Many European legislative or industry initiatives affect consumers in the digital world:

Publishing Sector Paper Background The European Commission has recently published a staff working paper on publishing within the framework of media policy intended for consultation. It describes the various sub-sectors that make up EU publishing and elaborates some criteria for assessing competitiveness. The paper also identifies some potential policy strands for the future. The paper claims that enhancing the copyright regime in the digital age is also essential, with the industry now taking a strong interest in digital rights management (DRM) technologies and describes DRM as an enabler for the on-line business models which publishers strive to develop.

BEUC position BEUC believes that the European publishing sector is crucial to the building of a knowledge-based economy. However, blindly ‘enhancing’, ‘supporting’ and ‘extending’ the copyright protection regime may confer unjustified monopoly privileges, impede competition, potentially impose unfair costs on consumers and risk to inhibit creativity. Do we want a society in which the free exchange of ideas - on which our society thrives - remains possible or do we want access to content curtailed by excessive copyright regulation and abusive use of DRMs? The report correctly states about copyright and DRMs that “widespread acceptance by consumers is still lacking”. The reason for this is (at least) twofold: Firstly, DRMs are restricting consumers legitimate use of copyrighted (and non-copyrighted) material. According to the Commission, publishers also regard DRM as a technology with increased control over content and more precise definitions of the rights associated to the assets they commercialise. These “rights” go beyond what is asserted by intellectual property law and we deplore the lack of discussion on potential adverse effects on consumers, and the eventual need to guarantee consumers rights in relation to the works they legally purchase. Review of the IP law acquis Background In 2004, the Commission has issued a staff working paper on the review of the EC legal framework in the field of copyright and related rights. The objective is to consider adaptation of the early directives to increase consistency as well as to evaluate potential adverse effects of non-harmonised issues on the Internal Market. The Commission attempted a tidying up exercise rather than a reform or in-depth review of the existing acquis. The Commission will continue work on a recast of the legal framework in 2006.

BEUC position At present we observe the extension of exclusive rights and the deterioration of societal rights. The Information Society Directive contains crucial flaws, does not ensure sufficiently the benefit of certain exceptions and excessively protects technical protection measures, to the detriment of innovation and legitimate uses. There is a growing resistance to ever expanding intellectual property rights from society groups, consumer organisations, scientists and academics and an increasing community relying on alternatives (creative common, Gutenberg project, open source software, Wikipedia, etc.). So far, the Commission has simply rejected these developments.


Review of the consumer law acquis Background The Commission is looking at the body of European consumer protection law. Eight directives have been chosen to undergo an indepth analysis, amongst for example the unfair terms directive and the distance selling directive.

BEUC position Consumers in the digital world are ever more confronted on-demand services relying on intellectual property rights and with so-called shrink wrap licenses that impose usage restrictions through licensing terms. It is essential that the general commitment of consumer policy, i.e. a high level of consumer protection within the European Union, be steadily developed. In view of digitalisation, consumer protection needs to adapt to current problems of B2C transactions and to be apt to deal with challenges that new technologies or new business models impose on consumers.


Internet licensing of music Background The European Commission believes that online music distribution can be a driving force for overall online services. On 12 October it adopted a recommendation on the management of online rights in musical works following two consultations in 2004 and 2005. The recommendation puts forward (non-binding) measures for improving the EU-wide licensing of copyright for online services.

BEUC position We believe that online music rights require a harmonised collective rights management system. This, we believe, could foster solutions in the information society where major right holders may otherwise dictate unfavorable terms. BEUC supports that more common ground and a policy of good governance should be established to develop a Community-wide licensing for the exploitation of certain rights. Nevertheless, the current approach ignores the fact that consumers have a direct interest in a well-functioning collective rights management system and a vital interest in having access to a culturally diverse and broad online offer at a price that adequately remunerates the artists and simultaneously takes into account the cost efficiencies of online distribution.


Enforcement of IP Background On July 12, 2005, the European Commission adopted two proposals aimed at harmonizing a number of criminal law aspects relating to IP rights: under the proposal for a new Directive, infringements of any intellectual property rights are treated as criminal offense if undertaken intentionally and on a commercial scale. Similarly, attempting, aiding and inciting such infringements are considered criminal acts. The second proposal for a Framework Decision defines minimum penalties that have to be available for such offense if it involves a criminal organization or poses a risk to public health and safety. These proposals bring back provisions that have been rejected in the IP Enforcement Directive (2004/48/EC) of April 2004. After the adoption of that directive, BEUC had expressed deep disappointment with the outcome. The EP and the Council had extended the scope of the directive, giving industry a weapon to intimidate consumers in their own home.

BEUC position We believe that it is disproportionate to invoke ever-tougher penalties for infringing intellectual property laws. Similar to the IP Enforcement Directive 2004, the use of the “commercial scale” qualification to characterize serious offences that can lead to criminal sanctions is highly ambivalent. It does not require financial benefit, profit or motive. Criminal sanctions for infringing copyright holders' rights should be applied only to infringements for commercial gain or organised crime - not to individual citizens making use of new technologies. We are also very concerned about the potential negative effects on scientific research and innovation.


Digital Rights Management Background In 2004, the Commission - under the aegis of former Commissioner Liikanen – established a stakeholder High Level Group on Digital Rights Management (DRM) to achieve consensus on controversial issues relating to the take-up of DRM ended unsuccessful in 2005, in particular as no consensus could be achieved on consumer protection.

Under the aegis of Commissioner Reding, a new group of stakeholders is invited to discuss similar issues – this time without the participation of consumer groups.

At the same time, industry is – under the framework of the Commission’s research programme – seeking to develop DRM specifications under the NAVSHP project. These specifications include defining terms like “household”, “pre-defined usage”, authorized domain, etc. While it is considered to be a “technology agnostic” the project risks pre-empting policy decisions.

Similar attempts to describe DRM specifications are made by an industry group called the Digital Video Broadcasting Project (DVB). This is an industry-led consortium (with no consumer participation) of over 260 broadcasters, manufacturers, network operators, software developers, regulatory bodies and others in over 35 countries committed to designing global standards for the global delivery of digital television and data services. Its sub groups, CM-CP and TM-CPT, are working to develop the Content Protection and Copy Management (DVB-CPCM) system for managing distribution, copying and redistribution of television content, akin to the US “Broadcast Flag” which has been successfully stopped in a recent US court of appeal decision. DVB-compliant solutions will effectively hinder or prevent consumers from recording free over-the-air broadcasting for legitimate time-shifting usages. It seems also that industry – in particular US entertainment industry - is seeking mandatory technical solutions on a world-wide basis.

BEUC position In its current forms, Digital Rights Management undermines existing consumer protection laws and poses a serious danger to the traditional balance between rewarding creators and providing for the legitimate use of consumers. It also threatens economic growth through its anti-competitive behaviour and in the ways that it impedes innovation.

We are very concerned about the attempts of industry consortia to prescribe policies in DRM specifications which are still under discussion. We urge the Commission to ensure proper consumer representation and to ensure that policies are not defined in close groups. We object to the reference of such deliverables in European legislations and policies, in particular when dealing with basic legal and economic interests of consumers.