Select Committee on European Scrutiny Eighth Report


COM(00) 789

Commission Communication — Follow-up to the Green Paper on combatting counterfeiting and piracy in the single market.

Legal base:
Document originated: 30 November 2000
Forwarded to the Council: 4 December 2000
Deposited in Parliament: 9 January 2001
Department: Trade and Industry
Basis of consideration: EM of 12 January 2001
Previous Committee Report: None; but see (19482) 12240/98: HC 34-iv (1998-99), paragraph 3 (16 December 1998) and HC 34-xvii (1998-99), paragraph 13 (28 April 1999)
To be discussed in Council: No further substantive discussion expected at this stage of the proposal
Committee's assessment: Politically important
Committee's decision: Cleared


  20.1  In late 1998, the Commission issued a Green Paper on combatting counterfeiting and piracy in the Single Market.[45] Its aim was to determine the economic impact of this activity on the Single Market, to assess the effectiveness of the applicable legislation, and to suggest approaches that could improve the situation. The Green Paper adopted a broad definition of counterfeiting and piracy to include infringement of all intellectual property rights, including over-production by licensees and parallel imports[46] from outside the Community.

The Commission Communication

  20.2  The Commission reports that 145 responses to the Green Paper were received. A meeting was held on 2 and 3 March 1999 for interested parties. On 3 November 1999, an experts' meeting was held with the Member States. The Economic and Social Committee issued its Opinion on the Green Paper on 24 February 1999 and the European Parliament adopted a Resolution on 4 May 2000.

  20.3  The results of the consultation reveal that the scale of counterfeiting and piracy within the Single Market is considerable. Though it is difficult to quantify, the Commission concludes that these activities are a major problem in most economic and industrial sectors and that the EU should take steps to "strengthen and improve the fight against counterfeiting and piracy in the Single Market at EU level".

  20.4  Figures frequently quoted are those in the 1997 paper[47] by the Counterfeiting Intelligence Bureau, set up by the International Chamber of Commerce. According to these, counterfeiting and piracy represent from 5% to 7% of world trade, at a cost of 200 to 300 billion euros a year, with the loss worldwide of 200,000 jobs a year. EU companies operating internationally were estimated to lose between 400 and 800 million euros in the Single Market and 2,000 million euros outside the EU each year. The percentage share of counterfeiting and piracy in relation to legitimate trade in the Single Market has been estimated at:

SectorCounterfeiting/piracy rate
Textile10% to 16%
Car spare parts5% to 10%
Sport and leisure5% to 7%

  20.5  The Commission says that complaints were made about the lack of uniformity of sanctions regimes, with the result that counterfeiting and piracy operations were concentrated in particular areas of the EU. These were not specified in the Commission document.

  20.6  The Commission concludes that these malpractices affected consumers, rights holders and other legitimate businesses, as well as governments, which lose revenue. While the public authorities had an important role, rights holders also had a vital part to play, both in taking preventative measures and in enforcing their rights, co-operating closely with the authorities when appropriate. There was general agreement that the problem should be dealt with vigorously.

  20.7  The Commission shares the concerns expressed and proposes an Action Plan. It divides the actions proposed into those which should be carried out as a matter of urgency, for which it will submit proposals in the near future, medium-term actions and other initiatives:

    "Actions to be carried out as a matter of urgency:

    "—  the Commission will submit a proposal for a Directive aimed at strengthening the means for enforcing intellectual property rights and defining a general framework for the exchange of information and administrative co-operation;

    "—  on the basis of existing programmes, the Commission will develop training activities for officials of law enforcement authorities, including those of the applicant countries, and public information and awareness activities;

    "—  the Commission will continue to give priority to combatting counterfeiting and piracy in the enlargement negotiations;

    "—  the Commission will launch a study for defining a methodology for collecting, analysing and comparing data on counterfeiting and piracy; and

    "—  the Commission intends to identify a contact point at Commission level. This will provide an interface between the various departments for work on combatting counterfeiting and piracy and promote transparency vis-a-vis the outside world;

    Medium-term actions

    "—  the Commission will examine the appropriateness of setting up complementary administrative co-operating mechanisms for combatting counterfeiting and piracy, particularly between the competent national authorities, but also between these authorities and the Commission; and

    "—  the Commission will examine the need to submit proposals for harmonising the minimum thresholds for criminal sanctions, extending Europol's powers to include combatting counterfeiting and piracy and establishing a structure permitting access — via an Internet site, for example — to judgments by national courts;

    Other initiatives

    "—  ... the Commission sets out recommendations aimed in particular at making better use of existing information systems and strengthening co-operation and exchange of information between the private sector and public authorities".

  20.8  The Commission comments that the activities in the Action Plan will obviously have to be integrated with the European Union's strategy on the prevention and control of organised crime in accordance with the Amsterdam Treaty, the Conclusions of the Tampere European Council and the Commission's own guidelines.

The Government's view

  20.9  The Parliamentary Under-Secretary of State for Consumers and Corporate Affairs at the Department of Trade and Industry (Dr Kim Howells) says:

    "The Government is committed to fighting counterfeiting and piracy, so any action to deal with these issues is generally welcomed. Many of the proposals are consistent with current Government initiatives, such as raising awareness amongst consumers of the harmful effects on them of counterfeiting and piracy, and facilitating better co-operation between both public and private sector interests over matters such as improved and better sharing of information about counterfeiting and piracy and best practice in enforcement to deal with it.

    "The Government is also committed to some rationalisation and improvement of the criminal laws to deal with counterfeiting and piracy, such as raising the maximum penalties for copyright offences to the same level as those for trade mark offences. There may be reservations about the severity of certain sanctions and their appropriateness, particularly in the context of civil law. Many of the provisions flagged up for inclusion in the proposed Directive have general application and we will need to think very carefully about the read-across from these proposals."

— The Trade and Industry Select Committee report

  20.10  In its report on Trade Marks, Fakes and Consumers[48], the Trade and Industry Committee called on the Government to raise awareness of the damaging effect of counterfeiting and for recognition in the public mind of this as an offence of dishonesty.


  20.11  It has taken some time for the Commission to assemble and analyse the responses to its consultation, and to put forward an Action Plan. It is clear that respondents want vigorous action to be taken without delay. At the same time, we regard it as important that any legislation proposed is carefully drawn up.

  20.12  We clear this Communication, but we ask the Government to ensure that it submits Explanatory Memoranda on the proposed draft Directive, and on any other proposals for legislation made in response to this consultation, in good time for us to consider such legislation before it is put to a Council for agreement.

45  (19482) 12240/98; see headnote to this paragraph. Back

46  Parallel imports are genuine branded goods that have been put on the market in one country at a lower price than in another country, and are subsequently imported for sale to the higher-priced country without the consent of the brand owner. Back

47  Countering Counterfeiting. A guide to protecting and enforcing intellectual property rights, Counterfeiting Intelligence Bureau, International Chamber of Commerce, 1997. Back

48  Eighth Report from the Trade and Industry Committee, HC 380 (1998-99), paragraph 110.  Back

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