trademark counterfeiting and copyright piracy. The Commission’s proposal did not give any justification for creating an additional layer of Community-level criminal sanctions on top of TRIPS, or for requiring sanctions for other types of infringements. Indeed, the proposal only included examples of trademark counterfeiting and copyright piracy – the very matters already covered by TRIPS.
2. Member States already have more extensive national criminal provisions against IPR infringements.
3. Even the establishment of "harmonised" criminal penalties will not solve the problem of forum-shopping. The Commission submits that, in the event of a major difference in penalties across Member States, commercial infringers or counterfeiters would operate from the country that offers the lowest maximum sentences. They also claim that this would seriously hinder effective protection of intellectual property across the Internal Market. However, it is well documented that if criminals choose to operate in a particular country, that decision will be based on their calculation of the likelihood of being caught, not the relative severity of available penalties. The Community cannot influence prosecution priorities at the national level, so efforts to harmonise criminal sanctions at the Community level will have no bearing at all on where criminal enterprises choose to conduct their activities.
4. An offence committed in a Member State with lower penalties and/or chance to get caught will soon be prosecutable in other Member States, namely where the counterfeit goods end up in normal circulation in the other Member State.
5. In many countries the IP criminal law - although well-developed - only plays a subordinate role in actual practice. It has not been established that effective measures to combat piracy necessitate expansion of the existing range of measures and sanctions under procedural law. The establishment of priorities and the exchange of knowledge are of greater importance.
6. The previous IPR Enforcement Directive 2004/48/EC of 29 April 2004 (IPRED1) allows for making the losing party pay for the costs of the trial. Thus, that directive already provides for disincentives against large-scale infringement enterprises since these costs act as a form of punitive damages.
7. The effects of IPRED1 are not yet known however, since it was only required to be implemented by 29 April 2006. They have to be evaluated before the need for extra criminal sanctions can be properly assessed.
8. Endangering public health, e.g. by selling fake or non-approved medicines, is already criminally prosecutable, regardless of whether patents or trademarks were violated in the process.
9. Most importantly, only a thorough investigation as to the current legal and factual conditions in the Member States could provide the justification for introducing more harmonised criminal measures. Apart from very general remarks regarding its competence, nothing in the explanatory memorandum to the proposal indicates that such an investigation was undertaken by the Commission, and, if so, what specific results it produced.

Calls for transparency

Secret Counterfeiting Treaty Must be Made Public

In September more than 100 public interest organizations called on officials from the countries negotiating ACTA to publish immediately the draft text of the agreement.

Based on leaked documents and industry comments on the proposed treaty, the groups expressed concerns that ACTA may:

+ Require Internet Service Providers to monitor all consumers' Internet communications;

+ Interfere with fair use of copyrighted materials;

+ Criminalize peer-to-peer electronic file sharing; and

+ Undermine access to low-cost generic medicines.

European Parliament resolution 18 December 2008

"28. Takes the view that the public interest in disclosure of ACTA preparatory drafts, including progress reports, and of the Commission's negotiating mandate should not be overridden by Article 4 of Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents(19) , and urges the Council to enforce Article 255 of the EC Treaty in such a way as to ensure the widest possible access to documents, provided that the necessary security measures are taken as required by data-protection law;"

European Parliament resolution 18 December 2008

Complaint

The Foundation for a Free Information Infrastructure (FFII) has filed a complaint with the Ombudsman against the EU Council for deliberately obstructing access to Anti-Counterfeiting Trade Agreement (ACTA) documents. As stated by an other participant in the negotiations, the EU has agreed to keep ACTA drafts secret. This way the EU hinders the proper application of Regulation 1049/2001 regarding public access to documents. The FFII asks for immediate publication of the documents.

Later it became clear governments even agreed to keep documents secret after conclusion of the negotiations.

Proportionality

ACTA has to leave room for Community legislation to be proportional. Either concepts have to be loose, with freedom of implementation, or they have to be formulated narrowly.

Fundamental misconception

The Community confuses business conflicts with piracy. It fails to make adequate distinctions between commercial piracy enterprises, legitimate/lawful activities undertaken by business competitors, or even the common activities of ordinary Europeans. As a result harsh measures aimed at commercial piracy enterprises also hurt business competitors and civilians. One of the parties in a business conflict gains disproportional advantage. This advantage can easily be misused.

Not all alleged infringements are indeed infringements. The exclusive right may turn out invalid or the act may fall outside the valid scope of the right. It is often unclear whether an intentional commercial scale act falls within the valid scope and whether the right itself is valid. This can only be established in a civil case.

The misconception already lead to disproportional civil and administrative measures in the IPRED (1) Directive, Directive 2004/48/ec of the European Parliament and of the Council on the enforcement of intellectual property rights. The French implementation of the IPRED 1 Directive even left out the "commercial scale" condition.

The misconception also lead to the IPRED 2 directive proposal, the Amended proposal for a Directive of the European Parliament and of the Council on criminal measures aimed at ensuring the enforcement of intellectual property rights, 2005/0127(COD). Almost all position papers written about this proposal characterized it as disproportional. Both chambers of the Dutch Parliament unanimously rejected it. The European Parliament debated it for over a year, in three committees and in plenary. The European Parliament IPRED 2 text has a weak "commercial scale" definition, not sufficiently protecting civilians. The FFII/EFF/EBLIDA/BEUC coalition report on the proposal as amended in Strasbourg by the European Parliament, provides detailed analysis of European Parliament amendments. Some of them are badly drafted.

According to the European Commission's website, a "path breaking" ACTA is foreseen. For this reason the Commission likes to work outside the normal formal structures.

ACTA may turn out more far reaching than the proposed IPRED 2 Directive, containing criminal measures. The music and movie industries want to remove both "intentional" and "commercial scale" as conditions. The leaked discussion paper mentions criminal provisions against trademark counterfeiting and copyright piracy. Contrary to the TRIPS agreement, “wilfull” and “commercial scale” are not mentioned as conditions. We already discussed the harmful effects of inclusion of non-commercial acts.

Should non-wilful acts be crimes on a world scale? Leaving this condition out will make ACTA disproportional. In fact, normal intention is not sufficient, since all commercial acts are intentional acts. The inclusion of dolus malus (with malice), the knowledge one is infringing, is required.

The discussion paper mentions a dispute settlement committee to solve implementation issues. Dedicated committees tend to quickly become a champion for its specialty. We have to fear a worst case scenario here.

The Max Planck Institute (MPI) stated for the IPRED 2 directive to be proportional, it is essential to define the qualification characteristics of the elements of a crime as clearly and narrowly as possible. Proportionality is a conditio sine qua non for Community legislation (art. 5 TEC). At the bare minimum, "infringing item", "commercial scale" and "intentional infringement" have to be clearly defined. Again, without such narrow definitions, harsh civil and administrative measures are disproportional too, as they hurt legitimate business competitors as well.

Unsolved issues – Scope

Even if "infringing item", "commercial scale" and "intentional infringement" are defined as sharply as possible, not all proportionality issues are solved. It is essential to limit the scope as well.

We already saw patents should never be under the scope of anti-piracy measures. Design rights and database rights should not be under the scope for two reasons. First, they are relatively new, and the case law is still evolving. Second, these rights are unexamined and may often be invalid. And if they are valid, it is unclear whether the actions in question fall within the valid scope of the right.

Similar problems plague the definition of database rights, which are, according to the Commission's own report, surrounded by "considerable legal uncertainty" due to vague legal drafting. This stems largely from the unclear criterion of what constitutes "substantial investment" by the database owner, and which has recently been challenged in several ECJ decisions.

Allowing untested rights under the scope leads to disproportional measures.

Example: design rights. Dyson makes vacuum cleaners. Another company, Qualtex, made spare parts for these vacuum cleaners. Dyson sued Qualtex for infringing on its unregistered design rights, because the spare parts had the same appearance as the originals. Qualtex tried to defend itself by saying the parts had to be designed that way because of "must match" and "must fit" requirements, and in those cases design rights do not apply. The judge, however, ruled that those exceptions did not hold in this case.

This was a civil suit, and the result is that Qualtex had to stop making spare parts. Harsh measures aimed at commercial piracy enterprises are not in place here, it would significantly stifle the spare parts market.

Unsolved issues – public cause

Even if infringing item, commercial scale and intentional are defined as sharply as possible, and even if untested rights are removed from the scope, not all proportionality issues will be solved. It is essential to protect journalists, scientists, etc.

How to protect a non professional journalist, like a weblogger? Should archiving be explicitly mentioned? Take for instance the following example:

In order to preserve digital sound recordings for posterity, a library unlawfully breaks the technical protection measure wrapping the digital recording each time it lawfully receives a sound recording either by purchase or by legal deposit. This is intentional infringement (in pursuit of a lawful purpose) in order to reformat the recordings for sensible preservation. It happens routinely for hundreds of recordings. It is thus probably on a commercial scale, and it is certainly intentional. Should Europe sign an agreement that will force us to implement laws that can jail librarians? We will have to be very careful with harsh civil measures as well.

Prior complaint

Criminal investigation authorities should not be able to act on their own initiative without a prior complaint of the rights owner, because licensing arrangements are not published and the rights owner has the fundamental right to dispose of his rights as he desires.

Secondary liability

National legal systems have their own general methods for dealing with recognized criminal offences like "attempting, aiding or abetting". The Community does not have the authority to harmonise these systems, not even after decision C-176/03. Harmonisation on a directive by directive basis will create different rules for aiding/abetting/... depending on the crime committed. The end result will be more fragmented than the current situation while losing the national context in which the original statutes were drafted. ACTA can not impose on the Community obligations it can not fulfill.

ACTA may create an unprecedented scope of secondary liability for Internet intermediaries, ICTs, software vendors and a range of legitimate business activity. Such a regime would have dire consequences for the commercial sector, where litigation around these definitions is sure to erupt.

For example, it could be argued that the ready availability of mp3 players incites IPR infringements. Consider the following example: Apple sells the popular iPod mp3 player. These devices can both play purchased music, and music downloaded without authorization from the Internet. According to Apple, the average iPod holds about 1,000 songs, but the iTunes Music Store has only sold enough "legitimate" music to put 22 songs on each player. The other 978 songs have to come from somewhere else – a personal CD collection, authorized downloads from non-iTunes sources, or, more likely, unauthorized downloads. If these players were not be able to play music downloaded from the Internet, their appeal would be significantly lower. Apple could therefore be seen to be inciting people to infringe copyright by downloading music and putting it on their iPod mp3 players. In fact, the CEO of Universal Music has already said this in public. UMG chairman/CEO Doug Morris wants part of Apple's income from iPod sales because, he says, "these devices are just repositories for stolen music, and they all know it [...] So it's time to get paid for it." In other words, Apple is supposedly knowingly selling devices for storing "stolen music", thus arguably inciting/aiding/abetting infringements.

Parallel importation

Parallel importation does not involve copying at all: genuine products are sold after being imported from a country where they are already being offered to the public. Parallel importation is not piracy.

There are two kinds of parallel importation, from within and from outside the EU. Parallel importation from within the EU is not an infringement, yet there may be exceptions, as ECJ Case C-348/04 shows. In those cases that parallel importation from within the EU is an infringement, it should not be a crime.

Parallel importation from outside the EU is an infringement. The MPI wrote in its IPRED 2 position paper: "16 . Parallel importation of genuine goods which have been marketed with the consent of the right-holder in a non -EU country and/or measures accessory to such imports cannot be considered as piracy or counterfeiting. In accordance with what was said above, harmonisation of IP penalties should not be contemplated for such cases."

Likewise, ACTA should not criminalise parallel importation.

Misuse

Countermeasures

The Max Planck Institute, about IPRED 2: "20. The potential of a rightholder to deter potential infringers increases considerably if criminal penalties are threatened. Furthermore, procedural misuses are conceivable. A harmonisation of IP criminal sanctions, therefore, calls for countermeasures."

We believe the same to be true for ACTA.

The rights holder's role

The Commission IPRED 2 text allowed rights holders to assist in the investigations by joint investigation teams. This sparked much criticism. The MPI wrote: "The obligation of Member States to delegate functions within the conduct of criminal investigations to private parties in such a diffuse manner is therefore incompatible with the fundamental structure of a democratic society."

A subject like this should be left to the discretion of the Member States, in ACTA as well.

Information gathered can be used in civil cases?

Criminal law gives broader possibilities to gather information. Maintaining a distinction between public and private action is essential to an equitable justice system.

Harmonisation issues

ACTA may eventually lead to harmonisation. There are some serious issues with harmonisation of criminal measures. We will point them out here, so that they can be taken into consideration.

Preliminary ruling incompatible with right to a fair trial

Preliminary rulings are an essential aspect of harmonisation. If Community law is not clear, and a court has to ask the ECJ for a preliminary ruling, the process commonly takes 2-3 years. In the context of criminal law, this presents serious problems for prosecuters and defendants.

According to Art. 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms, everyone is entitled to a fair and public hearing within a reasonable time. However, it is impossible to request a preliminary ruling and have a conclusion of the trial within a reasonable amount of time. In each case in which a preliminary ruling is asked, the suspect's right to a timely trial will almost certainly be breached, since such requests normally take 2-3 years to move through the system. This is unacceptable as a matter of human rights.

Moreover Directives undermine the State's ability to effectively prosecute the very crimes they describe. Dutch courts have already reduced the punishment, or even dismissed cases, if the suspect is forced to wait too long before his or her trial, in view of the above ECHR article. In short, the State may lose its case or have its desired punishment drastically lowered because the ECJ -- a crucial component of harmonisation -- is fundamentally incompatible with criminal proceedings. The ECJ may try to provide an "expressway" for criminal cases - but a rush procedure is hard to reconcile with the requirements of a fair trial and the presumptio innocentiae.

The system of harmonisation is designed without criminal law in mind. Preliminary rulings make it impossible to add criminal law without redesigning the system of harmonisation on a fundamental level.

Underlying substantive law not harmonised

A directive is supposed to create uniform enforcement, but the underlying substantive law is not harmonised. Even limitation to those areas of intellectual property law that have been harmonised would not help. For example, copyright law is still fairly different in the Member States, even though the minimum standards have been harmonised by directives. E.g, only in the Netherlands is every piece of printed matter protected by copyright, regardless of its level of originality (normally an explicit requirement in copyright law). Germany has a large body of copyright contract law, while the Netherlands has nothing in this area.

Criminal law systems differ considerably as well: e.g. in some Member States "legal persons" (companies) can only be fined, while in others the "factual leaders" can be imprisoned.

Distortion of carefully balanced national law systems

If ACTA resembles the Commission's or EP's IPRED 2 versions, the carefully balanced national procedural law systems risk being distorted.

Moreover, criminal law should be malleable, in case it fails to achieve the effects intended by the legislator. On a national level it is possible to change criminal laws when these problems inevitably arise. This will be much harder on a Community level. Criminal law may lose its precision and adaptability, and therefore its legitimacy.

Attachment 1: Relevant articles TEC

TEC: CONSOLIDATED VERSION OF THE TREATY ESTABLISHING THE EUROPEAN COMMUNITY

TITLE IX Common Commercial Policy

ACTA is based on article 133, which is part of TITLE IX Common Commercial Policy. The intention expressed in the leaked discussion paper to criminalise non-commercial acts by civilians does not fall within TITLE IX Common Commercial Policy.

Article 133:

• "3. Where agreements with one or more States or international organisations need to be negotiated, the Commission shall make recommendations to the Council, which shall authorise the Commission to open the necessary negotiations. The Council and the Commission shall be responsible for ensuring that the agreements negotiated are compatible with internal Community policies and rules."

The Commission wants a "path breaking" agreement. That may not be compatible with internal Community policies and rules.

The Commission shall make an assessment of the IPRED (1) Directive, which can then be amended. Measures in this Directive may turn out to be too harsh. An agreement has to leave room to soften IPRED 1, an agreement has to be more conservative than adopted rules.

• "The Commission shall conduct these negotiations in consultation with a special committee appointed by the Council to assist the Commission in this task and within the framework of such directives as the Council may issue to it. The Commission shall report regularly to the special committee on the progress of negotiations." "The relevant provisions of Article 300 shall apply."
  • "4. In exercising the powers conferred upon it by this Article, the Council shall act by a qualified majority."

We will look at art 300 below.

• "5. Paragraphs 1 to 4 shall also apply to the negotiation and conclusion of agreements in the fields of trade in services and the commercial aspects of intellectual property, in so far as those agreements are not covered by the said paragraphs and without prejudice to paragraph 6."

According to the leaked document, the negotiators want to use a very broad definition of commercial, which may well fall outside a normal interpretation of "commercial aspects". Furthermore the agreement is intended to include non commercial acts. The agreement will exceed the competence granted in paragraph 5.

• "By way of derogation from paragraph 4, the Council shall act unanimously when negotiating and concluding an agreement in one of the fields referred to in the first subparagraph, where that agreement includes provisions for which unanimity is required for the adoption of internal rules or where it relates to a field in which the Community has not yet exercised the powers conferred upon it by this Treaty by adopting internal rules. The Council shall act unanimously with respect to the negotiation and conclusion of a horizontal agreement insofar as it also concerns the preceding subparagraph or the second subparagraph of paragraph 6."

The Community did not adopt criminal measures yet in the field of "intellectual property" rights, unanimity is needed for adding criminal measures to ACTA.

• "6. An agreement may not be concluded by the Council if it includes provisions which would go beyond the Community's internal powers, in particular by leading to harmonisation of the laws or regulations of the Member States in an area for which this Treaty rules out such harmonisation."

The Community's competence to impose criminal sanctions is limited (ECJ C-176/03, ECJ C-440/05). ACTA can not go beyond the Community's internal powers. The Community can only take criminal measures if both the objective of the Community and the measures are essential. The Commission is studying whether criminal measures are essential. ACTA can not be concluded before the study is ready, and the criminal measures proven essential. (Or the criminal measures have to be left out.)

The Community can not impose criminal measures if the policy field is not harmonised. This rules out patents, utility models, trade names. The Community can not impose precise sanctions.

• "In this regard, by way of derogation from the first subparagraph of paragraph 5, agreements relating to trade in cultural and audiovisual services, educational services, and social and human health services, shall fall within the shared competence of the Community and its Member States. Consequently, in addition to a Community decision taken in accordance with the relevant provisions of Article 300, the negotiation of such agreements shall require the common accord of the Member States. Agreements thus negotiated shall be concluded jointly by the Community and the Member States."

The agreement relates to trade in cultural and audiovisual services. Common accord of the Member States is required.

• "7. Without prejudice to the first subparagraph of paragraph 6, the Council, acting unanimously on a proposal from the Commission and after consulting the European Parliament, may extend the application of paragraphs 1 to 4 to international negotiations and agreements on intellectual property in so far as they are not covered by paragraph 5."

As we saw above, the intended agreement is not covered by paragraph 5. Unanimity is needed. The European Parliament has to be consulted.

article 300

Article 300

• "1. (...) In exercising the powers conferred upon it by this paragraph, the Council shall act by a qualified majority, except in the cases where the first subparagraph of paragraph 2 provides that the Council shall act unanimously."
• "2. Subject to the powers vested in the Commission in this field, the signing, which may be accompanied by a decision on provisional application before entry into force, and the conclusion of the agreements shall be decided on by the Council, acting by a qualified majority on a proposal from the Commission. The Council shall act unanimously when the agreement covers a field for which unanimity is required for the adoption of internal rules and for the agreements referred to in Article 310. (...)"

We will look at article 310 below.

• "3. (...) By way of derogation from the previous subparagraph, agreements referred to in Article 310, other agreements establishing a specific institutional framework by organising cooperation procedures, agreements having important budgetary implications for the Community and agreements entailing amendment of an act adopted under the procedure referred to in Article 251 shall be concluded after the assent of the European Parliament has been obtained."

In the discussion paper, cooperation procedures are foreseen. The agreement will have budgetary implications for the Community, it is a matter of interpretation whether these are important. The agreement will create a fait accompli, with the foreseen "path breaking" content, acts adopted under the procedure referred to in Article 251 will have to be amended. Assent of the European Parliament has to be obtained.

• (...) 6. The European Parliament, the Council, the Commission or a Member State may obtain the opinion of the Court of Justice as to whether an agreement envisaged is compatible with the provisions of this Treaty. Where the opinion of the Court of Justice is adverse, the agreement may enter into force only in accordance with Article 48 of the Treaty on European Union.
  • Agreements concluded under the conditions set out in this Article shall be binding on the institutions of the Community and on Member States.

Conclusion article 300

Assent of the European Parliament has to be obtained.

article 310

• The Community may conclude with one or more States or international organisations agreements establishing an association involving reciprocal rights and obligations, common action and special procedure.

In the leaked document, the word association is not mentioned. That would rule out art 310. On the other hand dispute settlement and cooperation are mentioned, this implies a de facto association. Depending on interpretation, article 310 makes unanimity in Council and assent by the European Parliament necessary.

Attachment 2: Protocol on the role of the national parliaments in the European Union

Protocol

ACTA will provide legal framework. By adding legal framework to a trade agreement the Protocol on the role of the national parliaments in the European Union's transparency requirements for Community legislation are circumvented. This should not be allowed, the Protocols transparency requirements have to be respected.

Attachment 3: The Turco case

In the landmark ECJ judgment on the Turco case (joined cases C-39/05 P and C-52/05 P) the Court stressed the importance of the public right of access to the documents of the institutions. In general (45) and especially in the case of legislative acts (46 and 47). While ACTA is not a legislative act in the strict sense, it will be legally binding for the member states. ACTA is de facto legislation. ACTA texts should be made directly accessible.

45:

• "In that respect, it is for the Council to balance the particular interest to be protected by non-disclosure of the document concerned against, inter alia, the public interest in the document being made accessible in the light of the advantages stemming, as noted in recital 2 of the preamble to Regulation No 1049/2001, from increased openness, in that this enables citizens to participate more closely in the decision-making process and guarantees that the administration enjoys greater legitimacy and is more effective and more accountable to the citizen in a democratic system."

46:

• "Those considerations are clearly of particular relevance where the Council is acting in its legislative capacity, as is apparent from recital 6 of the preamble to Regulation No 1049/2001, according to which wider access must be granted to documents in precisely such cases. Openness in that respect contributes to strengthening democracy by allowing citizens to scrutinize all the information which has formed the basis of a legislative act. The possibility for citizens to find out the considerations underpinning legislative action is a precondition for the effective exercise of their democratic rights."

47:

• "It is also worth noting that, under the second subparagraph of Article 207(3) EC, the Council is required to define the cases in which it is to be regarded as acting in its legislative capacity, with a view to allowing greater access to documents in such cases. Similarly, Article 12(2) of Regulation No 1049/2001 acknowledges the specific nature of the legislative process by providing that documents drawn up or received in the course of procedures for the adoption of acts which are legally binding in or for the Member States should be made directly accessible."