The EU's Intellectual Property Rights Directive, which is similar to the US Digital Millennium Copyright Act (DMCA), is designed to harmonise the enforcement of copyright, patents and trademarks across the EU and help law enforcers crack down on piracy. But in the process, it could stifle legitimate trade by making it impossible for small companies to produce goods that are compatible with products such as Sony's PlayStation or Microsoft's Windows without paying a licence fee, according to critics.
The draft directive is due for a vote before the European Parliament on 11 September, following a parliamentary review. When the draft was first introduced in January, it drew a "dismayed" reaction from the International Federation of the Phonographic Industry (IFPI) and other copyright-holder lobbyists, which called for the proposed measures to be beefed up.
Now, civil liberties groups are expressing concern that the measures err in the opposite direction, imposing out-of-proportion penalties on consumers and smaller companies while handing excessive power to large corporations.
The Foundation for Information Policy Research (FIPR), a British Internet policy think tank, believes the proposition would have serious implications for the battered telecoms industry because ISPs will face "legal harassment, equipment seizures, limitless injunctions and damages calculated on a different scale from today". They could also be "ordered to disclose customer names, block content or do surveillance".
An analysis published by the FIPR's Ross Anderson, of Cambridge University, said that most large companies -- like Microsoft, Sony and Disney -- would be the biggest beneficiaries of the directive, because of its stance on reverse engineering. "The EU Software Directive permits EU companies to reverse engineer their competitors' products in order to produce compatible, competing products," said Anderson in his analysis. He explained that this compromise was worked out 17 years ago to promote enterprise and competition. "The Enforcement Directive will fatally undermine it," he said.
As an extreme example, the FIPR said that devices such as book readers for the blind would become illegal, because they circumvent copy protection by changing the format of the product. Individual users of peer-to-peer software such as Kazaa would be criminalised, but so would street buskers, because they do not pay royalties for performing copyright songs.
The IFPI argued in January that the proposed measures are not tough enough to hold back an "epidemic of counterfeiting". In January, the group complained that "the tools the proposal introduces to bring actions against infringers do not even reach the levels already available under some existing national laws" and may "fall short" of what it called international standards, a reference to the DMCA.
Rather than taking on board the strongest anti-piracy measures of the member states, the draft legislation aims to represent "best practice" legislation, according to the EU.
The IFPI estimates that more than one billion pirate music CDs have been sold, which means one in every three discs is illegal. The organisation estimates the industry has lost $4.6bn (£2.86bn) because of piracy.