EU UPDATE

Computer Law & Security Report (2005) 21, 78e83

Baker & McKenzie’s annual review ofdevelopments in EU law relating to IP, IT andtelecommunications

David Halliday, Paul Ganley, Ruth Tomlinson, Miriam Andrews

Baker & McKenzie

Abstract This is a summary of the Baker & McKenzie columns on developments inEU law relating to IP, IT and telecommunications. This summarises the principaldevelopments which took place in 2004 that are considered important forpractitioners, students and academics in a wide range of information technology,e-commerce, telecommunications and intellectual property areas and which werereported on in this column in 2004. It seeks also to update any further developmentwhich may have taken place in relation to the specific topics since originallyreported. It cannot be exhaustive but intends to address the important points. Thisis a hard copy reference guide, but links to outside web sites are included wherepossible. No responsibility is assumed for the accuracy of information contained inthese links.ª 2005 Baker & McKenzie. Published by Elsevier Ltd. All rights reserved.

A. Intellectual property enforcement

1. Intellectual property rightsenforcement Directive

On 29 April 2004 Directive 2004/48/EC of theEuropean Parliament and of the Council on theenforcement of intellectual property rights waspublished. The Directive is controversial, not leastbecause it was passed quickly, giving rise tocomplaints that not enough consultation timehad been devoted to it. Also, there had beenconsiderable debate as to whether small-scale IPR

0267-3649/$ - see front matter ª 2005 Baker & McKenzie. Publishdoi:10.1016/j.clsr.2005.01.017

infringement (e.g. occasional downloaders of MP3files) should be caught by the Directive. Thecompromise position limits certain provisions toacts of infringement committed on a ‘‘commercialscale’’, and the recitals note that this will‘‘normally exclude acts done by consumers actingin good faith’’. The Directive also gives MemberSates the option of introducing criminal sanctionsfor IPR infringement.

The Directive requires Member States to providecourts with certain evidence-gathering powers,the power to issue interlocutory injunctions toprevent impending or continuing infringement, the

ed by Elsevier Ltd. All rights reserved.

Baker & McKenzie’s annual review of developments in EU law 79

power to order the delivery-up of infringing goodsand the power to seize certain assets of infringers.These provisions already form part of UK law and itis unlikely that many changes will be required.However, the Directive will require substantialamendments to the laws of certain Member States,particularly those which joined the EC on 1 May2004. Member States have two years to implementthe measures.

� Directive: http://europa.eu.int/eur-lex/pri/en/oj/dat/2004/l_195/l_19520040602en00160025.pdf.

Original article in [2004] 20 CLSR 216.

2. Commission strategy on enforcementof intellectual property rightsin third countries

On 10 November 2004 the European Commissionannounced the adoption of a ‘‘strategy for theenforcement of intellectual property rights in thirdcountries’’.

The strategy is aimed at violations in thirdcountries, as existing initiatives are not effectiveagainst infringements that directly affect Commu-nity right-holders but occur outside the Commu-nity borders. There are eight proposed actions setout in the strategy to address the problem:identifying the priority countries; multilateral/bilateral agreements; political dialogue; incen-tives/technical cooperation and assistance; dis-pute settlement/sanctions; creation of publiceprivate partnerships; raising awareness of bothconsumers and rights-holders; and institutionalcooperation of the Commission services.

The approach of the Commission in its Commu-nication is not to put in place a stream of newlegislation, but to focus instead on effectiveenforcement of existing and prospective meansand actions, for the benefit of both right-holdersand third countries.

� Commission Communication: http://trade-info.cec.eu.int/doclib/html/120025.htm.

3. Regulation on customs actionagainst counterfeit and piratedgoods comes into force

Council Regulation 1383/2003/EC came into forceon 1 July 2004 to govern the regime for customsaction against IP infringing goods. At the same

time, UK law was amended by the Goods InfringingIntellectual Property Rights (Customs) Regulations2004 (SI 2004/1473) to implement the new regime.The new measures extend the IP rights for whichsanctions are available to include plant varietyrights, protected designations of origin and pro-tected geographical indications. Customs officialsare also given greater powers in relation to thedetention of goods and the disposal of infringingarticles. A number of procedural changes havebeen introduced, including the substitution of theright to ask for security to cover the costs ofinterceptions with a requirement that rights-hold-ers provide written undertakings to pay such costsand accept additional liabilities if goods are laterfound to be non-infringing; a requirement thatcustoms officials provide rights-holders with moredetails of interceptions made, and the possibilityof lodging notice applications online.

� EC Regulation: http://europa.eu.int/eur-lex/pri/en/oj/dat/2003/l_196/l_19620030802en00070014.pdf.

� UK statutory instrument:http://www.legislation.hmso.gov.uk/si/si2004/20041473.htm.

Original article in [2004] 20 CLSR 413.

B. Patents and designs

1. Proposal for a directive on thepatentability of computerimplemented inventions

The tortured history of the draft proposal on thepatentability of computer implemented inventionstook more twists and turns throughout 2004.Following the initial proposal from the EuropeanCommission in February 2002 (COM (2002)92) andthe heavily amended proposal passed by theEuropean Parliament in September 2003, theCompetitiveness Council agreed a ‘common posi-tion’ on 18 May 2004. The common positionrejected most of the amendments made by theEuropean Parliament and under the co-decisionprocedure will need to be presented again to theParliament. However, the Dutch parliament wasreported to be unhappy with its government’sagreement of the common position, and on 17November 2004, the Polish government announcedthat it could not support the proposed commonposition. The revised voting procedure in theCouncil following the enlargement of the EUmeans that the Polish government could block

80 D. Halliday et al.

the adoption of the common position, which willmean that there will need to be further politicalnegotiations before the draft directive can go backto the European Parliament.

� Common position: http://register.consilium.eu./int/pdf/en/04/st11/st11979.en04.pdf.

2. Draft directive amending thelegal protection of designs

On 14 September 2004 the European Commissionpublished a draft Directive amending Directive 98/71/EC on the legal protection of designs, followinga study of ways to harmonise the aftermarket inspare parts. The purpose of the proposal is toprevent design protection creating a completemonopoly right, and to complete the InternalMarket already partially achieved by Directive98/71/EC.

The proposed Directive introduces a ‘‘repairsclause’’ so that visible component parts of a com-plex product will not be protected under designlaw for the purpose of repair of that complexproduct. The text of the repairs clause is takenfrom the Council Regulation (EC) No 6/2002 onCommunity Designs where there is already noprotection for ‘‘must-match’’ spare parts in theaftermarket. As a result of this amendment visiblecar parts will only be protected by design law inthe primary market and not in the aftermarket/secondary market; however, the exclusive rightsthat vehicle manufacturers have over the use ofdesigns for new parts and new vehicles will re-main. The amendment will allow for a morecompetitive market to open up in the manufactureand supply of replacement vehicle parts. Bothconsumers and SMEs are expected to benefit fromthis change in the market.

The proposal is to be considered by the Euro-pean Parliament and Council. No formal timetablehas yet been announced.

� Draft Directive: http://europa.eu.int/comm/internal_market/en/indprop/design/.

� Directive98/71/EC:http://europa.eu.int/comm/internal_market/en/indprop/design/.

3. Draft regulation on compulsorylicensing of patents formedicine exports

On 29 October 2004 the European Commissionpublished a proposal for a regulation on ‘‘compul-

sory licensing of patents relating to the manufac-ture of pharmaceutical products for export tocountries which have public health problems’’.

The purpose of the proposal is to give effect tothe WTO General Council Decision of 30 August2003 on the Implementation of paragraph 6 of theDoha Declaration on the TRIPS Agreements andPublic Health. Implementation of the Decision isnecessary in all of the EU Member States to avoiddistortion of competition. The proposed regulationaims to provide importing WTO members with thedrugs needed to treat diseases, whilst also pro-tecting the interests of the pharmaceutical man-ufacturers. It establishes a procedure for the grantof compulsory licenses by the competent authorityin the Member State, to applicants who havereceived a specific request from authorised repre-sentatives of the importing WTO member.

The grant of a license is subject to the applicanthaving first attempted to agree a negotiated li-cense with the right owner. Compulsory licensesshall be non-exclusive, non-assignable, and neces-sary to meet the needs of the importing WTOmember. The proposal calls for a review of theregulation three years after it enters into force.

The proposal is to be considered by the Euro-pean Parliament and Council. No formal timetablehas yet been announced.

� Draft Regulation: http://www.europa.eu.int/comm/internal_market/en/indprop/patent/draft_medicines_en.pdf.

� Doha Declaration: http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

C. Data protection/privacy

1. European Commission to investigateUK’s approach to the EU dataprotection directive

The European Commission is to investigate the UK’simplementation of the EC Data Protection Directivein the Data Protection Act 1998 (the ‘‘Act’’). TheCommission has issued a letter of formal noticerequesting further information against which com-pliance will be adjudged. A key area of concern isthe definition under UK law of ‘‘personal data’’following the decision in Durant -v- FinancialServices Authority [2003] EWCA 1746 in December2003 where it was held that not all data that areretrieved from a computer against an individual’sname or unique identifier were ‘‘personal data’’under the Act. The decision was criticised as giving

Baker & McKenzie’s annual review of developments in EU law 81

a narrow interpretation of the definition of personaldata, and the Commission favours a wider definitionto include personal information that applies in-directly to an individual. Other issues thought tobe under investigation include the scope of dero-gations to the prohibition on cross-border transfersof data and the powers granted to the InformationCommissioner under the Act.

Original article in [2004] 20 CLSR 414.

D. Competition law

1. Commission decision in the Microsoftcase e 24 March 2004 e (CaseCOMP/C-3/37.792)

On 24 March 2004 the European Commission de-livered its judgment in the Microsoft case. Thecase concerned alleged breaches by Microsoft ofArticle 82 of the EC Treaty (which makes it anoffence for an undertaking to abuse a dominantposition). The Commission found that Microsofthad abused its dominant market position byleveraging its near monopoly in the market for PCoperating systems onto the markets for work groupserver operating systems, and for media players.

The case arose out of a complaint by SunMicrosystems to the Commission about Microsoft’srefusal to release interface information that wouldmake it easier for Sun to develop products thatcould talk to the Windows operating system. TheCommission extended the investigation to considerthe manner in which the Windows Media Productwas bundled with Windows.

The Commission imposed a number of penaltieson Microsoft including a record V497 million, anobligation to provide accurate interface informa-tion within 120 days, and an obligation to providean unbundled version of Windows. The sanctionshave been suspended pending the outcome of theappeal.

� Full text of decision: http://europa.eu.int/comm/competition/antitrust/cases/decisions/37792/en.pdf.

Original article in [2004] 20 CLSR 328.

2. European technology transferblock exemption regulation

On 27 April 2004, the Commission announced that ithad adopted a new European Technology Transfer

Block Exemption Regulation. The Regulation cameinto force on 1 May 2004, although agreementsentered into before under the previous TTBERegulation 240/96 will continue to benefit fromits ‘‘safe harbours’’ until 31 March 2006.

The new TTBE Regulation is wider in scope thanthe old Regulation and applies to a number ofpatent, know-how or software copyright licensingagreements, or a combination of these. However,if the combined market share of the competingparties to an agreement exceeds 20% of therelevant market, or if the market share of eachof the non-competing parties to an agreementexceeds 30% of the relevant market, the blockexemption will not apply. Under the Regulation,even where the parties remain within the marketshare thresholds, an agreement will not benefitfrom the block exemption if it contains certain‘‘hardcore’’ restrictions such as the fixing of pricescharged to third parties.

The Commission has published detailed guide-lines on the application of Articles 81(1) and 81(3)of the EC Treaty to agreements that fall outsidethe block exemption. In the absence of hardcorerestrictions, there is no general presumption thatsuch agreements infringe Article 81(1) simply be-cause they fall outside the scope of the Regulation.

� TTBERegulation:http://europa.eu.int/eur-lex/pri/en/oj/dat/2004/l_123/l_12320040427en00110017.pdf.

� Article 81 Guidelines: http://europa.eu.int/eur-lex/pri/en/oj/dat/2004/c_101/c_10120040427en00020042.pdf.

Original article in [2004] 20 CLSR 329.

E. Telecoms

1. Application of the e-Money Directiveto Mobile Operators: Consultation paperof the Director General of the InternalMarket (DGIM)

The European Commission has published a consul-tation paper on the nature of pre-paid mobilephone cards and the application of the e-MoneyDirective (2000/46/EC) to mobile operators. Thisissue has come to the fore now that credit onpre-paid phone cards can be used to purchasea range of products and services from companiesother than the mobile operator. The EU BankingAdvisory Committee recently concluded that the

82 D. Halliday et al.

pre-paid phone cards fall within the definition of‘‘electronic money’’ set out in Article 1 of theDirective when they are used to purchase thirdparty products or services such as ringtones or newsalerts. The consultation period is now closed andthe responses have now been published on the DGIMwebsite.

� e-Money and mobile operators portal: http://europa.eu.int/comm/internal_market/bank/e-money/index_en.htm.

� e-Money Directive: http://europa.eu.int/eur-lex/pri/en/oj/dat/2000/l_275/l_27520001027en00390043.pdf.

Original article in [2004] 20 CLSR 330.

2. European Commission and OFCOMpublish consultations on Voice overInternet Protocol (VoIP)

With the proliferation of broadband servicesthroughout the EU, the European Commission hasissued a consultation document on the regulation ofVoIP (i.e. the ability to make voice calls over theinternet). The consultation addresses a number oftechnical issues including access to emergencyservices, network availability and the in-linepowering of terminals. The consultation also seeksviews on how existing rules applicable to operatorsof Publicly Available Telephone Services (PATS)should apply to VoIP providers. The results of theconsultation process will form the basis of non-binding guidelines which are expected to influencenational regulators such as Ofcom which is alsoconsulting on the issue. At present Ofcom appearsto favour a light touch with the emphasis onmaking customers aware that service levelsthey are used to from PATS will not necessarilyapply to VoIP, rather than imposing heavy-handedregulation.

The Commission is expected to adopt a non-binding position at the end of 2004/beginning of2005. Ofcom’s consultation closed on 15 November2004 and it expects to make a final statement,based on its own and the Commission’s consulta-tion, in early 2005.

� Commission consultation: http://europa.eu.int/information_society/topics/ecomm/doc/useful_information/library/commiss_serv_doc/406_14_voip_consult_paper_v2_1.pdf.

� Ofcom VoIP and Voice over Broadband portal:http://www.ofcom.org.uk/ind_groups/ind_

groups/telecommunications/vob/vobqa/?aZ87101.

Original article in [2004] 20 CLSR 492.

F. e-Commerce

1. European Commission consultationconcerning a new legal framework forpayments in the Internal Market

As part of the move towards creating a ‘‘SinglePayment Area’’ in the EU the Commission soughtcomments from interested parties on the generalprinciples that should govern the modernisationand simplification of the regulatory frameworkapplying to payment services in the Internal Mar-ket. The Commission’s aim is to make it easy, cheapand secure to make cross-border payments. Theconsultation period closed on 31 January 2004.

The Commission sought views on whether exist-ing legislation in this area was sufficient or whethernew regulatory measures may be necessary. Whenformulating measures in this area, the Commissionhas stated that it intends to observe the followingprinciples:

� improving efficiency as a permanent objectiveof the Internal Market;

� enhancing the legal and technical security ofpayment instruments and systems;

� boosting competition and easier access to themarket;

� strong safeguards for consumers; and� avoiding discrimination between payment in-struments.

The Commission specifically sought views ona number of issues including the appropriateregulatory environment for emergent paymentsystems, the use of digital signatures, the infor-mation requirements imposed on payment serviceproviders, the conditions under which paymentorders may be revoked, and the appropriate roleof payment service providers in the case ofmerchant/customer disputes. The Commission alsoemphasised that any measures adopted should betechnologically neutral.

� Payment services portal: http://europa.eu.int/comm/internal_market/payments/framework/index_en.htm.

Original article in [2004] 20 CLSR 215.

Baker & McKenzie’s annual review of developments in EU law 83

G. Consumer protection

1. Financial Services (Distance Marketing)Regulations 2004

The Financial Services (Distance Marketing) Regu-lations 2004 (SI 2004/2095) came into force on 31October 2004. The Regulations implement Direc-tive 2002/65/EC on the distance marketing ofconsumer financial services and in doing so amenda number of existing legislative measures. TheRegulations cover distance contracts for banking,credit, insurance, personal pension, investmentor payment services. A distance contract isgenerally defined as one concluded by way oftelephone, fax, mail or email. Two of the mostimportant provisions govern the provision of in-formation to consumers prior to the conclusion ofa distance contract (Regulation 7) and consumer’sright to cancel a distance contract within a given

period (Regulation 9, subject to exceptions).Other provisions deal with the fraudulent use ofcredit cards in connection with a distance con-tract and the duties and powers of enforcementauthorities.

� Regulations: http://www.legislation.hmso.gov.uk/si/si2004/20042095.htm.

� Directive: http://europa.eu.int/eur-lex/pri/en/oj/dat/2002/l_271/l_27120021009en00160024.pdf.

Original article in [2004] 20 CLSR 491.

For further information on any of the above, please contactHarry Small (harry.small@bakernet.com) of the IntellectualProperty & Information Technology Department of the Londonoffice of Baker & McKenzie (tel: C44 20 7919 1000). Mr Smallwas assisted in the preparation of this article by MiriamAndrews, Paul Ganley, Ruth Tomlinson and David Halliday.