[Finnish original 9th May 2003; translated into English on 27th May 2003.]


To the Ministry of Trade and Industry

Statement on the proposed IPR enforcement directive

Electronic Frontier Finland - EFFI ry

General remarks

EFFI considers the proposed directive mainly unnecessary since the current legislation on intellectual property rights already requires that sufficiently efficient judicial protections are incorporated into national legislations (e.g. TRIPS). However, because it seems apparent that the directive is really attempted to be made into force we want to comment some parts of it.

We are especially concerned of digital products, which are compared in the directive to e.g. medicines, alcohol, toys and car parts. We naturally wish that piracy and counterfeits are efficiently weeded out when it is a matter of safety and health of individuals. However, we cannot agree with the assumption that the same rules should apply also to digital products.

Notably the "studies" behind the proposed directive are not about safety or health but about digital products. The most used source seems to be the statistics of the Business Software Alliance (BSA) regarding the possible markets and employing effects of computer software. Generally speaking, using material produced by various interest groups indicates bad administrative practice. EFFI thinks the commission should have first conducted politically neutral background studies with impartial research institutions.

The BSA statistics have among other things severe methodological problems. For example, the alleged loss figures of software and media industries are based on assumptions that one pirated copy would correspond to one purchased copy and that these imaginary profits would be used to hire new employees. In reality the media industry also benefits significantly from piracy in Eastern Europe e.g. because of network effects and brand dispersion. On the other hand, the media industry does not really employ directly others than administrative people and lawyers lobbying new laws like this one. Moreover, alternative business models for digital products that are not based on license fees (e.g. open source computer software, various marketing strategies) have not been taken into account when calculating the alleged losses.

Law making cannot be a word play

The language used in the proposed directive is especially worrying. The official documents are widely referenced and they should therefore be written using appropriate language and claims should be supported with references to neutral studies. If the only available statistics and studies are from various interest groups (for example because of a monopoly situation) one should be especially careful with the source critique.

This directive does not fulfill these minimum requirements. The strangest thought in this proposal is connecting piracy to organized crime and terrorism. A word play like this is nothing new to the media industry interest groups. The proposed directive claims without any reference (p. 12) that e.g. "piracy - - goes hand-in-hand with organized crime", "...laundering earnings", "...are even said to have become more attractive nowadays than drug trafficing" and "...factor in promoting crime, including terrorism". These allegiations have not been accounted for in any way. We can only wonder the boldness of the drafters of the proposed directive to rely so strongly on the political rhetorics of only one party.

To exaggerate a bit, we could argue that one should have more severe penalties for travelling without a valid ticket in public transports since the current small penalties for free riding encourage crime. Let us also remember that drug trade and terrorism are crimes and see: travelling without a ticket is connected to terrorism and drugs! With this kind of reasoning it is of course easier to gain political support for the legislative initiative. Of course, it was not mentioned that if the price of the tickets is too high and if the penalties are unreasonable a part of the passengers will walk or cycle - which might have beneficial health effects for the society as a whole.

The choice of words creates impressions and impressions become in time "truths" unless they are questioned. Even though the language of the directive is in some parts quite humorous it is still a serious and far reaching matter. Therefore EFFI thinks that Finland should point out about the language and at least suggest that the flagrancies in pages 12-13 are written anew.

Detailed comments

Punitive damages (article 17)

Finland and other EU countries have so called full compensation principle. The occured damage is compensated fully, no more and no less, unless there are special reasons to settle down the compensation. For example in copyright violations the starting point has been the normal licenced price of the product and the damages have been settled down if the compensation would have been unreasonably high (e.g. [Finnish] piracy BBS cases). It is also important to remember that the copyright holder benefits more from compensation than license sales since in the case of compensation there has been no need to pay the production costs or taxes.

The proposed directive diverges from this principle significantly. According to article 17 the basis for compensation should be two times the regular licensing fee. There is no mentioning of any settling principles. Alternatively the article proposes a compensation that would be based in addition to the licensing fees to the incomes that would possibly have been earned without the copyright violation. A proposal like this would lead to the strange situation that opposing piracy could become a profitable business. In this form article 17 would "legalize" the calculations of BSA that could apparently be used as such for the basis of compensation in legal judgements.

The idea of punitive damages is therefore not only unreasonable but also possibly against the principles of the criminal law. EFFI proposes the article to be written totally anew.

Publication of judgements paid by defendant (article 19)

Article 19 introduces a questionable punitive method: the one who infringes intellectual property rights should pay for the publication of the judgement in a newspaper selected by the rights owner. As a punitive method this conviction of shame is most likely against the principles set in human rights treaties. The proposed article does not define how severe the infringement must be and how expensive the publication may be. Obviously the rights owner has the power to decide these details. This cannot be said to be neither fair nor according to the principles of the criminal law (it must be clear what kind of a penalty follows from a particular crime)

Patented technical protection measures (article 21)

Article 21 would create without sufficient justification one more legal protection layer to digital products. We don't see any category of digital works which would need this new protection layer. At the moment copyright, technical measures (as in the copyright directive) and patents cover digital products and computer programs. With the proposed article 21 the circumvention of technical protection systems could be intrepreted once again as criminal activity without any defense options left to those who circumvent.

Obviously the legislator does not understand what technical protection measures are. In practise e.g. different file formats (Microsoft Office) and security algorithms (DVD and CD copy protections) include a number of patents. There is a lively and ongoing EU-wide debate on e.g. when a private person may circumvent technical protection if legal use of a work is not possible otherwise. Copyright directive and national legislation has currently defenses to hackers - though the legislator attempted to include a similar trick to the national implementation of the copyright directive [which failed to pass the parliament]: it is allowed to circumvent DVD- and CD-protections if it is not possible to play the record legally in e.g cars and portable devices. It is also legal to decompile a file format if the aim of decompilation is for example interoperability. What happens to these important exemptions if the proposed article 21 is accepted?

In essence, does article 21 mean that DVD- and CD-copy protections may not be hacked just because they include patents? In that case article 21 would be in conflict with the basic principle that this directive would have nothing to do with the contents of the patent and copyright laws. EFFI thinks that Finland should first and foremost demand the dropping of article 21. Second, and at the minimum, Finland should require the clarification of the criteria for circumvention of patented technical protection for legal purposes. In addition, we can only understand that particular uses of hacking devices may be in some circumstances illegal but the possession and manufacturing should be always allowed since they have also legal uses (compare to guns and regarding copyright photocopying machines, videos and peer-to-peer networks).


Finally, we stress that the directive proposal is extremely political in spite of its technical harmonizing goals. Its implications are not limited to "industry" but it also affects individuals, small and medium size firms and all kinds of hobby activity.

It is hardly a coincidence that the directive proposal comes out just before EU enlargement to Eastern Europe is completed. The requirements set in this directive concern mostly the new member states, which have not been negotiating on the contents of the directive. To compare, the beneficiaries of the proposed directive are mostly multinational companies whose domicile is either within the current EU or North America.

In the EU parliament the directive is unfortunately on the table of only the committees of industrial and legal affairs. The draft by Janelly Fourtou, chairman of the legal affairs committee, reflects quite to the point where the directive aims at. Fourtou repeats media industry arguments and concludes in her draft that the proposal would be "too soft to some forms of piracy". EFFI's stand is exactly the opposite: the directive proposal is first of all too strict and too inaccurate. Therefore it should be dismissed. At the minimum we require that a substantial part of the proposal is written anew without promoting any particular interest group.

Helsinki 9th May 2003

Mikko Välimäki
Electronic Frontier Finland - EFFI ry
phone +358 50 598 0498
fax. +358 9 694 9768

Ville Oksanen
phone +358 40 536 8583

Electronic Frontier Finland - EFFI ry was founded in 2001 to defend active users and citizens of the Finnish society in the electronic frontier. EFFI influences legislative proposals concerning e.g. personal privacy, freedom of speech and fair use in copyright law. We make statements, press releases and participate actively in actual public policy and legal discussions. EFFI has been featured in the national media including TV, radio and leading newspapers. EFFI also works in close cooperation with organizations sharing the same goals and values in the Europe, United States and elsewhere. EFFI is a founding member of the European Digital Rights and a member of Global Internet Liberty Campaign. More information from EFFI's home pages: http://www.effi.org/.