EU Associations question the need for a revision of the IPRED

In the context of the Commission’s recent Consultation on the Civil Enforcement of Intellectual Property Rights, the pan-European organisations Cable Europe, ECTA, ETNO and EuroISPA have underlined the essential role played by Internet intermediaries in building consumers’ trust in the digital environment and in developing the Information Society services of the future.

April 2013. The Associations have stressed that the IPRED as it stands offers a well-balanced and functioning framework to address digital piracy and that it is premature to review the Directive at this stage due to the limited experience with its implementation and the lack of evidence justifying any revision.

INTRODUCTION
Our pan-European organisations, Cable Europe, ECTA, ETNO and EuroISPA, represent the European electronic communications industry that is comprised of both national and pan-European fixed and mobile telecoms operators, Internet Services Providers (ISPs) and cable companies. The European electronic communications industry plays a crucial part in connecting European citizens and businesses to information, news, entertainment and cultural content. We welcome the opportunity to provide comments in relation to the Commission’s Consultation on the Civil Enforcement of Intellectual Property Rights and to underline the essential role played by Internet intermediaries in building consumers’ trust in the digital environment and in developing the Information Society services of the future.

ANY REVISION OF THE IPRED WOULD BE PREMATURE
First and foremost, we consider that the IPRED as it stands offers a well-balanced and functioning framework to address digital piracy. Therefore, we regret that the European Commission is continuing to explore the opening up of the IPRED in the absence of any necessity for such a revision. We believe that it is premature to review the Directive at this stage due to the limited experience with its implementation and the lack of evidence justifying any revision. Indeed, as noted by the Commission in its report on IPRED, “due to late transposition of the Directive in many Member States […], experience in applying the Directive is limited […].Therefore, the Commission has not been able to conduct a critical economic analysis of the impact that the Directive has had on innovation and on development of the information society, as provided for in Article 18 of the Directive”. Moreover, both the evaluation report and staff working document report that the Directive provides efficient provisions to support rightsholders in enforcing their rights. Hence, as the Commission itself points out several times, additional evidence is needed to fully assess the need for revision. The IPRED working group set up by the Commission could provide an opportunity to share national experiences concerning the Directive and try to ensure Member States’ commitment to its implementation.

HARMONISATION IS KEY TO AN EFFECTIVE ENFORCEMENT IN THE SINGLE MARKET
The EU is facing the challenge of adapting the Single Market to the digital age. This can only be achieved if a single framework is efficiently implemented across the EU. The Commission should refrain from drawing the conclusion that the IPRED is not sufficient to achieve this goal before it has been properly implemented. Prematurely introducing stricter enforcement through ever-increasing restrictive technical measures in a fast changing digital environment would inevitably result in a chilling effect on innovation, undermining consumers’ confidence in digital products and causing
unintended negative consequences on the freedom of communications and Internet openness.

THE ROLE OF INJUNCTIVE RELIEFS
Articles 9 and 11 of the IPRED introduced injunctions within the majority of Member States. These mechanisms, relatively unknown to many Member States in 2004, proved to be efficient for rightsholders in the enforcement of their rights across the EU, especially with regard to commercial infringement, and are widely used across the EU. In this regard, we remind the Commission that at the time of the adoption of the Directive back in 2004, the problem of IPR infringements through P2P networks, for instance, was already well known and, as the Commission acknowledges in its evaluation report, the injunctive relief mechanisms contributed positively to addressing this issue through a judicial intervention. In light of the late transposition and different interpretation of these articles across Member States, the effectiveness of injunctive relief cannot be efficiently assessed. Therefore, we call on the Commission to ensure a proper, harmonised implementation of the IPRED provisions across the EU before making any proposal regarding the suitability of a revision.

TECHNICAL MEASURES WILL NOT BE EFFECTIVE IN FIGHTING DIGITAL PIRACY AND ARE DISPROPORTIONATE
The implementation of technical filters in ISPs’ networks and servers for communications generated by users, irrespective of whether they are alleged infringers or not, is contrary to the principles of the ECommerce Directive, providing that a general monitoring obligation cannot be imposed on ISPs in relation to the content transmitted over their operated networks. In a recent ruling, the ECJ has confirmed that general filtering systems installed for the prevention of copyright infringements are disproportionate. Moreover, such technical filters would be complex and very costly. Yet the effectiveness of such measures in combating piracy is doubtful because such measures are likely to be circumvented or quickly become obsolete in this fast moving digital world. Technical measures such as site filtering/blocking have detrimental effects on consumers and online businesses – for example, access to legitimate sites or content may be blocked in the process.

INCOMPATIBILITY WITH THE E-COMMERCE DIRECTIVE
The IPRED, in article 2.3a, makes it clear that it “shall not affect” the provisions in the E-Commerce Directive, in particular those relating to the liability regime of intermediaries (Articles 12 to 14) and the non-general monitoring obligation (Article 15). The latter in particular has implications that are much broader than the mere liability issue (as suggested by the analysis of the Commission in the evaluation report), notably with regard to the freedom of expression (as also mentioned in Recital 9 of the ECommerce Directive). Indeed, any injunction on an ISP to ensure that a given IPR infringing act is taking place through its service, even for a single piece of content, effectively amounts to a general obligation to monitor and filter “every single” communication carried through a network or hosted in a server. It was also confirmed by the recent CJEU decisions SABAM v. Scarlet and SABAM v. Netlog NV, that such general monitoring obligations are both inconsistent with the E-Commerce Directive and with important underlying fundamental rights of users. In addition, the Court ruled that the introduction of enforcement measures should be proportionate and respectful of industry’s freedom to conduct a business activity as laid down in article 16 of the EU Charter of Fundamental Rights. We urge the Commission to abandon its extreme interpretation of IPRED that an intermediary – because of its supposed position of control, while not itself committing or condoning the alleged infringement – may be ordered to implement unspecified, disproportionate and possibly repressive technical measures in a blanket fashion against their customers simply because the intermediaries are not the infringing party.

INFRINGEMENT OF FUNDAMENTAL RIGHTS AND EUROPEAN PRINCIPLES
Technical measures involve processing personal data in a manner which contradicts data protection laws or the freedom of communications when ISPs are obliged to monitor users’ transmissions. The two studies conducted for the Commission on online copyright enforcement and data protection has already confirmed that IP addresses may be considered as personal data and their processing in the context of online copyright enforcement is considered as sensitive data in many Member States. However the studies also highlighted that the case law of the Court of Justice of the EU on online copyright enforcement and data protection still leaves open a lot of questions as to the proportionality and fair balance of rights.3 We have serious concerns that any change to the IPRED – e.g. introducing technical measures to combat piracy online – would be incompatible with fundamental laws of privacy around data protection and freedom of communications which are essential for innovation and growth in the digital market4. Therefore, we strongly believe that the balance between fundamental rights at stake (property rights, privacy of communications, freedom of expression, etc.) needs to be decided on a case-by-case basis by a competent judge. Any other cooperative mechanism, voluntary or not, should be carefully assessed in the light of proportionality, necessity and transparency principles, within a legitimate framework and in the presence of consumer-friendly legal offers in the market.

IS PIRACY THE SYMPTOM OF AN INNEFICIENT MARKET STRUCTURE?
In order to understand whether or not a revision of the IPRED is needed, an economic quantification of the problem is required. The Commission has so far failed to provide any neutral, comprehensive study assessing the magnitude of the problem across the EU, as provided for in Article 18 of the Directive. In addition, the study carried out by RAND5 concluded that the studies commissioned by the industry presented a number of critical issues, especially regarding the methodology consisting of applying a so-called “substitution rate” which multiplies the total number of infringements by the number of lost sales per infringement. We welcome the recent study of the Commission6 which found that “Internet users do not view illegal downloading as a substitute to legal digital music” and that “digital music piracy does not displace legal music purchases in digital format”. In addition, the study outlines a “positive effect of online streaming on music consumption channels” while showing that “illegal music downloads have little or no effect on legal digital sales”. However, it still only covers the consumption of music products. We therefore call on the Commission to assess how such a structure could be changed in a way to accelerate the transition of traditional content business model and chain of economic value to digital content distribution and meet the requirements of the digital age.

WORK ON SUSTAINABLE COPYRIGHT SOLUTIONS FOR THE DIGITAL AGE
We firmly believe that a sustainable solution to IPR infringement lies in a better public awareness on the value and use of IPR as an economic and cultural asset. For Europe’s citizens to fully appreciate the value of IPR, this will require the development of innovative and attractive content services online, at affordable prices and based on new business models, able to meet consumers’ expectations and needs. Therefore, we call on the Commission to continue this positive focus on new measures that promote the establishment of innovative services that will effectively allow the value of copyright to be realised and constitute new sources of revenues for creators. A new reality for business models requires that European policy makers work with the Internet establishment to promote, rather than restrict, new developments, especially given the delicate balance it takes to best nurture both the creative industry and those who help to disseminate their work.

CONCLUSIONS
Finally, we consider that the focus of any initiative undertaken by the Commission on the protection of IPRs should be directed towards encouraging the creation of innovative, affordable content services, based on business models which are able to embrace the Internet revolution. This is a much more effective strategy for enforcing IPRs than increasingly repressive legislation which will inevitably produce the opposite result and will only serve to maintain those barriers to trade that are the real obstacle to the creation of a truly European Digital Single Market.