Europe's Regulatory Gridlock

As media-copying sprouts, Brussels fails to keep pace

3 min read
Europe's Regulatory Gridlock

Europe may be known for its fast highways, of both the paved and information variety. But when it comes to establishing rules to protect copyright holders in the digital age, it is moving in the slow lane.

The legislative wheels of the European Union (EU), representing 15 countries speaking a dozen languages, never spin quickly, but what particularly troubles copyright holders is that the wheels seem to be slowing even as their revenue losses—which they blame on piracy—accelerate. European lawmakers are certainly aware that a problem exists. The EU estimates that 37 percent of its members' software—representing nearly 3 billion euros at retail prices—was acquired illegitimately. Music sales have dropped nearly 8 percent on average over the past two years; while causes are hard to pin down, the industry blames the rise of illegal online song-swapping services.

special report copy protection graphic

To protect copyright holders, the European Commission (EC, Brussels), the legislative arm of the EU, has put several new directives on the table. But these initiatives have yet to be approved by the European Parliament (Strasbourg, France), let alone be adopted by its member states. The initiatives concerning counterfeiting and copyright are the most salient, although neither one mandates the imposition of digital rights management (DRM), which, in the view of some, is essential to ensuring that copyright holders get paid for each and every easily made digital copy created—when, for example, a song is downloaded to a mobile phone or computer hard drive.

The new directive against counterfeiters was proposed by the EC at the end of January. Under the proposed law, counterfeiters in Europe would face criminal sanctions and fines amounting to double the proper retail value of each item they pirated, plus the illicit profits they reaped on the sale of copied goods. The proposal must be debated by the European Parliament and ministers from the 15 national governments. If passed, EU rules require that it eventually replace existing national legislation against counterfeiting.

As for the EU's copyright directive, a deadline for its adoption passed at the end of December with just two countries, Greece and Denmark, signing up. Many media and software companies see that slender support as a blow to deterring unauthorized duplication of their works across the Internet. After all, member states had 18 months to adopt the directive, which, like the U.S. Digital Millennium Copyright Act of 1998, is intended to better protect the distribution of film, music, and software across the Net and onto digital devices, such as mobile phones.

And, despite intense lobbying, the software, film, and music industries have to date failed to convince politicians that technological stopgaps, such as DRM systems, will work or are necessary. Instead, the industry has been holding workshops with the hope of arriving at an industry consensus on how best to implement DRM technology. The most recent workshop was on 25 March.

Industry: it's your move

The European Parliament has also held back from introducing DRM legislation. Arlene McCarthy, a member of the European Parliament from the UK, argues that there should be no legislation on this. Industry, she says, should take the lead. In her view, shared by many other European parliamentarians, legislating DRM "may not lead to the right technical specifications."

Pressure to achieve consensus is mounting on a second front. In January, executives from some of the biggest names in hardware and software, such as Microsoft, Hewlett-Packard, and Nokia, sent a letter to the EU requesting an end to an antiquated levy system imposed by several national governments on analog copying equipment, which they say is now being extended to blank CDs, recordable DVDs, CD writers, and even computers in some countries. A German collecting agent, VG Wort (Munich), recently tried to force Fujitsu Siemens Computers Holding BV, the largest PC maker in Germany, to pay royalties as high as ¤30 for every computer it sells.

The levy system was introduced decades ago to compensate rights holders for royalties lost to private copying of music, images, and movies. But charging levies isn't the best way to compensate rights holders in the digital age, say the hardware and software companies, all members of the European Information, Communications, and Consumer Technology Industry associations, in Brussels.

The new copyright directive leaves it up to member states whether they compensate rights holders with a levy or not. At present, six countries—Belgium, Germany, Greece, France, Italy, and Spain—impose taxes on recording materials, such as blank cassettes, and equipment, including video recorders, photocopiers, and fax machines. German consumers, for instance, pay an extra ¤1.28 for a CD recorder. Four other countries—Denmark, Finland, Sweden, and the Netherlands—tax recording materials only, not equipment. Ireland, Luxembourg, and the UK impose no levies.

"We'd like them to sort this issue out by themselves without us having to introduce legislation," says Per Haugaard, a spokesman for Erkki Liikanen, the commissioner for enterprise and the information society.

That approach may not work well. But as the U.S. experience attests, the alternative—to legislate first and work toward an industry consensus later—wouldn't be a smooth one, either. Witness the many lawsuits and protests over the 1998 Digital Millennium Copyright Act.

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