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This is an older analysis, providing some more information, but harder to read. You may like to start with our new text.
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On 25 April 2007 the European Parliament rejected criminalisation of parallel importation when it voted on 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 (COD 2005/127).
In the consolidated text the amendment excluding parallel importation from criminalisation, is missing. As a result the consolidated text does criminalise parallel importation. The consolidated text is the opposite of the vote.
In Intellectual Property Watch Professor Annette Kur, Research Fellow at the Max Planck Institute for Intellectual Property, Competition and Tax Law called the change "a turnaround". She added: "People who engage in parallel imports are not criminals".
Our analysis shows the consolidated text violates the European Parliament Rules of Procedure. Adopted amendments have to show up in the consolidated text. Democracy is violated.
The consolidated text has to be corrected as soon as possible. Innocent people are criminalised.
Update: MEP Eva Lichtenberger wrote the President of the European Parliament a letter. Heise has the story.
Update: despite on going discussion the Official Journal of the European Union published the corrupted text.
Examples
These activities are criminalised because amendment 15 is missing:
- A shop importing genuine Levi jeans itself from the U.S.
- A shop importing genuine Sony Playstations itself from Asia.
- A shop importing genuine trade marked software itself from the U.S.
European Court of Justice example:
"[T]he European Court permitted an Austrian Company, Silhouette, to apply its trademark rights in the name 'Silhouette' in order to prevent the re-importation into Austria from Bulgaria of its no-longer-fashionable spectacle frames, where it hoped to have the frames remaindered in obscurity."
Here someone imported genuine but no-longer-fashionable spectacle frames. It is one thing this is an infringement, it is not criminal behaviour.
Amendment 15 is missing
You may like to take a look at our flyer first.
Two amendments are important here, 15 and 38. At the sideline amendments 11 and 13 play a role. In this document we pasted the 4 amendments together.
Here we show the consolidated text, with the important parts highlighted. Here are the official texts at the EP server: amendments and consolidated text.
Amendments 11 and 15 both exclude parallel importation from criminalisation. Amendment 38 on the other hand only has an ineffective exclusion (see below). Where we would expect the text of amendment 15 we see the text of amendment 38. Amendment 38 replaces amendment 15.
No compromise amendment
On 9 May FFII and BEUC reported to Parliament amendment 15 is missing. The office of MEP Mayer replied that amendment 38 was a compromise-agreement between Mr Zingaretti and Mr Mayer, the text of amendment 15 was aligned with that of amendment 38. This explanation is wrong. Amendment 38 may have been a compromise between Mr Zingaretti and Mr Mayer, it was not a compromise amendment according to the Rules of Procedure:
- it was not tabled as a compromise amendment.
plenary compromise amendments have to be made by the Committee responsible. (Rules of Procedure 154.2 and 154.4). The voting list says it was tabled by "PES+EPP-ED", not by "committee".
- if it would have been a compromise amendment, it would have been voted first and would have made amendment 15 lapse. That did not happen. Not being a compromise amendment, amendment 38 can only change the individual article of the text to which it relates, which is art. 2. It can not touch amendment 15 (in art. 3).
Different articles, 38 voted last
Amendment 38 is restricted to the individual article of the text to which it relates, which is art. 2 (Rules of Procedure 151.1.c). It can not touch amendment 15 (art.3). The two amendments amend different articles, they both have to be incorporated in the text.
Amendment 38 was voted last. If there would have been a relationship, amendment 15 would have made 38 lapse, not the other way around.
Transparent Rules of Procedure violated
The European Parliament Rules of Procedure (RoP) are transparent. Adopted amendments make competing amendments lapse, the competing amendment can not be adopted too (RoP art. 151.2). To give compromise amendments a good chance, compromise amendments are voted first (RoP art. 154.4). That's it, adopted amendments have to show up in the consolidated text. Amendment 15 has to be represented in the consolidated text.
Amendments may make identical changes to a particular form of words throughout the text (RoP 151.1.c) - which is not the case here. In no way the text of amendment 15 could have been changed.
The consolidated text is in violation of the Rules of Procedure.
No conflict
Did the Parliament adopt conflicting amendments? No, amendment 38 second part regards the scope, amendment 15 the definition of the crime. Criminal legislation can perfectly have limitations in both. It is like first choosing the area where to build and then designing the building.
Besides, exclusions are cumulative, are never conflicting.
On top of that, an ineffective amendment does not conflict with other amendments. Both amendment 15 and 38 can and have to be incorporated in the consolidated text.
Measures to take
The consolidated text has to be corrected as soon as possible. Amendment 15 has to be incorporated.
Parallel importers are not criminals
Goods are marketed in a region by the trade mark rights holder or with his consent. Someone buys these goods and sells them in an other region, this is called parallel importation. Basically this is trade. But if the goods are trade marked, it is an infringement of trade mark. The rights holder can sue the parallel importer. But should parallel importation be a crime too? No copying is involved, genuine goods are bought and sold, it is not piracy. The Max Planck Institute wrote about this: "16. Parallel importation of genuine goods which have been marketed with the consent of the rightsholder 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."
Following the Max Planck position, amendment 15 excludes parallel importation from criminalisation. It was adopted by all Committees (ITRE, LIBE and JURI), and in Plenary.
Amendment 38 second part does not exclude parallel importation from criminalisation. Here "have been allowed" refers to "original goods", goods which are imported. This amendment rather suggests that only goods which are imported with consent do fall under the exception. Importation with consent would not even be an infringement, so the amendment lacks effectiveness.
Amendment 15 is effective, amendment 38 second part is ineffective.
In the IP-Watch article the Mr Mayer assistant confirmed "a huge difference". Professor Annette Kur, Research Fellow at the Max Planck Institute for Intellectual Property, Competition and Tax Law is quoted: ' "In my opinion this is a change of considerable weight," said Kur. Parallel imports of products marketed by EU companies outside the union for lower prices were a much seen phenomenon. While civil right sanctions are in place, criminal law sanctions would be wrong, according to Kur. ' She added: "People who engage in parallel imports are not criminals," There is even a long, ongoing debate about whether parallel importing was a violation of trademark law at all.
A reconstruction
After the Juri (or Legal Affairs) committee vote, amendment 15 had been adopted by all three committees, amendment 11 by two committees. Being adopted by JURI, they were tabled automatically for Plenary. Amendment 15 was placed in the bloc to be voted first, the bloc with non controversial amendments. Together with the other political groups, Mr Zingaretti (PSE), Rapporteur, and Mr Mayer (EPP-ED) supported the block vote. It was sure parallel importation would not be criminalised. Amendment 15 was indeed adopted.
From here to a consolidated text that does not exclude parallel importation from criminalisation is a long road.
In a nutshell: Mr Zingaretti and Mr Mayer both supported the block vote containing amendment 15 and tabled a rather hidden amendment with the opposite effect, to another article. After the vote they decided that only their amendment would show up in the consolidated text - in violation of the Rules of Procedure.
Hidden amendment
Amendment 38 presents itself in the justification as an alternative version of amendment 11, yet it is tabled for an other article. Amendment 11 excludes some rights from the scope and excludes parallel importation from criminalisation. Amendment 38 adds one right to the list of excluded rights. But not only that. It also turns the exclusion of parallel importation ineffective by removing the word "marketed". This change may not be apparent at first. On top of that, the justification only says: "The amendment wished to provide coherence to the whole text, since the original amendment doesn't mention the exclusion of plant variety rights, already excluded from the list provided by oral amendment 1 (now amendment 13), adopted by the Legal Affairs Committee."
The amendment was written by Mr Zingaretti (PSE), Rapporteur, and Mr Mayer (EPP-ED). The Rapporteur is responsible for guiding the Directive through Parliament. The Rapporteur introduced a major change which reverses the meaning of the text and didn't indicate this in the justification. The justification only mentions "provide coherence". Amendment 38 is a rather hidden amendment.
Note the mentioned "original amendment" in the justification is amendment 11. Note the justification says "original amendment" (singular), not "original amendments" (plural). Note "provide coherence" only refers to the list of excluded rights.
Note there is no relationship at all between amendment 38 and 15. They amend different articles, different topics (scope and crime), no relationship follows from justification or voting list.
No alternatives
As an alternative for amendment 11, amendment 38 is tabled against the wrong article, art. 2 in stead of art. 1.
In the night before the vote, amendment 11 was taken out of the block vote. Amendment 11 was rejected, 38 adopted. Since the change regarding parallel importation was rather hidden, many Members may have thought to have voted against criminalisation when they voted for amendment 38. Anyway, they did when they voted for amendment 15.
Under Rules of Procedure 155.5, amendments can not be voted collectively if there are other amendments. Amendment 15 was not taken out of the block vote. Indeed 15 and 38 are no alternatives, they are cumulative and tabled for other articles. Thus RoP 155.5 is not violated. But then amendment 38 can not touch 15 afterwards.
No compromise
After the vote amendment 38 was called a compromise amendment, while it never was not a compromise amendment according to the Rules of Procedure. Changing the text of amendment 15 is in violation of the RoP.
Doors are wide open for manipulation
Intellectual Property Watch: "Lead rapporteur Nicola Zingaretti was consulted and himself also consulted the shadow rapporteur and the secretariat of the Parliament, the assistant said."
The Tabling Office Verification Service consulted a non neutral politician, the author of the rather hidden amendment. He himself consulted the co-author of the amendment, and they decided their rather hidden amendment was the only one to show up in the consolidated text - in violation of the Rules of Procedure.
The system does not work, interested politicians play a role. Especially since the Community claims the right to be involved in criminal law, quality is needed. As things stand now, Parliament is not ready for criminal law.
Routine?
In Intellectual Property Watch an assistant of Mr Mayer confirmed "a huge difference" between amendment 38 and 15. The article also mentions: 'The changes, according to her, were routine and from the standpoint of content "logical".'
It should have been apparent that a reversal of the vote is never routine and logical. A Parliament that boosts about changing amendments after the vote?
Letter
Parliament was first informed by FFII and BEUC on May 9. Below a letter sent to the Permanent Representatives of the EU Member States, cc the President of the European Parliament and the Chairman of the EP Legal Affairs Committee. Then we had not yet discovered amendment 11 is missing as well. That was added to this page on August 5.
June 3, 2007
Dear Representatives,
According to the agenda, tomorrow, Monday 4 June 2007 at 10H00, the Working Party on Substantive Criminal Law will discuss 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 (COD 2005/127).
The EP provisional consolidated text of this proposal contains a mistake.
The EP adopted two amendments on parallel importation. One of them, amendment 15, excludes parallel importation in a clear and meaningful way. The other amendment, number 38, is unclear, it does not exclude parallel importation in a clear and meaningful way. The provisional consolidated text only contains the unclear amendment twice, it does not represent the EP vote.
The EP adopted amendment 15: "Criminal sanctions shall not be applied in cases of parallel importation of original goods which have been marketed with the agreement of the right-holder in a country outside the European Union." [note 1] This adopted amendment is meaningful. Parallel importation does not involve copying, genuine products are sold, it is not piracy. For this reason all parallel importation of goods, marketed with the agreement of the right-holder in a country outside the European Union, should not be criminalised. This was first observed by the Max Planck Institute. [note 2]
The EP also adopted amendment 38: "In particular, this Directive does not apply to any infringement of an intellectual property right related to: (...) - parallel importation of original goods from a third country which have been allowed by the rightholder." [note 1]
This amendment is unclear, "have been allowed" refers to "original goods". It's meaning is ambiguous. An example. Suppose a company is shipping in Levi jeans from the USA, where let's say they happen to be cheaper. The difference is between
(i) the rightsholder allowing the jeans to be sold in the USA
(ii) the rightsholder allowing the jeans to be imported into the EU
In this amendment it seems (ii) is the test. A parallel importation which is allowed by the rightholder is not even an infringement. The amendment is ineffective with regards to parallel importation from outside the EU. Furthermore, in parallel importation often no third country is involved, just the country where the product was marketed and the EU are involved.
The consolidated text [note 3] contains adopted amendment 38, which is meaningless with regards to parallel importation. Adopted amendment 15 is reformulated to be equal to amendment 38, rendering amendment 15 unclear and meaningless. The provisional consolidated text does not represent the EP vote. The EP has been informed 3 weeks ago but did not update the provisional text.
For information on parallel importation from within the EU and other issues, see the BEUC / EBLIDA / EFF / FFII report on the proposal as amended in Strasbourg by the European Parliament at its first reading on Wednesday, 25 April, 2007. [note 4]
Yours sincerely,
Ante Wessels
FFII