EC response to TACD recommendations on e-commerce and intellectual property (fwd)

Thought you guys might be interested in this.

Lynn

---------- Forwarded message ----------
Date: Fri, 12 Nov 1999 19:38:09 -0500
From: James Love <love(at)cptech(dot)org>
Reply-To: cni-copyright(at)cni(dot)org
To: Multiple recipients of list <cni-copyright(at)cni(dot)org>
Subject: EC response to TACD recommendations on e-commerce and intellectual
property

--- EC response to TACD recommendations on e-commerce
and intellectual property

The Trans Atlantic Consumer Dialogue (TACD) is a forum of more than
60 US and EU consumer organizations which develops and agrees upon
joint consumer policy recommendations to the US government and European
Union. It was organized in 1998, and has a web page at
<http://www.tacd.org/>.

The TACD was increased in part in response to the Trans Atlantic
Business Dialogue (TABD), which was organized much earlier.
<http://www.tabd.org>. There are also similar dialogues on labor and
the environment.

The following are the April 1999 TACD recommendations concerning
Intellectual Property and electronic commerce, followed by the European
Commission's responses.

The EC's responses were disappointing in many areas, and generally
a justification of the status quo. Indeed, often the EC offers a TABD
position (the Business dialogue) as a justification of its policies,
which is hardly comforting to TACD members (consumer groups).

One interesting EC comment concerned business practices patents.
TACD had asked the EC and the US government to hold hearings to
determine if e-commerce business practices patents were "needed, or if
they are unnecessary, anticompetitive and socially wasteful." The EC
comment was:

With regard to patents on so-called "business
practice patents" (Recommendation No. 7), currently
Article 52 of the European Patent Convention excludes
from the scope of patentable inventions "schemes,
rules and methods for doing business". Therefore, the
request by the TACD to solicit public comments and
hold public hearings in this respect would not be of any
additional value at the moment.

Unfortunately, the US government is issuing these patents in
large numbers, and Article 27.1 of the WTO's TRIPS agreement
on intellectual property requires member countries to provide
patents:

available for any inventions, whether products or
processes, in all fields of technology, provided that
they are new, involve an inventive step and are capable
of industrial application . . . patents shall be
available and patent rights enjoyable without
discrimination as to the place of invention, the field
of technology and whether products are imported or
locally produced.

Some US government officials, including officials from the USTR,
are arguing that the US government should force the EC and
other WTO members to extend patent to business practices.

Here are the TACD recommenditons, followed by the EC response.

Jamie Love <love(at)cptech(dot)org>

<-TACD Recommendations on Intellectual Property and E-Commerce->

Intellectual property and electronic commerce

The Internet and new information technologies present a number of
complex issues regarding intellectual property rights. Authors
and creators have an interest in protecting unauthorised
commercial exploitation of their own works, but also in obtaining
access to the works of others. Firms that sell computing
equipment and software may seek protection for those works, but
also may need the right to reverse engineer or develop products
that are interoperable with works owned by others. Citizens
benefit from the economic incentives of copyright laws, but
also from fair ("innocent") use exemptions in several national
copyright systems. The free flow of information is essential
for a variety of purposes, including the exercise of free speech
and the ability of innovate and create. Education use presents
special issues, including those involved in distance learning.

For these reasons, governments in the US and the EU should
embrace an intellectual property framework that includes the
following elements:

1. Distance Education. Mechanisms to protect
copyrighted works on the Internet should not unduly
restrict the ability of educators to share information
with students in ways that are equivalent to current
practices involving more conventional teaching methods.

2. Privacy. There are important conflicts between
privacy and certain technologies that protect copyrighted
materials. Privacy is a social good. Society should
avoid mechanisms to protect copyright that are
unreasonable intrusions on personal privacy, particularly
when less intrusive mechanisms are technologically
feasible.

3. Copyright exceptions. Governments should
provide copyright exceptions that address such issues as
fair or innocent use, private copying, library uses,
research and private study, and exceptions that are
essential for reverse engineering and other techniques
needed for the development of interoperable products.
Consumer rights in the digital world should not be less
than traditional rights in older publishing and other
information technologies. Consumer rights for fair uses
of copyrighted materials should not be alienated by
coercive or unfair contracts. Legislation to implement
WIPO treaties should address these concerns.

4. TRIPS Article 13. Governments should ask the WTO
to expand Article 13 of the TRIPS regarding exceptions to
copyrights. The language is currently too narrow, and
does not even include the language in Article 30
concerning patents, that permits governments to consider
the legitimate interests of third parties.

5. Public Domain and non-commercial software. The
public domain and non-commercial software plays an
important role in public and commercial life. The
Internet is built upon public and open protocols and uses
a wide range of free software programs. Free software
operating systems such as Linux and xBSD are important
alternatives to more monopolistic server technologies.
Databases of government information provide an important
new foundation for civic democracy in the information
society.

6. Database rights. National legislation to protect
investments in databases should avoid overly broad
protections, creating rights in facts, or rights that lead
to anticompetitive or monopolistic acts.

7. Business Practice Patents. The US and EU
governments should ask competition authorities to solicit
public comments and hold public hearings on the policy
issues associated with issuing patents on business
practices, including those associated with electronic
commerce, to determine if these patents are needed, or
if they are unnecessary, anticompetitive and socially
wasteful.

8. Parallel Imports. Electronic commerce raises profound
and fundamental challenges to national policies that seek
to restrict parallel imports of goods. Government should
provide for international exhaustion of rights for
copyrights, patents and trademarks, as is permitted under
Article 6 of the WTO/TRIPS agreement, so that consumers
can benefit from the free flow of goods. Governments can
require that goods be labelled or identified as parallel
imports, if such requirements benefit consumers and do not
present unreasonable restrictions on trade in parallel
goods.

Appendix

TRIPS Articles 6, 13 and 30

Article 6
Exhaustion

For the purposes of dispute settlement under this Agreement,
subject to the provisions of Articles 3 and 4 nothing in this
Agreement shall be used to address the issue of the exhaustion of
intellectual property rights.

Article 13
Limitations and Exceptions
(copyright)

Members shall confine limitations or exceptions to exclusive
rights to certain special cases, which do not conflict with a
normal exploitation of the work and do not unreasonably prejudice
the legitimate interests of the right holder.

Article 30
Exceptions to Rights Conferred
(patents)

Members may provide limited exceptions to the exclusive rights
conferred by a patent, provided that such exceptions do not
unreasonably conflict with a normal exploitation of the patent
and do not unreasonably prejudice the legitimate interests of the
patent owner, taking account of the legitimate interests of third
parties.

<-------------------EC Services Response------------------->

EUROPEAN COMMISSION SERVICES' RESPONSE

The European Commission services take note of the Recommendations
made by the TACD on matters relating to the protection of
intellectual property rights in the framework of electronic
commerce. The emerging Information Society will bring new
challenges to the protection of intellectual property rights. A
number of these challenges resulting from the digital environment
have already been addressed in two international treaties adopted
in December 1996 under the auspices of the World Intellectual
Property Organisation (WIPO Copyright Treaty and WIPO
Performances and Phonograms Treaty). They represent a major step
forward in providing for adequate protection of authors,
performers and phonogram producers in the digital environment.
The Draft Directive on Copyright and Related Rights in the
Information Society plays a crucial role in this context. The
aim of this proposal is to adjust and complement the existing EU
framework on copyright and related rights to provide for a
Community-wide level playing field in the digital environment,
which ensures public acceptance of the new services and fosters
creativity and investment in them. At the same time, the draft
Directive serves to implement the main obligations of the two
WIPO treaties signed by the European Community and Member States
in the course of 1997. The European Community and the Member
States are currently in the process of ratifying and implementing
these treaties. Citizens will benefit from a harmonised legal
framework on copyright and related rights, including appropriate
exceptions to these rights, as well as the conditions of their
application. Such a harmonisation is crucial in order to
facilitate cross-border exploitation of copyright protected goods
and services, including their dissemination to users. The TABD
has already stressed the need for swift ratification and
implementation of the two treaties by the U.S., the EU and other
third countries.

The TRIPs Council has just begun to look into matters related
to the impact of electronic commerce on the protection of
intellectual property rights. Further discussions will be held
in the near future to examine the current provisions of the
TRIPs Agreement and the possible need to adapt them to the new
developments.

On the general introduction to the Recommendations, it should be
noted that authors and related right holders have an interest
not only to receive protection against commercial exploitation
of their works and other subject matter, but also against their
illegal exploitation by private users. Access to works is,
naturally, facilitated through publication. As regards reverse
engineering, Article 6 Council Directive No. 91/250/EEC on the
Legal Protection of Computer Programs already provides for this
facility in order to achieve the interoperability of computer
programs with other programs.

The need for limitations and exceptions to copyright and
related rights for certain uses, such as for educational use
(Recommendation No. 1), private copying, library use and
research (Recommendation No. 3) has always been recognised, in
the international conventions as well as in the EC "acquis
communautaire" on copyright and related rights, including
proposed legislation which explicitly allows for exceptions
for specific uses. However, the economic impact of any such
exception in the new technological environment may be different
compared to the traditional environment. The scope of certain
exceptions may therefore need to be re-assessed in the light of
the new environment, in order to avoid economic damage to the
market of protected works and other subject matter.

In general, conflicts between privacy and copyright protection
should not arise (Recommendation No. 2). As far as personal data
are concerned, Directive No. 95/46/EC on the Protection of
Individuals with regard to the Processing of Personal Data and
on the Free Movement of such Data, also applies to the area of
copyright and related rights, thereby ensuring adequate
mechanisms to respect privacy.

Article 13 of TRIPs Agreement (Recommendation No. 4) provides for
the possibility to allow limitations and exceptions to copyright
and related rights based on the corresponding Article 9,
paragraph 2 of Berne Convention. Given the different nature of
industrial property, the corresponding provisions in the patent
area (Article 30 of TRIPs Agreement) also requires account to be
taken of the "legitimate interests of third parties".

The creation of works, notably software, often requires
considerable creativity and deployment of skill and labour
(Recommendation No. 5). Authors are vested with intellectual
property rights. It is, therefore, up to the author to decide if
and when to allow third parties to use his works against the
payment of a fee or not. While it is true that public domain and
non-commercial software play an important role in public and
commercial life, this must not undermine the author's legitimate
interest in receiving adequate compensation for exploitation of
his property.

On the protection of databases (Recommendation No. 6), Directive
No. 96/9/EC on the Legal Protection of Databases allows Member
States to provide for a number of exceptions to the rights of
authors and makers of databases conferred under the Directive,
including for private purposes, teaching and scientific research,
etc. It, therefore, strikes a careful balance between the
interests of authors and makers of databases and of users. With
regard to possible anti-competitive practices in the area of
databases, it has to be recalled that the exercise of
intellectual property rights is subject to the provisions of
competition law. Moreover, the Directive provides for rights in
databases or in substantial parts of databases, but not in facts.

With regard to patents on so-called "business practice patents"
(Recommendation No. 7), currently Article 52 of the European
Patent Convention excludes from the scope of patentable
inventions "schemes, rules and methods for doing business".
Therefore, the request by the TACD to solicit public comments
and hold public hearings in this respect would not be of any
additional value at the moment.

The question of parallel imports, i.e. the exhaustion of
exclusive rights (Recommendation No. 8), remains very sensitive.
The TRIPs Agreement leaves it up to the WTO Members whether or
not to allow parallel importation. The European Commission has
commissioned, in the area of trademarks, a study on the impact of
parallel imports which was discussed with the interested parties
in April 1999. The European Commission is currently evaluating
the outcome of the study and the comments received in order to
review the current system of regional exhaustion in the
Community. In this respect it has to be noted that the TABD
expressed its opposition to the international exhaustion of
intellectual property rights.

--
James Love / Director, Consumer Project on Technology
http://www.cptech.org/ / love(at)cptech(dot)org
P.O. Box 19367, Washington, DC 20036
voice 202.387.8030 / fax 202.234.5176