Heiki Pisuke is Professor of Law and Acting Director at the Institute of Law of the University of Tartu.
1. Enlargement of the EU - more or fewer problems in the field of piracy ?
1.1. Historical background
On 1 May 2004 10 new countries joined the European Union (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia). This created a completely new situation in Europe where 25 European states with the population of 454 million people at the same time follow and create acquis communautaire. Several other countries (Bulgaria, Romania, Croatia, Turkey) are still on the European Union “waiting-list”.
The background of the new EU Member States is different. Former independent states till 1940 Estonia, Latvia and Lithuania were part of the former Soviet Union. Five other new EU Member States (Poland, Hungary, the Check Republic, the Slovak Republic, Slovenia) belong to the so-called group of post-socialist countries or the so-called Central and Eastern European countries (CEEC). And all of these countries, some more others less, were, mildly put, considered problematic by former EU Member States and the USA as far as enforcement of intellectual property rights and illegal reproduction and distribution of protected works (piracy) was concerned. The question of enforcement and piracy was one of the key issues in accession negotiations with the EU and with the World Trade Organization (WTO).
The intellectual property (IP) systems of CEECs before the dissolution of the Soviet block were based on socialist planned economy economic principles, lack of democracy, over-regulation of issues concerning domestic authors and under-regulation of protection of works of foreign authors. By now, all ten new EU Member States have the legislation, which is absolutely on the same level with the former EU Member States. Furthermore, it sometimes even exceeds the protection standards of old Member States. The last statement is explained by the fact that in new democracies it is comparatively easier to introduce new ideas and legal concepts (including from the academia), standards of the EU directives and models from foreign countries. Let me give you only some examples. The related rights in accordance with the 1961 Rome convention (i.e. the rights of performers, producers of phonograms and broadcasting organizations) were not known in the laws of the former Soviet Union and Central and Eastern European countries, and were first introduced only at the beginning of the 1990s. And one more example from Estonia. The 1992 Copyright Act of Estonia introduced the copyright protection of computer programs, databases, rental and lending rights, etc. which were harmonized on the European Union level by the Member States through directives several years later. The full harmonization of all EU copyright and related rights directives by the new EU member states was the pre-requisite for joining according to the so-called Association Agreements or Europe Agreements. And as the harmonization of the 2001 EU Information Society Directive has shown, the new member states have managed to do it earlier than the old member states.
At present, lobby groups, especially these connected with cultural industries, have also become an influential factor in legislating. At times such lobby groups have succeeded in blocking some provisions not favourable to them, and this is a growing tendency.
The other fact is, that several new EU member states or candidate countries (Bulgaria, Croatia, Cyprus, the Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia) have joined the 1996 WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). This is the fact about which the European Commission and the Member States are not very happy about, and which has caused several political and legal problems already. The reason is that the EU itself as well as its old member states have not yet joined WCT and WPPT.
So let me stress, once more, my first conclusion. The copyright and related rights legislation in the new EU member states is at present harmonized on the highest possible European level. When I say the highest possible European level, I mean, both the European Union directives, as well as the Council of Europe legal documents , which put political obligations to the 45 Council of Europe member states, including 21 Central and Eastern Europe countries.
My second conclusion is that in most of the Central and Eastern European countries protection of intellectual property and protection of works of foreign authors is an old and rooted concept, based on European cultural traditions. For instance, Poland joined the Berne Convention in 1920, Bulgaria in 1921, Hungary in 1922, Estonia and Romania in 1927, Latvia in 1937 (Canada and Finland in 1928). But an important and sad fact to mention is that the logical development of and European cultural roots were badly damaged during the Soviet period lasting nearly for 50 years. Estonia re-joined the Berne Convention in 1994, Latvia in 1995, the majority of CEECs at the beginning of the 1990s.
1.2. Creating a new national IP system : fundamentals of reforms in the former Republics of the Soviet Union
As a result of the collapse of the Soviet Union and the establishment of independent states during 1991-1992, all the former Soviet Socialist Republics, including Estonia, Latvia and Lithuania, had to carry out reforms affecting the whole society and encompassing political, economic and legal reforms. This meant the transformation of the entire legal system starting from the adoption of a new Constitution.
In the field of intellectual property, there were a lot of crucial issues, which demanded radical legal solutions. Below a few of them have been mentioned :
1) The place of intellectual property in the state’s political and ideological system. Several countries adopted the position that intellectual property rights are the fundamental rights of a person, provided for in the chapter of the Constitution concerning the fundamental rights and freedoms. 2) The place of intellectual property in the state’s economic system. As a result of transition from the socialist planned economy to market economy, intellectual property became an instrument of market economy. For example, in Estonia, the so-called ultra-liberal market economy is being implemented, where the role of the state in regulating economic relations is minimum. 3) The place of intellectual property rules in the state’s legal system. The Soviet legal system entailed the following intellectual property institutes : author’s rights (copyright), rights in inventions, and rights in discoveries. All these three institutes formed separate parts of the Civil Code. The Soviet doctrine did not recognise the theory of intellectual property as specific exclusive economic and moral rights. Several newly established legal systems, including Estonia, Latvia and Lithuania regulate intellectual property related issues in separate laws, thus outside the framework of the Civil Code. But in several countries of the former Soviet Union copyright is regarded as part of the civil law and regulated in the Civil Code. 4) Models of new intellectual property system. All the former Soviet Republics, which became independent have relied on the Berne Convention, Rome Convention (1961), WIPO treaties, the WTO TRIPS Agreement and WIPO Model Law in drafting their own intellectual property legislation. Estonian, Latvian and Lithuanian IP legislation has also been modelled on the basis of EU legal acts. 5) Implementation and enforcement. The new legislation based on international models has given a powerful impetus to the development of institutions dealing with the implementation of intellectual property. State intellectual property agencies, state patent offices, copyright departments at the Ministries of Culture or Justice or within the Patent Offices, collective management organisations, special police task forces to fight piracy, etc. - are some examples of institutions specially founded or developed during the reforms. 6) Case law. The case law in the field of intellectual property rights exists, but it is still in its early phase of development. 7) Information to the public. In all the post-socialist countries the need to improve information efforts relating to intellectual property and providing practical advice has been a very topical issue. Training of judges, civil servants, police and customs officers, as well as training of trainers, students, authors and other target groups is one of the key issues of enforcement of new intellectual property laws.
2. The real situation - piracy in statistics and in everyday life
2.1. The question of methodology
Statistics and its concept area are often beyond common knowledge of non-specialists as well as lawyers. A story goes : The river was half a meter deep on the average but a horse was drowned. How could it happen ?
The same phenomenon can be observed in statistics concerning violations in the field of intellectual property. The figures presented sometimes by interest groups - industries and rightholders’ organisations, are hard to believe. When questioning the representatives of such interest groups about the methods the figures are based on, quite often one cannot get a reasonable answer. To illustrate it : In answer to my question on what grounds the index of piracy of audiovisual works in Estonia have been calculated I received the following explanation : this is the case in Poland and you cannot possibly be in a better situation. However, it should be admitted that this example was a very exceptional one. All interest groups are constantly improving methodology of waterproof statistics, but statistics run by interest groups do not replace state-controlled methodological research of cultural industries accompanied by the simultaneous evaluation of piracy levels. However, it should be admitted that state-run research on cultural industry is both in Estonia and in CEECs still in its initial phase. This is also the reason why there is generally lack of internal state-run piracy monitoring. Research in the field of cultural industries carried out by WIPO and the European Commission will decidedly promote aforementioned internal research .
When speaking about piracy and piracy level, one can approach it from different angles : legislation, cultural industries, black economy, organized crime, consumer behavior and consumer protection, etc. All these approaches are based on different research methodology.
2.2. Central and Eastern European countries in the general piracy picture
Piracy is a global issue. Mr. Jay Berman, IFPI Chairman and CEO, has said that the organized commercial music pirate trade remains a key threat to the recording industry, with pirate disc sales topping the one billion mark for the first time ever in 2003. No fewer than 40 %, or two out of every five recordings sold in the world, are pirate copies . In 2003 IFPI for the first time published a list of ten top priority territories in the global fight against piracy . These countries were the following : Brazil, China, Mexico, Paraguay, Poland, Russia, Spain, Taiwan, Thailand, the Ukraine. In recently published “The recording industry commercial piracy report 2004” Poland was not on the list, and it was replaced with Pakistan. So, there are no CEECs on IFPI top priority list. See also Appendix 1.
When we are looking at the famous “Special 301” we can find nearly all the new EU Member States (Bulgaria, Croatia, Hungary, Latvia, Lithuania, Poland, Romania and the Slovak Republic) on the Watch List, excluding Estonia and Slovenia. As for Estonia the International Intellectual Property Alliance (IIPA) is on the opinion that absence of Estonia (as well as Spain) on the 301 lists “to be unjustified, as those two European countries certainly merit Special 301 attention” . The European Union as such is traditionally on Priority Watch List. See Appendix 2.
Being not the worst does not mean that there are no problems in the CEECs and all is O.K.
According to IFPI the most serious problem in Southern and Eastern Europe is CD-Rom piracy, which is growing rapidly (also in Italy, Spain, Greece, Portugal), and pirate cassettes. Pressed discs dominate the pirate markets in Russia and Asia.
Another critical issue concerns industry in particular fields. Optical disc manufacturing capacity in Eastern Europe has increased rapidly. According to IFPI optical discs plants in Poland have nearly doubled their production capacities in 2001- 2002. In Bulgaria, Serbia and Montenegro and other countries new plants for producing CD-s, CD-R and DVD-s are mushrooming up. Serious problems are connected with transshipment of pirate CDs through the Baltic States, particularly Lithuania, mostly from Russia and theUkraine . Largely due to pressure from outside an optical disc regulation was adopted recently in Poland which is the first such regulation in new EU member states .
Another global tendency influencing also the situation in CEECs is growth in online music market. There are over a hundred legal sites where consumers can buy music (in 2003 in Europe more than 50 legitimate services) . Illegal file-swapping, file sharing, is a global problem. IFPI has started more than 200 criminal and civil actions in old EU member States Denmark, Germany and Italy . It is expected that sooner or later the CEECs will also be the target group for legal action. At present warning campaigns are going on in several countries organized by IFPI, its national groups, authors’ organizations and BSA.
It is worth mentioning that the level of programming knowledge and general computer skills is very high in some of the CEECs. For instance KaZaA, as well as Skype software was worked out by young Estonian programmers, commissioned by a Swedish company.
A very serious problem in CEECs, may-be even the most serious social problem, is crime and its most dangerous form - international organized crime. Trade in drugs, trade in women, prostitution, fraud, car theft, malpractices in real estate market and timber trade are some kinds to mention. Such crime have a direct effect also to the piracy picture. Already in 1998 OECD study found that counterfeit and copyright infringing goods represented at least 7-9 % of world cross-border trade . Today the picture may be even worse, regardless of serious action taken on the European Union and global levels. So, inter-governmental co-operation and enforcing global enforcement strategies are extremely important. For instance, recently Intellectual Property Crime Action Group was formed at Interpol.
3. Enforcement - problems and perspectives
3.1. A dichotomy between the law and enforcement
A dichotomy between the law in law books and the law in real life is particularly well expressed in enforcement issues. A response to the question whether the post-socialist countries are prepared to transpose the standards of advanced countries is given first and foremost in the field of enforcement, and especially in the fight against copyright piracy and counterfeiting. It is easier to create completely new copyright law or new provisions in former ones, especially in a country, which has lacked a law in a given area, than to implement and enforce the laws. Why does implementation constitute such a problem ? In most cases, the law just cannot be implemented due to lack of due criminal, administrative or civil procedure, administrative capacity of the implementing institutions or lack of such institutions, whereas in some cases there is no wish to do so for one or another reason.
3.2. Legal side of enforcement
3.2.1. EU level
The first directive in drafting of which the new associated countries were present was Directive 2004/48/EC of the European Parliament and the Council of 29 April 2004 on the enforcement of intellectual property rights . The time of implementation is by the end of April, 2006, but several CEECs have already started the legislative procedure.
An important political message was given by the European Parliament a year earlier. On 5 June 2003 the European Parliament adopted a Declaration on Piracy and Counterfeiting in the Enlarged EU.
As the question of harmonized measures in criminal sanctions was not favored by the Member States, the European Commission has made a statement declaring that “the Commission will examine the possibility to propose in due course further measures providing for criminal sanctions in this field”.
3.2.2. National legal systems
Copyright laws of several CEECs contain precise provisions on piracy issues. For instance the Estonian Copyright Act of 1992 defines pirated copy in § 801 as “a copy, in any form and whether or not with a corresponding packaging, of a work or object of related rights which has been reproduced in any country without the authorisation of the author of the work, holder of copyright or holder of related rights” . Estonian Copyright Act contains special provisions on trade in pirated copies, identification of pirated copies and prevention of further circulation thereof, storing of pirated copies, handling of seized pirated goods and hardware used for piracy purposes, damages, sanctions in the case of trade in pirated goods, etc. Chapter 14 of the Estonian Penal Code of 2001 contains special articles on manufacturing a pirated copy, public performance using a pirated copy, trade in private copies, etc. The sanctions for physical persons are imprisonment up to 3 years and fine. The criminal liability of legal persons for the acts mentioned is fine. The objects of violation are subject to seizure.
During recent years all the CEECs have amended their Copyright Acts, Criminal Codes and other relevant legislation in issues concerning piracy.
The problem area in most of the CEECs is procedure legislation. Although most of the CEECs have stated that their procedure codes, laws and other similar legislation are in conformity with WTO TRIPS-Agreement and contain adequate procedural rules, it is probably not the case. I can say it relying also on the example of Estonia.
There are several unsolved legal questions concerning seizures in the CEECs. Obtaining of search and seizure orders or injunctions orders in due time, proving the status of pirated copy, provisions recognizing “sampling”, using specialists from copyright organizations as experts, evidence rules, etc. Or the question, what will be done with seized records, for instance ? Forensics laboratories, which enable to identify pirated copies are still at their start.
Police actions are going on in all of the new EU Member States, however, they are not organized regularly. Problem areas and lacunae can also be found in customs legislation. Effective border measures in customs legislation, the right of customs officials to seize infringing imported or exported goods and trans-shipments on their own initiative is not guaranteed or enforced in all the legislations.
This report does not cover case law in CEECs. But in every new EU Member State there is an established case law already on all the levels of court system. The problem which the judges in CEECs face is lack of knowledge of EU case law and procedure (in the issues of preliminary rulings of the European Court of Justice, for example).
In conclusion, piracy is a challenging topic also for the academic circles in the light of theoretical concepts of global IP society and global IP culture.