Brands need legal system to fight the fakes

Two MEPs discuss the problem of counterfeiting

Nicola Zingaretti

How can you protect and promote goods ‘made in Europe’? How can you ensure security and quality for European consumers?

These two simple questions would require an entire issue of European Voice - and more - to be analysed properly. The topic involves such a wide spectrum of interests that it should be faced by taking into account all the multiple instruments offered to European legislators.

First, the protection of ‘made in Europe’ has to be ensured because it provides certainty and quality standards to final users. Having said this, ‘extra EU’ goods that can ensure high levels of innovation and respect European standards of security - in a loyal and fair system of competition - should be seen as a positive way to offer a wider choice on our markets to consumers.

The goods in question often originate from small- and medium-sized enterprises that are rich in history and traditions: a patrimony of cultures that has to be properly valued and stimulated through education to responsible consumption.

For consumers, it is crucial for the EU to keep moving towards a fair system of promotion of ‘made in Europe’ goods: detailed labels, indicating if the selected good has been produced within the EU and containing information related to its specific qualities (especially when it comes to food and drink); education for consumers; verification by public authorities of credentials reported on the labels and, if necessary, repression of every crime related to the production and distribution of counterfeited goods.

Fake goods are invading our countries: these dangerous and harmful goods represent a threat to our consumers, a danger for our enterprises and a deadly weapon pointed at our public finances.

For these reasons, the European Parliament is about to adopt a resolution on the proposed directive on criminal sanctions aiming at ensuring the protection of intellectual property rights. This proposal, for which I was appointed draftsman by the Parliament almost two years ago, fixes a clear set of penalties and sanctions for every intentional violation of an intellectual property right committed on a commercial scale. We are talking about the massive flows of counterfeited goods coming mainly from Asia and for which there is no common policy Europe-wide.

Organised crime has gained an international dimension: it can orient its business directly to member states whose national legislations are weaker. Furthermore, criminal holdings can easily base their hidden industries in these countries, but then distribute fake goods all over Europe.

This is why Europe has to enforce a common strategy and it has to do so now. Criminal groups are suddenly diversifying from traditional criminal markets (drug trafficking, prostitution, etc.) to this new type of activity, that can ensure them widely varying fines from country to country (and, in some countries, no sanctions at all).

Consumers have a lot to gain from a common strategy, because it would protect their freedom of choice without compromising their duties. Furthermore, when it comes to personal use, it does not affect a very specific and sensitive type of intellectual property right: copyright.

Private violation of copyright won’t be sanctioned within a penal framework, thanks to the amendments that I have been proposing and that the legal affairs committee decided to accept almost unanimously, despite the opposition of some interest groups that, surprisingly, found themselves joining exactly the same field.

Unfair competition perpetrated by criminal organisations has a dramatic impact on our labour market: every year more than 100,000 European workers lose their jobs due to the impact of fake goods on the European economy: a constant and growing haemorrhaging of jobs that needs to be handled in the proper way, in accordance with the European Charter of Fundamental Rights.

• Italian Socialist MEP Nicola Zingaretti is a member of the European Parliament’s internal market and consumer protection committee and a substitute member of the legal affairs committee.

Bert Doorn

Fake Rolex watches, fake Gucci handbags and fake Ralph Lauren polo shirts, but also toys and medication; the variety of counterfeited products is enormous and so are the costs for the owners of the intellectual property rights (IPR). Whereas watches and handbags will only cause small discomfort to the consumer by lasting but a fraction of the lifetime of the originals, toys and medication marketed under the name of the rightful owner of the IPRs, but not subject to the same quality standards as the originals, pose a direct threat to the health of unsuspecting customers in the European Union. The European Commission has estimated that between 1998 and 2004 counterfeited products seized by EU rose by more than 1,000%. This equals more than 100 million articles each year. And this is probably only a glimpse of the total amount of counterfeited products that are annually smuggled into the EU successfully.

It is not a surprise to find the battle against counterfeited products high on the political agenda of the EU’s institutions. On 20 March, the legal affairs committee of the European Parliament adopted the Zingaretti report on criminal measures aimed at ensuring the enforcement of intellectual property rights. This report was a reaction to the Commission proposal to extend the 2004 directive on intellectual property rights that harmonised procedures and civil and administrative remedies against counterfeiting with criminal measures. When adopted in Strasbourg, this directive will be the first community directive that puts the ruling of the European Court of Justice in case 176/03 into practice by prescribing member states to set minimum level of penalties in their penal codes for the enforcement of IPRs. This guarantees a harmonised minimum level of criminal enforcement measures for infringements of intellectual property rights and prevents criminals from moving their business to the country with the most lenient penal code.

It is clear that the criminal measures should be targeted towards large-scale infringements of intellectual property rights for which organised crime is responsible. The legal affairs committee has therefore reformulated the definitions of this directive so that it applies to "infringements on a commercial scale" and by linking "intentional infringements of an intellectual property right" to "obtaining an economic advantage on a commercial scale". The directive does not apply to private users who would occasionally copy for personal use. A just distinction in my opinion that is realistic in the sense of allowing for effective enforcement by targeting the enforcement capacities of the member states to those large-scale activities connected with organised crime.

Enforcement in the community is, however, but one side of the solution since it targets the trade in counterfeited goods within the internal market. The EU’s attention should be focused on the supply side, the actual production of counterfeited products. The Union should urge those states where the counterfeited products are actually being produced to engage and enforce intellectual property laws. This concerns especially those countries that are members of the World Trade Organization. In November EPP-ED members of the legal affairs committee will organise a fact-finding mission to India to get an introduction to how the Indian government is organising the enforcement of IPRs on its territory. Stimulating enforcement of intellectual property rights in those countries where they are infringed is a much-needed addition to the current community legislation.

The enforcement of IPRs is high on the political agenda of the EU institutions. The EU should come down hard on both the production and the trade in counterfeited goods. The new directive that is being prepared offers, in combination with the existing directive, a framework in which the European Union can apply and enforce IPRs uniformly. Counterfeited products include after all more than just cheap watches, they can pose a serious threat to the health of consumers.

• Dutch centre-right (EPP-ED) MEP Bert Doorn is a member of the Parliament’s legal affairs committee and a substitute member of the internal market and consumer protection committee.

Two MEPs discuss the problem of counterfeiting